Vornado Realty Trust VNO reported funds from operations (“FFO”) per share of $1.71 for second-quarter 2015, comfortably beating the Zacks Consensus Estimate of $1.24. Further, the bottom line came in much higher than the prior-year quarter tally of $1.15 per share.
Total revenue rose 7.3% year over year to $616.3 million in the second quarter. However, the figure missed the Zacks Consensus Estimate of $620 million.
Quarter in Detail
In the New York City portfolio, Vornado leased 605,000 square feet of office and 36,000 square feet of street retail space. In Washington DC, the company leased 411,000 square feet of office space. At quarter-end, same-store occupancy in the New York portfolio was 96.5%, reflecting a year-over-year decrease of 50 basis points (bps). On the other hand, same-store occupancy in the Washington DC portfolio was 85%, up from 83.5% at the end of second-quarter 2014. Same-store earnings before interest, tax, depreciation and amortization (“EBITDA”) for New York and Washington DC inched up 1.5% and 0.8%, respectively.
Other Developments
On Jun 2, Vornado acquired Center Building, a 437,000-square foot office building, located in Long Island City, NY, for $142 million.
In the quarter, the company also inked a joint venture (“JV”) to own 55% interest in as well as develop a 173,00-square foot Class-A office building, for around $225 million.
As of Jun 30, 2015, Vornado had $516.3 million of cash and cash equivalents, down from $1.20 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 the Manhattan street retail properties.
Currently, Vornado has a Zacks Rank #3 (Hold).
We currently look forward to other REIT stocks that are scheduled to release second-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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