Boston, MA 05/06/2014 (wallstreetpr) – Vornado Realty Trust (NYSE:VNO) reported Q1 revenue that missed the consensus estimate and also declined from a year earlier quarter. However, the weak quarter did not stop shares from going up during Monday session. Investors were clearly less concerned about the Q1 performance but more concerned about the planned spinoff of the shopping centers that should lead to streamlined operations in the company and support higher revenue.
Vornado Realty Trust (NYSE:VNO) recently announced that it plans to spin off its 85 shopping centers into a standalone publicly traded REIT. The company has all along pledged transformation and the planned spinoff fall well in-line with the transformation efforts that the CEO Steven Roth believes have the potential of significantly improving shareholder value.
According to analysts and pundits, the planned spinoff of the shopping centers might start in Q22014 during which the company is expected to file registration request with the U.S. Securities Exchange Commission.
The properties that have been earmarked for spinoff are mainly in Northeast with a vast majority of them being strip malls. The properties together have more than 16 million sq ft of spaces. The shopping centers enjoy good occupancy have been almost 96 percent occupied by the end of 2013.
New company management
In addition to the planned spinoff, Vornado Realty Trust (NYSE:VNO) has also sold several of its assets. The past two years have seen the company generate about $3.6 billion from asset sales. Combining asset sales and spinoff are expected to lead to more efficient operations that should reduce costs and expenses and support bottom-line improvement. After the spinoff of the earmarked shopping centers, the newly formed company will be headed by Jeffrey Olson as the CEO. Mr. Olson is the current head of the business shopping center business.
Q1 in numbers
Vornado Realty Trust (NYSE:VNO) reported Q1 funds from operations (FFO) of $247.1 million or $1.31 per share. Analysts expected FFO of $1.27 per share. Revenue was $660.6 million, down from $718.7 million in Q12013. Analysts expected $670.6 million for the quarter.
