Vornado Realty Announces Items To Impact Its 4Q Results
Zacks Investment Research | Jan 18, 2018 09:50PM ET
Vornado Realty Trust (NYSE:VNO) announced that its fourth-quarter financial results will include certain items that will have a negative impact of 18 cents on its funds from operation (FFO) per share. However, this amount will be excluded in the adjusted FFO per share figure.
The non-recurring items will have a loss impact of 20 cents per share, after non-controlling interests, on its net income for the quarter. Similar to FFO, the adjusted net income will exclude the impact.
On account of a reduction in corporate tax rates under the Tax Cuts and Jobs Act as of Dec 22, 2017, this real estate investment trust (REIT) will recognize $34.8 million of tax expense. The tax expense pertains to a reduction in deferred tax assets — primarily 220 Central Park South — of Vornado’s taxable REIT subsidiaries.
The company will also record expense of $4.8 million that concerns the prepayment of $450 million of aggregate principal on its senior unsecured notes. Specifically, on Dec 13, 2017, the company prepaid the principal amount on the 2.5% notes due in 2019.
Vornado will also report net loss from other items amounting to $1 million. This includes any losses from the real estate fund.
The company also stated that the aforementioned figures are preliminary estimates and are conditioned on the completion of the financial closing procedures. Hence, it does not assure any consistency between these estimates and the final results.
Notably, Vornado, focused on improving its core business, has been making opportunistic acquisitions and divestitures in addition to business spin-offs. In fact, well-planned sell-outs provide it with the dry powder to reinvest in opportunistic acquisitions. The company also strives to improve its liquidity position and achieve decent leverage with well-manageable debt maturities.
However, dilutive impact on earnings from divestitures of assets cannot be bypassed in the near term. Further, intense competition and hike in interest rates remain concerns.
Shares of Vornado have underperformed the Zacks Investment Research
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