Vornado Relying on Flexibility to Combat Uncertainty

Following the Great Recession and the financial crisis that precipitated the economic slowdown, Michael D. Fascitelli, president and CEO of Vornado Realty Trust (NYSE: VNO), said his company has emphasized paying down its debt and maintaining flexibility.

After the financial markets went into a tailspin in 2008, Vornado paid down more than $2 billion in debt. The company also extended out its maturity schedules.

"That obviously gives you a lot more operating leeway and flexibility," Fascitelli said in an interview with REIT.com. "We made the financial side of our business reflect the fact that it was an uncertain time."

Regarding Vornado's $800 million real estate investment fund, Vornado Capital Partners, Fascitelli declined to address whether or not the company planned to expand that side of its business. The creation of the fund came at "a particularly opportune time to expand the kind of capital we attracted," according to Fascitelli. Vornado had participated in some private joint ventures previously, he noted.

"This was another way to expand those relationships and take in more funding sources to continue to grow our business," Fascitelli said. "We have a fund, but I would describe it more as a partnership"“a club deal with a handful of big partners that have led to other joint venture relationships and strategic relationships."

Having taken over the CEO chair from Vornado's current chairman, Steve Roth, who's widely considered one of the leading real estate executives of his generation, Fascitelli shared some of his insights on the notion of succession planning for REIT executives. Fascitelli pointed out that he and Roth have worked closely in a partnership relationship for more than 15 years. As such, he characterized the transition as more "evolutionary" than "revolutionary."

"Sometimes the titans want to do something radically different," Fascitelli said. "Sometimes the titans don't want to allow someone like me to actually grow and come in to be a partner. Sometimes they want to be too involved. I think Steve and I have found the right mix."