• Vornado Announces First Quarter 2019 Financial Results

    Source: Nasdaq GlobeNewswire / 29 Apr 2019 11:06:39   America/New_York

    NEW YORK, April 29, 2019 (GLOBE NEWSWIRE) -- VORNADO REALTY TRUST (NYSE: VNO) reported today:

    Quarter Ended March 31, 2019 Financial Results

    NET INCOME attributable to common shareholders for the quarter ended March 31, 2019 was $181.5 million, or $0.95 per diluted share, compared to net loss attributable to common shareholders of $17.8 million, or $0.09 per diluted share, for the prior year's quarter. Adjusting net income (loss) attributable to common shareholders for the items that impact the comparability of period-to-period net income (loss) listed in the table on the following page, net income attributable to common shareholders, as adjusted (non-GAAP) for the quarters ended March 31, 2019 and 2018 was $24.8 million and $55.3 million, or $0.13 and $0.29 per diluted share, respectively. The decrease in net income, as adjusted was partially due to $16.2 million, or $0.08 per share, of non-cash expense for the accelerated vesting of previously issued OP Units and Vornado restricted stock due to the removal of the time-based vesting requirement to participants who have reached 65 years of age. The right to sell such awards remains subject to original terms of grant. The increase in expense in the first quarter of 2019 will be completely offset by lower non-cash stock-based compensation expense of $2.6 million in each of the second, third and fourth quarters of 2019 and $8.4 million thereafter.

    FUNDS FROM OPERATIONS ("FFO") attributable to common shareholders plus assumed conversions (non-GAAP) for the quarter ended March 31, 2019 was $247.7 million, or $1.30 per diluted share, compared to $135.0 million, or $0.71 per diluted share, for the prior year's quarter.  Adjusting FFO attributable to common shareholders plus assumed conversions for the items that impact the comparability of period-to-period FFO listed in the table on page 3, FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the quarters ended March 31, 2019 and 2018 was $149.9 million and $172.9 million, or $0.79 and $0.91 per diluted share, respectively. The decrease in FFO, as adjusted was partially due to $16.2 million, or $0.08 per share, of non-cash expense for the accelerated vesting of previously issued OP Units and Vornado restricted stock, as described above.

    The following table reconciles our net income (loss) attributable to common shareholders to net income attributable to common shareholders, as adjusted (non-GAAP):

    (Amounts in thousands, except per share amounts)For the Three Months Ended
    March 31,
     2019 2018
    Net income (loss) attributable to common shareholders$181,488  $(17,841)
    Per diluted share$0.95  $(0.09)
        
    Certain (income) expense items that impact net income (loss) attributable to common shareholders:   
    After-tax net gain on sale of 220 Central Park South ("220 CPS") condominium units$(130,954) $ 
    Net gain from sale of Urban Edge Properties ("UE") common shares(62,395)  
    Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 202222,540   
    Mark-to-market (increase) decrease in Lexington Realty Trust ("Lexington") common shares (sold on March 1, 2019)(16,068) 32,875 
    Mark-to-market decrease in Pennsylvania Real Estate Investment Trust ("PREIT") common shares
    (accounted for as a marketable security from March 12, 2019)
    15,649   
    Our share of disputed additional New York City transfer taxes based on a Tax Tribunal interpretation  23,503 
    Preferred share issuance costs  14,486 
    Previously capitalized internal leasing costs(1)  (1,348)
    Other4,056  8,666 
     (167,172) 78,182 
    Noncontrolling interests' share of above adjustments10,498  (5,001)
    Total of certain (income) expense items that impact net income (loss) attributable to common shareholders$(156,674) $73,181 
        
    Net income attributable to common shareholders, as adjusted (non-GAAP)$24,814  $55,340 
    Per diluted share (non-GAAP)$0.13  $0.29 

    ____________________________________________________________
    (1) See note on the following page.


    The following table reconciles our FFO attributable to common shareholders plus assumed conversions (non-GAAP) to FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP):

    (Amounts in thousands, except per share amounts)For the Three Months Ended
    March 31,
     2019 2018
    FFO attributable to common shareholders plus assumed conversions (non-GAAP)(2)$247,684  $135,000 
    Per diluted share (non-GAAP)$1.30  $0.71 
        
    Certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions:   
    After-tax net gain on sale of 220 CPS condominium units$(130,954) $ 
    Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 202222,540   
    Our share of disputed additional New York City transfer taxes based on a Tax Tribunal interpretation  23,503 
    Preferred share issuance costs  14,486 
    Previously capitalized internal leasing costs(1)  (1,348)
    Other4,110  3,607 
     (104,304) 40,248 
    Noncontrolling interests' share of above adjustments6,559  (2,341)
    Total of certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions, net$(97,745) $37,907 
        
    FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)$149,939  $172,907 
    Per diluted share (non-GAAP)$0.79  $0.91 

    ____________________________________________________________
    (1) "Net income, as adjusted" and "FFO, as adjusted" for the three months ended March 31, 2018 have been reduced by $1,348, or $0.01 per diluted share, for previously capitalized internal leasing costs to present 2018 “as adjusted” financial results on a comparable basis with the current year as a result of the January 1, 2019 adoption of a new GAAP accounting standard under which internal leasing costs can no longer be capitalized.
    (2) See page 11 for a reconciliation of our net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the three months ended March 31, 2019 and 2018.

    First Quarter Activity:

    Dispositions:

    220 CPS

    During the first quarter of 2019, we closed on the sale of 12 condominium units at 220 CPS for net proceeds aggregating $425,484,000 and resulting in a financial statement net gain of $157,899,000 which is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income. In connection with these sales, $26,945,000 of income tax expense was recognized in our consolidated statements of income. From inception to March 31, 2019, we closed on the sale of 23 units for aggregate net proceeds of $640,260,000 which was used to pay $637,000,000 of the $950,000,000 220 CPS loan.

    Lexington

    On March 1, 2019, we sold all of our 18,468,969 common shares of Lexington realizing net proceeds of $167,698,000. For the three months ended March 31, 2019, we recorded a $16,068,000 mark-to-market increase in the fair value of our common shares for the period from January 1, 2019 through the date of sale, which is included in "interest and other investment income (loss), net" on our consolidated statements of income.

    UE

    On March 4, 2019, we converted to common shares and sold all of our 5,717,184 partnership units of UE, realizing net proceeds of $108,512,000. The sale resulted in a net gain of $62,395,000 which is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income for the three months ended March 31, 2019.

    Fifth Avenue and Times Square JV

    On April 18, 2019 ("Closing Date"), we entered into a transaction agreement (the "Transaction Agreement") with a group of institutional investors (the "Investors"). The Transaction Agreement provides for a series of transactions (collectively, the "Transaction") pursuant to which (i) prior to the Closing Date, the Operating Partnership contributed its interests in properties located at 640 Fifth Avenue, 655 Fifth Avenue, 666 Fifth Avenue, 689 Fifth Avenue, 697-703 Fifth Avenue, 1535 Broadway and 1540 Broadway (collectively, the “Properties”) to subsidiaries of a newly formed joint venture ("Fifth Avenue and Times Square JV") and (ii) on the Closing Date, transferred a 48.5% common interest in Fifth Avenue and Times Square JV to the Investors. The 48.5% common interest in the joint venture represents an effective 47.2% interest in the Properties. The Properties include approximately 489,000 square feet of retail space, 327,000 square feet of office space, signage associated with 1535 and 1540 Broadway, the parking garage at 1540 Broadway and the theatre at 1535 Broadway.

    We retained the remaining 51.5% common interest in Fifth Avenue and Times Square JV which represents an effective 51.0% interest in the Properties and an aggregate $1.828 billion of preferred equity interests in certain of the properties. The preferred equity has an annual coupon of 4.25% for the first five years, increasing to 4.75% for the next five years and thereafter at a formulaic rate. It can be redeemed under certain conditions on a tax deferred basis.

    Net cash proceeds to us from the Transaction are approximately $1.198 billion, after (i) deductions for the repayment of a $390,000,000 mortgage loan on 666 Fifth Avenue and a $140,000,000 mortgage loan on 655 Fifth Avenue, (ii) anticipated proceeds from a new $500,000,000 mortgage loan on 640 Fifth Avenue, (iii) approximately $26,000,000 used to purchase noncontrolling investors' interests and (iv) approximately $56,000,000 of estimated transaction costs. Until the new mortgage closes, Vornado will retain $500 million of preferred equity interests in addition to the $1.828 billion referenced above.

    The Transaction values the Properties at $5.556 billion resulting in a financial statement net gain of approximately $2.6 billion from the Transaction and the related step-up in our basis of the assets to fair value. The net gain will be recognized in our consolidated statements of income for the three months ended June 30, 2019. Our tax gain is approximately $735,000,000. We continue to manage the Properties and share control over major decisions of the joint venture. Accordingly, the Properties will be deconsolidated and the joint venture will be accounted for under the equity method from the date of transfer. As of March 31, 2019, the assets and liabilities associated with the Properties were classified as “assets held for sale” and “liabilities related to assets held for sale”, respectively, on our consolidated balance sheets. 

    First Quarter Activity - continued:

    Financings:

    On January 28, 2019, the joint venture, in which we have a 45.1% interest, completed a $167,500,000 refinancing of 61 Ninth Avenue, a 166,000 square foot newly constructed office and retail property in the Meatpacking district of Manhattan which is fully leased to Aetna and Starbucks. The seven-year interest only loan carries a rate of LIBOR plus 1.35% (3.85% as of March 31, 2019) and matures in January 2026. We realized net proceeds of approximately $31,000,000. The loan replaces the previous $90,000,000 construction loan that bore interest at LIBOR plus 3.05% and was scheduled to mature in 2021.

    On February 4, 2019, we completed a $95,700,000 refinancing of 435 Seventh Avenue, a 43,000 square foot Manhattan retail property. The interest-only loan carries a rate of LIBOR plus 1.30% (3.78% as of March 31, 2019) and matures in 2024. The recourse loan replaces the previous $95,700,000 loan that bore interest at LIBOR plus 2.25% and was scheduled to mature in August 2019.

    On February 12, 2019, we completed a $580,000,000 refinancing of 100 West 33rd Street, a 1.1 million square foot Manhattan property comprised of 859,000 square feet of office space and the 256,000 square foot Manhattan Mall. The interest-only loan carries a rate of LIBOR plus 1.55% (4.03% as of March 31, 2019) and matures in April 2024, with two one-year extension options. The loan replaces the previous $580,000,000 loan that bore interest at LIBOR plus 1.65% and was scheduled to mature in July 2020.

    On March 1, 2019, we called for redemption all of our $400,000,000 5.00% senior unsecured notes. The notes, which were scheduled to mature in January 2022, were redeemed on April 1, 2019 at a redemption price of 105.51% of the principal amount plus accrued interest. In connection therewith, we expensed $22,540,000 relating to debt prepayment costs which is included in "interest and debt expense" on our consolidated statements of income for the three months ended March 31, 2019.

    On March 26, 2019, we increased to $1.5 billion (from $1.25 billion) and extended to March 2024 (as fully extended) from February 2022 one of our two unsecured revolving credit facilities. The interest rate on the extended facility was lowered from LIBOR plus 1.00% to LIBOR plus 0.90%. The facility fee remains unchanged at 20 basis points.

    First Quarter Activity - continued:

    Leasing:

    • 396,000 square feet of New York Office space (350,000 square feet at share) at an initial rent of $75.91 per square foot and a weighted average term of 9 years. The GAAP and cash mark-to-market rent on the 312,000 square feet of second generation space were positive 0.9% and 1.8%, respectively. Tenant improvements and leasing commissions were $9.67 per square foot per annum, or 12.7% of initial rent. 
    • 49,000 square feet of New York Retail space (43,000 square feet at share) at an initial rent of $113.37 per square foot and a weighted average term of 3.4 years. The GAAP and cash mark-to-market rent on the 38,000 square feet of second generation space were positive 2.2% and negative 8.5%, respectively. Tenant improvements and leasing commissions were $5.93 per square foot per annum, or 5.2% of initial rent.
    • 159,000 square feet at theMART at an initial rent of $46.67 per square foot and a weighted average term of 7.0 years. The GAAP and cash mark-to-market rent on the 157,000 square feet of second generation space were positive 11.3% and 6.2%, respectively. Tenant improvements and leasing commissions were $5.03 per square foot per annum, or 10.8% of initial rent.
    • 61,000 square feet at 555 California Street (43,000 square feet at share) at an initial rent of $81.05 per square foot and a weighted average term of 5.1 years. The GAAP and cash mark-to-market rent on the 43,000 square feet of second generation space were positive 68.9% and 37.6%, respectively. Tenant improvements and leasing commissions were $9.64 per square foot per annum, or 11.9% of initial rent.

    Same Store Net Operating Income ("NOI") At Share:

    The percentage (decrease) increase in same store NOI at share and same store NOI at share - cash basis of our New York segment, theMART and 555 California Street are summarized below.

      Total New York(2) theMART 555
    California
    Street
    Same store NOI at share % (decrease) increase(1):       
     Three months ended March 31, 2019 compared to March 31, 2018(0.1)% (0.1)% (4.3)% 7.3%
     Three months ended March 31, 2019 compared to December 31, 20181.0% (3.0)% 106.2%(3)3.4%
             
    Same store NOI at share - cash basis % increase (decrease)(1):       
     Three months ended March 31, 2019 compared to March 31, 20183.0% 2.6% 0.9% 15.0%
     Three months ended March 31, 2019 compared to December 31, 20180.2% (4.2)% 88.6%(3)6.9%

    ____________________

    (1)See pages 13 through 16 for same store NOI at share and same store NOI at share - cash basis reconciliations. 
      Increase 
    (2)Excluding Hotel Pennsylvania, same store NOI at share % increase:  
     Three months ended March 31, 2019 compared to March 31, 20180.5% 
     Three months ended March 31, 2019 compared to December 31, 20181.2% 
        
     Excluding Hotel Pennsylvania, same store NOI at share - cash basis % increase:  
     Three months ended March 31, 2019 compared to March 31, 20183.3% 
     Three months ended March 31, 2019 compared to December 31, 20180.2% 
        
    (3)The three months ended December 31, 2018 includes an additional $12,124,000 real estate tax expense accrual due to an increase in the tax-assessed value of theMART.

    NOI At Share:

    The elements of our New York and Other NOI at share for the three months ended March 31, 2019 and 2018 and December 31, 2018 are summarized below.

    (Amounts in thousands)For the Three Months Ended 
     March 31, December 31, 2018 
     2019 2018  
    New York:      
    Office$183,540  $187,156  $186,832  
    Retail88,267  87,909  85,549  
    Residential6,045  6,141  5,834  
    Alexander's Inc. ("Alexander's")11,322  11,575  11,023  
    Hotel Pennsylvania(5,816) (4,185) 5,961  
    Total New York283,358  288,596  295,199  
           
    Other:      
    theMART23,523  26,875  10,981 (1)
    555 California Street14,501  13,511  14,005  
    Other investments16,390  20,054  9,346  
    Total Other54,414  60,440  34,332  
           
    NOI at share$337,772  $349,036  $329,531  

    ____________________
    (1) Includes additional real estate tax expense accruals of $12,124 for the three months ended December 31, 2018 due to an increase in the tax-assessed value of theMART.

    NOI At Share - Cash Basis:

    The elements of our New York and Other NOI at share - cash basis for the three months ended March 31, 2019 and 2018 and December 31, 2018 are summarized below.

    (Amounts in thousands)For the Three Months Ended 
     March 31, December 31, 2018 
     2019 2018  
    New York:      
    Office$184,370  $178,199  $185,624  
    Retail80,936  79,589  80,515  
    Residential5,771  5,599  5,656  
    Alexander's11,527  12,039  11,129  
    Hotel Pennsylvania(5,864) (4,153) 6,009  
    Total New York276,740  271,273  288,933  
           
    Other:      
    theMART24,912  27,079  12,758 (1)
    555 California Street14,745  12,826  13,784  
    Other investments16,194  19,910  8,524  
    Total Other55,851  59,815  35,066  
           
    NOI at share - cash basis$332,591  $331,088  $323,999  

    ____________________
    (1) Includes additional real estate tax expense accruals of $12,124 for the three months ended December 31, 2018 due to an increase in the tax-assessed value of theMART.


    Development/Redevelopment as of March 31, 2019

    (Amounts in thousands, except square feet)     (At Share)        Full
    Quarter
    Stabilized
    Operations
        Property
    Rentable
    Sq. Ft.
     Excluding Land Costs      Available
    for
    Occupancy
     
    Current Projects Segment  Incremental
    Budget
     Amount
    Expended
      %
    Complete
     Start  
    220 CPS - residential condominiums Other 397,000  $1,400,000  $1,251,815 (1) 89.4% Q3 2012 N/A N/A
    Farley Office and Retail Building - (95.0% interest) New York 850,000  760,000  196,759 (2) 25.9% Q2 2017 Q3 2020 Q2 2022
    PENN1(3) New York 2,543,000  200,000 (4)41,872   20.9% Q4 2018 N/A N/A
    512 West 22nd Street - office (55.0% interest) New York 173,000  72,000  54,288 (5) 75.4% Q4 2015 Q1 2019 Q3 2020
    345 Montgomery Street (555 California Street) (70.0% interest) Other 78,000  32,000  16,442 (6) 51.4% Q1 2018 Q3 2019 Q3 2020
    606 Broadway - office/retail (50.0% interest) New York 35,000  30,000  26,920 (7) 89.7% Q2 2016 Q4 2018 Q2 2020
    825 Seventh Avenue - office (50.0% interest) New York 165,000  15,000  7,133   47.6% Q2 2018 Q1 2020 Q1 2021
    Total current projects     $2,509,000  $1,595,229          
                      
    Future Opportunities Segment Property
    Zoning
    Sq. Ft.
                 
    Penn District - multiple opportunities - office/residential/retail New York TBD             
    PENN2 - office/retail New York TBD             
    Hotel Pennsylvania New York 2,052,000              
    260 Eleventh Avenue - office(8) New York 280,000              
                      
    Undeveloped Land                 
    29, 31, 33 West 57th Street (50.0% interest) New York 150,000              
    484, 486 Eighth Avenue and 265, 267 West 34th Street New York 125,000              
    527 West Kinzie, Chicago Other 330,000              
    Rego Park III (32.4% interest) New York TBD             
    Total undeveloped land   605,000              

    _______________________
    (1) Excludes land and acquisition costs of $515,426.
    (2) Excludes our share of the upfront contribution of $230,000 and net of anticipated historic tax credits. The building and land are subject to a lease which expires in 2116.
    (3) The building is subject to a ground lease which expires in 2098 assuming all renewal options are exercised.
    (4) We expect the final budget will exceed $200,000 after anticipated scope changes.
    (5) Excludes land and acquisition costs of $57,000.
    (6) Excludes land and building costs of $31,000.
    (7) Excludes land and acquisition costs of $22,703.
    (8) The building is subject to a ground lease which expires in 2114.

    Conference Call and Audio Webcast

    As previously announced, the Company will host a quarterly earnings conference call and an audio webcast on Tuesday, April 30, 2019 at 10:00 a.m. Eastern Time (ET). The conference call can be accessed by dialing 888-771-4371 (domestic) or 847-585-4405 (international) and indicating to the operator the passcode 48545290. A telephonic replay of the conference call will be available from 1:30 p.m. ET on April 30, 2019 through May 30, 2019. To access the replay, please dial 888-843-7419 and enter the passcode 48545290#.  A live webcast of the conference call will be available on the Company’s website at www.vno.com and an online playback of the webcast will be available on the website following the conference call.

    Supplemental Financial Information

    Further details regarding results of operations, properties and tenants can be accessed at the Company’s website www.vno.com. Vornado Realty Trust is a fully - integrated equity real estate investment trust.

    Certain statements contained herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. For a discussion of factors that could materially affect the outcome of our forward-looking statements and our future results and financial condition, see “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2018. Such factors include, among others, risks associated with the timing of and costs associated with property improvements, financing commitments and general competitive factors.

    VORNADO REALTY TRUST
    CONSOLIDATED BALANCE SHEET

    (Amounts in thousands, except unit, share, and per share amounts)As of
     March 31, 2019 December 31, 2018
    ASSETS   
    Real estate, at cost:   
    Land$2,608,770  $3,306,280 
    Buildings and improvements7,821,301  10,110,992 
    Development costs and construction in progress1,961,512  2,266,491 
    Moynihan Train Hall development expenditures550,996  445,693 
    Leasehold improvements and equipment115,756  108,427 
         Total13,058,335  16,237,883 
    Less accumulated depreciation and amortization(2,845,120) (3,180,175)
    Real estate, net10,213,215  13,057,708 
    Assets held for sale3,027,058   
    Right-of-use assets457,662   
    Cash and cash equivalents307,047  570,916 
    Restricted cash593,759  145,989 
    Marketable securities39,866  152,198 
    Tenant and other receivables, net of allowance for doubtful accounts of $4,154 as of December 31, 201873,404  73,322 
    Investments in partially owned entities730,264  858,113 
    Real estate fund investments322,858  318,758 
    220 Central Park South condominium units ready for sale229,567  99,627 
    Receivable arising from the straight-lining of rents, net of allowance of $1,644 as of December 31, 2018766,634  935,131 
    Deferred leasing costs, net of accumulated amortization of $180,953 and $207,529345,241  400,313 
    Identified intangible assets, net of accumulated amortization of $97,749 and $172,11434,161  136,781 
    Other assets497,219  431,938 
     $17,637,955  $17,180,794 
    LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY   
    Mortgages payable, net$6,519,189  $8,167,798 
    Senior unsecured notes, net845,261  844,002 
    Unsecured term loan, net745,076  744,821 
    Unsecured revolving credit facilities530,000  80,000 
    Liabilities related to assets held for sale1,097,350   
    Lease liabilities484,173   
    Moynihan Train Hall obligation550,996  445,693 
    Accounts payable and accrued expenses442,496  430,976 
    Deferred revenue71,328  167,730 
    Deferred compensation plan101,922  96,523 
    Other liabilities292,187  311,806 
    Total liabilities11,679,978  11,289,349 
    Commitments and contingencies   
    Redeemable noncontrolling interests:   
    Class A units - 12,789,891 and 12,544,477 units outstanding862,550  778,134 
    Series D cumulative redeemable preferred units - 141,401 and 177,101 units outstanding4,535  5,428 
         Total redeemable noncontrolling interests867,085  783,562 
    Shareholders' equity:   
    Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares;
    issued and outstanding 36,797,580 and 36,798,580 shares
    891,263  891,294 
    Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares;
    issued and outstanding 190,761,498 and 190,535,499 shares
    7,609  7,600 
    Additional capital7,676,770  7,725,857 
    Earnings less than distributions(4,120,265) (4,167,184)
    Accumulated other comprehensive (loss) income(11,385) 7,664 
         Total shareholders' equity4,443,992  4,465,231 
    Noncontrolling interests in consolidated subsidiaries646,900  642,652 
    Total equity5,090,892  5,107,883 
     $17,637,955  $17,180,794 


    VORNADO REALTY TRUST
    OPERATING RESULTS

    (Amounts in thousands, except per share amounts)For the Three Months Ended
    March 31,
     2019 2018
    Revenues$534,668  $536,437 
        
    Income from continuing operations$213,181  $645 
    Loss from discontinued operations(137) (363)
    Net income213,044  282 
    Less net (income) loss attributable to noncontrolling interests in:   
    Consolidated subsidiaries(6,820) 8,274 
    Operating Partnership(12,202) 1,124 
    Net income attributable to Vornado194,022  9,680 
    Preferred share dividends(12,534) (13,035)
    Preferred share issuance costs  (14,486)
    NET INCOME (LOSS) attributable to common shareholders$181,488  $(17,841)
        
    INCOME (LOSS) PER COMMON SHARE – BASIC:   
    Net income (loss) per common share$0.95  $(0.09)
    Weighted average shares outstanding190,689  190,081 
        
    INCOME (LOSS) PER COMMON SHARE – DILUTED:   
    Net income (loss) per common share$0.95  $(0.09)
    Weighted average shares outstanding190,996  190,081 
        
    FFO attributable to common shareholders plus assumed conversions (non-GAAP)$247,684  $135,000 
    Per diluted share (non-GAAP)$1.30  $0.71 
        
    FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)$149,939  $172,907 
    Per diluted share (non-GAAP)$0.79  $0.91 
        
    Weighted average shares used in determining FFO per diluted share190,996  191,057 


    VORNADO REALTY TRUST
    NON-GAAP RECONCILIATIONS

    The following table reconciles net income (loss) attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions:

    (Amounts in thousands, except per share amounts)For the Three Months Ended
    March 31,
     2019 2018
    Net income (loss) attributable to common shareholders$181,488  $(17,841)
    Per diluted share$0.95  $(0.09)
        
    FFO adjustments:   
    Depreciation and amortization of real property$108,483  $100,410 
    Net gain from sale of UE common shares(62,395)  
    (Increase) decrease in fair value of marketable securities:   
    Lexington(16,068) 32,875 
    PREIT15,649   
    Other(42) 111 
    Proportionate share of adjustments to equity in net income (loss) of partially owned entities to arrive at FFO:   
    Depreciation and amortization of real property24,990  28,106 
    Net gains on sale of real estate  (305)
    (Increase) decrease in fair value of marketable securities(12) 1,674 
     70,605  162,871 
    Noncontrolling interests' share of above adjustments(4,424) (10,046)
    FFO adjustments, net$66,181  $152,825 
        
    FFO attributable to common shareholders (non-GAAP)$247,669  $134,984 
    Convertible preferred share dividends15  16 
    FFO attributable to common shareholders plus assumed conversions (non-GAAP)$247,684  $135,000 
    Per diluted share (non-GAAP)$1.30  $0.71 

    FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gains from sales of depreciated real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specified non-cash items, including the pro rata share of such adjustments of unconsolidated subsidiaries.  FFO and FFO per diluted share are non-GAAP financial measures used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions.  FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flow as a liquidity measure.  FFO may not be comparable to similarly titled measures employed by other companies.  A reconciliation of our net income (loss) attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions is provided above.  In addition to FFO attributable to common shareholders plus assumed conversions, we also disclose FFO attributable to common shareholders plus assumed conversions, as adjusted.  Although this non-GAAP measure clearly differs from NAREIT’s definition of FFO, we believe it provides a meaningful presentation of operating performance.  Reconciliations of FFO attributable to common shareholders plus assumed conversions to FFO attributable to common shareholders plus assumed conversions, as adjusted are provided on page 3 of this press release.

    In accordance with the NAREIT December 2018 restated definition of FFO, we have elected to exclude the mark-to-market adjustments of marketable equity securities from the calculation of FFO. Our FFO for the three months ended March 31, 2018 has been adjusted to exclude the $34,660,000, or $0.17 per share, decrease in fair value of marketable equity securities previously reported.


    VORNADO REALTY TRUST
    NON-GAAP RECONCILIATIONS - CONTINUED

    Below is a reconciliation of net income to NOI at share and NOI at share - cash basis for the three months ended March 31, 2019 and 2018 and December 31, 2018.

     For the Three Months Ended
    (Amounts in thousands)March 31, December 31, 2018
     2019 2018 
    Net income$213,044  $282  $97,821 
          
    Deduct:     
    (Income) loss from partially owned entities(7,320) 9,904  (3,090)
    Interest and other investment (income) loss, net(5,045) 24,384  (7,656)
    Net gains on disposition of wholly owned and partially owned assets(220,294)   (81,203)
    Purchase price fair value adjustment    (44,060)
    NOI attributable to noncontrolling interests in consolidated subsidiaries(17,403) (17,312) (19,771)
          
    Add:     
    Loss from real estate fund investments167  8,807  51,258 
    Depreciation and amortization expense116,709  108,686  112,869 
    General and administrative expense58,020  42,533  32,934 
    Transaction related costs, impairment loss and other149  13,156  14,637 
    NOI from partially owned entities67,402  67,513  60,205 
    Interest and debt expense102,463  88,166  83,175 
    Loss (income) from discontinued operations137  363  (257)
    Income tax expense29,743  2,554  32,669 
    NOI at share337,772  349,036  329,531 
    Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other(5,181) (17,948) (5,532)
    NOI at share - cash basis$332,591  $331,088  $323,999 

    NOI represents total revenues less operating expenses.  We consider NOI to be the primary non-GAAP financial measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. As properties are bought and sold based on NOI, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI should not be considered a substitute for net income. NOI may not be comparable to similarly titled measures employed by other companies.

    VORNADO REALTY TRUST
    NON-GAAP RECONCILIATIONS - CONTINUED

    Below are reconciliations of NOI at share to same store NOI at share for our New York segment, theMART, 555 California Street and other investments for the three months ended March 31, 2019 compared to March 31, 2018.

    (Amounts in thousands)Total New York theMART 555 California Street Other
    NOI at share for the three months ended March 31, 2019$337,772  $283,358  $23,523  $14,501  $16,390 
    Less NOI at share from:          
    Acquisitions (227) (227)      
    Dispositions 2  2       
    Development properties (11,710) (11,710)      
    Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net 1,902  1,902       
    Other non-same store income, net (18,779) (558) (1,831)   (16,390)
    Same store NOI at share for the three months ended March 31, 2019$308,960  $272,767  $21,692  $14,501  $ 
              
    NOI at share for the three months ended March 31, 2018$349,036  $288,596  $26,875  $13,511  $20,054 
    Less NOI at share from:          
    Acquisitions (121) (121)      
    Dispositions (62) (62)      
    Development properties (13,686) (13,686)      
    Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net (1,127) (1,127)      
    Other non-same store income, net (24,805) (551) (4,200)   (20,054)
    Same store NOI at share for the three months ended March 31, 2018$309,235  $273,049  $22,675  $13,511  $ 
              
    (Decrease) increase in same store NOI at share for the three months ended March 31, 2019 compared to March 31, 2018$(275) $(282) $(983) $990  $ 
               
    % (decrease) increase in same store NOI at share(0.1)% (0.1)%(1)(4.3)% 7.3% %

    ____________________
    (1) Excluding Hotel Pennsylvania, same store NOI at share increased by 0.5%.

    Same store NOI at share represents NOI at share from property operations which are owned by us and in service in both the current and prior year reporting periods. Same store NOI at share - cash basis is NOI at share from operations before straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments which are owned by us and in service in both the current and prior year reporting periods. We present these non-GAAP measures to (i) facilitate meaningful comparisons of the operational performance of our properties and segments, (ii) make decisions on whether to buy, sell or refinance properties, and (iii) compare the performance of our properties and segments to those of our peers. Same store NOI at share and same store NOI at share - cash basis should not be considered as an alternative to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.

    VORNADO REALTY TRUST
    NON-GAAP RECONCILIATIONS - CONTINUED

    Below are reconciliations of NOI at share - cash basis to same store NOI at share - cash basis for our New York segment, theMART, 555 California Street and other investments for the three months ended March 31, 2019 compared to March 31, 2018.

    (Amounts in thousands)Total New York theMART 555
    California
    Street
     Other
    NOI at share - cash basis for the three months ended March 31, 2019$332,591  $276,740  $24,912  $14,745  $16,194 
     Less NOI at share - cash basis from:         
     Acquisitions(228) (228)      
     Dispositions2  2       
     Development properties(14,286) (14,286)      
     Lease termination income(429) (429)      
     Other non-same store income, net(18,585) (560) (1,831)   (16,194)
    Same store NOI at share - cash basis for the three months ended March 31, 2019$299,065  $261,239  $23,081  $14,745  $ 
               
    NOI at share - cash basis for the three months ended March 31, 2018$331,088  $271,273  $27,079  $12,826  $19,910 
     Less NOI at share - cash basis from:         
     Acquisitions(121) (121)      
     Dispositions(65) (65)      
     Development properties(14,945) (14,945)      
     Lease termination income(1,061) (1,061)      
     Other non-same store income, net(24,661) (551) (4,200)   (19,910)
    Same store NOI at share - cash basis for the three months ended March 31, 2018$290,235  $254,530  $22,879  $12,826  $ 
              
    Increase (decrease) in same store NOI at share - cash basis for the three months
    ended March 31, 2019 compared to March 31, 2018
    $8,830  $6,709  $202  $1,919  $ 
              
    % increase (decrease) in same store NOI at share - cash basis3.0% 2.6%(1)0.9% 15.0% %

    ____________________
    (1) Excluding Hotel Pennsylvania, same store NOI at share - cash basis increased by 3.3%.

    VORNADO REALTY TRUST
    NON-GAAP RECONCILIATIONS - CONTINUED

    Below are reconciliations of NOI at share to same store NOI at share for our New York segment, theMART, 555 California Street and other investments for the three months ended March 31, 2019 compared to December 31, 2018.

    (Amounts in thousands)Total New York theMART 555
    California
    Street
     Other
    NOI at share for the three months ended March 31, 2019$337,772  $283,358  $23,523  $14,501  $16,390 
     Less NOI at share from:         
     Dispositions2  2       
     Development properties(11,710) (11,710)      
     Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net1,902  1,902       
     Other non-same store income, net(18,780) (559) (1,831)   (16,390)
    Same store NOI at share for the three months ended March 31, 2019$309,186  $272,993  $21,692  $14,501  $ 
              
    NOI at share for the three months ended December 31, 2018$329,531  $295,199  $10,981  $14,005  $9,346 
     Less NOI at share from:         
     Dispositions19  19       
     Development properties(12,986) (13,000)   14   
     Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net(95) 368  (463)    
     Other non-same store income, net(10,414) (1,068)     (9,346)
    Same store NOI at share for the three months ended December 31, 2018$306,055  $281,518  $10,518  $14,019  $ 
              
    Increase (decrease) in same store NOI at share for the three months ended March 31, 2019 compared to December 31, 2018$3,131  $(8,525) $11,174  $482  $ 
               
    % increase (decrease) in same store NOI at share1.0% (3.0)%(1)106.2%(2)3.4% %

    ____________________
    (1) Excluding Hotel Pennsylvania, same store NOI at share increased by 1.2%.
    (2) The three months ended December 31, 2018 includes an additional $12,124 real estate tax expense accrual due to an increase in the tax-assessed value of theMART.

    VORNADO REALTY TRUST
    NON-GAAP RECONCILIATIONS - CONTINUED

    Below are reconciliations of NOI at share - cash basis to same store NOI at share - cash basis for our New York segment, theMART, 555 California Street and other investments for the three months ended March 31, 2019 compared to December 31, 2018.

    (Amounts in thousands)Total New York theMART 555
    California
    Street
     Other
    NOI at share - cash basis for the three months ended March 31, 2019$332,591  $276,740  $24,912  $14,745  $16,194 
     Less NOI at share - cash basis from:         
     Dispositions2  2       
     Development properties(14,286) (14,286)      
     Lease termination income(429) (429)      
     Other non-same store income, net(18,585) (560) (1,831)   (16,194)
    Same store NOI at share - cash basis for the three months ended March 31, 2019$299,293  $261,467  $23,081  $14,745  $ 
               
    NOI at share - cash basis for the three months ended December 31, 2018$323,999  $288,933  $12,758  $13,784  $8,524 
     Less NOI at share - cash basis from:         
     Dispositions19  19       
     Development properties(15,041) (15,055)   14   
     Lease termination income(563) (43) (520)    
     Other non-same store income, net(9,590) (1,066)     (8,524)
    Same store NOI at share - cash basis for the three months ended December 31, 2018$298,824  $272,788  $12,238  $13,798  $ 
              
    Increase (decrease) in same store NOI at share - cash basis for the three months ended
    March 31, 2019 compared to December 31, 2018
    $469  $(11,321) $10,843  $947  $ 
              
    % increase (decrease) in same store NOI at share - cash basis0.2% (4.2)%(1)88.6%(2)6.9% %

    ____________________
    (1) Excluding Hotel Pennsylvania, same store NOI at share - cash basis increased by 0.2%.
    (2) The three months ended December 31, 2018 includes an additional $12,124 real estate tax expense accrual due to an increase in the tax-assessed value of theMART.

    CONTACT:
    JOSEPH MACNOW
    (212) 894-7000

    Primary Logo

Share on,