Vornado Realty Trust is a NYC focused office REIT that owns the second biggest office portfolio in the city. Their stock is often associated with the health of the NYC market and so might be thinking differently about the Big Apple after today’s earnings call. The company’s earnings are down from the previous year, and they are still profitable tune of $46 million for the quarter. The future is still uncertain for offices, but Vornado sees things getting better soon. “Our leasing pipeline in New York is strong and not reflective of the media’s negative office narrative. We have 580,000 square feet of leases in negotiation, plus an additional 1.2 million square feet in our pipeline,” said their CFO, Michael Franco. Even if things do get worse, the company thinks it will be able to weather the storm. They touted their $1.3 billion of cash reserves and $1.9 billion in undrawn credit in a revolving line of credit.
Vornado’s outspoken CEO Steven Roth made parallels between investor sentiment in office at the moment and what happened with malls when e-commerce started forcing stores to close. “Five years or so ago, there was universal certainty that mall and brick-and-mortar REITs were dead forever, the victim of ubiquitous and explosively growing e-commerce,” he said. “Capital markets shut down, no more malls were built. But the whole today five years later, malls are booming. Sound familiar?” Roth thinks that from what he has seen the future looks bright and the struggles of office REIT stock is due mostly to “emotional and shortsighted view in the investment community.” These words weren’t just hot air, either. Vornado has also bet on themselves being undervalued by buying back $29 million of stock from shareholders at close to the stock’s all time price.