Vornado Realty Trust (VNO - Free Report) is raising its ownership stake in One Park Avenue in New York to 55% by making an additional investment of $22.7 million. Earlier, the company had an interest of 49.7%. This property has an estimated value of $560 million.
The stake will be enhanced through a joint venture with the Canada Pension Plan Investment Board whose current stake will increase to 45%.
Notably, this 20-story office building spans 941,000 square foot of space. It was built in 1925 and the building occupies the entire eastern block front of Park Avenue between 32nd and 33rd Street in Midtown South. The property is laden with a $250 million mortgage.
As a matter of fact, the office REITs have started to benefit from the recovery in the economy, growth in jobs and lower new supply. Private sector employment growth is likely to drive the revival, pushing vacancy levels lower.
Vornado is expected to see better results in the quarters ahead because of its strategic portfolio repositioning activities and leasing efforts. Further, the company’s decision to spin off the shopping center is part of its strategy to streamline the business and is expected to aid Vornado focus exclusively on the office assets in the New York City and Washington, DC region and the Manhattan street retail properties.
Vornado currently carries a Zacks Rank #3 (Hold). Investors interested in REITs may consider stocks like Chatham Lodging Trust (CLDT - Free Report) , The GEO Group, Inc. (GEO - Free Report) and Terreno Realty Corp. (TRNO - Free Report) . All these stocks hold a Zacks Rank #1 (Strong Buy).