This compares with a 30% rise in rents in its New York office portfolio, a 4.8% hike for its Washington DC office portfolio, and an 8.8% increase in rents at Chicago's Merchandise Mart. The company acquired $921 million in retail assets during 2006, and devoted another $904 million to retail and/or retail/office mixed-use assets so far this year.
As of Dec. 31, 2006, occupancy in the retail portion of the company's portfolio was 92.7%. The retail sector's contribution to overall EBITDA for full-year 2006 was 22%, up 6.8% in comparison with year-end 2005.
The company's overall operating and investment strategies include the operation of real estate platforms that have "size and scale," according to presenters Joseph Macnow, EVP and CFO, and Wendy Silverstein, EVP of capital markets. Owning "real estate in markets with high barriers to entry and a high likelihood of capital appreciation" is also key to the strategy.
This year's $689-million buy of Manhattan Mall in the Penn Plaza district of Manhattan, which included 812,000 sf of office space and 164,000 sf of retail space, fits the bill. So does this year's $165-million acquisition of Bruckner Plaza in the Bronx and $50-million retail JV redevelopment of Filene's property in Boston.
At an aggregate of 20.2 million sf, retail is a core of Vornado's business. It compares with 18 million sf of office properties in Washington DC, 15.9 million sf of New York office assets and the Merchandise Mart's aggregate of 9.2 million sf.
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