This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Vornado Adopts Simpler REIT Strategy

Stocks in this article: VNO JCP

NEW YORK ( TheStreet) -- Last week Vornado Realty Trust (VNO) announced the sales of The Plant, a power strip shopping center in San Jose, Calif., and a retail property that is part of Philadelphia's Gallery at Market East, for $203 million and $60 million, respectively.

The combined sales resulted in net proceeds of approximately $156 million, after the repayment of the mortgage on the San Jose property and closing costs.

The recent news reflects the continuing trend of the New York-based REIT to simplify its business model and focus more on its core property holdings.

Vornado owns and manages more than 100 million square feet of office and retail space across the country and generates nearly $3 billion in annual revenue, with around 80% of earnings from properties in Washington, D.C., and New York City.

So far this year, Vornado has made substantial progress in simplifying the company, and that is evident in the REIT's more recent plan to sell around 40%, or 10 million, of its J.C. Penney (JCP) shares.

Although Vornado sold the JCP shares at a loss (or around 50%), the move was a necessary step towards a more broad-based transformation from the company's more hedge fund-like strategy into more of a pure-play REIT strategy.

Other noncore holdings that Vorndao likely will monetize include investments in Alexander's (ALX), Toys 'R' Us, Lexington Realty Trust (LXP) and LNR Property.

It's widely known that Vornado's noncore approach to investing -- similar to a hedge fund strategy -- was originally designed to diversify revenue in higher-risk marketable securities.

Like JCP, Toys 'R' Us is also subject to the risks of e-commerce competition, and since Toys 'R' Us is a highly seasonal business, profits are not generated until the fourth quarter (around 80% of revenue is accounted for during the December holiday season). That could make Toys a tougher unwind.

Vornado also owns a 32.4% interest in the outstanding common stock of Alexander's, a small-cap REIT engaged in leasing, managing and developing properties that are focused primarily on the locations where its former department stores operated before they ceased operations in 1992.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs