x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)   

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:   

June 30, 2011

o

TRANSITION REPORT PURSUANT TO SECTION  13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from:

to

Commission File Number:

001-11954

Maryland

22-1657560

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

888 Seventh Avenue, New York, New York

10019

(Address of principal executive offices)

(Zip Code)

x Large Accelerated Filer

o Accelerated Filer

o Non-Accelerated Filer (Do not check if smaller reporting company)

o Smaller Reporting Company

PART I.

Financial Information:  

Page Number

Item 1.

Financial Statements:  

Consolidated Balance Sheets (Unaudited) as of  

June 30, 2011 and December 31, 2010  

3

Consolidated Statements of Income (Unaudited) for the  

Three and Six Months Ended June 30, 2011 and 2010  

4

Consolidated Statements of Comprehensive Income (Unaudited) for the  

Three and Six Months Ended June 30, 2011 and 2010  

5

Consolidated Statements of Changes in Equity (Unaudited) for the  

Six Months Ended June 30, 2011 and 2010  

6

Consolidated Statements of Cash Flows (Unaudited) for the  

Six Months Ended June 30, 2011 and 2010  

7

Notes to the Consolidated Financial Statements (Unaudited)  

9

Report of Independent Registered Public Accounting Firm   

35

Item 2.

Management's Discussion and Analysis of Financial   

Condition and Results of Operations  

36

Item 3.

Quantitative and Qualitative Disclosures about Market Risk  

72

Item 4.

Controls and Procedures  

73

PART II.

Other Information:  

Item 1.

Legal Proceedings  

74

Item 1A.

Risk Factors  

75

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds  

75

Item 3.

Defaults Upon Senior Securities  

75

Item 5.

Other Information  

75

Item 6.

Exhibits  

75

Signatures

76

Exhibit Index

77

VORNADO REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(Amounts in thousands, except share and per share amounts)

June 30,

December 31,

ASSETS

2011 

2010 

Real estate, at cost:

Land

$

 4,592,075 

$

 4,598,303 

Buildings and improvements

 12,753,909 

 12,733,487 

Development costs and construction in progress

 236,393 

 218,156 

Leasehold improvements and equipment

 126,784 

 124,976 

Total

 17,709,161 

 17,674,922 

Less accumulated depreciation and amortization

 (2,941,929) 

 (2,763,997) 

Real estate, net

 14,767,232 

 14,910,925 

Cash and cash equivalents

 591,515 

 690,789 

Restricted cash

 155,320 

 200,822 

Marketable securities

 791,676 

 766,116 

Accounts receivable, net of allowance for doubtful accounts of $71,939 and $62,979

 168,624 

 157,146 

Investments in partially owned entities

 1,160,292 

 927,672 

Investment in Toys "R" Us

 558,755 

 447,334 

Real Estate Fund investments

 255,795 

 144,423 

Mezzanine loans receivable, net

 155,613 

 202,412 

Receivable arising from the straight-lining of rents, net of allowance of $8,148 and $7,323

 739,784 

 720,806 

Deferred leasing and financing costs, net of accumulated amortization of $236,577 and $223,131

 366,421 

 368,314 

Identified intangible assets, net of accumulated amortization of $363,341 and $338,508

 317,257 

 348,745 

Assets related to discontinued operations

 - 

 234,464 

Due from officers

 13,183 

 13,187 

Other assets

 497,397 

 384,316 

$

 20,538,864 

$

 20,517,471 

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Notes and mortgages payable

$

 8,575,022 

$

 8,259,298 

Senior unsecured notes

 982,629 

 1,082,928 

Exchangeable senior debentures

 494,403 

 491,000 

Convertible senior debentures

 187,994 

 186,413 

Revolving credit facility debt

 300,000 

 874,000 

Accounts payable and accrued expenses

 436,229 

 438,479 

Deferred credit

 555,709 

 583,369 

Deferred compensation plan

 100,374 

 91,549 

Deferred tax liabilities

 13,256 

 13,278 

Liabilities related to discontinued operations

 - 

 255,922 

Other liabilities

 104,257 

 82,856 

Total liabilities

 11,749,873 

 12,359,092 

Commitments and contingencies

Redeemable noncontrolling interests:

Class A units - 12,561,359 and 12,804,202 units outstanding

 1,170,467 

 1,066,974 

Series D cumulative redeemable preferred units - 10,000,001 and 10,400,001 units outstanding

 251,000 

 261,000 

Total redeemable noncontrolling interests

 1,421,467 

 1,327,974 

Vornado shareholders' equity:

Preferred shares of beneficial interest: no par value per share; authorized 110,000,000

shares; issued and outstanding 41,188,509 and 32,340,009 shares

 997,446 

 783,088 

Common shares of beneficial interest: $.04 par value per share; authorized

250,000,000 shares; issued and outstanding 184,427,825 and 183,661,875 shares

 7,347 

 7,317 

Additional capital

 6,885,223 

 6,932,728 

Earnings less than distributions

 (1,244,254) 

 (1,480,876) 

Accumulated other comprehensive income

 114,479 

 73,453 

Total Vornado shareholders' equity

 6,760,241 

 6,315,710 

Noncontrolling interests in consolidated subsidiaries

 607,283 

 514,695 

Total equity

 7,367,524 

 6,830,405 

$

 20,538,864 

$

 20,517,471 

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

For the Three

For the Six

Months Ended June 30,

Months Ended June 30,

(Amounts in thousands, except per share amounts)

2011 

2010 

2011 

2010 

REVENUES:

Property rentals

$

 573,646 

$

 565,412 

$

 1,144,806 

$

 1,117,869 

Tenant expense reimbursements

 82,325 

 86,420 

 173,284 

 178,350 

Cleveland Medical Mart development project

 32,369 

 - 

 73,068 

 - 

Fee and other income

 41,811 

 32,157 

 76,104 

 73,084 

Total revenues

 730,151 

 683,989 

 1,467,262 

 1,369,303 

EXPENSES:

Operating

 273,152 

 261,845 

 563,925 

 536,538 

Depreciation and amortization

 131,898 

 133,277 

 264,125 

 267,070 

General and administrative

 50,251 

 49,540 

 109,254 

 98,170 

Cleveland Medical Mart development project

 29,940 

 - 

 68,218 

 - 

Acquisition and other costs

 1,897 

 1,930 

 20,167 

 1,930 

Total expenses

 487,138 

 446,592 

 1,025,689 

 903,708 

Operating income

 243,013 

 237,397 

 441,573 

 465,595 

(Loss) income applicable to Toys "R" Us

 (22,846) 

 (21,004) 

 90,098 

 104,866 

Income from partially owned entities

 26,403 

 4,452 

 42,687 

 15,796 

Income from Real Estate Fund (of which $12,102 and $12,028 is

allocated to noncontrolling interests, in the three and six months

ended June 30, 2011, respectively)

 19,058 

 - 

 20,138 

 - 

Interest and other investment income, net

 8,007 

 3,876 

 125,115 

 18,580 

Interest and debt expense (including amortization of deferred

financing costs of $5,235 and $4,514 in each three-month

period, respectively, and $9,868 and $8,915 in each six-month

period, respectively)

 (137,202) 

 (142,175) 

 (271,967) 

 (277,902) 

Net (loss) on extinguishment of debt

 - 

 (1,072) 

 - 

 (1,072) 

Net gain on disposition of wholly owned and partially owned assets

 - 

 4,382 

 6,677 

 7,687 

Income before income taxes

 136,433 

 85,856 

 454,321 

 333,550 

Income tax expense

 (5,922) 

 (4,964) 

 (12,304) 

 (10,544) 

Income from continuing operations

 130,511 

 80,892 

 442,017 

 323,006 

Income (loss) from discontinued operations

 458 

 (3,681) 

 134,773 

 (13,251) 

Net income

 130,969 

 77,211 

 576,790 

 309,755 

Less:

Net income attributable to noncontrolling interests in

consolidated subsidiaries

 (13,657) 

 (981) 

 (15,007) 

 (1,194) 

Net income attributable to noncontrolling interests in the

Operating Partnership, including unit distributions

 (8,731) 

 (4,124) 

 (40,539) 

 (21,903) 

Net income attributable to Vornado

 108,581 

 72,106 

 521,244 

 286,658 

Preferred share dividends

 (16,668) 

 (14,266) 

 (30,116) 

 (28,533) 

NET INCOME attributable to common shareholders

$

 91,913 

$

 57,840 

$

 491,128 

$

 258,125 

INCOME PER COMMON SHARE - BASIC:

Income from continuing operations, net

$

 0.50 

$

 0.34 

$

 1.98 

$

 1.49 

(Loss) income from discontinued operations, net

- 

 (0.02) 

 0.69 

 (0.07) 

Net income per common share

$

 0.50 

$

 0.32 

$

 2.67 

$

 1.42 

Weighted average shares

 184,268 

 182,027 

 184,129 

 181,786 

INCOME PER COMMON SHARE - DILUTED:

Income from continuing operations, net

$

 0.49 

$

 0.33 

$

 1.97 

$

 1.48 

(Loss) income from discontinued operations, net

- 

 (0.02) 

 0.66 

 (0.07) 

Net income per common share

$

 0.49 

$

 0.31 

$

 2.63 

$

 1.41 

Weighted average shares

 186,144 

 183,644 

 191,736 

 183,598 

DIVIDENDS PER COMMON SHARE

$

 0.69 

$

 0.65 

$

 1.38 

$

 1.30 

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

For the Three

For the Six

Months Ended June 30,

Months Ended June 30,

(Amounts in thousands)

2011 

2010 

2011 

2010 

Net income

$

 130,969 

$

 77,211 

$

 576,790 

$

 309,755 

Other comprehensive income:

Change in unrealized net gain on securities available-for-sale

 (27,195) 

 7,943 

 40,844 

 25,531 

Pro rata share of other comprehensive income of

     nonconsolidated subsidiaries

 30,156 

 (277) 

 26,365 

 (15,965) 

Change in value of interest rate swap and caps

 (10,887) 

 - 

 (18,034) 

 - 

Other

 (5,105) 

 (22) 

 (5,045) 

 (418) 

Comprehensive income

 117,938 

 84,855 

 620,920 

 318,903 

Less:

Comprehensive income attributable to noncontrolling interests

 (21,875) 

 (5,640) 

 (58,650) 

 (23,737) 

Comprehensive income attributable to Vornado

$

 96,063 

$

 79,215 

$

 562,270 

$

 295,166 

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

Accumulated

(Amounts in thousands)

Earnings

Other

Non-

Preferred Shares

Common Shares

Additional

Less Than

Comprehensive

controlling

Total

Shares

Amount

Shares

Amount

Capital

Distributions

Income (Loss)

Interests

Equity

Balance, December 31, 2009

 33,952 

$

 823,686 

 181,214 

$

 7,218 

$

 6,961,007 

$

 (1,577,591) 

$

 28,449 

$

 406,637 

$

 6,649,406 

Net income

 - 

 - 

 - 

 - 

 - 

 286,658 

 - 

 1,194 

 287,852 

Dividends on common shares

 - 

 - 

 - 

 - 

 - 

 (236,279) 

 - 

 - 

 (236,279) 

Dividends on preferred shares

 - 

 - 

 - 

 - 

 - 

 (28,533) 

 - 

 - 

 (28,533) 

Common shares issued:

Upon redemption of Class A

units, at redemption value

 - 

 - 

 495 

 20 

 35,691 

 - 

 - 

 - 

 35,711 

Under employees' share

option plan

 - 

 - 

 548 

 22 

 8,989 

 (25,433) 

 - 

 - 

 (16,422) 

Under dividend reinvestment

plan

 - 

 - 

 12 

 1 

 801 

 - 

 - 

 - 

 802 

Conversion of Series A

preferred shares to common

shares

 (3) 

 (152) 

 4 

 - 

 152 

 - 

 - 

 - 

 - 

Deferred compensation shares

and options

 - 

 - 

 17 

 1 

 3,905 

 - 

 - 

 - 

 3,906 

Change in unrealized net gain