Last week, Vornado Realty Trust (VNO) disclosed that its real estate fund –Vornado Capital Partners – along with its joint venture partner Angelo, Gordon & Co., have sold off Georgetown Park for $272.5 million. The sale follows a multi-million dollar revamp and transformation job.
However, during Friday’s regular session, the shares were down on broader market concerns.
The multi-level retail property, originally opened in 1981, is currently spread across an area of 305,000 square foot. It was bought by Vornado at a foreclosure auction for $61 million in 2010. The property later underwent a massive renovation in order to accommodate large format retail tenants, and added national retailers such as DSW Inc. (DSW) and The TJX Companies, Inc. (TJX).
Disposition of this retail property, positioned at M Street and Wisconsin Avenue in Georgetown, is in sync with Vornado’s current strategy of offloading its retail assets in several locations.
Notably, in April, Vornado announced a plan to spin off its U.S. shopping center business into a new publicly traded REIT. Specifically, the company planned to spin off 80 strip centers, 4 malls and a warehouse park, expectedly by the end of this year. Vornado intends to focus exclusively on its office assets in the New York City and Washington DC region as well as the Manhattan street retail properties.
Recently, hurt by higher Toys 'R' Us losses, Vornado reported funds from operations (FFO) per share of $1.15 for second-quarter 2014, down from $1.25 earned in the year-ago quarter.
However, on an adjusted basis, Vornado’s funds from operations (FFO) per share came in at $1.44, higher than the year-ago figure of $1.27. The Zacks Consensus Estimate for second-quarter 2014 FFO per share was $1.11.
Vornado currently carries a Zacks Rank #3 (Hold). Investors interested in REITs may consider another stock, DCT Industrial Trust Inc. (DCT), carrying 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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