Fascitelli’s Vornado exit a “succession failure,” new report says

TRD New York /
Mar.March 08, 2013 05:30 PM

Michael Fascitelli’s decision to step down as the chief executive officer of Vornado Realty Trust represents a failure of succession planning at the $30 billion-plus real estate investment trust and creates uncertainty about the firm’s long-term strategic direction, according to an internal research report seen by The Real Deal

Fascitelli, in a Feb. 27 earnings call, announced that he would be stepping down on April 15 to take a break from over 30 years of “working like a dog.” Steven Roth, the chairman of Vornado, will return to his previous position as CEO. However, the report, prepared by analyst Michael Knott of Green Street Advisors, calls the move “premature” and says that there is no clear heir-apparent in place.

“The point is that Mr. Roth always had Mr. Fascitelli, but there is not an obvious Fascitelli 2.0 behind the original,” said the report, which was prepared on Feb. 27 following the resignation announcement.

The return of Roth is a worrying sign not because of any doubts about his ability, the report continues, but because it increases uncertainty at the REIT, which has had some serious stumbles in recent years.

The report evaluates Fascitelli’s run at Vornado — which he joined from Goldman Sachs’ real estate division in 1996 — as starting strongly, but ending on a more disappointing note. One Forbes columnist speculated that Vornado’s investment in JC Penney, which led to a loss of $224.9 million, was the catalyst for his resignation, while others have said it was a clash of personalities between Fascitelli and Roth.

Roth announced this week that the REIT would be divesting 40 percent of its 23.4 million shares in the long-struggling retailer. The company has been aggressively streamlining its portfolio over the past year, with $2 billion in sales compared to only $1.3 billion in investments. Some of the more high-profile investments, such as the $140 million that Vornado will spend to redevelop the Marriott Marquis retail space at 1535 Broadway, “feel” like appropriate moves in line with the company’s long-term plans, the report states.

Representatives from Vornado declined to comment.

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