UPDATE 2-Vornado begins 12.5 million common share offering
(Adds comparable first quarter FFO and first quarter revenue)
* Offering 12.5 mln common shares
* Sees first-quarter FFO of $1.60 per share
* Shares fall 6.4 percent after hours
NEW YORK, April 21 (Reuters) - Vornado Realty Trust (VNO.N), owner of office and retail properties, on Tuesday said it began a public offering of 12.5 million common shares.
Vornado also expects to grant the underwriters a 30-day option to buy an additional 1.875 million shares to cover overallotments.
Although the debt markets often have turned a cold shoulder to large loans to commercial real estate companies, equity investors have been willing to buy newly issued shares of real estate investment trusts (REITs).
Companies such as Simon Property Group Inc (SPG.N), AMB Property Corp (AMB.N), Kimco Realty Corp (KIM.N) and ProLogis (PLD.N) all have raised money through follow-on offerings.
Vornado said it plans to use the net proceeds from the offering for general corporate purposes, which may include repayment of debt and acquisitions.
Vornado, along with Simon and Australia's Westfield Group (WDC.AX), have been mentioned as potential buyers of malls that General Growth Properties Inc (GGWPQ.PK) may sell as a result of its Chapter 11 bankruptcy.
Vornado also said it expected to report first-quarter funds from operations (FFO) of $1.60 per share compared with $3.17 per share for the first quarter of 2008.
Excluding certain items that affect comparability, such as the company's reversal of deferred income taxes, its gain on the sale of cold storage company Americold and other items, the company said it sees first-quarter FFO of $1.70 per share, compared with $1.61 a year earlier.
It also sees first-quarter revenue of $682 million compared with $649.3 million in the first quarter 2008.
Shares of Vornado fell 6.4 percent to $44 in after hours trading from their close of $47 on the New York Stock Exchange. (Reporting by Ilaina Jonas; editing by Carol Bishopric and Steve Orlofsky)
