x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)   

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:   

September 30, 2012

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

September 30, 2012 and December 31, 2011

3

Consolidated Statements of Income (Unaudited) for the

Three and Nine Months Ended September 30, 2012 and 2011

4

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

for the Three and Nine Months Ended September 30, 2012 and 2011

5

Consolidated Statements of Changes in Equity (Unaudited) for the

Nine Months Ended September 30, 2012 and 2011

6

Consolidated Statements of Cash Flows (Unaudited) for the

Nine Months Ended September 30, 2012 and 2011

8

Notes to Consolidated Financial Statements (Unaudited)

10

Report of Independent Registered Public Accounting Firm

40

Item 2.

Management's Discussion and Analysis of Financial Condition

and Results of Operations

41

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

83

Item 4.

Controls and Procedures

84

PART II.

Other Information:

Item 1.

Legal Proceedings

85

Item 1A.

Risk Factors

86

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

86

Item 3.

Defaults Upon Senior Securities

86

Item 4.

Mine Safety Disclosures

86

Item 5.

Other Information

86

Item 6.

Exhibits

86

SIGNATURES

87

EXHIBIT INDEX

88

VORNADO REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

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

September 30,

December 31,

ASSETS

2012 

2011 

Real estate, at cost:

Land

$

4,143,581 

$

4,416,613 

Buildings and improvements

11,851,152 

12,041,054 

Development costs and construction in progress

865,953 

119,540 

Leasehold improvements and equipment

128,168 

126,712 

Total

16,988,854 

16,703,919 

Less accumulated depreciation and amortization

(3,034,815)

(2,901,203)

Real estate, net

13,954,039 

13,802,716 

Cash and cash equivalents

465,884 

606,553 

Restricted cash

391,794 

98,068 

Marketable securities

485,001 

741,321 

Accounts receivable, net of allowance for doubtful accounts of $38,351 and $43,241

181,242 

171,798 

Investments in partially owned entities

1,319,710 

1,233,650 

Investment in Toys "R" Us

549,421 

506,809 

Real Estate Fund investments

482,442 

346,650 

Mezzanine loans receivable

131,585 

133,948 

Receivable arising from the straight-lining of rents, net of allowance of $4,448 and $3,290

755,866 

701,827 

Deferred leasing and financing costs, net of accumulated amortization of $220,846 and $237,766

389,155 

364,855 

Identified intangible assets, net of accumulated amortization of $362,516 and $347,039

252,683 

295,432 

Assets related to discontinued operations

537,938 

1,049,153 

Due from officers

- 

13,127 

Other assets

501,056 

380,580 

$

20,397,816 

$

20,446,487 

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Notes and mortgages payable

$

7,852,657 

$

8,065,576 

Senior unsecured notes

1,357,921 

1,357,661 

Revolving credit facility debt

600,000 

138,000 

Exchangeable senior debentures

- 

497,898 

Convertible senior debentures

- 

10,168 

Accounts payable and accrued expenses

442,644 

423,512 

Deferred revenue

465,929 

511,959 

Deferred compensation plan

103,003 

95,457 

Deferred tax liabilities

15,432 

13,315 

Liabilities related to discontinued operations

478,980 

518,319 

Other liabilities

396,897 

145,498 

Total liabilities

11,713,463 

11,777,363 

Commitments and contingencies

Redeemable noncontrolling interests:

Class A units - 11,714,978 and 12,160,771 units outstanding

949,499 

934,677 

Series D cumulative redeemable preferred units - 1,800,001 and 9,000,001 units outstanding

46,000 

226,000 

Total redeemable noncontrolling interests

995,499 

1,160,677 

Vornado shareholders' equity:

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

shares; issued and outstanding 51,184,609 and 42,186,709 shares

1,237,699 

1,021,660 

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

250,000,000 shares; issued and outstanding 186,143,105 and 185,080,020 shares

7,415 

7,373 

Additional capital

7,136,090 

7,127,258 

Earnings less than distributions

(1,319,118)

(1,401,704)

Accumulated other comprehensive (loss) income

(160,107)

73,729 

Total Vornado shareholders' equity

6,901,979 

6,828,316 

Noncontrolling interests in consolidated subsidiaries

786,875 

680,131 

Total equity

7,688,854 

7,508,447 

$

20,397,816 

$

20,446,487 

See notes to consolidated financial statements (unaudited).

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)

2012 

2011 

2012 

2011 

REVENUES:

Property rentals

$

518,141 

$

530,192 

$

1,564,168 

$

1,592,867 

Tenant expense reimbursements

80,497 

85,757 

224,287 

237,945 

Cleveland Medical Mart development project

72,651 

35,135 

184,014 

108,203 

Fee and other income

39,688 

36,776 

106,018 

111,813 

Total revenues

710,977 

687,860 

2,078,487 

2,050,828 

EXPENSES:

Operating

264,487 

262,837 

764,018 

773,331 

Depreciation and amortization

124,335 

126,935 

386,974 

373,380 

General and administrative

48,742 

46,121 

151,142 

154,359 

Cleveland Medical Mart development project

70,431 

33,419 

177,127 

101,637 

Acquisition related costs and tenant buy-outs

1,070 

2,288 

4,314 

22,455 

Total expenses

509,065 

471,600 

1,483,575 

1,425,162 

Operating income

201,912 

216,260 

594,912 

625,666 

(Loss) income applicable to Toys "R" Us

(8,585)

(9,304)

88,696 

80,794 

Income from partially owned entities

21,268 

13,140 

53,491 

55,035 

Income from Real Estate Fund (of which $4,787 and $3,675 in

each three-month period, respectively, and $25,026 and $15,703

in each nine-month period, respectively, are attributable to

noncontrolling interests)

5,509 

5,353 

37,572 

25,491 

Interest and other investment income (loss), net

10,523 

(30,011)

(22,984)

95,086 

Interest and debt expense (including amortization of deferred

financing costs of $5,725 and $4,670, in each three-month period,

respectively, and $17,204 and $14,093 in each nine-month

period, respectively)

(120,770)

(131,998)

(377,600)

(394,192)

Net gain on disposition of wholly owned and partially owned assets

- 

1,298 

4,856 

7,975 

Income before income taxes

109,857 

64,738 

378,943 

495,855 

Income tax expense

(3,015)

(6,959)

(17,319)

(18,548)

Income from continuing operations

106,842 

57,779 

361,624 

477,307 

Income from discontinued operations

157,314 

8,444 

241,024 

165,706 

Net income

264,156 

66,223 

602,648 

643,013 

Less net income attributable to noncontrolling interests in:

Consolidated subsidiaries

(6,610)

(5,636)

(30,928)

(20,643)

Operating Partnership, including unit distributions

(16,240)

(6,825)

(40,595)

(47,364)

Net income attributable to Vornado

241,306 

53,762 

531,125 

575,006 

Preferred share dividends

(20,613)

(17,627)

(56,187)

(47,743)

Discount on preferred unit redemptions

11,700 

5,000 

11,700 

5,000 

NET INCOME attributable to common shareholders

$

232,393 

$

41,135 

$

486,638 

$

532,263 

INCOME PER COMMON SHARE - BASIC:

Income from continuing operations, net

$

0.45 

$

0.18 

$

1.40 

$

2.04 

Income from discontinued operations, net

0.80 

0.04 

1.22 

0.85 

Net income per common share

$

1.25 

$

0.22 

$

2.62 

$

2.89 

Weighted average shares outstanding

185,924 

184,398 

185,656 

184,220 

INCOME PER COMMON SHARE - DILUTED:

Income from continuing operations, net

$

0.45 

$

0.18 

$

1.39 

$

2.02 

Income from discontinued operations, net

0.79 

0.04 

1.22 

0.84 

Net income per common share

$

1.24 

$

0.22 

$

2.61 

$

2.86 

Weighted average shares outstanding

186,655 

186,065 

186,399 

186,039 

DIVIDENDS PER COMMON SHARE

$

0.69 

$

0.69 

$

2.07 

$

2.07 

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

For the Three

For the Nine

Months Ended September 30,

Months Ended September 30,

(Amounts in thousands)

2012 

2011 

2012 

2011 

Net income

$

264,156 

$

66,223 

$

602,648 

$

643,013 

Other comprehensive income (loss):

Change in unrealized net gain (loss) on securities

available-for-sale

18,358 

(161,178)

(202,167)

(120,334)

Pro rata share of other comprehensive (loss) income of

nonconsolidated subsidiaries

(12,607)

112 

(38,861)

26,477 

Change in value of interest rate swap

(2,866)

(24,424)

(8,868)

(42,458)

Other

(30)

(69)

343 

(5,114)

Comprehensive income (loss)

267,011 

(119,336)

353,095 

501,584 

Less comprehensive income attributable to noncontrolling interests

(23,027)

(400)

(55,806)

(59,050)

Comprehensive income (loss) attributable to Vornado

$

243,984 

$

(119,736)

$

297,289 

$

442,534 

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, 2010

32,340 

$

783,088 

183,662 

$

7,317 

$

6,932,728 

$

(1,480,876)

$

73,453 

$

514,695 

$

6,830,405 

Net income

- 

- 

- 

- 

- 

575,006 

- 

20,643 

595,649 

Dividends on common shares

- 

- 

- 

- 

- 

(381,382)

- 

- 

(381,382)

Dividends on preferred shares

- 

- 

- 

- 

- 

(47,905)

- 

- 

(47,905)

Issuance of Series J preferred shares

9,850 

239,037 

- 

- 

- 

- 

- 

- 

239,037 

Common shares issued:

Upon redemption of Class A

units, at redemption value

- 

- 

435 

17 

38,203 

- 

- 

- 

38,220 

Under employees' share

option plan

- 

- 

369 

15 

21,603 

(397)

- 

- 

21,221 

Under dividend reinvestment plan

- 

- 

15 

1 

1,329 

- 

- 

- 

1,330 

Contributions:

Real Estate Fund

- 

- 

- 

- 

- 

- 

- 

109,241 

109,241 

Other

- 

- 

- 

- 

- 

- 

- 

364 

364 

Distributions: