XNYS:VNOPRA Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)   

OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the quarterly period ended:   

June 30, 2012

 

 

Or

 

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

 

 

VORNADO REALTY TRUST

(Exact name of registrant as specified in its charter)

 

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)

 

 

(212) 894-7000

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

x Large Accelerated Filer

 

o Accelerated Filer

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

 

o Smaller Reporting Company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes No

 

As of June 30, 2012, 185,814,787 of the registrant’s common shares of beneficial interest are outstanding.

 

 

  

 


 

 

PART I.

Financial Information:

Page Number

Item 1.

Financial Statements:

Consolidated Balance Sheets (Unaudited) as of

June 30, 2012 and December 31, 2011

3

Consolidated Statements of Income (Unaudited) for the

Three and Six Months Ended June 30, 2012 and 2011

4

Consolidated Statements of Comprehensive (Loss) Income (Unaudited)

for the Three and Six Months Ended June 30, 2012 and 2011

5

Consolidated Statements of Changes in Equity (Unaudited) for the

Six Months Ended June 30, 2012 and 2011

6

Consolidated Statements of Cash Flows (Unaudited) for the

Six Months Ended June 30, 2012 and 2011

8

Notes to Consolidated Financial Statements (Unaudited)

10

Report of Independent Registered Public Accounting Firm

38

Item 2.

Management's Discussion and Analysis of Financial

Condition and Results of Operations

39

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

78

Item 4.

Controls and Procedures

79

PART II.

Other Information:

Item 1.

Legal Proceedings

80

Item 1A.

Risk Factors

81

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

81

Item 3.

Defaults Upon Senior Securities

81

Item 4.

Mine Safety Disclosures

81

Item 5.

Other Information

81

Item 6.

Exhibits

81

SIGNATURES

82

EXHIBIT INDEX

83

2

 


 

 

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

 

VORNADO REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

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

June 30,

December 31,

ASSETS

2012 

2011 

Real estate, at cost:

Land

$

4,598,453 

$

4,578,962 

Buildings and improvements

12,298,264 

12,328,234 

Development costs and construction in progress

140,394 

121,555 

Leasehold improvements and equipment

125,339 

126,841 

Total

17,162,450 

17,155,592 

Less accumulated depreciation and amortization

(3,070,968)

(2,979,897)

Real estate, net

14,091,482 

14,175,695 

Cash and cash equivalents

471,363 

606,553 

Restricted cash

112,726 

98,068 

Marketable securities

466,599 

741,321 

Accounts receivable, net of allowance for doubtful accounts of $42,166 and $43,241

180,769 

171,798 

Investments in partially owned entities

1,285,147 

1,233,650 

Investment in Toys "R" Us

573,292 

506,809 

Real Estate Fund investments

460,496 

346,650 

Mezzanine loans receivable

132,369 

133,948 

Receivable arising from the straight-lining of rents, net of allowance of $2,909 and $3,290

755,926 

712,231 

Deferred leasing and financing costs, net of accumulated amortization of $222,123 and $241,073

382,210 

368,873 

Identified intangible assets, net of accumulated amortization of $349,060 and $347,105

266,386 

295,460 

Assets related to discontinued operations

301,946 

661,724 

Due from officers

13,127 

Other assets

523,054 

380,580 

$

20,003,765 

$

20,446,487 

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Notes and mortgages payable

$

8,360,192 

$

8,483,621 

Senior unsecured notes

1,357,835 

1,357,661 

Revolving credit facility debt

500,000 

138,000 

Exchangeable senior debentures

497,898 

Convertible senior debentures

10,168 

Accounts payable and accrued expenses

431,346 

423,512 

Deferred revenue

481,302 

511,959 

Deferred compensation plan

101,163 

95,457 

Deferred tax liabilities

15,577 

13,315 

Liabilities related to discontinued operations

70,844 

93,603 

Other liabilities

175,056 

152,169 

Total liabilities

11,493,315 

11,777,363 

Commitments and contingencies

Redeemable noncontrolling interests:

Class A units - 12,036,494 and 12,160,771 units outstanding

1,010,825 

934,677 

Series D cumulative redeemable preferred units - 9,000,001 units outstanding

226,000 

226,000 

Total redeemable noncontrolling interests

1,236,825 

1,160,677 

Vornado shareholders' equity:

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

shares; issued and outstanding 42,184,609 and 42,186,709 shares

1,021,555 

1,021,660 

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

250,000,000 shares; issued and outstanding 185,814,787 and 185,080,020 shares

7,402 

7,373 

Additional capital

7,059,872 

7,127,258 

Earnings less than distributions

(1,420,304)

(1,401,704)

Accumulated other comprehensive (loss) income

(162,785)

73,729 

Total Vornado shareholders' equity

6,505,740 

6,828,316 

Noncontrolling interests in consolidated subsidiaries

767,885 

680,131 

Total equity

7,273,625 

7,508,447 

$

20,003,765 

$

20,446,487 

See notes to consolidated financial statements (unaudited).

3

 


 

 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

For the Three

For the Six

Months Ended June 30,

Months Ended June 30,

(Amounts in thousands, except per share amounts)

2012 

2011 

2012 

2011 

REVENUES:

Property rentals

$

532,399 

$

544,905 

$

1,067,374 

$

1,084,814 

Tenant expense reimbursements

78,833 

77,902 

157,934 

164,507 

Cleveland Medical Mart development project

56,304 

32,369 

111,363 

73,068 

Fee and other income

33,055 

40,862 

66,344 

75,048 

Total revenues

700,591 

696,038 

1,403,015 

1,397,437 

EXPENSES:

Operating

251,970 

257,228 

515,339 

528,642 

Depreciation and amortization

132,529 

125,802 

267,983 

251,598 

General and administrative

46,834 

49,795 

102,405 

108,243 

Cleveland Medical Mart development project

53,935 

29,940 

106,696 

68,218 

Acquisition related costs and tenant buy-outs

2,559 

1,897 

3,244 

20,167 

Total expenses

487,827 

464,662 

995,667 

976,868 

Operating income

212,764 

231,376 

407,348 

420,569 

(Loss) income applicable to Toys "R" Us

(19,190)

(22,846)

97,281 

90,098 

Income from partially owned entities

12,563 

26,016 

32,223 

41,895 

Income from Real Estate Fund (of which $12,306 and $12,102 in

each three-month period, respectively, and $20,239 and $12,028

in each six-month period, respectively, are attributable to

noncontrolling interests)

20,301 

19,058 

32,063 

20,138 

Interest and other investment (loss) income, net

(49,172)

7,998 

(33,507)

125,097 

Interest and debt expense (including amortization of deferred

financing costs of $5,855 and $5,191, in each three-month period,

respectively, and $11,720 and $9,792 in each six-month

period, respectively)

(128,427)

(135,361)

(262,655)

(268,296)

Net gain on disposition of wholly owned and partially owned assets

4,856 

4,856 

6,677 

Income before income taxes

53,695 

126,241 

277,609 

436,178 

Income tax expense

(7,479)

(5,641)

(14,304)

(11,589)

Income from continuing operations

46,216 

120,600 

263,305 

424,589 

Income from discontinued operations

12,012 

10,369 

75,187 

152,201 

Net income

58,228 

130,969 

338,492 

576,790 

Less net income attributable to noncontrolling interests in:

Consolidated subsidiaries

(14,721)

(13,657)

(24,318)

(15,007)

Operating Partnership, including unit distributions

(5,210)

(8,731)

(24,355)

(40,539)

Net income attributable to Vornado

38,297 

108,581 

289,819 

521,244 

Preferred share dividends

(17,787)

(16,668)

(35,574)

(30,116)

NET INCOME attributable to common shareholders

$

20,510 

$

91,913 

$

254,245 

$

491,128 

INCOME PER COMMON SHARE - BASIC:

Income from continuing operations, net

$

0.05 

$

0.44 

$

0.99 

$

1.89 

Income from discontinued operations, net

0.06 

0.06 

0.38 

0.78 

Net income per common share

$

0.11 

$

0.50 

$

1.37 

$

2.67 

Weighted average shares outstanding

185,673 

184,268 

185,521 

184,129 

INCOME PER COMMON SHARE - DILUTED:

Income from continuing operations, net

$

0.05 

$

0.44 

$

0.98 

$

1.88 

Income from discontinued operations, net

0.06 

0.05 

0.38 

0.75 

Net income per common share

$

0.11 

$

0.49 

$

1.36 

$

2.63 

Weighted average shares outstanding

186,342 

186,144 

186,271 

191,736 

DIVIDENDS PER COMMON SHARE

$

0.69 

$

0.69 

$

1.38 

$

1.38 

See notes to consolidated financial statements (unaudited).

4

 


 

 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(UNAUDITED)

For the Three

For the Six

Months Ended June 30,

Months Ended June 30,

(Amounts in thousands)

2012 

2011 

2012 

2011 

Net income

$

58,228 

$

130,969 

$

338,492 

$

576,790 

Other comprehensive (loss) income:

Change in unrealized net (loss) gain on securities

available-for-sale

(233,218)

(27,195)

(220,525)

40,844 

Pro rata share of other comprehensive (loss) income of

nonconsolidated subsidiaries

(4,310)

30,156 

(26,254)

26,365 

Change in value of interest rate swap

(8,388)

(10,887)

(6,002)

(18,034)

Other

496 

(5,105)

373 

(5,045)

Comprehensive (loss) income

(187,192)

117,938 

86,084 

620,920 

Less comprehensive income attributable to noncontrolling interests

(4,470)

(21,875)

(32,779)

(58,650)

Comprehensive (loss) income attributable to Vornado

$

(191,662)

$

96,063 

$

53,305 

$

562,270 

See notes to consolidated financial statements (unaudited).

5

 


 

 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

Accumulated

(Amounts in thousands)

Earnings

Other

Non-

Preferred Shares

Common Shares

Additional

Less Than

Comprehensive

controlling

Total

Shares

Amount

Shares

Amount

Capital

Distributions

Income (Loss)

Interests

Equity

Balance, December 31, 2010

32,340 

$

783,088 

183,662 

$

7,317 

$

6,932,728 

$

(1,480,876)

$

73,453 

$

514,695 

$

6,830,405 

Net income

521,244 

15,007 

536,251 

Dividends on common shares

(254,099)

(254,099)

Dividends on preferred shares

(30,116)

(30,116)

Issuance of Series J preferred shares

8,850 

214,538 

214,538 

Common shares issued:

Upon redemption of Class A

units, at redemption value

401 

16 

35,192 

35,208 

Under employees' share

option plan

343 

14 

20,434 

(397)

20,051 

Under dividend reinvestment plan

10 

883 

883 

Contributions:

Real Estate Fund

109,241 

109,241 

Other

364 

364 

Distributions:

Real Estate Fund

(20,796)

(20,796)

Other

(15,604)

(15,604)

Conversion of Series A preferred

shares to common shares

(1)

(75)

75 

Deferred compensation shares

and options

10 

5,122 

5,122 

Change in unrealized net gain

on securities available-for-sale

40,844 

40,844 

Pro rata share of other

comprehensive income of

nonconsolidated subsidiaries

26,365 

26,365 

Change in value of interest rate swap

(18,034)

(18,034)

Adjustments to carry redeemable

Class A units at redemption value

(104,693)

(104,693)

Redeemable noncontrolling interests'

share of above adjustments

(3,104)

(3,104)

Other

(105)

(4,518)

(10)

(5,045)

4,376 

(5,302)

Balance, June 30, 2011

41,189 

$

997,446 

184,428 

$

7,347 

$

6,885,223 

$

(1,244,254)

$

114,479 

$

607,283 

$

7,367,524 

See notes to consolidated financial statements (unaudited).

6

 


 
 

 

 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - CONTINUED

(UNAUDITED)

Accumulated

(Amounts in thousands)

Earnings

Other

Non-

Preferred Shares

Common Shares

Additional

Less Than

Comprehensive

controlling

Total

Shares

Amount

Shares

Amount

Capital

Distributions

Income (Loss)

Interests

Equity

Balance, December 31, 2011

42,187 

$

1,021,660 

185,080 

$

7,373 

$

7,127,258 

$

(1,401,704)

$

73,729 

$

680,131 

$

7,508,447 

Net income

289,819 

24,318 

314,137 

Dividends on common shares