Vornado (VNO) Refinances Manhattan Asset, Realizes $111M
Zacks Investment Research | Dec 06, 2016 09:32PM ET
Vornado Realty Trust (NYSE:VNO) realized around $111 million of net proceeds from the completion of the $400-million refinancing of 350 Park Avenue in Manhattan. This move is aimed at enhancing the company’s financial capacity on favorable terms.
The Manhattan property that has been refinanced is an office building and includes 571,000 square foot of space. The refinancing involved a ten-year interest-only loan, which bears a fixed rate of 3.92%, and is slated to mature in Jan 2027. On the other hand, the company repaid the existing 3.75% $284 million loan and closing costs.
Of late, Vornado has been dominating headlines, with its October announcement of the board approved spin-off of its Washington, DC business. This move would enable the company to transform into a New York-based office and high street retail REIT.
Earlier in 2015, the REIT had also completed the spin-off of its shopping center business into a publicly traded REIT, named Urban Edge Properties (NYSE:UE) . The spin-off was an outcome of Vornado’s decision to separate two businesses, which have been together for legacy reasons without real operating synergies.
Earlier, Vornado was subject to criticism for venturing into too many sectors. Hence such efforts to streamline its business are expected to keep the growth momentum alive. Initiatives to improve financial flexibility also look encouraging. However, the earnings dilutive impact of portfolio repositioning, stiff competition and any hike in interest rates remain concerns.
Vornado currently has a Zacks Rank #3 (Hold). Shares of Vornado have outperformed the Zacks categorized REIT- Equity Trust – Other industry in the past one month. Vornado has logged in a return of 13.9% over this time frame, while the industry managed to post just a gain of around 0.2%.
Investors interested in the REIT industry can consider stocks like DCT Industrial Trust Inc. (NYSE:DCT) , Mack-Cali Realty Corp. (NYSE:CLI) and Seritage Growth Properties (NYSE:SRG) . Each of these stocks has a Zacks Rank #2 (Buy). You can see Original post
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