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These Factors Could Affect Vornado’s 2Q17 Results


Jul. 26 2017, Updated 7:43 a.m. ET

2Q17 expectations

Vornado Realty Trust (VNO) is scheduled to report its 2Q17 earnings on July 31, 2017. Wall Street expects the company to report adjusted funds from operation (or FFO) of $1.15, which is flat year-over-year, and revenues of $622.3 million, down 1.2% year-over-year.

Analysts expect the company to experience some near-term dilution of earnings due to dispositions of its non-core assets. However, analysts are confident about the company’s fundamentals, and they expect the company to gain momentum as soon as it overcomes the short-term headwinds.

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Vornado successfully maintains its business momentum by way of strategic acquisition, development, and disposition of its properties. Thus, the company maintains its efficiency and benefits from its economies of scale. Let’s take a look at VNO’s expansion activity during 1Q17 that could boost revenue in 2Q17.

Development projects

In 1Q17, Vornado undertook several development projects. VNO constructed a 397,000-square-foot residential condominium tower at the prominent location of 220 Central Park South. Vornado also developed a 173,000-square-foot office property at 512 West 22nd Street in Manhattan. At 61 Ninth Avenue, Vornado built a 170,000-square-foot office building in the popular West Chelsea submarket of Manhattan.

These high-profile development projects are expected to help the company drive higher revenue and also combat the ongoing headwinds in the retail sector. Further, the ongoing job growth in the economy is helping the company’s strategic initiative of developing office buildings in Manhattan.

Peers like AvalonBay Communities (AVB), Boston Properties (BXP), and Equity Residential (EQR) are also resorting to expansion to maintain profits.

Vornado and its residential REIT peers together constitute 12.4% of the iShares Cohen & Steers REIT ETF (ICF). ICF’s wide product diversity cushions investors against macro headwinds.


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