Author Topic: VNO - Vornado Realty Trust  (Read 56533 times)

thepupil

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Re: VNO - Vornado Realty Trust
« Reply #260 on: November 03, 2020, 05:53:19 AM »
A few minor observations from earnings:

- the NYU lease signed is pretty small (300-400K at share, only 2% of their core NYC office in service sf at share), but locks up 70% of the office at One Park Avenue for 20+ years at HIGHER rents than previously (Facebook lease is 15 years, WA duration of leases signed is 19 years, so you know NYU Langone's lease is over 20 years, by my estimate, it's 25 years). Considering One Park is their next maturity (March 2021), it's good to know that that asset is money good for a long time. NYU Langone is a decent credit (2055 bonds trade at 3.5%). what's the right cap rate for a 20+ secured escalating obligation of NY Langone (of course that building has other tenants and 100K of retail, but this is just me channelling permabull bruce flatt.

this is the type of data point where if it went the other way ( if NYU left) it'd make headlines and people would freak out, but VNO quietly signing a 20+ year lease at decent step ups is not news (it should not be news).

- they extended 770 Broadway maturity (leased to FB, their HQ before Farley from MArch 21 to March 2022), continues trend of terming out the maturity wall. 555 and 1290 are the next and far more important step. the 770 Broadway loan ($700 million) is VNO's largest at share.

- this is extremely small asset so who cares but they paid off one of their highest cost mortgages, "Borgata Land". I had never previously looked into this and assumed it was some failed development play and was assuming they'd hand back the keys. in actuality, they own the ground underneath the Borgata with payments owed until 2070. They bought this in 2010 and were able to borrow $60mm at 5% back then against it. this is probably one of the lower discount rate assets they own (no capex, corporate guarantee from MGM Resorts to MGM Properties to Borgata Land, secured by the land, etc).

« Last Edit: November 03, 2020, 07:26:07 AM by thepupil »


thepupil

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Re: VNO - Vornado Realty Trust
« Reply #261 on: November 04, 2020, 11:06:38 AM »
in my opinion, this is a result of real caution in markets and the complication of no institution wanting to put money directly or indirectly in trump's pockets.

think a modest cash-out refi is the base case outcome here.

Quote
Vornado Realty Trust is tempering its pricing expectations for trophy office towers in Manhattan and San Francisco that it co-owns with the Trump Organization, citing caution in commercial-property markets.
Since June, the New York landlord has been actively marketing its 70% interest in the properties, at 555 California St. in San Francisco and 1290 Avenue of the Americas in Manhattan.
But it’s a tricky time to sell big assets, especially in New York and San Francisco, two of the priciest office markets in the country, and among the hardest hit by the pandemic. Many companies are rolling out plans to let employees work remotely indefinitely, which could have a long-term impact on future office demand.
“Given the investor caution, it does not look like we’re going to achieve our original top-tier pricing objective,” Vornado Chief Executive Officer Steven Rothsaid on an earnings call Wednesday.

fareastwarriors

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Re: VNO - Vornado Realty Trust
« Reply #262 on: November 19, 2020, 09:33:45 AM »
The inside story of the world’s most profitable condo
After Vornado’s 15-year odyssey, a $1 billion prize



https://therealdeal.com/2020/11/19/the-inside-story-of-220-central-park-south/?utm_source=internal&utm_medium=widget&utm_campaign=feature_posts

thepupil

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Re: VNO - Vornado Realty Trust
« Reply #263 on: November 20, 2020, 06:19:56 AM »
weird to me that this isn't a refinance of the 5.7%'s which are open for prepayment. it may be, but they didn't announce calling them. don't think this effects RC borrowing amount, so VNO now has $300mm more cash/liquidity, but at 5.25% this is the most "expensive" money they raise (since it's subordinated preferred equity w/ no maturity and negative convexity due to its 5 year call).

regardless, it's not really important / material. if it's a refi, it's only $1.5mm of interest savings. if it's not a refi, interest expense increases by ~$15.75mm (4-5% of previous interest)


Vornado Realty Prices Series N Cumulative Redeemable Preferred Shares
(MT Newswires)
Vornado Realty Trust (VNO) on Thursday priced a public public offering of $300 million perpetual 5.25% Series N Cumulative Redeemable Preferred Shares at $25.00 per share.

The company said it may redeem the shares at $25.00 per share on and after Nov. 24, 2025.

The offering is expected to close on Nov. 24, 2020.
« Last Edit: November 20, 2020, 06:32:56 AM by thepupil »

thepupil

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Re: VNO - Vornado Realty Trust
« Reply #264 on: November 20, 2020, 12:24:56 PM »
the material de-risking events/roadmap during corona have been

1)  close 220 CPS units and generate gobs of cash, this has more or less happened
2)  lease Farley to FB at underwritten rents, this has more or less happened

3)  get some level of clarity on high street retail values to give confidence that the $1.8B of preferred is both a) money good and b) monetizable <--in my view, this hasn't happened
4)  generate gobs of cash and term out the maturity wall through a sale / recap of 1290 / 555

as of today, number 4 has not and will not happen. trump ownership appears to have been a problem or maybe the market has deteriorated enough such that VNO jsut didn't want to sell.

they could still refi (hopefully with substantial cash out)

this decreases conviction.

(Dow Jones) -- The Trump family's partner in two of its most valuable properties halted an effort to sell the buildings, cutting off what could have been a big cash payout for the Trump Organization, which has hundreds of millions of dollars in debt coming due.
Vornado Realty Trust, which co-owns with the Trumps an office tower in San Francisco and another in Midtown Manhattan, decided to shelve the sales process when it couldn't attract a buyer at the prices it wanted, according to one of the selling brokers and other people familiar with the matter. Concerns about conflicts of interested presented by selling the buildings with President Trump still in the White House also hampered the efforts, some of these people said.
Vornado was hoping to raise up to $5 billion in a sale of the two properties, these people said. At that price, the Trumps' 30% stake in each of the towers would have been worth $1.5 billion.
As recently as this month, Vornado Chief Executive Steven Roth said during the property firm's analyst call that he was continuing to actively pursue a deal for the buildings despite what he described as investor caution. "There is active interest from investors and widespread appreciation for the quality of these assets," he said.
New York City and San Francisco office buildings have been among the hardest hit real-estate sectors since the outbreak of Covid-19. The markets were the most expensive in the U.S. when the pandemic arrived.
Since then, many workers have been working from home or fled to cheaper cities, reducing corporate demand for office space. Vornado's asking price proved lofty given how rapidly office values have declined in those cities, these people said.
The Trump Organization has more than $400 million of debt due in the next few years, and it isn't known how many lenders might be willing to work with the Trumps to refinance it. Mr. Trump's tumultuous business history and concerns over his political activities have made banks reluctant to do business with the company.
The Trump Organization has also considered selling its Seven Springs estate outside of New York City, and it has previously looked for a buyer for the Trump International Hotel in Washington, D.C.
The company has said its businesses are financially sound. "The Trump Organization is an incredible company with tremendous cash flow. We have never been stronger," it said.
With its minority stake, the Trump family is a passive owner and has no control over the sales decision-making for the two Vornado buildings, these people said. Vornado's Mr. Roth has served as an adviser to Mr. Trump, part of a yearslong relationship between the men.
The high price tag limited the number of potential buyers. In many cases, flush foreign-government funds with an eye for trophy American properties would be leading candidates for these high-end properties. Some of these buyers were concerned about potential conflicts, or the perception of conflicts, in buying an asset from the U.S. president, these people said.
The two buildings, at 555 California Street in San Francisco's Financial District and at 1290 Avenue of the Americas not far from Manhattan's Rockefeller Center, are both modern office towers. They are near-fully leased properties with blue-chip tenants in the law, technology, finance and investment industries.
Vornado now plans to refinance its loans on the buildings, said Doug Harmon, an investment adviser at Cushman & Wakefield. His firm led marketing on the New York property, while Eastdil Secured LLC led on the San Francisco tower.
"We are now focusing more on refinancing both assets," Mr. Harmon said. He added that the owners hope to put the properties back on the market sometime next year after election uncertainty fades, a coronavirus vaccine arrives and "when international investors can travel with less restrictions, and the path back to normal is under way."
The Trumps are unlikely to receive much if any cash from refinancing, which is typically used for a building's cash reserves or improvements.
« Last Edit: November 20, 2020, 12:30:49 PM by thepupil »

johnny

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Re: VNO - Vornado Realty Trust
« Reply #265 on: November 20, 2020, 05:21:58 PM »
From the real deal piece:

Quote
"The overall cost of capital on the $1.5 billion project, Roth said, was just 1.4 percent, far lower than his rivals paid."

How much detail is available on this? I'm quite curious about the Bank of China facility especially, but in general I'm just trying to get into the head of the people providing capital at 1.4% (back when rates were "normal").


CorpRaider

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Re: VNO - Vornado Realty Trust
« Reply #267 on: November 22, 2020, 05:40:45 PM »
Sold my $VNO @ $42. 

thepupil

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Re: VNO - Vornado Realty Trust
« Reply #268 on: November 24, 2020, 01:57:34 PM »
this won't impact cash flow, but nice to see Apple taking more space at Penn11.

I maintain that Apple is setting itself up well to be the anchor tenant to Penn2 (across the street) above the main entrance to Penn Station, but that's speculative.

Quote
Apple is betting big on Midtown: The tech giant has inked a deal to expand its offices at Vornado Realty Trust’s 11 Penn Plaza.
In February, the Cupertino, California-based company signed a sublease for 220,000 square feet spanning four floors of the building. At the time, the Art Deco tower had 638,921 square feet available on the 4th through 14th floors as a sublease from Macy’s.

Now, The Real Deal has learned that Apple has added two additional floors to its lease, bringing its total occupancy to 336,000 square feet. The tech company’s offices will span the ninth through 14th floors.


Apple’s sublease is for just six years, according to the source, with the rent in the mid-$60’s per square foot.
Representatives for Apple and Vornado did not respond to requests for comment.

For the 11 Penn Plaza deal, Apple was represented by Peter Riguardi and Martin Horner of JLL, and Vornado was represented in-house. Macy’s has Scott Gottlieb, Liz Lash and Ross Zimbalist of CBRE working on the remaining sublease on the 4th through 7th floors, which are roughly 60,000 square feet each. Neither JLL nor CBRE responded to requests for comment.

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Macy’s will remain on the lease for its entire term, which ends in April 2035. Earlier this year, the department store moved its headquarters to the Jacx, Tishman Speyer’s office building in Long Island City.

Tech companies are clustering on Manhattan’s Far West Side: Apple previously duked it out with Facebook for space in Vornado’s renovation of the Farley Post Office building. Facebook finally won that battle, signing a deal over the summer for 740,000 square feet. The Vornado-led redevelopment includes the new Moynihan Station, as well as 120,000 square feet of shops and restaurants.

Facebook also inked a deal for 1.5 million square feet at 50 and 55 Hudson Yards, where its rent is over $100 per square foot.

And Amazon recently signed a deal for space at 410 Tenth Avenue, which SL Green recently agreed to sell to 601W Companies. The company, which previously redeveloped the nearby Starrett-Lehigh Building at 601 West 26th Street, agreed to pay $952.5 million.