What Are Vornado's J. C. Penney Intentions?

So what are REITs doing with all of that extra capital they've raised? In the case of Vornado Realty Trust, it is investing in tenants.

On Friday, the company announced that it owns 9.9% of J.C. Penney's common stock. So far the investment has paid off well for Vornado. In the third quarter, the firm made $32.2 million on the investment.

Of course, this is not the first time Vornado has invested in a high-profile retailer. It has a sizable investment in Toys "R" Us, a chain that is soon expected to file an IPO.

In another interesting twist, William Ackman's hedge fund, Pershing Square Capital, is also investing in J. C. Penney. Ackman also has interests in mall owner General Growth Properties and Target and also owns share of Borders Group.

It looks like J.C. Penney's sales are turning around. The company announced a 2.9% same-store sales gain in September, and in the first 35 weeks of the year, they rose 1.9%, a major improvement from same period last year, when they fell 7.5%.

So what do you think Vornado's intentions are with J. C. Penney? Is it just a smart move investing in an improving low-cost retailer that can do well in the recession? Or is this some kind of real estate play, like what everyone suspects Eddie Lampert is doing with Sears?