Vornado Announces Fourth Quarter 2012 Financial Results

PARAMUS, N.J.--(BUSINESS WIRE)--

VORNADO REALTY TRUST (New York Stock Exchange: VNO) filed its Form 10-K for the year ended December 31, 2012 today and reported:

Fourth Quarter 2012 Results

NET INCOME attributable to common shareholders for the quarter ended December 31, 2012 was $62.6 million, or $0.33 per diluted share, compared to $69.5 million, or $0.37 per diluted share for the quarter ended December 31, 2011. Net income for the quarters ended December 31, 2012 and 2011 includes $281.5 million and $1.9 million, respectively, of net gains on sale of real estate, and $117.9 million and $28.8 million, respectively, of real estate impairment losses. In addition, the quarters ended December 31, 2012 and 2011 include certain other items that affect comparability which are listed in the table below. Adjusting net income attributable to common shareholders for net gains on sale of real estate, real estate impairment losses and the items in the table below, net of amounts attributable to noncontrolling interests, net income attributable to common shareholders for the quarters ended December 31, 2012 and 2011 was $81.3 million and $20.9 million, or $0.43 and $0.11 per diluted share, respectively.

FUNDS FROM OPERATIONS attributable to common shareholders plus assumed conversions (“FFO”) for the quarter ended December 31, 2012 was $55.9 million, or $0.30 per diluted share, compared to $280.4 million, or $1.46 per diluted share for the prior year's quarter. Adjusting FFO for certain items that affect comparability which are listed in the table below, FFO for the quarters ended December 31, 2012 and 2011 was $228.6 million and $197.9 million, or $1.22 and $1.03 per diluted share, respectively.

(Amounts in thousands, except per share amounts)				For the Quarters Ended December 31,
				2012				2011
FFO (1)				$	55,890			$	280,369
Per Share				$	0.30			$	1.46
Items that affect comparability income (expense):
Non-cash impairment loss on J.C. Penney owned shares				$	(224,937	)		$	-
(Loss) income from the mark-to-market of J.C. Penney derivative position					(22,472	)			40,120
Non-cash impairment loss on investment in Toys					(40,000	)			-
Accelerated amortization of discount on investment in subordinated debt of Independence Plaza					60,396				-
1290 Avenue of the Americas and 555 California Street priority return and income tax benefit					25,260				-
Net gain resulting from Lexington Realty Trust's stock issuance					14,116				-
FFO attributable to discontinued operations, including our share of discontinued operations
of Alexander's					12,736				25,398
Recognition of disputed receivable from Stop & Shop					-				23,521
Other, net					(8,825	)			(1,014	)
					(183,726	)			88,025
Noncontrolling interests' share of above adjustments					11,056				(5,532	)
Items that affect comparability, net				$	(172,670	)		$	82,493
FFO as adjusted for comparability				$	228,560			$	197,876
Per Share				$	1.22			$	1.03

____________________________________________________________
(1)		See page 4 for a reconciliation of our net income to FFO for the quarters ended December 31, 2012 and 2011.

Year Ended 2012 Results

NET INCOME attributable to common shareholders for the year ended December 31, 2012 was $549.3 million, or $2.94 per diluted share, compared to $601.8 million, or $3.23 per diluted share for the year ended December 31, 2011. Net income for the years ended December 31, 2012 and 2011 includes $487.4 million and $61.4 million, respectively, of net gains on sale of real estate, and $141.6 million and $28.8 million, respectively, of real estate impairment losses. In addition, the years ended December 31, 2012 and 2011 include certain other items that affect comparability which are listed in the table below. Adjusting net income attributable to common shareholders for net gains on sale of real estate, real estate impairment losses and the items in the table below, net of amounts attributable to noncontrolling interests, net income attributable to common shareholders for the years ended December 31, 2012 and 2011 was $384.4 million and $314.1 million, or $2.06 and $1.68 per diluted share, respectively.

FFO for the year ended December 31, 2012 was $818.6 million, or $4.39 per diluted share, compared to $1,231.0 million, or $6.42 per diluted share for the prior year. Adjusting FFO for certain items that affect comparability which are listed in the table below, FFO for the years ended December 31, 2012 and 2011 was $964.1 million and $939.3 million, or $5.17 and $4.90 per diluted share, respectively.

(Amounts in thousands, except per share amounts)				For the Years Ended December 31,
				2012				2011
FFO (1)				$	818,565			$	1,230,973
Per Share				$	4.39			$	6.42
Items that affect comparability income (expense):
Non-cash impairment loss on J.C. Penney owned shares				$	(224,937	)		$	-
(Loss) income from the mark-to-market of J.C. Penney derivative position					(75,815	)			12,984
Non-cash impairment loss on investment in Toys					(40,000	)			-
FFO attributable to discontinued operations, including our share of discontinued operations
of Alexander's					68,501				91,938
Accelerated amortization of discount on investment in subordinated debt of Independence Plaza					60,396				-
1290 Avenue of the Americas and 555 California Street priority return and income tax benefit					25,260				-
After-tax net gain on sale of Canadian Trade Shows					19,657				-
Net gain resulting from Lexington Realty Trust's stock issuance					14,116				9,760
Net gain on extinguishment of debt					-				83,907
Mezzanine loan loss reversal and gain on disposition					-				82,744
Recognition of disputed receivable from Stop & Shop					-				23,521
Other, net					(2,339	)			6,440
					(155,161	)			311,294
Noncontrolling interests' share of above adjustments					9,601				(19,594	)
Items that affect comparability, net				$	(145,560	)		$	291,700
FFO as adjusted for comparability				$	964,125			$	939,273
Per Share				$	5.17			$	4.90

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(1)		See page 4 for a reconciliation of our net income to FFO for the years ended December 31, 2012 and 2011.

Supplemental Financial Information

Further details regarding the Company's 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, 2012. Such factors include, among others, risks associated with the timing of and costs associated with property improvements, financing commitments and general competitive factors.

VORNADO REALTY TRUST
OPERATING RESULTS FOR THE QUARTERS AND YEARS ENDED
DECEMBER 31, 2012 AND 2011
				For The Quarters								For The Years
(Amounts in thousands, except per share amounts)				Ended December 31,								Ended December 31,
				2012				2011				2012				2011
Revenues				$	697,654			$	689,959			$	2,766,457			$	2,732,836
Income from continuing operations					50,432				105,275				408,599				578,885
Income (loss) from discontinued operations					41,461				(8,288	)			285,942				161,115
Net income					91,893				96,987				694,541				740,000
Less net income attributable to noncontrolling interests in:
Consolidated Subsidiaries					(1,090	)			(1,143	)			(32,018	)			(21,786	)
Operating Partnership					(3,882	)			(4,674	)			(35,327	)			(41,059	)
Preferred unit distributions of the Operating Partnership					(786	)			(3,874	)			(9,936	)			(14,853	)
Net income attributable to Vornado					86,135				87,296				617,260				662,302
Preferred share dividends					(20,750	)			(17,788	)			(76,937	)			(65,531	)
Discount on preferred share and unit redemptions					(2,752	)			-				8,948				5,000
Net income attributable to common shareholders				$	62,633			$	69,508			$	549,271			$	601,771
Net income per common share:
Basic				$	0.34			$	0.38			$	2.95			$	3.26
Diluted				$	0.33			$	0.37			$	2.94			$	3.23
Weighted average shares:
Basic					186,267				184,571				185,810				184,308
Diluted					186,866				185,963				186,530				186,021
FFO attributable to common shareholders plus assumed conversions				$	55,890			$	280,369			$	818,565			$	1,230,973
Per diluted share				$	0.30			$	1.46			$	4.39			$	6.42
FFO as adjusted for comparability				$	228,560			$	197,876			$	964,125			$	939,273
Per diluted share				$	1.22			$	1.03			$	5.17			$	4.90
Weighted average shares used in determining FFO per diluted share					186,866				191,751				186,530				191,757

The following table reconciles our net income to FFO:
				For The Quarters								For The Years
(Amounts in thousands)				Ended December 31,								Ended December 31,
				2012				2011				2012				2011
Reconciliation of our net income to FFO:
Net income attributable to Vornado				$	86,135			$	87,296			$	617,260			$	662,302
Depreciation and amortization of real property					125,069				152,655				504,407				530,113
Net gains on sale of real estate					(41,998	)			-				(245,799	)			(51,623	)
Real estate impairment losses					116,453				28,799				129,964				28,799
Proportionate share of adjustments to equity in net income of
Toys, to arrive at FFO:
Depreciation and amortization of real property					17,777				18,039				68,483				70,883
Net gains on sale of real estate					-				-				-				(491	)
Real estate impairment losses					1,430				-				9,824				-
Income tax effect of above adjustments					(6,728	)			(6,314	)			(27,493	)			(24,634	)
Proportionate share of adjustments to equity in net income of
partially owned entities, excluding Toys, to arrive at FFO:
Depreciation and amortization of real property					20,387				26,699				86,197				99,992
Net gains on sale of real estate					(239,551	)			(1,916	)			(241,602	)			(9,276	)
Real estate impairment losses					-				-				1,849				-
Noncontrolling interests' share of above adjustments					418				(13,733	)			(16,649	)			(40,957	)
FFO					79,392				291,525				886,441				1,265,108
Preferred share dividends					(20,750	)			(17,788	)			(76,937	)			(65,531	)
Discount on preferred share and unit redemptions					(2,752	)			-				8,948				5,000
FFO attributable to common shareholders					55,890				273,737				818,452				1,204,577
Interest on 3.88% exchangeable senior debentures					-				6,602				-				26,272
Convertible preferred share dividends					-				30				113				124
FFO attributable to common shareholders plus assumed conversions				$	55,890			$	280,369			$	818,565			$	1,230,973

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 gain from sales of depreciated real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets, extraordinary items and other specified non-cash items, including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are 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 flows as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies. A reconciliation of our net income to FFO is provided above. In addition to FFO, we also disclose FFO before certain items that affect comparability. Although this non-GAAP measure clearly differs from NAREIT's definition of FFO, we believe it provides a meaningful presentation of operating performance. A reconciliation of FFO to FFO as adjusted for comparability is provided on page 1 and page 2 of this press release.

Conference Call and Audio Webcast

As previously announced, the Company will host a quarterly earnings conference call and audio webcast on February 27, 2013 at 10:00 a.m. Eastern Time (ET). The conference call can be accessed by dialing 800-446-2782 (domestic) or 847-413-3235 (international) and indicating to the operator the passcode 34178055. A telephonic replay of the conference call will be available from 12:30 p.m. ET on February 27, 2013 through March 29, 2013. To access the replay, please dial 888-843-7419 and enter the passcode 34178055#. 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 for 90 days following the conference call.