• Vornado Announces Fourth Quarter 2018 Financial Results

    Source: Nasdaq GlobeNewswire / 11 Feb 2019 16:32:59   America/New_York

    NEW YORK, Feb. 11, 2019 (GLOBE NEWSWIRE) -- VORNADO REALTY TRUST (NYSE: VNO) reported today:

    Quarter Ended December 31, 2018 Financial Results

    NET INCOME attributable to common shareholders for the quarter ended December 31, 2018 was $100.5 million, or $0.53 per diluted share, compared to $27.3 million, or $0.14 per diluted share, for the prior year's quarter. Adjusting net income attributable to common shareholders for the items that impact the comparability of period-to-period net income listed in the table on page 2, net income attributable to common shareholders, as adjusted (non-GAAP) for the quarters ended December 31, 2018 and 2017 was $51.0 million and $65.8 million, or $0.27 and $0.34 per diluted share, respectively.

    FUNDS FROM OPERATIONS ("FFO") attributable to common shareholders plus assumed conversions (non-GAAP) for the quarter ended December 31, 2018 was $210.1 million, or $1.10 per diluted share, compared to $153.2 million, or $0.80 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 December 31, 2018 and 2017 was $171.4 million and $187.1 million, or $0.90 and $0.98 per diluted share, respectively.

    Year Ended December 31, 2018 Financial Results

    NET INCOME attributable to common shareholders for the year ended December 31, 2018 was $384.8 million, or $2.01 per diluted share, compared to $162.0 million, or $0.85 per diluted share, for the year ended December 31, 2017. Adjusting net income attributable to common shareholders for the items that impact the comparability of period-to-period net income listed in the table on page 2, net income attributable to common shareholders, as adjusted (non-GAAP) for the year ended December 31, 2018 and 2017 was $243.9 million and $252.9 million, or $1.27 and $1.32 per diluted share, respectively.

    FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the year ended December 31, 2018 was $729.7 million, or $3.82 per diluted share, compared to $717.8 million, or $3.75 per diluted share, for the year ended December 31, 2017. 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 years ended December 31, 2018 and 2017 was $718.8 million and $713.0 million, or $3.76 and $3.73 per diluted share, respectively.

    The following table reconciles our net income 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
    December 31,
     For the Year Ended
    December 31,
     2018 2017 2018 2017
    Net income attributable to common shareholders$100,494  $27,319  $384,832  $162,017 
    Per diluted share$0.53  $0.14  $2.01  $0.85 
            
    Certain (income) expense items that impact net income attributable to common shareholders:       
    After-tax net gain on sale of 220 Central Park South condominium units$(67,336) $  $(67,336) $ 
    After-tax purchase price fair value adjustment related to the increase in ownership of the Farley joint venture(27,289)   (27,289)  
    Our share of loss (income) from real estate fund investments (excluding our $4,252 share of One Park Avenue potential additional transfer taxes)24,366  (529) 23,749  10,804 
    Real estate impairment losses (including our share of partially owned entities)12,000  145  12,000  7,692 
    Decrease in fair value of marketable securities resulting from a new GAAP accounting standard effective January 1, 2018 (including our share of partially owned entities)3,733    30,335   
    (Income) loss from discontinued operations and sold properties (primarily related to JBG SMITH Properties operating results and transaction costs through July 17, 2017 spin-off and 666 Fifth Avenue Office Condominium operations through August 3, 2018 sale)(242) 1,664  5,727  43,615 
    Tax expense related to the reduction of our taxable REIT subsidiaries deferred tax assets  34,800    34,800 
    Net gains on sale of real estate (including our share of partially owned entities)  (585) (28,104) (21,574)
    Net gain on sale of our ownership interests in 666 Fifth Avenue Office Condominium    (134,032)  
    Net gain on the repayment of our loan investment in 666 Fifth Avenue Office Condominium    (7,308)  
    Our share of potential additional New York City transfer taxes based on a Tax Tribunal interpretation which Vornado is appealing    23,503   
    Preferred share issuance costs    14,486   
    Impairment loss on investment in Pennsylvania Real Estate Investment Trust ("PREIT")      44,465 
    Net gain resulting from Urban Edge Properties ("UE") operating partnership unit issuances      (21,100)
    Net gain on repayment of our Suffolk Downs JV debt investments      (11,373)
    Other1,996  5,515  4,046  9,900 
     (52,772) 41,010  (150,223) 97,229 
    Noncontrolling interests' share of above adjustments3,268  (2,539) 9,285  (6,382)
    Total of certain (income) expense items that impact net income attributable to common shareholders$(49,504) $38,471  $(140,938) $90,847 
            
    Net income attributable to common shareholders, as adjusted (non-GAAP)$50,990  $65,790  $243,894  $252,864 
    Per diluted share (non-GAAP)$0.27  $0.34  $1.27  $1.32 
                    

    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 For the Year Ended
     December 31,December 31,
     2018 2017 2018 2017
    FFO attributable to common shareholders plus assumed conversions (non-GAAP)(1)$210,100  $153,151  $729,740  $717,805 
    Per diluted share (non-GAAP)$1.10  $0.80  $3.82  $3.75 
            
    Certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions:       
    After-tax net gain on sale of 220 Central Park South condominium units$(67,336) $  $(67,336) $ 
    Our share of FFO from real estate fund investments (excluding our $4,252 share of One Park Avenue potential additional transfer taxes)24,366  (529) 23,749  10,804 
    FFO from discontinued operations and sold properties (primarily related to JBG SMITH Properties operating results and transaction costs through July 17, 2017 spin-off and 666 Fifth Avenue Office Condominium operations through August 3, 2018 sale)(242) (4,006) (2,834) (73,240)
    Tax expense related to the reduction of our taxable REIT subsidiaries deferred tax assets  34,800    34,800 
    Our share of potential additional New York City transfer taxes based on a Tax Tribunal interpretation which Vornado is appealing    23,503   
    Preferred share issuance costs    14,486   
    Net gain on the repayment of our loan investment in 666 Fifth Avenue Office Condominium    (7,308)  
    Impairment loss on investment in PREIT      44,465 
    Net gain resulting from UE operating partnership unit issuances      (21,100)
    Net gain on repayment of our Suffolk Downs JV debt investments      (11,373)
    Other1,987  5,951  4,033  10,328 
     (41,225) 36,216  (11,707) (5,316)
    Noncontrolling interests' share of above adjustments2,552  (2,242) 727  534 
    Total of certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions, net$(38,673) $33,974  $(10,980) $(4,782)
            
    FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)$171,427  $187,125  $718,760  $713,023 
    Per diluted share (non-GAAP)$0.90  $0.98  $3.76  $3.73 
                    

    ____________________________________________________________

    (1) See page 10 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 and year ended December 31, 2018 and 2017.

    Fourth Quarter Activity:

    Acquisition:

    Farley Office and Retail Building

    On October 30, 2018, we increased our ownership interest in the joint venture that is developing the Farley Office and Retail Building to 95.0% from 50.1% by acquiring a 44.9% additional ownership interest from the Related Companies ("Related"). The purchase price was $41,500,000 plus the reimbursement of $33,026,000 of costs funded by Related through October 30, 2018. We consolidate the accounts of the joint venture as of October 30, 2018. In connection therewith, we recorded a net gain of $44,060,000, which is included in "purchase price fair value adjustment" on our consolidated statements of income. As a result of this gain, because we hold our investment in the joint venture through a taxable REIT subsidiary, $16,771,000 of income tax expense was recognized on our consolidated statements of income.

    Financing:

    On October 26, 2018, we extended our $750,000,000 unsecured term loan from October 2020 to February 2024. The interest rate on the extended unsecured term loan was lowered from LIBOR plus 1.15% to LIBOR plus 1.00% (3.52% as of December 31, 2018). In connection with the extension of our unsecured term loan, we entered into an interest rate swap from LIBOR plus 1.00% to a fixed rate of 3.87% through October 2023.

    On November 16, 2018, we completed a $205,000,000 refinancing of 150 West 34th Street, a 78,000 square foot Manhattan retail property. The interest-only loan carries a rate of LIBOR plus 1.88% (4.26% as of December 31, 2018) and matures in 2024, as extended. Concurrently, we invested $105,000,000 in a participation in the refinanced mortgage loan, which earns interest at a rate of LIBOR plus 2.00% (4.38% as of December 31, 2018) and also matures in 2024, as extended, and is included in "other assets" on our consolidated balance sheets. The property was previously encumbered by a mortgage of the same amount at LIBOR plus 2.25%, which was scheduled to mature in 2020.

    Other:

    220 Central Park South ("220 CPS")

    During the fourth quarter of 2018, we completed the sale of 11 condominium units at 220 CPS for net proceeds aggregating $214,776,000 and resulting in a financial statement net gain of $81,224,000 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, $13,888,000 of income tax expense was recognized in our consolidated statements of income and $213,000,000 of the $950,000,000 220 CPS loan was repaid.

    Fourth Quarter Activity - continued:

    Leasing:

    • 479,000 square feet of New York Office space (415,000 square feet at share) at an initial rent of $72.97 per square foot and a weighted average term of 7.7 years. The GAAP and cash mark-to-market rent on the 357,000 square feet of second generation space were positive 6.9% and 1.2%, respectively. Tenant improvements and leasing commissions were $10.22 per square foot per annum, or 14.0% of initial rent.

    • 26,000 square feet of New York Retail space (17,000 square feet at share) at an initial rent of $211.34 per square foot and a weighted average term of 8.2 years. The GAAP and cash mark-to-market rent on the 7,000 square feet of second generation space were positive 3.0% and 1.1%, respectively. Tenant improvements and leasing commissions were $17.62 per square foot per annum, or 8.3% of initial rent.

    • 46,000 square feet at theMART (all at share) at an initial rent of $60.73 per square foot and a weighted average term of 5.6 years. The GAAP and cash mark-to-market rent on the 46,000 square feet of second generation space were positive 8.7% and 3.2%, respectively. Tenant improvements and leasing commissions were $1.61 per square foot per annum, or 2.7% 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(3) 555
    California
    Street
    Same store NOI at share % (decrease) increase(1):       
     Three months ended December 31, 2018 compared to December 31, 2017(6.3)% (3.1)% (56.6)% 16.8%
     Year ended December 31, 2018 compared to December 31, 20170.8% 1.4% (12.2)% 14.9%
     Three months ended December 31, 2018 compared to September 30, 2018(5.3)% (1.1)% (58.0)% 3.8%
                 
    Same store NOI at share - cash basis % (decrease) increase:           
     Three months ended December 31, 2018 compared to December 31, 2017(1.7)% 1.9% (49.8)% 15.8%
     Year ended December 31, 2018 compared to December 31, 20173.9% 4.3% (6.5)% 18.1%
     Three months ended December 31, 2018 compared to September 30, 2018(4.2)% % (52.9)% 5.7%
    ____________________            
    (1)See pages 12 through 17 for same store NOI at share and same store NOI at share - cash basis reconciliations.           
         (Decrease)      
         Increase      
    (2)Excluding Hotel Pennsylvania, same store NOI at share % (decrease) increase:          
     Three months ended December 31, 2018 compared to December 31, 2017   (3.0)%      
     Year ended December 31, 2018 compared to December 31, 2017   1.5%      
     Three months ended December 31, 2018 compared to September 30, 2018   (1.7)%      
                
     Excluding Hotel Pennsylvania, same store NOI at share - cash basis % increase (decrease):          
     Three months ended December 31, 2018 compared to December 31, 2017   2.1%      
     Year ended December 31, 2018 compared to December 31, 2017   4.5%      
     Three months ended December 31, 2018 compared to September 30, 2018   (0.6)%      
                
    (3)Includes additional real estate tax expense accruals of $12,124,000 and $15,148,000 for the three months and year ended December 31, 2018, respectively, 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 and year ended December 31, 2018 and 2017 and the three months ended September 30, 2018 are summarized below.

    (Amounts in thousands)For the Three Months Ended For the Year Ended
     December 31, September 30, 
     December 31,
     2018 2017 2018 2018 2017
    New York:         
    Office$186,832  $189,481  $184,146  $743,001  $721,183 
    Retail85,549  90,853  92,858  353,425  359,944 
    Residential5,834  5,920  5,202  23,515  24,370 
    Alexander's11,023  11,656  10,626  45,133  47,302 
    Hotel Pennsylvania5,961  6,318  4,496  11,916  13,266 
    Total New York295,199  304,228  297,328  1,176,990  1,166,065 
              
    Other:         
    theMART(1)10,981  24,249  25,257  90,929  102,339 
    555 California Street14,005  12,003  13,515  54,691  47,588 
    Other investments9,346  23,377  13,524  60,010  85,391 
    Total Other34,332  59,629  52,296  205,630  235,318 
              
    NOI at share$329,531  $363,857  $349,624  $1,382,620  $1,401,383 
                        

    ____________________

    (1) Includes additional real estate tax expense accruals of $12,124 and $15,148 for the three months and year ended December 31, 2018, respectively, 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 and year ended December 31, 2018 and 2017 and the three months ended September 30, 2018 are summarized below.

    (Amounts in thousands)For the Three Months Ended For the Year Ended
     December 31, September 30, December 31,
     2018 2017 2018    2018 2017
    New York:         
    Office$185,624  $175,787  $181,575  $726,108  $678,839 
    Retail80,515  83,320  84,976  324,219  324,318 
    Residential5,656  5,325  5,358  22,076  21,626 
    Alexander's11,129  12,004  11,774  47,040  48,683 
    Hotel Pennsylvania6,009  6,351  4,520  12,120  13,397 
    Total New York288,933  282,787  288,203  1,131,563  1,086,863 
              
    Other:         
    theMART(1)12,758  24,396  26,234  94,070  99,242 
    555 California Street13,784  11,916  13,070  53,488  45,281 
    Other investments8,524  23,179  13,374  58,795  83,155 
    Total Other35,066  59,491  52,678  206,353  227,678 
              
    NOI at share - cash basis$323,999  $342,278  $340,881  $1,337,916  $1,314,541 
                        

    ____________________

    (1) Includes additional real estate tax expense accruals of $12,124 and $15,148 for the three months and year ended December 31, 2018, respectively, due to an increase in the tax-assessed value of theMART.

    Development/Redevelopment as of December 31, 2018

    (Amounts in thousands, except square feet)      (At Share)         
          Excluding Land Costs        Full
        Property              Available  Quarter
        Rentable Incremental Amount  %   for  Stabilized 
    Current Projects Segment Sq. Ft.  Budget Expended  Complete Start  Occupancy  Operations 
    220 Central Park South - residential condominiums Other 397,000  $1,400,000  $1,199,913 (1) 85.7% Q3 2012 N/A N/A
    Farley Office and Retail Building - (95.0% interest) New York 850,000  760,000  137,267 (2) 18.1% Q2 2017 Q3 2020 Q2 2022
    PENN1(3) New York 2,545,000  200,000 (4)9,725   4.9% Q4 2018 N/A N/A
    512 West 22nd Street - office (55.0% interest) New York 173,000  72,000  52,505 (5) 72.9% Q4 2015 Q1 2019 Q3 2020
    345 Montgomery Street (555 California Street) (70.0% interest) Other 78,000  32,000  15,284 (6) 47.8% Q1 2018 Q3 2019 Q3 2020
    606 Broadway - office/retail (50.0% interest) New York 34,000  30,000  25,601 (7) 85.3% Q2 2016 Q4 2018 Q2 2020
    825 Seventh Avenue - office (50.0% interest) New York 165,000  15,000  4,484   29.9% Q2 2018 Q1 2020 Q1 2021
    Total current projects     $2,509,000  $1,444,779           
                       
        Property                  
       Zoning              
    Future Opportunities SegmentSq. 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) Other 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.
    (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, February 12, 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 48102474. A telephonic replay of the conference call will be available from 1:30 p.m. ET on February 12, 2019 through March 14, 2019. To access the replay, please dial 888-843-7419 and enter the passcode 48102474#. 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.

    CONTACT:
    JOSEPH MACNOW
    (212) 894-7000

    VORNADO REALTY TRUST  
    CONSOLIDATED BALANCE SHEET  
    (Amounts in thousands, except unit, share, and per share amounts)As of
     December 31, 2018 December 31, 2017
    ASSETS   
    Real estate, at cost:   
    Land$3,306,280  $3,143,648 
    Buildings and improvements10,110,992  9,898,605 
    Development costs and construction in progress2,266,491  1,615,101 
    Moynihan Train Hall development expenditures445,693   
    Leasehold improvements and equipment108,427  98,941 
    Total16,237,883  14,756,295 
    Less accumulated depreciation and amortization(3,180,175) (2,885,283)
    Real estate, net13,057,708  11,871,012 
    Cash and cash equivalents570,916  1,817,655 
    Restricted cash145,989  97,157 
    Marketable securities152,198  182,752 
    Tenant and other receivables, net of allowance for doubtful accounts of $4,154 and $5,52673,322  58,700 
    Investments in partially owned entities858,113  1,056,829 
    Real estate fund investments318,758  354,804 
    220 Central Park South condominium units ready for sale99,627   
    Receivable arising from the straight-lining of rents, net of allowance of $1,644 and $954935,131  926,711 
    Deferred leasing costs, net of accumulated amortization of $207,529 and $191,827400,313  403,492 
    Identified intangible assets, net of accumulated amortization of $172,114 and $150,837136,781  159,260 
    Other assets431,938  469,562 
     $17,180,794  $17,397,934 
    LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY   
    Mortgages payable, net$8,167,798  $8,137,139 
    Senior unsecured notes, net844,002  843,614 
    Unsecured term loan, net744,821  748,734 
    Unsecured revolving credit facilities80,000   
    Moynihan Train Hall obligation445,693   
    Accounts payable and accrued expenses430,976  415,794 
    Deferred revenue167,730  227,069 
    Deferred compensation plan96,523  109,177 
    Preferred shares redeemed on January 4 and 11, 2018  455,514 
    Other liabilities311,806  468,255 
    Total liabilities11,289,349  11,405,296 
    Commitments and contingencies   
    Redeemable noncontrolling interests:   
    Class A units - 12,544,477 and 12,528,899 units outstanding778,134  979,509 
    Series D cumulative redeemable preferred units - 177,101 units outstanding5,428  5,428 
    Total redeemable noncontrolling interests783,562  984,937 
    Vornado's shareholders' equity:   
    Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 36,798,580 and 36,799,573 shares891,294  891,988 
    Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 190,535,499 and 189,983,858 shares7,600  7,577 
    Additional capital7,725,857  7,492,658 
    Earnings less than distributions(4,167,184) (4,183,253)
    Accumulated other comprehensive income7,664  128,682 
    Total Vornado shareholders' equity4,465,231  4,337,652 
    Noncontrolling interests in consolidated subsidiaries642,652  670,049 
    Total equity5,107,883  5,007,701 
     $17,180,794  $17,397,934 
            


    VORNADO REALTY TRUST  
    OPERATING RESULTS  
                    
    (Amounts in thousands, except per share amounts)For the Three Months Ended For the Year Ended
     December 31, December 31,
     2018 2017 2018 2017
    Revenues$543,417  $536,226  $2,163,720  $2,084,126 
            
    Income from continuing operations$97,564  $52,278  $421,965  $277,356 
    Income (loss) from discontinued operations257  1,273  638  (13,228)
    Net income97,821  53,551  422,603  264,128 
    Less net loss (income) attributable to noncontrolling interests in:       
    Consolidated subsidiaries21,886  (7,366) 53,023  (25,802)
    Operating Partnership(6,680) (1,853) (25,672) (10,910)
    Net income attributable to Vornado113,027  44,332  449,954  227,416 
    Preferred share dividends(12,533) (17,013) (50,636) (65,399)
    Preferred share issuance costs    (14,486)  
    NET INCOME attributable to common shareholders$100,494  $27,319  $384,832  $162,017 
            
    INCOME PER COMMON SHARE – BASIC:       
    Income from continuing operations, net$0.53  $0.14  $2.02  $0.92 
    Loss from discontinued operations, net      (0.07)
    Net income per common share$0.53  $0.14  $2.02  $0.85 
    Weighted average shares outstanding190,348  189,898  190,219  189,526 
            
    INCOME PER COMMON SHARE – DILUTED:       
    Income from continuing operations, net$0.53  $0.14  $2.01  $0.91 
    Loss from discontinued operations, net      (0.06)
    Net income per common share$0.53  $0.14  $2.01  $0.85 
    Weighted average shares outstanding191,199  191,020  191,290  191,258 
            
    FFO attributable to common shareholders plus assumed conversions (non-GAAP)$210,100  $153,151  $729,740  $717,805 
    Per diluted share (non-GAAP)$1.10  $0.80  $3.82  $3.75 
            
    FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)$171,427  $187,125  $718,760  $713,023 
    Per diluted share (non-GAAP)$0.90  $0.98  $3.76  $3.73 
            
    Weighted average shares used in determining FFO per diluted share191,199  191,063  191,189  191,304 
                    


    VORNADO REALTY TRUST 
    NON-GAAP RECONCILIATIONS 
                    
    The following table reconciles net income 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 For the Year Ended
     December 31, December 31,
     2018 2017 2018 2017
    Net income attributable to common shareholders$100,494  $27,319  $384,832  $162,017 
    Per diluted share$0.53  $0.14  $2.01  $0.85 
            
    FFO adjustments:       
    Depreciation and amortization of real property$104,067  $106,017  $413,091  $467,966 
    Net gains on sale of real estate    (158,138) (3,797)
    Real estate impairment losses12,000    12,000   
    Decrease in fair value of marketable securities1,652    26,453   
    After-tax purchase price fair value adjustment on depreciable real estate(27,289)   (27,289)  
    Proportionate share of adjustments to equity in net income of               
    partially owned entities to arrive at FFO:               
    Depreciation and amortization of real property24,309  28,247  101,591  137,000 
    Net gains on sale of real estate  (585) (3,998) (17,777)
    Real estate impairment losses  145    7,692 
    Decrease in fair value of marketable securities2,081    3,882   
     116,820  133,824  367,592  591,084 
    Noncontrolling interests' share of above adjustments(7,229) (8,010) (22,746) (36,420)
    FFO adjustments, net$109,591  $125,814  $344,846  $554,664 
            
    FFO attributable to common shareholders (non-GAAP)$210,085  $153,133  $729,678  $716,681 
    Convertible preferred share dividends15  18  62  77 
    Earnings allocated to Out-Performance Plan units      1,047 
    FFO attributable to common shareholders plus assumed conversions (non-GAAP)$210,100  $153,151  $729,740  $717,805 
    Per diluted share (non-GAAP)$1.10  $0.80  $3.82  $3.75 
                    

    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 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 nine months ended September 30, 2018 has been adjusted to exclude the $26,602,000, or $0.13 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 and year ended December 31, 2018 and 2017 and the three months ended September 30, 2018.  
                        
     For the Three Months Ended For the Year Ended
    (Amounts in thousands)December 31, September 30, December 31,
     2018 2017 2018    2018 2017
    Net income$97,821  $53,551  $219,162  $422,603  $264,128 
              
    Deduct:         
    Income from partially owned entities(3,090) (9,622) (7,206) (9,149) (15,200)
    Loss (income) from real estate fund investments51,258  (4,889) 190  89,231  (3,240)
    Interest and other investment income, net(7,656) (8,294) (2,893) (17,057) (30,861)
    Net gains on disposition of wholly owned and partially owned assets(81,203)   (141,269) (246,031) (501)
    Purchase price fair value adjustment(44,060)     (44,060)  
    (Income) loss from discontinued operations(257) (1,273) (61) (638) 13,228 
    NOI attributable to noncontrolling interests in consolidated subsidiaries(19,771) (16,533) (16,943) (71,186) (65,311)
              
    Add:         
    Depreciation and amortization expense112,869  114,166  113,169  446,570  429,389 
    General and administrative expense32,934  34,916  31,977  141,871  150,782 
    Transaction related costs, impairment loss and other14,637  703  2,510  31,320  1,776 
    Our share of NOI from partially owned entities60,205  69,175  60,094  253,564  269,164 
    Interest and debt expense83,175  93,073  88,951  347,949  345,654 
    Income tax expense32,669  38,884  1,943  37,633  42,375 
    NOI at share329,531  363,857  349,624  1,382,620  1,401,383 
    Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other(5,532) (21,579) (8,743) (44,704) (86,842)
    NOI at share - cash basis$323,999  $342,278  $340,881  $1,337,916  $1,314,541 
                        
    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 December 31, 2018 compared to December 31, 2017.  
    (Amounts in thousands)Total New York theMART 555
    California
    Street
     Other
    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:          
    Acquisitions (337) (337)      
    Dispositions 19  19       
    Development properties (12,623) (12,637)   14   
    Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net (96) 368  (464)    
    Other non-operating income, net (10,412) (1,066)     (9,346)
    Same store NOI at share for the three months ended December 31, 2018$306,082  $281,546  $10,517  $14,019  $ 
              
    NOI at share for the three months ended December 31, 2017$363,857  $304,228  $24,249  $12,003  $23,377 
    Less NOI at share from:          
    Acquisitions 2  2       
    Dispositions (23) (23)      
    Development properties (12,789) (12,789)      
    Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net (984) (984)      
    Other non-operating income, net (23,377)       (23,377)
    Same store NOI at share for the three months ended December 31, 2017$326,686  $290,434  $24,249  $12,003  $ 
              
    (Decrease) increase in same store NOI at share for the three months ended December 31, 2018 compared to December 31, 2017$(20,604) $(8,888) $(13,732) $2,016  $ 
               
    % (decrease) increase in same store NOI at share(6.3)% (3.1)%(1)(56.6)%(2)16.8% %
                         

    (1) Excluding Hotel Pennsylvania, same store NOI at share decreased by 3.0%.
    (2) The three months ended December 31, 2018 includes an additional $12,814 real estate tax expense accrual due to an increase in the tax-assessed value of theMART.

    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 December 31, 2018 compared to December 31, 2017.
    (Amounts in thousands)Total New York theMART 555
    California
    Street
     Other
    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:         
    Acquisitions(336) (336)      
    Dispositions19  19       
    Development properties(14,628) (14,642)   14   
    Lease termination income(563) (43) (520)    
    Other non-operating income, net(9,590) (1,066)     (8,524)
    Same store NOI at share - cash basis for the three months ended December 31, 2018$298,901  $272,865  $12,238  $13,798  $ 
               
    NOI at share - cash basis for the three months ended December 31, 2017$342,278  $282,787  $24,396  $11,916  $23,179 
    Less NOI at share - cash basis from:         
    Acquisitions2  2       
    Dispositions76  76       
    Development properties(13,677) (13,677)      
    Lease termination income(1,393) (1,393)      
    Other non-operating income, net(23,180) (1)     (23,179)
    Same store NOI at share - cash basis for the three months ended December 31, 2017$304,106  $267,794  $24,396  $11,916  $ 
              
    (Decrease) increase in same store NOI at share - cash basis for the three months ended December 31, 2018 compared to December 31, 2017$(5,205) $5,071  $(12,158) $1,882  $ 
              
    % (decrease) increase in same store NOI at share - cash basis(1.7)% 1.9%(1)(49.8)%(2)15.8% %
    ____________________                    
    (1)  Excluding Hotel Pennsylvania, same store NOI at share - cash basis increased by 2.1%.
    (2)  The three months ended December 31, 2018 includes an additional $12,814 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 to same store NOI at share for our New York segment, theMART, 555 California Street and other investments for the three months ended December 31, 2018 compared to September 30, 2018.
    (Amounts in thousands)Total New York theMART 555
    California
    Street
     Other
    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(12,623) (12,637)   14   
    Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net(96) 368  (464)    
    Other non-operating income, net(10,412) (1,066)     (9,346)
    Same store NOI at share for the three months ended December 31, 2018$306,419  $281,883  $10,517  $14,019  $ 
              
    NOI at share for the three months ended September 30, 2018$349,624  $297,328  $25,257  $13,515  $13,524 
    Less NOI at share from:         
    Development properties(13,488) (13,474)   (14)  
    Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net1,581  1,800  (219)    
    Other non-operating income, net(14,103) (579)     (13,524)
    Same store NOI at share for the three months ended September 30, 2018$323,614  $285,075  $25,038  $13,501  $ 
              
    (Decrease) increase in same store NOI at share for the three months ended December 31, 2018 compared to September 30, 2018$(17,195) $(3,192) $(14,521) $518  $ 
               
    % (decrease) increase in same store NOI at share(5.3)% (1.1)%(1)(58.0)%(2)3.8% %
    ____________________                    
    (1)  Excluding Hotel Pennsylvania, same store NOI at share decreased by 1.7%.
    (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 December 31, 2018 compared to September 30, 2018.
    (Amounts in thousands)Total New York theMART 555
    California
    Street
     Other
    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(14,628) (14,642)   14   
    Lease termination income(563) (43) (520)    
    Other non-operating income, net(9,590) (1,066)     (8,524)
    Same store NOI at share - cash basis for the three months ended December 31, 2018$299,237  $273,201  $12,238  $13,798  $ 
               
    NOI at share - cash basis for the three months ended September 30, 2018$340,881  $288,203  $26,234  $13,070  $13,374 
    Less NOI at share - cash basis from:         
    Development properties(14,342) (14,328)   (14)  
    Lease termination income(318) (58) (260)    
    Other non-operating income, net(13,954) (580)     (13,374)
    Same store NOI at share - cash basis for the three months ended September 30, 2018$312,267  $273,237  $25,974  $13,056  $ 
              
    (Decrease) increase in same store NOI at share - cash basis for the three months ended December 31, 2018 compared to September 30, 2018$(13,030) $(36) $(13,736) $742  $ 
              
    % (decrease) increase in same store NOI at share - cash basis(4.2)% %(1)(52.9)%(2)5.7% %
    ____________________                   
    (1)  Excluding Hotel Pennsylvania, same store NOI at share - cash basis decreased by 0.6%.
    (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 to same store NOI at share for our New York segment, theMART, 555 California Street and other investments for the year ended December 31, 2018 compared to December 31, 2017.
    (Amounts in thousands)Total New York theMART 555
    California
    Street
     Other
    NOI at share for the year ended December 31, 2018$1,382,620  $1,176,990  $90,929  $54,691  $60,010 
    Less NOI at share from:         
    Acquisitions(1,534) (1,385) (149)    
    Dispositions(351) (351)      
    Development properties(38,477) (38,477)      
    Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net2,301  3,025  (724)    
    Other non-operating income, net(62,732) (2,722)     (60,010)
    Same store NOI at share for the year ended December 31, 2018$1,281,827  $1,137,080  $90,056  $54,691  $ 
              
    NOI at share for the year ended December 31, 2017$1,401,383  $1,166,065  $102,339  $47,588  $85,391 
    Less NOI at share from:         
    Acquisitions36  (164) 200     
    Dispositions(1,532) (1,532)      
    Development properties(37,307) (37,307)      
    Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net(2,976) (2,957) (19)    
    Other non-operating income, net(88,017) (2,626)     (85,391)
    Same store NOI at share for the year ended December 31, 2017$1,271,587  $1,121,479  $102,520  $47,588  $ 
              
    Increase (decrease) in same store NOI at share for the year ended December 31, 2018 compared to December 31, 2017$10,240  $15,601  $(12,464) $7,103  $ 
               
    % increase (decrease) in same store NOI at share0.8% 1.4%(1)(12.2)%(2)14.9% %
    ____________________                    
    (1)  Excluding Hotel Pennsylvania, same store NOI at share increased by 1.5%.                    
    (2)  The year ended December 31, 2018 includes an additional $15,148 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 year ended December 31, 2018 compared to December 31, 2017.
    (Amounts in thousands)Total New York theMART 555
    California
    Street
     Other
    NOI at share - cash basis for the year ended December 31, 2018$1,337,916  $1,131,563  $94,070  $53,488  $58,795 
    Less NOI at share - cash basis from:         
    Acquisitions(1,235) (1,086) (149)    
    Dispositions(287) (287)      
    Development properties(42,264) (42,264)      
    Lease termination income(2,105) (1,163) (942)    
    Other non-operating income, net(61,515) (2,720)     (58,795)
    Same store NOI at share - cash basis for the year ended December 31, 2018$1,230,510  $1,084,043  $92,979  $53,488  $ 
              
    NOI at share - cash basis for the year ended December 31, 2017$1,314,541  $1,086,863  $99,242  $45,281  $83,155 
    Less NOI at share - cash basis from:         
    Acquisitions137  (63) 200     
    Dispositions(1,078) (1,078)      
    Development properties(38,211) (38,211)      
    Lease termination income(4,958) (4,927) (31)    
    Other non-operating income, net(86,501) (3,346)     (83,155)
    Same store NOI at share - cash basis for the year ended December 31, 2017$1,183,930  $1,039,238  $99,411  $45,281  $ 
              
    Increase (decrease) in same store NOI at share - cash basis for the year ended December 31, 2018 compared to December 31, 2017$46,580  $44,805  $(6,432) $8,207  $ 
               
    % increase (decrease) in same store NOI at share - cash basis3.9% 4.3%(1)(6.5)%(2)18.1% %
    ____________________                    
    (1)  Excluding Hotel Pennsylvania, same store NOI at share - cash basis increased by 4.5%.                  
    (2)  The year ended December 31, 2018 includes an additional $15,148 real estate tax expense accrual due to an increase in the tax-assessed value of theMART.


     

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