Vornado should have issued equity instead of convertibles, CEO says

By Angela McDaniels

Tacoma, Wash., April 6 - Vornado Realty Trust chairman and chief executive officer Steven Roth expressed some regret about the company's issuance of convertibles in recent years in light of the company's current share price.

"In November 2006 and March 2007, we issued 20-year, put-back convertible debt with strike prices of $153 and $162 per share. It is now obvious that we should have issued equity," Roth said in a letter to shareholders, which was included in the company's annual report for 2008 and attached to an 8-K filing with the Securities and Exchange Commission.

Vornado stock closed at $39.66 (NYSE: VNO) on Monday.

The company's stock price declined 28.4% in 2008 and a further 40% so far in 2009, Roth reported.

"If we were still school age, we'd be off to detention," Roth said about the decline.

The company sold $1 billion of 3.625% convertible senior debentures due 2026 in November 2006 and $1.4 billion of 2.85% convertible senior debentures due 2027 in March 2007.

The 2.85% convertibles become putable in April 2012, and the 3.625% convertibles become putable in November 2013.

According to the letter, Vornado had $1.83 billion of cash and $1.83 billion of unused bank revolving credit capacity as of March 31.

Vornado is a New York-based real estate investment trust that focuses on commercial and retail properties.

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