Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - VORNADO REALTY TRUST | vno-033118x8k.htm |
| EX-99.2 - EXHIBIT 99.2 - VORNADO REALTY TRUST | vno-033118x8kxexhibit992xf.htm |
EXHIBIT 99.1
CONTACT: | JOSEPH MACNOW |  | ||
(212) 894-7000 | ||||
888 Seventh Avenue New York, NY 10019 | ||||
FOR IMMEDIATE RELEASE - April 30, 2018
Vornado Announces First Quarter 2018 Financial Results
NEW YORK.......VORNADO REALTY TRUST (NYSE: VNO) reported today:
Quarter Ended March 31, 2018 Financial Results
NET LOSS attributable to common shareholders for the quarter ended March 31, 2018 was $17.8 million, or $0.09 per diluted share compared to net income attributable to common shareholders of $47.8 million, or $0.25 per diluted share, for the prior year's quarter. Adjusting net (loss) income attributable to common shareholders for the items listed in the table below, net income attributable to common shareholders, as adjusted (non-GAAP) for the quarters ended March 31, 2018 and 2017 was $56.4 million and $46.9 million, or $0.30 and $0.25 per diluted share, respectively.
The following table reconciles our net (loss) income attributable to common shareholders to net income attributable to common shareholders, as adjusted (non-GAAP):
(Amounts in thousands, except per share amounts) | For the Three Months Ended March 31, | ||||||
2018 | 2017 | ||||||
Net (loss) income attributable to common shareholders | $ | (17,841 | ) | $ | 47,752 | ||
Per diluted share | $ | (0.09 | ) | $ | 0.25 | ||
Certain expense (income) items that impact net (loss) income attributable to common shareholders: | |||||||
Decrease in fair value of marketable securities resulting from a new GAAP accounting standard effective January 1, 2018 | $ | 34,660 | $ | — | |||
Our share of potential additional New York City transfer taxes based on a Tax Tribunal interpretation which Vornado is appealing | 23,503 | — | |||||
Preferred share issuance costs | 14,486 | — | |||||
666 Fifth Avenue Office Condominium (49.5% interest) | 3,492 | 10,197 | |||||
Our share of real estate fund investments (excluding our $4,252 share of One Park Avenue potential additional transfer taxes and reduction in carried interest) | (814 | ) | 3,235 | ||||
Loss (income) from discontinued operations (primarily related to JBG SMITH Properties operating results and transaction costs through July 17, 2017 spin-off) | 363 | (15,318 | ) | ||||
Other | 3,420 | 949 | |||||
79,110 | (937 | ) | |||||
Noncontrolling interests' share of above adjustments | (4,881 | ) | 58 | ||||
Total of certain expense (income) items that impact net (loss) income attributable to common shareholders | $ | 74,229 | $ | (879 | ) | ||
Net income attributable to common shareholders, as adjusted (non-GAAP) | $ | 56,388 | $ | 46,873 | |||
Per diluted share (non-GAAP) | $ | 0.30 | $ | 0.25 | |||
1
FUNDS FROM OPERATIONS ("FFO") attributable to common shareholders plus assumed conversions (non-GAAP) for the quarter ended March 31, 2018 was $102.5 million, or $0.54 per diluted share, compared to $205.7 million, or $1.08 per diluted share, for the prior year's quarter. Adjusting FFO attributable to common shareholders plus assumed conversions for the items listed in the table below, FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the quarters ended March 31, 2018 and 2017 was $173.8 million and $160.1 million, or $0.91 and $0.84 per diluted share, respectively.
The following table reconciles our FFO attributable to common shareholders plus assumed conversions (non-GAAP) to FFO, as adjusted attributable to common shareholders plus assumed conversions (non-GAAP):
(Amounts in thousands, except per share amounts) | For the Three Months Ended March 31, | ||||||
2018 | 2017 | ||||||
FFO attributable to common shareholders plus assumed conversions (non-GAAP)(1) | $ | 102,479 | $ | 205,729 | |||
Per diluted share (non-GAAP) | $ | 0.54 | $ | 1.08 | |||
Certain expense (income) items that impact FFO attributable to common shareholders plus assumed conversions: | |||||||
Decrease in fair value of marketable securities resulting from a new GAAP accounting standard effective January 1, 2018 | $ | 34,660 | $ | — | |||
Our share of potential additional New York City transfer taxes based on a Tax Tribunal interpretation which Vornado is appealing | 23,503 | — | |||||
Preferred share issuance costs | 14,486 | — | |||||
Our share of real estate fund investments (excluding our $4,252 share of One Park Avenue potential additional transfer taxes and reduction in carried interest) | (814 | ) | 3,235 | ||||
FFO from discontinued operations (primarily related to JBG SMITH Properties operating results and transaction costs through July 17, 2017 spin-off) | 363 | (48,093 | ) | ||||
666 Fifth Avenue Office Condominium (49.5% interest) | 137 | (3,553 | ) | ||||
Other | 3,721 | (249 | ) | ||||
76,056 | (48,660 | ) | |||||
Noncontrolling interests' share of above adjustments | (4,693 | ) | 3,036 | ||||
Total of certain expense (income) items that impact FFO attributable to common shareholders plus assumed conversions | $ | 71,363 | $ | (45,624 | ) | ||
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) | $ | 173,842 | $ | 160,105 | |||
Per diluted share (non-GAAP) | $ | 0.91 | $ | 0.84 | |||
____________________________________________________________
(1) | See page 9 for a reconciliation of our net (loss) income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the three months ended March 31, 2018 and 2017. |
2
Acquisition Activity
On February 9, 2018, we acquired 537 West 26th Street, a 14,000 square foot commercial property adjacent to our 260 Eleventh Avenue office property and 55,000 square feet of additional zoning air rights, for $44,000,000.
Disposition Activity
On January 17, 2018, Vornado Capital Partners Real Estate Fund (the "Fund") completed the sale of the retail condominium at 11 East 68th Street, a property located on Madison Avenue and 68th Street, for $82,000,000. From the inception of this investment through its disposition, the Fund realized a $46,259,000 net gain.
Financing Activities
On January 4 and 11, 2018, we redeemed all of the outstanding 6.625% Series G and Series I cumulative redeemable preferred shares at their redemption price of $25.00 per share, or $470,000,000 in the aggregate, plus accrued and unpaid dividends through the date of redemption, and expensed $14,486,000 of previously capitalized issuance costs.
On January 5, 2018, we completed a $100,000,000 refinancing of 33-00 Northern Boulevard (Center Building), a 471,000 square foot office building in Long Island City, New York. The seven-year loan is at LIBOR plus 1.80%, which was swapped to a fixed rate of 4.14%. We realized net proceeds of approximately $37,200,000 after repayment of the existing 4.43% $59,800,000 mortgage and closing costs.
First Quarter Leasing Activity:
• | 424,000 square feet of New York Office space (359,000 square feet at share) at an initial rent of $82.07 per square foot and a weighted average term of 10.5 years. The GAAP and cash mark-to-markets on the 285,000 square feet of second generation space were positive 62.5% and 50.3%, respectively. Excluding a 77,000 square foot lease at 770 Broadway, the GAAP and cash mark-to-markets were positive 20.2% and 12.5%, respectively. Tenant improvements and leasing commissions were $9.33 per square foot per annum, or 11.4% of initial rent. |
• | 77,000 square feet of New York Retail space (all at share and all second generation) at an initial rent of $212.03 per square foot and a weighted average term of 4.5 years. The GAAP and cash mark-to-markets were negative 12.3% and 20.1%, respectively. Excluding a 43,000 square foot lease at 435 Seventh Avenue, the GAAP and cash mark-to-markets were positive 19.2% and 4.9%, respectively. Tenant improvements and leasing commissions were $14.06 per square foot per annum, or 6.6% of initial rent. |
• | 119,000 square feet at theMART (all at share) at an initial rent of $50.39 per square foot and a weighted average term of 5.7 years. The GAAP and cash mark-to-markets on the 113,000 square feet of second generation space were positive 36.6% and 28.0%, respectively. Tenant improvements and leasing commissions were $4.19 per square foot per annum, or 8.3% of initial rent. |
• | 89,000 square feet at 555 California Street (62,000 square feet at share) at an initial rent of $85.89 per square foot and a weighted average term of 7.1 years. The GAAP and cash mark-to-markets on the 30,000 square feet of second generation space were positive 39.3% and 17.0%, respectively. Tenant improvements and leasing commissions were $11.64 per square foot per annum, or 13.6% of initial rent. |
3
Same Store Net Operating Income ("NOI"):
The percentage increase (decrease) in same store NOI and same store NOI - cash basis of our New York segment, theMART and 555 California Street are summarized below.
New York | theMART | 555 California Street | |||||||
Same store NOI at share % increase (decrease): | |||||||||
Three months ended March 31, 2018 compared to March 31, 2017 | 4.0 | % | (1) | 3.4 | % | 12.3 | % | ||
Three months ended March 31, 2018 compared to December 31, 2017 | (5.6 | )% | (1) | 10.7 | % | (2) | 12.6 | % | |
Same store NOI at share - cash basis % increase (decrease): | |||||||||
Three months ended March 31, 2018 compared to March 31, 2017 | 5.6 | % | (1) | 10.0 | % | 13.3 | % | ||
Three months ended March 31, 2018 compared to December 31, 2017 | (4.5 | )% | (1) | 10.9 | % | (2) | 7.6 | % | |
____________________
Increase (Decrease) | |||
(1) | Excluding Hotel Pennsylvania - same store NOI at share % increase (decrease): | ||
Three months ended March 31, 2018 compared to March 31, 2017 | 3.7 | % | |
Three months ended March 31, 2018 compared to December 31, 2017 | (2.2 | )% | |
Excluding Hotel Pennsylvania - same store NOI at share - cash basis % increase (decrease): | |||
Three months ended March 31, 2018 compared to March 31, 2017 | 5.3 | % | |
Three months ended March 31, 2018 compared to December 31, 2017 | (0.8 | )% | |
(2) Excluding tradeshows seasonality, same store NOI at share and same store NOI at share - cash basis decreased by 0.7% and 0.5%, respectively.
4
NOI:
The elements of our New York and Other NOI for the three months ended March 31, 2018, March 31, 2017 and December 31, 2017 are summarized below.
For the Three Months Ended | |||||||||||
(Amounts in thousands) | March 31, | December 31, 2017 | |||||||||
2018 | 2017 | ||||||||||
New York: | |||||||||||
Office | $ | 187,156 | $ | 174,724 | $ | 189,481 | |||||
Retail | 87,909 | 89,048 | 90,853 | ||||||||
Residential | 6,141 | 6,278 | 5,920 | ||||||||
Alexander's | 11,575 | 11,743 | 11,656 | ||||||||
Hotel Pennsylvania | (4,185 | ) | (4,638 | ) | 6,318 | ||||||
Total New York | 288,596 | 277,155 | 304,228 | ||||||||
Other: | |||||||||||
theMART | 26,875 | 25,889 | 24,249 | ||||||||
555 California Street | 13,511 | 12,034 | 12,003 | ||||||||
Other investments | 20,054 | 22,080 | 23,377 | ||||||||
Total Other | 60,440 | 60,003 | 59,629 | ||||||||
NOI at share | $ | 349,036 | $ | 337,158 | $ | 363,857 | |||||
NOI - Cash Basis:
The elements of our New York and Other NOI - cash basis for the three months ended March 31, 2018, March 31, 2017 and December 31, 2017 are summarized below.
For the Three Months Ended | |||||||||||
(Amounts in thousands) | March 31, | December 31, 2017 | |||||||||
2018 | 2017 | ||||||||||
New York: | |||||||||||
Office | $ | 178,199 | $ | 166,339 | $ | 175,787 | |||||
Retail | 79,589 | 79,419 | 83,320 | ||||||||
Residential | 5,599 | 5,542 | 5,325 | ||||||||
Alexander's | 12,039 | 12,088 | 12,004 | ||||||||
Hotel Pennsylvania | (4,153 | ) | (4,605 | ) | 6,351 | ||||||
Total New York | 271,273 | 258,783 | 282,787 | ||||||||
Other: | |||||||||||
theMART | 27,079 | 24,532 | 24,396 | ||||||||
555 California Street | 12,826 | 11,325 | 11,916 | ||||||||
Other investments | 19,910 | 22,037 | 23,179 | ||||||||
Total Other | 59,815 | 57,894 | 59,491 | ||||||||
NOI at share - cash basis | $ | 331,088 | $ | 316,677 | $ | 342,278 | |||||
5
Development/Redevelopment as of March 31, 2018
(in thousands, except square feet) | |||||||||||||||||||||||
(At Share) | Full Quarter Stabilized Operations | ||||||||||||||||||||||
Property Rentable Sq. Ft. | Excluding Land Costs | Initial Occupancy | |||||||||||||||||||||
Current Projects: | Segment | Incremental Budget | Amount Expended | % Complete | Start | ||||||||||||||||||
220 Central Park South - residential condominiums | Other | 397,000 | $ | 1,400,000 | $ | 970,000 | (1) | 69.3% | Q3 2012 | N/A | N/A | ||||||||||||
Moynihan Office Building - (50.1% interest)(2) | New York | 850,000 | 400,000 | 30,375 | 7.6% | Q2 2017 | Q3 2020 | Q2 2022 | |||||||||||||||
One Penn Plaza - renovation(3) | New York | 2,530,000 | 200,000 | 2,460 | 1.2% | Q4 2018 | N/A | N/A | |||||||||||||||
61 Ninth Avenue - office/retail (45.1% interest)(4) | New York | 170,000 | 69,000 | 51,826 | 75.1% | Q1 2016 | Q2 2018 | Q2 2019 | |||||||||||||||
512 West 22nd Street - office/retail (55.0% interest) | New York | 173,000 | 72,000 | 44,521 | (5) | 61.8% | Q4 2015 | Q3 2018 | Q1 2020 | ||||||||||||||
345 Montgomery Street (555 California Street) (70.0% interest) | Other | 64,000 | 32,000 | 3,157 | (6) | 9.9% | Q1 2018 | Q3 2019 | Q3 2020 | ||||||||||||||
606 Broadway - office/retail (50.0% interest) | New York | 34,000 | 30,000 | 19,195 | (7) | 64.0% | Q2 2016 | Q4 2018 | Q2 2020 | ||||||||||||||
825 Seventh Avenue - office (50.0% interest) | New York | 165,000 | 15,000 | 1,103 | 7.4% | Q2 2018 | Q1 2020 | Q1 2021 | |||||||||||||||
Total current projects | $ | 1,122,637 | |||||||||||||||||||||
Future Opportunities: | Segment | Property Zoning Sq. Ft. | |||||||||||||||||||||
Penn Plaza - multiple opportunities - office/residential/retail | New York | TBD | |||||||||||||||||||||
Hotel Pennsylvania | New York | 2,052,000 | |||||||||||||||||||||
260 Eleventh Avenue - office(8) | New York | 300,000 | |||||||||||||||||||||
Undeveloped Land: | |||||||||||||||||||||||
29, 31, 33 West 57th Street (50.0% interest) | New York | 150,000 | |||||||||||||||||||||
527 West Kinzie, Chicago | Other | 330,000 | |||||||||||||||||||||
Total undeveloped land | 480,000 | ||||||||||||||||||||||
_______________________
(1) | Excludes land and acquisition costs of $515,426. |
(2) | Excludes $115,230 for our share of the upfront contribution of $230,000. The building and land are subject to a lease which expires in 2116. |
(3) | The building is subject to a ground lease which expires in 2098. |
(4) | The building is subject to a ground lease which expires in 2115. |
(5) | Excludes land and acquisition costs of $57,000. |
(6) | Excludes land and building costs of $31,000. |
(7) | Excludes land and acquisition costs of $22,703. |
(8) | The building is subject to a ground lease which expires in 2114. |
Conference Call and Audio Webcast
As previously announced, the Company will host a quarterly earnings conference call and an audio webcast on Tuesday, May 1, 2018 at 10:00 a.m. Eastern Time (ET). The conference call can be accessed by dialing 888-771-4371 (domestic) or 847-585-4405 (international) and indicating to the operator the passcode 46816083. A telephonic replay of the conference call will be available from 1:00 p.m. ET on May 1, 2018 through May 31, 2018. To access the replay, please dial 888-843-7419 and enter the passcode 46816083#. A live webcast of the conference call will be available on the Company’s website at www.vno.com and an online playback of the webcast will be available on the website for 90 days following the conference call.
Supplemental Financial Information
Further details regarding results of operations, properties and tenants can be accessed at the Company’s website www.vno.com. Vornado Realty Trust is a fully - integrated equity real estate investment trust.
Certain statements contained herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. For a discussion of factors that could materially affect the outcome of our forward-looking statements and our future results and financial condition, see “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2017. Such factors include, among others, risks associated with the timing of and costs associated with property improvements, financing commitments and general competitive factors.
6
VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEETS
As of | |||||||
(Amounts in thousands, except unit, share, and per share amounts) | March 31, 2018 | December 31, 2017 | |||||
ASSETS | |||||||
Real estate, at cost: | |||||||
Land | $ | 3,170,158 | $ | 3,143,648 | |||
Buildings and improvements | 9,946,225 | 9,898,605 | |||||
Development costs and construction in progress | 1,705,244 | 1,615,101 | |||||
Leasehold improvements and equipment | 104,710 | 98,941 | |||||
Total | 14,926,337 | 14,756,295 | |||||
Less accumulated depreciation and amortization | (2,962,983 | ) | (2,885,283 | ) | |||
Real estate, net | 11,963,354 | 11,871,012 | |||||
Cash and cash equivalents | 1,327,384 | 1,817,655 | |||||
Restricted cash | 90,684 | 97,157 | |||||
Marketable securities | 149,766 | 182,752 | |||||
Tenant and other receivables, net of allowance for doubtful accounts of $5,171 and $5,526 | 64,387 | 58,700 | |||||
Investments in partially owned entities | 1,033,228 | 1,056,829 | |||||
Real estate fund investments | 336,552 | 354,804 | |||||
Receivable arising from the straight-lining of rents, net of allowance of $739 and $954 | 934,535 | 926,711 | |||||
Deferred leasing costs, net of accumulated amortization of $194,078 and $191,827 | 405,209 | 403,492 | |||||
Identified intangible assets, net of accumulated amortization of $157,062 and $150,837 | 152,834 | 159,260 | |||||
Assets related to discontinued operations | 275 | 1,357 | |||||
Other assets | 406,275 | 468,205 | |||||
$ | 16,864,483 | $ | 17,397,934 | ||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | |||||||
Mortgages payable, net | $ | 8,102,238 | $ | 8,137,139 | |||
Senior unsecured notes, net | 843,125 | 843,614 | |||||
Unsecured term loan, net | 749,114 | 748,734 | |||||
Unsecured revolving credit facilities | 80,000 | — | |||||
Accounts payable and accrued expenses | 431,094 | 415,794 | |||||
Deferred revenue | 200,648 | 227,069 | |||||
Deferred compensation plan | 109,525 | 109,177 | |||||
Liabilities related to discontinued operations | 1,176 | 3,620 | |||||
Preferred shares redeemed on January 4 and 11, 2018 | — | 455,514 | |||||
Other liabilities | 465,659 | 464,635 | |||||
Total liabilities | 10,982,579 | 11,405,296 | |||||
Commitments and contingencies | |||||||
Redeemable noncontrolling interests: | |||||||
Class A units - 12,653,821 and 12,528,899 units outstanding | 851,598 | 979,509 | |||||
Series D cumulative redeemable preferred units - 177,101 units outstanding | 5,428 | 5,428 | |||||
Total redeemable noncontrolling interests | 857,026 | 984,937 | |||||
Vornado's shareholders' equity: | |||||||
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 36,799,573 shares | 891,325 | 891,988 | |||||
Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 190,169,168 and 189,983,858 shares | 7,584 | 7,577 | |||||
Additional capital | 7,629,013 | 7,492,658 | |||||
Earnings less than distributions | (4,198,088 | ) | (4,183,253 | ) | |||
Accumulated other comprehensive income | 30,258 | 128,682 | |||||
Total Vornado shareholders' equity | 4,360,092 | 4,337,652 | |||||
Noncontrolling interests in consolidated subsidiaries | 664,786 | 670,049 | |||||
Total equity | 5,024,878 | 5,007,701 | |||||
$ | 16,864,483 | $ | 17,397,934 | ||||
7
VORNADO REALTY TRUST
OPERATING RESULTS
(Amounts in thousands, except per share amounts) | For the Three Months Ended March 31, | ||||||
2018 | 2017 | ||||||
Revenues | $ | 536,437 | $ | 508,058 | |||
Income from continuing operations | $ | 645 | $ | 58,529 | |||
(Loss) income from discontinued operations | (363 | ) | 15,318 | ||||
Net income | 282 | 73,847 | |||||
Less net loss (income) attributable to noncontrolling interests in: | |||||||
Consolidated subsidiaries | 8,274 | (6,737 | ) | ||||
Operating Partnership | 1,124 | (3,229 | ) | ||||
Net income attributable to Vornado | 9,680 | 63,881 | |||||
Preferred share dividends | (13,035 | ) | (16,129 | ) | |||
Preferred share issuance costs | (14,486 | ) | — | ||||
Net (loss) income attributable to common shareholders | $ | (17,841 | ) | $ | 47,752 | ||
(Loss) income per common share - Basic: | |||||||
(Loss) income from continuing operations, net | $ | (0.09 | ) | $ | 0.18 | ||
Income from discontinued operations, net | — | 0.07 | |||||
Net (loss) income per common share | $ | (0.09 | ) | $ | 0.25 | ||
Weighted average shares outstanding | 190,081 | 189,210 | |||||
(Loss) income per common share - Diluted: | |||||||
(Loss) income from continuing operations, net | $ | (0.09 | ) | $ | 0.18 | ||
Income from discontinued operations, net | — | 0.07 | |||||
Net (loss) income per common share | $ | (0.09 | ) | $ | 0.25 | ||
Weighted average shares outstanding | 190,081 | 190,372 | |||||
FFO attributable to common shareholders plus assumed conversions (non-GAAP) | $ | 102,479 | $ | 205,729 | |||
Per diluted share (non-GAAP) | $ | 0.54 | $ | 1.08 | |||
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) | $ | 173,842 | $ | 160,105 | |||
Per diluted share (non-GAAP) | $ | 0.91 | $ | 0.84 | |||
Weighted average shares used in determining FFO per diluted share | 191,057 | 190,412 | |||||
####
8
VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS
The following table reconciles net (loss) income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions:
(Amounts in thousands, except per share amounts) | For the Three Months Ended March 31, | ||||||
2018 | 2017 | ||||||
Net (loss) income attributable to common shareholders | $ | (17,841 | ) | $ | 47,752 | ||
Per diluted share | $ | (0.09 | ) | $ | 0.25 | ||
FFO adjustments: | |||||||
Depreciation and amortization of real property | $ | 100,410 | $ | 130,469 | |||
Net gains on sale of real estate | — | (2,267 | ) | ||||
Proportionate share of adjustments to equity in net (loss) income of partially owned entities to arrive at FFO: | |||||||
Depreciation and amortization of real property | 28,106 | 39,074 | |||||
Net gains on sale of real estate | (305 | ) | (1,853 | ) | |||
Real estate impairment losses | 4 | 3,051 | |||||
128,215 | 168,474 | ||||||
Noncontrolling interests' share of above adjustments | (7,911 | ) | (10,517 | ) | |||
FFO adjustments, net | $ | 120,304 | $ | 157,957 | |||
FFO attributable to common shareholders (non-GAAP) | $ | 102,463 | $ | 205,709 | |||
Convertible preferred share dividends | 16 | 20 | |||||
FFO attributable to common shareholders plus assumed conversions (non-GAAP) | $ | 102,479 | $ | 205,729 | |||
Per diluted share (non-GAAP) | $ | 0.54 | $ | 1.08 | |||
FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gains from sales of depreciated real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specified non-cash items, including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are non-GAAP financial measures used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flow as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies. A reconciliation of our net (loss) income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions is provided above. In addition to FFO attributable to common shareholders plus assumed conversions, we also disclose FFO attributable to common shareholders plus assumed conversions, as adjusted. Although this non-GAAP measure clearly differs from NAREIT’s definition of FFO, we believe it provides a meaningful presentation of operating performance. Reconciliations of FFO attributable to common shareholders plus assumed conversions to FFO attributable to common shareholders plus assumed conversions, as adjusted are provided on page 2 of this press release.
9
VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED
Below is a reconciliation of net income to NOI by segment for the three months ended March 31, 2018, March 31, 2017 and December 31, 2017.
For the Three Months Ended | |||||||||||
(Amounts in thousands) | March 31, | December 31, 2017 | |||||||||
2018 | 2017 | ||||||||||
Net income | $ | 282 | $ | 73,847 | $ | 53,551 | |||||
Deduct: | |||||||||||
Loss (income) from partially owned entities | 9,904 | (1,358 | ) | (9,622 | ) | ||||||
Loss (income) from real estate fund investments | 8,807 | (268 | ) | (4,889 | ) | ||||||
Interest and other investment loss (income), net | 24,384 | (6,695 | ) | (8,294 | ) | ||||||
Net gains on disposition of wholly owned and partially owned assets | — | (501 | ) | — | |||||||
Loss (income) from discontinued operations | 363 | (15,318 | ) | (1,273 | ) | ||||||
NOI attributable to noncontrolling interests in consolidated subsidiaries | (17,312 | ) | (16,338 | ) | (16,533 | ) | |||||
Add: | |||||||||||
Depreciation and amortization expense | 108,686 | 105,128 | 114,166 | ||||||||
General and administrative expense | 43,633 | 47,237 | 35,139 | ||||||||
Transaction related costs and other | 13,156 | 752 | 703 | ||||||||
NOI from partially owned entities | 67,513 | 66,097 | 69,175 | ||||||||
Interest and debt expense | 88,166 | 82,724 | 93,073 | ||||||||
Income tax expense | 1,454 | 1,851 | 38,661 | ||||||||
NOI at share | 349,036 | 337,158 | 363,857 | ||||||||
Non cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other | (17,948 | ) | (20,481 | ) | (21,579 | ) | |||||
NOI at share - cash basis | $ | 331,088 | $ | 316,677 | $ | 342,278 | |||||
NOI represents total revenues less operating expenses. We consider NOI to be the primary non-GAAP financial measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. As properties are bought and sold based on NOI, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI should not be considered a substitute for net income. NOI may not be comparable to similarly titled measures employed by other companies.
10
VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED
Below are reconciliations of NOI to same store NOI for our New York segment, theMART and 555 California Street for the three months ended March 31, 2018 compared to March 31, 2017.
(Amounts in thousands) | New York | theMART | 555 California Street | |||||||||
NOI at share for the three months ended March 31, 2018 | $ | 288,596 | $ | 26,875 | $ | 13,511 | ||||||
Less NOI at share from: | ||||||||||||
Acquisitions | (350 | ) | (85 | ) | — | |||||||
Dispositions | 40 | — | — | |||||||||
Development properties placed into and out of service | (412 | ) | — | — | ||||||||
Lease termination income, net of straight-line and FAS 141 adjustments | (1,127 | ) | — | — | ||||||||
Other non-operating income, net | (579 | ) | — | — | ||||||||
Same store NOI at share for the three months ended March 31, 2018 | $ | 286,168 | $ | 26,790 | $ | 13,511 | ||||||
NOI at share for the three months ended March 31, 2017 | $ | 277,155 | $ | 25,889 | $ | 12,034 | ||||||
Less NOI at share from: | ||||||||||||
Acquisitions | — | 31 | — | |||||||||
Dispositions | (228 | ) | — | — | ||||||||
Development properties placed into and out of service | 16 | — | — | |||||||||
Lease termination income, net of straight-line and FAS 141 adjustments | (638 | ) | (20 | ) | — | |||||||
Other non-operating income, net | (1,084 | ) | — | — | ||||||||
Same store NOI at share for the three months ended March 31, 2017 | $ | 275,221 | $ | 25,900 | $ | 12,034 | ||||||
Increase in same store NOI at share for the three months ended March 31, 2018 compared to March 31, 2017 | $ | 10,947 | $ | 890 | $ | 1,477 | ||||||
% increase in same store NOI at share | 4.0 | % | (1) | 3.4 | % | 12.3 | % | |||||
____________________
(1) | Excluding Hotel Pennsylvania, same store NOI at share increased by 3.7%. |
Same store NOI represents NOI from operations which are owned by us and in service in both the current and prior year reporting periods. Same store NOI - cash basis is NOI from operations before straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments which are owned by us and in service in both the current and prior year reporting periods. We present these non-GAAP measures to (i) facilitate meaningful comparisons of the operational performance of our properties and segments, (ii) make decisions on whether to buy, sell or refinance properties, and (iii) compare the performance of our properties and segments to those of our peers. Same store NOI and same store NOI - cash basis should not be considered as an alternative to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.
11
VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED
Below are reconciliations of NOI - cash basis to same store NOI - cash basis for our New York segment, theMART and 555 California Street for the three months ended March 31, 2018 compared to March 31, 2017.
(Amounts in thousands) | New York | theMART | 555 California Street | |||||||||
NOI at share - cash basis for the three months ended March 31, 2018 | $ | 271,273 | $ | 27,079 | $ | 12,826 | ||||||
Less NOI at share - cash basis from: | ||||||||||||
Acquisitions | (200 | ) | (85 | ) | — | |||||||
Dispositions | 40 | — | — | |||||||||
Development properties placed into and out of service | (603 | ) | — | — | ||||||||
Lease termination income | (1,061 | ) | — | — | ||||||||
Other non-operating income, net | (579 | ) | — | — | ||||||||
Same store NOI at share - cash basis for the three months ended March 31, 2018 | $ | 268,870 | $ | 26,994 | $ | 12,826 | ||||||
NOI at share - cash basis for the three months ended March 31, 2017 | $ | 258,783 | $ | 24,532 | $ | 11,325 | ||||||
Less NOI at share - cash basis from: | ||||||||||||
Acquisitions | — | 31 | — | |||||||||
Dispositions | (228 | ) | — | — | ||||||||
Development properties placed into and out of service | 106 | — | — | |||||||||
Lease termination income | (3,030 | ) | (31 | ) | — | |||||||
Other non-operating income, net | (1,029 | ) | — | — | ||||||||
Same store NOI at share - cash basis for the three months ended March 31, 2017 | $ | 254,602 | $ | 24,532 | $ | 11,325 | ||||||
Increase in same store NOI at share - cash basis for the three months ended March 31, 2018 compared to March 31, 2017 | $ | 14,268 | $ | 2,462 | $ | 1,501 | ||||||
% increase in same store NOI at share - cash basis | 5.6 | % | (1) | 10.0 | % | 13.3 | % | |||||
____________________
(1) | Excluding Hotel Pennsylvania, same store NOI at share - cash basis increased by 5.3%. |
12
VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED
Below are reconciliations of NOI to same store NOI for our New York segment, theMART and 555 California Street for the three months ended March 31, 2018 compared to December 31, 2017.
(Amounts in thousands) | New York | theMART | 555 California Street | |||||||||
NOI at share for the three months ended March 31, 2018 | $ | 288,596 | $ | 26,875 | $ | 13,511 | ||||||
Less NOI at share from: | ||||||||||||
Acquisitions | (109 | ) | (85 | ) | — | |||||||
Dispositions | 40 | — | — | |||||||||
Development properties placed into and out of service | (412 | ) | — | — | ||||||||
Lease termination income, net of straight-line and FAS 141 adjustments | (1,127 | ) | — | — | ||||||||
Other non-operating income, net | (579 | ) | — | — | ||||||||
Same store NOI at share for the three months ended March 31, 2018 | $ | 286,409 | $ | 26,790 | $ | 13,511 | ||||||
NOI at share for the three months ended December 31, 2017 | $ | 304,228 | $ | 24,249 | $ | 12,003 | ||||||
Less NOI at share from: | ||||||||||||
Acquisitions | 2 | (46 | ) | — | ||||||||
Dispositions | (8 | ) | — | — | ||||||||
Development properties placed into and out of service | 309 | — | — | |||||||||
Lease termination income, net of straight-line and FAS 141 adjustments | (984 | ) | — | — | ||||||||
Other non-operating income, net | (16 | ) | — | — | ||||||||
Same store NOI at share for the three months ended December 31, 2017 | $ | 303,531 | $ | 24,203 | $ | 12,003 | ||||||
(Decrease) increase in same store NOI at share for the three months ended March 31, 2018 compared to December 31, 2017 | $ | (17,122 | ) | $ | 2,587 | $ | 1,508 | |||||
% (decrease) increase in same store NOI at share | (5.6 | )% | (1) | 10.7 | % | (2) | 12.6 | % | ||||
____________________
(1) | Excluding Hotel Pennsylvania, same store NOI at share decreased by 2.2%. |
(2) | Excluding tradeshows seasonality, same store NOI at share decreased by 0.7%. |
13
VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED
Below are reconciliations of NOI - cash basis to same store NOI - cash basis for our New York segment, theMART and 555 California Street for the three months ended March 31, 2018 compared to December 31, 2017.
(Amounts in thousands) | New York | theMART | 555 California Street | |||||||||
NOI at share - cash basis for the three months ended March 31, 2018 | $ | 271,273 | $ | 27,079 | $ | 12,826 | ||||||
Less NOI at share - cash basis from: | ||||||||||||
Acquisitions | (109 | ) | (85 | ) | — | |||||||
Dispositions | 40 | — | — | |||||||||
Development properties placed into and out of service | (603 | ) | — | — | ||||||||
Lease termination income | (1,061 | ) | — | — | ||||||||
Other non-operating income, net | (579 | ) | — | — | ||||||||
Same store NOI at share - cash basis for the three months ended March 31, 2018 | $ | 268,961 | $ | 26,994 | $ | 12,826 | ||||||
NOI at share - cash basis for the three months ended December 31, 2017 | $ | 282,787 | $ | 24,396 | $ | 11,916 | ||||||
Less NOI at share - cash basis from: | ||||||||||||
Acquisitions | 2 | (46 | ) | — | ||||||||
Dispositions | (8 | ) | — | — | ||||||||
Development properties placed into and out of service | 253 | — | — | |||||||||
Lease termination income | (1,393 | ) | — | — | ||||||||
Other non-operating income, net | (16 | ) | — | — | ||||||||
Same store NOI at share - cash basis for the three months ended December 31, 2017 | $ | 281,625 | $ | 24,350 | $ | 11,916 | ||||||
(Decrease) increase in same store NOI at share - cash basis for the three months ended March 31, 2018 compared to December 31, 2017 | $ | (12,664 | ) | $ | 2,644 | $ | 910 | |||||
% (decrease) increase in same store NOI at share - cash basis | (4.5 | )% | (1) | 10.9 | % | (2) | 7.6 | % | ||||
____________________
(1) | Excluding Hotel Pennsylvania, same store NOI at share - cash basis decreased by 0.8%. |
(2) | Excluding tradeshows seasonality, same store NOI at share - cash basis decreased by 0.5%. |
14