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Vornado Reaps $49M from Manhattan Building Refinancing

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Vornado Realty TrustVNO recently disclosed that it has completed a $375-million refinancing of 888 Seventh Avenue, which is an 882,000-square foot Manhattan office building. Notably, the loan, with a term period of five years, is interest-only at London inter-bank offered rate ("LIBOR") plus 1.60%, and was swapped for a term loan with a fixed interest rate of 3.15%. This move has fetched the NY-based real estate investment trust ("REIT") net proceeds of around $49 million. Earlier, this property was encumbered with a 5.71% $319-million mortgage, slated to mature in Jan 2016.

Vornado is the owner and manager of commercial real estate in the U.S., with a portfolio mainly spread across the New York City and Washington D.C. areas. On Nov 2, 2015, Vornado had entered into an unsecured delayed-draw term loan facility of up to $750 million. The rate of interest associated with this facility is determined on the basis of LIBOR plus 115 basis points (bps) with a fee of 20 bps per annum on the unused portion. The loan facility, due for maturity on Oct 2018, has the option of two one-year extensions. We believe these developments will likely boost Vornado's financial capacity in the near future.

Vornado reported funds from operations ("FFO") per share of $1.25 for third-quarter 2015, in line with the Zacks Consensus Estimate.

Vornado currently carries a Zacks Rank #3 (Hold).

Investors interested in the REIT space may also consider stocks like Hersha Hospitality Trust HT , Getty Realty Corp. GTY and Mack-Cali Realty Corp. CLI All three stocks sport a Zacks Rank #1 (Strong Buy).

Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation and amortization and other non-cash expenses to net income.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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