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Vornado's Steven Roth Dishes on Conference Calls, Portfolio

04/23/2012 | By Carisa Chappell

Vornado Realty Trust (NYSE: VNO) is taking steps to address questions about its diverse portfolio of properties and communication with investors, according to the REIT's founder and chairman, Steven Roth.

Roth addressed some of Vornado's recent moves during the April 19 Real Estate Luminaries Series event at Georgetown University, sponsored by NAREIT in conjunction with Georgetown's McDonough School of Business. Vornado recently announced that it would begin holding investor conference calls, starting with the second quarter.

"We thought we had as good of a way or a better way to communicate, but we were perceived as arrogant. If doing a conference call will increase my net worth, then I'm all for conference calls," he quipped.

Roth said he had preferred other forms of communication with investors, including the publication of Vornado's annual report and meeting with investors at its New York headquarters "five or six times a year." However, he said it became increasingly obvious that the fact the company was not holding quarterly calls was becoming a point of contention with investors.

Roth also discussed opinions revolving around Vornado having multiple lines of businesses in its portfolio. In addition to Vornado's expansive office portfolio, the company also has a retail business that includes strip shopping centers and malls. Roth noted that "pure play companies that have clearly defined business strategies" are currying favor with investors.

Going forward, Roth said Vornado plans to cut some of its retail center holdings.

"Some of the stuff we invest in, the market is not happy with, and we're going to fix that," Roth said.

Additionally, Roth said the size of Vornado's portfolio, which consists of more than 100 million square feet of real estate, prevented the company from taking advantage of falling commercial real estate prices during the economic slump. "We were constrained by our balance sheet, which wasn't down, but not ready to rock," he said.

The discussion was moderated by Steven Wechsler, president and CEO of NAREIT, and also included Mike Kirby, co-founder, chairman and director of research of Green Street Advisors. Kirby agreed that Vornado's recent moves represented a step in the right direction for the company.

Debt Discussion

The event opened with a panel discussion on the state of the debt capital markets with Tobin Cobb, co-CEO of LNR Property LLC; Steve Plavin, CEO of Capital Trust Inc. (NYSE: CT); and Robert O'Brien, partner and vice chairman with Deloitte & Touche LLP.

The panelists agreed that the commercial mortgage-backed securities (CMBS) market is growing rapidly. With the loosening of credit standards, Cobb said he's fearful that the market is heading down the same path as it was prior to the financial crisis.

"We'd rather see broader availability with more stringent credit standards," he said.

Plavin said event risks and growing connectivity in the world today have created new challenges in the credit markets.

"You have to think about risk factors that you didn't have to before," he said.