EX-99.2 3 vno-033118x8kxexhibit992xf.htm EXHIBIT 99.2 Exhibit




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INDEX
 
 
 
 
 
 
 
 
Page
Financial Supplement Definitions
 
 
Investor Information
 
 
2018 Business Developments
 
 
Common Shares Data
 
 
Financial Highlights
 
 
Trailing Twelve Month Pro-Forma Cash Net Operating Income
 
 
Net (Loss) Income Attributable to Common Shareholders (Consolidated and by Segment)
-
Net Operating Income at Share (by Segment and by Subsegment)
-
Consolidated Balance Sheets
 
 
Capital Structure
 
 
Debt Analysis and Debt Maturities
-
Unconsolidated Joint Ventures
-
Square Footage
 
 
Top 30 Tenants
 
 
Lease Expirations
-
Leasing Activity
 
 
Occupancy, Same Store NOI at share and NOI at share - Cash Basis and Residential Statistics
 
 
Development/Redevelopment Summary
 
 
Capital Expenditures
-
Property Table
-
Appendix: Non-GAAP Reconciliations
 
 
 
Net (Loss) Income Attributable to Common Shareholders to Net Income Attributable to Common Shareholders, as Adjusted
 
 
Net (Loss) Income Attributable to Common Shareholders to FFO Attributable to Common Shareholders Plus Assumed Conversions
 
 
FFO Attributable to Common Shareholders Plus Assumed Conversions to FFO Attributable to Common Shareholders Plus Assumed Conversions, as Adjusted
 
 
FFO Attributable to Common Shareholders Plus Assumed Conversions to Funds Available for Distribution
 
 
Net Income to NOI at Share and NOI at Share - Cash Basis
 
 
Components of NOI at Share and NOI at Share - Cash Basis / NOI at Share by Region
 
 
NOI at Share to Same Store NOI at Share for the Three Months Ended March 31, 2018 compared to March 31, 2017
 
 
NOI at Share to Same Store NOI at Share for the Three Months Ended March 31, 2018 compared to December 31, 2017
 
 
NOI at Share - Cash Basis to Same Store NOI at Share - Cash Basis for the Three Months Ended March 31, 2018 compared to March 31, 2017
 
 
NOI at Share - Cash Basis to Same Store NOI at Share - Cash Basis for the Three Months Ended March 31, 2018 compared to December 31, 2017
 
 
Consolidated Revenues to our Pro Rata Share of Revenues (Annualized) / Consolidated Debt to Contractual Debt
 
 
Net Income to EBITDAre and EBITDAre, as adjusted
-

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 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 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 our Annual Report on Form 10-K for the year ended December 31, 2017. 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 our Annual Report on Form 10-K, or Quarterly Report on Form 10-Q, as applicable, and this supplemental package.



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FINANCIAL SUPPLEMENT DEFINITIONS
The financial supplement includes various non-GAAP financial measures.  Descriptions of these non-GAAP measures are provided below. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are provided in Appendix: Non-GAAP Reconciliations.
Net Operating Income ("NOI") - 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. We calculate NOI on an Operating Partnership basis which is before allocation to the noncontrolling interest of the Operating Partnership.
Funds From Operations ("FFO") - 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.
Funds Available For Distribution ("FAD") - FAD is defined as FFO less (i) cash basis recurring tenant improvements, leasing commissions and capital expenditures, (ii) straight-line rents and amortization of acquired below-market leases, net, and (iii) other non-cash income, plus (iv) other non-cash charges.  FAD is a non-GAAP financial measure that is not intended to represent cash flow and is not indicative of cash flow provided by operating activities as determined in accordance with GAAP. FAD is presented solely as a supplemental disclosure that management believes provides useful information regarding the Company's ability to fund its dividends.


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INVESTOR INFORMATION
 
 
 
 
 
 
Executive Officers:
 
 
 
 
 
Steven Roth
Chairman of the Board and Chief Executive Officer
David R. Greenbaum
President - New York Division
Michael J. Franco
Executive Vice President - Chief Investment Officer
Joseph Macnow
Executive Vice President - Chief Financial Officer and Chief Administrative Officer
 
 
 
 
 
 
RESEARCH COVERAGE - EQUITY
 
 
 
 
 
 
James Feldman/Kimberly Hong
 
 
Steve Sakwa/Robert Simone
 
John W. Guinee/Aaron Wolf
Bank of America/Merrill Lynch
 
 
Evercore ISI
 
Stifel Nicolaus & Company
646-855-5808/646-556-3329
 
 
212-446-9462/212-446-9459
 
443-224-1307/443-224-1206
 
 
 
 
 
 
Ross Smotrich/Trevor Young
 
 
Jed Reagan/Daniel Ismail
 
Michael Lewis
Barclays Capital
 
 
Green Street Advisors
 
SunTrust Robinson Humphrey
212-526-2306/212-526-3098
 
 
949-640-8780
 
212-319-5659
 
 
 
 
 
 
John P. Kim/Alex Nelson
 
 
Anthony Paolone
 
Nick Yulico/Frank Lee
BMO Capital Markets
 
 
JP Morgan
 
UBS
212-885-4115/212-885-4144
 
 
212-622-6682
 
212-713-3402/415-352-5679
 
 
 
 
 
 
Michael Bilerman/Emmanuel Korchman
 
 
Vikram Malhotra/Adam J. Gabalski
 
 
Citi
 
 
Morgan Stanley
 
 
212-816-1383/212-816-1382
 
 
212-761-7064/212-761-8051
 
 
 
 
 
 
 
 
Vincent Chao/Mike Husseini
 
 
Alexander Goldfarb/Daniel Santos
 
 
Deutsche Bank
 
 
Sandler O'Neill
 
 
212-250-6799/212-250-7703
 
 
212-466-7937/212-466-7927
 
 
 
 
 
 
 
 
RESEARCH COVERAGE - DEBT
 
 
 
 
 
 
Andrew Molloy
 
 
Jesse Rosenthal
 
Thierry Perrein
Bank of America/Merrill Lynch
 
 
CreditSights
 
Wells Fargo Securities
646-855-6435
 
 
212-340-3816
 
704-410-3262
 
 
 
 
 
 
Cristina Rosenberg
 
 
Mark Streeter
 
 
Citi
 
 
JP Morgan
 
 
212-723-6199
 
 
212-834-5086
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
This information is provided as a service to interested parties and not as an endorsement of any report, or representation as to the accuracy of any information contained therein. Opinions, forecasts and other forward-looking statements expressed in analysts' reports are subject to change without notice.        


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2018 BUSINESS DEVELOPMENTS
 
Acquisition Activity

537 West 26th Street

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

11 East 68th Street

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.


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COMMON SHARES DATA (NYSE: VNO)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Vornado Realty Trust common shares are traded on the New York Stock Exchange ("NYSE") under the symbol VNO.  Below is a summary of performance and dividends for VNO common shares (based on NYSE prices):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First Quarter
2018
 
Fourth Quarter
2017
 
Third Quarter
2017
 
Second Quarter
2017
High price
 
$
78.31

(1) 
$
80.30

(1) 
$
97.25

 
$
103.35

Low price
 
$
64.13

(1) 
$
71.90

(1) 
$
72.77

(1) 
$
91.18

Closing price - end of quarter
 
$
67.30

(1) 
$
78.18

(1) 
$
76.88

(1) 
$
93.90

 
 
 
 
 
 
 
 
 
 
 
 
 
Annualized dividend per share
 
$
2.52

(1) 
$
2.40

(1) 
$
2.40

(1) 
$
2.84

JBGS annualized dividend per share
 
 
0.45

(2) 
 
0.45

(2) 
 
0.45

(2) 
 

 
 
$
2.97

 
$
2.85

 
$
2.85

 
$
2.84

 
 
 
 
 
 
 
 
 
 
 
 
 
Annualized dividend yield - on closing price
 
 
3.7
%
 
 
3.1
%
 
 
3.1
%
 
 
3.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding shares, Class A units and convertible preferred units as converted, excluding stock options (in thousands)
 
 
203,613

 
 
203,198

 
 
203,138

 
 
202,518

 
 
 
 
 
 
 
 
 
 
 
 
 
Closing market value of outstanding shares, Class A units and convertible preferred units as converted, excluding stock options
 
$
13.7 Billion

 
$
15.9 Billion

 
$
15.6 Billion

 
$
19.0 Billion

____________________
(1) Reflects the July 17, 2017 spin-off of JBG SMITH Properties (NYSE: JBGS).
(2) JBGS annualized dividend of $0.90 per common share, adjusted for the 1:2 spin-off distribution.


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FINANCIAL HIGHLIGHTS
(unaudited and in thousands, except per share amounts)
 
Three Months Ended
 
March 31,
 
December 31, 2017
 
2018
 
2017
 
Total revenues
$
536,437

 
$
508,058

 
$
536,226

 
 
 
 
 
 
Net (loss) income attributable to common shareholders
$
(17,841
)
 
$
47,752

 
$
27,319

Per common share:
 
 
 
 
 
Basic
$
(0.09
)
 
$
0.25

 
$
0.14

Diluted
$
(0.09
)
 
$
0.25

 
$
0.14

 
 
 
 
 
 
Net income attributable to common shareholders, as adjusted (non-GAAP)
$
56,388

 
$
46,873

 
$
65,479

Per diluted share (non-GAAP)
$
0.30

 
$
0.25

 
$
0.34

 
 
 
 
 
 
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)
$
173,842

 
$
160,105

 
$
187,553

Per diluted share (non-GAAP)
$
0.91

 
$
0.84

 
$
0.98

 
 
 
 
 
 
FFO attributable to common shareholders plus assumed conversions (non-GAAP)
$
102,479

 
$
205,729

 
$
153,151

FFO - Operating Partnership Basis ("OP Basis") (non-GAAP)
$
109,418

 
$
219,513

 
$
163,523

Per diluted share (non-GAAP)
$
0.54

 
$
1.08

 
$
0.80

 
 
 
 
 
 
Dividends per common share
$
0.63

 
$
0.71

 
$
0.60

 
 
 
 
 
 
FFO payout ratio (based on FFO attributable to common shareholders plus assumed conversions, as adjusted)
69.2
%
 
84.5
%
 
61.2
%
FAD payout ratio
90.0
%
 
94.7
%
 
90.9
%
 
 
 
 
 
 
Weighted average shares used in determining FFO attributable to common shareholders
   plus assumed conversions per diluted share (REIT basis)
191,057

 
190,412

 
191,063

Convertible units:
 
 
 
 
 
Class A
11,848

 
11,634

 
11,677

D-13
678

 
445

 
615

G1-G4
58

 
39

 
50

Equity awards - unit equivalents
353

 
640

 
598

Weighted average shares used in determining FFO attributable to Class A unitholders
   plus assumed conversions per diluted share (OP Basis)
203,994

 
203,170

 
204,003


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TRAILING TWELVE MONTH PRO-FORMA CASH NET OPERATING INCOME
(unaudited and in thousands)
 
 
 
 
Trailing Twelve Months Ended March 31, 2018
 
Year Ended December 31, 2017
 
 
NOI - cash basis
 
Less: BMS
 
Pro-forma
NOI - cash basis
 
Pro-forma
NOI - cash basis
 
 
 
 
 
 
New York - Office
$
690,699

 
$
(24,690
)
 
$
666,009

 
$
654,839

 
New York - Retail
324,488

 

 
324,488

 
324,318

 
New York - Residential
21,683

 

 
21,683

 
21,626

 
theMART
101,789

 

 
101,789

 
99,242

 
555 California Street
46,782

 

 
46,782

(1) 
45,281

(1) 
 
$
1,185,441

 
$
(24,690
)
 
$
1,160,751

 
$
1,145,306

 
____________________
(1)
Excludes incremental NOI from the lease-up of 345 Montgomery Street.





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CONSOLIDATED NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
(unaudited and in thousands)
 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
 
2018
 
2017
 
Inc (Dec)
 
2017
Property rentals
 
$
422,099

 
$
391,920

 
$
30,179

 
$
419,970

Straight-lining of rents
 
7,430

 
11,856

 
(4,426
)
 
8,040

Amortization of acquired below-market leases, net
 
10,581

 
11,116

 
(535
)
 
11,345

Total property rentals
 
440,110

 
414,892

 
25,218

 
439,355

Tenant expense reimbursements
 
60,310

 
59,033

 
1,277

 
59,333

Fee and other income:
 
 
 
 
 
 
 
 
BMS cleaning fees
 
28,355

 
25,071

 
3,284

 
28,218

Management and leasing fees
 
2,764

 
2,275

 
489

 
2,705

Lease termination fees
 
345

 
3,850

 
(3,505
)
 
2,224

Other income
 
4,553

 
2,937

 
1,616

 
4,391

Total revenues
 
536,437

 
508,058

 
28,379

 
536,226

Operating expenses
 
237,602

 
220,659

 
16,943

 
225,011

Depreciation and amortization
 
108,686

 
105,128

 
3,558

 
114,166

General and administrative
 
43,633

 
47,237

 
(3,604
)
 
35,139

(Income) expense from deferred compensation plan liability
 
(404
)
 
2,469

 
(2,873
)
 
1,699

Transaction related costs and other
 
13,156

 
752

 
12,404

 
703

Total expenses
 
402,673

 
376,245

 
26,428

 
376,718

Operating income
 
133,764

 
131,813

 
1,951

 
159,508

(Loss) income from partially owned entities
 
(9,904
)
 
1,358

 
(11,262
)
 
9,622

(Loss) income from real estate fund investments
 
(8,807
)
 
268

 
(9,075
)
 
4,889

Interest and other investment (loss) income, net
 
(24,384
)
 
6,695

 
(31,079
)
 
8,294

(Loss) income from deferred compensation plan assets
 
(404
)
 
2,469

 
(2,873
)
 
1,699

Interest and debt expense
 
(88,166
)
 
(82,724
)
 
(5,442
)
 
(93,073
)
Net gains on disposition of wholly owned and partially owned assets
 

 
501

 
(501
)
 

Income before income taxes
 
2,099

 
60,380

 
(58,281
)
 
90,939

Income tax expense
 
(1,454
)
 
(1,851
)
 
397

 
(38,661
)
Income from continuing operations
 
645

 
58,529

 
(57,884
)
 
52,278

(Loss) income from discontinued operations
 
(363
)
 
15,318

 
(15,681
)
 
1,273

Net income
 
282

 
73,847

 
(73,565
)
 
53,551

Less net loss (income) attributable to noncontrolling interests in:
 
 
 
 
 
 
 
 
Consolidated subsidiaries
 
8,274

 
(6,737
)
 
15,011

 
(7,366
)
Operating Partnership
 
1,124

 
(3,229
)
 
4,353

 
(1,853
)
Net income attributable to Vornado
 
9,680

 
63,881

 
(54,201
)
 
44,332

Preferred share dividends
 
(13,035
)
 
(16,129
)
 
3,094

 
(17,013
)
Preferred share issuance costs
 
(14,486
)
 

 
(14,486
)
 

Net (loss) income attributable to common shareholders
 
$
(17,841
)
 
$
47,752

 
$
(65,593
)
 
$
27,319

 
 
 
 
 
 
 
 
 
Capitalized expenditures:
 
 
 
 
 
 
 
 
Leasing payroll
 
$
1,348

 
$
974

 
$
374

 
$
1,749

Development payroll
 
1,709

 
1,173

 
536

 
1,710

Interest and debt expense
 
14,726

 
10,815

 
3,911

 
13,251


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NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS BY SEGMENT
(unaudited and in thousands)
 
 
Three Months Ended March 31, 2018
 
 
Total
 
New York
 
Other
Property rentals
 
$
422,099

 
$
343,045

 
$
79,054

Straight-lining of rents
 
7,430

 
6,019

 
1,411

Amortization of acquired below-market leases, net
 
10,581

 
10,282

 
299

Total property rentals
 
440,110

 
359,346

 
80,764

Tenant expense reimbursements
 
60,310

 
54,490

 
5,820

Fee and other income:
 
 
 
 
 
 
BMS cleaning fees
 
28,355

 
30,153

 
(1,798
)
Management and leasing fees
 
2,764

 
2,481

 
283

Lease termination fees
 
345

 
308

 
37

Other income
 
4,553

 
1,706

 
2,847

Total revenues
 
536,437

 
448,484

 
87,953

Operating expenses
 
237,602

 
197,916

 
39,686

Depreciation and amortization
 
108,686

 
87,150

 
21,536

General and administrative
 
43,633

 
11,116

 
32,517

Income from deferred compensation plan liability
 
(404
)
 

 
(404
)
Transaction related costs and other
 
13,156

 
13,103

 
53

Total expenses
 
402,673

 
309,285

 
93,388

Operating income (loss)
 
133,764

 
139,199

 
(5,435
)
Loss from partially owned entities
 
(9,904
)
 
(6,938
)
 
(2,966
)
Loss from real estate fund investments
 
(8,807
)
 

 
(8,807
)
Interest and other investment (loss) income, net
 
(24,384
)
 
1,258

 
(25,642
)
Loss from deferred compensation plan assets
 
(404
)
 

 
(404
)
Interest and debt expense
 
(88,166
)
 
(62,209
)
 
(25,957
)
Income (loss) before income taxes
 
2,099

 
71,310

 
(69,211
)
Income tax expense
 
(1,454
)
 
(1,041
)
 
(413
)
Income (loss) from continuing operations
 
645

 
70,269

 
(69,624
)
Loss from discontinued operations
 
(363
)
 

 
(363
)
Net income (loss)
 
282

 
70,269

 
(69,987
)
Less net loss attributable to noncontrolling interests in:
 
 
 
 
 
 
Consolidated subsidiaries
 
8,274

 
3,669

 
4,605

Operating Partnership
 
1,124

 

 
1,124

Net income (loss) attributable to Vornado
 
9,680

 
73,938

 
(64,258
)
Preferred share dividends
 
(13,035
)
 

 
(13,035
)
Preferred share issuance costs
 
(14,486
)
 

 
(14,486
)
Net (loss) income attributable to common shareholders for the three months ended March 31, 2018
 
$
(17,841
)
 
$
73,938

 
$
(91,779
)
Net income (loss) attributable to common shareholders for the three months ended March 31, 2017
 
$
47,752

 
$
94,020

 
$
(46,268
)


- 10 -


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NET OPERATING INCOME AT SHARE BY SEGMENT
(unaudited and in thousands)
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended March 31, 2018
 
Total
 
New York
 
Other
Total revenues
$
536,437

 
$
448,484

 
$
87,953

Operating expenses
237,602

 
197,916

 
39,686

NOI - consolidated
298,835

 
250,568

 
48,267

Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries
(17,312
)
 
(11,745
)
 
(5,567
)
Add: Our share of NOI from partially owned entities
67,513

 
49,773

 
17,740

NOI at share
349,036

 
288,596

 
60,440

Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other
(17,948
)
 
(17,323
)
 
(625
)
NOI at share - cash basis
$
331,088

 
$
271,273

 
$
59,815

 
For the Three Months Ended March 31, 2017
 
Total
 
New York
 
Other
Total revenues
$
508,058

 
$
426,239

 
$
81,819

Operating expenses
220,659

 
183,107

 
37,552

NOI - consolidated
287,399

 
243,132

 
44,267

Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries
(16,338
)
 
(11,439
)
 
(4,899
)
Add: Our share of NOI from partially owned entities
66,097

 
45,462

 
20,635

NOI at share
337,158

 
277,155

 
60,003

Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other
(20,481
)
 
(18,372
)
 
(2,109
)
NOI at share - cash basis
$
316,677

 
$
258,783

 
$
57,894

 
For the Three Months Ended December 31, 2017
 
Total
 
New York
 
Other
Total revenues
$
536,226

 
$
462,597

 
$
73,629

Operating expenses
225,011

 
195,421

 
29,590

NOI - consolidated
311,215

 
267,176

 
44,039

Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries
(16,533
)
 
(11,648
)
 
(4,885
)
Add: Our share of NOI from partially owned entities
69,175

 
48,700

 
20,475

NOI at share
363,857

 
304,228

 
59,629

Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other
(21,579
)
 
(21,441
)
 
(138
)
NOI at share - cash basis
$
342,278

 
$
282,787

 
$
59,491

________________________________________
See appendix page vi for details of NOI components.


- 11 -


 vnortlogoblack2.jpg

NET OPERATING INCOME AT SHARE BY SUBSEGMENT
(unaudited and in thousands)
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
March 31,
 
December 31,
2017
 
2018
 
2017
 
NOI at share:
 
 
 
 
 
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

 
 
 
 
 
 
Total NOI at share
$
349,036

 
$
337,158

 
$
363,857

NOI at share - cash basis:
 
 
 
 
 
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

 
 
 
 
 
 
Total NOI at share - cash basis
$
331,088

 
$
316,677

 
$
342,278



- 12 -


 vnortlogoblack2.jpg

CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)
 
As of
 
Increase
(Decrease)
 
March 31, 2018
 
December 31, 2017
 
ASSETS
 
 
 
 
 
Real estate, at cost:
 
 
 
 
 
Land
$
3,170,158

 
$
3,143,648

 
$
26,510

Buildings and improvements
9,946,225

 
9,898,605

 
47,620

Development costs and construction in progress
1,705,244

 
1,615,101

 
90,143

Leasehold improvements and equipment
104,710

 
98,941

 
5,769

Total
14,926,337

 
14,756,295

 
170,042

Less accumulated depreciation and amortization
(2,962,983
)
 
(2,885,283
)
 
(77,700
)
Real estate, net
11,963,354

 
11,871,012

 
92,342

Cash and cash equivalents
1,327,384

 
1,817,655

 
(490,271
)
Restricted cash
90,684

 
97,157

 
(6,473
)
Marketable securities
149,766

 
182,752

 
(32,986
)
Tenant and other receivables, net
64,387

 
58,700

 
5,687

Investments in partially owned entities
1,033,228

 
1,056,829

 
(23,601
)
Real estate fund investments
336,552

 
354,804

 
(18,252
)
Receivable arising from the straight-lining of rents, net
934,535

 
926,711

 
7,824

Deferred leasing costs, net
405,209

 
403,492

 
1,717

Identified intangible assets, net
152,834

 
159,260

 
(6,426
)
Assets related to discontinued operations
275

 
1,357

 
(1,082
)
Other assets
406,275

 
468,205

 
(61,930
)
Total Assets
$
16,864,483

 
$
17,397,934

 
$
(533,451
)
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
 
 
 
 
 
Liabilities:
 
 
 
 
 
Mortgages payable, net
$
8,102,238

 
$
8,137,139

 
$
(34,901
)
Senior unsecured notes, net
843,125

 
843,614

 
(489
)
Unsecured term loan, net
749,114

 
748,734

 
380

Unsecured revolving credit facilities
80,000

 

 
80,000

Accounts payable and accrued expenses
431,094

 
415,794

 
15,300

Deferred revenue
200,648

 
227,069

 
(26,421
)
Deferred compensation plan
109,525

 
109,177

 
348

Liabilities related to discontinued operations
1,176

 
3,620

 
(2,444
)
Preferred shares redeemed on January 4 and 11, 2018

 
455,514

 
(455,514
)
Other liabilities
465,659

 
464,635

 
1,024

Total liabilities
10,982,579

 
11,405,296

 
(422,717
)
Redeemable noncontrolling interests
857,026

 
984,937

 
(127,911
)
Vornado shareholders' equity
4,360,092

 
4,337,652

 
22,440

Noncontrolling interests in consolidated subsidiaries
664,786

 
670,049

 
(5,263
)
Total Liabilities, Redeemable Noncontrolling Interests and Equity
$
16,864,483

 
$
17,397,934

 
$
(533,451
)

- 13 -


 vnortlogoblack2.jpg

CAPITAL STRUCTURE
(unaudited and in thousands, except per share and unit amounts)
 
 
 
 
 
March 31, 2018
Debt (contractual balances) (non-GAAP):
 
 
 
 
 
Consolidated debt (1):
 
 
 
 
 
Mortgages payable
 
 
 
 
$
8,164,718

Senior unsecured notes
 
 
 
 
850,000

$750 Million unsecured term loan
 
 
 
 
750,000

$2.5 Billion unsecured revolving credit facilities
 
 
 
 
80,000

 
 
 
 
 
9,844,718

Pro rata share of debt of non-consolidated entities (excluding $1,673,728 of Toys' debt)
 
 
 
 
3,459,655

Less: Noncontrolling interests' share of consolidated debt
        (primarily 1290 Avenue of the Americas, 555 California Street, and St. Regis - retail)
 
 
 
 
(602,715
)
 
 
 
 
 
12,701,658

 
 
 
 
 
 
 
Shares/Units
 
Par Value
 
 
Perpetual Preferred:
 
 
 
 
 
5.00% preferred unit (D-16) (1 unit @ $1,000,000 per unit)
 
 
 
 
1,000

3.25% preferred units (D-17) (177,100 units @ $25 per unit)
 
 
 
 
4,428

5.70% Series K preferred shares
12,000

 
$
25.00

 
300,000

5.40% Series L preferred shares
12,000

 
25.00

 
300,000

5.25% Series M preferred shares
12,780

 
25.00

 
319,500

 
 
 
 
 
924,928

 
 
 
 
 
 
 
Converted
Shares
 
March 31, 2018 Common Share Price
 
 
Equity:
 
 
 
 
 
Common shares
190,169

 
$
67.30

 
12,798,374

Class A units
11,895

 
67.30

 
800,534

Convertible share equivalents:
 
 
 
 
 
Equity awards - unit equivalents
759

 
67.30

 
51,081

D-13 preferred units
694

 
67.30

 
46,706

G1-G4 units
58

 
67.30

 
3,903

Series A preferred shares
38

 
67.30

 
2,557

 
 
 
 
 
13,703,155

Total Market Capitalization
 
 
 
 
$
27,329,741

____________________
(1)
See reconciliation of consolidated debt, net (GAAP) to contractual debt (non-GAAP) on page xi in Appendix: Non-GAAP Reconciliations.

- 14 -


 vnortlogoblack2.jpg

DEBT ANALYSIS
 
 
 
 
 
 
 
 
 
 
 
(unaudited and in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
As of March 31, 2018
 
Total
 
Variable
 
Fixed
(Contractual debt balances) (non-GAAP)
Amount
 
Weighted
Average
Interest Rate
 
Amount
 
Weighted
Average
Interest Rate
 
Amount
 
Weighted
Average
Interest Rate
Consolidated debt(1)
$
9,844,718

 
3.56%
 
$
3,982,692

 
3.47%
 
$
5,862,026

 
3.63%
Pro rata share of debt of non-consolidated entities:
 

 
 
 
 
 
 
 
 
 
 
Toys
1,673,728

 
9.58%
 
1,077,782

 
9.29%
 
595,946

 
10.10%
All other
3,459,655

 
4.26%
 
1,415,799

 
3.54%
 
2,043,856

 
4.75%
Total
14,978,101

 
4.40%
 
6,476,273

 
4.46%
 
8,501,828

 
4.35%
Less: Noncontrolling interests' share of consolidated debt (primarily 1290 Avenue of the Americas, 555 California Street, and St. Regis - retail)
(602,715
)
 
 
 
(147,709
)
 
 
 
(455,006
)
 
 
Company's pro rata share of total debt
$
14,375,386

 
4.42%
 
$
6,328,564

 
4.48%
 
$
8,046,822

 
4.37%
Debt Covenant Ratios:(2)
Senior Unsecured Notes
 
Unsecured Revolving Credit Facilities
and Unsecured Term Loan
 
 
 
Actual
 
 
Required
 
Due 2022
 
Due 2025
 
Required
 
Actual
Total outstanding debt/total assets(3)
Less than 65%
 
51%
 
49%
 
Less than 60%
 
39%
Secured debt/total assets
Less than 50%
 
41%
 
39%
 
Less than 50%
 
31%
Interest coverage ratio (annualized combined EBITDA to annualized interest expense)
Greater than 1.50
 
2.55
 
2.55
 
 
 
N/A
Fixed charge coverage
 
 
N/A
 
N/A
 
Greater than 1.40
 
2.44
Unencumbered assets/unsecured debt
Greater than 150%
 
389%
 
409%
 
 
 
N/A
Unsecured debt/cap value of unencumbered assets
 
 
N/A
 
N/A
 
Less than 60%
 
20%
Unencumbered coverage ratio
 
 
N/A
 
N/A
 
Greater than 1.50
 
7.87
Unencumbered EBITDA (non-GAAP):
Q1 2018
 
 
Annualized
 
New York
$
413,684

 
Other
35,336

 
Total
$
449,020

 
____________________
(1)
See reconciliation of consolidated debt, net (GAAP) to contractual debt (non-GAAP) on page xi in Appendix: Non-GAAP Reconciliations.
(2)
Our debt covenant ratios are computed in accordance with the terms of our senior unsecured notes, unsecured revolving credit facilities, and unsecured term loan, as applicable.  The methodology used for these computations may differ significantly from similarly titled ratios of other companies. For additional information regarding the methodology used to compute these ratios, please see our filings with the SEC of our revolving credit facilities, senior debt indentures and applicable prospectuses and prospectus supplements.
(3)
Total assets include EBITDA capped at 7.5% under the senior unsecured notes due 2022, 7.0% under the senior unsecured notes due 2025 and 6.0% under the unsecured revolving credit facilities and unsecured term loan.

- 15 -


 vnortlogoblack2.jpg

DEBT MATURITIES (CONTRACTUAL BALANCES) (NON-GAAP)
(unaudited and in thousands)
Property
 
Maturity
Date (1)
 
Spread over
LIBOR
 
Interest
Rate
 
2018
 
2019
 
2020
 
2021
 
2022
 
Thereafter
 
Total
435 Seventh Avenue - retail
 
08/19
 
L+225
 
4.06%
 
$

 
$
96,538

 
$

 
$

 
$

 
$

 
$
96,538

4 Union Square South - retail
 
11/19
 
L+215
 
3.82%
 

 
113,495

 

 

 

 

 
113,495

150 West 34th Street
 
06/20
 
L+225
 
3.95%
 

 

 
205,000

 

 

 

 
205,000

100 West 33rd Street - office and retail
 
07/20
 
L+165
 
3.34%
 

 

 
580,000

 

 

 

 
580,000

220 Central Park South
 
09/20
 
L+200
 
3.89%
 

 

 
950,000

 

 

 

 
950,000

Unsecured Term Loan
 
10/20
 
L+115
 
3.02%
 

 

 
750,000

 

 

 

 
750,000

Eleven Penn Plaza
 
12/20
 
 
 
3.95%
 

 

 
450,000

 

 

 

 
450,000

888 Seventh Avenue
 
12/20
 
 
 
3.15%
(2) 

 

 
375,000

 

 

 

 
375,000

Borgata Land
 
02/21
 
 
 
5.14%
 

 

 

 
55,338

 

 

 
55,338

770 Broadway
 
03/21
 
 
 
2.56%
(3) 

 

 

 
700,000

 

 

 
700,000

909 Third Avenue
 
05/21
 
 
 
3.91%
 

 

 

 
350,000

 

 

 
350,000

606 Broadway
 
05/21
 
L+300
 
4.74%
 

 

 

 
42,659

 

 

 
42,659

555 California Street
 
09/21
 
 
 
5.10%
 

 

 

 
566,688

 

 

 
566,688

theMART
 
09/21
 
 
 
2.70%
 

 

 

 
675,000

 

 

 
675,000

655 Fifth Avenue
 
10/21
 
L+140
 
3.06%
 

 

 

 
140,000

 

 

 
140,000

Two Penn Plaza
 
12/21
 
L+165
 
3.31%
 

 

 

 
575,000

 

 

 
575,000

Senior unsecured notes due 2022
 
01/22
 
 
 
5.00%
 

 

 

 

 
400,000

 

 
400,000

$1.25 Billion unsecured revolving credit facility
 
02/22
 
L+100
 
—%
 

 

 

 

 

 

 

1290 Avenue of the Americas
 
11/22
 
 
 
3.34%
 

 

 

 

 
950,000

 

 
950,000

697-703 Fifth Avenue (St. Regis - retail)
 
12/22
 
L+180
 
3.46%
 

 

 

 

 
450,000

 

 
450,000

$1.25 Billion unsecured revolving credit facility
 
01/23
 
L+100
 
2.72%
 

 

 

 

 

 
80,000

 
80,000

666 Fifth Avenue Retail Condominium
 
03/23
 
 
 
3.61%
 

 

 

 

 

 
390,000

 
390,000

33-00 Northern Boulevard
 
01/25
 
 
 
4.14%
(4) 

 

 

 

 

 
100,000

 
100,000

Senior unsecured notes due 2025
 
01/25
 
 
 
3.50%
 

 

 

 

 

 
450,000

 
450,000

350 Park Avenue
 
01/27
 
 
 
3.92%
 

 

 

 

 

 
400,000

 
400,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total consolidated debt (contractual)
 
 
 
 
 
 
 
$

 
$
210,033

 
$
3,310,000

 
$
3,104,685

 
$
1,800,000

 
$
1,420,000

 
$
9,844,718

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average rate
 
 
 
 
 
 
 
%
 
3.93
%
 
3.52
%
 
3.44
%
 
3.74
%
 
3.65
%
 
3.56
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed rate debt
 
 
 
 
 
 
 
$

 
$

 
$
825,000

 
$
2,347,026

 
$
1,350,000

 
$
1,340,000

 
$
5,862,026

Fixed weighted average rate expiring
 
 
 
 
 
 
 
%
 
%
 
3.59
%
 
3.47
%
 
3.83
%
 
3.70
%
 
3.63
%
Floating rate debt
 
 
 
 
 
 
 
$

 
$
210,033

 
$
2,485,000

 
$
757,659

 
$
450,000

 
$
80,000

 
$