Vornado sees $100M retail JV loss, $190M in 220 CPS gains

REIT also records $6M in severance for Hotel Pennsylvania closure in Q3

New York /
Oct.October 21, 2020 01:30 PM
Vornado CEO Steven Roth with 1535 Broadway and 220 Central Park South (Getty, VNO, Google Maps)

Vornado CEO Steven Roth with 1535 Broadway and 220 Central Park South (Getty, VNO, Google Maps, iStock)

The ultra-luxury condo tower at 220 Central Park South continues to be a key income source for Vornado Realty Trust, as the coronavirus batters its prized retail assets on Fifth Avenue and in Times Square.

The real estate investment trust has recorded an additional $103 million impairment loss on its prime retail joint venture for the third quarter, according to preliminary estimates released Tuesday. Over the same period, unit sales at 220 Central Park South generated a $187 million net gain.

The retail loss adds to the $306 million recorded in the second quarter. Gains from 220 Central Park South in that quarter totalled much less, at just $49 million. As an accounting loss, the joint venture impairment does not impact Vornado’s funds from operations (FFO) figure, while the Midtown condo’s sales contributed $0.92 per share.

The REIT has also recorded $6.1 million in severance accruals in connection with the closure of the Hotel Pennsylvania. CEO Steven Roth noted in the firm’s first-quarter earnings call that Vornado might use the pandemic as an opportunity to close the century-old property for good, making way for a possible redevelopment.

At the time, 414 of the hotel’s employees had been furloughed but not laid off.

Additionally, Vornado’s filings shows that the company has taken another $26 million in write-offs related to straight-lining of rents and uncollectible tenant receivables — not as stark as the $45 million loss Vornado saw in the prior quarter, when J.C. Penney and New York & Company declared bankruptcy.

The J.C. Penney space in Midtown may now be converted to a last-mile logistics facility, Roth mentioned on the firm’s second-quarter earnings call.

An analysis by The Real Deal this month found that 220 Central Park South was one of the few bright spots for Manhattan’s condo market in the third quarter, single-handedly accounting for $592 million of the borough’s $1.85 billion sales volume. Many of its apartments have been in contract for several years, with closings finally happening this year.

The company’s third-quarter earnings call is scheduled for Nov. 2.





    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
    Amazon's Jeff Bezos, Google's Sundar Pichai and Facebook's Mark Zuckerberg (Getty, iStock)

    Tech giants occupy nearly 600M-sf of US real estate

    Tech giants occupy nearly 600M-sf of US real estate
    Hana Financial Investment’s Lee Jin-Kook and a rendering of 1 St. Marks Place (Hana Financial Investments)

    Hana Financial to sell loans tied to Manhattan office, hotel properties

    Hana Financial to sell loans tied to Manhattan office, hotel properties
    Cineworld Group CEO Mooky Greidinger and Regal Cinema (Photo via Getty; Wikipedia)

    Regal Cinemas scores financial rescue package

    Regal Cinemas scores financial rescue package
    (iStock)

    What doom-and-gloom forecasts miss about the office market

    What doom-and-gloom forecasts miss about the office market
    From left: Edison Properties CEO Robert Selsam, Ironstate Development's Michael Barry, Stellar Management founder Larry Gluck (LinkedIn; Gluck Family Foundation)

    These developers could benefit the most from Soho’s rezoning

    These developers could benefit the most from Soho’s rezoning
    arrow_forward_ios

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

    Loading...