x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)   

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:   

September 30, 2013

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, 2013 and December 31, 2012

3

Consolidated Statements of Income (Unaudited) for the

Three and Nine Months Ended September 30, 2013 and 2012

4

Consolidated Statements of Comprehensive Income (Unaudited)

for the Three and Nine Months Ended September 30, 2013 and 2012

5

Consolidated Statements of Changes in Equity (Unaudited) for the

Nine Months Ended September 30, 2013 and 2012

6

Consolidated Statements of Cash Flows (Unaudited) for the

Nine Months Ended September 30, 2013 and 2012

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

84

Item 4.

Controls and Procedures

85

PART II.

Other Information:

Item 1.

Legal Proceedings

86

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

2013 

2012 

Real estate, at cost:

Land

$

4,170,656 

$

4,791,049 

Buildings and improvements

12,387,153 

12,445,970 

Development costs and construction in progress

1,077,703 

920,349 

Leasehold improvements and equipment

129,425 

130,030 

Total

17,764,937 

18,287,398 

Less accumulated depreciation and amortization

(3,334,920)

(3,078,667)

Real estate, net

14,430,017 

15,208,731 

Cash and cash equivalents

872,323 

960,319 

Restricted cash

320,979 

183,256 

Marketable securities

210,554 

398,188 

Tenant and other receivables, net of allowance for doubtful accounts of $22,105 and $37,674

131,479 

195,718 

Investments in partially owned entities

1,169,728 

1,226,256 

Investment in Toys "R" Us

378,615 

478,041 

Real Estate Fund investments

635,990 

600,786 

Mortgage and mezzanine loans receivable

176,388 

225,359 

Receivable arising from the straight-lining of rents, net of allowance of $5,106 and $3,165

804,526 

759,742 

Deferred leasing and financing costs, net of accumulated amortization of $261,548 and $223,670

400,970 

407,126 

Identified intangible assets, net of accumulated amortization of $297,391 and $346,613

275,250 

406,309 

Assets related to discontinued operations

27,413 

634,139 

Other assets

441,089 

381,079 

$

20,275,321 

$

22,065,049 

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Mortgages payable

$

8,566,582 

$

8,644,200 

Senior unsecured notes

1,350,769 

1,358,008 

Revolving credit facility debt

83,982 

1,170,000 

Accounts payable and accrued expenses

442,623 

484,746 

Deferred revenue

472,805 

596,067 

Deferred compensation plan

111,752 

105,200 

Deferred tax liabilities

15,420 

15,305 

Liabilities related to discontinued operations

-   

442,293 

Other liabilities

452,456 

400,934 

Total liabilities

11,496,389 

13,216,753 

Commitments and contingencies

Redeemable noncontrolling interests:

Class A units - 11,302,612 and 11,215,682 units outstanding

950,098 

898,152 

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

1,000 

46,000 

Total redeemable noncontrolling interests

951,098 

944,152 

Vornado shareholders' equity:

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

shares; issued and outstanding 52,682,807 and 51,184,609 shares

1,277,455 

1,240,278 

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

250,000,000 shares; issued and outstanding 187,048,110 and 186,734,711 shares

7,440 

7,440 

Additional capital

7,183,660 

7,195,438 

Earnings less than distributions

(1,527,663)

(1,573,275)

Accumulated other comprehensive income (loss)

83,327 

(18,946)

Total Vornado shareholders' equity

7,024,219 

6,850,935 

Noncontrolling interests in consolidated subsidiaries

803,615 

1,053,209 

Total equity

7,827,834 

7,904,144 

$

20,275,321 

$

22,065,049 

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)

2013 

2012 

2013 

2012 

REVENUES:

Property rentals

$

532,691 

$

511,561 

$

1,609,442 

$

1,536,216 

Tenant expense reimbursements

84,638 

79,215 

236,580 

220,679 

Cleveland Medical Mart development project

4,893 

72,651 

34,026 

184,014 

Fee and other income

61,158 

39,625 

206,330 

105,889 

Total revenues

683,380 

703,052 

2,086,378 

2,046,798 

EXPENSES:

Operating

264,422 

261,512 

784,031 

749,213 

Depreciation and amortization

124,079 

122,241 

400,952 

381,270 

General and administrative

48,250 

48,456 

157,155 

150,578 

Cleveland Medical Mart development project

3,239 

70,431 

29,764 

177,127 

Acquisition related costs

2,818 

1,070 

6,769 

4,314 

Total expenses

442,808 

503,710 

1,378,671 

1,462,502 

Operating income

240,572 

199,342 

707,707 

584,296 

(Loss) income applicable to Toys "R" Us

(34,209)

(8,585)

(69,311)

88,696 

Income from partially owned entities

1,453 

21,268 

23,691 

53,491 

Income from Real Estate Fund

22,913 

5,509 

73,947 

37,572 

Interest and other investment (loss) income, net

(10,275)

10,523 

(32,933)

(22,984)

Interest and debt expense

(119,870)

(119,330)

(363,128)

(373,257)

Net gain (loss) on disposition of wholly owned and

partially owned assets

15,138 

- 

(20,581)

4,856 

Income before income taxes

115,722 

108,727 

319,392 

372,670 

Income tax expense

(2,222)

(3,015)

(6,172)

(17,319)

Income from continuing operations

113,500 

105,712 

313,220 

355,351 

Income from discontinued operations

18,751 

158,444 

290,279 

247,297 

Net income

132,251 

264,156 

603,499 

602,648 

Less net income attributable to noncontrolling interests in:

Consolidated subsidiaries

(23,833)

(6,610)

(50,049)

(30,928)

Operating Partnership

(5,032)

(14,837)

(27,814)

(31,445)

Preferred unit distributions of the Operating Partnership

(12)

(1,403)

(1,146)

(9,150)

Net income attributable to Vornado

103,374 

241,306 

524,490 

531,125 

Preferred share dividends

(20,369)

(20,613)

(62,439)

(56,187)

Preferred unit and share redemptions

- 

11,700 

(1,130)

11,700 

NET INCOME attributable to common shareholders

$

83,005 

$

232,393 

$

460,921 

$

486,638 

INCOME PER COMMON SHARE - BASIC:

Income from continuing operations, net

$

0.36 

$

0.45 

$

1.02 

$

1.36 

Income from discontinued operations, net

0.08 

0.80 

1.45 

1.26 

Net income per common share

$

0.44 

$

1.25 

$

2.47 

$

2.62 

Weighted average shares outstanding

186,969 

185,924 

186,885 

185,656 

INCOME PER COMMON SHARE - DILUTED:

Income from continuing operations, net

$

0.36 

$

0.44 

$

1.01 

$

1.36 

Income from discontinued operations, net

0.08 

0.80 

1.45 

1.25 

Net income per common share

$

0.44 

$

1.24 

$

2.46 

$

2.61 

Weighted average shares outstanding

187,724 

186,655 

187,679 

186,399 

DIVIDENDS PER COMMON SHARE

$

0.73 

$

0.69 

$

2.19 

$

2.07 

See notes to consolidated financial statements (unaudited).

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)

2013 

2012 

2013 

2012 

Net income

$

132,251 

$

264,156 

$

603,499 

$

602,648 

Other comprehensive income:

Change in unrealized net (loss) gain on

available-for-sale securities

(8,252)

18,358 

160,886 

(202,167)

Amounts reclassified from accumulated other comprehensive

income related to sale of available-for-sale securities

(42,404)

-   

(42,404)

-   

Pro rata share of other comprehensive loss of

nonconsolidated subsidiaries

(1,669)

(12,607)

(25,023)

(38,861)

Change in value of interest rate swap

(295)

(2,866)

14,265 

(8,868)

Other

1 

(30)

531 

343 

Comprehensive income

79,632 

267,011 

711,754 

353,095 

Less comprehensive income attributable to noncontrolling interests

(25,825)

(23,027)

(84,991)

(55,806)

Comprehensive income attributable to Vornado

$

53,807 

$

243,984 

$

626,763 

$

297,289 

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

Non-

Accumulated

controlling

(Amounts in thousands)

Earnings

Other

Interests in

Preferred Shares

Common Shares

Additional

Less Than

Comprehensive

Consolidated

Total

Shares

Amount

Shares

Amount

Capital

Distributions

Income (Loss)

Subsidiaries

Equity

Balance, December 31, 2011

42,187 

$

1,021,660 

185,080 

$

7,373 

$

7,127,258 

$

(1,401,704)

$

73,729 

$

680,131 

$

7,508,447 

Net income

-   

-   

-   

-   

-   

531,125 

-   

30,928 

562,053 

Dividends on common shares

-   

-   

-   

-   

-   

(384,353)

-   

-   

(384,353)

Dividends on preferred shares

-   

-   

-   

-   

-   

(56,187)

-   

-   

(56,187)

Issuance of Series K preferred shares

12,000 

291,144 

-   

-   

-   

-   

-   

-   

291,144 

Redemption of Series E preferred

shares

(3,000)

(75,000)

-   

-   

-   

-   

-   

-   

(75,000)

Common shares issued:

Upon redemption of Class A

units, at redemption value

-   

-   

624 

25 

51,191 

-   

-   

-   

51,216 

Under employees' share

option plan

-   

-   

414 

16 

8,915 

(16,389)

-   

-   

(7,458)

Under dividend reinvestment plan

-   

-   

15 

1 

1,269 

-   

-   

-   

1,270 

Contributions:

Real Estate Fund

-   

-