Vornado VNO has completed a $950 million refinancing of 1290 Avenue of the Americas. VNO owns a 70% controlling stake in the partnership to own the 2.1-million-square-foot Class A Manhattan office building.
The interest-only loan carries an interest rate of LIBOR plus 1.6% for the first five years, after which it will increase 0.25% in both sixth and seventh years.
The loan replaces a previous borrowing of $950 million with a fixed interest rate of 3.34%, which was slated to mature in November 2022. The refinanced loan is scheduled to mature in November 2028 post full extension.
With the refinancing, Vornado extended the maturities of the assumed debt. This strategy will help it improve its maturity profile and enjoy greater liquidity for day-to-day operations.
The move will also boost Vornado’s cash flow and alleviate bottom-line pressure. Further, it offers greater financial flexibility and will strengthen VNO’s balance sheet position. As of Sep 30, 2021, VNO had $4.5 billion of liquidity, which consisted of $2.3 billion of cash and cash equivalents, up from $1.62 billion as of Dec 31, 2020.
In May, Vornado had completed a $1.2-billion refinancing of 555 California Street.
Vornado’s focus on having assets in such a few select high-rent, high barrier-to-entry geographic markets and its diversified tenant base, including several industry bellwethers, are expected to fuel its growth over the long term.
Shares of the currently Zacks Rank #3 (Hold) VNO have gained 10.1% over the past three months compared with the industry's rise of 2.9%.
Image Source: Zacks Investment Research
Key Picks
Some better-ranked stocks from the REIT sector are Cedar Realty Trust CDR, Alpine Income Property Trust PINE and Apple Hospitality REIT APLE.
The Zacks Consensus Estimate for Cedar Realty Trust’s ongoing year’s FFO per share has been raised 2.6% in the past week.
Cedar Realty currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Alpine Income Property Trust’s 2021 fund from operations (FFO) per share has been raised 2.1% over the past month.
Alpine Income carries a Zacks Rank #2 (Buy), currently.
The Zacks Consensus Estimate for Apple Hospitality REIT’s2021 FFO per share has moved 4.9% upward in the past month.
Apple Hospitality currently carries a Zacks Rank of 2.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs
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Vornado Realty Trust (VNO): Free Stock Analysis Report
Cedar Realty Trust, Inc. (CDR): Free Stock Analysis Report
Apple Hospitality REIT, Inc. (APLE): Free Stock Analysis Report
Alpine Income Property Trust, Inc. (PINE): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
