Vornado’s (VNO) Q3 FFO Meets, Revenues Beat Estimates

Vornado Realty Trust VNO reported funds from operations (“FFO”) per share of $1.25 for third-quarter 2015, in line with the Zacks Consensus Estimate.

Total revenue came in at $627.6 million for the third quarter, surpassing the Zacks Consensus Estimate of $602 million.

Quarter in Detail

In the New York City portfolio, Vornado leased 509,000 square feet of office and 45,000 square feet of retail space. In Washington DC, the company leased 414,000 square feet of office space. At quarter-end, same-store occupancy in the New York portfolio was 96.2%, reflecting a year-over-year decrease of 50 basis points.

On the other hand, same-store occupancy in the Washington DC portfolio was 84.7%, up from 83.2% at the end of third-quarter 2014. Same-store earnings before interest, tax, depreciation and amortization for New York and Washington DC inched up 1.4% and declined 4.5%, respectively.

Other Developments

On Jun 31, Vornado acquired 260 Eleventh Avenue, a 235,000-square foot office building for $80 million. Again, on Sep 25, the company acquired 265 West 34th Street for $28.5 million.

On Aug 6, Vornado divested 50% interest in Monmouth Mall in Eatontown, NJ for a net gain of around $33.2 million. Again, on Sep 9, the company sold 1750 Pennsylvania Avenue, NW for a net gain of around $102 million.

As of Sep 30, 2015, Vornado had $788.1 million of cash and cash equivalents, down from $1.2 billion as of Dec 31, 2014.

Our Viewpoint

We believe Vornado’s streamlining measures will help it focus exclusively on office assets in the New York City and Washington, DC region as well as on Manhattan street retail properties.

Currently, Vornado has a Zacks Rank #2 (Buy).

We currently look forward to other REIT stocks that are scheduled to release third-quarter 2015 results later this week. These include Lamar Advertising Co. LAMR, Federal Realty Investment Trust FRT and The St. Joe Company JOE.

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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