NEW YORK, 2014-4-14 — /EPR Retail News/ — Vornado Realty Trust plans to spin off its shopping center business consisting of 81 strip centers and four malls into a new publicly traded REIT. The strip centers are primarily located in the densely populated Northeastern U.S. The malls consist of Bergen Town Center, in Paramus, N.J.; Monmouth Mall, in Eatontown, N.J. and two malls in suburbs of San Juan, Puerto Rico. The 85 retail properties total approximately 16.1 million square feet and had average occupancy of 95.5 percent at December 31, 2013. The new REIT’s 2014 net operating income is estimated to be approximately $200 million.
Jeffrey S. Olson, currently CEO of Equity One Inc., will be the new REIT’s chairman and CEO. Robert Minutoli, executive vice president of Vornado’s existing retail segment, will remain with the new REIT as its COO. Steven Roth, chairman of the board and CEO of Vornado, will serve on the board of the new REIT, which is being called SpinCo until a name is chosen.
The new REIT’s portfolio average base rent is $18.75 per square foot as compared to the peer median of $15.66 per square foot, Vornado says.
Vornado will retain, for disposition in the near term, 20 small retail assets, which do not fit the new REIT’s’s strategy, valued at approximately $100 million. Further, Vornado will retain Beverly Connection and Springfield Town Center, both of which are under contract for disposition. Vornado’s business after these dispositions and the spin-off will be highly concentrated in New York City and Washington, D.C., and be comprised of its high quality office portfolios and the largest, most valuable portfolio of Manhattan street retail assets.