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Vornado Diving Into Distressed Property Buys

By Dan Weil   |   Tuesday, 14 Jul 2009 04:58 PM

Many investment firms are shying away from real estate, but not Vornado Realty Trust, one of the country’s biggest real-estate investment trusts.

The firm plans to gather $1 billion for a private-equity fund that will buy some of the multitude of distressed commercial properties expected to be available in the next few years, The Wall Street Journal reported.

The fund, Vornado Capital Partners, will be the company's "exclusive vehicle” for real estate investments, the company told potential investors, according to The Journal.

Vornado said the fund would seek annual returns of more than 20 percent. It will focus on office and retail properties in New York and Washington.

Vornado is putting its money where its mouth is, providing 20 percent of the fund’s capital.

Vornado Chairman Steven Roth and CEO Michael Fascitelli have built a reputation for making shrewd buys at the bottom of earlier real-estate slumps. And there should be no shortage of bargains now, experts say.

Still, raising private-equity money won’t be easy in this environment.

"A lot of folks are feeling that while there are going to be tremendous opportunities, they haven't unfolded in wholesale fashion yet,” Geoffrey Dohrmann, who heads Institutional Real Estate Inc., told The Journal. “There's no penalty for waiting."

Vornado isn’t the only real-estate bull. “The next five years will be one of the most attractive real-estate investment periods in the past 50 years,” Starwood Property said in a recent regulatory filing.

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Many investment firms are shying away from real estate, but not Vornado Realty Trust, one of the country’s biggest real-estate investment trusts.The firm plans to gather $1 billion for a private-equity fund that will buy some of the multitude of distressed commercial...
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