Vornado Realty (VNO) Q4 FFO and Revenues Beat Estimates

Vornado Realty Trust VNO reported fourth-quarter 2017 adjusted funds from operations (FFO) per share of 98 cents, beating the Zacks Consensus Estimate of 93 cents. However, the figure came in lower than the prior-year quarter tally of $ 1.02.

Total revenues came in at $ 536.2 million in the reported quarter, surpassing the Zacks Consensus Estimate of $ 524.1 million. Moreover, total revenues increased 4.3% year over year.

Results reflect growth in occupancy and same-store net operating income (NOI) in the New York portfolio.

For full-year 2017, adjusted FFO per share came in at $ 3.73, well ahead of the year-ago tally of $ 3.59. This was backed by 4.0% year-over-year growth in total revenues to $ 2.1 billion.

Behind the Headline Numbers

In the New York portfolio, 319,000 square feet of office space and 39,000 square feet of retail space were leased in the reported quarter. Also, 118,000 square feet and 153,000 square feet of space in theMart and 555 California Street, respectively, were leased.

At the quarter end, occupancy in the New York portfolio was 97.2%, up 30 basis points (bps) sequentially and 70 bps year over year. Occupancy in theMART was 98.6%, down 10 bps sequentially and 30 bps year over year. Further, occupancy in 555 California Street was 94.2%, unchanged sequentially, and up 180 bps year over year.

During the fourth quarter, same-store net operating income (NOI) at share increased 2.8% year over year for the New York portfolio. The same for theMART grew 7.1% and 10.4% for 555 California Street, respectively, year over year.

As of Dec 31, 2017, Vornado had nearly $ 1.8 billion of cash and cash equivalents, up from $ 1.5 billion as of the prior-year end.

Our Viewpoint

Vornado’s premium assets in high-rent, high barrier-to-entry markets and a diverse tenant base have the capability to drive long-term growth. As part of its portfolio-repositioning efforts, the company has been aggressively disposing its assets. However, dilutive impact on earnings from divestitures of assets cannot be bypassed in the near term. Also, intense competition and hike in interest rates remain concerns.  

Currently, Vornado carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Vornado have declined 12.2% in the past six months, underperforming the 8.8% loss incurred by its industry.

Vornado Realty Trust Price, Consensus and EPS Surprise

Vornado Realty Trust Price, Consensus and EPS Surprise | Vornado Realty Trust Quote

We now look forward to the earnings releases of DDR Corp. DDR, Kimco Realty Corporation KIM and Digital Realty Trust, Inc. DLR, all of which are scheduled to report their numbers on Feb 15.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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