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Vornado Announces Third Quarter 2019 Financial Results

NEW YORK, Oct. 28, 2019 (GLOBE NEWSWIRE) -- VORNADO REALTY TRUST (VNO) reported today:

Quarter Ended September 30, 2019 Financial Results

NET INCOME attributable to common shareholders for the quarter ended September 30, 2019 was $322,906,000, or $1.69 per diluted share, compared to $190,645,000, or $1.00 per diluted share, for the prior year's quarter. Adjusting net income attributable to common shareholders for the items that impact the comparability of period-to-period net income listed in the table on the following page, net income attributable to common shareholders, as adjusted (non-GAAP) for the quarters ended September 30, 2019 and 2018 was $52,624,000 and $64,806,000, or $0.28 and $0.34 per diluted share, respectively.

FUNDS FROM OPERATIONS ("FFO") attributable to common shareholders plus assumed conversions (non-GAAP) for the quarter ended September 30, 2019 was $279,509,000, or $1.46 per diluted share, compared to $189,987,000, or $0.99 per diluted share, for the prior year's quarter. Adjusting FFO attributable to common shareholders plus assumed conversions for the items that impact the comparability of period-to-period FFO listed in the table on page 3, FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the quarters ended September 30, 2019 and 2018 was $170,966,000 and $184,280,000, or $0.89 and $0.96 per diluted share, respectively.

Nine Months Ended September 30, 2019 Financial Results

NET INCOME attributable to common shareholders for the nine months ended September 30, 2019 was $2.905 billion, or $15.20 per diluted share, compared to $284,338,000, or $1.49 per diluted share, for the nine months ended September 30, 2018. Adjusting net income attributable to common shareholders for the items that impact the comparability of period-to-period net income listed in the table on the following page, net income attributable to common shareholders, as adjusted (non-GAAP) for the nine months ended September 30, 2019 and 2018 was $120,372,000 and $189,307,000, or $0.63 and $0.99 per diluted share, respectively.

FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the nine months ended September 30, 2019 was $691,522,000, or $3.62 per diluted share, compared to $519,640,000, or $2.72 per diluted share, for the nine months ended September 30, 2018. Adjusting FFO attributable to common shareholders plus assumed conversions for the items that impact the comparability of period-to-period FFO listed in the table on page 3, FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the nine months ended September 30, 2019 and 2018 was $494,936,000 and $543,531,000, or $2.59 and $2.84 per diluted share, respectively.

The decreases in "net income attributable to common shareholders, as adjusted" and "FFO attributable to common shareholders plus assumed conversions, as adjusted" were partially due to (i) $8,986,000 (at share), or $0.04 per diluted share, from the non-cash write-off of straight-line rent receivables, (ii) $8,046,000, or $0.04 per diluted share, of non-cash expense for the time-based equity compensation granted in connection with the new leadership group announced in April 2019 and (iii) $11,055,000, or $0.05 per share, of non-cash expense for the accelerated vesting of previously issued OP Units and Vornado restricted stock due to the removal of the time-based vesting requirement for participants who have reached 65 years of age.

The following table reconciles our 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
September 30,
  For the Nine Months Ended
September 30,
  2019   2018   2019   2018
Net income attributable to common shareholders $ 322,906     $ 190,645     $ 2,904,589     $ 284,338  
Per diluted share $ 1.69     $ 1.00     $ 15.20     $ 1.49  
               
Certain (income) expense items that impact net income attributable to common shareholders:              
Net gains on sale of real estate (primarily our 25% interest in 330 Madison Avenue in 2019) $ (178,769 )   $ (3,350 )   $ (178,769 )   $ (27,786 )
After-tax net gain on sale of 220 Central Park South ("220 CPS") condominium units (109,035 )       (328,910 )    
Mark-to-market decrease in Pennsylvania Real Estate Investment Trust ("PREIT") common shares (accounted for as a marketable security from March 12, 2019) 4,875         19,211      
Our share of (income) loss from real estate fund investments (1,455 )   748     22,207     (617 )
Net gain on sale of our ownership interests in 666 Fifth Avenue Office Condominium     (134,032 )       (134,032 )
Mark-to-market decrease (increase) in Lexington Realty Trust ("Lexington") common shares (sold on March 1, 2019)     7,942     (16,068 )   24,934  
Previously capitalized internal leasing costs(1)     (1,444 )       (3,883 )
Net gain on transfer to Fifth Avenue and Times Square retail JV, net of $11,945 attributable to noncontrolling interests         (2,559,154 )    
Non-cash impairment losses and related write-offs, substantially 608 Fifth Avenue         108,592      
Net gain from sale of Urban Edge Properties ("UE") common shares (sold on March 4, 2019)         (62,395 )    
Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 2022         22,540      
Our share of disputed additional New York City transfer taxes             23,503  
Preferred share issuance costs             14,486  
Other (4,811 )   (4,035 )   (857 )   2,061  
  (289,195 )   (134,171 )   (2,973,603 )   (101,334 )
Noncontrolling interests' share of above adjustments 18,913     8,332     189,386     6,303  
Total of certain (income) expense items that impact net income attributable to common shareholders $ (270,282 )   $ (125,839 )   $ (2,784,217 )   $ (95,031 )
               
Net income attributable to common shareholders, as adjusted (non-GAAP) $ 52,624     $ 64,806     $ 120,372     $ 189,307  
Per diluted share (non-GAAP) $ 0.28     $ 0.34     $ 0.63     $ 0.99  

____________________________________________________________

See notes on the following page.


The following table reconciles our 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
September 30,
  For the Nine Months Ended
September 30,
  2019   2018   2019   2018
FFO attributable to common shareholders plus assumed conversions (non-GAAP)(2) $ 279,509     $ 189,987     $ 691,522     $ 519,640  
Per diluted share (non-GAAP) $ 1.46     $ 0.99     $ 3.62     $ 2.72  
               
Certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions:              
After-tax net gain on sale of 220 CPS condominium units $ (109,035 )   $     $ (328,910 )   $  
Our share of (income) loss from real estate fund investments (1,455 )   748     22,207     (617 )
Previously capitalized internal leasing costs(1)     (1,444 )       (3,883 )
Non-cash impairment loss and related write-offs on 608 Fifth Avenue         77,156      
Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 2022         22,540      
Our share of disputed additional New York City transfer taxes             23,503  
Preferred share issuance costs             14,486  
Other (5,229 )   (5,389 )   (2,931 )   (7,854 )
  (115,719 )   (6,085 )   (209,938 )   25,635  
Noncontrolling interests' share of above adjustments 7,176     378     13,352     (1,744 )
Total of certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions, net $ (108,543 )   $ (5,707 )   $ (196,586 )   $ 23,891  
               
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) $ 170,966     $ 184,280     $ 494,936     $ 543,531  
Per diluted share (non-GAAP) $ 0.89     $ 0.96     $ 2.59     $ 2.84  

____________________________________________________________

  1. "Net income, as adjusted" and "FFO, as adjusted" for the three and nine months ended September 30, 2018 have been reduced by $1,444 and $3,883, or $0.01 and $0.02 per diluted share, respectively for previously capitalized internal leasing costs to present 2018 “as adjusted” financial results on a comparable basis with the current year as a result of the January 1, 2019 adoption of a new GAAP accounting standard under which internal leasing costs can no longer be capitalized.
  2. See page 10 for a reconciliation of our net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the three and nine months ended September 30, 2019 and 2018.

Dispositions:

220 CPS

During the three months ended September 30, 2019, we closed on the sale of 14 condominium units at 220 CPS for net proceeds aggregating $348,759,000 resulting in a financial statement net gain of $130,888,000 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, $21,853,000 of income tax expense was recognized on our consolidated statements of income.

330 Madison Avenue

On July 11, 2019, we sold our 25% interest in 330 Madison Avenue to our joint venture partner. We received net proceeds of approximately $100,000,000 after deducting our share of the existing $500,000,000 mortgage loan resulting in a financial statement net gain of $159,292,000. The net gain is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income for the three and nine months ended September 30, 2019. The gain for tax purposes was approximately $139,000,000.

3040 M Street

On September 18, 2019, we completed the $49,750,000 sale of 3040 M Street, a 44,000 square foot retail building in Washington, DC, which resulted in a net gain of $19,477,000 which is included in “net gains on disposition of wholly owned and partially owned assets” on our consolidated statements of income for the three and nine months ended September 30, 2019. The gain for tax purposes was approximately $19,000,000.

Financings:

On July 25, 2019, a joint venture, in which we have a 50% interest, completed a $60,000,000 refinancing of 825 Seventh Avenue, a 165,000 square foot office building on the corner of 53rd Street and Seventh Avenue, of which $28,882,000 was outstanding as of September 30, 2019. The interest-only loan carries a rate of LIBOR plus 1.65% (3.78% as of September 30, 2019) and matures in 2022 with a one-year extension option. The loan replaces the previous $20,500,000 loan that bore interest at LIBOR plus 1.40% and was scheduled to mature in September 2019.

On September 5, 2019, a consolidated joint venture, in which we have a 50% interest, completed a $75,000,000 refinancing of 606 Broadway, a 35,000 square foot office and retail building on the northeast corner of Broadway and Houston Street in Manhattan, of which $67,500,000 was outstanding as of September 30, 2019. The interest-only loan carries a rate of LIBOR plus 1.80% (3.85% as of September 30, 2019) and matures in 2024. In connection therewith, the joint venture purchased an interest rate cap that caps LIBOR at a rate of 4.00%. The loan replaces the previous $65,000,000 construction loan. The construction loan bore interest at LIBOR plus 3.00% and was scheduled to mature in May 2021.

On September 27, 2019, we repaid the $575,000,000 mortgage loan on PENN2 with proceeds from our unsecured revolving credit facilities. The mortgage loan was scheduled to mature in December 2021, as fully extended. PENN2 is a 1,795,000 square foot office building located on the west side of 7th Avenue between 31st and 33rd Street currently under redevelopment.

Leasing:

  • 197,000 square feet of New York Office space (171,000 square feet at share) at an initial rent of $80.44 per square foot and a weighted average lease term of 6.5 years. The GAAP and cash mark-to-market rent on the 108,000 square feet of second generation space were positive 28.5% and 22.7%, respectively. Tenant improvements and leasing commissions were $13.13 per square foot per annum, or 16.3% of initial rent.
  • 26,000 square feet of New York Retail space (24,000 square feet at share) at an initial rent of $145.54 per square foot and a weighted average lease term of 5.4 years. The GAAP and cash mark-to-market rent on the 17,000 square feet of second generation space were positive 15.6% and 6.2%, respectively. Tenant improvements and leasing commissions were $8.31 per square foot per annum, or 5.7% of initial rent.
  • 45,000 square feet at theMART at an initial rent of $48.54 per square foot and a weighted average lease term of 5.5 years. The GAAP and cash mark-to-market rent on the 43,000 square feet of second generation space were positive 14.9% and 6.7%, respectively. Tenant improvements and leasing commissions were $10.12 per square foot per annum, or 20.9% of initial rent.
  • 50,000 square feet at 555 California Street (35,000 square feet at share) at an initial rent of $96.54 per square foot and a weighted average lease term of 8.5 years. The GAAP and cash mark-to-market rent on the 29,000 square feet of second generation space were positive 64.5% and 39.3%, respectively. Tenant improvements and leasing commissions were $9.94 per square foot per annum, or 10.3% of initial rent.

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

The percentage increase (decrease) in same store NOI at share and same store NOI at share - cash basis of our New York segment, theMART and 555 California Street are summarized below.

                 
    Total   New York(2)   theMART   555
California
Street
Same store NOI at share % increase (decrease)(1):              
  Three months ended September 30, 2019 compared to September 30, 2018 0.9 %   0.5 %   (2.8 )%   13.9 %
  Nine months ended September 30, 2019 compared to September 30, 2018 0.6 %   (0.2 )%   2.2 %   11.9 %
  Three months ended September 30, 2019 compared to June 30, 2019 (0.8 )%   1.9 %   (21.2 )%   (1.1 )%
                 
Same store NOI at share - cash basis % increase (decrease)(1):              
  Three months ended September 30, 2019 compared to September 30, 2018 1.0 %   0.3 %   (1.0 )%   17.7 %
  Nine months ended September 30, 2019 compared to September 30, 2018 2.7 %   1.6 %   5.5 %   15.7 %
  Three months ended September 30, 2019 compared to June 30, 2019 (2.7 )%   (0.4 )%   (19.3 )%   (2.2 )%

____________________

(1 ) See pages 12 through 17 for same store NOI at share and same store NOI at share - cash basis reconciliations.
    Increase  
(2 ) Excluding Hotel Pennsylvania, same store NOI at share % increase:    
  Three months ended September 30, 2019 compared to September 30, 2018 1.2%  
  Nine months ended September 30, 2019 compared to September 30, 2018 0.4%  
  Three months ended September 30, 2019 compared to June 30, 2019 2.4%  
       
  Excluding Hotel Pennsylvania, same store NOI at share - cash basis % increase:    
  Three months ended September 30, 2019 compared to September 30, 2018 1.0%  
  Nine months ended September 30, 2019 compared to September 30, 2018 2.4%  
  Three months ended September 30, 2019 compared to June 30, 2019 0.1%  
       

NOI At Share:

The elements of our New York and Other NOI at share for the three and nine months ended September 30, 2019 and 2018 and the three months ended June 30, 2019 are summarized below.

       
(Amounts in thousands) For the Three Months Ended   For the Nine Months Ended
  September 30,   June 30, 2019
  September 30,
  2019   2018     2019   2018
New York:                  
Office(1) $ 177,469     $ 184,146     $ 179,592     $ 540,601     $ 556,169  
Retail(1) 68,159     92,858     57,063     213,489     267,876  
Residential 5,575     5,202     5,908     17,528     17,681  
Alexander's Inc. ("Alexander's") 11,269     10,626     11,108     33,699     34,110  
Hotel Pennsylvania 3,012     4,496     4,031     1,227     5,955  
Total New York 265,484     297,328     257,702     806,544     881,791  
                   
Other:                  
theMART 24,862     25,257     30,974     79,359     79,948  
555 California Street 15,265     13,515     15,358     45,124     40,686  
Other investments 1,919     13,524     4,875     23,184     50,664  
Total Other 42,046     52,296     51,207     147,667     171,298  
                   
NOI at share $ 307,530     $ 349,624     $ 308,909     $ 954,211     $ 1,053,089  
                                       

____________________
(1)   Reflects the transfer of 45.4% of common equity in the properties contributed to the Fifth Avenue and Times Square JV on April 18, 2019.

NOI At Share - Cash Basis:

The elements of our New York and Other NOI at share - cash basis for the three and nine months ended September 30, 2019 and 2018 and the three months ended June 30, 2019 are summarized below.

       
(Amounts in thousands) For the Three Months Ended   For the Nine Months Ended
  September 30,   June 30, 2019
  September 30,
  2019   2018     2019   2018
New York:                  
Office(1) $ 174,796     $ 181,575     $ 178,806     $ 537,972     $ 540,484  
Retail(1) 65,636     84,976     66,726     213,298     243,704  
Residential 5,057     5,358     5,303     16,131     16,420  
Alexander's 11,471     11,774     11,322     34,320     35,911  
Hotel Pennsylvania 2,964     4,520     3,982     1,082     6,111  
Total New York 259,924     288,203     266,139     802,803     842,630  
                   
Other:                  
theMART 26,588     26,234     31,984     83,484     81,312  
555 California Street 15,325     13,070     15,595     45,665     39,704  
Other investments 1,656     13,374     4,939     22,789     50,271  
Total Other 43,569     52,678     52,518     151,938     171,287  
                   
NOI at share - cash basis $ 303,493     $ 340,881     $ 318,657     $ 954,741     $ 1,013,917  
                                       

____________________

(1)   Reflects the transfer of 45.4% of common equity in the properties contributed to the Fifth Avenue and Times Square JV on April 18, 2019.

Penn District - Active Development/Redevelopment Summary as of September 30, 2019

(Amounts in thousands, except square feet)    
        Property
Rentable
Sq. Ft.
                  Projected
Incremental
Cash Yield
Active Penn District Projects   Segment     Budget(1)   Amount
Expended
  Remainder
to be
Expended
  Stabilization
Year
 
Farley (95% interest)   New York   845,000     1,030,000   (2) 528,080     501,920     2022   7.4 %
PENN2 - as expanded   New York   1,795,000     750,000     34,372     715,628     2024   8.4 %
PENN1(3)   New York   2,544,000     325,000     57,355     267,645     N/A   13.5% (3)(4)
Districtwide Improvements   New York   N/A   100,000     5,372     94,628     N/A   N/A  
Total Active Penn District Projects           2,205,000     625,179     1,579,821   (5)     8.3 %

__________________________

  1. Excluding debt and equity carry.
  2. Net of anticipated historic tax credits.
  3. Property is ground leased through 2098, as fully extended. Fair market value resets occur in 2023, 2048 and 2073. The 13.5% projected return is before the ground rent reset in 2023, which may be material.
  4. Achieved as existing leases roll; average remaining lease term 5.4 years.
  5. Expected to be funded from our balance sheet, principally from 220 CPS net sales proceeds.

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, October 29, 2019 at 10:00 a.m. Eastern Time (ET). The conference call can be accessed by dialing 888-771-4371 (domestic) or 847-585-4405 (international) and indicating to the operator the passcode 49056911. A telephonic replay of the conference call will be available from 1:30 p.m. ET on October 29, 2019 through November 28, 2019. To access the replay, please dial 888-843-7419 and enter the passcode 49056911#. A live webcast of the conference call will be available on the Company’s website at www.vno.com and an online playback of the webcast will be available on the website following the conference call.

Supplemental Financial Information

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. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. 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, 2018. Such factors include, among others, risks associated with the timing of and costs associated with property improvements, financing commitments and general competitive factors.


VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEETS


(Amounts in thousands, except unit, share, and per share amounts) As of
  September 30, 2019
  December 31, 2018
ASSETS      
Real estate, at cost:      
Land $ 2,602,039     $ 3,306,280  
Buildings and improvements 7,888,950     10,110,992  
Development costs and construction in progress 1,805,846     2,266,491  
Moynihan Train Hall development expenditures 791,703     445,693  
Leasehold improvements and equipment 121,164     108,427  
Total 13,209,702     16,237,883  
Less accumulated depreciation and amortization (2,945,107 )   (3,180,175 )
Real estate, net 10,264,595     13,057,708  
Right-of-use assets 370,604      
Cash and cash equivalents 1,132,491     570,916  
Restricted cash 113,065     145,989  
Marketable securities 35,751     152,198  
Tenant and other receivables 99,499     73,322  
Investments in partially owned entities 4,023,820     858,113  
Real estate fund investments 306,596     318,758  
220 Central Park South condominium units ready for sale 288,135     99,627  
Receivable arising from the straight-lining of rents 743,646     935,131  
Deferred leasing costs, net of accumulated amortization of $191,299 and $207,529 360,608     400,313  
Identified intangible assets, net of accumulated amortization of $99,623 and $172,114 30,773     136,781  
Other assets 446,516     431,938  
  $ 18,216,099     $ 17,180,794  
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY      
Mortgages payable, net $ 5,640,895     $ 8,167,798  
Senior unsecured notes, net 445,668     844,002  
Unsecured term loan, net 745,585     744,821  
Unsecured revolving credit facilities 655,000     80,000  
Lease liabilities 490,978      
Moynihan Train Hall obligation 791,703     445,693  
Accounts payable and accrued expenses 453,331     430,976  
Deferred revenue 62,583     167,730  
Deferred compensation plan 99,677     96,523  
Other liabilities 266,090     311,806  
Total liabilities 9,651,510     11,289,349  
Commitments and contingencies      
Redeemable noncontrolling interests:      
Class A units - 13,346,927 and 12,544,477 units outstanding 849,798     778,134  
Series D cumulative redeemable preferred units - 141,401 and 177,101 units outstanding 4,535     5,428  
Total redeemable noncontrolling interests 854,333     783,562  
Shareholders' equity:      
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 36,797,280 and 36,798,580 shares 891,256     891,294  
Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 190,850,321 and 190,535,499 shares 7,613     7,600  
Additional capital 7,872,597     7,725,857  
Earnings less than distributions (1,649,035 )   (4,167,184 )
Accumulated other comprehensive (loss) income (47,359 )   7,664  
Total shareholders' equity 7,075,072     4,465,231  
Noncontrolling interests in consolidated subsidiaries 635,184     642,652  
Total equity 7,710,256     5,107,883  
  $ 18,216,099     $ 17,180,794  
               

 

VORNADO REALTY TRUST
OPERATING RESULTS


(Amounts in thousands, except per share amounts) For the Three Months Ended   For the Nine Months Ended
September 30, September 30,
  2019   2018   2019   2018
Revenues $ 465,961     $ 542,048     $ 1,463,732     $ 1,620,303  
               
Income from continuing operations $ 363,857     $ 219,101     $ 3,173,671     $ 324,401  
(Loss) income from discontinued operations (8 )   61     (85 )   381  
Net income 363,849     219,162     3,173,586     324,782  
Less net (income) loss attributable to noncontrolling interests in:              
Consolidated subsidiaries (5,774 )   (3,312 )   (34,045 )   31,137  
Operating Partnership (22,637 )   (12,671 )   (197,354 )   (18,992 )
Net income attributable to Vornado 335,438     203,179     2,942,187     336,927  
Preferred share dividends (12,532 )   (12,534 )   (37,598 )   (38,103 )
Preferred share issuance costs             (14,486 )
NET INCOME attributable to common shareholders $ 322,906     $ 190,645     $ 2,904,589     $ 284,338  
               
INCOME PER COMMON SHARE – BASIC:              
Net income per common share $ 1.69     $ 1     $ 15.22     $ 1.5  
Weighted average shares outstanding 190,814     190,245     190,762     190,176  
               
INCOME PER COMMON SHARE – DILUTED:              
Net income per common share $ 1.69     $ 1     $ 15.2     $ 1.49  
Weighted average shares outstanding 191,024     191,327     191,027     191,292  
               
FFO attributable to common shareholders plus assumed conversions (non-GAAP) $ 279,509     $ 189,987     $ 691,522     $ 519,640  
Per diluted share (non-GAAP) $ 1.46     $ 0.99     $ 3.62     $ 2.72  
               
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) $ 170,966     $ 184,280     $ 494,936     $ 543,531  
Per diluted share (non-GAAP) $ 0.89     $ 0.96     $ 2.59     $ 2.84  
               
Weighted average shares used in determining FFO attributable to common shareholders plus assumed conversions per diluted share 191,024     191,327     191,024     191,186  
                               


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   For the Nine Months Ended
September 30, September 30,
  2019   2018   2019   2018
Reconciliation of our net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions:              
Net income attributable to common shareholders $ 322,906     $ 190,645     $ 2,904,589     $ 284,338  
Per diluted share $ 1.69     $ 1     $ 15.2     $ 1.49  
               
FFO adjustments:              
Depreciation and amortization of real property $ 89,479     $ 105,015     $ 303,415     $ 309,024  
Net gains on sale of real estate (178,769 )   (133,961 )   (178,769 )   (158,138 )
Real estate impairment losses         31,436      
Net gain on transfer to Fifth Avenue and Times Square JV, net of $11,945 attributable to noncontrolling interests         (2,559,154 )    
Net gain from sale of UE common shares (sold on March 4, 2019)         (62,395 )    
Decrease (increase) in fair value of marketable securities:              
PREIT 4,875         19,211      
Lexington (sold on March 1, 2019)     7,942     (16,068 )   24,934  
Other (7 )   (243 )   (48 )   (133 )
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO:              
Depreciation and amortization of real property 37,696     23,688     97,317     77,282  
Net gains on sale of real estate     (3,421 )       (3,998 )
Decrease in fair value of marketable securities 291     267     1,988     1,801  
  (46,435 )   (713 )   (2,363,067 )   250,772  
Noncontrolling interests' share of above adjustments 3,024     40     149,957     (15,517 )
FFO adjustments, net $ (43,411 )   $ (673 )   $ (2,213,110 )   $ 235,255  
               
FFO attributable to common shareholders $ 279,495     $ 189,972     $ 691,479     $ 519,593  
Convertible preferred share dividends 14     15     43     47  
FFO attributable to common shareholders plus assumed conversions $ 279,509     $ 189,987     $ 691,522     $ 519,640  
Per diluted share $ 1.46     $ 0.99     $ 3.62     $ 2.72  
               
Reconciliation of Weighted Average Shares              
Weighted average common shares outstanding 190,814     190,245     190,762     190,176  
Effect of dilutive securities:              
Employee stock options and restricted share awards 176     1,045     227     972  
Convertible preferred shares 34     37     35     38  
Denominator for FFO per diluted share 191,024     191,327     191,024     191,186  
                               

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 depreciable 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 it excludes 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. 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. A reconciliation of our net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions is provided above. 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 FFO attributable to common shareholders plus assumed conversions to FFO attributable to common shareholders plus assumed conversions, as adjusted are provided on page 3 of this press release.

In accordance with the NAREIT December 2018 restated definition of FFO, we have elected to exclude the mark-to-market adjustments of marketable equity securities from the calculation of FFO. FFO for the three months ended September 30, 2018 has been adjusted to exclude the $7,966,000, or $0.04 per share, decrease in fair value of marketable equity securities previously reported. FFO for the nine months ended September 30, 2018 has been adjusted to exclude the $26,602,000, or $0.13 per share, decrease in fair value of marketable equity securities previously reported.


VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below is a reconciliation of net income to NOI at share and NOI at share - cash basis for the three and nine months ended September 30, 2019 and 2018 and the three months ended June 30, 2019.

...
  For the Three Months Ended   For the Nine Months Ended
(Amounts in thousands) September 30,   June 30, 2019
  September 30,
  2019   2018     2019   2018
Net income $ 363,849     $ 219,162     $ 2,596,693     $ 3,173,586     $ 324,782  
Depreciation and amortization expense 96,437     113,169     113,035     326,181     333,701  
General and administrative expense 33,237     31,977     38,872     130,129     108,937  
Transaction related costs, impairment losses and other 1,576     2,510     101,590     103,315     16,683  
Income from partially owned entities (25,946 )   (7,206 )   (22,873 )   (56,139 )   (6,059 )
(Income) loss from real estate fund investments (2,190 )   190     15,803     13,780     37,973  
Interest and other investment income, net (3,045 )   (2,893 )   (7,840 )   (15,930 )   (9,401 )
Interest and debt expense 61,448     88,951     63,029     226,940     264,774  
Net gain on transfer to Fifth Avenue and Times Square JV         (2,571,099 )   (2,571,099 )    
Net gains on disposition of wholly owned and partially owned assets (309,657 )   (141,269 )   (111,713 )   (641,664 )   (164,828 )
Income tax expense 23,885     1,943     26,914     80,542     4,964  
Loss (income) from discontinued operations 8     (61 )   (60 )   85     (381 )
NOI from partially owned entities 86,024     60,094     82,974     236,400     193,359  
NOI attributable to noncontrolling interests in consolidated subsidiaries (18,096 )   (16,943 )   (16,416 )   (51,915 )   (51,415 )
NOI at share 307,530