VNORP - Vornado Realty: I'm Still Buying The Preferreds
2024-04-01 05:58:08 ET
Summary
- Vornado Realty's common shares have rallied from record lows, partially driven by its strong development and leasing pipeline.
- There is a 40% probability of the Fed cutting rates by 75 basis points to exit 2024, which could lead to further expansion of the VNO's FFO multiple.
- This should also boost the value of the preferreds which are trading at significant discounts to their liquidation value.
Vornado Realty's ( VNO ) 1-year rally has been incredible with the REIT now trading for 11.4x its annualized fiscal 2023 fourth quarter FFO. The Manhattan-focused office REIT generated fourth-quarter FFO of $0.63 per share , down 9 cents from its year-ago comp but outperforming consensus estimates by roughly 2 cents. The REIT's common shares staged a dramatic rally from record lows a year ago when investor sentiment towards office REITs cratered and CRE was the boogeyman of the stock market. This zeitgeist remains but VNO owns some of the best Class A office property assets in the US as measured by rent per square foot and has a strong development and leasing pipeline. Penn 1 and Penn 2, the REIT's currently in development Penn District office towers also both stand to materially drive rents and FFO growth over the next two years as pending Fed rate cuts and rising office occupancy look set to form tailwinds for VNO....
Vornado Realty: I'm Still Buying The Preferreds