Strategic Focus on Core Manhattan Market and Asset Dispositions
Vornado is 90% Manhattan-centric, with a focus on Prime Pitch Manhattan. The company owns assets in Chicago and San Francisco, which may be sold if the right deal arises.
Assets in San Francisco (555 California Street) and Chicago (The Mart) are considered valuable but are not sacred; they may be sold for the right price to optimize shareholder value.
The company's primary mission is to increase stock price, leading to a flexible approach to asset sales and acquisitions.
Strategic Development of 343 Madison Avenue with Anchor Tenant and Capital Structure
Proceeding with full vertical construction for late 2029 delivery, with site prep and foundation work underway since October 2024.
Executed a letter of intent with a prestigious investment-grade financial institution for approximately 30% of the building.
Plan to buy out the 45% joint venture partner for about $44 million, citing partner’s shift in investment focus.
Projected stabilized cash yield of 7.5% to 8%, with potential for high single-digit IRR on levered basis, depending on exit cap and sale timing.
Estimated total development cost of just under $2 billion, with strong pre-leasing activity and high demand for premier office space in Midtown Manhattan.
Impact of Software Asset Divestments on Capital and Business Focus
Divestitures are expected to be accretive, allowing greater capital allocation to high-growth, profitable segments.
Proceeds from sales will be used in line with the company's capital framework, with potential return to shareholders if no immediate growth opportunities are identified.
The sale of software assets significantly reduces revenue contribution from 8% to a smaller proportion, enabling a sharper strategic focus on financial services.
Accelerated Non-Strategic Asset Sales and Early Debt Reduction
Veris Residential has executed or completed approximately $450 million of non-strategic asset sales year-to-date, surpassing the initial target of $300-$500 million by 2026.
Recent sales include Signature Place in New Jersey for $85 million and 145 Front Street in Worcester for $122 million, both at a cap rate of 5.1%.
Additional binding contracts for $180 million in sales are expected to close soon, supporting the goal to reduce leverage to below 9x by 2026.
The asset sales are primarily aimed at deleveraging the balance sheet and reducing debt costs, with a focus on smaller assets and land.
Dafinchi