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Vornado Announces Second Quarter 2022 Financial Results

Vornado Realty Trust
Vornado Realty Trust

NEW YORK, Aug. 01, 2022 (GLOBE NEWSWIRE) -- Vornado Realty Trust (NYSE: VNO) reported today:

Quarter Ended June 30, 2022 Financial Results

NET INCOME attributable to common shareholders for the quarter ended June 30, 2022 was $50,418,000, or $0.26 per diluted share, compared to $48,045,000, or $0.25 per diluted share, for the prior year's quarter. Adjusting for the items that impact period-to-period comparability listed in the table on the following page, net income attributable to common shareholders, as adjusted (non-GAAP) for the quarter ended June 30, 2022 was $37,403,000, or $0.19 per diluted share, and $26,804,000, or $0.14 per diluted share for the quarter ended June 30, 2021.

FUNDS FROM OPERATIONS ("FFO") attributable to common shareholders plus assumed conversions (non-GAAP) for the quarter ended June 30, 2022 was $154,965,000, or $0.80 per diluted share, compared to $153,364,000, or $0.80 per diluted share, for the prior year's quarter. Adjusting for the items that impact period-to-period comparability listed in the table on the following page, FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the quarter ended June 30, 2022 was $160,059,000, or $0.83 per diluted share, and $133,161,000, or $0.69 per diluted share for the quarter ended June 30, 2021.

Six Months Ended June 30, 2022 Financial Results

NET INCOME attributable to common shareholders for the six months ended June 30, 2022 was $76,896,000, or $0.40 per diluted share, compared to $52,128,000, or $0.27 per diluted share, for the six months ended June 30, 2021. Adjusting for the items that impact period-to-period comparability listed in the table on the following page, net income attributable to common shareholders, as adjusted (non-GAAP) for the six months ended June 30, 2022 was $69,209,000, or $0.36 per diluted share, and $39,250,000, or $0.20 per diluted share, for the six months ended June 30, 2021.

FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the six months ended June 30, 2022 was $309,997,000, or $1.60 per diluted share, compared to $271,771,000, or $1.41 per diluted share, for the six months ended June 30, 2021. Adjusting for the items that impact period-to-period comparability listed in the table on the following page, FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the six months ended June 30, 2022 was $312,496,000, or $1.62 per diluted share, and $257,520,000, or $1.34 per diluted share, for the six months ended June 30, 2021.

The following table reconciles net income attributable to common shareholders to net income attributable to common shareholders, as adjusted (non-GAAP):

(Amounts in thousands, except per share amounts)

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

 

2022

 

2021

 

2022

 

2021

Net income attributable to common shareholders

$

50,418

 

 

$

48,045

 

 

$

76,896

 

 

$

52,128

 

Per diluted share

$

0.26

 

 

$

0.25

 

 

$

0.40

 

 

$

0.27

 

 

 

 

 

 

 

 

 

Certain (income) expense items that impact net income attributable to common shareholders:

 

 

 

 

 

 

 

Net gain on sale of the Center Building (33-00 Northern Boulevard, Long Island City, NY)

$

(15,213

)

 

$

 

 

$

(15,213

)

 

$

 

Refund of New York City transfer taxes related to the April 2019 transfer to Fifth Avenue and Times Square JV

 

(13,613

)

 

 

 

 

 

(13,613

)

 

 

 

Hotel Pennsylvania loss

 

8,931

 

 

 

4,992

 

 

 

17,860

 

 

 

13,982

 

Deferred tax liability on our investment in Farley Office and Retail (held through a taxable REIT subsidiary)

 

3,234

 

 

 

 

 

 

6,407

 

 

 

 

After-tax net gain on sale of 220 Central Park South ("220 CPS") condominium unit(s) and ancillary amenities

 

(673

)

 

 

(22,208

)

 

 

(6,085

)

 

 

(22,208

)

Other

 

3,760

 

 

 

(5,508

)

 

 

2,660

 

 

 

(5,574

)

 

 

(13,574

)

 

 

(22,724

)

 

 

(7,984

)

 

 

(13,800

)

Noncontrolling interests' share of above adjustments

 

559

 

 

 

1,483

 

 

 

297

 

 

 

922

 

Total of certain (income) expense items that impact net income attributable to common shareholders

$

(13,015

)

 

$

(21,241

)

 

$

(7,687

)

 

$

(12,878

)

Per diluted share (non-GAAP)

$

(0.07

)

 

$

(0.11

)

 

$

(0.04

)

 

$

(0.07

)

 

 

 

 

 

 

 

 

Net income attributable to common shareholders, as adjusted (non-GAAP)

$

37,403

 

 

$

26,804

 

 

$

69,209

 

 

$

39,250

 

Per diluted share (non-GAAP)

$

0.19

 

 

$

0.14

 

 

$

0.36

 

 

$

0.20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table reconciles FFO attributable to common shareholders plus assumed conversions (non-GAAP) to FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP):

(Amounts in thousands, except per share amounts)

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

 

2022

 

2021

 

2022

 

2021

FFO attributable to common shareholders plus assumed conversions (non-GAAP)(1)

$

154,965

 

 

$

153,364

 

 

$

309,997

 

 

$

271,771

 

Per diluted share (non-GAAP)

$

0.80

 

 

$

0.80

 

 

$

1.60

 

 

$

1.41

 

 

 

 

 

 

 

 

 

Certain expense (income) items that impact FFO attributable to common shareholders plus assumed conversions:

 

 

 

 

 

 

 

Deferred tax liability on our investment in Farley Office and Retail (held through a taxable REIT subsidiary)

$

3,234

 

 

$

 

 

$

6,407

 

 

$

 

After-tax net gain on sale of 220 CPS condominium unit(s) and ancillary amenities

 

(673

)

 

 

(22,208

)

 

 

(6,085

)

 

 

(22,208

)

Other

 

2,912

 

 

 

953

 

 

 

2,363

 

 

 

7,304

 

 

 

5,473

 

 

 

(21,255

)

 

 

2,685

 

 

 

(14,904

)

Noncontrolling interests' share of above adjustments

 

(379

)

 

 

1,052

 

 

 

(186

)

 

 

653

 

Total of certain expense (income) items that impact FFO attributable to common shareholders plus assumed conversions, net

$

5,094

 

 

$

(20,203

)

 

$

2,499

 

 

$

(14,251

)

Per diluted share (non-GAAP)

$

0.03

 

 

$

(0.11

)

 

$

0.02

 

 

$

(0.07

)

 

 

 

 

 

 

 

 

FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)

$

160,059

 

 

$

133,161

 

 

$

312,496

 

 

$

257,520

 

Per diluted share (non-GAAP)

$

0.83

 

 

$

0.69

 

 

$

1.62

 

 

$

1.34

 

____________________________________________________________

(1)   See page 10 for a reconciliation of net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the three and six months ended June 30, 2022 and 2021.

FFO, as Adjusted Bridge - Q2 2022 vs. Q2 2021

The following table bridges our FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the three months ended June 30, 2021 to FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the three months ended June 30, 2022:

(Amounts in millions, except per share amounts)

FFO, as Adjusted

 

Amount

 

Per Share

FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the three months ended June 30, 2021

$

133.2

 

 

$

0.69

 

 

 

 

Increase (decrease) in FFO, as adjusted due to:

 

 

 

Rent commencement and other tenant related items

 

26.0

 

 

 

Variable businesses (primarily signage and trade shows)

 

8.5

 

 

 

Acquisition of our partner's 45% ownership interest in One Park Avenue on August 5, 2021

 

3.6

 

 

 

Straight-line impact of PENN 1 2023 estimated ground rent reset

 

(5.8

)

 

 

Other, net

 

(3.3

)

 

 

 

 

29.0

 

 

 

Noncontrolling interests' share of above items

 

(2.1

)

 

 

Net increase

 

26.9

 

 

 

0.14

 

 

 

 

FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the three months ended June 30, 2022

$

160.1

 

 

$

0.83

See page 10 for a reconciliation of net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the three and six months ended June 30, 2022 and 2021. Reconciliations of FFO attributable to common shareholders plus assumed conversions to FFO attributable to common shareholders plus assumed conversions, as adjusted are provided above.

Dispositions:

220 CPS

During the six months ended June 30, 2022, we closed on the sale of one condominium unit and ancillary amenities at 220 CPS for net proceeds of $16,124,000 resulting in a financial statement net gain of $7,030,000 which is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income. In connection with these sales, $945,000 of income tax expense was recognized on our consolidated statements of income. From inception to June 30, 2022, we have closed on the sale of 107 units and ancillary amenities for net proceeds of $3,023,020,000 resulting in financial statement net gains of $1,124,285,000.

SoHo Properties

On January 13, 2022, we sold two Manhattan retail properties located at 478-482 Broadway and 155 Spring Street for $84,500,000 and realized net proceeds of $81,399,000. In connection with the sale, we recognized a net gain of $551,000 which is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income.

Center Building (33-00 Northern Boulevard)

On June 17, 2022, we sold the Center Building, an eight-story 498,000 square foot office building located at 33‑00 Northern Boulevard in Long Island City, New York, for $172,750,000. We realized net proceeds of $58,946,000 after repayment of the existing $100,000,000 mortgage loan and closing costs. In connection with the sale, we recognized a net gain of $15,213,000 which is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income. The gain for tax purposes was approximately $74,000,000.

Financings:

100 West 33rd Street

On June 15, 2022, we completed a $480,000,000 refinancing of 100 West 33rd Street, a 1.1 million square foot building comprised of 859,000 square feet of office space and 255,000 square feet of retail space. The interest-only loan bears a rate of SOFR plus 1.65% (3.09% as of June 30, 2022) through March 2024, increasing to SOFR plus 1.85% thereafter. The loan matures in June 2027, with two one-year extension options subject to debt service coverage ratio and loan-to-value tests. The loan replaces the previous $580,000,000 loan that bore interest at LIBOR plus 1.55% and was scheduled to mature in April 2024.

770 Broadway

On June 28, 2022, we completed a $700,000,000 refinancing of 770 Broadway, a 1.2 million square foot Class A Manhattan office building. The interest-only loan bears a rate of SOFR plus 2.25% (3.75% as of June 30, 2022) and matures in July 2024, with three one-year extension options (July 2027 as fully extended). Upon the achievement of certain conditions within the first 18 months of closing, the interest rate will decrease to SOFR plus 1.75% and we will have the option to draw an additional $300,000,000 of proceeds. Concurrently with the refinancing, the interest rate on $350,000,000 of the loan was swapped to a fixed rate of 5.11% and on July 22, 2022, the interest rate on the remaining $350,000,000 was swapped to a fixed rate of 4.85%. The swaps result in a blended fixed interest rate of 4.98% through July 2027. The loan replaces the previous $700,000,000 loan that bore interest at SOFR plus 1.86% and was scheduled to mature in July 2022.

Unsecured Revolving Credit Facility

On June 30, 2022, we amended and extended one of our two revolving credit facilities. The $1.25 billion amended facility bears interest at a rate of SOFR plus 1.15% (2.68% as of June 30, 2022). The term of the facility was extended from March 2024 to December 2027, as fully extended. The facility fee is 25 basis points. Our other $1.25 billion revolving credit facility matures in April 2026, as fully extended, and bears a rate of SOFR plus 1.19% with a facility fee of 25 basis points.

Unsecured Term Loan

On June 30, 2022, we extended our $800,000,000 unsecured term loan from February 2024 to December 2027. The extended loan bears interest at a rate of SOFR plus 1.30% (2.83% as of June 30, 2022). Under an existing swap agreement, $750,000,000 of the $800,000,000 loan has been swapped to a fixed rate of 4.05% through October 2023.

Leasing Activity For the Three Months Ended June 30, 2022:

  • 301,000 square feet of New York Office space (231,000 square feet at share) at an initial rent of $85.27 per square foot and a weighted average lease term of 11.5 years. The changes in the GAAP and cash mark-to-market rent on the 109,000 square feet of second generation space were positive 5.1% and positive 1.7%, respectively. Tenant improvements and leasing commissions were $10.40 per square foot per annum, or 12.2% of initial rent.

  • 8,000 square feet of New York Retail space (all at share) at an initial rent of $626.76 per square foot and a weighted average lease term of 12.7 years. The changes in the GAAP and cash mark-to-market rent on the 6,000 square feet of second generation space were positive 55.0% and positive 51.3%, respectively. Tenant improvements and leasing commissions were $66.28 per square foot per annum, or 10.6% of initial rent.

  • 59,000 square feet at theMART (all at share) at an initial rent of $56.33 per square foot and a weighted average lease term of 4.7 years. The changes in the GAAP and cash mark-to-market rent on the 50,000 square feet of second generation space were positive 1.0% and negative 2.6%, respectively. Tenant improvements and leasing commissions were $4.23 per square foot per annum, or 7.5% of initial rent.

Leasing Activity For the Six Months Ended June 30, 2022:

  • 573,000 square feet of New York Office space (467,000 square feet at share) at an initial rent of $83.15 per square foot and a weighted average lease term of 10.2 years. The changes in the GAAP and cash mark-to-market rent on the 261,000 square feet of second generation space were positive 5.9% and positive 4.7%, respectively. Tenant improvements and leasing commissions were $11.41 per square foot per annum, or 13.7% of initial rent.

  • 28,000 square feet of New York Retail space (all at share) at an initial rent of $303.57 per square foot and a weighted average lease term of 13.7 years. The changes in the GAAP and cash mark-to-market rent on the 6,000 square feet of second generation space were positive 55.0% and positive 51.3%, respectively. Tenant improvements and leasing commissions were $28.05 per square foot per annum, or 9.2% of initial rent.

  • 208,000 square feet at theMART (all at share) at an initial rent of $51.64 per square foot and a weighted average lease term of 7.2 years. The changes in the GAAP and cash mark-to-market rent on the 183,000 square feet of second generation space were negative 4.8% and negative 3.9%, respectively. Tenant improvements and leasing commissions were $10.58 per square foot per annum, or 20.5% of initial rent.

  • 56,000 square feet at 555 California (39,000 square feet at share) at an initial rent of $91.49 per square foot and a weighted average lease term of 6.8 years. The changes in the GAAP and cash mark-to-market rent on the 34,000 square feet of second generation space were positive 56.4% and positive 19.8%, respectively. Tenant improvements and leasing commissions were $12.50 per square foot per annum, or 13.7% of initial rent.

Same Store Net Operating Income ("NOI") At Share:

Below is the percentage increase in same store NOI at share and same store NOI at share - cash basis of our New York segment, theMART and 555 California Street.

 

Total

 

New York

 

theMART

 

555 California Street

Same store NOI at share % increase(1):

 

 

 

 

 

 

 

Three months ended June 30, 2022 compared to June 30, 2021

7.1

%

 

7.1

%

 

8.3

%

 

6.1

%

Six months ended June 30, 2022 compared to June 30, 2021

5.3

%

 

5.0

%

 

9.2

%

 

4.6

%

Three months ended June 30, 2022 compared to March 31, 2022

2.1

%

 

2.2

%

 

0.2

%

 

3.0

%

 

 

 

 

 

 

 

 

Same store NOI at share - cash basis % increase(1):

 

 

 

 

 

 

 

Three months ended June 30, 2022 compared to June 30, 2021

8.4

%

 

7.7

%

 

10.5

%

 

14.9

%

Six months ended June 30, 2022 compared to June 30, 2021

7.3

%

 

6.6

%

 

12.4

%

 

10.0

%

Three months ended June 30, 2022 compared to March 31, 2022

1.7

%

 

1.3

%

 

5.4

%

 

3.0

%

____________________
(1)   See pages 12 through 17 for same store NOI at share and same store NOI at share - cash basis reconciliations.

NOI At Share:

The elements of our New York and Other NOI at share for the three and six months ended June 30, 2022 and 2021 and the three months ended March 31, 2022 are summarized below.

(Amounts in thousands)

For the Three Months Ended

 

For the Six Months Ended
June 30,

 

June 30,

 

March 31, 2022

 

 

2022

 

2021

 

 

2022

 

2021

NOI at share:

 

 

 

 

 

 

 

 

 

New York:

 

 

 

 

 

 

 

 

 

Office(1)

$

182,042

 

$

164,050

 

 

$

177,809

 

$

359,851

 

$

330,685

 

Retail

 

51,438

 

 

39,213

 

 

 

52,105

 

 

103,543

 

 

75,915

 

Residential

 

5,250

 

 

4,239

 

 

 

4,774

 

 

10,024

 

 

8,695

 

Alexander's

 

9,362

 

 

9,069

 

 

 

8,979

 

 

18,341

 

 

19,558

 

Hotel Pennsylvania(2)

 

 

 

(5,533

)

 

 

 

 

 

 

(12,677

)

Total New York

 

248,092

 

 

211,038

 

 

 

243,667

 

 

491,759

 

 

422,176

 

Other:

 

 

 

 

 

 

 

 

 

theMART

 

19,947

 

 

18,412

 

 

 

19,914

 

 

39,861

 

 

36,519

 

555 California Street

 

16,724

 

 

16,038

 

 

 

16,235

 

 

32,959

 

 

32,102

 

Other investments

 

4,183

 

 

4,079

 

 

 

4,442

 

 

8,625

 

 

8,878

 

Total Other

 

40,854

 

 

38,529

 

 

 

40,591

 

 

81,445

 

 

77,499

 

 

 

 

 

 

 

 

 

 

 

NOI at share

$

288,946

 

$

249,567

 

 

$

284,258

 

$

573,204

 

$

499,675

 

_______________________
See notes below.

NOI At Share - Cash Basis:

The elements of our New York and Other NOI at share - cash basis for the three and six months ended June 30, 2022 and 2021 and the three months ended March 31, 2022 are summarized below.

(Amounts in thousands)

For the Three Months Ended

 

For the Six Months Ended
June 30,

 

June 30,

 

March 31, 2022

 

 

2022

 

2021

 

 

2022

 

2021

NOI at share - cash basis:

 

 

 

 

 

 

 

 

 

New York:

 

 

 

 

 

 

 

 

 

Office(1)

$

180,326

 

$

167,322

 

 

$

177,827

 

$

358,153

 

$

334,418

 

Retail

 

47,189

 

 

36,214

 

 

 

47,393

 

 

94,582

 

 

71,090

 

Residential

 

4,309

 

 

3,751

 

 

 

4,689

 

 

8,998

 

 

7,762

 

Alexander's

 

10,079

 

 

9,848

 

 

 

9,783

 

 

19,862

 

 

21,197

 

Hotel Pennsylvania(2)

 

 

 

(5,556

)

 

 

 

 

 

 

(12,723

)

Total New York

 

241,903

 

 

211,579

 

 

 

239,692

 

 

481,595

 

 

421,744

 

Other:

 

 

 

 

 

 

 

 

 

theMART

 

21,541

 

 

19,501

 

 

 

20,436

 

 

41,977

 

 

37,341

 

555 California Street

 

16,855

 

 

14,952

 

 

 

16,360

 

 

33,215

 

 

30,807

 

Other investments

 

4,372

 

 

4,381

 

 

 

4,640

 

 

9,012

 

 

9,431

 

Total Other

 

42,768

 

 

38,834

 

 

 

41,436

 

 

84,204

 

 

77,579

 

 

 

 

 

 

 

 

 

 

 

NOI at share - cash basis

$

284,671

 

$

250,413

 

 

$

281,128

 

$

565,799

 

$

499,323

 

______________________
(1)   Includes Building Maintenance Services NOI of $6,468, $6,197, $5,782, $12,250 and $12,547, respectively, for the three months ended June 30, 2022 and 2021 and March 31, 2022 and the six months ended June 30, 2022 and 2021.
(2)   On April 5, 2021, we permanently closed the Hotel Pennsylvania. Beginning in the third quarter of 2021, we commenced capitalization of carrying costs in connection with our development of the future PENN 15 (formerly Hotel Pennsylvania) site.

PENN District - Active Development/Redevelopment Summary as of June 30, 2022

(Amounts in thousands of dollars, except square feet)

 

 

 

 

 

 

 

Property
Rentable
Sq. Ft.

 

 

 

Cash Amount
Expended

 

Remaining Expenditures

 

 

 

Projected
Incremental Cash Yield

Active PENN District Projects

 

Segment

 

 

Budget(1)

 

 

 

Stabilization
Year

 

Farley (95% interest)

 

New York

 

845,000

 

1,120,000

(2)

1,059,403

(2)

60,597

 

2022

 

6.4

%

 

PENN 2 - as expanded

 

New York

 

1,795,000

 

750,000

 

268,409

 

481,591

 

2025

 

9.0

%

 

PENN 1 (including LIRR Concourse Retail)(3)

 

New York

 

2,527,000

 

450,000

 

337,360

 

112,640

 

N/A

 

12.2

%

(3)(4)

Districtwide Improvements

 

New York

 

N/A 

 

100,000

 

37,883

 

62,117

 

N/A

 

N/A

 

 

Total Active PENN District Projects

 

 

 

 

 

2,420,000

 

1,703,055

 

716,945

 

 

 

8.0

%

 

________________________________
(1)   Excluding debt and equity carry.
(2)   Net of 154,000 of historic tax credit investor contributions, of which 88,000 has been funded to date (at our 95% share).
(3)   Property is ground leased through 2098, as fully extended. Fair market value resets occur in 2023, 2048 and 2073. The 12.2% projected return is before the ground rent reset in 2023, which may be material.
(4)   Projected to be achieved as pre-redevelopment leases roll; approximate average remaining lease term 3.6 years.

There can be no assurance that the above projects will be completed, completed on schedule or within budget. In addition, there can be no assurance that the Company will be successful in leasing the properties on the expected schedule or at the assumed rental rates.

Conference Call and Audio Webcast

As previously announced, the Company will host a quarterly earnings conference call and an audio webcast on Tuesday, August 2, 2022 at 10:00 a.m. Eastern Time (ET). The conference call can be accessed by dialing 866-374-5140 (domestic) or 404-400-0571 (international) and entering the passcode 54130070. A live webcast of the conference call will be available on Vornado’s website at www.vno.com in the Investor Relations section and an online playback of the webcast will be available on the website following the conference call.

Contact

Thomas J. Sanelli
(212) 894-7000

Supplemental Data

Further details regarding results of operations, properties and tenants can be accessed at the Company’s website www.vno.com. Vornado Realty Trust is a fully - integrated equity real estate investment trust.

Certain statements contained herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. 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 "approximates," "believes," "expects," "anticipates," "estimates," "intends," "plans," "would," "may" or other similar expressions in this press release. We also note the following forward-looking statements: in the case of our development and redevelopment projects, the estimated completion date, estimated project cost, projected incremental cash yield, stabilization date and cost to complete; and estimates of future capital expenditures, dividends to common and preferred shareholders and operating partnership distributions. For a discussion of factors that could materially affect the outcome of our forward-looking statements and our future results and financial condition, see “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2021. Currently, one of the most significant factors is the ongoing adverse effect of the COVID-19 pandemic on our business, financial condition, results of operations, cash flows, operating performance and the effect it has had and may continue to have on our tenants, the global, national, regional and local economies and financial markets and the real estate market in general. The extent of the impact of the COVID-19 pandemic will continue to depend on future developments, including vaccination rates among the population, the efficacy and durability of vaccines against emerging variants, and governmental and tenant responses thereto, which continue to be uncertain but the impact could be material. Moreover, you are cautioned that the COVID-19 pandemic will heighten many of the risks identified in "Item 1A. Risk Factors" in Part I of our Annual Report on Form 10-K for the year ended December 31, 2021.


VORNADO REALTY TRUST

CONSOLIDATED BALANCE SHEETS

 

(Amounts in thousands)

As of

 

Increase
(Decrease)

 

 

June 30, 2022

 

December 31, 2021

 

 

ASSETS

 

 

 

 

 

 

Real estate, at cost:

 

 

 

 

 

 

Land

$

2,493,688

 

 

$

2,540,193

 

 

$

(46,505

)

 

Buildings and improvements

 

10,054,872

 

 

 

9,839,166

 

 

 

215,706

 

 

Development costs and construction in progress

 

711,250

 

 

 

718,694

 

 

 

(7,444

)

 

Leasehold improvements and equipment

 

122,151

 

 

 

119,792

 

 

 

2,359

 

 

Total

 

13,381,961

 

 

 

13,217,845

 

 

 

164,116

 

 

Less accumulated depreciation and amortization

 

(3,532,984

)

 

 

(3,376,347

)

 

 

(156,637

)

 

Real estate, net

 

9,848,977

 

 

 

9,841,498

 

 

 

7,479

 

 

Right-of-use assets

 

685,962

 

 

 

337,197

 

 

 

348,765

 

(1)

Cash, cash equivalents, restricted cash and investments in U.S. Treasury bills:

 

 

 

 

 

 

Cash and cash equivalents

 

988,398

 

 

 

1,760,225

 

 

 

(771,827

)

 

Restricted cash

 

127,920

 

 

 

170,126

 

 

 

(42,206

)

 

Investments in U.S. Treasury bills

 

494,045

 

 

 

 

 

 

494,045

 

 

Total

 

1,610,363

 

 

 

1,930,351

 

 

 

(319,988

)

 

Tenant and other receivables

 

76,769

 

 

 

79,661

 

 

 

(2,892

)

 

Investments in partially owned entities

 

3,270,229

 

 

 

3,297,389

 

 

 

(27,160

)

 

Real estate fund investments

 

930

 

 

 

7,730

 

 

 

(6,800

)

 

220 CPS condominium units ready for sale

 

51,072

 

 

 

57,142

 

 

 

(6,070

)

 

Receivable arising from the straight-lining of rents

 

687,782

 

 

 

656,318

 

 

 

31,464

 

 

Deferred leasing costs, net

 

378,484

 

 

 

391,693

 

 

 

(13,209

)

 

Identified intangible assets, net

 

144,597

 

 

 

154,895

 

 

 

(10,298

)

 

Other assets

 

397,256

 

 

 

512,714

 

 

 

(115,458

)

 

Total assets

$

17,152,421

 

 

$

17,266,588

 

 

$

(114,167

)

 

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Mortgages payable, net

$

5,834,275

 

 

$

6,053,343

 

 

$

(219,068

)

 

Senior unsecured notes, net

 

1,190,812

 

 

 

1,189,792

 

 

 

1,020

 

 

Unsecured term loan, net

 

792,644

 

 

 

797,812

 

 

 

(5,168

)

 

Unsecured revolving credit facilities

 

575,000

 

 

 

575,000

 

 

 

 

 

Lease liabilities

 

727,641

 

 

 

370,206

 

 

 

357,435

 

(1)

Accounts payable and accrued expenses

 

463,333

 

 

 

613,497

 

 

 

(150,164

)

 

Deferred revenue

 

43,904

 

 

 

48,118

 

 

 

(4,214

)

 

Deferred compensation plan

 

96,202

 

 

 

110,174

 

 

 

(13,972

)

 

Other liabilities

 

271,788

 

 

 

304,725

 

 

 

(32,937

)

 

Total liabilities

 

9,995,599

 

 

 

10,062,667

 

 

 

(67,068

)

 

Redeemable noncontrolling interests

 

506,009

 

 

 

688,683

 

 

 

(182,674

)

 

Shareholders' equity

 

6,396,819

 

 

 

6,236,346

 

 

 

160,473

 

 

Noncontrolling interests in consolidated subsidiaries

 

253,994

 

 

 

278,892

 

 

 

(24,898

)

 

Total liabilities, redeemable noncontrolling interests and equity

$

17,152,421

 

 

$

17,266,588

 

 

$

(114,167

)

 

____________________________________________________________
(1)   In January 2022, we exercised a 25-year renewal option on our PENN 1 ground lease extending the term through June 2073. As a result of the exercise, we remeasured the related ground lease liability to include the 25-year extension option and recorded an estimated incremental right-of-use asset and lease liability of approximately $350,000.


VORNADO REALTY TRUST

OPERATING RESULTS

 

(Amounts in thousands, except per share amounts)

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

 

2022

 

2021

 

2022

 

2021

Revenues

$

453,494

 

 

$

378,941

 

 

$

895,624

 

 

$

758,918

 

 

 

 

 

 

 

 

 

Net income

$

68,903

 

 

$

76,832

 

 

$

122,278

 

 

$

103,825

 

Less net loss (income) attributable to noncontrolling interests in:

 

 

 

 

 

 

 

Consolidated subsidiaries

 

826

 

 

 

(8,784

)

 

 

(8,548

)

 

 

(14,898

)

Operating Partnership

 

(3,782

)

 

 

(3,536

)

 

 

(5,776

)

 

 

(3,865

)

Net income attributable to Vornado

 

65,947

 

 

 

64,512

 

 

 

107,954

 

 

 

85,062

 

Preferred share dividends

 

(15,529

)

 

 

(16,467

)

 

 

(31,058

)

 

 

(32,934

)

Net income attributable to common shareholders

$

50,418

 

 

$

48,045

 

 

$

76,896

 

 

$

52,128

 

 

 

 

 

 

 

 

 

Income per common share - basic:

 

 

 

 

 

 

 

Net income per common share

$

0.26

 

 

$

0.25

 

 

$

0.40

 

 

$

0.27

 

Weighted average shares outstanding

 

191,750

 

 

 

191,527

 

 

 

191,737

 

 

 

191,473

 

 

 

 

 

 

 

 

 

Income per common share - diluted:

 

 

 

 

 

 

 

Net income per common share

$

0.26

 

 

$

0.25

 

 

$

0.40

 

 

$

0.27

 

Weighted average shares outstanding

 

192,039

 

 

 

192,380

 

 

 

192,047

 

 

 

192,207

 

 

 

 

 

 

 

 

 

FFO attributable to common shareholders plus assumed conversions (non-GAAP)

$

154,965

 

 

$

153,364

 

 

$

309,997

 

 

$

271,771

 

Per diluted share (non-GAAP)

$

0.80

 

 

$

0.80

 

 

$

1.60

 

 

$

1.41

 

 

 

 

 

 

 

 

 

FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)

$

160,059

 

 

$

133,161

 

 

$

312,496

 

 

$

257,520

 

Per diluted share (non-GAAP)

$

0.83

 

 

$

0.69

 

 

$

1.62

 

 

$

1.34

 

 

 

 

 

 

 

 

 

Weighted average shares used in determining FFO attributable to common shareholders plus assumed conversions per diluted share

 

193,423

 

 

 

192,406

 

 

 

193,297

 

 

 

192,233

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gains from sales of certain real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specified items, including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are non-GAAP financial measures used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because they exclude the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. The Company also uses FFO attributable to common shareholders plus assumed conversions, as adjusted for certain items that impact the comparability of period to period FFO, as one of several criteria to determine performance-based compensation for members of its senior management. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flow as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies. In addition to FFO attributable to common shareholders plus assumed conversions, we also disclose FFO attributable to common shareholders plus assumed conversions, as adjusted. Although this non-GAAP measure clearly differs from NAREIT’s definition of FFO, we believe it provides a meaningful presentation of operating performance. Reconciliations of net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions are provided on the following page. Reconciliations of FFO attributable to common shareholders plus assumed conversions to FFO attributable to common shareholders plus assumed conversions, as adjusted are provided on page 2 of this press release.


VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS

The following table reconciles net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions:

(Amounts in thousands, except per share amounts)

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

 

2022

 

2021

 

2022

 

2021

Net income attributable to common shareholders

$

50,418

 

 

$

48,045

 

 

$

76,896

 

 

$

52,128

 

Per diluted share

$

0.26

 

 

$

0.25

 

 

$

0.40

 

 

$

0.27

 

 

 

 

 

 

 

 

 

FFO adjustments:

 

 

 

 

 

 

 

Depreciation and amortization of real property

$

106,620

 

 

$

82,396

 

 

$

212,582

 

 

$

170,115

 

Net gain on sale of real estate

 

(27,803

)

 

 

 

 

 

(28,354

)

 

 

 

Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO:

 

 

 

 

 

 

 

Depreciation and amortization of real property

 

33,681

 

 

 

34,846

 

 

 

65,820

 

 

 

69,704

 

Net gain on sale of real estate

 

(175

)

 

 

(3,052

)

 

 

(175

)

 

 

(3,052

)

Increase in fair value of marketable securities

 

 

 

 

(1,216

)

 

 

 

 

 

(1,405

)

 

 

112,323

 

 

 

112,974

 

 

 

249,873

 

 

 

235,362

 

Noncontrolling interests' share of above adjustments

 

(7,781

)

 

 

(7,666

)

 

 

(17,287

)

 

 

(15,741

)

FFO adjustments, net

$

104,542