Is it Wise to Retain Vornado Realty Stock in Your Portfolio Now?

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.However, ongoing choppiness in the office real estate market, geographic concentration of assets and competition raise concerns.What’s Supporting VNO?This office real estate investment trust (REIT) 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.VNO’s focus on having assets in a few select high-rent, high-barrier-to-entry geographic markets, as well as a diversified tenant base that includes several industry bellwethers, is expected to drive steady cash flows and fuel its growth over the long term. We estimate its total revenues to increase 1.8% and 2.4% year over year in 2025 and 2026, respectively.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.In May 2025, Vornado Realty announced that its 55% owned joint venture (JV) had entered into an agreement to sell 512 West 22nd Street, a 173,000-square-foot Class A office building, for $205 million. Subject to customary closing conditions, the sale is expected to close in the third quarter of 2025. In January 2025, the company’s JV completed the sale of the portion of its U.S. flagship store at 666 Fifth Avenue to UNIQLO for $350 million and realized net proceeds of $342 million. Moreover, in the first quarter of 2025, the company closed on the sale of two condominium units and ancillary amenities at 220 CPS for net proceeds of $24.7 million.VNO has a healthy balance sheet and ample liquidity. As of March 31, 2025, the company had $2.3 billion of liquidity, comprising $807 million of cash and cash equivalents and restricted cash, and $1.5 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.What’s Hurting VNO?With persistent macroeconomic uncertainty and a hybrid-working environment, near-term demand for office spaces is expected to remain choppy in this market.Vornado Realty has high office-market exposure in New York City, along with significant street retail there (86.4% of its net operating income at share for the first quarter of 2025). This concentrated portfolio makes the company’s cash flows vulnerable to the macroeconomic situation prevailing in that region.VNO faces competition from developers, owners and operators of office properties and other commercial real estate, including sublease space available from its tenants. This affects the company’s ability to attract and retain tenants at relatively higher rents than its competitors, thereby adversely affecting its long-term profitability.Solid dividend payouts remain the biggest attractions for REIT investors. However, it has increased its dividend only once in the last five years, and its five-year annualized dividend growth rate is negative 33.88%, which remains a concern. The company anticipates paying a single common share dividend in the fourth quarter of 2025 as part of its common share dividend policy for the year.In the past three months, shares of this Zacks Rank #3 (Hold) company have declined 3.7% compared to the industry's fall of 2.7%. Image Source: Zacks Investment Research Stocks to ConsiderSome better-ranked stocks from the broader REIT sector are CareTrust REIT CTRE and VICI Properties VICI, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for CTRE’s 2025 FFO per share is pegged at $1.81, which indicates year-over-year growth of 20.7%.The Zacks Consensus Estimate for VICI’s full-year FFO per share is $2.34, which indicates an increase of 3.5% from the year-ago period.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Vornado Realty Trust (VNO): Free Stock Analysis Report CareTrust REIT, Inc. (CTRE): Free Stock Analysis Report VICI Properties Inc. (VICI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks