NEW YORK CITY—Vornado Realty Trust said in an SEC filing Monday that it expects its shopping center spinoff to begin trading on the New York Stock by next month, subject to its registration statement being declared effective. To be known as Urban Edge Properties, the REIT would separate VNO's shopping center business from its core office and street retail properties.
Totaling 14.9 million square feet, the UE portfolio consists of 79 shopping centers, three malls and a warehouse park. While 71 of the spinoff's assets are located along the Boston-to-Washington-DC corridor, there are also properties in California and Puerto Rico.
Shareholders in VNO would receive one share of UE stock for every two VNO shares in connection with the spinoff, according to the SEC filing. The filing said that separating “a great Northeastern shopping center business with strong growth prospects” from VNO's “unique world class Manhattan and Washington businesses” would create “two focused, pure-play REITs.”
The Wall Street Journal reported that VNO had explored the possibility of a spinoff for more than a year, retaining Goldman Sachs and Morgan Stanley as advisors. Along the way, it also considered other options for the shipping center portfolio, including merger with another company.
In a letter to shareholders this past spring, chairman and CEO Steven Roth estimated the value of the spinoff at $3 billion. However, he wrote that the shopping centers, together with VNO's office and urban retail properties, “have been together for legacy reasons, but have no real operating synergies.” In its SEC filing, VNO likened UE's portfolio to that of VNO itself circa 1993, when it elected to be taxed as a REIT.
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