Retail Pain Pushes Manhattan Landlord To $224M Fourth-Quarter Loss

888 Seventh Avenue
Vornado's Headquarters At 888 Seventh Ave. In Manhattan

After strong sales at its luxury condo tower boosted it to a profitable third quarter, Vornado's earnings went deep in the red in the final quarter of 2020.

The real estate investment trust posted a $223.6M loss in a regulatory disclosure Friday evening.

Vornado generated $36.3M in condo sales at 220 Central Park South during the quarter, a far cry from the over $591M the building made in Q3. Vornado disclosed $236M in impairment losses, primarily from reductions in value to its sizable retail portfolio in Times Square and along Fifth Avenue.

The REIT also declared a $23.3M loss from the quarter on severance and headcount reduction costs. It said in a Dec. 1 filing that it was undertaking a program to reduce overhead costs by $35M a year, which included cutting 70 employees. It laid off a combined 49 workers at Manhattan properties as of last Oct. 6, according to filings with the New York State Department of Labor.

Former Chief Financial Officer Joseph Macnow retired from the company at the end of the year, taking home a $4.5M severance package, filings show. The change was announced on Dec. 1, and Vornado President Michael Franco will assume the CFO role going forward.

Last quarter, Vornado Chairman Steven Roth told shareholders that the company’s pains were temporary.

“Our financial results, as well as our peers’, are suffering,” he said during the Q3 earnings call in November. "But it's important to appreciate that today's quarterly results are a reaction to a short-term crisis and are certainly not predictive of the future."

The losses cap a tumultuous year for the company, which is focused primarily on Manhattan office and retail properties, among the most heavily affected in the country from the coronavirus pandemic's economic upheaval. Vornado’s stock price, which is traded on the New York Stock Exchange, fell nearly 40% in 2020. It reports its full 2020 earnings on Feb. 16.

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