Vornado Realty Launches $2 Billion Buyback For Convertible Debt
By A.D. Pruitt, Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Vornado Realty Trust (VNO) launched a cash tender offer
for $2 billion in outstanding convertible debt Monday for the face amount of the
securities. The deal could go a long way in helping the real-estate investment
trust pay down its debt.
Vornado, based in Paramus, N.J., announced a cash tender for all of its $887
million of outstanding 3.625% convertible senior debt maturing in 2026 and $
1.125 billion of 2.85% convertible senior securities due in 2027. The offer is
slated to expire Dec. 1.
The deal comes amid concerns about Vornado's upcoming debt maturities
resulting largely from its acquisition strategy. The company went on a $14.9
billion buying spree over the last decade but sold only $1.2 billion, according
to a company filing last spring. Vornado has $2.7 billion of unsecured debt that
bondholders can demand be repaid in 2011 and 2012.
Michael Knott, an analyst at Green Street Advisors, said these kind of
buybacks have been very common among REITs trying to accelerate the repayment of
debt that hasn't yet matured. "VNO has a massive amount of cash on its balance
sheet, much of which may ultimately be used to repay debt...so a tender can help
to fast-forward the process," he said.
A Vornado representative was not immediately available to comment.
The company is known for big office deals and now owns more than 100
properties, mostly in New York and Washington, D.C. It also has significant
retail holdings, including a one-third stake in Toys "R" Us Inc.
The company's shares closed up 1.1% at $60.24 Monday and are unchanged in late
trading.
-By A.D. Pruitt, Dow Jones Newswires; 212-416-2197; angela.pruitt@dowjones.com
(Christina S.N. Lewis contributed to this report.)
(END) Dow Jones Newswires
11-02-091641ET
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