Vornado Realty Trust is considering spinning off its Washington office and street retail operations, Chairman Steven Roth said in his annual letter to shareholders.
The company’s Washington-area offices have been hurt by departures of U.S. Department of Defense tenants under an initiative to move operations onto military bases. The unit’s earnings before taxes and other items fell 7 per cent last year, while rising 34 per cent at the Manhattan-focused street retail operations.
“We have considered and we are still considering options with respect to our Washington business, such as inviting in a new investor(s) or even separating the business in a spin or in a spin-merge,” Roth wrote in the letter, included Friday in a Securities and Exchange Commission filing. “Ditto for our street retail business.”
Vornado has spent the last three years selling businesses and properties it considered outside its core strengths as an owner and manager of New York and Washington office buildings, and Manhattan stores. In January, the New York-based company spun most of its strip-shopping centers into a new real estate investment trust, Urban Edge Properties.
“That we continuously consider our options should not be a revelation or a surprise to anyone,” Roth said in his letter. “Everything is on the table.”
Vornado has 16.1 million square feet (1.5 million square meters) of Washington-area offices, including 7.4 million square feet in Crystal City in Arlington, Virginia. It has 2.5 million square feet of Manhattan street retail at 56 properties, including the Marriott Marquis Hotel stores facing Times Square, where in November it introduced an animated LED sign that the company says is the largest in the world.
News by Bloomberg, edited by ESM