Vornado Realty Trust

THE SCOOP

Covering the REIT coast

Vornado Realty Trust, one of the nation’s largest real estate investment trusts (REITs), owns land mainly in the New York and the Capitol District of Washington, D.C.  Total holdings cover more than 87 million square feet, including 82 properties in Washington, D.C., and 28 properties in New York City.  In addition, Vornado maintains a retail portfolio of 173 retail centers, including supermarkets, strip centers and malls in the Northeast and California, while Vornado’s Merchandise Mart segment owns eight other properties in addition to producing trade shows.  Prime properties include New York’s Hotel Pennsylvania and One Penn Plaza, Chicago’s Merchandise Mart and Washington’s Nassif Building.  Business is divided into four main platforms: Manhattan Office Properties, Charles E. Smith Commercial Realty, Retail Properties and Merchandise Mart.  Since 2000, the trust’s annual return has been 26 percent compared with 15 percent returned by office REITs and 20 percent by all REITs.  Vornado has assets worth $21.4 billion and had total revenue of $2.7 billion in 2008.

Trusting in “Mr. Patienceâ€

Founder and current chairman Steven Roth has been called both “Mr. Patience†and “utterly brilliant†by industry insiders and is well known for his keen eye for real estate opportunities.  Roth gained control of Vornado, then the publicly held parent of a failing discount retail chain, in 1980, and got to work putting his own stamp on the firm by closing the chain stores and steering Vornado in a new directionâ€"real estate.  The company converted to an REIT in 1993.

Two years later, Roth picked up controlling interest in Alexander’s Inc., a department store chain recovering from Chapter 11 protection, in a deal that cemented his reputation of making bank by investing in failed retailers.  Alexander’s flagship Manhattan-based store, across from the famed Bloomingdale’s, was vacated in 1999 and stood empty for more than two years while redevelopment plan after redevelopment plan went bust, and insiders assumed Roth was in over his head.  The persistent chief delivered in 2001 with a whopping $630 million, 56-story glass, stainless steel and aluminum tower for mixed-use designed by well-known architecture firm Cesar Pelli & Associates.  The resulting building, which today houses a Home Depot, Citibank, and H&M shop as well as more than 100 luxury condos and the world headquarters of the Bloomberg LP financial information firm, is considered a smashing success.

Property profits

Roth has also helped build Vornado internally through a string of business acquisitions, most notably the 1998 purchase of Merchandise Mart for $625 million and a 2001 merger with Charles E. Smith Commercial Realty.  In June 2004, the company picked up 25 supermarkets in Southern California covering 766,000 square feet of space for $65 million.  Three months later, Vornado unveiled a major renovation on an old Union Square building in New York City, revealing a vertical mall with tenants including Filene’s Basement, DSW, Forever 21 and Whole Foods.  In November 2004, Vornado picked up a 4.3-percent interest in Sears, sparking some chatter that Vornado would turn into a dark horse to break up the then-pending merger between Sears and Kmart.  Vornado, however, threw its support behind the deal which led to a $114-million profit on its Sears stake and looks to increase real estate value for Sears and Kmart properties in the future.

Riding with the waves

Although nobody could deny the fact that 2008 and early 2009 were a tough time for businesses around the world, Vornado still managed to stay afloat.  The total revenue of the firm increased to $2.7 billion in 2008, compared to $2.4 billion in 2007.  Vornado’s net income in 2008, however, decreased to $337.9 million from $511.7 million in 2007.  Most of its developments in New York City were scaled down and some even discontinued.  Despite the fact that there was a decline in office rentals in New York which fell to 96.1-percent occupancy in June 2009 from 97 percent last year, the company’s Washington offices still posted an increase of 95.4 percent from 93.9 percent in 2007.


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Vornado Realty Trust


888 Seventh Avenue
New York, NY 10019
Phone: (212) 894-7000
Fax: (201) 587-0600
www.vno.com

STATS


  • Employer Type: Public
  • Stock Symbol: VNO
  • Stock Exchange: NYSE
  • President & CEO: Michael D. Fascitelli
  • 2008 Employees: 3,529

Major Office Locations

  • New York, NY

Key Financials

  • 2008 Revenue: $2,697 million

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