Project Description

Vector Group Spin-off Notes

November 12, 2021 Update

Vector Group (VGR) announced on Monday its plans to Spin-off its real estate business through the Douglas Elliman real estate brokerage group.Douglas Elliman, one of the nation’s largest residential real estate firms and a major player in the Long Island market, but has expanded much further such as Florida and California. The new public company, will trade under the ticker (NYSE:DOUG), will focus solely on real estate. In its recent third quarter earnings release, Vector Group reported revenue of $1.93 billion in the first three quarters of the year. That included $1.3 billion in revenue from real estate operations and $1.2 billion in revenue from tobacco sales. Douglas Elliman accounted for nearly all of the $1.3 billion in real estate revenue as it closed $47.7 billion in deals. Douglas Elliman posted an adjusted EBITDA of $106.2M and a net income of $82.2 million. If numbers like that hold up, the spinoff will be among the largest real estate companies in South Florida. Vector Group holders will get one share of the spinoff for every two VGR shares held. The company also expects that the new company will pay $0.05 per share quarterly dividend to Douglas Elliman common stockholders. Vector (VGR) will continue to pay $0.20 per share quarterly dividend. The transaction is expected to be take place near the end of 2021. The transaction looks interesting given that tobacco and real estate have nothing to do with one another (and thus should re-rate).