EX-99.2 3 vno-33120xexhibit992xf.htm EXHIBIT 99.2 Exhibit
EXHIBIT 99.2


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

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

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COVID-19 PANDEMIC

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


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


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

 
$
534,668

 
$
460,968

 
 
 
 
 
 
Net income attributable to common shareholders
$
4,963

 
$
181,488

 
$
193,217

Per common share:
 
 
 
 
 
Basic
$
0.03

 
$
0.95

 
$
1.01

Diluted
$
0.03

 
$
0.95

 
$
1.01

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

 
$
24,814

 
$
56,381

Per diluted share (non-GAAP)
$
0.11

 
$
0.13

 
$
0.29

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

 
$
149,939

 
$
171,030

Per diluted share (non-GAAP)
$
0.72

 
$
0.79

 
$
0.89

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

 
$
247,684

 
$
311,876

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

 
$
263,697

 
$
332,029

Per diluted share (non-GAAP)
$
0.68

 
$
1.30

 
$
1.63

 
 
 
 
 
 
Dividends per common share:
 
 
 
 
 
Quarterly dividends
$
0.66

 
$
0.66

 
$
0.66

Special dividend

 

 
1.95

Total
$
0.66

 
$
0.66

 
$
2.61

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

 
190,996

 
191,140

Convertible units:
 
 
 
 
 
Class A
12,332

 
12,083

 
12,162

Equity awards - unit equivalents
71

 
265

 
189

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

 
203,344

 
203,491


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

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

 
$
428,380

 
$
(73,320
)
 
$
360,139

Tenant expense reimbursements(1)
 
52,173

 
66,112

 
(13,939
)
 
55,233

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

 
6,525

 
(2,319
)
 
4,269

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

 
499,877

 
(98,603
)
 
418,408

Fee and other income:
 
 
 
 
 
 
 
 
BMS cleaning fees
 
32,466

 
29,785

 
2,681

 
31,642

Management and leasing fees
 
2,867

 
2,237

 
630

 
3,479

Other income
 
7,925

 
2,769

 
5,156

 
7,439

Total revenues
 
444,532

 
534,668

 
(90,136
)
 
460,968

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

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

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

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

 
(5,433
)
 
16,678

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

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

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

 
7,320

 
11,783

 
22,726

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

 
(10,949
)
 
5,889

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

 
(16,678
)
 
3,887

Interest and debt expense
 
(58,842
)
 
(102,463
)
 
43,621

 
(59,683
)
Net gains on disposition of wholly owned and partially owned assets
 
68,589

 
220,294

 
(151,705
)
 
203,835

(Loss) income before income taxes
 
(91,690
)
 
242,924

 
(334,614
)
 
183,518

Income tax expense
 
(12,813
)
 
(29,743
)
 
16,930

 
(22,897
)
(Loss) income from continuing operations
 
(104,503
)
 
213,181

 
(317,684
)
 
160,621

(Loss) income from discontinued operations
 

 
(137
)
 
137

 
55

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

 
(317,547
)
 
160,676

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

 
(6,820
)
 
129,207

 
58,592

Operating Partnership
 
(390
)
 
(12,202
)
 
11,812

 
(13,518
)
Net income attributable to Vornado
 
17,494

 
194,022

 
(176,528
)
 
205,750

Preferred share dividends
 
(12,531
)
 
(12,534
)
 
3

 
(12,533
)
Net income attributable to common shareholders
 
$
4,963

 
$
181,488

 
$
(176,525
)
 
$
193,217

 
 
 
 
 
 
 
 
 
Capitalized expenditures:
 
 
 
 
 
 
 
 
Development payroll
 
$
5,307

 
$
4,590

 
$
717

 
$
3,341

Interest and debt expense
 
12,055

 
23,325

 
(11,270
)
 
13,016

________________________________
(1)
"Property rentals" and "tenant expense reimbursements" represent non-GAAP financial measures which are reconciled above to "rental revenues" the most directly comparable financial measure calculated in accordance with GAAP.
(2)
Beginning April 18, 2019, "income from partially owned entities" includes the previously consolidated properties contributed to Fifth Avenue and Times Square JV.

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NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS BY SEGMENT (unaudited)
(Amounts in thousands)
 
For the Three Months Ended March 31, 2020
 
Total
 
New York
 
Other
Property rentals(1)
$
355,060

 
$
277,688

 
$
77,372

Tenant expense reimbursements(1)
52,173

 
41,856

 
10,317

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

 
4,013

 
193

Straight-lining of rents
(10,165
)
 
(8,824
)
 
(1,341
)
Total rental revenues
401,274

 
314,733

 
86,541

Fee and other income:
 
 
 
 
 
BMS cleaning fees
32,466

 
34,429

 
(1,963
)
Management and leasing fees
2,867

 
2,874

 
(7
)
Other income
7,925

 
3,579

 
4,346

Total revenues
444,532

 
355,615

 
88,917

Operating expenses
(230,007
)
 
(183,031
)
 
(46,976
)
Depreciation and amortization
(92,793
)
 
(69,898
)
 
(22,895
)
General and administrative
(52,834
)
 
(17,457
)
 
(35,377
)
Benefit from deferred compensation plan liability
11,245

 

 
11,245

Transaction related costs and other
(71
)
 

 
(71
)
Total expenses
(364,460
)
 
(270,386
)
 
(94,074
)
Income from partially owned entities
19,103

 
17,304

 
1,799

Loss from real estate fund investments
(183,463
)
 

 
(183,463
)
Interest and other investment (loss) income, net
(5,904
)
 
151

 
(6,055
)
Loss from deferred compensation plan assets
(11,245
)
 

 
(11,245
)
Interest and debt expense
(58,842
)
 
(31,686
)
 
(27,156
)
Net gains on disposition of wholly owned and partially owned assets
68,589

 

 
68,589

(Loss) income before income taxes
(91,690
)
 
70,998

 
(162,688
)
Income tax expense
(12,813
)
 
(1,315
)
 
(11,498
)
Net (loss) income
(104,503
)
 
69,683

 
(174,186
)
Less net loss (income) attributable to noncontrolling interests in consolidated subsidiaries
122,387

 
(2,457
)
 
124,844

Net income attributable to Vornado Realty L.P.
17,884

 
$
67,226

 
$
(49,342
)
Less net income attributable to noncontrolling interests in the Operating Partnership
(349
)
 
 
 
 
Preferred unit distributions
(12,572
)
 
 
 
 
Net income attributable to common shareholders
$
4,963

 
 
 
 
For the three months ended March 31, 2019:
 
 
 
 
 
Net income attributable to Vornado Realty L.P.
$
206,224

 
$
82,790

 
$
123,434

Net income attributable to common shareholders
$
181,488

 
 
 
 
________________________________
(1)
"Property rentals" and "tenant expense reimbursements" represent non-GAAP financial measures which are reconciled above to "rental revenues" the most directly comparable financial measure calculated in accordance with GAAP.


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NET OPERATING INCOME AT SHARE BY SEGMENT (unaudited)
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended March 31, 2020
 
Total
 
New York(1)
 
Other
Total revenues
$
444,532

 
$
355,615

 
$
88,917

Operating expenses
(230,007
)
 
(183,031
)
 
(46,976
)
NOI - consolidated
214,525

 
172,584

 
41,941

Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries
(15,493
)
 
(8,433
)
 
(7,060
)
Add: NOI from partially owned entities
81,881

 
78,408

 
3,473

NOI at share
280,913

 
242,559

 
38,354

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

 
1,106

 
1,970

NOI at share - cash basis
$
283,989

 
$
243,665

 
$
40,324


 
For the Three Months Ended March 31, 2019
 
Total
 
New York
 
Other
Total revenues
$
534,668

 
$
443,285

 
$
91,383

Operating expenses
(246,895
)
 
(198,095
)
 
(48,800
)
NOI - consolidated
287,773

 
245,190

 
42,583

Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries
(17,403
)
 
(11,407
)
 
(5,996
)
Add: NOI from partially owned entities
67,402

 
49,575

 
17,827

NOI at share
337,772

 
283,358

 
54,414

Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other
(5,181
)
 
(6,618
)
 
1,437

NOI at share - cash basis
$
332,591

 
$
276,740

 
$
55,851


 
For the Three Months Ended December 31, 2019
 
Total
 
New York(1)
 
Other
Total revenues
$
460,968

 
$
377,626

 
$
83,342

Operating expenses
(223,975
)
 
(184,231
)
 
(39,744
)
NOI - consolidated
236,993

 
193,395

 
43,598

Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries
(17,417
)
 
(9,885
)
 
(7,532
)
Add: NOI from partially owned entities
85,990

 
82,774

 
3,216

NOI at share
305,566

 
266,284

 
39,282

Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other
(6,590
)
 
(8,577
)
 
1,987

NOI at share - cash basis
$
298,976

 
$
257,707

 
$
41,269

________________________________
(1)
Reflects the transfer of 45.4% of common equity in the properties contributed to the Fifth Avenue and Times Square JV on April 18, 2019.
See Appendix page vii for details of NOI at share components.


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NET OPERATING INCOME AT SHARE BY SUBSEGMENT (unaudited)
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
March 31,
 
December 31,
2019
 
2020
 
2019
 
NOI at share:
 
 
 
 
 
New York:
 
 
 
 
 
Office(1)
$
183,205

 
$
183,540

 
$
183,925

Retail(1)
52,018

 
88,267

 
59,728

Residential
6,200

 
6,045

 
5,835

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

 
11,322

 
10,626

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

Total New York
242,559

 
283,358

 
266,284

 
 
 
 
 
 
Other:
 
 
 
 
 
theMART
21,113

 
23,523

 
22,712

555 California Street
15,231

 
14,501

 
14,533

Other investments(3)
2,010

 
16,390

 
2,037

Total Other
38,354

 
54,414

 
39,282

 
 
 
 
 
 
NOI at share
$
280,913

 
$
337,772

 
$
305,566

NOI at share - cash basis:
 
 
 
 
 
New York:
 
 
 
 
 
Office(1)
$
187,035

 
$
184,370

 
$
180,762

Retail(1)
49,041

 
80,936

 
54,357

Residential
5,859

 
5,771

 
5,763

Alexander's
11,094

 
11,527

 
10,773

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

Total New York
243,665

 
276,740

 
257,707

 
 
 
 
 
 
Other:
 
 
 
 
 
theMART
22,705

 
24,912

 
24,646

555 California Street
15,435

 
14,745

 
14,491

Other investments(3)
2,184

 
16,194

 
2,132

Total Other
40,324

 
55,851

 
41,269

 
 
 
 
 
 
NOI at share - cash basis
$
283,989

 
$
332,591

 
$
298,976

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


- 9 -


 vornadologoa19.jpg

SAME STORE NOI AT SHARE AND NOI AT SHARE - CASH BASIS (NON-GAAP) (unaudited)
 
 
Total
 
New York(2)
 
theMART(3)
 
555 California Street
Same store NOI at share % (decrease) increase(1):
 
 
 
 
 
 
 
 
Three months ended March 31, 2020 compared to March 31, 2019
(2.5
)%
 
(1.9
)%
 
(13.3
)%
 
5.6
%
 
Three months ended March 31, 2020 compared to December 31, 2019
(8.2
)%
 
(9.0
)%
 
(8.2
)%
 
5.1
%
 
 
 
 
 
 
 
 
 
Same store NOI at share - cash basis % (decrease) increase(1):
 
 
 
 
 
 
 
 
Three months ended March 31, 2020 compared to March 31, 2019
(1.5
)%
 
(0.7
)%
 
(11.8
)%
 
3.7
%
 
Three months ended March 31, 2020 compared to December 31, 2019
(7.0
)%
 
(7.6
)%
 
(9.0
)%
 
5.8
%
________________________________
(1)
See pages viii through xi in the Appendix for same store NOI at share and same store NOI at share - cash basis reconciliations.
 
 
 
 
 
(2)
As a result of the COVID-19 pandemic, we have temporarily closed the Hotel Pennsylvania.
 
 

Excluding the Hotel Pennsylvania, same store NOI at share % decrease:
 
 
 
Three months ended March 31, 2020 compared to March 31, 2019
(0.3
)%
 
 
Three months ended March 31, 2020 compared to December 31, 2019
(2.7
)%
 
 
 
 
 
 
Excluding the Hotel Pennsylvania, same store NOI at share - cash basis % increase (decrease):
 
 
 
Three months ended March 31, 2020 compared to March 31, 2019
0.9
 %
 
 
Three months ended March 31, 2020 compared to December 31, 2019
(1.0
)%
 
(3)
The decrease is primarily due to the cancellation of trade shows resulting from the COVID-19 pandemic.
 
 
 
Excluding trade shows, same store NOI at share % increase (decrease):
 
 
 
Three months ended March 31, 2020 compared to March 31, 2019
1.1
 %
 
 
Three months ended March 31, 2020 compared to December 31, 2019
(2.8
)%
 
 
 
 
 
 
Excluding trade shows, same store NOI at share - cash basis % increase (decrease):
 
 
 
Three months ended March 31, 2020 compared to March 31, 2019
2.0
 %
 
 
Three months ended March 31, 2020 compared to December 31, 2019
(4.0
)%
 
NOI AT SHARE BY REGION (unaudited)
 
For the Three Months Ended March 31,
 
2020
 
2019
Region:
 
 
 
New York City metropolitan area
87
%
 
88
%
Chicago, IL
8
%
 
7
%
San Francisco, CA
5
%
 
5
%
 
100
%
 
100
%


- 10 -


 vornadologoa19.jpg

CONSOLIDATED BALANCE SHEETS (unaudited)
(Amounts in thousands)
 
As of
 
Increase
(Decrease)
 
March 31, 2020
 
December 31, 2019
 
ASSETS
 
 
 
 
 
Real estate, at cost:
 
 
 
 
 
Land
$
2,589,800

 
$
2,591,261

 
$
(1,461
)
Buildings and improvements
7,946,523

 
7,953,163

 
(6,640
)
Development costs and construction in progress
1,532,828

 
1,490,614

 
42,214

Moynihan Train Hall development expenditures
972,199

 
914,960

 
57,239

Leasehold improvements and equipment
126,910

 
124,014

 
2,896

Total
13,168,260

 
13,074,012

 
94,248

Less accumulated depreciation and amortization
(3,049,609
)
 
(3,015,958
)
 
(33,651
)
Real estate, net
10,118,651

 
10,058,054

 
60,597

Right-of-use assets
378,257

 
379,546

 
(1,289
)
Cash and cash equivalents
1,586,738

 
1,515,012

 
71,726

Restricted cash
80,570

 
92,119

 
(11,549
)
Marketable securities

 
33,313

 
(33,313
)
Tenant and other receivables
115,795

 
95,733

 
20,062

Investments in partially owned entities
3,970,791

 
3,999,165

 
(28,374
)
Real estate fund investments
45,129

 
222,649

 
(177,520
)
220 Central Park South condominium units ready for sale
393,417

 
408,918

 
(15,501
)
Receivable arising from the straight-lining of rents
731,807

 
742,206

 
(10,399
)
Deferred leasing costs, net
353,467

 
353,986

 
(519
)
Identified intangible assets, net
29,123

 
30,965

 
(1,842
)
Other assets
405,914

 
355,347

 
50,567

Total Assets
$
18,209,659

 
$
18,287,013

 
$
(77,354
)
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
 
 
 
 
 
Liabilities:
 
 
 
 
 
Mortgages payable, net
$
5,643,707

 
$
5,639,897

 
$
3,810

Senior unsecured notes, net
446,076

 
445,872

 
204

Unsecured term loan, net
795,974

 
745,840

 
50,134

Unsecured revolving credit facilities
1,075,000

 
575,000

 
500,000

Lease liabilities
497,531

 
498,254

 
(723
)
Moynihan Train Hall obligation
972,199

 
914,960

 
57,239

Special dividend/distribution payable

 
398,292

 
(398,292
)
Accounts payable and accrued expenses
407,598

 
440,049

 
(32,451
)
Deferred revenue
54,992

 
59,429

 
(4,437
)
Deferred compensation plan
90,888

 
103,773

 
(12,885
)
Other liabilities
308,683

 
265,754

 
42,929

Total liabilities
10,292,648

 
10,087,120

 
205,528

Redeemable noncontrolling interests
623,799

 
888,915

 
(265,116
)
Shareholders' equity
6,837,027

 
6,732,030

 
104,997

Noncontrolling interests in consolidated subsidiaries
456,185

 
578,948

 
(122,763
)
Total liabilities, redeemable noncontrolling interests and equity
$
18,209,659

 
$
18,287,013

 
$
(77,354
)

- 11 -


 vornadologoa19.jpg

LEASING ACTIVITY (unaudited)
(Square feet in thousands)
The leasing activity and related statistics in the table below are based on leases signed during the period and are not intended to coincide with the commencement of rental revenue in accordance with accounting principles generally accepted in the United States of America ("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.
 
 
New York
 
 
 
555 California Street
 
 
Office
 
Retail
 
theMART
 
Three Months Ended March 31, 2020
 
 
 
 
 
 
 
 
Total square feet leased
 
311

 
15

 
231

 
6

Our share of square feet leased:
 
297

 
13

 
231

 
4

Initial rent(1)
 
$
90.47

 
$
416.36

 
$
47.31

 
$
117.00

Weighted average lease term (years)
 
6.6

 
9.7

 
10.3

 
1.4

Second generation relet space:
 
 
 
 
 
 
 
 
Square feet
 
275

 
9

 
228

 
4

GAAP basis:
 
 
 
 
 
 
 
 
Straight-line rent(2)
 
$
88.96

 
$
476.94

 
$
44.52

 
$
118.03

Prior straight-line rent
 
$
91.98

 
$
210.48

 
$
43.41

 
$
81.70

Percentage (decrease) increase
 
(3.3
)%
 
126.6
%
 
2.6
 %
 
44.5
%
Cash basis (non-GAAP):
 
 
 
 
 
 
 
 
Initial rent(1)
 
$
89.22

 
$
469.99

 
$
47.05

 
$
117.00

Prior escalated rent
 
$
88.55

 
$
229.66

 
$
47.62

 
$
90.24

Percentage increase (decrease)
 
0.8
 %
 
104.6
%
 
(1.2
)%
 
29.7
%
Tenant improvements and leasing commissions:
 
 
 
 
 
 
 
 
Per square foot
 
$
77.14

 
$
467.30

 
$
45.72

 
$
4.08

Per square foot per annum
 
$
11.69

 
$
48.18

 
$
4.44

 
$
2.91

Percentage of initial rent
 
12.9
 %
 
11.6
%
 
9.4
 %
 
2.5
%
________________________________
(1)
Represents the cash basis weighted average starting rent per square foot, which is generally indicative of market rents. Most leases include free rent and periodic step-ups in rent which are not included in the initial cash basis rent per square foot but are included in the GAAP basis straight-line rent per square foot.
(2)
Represents the GAAP basis weighted average rent per square foot that is recognized over the term of the respective leases and includes the effect of free rent and periodic step-ups in rent.



- 12 -


 vornadologoa19.jpg

LEASE EXPIRATIONS (unaudited)
NEW YORK SEGMENT
 
 
Period of Lease
Expiration
 
Our Share of
Square Feet
of Expiring
Leases(1)
 
Weighted Average Annual
Rent of Expiring Leases
 
Percentage of
Annualized
Escalated Rent
 
 
 
Total
 
Per Sq. Ft.
 
Office:
Month to Month
 
47,000

 
$
2,913,000

 
$
61.98

 
0.3
%
 
 
 
 
 
 
 
 
 
 
 
Second Quarter 2020
 
135,000

 
10,382,000

 
76.90

 
0.9
%
 
Third Quarter 2020
 
186,000

 
16,150,000

 
86.83

 
1.4
%
 
Fourth Quarter 2020
 
142,000

 
9,333,000

 
65.73

 
0.8
%
 
Total 2020
 
463,000

 
35,865,000

 
77.46

 
3.1
%
 
First Quarter 2021
 
379,000

 
25,803,000

 
68.08

 
2.3
%
 
Remaining 2021
 
788,000

 
59,112,000

 
75.02

 
5.3
%
 
2022
 
661,000

 
43,876,000

 
66.38

 
3.9
%
 
2023
 
1,888,000

 
165,105,000

 
87.45

 
14.8
%
 
2024
 
1,446,000

 
120,995,000

 
83.68

 
10.8
%
 
2025
 
837,000

(2) 
66,163,000

 
79.05

 
5.9
%
 
2026
 
1,212,000

 
93,632,000

 
77.25

 
8.4
%
 
2027
 
1,103,000

 
81,091,000

 
73.52

 
7.3
%
 
2028
 
886,000

 
61,871,000

 
69.83

 
5.5
%
 
2029
 
679,000

 
55,427,000

 
81.63

 
5.0
%
 
2030
 
785,000

 
55,661,000

 
70.91

 
5.0
%
 
Thereafter
 
3,666,000

 
249,819,000

 
68.14

 
22.4
%
 
 
 
 
 
 
 
 
 
 
Retail:
Month to Month
 
27,000

 
$
3,250,000

 
$
120.37

 
1.1
%
 
 
 
 
 
 
 
 
 
 
 
Second Quarter 2020
 
5,000

 
1,551,000

 
310.20

 
0.5
%
 
Third Quarter 2020
 
7,000

 
2,351,000

 
335.86

 
0.8
%
 
Fourth Quarter 2020
 
30,000

 
7,503,000

 
250.10

 
2.5
%
 
Total 2020
 
42,000

 
11,405,000

 
271.57

 
3.8
%
 
First Quarter 2021
 
33,000

 
8,692,000

 
263.39

 
2.8
%
 
Remaining 2021
 
76,000

 
7,190,000

 
94.61

 
2.3
%
 
2022
 
25,000

 
6,831,000

 
273.24

 
2.2
%
 
2023
 
141,000

 
32,239,000

 
228.65

 
10.5
%
 
2024
 
205,000

 
47,000,000

 
229.27

 
15.3
%
 
2025
 
37,000

 
12,234,000

 
330.65

 
4.0
%
 
2026
 
71,000

 
26,269,000

 
369.99

 
8.6
%
 
2027
 
30,000

 
20,729,000

 
690.97

 
6.8
%
 
2028
 
25,000

 
12,763,000

 
510.52

 
4.2
%
 
2029
 
201,000

 
39,714,000

 
197.58

 
13.0
%
 
2030
 
161,000

 
21,265,000

 
132.08

 
6.9
%
 
Thereafter
 
296,000

 
56,640,000

 
191.35

 
18.5
%
________________________________
(1)
Excludes storage, vacancy and other.
(2)
Assumes U.S. Post Office exercises lease renewal options at 909 Third Avenue for which the annual escalated rent is $13.51 per square foot on their 492,000 square feet space.


- 13 -


 vornadologoa19.jpg

LEASE EXPIRATIONS (unaudited)
theMART
 
 
Period of Lease
Expiration
 
Our Share of
Square Feet
of Expiring
Leases(1)
 
Weighted Average Annual
Rent of Expiring Leases
 
Percentage of
Annualized
Escalated Rent
 
 
 
Total
 
Per Sq. Ft.
 
Office / Showroom / Retail:
Month to Month
 
17,000

 
$
1,103,000

 
$
64.88

 
0.7
%
 
 
 
 
 
 
 
 
 
 
 
Second Quarter 2020
 
26,000

 
1,462,000

 
56.23

 
0.9
%
 
Third Quarter 2020
 
25,000

 
1,541,000

 
61.64

 
0.9
%
 
Fourth Quarter 2020
 
49,000

 
2,524,000

 
51.51

 
1.5
%
 
Total 2020
 
100,000

 
5,527,000

 
55.27

 
3.3
%
 
First Quarter 2021
 
61,000

 
2,731,000

 
44.77

 
1.7
%
 
Remaining 2021
 
251,000

 
12,431,000

 
49.53

 
7.6
%
 
2022
 
466,000

 
23,299,000

 
50.00

 
14.3
%
 
2023
 
296,000

 
15,313,000

 
51.73

 
9.4
%
 
2024
 
337,000

 
16,913,000

 
50.19

 
10.4
%
 
2025
 
328,000

 
17,578,000

 
53.59

 
10.8
%
 
2026
 
295,000

 
14,549,000

 
49.32

 
8.9
%
 
2027
 
147,000

 
7,287,000

 
49.57

 
4.5
%
 
2028
 
642,000

 
28,336,000

 
44.14

 
17.4
%
 
2029
 
73,000

 
3,466,000

 
47.48

 
2.1
%
 
2030
 
5,000

 
313,000

 
62.60

 
0.2
%
 
Thereafter
 
317,000

 
14,267,000

 
45.01

 
8.7
%
________________________________
(1)    Excludes storage, vacancy and other.




- 14 -


 vornadologoa19.jpg

LEASE EXPIRATIONS (unaudited)
555 California Street
 
 
Period of Lease
Expiration
 
Our Share of
Square Feet
of Expiring
Leases(1)
 
Weighted Average Annual
Rent of Expiring Leases
 
Percentage of
Annualized
Escalated Rent
 
 
 
Total
 
Per Sq. Ft.
 
Office / Retail:
Month to Month
 

 
$

 
$

 
0.0
%
 
 
 
 
 
 
 
 
 
 
 
Second Quarter 2020
 
5,000

 
499,000

 
99.80

 
0.5
%
 
Third Quarter 2020
 
3,000

 
273,000

 
91.00

 
0.3
%
 
Fourth Quarter 2020
 
7,000

 
669,000

 
95.57

 
0.7
%
 
Total 2020
 
15,000

 
1,441,000

 
96.13

 
1.4
%
 
First Quarter 2021
 
1,000

 
95,000

 
95.00

 
0.1
%
 
Remaining 2021
 
79,000

 
6,061,000

 
76.72

 
6.0
%
 
2022
 
36,000

 
2,965,000

 
82.36

 
2.9
%
 
2023
 
133,000

 
10,018,000

 
75.32

 
9.8
%
 
2024
 
51,000

 
4,949,000

 
97.04

 
4.8
%
 
2025
 
432,000

 
33,857,000

 
78.37

 
33.3
%
 
2026
 
140,000

 
11,126,000

 
79.47

 
10.9
%
 
2027
 
69,000

 
6,061,000

 
87.84

 
6.0
%
 
2028
 
20,000

 
1,545,000

 
77.25

 
1.5
%
 
2029
 
74,000

 
7,029,000

 
94.99

 
6.9
%
 
2030
 
110,000

 
10,443,000

 
94.94

 
10.3
%
 
Thereafter
 
84,000

 
6,227,000

 
74.13

 
6.1
%
________________________________
(1)    Excludes storage, vacancy and other.




- 15 -


 vornadologoa19.jpg

TRAILING TWELVE MONTH PRO-FORMA CASH NET OPERATING INCOME AT SHARE (unaudited)
(Amounts in thousands)
 
 
For the Trailing Twelve Months Ended March 31, 2020
 
For the Trailing
Twelve Months Ended
December 31, 2019
 
 
 
Adjustment for Transfer of 45.4% Interest in Fifth Avenue and Times Square JV(1)
 
 
 
 
 
 
 
NOI at Share - Cash Basis
 
 
Adjustments
 
Pro Forma NOI at Share -
Cash Basis
 
Pro Forma NOI at Share - Cash Basis
Office:
 
 
 
 
 
 
 
 
 
New York
$
721,399

 
$
(968
)
 
$
(31,195
)
(2) 
$
689,236

 
$
678,184

theMART
105,923

 

 

 
105,923

 
108,130

555 California Street
60,846

 

 

 
60,846

 
60,156

Total Office
888,168

 
(968
)
 
(31,195
)
 
856,005

 
846,470

New York - Retail
235,760

 
(4,171
)
 
(15,483
)
(3) 
216,106

 
219,669

New York - Residential
21,982

 

 

 
21,982

 
21,894

 
$
1,145,910

 
$
(5,139
)
 
$
(46,678
)
 
$
1,094,093

 
$
1,088,033

________________________________
(1)
Adjusts April 1, 2019 through April 18, 2019 to reflect new ownership interests in the properties contributed to Fifth Avenue and Times Square JV.
(2)
Adjustment to deduct $27,969 of BMS NOI and $3,226 of 330 Madison Avenue NOI (sold on July 11, 2019).
(3)
Adjusting for Topshop at 608 Fifth Avenue and 478-486 Broadway, the sale of 3040 M Street and Forever 21 rent reduction at 1540 Broadway.

- 16 -


 vornadologoa19.jpg

CAPITAL STRUCTURE (unaudited)
(Amounts in thousands, except per share and per unit amounts)
 
 
 
 
 
 
 
As of
March 31, 2020
 
 
Debt (contractual balances) (non-GAAP):
 
 
 
 
 
 
 
Consolidated debt (1):
 
 
 
 
 
 
 
Mortgages payable
 
 
 
 
$
5,670,928

 
 
Senior unsecured notes
 
 
 
 
450,000

 
 
$800 Million unsecured term loan
 
 
 
 
800,000

 
 
$2.75 Billion unsecured revolving credit facilities
 
 
 
 
1,075,000

 
 
 
 
 
 
 
7,995,928

 
 
Pro rata share of debt of non-consolidated entities(2)
 
 
 
 
2,851,605

 
 
Less: Noncontrolling interests' share of consolidated debt
        (primarily 1290 Avenue of the Americas and 555 California Street)
 
 
 
 
(484,298
)
 
 
 
 
 
 
 
10,363,235

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

 
 
3.25% preferred units (D-17) (141,400 units @ $25 per unit)
 
 
 
 
3,535

 
 
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

 
 
 
 
 
 
 
924,035

 
(B)
 
 
 
 
 
 
 
 
 
Converted
Shares
 
March 31, 2020 Common Share Price
 
 
 
 
Equity:
 
 
 
 
 
 
 
Common shares
191,116

 
$
36.21

 
6,920,310

 
 
Class A units
12,387

 
36.21

 
448,533

 
 
Convertible share equivalents:
 
 
 
 
 
 
 
Equity awards - unit equivalents
1,362

 
36.21

 
49,318

 
 
D-13 preferred units
1,289

 
36.21

 
46,675

 
 
G1-G4 units
96

 
36.21

 
3,476

 
 
Series A preferred shares
30

 
36.21

 
1,086

 
 
 
 
 
 

 
7,469,398