Vornado Realty Trust (VNO) expects its shopping centers spin-off unit to commence trading in January, as per a filing with the Securities and Exchange Commission on Monday.
The spin-off unit, which would comprise 79 shopping centers, 3 malls and a warehouse park encompassing a total of 14.9 million square feet, would be named Urban Edge Properties. The properties are concentrated over Northeastern U.S.
This unit is expected to trade under the symbol “UE” on the NYSE, as per the SEC filing. And shareholders of Vornado would receive one share of Urban Edge for every two units of Vornado held.
Notably, Vornado had revealed its plan to spin off this shopping centers business in April. The spin-off comes as a result of Vornado’s decision to separate the two businesses, which have been together for legacy reasons but with no real operating synergies. Following the spin-off, Vornado would be left with office towers and retail shops in Washington and Manhattan.
We believe the creation of two focused real estate investment trust (REITs) would help in efficiently leveraging the improving fundamentals of each asset type. Vornado, which have been subject to criticism for venturing into too many sectors, would now be able to focus exclusively on office properties and retail shops over select regions. On the other hand, the new unit is expected to unleash the potential of shopping centers and malls which it will own.
Vornado currently has a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider better-ranked stocks like Host Hotels & Resorts, Inc. (HST), Prologis, Inc. (PLD) and Public Storage (PSA). All these stocks carry a Zacks Rank #2 (Buy).
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