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Vornado Pulling Out Of New York City Casino Sweepstakes

Vornado had explored building a casino next to Penn Station and Madison Square Garden, where it's the dominant property owner.

Vornado has shut down talk it will enter the crowded competition for a casino license after reports emerged earlier this year it would build a gaming center near Penn Station.

“It is highly likely that we will not pursue a casino license,” CEO Steven Roth said on a conference call Tuesday, Crain’s New York Business first reported.

The company had said in January it was “studying the possibility” of applying for one of the state’s casino licenses. The New York Post reported it was considering a casino for the former Hotel Pennsylvania across from Penn Station. Neil Bluhm, managing principal of Walton Street Capital, was reportedly in talks to come on as a partner.

The state is offering three licenses, and Related Cos., SL Green, Silverstein Properties, Thor Equities, RXR Realty, the Soloviev GroupHudson’s Bay Co. and Mets owner Steve Cohen have all been linked to bids. Two of the licenses are expected to go to existing gaming facilities, leaving the developers — many of whom have struck deals with Las Vegas casino operators — to compete for a single available license. The project will cost the winning bidder at least $1B up front. 

Vornado's decision to withdraw from the sweepstakes comes as it reckons with a painful commercial real estate and capital markets environment. Its funds from operations in the third quarter, a key indicator of a REIT's performance, was $119.5M, down from $152.4M a year prior.

“The policy of the company in this environment is to retain as much cash as we can,” Roth said on the call. “The preservation of our balance sheet is the No. 1 priority.”  

The company’s New York office occupancy was 91.6% in the third quarter, while its retail occupancy was at 74.3%, it reported in its quarterly earnings release. Both figures are slightly down from where they were at the end of 2022.

The company stock price dropped by 5% on Tuesday, per Crain’s, to around $19 a share. Some 25% has been shaved off its share value since early September, when it became clear that Labor Day wouldn't deliver a meaningful uptick in office usage.