Vornado Realty Trust (VNO, Financial) (“Vornado”) – Vornado is a commercial real estate investment trust (“REIT”) which owns and operates a portfolio of premier office properties, primarily located in midtown Manhattan and, to a lesser extent, San Francisco and Chicago. The company has historically been extremely wellmanaged and well-financed, which remains the case today. We view the company’s balance sheet as sufficient to navigate the challenges associated with COVID-19, which will undoubtedly impact the street-level retail, and potentially office vacancy levels, within Vornado’s landmark office properties. Given the quality of Vornado’s office properties, the strength of its Manhattan platform, including as owner of Amazon’s inaugural New York City headquarters, the strength of its balance sheet, and the experience of its management team, we have been very surprised by the magnitude of its share price decline during recent market turmoil. Admittedly, the commercial mortgage-backed security market is in disarray at the moment and REITs in general have been sold en masse, but we believe that companies with modest leverage, a lack of large near-term maturities, access to liquidity, and highly desirable properties will be able to see their way through this period and potentially use it as an opportunity to create value through asset acquisitions or share repurchases. Vornado is yet one more company whose valuation currently rivals its valuation during the Global Financial Crisis.
From the Third Avenue Value Fund (Trades, Portfolio)'s first-quarter 2020 commentary.
