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Is it Wise to Retain Vornado Realty Stock in Your Portfolio Now?
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Key Takeaways
VNO gains from premier office assets in high-barrier-to-entry markets like New York, Chicago & San Francisco.
Strategic divestitures, including its to-be-sold 55% owned JV, provide capital for development projects.
Choppy demand for office spaces, geographic concentration of assets and competition are likely to hurt VNO.
Vornado Realty Trust’s (VNO - Free Report) ability to cater to the rising demand for premier office spaces with class-apart amenities is likely to drive leasing activity. Its portfolio-repositioning efforts also augur well. A healthy balance sheet position supports the company’s growth endeavors.
However, ongoing choppiness in the office real estate market, geographic concentration of assets and competition raise concerns.
What’s Supporting VNO?
This office real estate investment trust (REIT) owns a portfolio of top-quality office properties in a few select high-rent, high-barrier-to-entry markets of New York, Chicago and San Francisco. It boasts a concentration of high-quality assets and a strategic focus on expanding its market share in the New York City office market.
VNO’s focus on having assets in a few select high-rent, high-barrier-to-entry geographic markets, as well as a diversified tenant base that includes several industry bellwethers, is expected to drive steady cash flows and fuel its growth over the long term. We estimate its total revenues to increase 1.8% and 2.4% year over year in 2025 and 2026, respectively.
Vornado Realty is focused on improving its core business by making opportunistic developments and divestitures, in addition to business spin-offs. Strategic sell-outs provide the company with the dry powder to reinvest in opportunistic developments and redevelopments.
In May 2025, Vornado Realty announced that its 55% owned joint venture (JV) had entered into an agreement to sell 512 West 22nd Street, a 173,000-square-foot Class A office building, for $205 million. Subject to customary closing conditions, the sale is expected to close in the third quarter of 2025. In January 2025, the company’s JV completed the sale of the portion of its U.S. flagship store at 666 Fifth Avenue to UNIQLO for $350 million and realized net proceeds of $342 million. Moreover, in the first quarter of 2025, the company closed on the sale of two condominium units and ancillary amenities at 220 CPS for net proceeds of $24.7 million.
VNO has a healthy balance sheet and ample liquidity. As of March 31, 2025, the company had $2.3 billion of liquidity, comprising $807 million of cash and cash equivalents and restricted cash, and $1.5 billion available under its $2.2 billion revolving credit facilities. A flexible financial position will enable it to take advantage of future investment opportunities and fund its development projects.
What’s Hurting VNO?
With persistent macroeconomic uncertainty and a hybrid-working environment, near-term demand for office spaces is expected to remain choppy in this market.
Vornado Realty has high office-market exposure in New York City, along with significant street retail there (86.4% of its net operating income at share for the first quarter of 2025). This concentrated portfolio makes the company’s cash flows vulnerable to the macroeconomic situation prevailing in that region.
VNO faces competition from developers, owners and operators of office properties and other commercial real estate, including sublease space available from its tenants. This affects the company’s ability to attract and retain tenants at relatively higher rents than its competitors, thereby adversely affecting its long-term profitability.
Solid dividend payouts remain the biggest attractions for REIT investors. However, it has increased its dividend only once in the last five years, and its five-year annualized dividend growth rate is negative 33.88%, which remains a concern. The company anticipates paying a single common share dividend in the fourth quarter of 2025 as part of its common share dividend policy for the year.
In the past three months, shares of this Zacks Rank #3 (Hold) company have declined 3.7% compared to the industry's fall of 2.7%.
The Zacks Consensus Estimate for CTRE’s 2025 FFO per share is pegged at $1.81, which indicates year-over-year growth of 20.7%.
The Zacks Consensus Estimate for VICI’s full-year FFO per share is $2.34, which indicates an increase of 3.5% from the year-ago period.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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Is it Wise to Retain Vornado Realty Stock in Your Portfolio Now?
Key Takeaways
Vornado Realty Trust’s (VNO - Free Report) ability to cater to the rising demand for premier office spaces with class-apart amenities is likely to drive leasing activity. Its portfolio-repositioning efforts also augur well. A healthy balance sheet position supports the company’s growth endeavors.
However, ongoing choppiness in the office real estate market, geographic concentration of assets and competition raise concerns.
What’s Supporting VNO?
This office real estate investment trust (REIT) owns a portfolio of top-quality office properties in a few select high-rent, high-barrier-to-entry markets of New York, Chicago and San Francisco. It boasts a concentration of high-quality assets and a strategic focus on expanding its market share in the New York City office market.
VNO’s focus on having assets in a few select high-rent, high-barrier-to-entry geographic markets, as well as a diversified tenant base that includes several industry bellwethers, is expected to drive steady cash flows and fuel its growth over the long term. We estimate its total revenues to increase 1.8% and 2.4% year over year in 2025 and 2026, respectively.
Vornado Realty is focused on improving its core business by making opportunistic developments and divestitures, in addition to business spin-offs. Strategic sell-outs provide the company with the dry powder to reinvest in opportunistic developments and redevelopments.
In May 2025, Vornado Realty announced that its 55% owned joint venture (JV) had entered into an agreement to sell 512 West 22nd Street, a 173,000-square-foot Class A office building, for $205 million. Subject to customary closing conditions, the sale is expected to close in the third quarter of 2025. In January 2025, the company’s JV completed the sale of the portion of its U.S. flagship store at 666 Fifth Avenue to UNIQLO for $350 million and realized net proceeds of $342 million. Moreover, in the first quarter of 2025, the company closed on the sale of two condominium units and ancillary amenities at 220 CPS for net proceeds of $24.7 million.
VNO has a healthy balance sheet and ample liquidity. As of March 31, 2025, the company had $2.3 billion of liquidity, comprising $807 million of cash and cash equivalents and restricted cash, and $1.5 billion available under its $2.2 billion revolving credit facilities. A flexible financial position will enable it to take advantage of future investment opportunities and fund its development projects.
What’s Hurting VNO?
With persistent macroeconomic uncertainty and a hybrid-working environment, near-term demand for office spaces is expected to remain choppy in this market.
Vornado Realty has high office-market exposure in New York City, along with significant street retail there (86.4% of its net operating income at share for the first quarter of 2025). This concentrated portfolio makes the company’s cash flows vulnerable to the macroeconomic situation prevailing in that region.
VNO faces competition from developers, owners and operators of office properties and other commercial real estate, including sublease space available from its tenants. This affects the company’s ability to attract and retain tenants at relatively higher rents than its competitors, thereby adversely affecting its long-term profitability.
Solid dividend payouts remain the biggest attractions for REIT investors. However, it has increased its dividend only once in the last five years, and its five-year annualized dividend growth rate is negative 33.88%, which remains a concern. The company anticipates paying a single common share dividend in the fourth quarter of 2025 as part of its common share dividend policy for the year.
In the past three months, shares of this Zacks Rank #3 (Hold) company have declined 3.7% compared to the industry's fall of 2.7%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are CareTrust REIT (CTRE - Free Report) and VICI Properties (VICI - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for CTRE’s 2025 FFO per share is pegged at $1.81, which indicates year-over-year growth of 20.7%.
The Zacks Consensus Estimate for VICI’s full-year FFO per share is $2.34, which indicates an increase of 3.5% from the year-ago period.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.