Fascitelli Resigns on His Own as Vornado CEO

By Gail Kalinoski, Contributing Editor

Michael Fascitelli

In a surprising move this morning, Vornado Realty Trust (VNO) announced that Michael Fascitelli was resigning effective April 15 as president and CEO of the REIT and Steven Roth, the company’s chairman, was taking the CEO spot.

Fascitelli, 56, joined Vornado 16 years ago as president and Trustee. He became CEO in May 2009, taking over from Roth, who had served as CEO from May 1989 to May 2009. Fascitelli will continue to serve on the Board of Trustees and maintain an office at Vornado’s Manhattan location.

The two men briefly talked about the change in roles this morning at the beginning of the fourth-quarter earnings call.

Roth said that Fascitelli had asked to step down from his day to day responsibilities at the Paramus, N.J.,-based REIT, which is one of the largest owners and managers of commercial real estate in the United States with a portfolio of more than 100 million square feet of office and retail assets, primarily in New York and Washington, D.C.

“Mike is family,” Roth said. “This was entirely his decision.”

Roth said the Board of Trustees “asked that I come back for another tour as CEO,” adding that the transition would be seamless.

Fascitelli did not offer specifics on his reasons for the resignation only saying, “I am a firm believer in not being afraid to try something new.”

He added that he felt “now is the right time to take a break before trying something different.”

Although the resignation came one day after Vornado announced it has taken a $224.9 million loss on its 11 percent stake in J.C. Penney, David Harris, an analyst at Imperial Capital in New York City, said he didn’t believe Fascitelli’s departure was directly related to that. Vornado also reported that its fourth-quarter funds from operations was $55.9 million, down 80 percent from $280.4 million the year before and 30 cents a share compared to $1.46 the previous year. Its adjusted FFO for the fourth quarter was $228 million, an increase from $197 million in 2011. Its year-to-year FFO had dropped from $1.2 billion in 2011 to $818 million in 2012 although the adjusted FFO was better at $964 million for 2012 compared to $939 million for 2011.

“I don’t think it was tied to a specific event,” Harris told Commercial Property Executive. “Over the last two years, there has been increasing pressure on the company by the investment community to simplify the company.”

In fact, Fascitelli made reference to that during the earnings call saying that for the past year the company “had been in simplification mode.” The REIT has been disposing of numerous properties, including the Green Acres Mall in Valley Stream, N.Y., which it recently sold for $500 million. Earlier this month, it announced it was selling The Plant, a retail power strip in San Jose for $203 million that is expected to close in the second quarter of this year. The company lately has been focusing on street-level retail in New York City like the acquisition in December of 666 Fifth Ave., a 114,000-square-foot retail condo in Manhattan for $707 million.

But the Wall Street Journal reported today that Vornado continues to be criticized by both investors and analysts for having too many disparate pieces.  In addition to the J.C. Penney investment that has created losses for Vornado, its 32.5 percent share in Toys R Us continues to be a drag on the company.

“It’s a lot less fun selling toys than buying toys,” said Harris.

Harris added that he would like to see Vornado sell its stakes in both J.C. Penney and Toys R Us and continue to focus on its street-level retail in New York City.

Harris, who was listening to the earnings call this morning, said he was “genuinely surprised” about Fascitelli’s sudden resignation. But he added that there was “no hint of acrimony or back story in this.”

Harris described Roth as “very hands on in the chairman role” and expected that once he reassumed the CEO position on April 15, he would keep it “for the foreseeable future.”

Roth, 71, would only say on the conference call that they would be looking at succession planning but gave no timetable.