Vornado Realty Trust (NYSE: VNO) reported today:
Quarter Ended March 31, 2023 Financial
Results
NET INCOME attributable to common shareholders
for the quarter ended March 31, 2023 was $5,168,000, or $0.03 per
diluted share, compared to $26,478,000, or $0.14 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 quarter ended March 31, 2023 was $2,373,000, or $0.01 per
diluted share, and $31,682,000, or $0.16 per diluted share for the
prior year's quarter.
FUNDS FROM OPERATIONS ("FFO") attributable to
common shareholders plus assumed conversions (non-GAAP) for the
quarter ended March 31, 2023 was $119,083,000, or $0.61 per diluted
share, compared to $154,908,000, or $0.80 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 quarter ended March 31,
2023 was $116,288,000, or $0.60 per diluted share, and
$152,313,000, or $0.79 per diluted share for the prior year's
quarter.
The following table reconciles 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 EndedMarch
31, |
|
|
2023 |
|
|
|
2022 |
|
Net income attributable to
common shareholders |
$ |
5,168 |
|
|
$ |
26,478 |
|
Per diluted share |
$ |
0.03 |
|
|
$ |
0.14 |
|
|
|
|
|
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 |
$ |
(6,173 |
) |
|
$ |
(5,412 |
) |
Deferred tax liability on our investment in The Farley Building
(held through a taxable REIT subsidiary) |
|
2,875 |
|
|
|
3,173 |
|
Other |
|
288 |
|
|
|
7,829 |
|
|
|
(3,010 |
) |
|
|
5,590 |
|
Noncontrolling interests'
share of above adjustments |
|
215 |
|
|
|
(386 |
) |
Total of certain (income)
expense items that impact net income attributable to common
shareholders |
$ |
(2,795 |
) |
|
$ |
5,204 |
|
Per diluted share (non-GAAP) |
$ |
(0.02 |
) |
|
$ |
0.02 |
|
|
|
|
|
Net income attributable to
common shareholders, as adjusted (non-GAAP) |
$ |
2,373 |
|
|
$ |
31,682 |
|
Per diluted share (non-GAAP) |
$ |
0.01 |
|
|
$ |
0.16 |
|
The following table reconciles 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 EndedMarch
31, |
|
|
2023 |
|
|
|
2022 |
|
FFO attributable to common
shareholders plus assumed conversions (non-GAAP) |
$ |
119,083 |
|
|
$ |
154,908 |
|
Per diluted share (non-GAAP) |
$ |
0.61 |
|
|
$ |
0.80 |
|
|
|
|
|
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 |
$ |
(6,173 |
) |
|
$ |
(5,412 |
) |
Deferred tax liability on our investment in The Farley Building
(held through a taxable REIT subsidiary) |
|
2,875 |
|
|
|
3,173 |
|
Other |
|
288 |
|
|
|
(549 |
) |
|
|
(3,010 |
) |
|
|
(2,788 |
) |
Noncontrolling interests'
share of above adjustments |
|
215 |
|
|
|
193 |
|
Total of certain (income)
expense items that impact FFO attributable to common shareholders
plus assumed conversions, net |
$ |
(2,795 |
) |
|
$ |
(2,595 |
) |
Per diluted share (non-GAAP) |
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
FFO attributable to common
shareholders plus assumed conversions, as adjusted (non-GAAP) |
$ |
116,288 |
|
|
$ |
152,313 |
|
Per diluted share (non-GAAP) |
$ |
0.60 |
|
|
$ |
0.79 |
|
FFO, as Adjusted Bridge - Q1 2023 vs. Q1
2022
The following table bridges our FFO attributable
to common shareholders plus assumed conversions, as adjusted
(non-GAAP) for the three months ended March 31, 2022 to FFO
attributable to common shareholders plus assumed conversions, as
adjusted (non-GAAP) for the three months ended March 31, 2023:
(Amounts in millions, except
per share amounts) |
FFO, as Adjusted |
|
Amount |
|
Per Share |
FFO attributable to common shareholders plus assumed
conversions, as adjusted (non-GAAP) for the three months ended
March 31, 2022 |
$ |
152.3 |
|
|
$ |
0.79 |
|
|
|
|
|
Decrease in FFO, as adjusted
due to: |
|
|
|
Increase in interest expense, net of increase in interest
income |
|
(30.0 |
) |
|
|
Tenant related items |
|
(4.6 |
) |
|
|
Sale of 33‐00 Northern Boulevard, 40 Fulton Street and street
retail properties |
|
(2.8 |
) |
|
|
Other, net |
|
(1.3 |
) |
|
|
|
|
(38.7 |
) |
|
|
Noncontrolling interests'
share of above items and impact of assumed conversions of
convertible securities |
|
2.7 |
|
|
|
Net decrease |
|
(36.0 |
) |
|
|
(0.19 |
) |
|
|
|
|
FFO attributable to
common shareholders plus assumed conversions, as adjusted
(non-GAAP) for the three months ended March 31, 2023 |
$ |
116.3 |
|
|
$ |
0.60 |
|
See page 9 for a reconciliation of net income
attributable to common shareholders to FFO attributable to common
shareholders plus assumed conversions (non-GAAP) for the three
months ended March 31, 2023 and 2022. Reconciliations of FFO
attributable to common shareholders plus assumed conversions to FFO
attributable to common shareholders plus assumed conversions, as
adjusted are provided above.
Dividends/Share Repurchase
Program:
On April 26, 2023, Vornado announced that it
will postpone dividends on its common shares until the end of 2023,
at which time, upon finalization of its 2023 taxable income,
including the impact of asset sales, it will pay the 2023 dividend
in either (i) cash, or (ii) a combination of cash and securities,
as determined by its Board of Trustees.
Vornado also announced that its Board of
Trustees has authorized the repurchase of up to $200,000,000 of its
outstanding common shares under a newly established share
repurchase program. Cash retained from dividends or from asset
sales will be used to reduce debt and/or fund share
repurchases.
350 Park Avenue:
On January 24, 2023, we and the Rudin family
(“Rudin”) completed agreements with Citadel Enterprise Americas LLC
(“Citadel”) and with an affiliate of Kenneth C. Griffin, Citadel’s
Founder and CEO (“KG”), for a series of transactions relating to
350 Park Avenue and 40 East 52nd Street.
Pursuant to the agreements, Citadel master
leases 350 Park Avenue, a 585,000 square foot Manhattan office
building, on an “as is” basis for ten years, with an initial annual
net rent of $36,000,000. Per the terms of the lease, no tenant
allowance or free rent was provided. Citadel will also master lease
Rudin’s adjacent property at 40 East 52nd Street (390,000 square
feet).
In addition, we have entered into a joint
venture with Rudin (“Vornado/Rudin”) to purchase 39 East 51st
Street for $40,000,000 and, upon formation of the KG joint venture
described below, will combine that property with 350 Park Avenue
and 40 East 52nd Street to create a premier development site
(collectively, the “Site”). The purchase is expected to close in
the second quarter of 2023.
From October 2024 to June 2030, KG will have the
option to either:
- acquire a 60% interest in a joint
venture with Vornado/Rudin that would value the Site at
$1.2 billion ($900,000,000 to Vornado and $300,000,000 to
Rudin) and build a new 1,700,000 square foot office tower (the
“Project”) pursuant to East Midtown Subdistrict zoning with
Vornado/Rudin as developer. KG would own 60% of the joint venture
and Vornado/Rudin would own 40% (with Vornado owning 36% and Rudin
owning 4% of the joint venture along with a $250,000,000 preferred
equity interest in the Vornado/Rudin joint venture).
- at the joint venture formation, Citadel or its affiliates will
execute a pre-negotiated 15-year anchor lease with renewal options
for approximately 850,000 square feet (with expansion and
contraction rights) at the Project for its primary office in New
York City;
- the rent for Citadel’s space will be determined by a formula
based on a percentage return (that adjusts based on the actual cost
of capital) on the total Project cost;
- the master leases will terminate at the scheduled commencement
of demolition;
- or, exercise an option to purchase
the Site for $1.4 billion ($1.085 billion to Vornado and
$315,000,000 to Rudin), in which case Vornado/Rudin would not
participate in the new development.
Further, Vornado/Rudin will have the option from
October 2024 to September 2030 to put the Site to KG for
$1.2 billion ($900,000,000 to Vornado and $300,000,000 to
Rudin). For ten years following any put option closing, unless the
put option is exercised in response to KG’s request to form the
joint venture or KG makes a $200,000,000 termination payment,
Vornado/Rudin will have the right to invest in a joint venture with
KG on the terms described above if KG proceeds with development of
the Site.
Dispositions:
Alexander's, Inc. ("Alexander's")
On March 8, 2023, Alexander's entered into an
agreement to sell the Rego Park III land parcel, located in Queens,
New York, for $71,060,000, inclusive of consideration for
Brownfield tax benefits and reimbursement of costs for plans,
specifications and improvements to date. Alexander's anticipates
the closing of the sale in the second quarter of 2023 and will
recognize a financial statement gain of approximately $54,000,000.
Upon completion of the sale, we will recognize our approximate
$16,000,000 share of the net gain.
Financings:
150 West 34th Street Loan Participation
On January 9, 2023, our $105,000,000
participation in the $205,000,000 mortgage loan on 150 West 34th
Street was repaid, which reduced “other assets” and “mortgages
payable, net” on our consolidated balance sheets by $105,000,000.
The remaining $100,000,000 mortgage loan balance bears interest at
SOFR plus 1.86%, subject to an interest rate cap arrangement with a
SOFR strike rate of 4.10%, and matures in May 2024.
Financings - continued:
Interest Rate Hedging Activities
We entered into the following interest rate swap
agreements during the three months ended March 31, 2023. For
further detail on our interest rate swap and cap arrangements see
page 28 of our Supplemental Operating and Financial Data package
for the quarter ended March 31, 2023.
(Amounts in thousands) |
|
Notional Amount |
|
All-In Swapped Rate |
|
Swap Expiration Date |
|
Variable Rate Spread |
555 California Street (effective 05/24) |
|
$ |
840,000 |
|
5.92 |
% |
|
05/26 |
|
L+193 |
Unsecured term loan(1) (effective 10/23) |
|
|
150,000 |
|
5.13 |
% |
|
07/25 |
|
S+130 |
____________________
(1) The unsecured term
loan, which matures in December 2027, is subject to various
interest rate swap arrangements through August 2027, see below for
details:
|
|
Swapped Balance |
|
All-In Swapped Rate |
|
Unswapped Balance(bears interest at
S+130) |
Through 10/23 |
|
$ |
800,000 |
|
4.05 |
% |
|
$ |
— |
10/23 through 07/25 |
|
|
700,000 |
|
4.53 |
% |
|
|
100,000 |
07/25 through 10/26 |
|
|
550,000 |
|
4.36 |
% |
|
|
250,000 |
10/26 through 08/27 |
|
|
50,000 |
|
4.04 |
% |
|
|
750,000 |
Leasing Activity For the Three Months Ended March 31,
2023:
The leasing activity and related statistics
below are based on leases signed during the period and are not
intended to coincide with the commencement of rental revenue in
accordance with GAAP. Second generation relet space represents
square footage that has not been vacant for more than nine months
and tenant improvements and leasing commissions are based on our
share of square feet leased during the period.
-
777,000 square feet of New York Office space (771,000 square feet
at share) at an initial rent of $101.02 per square foot and a
weighted average lease term of 9.5 years. The changes in the GAAP
and cash mark-to-market rent on the 677,000 square feet of second
generation space were positive 8.5% and positive 1.7%,
respectively. Tenant improvements and leasing commissions were
$2.48 per square foot per annum, or 2.5% of initial rent.
-
25,000 square feet of New York Retail space (20,000 square feet at
share) at an initial rent of $373.07 per square foot and a weighted
average lease term of 6.8 years. The changes in the GAAP and cash
mark-to-market rent on the 7,000 square feet of second generation
space were positive 2.9% and positive 2.4%, respectively. Tenant
improvements and leasing commissions were $26.54 per square foot
per annum, or 7.1% of initial rent.
-
79,000 square feet at THE MART (all at share) at an initial rent of
$56.44 per square foot and a weighted average lease term of 6.8
years. The changes in the GAAP and cash mark-to-market rent on
the 51,000 square feet of second generation space were negative
1.5% and negative 7.9%, respectively. Tenant improvements and
leasing commissions were $8.04 per square foot per annum, or 14.2%
of initial rent.
- 4,000 square feet at 555 California
Street (3,000 square feet at share) at an initial rent of $156.96
per square foot and a weighted average lease term of 7.0 years. The
4,000 square feet was first generation space. Tenant improvements
and leasing commissions were $39.07 per square foot per annum, or
24.9% of initial rent.
Same Store Net Operating Income ("NOI")
At Share:
Below is the percentage increase (decrease) in
same store NOI at share and same store NOI at share - cash basis of
our New York segment, THE MART and 555 California Street.
|
Total |
|
New York |
|
THE MART |
|
555 California Street |
Same store NOI at share %
increase (decrease)(1): |
|
|
|
|
|
|
|
Three months ended March 31, 2023 compared to March 31, 2022 |
0.0 |
% |
|
1.6 |
% |
|
(22.6)% |
|
4.3 |
% |
Three months ended March 31, 2023 compared to December 31,
2022 |
(4.2 |
)% |
|
(2.7 |
)% |
|
(26.9)% |
|
1.7 |
% |
|
|
|
|
|
|
|
|
Same store NOI at share - cash
basis % increase (decrease)(1): |
|
|
|
|
|
|
|
Three months ended March 31, 2023 compared to March 31, 2022 |
1.5 |
% |
|
3.8 |
% |
|
(28.2)% |
|
8.3 |
% |
Three months ended March 31, 2023 compared to December 31,
2022 |
(3.5 |
)% |
|
(0.6 |
)% |
|
(36.1)% |
|
0.3 |
% |
____________________
(1) See pages 11 through
14 for same store NOI at share and same store NOI at share - cash
basis reconciliations.
NOI At Share:
The elements of our New York and Other NOI at
share for the three months ended March 31, 2023 and 2022 and
December 31, 2022 are summarized below.
(Amounts in thousands) |
For the Three Months Ended |
|
March 31, |
|
December 31, 2022 |
|
|
2023 |
|
|
2022 |
|
NOI at
share: |
|
|
|
|
|
New York: |
|
|
|
|
|
Office(1) |
$ |
174,270 |
|
$ |
177,809 |
|
$ |
184,045 |
Retail |
|
47,196 |
|
|
52,105 |
|
|
50,083 |
Residential |
|
5,458 |
|
|
4,774 |
|
|
4,978 |
Alexander's |
|
9,070 |
|
|
8,979 |
|
|
9,489 |
Total New York |
|
235,994 |
|
|
243,667 |
|
|
248,595 |
Other: |
|
|
|
|
|
THE MART |
|
15,409 |
|
|
19,914 |
|
|
21,276 |
555 California Street |
|
16,929 |
|
|
16,235 |
|
|
16,641 |
Other investments |
|
5,151 |
|
|
4,442 |
|
|
5,243 |
Total Other |
|
37,489 |
|
|
40,591 |
|
|
43,160 |
|
|
|
|
|
|
NOI at share |
$ |
273,483 |
|
$ |
284,258 |
|
$ |
291,755 |
_______________________See
notes below.
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, 2023 and
2022 and December 31, 2022 are summarized below.
(Amounts in thousands) |
For the Three Months Ended |
|
March 31, |
|
December 31, 2022 |
|
|
2023 |
|
|
2022 |
|
NOI at share - cash
basis: |
|
|
|
|
|
New York: |
|
|
|
|
|
Office(1) |
$ |
182,081 |
|
$ |
177,827 |
|
$ |
182,648 |
Retail |
|
44,034 |
|
|
47,393 |
|
|
46,168 |
Residential |
|
5,051 |
|
|
4,689 |
|
|
4,660 |
Alexander's |
|
9,861 |
|
|
9,783 |
|
|
10,236 |
Total New York |
|
241,027 |
|
|
239,692 |
|
|
243,712 |
Other: |
|
|
|
|
|
THE MART |
|
14,675 |
|
|
20,436 |
|
|
23,163 |
555 California Street |
|
17,718 |
|
|
16,360 |
|
|
17,672 |
Other investments |
|
5,115 |
|
|
4,640 |
|
|
5,052 |
Total Other |
|
37,508 |
|
|
41,436 |
|
|
45,887 |
|
|
|
|
|
|
NOI at share - cash basis |
$ |
278,535 |
|
$ |
281,128 |
|
$ |
289,599 |
______________________
(1) Includes Building
Maintenance Services NOI of $6,289, $5,782 and $8,305,
respectively, for the three months ended March 31, 2023 and 2022
and December 31, 2022.
PENN District - Active
Development/Redevelopment Summary as of March 31,
2023
(Amounts in
thousands of dollars, except square feet) |
|
|
|
|
|
|
|
|
PropertyRentableSq.
Ft. |
|
|
|
Cash AmountExpended |
|
Remaining Expenditures |
|
Stabilization Year |
|
Projected IncrementalCash
Yield |
Active PENN District Projects |
|
Segment |
|
|
Budget(1) |
|
|
|
|
PENN 2 - as expanded |
|
New York |
|
1,795,000 |
|
750,000 |
|
452,509 |
|
297,491 |
|
2025 |
|
|
9.5 |
% |
|
PENN 1 (including LIRR
Concourse Retail)(2) |
|
New York |
|
2,547,000 |
|
450,000 |
|
384,843 |
|
65,157 |
|
N/A |
|
|
13.2 |
% |
(2)(3) |
Districtwide Improvements |
|
New York |
|
N/A |
|
100,000 |
|
42,098 |
|
57,902 |
|
N/A |
|
|
N/A |
|
|
Total Active PENN District Projects |
|
|
|
|
|
1,300,000 |
|
879,450 |
|
420,550 |
|
|
|
|
10.1 |
% |
|
________________________________
(1) Excluding debt and
equity carry. (2) Property is ground leased
through 2098, as fully extended. Fair market value resets occur in
2023, 2048 and 2073. The 13.2% projected return is before the
ground rent reset in June 2023, which may be
material.(3) Projected to be achieved as
pre-redevelopment leases roll, which have an approximate average
remaining term of 3.4 years.
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 2, 2023 at 10:00 a.m. Eastern Time (ET). The conference call
can be accessed by dialing 833-816-1409 (domestic) or 412-317-0502
(international) and asking the operator to join the Vornado Realty
Trust conference call. A live webcast of the conference call will
be available on Vornado’s website at www.vno.com in the
Investor Relations section and an online playback of the webcast
will be available on the website following the conference call.
Contact
Thomas J. Sanelli(212) 894-7000
Supplemental Data
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. Forward-looking
statements are not guarantees of 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 press release. 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; estimates of future capital expenditures, dividends to
common and preferred shareholders and operating partnership
distributions, including the form of any 2023 dividend payments,
and the amount and form of potential share repurchases and/or asset
sales. 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,
2022. Currently, some of the factors are the increase in interest
rates and inflation and the continuing effect of the COVID-19
pandemic on our business, financial condition, results of
operations, cash flows, operating performance and the effect that
these factors have had and may continue to have on our tenants, the
global, national, regional and local economies and financial
markets and the real estate market in general.
VORNADO REALTY
TRUSTCONSOLIDATED BALANCE SHEETS
(Amounts in thousands) |
As of March 31, |
|
Increase(Decrease) |
|
|
2023 |
|
|
|
2022 |
|
|
ASSETS |
|
|
|
|
|
Real estate, at cost: |
|
|
|
|
|
Land |
$ |
2,451,828 |
|
|
$ |
2,451,828 |
|
|
$ |
— |
|
Buildings and improvements |
|
9,838,757 |
|
|
|
9,804,204 |
|
|
|
34,553 |
|
Development costs and construction in progress |
|
1,058,518 |
|
|
|
933,334 |
|
|
|
125,184 |
|
Leasehold improvements and equipment |
|
125,982 |
|
|
|
125,389 |
|
|
|
593 |
|
Total |
|
13,475,085 |
|
|
|
13,314,755 |
|
|
|
160,330 |
|
Less accumulated depreciation and amortization |
|
(3,546,942 |
) |
|
|
(3,470,991 |
) |
|
|
(75,951 |
) |
Real estate, net |
|
9,928,143 |
|
|
|
9,843,764 |
|
|
|
84,379 |
|
Right-of-use assets |
|
685,152 |
|
|
|
684,380 |
|
|
|
772 |
|
Cash, cash equivalents,
restricted cash and investments in U.S. Treasury bills: |
|
|
|
|
|
Cash and cash equivalents |
|
890,957 |
|
|
|
889,689 |
|
|
|
1,268 |
|
Restricted cash |
|
142,882 |
|
|
|
131,468 |
|
|
|
11,414 |
|
Investments in U.S. Treasury bills |
|
276,645 |
|
|
|
471,962 |
|
|
|
(195,317 |
) |
Total |
|
1,310,484 |
|
|
|
1,493,119 |
|
|
|
(182,635 |
) |
Tenant and other
receivables |
|
95,034 |
|
|
|
81,170 |
|
|
|
13,864 |
|
Investments in partially owned
entities |
|
2,633,558 |
|
|
|
2,665,073 |
|
|
|
(31,515 |
) |
220 CPS condominium units
ready for sale |
|
37,644 |
|
|
|
43,599 |
|
|
|
(5,955 |
) |
Receivable arising from the
straight-lining of rents |
|
691,271 |
|
|
|
694,972 |
|
|
|
(3,701 |
) |
Deferred leasing costs,
net |
|
366,960 |
|
|
|
373,555 |
|
|
|
(6,595 |
) |
Identified intangible assets,
net |
|
137,161 |
|
|
|
139,638 |
|
|
|
(2,477 |
) |
Other assets |
|
387,011 |
|
|
|
474,105 |
|
|
|
(87,094 |
) |
Total assets |
$ |
16,272,418 |
|
|
$ |
16,493,375 |
|
|
$ |
(220,957 |
) |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND
EQUITY |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Mortgages payable, net |
$ |
5,717,338 |
|
|
$ |
5,829,018 |
|
|
$ |
(111,680 |
) |
Senior unsecured notes, net |
|
1,192,342 |
|
|
|
1,191,832 |
|
|
|
510 |
|
Unsecured term loan, net |
|
793,517 |
|
|
|
793,193 |
|
|
|
324 |
|
Unsecured revolving credit facilities |
|
575,000 |
|
|
|
575,000 |
|
|
|
— |
|
Lease liabilities |
|
740,301 |
|
|
|
735,969 |
|
|
|
4,332 |
|
Accounts payable and accrued expenses |
|
441,741 |
|
|
|
450,881 |
|
|
|
(9,140 |
) |
Deferred revenue |
|
37,879 |
|
|
|
39,882 |
|
|
|
(2,003 |
) |
Deferred compensation plan |
|
98,996 |
|
|
|
96,322 |
|
|
|
2,674 |
|
Other liabilities |
|
312,107 |
|
|
|
268,166 |
|
|
|
43,941 |
|
Total liabilities |
|
9,909,221 |
|
|
|
9,980,263 |
|
|
|
(71,042 |
) |
Redeemable noncontrolling
interests |
|
430,539 |
|
|
|
436,732 |
|
|
|
(6,193 |
) |
Shareholders' equity |
|
5,691,632 |
|
|
|
5,839,728 |
|
|
|
(148,096 |
) |
Noncontrolling interests in
consolidated subsidiaries |
|
241,026 |
|
|
|
236,652 |
|
|
|
4,374 |
|
Total liabilities, redeemable noncontrolling interests and
equity |
$ |
16,272,418 |
|
|
$ |
16,493,375 |
|
|
$ |
(220,957 |
) |
VORNADO REALTY
TRUSTOPERATING RESULTS
(Amounts in thousands, except per
share amounts) |
For the Three Months EndedMarch
31, |
|
|
2023 |
|
|
|
2022 |
|
Revenues |
$ |
445,923 |
|
|
$ |
442,130 |
|
|
|
|
|
Net income |
$ |
11,198 |
|
|
$ |
53,375 |
|
Less net loss (income)
attributable to noncontrolling interests in: |
|
|
|
Consolidated subsidiaries |
|
9,928 |
|
|
|
(9,374 |
) |
Operating Partnership |
|
(429 |
) |
|
|
(1,994 |
) |
Net income attributable to
Vornado |
|
20,697 |
|
|
|
42,007 |
|
Preferred share dividends |
|
(15,529 |
) |
|
|
(15,529 |
) |
Net income
attributable to common shareholders |
$ |
5,168 |
|
|
$ |
26,478 |
|
|
|
|
|
Income per common
share - basic: |
|
|
|
Net income per common share |
$ |
0.03 |
|
|
$ |
0.14 |
|
Weighted average shares outstanding |
|
191,869 |
|
|
|
191,724 |
|
|
|
|
|
Income per common
share - diluted: |
|
|
|
Net income per common share |
$ |
0.03 |
|
|
$ |
0.14 |
|
Weighted average shares outstanding |
|
191,881 |
|
|
|
192,038 |
|
|
|
|
|
FFO attributable to common shareholders plus assumed conversions
(non-GAAP) |
$ |
119,083 |
|
|
$ |
154,908 |
|
Per diluted share (non-GAAP) |
$ |
0.61 |
|
|
$ |
0.80 |
|
|
|
|
|
FFO attributable to common shareholders plus assumed conversions,
as adjusted (non-GAAP) |
$ |
116,288 |
|
|
$ |
152,313 |
|
Per diluted share (non-GAAP) |
$ |
0.60 |
|
|
$ |
0.79 |
|
|
|
|
|
Weighted average shares used in determining FFO attributable to
common shareholders plus assumed conversions per diluted share |
|
194,409 |
|
|
|
193,174 |
|
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 certain 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. The Company also uses FFO
attributable to common shareholders plus assumed conversions, as
adjusted for certain items that impact the comparability of period
to period FFO, as one of several criteria to determine
performance-based compensation for senior management. 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. 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 net income attributable to common
shareholders to FFO attributable to common shareholders plus
assumed conversions are provided on the following page.
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
TRUSTNON-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 EndedMarch
31, |
|
|
2023 |
|
|
|
2022 |
|
Net income attributable to
common shareholders |
$ |
5,168 |
|
|
$ |
26,478 |
|
Per diluted share |
$ |
0.03 |
|
|
$ |
0.14 |
|
|
|
|
|
FFO adjustments: |
|
|
|
Depreciation and amortization
of real property |
$ |
94,792 |
|
|
$ |
105,962 |
|
Net gain on sale of real
estate |
|
— |
|
|
|
(551 |
) |
Proportionate share of
adjustments to equity in net income of partially owned entities to
arrive at FFO: |
|
|
|
Depreciation and amortization of real property |
|
27,469 |
|
|
|
32,139 |
|
|
|
122,261 |
|
|
|
137,550 |
|
Noncontrolling interests'
share of above adjustments |
|
(8,746 |
) |
|
|
(9,506 |
) |
FFO adjustments, net |
$ |
113,515 |
|
|
$ |
128,044 |
|
|
|
|
|
FFO attributable to common
shareholders |
$ |
118,683 |
|
|
$ |
154,522 |
|
Impact of assumed conversion
of dilutive convertible securities |
|
400 |
|
|
|
386 |
|
FFO attributable to common
shareholders plus assumed conversions |
$ |
119,083 |
|
|
$ |
154,908 |
|
Per diluted share |
$ |
0.61 |
|
|
$ |
0.80 |
|
|
|
|
|
Reconciliation of
weighted average shares outstanding: |
|
|
|
Weighted average common shares
outstanding |
|
191,869 |
|
|
|
191,724 |
|
Effect of dilutive
securities: |
|
|
|
Convertible securities |
|
2,470 |
|
|
|
1,136 |
|
Share-based payment awards |
|
70 |
|
|
|
314 |
|
Denominator for FFO per
diluted share |
|
194,409 |
|
|
|
193,174 |
|
VORNADO REALTY
TRUSTNON-GAAP RECONCILIATIONS -
CONTINUED
Below is a reconciliation of net income (loss)
to NOI at share and NOI at share - cash basis for the three months
ended March 31, 2023 and 2022 and December 31, 2022.
|
For the Three Months Ended |
(Amounts in thousands) |
March 31, |
|
December 31, 2022 |
|
|
2023 |
|
|
|
2022 |
|
|
Net income (loss) |
$ |
11,198 |
|
|
$ |
53,375 |
|
|
$ |
(525,002 |
) |
Depreciation and amortization
expense |
|
106,565 |
|
|
|
117,443 |
|
|
|
133,871 |
|
General and administrative
expense |
|
41,595 |
|
|
|
41,216 |
|
|
|
31,439 |
|
Transaction related costs,
impairment losses and other |
|
658 |
|
|
|
1,005 |
|
|
|
26,761 |
|
(Income) loss from partially
owned entities |
|
(16,666 |
) |
|
|
(33,714 |
) |
|
|
545,126 |
|
Loss (income) from real estate
fund investments |
|
19 |
|
|
|
(5,674 |
) |
|
|
1,880 |
|
Interest and other investment
income, net |
|
(9,603 |
) |
|
|
(1,018 |
) |
|
|
(10,587 |
) |
Interest and debt expense |
|
86,237 |
|
|
|
52,109 |
|
|
|
88,242 |
|
Net gains on disposition of
wholly owned and partially owned assets |
|
(7,520 |
) |
|
|
(6,552 |
) |
|
|
(65,241 |
) |
Income tax expense |
|
4,667 |
|
|
|
7,411 |
|
|
|
6,974 |
|
NOI from partially owned
entities |
|
68,097 |
|
|
|
78,692 |
|
|
|
77,221 |
|
NOI attributable to
noncontrolling interests in consolidated subsidiaries |
|
(11,764 |
) |
|
|
(20,035 |
) |
|
|
(18,929 |
) |
NOI at share |
|
273,483 |
|
|
|
284,258 |
|
|
|
291,755 |
|
Non-cash adjustments for
straight-line rents, amortization of acquired below-market leases,
net and other |
|
5,052 |
|
|
|
(3,130 |
) |
|
|
(2,156 |
) |
NOI at share - cash basis |
$ |
278,535 |
|
|
$ |
281,128 |
|
|
$ |
289,599 |
|
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.
VORNADO REALTY
TRUSTNON-GAAP RECONCILIATIONS -
CONTINUED
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.
Below are reconciliations of NOI at share to
same store NOI at share for our New York segment, THE MART, 555
California Street and other investments for the three months ended
March 31, 2023 compared to March 31, 2022.
(Amounts in thousands) |
Total |
|
New York |
|
THE MART |
|
555 California Street |
|
Other |
NOI at share for the three months ended March 31, 2023 |
$ |
273,483 |
|
|
$ |
235,994 |
|
|
$ |
15,409 |
|
|
$ |
16,929 |
|
|
$ |
5,151 |
|
Less NOI at share from: |
|
|
|
|
|
|
|
|
|
Dispositions |
|
134 |
|
|
|
134 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Development properties |
|
(7,545 |
) |
|
|
(7,545 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other non-same store (income) expense, net |
|
(1,487 |
) |
|
|
3,664 |
|
|
|
— |
|
|
|
— |
|
|
|
(5,151 |
) |
Same store NOI at share for
the three months ended March 31, 2023 |
$ |
264,585 |
|
|
$ |
232,247 |
|
|
$ |
15,409 |
|
|
$ |
16,929 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
NOI at share for the three
months ended March 31, 2022 |
$ |
284,258 |
|
|
$ |
243,667 |
|
|
$ |
19,914 |
|
|
$ |
16,235 |
|
|
$ |
4,442 |
|
Less NOI at share from: |
|
|
|
|
|
|
|
|
|
Dispositions |
|
(3,232 |
) |
|
|
(3,232 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Development properties |
|
(7,440 |
) |
|
|
(7,440 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other non-same store income, net |
|
(8,918 |
) |
|
|
(4,476 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4,442 |
) |
Same store NOI at share for
the three months ended March 31, 2022 |
$ |
264,668 |
|
|
$ |
228,519 |
|
|
$ |
19,914 |
|
|
$ |
16,235 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in same
store NOI at share |
$ |
(83 |
) |
|
$ |
3,728 |
|
|
$ |
(4,505 |
) |
|
$ |
694 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
% (decrease) increase in same
store NOI at share |
|
0.0 |
% |
|
|
1.6 |
% |
|
(22.6 |
)% |
|
|
4.3 |
% |
|
|
0.0 |
% |
VORNADO REALTY
TRUSTNON-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, THE MART, 555 California Street and other investments for
the three months ended March 31, 2023 compared to March 31,
2022.
(Amounts in thousands) |
Total |
|
New York |
|
THE MART |
|
555 California Street |
|
Other |
NOI at share - cash basis for the three months ended March 31,
2023 |
$ |
278,535 |
|
|
$ |
241,027 |
|
|
$ |
14,675 |
|
|
$ |
17,718 |
|
|
$ |
5,115 |
|
Less NOI at share - cash basis
from: |
|
|
|
|
|
|
|
|
|
Dispositions |
|
134 |
|
|
|
134 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Development properties |
|
(6,770 |
) |
|
|
(6,770 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other non-same store income, net |
|
(6,070 |
) |
|
|
(955 |
) |
|
|
— |
|
|
|
— |
|
|
|
(5,115 |
) |
Same store NOI at share - cash
basis for the three months ended March 31, 2023 |
$ |
265,829 |
|
|
$ |
233,436 |
|
|
$ |
14,675 |
|
|
$ |
17,718 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
NOI at share - cash basis for
the three months ended March 31, 2022 |
$ |
281,128 |
|
|
$ |
239,692 |
|
|
$ |
20,436 |
|
|
$ |
16,360 |
|
|
$ |
4,640 |
|
Less NOI at share - cash basis
from: |
|
|
|
|
|
|
|
|
|
Dispositions |
|
(3,252 |
) |
|
|
(3,252 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Development properties |
|
(6,756 |
) |
|
|
(6,756 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other non-same store income, net |
|
(9,332 |
) |
|
|
(4,692 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4,640 |
) |
Same store NOI at share - cash
basis for the three months ended March 31, 2022 |
$ |
261,788 |
|
|
$ |
224,992 |
|
|
$ |
20,436 |
|
|
$ |
16,360 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in same
store NOI at share - cash basis |
$ |
4,041 |
|
|
$ |
8,444 |
|
|
$ |
(5,761 |
) |
|
$ |
1,358 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
% increase (decrease) in same
store NOI at share - cash basis |
|
1.5 |
% |
|
|
3.8 |
% |
|
(28.2 |
)% |
|
|
8.3 |
% |
|
|
0.0 |
% |
VORNADO REALTY
TRUSTNON-GAAP RECONCILIATIONS -
CONTINUED
Below are reconciliations of NOI at share to
same store NOI at share for our New York segment, THE MART, 555
California Street and other investments for the three months ended
March 31, 2023 compared to December 31, 2022.
(Amounts in thousands) |
Total |
|
New York |
|
THE MART |
|
555 California Street |
|
Other |
NOI at share for the three months ended March 31, 2023 |
$ |
273,483 |
|
|
$ |
235,994 |
|
|
$ |
15,409 |
|
|
$ |
16,929 |
|
|
$ |
5,151 |
|
Less NOI at share from: |
|
|
|
|
|
|
|
|
|
Dispositions |
|
134 |
|
|
|
134 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Development properties |
|
(7,545 |
) |
|
|
(7,545 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other non-same store (income) expense, net |
|
(1,189 |
) |
|
|
3,962 |
|
|
|
— |
|
|
|
— |
|
|
|
(5,151 |
) |
Same store NOI at share for
the three months ended March 31, 2023 |
$ |
264,883 |
|
|
$ |
232,545 |
|
|
$ |
15,409 |
|
|
$ |
16,929 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
NOI at share for the three
months ended December 31, 2022 |
$ |
291,755 |
|
|
$ |
248,595 |
|
|
$ |
21,276 |
|
|
$ |
16,641 |
|
|
$ |
5,243 |
|
Less NOI at share from: |
|
|
|
|
|
|
|
|
|
Dispositions |
|
(1,499 |
) |
|
|
(1,499 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Development properties |
|
(5,423 |
) |
|
|
(5,423 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other non-same store income, net |
|
(8,201 |
) |
|
|
(2,756 |
) |
|
|
(202 |
) |
|
|
— |
|
|
|
(5,243 |
) |
Same store NOI at share for
the three months ended December 31, 2022 |
$ |
276,632 |
|
|
$ |
238,917 |
|
|
$ |
21,074 |
|
|
$ |
16,641 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in same
store NOI at share |
$ |
(11,749 |
) |
|
$ |
(6,372 |
) |
|
$ |
(5,665 |
) |
|
$ |
288 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
% (decrease) increase in same
store NOI at share |
(4.2 |
)% |
|
(2.7 |
)% |
|
(26.9 |
)% |
|
|
1.7 |
% |
|
|
0.0 |
% |
VORNADO REALTY
TRUSTNON-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, THE MART, 555 California Street and other investments for
the three months ended March 31, 2023 compared to December 31,
2022.
(Amounts in thousands) |
Total |
|
New York |
|
THE MART |
|
555 California Street |
|
Other |
NOI at share - cash basis for the three months ended March 31,
2023 |
$ |
278,535 |
|
|
$ |
241,027 |
|
|
$ |
14,675 |
|
|
$ |
17,718 |
|
|
$ |
5,115 |
|
Less NOI at share - cash basis
from: |
|
|
|
|
|
|
|
|
|
Dispositions |
|
134 |
|
|
|
134 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Development properties |
|
(6,770 |
) |
|
|
(6,770 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other non-same store income, net |
|
(5,709 |
) |
|
|
(594 |
) |
|
|
— |
|
|
|
— |
|
|
|
(5,115 |
) |
Same store NOI at share - cash
basis for the three months ended March 31, 2023 |
$ |
266,190 |
|
|
$ |
233,797 |
|
|
$ |
14,675 |
|
|
$ |
17,718 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
NOI at share - cash basis for
the three months ended December 31, 2022 |
$ |
289,599 |
|
|
$ |
243,712 |
|
|
$ |
23,163 |
|
|
$ |
17,672 |
|
|
$ |
5,052 |
|
Less NOI at share - cash basis
from: |
|
|
|
|
|
|
|
|
|
Dispositions |
|
(1,184 |
) |
|
|
(1,184 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Development properties |
|
(4,555 |
) |
|
|
(4,555 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other non-same store income, net |
|
(8,075 |
) |
|
|
(2,821 |
) |
|
|
(202 |
) |
|
|
— |
|
|
|
(5,052 |
) |
Same store NOI at share - cash
basis for the three months ended December 31, 2022 |
$ |
275,785 |
|
|
$ |
235,152 |
|
|
$ |
22,961 |
|
|
$ |
17,672 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in same
store NOI at share - cash basis |
$ |
(9,595 |
) |
|
$ |
(1,355 |
) |
|
$ |
(8,286 |
) |
|
$ |
46 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
% (decrease) increase in same
store NOI at share - cash basis |
(3.5 |
)% |
|
(0.6 |
)% |
|
(36.1 |
)% |
|
|
0.3 |
% |
|
|
0.0 |
% |
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