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Vornado Announces First Quarter 2018 Financial Results

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NEW YORK, April 30, 2018 (GLOBE NEWSWIRE) -- VORNADO REALTY TRUST (NYSE:VNO) reported today:

Quarter Ended March 31, 2018 Financial Results

NET LOSS attributable to common shareholders for the quarter ended March 31, 2018 was $17.8 million, or $0.09 per diluted share compared to net income attributable to common shareholders of $47.8 million, or $0.25 per diluted share, for the prior year's quarter.  Adjusting net (loss) income attributable to common shareholders for the items listed in the table below, net income attributable to common shareholders, as adjusted (non-GAAP) for the quarters ended March 31, 2018 and 2017 was $56.4 million and $46.9 million, or $0.30 and $0.25 per diluted share, respectively.

The following table reconciles our net (loss) 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,
  2018   2017
Net (loss) income attributable to common shareholders $ (17,841 )   $ 47,752  
Per diluted share $ (0.09 )   $ 0.25  
       
Certain expense (income) items that impact net (loss) income attributable to common shareholders:      
Decrease in fair value of marketable securities resulting from a new GAAP accounting standard effective January 1, 2018 $ 34,660     $  
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      
666 Fifth Avenue Office Condominium (49.5% interest) 3,492     10,197  
Our share of real estate fund investments (excluding our $4,252 share of One Park Avenue potential additional transfer taxes and reduction in carried interest) (814 )   3,235  
Loss (income) from discontinued operations (primarily related to JBG SMITH Properties operating results and transaction costs through July 17, 2017 spin-off) 363     (15,318 )
Other 3,420     949  
  79,110     (937 )
Noncontrolling interests' share of above adjustments (4,881 )   58  
Total of certain expense (income) items that impact net (loss) income attributable to common shareholders $ 74,229     $ (879 )
       
Net income attributable to common shareholders, as adjusted (non-GAAP) $ 56,388     $ 46,873  
Per diluted share (non-GAAP) $ 0.30     $ 0.25  
               

FUNDS FROM OPERATIONS ("FFO") attributable to common shareholders plus assumed conversions (non-GAAP) for the quarter ended March 31, 2018 was $102.5 million, or $0.54 per diluted share, compared to $205.7 million, or $1.08 per diluted share, for the prior year's quarter.  Adjusting FFO attributable to common shareholders plus assumed conversions for the items listed in the table below, FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the quarters ended March 31, 2018 and 2017 was $173.8 million and $160.1 million, or $0.91 and $0.84 per diluted share, respectively.

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

   
(Amounts in thousands, except per share amounts) For the Three Months Ended March 31,
  2018   2017
FFO attributable to common shareholders plus assumed conversions (non-GAAP)(1) $ 102,479     $ 205,729  
Per diluted share (non-GAAP) $ 0.54     $ 1.08  
       
Certain expense (income) items that impact FFO attributable to common shareholders plus assumed conversions:      
Decrease in fair value of marketable securities resulting from a new GAAP accounting standard effective January 1, 2018 $ 34,660     $  
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      
Our share of real estate fund investments (excluding our $4,252 share of One Park Avenue potential additional transfer taxes and reduction in carried interest) (814 )   3,235  
FFO from discontinued operations (primarily related to JBG SMITH Properties operating results and transaction costs through July 17, 2017 spin-off) 363     (48,093 )
666 Fifth Avenue Office Condominium (49.5% interest) 137     (3,553 )
Other 3,721     (249 )
  76,056     (48,660 )
Noncontrolling interests' share of above adjustments (4,693 )   3,036  
Total of certain expense (income) items that impact FFO attributable to common shareholders plus assumed conversions $ 71,363     $ (45,624 )
       
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) $ 173,842     $ 160,105  
Per diluted share (non-GAAP) $ 0.91     $ 0.84  

____________________________________________________________

  1. See page 9 for a reconciliation of our net (loss) income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the three months ended March 31, 2018 and 2017.

Acquisition Activity

On February 9, 2018, we acquired 537 West 26th Street, a 14,000 square foot commercial property adjacent to our 260 Eleventh Avenue office property and 55,000 square feet of additional zoning air rights, for $44,000,000.

Disposition Activity

On January 17, 2018, Vornado Capital Partners Real Estate Fund (the "Fund") completed the sale of the retail condominium at 11 East 68th Street, a property located on Madison Avenue and 68th Street, for $82,000,000.  From the inception of this investment through its disposition, the Fund realized a $46,259,000 net gain.

Financing Activities

On January 4 and 11, 2018, we redeemed all of the outstanding 6.625% Series G and Series I cumulative redeemable preferred shares at their redemption price of $25.00 per share, or $470,000,000 in the aggregate, plus accrued and unpaid dividends through the date of redemption, and expensed $14,486,000 of previously capitalized issuance costs.

On January 5, 2018, we completed a $100,000,000 refinancing of 33-00 Northern Boulevard (Center Building), a 471,000 square foot office building in Long Island City, New York.  The seven-year loan is at LIBOR plus 1.80%, which was swapped to a fixed rate of 4.14%. We realized net proceeds of approximately $37,200,000 after repayment of the existing 4.43% $59,800,000 mortgage and closing costs.

First Quarter Leasing Activity:

  • 424,000 square feet of New York Office space (359,000 square feet at share) at an initial rent of $82.07 per square foot and a weighted average term of 10.5 years.  The GAAP and cash mark-to-markets on the 285,000 square feet of second generation space were positive 62.5% and 50.3%, respectively. Excluding a 77,000 square foot lease at 770 Broadway, the GAAP and cash mark-to-markets were positive 20.2% and 12.5%, respectively. Tenant improvements and leasing commissions were $9.33 per square foot per annum, or 11.4% of initial rent.
  • 77,000 square feet of New York Retail space (all at share and all second generation) at an initial rent of $212.03 per square foot and a weighted average term of 4.5 years.  The GAAP and cash mark-to-markets were negative 12.3% and 20.1%, respectively. Excluding a 43,000 square foot lease at 435 Seventh Avenue, the GAAP and cash mark-to-markets were positive 19.2% and 4.9%, respectively. Tenant improvements and leasing commissions were $14.06 per square foot per annum, or 6.6% of initial rent.
  • 119,000 square feet at theMART (all at share) at an initial rent of $50.39 per square foot and a weighted average term of 5.7 years.  The GAAP and cash mark-to-markets on the 113,000 square feet of second generation space were positive 36.6% and 28.0%, respectively. Tenant improvements and leasing commissions were $4.19 per square foot per annum, or 8.3% of initial rent.
  • 89,000 square feet at 555 California Street (62,000 square feet at share) at an initial rent of $85.89 per square foot and a weighted average term of 7.1 years.  The GAAP and cash mark-to-markets on the 30,000 square feet of second generation space were positive 39.3% and 17.0%, respectively. Tenant improvements and leasing commissions were $11.64 per square foot per annum, or 13.6% of initial rent.

Same Store Net Operating Income ("NOI"):

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

             
    New York   theMART   555 California Street
Same store NOI at share % increase (decrease):          
  Three months ended March 31, 2018 compared to March 31, 2017 4.0 % (1) 3.4 %   12.3 %
  Three months ended March 31, 2018 compared to December 31, 2017 (5.6 )% (1) 10.7 % (2) 12.6 %
             
Same store NOI at share - cash basis % increase (decrease):          
  Three months ended March 31, 2018 compared to March 31, 2017 5.6 % (1) 10.0 %   13.3 %
  Three months ended March 31, 2018 compared to December 31, 2017 (4.5 )% (1) 10.9 % (2) 7.6 %
                   

____________________

     
    Increase (Decrease)
(1) Excluding Hotel Pennsylvania - same store NOI at share % increase (decrease):  
  Three months ended March 31, 2018 compared to March 31, 2017 3.7 %
  Three months ended March 31, 2018 compared to December 31, 2017 (2.2 )%
     
  Excluding Hotel Pennsylvania - same store NOI at share - cash basis % increase (decrease):  
  Three months ended March 31, 2018 compared to March 31, 2017 5.3 %
  Three months ended March 31, 2018 compared to December 31, 2017 (0.8 )%
       
(2) Excluding tradeshows seasonality, same store NOI at share and same store NOI at share - cash basis decreased by 0.7% and 0.5%, respectively.    
       

NOI:

The elements of our New York and Other NOI for the three months ended March 31, 2018, March 31, 2017 and December 31, 2017 are summarized below.

   
  For the Three Months Ended
(Amounts in thousands) March 31,   December 31,
2017

  2018   2017  
New York:          
Office $ 187,156     $ 174,724     $ 189,481  
Retail 87,909     89,048     90,853  
Residential 6,141     6,278     5,920  
Alexander's 11,575     11,743     11,656  
Hotel Pennsylvania (4,185 )   (4,638 )   6,318  
Total New York 288,596     277,155     304,228  
           
Other:          
theMART 26,875     25,889     24,249  
555 California Street 13,511     12,034     12,003  
Other investments 20,054     22,080     23,377  
Total Other 60,440     60,003     59,629  
           
NOI at share $ 349,036     $ 337,158     $ 363,857  
                       

NOI - Cash Basis:

The elements of our New York and Other NOI - cash basis for the three months ended March 31, 2018, March 31, 2017 and December 31, 2017 are summarized below.

   
  For the Three Months Ended
(Amounts in thousands) March 31,   December 31,
2017
  2018   2017  
New York:          
Office $ 178,199     $ 166,339     $ 175,787
Retail 79,589     79,419     83,320
Residential 5,599     5,542     5,325
Alexander's 12,039     12,088     12,004
Hotel Pennsylvania (4,153 )   (4,605 )   6,351
Total New York 271,273     258,783     282,787
           
Other:          
theMART 27,079     24,532     24,396
555 California Street 12,826     11,325     11,916
Other investments 19,910     22,037     23,179
Total Other 59,815     57,894     59,491
           
NOI at share - cash basis $ 331,088     $ 316,677     $ 342,278
                     

Development/Redevelopment as of March 31, 2018

(in thousands, except square feet)
            (At Share)                 Full
Quarter
Stabilized
Operations
        Property
Rentable
Sq. Ft.
  Excluding Land Costs             Initial
Occupancy
 
Current Projects:   Segment     Incremental
Budget
  Amount
Expended
    %
Complete
  Start    
220 Central Park South - residential condominiums   Other   397,000     $ 1,400,000     $ 970,000   (1)   69.3 %   Q3 2012   N/A   N/A
Moynihan Office Building - (50.1% interest)(2)   New York   850,000     400,000     30,375       7.6 %   Q2 2017   Q3 2020   Q2 2022
One Penn Plaza - renovation(3)

  New York   2,530,000     200,000     2,460       1.2 %   Q4 2018   N/A   N/A
61 Ninth Avenue - office/retail (45.1% interest)(4)   New York   170,000     69,000     51,826       75.1 %   Q1 2016   Q2 2018   Q2 2019
512 West 22nd Street - office/retail (55.0% interest)   New York   173,000     72,000     44,521   (5)   61.8 %   Q4 2015   Q3 2018   Q1 2020
345 Montgomery Street (555 California Street) (70.0% interest)

  Other   64,000     32,000     3,157   (6)   9.9 %   Q1 2018   Q3 2019   Q3 2020
606 Broadway - office/retail (50.0% interest)   New York   34,000     30,000     19,195   (7)   64.0 %   Q2 2016   Q4 2018   Q2 2020
825 Seventh Avenue - office (50.0% interest)

  New York   165,000     15,000     1,103       7.4 %   Q2 2018   Q1 2020   Q1 2021
Total current projects               $ 1,122,637                    
                                   
Future Opportunities:   Segment   Property
Zoning
Sq. Ft.
                         
Penn Plaza - multiple opportunities - office/residential/retail   New York   TBD                          
Hotel Pennsylvania   New York   2,052,000                            
260 Eleventh Avenue - office(8)   New York   300,000                            
                                   
Undeveloped Land:                                  
29, 31, 33 West 57th Street (50.0% interest)   New York   150,000                            
527 West Kinzie, Chicago   Other   330,000                            
Total undeveloped land       480,000                            

_______________________

  1. Excludes land and acquisition costs of $515,426.
  2. Excludes $115,230 for our share of the upfront contribution of $230,000. 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. The building is subject to a ground lease which expires in 2115.
  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, May 1, 2018 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 46816083.  A telephonic replay of the conference call will be available from 1:00 p.m. ET on May 1, 2018 through May 31, 2018. To access the replay, please dial 888-843-7419 and enter the passcode 46816083#. 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.

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, 2017.  Such factors include, among others, risks associated with the timing of and costs associated with property improvements, financing commitments and general competitive factors.

     
VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEETS
 
     
  As of  
(Amounts in thousands, except unit, share, and per share amounts) March 31,
2018
  December 31,
2017
 
ASSETS        
Real estate, at cost:        
Land $ 3,170,158     $ 3,143,648  
Buildings and improvements 9,946,225     9,898,605  
Development costs and construction in progress 1,705,244     1,615,101  
Leasehold improvements and equipment 104,710     98,941  
     Total 14,926,337     14,756,295  
Less accumulated depreciation and amortization (2,962,983 )   (2,885,283 )
Real estate, net 11,963,354     11,871,012  
Cash and cash equivalents 1,327,384     1,817,655  
Restricted cash 90,684     97,157  
Marketable securities 149,766     182,752  
Tenant and other receivables, net of allowance for doubtful accounts of $5,171 and $5,526 64,387     58,700  
Investments in partially owned entities 1,033,228     1,056,829  
Real estate fund investments 336,552     354,804  
Receivable arising from the straight-lining of rents, net of allowance of $739 and $954 934,535     926,711  
Deferred leasing costs, net of accumulated amortization of $194,078 and $191,827 405,209     403,492  
Identified intangible assets, net of accumulated amortization of $157,062 and $150,837 152,834     159,260  
Assets related to discontinued operations 275     1,357  
Other assets 406,275     468,205  
  $ 16,864,483     $ 17,397,934  
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY        
Mortgages payable, net $ 8,102,238     $ 8,137,139  
Senior unsecured notes, net 843,125     843,614  
Unsecured term loan, net 749,114     748,734  
Unsecured revolving credit facilities 80,000      
Accounts payable and accrued expenses 431,094     415,794  
Deferred revenue 200,648     227,069  
Deferred compensation plan 109,525     109,177  
Liabilities related to discontinued operations 1,176     3,620  
Preferred shares redeemed on January 4 and 11, 2018     455,514  
Other liabilities 465,659     464,635  
Total liabilities 10,982,579     11,405,296  
Commitments and contingencies        
Redeemable noncontrolling interests:        
Class A units - 12,653,821 and 12,528,899 units outstanding 851,598     979,509  
Series D cumulative redeemable preferred units - 177,101 units outstanding 5,428     5,428  
     Total redeemable noncontrolling interests 857,026     984,937  
Vornado's shareholders' equity:        
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 36,799,573 shares 891,325     891,988  
Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 190,169,168 and 189,983,858 shares 7,584     7,577  
Additional capital 7,629,013     7,492,658  
Earnings less than distributions (4,198,088 )   (4,183,253 )
Accumulated other comprehensive income 30,258     128,682  
     Total Vornado shareholders' equity 4,360,092     4,337,652  
Noncontrolling interests in consolidated subsidiaries 664,786     670,049  
Total equity 5,024,878     5,007,701  
  $ 16,864,483     $ 17,397,934  
               


   
VORNADO REALTY TRUST
OPERATING RESULTS
   
(Amounts in thousands, except per share amounts) For the Three Months Ended March 31,
  2018   2017
Revenues $ 536,437     $ 508,058  
       
Income from continuing operations $ 645     $ 58,529  
(Loss) income from discontinued operations (363 )   15,318  
Net income 282     73,847  
Less net loss (income) attributable to noncontrolling interests in:      
Consolidated subsidiaries 8,274     (6,737 )
Operating Partnership 1,124     (3,229 )
Net income attributable to Vornado 9,680     63,881  
Preferred share dividends (13,035 )   (16,129 )
Preferred share issuance costs (14,486 )    
Net (loss) income attributable to common shareholders $ (17,841 )   $ 47,752  
       
(Loss) income per common share - Basic:      
(Loss) income from continuing operations, net $ (0.09 )   $ 0.18  
Income from discontinued operations, net     0.07  
Net (loss) income per common share $ (0.09 )   $ 0.25  
Weighted average shares outstanding 190,081     189,210  
       
(Loss) income per common share - Diluted:      
(Loss) income from continuing operations, net $ (0.09 )   $ 0.18  
Income from discontinued operations, net     0.07  
Net (loss) income per common share $ (0.09 )   $ 0.25  
Weighted average shares outstanding 190,081     190,372  
       
FFO attributable to common shareholders plus assumed conversions (non-GAAP) $ 102,479     $ 205,729  
Per diluted share (non-GAAP) $ 0.54     $ 1.08  
       
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) $ 173,842     $ 160,105  
Per diluted share (non-GAAP) $ 0.91     $ 0.84  
       
Weighted average shares used in determining FFO per diluted share 191,057     190,412  
           

VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS

The following table reconciles net (loss) 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,  
  2018   2017  
Net (loss) income attributable to common shareholders $ (17,841 )   $ 47,752  
Per diluted share $ (0.09 )   $ 0.25  
         
FFO adjustments:        
Depreciation and amortization of real property $ 100,410     $ 130,469  
Net gains on sale of real estate     (2,267 )
Proportionate share of adjustments to equity in net (loss) income of partially owned entities to arrive at FFO:        
Depreciation and amortization of real property 28,106     39,074  
Net gains on sale of real estate (305 )   (1,853 )
Real estate impairment losses 4     3,051  
  128,215     168,474  
Noncontrolling interests' share of above adjustments (7,911 )   (10,517  
FFO adjustments, net $ 120,304     $ 157,957  
         
FFO attributable to common shareholders (non-GAAP) $ 102,463     $ 205,709  
Convertible preferred share dividends 16     20  
FFO attributable to common shareholders plus assumed conversions (non-GAAP) $ 102,479     $ 205,729  
Per diluted share (non-GAAP) $ 0.54     $ 1.08  
               

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 (loss) 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.

VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below is a reconciliation of net income to NOI by segment for the three months ended March 31, 2018, March 31, 2017 and December 31, 2017.

     
  For the Three Months Ended  
(Amounts in thousands) March 31,   December 31,
2017
 
  2018   2017    
Net income $ 282     $ 73,847     $ 53,551  
             
Deduct:            
Loss (income) from partially owned entities 9,904     (1,358 )   (9,622 )
Loss (income) from real estate fund investments 8,807     (268 )   (4,889 )
Interest and other investment loss (income), net 24,384     (6,695 )   (8,294 )
Net gains on disposition of wholly owned and partially owned assets     (501 )    
Loss (income) from discontinued operations 363     (15,318 )   (1,273 )
NOI attributable to noncontrolling interests in consolidated subsidiaries (17,312 )   (16,338 )   (16,533 )
             
Add:            
Depreciation and amortization expense 108,686     105,128     114,166  
General and administrative expense 43,633     47,237     35,139  
Transaction related costs and other 13,156     752     703  
NOI from partially owned entities 67,513     66,097     69,175  
Interest and debt expense 88,166     82,724     93,073  
Income tax expense 1,454     1,851     38,661  
NOI at share 349,036     337,158     363,857  
Non cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other (17,948 )   (20,481 )   (21,579 )
NOI at share - cash basis $ 331,088     $ 316,677     $ 342,278  
                       

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 to same store NOI for our New York segment, theMART and 555 California Street for the three months ended March 31, 2018 compared to March 31, 2017.

             
(Amounts in thousands) New York   theMART   555 California Street  
NOI at share for the three months ended March 31, 2018 $ 288,596     $ 26,875     $ 13,511  
  Less NOI at share from:            
  Acquisitions (350 )   (85 )    
  Dispositions 40          
  Development properties placed into and out of service (412 )        
  Lease termination income, net of straight-line and FAS 141 adjustments (1,127 )        
  Other non-operating income, net (579 )        
Same store NOI at share for the three months ended March 31, 2018 $ 286,168     $ 26,790     $ 13,511  
             
NOI at share for the three months ended March 31, 2017 $ 277,155     $ 25,889     $ 12,034  
  Less NOI at share from:            
  Acquisitions     31      
  Dispositions (228 )        
  Development properties placed into and out of service 16          
  Lease termination income, net of straight-line and FAS 141 adjustments (638 )   (20 )    
  Other non-operating income, net (1,084 )        
Same store NOI at share for the three months ended March 31, 2017 $ 275,221     $ 25,900     $ 12,034  
             
Increase in same store NOI at share for the three months ended March 31, 2018 compared to March 31, 2017 $ 10,947     $ 890     $ 1,477  
               
% increase in same store NOI at share 4.0 % (1) 3.4 %   12.3 %

____________________

  1. Excluding Hotel Pennsylvania, same store NOI at share increased by 3.7%.

Same store NOI represents NOI from operations which are owned by us and in service in both the current and prior year reporting periods.  Same store NOI - cash basis is NOI 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 and same store NOI - 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 - cash basis to same store NOI - cash basis for our New York segment, theMART and 555 California Street for the three months ended March 31, 2018 compared to March 31, 2017.

             
(Amounts in thousands) New York   theMART   555 California Street  
NOI at share - cash basis for the three months ended March 31, 2018 $ 271,273     $ 27,079     $ 12,826  
  Less NOI at share - cash basis from:            
  Acquisitions (200 )   (85 )    
  Dispositions 40          
  Development properties placed into and out of service (603 )        
  Lease termination income (1,061 )        
  Other non-operating income, net (579 )        
Same store NOI at share - cash basis for the three months ended March 31, 2018 $ 268,870     $ 26,994     $ 12,826  
               
NOI at share - cash basis for the three months ended March 31, 2017 $ 258,783     $ 24,532     $ 11,325  
  Less NOI at share - cash basis from:            
  Acquisitions     31      
  Dispositions (228 )        
  Development properties placed into and out of service 106          
  Lease termination income (3,030 )   (31 )    
  Other non-operating income, net (1,029 )        
Same store NOI at share - cash basis for the three months ended March 31, 2017 $ 254,602     $ 24,532     $ 11,325  
             
Increase in same store NOI at share - cash basis for the three months ended March 31, 2018 compared to March 31, 2017 $ 14,268     $ 2,462     $ 1,501  
             
% increase in same store NOI at share - cash basis 5.6 % (1) 10.0 %   13.3 %

____________________

  1. Excluding Hotel Pennsylvania, same store NOI at share - cash basis increased by 5.3%.

VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below are reconciliations of NOI to same store NOI for our New York segment, theMART and 555 California Street for the three months ended March 31, 2018 compared to December 31, 2017.

             
(Amounts in thousands) New York   theMART   555 California Street  
NOI at share for the three months ended March 31, 2018 $ 288,596     $ 26,875     $ 13,511  
  Less NOI at share from:            
  Acquisitions (109 )   (85 )    
  Dispositions 40          
  Development properties placed into and out of service (412 )        
  Lease termination income, net of straight-line and FAS 141 adjustments (1,127 )        
  Other non-operating income, net (579 )        
Same store NOI at share for the three months ended March 31, 2018 $ 286,409     $ 26,790     $ 13,511  
             
NOI at share for the three months ended December 31, 2017 $ 304,228     $ 24,249     $ 12,003  
  Less NOI at share from:            
  Acquisitions 2     (46 )    
  Dispositions (8 )        
  Development properties placed into and out of service 309          
  Lease termination income, net of straight-line and FAS 141 adjustments (984 )        
  Other non-operating income, net (16 )        
Same store NOI at share for the three months ended December 31, 2017 $ 303,531     $ 24,203     $ 12,003  
             
(Decrease) increase in same store NOI at share for the three months ended March 31, 2018 compared to December 31, 2017 $ (17,122 )   $ 2,587     $ 1,508  
               
%  (decrease) increase in same store NOI at share (5.6 )% (1) 10.7 % (2) 12.6 %

____________________

  1. Excluding Hotel Pennsylvania, same store NOI at share decreased by 2.2%.
  2. Excluding tradeshows seasonality, same store NOI at share decreased by 0.7%.

VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below are reconciliations of NOI - cash basis to same store NOI - cash basis for our New York segment, theMART and 555 California Street for the three months ended March 31, 2018 compared to December 31, 2017.

             
(Amounts in thousands) New York   theMART   555 California Street  
NOI at share - cash basis for the three months ended March 31, 2018 $ 271,273     $ 27,079     $ 12,826  
  Less NOI at share - cash basis from:            
  Acquisitions (109 )   (85 )    
  Dispositions 40          
  Development properties placed into and out of service (603 )        
  Lease termination income (1,061 )        
  Other non-operating income, net (579 )        
Same store NOI at share - cash basis for the three months ended March 31, 2018 $ 268,961     $ 26,994     $ 12,826  
               
NOI at share - cash basis for the three months ended December 31, 2017 $ 282,787     $ 24,396     $ 11,916  
  Less NOI at share - cash basis from:            
  Acquisitions 2     (46 )    
  Dispositions (8 )        
  Development properties placed into and out of service 253          
  Lease termination income (1,393 )        
  Other non-operating income, net (16 )        
Same store NOI at share - cash basis for the three months ended December 31, 2017 $ 281,625     $ 24,350     $ 11,916  
             
(Decrease) increase in same store NOI at share - cash basis for the three months ended March 31, 2018 compared to December 31, 2017 $ (12,664 )   $ 2,644     $ 910  
             
% (decrease) increase in same store NOI at share - cash basis (4.5 )% (1) 10.9 % (2) 7.6 %

____________________

  1. Excluding Hotel Pennsylvania, same store NOI at share - cash basis decreased by 0.8%.
  2. Excluding tradeshows seasonality, same store NOI at share - cash basis decreased by 0.5%.
CONTACT: JOSEPH MACNOW
  (212) 894-7000

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