Vornado Realty Trust (VNO) penned a deal to exchange the redeveloped Springfield Town Center in Virginia with Pennsylvania Real Estate Investment Trust (PEI) for $465 million. The deal is in line with Vornado’s strategic portfolio repositioning activity.
The $465 million that Vornado will get for the transaction consists of $340 million in cash and Pennsylvania Real Estate’soperating partnership units worth $125 million. Owing to the deal, Vornado will incur a non-cash impairment loss of about $20 million in first quarter 2014. The exchange deal will be completed by Mar 31, 2015.
SpringfieldTown Center, situated in Fairfax County, spans 1.35 million square foot. The redevelopment of the property is anticipated to finish in the fourth quarter of 2014. We expect the transaction to enhance Vornado’s financial flexibility and pave the way for more profitable investment opportunities.
Later in the last month, Vornado reported fourth-quarter 2013 results. Hurt by higher Toys 'R' Us losses, this real estate investment trust (REIT) reported negative funds from operations (FFO) per share of 4 cents in fourth-quarter 2013. The company had reported FFO per share of 30 cents in the year-ago quarter.
However, on an adjusted basis, Vornado’s FFO per share came in at $1.33, higher than the year-ago FFO of $1.11. The Zacks Consensus Estimate for fourth-quarter 2013 FFO per share stood at 65 cents.
Vornado currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the REIT industry include Liberty Property Trust (LPT) and Cousins Properties Inc. (CUZ). Both stocks hold a Zacks Rank #2 (Buy).
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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