Vornado Realty Trust (VNO), the owner of more than 100 million square feet of mostly office and retail properties, rose the most in more than a year after selling part of its money-losing investment in retailer J.C. Penney Co.
Vornado sold 10 million shares at $16.03 each, the New York-based real estate investment trust said in a regulatory filing after the close of regular trading today. The shares represent 6.1 percent of J.C. Penney’s common stock. Vornado had held 23.4 million shares as of the end of last year.
The real estate investment trust said last week that it had a $224.9 million loss in the fourth quarter on its investment in the Plano, Texas-based department-store chain. The stock sale is “a positive, and something we’ve been advocating for,” said Alex Goldfarb, analyst with Sandler O’Neill & Partners LP, who has a hold rating on Vornado shares.
“This is a company that typically doesn’t walk away from losses,” Goldfarb said in a telephone interview. “It’s one thing to write down your investment on your books, it’s another to crystallize it by actually selling. It’s certainly a recognition on the part of management that J.C. Penney didn’t turn out as they expected.”
Vornado rose 3.4 percent to $84.11 in New York trading, the biggest increase since Dec. 20, 2011. J.C. Penney slid 11 percent to $14.96, a four-year low.
Vornado joined Bill Ackman’s Pershing Square Capital Management LP in acquiring large interests in J.C. Penney in 2010, with plans to turn the company around. Ackman holds 17.8 percent of the retailer’s shares, according to data compiled by Bloomberg, while Vornado owned almost 11 percent before the sale. J.C. Penney last week reported a 25 percent decline in annual revenue to $13 billion, the lowest since at least 1987.
Goldfarb calculated a loss of about $30 million on the 10 million J.C. Penney shares Vornado sold.
A phone call to Wendi Kopsick, a spokeswoman for Vornado with public-relations firm Kekst & Co., wasn’t returned.
The J.C. Penney shares Vornado owned as of Dec. 31 included 18.6 million at an average cost of $25.76 each, the REIT said last week in its annual report. Vornado “could be back in the market in the near-term” to sell its remaining J.C. Penney shares, Lorraine Hutchinson, an analyst at Bank of America Corp., wrote in a note earlier today.
Vornado has an understanding with Deutsche Bank AG (DBK), which marketed the stock, that it won’t sell any additional J.C. Penney shares before March 11, according to the filing.
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