Vornado Seeks Retail Acquisitions With $1.4B in Cash
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Vornado Realty Trust, the fourth-biggest American real estate investment trust, is looking for retail properties to buy with the $1.4 billion of cash on its balance sheet, company executives said.
“What we like more than anything else is New York City retail,” the chief executive officer of Vornado, Steven Roth, said Tuesday at a presentation to company investors in Manhattan. “We think we’re better at it than anyone else.”
The company has accumulated cash, and has access to financing for acquisitions as its competitors are hurt by rising borrowing costs, Mr. Roth and the president of the New York-based REIT, Michael Fascitelli, said. So far they have found few attractive opportunities, they said.
Having that much cash on its balance sheet is “very dilutive” to earnings and has hurt funds from operations growth, Mr. Fascitelli told investors. Funds from operations, a measure of cash flow used by REITs, doesn’t conform with generally accepted accounting principles.
“It’s slowing down some of our core numbers,” he said. “We don’t live quarter to quarter. That’s not our objective.”
Funds from operations per share growth was 3.7% in the first quarter, compared with the year before Mr. Fascitelli said, compared with 16% growth between 2006 and 2007’s first quarter. Those numbers don’t include a special dividend distribution, he said.
Vornado rose 24 cents to $95.31 in New York Stock Exchange composite trading. Shares are down 21% the last 12 months, compared with a 19 percent decline in the Bloomberg REIT Index.
