|Bid||0.00 x 0|
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|Day's range||31.40 - 32.40|
|52-week range||26.60 - 62.00|
|Beta (5Y monthly)||N/A|
|PE ratio (TTM)||N/A|
|Forward dividend & yield||N/A (N/A)|
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(Bloomberg) -- A New York state plan to redevelop the neighborhood surrounding Penn Station would clear the way for more than 14 million square feet of new offices, a massive addition of space that would accelerate the shift of Manhattan’s core toward the West side.The project would use new construction on eight sites to fund improvements to the existing Penn Station and create underground tracks and platforms to the south of the transit hub, according to a draft proposal posted online.New York Governor Andrew Cuomo first proposed the plan in January, promising to expand the Penn Station’s capacity by 40% and create new development projects to finance improvements to the transit hub.Empire State Development, the state’s economic development agency, is seeking authority to override New York City zoning rules to allow for larger buildings than currently permitted. The agency is working with Vornado Realty Trust, a major landowner in the area, the proposal said.“Governor Cuomo has advanced a bold vision to build New York back stronger than ever,” Empire State Development said in a statement. “The environmental scoping document just released is the first step of a comprehensive public review process that will study all impacts of this project and include the local community in ensuring it achieves these goals.Vornado didn’t respond to a request for comment. The project, dubbed the Empire Station Complex, could take 16 years to complete and calls for more than 800,000 square feet of retail space and nearly 1,300 hotel rooms, according to the published documents.The retail and lodging industries have been among the hardest hit by the pandemic, raising the prospect that existing properties could be converted to other uses. The future of the Manhattan office market is also uncertain, as employers get comfortable with remote-work, and city-dwellers who fled New York in the early days of the pandemic consider relocating permanently.But the Penn Station project’s long time horizon will give New York’s economy time to recover, and its West side location puts the proposed development in the middle of an emerging office hub.The first phase of Hudson Yards, a few blocks west of Penn Station, included more than 8 million square feet of office space. Macy’s Inc., meanwhile, has proposed building a 1.5 million square foot office building atop its nearby flagship store on 34th Street, a block east of the train station.For its part, Vornado is in the process of converting the former James A. Farley Post Office, across the street from Penn Station, into a massive office building.The company has said it will spend more than $2 billion to redevelop over 5 million square feet of real estate in the area.The state’s plan would likely require agreements with the Metropolitan Transportation Authority and other parties, according to the proposal. The state is holding a virtual session on July 20 to discuss the project.(Updates with state from Empire State Development.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Manhattan’s 1290 Sixth Avenue and San Francisco’s 555 California Street are outliers in President Donald Trump’s real-estate portfolio. His name doesn’t appear in big letters there. Trump owns only 30% of them. His company doesn’t have a management role.Yet without fanfare, the two office towers are also among the Trump Organization’s most lucrative assets, together generating tens of millions in cash flow each year, according to a Bloomberg analysis. Now the properties could propel the most lucrative real estate deal involving Trump’s company during tenure in the White House.Vornado Realty Trust, which holds the remaining 70% in the buildings, said this week it’s seeking to recapitalize them. People familiar with the matter said Vornado is looking to sell the high-rises and would lead the effort, meaning Trump’s family would be a step removed from talks. The Trump Organization is likely to sell its stakes as part of a deal, the people said.The president bucked decades of tradition by declining to divest from his family business when joining the White House, and he has been dogged by lawsuits alleging his businesses open the door to spending by favor-seekers. In any sale, opponents and ethics organizations will surely scrutinize the buyer’s motives and the fairness of terms. A deal could yield hundreds of millions of dollars that the president’s company could plow into new investments, which could benefit from some of the real-estate friendly tax policies and banking regulations enacted by his administration.Vornado declined to comment. The Trump Organization didn’t respond to requests for comment.The two office buildings occupy prime commercial zones in two of the U.S.’s priciest cities, with tenants including Cushman & Wakefield and Neuberger Berman in Manhattan, and Microsoft Corp. and Goldman Sachs Group Inc in San Francisco. Vornado’s stakes in the two could be worth $2.6 billion, according to an analysis by Green Street Advisors, a real estate advisory firm. That implies that Trump’s stake could be worth as much as $1.1 billion before accounting for his share of debt.The 45-floor Sixth Avenue building generated $63 million of net cash flow after debt payments last year, according to loan disclosures compiled by Bloomberg. Trump’s share of that, $19 million, is more than the combined $15 million in net cash flow after debt generated by offices at two of his marquee office properties, Trump Tower and 40 Wall Street.“This is is a significant asset,” said Danny Ismail, an analyst at Green Street. With more than 2 million square feet, it has a roster of blue chip tenants and gets healthy rents given its quality and location, he said. ”It would be a good North Star in terms of where investors are valuing NYC office buildings.”Beyond the challenges posed by a minority partner who is running for re-election, it is an uncertain time to be marketing office properties. A recent report from Savills found that asking rents in Manhattan could plunge 26% to the lowest level since 2012 in the event of a prolonged recession.Companies are re-evaluating their need for space as the continuing coronavirus surge in the U.S. has left millions of workers uncertain about when they’ll return to their offices.“Last week everything was looking pretty good. Now all of a sudden we have new outbreaks so maybe things aren’t so good,” said Joshua Stein, a New York-based real estate attorney. “The value of this building could change by the minute.”Such a sale could give Vornado the chance to make a statement about the value of its portfolio of commercial properties, after the coronavirus pandemic helped depress its shares in March to levels reminiscent of the troughs of 2009. The stock is down about 45% for the year after slipping 3.4% on Friday in New York to $36.64. Both properties have rent rolls filled with tenants in long leases that are likely to outlast the economic upheaval. To handle the sales, Vornado turned to two firms that specialize in high-end commercial real estate. San Francisco’s 555 California is being brokered by Eastdil Secured, a real estate investment banking company. Cushman & Wakefield, which has handled an assortment of billion-dollar transactions in Manhattan in recent years, is representing 1290 Sixth Avenue.Trump’s office properties are his company’s most reliable income generators, and throughout the years have helped fuel the companies acquisition of higher-risk assets, including golf courses.This isn’t the first time that Vornado’s chairman, Steve Roth, has featured prominently in Trump family dealings. Kushner Cos., the family firm of Trump’s son-in-law Jared Kushner, co-owned another midtown office building, 666 Fifth Avenue, with Vornado prior to its sale in 2018.(Updates shares.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Vornado Realty Trust is exploring the potential sale of two office towers that it co-owns with the Trump Organization, a deal that could be complicated by the president’s ownership and an uncertain commercial real estate market.The New York-based real estate investment trust is working with brokers to market its 70% interest in the properties, 555 California Street in San Francisco and 1290 Avenue of the Americas in Manhattan. The Trump Organization may also sell its stakes in the buildings, according to to people familiar with the matter who asked not to be identified.The property in San Francisco could fetch more than $2 billion, according to some of the people.Vornado said in a statement Tuesday that it was exploring options for recapitalizing the properties, without elaborating on price or whether the president’s company would also sell its stakes. Representatives for Trump declined to comment.The Trump Organization’s 30% stake in the buildings has been described as passive, meaning the business doesn’t actively oversee the properties. The San Francisco building is home to tenants including Goldman Sachs Group Inc., KKR & Co., Microsoft Corp. and McKinsey & Co.Neuberger Berman and State Street Bank are among the tenants at 1290 Avenue of the Americas.Critics have long faulted Trump for his refusal to sell his business when entering the White House. His ownership stakes could make a potential deal harder at a time when investors are struggling to home in on values for office buildings. The pandemic has slowed commercial real estate deals to a trickle and forced many companies to rethink their needs for space.Years AgoVornado’s shares were little changed on Tuesday. The stock has dropped 27% since the beginning of March, with investors concerned that Manhattan offices face a long recovery from the pandemic. The company is spending more than $2 billion to redevelop the area around Pennsylvania Station, hoping to draw tenants to an area that is typically bustling with commuters and tourists.Vornado, a major New York landlord run by Steven Roth, has a partnership with Trump in the San Francisco and Manhattan buildings as the result of a series of transactions that began years ago. It started when Trump’s majority partners in a residential project in Manhattan’s west side sold the development against Trump’s wishes.Trump, believing the properties could have fetched more, sued his partners, including investors Henry Cheng and Vincent Lo, who then bought 555 California and 1290 Sixth Avenue. In 2007, while Trump’s lawsuit was ongoing, Vornado bought the investor group’s 70% stake in the office buildings for $1.8 billion.In 2015, as Salesforce Tower was being constructed nearby, Roth told investors that 555 California was the area’s “dominant building.”“It has the best roster of financial services tenants of any building anywhere in the United States including in Manhattan,” Roth said.Trump’s minority stake in the two properties was worth $765 million after accounting for his share of debt in them, according to a Bloomberg Billionaires Index assessment last year.(Adds potential price in third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Last week, you might have seen that Vornado Realty Trust (NYSE:VNO) released its annual result to the market. The...
(Bloomberg) -- Sandeep Mathrani knows what it’s like to lead a company out of trouble.His former employer, General Growth Properties, had been flattened by the economic recession of 2008. GGP, the second-biggest owner of shopping malls in America, named Mathrani as chief executive officer in 2011 as it was emerging from what was then the biggest real estate bankruptcy in U.S. history.Six years later, Mathrani sold the business to Brookfield Property Partners LP in a deal valued at about $15 billion. The project won him a reputation as a corporate turnaround artist. “I’ve had plenty of opportunities and plenty of luck,” he said last year during an acceptance speech for a real estate industry award.That luck will surely be tested in his new job at WeWork. The troubled co-working company appointed Mathrani, 57, as CEO on Saturday. He’ll report to Marcelo Claure, the executive chairman at WeWork and operating chief at SoftBank Group Corp., WeWork’s majority owner. In a statement, Claure praised Mathrani’s “turnaround expertise.”Mathrani is a fixture in the clubby world of commercial real estate, but he also has some experience working with startups. At Brookfield, he led an investment in Industrious, a WeWork rival. “While real estate is full of some very dry, very conservative characters, Sandeep is very much not that,” said Jamie Hodari, co-founder and CEO of Industrious. “If WeWork wanted to bring in someone with serious real estate chops but who was a little closer to the WeWork spirit, he seems to fit that bill.”However, WeWork poses a very different challenge from the shopping center business. Adam Neumann, its larger-than-life co-founder, started WeWork in 2010 to rent trendy office spaces to companies and freelancers. He pitched it as a hybrid real estate and technology business, a “physical social network.”Investors bought into Neumann’s vision, giving him billions of dollars and mostly unchecked authority to set up offices around the world. SoftBank, a Japanese technology conglomerate, was the biggest believer and drove the valuation of the business up to $47 billion.But when they tried to take the parent company We Co. public last year, the plan quickly crumbled under scrutiny from Wall Street. WeWork was spending far more than it was generating in revenue and had a litany of apparent conflicts of interest with Neumann, who received loans from WeWork as it paid him rent on buildings he owned. WeWork pulled the IPO in September and agreed to sever ties with Neumann, netting him an exit package worth more than $1 billion. SoftBank said it would rescue the company by arranging about $9.5 billion in financing.The appointment of Mathrani has parallels to the situation at another unicorn startup once beset by crisis. Uber Technologies Inc., which also counts SoftBank as its largest shareholder, replaced its controversial co-founder with Dara Khosrowshahi in 2017. Khosrowshahi, an Iranian immigrant who rose to the top job at online travel provider Expedia Group Inc., was asked to tame Uber’s raucous workplace culture and its boom-or-bust financial model. Both CEOs were respected in their fields but largely unknown outside. And both had solid reputations as business operators capable of increasing profit at a steady pace and earning accolades from public investors.Mathrani was born into a wealthy family in India. In the early 1980s, his father sent him to the prestigious British boarding school Eton, but he soon left to attend public high school in suburban Philadelphia as an exchange student, Mathrani recounted during the 2019 awards ceremony speech. By age 20, he had earned engineering and business degrees from Stevens Institute of Technology, whose campus in Hoboken, New Jersey, overlooks the New York City skyline.His first foray into real estate came when he made $20,000 from flipping an apartment he’d bought for $55,000 two years earlier. For a young engineer, that was a lot of money, Mathrani said in the speech. “Wow, I made 20 grand, hallelujah,” he recalled thinking at the time. “Real estate is a good business!”Mathrani said he applied for whatever real estate jobs he could find. He was hired as a mall designer and began rising through the ranks. In 1994, he went to Forest City Ratner Cos., the development company owned at the time by real estate titan and former Brooklyn Nets owner Bruce Ratner, who would become one of Mathrani’s mentors, according to Women’s Wear Daily. In 2002, Mathrani joined Vornado Realty Trust, the largest owner of real estate in New York City, where he ran the company’s retail division.Eight years later, the call came to lead GGP. There, Mathrani had to overcome the aftershocks of the recession, a retail industry in decline and the sharp rise of Amazon.com Inc. Mathrani focused on high-end properties and courted internet-native brands like Warby Parker and Tesla Inc. to his malls. He was rewarded by becoming one of the highest-paid executives in real estate.In broadcast interviews and speeches, Mathrani is soft-spoken and understated. For the speech last year, he wore a plain suit, patterned tie and rimless glasses, his hair slightly out of place, looking the part of a college professor. He spoke about his fortune in life and finding success in America.In a statement, Mathrani said WeWork “has redefined how people and companies approach work with an innovative platform.” Under Mathrani, WeWork will refocus on office rentals and walk away from passion projects started by Neumann. It has sold business units and other holdings, including a large stake in female-focused co-working startup the Wing. WeWork also said it would terminate about 2,400 jobs.Staff morale at WeWork is low, and it’ll likely take years to get the company’s finances in order. A recent business plan set a target for positive cash flow by 2023. It could take even longer to change the company’s image in the minds of public investors.Mathrani’s role at WeWork is designed to complement Claure, a longtime telecommunications executive who was abruptly thrust into the WeWork debacle a few months ago when he was named chairman. Claure recently tweeted a photo of an inspirational message that he said reminded him of his first few days learning the real estate industry. The message read: “Be brave enough to suck at something new.”To contact the reporters on this story: Gerrit De Vynck in New York at email@example.com;Ellen Huet in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Mark Milian at email@example.com, ;Alistair Barr at firstname.lastname@example.org, Vlad SavovFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Today we're going to take a look at the well-established Vornado Realty Trust (NYSE:VNO). The company's stock saw its...