x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:   

September 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

September 30, 2014 and December 31, 2013

3

Consolidated Statements of Income (Unaudited) for the

Three and Nine Months Ended September 30, 2014 and 2013

4

Consolidated Statements of Comprehensive Income (Unaudited)

for the Three and Nine Months Ended September 30, 2014 and 2013

5

Consolidated Statements of Changes in Equity (Unaudited) for the

Nine Months Ended September 30, 2014 and 2013

6

Consolidated Statements of Cash Flows (Unaudited) for the

Nine Months Ended September 30, 2014 and 2013

8

Notes to Consolidated Financial Statements (Unaudited)

10

Report of Independent Registered Public Accounting Firm

34

Item 2.

Management's Discussion and Analysis of Financial Condition

and Results of Operations

35

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

75

Item 4.

Controls and Procedures

76

PART II.

Other Information:

Item 1.

Legal Proceedings

77

Item 1A.

Risk Factors

77

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

77

Item 3.

Defaults Upon Senior Securities

77

Item 4.

Mine Safety Disclosures

77

Item 5.

Other Information

77

Item 6.

Exhibits

77

SIGNATURES

78

EXHIBIT INDEX

79

VORNADO REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

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

September 30,

December 31,

ASSETS

2014 

2013 

Real estate, at cost:

Land

$

4,137,278 

$

4,066,837 

Buildings and improvements

12,609,463 

12,466,244 

Development costs and construction in progress

1,680,202 

1,353,103 

Leasehold improvements and equipment

128,982 

132,483 

Total

18,555,925 

18,018,667 

Less accumulated depreciation and amortization

(3,613,098)

(3,372,207)

Real estate, net

14,942,827 

14,646,460 

Cash and cash equivalents

1,683,142 

583,290 

Restricted cash

160,848 

262,440 

Marketable securities

184,154 

191,917 

Tenant and other receivables, net of allowance for doubtful accounts of $18,307 and $21,869

118,636 

115,862 

Investments in partially owned entities

1,268,066 

1,166,443 

Investment in Toys "R" Us

-   

83,224 

Real Estate Fund investments

495,392 

667,710 

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

17,085 

170,972 

Receivable arising from the straight-lining of rents, net of allowance of $3,396 and $4,355

873,901 

817,314 

Deferred leasing and financing costs, net of accumulated amortization of $299,542 and $264,421

483,902 

411,922 

Identified intangible assets, net of accumulated amortization of $223,786 and $277,998

280,207 

311,963 

Assets related to discontinued operations

-   

316,219 

Other assets

492,355 

351,488 

$

21,000,515 

$

20,097,224 

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Mortgages payable

$

9,273,212 

$

8,331,993 

Senior unsecured notes

1,791,987 

1,350,855 

Revolving credit facility debt

88,138 

295,870 

Accounts payable and accrued expenses

498,565 

422,276 

Deferred revenue

489,250 

529,048 

Deferred compensation plan

113,549 

116,515 

Liabilities related to discontinued operations

-   

13,950 

Other liabilities

380,843 

438,353 

Total liabilities

12,635,544 

11,498,860 

Commitments and contingencies

Redeemable noncontrolling interests:

Class A units - 11,395,068 and 11,292,038 units outstanding

1,139,052 

1,002,620 

Series D cumulative redeemable preferred unit - 1 unit outstanding

1,000 

1,000 

Total redeemable noncontrolling interests

1,140,052 

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 187,735,229 and 187,284,688 shares

7,487 

7,469 

Additional capital

7,040,538 

7,143,840 

Earnings less than distributions

(1,878,125)

(1,734,839)

Accumulated other comprehensive income

69,580 

71,537 

Total Vornado shareholders' equity

6,516,506 

6,765,232 

Noncontrolling interests in consolidated subsidiaries

708,413 

829,512 

Total equity

7,224,919 

7,594,744 

$

21,000,515 

$

20,097,224 

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)

2014 

2013 

2014 

2013 

REVENUES:

Property rentals

$

538,168 

$

521,433 

$

1,606,120 

$

1,589,038 

Tenant expense reimbursements

86,330 

81,814 

248,964 

229,938 

Cleveland Medical Mart development project

- 

4,893 

- 

34,026 

Fee and other income

46,411 

60,849 

142,618 

205,523 

Total revenues

670,909 

668,989 

1,997,702 

2,058,525 

EXPENSES:

Operating

268,450 

261,776 

802,505 

785,992 

Depreciation and amortization

130,208 

122,119 

406,868 

394,579 

General and administrative

44,547 

44,186 

141,273 

145,871 

Cleveland Medical Mart development project

- 

3,239 

- 

29,764 

Impairment losses, acquisition and transaction related costs

7,105 

2,818 

32,972 

6,769 

Total expenses

450,310 

434,138 

1,383,618 

1,362,975 

Operating income

220,599 

234,851 

614,084 

695,550 

(Loss) applicable to Toys "R" Us

(18,418)

(34,209)

(74,162)

(69,311)

(Loss) income from partially owned entities

(7,245)

1,453 

(3,264)

23,691 

Income from Real Estate Fund

24,160 

22,913 

142,418 

73,947 

Interest and other investment income (loss), net

7,602 

(10,275)

28,930 

(32,935)

Interest and debt expense

(115,120)

(119,676)

(341,613)

(360,679)

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

owned assets

2,665 

15,138 

13,205 

(20,581)

Income before income taxes

114,243 

110,195 

379,598 

309,682 

Income tax expense

(3,177)

(2,222)

(8,358)

(6,172)

Income from continuing operations

111,066 

107,973 

371,240 

303,510 

Income from discontinued operations

58,131 

24,278 

61,800 

299,989 

Net income

169,197 

132,251 

433,040 

603,499 

Less net income attributable to noncontrolling interests in:

Consolidated subsidiaries

(9,685)

(23,833)

(85,239)

(50,049)

Operating Partnership

(7,975)

(5,032)

(16,514)

(27,814)

Preferred unit distributions of the Operating Partnership

(13)

(12)

(38)

(1,146)

Net income attributable to Vornado

151,524 

103,374 

331,249 

524,490 

Preferred share dividends

(20,365)

(20,369)

(61,099)

(62,439)

Preferred unit and share redemptions

- 

- 

- 

(1,130)

NET INCOME attributable to common shareholders

$

131,159 

$

83,005 

$

270,150 

$

460,921 

INCOME PER COMMON SHARE - BASIC:

Income from continuing operations, net

$

0.41 

$

0.33 

$

1.13 

$

0.97 

Income from discontinued operations, net

0.29 

0.11 

0.31 

1.50 

Net income per common share

$

0.70 

$

0.44 

$

1.44 

$

2.47 

Weighted average shares outstanding

187,671 

186,969 

187,503 

186,885 

INCOME PER COMMON SHARE - DILUTED:

Income from continuing operations, net

$

0.40 

$

0.33 

$

1.12 

$

0.96 

Income from discontinued operations, net

0.29 

0.11 

0.31 

1.50 

Net income per common share

$

0.69 

$

0.44 

$

1.43 

$

2.46 

Weighted average shares outstanding

188,812 

187,724 

188,592 

187,679 

DIVIDENDS PER COMMON SHARE

$

0.73 

$

0.73 

$

2.19 

$

2.19 

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)

2014 

2013 

2014 

2013 

Net income

$

169,197 

$

132,251 

$

433,040 

$

603,499 

Other comprehensive income (loss):

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

(22,764)

(8,252)

(7,761)

160,886 

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

(6,028)

(1,669)

(151)

(25,023)

Change in value of interest rate swap

4,781 

(295)

5,846 

14,265 

Other

1 

1 

-   

531 

Comprehensive income

145,187 

79,632 

430,974 

711,754 

Less comprehensive income attributable to noncontrolling interests

(16,304)

(25,825)

(101,682)

(84,991)

Comprehensive income attributable to Vornado

$

128,883 

$

53,807 

$

329,292 

$

626,763 

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENT 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, 2013

52,683 

$

1,277,225 

187,285 

$

7,469 

$

7,143,840 

$

(1,734,839)

$

71,537 

$

829,512 

$

7,594,744 

Net income attributable to Vornado

-   

-   

-   

-   

-   

331,249 

-   

-   

331,249 

Net income attributable to

noncontrolling interests in

consolidated subsidiaries

-   

-   

-   

-   

-   

-   

-   

85,239 

85,239 

Dividends on common shares

-   

-   

-   

-   

-   

(410,724)

-   

-   

(410,724)

Dividends on preferred shares

-   

-   

-   

-   

-   

(61,099)

-   

-   

(61,099)

Common shares issued:

Upon redemption of Class A

units, at redemption value

-   

-   

227 

9 

22,659 

-   

-   

-   

22,668 

Under employees' share

option plan

-   

-   

199 

8 

12,342 

-   

-   

-   

12,350 

Under dividend reinvestment plan

-   

-   

13 

-   

1,387 

-   

-   

-   

1,387 

Contributions:

Real Estate Fund

-   

-   

-   

-   

-   

-   

-   

5,297 

5,297 

Other