VNO - Vornado Realty Trust: An 8.5% Yield For 52 Cents With The Series O Preferreds
2024-06-07 17:17:28 ET
Summary
- Vornado Realty Trust's Series O Preferred Shares offer a high yield and are trading at a steep discount to par value of 52%.
- Manhattan office real estate trends are improving, with new office developments collapsing and demand for Class A office space increasing.
- Vornado's balance sheet depth and free cash flow provide strong coverage for the Series O preferreds, making them an attractive investment.
Vornado Realty Trust ( VNO ) Series O Preferred Shares ( VNO.PR.O ) offers one of the best risk-and-reward profiles of any publicly listed REIT preferred series as it is trading at a steep discount to par value of around 48% with an annual coupon of $1.1125 for an 8.5% yield on cost. The discount to par means the preferreds are essentially swapping hands for 52 cents on the dollar despite Vornado's near-fortress balance sheet , the positive trends being seen in Manhattan office real estate, and the resumption of the dip in consumer inflation. Hence, I've swapped my Series N Preferred Shares for the O's to capture the greater upside to par as the bullish thesis looks set to play over the next decade....
Vornado Realty Trust: An 8.5% Yield For 52 Cents With The Series O Preferreds