Vornado Realty Trust VNO recently announced an inaugural lease at Sunset Pier 94 Studios with Paramount Television Studios. The lease encompasses 70,000 square feet to be used for filming the second season of the Showtime original series Dexter: Resurrection for Paramount+.
Featuring one-of-a-kind facility, Sunset Pier 94 Studios spans 232,000 square feet of leasable stages, production support space and offices with on-site parking and sufficient opportunities for exterior signage. A joint venture between Hudson Pacific Properties, Inc., Blackstone Real Estate and Vornado, the facility comprises six purpose-built sound stages up to 36 feet, easily accessible to the on-site mill. The ideal Manhattan location with the Hudson River in its background, combined with the recently relaxed New York State tax credits, makes it an attractive destination.
In addition, Sunset Pier 94 Studios provides notable community benefits like an extension of Hudson River Park with new public restrooms, 25,000 square feet of waterfront open space and pier access, around 2,000 square feet of community amenity space and safety improvements to the bikeway. Through workforce development and training programs, the site is set to pave the way for 400 permanent jobs with a $6.4 billion contribution to the local economy over the coming 30 years.
VNO in a Nutshell
Vornado boasts a concentration of high-quality assets and a strategic focus on expanding its market share in the New York City office market. In addition, the company has a controlling interest in 555 California Street in the heart of San Francisco's Financial District and owns theMART in Chicago's River North District, which are iconic office assets in signature cities.
The above lease at Sunset Pier 94 Studios highlights the value of diversification into alternative property uses for VNO. Clinching a major deal with a high-profile tenant like Paramount at the outset strengthens the long-term outlook for the company’s revenues and improves earnings visibility.
However, the geographic concentration of assets and competition from developers and operators are key concerns for Vornado. High debt burden and elevated interest expenses add to its woes.
Over the past month, shares of this Zacks Rank #4 (Sell) office REIT have declined 14.2% compared with the industry’s fall of 0.5%.
However, analysts seem bullish on this stock, with the Zacks Consensus Estimate for 2025 FFO per share having been revised northward by a cent to $2.34 over the past two months. Meanwhile, the estimate for 2026 has been moved down by a cent to $2.39 over the same period.
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Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Prologis Inc. PLD and Host Hotels & Resorts HST, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for PLD’s 2025 and 2026 FFO per share is pinned at $5.80 and $6.08, respectively. This calls for year-over-year growth of 4.3% for 2025 and 4.7% for 2026.
The Zacks Consensus Estimate for HST’s 2025 and 2026 FFO per share is pegged at $2.05 and $2.04, respectively. This implies year-over-year growth of 4.1% for 2025 and a marginal fall for 2026.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
