☑  

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)   

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:   

September 30, 2016

☐

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)

☑ Large Accelerated Filer

☐ Accelerated Filer

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

☐ Smaller Reporting Company

PART I.

Financial Information:

Page Number

Item 1.

Financial Statements:

Consolidated Balance Sheets (Unaudited) as of

September 30, 2016 and December 31, 2015

3

Consolidated Statements of Income (Unaudited) for the

Three and Nine Months Ended September 30, 2016 and 2015

4

Consolidated Statements of Comprehensive Income (Unaudited)

for the Three and Nine Months Ended September 30, 2016 and 2015

5

Consolidated Statements of Changes in Equity (Unaudited) for the

Nine Months Ended September 30, 2016 and 2015

6

Consolidated Statements of Cash Flows (Unaudited) for the

Nine Months Ended September 30, 2016 and 2015

8

Notes to Consolidated Financial Statements (Unaudited)

10

Report of Independent Registered Public Accounting Firm

35

Item 2.

Management's Discussion and Analysis of Financial Condition

and Results of Operations

36

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

77

Item 4.

Controls and Procedures

77

PART II.

Other Information:

Item 1.

Legal Proceedings

78

Item 1A.

Risk Factors

78

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

78

Item 3.

Defaults Upon Senior Securities

78

Item 4.

Mine Safety Disclosures

78

Item 5.

Other Information

78

Item 6.

Exhibits

78

SIGNATURES

79

EXHIBIT INDEX

80

VORNADO REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

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

September 30, 2016

December 31, 2015

ASSETS

Real estate, at cost:

Land

$

4,129,497

$

4,164,799

Buildings and improvements

12,654,086

12,582,671

Development costs and construction in progress

1,369,953

1,226,637

Leasehold improvements and equipment

114,026

116,030

Total

18,267,562

18,090,137

Less accumulated depreciation and amortization

(3,430,832)

(3,418,267)

Real estate, net

14,836,730

14,671,870

Cash and cash equivalents

1,352,697

1,835,707

Restricted cash

111,941

107,799

Marketable securities

198,165

150,997

Tenant and other receivables, net of allowance for doubtful accounts of $11,171 and $11,908

94,057

98,062

Investments in partially owned entities

1,497,925

1,550,422

Real estate fund investments

519,386

574,761

Receivable arising from the straight-lining of rents, net of allowance of $2,414 and $2,751

1,027,319

931,245

Deferred leasing costs, net of accumulated amortization of $234,330 and $218,239

462,179

480,421

Identified intangible assets, net of accumulated amortization of $201,164 and $187,360

201,450

227,901

Assets related to discontinued operations

5,546

37,020

Other assets

551,974

477,088

$

20,859,369

$

21,143,293

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Mortgages payable, net

$

9,867,550

$

9,513,713

Senior unsecured notes, net

845,223

844,159

Unsecured revolving credit facilities

115,630

550,000

Unsecured term loan, net

371,835

183,138

Accounts payable and accrued expenses

461,234

443,955

Deferred revenue

301,017

346,119

Deferred compensation plan

118,359

117,475

Liabilities related to discontinued operations

3,284

12,470

Other liabilities

457,928

426,965

Total liabilities

12,542,060

12,437,994

Commitments and contingencies

-

-

Redeemable noncontrolling interests:

Class A units - 12,280,354 and 12,242,820 units outstanding

1,242,895

1,223,793

Series D cumulative redeemable preferred units - 177,101 units outstanding

5,428

5,428

Total redeemable noncontrolling interests

1,248,323

1,229,221

Vornado shareholders' equity:

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

shares; issued and outstanding 42,826,629 and 52,676,629 shares

1,038,111

1,276,954

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

250,000,000 shares; issued and outstanding 188,994,234 and 188,576,853 shares

7,537

7,521

Additional capital

7,139,220

7,132,979

Earnings less than distributions

(1,951,411)

(1,766,780)

Accumulated other comprehensive income

82,374

46,921

Total Vornado shareholders' equity

6,315,831

6,697,595

Noncontrolling interests in consolidated subsidiaries

753,155

778,483

Total equity

7,068,986

7,476,078

$

20,859,369

$

21,143,293

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(Amounts in thousands, except per share amounts)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2016

2015

2016

2015

REVENUES:

Property rentals

$

523,998

$

526,337

$

1,570,668

$

1,541,454

Tenant expense reimbursements

71,425

67,098

191,841

196,234

Fee and other income

37,774

34,161

105,433

112,998

Total revenues

633,197

627,596

1,867,942

1,850,686

EXPENSES:

Operating

260,826

256,561

762,313

753,744

Depreciation and amortization

138,968

141,920

423,238

402,999

General and administrative

40,442

36,157

134,710

133,838

Impairment loss and acquisition and transaction related costs

3,808

1,518

171,994

7,560

Total expenses

444,044

436,156

1,492,255

1,298,141

Operating income

189,153

191,440

375,687

552,545

Income (loss) from partially owned entities

4,127

(325)

529

(8,709)

Income from real estate fund investments

1,077

1,665

28,750

52,122

Interest and other investment income, net

6,508

3,160

20,262

19,618

Interest and debt expense

(98,365)

(95,344)

(304,430)

(279,110)

Net gain on disposition of wholly owned

and partially owned assets

-

103,037

160,225

104,897

Income before income taxes

102,500

203,633

281,023

441,363

Income tax (expense) benefit

(4,865)

(2,856)

(9,805)

84,245

Income from continuing operations

97,635

200,777

271,218

525,608

Income from discontinued operations

2,969

34,463

6,160

50,278

Net income

100,604

235,240

277,378

575,886

Less net income attributable to noncontrolling interests in:

Consolidated subsidiaries

(3,658)

(3,302)

(26,361)

(38,370)

Operating Partnership

(4,366)

(12,704)

(11,410)

(28,189)

Net income attributable to Vornado

92,580

219,234

239,607

509,327

Preferred share dividends

(19,047)

(20,364)

(59,774)

(60,213)

Preferred share issuance costs (Series J redemption)

(7,408)

-

(7,408)

-

NET INCOME attributable to common shareholders

$

66,125

$

198,870

$

172,425

$

449,114

INCOME PER COMMON SHARE - BASIC:

Income from continuing operations, net

$

0.34

$

0.88

$

0.88

$

2.13

Income from discontinued operations, net

0.01

0.17

0.03

0.25

Net income per common share

$

0.35

$

1.05

$

0.91

$

2.38

Weighted average shares outstanding

188,901

188,504

188,778

188,291

INCOME PER COMMON SHARE - DILUTED:

Income from continuing operations, net

$

0.33

$

0.88

$

0.88

$

2.12

Income from discontinued operations, net

0.02

0.17

0.03

0.25

Net income per common share

$

0.35

$

1.05

$

0.91

$

2.37

Weighted average shares outstanding

190,048

189,581

190,086

189,789

DIVIDENDS PER COMMON SHARE

$

0.63

$

0.63

$

1.89

$

1.89

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(Amounts in thousands)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2016

2015

2016

2015

Net income

$

100,604

$

235,240

$

277,378

$

575,886

Other comprehensive income (loss):

Increase (reduction) in unrealized net gain on

available-for-sale securities

3,685

(7,064)

42,798

(53,396)

Pro rata share of other comprehensive loss of

nonconsolidated subsidiaries

(915)

(114)

(1,537)

(1,148)

Increase (reduction) in value of interest rate swaps and other

7,689

(289)

(3,482)

1,788

Comprehensive income

111,063

227,773

315,157

523,130

Less comprehensive income attributable to noncontrolling interests

(8,665)

(15,559)

(40,097)

(63,477)

Comprehensive income attributable to Vornado

$

102,398

$

212,214

$

275,060

$

459,653

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

(Amounts in thousands)

Non-

Accumulated

controlling

Earnings

Other

Interests in

Preferred Shares

Common Shares

Additional

Less Than

Comprehensive

Consolidated

Total

Shares

Amount

Shares

Amount

Capital

Distributions

Income

Subsidiaries

Equity

Balance, December 31, 2015

52,677

$

1,276,954

188,577

$

7,521

$

7,132,979

$

(1,766,780)

$

46,921

$

778,483

$

7,476,078

Net income attributable to Vornado

-

-

-

-

-

239,607

-

-

239,607

Net income attributable to

noncontrolling interests in 

consolidated subsidiaries

-

-

-

-

-

-

-

26,361

26,361

Dividends on common shares

-

-

-

-

-

(356,863)

-

-

(356,863)

Dividends on preferred shares

-

-

-

-

-

(59,774)

-

-

(59,774)

Redemption of Series J

preferred shares

(9,850)

(238,842)

-

-

-

(7,408)

-

-

(246,250)

Common shares issued:

Upon redemption of Class A

units, at redemption value

-

-

293

12

28,114

-

-

-

28,126

Under employees' share

option plan

-

-

106

4

5,936

-

-

-

5,940

Under dividend reinvestment plan

-

-

12

-

1,080

-

-

-

1,080

Contributions:

Other

-

-

-

-

-

-

-

19,699

19,699

Distributions:

Real estate fund investments

-

-

-

-

-

-

-

(59,843)

(59,843)

Other

-

-

-

-

-

-

-

(11,631)

(11,631)

Deferred compensation shares

and options

-

-

7

1

1,370

(186)

-

-

1,185

Increase in unrealized net gain on

available-for-sale securities

-