Initiated 2026-10-24 · Price $34.80 (close 2026-10-23, stockanalysis.com) · Mkt cap $7.08bn · Real estate / Manhattan office and street-retail REIT · Model: verified

Rating: Hold — Conviction: Medium

Vornado's Manhattan leasing is strong. New York office occupancy is 90.8%, starting rents are around $107/sq ft, and about $180mm of signed rent has not yet commenced, most of it at PENN 2. The 350 Park Avenue site has become a funded Citadel-anchored development. But on its share of the debt the company runs about 8.6x levered, and pays $62mm a year of preferred dividends, so the cash stream left for common holders is thin. The price already sits where the base case lands. The upside depends on private buyers paying a lower cap rate for Manhattan office than today's price implies. Recurring cash flow on its own does not support the price. That makes it a Hold.

Conviction tests (3a-v-c): T1 pass (Base −0.9% at +1pp, +2.0% at −1pp; Hold at both) · T2 fail (NAV alone +28.4% reads Buy; AFFO DCF alone −27.3% reads Sell) · T3 pass (one est. input, development interests in other_claims, moves Base 8.0%) · T4 pass (no single pending event >25%)

Model value range vs price
Bear $19.56Base $34.99Bull $49.05Price $34.80

Business overview

Vornado owns Manhattan office and street retail. New York was $949mm (85%) of FY2025 NOI at share. THE MART in Chicago and 555 California Street in San Francisco were about $69mm and $68mm, the rest of the portfolio. Much of the value sits in JVs: Alexander's (32.4%), the Fifth Avenue and Times Square retail JV, Park Avenue Plaza (49%, bought June 2026 at a $1.1bn gross valuation) and 350 Park (36%). The land bank includes the 2.05mm zoning sq ft Hotel Pennsylvania site.

Three variables drive earnings:

Competition

Bull case

  1. Signed rent commences. About $180mm of SNO rent, which management equates to ~$150mm+ of FFO, starts during 2026–2027. PENN 2 is expected to be fully leased by year-end. Plays out if Manhattan office demand holds and Q3's projected >20% mark-to-markets persist. Model: ss_noi_growth
  2. Capital recycling plus 623 Fifth. Park Avenue Plaza adds NOI. 623 Fifth ($450mm budget, 10.1% projected yield) stabilizes in 2028. Asset sales are made at private-market values. Plays out if the two sales under discussion close near NAV. Model: acq_noi
  3. Private values close the NAV gap. Today's price implies a ~7.3% cap rate on Base Y1 GAAP NOI. Management cites Green Street's ~23% NAV discount, and Park Avenue Plaza traded at ~$950/sq ft. Plays out if office financing reopens and trophy scarcity spills into Class A. Model: cap_rate, terminal_p_affo

Bear case

  1. Leasing stalls before the SNO book lands. Commencements slip. Tenants in financial services and tech cut space in an AI or market derating. Occupancy stalls near 91%. Plays out if S2 or S12 arrives in 2027. Model: ss_noi_growth
  2. Shrinking to fund commitments. Asset sales fund ~$350–400mm of back-ended 350 Park equity, the rest of 623 Fifth ($206mm) and the 888 Seventh loan ($244.5mm, in forbearance to March 2027). Each sale takes NOI out. Plays out if sales come in at weak pricing. Model: acq_noi
  3. Rates reprice both sides. $1.53bn of variable-rate mortgages (5.48%) carry rate caps with about seven months left. New unsecured debt costs 5.75%, and with the 10Y at 5.00% cap rates could move toward 7.5%. Plays out if S3 or S4 persists. Model: cost_of_debt, cap_rate, terminal_p_affo

Valuation & balance sheet

Metric (definition) Current Own history (range or 5y avg) Peers Source, as-of
P/FFO (TTM, aggregator) 14.7x · 13.0x on Q2 2026 FFO as adjusted annualized ($2.68) FFO as adj. $2.61 (2023), $2.26 (2024), $2.32 (2025) SL Green 10.1x · BXP 9.1x · Kilroy 10.1x · ESRT 25.1x (depressed FFO) stockanalysis.com, 2026-10-23; Q2 2026 and Q4 releases
Implied cap rate (Base Y1 NOI at share / EV; EV = mkt cap + $9,574mm pro rata debt − cash + preferred − 350 Park and 623 Fifth at value) 7.3% (6.8% with those interests at zero) n/a (unverified) n/a (not on one source) model-inputs basis
P/B 1.41x n/a (unverified) SL Green 1.09x · BXP 1.92x · ESRT 0.83x stockanalysis.com, 2026-10-23
Dividend yield ($0.74, one annual payment) 2.1% n/a (unverified) SL Green 4.93% · BXP 4.51% · ESRT 2.79% stockanalysis.com, 2026-10-23

Model-implied value range (from model-summary.json; reit module, NAV at a cap rate and AFFO/share DCF with a terminal P/AFFO, midpoints): Bear $19.56 · Base $34.99 · Bull $49.05 per share, i.e. implied returns of −43.8% / +0.5% / +41.0% vs $34.80. These ranges show how the bull and bear drivers translate into value; they are not price targets.

Balance sheet:

Model note: tier full, status built, verification verified (1,988 formula cells matched in LibreOffice). No assumptions without basis. Scenario consistency is OK on all 14 rows.

Relative value vs peers
MetricVNOSLGBXPESRTKRCPeer medianvs median
P/FFO14.7x10.1x9.1x25.1x10.1x10.1x+45%
EV/EBITDA (TTM)18.9x18.2x16.6x11.1x14.9x15.8x+20%
P/B1.4x1.1x1.9x0.8x0.8x1.0x+46%
Dividend yield2.1%4.9%4.5%2.8%5.8%4.7%−2.6pp
P/FFOESRT25.1xVNO14.7xKRC10.1xSLG10.1xBXP9.1x
EV/EBITDA (TTM)VNO18.9xSLG18.2xBXP16.6xKRC14.9xESRT11.1x
P/BBXP1.9xVNO1.4xSLG1.1xKRC0.8xESRT0.8x
Dividend yieldKRC5.8%SLG4.9%BXP4.5%ESRT2.8%VNO2.1%

As of 2026-10-23. One source and one definition for every company: aggregator TTM multiples, consolidated lease-inclusive EV. Not the model's own pro rata EV basis (see the report's valuation table). Quotes taken at the 4:00 PM ET close on 2026-10-23; pages fetched 2026-10-24. BXP and KRC figures are from the same page type and close, fetched 2026-10-24 for research/KRC/relative-value.json. Dashed line = peer median. Source: stockanalysis.com /stocks/<ticker>/statistics/, fetched 2026-10-24.

Notes. ESRT's 25.1x rests on the source's TTM FFO figure, far above its usual range; treat as distorted by that definition. VNO pays one annual common dividend ($0.74 for 2025, paid in Q4).

Scenario stress test

Reasoned from the bull/bear drivers above. The model column comes from the scenario overlays (Base case + shock).

Scenario Effect Mechanism Magnitude Model Δ value vs Base ($/sh)
S1 Fast equity crash − A beta-1.59 levered office equity de-rates; private cap rates barely move Med −$3.09
S2 Slow bear / recession − Finance layoffs slow leasing and SNO commencements. Milder than Base − Bear ($15.43) because it lasts two years without the bear case's sales, refinancing and exit-multiple reset High −$7.53
S3 Rapid rate shock − Cap rates track real yields; variable mortgages and JV debt reprice High −$8.69
S4 Slow rate grind − Multi-year refinancing drag; cap rates drift up Med −$5.70
S5 Soft-landing cuts + Financing reopens and cap rates compress with leasing intact High +$6.64
S6 Recession-driven cuts − Variable-rate relief does not offset a breaking labor market Med −$2.69
S7a Credit liquidity shock − Forced selling of levered office REITs; CMBS window shuts Med −$4.32
S7b Slow default cycle − Retail and smaller office tenants default; spreads widen Med −$2.83
S8 Stagflation − Higher rates outweigh fixed rent bumps; leasing slows Med −$5.29
S9a Dollar spike 0 No material effect, not modeled — domestic rents — $0.00
S9b Dollar slide 0 No material effect, not modeled — as S9a — $0.00
S10 Melt-up + Wall Street bonuses lift leasing and REIT multiples Med +$3.70
S11 Energy supply shock − No operating channel; yields and financing costs rise Low −$0.18
S12 Mega-cap/AI derating − Tech and finance tenants trim expansion; the stock de-rates Med −$3.84

Currently active/on watch per the playbook:

Model value change vs Base, by scenario
S3 Rapid rate shock−$8.69S2 Slow bear / recession−$7.53S4 Slow rate grind−$5.70S8 Stagflation−$5.29S7a Credit liquidity shock−$4.32S12 Mega-cap/AI derating−$3.84S1 Fast equity crash−$3.09S7b Slow default cycle−$2.83S6 Recession-driven cuts−$2.69S11 Energy supply shock−$0.18S9a Dollar spike$0.00S9b Dollar slide$0.00S10 Melt-up+$3.70S5 Soft-landing cuts+$6.64

What would change the call

Upgrades if:

Downgrades if:

Watch items

Sources