2.15.22 - Urban retail not recovering like malls, shopping centers: Vornado
' A “startling” retail recovery across the country has included malls and shopping centers, but big cities have been laggards, Vornado Realty Trust executives said Tuesday.
And New York’s prime retail landlords might never again collect the astronomical rents of the pre-pandemic era, Vornado’s chairman, Steven Roth, acknowledged. That helps explain why, despite reaping huge profits from the most successful condominium development ever, Vornado’s stock has lost more than half of its value in the past five years.
Vornado owns buildings in San Francisco and Chicago, but New York City is where its portfolio is concentrated. On an earnings call, Roth said retailers on Fifth Avenue and Times Square have only begun to “nibble” at new locations.
“We expect that, over time, street retail will recover,” Roth said. “We do not expect it to recover to the unbelievable highs of the top rents of four or five years ago. But it will recover from today’s levels very aggressively.”
Vornado Realty Trust’s shares surged more than 6 percent Tuesday after the Manhattan office and retail landlord reported 2021 fourth quarter results above Wall Street estimates. The company recorded funds from operations, a key metric of REIT operating performance, of 81 cents per share — 7 cents better than the average of what analysts predicted.
Vornado’s stock still hasn’t recovered to its pre-pandemic level, however. On Valentine’s Day two years ago it stood at $67.89 but plunged to $29.66 on March 20 of that year. It was trading just above $43 Tuesday afternoon.
Net operating income for the company’s New York business increased 11.3 percent over the year-ago quarter, and 10.1 percent company-wide.
Vornado forecast “double-digit” growth in FFO per share in 2022, driven primarily by office and retail leasing. '
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