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Vornado (VNO) Maintains Strong Portfolio: Should You Hold?
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We updated our research report on Vornado Realty Trust (VNO - Free Report) on Mar 27.
This New York-based real estate investment trust (REIT) is the owner and manager of commercial real estate in the U.S., with a portfolio that is mainly located in the New York City and Washington D.C. areas.
In February, Vornado reported fourth-quarter 2016 adjusted funds from operations (FFO) per share of $1.13, missing the Zacks Consensus Estimate of $1.31. The figure also compared unfavorably with the fourth-quarter 2015 adjusted FFO per share of $1.26. Results reflect a fall in occupancy in the Washington DC portfolio.
However, Vornado’s Class A office properties are concentrated in a few select high-rent, high barrier-to-entry geographic markets. Also, the company enjoys a diversified and high-end tenant base, which assures steady rental revenue growth, going forward.
Moreover, the company, focused on improving its core business, is making opportunistic acquisitions and divestitures in addition to business spin-offs. In fact, strategic sell-outs provide the company with dry powder to reinvest in opportunistic acquisitions.
Although the efforts of the company to streamline its business are commendable, the earnings dilutive effects of these moves cannot be overlooked. Vornado faces intense competition from developers, owners and operators of office properties and other commercial real estate, including sublease space available from its tenants. This influences the company’s ability to attract and retain tenants at relatively higher rents than its competitors, thereby adversely affecting its long-term profitability. Hike in interest rate can also pose a challenge for Vornado.
Shares of Vornado underperformed the Zacks categorized REIT and Equity Trust – Other industry in the last six months. During this time, Vornado declined 1.3%, while the industry lost 3.7%. Its FFO per share estimate for 2017 declined 1.1% in the last seven days.
Currently, Vornado carries a Zacks Rank #3 (Hold).
In the last 30 days, Arbor Realty Trust’s FFO per share for first-quarter 2017 escalated 11.8% to 19 cents.
In the last 30 days, CoreSite Realty’s FFO per share for first-quarter 2017 increased 0.9% to $1.06.
CorEnergy Infrastructure Trust’s first-quarter 2017 FFO per share estimates moved up 6.5% to $1.14, in the last 30 days.
Note: 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. All EPS numbers presented in this write up represent FFO per share.
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Vornado (VNO) Maintains Strong Portfolio: Should You Hold?
We updated our research report on Vornado Realty Trust (VNO - Free Report) on Mar 27.
This New York-based real estate investment trust (REIT) is the owner and manager of commercial real estate in the U.S., with a portfolio that is mainly located in the New York City and Washington D.C. areas.
In February, Vornado reported fourth-quarter 2016 adjusted funds from operations (FFO) per share of $1.13, missing the Zacks Consensus Estimate of $1.31. The figure also compared unfavorably with the fourth-quarter 2015 adjusted FFO per share of $1.26. Results reflect a fall in occupancy in the Washington DC portfolio.
However, Vornado’s Class A office properties are concentrated in a few select high-rent, high barrier-to-entry geographic markets. Also, the company enjoys a diversified and high-end tenant base, which assures steady rental revenue growth, going forward.
Moreover, the company, focused on improving its core business, is making opportunistic acquisitions and divestitures in addition to business spin-offs. In fact, strategic sell-outs provide the company with dry powder to reinvest in opportunistic acquisitions.
Although the efforts of the company to streamline its business are commendable, the earnings dilutive effects of these moves cannot be overlooked. Vornado faces intense competition from developers, owners and operators of office properties and other commercial real estate, including sublease space available from its tenants. This influences the company’s ability to attract and retain tenants at relatively higher rents than its competitors, thereby adversely affecting its long-term profitability. Hike in interest rate can also pose a challenge for Vornado.
Shares of Vornado underperformed the Zacks categorized REIT and Equity Trust – Other industry in the last six months. During this time, Vornado declined 1.3%, while the industry lost 3.7%. Its FFO per share estimate for 2017 declined 1.1% in the last seven days.
Currently, Vornado carries a Zacks Rank #3 (Hold).
Investors interested in the REIT space may consider stocks like Arbor Realty Trust, Inc. (ABR - Free Report) , CoreSite Realty Corporation (COR - Free Report) and CorEnergy Infrastructure Trust, Inc. . Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the last 30 days, Arbor Realty Trust’s FFO per share for first-quarter 2017 escalated 11.8% to 19 cents.
In the last 30 days, CoreSite Realty’s FFO per share for first-quarter 2017 increased 0.9% to $1.06.
CorEnergy Infrastructure Trust’s first-quarter 2017 FFO per share estimates moved up 6.5% to $1.14, in the last 30 days.
Note: 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. All EPS numbers presented in this write up represent FFO per share.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>