Analyst Note| Kevin Brown |
No-moat-rated Vornado Realty Trust reported middling first-quarter results as the end of pandemic appears to be in sight, with mass vaccinations helping to develop herd immunity in the public. Vornado was particularly hard-hit by the pandemic, given its somewhat elevated exposure to variable businesses like hotel, trade show revenue, and so on, in addition to a higher retail presence compared with its fellow office REIT peers. However, companies are now planning to return to offices and people are resuming their retail spending as the economy is poised for a strong rebound after an unprecedented disruption caused by the pandemic. The firm reported first-quarter adjusted funds from operations of $0.65 per share, down 15.5% from the $0.77 in adjusted FFO during the first quarter of 2020. Same-store cash net operating income was down 7.4% year over year basis, though on a sequential basis it grew 1.9%. As we fully incorporate these results, we do not plan to materially alter our $59 fair value estimate for Vornado Realty Trust.