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Vornado (NYSE:VNO) Pauses Dividend Payments; Stock Slips 13%
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Vornado (NYSE:VNO) Pauses Dividend Payments; Stock Slips 13%

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Vornado postpones dividend payments. Depressed demand and a tight credit market pose challenges for office REITs.

Vornado Realty Trust (NYSE:VNO), a REIT focused on the office sector, postponed its dividend payments until the end of 2023. The company said it would pay the 2023 dividend in cash or through a combination of cash and securities. VNO stock dropped over 13% in the pre-market session on April 27.

Vornado said that the cash retained from the suspension of dividends and asset sales would be used to reduce its debt or buyback shares. 

VNO stock has declined more than 27% year-to-date. Moreover, it has lost over 61% of its value over the past year. The decline in VNO stock reflects depressed demand across the sector and rising vacancy rates. Meanwhile, the Fed’s hawkish stance to curb inflation further poses challenges.

Following the suspension of dividends, Piper Sandler analyst Alexander Goldfarb downgraded Vornado Realty Trust to Sell from Hold. The analyst also lowered his price target to $11 from $16. 

On March 31, Ronald Kamdem of Morgan Stanley cut his price target on Vornado stock to $13 from $18. Kamdem reiterated his Sell recommendation. Elevated leverage, pressure on occupancy rates over the next 12-18 months, and tight lending conditions led Kamdem to reduce his estimates on Office REITs, including Vornado. 

It’s worth noting that VNO will report its first-quarter results on Monday, May 1, 2023. Analysts expect VNO to report a loss of $0.05 a share in Q1

What’s the Prediction for VNO Stock?

Given the ongoing challenges, VNO stock has a Moderate Sell consensus rating on TipRanks based on one Buy, four Hold, and four Sell recommendations. These analysts’ average price target of $17.89 implies 19.83% upside potential. 

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