Vornado’s Size Prevented Real Estate Purchases, Roth Says

Vornado Realty Trust (VNO) Chairman Steven Roth said the size of his company made him reluctant to to take advantage of plummeting commercial real estate prices during the U.S. recession.

“We were a little too large,” Roth, whose New York-based firm owns more than 100 million square feet (9.3 million square meters) of office buildings and other real estate, told business students at a Georgetown University forum yesterday. “It never threatened the company, not for one second, but it made us reluctant to really jump into the game” when “they were giving stuff away in 2009 and 2008,” he said.

Commercial property values plunged in the U.S. as the economic slump hurt demand for space at office buildings, shopping malls and other real estate. Real estate investment trusts’ property values fell 38 percent after peaking in August 2007, and have gained 50 percent since the May 2009 bottom, Newport Beach, California-based research firm Green Street Advisors Inc. said in an April 5 report.

Roth’s remarks, during a panel discussion at Georgetown's McDonough School of Business in Washington, were his first since saying that Vornado intends to sell assets and to hold quarterly conference calls with investors for the first time to help raise the company’s stock price. Those plans were disclosed on April 13 in Roth’s annual letter to shareholders.

Vornado was “constrained by our balance sheet, which wasn’t vulnerable, but not ready to rock,” Roth said at yesterday’s event, co-sponsored by the National Association of Real Estate Investment Trusts.

The company fell 0.2 percent to $82.93 yesterday in New York. Its shares have declined 8.4 percent in the past year, compared with a 7 percent gain for the Bloomberg REIT Index.

To contact the reporter on this story: David M. Levitt in New York at dlevitt@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net