Another sure sign of spring: the boring Chairman’s letter…

April 9, 2009

Along with the daffodils and the start of baseball (and one of these days, warmer weather) comes another rite of spring: the Chairman’s letter. While Warren Buffett’s annual letter is always held up as an example, most of them — as we footnoted last week — are either full of happy-talk or a long boring recitation of facts.

But then we came across this letter from Vornado Realty Trust (VNO) which caught our attention. Like Buffett’s letters, Chairman and CEO Steven Roth, actually has a sense of humor, and, perhaps even more surprising, a personality. And the lack of sugar-coating is downright refreshing. Here’s a snippet:

Our share price declined 28.4% in 2008 and a further 40.0% in 2009 to date. Mike and I consider our share price over time to be an important report card on our performance and, this year, if we were still school age, we—d be off to detention (along with every other REIT manager).

A bit later on, the letter also officially declares 2009 the “Great Recession” and notes that one of Vornado’s properties, the Hotel Pennsylvania across from New York’s Penn Station, “will struggle to do half as well as last year”. Roth also jokes — or at least we think it’s a joke — about starting a new bank which won’t have “legacy problems or bad loans”. There’s also a very interesting observation about retailers — a key constituency for Vornado: “Most retailers themselves are on shaky financial footing and even worse they suffer from a sameness of product offering, a boredom, if you will…Really scary is the consolidation of mall anchors. In many malls, in many markets, the loss of an anchor now spells a very long-term empty and a dead mall wing. Who will replace Mervyn—s, etc.?”

The letter also has an interesting political endorsement of the Obama Administration, calling the city “Washington, the beneficiary of an ambitious, new administration” and noting that it is “perhaps the strongest real estate market in the country.”

If only more Chairman’s letters were this entertaining, we might actually read them.

We’ll be off tomorrow for the holiday, but back on Monday with a new crop of filings!

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