Steven Roth, Vornado Realty Trust
Damian Ghigliotty Oct. 8, 2013, 7 a.m.
Vornado Realty Trust made some notable investments since last fall but continued to sell far more than it acquired in the past year. The majority of those unloaded properties and interests have been tied to the country’s volatile retail sector outside of the ever-bustling New York.
In the second quarter of 2013, Vornado got rid of its shopping center the Plant in San Jose, Calif., for $203 million, its 26 percent stake in LNR Property for $241 million and its portion of the Gallery at Market East in Philadelphia for $60 million, in addition to nine other retail assets.
Those combined sales brought in proceeds of $586 million and a net gain of $65 million, Vornado’s chairman and chief executive, Steven Roth, told investors in the company’s second quarter earnings call this August. “In this market, we will buy carefully and this year sell more than we buy—we will be net sellers this year,” he said.
The Paramus, N.J.-based REIT has continued its selling spree in the third quarter of 2013 with the $34 million sale of the Shops on Lake Avenue in Pasadena, Calif., and a contract to sell its land parcel in Harlem, where it had planned to build an office tower five years ago, for $65 million.
Vornado is also in the process of “liquefying” its investments in Toys ”R” Us and J.C. Penney, Mr. Roth recently told investors. The self-made real estate mogul resigned from the struggling retailer’s board of directors last month after his company sold 40 percent of its J.C. Penney shares in March.
Despite slimming down on retail assets in several areas, Vornado remains one of the country’s largest owners and managers of commercial real estate with a portfolio of more than 100 million square feet, including 19.4 million square feet of office space and 2.1 million square feet of retail space in New York.
In August, the real estate giant agreed to acquire 92.5 percent of a 57,500-square-foot retail and office building at 655 Fifth Avenue for $278 million. Vornado purchased the property from a joint venture including Madison Capital, which will hold onto its remaining 7.5 percent ownership. In December, Vornado purchased the nearby retail condominium at 666 Fifth Avenue for $707 million and completed a $390 million financing of the property in February.
The company is also heavily investing in the redevelopment of some of its East Coast office and retail properties including 330 West 34th Street, 280 Park Avenue and the Springfield Mall in Fairfax County Virginia, which is being turned into the Springfield Town Center—a mix of retail and commercial property with residential units, a hotel and recreational facilities.
Mr. Roth, 71, rose to notoriety in the real estate world after joining Vornado in 1980 when its only asset was the now defunct Two Guys discount retail chain. He became the company’s CEO for the first time in 1989 and has since grown Vornado into the country’s third-largest real estate investment trust by market value.
The New York native sees better opportunities on the horizon, telling investors in August, “It is my view that we are in an economy that is now growing and which will inevitably pick up steam.”—Damian Ghigliotty