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Here's Why You Should Retain Vornado (VNO) Stock for Now
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Vornado Realty Trust (VNO - Free Report) , with its high-quality assets, is well-poised to benefit from the improvement in conditions in the office leasing market. However, the company’s numerous retail tenants continue to be impacted by limitations on occupancy and other restrictions, impeding their ability to resume operations fully.
Markedly, Vornado boasts a concentration of high-quality assets and a focus on expanding its market share in the New York City office and Manhattan street retail. The focus on having assets in such a few select high-rent, high barrier-to-entry geographic markets is likely to enable the company to see decent demand for its properties amid the recovery in the U.S. office real estate market.
Particularly, office occupiers remain keen to grow their office footprints in New York. This along with notable government stimulus indicates a bullish scenario for New York office properties. Amid this, the company is seeing modest leasing volume, with stabilizing concessions. Hence, Vornado is well-positioned to benefit from the emerging trend, given its ability to offer top-quality office spaces, backed by its redevelopment efforts.
Also, the company is focusing on improving its core business and is making opportunistic developments and divestitures. Its strong balance sheet also supports such moves. Further, Vornado has been securing loan refinancing in recent times, enabling the company to reduce the interest rate on borrowings and extend debt maturities. Hence, a flexible financial position will enable it to take advantage of investment opportunities and fund its development projects.
However, the pandemic and related shutdowns continue to have a negative impact on the company’s operations. Amid business disruptions, it is offering rent deferrals and rent abatements for certain tenants. The company also canceled trade shows at theMART in late March of 2020 and expects to resume trade shows in third-quarter 2021. Further, on Apr 5, 2021, Vornado announced the permanent closure of Hotel Pennsylvania. The above-mentioned factors have reduced rental income and resulted in occupancy erosions, thereby, affecting cash flows.
The pandemic-led issues aside, the company’s retail portfolio is suffering from the rapid shift in customers’ shopping preferences and patterns, with online purchases growing by leaps and bounds. These have made retailers reconsider their footprint and eventually opt for store closures. Additionally, retailers, who are not being able to cope with competition, are filing for bankruptcies. This has emerged as a pressing concern for Vornado, as the trend is curtailing leasing velocity for the retail real estate space and resulting in lower absorption and rents.
A competitive industry landscape affects Vornado’s ability to attract and retain tenants at relatively higher rents than its competitors, thereby, affecting its long-term profitability.
Industrial Logistics Properties Trust’s (ILPT - Free Report) funds from operations (FFO) per share estimate for the current year has moved up to $1.88 in the past month. The company currently carries a Zacks Rank of 2 (Buy).
Mack-Cali Realty Corporation’s Zacks Consensus Estimate for 2021 FFO per share has moved marginally north to 54 cents in the past week. The company currently has a Zacks Rank of 2.
Braemar Hotels & Resorts Inc. (BHR - Free Report) carries a Zacks Rank of 2 at present. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised 37.5% upward in a month to 44 cents.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
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Here's Why You Should Retain Vornado (VNO) Stock for Now
Vornado Realty Trust (VNO - Free Report) , with its high-quality assets, is well-poised to benefit from the improvement in conditions in the office leasing market. However, the company’s numerous retail tenants continue to be impacted by limitations on occupancy and other restrictions, impeding their ability to resume operations fully.
Markedly, Vornado boasts a concentration of high-quality assets and a focus on expanding its market share in the New York City office and Manhattan street retail. The focus on having assets in such a few select high-rent, high barrier-to-entry geographic markets is likely to enable the company to see decent demand for its properties amid the recovery in the U.S. office real estate market.
Particularly, office occupiers remain keen to grow their office footprints in New York. This along with notable government stimulus indicates a bullish scenario for New York office properties. Amid this, the company is seeing modest leasing volume, with stabilizing concessions. Hence, Vornado is well-positioned to benefit from the emerging trend, given its ability to offer top-quality office spaces, backed by its redevelopment efforts.
Also, the company is focusing on improving its core business and is making opportunistic developments and divestitures. Its strong balance sheet also supports such moves. Further, Vornado has been securing loan refinancing in recent times, enabling the company to reduce the interest rate on borrowings and extend debt maturities. Hence, a flexible financial position will enable it to take advantage of investment opportunities and fund its development projects.
However, the pandemic and related shutdowns continue to have a negative impact on the company’s operations. Amid business disruptions, it is offering rent deferrals and rent abatements for certain tenants. The company also canceled trade shows at theMART in late March of 2020 and expects to resume trade shows in third-quarter 2021. Further, on Apr 5, 2021, Vornado announced the permanent closure of Hotel Pennsylvania. The above-mentioned factors have reduced rental income and resulted in occupancy erosions, thereby, affecting cash flows.
The pandemic-led issues aside, the company’s retail portfolio is suffering from the rapid shift in customers’ shopping preferences and patterns, with online purchases growing by leaps and bounds. These have made retailers reconsider their footprint and eventually opt for store closures. Additionally, retailers, who are not being able to cope with competition, are filing for bankruptcies. This has emerged as a pressing concern for Vornado, as the trend is curtailing leasing velocity for the retail real estate space and resulting in lower absorption and rents.
A competitive industry landscape affects Vornado’s ability to attract and retain tenants at relatively higher rents than its competitors, thereby, affecting its long-term profitability.
In the past six months, shares of this Zacks Rank #3 (Hold) have appreciated 18.9% compared with the industry’s 14.7% growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Industrial Logistics Properties Trust’s (ILPT - Free Report) funds from operations (FFO) per share estimate for the current year has moved up to $1.88 in the past month. The company currently carries a Zacks Rank of 2 (Buy).
Mack-Cali Realty Corporation’s Zacks Consensus Estimate for 2021 FFO per share has moved marginally north to 54 cents in the past week. The company currently has a Zacks Rank of 2.
Braemar Hotels & Resorts Inc. (BHR - Free Report) carries a Zacks Rank of 2 at present. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised 37.5% upward in a month to 44 cents.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>