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PARAMUS, NJ-Vornado Realty Trust will post $36.4 million in losses from its one-third share of the 1,400-store Toys “R” Us chain when it reports its third-quarter earnings on Sept. 30. The REIT’s FFO is expected to take a $30.2 million hit of 18 cents per share because of the retailer’s performance.

The Toys loss is significantly up from Vornado’s second quarter, when the chain cost it $7.9 million. But Vornado still posted an overall net-income gain of $148.7 million during that period.

In a company statement Vornado management downplays the third-quarter Toys loss, saying the chain’s business is “highly seasonal” and its “fourth quarter net income accounts for more than 80% of its fiscal year net income.”

In January Vornado management announced the closure of 87 Toys stores, 12 of which were converted into Babies “R” Us units, with the remainder permanently shutting their doors.

In March 2005 Vornado acquired Toys ‘R’ Us in an $8.6 billion deal with Bain Capital and Kohlberg, Kravis, Roberts & Co., bringing the chain private.

Meanwhile, Vornado Realty Trust, Westrust and Pacific Coast Capital Partners, broke ground last month on the $137-million, 646,000-sf “Plant” mixed-use project in San Jose, CA. The parties expect to open the center in July of next year.

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