UPDATE 1-Vornado CEO Fascitelli to leave, chairman to be CEO

Wed Feb 27, 2013 3:40pm EST

By Ilaina Jonas

NEW YORK Feb 27 (Reuters) - Vornado Realty Trust, the second-largest U.S. real estate investment trust after Simon Property Group Inc, in an unexpected move said on Wednesday its chief executive officer will step down next month.

Michael Fascitelli, 56, who has been with Vornado for 16 years, serving as CEO for the past four years, said he would step down on April 15. Chairman Steven Roth, whom Fascitelli succeeded as CEO in 2009, will resume his dual role of chairman and CEO. Fascitelli will remain a director on the board.

"To me, it's kind of succession planning failure," said Green Street analyst Michael Knott, who said he was surprised by the resignation. "Mike's not leaving a clear-cut, next generation leader under him."

Vornado, chiefly owns retail and office buildings in New York City and Washington, also has interest in J C Penney Co Inc and Toys "R" US Inc. Over the past year, the company has been simplifying its strategy by selling off strip malls, shopping centers, non-core real estate holdings as well as its stake in mortgage special servicer LNR.

Those actions came after Roth said in a letter in April that the company would consider a range of options to boost its languishing stock price. Yet, Vornado share price is nearly the same as it was the day letter was released. It traded at $82.98 on Wednesday

"There's never a great time to do this, but we thought it was a good time," Fascitelli said of his pending departure during the company's earnings conference call on Wednesday. "We've really embarked on a very rigorous program, and it is not over yet."

Fascitelli also said he would step down as president of Alexander's Inc, a New York REIT that is one-third owned by Vornado, but will remain on its board.

Late Tuesday, the company said fourth-quarter funds from operations, a REIT performance measure, fell to $55.9 million, or 30 cents a share, down from $280.4 million, or $1.46 per share, in the year-earlier quarter. The results were hurt by the company's investment in J C Penney and Toys "R" US.

Fascitelli said his departure was not the result of a disagreement with the board or Roth.

"I want to explore doing something very different, and figure I'll take some time off, take a break," he said.

Fascitelli's contract prohibits him for a year from taking a job in which he would compete with Vornado.

During the call, Roth apologized for the abrupt announcement of Fascitelli's pending departure.

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