In a notable development, Vornado Realty Trust VNO announced the divestiture of its leasehold interest in 20 Broad Street. Also, the NY-based real estate investment trust (“REIT”) executed a $450-million financing of the retail condominium of St. Regis Hotel and the nearby retail town house at 55th Street in Fifth Avenue.
Vornado is the owner and manager of commercial real estate in the United States, with its portfolio mainly spread over the New York City and Washington D.C. areas. The company, focused on improving its core enterprise, is making strategic acquisitions and divestitures in addition to business spin-offs. Such strategic sell-outs provide the company with dry powder to reinvest in opportunistic acquisitions.
Divestiture of the 473,000-square foot office building in Manhattan has been executed for an aggregate consideration of $200 million. The sale is expected to generate a total income of around $157 million, which will be recognized in the company’s fourth-quarter 2015 records.
On the other hand, the loan opted for financing St. Regis Fifth Avenue Retail will mature in Dec 2020 and has the option for two one-year extensions. For the first three years, the interest only rate is LIBOR plus 180 basis points (bps) and for the fourth and the fifth year, the rates will be LIBOR plus 190 bps and LIBOR plus 200 bps, respectively.
Vornado currently carries a Zacks Rank #3 (Hold).
Investors interested in the REIT space may consider stocks like Arbor Realty Trust Inc. ABR, Getty Realty Corp. GTY and Mack-Cali Realty Corp. CLI All three stocks sport a Zacks Rank #1 (Strong Buy).
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