Should VNO Stock Be in Your Portfolio Ahead of Q4 Earnings?

Vornado Realty Trust VNO is scheduled to report fourth-quarter 2025 results on Feb. 9, after market close. The company’s quarterly results are likely to display a year-over-year decline in revenues as well as funds from operations (FFO) per share.

In the last reported quarter, this New York-based real estate investment trust’s (REIT) FFO per share, plus assumed conversions, on an adjusted basis of 57 cents, beat the Zacks Consensus Estimate of 55 cents. Results displayed year-over-year growth in total same-store net operating income (NOI) and occupancy.

Over the trailing four quarters, Vornado’s FFO per share, plus assumed conversions, on an adjusted basis, topped the Zacks Consensus Estimate on each occasion, the average surprise being 12.5%. This is depicted in the graph below:

Vornado Realty Trust Price and EPS Surprise

Vornado Realty Trust price-eps-surprise | Vornado Realty Trust Quote

US Office Market in Q4

Per a Cushman & Wakefield report, U.S. office demand turned positive in the second half of 2025, marking a key inflection point for the sector. Leasing activity strengthened, vacancy is expected to peak later this year, and demand is becoming more geographically widespread. Competition for premium office space has intensified, while sublease availability continues to narrow. With new construction starts largely absent, conversions and repurposing of office assets are playing a bigger role in shaping supply.

The demand improvement was evident in absorption trends. Net absorption for the broader U.S. office market turned positive in the fourth quarter, ending 12 consecutive quarters of declines. While full-year 2025 absorption remained negative at 6.7 million square feet (msf), this marked a sharp improvement from the five-year annual average decline of 50.5 msf. Excluding five markets, the other 86 posted 11.1 msf of net absorption, with 50 U.S. markets turning positive in 2025 — the strongest since 2019 — highlighting a broad-based recovery.

Demand for Class A office assets is ubiquitous across U.S. markets. Class A absorption totaled 3.5 msf in Q4 2025 and reached 9.2 msf for the full year, reflecting growing competition for high-quality office space.

On the supply side, elevated construction costs and policy uncertainty have curtailed new development. Vacancy declined in nearly half of U.S. markets over the past year, with the national vacancy rate standing at 20.5% in the fourth quarter, up just 30 basis points year over year. Sublease availability also trended lower across roughly 60% of markets. Office conversions and repurposing have exacerbated supply constraints, tightening available space, even as developers begin evaluating new projects to address emerging shortages.

Factors to Consider Ahead of VNO’s Q4 Results

In reference to the above U.S. office market environment, high demand for quality offices has boosted leasing activity for Vornado’s strategically located premium portfolio.

However, high competition from developers, owners and operators of office properties and other commercial real estate has affected the company’s ability to attract and retain tenants at relatively higher rents than its competitors. To lure tenants, the company is offering rent concessions on its leased properties. This has adversely impacted the revenue growth momentum of VNO.

The company has a substantial debt burden. Given the elevated debt levels, higher interest expenses have weighed on its earnings growth.

Projections for VNO

The consensus mark for Vornado’s New York revenues is pinned at $348.5 million, down 9.2% from the prior-year quarter.

The Zacks Consensus Estimate for quarterly revenues is pegged at $434.8 million, implying a decline of 5% year over year.

The consensus mark for Vornado’s other revenues stands at $79.5 million, up from $74.1 million reported in the prior-year quarter.

The Zacks Consensus Estimate for occupancy in the New York office portfolio is pegged at 89.8%, up from 88.8% reported a year ago.

The company’s activities during the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has remained unchanged at 57 cents over the past three months. However, the figure indicates a 6.6% increase from the prior-year period’s reported number.

What Our Quantitative Model Predicts for VNO

Our proven model does not conclusively predict a surprise in terms of FFO per share for Vornado this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.

Vornado has an Earnings ESP of -0.40% and currently carries a Zacks Rank of 4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the broader REIT sector — W.P. Carey WPC and Host Hotels & Resorts HST— you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

W.P. Carey, scheduled to report quarterly numbers on Feb. 10, has an Earnings ESP of +1.06% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Host Hotels & Resorts, slated to release quarterly numbers on Feb. 18, has an Earnings ESP of +1.71% and carries a Zacks Rank of 3 at present.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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