Vornado to Divest Assets
Vornado Realty Trust (VNO), a real estate investment trust (:REIT), recently announced that it has inked deals to sell two properties to undisclosed buyers. The company is going to sell the Reston Executive Center located in Virginia for $126 million and another property in downtown Philadelphia for $60 million.
The company will get the combined net proceeds of $89 million from the sales after the repayment of existing loan and closing costs. Vornado Realty will earn a profit of around $70 million from the twin transactions.
Fairfax county-based Reston Executive Center is a class A three building office property and spans a total space of around 494,000 square feet. The office center is well connected to major roadways, airport and other important communication networks.
The center is around 78% leased to commercial tenants such as - VMware, Inc. (VMW), Genesis Partners, Inc. and New View Laser Eye Center. The second sold building is a part of a property – The Gallery at Market East – situated on Market Street in Philadelphia.
Vornado Realty is highly active on portfolio restructuring activity. Last month, the company penned an agreement with another REIT – The Macerich Company (MAC) to sell the Green Acres Mall in Valley Stream, New York, for $500 million. Earlier this quarter, the company’s 25% owned real estate fund, Vornado Realty Capital Partners, L.P acquired a retail property named 1100 Lincoln Road for $132 million.
Vornado Realty is the largest publicly traded office REIT in the New York region concentrating on Class A office properties. The company is engaged in acquiring, owning and leasing office properties, retail space, and temperature-controlled logistics and refrigerated warehouses.
Vornado Realty is expected to release its third-quarter 2012 results on November 1. The Zacks Consensus Estimate for FFO (fund from operations) for the quarter is currently pegged at $1.17 per share.
We have a long-term Neutral recommendation on Vornado Realty. Also, it holds a short-term Zacks #3 Rank (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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