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Vornado posts larger loss from Toys "R" Us

PARAMUS, N.J. (AP) -- Vornado Realty Trust said Friday that it will record a larger quarterly loss from its stake in Toys "R'' Us than last year.

The real estate investment trust has a 32.5 percent stake in the toy retailer, which is privately held.

Vornado said it will post a net loss of $33.8 million, or 17 cents per share, for the quarter that ends Dec. 31. That compares with a net loss of $32.3 million, or 16 cents per share, in the same period last year.

The real estate investment trust says the loss is from the retailer's fiscal third quarter performance but will be recorded in its own fourth quarter. It also noted that the toy retailer's business is highly season and historically, Toys "R'' Us' fourth quarter accounts for more than 80 percent of its fiscal year net income.

Its share of negative funds from operations after income taxes related to Toy "R'' Us is expected to be $21.3 million, or 11 cents per share, compared with $20.5 million, or 10 cent per share, a year ago. Funds from operations adds such items as amortization and depreciation to net income, and is considered a key gauge of a REIT's financial performance.

Toys "R'' Us said earlier this month that it had a fiscal third-quarter loss as the nation's largest toy retailer coped with weaker revenue and an increase in interest expenses.

The company posted a net loss of $105 million for the period that ended Oct. 27. That compares with a loss of $93 million in the same three-month period last year. The decline was driven primarily by a $29 million increase in interest expenses from issuing senior notes and repayment of other senior notes. Excluding that its net loss would have been about the same as the prior year.

Toys "R'' Us also struggled with weaker sales during the quarter. It reported that net revenue fell more than 3 percent to $2.6 billion due to the negative impact of foreign exchange rates as well as the impact of a layaway program, which defers the recognition of sales until the customer picks up the order.

The company said its focus was primarily on preparations for the critical holiday season.