Vornado Realty Trust (VNO) is a New York-based real estate investment trust (REIT) that acquires, owns, and leases office properties, retail space and temperature-controlled logistics and refrigerated warehouses. The company owns and manages approximately 100 million square feet of real estate (including pro-rata share of partially-owned properties and joint-ventures).
Due to strong in-fill locations in urban areas, VNO is in a better position than most peers to withstand the economic decline in 2009. It is clear that office and retail fundamentals are getting worse and operations will deteriorate in 2009. We think VNO, at a heavily discounted price, represents good long-term value. The company will pay 60% of its 2009 dividend in stock to conserve cash.
Going into 2009, VNO has plenty of cash and very limited debt maturities. We think VNO might have some attractive acquisition opportunities from companies that cannot refinance their debt and will be forced to sell. We continue our Buy rating, although expect volatility in entire office REIT sector in the coming months.