Vornado weighs stripping off strip malls

Spinoff to shareholders would refocus commercial landlord on New York, D.C. holdings

New York /
Mar.March 12, 2014 02:30 PM

Vornado Realty Trust is reportedly mulling a spinoff of the company’s suburban shopping centers into a separate company.

The commercial landlord would merge its strip malls with the San Diego-based Retail Opportunity Investments, sources familiar with the situation told the Wall Street Journal.

Shareholders would then receive a majority stake in the new company, a move that would spare Vornado the need to make a hefty tax payment.

Vornado has tapped Morgan Stanley and Goldman Sachs Group as advisors in determining the best scenario for the business, which is currently valued at between $2 billion and $3 billion, according to the Journal. The company could also decide to keep the shopping centers, though a spinoff would enable the company to focus primarily on its high-end office towers and retail holdings in Manhattan and Washington.

“They’d probably be rewarded by the market if they simplified further and focused more on their New York and D.C. portfolio,” Keith Pauley, a managing director with LaSalle Investment Management, which owns around 2.2 million Vornado shares, told the Journal.

The consideration of a spinoff comes after reported complaints from investors and analysts last year saying the company, one of the largest real-estate investment trusts in the U.S., was unfocused because it is operating in too many sectors. [WSJ]Julie Strickland


Related Articles

arrow_forward_ios
Vornado's Steve Roth and 220 Central Park South (Credit: Getty Images, iStock)
Free and clear: Vornado pays off debt at 220 CPS
Free and clear: Vornado pays off debt at 220 CPS
Vornado chairman and CEO Steven Roth, and 608 Fifth Avenue (Credit: Getty Images)
“Negative surprises”: Vornado execs talk retail struggles on Q2 earnings call
“Negative surprises”: Vornado execs talk retail struggles on Q2 earnings call
Steven Roth, CEO of Vornado and 640 Fifth Avenue (Credit: Getty Images and Vornado Realty Trust)
Bank of China issues $500M to Vornado in refi of 640 Fifth Avenue
Bank of China issues $500M to Vornado in refi of 640 Fifth Avenue
Vornado’s Steven Roth and One Park Avenue (Getty, Vornado)
Here’s what tenants are paying at One Park Ave
Here’s what tenants are paying at One Park Ave
Photo illustration of Vornado CEO Steven Roth and Hotel Pennsylvania at 401 Seventh Avenue (Getty, iStock, Vornado)
“Inevitable”: Vornado will demolish Hotel Pennsylvania
“Inevitable”: Vornado will demolish Hotel Pennsylvania
Unit 55B of Central Park South and Steve Roth of Vornado Realty Trust. (Compass, Vornado, Getty)
220 Central Park South’s first resale in the works
220 Central Park South’s first resale in the works
Equitable CEO Mark Pearson and Fisher Brothers’ CEO Ken Fisher with 1345 Avenue of the Americas (Google Maps)
Equitable Life Insurance inks 130K sf lease for new office
Equitable Life Insurance inks 130K sf lease for new office
Vornado's Steve Roth, 555 California Street in San Francisco and Donald Trump (Getty, Wikipedia Commons)
Vornado, Trump Org lock in big renewals at SF office tower
Vornado, Trump Org lock in big renewals at SF office tower
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...