x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)   

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:   

June 30, 2014

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, 2014 and December 31, 2013

3

Consolidated Statements of Income (Unaudited) for the

Three and Six Months Ended June 30, 2014 and 2013

4

Consolidated Statements of Comprehensive Income (Unaudited)

for the Three and Six Months Ended June 30, 2014 and 2013

5

Consolidated Statements of Changes in Equity (Unaudited) for the

Six Months Ended June 30, 2014 and 2013

6

Consolidated Statements of Cash Flows (Unaudited) for the

Six Months Ended June 30, 2014 and 2013

8

Notes to Consolidated Financial Statements (Unaudited)

10

Report of Independent Registered Public Accounting Firm

33

Item 2.

Management's Discussion and Analysis of Financial Condition

and Results of Operations

34

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

75

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

75

Item 3.

Defaults Upon Senior Securities

75

Item 4.

Mine Safety Disclosures

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

2014 

2013 

Real estate, at cost:

Land

$

4,051,053 

$

4,068,306 

Buildings and improvements

12,519,973 

12,475,556 

Development costs and construction in progress

1,550,084 

1,353,121 

Leasehold improvements and equipment

132,485 

132,483 

Total

18,253,595 

18,029,466 

Less accumulated depreciation and amortization

(3,527,372)

(3,381,457)

Real estate, net

14,726,223 

14,648,009 

Cash and cash equivalents

1,371,226 

583,290 

Restricted cash

160,353 

262,440 

Marketable securities

206,917 

191,917 

Tenant and other receivables, net of allowance for doubtful accounts of $21,521 and $21,869

118,217 

115,862 

Investments in partially owned entities

1,267,370 

1,166,443 

Investment in Toys "R" Us

26,309 

83,224 

Real Estate Fund investments

549,091 

667,710 

Mortgage and mezzanine loans receivable, net of allowance of $5,811 and $5,845

17,417 

170,972 

Receivable arising from the straight-lining of rents, net of allowance of $3,375 and $4,355

850,278 

817,357 

Deferred leasing and financing costs, net of accumulated amortization of $286,668 and $264,451

467,455 

411,927 

Identified intangible assets, net of accumulated amortization of $233,449 and $277,998

289,475 

311,963 

Assets related to discontinued operations

208,309 

314,622 

Other assets

478,139 

351,488 

$

20,736,779 

$

20,097,224 

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Mortgages payable

$

8,988,843 

$

8,331,993 

Senior unsecured notes

1,791,814 

1,350,855 

Revolving credit facility debt

88,138 

295,870 

Accounts payable and accrued expenses

452,641 

422,276 

Deferred revenue

501,384 

529,048 

Deferred compensation plan

111,858 

116,515 

Liabilities related to discontinued operations

-   

13,950 

Other liabilities

382,789 

438,353 

Total liabilities

12,317,467 

11,498,860 

Commitments and contingencies

Redeemable noncontrolling interests:

Class A units - 11,430,318 and 11,292,038 units outstanding

1,219,958 

1,002,620 

Series D cumulative redeemable preferred unit - 1 unit outstanding

1,000 

1,000 

Total redeemable noncontrolling interests

1,220,958 

1,003,620 

Vornado shareholders' equity:

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

shares; issued and outstanding 52,678,939 and 52,682,807 shares

1,277,026 

1,277,225 

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

250,000,000 shares; issued and outstanding 187,664,768 and 187,284,688 shares

7,484 

7,469 

Additional capital

6,949,663 

7,143,840 

Earnings less than distributions

(1,872,250)

(1,734,839)

Accumulated other comprehensive income

92,221 

71,537 

Total Vornado shareholders' equity

6,454,144 

6,765,232 

Noncontrolling interests in consolidated subsidiaries

744,210 

829,512 

Total equity

7,198,354 

7,594,744 

$

20,736,779 

$

20,097,224 

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)

2014 

2013 

2014 

2013 

REVENUES:

Property rentals

$

540,124 

$

534,074 

$

1,068,224 

$

1,067,867 

Tenant expense reimbursements

76,202 

72,291 

162,792 

148,255 

Cleveland Medical Mart development project

- 

16,990 

- 

29,133 

Fee and other income

50,280 

47,861 

96,208 

144,674 

Total revenues

666,606 

671,216 

1,327,224 

1,389,929 

EXPENSES:

Operating

261,453 

259,168 

534,844 

524,915 

Depreciation and amortization

129,025 

133,180 

276,676 

272,497 

General and administrative

44,568 

50,305 

96,726 

101,685 

Cleveland Medical Mart development project

- 

15,151 

- 

26,525 

Impairment losses, acquisition and transaction related costs

4,083 

3,350 

25,867 

3,951 

Total expenses

439,129 

461,154 

934,113 

929,573 

Operating income

227,477 

210,062 

393,111 

460,356 

(Loss) applicable to Toys "R" Us

(57,591)

(36,861)

(55,744)

(35,102)

Income from partially owned entities

3,849 

1,472 

3,981 

22,238 

Income from Real Estate Fund

100,110 

34,470 

118,258 

51,034 

Interest and other investment income (loss), net

9,435 

26,415 

21,328 

(22,660)

Interest and debt expense

(117,051)

(120,657)

(226,493)

(241,003)

Net gain (loss) on disposition of wholly owned and partially

owned assets

905 

1,005 

10,540 

(35,719)

Income before income taxes

167,134 

115,906 

264,981 

199,144 

Income tax expense

(3,599)

(2,877)

(5,181)

(3,950)

Income from continuing operations

163,535 

113,029 

259,800 

195,194 

Income from discontinued operations

2,152 

69,292 

4,043 

276,054 

Net income

165,687 

182,321 

263,843 

471,248 

Less net income attributable to noncontrolling interests in:

Consolidated subsidiaries

(63,975)

(14,930)

(75,554)

(26,216)

Operating Partnership

(4,691)

(8,849)

(8,539)

(22,782)

Preferred unit distributions of the Operating Partnership

(13)

(348)

(25)

(1,134)

Net income attributable to Vornado

97,008 

158,194 

179,725 

421,116 

Preferred share dividends

(20,366)

(20,368)

(40,734)

(42,070)

Preferred unit and share redemptions

- 

8,100 

- 

(1,130)

NET INCOME attributable to common shareholders

$

76,642 

$

145,926 

$

138,991 

$

377,916 

INCOME PER COMMON SHARE - BASIC:

Income from continuing operations, net

$

0.40 

$

0.43 

$

0.72 

$

0.63 

Income from discontinued operations, net

0.01 

0.35 

0.02 

1.39 

Net income per common share

$

0.41 

$

0.78 

$

0.74 

$

2.02 

Weighted average shares outstanding

187,527 

186,931 

187,418 

186,842 

INCOME PER COMMON SHARE - DILUTED:

Income from continuing operations, net

$

0.40 

$

0.43 

$

0.72 

$

0.62 

Income from discontinued operations, net

0.01 

0.35 

0.02 

1.39 

Net income per common share

$

0.41 

$

0.78 

$

0.74 

$

2.01 

Weighted average shares outstanding

188,617 

187,720 

188,431 

187,627 

DIVIDENDS PER COMMON SHARE

$

0.73 

$

0.73 

$

1.46 

$

1.46 

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)

2014 

2013 

2014 

2013 

Net income

$

165,687 

$

182,321 

$

263,843 

$

471,248 

Other comprehensive income (loss):

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

1,878 

20,348 

15,003 

169,138 

Pro rata share of other comprehensive income (loss) of

nonconsolidated subsidiaries

14,163 

(19,707)

5,877 

(23,354)

Change in value of interest rate swap

(545)

12,037 

1,065 

14,560 

Other

(2)

(3)

(1)

530 

Comprehensive income

181,181 

194,996 

285,787 

632,122 

Less comprehensive income attributable to noncontrolling interests

(69,578)

(24,862)

(85,378)

(59,166)

Comprehensive income attributable to Vornado

$

111,603 

$

170,134 

$

200,409 

$

572,956 

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, 2012

51,185 

$

1,240,278 

186,735 

$

7,440 

$

7,195,438 

$

(1,573,275)

$

(18,946)

$

1,053,209 

$

7,904,144 

Net income attributable to Vornado

-   

-   

-   

-   

-   

421,116 

-   

-   

421,116 

Net income attributable to

noncontrolling interests in

consolidated subsidiaries

-   

-   

-   

-   

-   

-   

-   

26,216 

26,216 

Dividends on common shares

-   

-   

-   

-   

-   

(272,825)

-   

-   

(272,825)

Dividends on preferred shares

-   

-   

-   

-   

-   

(42,070)

-   

-   

(42,070)

Issuance of Series L preferred shares

12,000 

290,536 

-   

-   

-   

-   

-   

-   

290,536 

Redemption of Series F and Series H

preferred shares

(10,500)

(253,269)

-   

-   

-   

-   

-   

-   

(253,269)

Common shares issued:

Upon redemption of Class A

units, at redemption value

-   

-   

180 

7 

14,973 

-   

-   

-   

14,980 

Under employees' share

option plan

-   

-   

62 

3 

3,564 

-   

-   

-   

3,567 

Under dividend reinvestment plan

-   

-   

11 

-   

903 

-   

-   

-   

903 

Contributions: