Vornado Realty: What Happened?

In a report published Tuesday, analysts at Morgan Stanley maintained their Equal-Weight rating on Vornado Realty Trust VNO. The company's partial quarter numbers revealed that the FFO per share was below the estimates and the consensus. Although FFO growth accelerated during the quarter to 11 percent, year on year, up from the 9 percent reported for the previous quarter, the miss was largely driven by the spin-off of Urban Edge and other one-time items. The company witnessed mixed leasing activity, which was stronger in DC than in NYC, while initial rents were up in NYC but declined in DC, as well as for street retail. Occupancy increased across the board, with occupancy in NYC reaching the peaks seen in 2Q14. However, TI/LCs also rose across the board. "We're Equal-weight VNO shares, balancing our bullish stance on NYC office and street retail and the bidding environment for major market real estate, against our concerns over the DC office recovery and the execution required to unlock value via the Penn district, Crystal City, and DC residential," the analysts explained.