vrt3q2011.htm - Generated by SEC Publisher for SEC Filing  

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)   

OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the quarterly period ended:   

September 30, 2011

 

 

Or

 

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

 

 

VORNADO REALTY TRUST

(Exact name of registrant as specified in its charter)

 

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)

 

 

(212) 894-7000

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

x Large Accelerated Filer

 

o Accelerated Filer

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

 

o Smaller Reporting Company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x 

 

As of September 30, 2011, 184,496,038 of the registrant’s common shares of beneficial interest are outstanding.

 

 

  

 

 
 

 

PART I.

Financial Information:

Page Number

Item 1.

Financial Statements:

Consolidated Balance Sheets (Unaudited) as of

September 30, 2011 and December 31, 2010

3

Consolidated Statements of Income (Unaudited) for the

Three and Nine Months Ended September 30, 2011 and 2010

4

Consolidated Statements of Comprehensive Income (Unaudited) for the

Three and Nine Months Ended September 30, 2011 and 2010

5

Consolidated Statements of Changes in Equity (Unaudited) for the

Nine Months Ended September 30, 2011 and 2010

6

Consolidated Statements of Cash Flows (Unaudited) for the

Nine Months Ended September 30, 2011 and 2010

7

Notes to the Consolidated Financial Statements (Unaudited)

9

Report of Independent Registered Public Accounting Firm

36

Item 2.

Management's Discussion and Analysis of Financial

Condition and Results of Operations

37

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

73

Item 4.

Controls and Procedures

74

PART II.

Other Information:

Item 1.

Legal Proceedings

75

Item 1A.

Risk Factors

76

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

76

Item 3.

Defaults Upon Senior Securities

76

Item 5.

Other Information

76

Item 6.

Exhibits

76

Signatures

77

Exhibit Index

78

2

 

 
 

 

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

 

VORNADO REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

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

September 30,

December 31,

ASSETS

2011 

2010 

Real estate, at cost:

Land

$

4,524,930 

$

4,535,042 

Buildings and improvements

12,573,880 

12,510,244 

Development costs and construction in progress

225,098 

217,505 

Leasehold improvements and equipment

127,294 

124,910 

Total

17,451,202 

17,387,701 

Less accumulated depreciation and amortization

(2,975,075)

(2,715,046)

Real estate, net

14,476,127 

14,672,655 

Cash and cash equivalents

585,183 

690,789 

Restricted cash

124,984 

200,822 

Marketable securities

631,361 

766,116 

Accounts receivable, net of allowance for doubtful accounts of $76,935 and $62,979

145,854 

157,146 

Investments in partially owned entities

1,157,326 

927,672 

Investment in Toys "R" Us

546,258 

447,334 

Real Estate Fund investments

261,417 

144,423 

Mezzanine loans receivable, net

156,365 

202,412 

Receivable arising from the straight-lining of rents, net of allowance of $8,973 and $7,316

724,483 

695,486 

Deferred leasing and financing costs, net of accumulated amortization of $236,859 and $219,965

360,056 

354,864 

Identified intangible assets, net of accumulated amortization of $356,118 and $335,113

334,878 

346,157 

Assets related to discontinued operations

253,352 

519,285 

Due from officers

13,185 

13,187 

Other assets

417,399 

379,123 

$

20,188,228 

$

20,517,471 

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Notes and mortgages payable

$

8,462,191 

$

8,255,101 

Senior unsecured notes

959,421 

1,082,928 

Exchangeable senior debentures

496,139 

491,000 

Convertible senior debentures

188,799 

186,413 

Revolving credit facility debt

300,000 

874,000 

Accounts payable and accrued expenses

469,024 

438,479 

Deferred credit

532,221 

575,836 

Deferred compensation plan

94,623 

91,549 

Deferred tax liabilities

13,814 

13,278 

Liabilities related to discontinued operations

8,954 

267,652 

Other liabilities

139,353 

82,856 

Total liabilities

11,664,539 

12,359,092 

Commitments and contingencies

Redeemable noncontrolling interests:

Class A units - 12,526,395 and 12,804,202 units outstanding

934,720 

1,066,974 

Series D cumulative redeemable preferred units - 9,000,001 and 10,400,001 units outstanding

226,000 

261,000 

Total redeemable noncontrolling interests

1,160,720 

1,327,974 

Vornado shareholders' equity:

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

shares; issued and outstanding 42,186,709 and 32,340,009 shares

1,021,855 

783,088 

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

250,000,000 shares; issued and outstanding 184,496,038 and 183,661,875 shares

7,350 

7,317 

Additional capital

7,112,004 

6,932,728 

Earnings less than distributions

(1,330,405)

(1,480,876)

Accumulated other comprehensive (loss) income

(59,019)

73,453 

Total Vornado shareholders' equity

6,751,785 

6,315,710 

Noncontrolling interests in consolidated subsidiaries

611,184 

514,695 

Total equity

7,362,969 

6,830,405 

$

20,188,228 

$

20,517,471 

See notes to consolidated financial statements (unaudited).

3

 

 
 

 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

For the Three

For the Nine

Months Ended September 30,

Months Ended September 30,

(Amounts in thousands, except per share amounts)

2011 

2010 

2011 

2010 

REVENUES:

Property rentals

$

561,149 

$

559,518 

$

1,688,551 

$

1,661,967 

Tenant expense reimbursements

94,053 

95,341 

264,857 

271,040 

Cleveland Medical Mart development project

35,135 

- 

108,203 

- 

Fee and other income

37,006 

32,266 

112,239 

104,838 

Total revenues

727,343 

687,125 

2,173,850 

2,037,845 

EXPENSES:

Operating

285,659 

275,077 

841,266 

802,927 

Depreciation and amortization

134,074 

130,599 

393,846 

393,259 

General and administrative

46,452 

55,200 

155,566 

153,231 

Cleveland Medical Mart development project

33,419 

- 

101,637 

- 

Tenant buy-outs and other acquisition related costs

2,288 

921 

22,455 

2,851 

Total expenses

501,892 

461,797 

1,514,770 

1,352,268 

Operating income

225,451 

225,328 

659,080 

685,577 

(Loss) income applicable to Toys "R" Us

(9,304)

(2,557)

80,794 

102,309 

Income (loss) from partially owned entities

13,552 

(1,996)

56,239 

13,800 

Income (loss) from Real Estate Fund (of which $3,675 and ($1,091) is

attributable to noncontrolling interests, in each three-month

period, respectively, and $15,703 and ($1,091) in each

nine-month period, respectively)

5,353 

(1,410)

25,491 

(1,410)

Interest and other investment (loss) income, net

(29,994)

47,096 

95,121 

65,676 

Interest and debt expense (including amortization of deferred

financing costs of $4,828 and $5,170 in each three-month

period, respectively, and $14,696 and $14,085 in each

nine-month period, respectively)

(136,672)

(145,561)

(408,532)

(423,354)

Net (loss) on extinguishment of debt

- 

(724)

- 

(1,796)

Net gain on disposition of wholly owned and partially owned assets

1,298 

5,072 

7,975 

12,759 

Income before income taxes

69,684 

125,248 

516,168 

453,561 

Income tax expense

(7,144)

(5,449)

(19,448)

(15,993)

Income from continuing operations

62,540 

119,799 

496,720 

437,568 

Income (loss) from discontinued operations

3,683 

(3,667)

146,293 

(11,681)

Net income

66,223 

116,132 

643,013 

425,887 

Less:

Net income attributable to noncontrolling interests in

consolidated subsidiaries

(5,636)

(296)

(20,643)

(1,490)

Net income attributable to noncontrolling interests in the

Operating Partnership, including unit distributions

(6,825)

(11,584)

(47,364)

(33,487)

Net income attributable to Vornado

53,762 

104,252 

575,006 

390,910 

Preferred share dividends

(17,627)

(13,442)

(47,743)

(41,975)

Discount on preferred share and unit redemptions

5,000 

4,382 

5,000 

4,382 

NET INCOME attributable to common shareholders

$

41,135 

$

95,192 

$

532,263 

$

353,317 

INCOME PER COMMON SHARE - BASIC:

Income from continuing operations, net

$

0.20 

$

0.54 

$

2.14 

$

2.00 

Income (loss) from discontinued operations, net

0.02 

(0.02)

0.75 

(0.06)

Net income per common share

$

0.22 

$

0.52 

$

2.89 

$

1.94 

Weighted average shares

184,398 

182,462 

184,220 

182,014 

INCOME PER COMMON SHARE - DILUTED:

Income from continuing operations, net

$

0.20 

$

0.54 

$

2.12 

$

1.98 

Income (loss) from discontinued operations, net

0.02 

(0.02)

0.74 

(0.06)

Net income per common share

$

0.22 

$

0.52 

$

2.86 

$

1.92 

Weighted average shares

186,065 

184,168 

186,039 

183,826 

DIVIDENDS PER COMMON SHARE

$

0.69 

$

0.65 

$

2.07 

$

1.95 

See notes to consolidated financial statements (unaudited).

4

 

 
 

 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

For the Three

For the Nine

Months Ended September 30,

Months Ended September 30,

(Amounts in thousands)

2011 

2010 

2011 

2010 

Net income

$

66,223 

$

116,132 

$

643,013 

$

425,887 

Other comprehensive (loss) income:

Change in unrealized net (loss) gain on securities available-for-sale

(161,178)

8,966 

(120,334)

34,497 

Pro rata share of other comprehensive income (loss) of

nonconsolidated subsidiaries

112 

3,885 

26,477 

(12,080)

Change in value of interest rate swap

(24,424)

- 

(42,458)

- 

Other

(69)

(5,176)

(5,114)

(5,594)

Comprehensive (loss) income

(119,336)

123,807 

501,584 

442,710 

Less:

Comprehensive income attributable to noncontrolling interests

(400)

(12,414)

(59,050)

(36,148)

Comprehensive (loss) income attributable to Vornado

$

(119,736)

$

111,393 

$

442,534 

$

406,562 

See notes to consolidated financial statements (unaudited).

5

 

 
 

 

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

- 

- 

- 

- 

- 

390,910 

- 

1,490 

392,400 

Dividends on common shares

- 

- 

- 

- 

- 

(354,937)

- 

- 

(354,937)

Dividends on preferred shares

- 

- 

- 

- 

- 

(42,100)

- 

- 

(42,100)

Redemption of preferred shares

(1,600)

(39,982)

- 

- 

- 

4,382 

- 

- 

(35,600)

Common shares issued:

Upon redemption of Class A

units, at redemption value

- 

- 

822 

33 

62,573 

- 

- 

- 

62,606 

Under employees' share

option plan

- 

- 

596 

24 

10,922 

(25,583)

- 

- 

(14,637)

Under dividend reinvestment plan

- 

- 

17 

1 

1,231 

- 

- 

- 

1,232 

Contributions:

Real Estate Fund

- 

- 

- 

- 

- 

- 

- 

37,698 

37,698 

Other

- 

- 

- 

- 

- 

- 

- 

188 

188 

Conversion of Series A preferred

shares to common shares

(3)

(177)

5 

- 

177 

- 

- 

- 

- 

Deferred compensation shares

and options

- 

- 

17 

1 

6,155 

- 

- 

- 

6,156 

Change in unrealized net gain

on securities available-for-sale

- 

- 

- 

- 

- 

- 

34,497 

- 

34,497 

Pro rata share of other

comprehensive (loss) of

nonconsolidated subsidiaries

- 

- 

- 

- 

- 

- 

(12,080)

- 

(12,080)

Adjustments to carry redeemable

Class A units at redemption value

- 

- 

- 

- 

(232,099)

- 

- 

- 

(232,099)

Other

- 

- 

- 

- 

(61)

30 

(5,594)

670 

(4,955)

Balance, September 30, 2010

32,349 

$

783,527 

182,671 

$