Vornado Real Estate Trust (NYSE: VNO) lost roughly $93 million last quarter fueled in part by loses in the D.C. market—a majority of which is supplemented by properties that call Crystal City home. Last week, in an investor's call, CEO Steven Roth explained that he is considering spinning off the business into a separate entity that could be sold as a total package to the right buyer. Ultimately, if Roth follows through, it would likely make investors happy while casting a shadow of uncertainty over the town.
For those unfamiliar with the name, Vornado is the majority real estate owner in Crystal City.
A decision to effectively sell their local assets would greatly impact the city, though it's obviously unclear at the moment if such a move would be beneficial to the local tech scene. Among other tech companies, Vornado acts as a landlord for 1776 Crystal City and WeWork's newly launched residential real estate business, WeLive.
In total, the New York real estate firm owns 12 offices buildings and a cohort of other properties currently filled by restaurants, shops and a hotel.
"If we do separate Washington, it will be to have a focused management team on a -- with a very specific mission in Washington, which may or may not involve capital partners, et cetera. And will have its own report card, namely its own stock price, and basically be able -- have its own board and be able to make its own decisions. So we are capitalists. We believe in incentive. We believe in report cards, et cetera. So we think that the Washington business, not that much unlike the Urban Edge business, will benefit enormously from being its own man and woman, so to speak," Roth said, according to a transcript.
Crystal City is a Northern Virginia town that was originally developed and occupied by a bevy of military contractors in a pre-sequestration era; a time when the defense budget had yet to tighten its belt. But with a decrease in federal funding, so too was there a decrease in tenants for Crystal City. The result looks like a mostly empty town with a shifting identity, which in recent years yearns for being known as a hub for startups, well-educated millennials, tech and everything that goes with it.
