Back to top

Analyst Blog

Vornado Realty Trust (VNO - Analyst Report) reaped around $241 million as net proceeds from the sale of LNR Property LLC, a company in which Vornado owned a 26.2% stake. The deal that LNR Property penned was disclosed in January and saw Starwood Property Trust Inc. (STWD - Snapshot Report) and Starwood Capital Group acquiring LNR Property for $1.05 billion.

Notably, LNR Property LLC was the former investment arm of the homebuilder Lennar Corp. and was spun off by Lennar in 1997. Starwood had acquired the property from affiliates of Aozora Bank Ltd., iStar Financial and Vornado Realty Trust.

Vornado is focused on improving its core business and is making strategic sale outs. Recently, the company announced that it will realize a net gain of $69 million in the second quarter from the sale of two assets located in San Jose, CA and Philadelphia, PA. The San Jose property – The Plant – is a power strip shopping center while the other one is a retail property in Philadelphia that is part of the Gallery at Market East. We expect the strategic sale outs to add to Vornado’s financial flexibility and hence we remain encouraged.

Notably, in February, Vornado reported fourth-quarter 2012 adjusted FFO (funds from operations) per share of $1.22, beating the Zacks Consensus Estimate by 7 cents. Moreover, the earnings exceeded the year-ago adjusted FFO of $1.03 by 18.4%. The strong quarterly results were attributable to the company’s successful execution of strategic initiatives.

Going forward, we believe that Vornado’s portfolio repositioning through upscale asset acquisitions and strategic sale offs would poise it well on the growth trajectory. Moreover, the company’s healthy balance sheet and liquidity position facilitate it to take advantage of distressed selling as asset values of office and retail properties continue to drop in the aftermath of the recession. We expect all these factors to provide upside potential to the company going forward.

Vornado currently has a Zacks Rank #3 (Hold). REITs that are performing better than Vornado include Agree Realty Corp. (ADC - Snapshot Report) and Simon Property Group Inc. (SPG - Analyst Report), both carrying a Zacks Rank #2 (Buy).

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.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.34 +2.73%
CHINA BIOLO… CBPO 47.59 +2.60%
GILEAD SCIE… GILD 104.58 +2.39%
SOUTHWEST A… LUV 31.92 +2.18%
BITAUTO HOL… BITA 79.38 +2.12%