Shares of Vornado Realty Trust (VNO) gained 2.38% since the company announced the acquisition of land and air rights for 137,000 zoning square feet of space at its development site – 220 Central Park South – in Manhattan on Oct 15, 2013.
The $194 million buyout will facilitate Vornado to begin construction of its planned 920-foot tall luxury residential condominium tower, comprising 472,000 zoning square feet, at the development site. Notably, with the deal, this real estate investment trust (:REIT) completed the assembly of its 220 Central Park South development site.
The Manhattan housing market is experiencing huge demand and consequently the sales and rent levels are also rising. Thus, Vornado’s decision to build a condominium at this time is strategic fit.
As a matter of fact, Vornado is currently focused on improving its core business and enhancing its portfolio mix through valuable portfolio restructuring initiatives like the abovementioned one. In relation to this, this month, Vornado accomplished the purchase of retail and office property on 655 Fifth Avenue Manhattan for $278 million.
Also, in the same month, the company’s joint venture, in collaboration with institutional investors advised by J.P. Morgan Asset Management of JP Morgan Chase & Co. (JPM), acquired a Class A office tower – 650 Madison Avenue – for $1.295 billion. Such accretive buyouts bode well for Vornado’s long-term growth.
The company is scheduled to release its third-quarter 2013 results on Nov 4, 2013, after the market closes. The Zacks Consensus Estimate for third-quarter 2013 funds from operations (:FFO) is currently pegged at $1.18, representing year-over-year growth of 3.13%.
Vornado currently has a Zacks Rank #3 (Hold). Other better-performing REITs include Sotherly Hotels Inc. (SOHO) and Parkway Properties Inc. (PKY). Both these stocks carry a Zacks Rank #1 (Strong Buy).
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.