VNO was 93 at this thread's inception- 5 month's ago
36 now
DJ 2ndUPDATE: Vornado Swings To 4Q Loss On $214M In Write-Downs
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(Updates to add analysts' comments, stock price)
By A.D. Pruitt, Shirleen Dorman and Kerry E. Grace
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Vornado Realty Trust (VNO) swung to a fourth-quarter net loss as concerns about the real-estate investment trust's exposure to Toys "R" Us Inc. continues to mount.
The company attributed its quarterly loss on $214 million of write-downs on investments and project costs. Vornado, which owns a 33% interest in Toys "R" Us, posted a net loss of $202.5 million, or $1.40 a share, compared with year-earlier net income of $105.2 million, or 57 cents a share.
Vornado in December said fourth-quarter results would include a 22-cent-per-share loss from its share of Toys "R" Us' third-quarter results. Vornado, Bain Capital Partners LLC and Kohlberg Kravis Roberts Co. took Toys "R" Us private in 2005 in a $6.6 billion deal.
"That entity has quite a bit of financial leverage and significant debt maturities in 2010 (resulting) in a large question mark as to what the financing strategy will be," said Michael Knott, an analyst at Green Street Advisors.
He added Vornado's earnings "showcase the sea change in the retailing environment."
Wachovia Securities Analyst Christopher Haley noted in a report Tuesday that Vornado's retail occupancy dropped 200 basis points to 92.1%.
Vornado's shares traded down 3.23% to $35.36 on the results. The company's stock has slumped roughly 40% on the year.
REITs have been struggling as commercial and retail markets continue to slump in the U.S. recession and on tight credit. Rising store closings are expected to add to an existing glut of space with few retailers ready to fill them, according to analysts.
UBS said in a report they still viewed the approximately $2.5 billion in Toys "R" Us debt maturities coming due in 2010 "as the most pressing (refinancing) risk" for Vornado.
Meanwhile, Vornado said funds from operations, a key measure of profitability for REITs, decreased to negative 50 cents a share from positive $1.18 a share a year earlier. Excluding items such as the write-downs, FFO fell to $1.14 a share from $1.25 a share.
Revenue climbed 5.9% to $696.3 million for the company, which owns properties mainly in the New York area and Washington, D.C.
Analysts polled by Thomson Reuters expected FFO of $1.23 a share and revenue of $674 million.
Revenue from property rentals rose 3.9% to $520.2 million. Occupancy rates slid to 96.7% as of Dec. 31 from 97.6% a year earlier.
Vornado, which owns, leases, manages and develops retail and industrial properties mainly in the Mid-Atlantic and Northeast, last month said it would retain about $390 million this year by distributing 60% of its dividends in stock and 40% in cash.
The move comes in the wake of a revised rule by the Internal Revenue Service, allowing REITs to keep as much cash in their coffers as possible during a continuing credit crunch and steep stock declines.
-By A.D. Pruitt, Dow Jones Newswires, 201-938-2269, angela.pruitt@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: djnewsplus.com. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
February 24, 2009 13:36 ET (18:36 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.- - 01 36 PM EST 02-24-09
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