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Vornado's (VNO) Q4 FFO Misses Estimates, Revenues Beat

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Vornado Realty TrustVNO reported fourth-quarter 2016 adjusted funds from operations ("FFO") per share of $1.13, missing the Zacks Consensus Estimate of $1.31. The adjusted FFO per share for fourth-quarter 2015 was $1.26.

Results reflect a fall in occupancy in the Washington DC portfolio.

The bottom line for full-year 2016 came in at $4.66 per share, down from the 2015 tally of $4.75. The Zacks Consensus Estimate for 2016 was $4.78.

For the reported quarter, total revenue came in at $638.2 million, down 2% year over year. However, it surpassed the Zacks Consensus Estimate of $627 million.

For full-year 2016, total revenue came in at $2.51 billion, almost in line with the Zacks Consensus Estimate. For full-year 2015, the company recorded total revenue of $2.51 billion.

Quarter in Detail

In the New York portfolio, Vornado leased 626,000 square feet of office space and 10,000 square feet of retail space. The company leased 329,000 square feet of office space in Washington DC.

At the quarter end, same-store occupancy in the New York portfolio was 96.5%, reflecting an expansion of 70 basis points (bps) sequentially and 10 bps year over year. However, same-store occupancy in the Washington DC portfolio was 90.5%, down 80 bps sequentially and 110 bps year over year.

Same-store earnings before interest, tax, depreciation and amortization for New York portfolio increased 7.8% from a year ago and for Washington DC, it rose 2.3%.

As of Dec 31, 2016, Vornado had $1.50 billion of cash and cash equivalents, down from $1.84 billion as of Dec 31, 2015.

Other Important Developments

On Oct 31, 2016, Vornado's Board of Trustees approved the tax-free spin-off of the Washington, DC segment and inked an agreement to merge it with the business and certain select assets of The JBG Companies ("JBG"), a Washington, DC real estate company.

On Dec 19, 2016, the company closed the sale of its 20% interest in Fairfax Square to its joint venture partner for $15.5 million.

On Dec 21, 2016 Vornado announced the final disposition of its Skyline properties in Fairfax, VA.

On Dec 2, 2016, the company closed a $400 million refinancing of 350 Park Avenue, a 571,000 square foot Manhattan office building. The company realized net proceeds of approximately $111 million.

Our Viewpoint

Vornado's results in the fourth quarter were disappointing. Though strategic acquisitions and divestitures including spin-offs are projected to improve growth in the long term, its portfolio-repositioning efforts, through property dispositions have earnings dilutive effects. Further, stiff competition and hike in interest rates remain concerns for the company.

Currently, Vornado carries a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Vornado Realty Trust Price, Consensus and EPS Surprise

Vornado Realty Trust Price, Consensus and EPS Surprise | Vornado Realty Trust Quote

We now look forward to the earnings releases of Realty Income Corporation O , Host Hotels & Resorts, Inc. HST and Welltower Inc. HCN , which are expected next week.

Note: All EPS numbers presented in this write-up represent funds from operations ("FFO") per share. FFO, a widely used metric to gauge the performance of REITs, is 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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