Vornado Realty Trust (VNO) announced the completion of a lease extension deal with Macy's, Inc. (M) for the space occupied by the latter at its Manhattan office building – 11 Penn Plaza. The deal is in line with the company’s strategic move of retaining high-end tenants in its properties.
Macy’s is one of the leading department store retailers in the U.S. Through its retail stores and Internet websites, the company trades in a wide range of merchandise in 45 states, the District of Columbia, Guam and Puerto Rico. The company occupies 646,000 square feet of space at the 11 Penn Plaza building. The extended lease term has an expiration date in 2035.
11 Penn Plaza, spanning 1.1 million square feet, is positioned in the east side of 7th Avenue between 31st and 32nd streets in the Penn Plaza district. Macy’s occupies 646,000 square feet at the building.
Vornado owns around 9 million square feet of office, retail and hotel space in the building. Apart from Macy’s, the property boasts other industry leading tenants such as AMC Networks Inc. (AMCX), PNC Bank of PNC Financial Services Group, Inc. (PNC) and Fuse Networks.
Vornado has a strong asset portfolio in 2 of the best long-term office markets in the U.S. – the New York City and Washington DC. The company aims at acquiring Class A properties positioned in high-barrier markets, thereby adding high-end tenants to its kitty. We expect the abovementioned deal to provide upside potential to Vornado and facilitate steady source of revenue going forward.
This real estate investment trust (:REIT) is scheduled to release its fourth quarter 2012 results today, after the closing bell. The Zacks Consensus Estimate for the company’s fourth-quarter FFO (funds from operations) is currently pegged at $1.15 per share.
Zacks Earnings ESP (Read: Zacks Earnings ESP: A Better Method) for Vornado is -6.96% for the fourth quarter. This reduces the chance for a positive earnings surprise, in spite of the fact that the company carries a Zacks Rank #3 (Hold).
Note: FFO, a widely accepted and reported measure of the performance of REITs is derived by adding depreciation, amortization and other non-cash expenses to net income.
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