UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
May 5, 2003
VORNADO REALTY TRUST
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(Exact Name of Registrant as Specified in Charter)
Maryland
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(State or Other Jurisdiction of Incorporation)
No. 001-11954
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(Commission File Number)
No. 22-1657560
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(IRS Employer Identification No.)
888 Seventh Avenue
New York, New York
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(Address of Principal Executive offices)
10019
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(Zip Code)
Registrant's telephone number, including area code: (212) 894-7000
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N/A
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(Former name or former address, if changed since last report)
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements.
None
(b) Pro Forma Financial Information.
None
(c) Exhibits.
The following exhibit is furnished as part of this report:
Exhibit Number Description
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99.1 Chairman's Letter to the Shareholders from Vornado
Realty Trust's 2002 Annual Report to Shareholders
99.2 Excerpts from Vornado Realty Trust's 2002 Annual Report
to Shareholders
99.3 Excerpt from Exhibit 99.1 to Vornado Realty Trust's
Current Report on Form 8-K, dated April 23, 2003, filed
on April 24, 2003
Item 9. REGULATION FD DISCLOSURE
In accordance with guidance from the Securities and Exchange Commission in
Release number 33-8216, part of the information furnished under this Item 9
("Regulation FD Disclosure") is intended to be furnished under Item 9
("Regulation FD Disclosure") and part of the information furnished under this
Item 9 ("Regulation FD Disclosure") is intended to be filed under Item 12
("Results of Operations and Financial Condition"). In accordance with General
Instruction B.6 of Form 8-K, the information in this Current Report on Form 8-K,
including Exhibits 99.1, 99.2 and 99.3, shall not be deemed "filed" for the
purpose of Section 18 of the Securities and Exchange Act of 1934 or otherwise
subject to the liability of that section, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933.
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The following material is furnished under Item 9 ("Regulation FD Disclosure"):
On May 5, 2003, Vornado Realty Trust (the "Company") began mailing its
2002 Annual Report to Shareholders (the "Annual Report"), which includes the
Chairman's Letter to the Shareholders (the "Chairman's Letter"). A copy of the
Chairman's Letter is being furnished as Exhibit 99.1 to this Current Report on
Form 8-K.
The Chairman's Letter contains certain "non-GAAP financial measures" (as
defined in Regulation G promulgated by the Securities and Exchange Commission).
Excerpts from the Annual Report and Exhibit 99.1 to the Company's Current Report
on Form 8-K filed on April 24, 2003 containing reconciliations of non-GAAP
financial measures to the most directly comparable financial measures calculated
and presented in accordance with Generally Accepted Accounting Principles
("GAAP") are furnished as Exhibits 99.2 and 99.3 to this Current Report on Form
8-K. The non-GAAP financial measures presented in the Chairman's Letter should
be considered supplemental to, and not as a substitute for, measures of
financial performance prepared in accordance with GAAP.
The following material is furnished under Item 12 ("Results of Operations and
Financial Condition"):
The Chairman's Letter contains certain information regarding the Company's
results of operations and financial condition for previously completed periods
that has not been disclosed previously. The portions of the Chairman's Letter
containing this information are set forth below.
* * *
Vornado's capital structure - the right hand side of the balance
sheet - is shown below. The summary balance sheet shown in this table is as
at April 23, 2003. It differs from our year-end financial statements by
including the Company's pro-rata share of joint venture debt gross and by
stating equity at the NYSE closing price of VNO shares on that date.
Weighted
Average
($ in millions except share data) Amount Rate
--------------------------------- ------ ----
Floating Rate Debt 1,449 2.86%
Fixed Rate Debt 3,642 7.56%
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Total Debt (including 1,032 of joint venture debt) 5,091 6.22%
Perpetual Preferred 1,067 8.33%
Market Value of Shares/Units - 139.6 million at $39.52 5,517 N/A
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Enterprise Value 11,675
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Debt to Enterprise 43.6%
Debt plus Perpetual Preferred to Enterprise Value 52.7%
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* * *
In June 2002, Vornado was a first-time issuer of unsecured debt, placing
$500 million of five-year 5.66% unsecured notes. These notes were issued at 168
basis points over the five-year treasury, which at the time was 3.98%. Thanks to
Wendy for this important deal - and for the as large and as important Hypo
deal,(1) as well.
Mike and I thought we timed this right, but with the 5-Year Treasury today
at 2.94% we get a hindsight flunking grade here. But no matter - at issue date
we simultaneously swapped this note to floating at 77 basis points over
three-month LIBOR in arrears. We are now paying a very satisfactory 2.18%
floating rate for this capital. Use of proceeds was to pay off other floating
rate debt, leaving our balance sheet both floating rate and leverage neutral. At
March 31, 2003, this swap (really the only sizeable derivative on our balance
sheet) is in the money by $35.2 million.
(1) The $490 million construction financing for the Alexander's 59th Street
tower.
* * *
Our mission during these times is the same as always - and that is to lease,
lease lease. Here's the math:
Office Retail Merchandise Mart
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New York CESCR Office Showroom
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Year Ended December 31, 2002:
Square feet leased (in thousands) 579 2,342 1,960 164 911
Initial rent per square foot $44.34 $31.29 $12.17 $26.97 $18.99
Percentage increase (1) 30.0% 5.5% 32.4% 1.2% 2.0%
Occupancy rate 95.9% 93.6% 88.3% 91.7% 95.2%
Quarter Ended March 31, 2003:
Square feet leased (in thousands) 235 563 110 110 436
Initial rent per square foot $43.86 $31.27 $27.03 $23.15 $22.62
Percentage increase (1) 30.5% 5.6% 17.6% 5.8% 21.4%
Occupancy rate 95.9% 93.2% 87.5% 90.4% 95.3%
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(1) Percentage increase over expiring escalated rent.
In this market, David Greenbaum has maintained 96% occupancy in New York -
think about that. In first quarter 2003, his roll over rents increased 30.5%
- think about that.
* * *
_________
The following table reconciles, as at April 23, 2003, debt disclosed in
accordance with GAAP with debt disclosed in the Chairman's Letter which includes
debt of partially owned entities:
Variable Rate Fixed Rate Total
($ in millions) Debt Debt Debt
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Debt (GAAP) ................................ $1,310 $2,749 $4,059
Partially-owned debt ....................... 139 893 1,032
Debt including partially-owned debt ........ 1,449 3,642 5,091
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Management believes that debt calculated to include debt of
partially owned entities is helpful to investors' understanding of the Company's
total leverage.
Certain statements contained in this Current Report on Form 8-K
constitute forward-looking statements as such term is defined in Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking statements are not guarantees
of performance. They involve risks, uncertainties and assumptions. Our future
results, financial condition and business may differ materially from those
expressed in these forward-looking statements. You can find many of these
statements by looking for words such as "believes," "expects," "anticipates,"
"intends," "plans" or similar expressions. These forward-looking statements are
subject to numerous assumptions, risks and uncertainties. Many of the factors
that will determine these items are beyond our ability to control or predict.
Factors that may cause actual results to differ materially from those
contemplated by the forward-looking statements include, but are not limited to,
those set forth in our Annual Report on Form 10-K for the year ended December
31, 2002 under "Forward Looking Statements" and "Item 1. Business - Certain
Factors That May Adversely Affect the Company's Business and Operations." For
these statements, we claim protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VORNADO REALTY TRUST
(Registrant)
By: /s/ Joseph Macnow
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Name: Joseph Macnow
Title: Executive Vice President -
Finance and Administration,
Chief Financial Officer
Date: May 6, 2003
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EXHIBIT INDEX
99.1 Chairman's Letter to the Shareholders from Vornado Realty
Trust's 2002 Annual Report to Shareholders
99.2 Excerpts from Vornado Realty Trust's 2002 Annual Report to
Shareholders
99.3 Excerpt from Exhibit 99.1 to Vornado Realty Trust's Current
Report on Form 8-K, dated April 23, 2003, filed on April 24,
2003
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