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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported):
May 4, 2020
 
VORNADO REALTY TRUST
(Exact Name of Registrant as Specified in Charter)
Maryland
 
No.
001-11954
 
No.
22-1657560
(State or Other
 
(Commission
 
(IRS Employer
Jurisdiction of Incorporation)
 
File Number)
 
Identification No.)
VORNADO REALTY L.P.
(Exact Name of Registrant as Specified in Charter)
Delaware
 
No.
001-34482
 
No.
13-3925979
(State or Other
 
(Commission
 
(IRS Employer
Jurisdiction of Incorporation)
 
File Number)
 
Identification No.)
 
888 Seventh Avenue
 

 New York,
New York
 
10019
(Address of Principal Executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code: (212) 894-7000
Former name or former address, if changed since last report: N/A
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2.):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 
Securities registered pursuant to Section 12(b) of the Act:
Registrant
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Vornado Realty Trust
 
Common Shares of beneficial interest, $.04 par value per share
 
VNO
 
New York Stock Exchange
 
 
Cumulative Redeemable Preferred Shares of beneficial interest, liquidation preference $25.00 per share:
 
 
 
 
Vornado Realty Trust
 
5.70% Series K
 
VNO/PK
 
New York Stock Exchange
Vornado Realty Trust
 
5.40% Series L
 
VNO/PL
 
New York Stock Exchange
Vornado Realty Trust
 
5.25% Series M
 
VNO/PM
 
New York Stock Exchange
 




Item 2.02. Results of Operations and Financial Condition.
On May 4, 2020, Vornado Realty Trust (the “Company”), the general partner of Vornado Realty L.P., issued a press release announcing its financial results for the first quarter of 2020.  That press release referred to certain supplemental financial information that is available on the Company’s website.  That press release and the supplemental financial information are attached to this Current Report on Form 8-K as Exhibits 99.1 and 99.2, respectively, and are incorporated by reference herein.
Exhibits 99.1 and 99.2 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company or Vornado Realty L.P. under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are being furnished as part of this Current Report on Form 8-K:
 
 
Vornado Realty Trust Press Release Dated May 4, 2020
 
 
Vornado Realty Trust supplemental operating and financial data for the quarter ended March 31, 2020



2



SIGNATURE 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
VORNADO REALTY TRUST
 
(Registrant)
 
 
 
 
By:
/s/ Matthew Iocco
 
Name:
Matthew Iocco
 
Title:
Chief Accounting Officer (duly authorized
officer and principal accounting officer)
Date: May 5, 2020
 
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
VORNADO REALTY L.P.
 
(Registrant)
 
By:
VORNADO REALTY TRUST,
 
 
Sole General Partner
 
 
 
 
By:
/s/ Matthew Iocco
 
Name:
Matthew Iocco
 
Title:
Chief Accounting Officer of Vornado
Realty Trust, sole General Partner of Vornado Realty
L.P. (duly authorized officer and principal accounting
officer)

Date: May 5, 2020


3

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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
EXHIBIT 99.1


403868533_vnortlogoblack2a34.jpg

Vornado Announces First Quarter 2020 Financial Results

May 4, 2020 04:30 PM Eastern Standard Time

NEW YORK.......VORNADO REALTY TRUST (NYSE: VNO) reported today:
Quarter Ended March 31, 2020 Financial Results
NET INCOME attributable to common shareholders for the quarter ended March 31, 2020 was $4,963,000, or $0.03 per diluted share, compared to $181,488,000, or $0.95 per diluted share, for the prior year's quarter. Adjusting for the items that impact period-to-period comparability listed in the table below, net income attributable to common shareholders, as adjusted (non-GAAP) for the quarters ended March 31, 2020 and 2019 was $20,233,000 and $24,814,000, or $0.11 and $0.13 per diluted share, respectively.
FUNDS FROM OPERATIONS ("FFO") attributable to common shareholders plus assumed conversions (non-GAAP) for the quarter ended March 31, 2020 was $130,360,000, or $0.68 per diluted share, compared to $247,684,000, or $1.30 per diluted share, for the prior year's quarter.  Adjusting for the items that impact period-to-period comparability listed in the table on the following page, FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the quarters ended March 31, 2020 and 2019 was $137,567,000 and $149,939,000, or $0.72 and $0.79 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
March 31,
 
2020
 
2019
Net income attributable to common shareholders
$
4,963

 
$
181,488

Per diluted share
$
0.03

 
$
0.95

 
 
 
 
Certain (income) expense items that impact net income attributable to common shareholders:
 
 
 
After-tax net gain on sale of 220 Central Park South ("220 CPS") condominium units
$
(59,911
)
 
$
(130,954
)
Our share of loss from real estate fund investments
56,158

 
2,904

Credit losses on loans receivable resulting from a new GAAP accounting standard effective January 1, 2020
7,261

 

Mark-to-market decrease in Pennsylvania Real Estate Trust Investment ("PREIT") common shares (accounted for as a marketable security from March 12, 2019 and sold on January 23, 2020)
4,938

 
15,649

Net gain from sale of Urban Edge Properties ("UE") common shares (sold on March 4, 2019)

 
(62,395
)
Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 2022

 
22,540

Mark-to-market increase in Lexington Realty Trust ("Lexington") common shares (sold on March 1, 2019)

 
(16,068
)
Other
7,896

 
1,152

 
16,342

 
(167,172
)
Noncontrolling interests' share of above adjustments
(1,072
)
 
10,498

Total of certain expense (income) items that impact net income attributable to common shareholders
$
15,270

 
$
(156,674
)
 
 
 
 
Net income attributable to common shareholders, as adjusted (non-GAAP)
$
20,233

 
$
24,814

Per diluted share (non-GAAP)
$
0.11

 
$
0.13


1


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,
 
2020
 
2019
FFO attributable to common shareholders plus assumed conversions (non-GAAP)(1)
$
130,360

 
$
247,684

Per diluted share (non-GAAP)
$
0.68

 
$
1.30

 
 
 
 
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
$
(59,911
)
 
$
(130,954
)
Our share of loss from real estate fund investments
56,158

 
2,904

Credit losses on loans receivable resulting from a new GAAP accounting standard effective January 1, 2020
7,261

 

Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 2022

 
22,540

Other
4,205

 
1,206

 
7,713

 
(104,304
)
Noncontrolling interests' share of above adjustments
(506
)
 
6,559

Total of certain expense (income) items that impact FFO attributable to common shareholders plus assumed conversions, net
$
7,207

 
$
(97,745
)
 
 
 
 
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)
$
137,567

 
$
149,939

Per diluted share (non-GAAP)
$
0.72

 
$
0.79

____________________________________________________________
(1)
See page 9 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, 2020 and 2019.

2


COVID-19 Pandemic
In December 2019, a novel strain of coronavirus (“COVID-19”) was identified in Wuhan, China and by March 11, 2020, the World Health Organization had declared it a global pandemic. Many states in the U.S., including New York, New Jersey, Illinois and California have implemented stay-at-home orders for all "non-essential" business and activity in an aggressive effort to curb the spread of the virus. Consequently, the U.S. economy has suffered and there has been significant volatility in the financial markets. Many U.S. industries and businesses have been negatively affected and millions of people have filed for unemployment.
As our first priority, we are following strict protocols and taking all measures to protect our employees, tenants, and communities.
Our properties, which are concentrated in New York City, and in Chicago and San Francisco, have been adversely affected as a result of the COVID-19 pandemic and the preventive measures taken to curb the spread. Some of the effects on us include the following:
With the exception of grocery stores and other "essential" businesses, substantially all of our retail tenants have closed their stores and many are seeking rent relief.
While our office buildings remain open, substantially all of our office tenants are working remotely.
We have temporarily closed the Hotel Pennsylvania.
We have postponed trade shows at theMART for the remainder of 2020.
Because certain of our development projects are deemed "non-essential," they have been temporarily paused due to New York State executive orders.
Closings on the sale of condominium units at 220 Central Park South have continued. During April 2020 we closed on the sale of four condominium units for net proceeds of $157,747,000. However, future closings may be temporarily delayed to the extent we cannot complete the buildout and obtain temporary certificates of occupancy on time.
We placed 1,803 employees on temporary furlough, including 1,293 employees of Building Maintenance Services LLC, a wholly owned subsidiary, which provides cleaning, security and engineering services primarily to our New York properties, 414 employees at the Hotel Pennsylvania and 96 corporate staff employees.
Effective April 1, 2020, our executive officers waived portions of their annual base salary for the remainder of 2020.
Effective April 1, 2020, each non-management member of our Board of Trustees agreed to forgo his or her $75,000 annual cash retainer for the remainder of 2020.
We have collected substantially all of the rent due for March 2020 and collected 90% of rent due from our office tenants for the month of April 2020 and 53% of the rent due from our retail tenants for the month of April 2020, or 83% in the aggregate. Many of our retail tenants and some of our office tenants have requested rent relief and/or rent deferral for April 2020 and beyond. While we believe that our tenants are required to pay rent under their leases, we have implemented and will continue to consider temporary rent deferrals on a case-by-case basis.
In light of the evolving health, social, economic, and business environment, governmental regulation or mandates, and business disruptions that have occurred and may continue to occur, the impact of COVID-19 on our financial condition and operating results remains highly uncertain but the impact could be material. The impact on us includes lower rental income and potentially lower occupancy levels at our properties which will result in less cash flow available for operating costs, to pay our indebtedness and for distribution to our shareholders. In addition, the value of our real estate assets may decline, which may result in non-cash impairment charges in future periods and that impact could be material.

Dispositions:
PREIT
On January 23, 2020, we sold all of our 6,250,000 common shares of PREIT, realizing net proceeds of $28,375,000. We recorded a $4,938,000 loss (mark-to-market decrease) for the three months ended March 31, 2020.
220 CPS
During the three months ended March 31, 2020, we closed on the sale of seven condominium units at 220 CPS for net proceeds aggregating $191,216,000 resulting in a financial statement net gain of $68,589,000 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, $8,678,000 of income tax expense was recognized on our consolidated statements of income. From inception to March 31, 2020, we closed on the sale of 72 units for aggregate net proceeds of $2,011,348,000.

3


Financings:
Unsecured Term Loan
On February 28, 2020, we increased our unsecured term loan balance to $800,000,000 (from $750,000,000) by exercising an accordion feature. Pursuant to an existing swap agreement, $750,000,000 of the loan bears interest at a fixed rate of 3.87% through October 2023, and the balance of $50,000,000 floats at a rate of LIBOR plus 1.00% (1.94% as of March 31, 2020). The entire $800,000,000 will float thereafter for the duration of the loan through February 2024.
Leasing Activity For The Three Months Ended March 31, 2020:
311,000 square feet of New York Office space (297,000 square feet at share) at an initial rent of $90.47 per square foot and a weighted average lease term of 6.6 years. The change in the GAAP and cash mark-to-market rent on the 275,000 square feet of second generation space were negative 3.3% and positive 0.8%, respectively. Tenant improvements and leasing commissions were $11.69 per square foot per annum, or 12.9% of initial rent.
15,000 square feet of New York Retail space (13,000 square feet at share) at an initial rent of $416.36 per square foot and a weighted average lease term of 9.7 years. The change in the GAAP and cash mark-to-market rent on the 9,000 square feet of second generation space were positive 126.6% and 104.6%, respectively. Tenant improvements and leasing commissions were $48.18 per square foot per annum, or 11.6% of initial rent.
231,000 square feet at theMART at an initial rent of $47.31 per square foot and a weighted average lease term of 10.3 years. The change in the GAAP and cash mark-to-market rent on the 228,000 square feet of second generation space were positive 2.6% and negative 1.2%, respectively. Tenant improvements and leasing commissions were $4.44 per square foot per annum, or 9.4% of initial rent.
6,000 square feet at 555 California Street (4,000 square feet at share) at an initial rent of $117.00 per square foot and a weighted average lease term of 1.4 years. The change in the GAAP and cash mark-to-market rent on the 4,000 square feet of second generation space were positive 44.5% and 29.7%, respectively. Tenant improvements and leasing commissions were $2.91 per square foot per annum, or 2.5% 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 March 31, 2020 compared to March 31, 2019
(2.5
)%
 
(1.9
)%
 
(13.3
)%
 
5.6
%
 
Three months ended March 31, 2020 compared to December 31, 2019
(8.2
)%
 
(9.0
)%
 
(8.2
)%
 
5.1
%
 
 
 
 
 
 
 
 
 
Same store NOI at share - cash basis % (decrease) increase(1):
 
 
 
 
 
 
 
 
Three months ended March 31, 2020 compared to March 31, 2019
(1.5
)%
 
(0.7
)%
 
(11.8
)%
 
3.7
%
 
Three months ended March 31, 2020 compared to December 31, 2019
(7.0
)%
 
(7.6
)%
 
(9.0
)%
 
5.8
%
____________________
(1)
See pages 11 through 14 for same store NOI at share and same store NOI at share - cash basis reconciliations.
(2)
As a result of the COVID-19 pandemic, we have temporarily closed the Hotel Pennsylvania.
 
 
 
Excluding the Hotel Pennsylvania, same store NOI at share % decrease:
 
 
 
Three months ended March 31, 2020 compared to March 31, 2019
(0.3
)%
 
 
Three months ended March 31, 2020 compared to December 31, 2019
(2.7
)%
 
 
 
 
 
 
Excluding the Hotel Pennsylvania, same store NOI at share - cash basis % increase (decrease):
 
 
 
Three months ended March 31, 2020 compared to March 31, 2019
0.9
 %
 
 
Three months ended March 31, 2020 compared to December 31, 2019
(1.0
)%
 
(3)
The decrease is primarily due to the cancellation of trade shows resulting from the COVID-19 pandemic.
 
 
Excluding trade shows, same store NOI at share % increase (decrease):
 
 
 
Three months ended March 31, 2020 compared to March 31, 2019
1.1
 %
 
 
Three months ended March 31, 2020 compared to December 31, 2019
(2.8
)%
 
 
 
 
 
 
Excluding trade shows, same store NOI at share - cash basis % increase (decrease):
 
 
 
Three months ended March 31, 2020 compared to March 31, 2019
2.0
 %
 
 
Three months ended March 31, 2020 compared to December 31, 2019
(4.0
)%
 

4


NOI At Share:
The elements of our New York and Other NOI at share for the three months ended March 31, 2020 and 2019 and the three months ended December 31, 2019 are summarized below.
(Amounts in thousands)
For the Three Months Ended
 
March 31,
 
December 31, 2019
 
2020
 
2019
 
New York:
 
 
 
 
 
Office(1)
$
183,205

 
$
183,540

 
$
183,925

Retail(1)
52,018

 
88,267

 
59,728

Residential
6,200

 
6,045

 
5,835

Alexander's Inc. ("Alexander's")
10,492

 
11,322

 
10,626

Hotel Pennsylvania(2)
(9,356
)
 
(5,816
)
 
6,170

Total New York
242,559

 
283,358

 
266,284

 
 
 
 
 
 
Other:
 
 
 
 
 
theMART
21,113

 
23,523

 
22,712

555 California Street
15,231

 
14,501

 
14,533

Other investments(3)
2,010

 
16,390

 
2,037

Total Other
38,354

 
54,414

 
39,282

 
 
 
 
 
 
NOI at share
$
280,913

 
$
337,772

 
$
305,566

____________________
(1)
Reflects the transfer of 45.4% of common equity in the properties contributed to the Fifth Avenue and Times Square JV on April 18, 2019.
(2)
The decrease in NOI at share is primarily due to seasonality of operations and the effects of the COVID-19 pandemic. The Hotel Pennsylvania was temporarily closed commencing on April 1, 2020 as result of the pandemic.
(3)
The three months ended March 31, 2019 includes our share of PREIT (accounted for as a marketable security from March 12, 2019 and sold on January 23, 2020) and Urban Edge Properties (sold on March 4, 2019).
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, 2020 and 2019 and the three months ended December 31, 2019 are summarized below.
(Amounts in thousands)
For the Three Months Ended
 
March 31,
 
December 31, 2019
 
2020
 
2019
 
New York:
 
 
 
 
 
Office(1)
$
187,035

 
$
184,370

 
$
180,762

Retail(1)
49,041

 
80,936

 
54,357

Residential
5,859

 
5,771

 
5,763

Alexander's
11,094

 
11,527

 
10,773

Hotel Pennsylvania(2)
(9,364
)
 
(5,864
)
 
6,052

Total New York
243,665

 
276,740

 
257,707

 
 
 
 
 
 
Other:
 
 
 
 
 
theMART
22,705

 
24,912

 
24,646

555 California Street
15,435

 
14,745

 
14,491

Other investments(3)
2,184

 
16,194

 
2,132

Total Other
40,324

 
55,851

 
41,269

 
 
 
 
 
 
NOI at share - cash basis
$
283,989

 
$
332,591

 
$
298,976

____________________
(1)
Reflects the transfer of 45.4% of common equity in the properties contributed to the Fifth Avenue and Times Square JV on April 18, 2019.
(2)
The decrease in NOI at share - cash basis is primarily due to seasonality of operations and the effects of the COVID-19 pandemic. The Hotel Pennsylvania was temporarily closed commencing on April 1, 2020 as result of the pandemic.
(3)
The three months ended March 31, 2019 includes our share of PREIT (accounted for as a marketable security from March 12, 2019 and sold on January 23, 2020) and Urban Edge Properties (sold on March 4, 2019).

5


Penn District - Active Development/Redevelopment Summary as of March 31, 2020
(Amounts in thousands of dollars, except square feet)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property
Rentable
Sq. Ft.
 

 
 
 
 
 
 
 
Projected Incremental Cash Yield
Active Penn District Projects
 
Segment
 
 
Budget(1)
 
Amount
Expended
 
Remainder to be Expended
 
Stabilization Year
 
Farley (95% interest)
 
New York
 
844,000

 
1,030,000

(2) 
650,506

 
379,494

 
2022
 
7.4%
PENN2 - as expanded(3)
 
New York
 
1,795,000

 
750,000

 
52,911

 
697,089

 
2024
 
8.4%
PENN1(4)
 
New York
 
2,546,000

 
325,000

 
95,919

 
229,081

 
N/A
 
    13.5%(4)(5)
Districtwide Improvements
 
New York
 
N/A
 
100,000

 
7,360

 
92,640

 
N/A
 
N/A
Total Active Penn District Projects
 
 
 
 
 
2,205,000

 
806,696

 
1,398,304

(6) 
 
 
8.3%
________________________________
(1)
Excluding debt and equity carry.
(2)
Net of anticipated historic tax credits.
(3)
PENN2 (including signage) estimated impact on cash basis NOI and FFO of square feet taken out of service:
 
 
2020
 
2021
 
2022
Square feet out of service at end of year
 
1,140,000

 
1,190,000

 
1,200,000

Year-over-year reduction in Cash Basis NOI(i)
 
(25,000
)
 
(14,000
)
 

Year-over-year reduction in FFO(ii)
 
(19,000
)
 

 

________________________________
(i) After capitalization of real estate taxes and operating expenses on space out of service.
(ii) Net of capitalized interest on space out of service under redevelopment.

(4)
Property is ground leased through 2098, as fully extended. Fair market value resets occur in 2023, 2048 and 2073. The 13.5% projected return is before the ground rent reset in 2023, which may be material.
(5)
Achieved as existing leases roll; average remaining lease term 4.9 years.
(6)
Expected to be funded from 220 CPS net sales proceeds and existing cash.

There can be no assurance that the above projects will be completed, completed on schedule or within budget. In addition, there can be no assurance that the Company will be successful in leasing the properties on the expected schedule or at the assumed rental rates.

Conference Call and Audio Webcast
As previously announced, the Company will host a quarterly earnings conference call and an audio webcast on Tuesday, May 5, 2020 at 10:00 a.m. Eastern Time (ET). The conference call can be accessed by dialing 877-690-9905 (domestic) or 720-405-3394 (international) and indicating to the operator the passcode 5868218. A telephonic replay of the conference call will be available from 2:00 p.m. ET on May 5, 2020 through June 5, 2020. To access the replay, please dial 855- 859-2056 and enter the passcode 5868218. 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.
Contact
Joseph Macnow
(212) 894-7000
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, 2019 and "Item 1A. Risk Factors" in Part II of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020. Such factors include, among others, risks associated with the timing of and costs associated with property improvements, financing commitments and general competitive factors. Currently, one of the most significant factors is the ongoing adverse effect of the COVID-19 pandemic on our business, financial condition, results of operations, cash flows, operating performance and the effect it will have on our tenants, the global, national, regional and local economies and financial markets and the real estate market in general. The extent of the impact of the COVID-19 pandemic will depend on future developments, including the duration of the pandemic, which are highly uncertain at this time but that impact could be material. Moreover, you are cautioned that the COVID-19 pandemic will heighten many of the risks identified in "Item 1A. Risk Factors" in Part I of our Annual Report on Form 10-K for the year ended December 31, 2019, as well as the risks set forth in "Item 1A. Risk Factors" in Part II of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020.

6


VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except unit, share, and per share amounts)
As of
 
March 31, 2020
 
December 31, 2019
ASSETS
 
 
 
Real estate, at cost:
 
 
 
Land
$
2,589,800

 
$
2,591,261

Buildings and improvements
7,946,523

 
7,953,163

Development costs and construction in progress
1,532,828

 
1,490,614

Moynihan Train Hall development expenditures
972,199

 
914,960

Leasehold improvements and equipment
126,910

 
124,014

Total
13,168,260

 
13,074,012

Less accumulated depreciation and amortization
(3,049,609
)
 
(3,015,958
)
Real estate, net
10,118,651

 
10,058,054

Right-of-use assets
378,257

 
379,546

Cash and cash equivalents
1,586,738

 
1,515,012

Restricted cash
80,570

 
92,119

Marketable securities

 
33,313

Tenant and other receivables
115,795

 
95,733

Investments in partially owned entities
3,970,791

 
3,999,165

Real estate fund investments
45,129

 
222,649

220 Central Park South condominium units ready for sale
393,417

 
408,918

Receivable arising from the straight-lining of rents
731,807

 
742,206

Deferred leasing costs, net of accumulated amortization of $188,976 and $196,229
353,467

 
353,986

Identified intangible assets, net of accumulated amortization of $100,298 and $98,587
29,123

 
30,965

Other assets
405,914

 
355,347

 
$
18,209,659

 
$
18,287,013

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
 
 
 
Mortgages payable, net
$
5,643,707

 
$
5,639,897

Senior unsecured notes, net
446,076

 
445,872

Unsecured term loan, net
795,974

 
745,840

Unsecured revolving credit facilities
1,075,000

 
575,000

Lease liabilities
497,531

 
498,254

Moynihan Train Hall obligation
972,199

 
914,960

Special dividend/distribution payable

 
398,292

Accounts payable and accrued expenses
407,598

 
440,049

Deferred revenue
54,992

 
59,429

Deferred compensation plan
90,888

 
103,773

Other liabilities
308,683

 
265,754

Total liabilities
10,292,648

 
10,087,120

Commitments and contingencies
 
 
 
Redeemable noncontrolling interests:
 
 
 
Class A units - 13,748,709 and 13,298,956 units outstanding
619,264

 
884,380

Series D cumulative redeemable preferred units - 141,401 units outstanding
4,535

 
4,535

Total redeemable noncontrolling interests
623,799

 
888,915

Shareholders' equity:
 
 
 
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 36,795,540 and 36,795,640 shares
891,211

 
891,214

Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 191,115,726 and 190,985,677 shares
7,624

 
7,618

Additional capital
8,112,523

 
7,827,697

Earnings less than distributions
(2,091,612
)
 
(1,954,266
)
Accumulated other comprehensive loss
(82,719
)
 
(40,233
)
Total shareholders' equity
6,837,027

 
6,732,030

Noncontrolling interests in consolidated subsidiaries
456,185

 
578,948

Total equity
7,293,212

 
7,310,978

 
$
18,209,659

 
$
18,287,013


7


VORNADO REALTY TRUST
OPERATING RESULTS

(Amounts in thousands, except per share amounts)
For the Three Months Ended
March 31,
 
2020
 
2019
Revenues
$
444,532

 
$
534,668

 
 
 
 
(Loss) income from continuing operations
$
(104,503
)
 
$
213,181

Loss from discontinued operations

 
(137
)
Net (loss) income
(104,503
)
 
213,044

Less net loss (income) attributable to noncontrolling interests in:
 
 
 
Consolidated subsidiaries
122,387

 
(6,820
)
Operating Partnership
(390
)
 
(12,202
)
Net income attributable to Vornado
17,494

 
194,022

Preferred share dividends
(12,531
)
 
(12,534
)
Net income attributable to common shareholders
$
4,963

 
$
181,488

 
 
 
 
Income per common share - basic:
 
 
 
Net income per common share
$
0.03

 
$
0.95

Weighted average shares outstanding
191,038

 
190,689

 
 
 
 
Income per common share - diluted:
 
 
 
Net income per common share
$
0.03

 
$
0.95

Weighted average shares outstanding
191,113

 
190,996

 
 
 
 
FFO attributable to common shareholders plus assumed conversions (non-GAAP)
$
130,360

 
$
247,684

Per diluted share (non-GAAP)
$
0.68

 
$
1.30

 
 
 
 
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)
$
137,567

 
$
149,939

Per diluted share (non-GAAP)
$
0.72

 
$
0.79

 
 
 
 
Weighted average shares used in determining FFO attributable to common shareholders plus assumed conversions per diluted share
191,143

 
190,996



8


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
March 31,
 
2020
 
2019
Reconciliation of our net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions:
 
 
 
Net income attributable to common shareholders
$
4,963

 
$
181,488

Per diluted share
$
0.03

 
$
0.95

 
 
 
 
FFO adjustments:
 
 
 
Depreciation and amortization of real property
$
85,136

 
$
108,483

Net gain from sale of UE common shares (sold on March 4, 2019)

 
(62,395
)
Decrease (increase) in fair value of marketable securities:
 
 
 
PREIT (accounted for as a marketable security from March 12, 2019 and sold on January 23, 2020)
4,938

 
15,649

Lexington (sold on March 1, 2019)

 
(16,068
)
Other

 
(42
)
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO:
 
 
 
Depreciation and amortization of real property
40,423

 
24,990

Decrease (increase) in fair value of marketable securities
3,691

 
(12
)
 
134,188

 
70,605

Noncontrolling interests' share of above adjustments
(8,804
)
 
(4,424
)
FFO adjustments, net
$
125,384

 
$
66,181

 
 
 
 
FFO attributable to common shareholders
130,347

 
247,669

Convertible preferred share dividends
13

 
15

FFO attributable to common shareholders plus assumed conversions
$
130,360

 
$
247,684

Per diluted share
$
0.68

 
$
1.30

 
 
 
 
Reconciliation of weighted average shares outstanding:
 
 
 
Weighted average common shares outstanding
191,038

 
190,689

Effect of dilutive securities:
 
 
 
Employee stock options and restricted share awards
75

 
271

Convertible preferred shares
30

 
36

Denominator for FFO per diluted share
191,143

 
190,996


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 depreciable real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specified 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 2 of this press release.

9


VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below is a reconciliation of net (loss) income to NOI at share and NOI at share - cash basis for the three months ended March 31, 2020 and 2019 and the three months ended December 31, 2019.
 
For the Three Months Ended
(Amounts in thousands)
March 31,
 
December 31, 2019
 
2020
 
2019
 
Net (loss) income
$
(104,503
)
 
$
213,044

 
$
160,676

Depreciation and amortization expense
92,793

 
116,709

 
92,926

General and administrative expense
52,834

 
58,020

 
39,791

Transaction related costs and other
71

 
149

 
3,223

Income from partially owned entities
(19,103
)
 
(7,320
)
 
(22,726
)
Loss from real estate fund investments
183,463

 
167

 
90,302

Interest and other investment loss (income), net
5,904

 
(5,045
)
 
(5,889
)
Interest and debt expense
58,842

 
102,463

 
59,683

Net gains on disposition of wholly owned and partially owned assets
(68,589
)
 
(220,294
)
 
(203,835
)
Income tax expense
12,813

 
29,743

 
22,897

Loss (income) from discontinued operations

 
137

 
(55
)
NOI from partially owned entities
81,881

 
67,402

 
85,990

NOI attributable to noncontrolling interests in consolidated subsidiaries
(15,493
)
 
(17,403
)
 
(17,417
)
NOI at share
280,913

 
337,772

 
305,566

Non cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other
3,076

 
(5,181
)
 
(6,590
)
NOI at share - cash basis
$
283,989

 
$
332,591

 
$
298,976


NOI at share represents total revenues less operating expenses including our share of partially owned entities. NOI at share - cash basis represents NOI at share adjusted to exclude straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments. We consider NOI at share - cash basis 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 at share - cash basis, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI at share and NOI at share - cash basis should not be considered alternatives to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.

10


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, 2020 compared to March 31, 2019.
(Amounts in thousands)
Total
 
New York
 
theMART
 
555 California Street
 
Other
NOI at share for the three months ended March 31, 2020
$
280,913

 
$
242,559

 
$
21,113

 
$
15,231

 
$
2,010

Less NOI at share from:
 
 
 
 
 
 
 
 
 
 
Acquisitions
 
(369
)
 
(369
)
 

 

 

Development properties
 
(14,266
)
 
(14,266
)
 

 

 

Other non-same store (income) expense, net
 
(7,791
)
 
(5,520
)
 
(422
)
 
161

 
(2,010
)
Same store NOI at share for the three months ended March 31, 2020
$
258,487

 
$
222,404

 
$
20,691

 
$
15,392

 
$

 
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV
 
(30,292
)
 
(30,292
)
 

 

 

Dispositions
 
(3,399
)
 
(3,399
)
 

 

 

Development properties
 
(20,593
)
 
(20,593
)
 

 

 

Other non-same store (income) expense, net
 
(18,378
)
 
(2,405
)
 
339

 
78

 
(16,390
)
Same store NOI at share for the three months ended March 31, 2019
$
265,110

 
$
226,669

 
$
23,862

 
$
14,579

 
$

 
 
 
 
 
 
 
 
 
 
(Decrease) increase in same store NOI at share for the three months ended March 31, 2020 compared to March 31, 2019
$
(6,623
)
 
$
(4,265
)
 
$
(3,171
)
 
$
813

 
$

 
 
 
 
 
 
 
 
 
 
 
% (decrease) increase in same store NOI at share
(2.5
)%
 
(1.9
)%
(1) 
(13.3
)%
(2) 
5.6
%
 
%
____________________
(1)
As a result of the COVID-19 pandemic, we have temporarily closed the Hotel Pennsylvania. Excluding the Hotel Pennsylvania, same store NOI decreased by 0.3%.
(2)
The decrease is primarily due to the cancellation of trade shows resulting from the COVID-19 pandemic. Excluding trade shows, same store NOI at share increased by 1.1%.

Same store NOI at share represents NOI at share from operations which are in service in both the current and prior year reporting periods. Same store NOI at share - cash basis is same store NOI at share adjusted to exclude straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments. 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 alternatives to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.

11


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, 2020 compared to March 31, 2019.
(Amounts in thousands)
Total
 
New York
 
theMART
 
555 California Street
 
Other
NOI at share - cash basis for the three months ended March 31, 2020
$
283,989

 
$
243,665

 
$
22,705

 
$
15,435

 
$
2,184

 
Less NOI at share - cash basis from:
 
 
 
 
 
 
 
 
 
 
Acquisitions
(348
)
 
(348
)
 

 

 

 
Development properties
(18,117
)
 
(18,117
)
 

 

 

 
Other non-same store income, net
(12,607
)
 
(9,944
)
 
(422
)
 
(57
)
 
(2,184
)
Same store NOI at share - cash basis for the three months ended March 31, 2020
$
252,917

 
$
215,256

 
$
22,283

 
$
15,378

 
$

 
 
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV
(27,722
)
 
(27,722
)
 

 

 

 
Dispositions
(3,581
)
 
(3,581
)
 

 

 

 
Development properties
(24,339
)
 
(24,339
)
 

 

 

 
Other non-same store (income) expense, net
(20,163
)
 
(4,386
)
 
339

 
78

 
(16,194
)
Same store NOI at share - cash basis for the three months ended March 31, 2019
$
256,786

 
$
216,712

 
$
25,251

 
$
14,823

 
$

 
 
 
 
 
 
 
 
 
 
(Decrease) increase in same store NOI at share - cash basis for the three months ended March 31, 2020 compared to March 31, 2019
$
(3,869
)
 
$
(1,456
)
 
$
(2,968
)
 
$
555

 
$

 
 
 
 
 
 
 
 
 
 
% (decrease) increase in same store NOI at share - cash basis
(1.5
)%
 
(0.7
)%
(1) 
(11.8
)%
(2) 
3.7
%
 
%
____________________
(1)
As a result of the COVID-19 pandemic, we have temporarily closed the Hotel Pennsylvania. Excluding the Hotel Pennsylvania, same store NOI at share - cash basis increased by 0.9%.
(2)
The decrease is primarily due to the cancellation of trade shows resulting from the COVID-19 pandemic. Excluding trade shows, same store NOI at share - cash basis increased by 2.0%.

 



12


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, 2020 compared to December 31, 2019.
(Amounts in thousands)
Total
 
New York
 
theMART
 
555 California Street
 
Other
NOI at share for the three months ended March 31, 2020
$
280,913

 
$
242,559

 
$
21,113

 
$
15,231

 
$
2,010

 
Less NOI at share from:
 
 
 
 
 
 
 
 
 
 
Acquisitions
(364
)
 
(364
)
 

 

 

 
Development properties
(14,271
)
 
(14,271
)
 

 

 

 
Other non-same store (income) expense, net
(7,477
)
 
(5,160
)
 
(422
)
 
115

 
(2,010
)
Same store NOI at share for the three months ended March 31, 2020
$
258,801

 
$
222,764

 
$
20,691

 
$
15,346

 
$

 
 
 
 
 
 
 
 
 
 
NOI at share for the three months ended December 31, 2019
$
305,566

 
$
266,284

 
$
22,712

 
$
14,533

 
$
2,037

 
Less NOI at share from:
 
 
 
 
 
 
 
 
 
 
Acquisitions
(118
)
 
(118
)
 

 

 

 
Development properties
(15,894
)
 
(15,894
)
 

 

 

 
Other non-same store (income) expense, net
(7,665
)
 
(5,530
)
 
(172
)
 
74

 
(2,037
)
Same store NOI at share for the three months ended December 31, 2019
$
281,889

 
$
244,742

 
$
22,540

 
$
14,607

 
$

 
 
 
 
 
 
 
 
 
 
(Decrease) increase in same store NOI at share for the three months ended March 31, 2020 compared to December 31, 2019
$
(23,088
)
 
$
(21,978
)
 
$
(1,849
)
 
$
739

 
$

 
 
 
 
 
 
 
 
 
 
 
% (decrease) increase in same store NOI at share
(8.2
)%
 
(9.0
)%
(1) 
(8.2
)%
(2) 
5.1
%
 
%
____________________
(1)
As a result of the COVID-19 pandemic, we have temporarily closed the Hotel Pennsylvania. Excluding the Hotel Pennsylvania, same store NOI at share decreased by 2.7%.
(2)
The decrease is primarily due to the cancellation of trade shows resulting from the COVID-19 pandemic. Excluding trade shows, same store NOI at share decreased by 2.8%.

13


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, 2020 compared to December 31, 2019.
(Amounts in thousands)
Total
 
New York
 
theMART
 
555 California Street
 
Other
NOI at share - cash basis for the three months ended March 31, 2020
$
283,989

 
$
243,665

 
$
22,705

 
$
15,435

 
$
2,184

 
Less NOI at share - cash basis from:
 
 
 
 
 
 
 
 
 
 
Acquisitions
(343
)
 
(343
)
 

 

 

 
Development properties
(18,122
)
 
(18,122
)
 

 

 

 
Other non-same store income, net
(12,293
)
 
(9,584
)
 
(422
)
 
(103
)
 
(2,184
)
Same store NOI at share - cash basis for the three months ended March 31, 2020
$
253,231

 
$
215,616

 
$
22,283

 
$
15,332

 
$

 
 
 
 
 
 
 
 
 
 
 
NOI at share - cash basis for the three months ended December 31, 2019
$
298,976

 
$
257,707

 
$
24,646

 
$
14,491

 
$
2,132

 
Less NOI at share - cash basis from:
 
 
 
 
 
 
 
 
 
 
Acquisitions
(49
)
 
(49
)
 

 

 

 
Development properties
(17,310
)
 
(17,310
)
 

 

 

 
Other non-same store income, net
(9,244
)
 
(6,940
)
 
(172
)
 

 
(2,132
)
Same store NOI at share - cash basis for the three months ended December 31, 2019
$
272,373

 
$
233,408

 
$
24,474

 
$
14,491

 
$

 
 
 
 
 
 
 
 
 
 
(Decrease) increase in same store NOI at share - cash basis for the three months ended March 31, 2020 compared to December 31, 2019
$
(19,142
)
 
$
(17,792
)
 
$
(2,191
)
 
$
841

 
$

 
 
 
 
 
 
 
 
 
 
% (decrease) increase in same store NOI at share - cash basis
(7.0
)%
 
(7.6
)%
(1) 
(9.0
)%
(2) 
5.8
%
 
%
____________________
(1)
As a result of the COVID-19 pandemic, we have temporarily closed the Hotel Pennsylvania. Excluding the Hotel Pennsylvania, same store NOI at share - cash basis decreased by 1.0%.
(2)
The decrease is primarily due to the cancellation of trade shows resulting from the COVID-19 pandemic. Excluding trade shows, same store NOI at share - cash basis decreased by 4.0%.

14
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
EXHIBIT 99.2


403868533_supplementalcoversoptions09.jpg



 403868533_vornadologoa19.jpg

INDEX
 
 
 
 
 
 
Page
 
 
COVID-19 PANDEMIC
 
 
 
 
BUSINESS DEVELOPMENTS
 
 
 
 
FINANCIAL INFORMATION
 
 
 
 
 
Financial Highlights
 
 
 
 
Net Income Attributable to Common Shareholders (Consolidated and by Segment)
-
 
 
Net Operating Income at Share (by Segment and by Subsegment)
-
 
 
Same Store NOI at Share and NOI at Share - Cash Basis and NOI at Share By Region
 
 
 
 
Consolidated Balance Sheets
 
 
 
 
LEASING ACTIVITY AND LEASE EXPIRATIONS
 
 
 
 
 
Leasing Activity
 
 
 
 
Leasing Expirations
-
 
 
TRAILING TWELVE MONTH PRO-FORMA CASH NOI AT SHARE
 
 

 
DEBT AND CAPITALIZATION
 
 
 
 
 
Capital Structure
 
 
 
 
Common Shares Data
 
 
 
 
Debt Analysis
 
 
 
 
Debt Maturities
 
 
 
 
UNCONSOLIDATED JOINT VENTURES
-
 
 
DEVELOPMENT ACTIVITY AND CAPITAL EXPENDITURES
 
 
 
 
 
Penn District Active Development/Redevelopment Summary
 
 
 
 
Other Development/Redevelopment Summary
 
 
 
 
Capital Expenditures, Tenant Improvements and Leasing Commissions
-
 
 
PROPERTY STATISTICS
 
 
 
 
 
Square Footage
 
 
 
 
Top 30 Tenants
 
 
 
 
Occupancy and Residential Statistics
 
 
 
 
Ground Leases
 
 
 
 
Property Table
-
 
 
EXECUTIVE OFFICERS AND RESEARCH COVERAGE
 
 
 
 
APPENDIX: DEFINITIONS AND NON-GAAP RECONCILIATIONS
 
 
 
 
 
Definitions
 
 
 
 
Reconciliations
-
 
Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximates," "believes," "expects," "anticipates," "estimates," "intends," "plans," "would," "may" or other similar expressions in this supplemental package. We also note the following forward-looking statements: in the case of our development and redevelopment projects, the estimated completion date, estimated project cost, projected incremental cash yield, stabilization date and cost to complete; and estimates of future capital expenditures, dividends to common and preferred shareholders and operating partnership distributions. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see "Item 1A. Risk Factors" in Part 1 of our Annual Report on Form 10-K for the year ended December 31, 2019 and "Item 1A. Risk Factors" in Part II of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020. Currently, one of the most significant factors is the ongoing adverse effect of the novel strain of coronavirus ("COVID-19") pandemic on our business, financial condition, results of operations, cash flows, operating performance and the effect it will have on our tenants, the global, national, regional and local economies and financial markets and the real estate market in general. The extent of the impact of the COVID-19 pandemic will depend on future developments, including the duration of the pandemic, which are highly uncertain at this time but that impact could be material. Moreover, you are cautioned that the COVID-19 pandemic will heighten many of the risks identified in "Item 1A. Risk Factors" in Part I of our Annual Report on Form 10-K for the year ended December 31, 2019, as well as the risks set forth in "Item 1A. Risk Factors" in Part II of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this supplemental package. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this supplemental package. This supplemental package includes certain non-GAAP financial measures, which are accompanied by what the Company considers the most directly comparable financial measures calculated and presented in accordance with GAAP. These include Funds From Operations ("FFO"), Funds Available for Distribution ("FAD"), Net Operating Income ("NOI") and Earnings Before Depreciation and Amortization for Real Estate Companies ("EBIDTAre"). Quantitative reconciliations of the differences between the most directly comparable GAAP financial measures and the non-GAAP financial measures presented are provided within this Supplemental package. Definitions of these non-GAAP financial measures and statements of the reasons why management believes the non-GAAP measures provide useful information to investors about the Company's financial condition and results of operations, and, if applicable, the purposes for which management uses the measures, can be found in the Definitions section of this Supplemental package starting on page i.

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COVID-19 PANDEMIC

In December 2019, a novel strain of coronavirus (“COVID-19”) was identified in Wuhan, China and by March 11, 2020, the World Health Organization had declared it a global pandemic. Many states in the U.S., including New York, New Jersey, Illinois and California have implemented stay-at-home orders for all "non-essential" business and activity in an aggressive effort to curb the spread of the virus. Consequently, the U.S. economy has suffered and there has been significant volatility in the financial markets. Many U.S. industries and businesses have been negatively affected and millions of people have filed for unemployment.
As our first priority, we are following strict protocols and taking all measures to protect our employees, tenants, and communities.
Our properties, which are concentrated in New York City, and in Chicago and San Francisco, have been adversely affected as a result of the COVID-19 pandemic and the preventive measures taken to curb the spread. Some of the effects on us include the following:
With the exception of grocery stores and other "essential" businesses, substantially all of our retail tenants have closed their stores and many are seeking rent relief.
While our office buildings remain open, substantially all of our office tenants are working remotely.
We have temporarily closed the Hotel Pennsylvania.
We have postponed trade shows at theMART for the remainder of 2020.
Because certain of our development projects are deemed "non-essential," they have been temporarily paused due to New York State executive orders.
Closings on the sale of condominium units at 220 Central Park South have continued. During April 2020 we closed on the sale of four condominium units for net proceeds of $157,747,000. However, future closings may be temporarily delayed to the extent we cannot complete the buildout and obtain temporary certificates of occupancy on time.
We placed 1,803 employees on temporary furlough, including 1,293 employees of Building Maintenance Services LLC, a wholly owned subsidiary, which provides cleaning, security and engineering services primarily to our New York properties, 414 employees at the Hotel Pennsylvania and 96 corporate staff employees.
Effective April 1, 2020, our executive officers waived portions of their annual base salary for the remainder of 2020.
Effective April 1, 2020, each non-management member of our Board of Trustees agreed to forgo his or her $75,000 annual cash retainer for the remainder of 2020.
We have collected substantially all of the rent due for March 2020 and collected 90% of rent due from our office tenants for the month of April 2020 and 53% of the rent due from our retail tenants for the month of April 2020, or 83% in the aggregate. Many of our retail tenants and some of our office tenants have requested rent relief and/or rent deferral for April 2020 and beyond. While we believe that our tenants are required to pay rent under their leases, we have implemented and will continue to consider temporary rent deferrals on a case-by-case basis.
In light of the evolving health, social, economic, and business environment, governmental regulation or mandates, and business disruptions that have occurred and may continue to occur, the impact of COVID-19 on our financial condition and operating results remains highly uncertain but the impact could be material. The impact on us includes lower rental income and potentially lower occupancy levels at our properties which will result in less cash flow available for operating costs, to pay our indebtedness and for distribution to our shareholders. In addition, the value of our real estate assets may decline, which may result in non-cash impairment charges in future periods and that impact could be material.
 


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BUSINESS DEVELOPMENTS
 
Disposition Activity
Pennsylvania Real Estate Investment Trust ("PREIT")
On January 23, 2020, we sold all of our 6,250,000 common shares of PREIT, realizing net proceeds of $28,375,000. We recorded a $4,938,000 loss (mark-to-market decrease) for the three months ended March 31, 2020.
220 Central Park South ("220 CPS")
During the three months ended March 31, 2020, we closed on the sale of seven condominium units at 220 CPS for net proceeds aggregating $191,216,000 resulting in a financial statement net gain of $68,589,000 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, $8,678,000 of income tax expense was recognized on our consolidated statements of income. From inception to March 31, 2020, we closed on the sale of 72 units for aggregate net proceeds of $2,011,348,000.
Financing Activity
Unsecured Term Loan
On February 28, 2020, we increased our unsecured term loan balance to $800,000,000 (from $750,000,000) by exercising an accordion feature. Pursuant to an existing swap agreement, $750,000,000 of the loan bears interest at a fixed rate of 3.87% through October 2023, and the balance of $50,000,000 floats at a rate of LIBOR plus 1.00% (1.94% as of March 31, 2020). The entire $800,000,000 will float thereafter for the duration of the loan through February 2024.
First Quarter Leasing Activity
311,000 square feet of New York Office space (297,000 square feet at share) at an initial rent of $90.47 per square foot and a weighted average lease term of 6.6 years. The change in the GAAP and cash mark-to-market rent on the 275,000 square feet of second generation space were negative 3.3% and positive 0.8%, respectively. Tenant improvements and leasing commissions were $11.69 per square foot per annum, or 12.9% of initial rent.
15,000 square feet of New York Retail space (13,000 square feet at share) at an initial rent of $416.36 per square foot and a weighted average lease term of 9.7 years. The change in the GAAP and cash mark-to-market rent on the 9,000 square feet of second generation space were positive 126.6% and 104.6%, respectively. Tenant improvements and leasing commissions were $48.18 per square foot per annum, or 11.6% of initial rent.
231,000 square feet at theMART at an initial rent of $47.31 per square foot and a weighted average lease term of 10.3 years. The change in the GAAP and cash mark-to-market rent on the 228,000 square feet of second generation space were positive 2.6% and negative 1.2%, respectively. Tenant improvements and leasing commissions were $4.44 per square foot per annum, or 9.4% of initial rent.
6,000 square feet at 555 California Street (4,000 square feet at share) at an initial rent of $117.00 per square foot and a weighted average lease term of 1.4 years. The change in the GAAP and cash mark-to-market rent on the 4,000 square feet of second generation space were positive 44.5% and 29.7%, respectively. Tenant improvements and leasing commissions were $2.91 per square foot per annum, or 2.5% of initial rent.


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FINANCIAL HIGHLIGHTS (unaudited)
 
 
 
 
 
(Amounts in thousands, except per share amounts)
 
For the Three Months Ended
 
March 31,
 
December 31, 2019
 
2020
 
2019
 
Total revenues
$
444,532

 
$
534,668

 
$
460,968

 
 
 
 
 
 
Net income attributable to common shareholders
$
4,963

 
$
181,488

 
$
193,217

Per common share:
 
 
 
 
 
Basic
$
0.03

 
$
0.95

 
$
1.01

Diluted
$
0.03

 
$
0.95

 
$
1.01

 
 
 
 
 
 
Net income attributable to common shareholders, as adjusted (non-GAAP)
$
20,233

 
$
24,814

 
$
56,381

Per diluted share (non-GAAP)
$
0.11

 
$
0.13

 
$
0.29

 
 
 
 
 
 
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)
$
137,567

 
$
149,939

 
$
171,030

Per diluted share (non-GAAP)
$
0.72

 
$
0.79

 
$
0.89

 
 
 
 
 
 
FFO attributable to common shareholders plus assumed conversions (non-GAAP)
$
130,360

 
$
247,684

 
$
311,876

FFO - Operating Partnership Basis ("OP Basis") (non-GAAP)
$
138,819

 
$
263,697

 
$
332,029

Per diluted share (non-GAAP)
$
0.68

 
$
1.30

 
$
1.63

 
 
 
 
 
 
Dividends per common share:
 
 
 
 
 
Quarterly dividends
$
0.66

 
$
0.66

 
$
0.66

Special dividend

 

 
1.95

Total
$
0.66

 
$
0.66

 
$
2.61

 
 
 
 
 
 
FFO payout ratio (based on FFO attributable to common shareholders plus assumed conversions, as adjusted)
91.7
%
 
83.5
%
 
74.2
%
FAD payout ratio
106.5
%
 
85.7
%
 
93.0
%
 
 
 
 
 
 
Weighted average shares used in determining FFO attributable to common shareholders
   plus assumed conversions per diluted share (REIT basis)
191,143

 
190,996

 
191,140

Convertible units:
 
 
 
 
 
Class A
12,332

 
12,083

 
12,162

Equity awards - unit equivalents
71

 
265

 
189

Weighted average shares used in determining FFO attributable to Class A unitholders
   plus assumed conversions per diluted share (OP Basis)
203,546

 
203,344

 
203,491


Please refer to the Appendix for reconciliations of GAAP to non-GAAP measures.

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CONSOLIDATED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS (unaudited)
(Amounts in thousands)
 
 
For the Three Months Ended
 
 
March 31,
 
December 31,
2019
 
 
2020
 
2019
 
Variance
 
Property rentals(1)
 
$
355,060

 
$
428,380

 
$
(73,320
)
 
$
360,139

Tenant expense reimbursements(1)
 
52,173

 
66,112

 
(13,939
)
 
55,233

Amortization of acquired below-market leases, net
 
4,206

 
6,525

 
(2,319
)
 
4,269

Straight-lining of rents
 
(10,165
)
 
(1,140
)
 
(9,025
)
 
(1,233
)
Total rental revenues
 
401,274

 
499,877

 
(98,603
)
 
418,408

Fee and other income:
 
 
 
 
 
 
 
 
BMS cleaning fees
 
32,466

 
29,785

 
2,681

 
31,642

Management and leasing fees
 
2,867

 
2,237

 
630

 
3,479

Other income
 
7,925

 
2,769

 
5,156

 
7,439

Total revenues
 
444,532

 
534,668

 
(90,136
)
 
460,968

Operating expenses
 
(230,007
)
 
(246,895
)
 
16,888

 
(223,975
)
Depreciation and amortization
 
(92,793
)
 
(116,709
)
 
23,916

 
(92,926
)
General and administrative
 
(52,834
)
 
(58,020
)
 
5,186

 
(39,791
)
Benefit (expense) from deferred compensation plan liability
 
11,245

 
(5,433
)
 
16,678

 
(3,887
)
Transaction related costs and other
 
(71
)
 
(149
)
 
78

 
(3,223
)
Total expenses
 
(364,460
)
 
(427,206
)
 
62,746

 
(363,802
)
Income from partially owned entities(2)
 
19,103

 
7,320

 
11,783

 
22,726

Loss from real estate fund investments
 
(183,463
)
 
(167
)
 
(183,296
)
 
(90,302
)
Interest and other investment (loss) income, net
 
(5,904
)
 
5,045

 
(10,949
)
 
5,889

(Loss) income from deferred compensation plan assets
 
(11,245
)
 
5,433

 
(16,678
)
 
3,887

Interest and debt expense