Shares of office REIT titans Vornado Realty Trust (VNO) - Get Vornado Realty Trust Report and SL Green Realty (SLG) - Get SL Green Realty Corp. Report rose Friday after Bank of America upgraded them to neutral from underperform.
Bank of America analyst James Feldman lifted his price targets, on Vornado to $46 from $42 and on SL Green to $75 from $70.
Among the factors he cited for the real estate investment trusts:
- “A return to offices in January 2022;
- “Limited tenant space reconfigurations;
- “Tech will continue to grow in New York City,” where VNO and SLG have much of their buildings;
- “Valuations are pricing in a lot of uncertainty;
- “Investor risk appetite is returning;
- “Tenants will think more about the quality of their buildings and landlords than ever before.”
Vornado recently traded at $44.35, up 2%, and has climbed 7% in the past month amid optimism that the pandemic will dissipate.
SL Green recently traded at $73.68, also up 2%, and has gained 3% in the past month.
As for Vornado, “We expect VNO's retail platform to remain a key drag but for the office portfolio to have some wins from future tech expansion in New York City,” Feldman said.
“Similar to SLG, VNO has a strong leasing and asset management platform that we expect to prove key competitive assets, as New York City works its way through the downturn to a recovery.”
Regarding SL Green, “We expect it to continue its plan to recycle assets, repurchase shares and grow the development pipeline, as it seeks to modernize the portfolio,” Feldman said.