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Vornado Realty Trust’s VNO ability to cater to the rising demand for premier office spaces with class-apart amenities is likely to drive leasing activity. Its portfolio-repositioning efforts also augur well. A healthy balance sheet position supports the company’s growth endeavors.
Analysts seem positive about this Zacks Rank #2 (Buy) company. The Zacks Consensus Estimate for VNO’s 2025 funds from operations (FFO) per share has moved one cent northward over the past month to $2.15.
Shares of this office-based real estate investment trust (REIT) company have gained 27.2% over the past six months against the industry’s decline of 6.3%. Given the strength in its fundamentals, there seems to be additional room for growth.
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Factors That Make Vornado Realty Stock a Solid Pick
Solid Property Base: Vornado Realty owns a portfolio of top-quality office properties in a few select high-rent, high-barrier-to-entry markets of New York, Chicago and San Francisco. It boasts a concentration of high-quality assets and a strategic focus on expanding its market share in the New York City office market. Its focus on having assets in these markets is expected to drive steady cash flows and fuel its growth over the long term.
Rents in the newly constructed or best-in-class redeveloped assets, which offer abundant amenities at transit-centric locations, have risen. Hence, Vornado is well positioned to benefit from the emerging trend, given its ability to offer top-quality office spaces, backed by its redevelopment efforts.
Diversified Tenant Base: The company enjoys a well-diversified, high-end tenant roster that includes several industry bellwethers. This enables it to generate stable rental revenues over time.
Portfolio Repositioning Initiatives: Vornado Realty is focused on improving its core business by making opportunistic developments and divestitures in addition to business spin offs. Strategic sell outs provide the company with the dry powder to reinvest in opportunistic developments and redevelopments. The timely portfolio-repositioning initiatives are likely to drive growth over the long term.
Balance Sheet Strength: Vornado has a healthy balance sheet and ample liquidity. As of Sept. 30, 2024, the company had $2.6 billion of liquidity, consisting of $1 billion of cash and cash equivalents and restricted cash and $1.6 billion available under its $2.2 billion revolving credit facilities. A flexible financial position will enable it to take advantage of future investment opportunities and fund its development projects.