XNYS:VNO Vornado Realty Trust Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

XNYS:VNO Fair Value Estimate
Premium
XNYS:VNO Consider Buying
Premium
XNYS:VNO Consider Selling
Premium
XNYS:VNO Fair Value Uncertainty
Premium
XNYS:VNO Economic Moat
Premium
XNYS:VNO Stewardship
Premium
 
vno10q1q2012.htm - Generated by SEC Publisher for SEC Filing  

 

 

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:   

March 31, 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 March 31, 2012, 185,642,051 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

March 31, 2012 and December 31, 2011

3

Consolidated Statements of Income (Unaudited) for the

Three Months Ended March 31, 2012 and 2011

4

Consolidated Statements of Comprehensive Income (Unaudited) for the

Three Months Ended March 31, 2012 and 2011

5

Consolidated Statements of Changes in Equity (Unaudited) for the

Three Months Ended March 31, 2012 and 2011

6

Consolidated Statements of Cash Flows (Unaudited) for the

Three Months Ended March 31, 2012 and 2011

7

Notes to the Consolidated Financial Statements (Unaudited)

9

Report of Independent Registered Public Accounting Firm

35

Item 2.

Management's Discussion and Analysis of Financial

Condition and Results of Operations

36

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

61

Item 4.

Controls and Procedures

62

PART II.

Other Information:

Item 1.

Legal Proceedings

63

Item 1A.

Risk Factors

64

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

64

Item 3.

Defaults Upon Senior Securities

64

Item 4.

Mine Safety Disclosures

64

Item 5.

Other Information

64

Item 6.

Exhibits

64

SIGNATURES

65

EXHIBIT INDEX

66

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)

March 31,

December 31,

ASSETS

2012 

2011 

Real estate, at cost:

Land

$

4,677,940 

$

4,666,929 

Buildings and improvements

12,720,139 

12,709,356 

Development costs and construction in progress

118,811 

122,075 

Leasehold improvements and equipment

128,391 

128,651 

Total

17,645,281 

17,627,011 

Less accumulated depreciation and amortization

(3,173,515)

(3,095,037)

Real estate, net

14,471,766 

14,531,974 

Cash and cash equivalents

614,359 

606,553 

Restricted cash

117,423 

98,068 

Marketable securities

754,510 

741,321 

Accounts receivable, net of allowance for doubtful accounts of $42,785 and $43,241

191,184 

171,798 

Investments in partially owned entities

1,285,104 

1,233,650 

Investment in Toys "R" Us

597,860 

506,809 

Real Estate Fund investments

324,514 

346,650 

Mezzanine loans receivable

133,143 

133,948 

Receivable arising from the straight-lining of rents, net of allowance of $3,986 and $4,046

750,017 

728,626 

Deferred leasing and financing costs, net of accumulated amortization of $218,111 and $245,087

387,481 

376,292 

Identified intangible assets, net of accumulated amortization of $361,856 and $359,944

304,385 

319,704 

Assets related to discontinued operations

251,202 

Due from officers

13,127 

Other assets

337,983 

386,765 

$

20,269,729 

$

20,446,487 

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Notes and mortgages payable

$

8,434,938 

$

8,558,275 

Senior unsecured notes

1,357,748 

1,357,661 

Exchangeable senior debentures

499,680 

497,898 

Convertible senior debentures

10,233 

10,168 

Revolving credit facility debt

138,000 

Accounts payable and accrued expenses

453,578 

423,512 

Deferred revenue

500,266 

516,259 

Deferred compensation plan

99,810 

95,457 

Deferred tax liabilities

13,380 

13,315 

Liabilities related to discontinued operations

14,153 

Other liabilities

139,660 

152,665 

Total liabilities

11,509,293 

11,777,363 

Commitments and contingencies

Redeemable noncontrolling interests:

Class A units - 12,172,197 and 12,160,771 units outstanding

1,024,899 

934,677 

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

226,000 

226,000 

Total redeemable noncontrolling interests

1,250,899 

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 185,642,051 and 185,080,020 shares

7,396 

7,373 

Additional capital

7,058,212 

7,127,258 

Earnings less than distributions

(1,312,670)

(1,401,704)

Accumulated other comprehensive income

67,174 

73,729 

Total Vornado shareholders' equity

6,841,667 

6,828,316 

Noncontrolling interests in consolidated subsidiaries

667,870 

680,131 

Total equity

7,509,537 

7,508,447 

$

20,269,729 

$

20,446,487 

See notes to consolidated financial statements (unaudited).

3

 


 

 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

For the Three

Months Ended March 31,

(Amounts in thousands, except per share amounts)

2012 

2011 

REVENUES:

Property rentals

$

557,413 

$

562,252 

Tenant expense reimbursements

81,607 

89,669 

Cleveland Medical Mart development project

55,059 

40,699 

Fee and other income

33,387 

34,263 

Total revenues

727,466 

726,883 

EXPENSES:

Operating

276,826 

286,362 

Depreciation and amortization

139,437 

129,833 

General and administrative

55,890 

58,946 

Cleveland Medical Mart development project

52,761 

38,278 

Acquisition related costs and tenant buy-outs

685 

18,270 

Total expenses

525,599 

531,689 

Operating income

201,867 

195,194 

Income applicable to Toys "R" Us

116,471 

112,944 

Income from partially owned entities

20,033 

16,284 

Income from Real Estate Fund (of which $7,933 and ($74), respectively,

are attributable to noncontrolling interests)

11,762 

1,080 

Interest and other investment income, net

15,681 

117,108 

Interest and debt expense (including amortization of deferred financing

costs of $5,867 and $4,633, respectively)

(135,169)

(134,710)

Net gain on disposition of wholly owned and partially owned assets

6,677 

Income before income taxes

230,645 

314,577 

Income tax expense

(7,096)

(6,382)

Income from continuing operations

223,549 

308,195 

Income from discontinued operations

56,715 

137,626 

Net income

280,264 

445,821 

Less net income attributable to noncontrolling interests in:

Consolidated subsidiaries

(9,597)

(1,350)

Operating Partnership, including unit distributions

(19,145)

(31,808)

Net income attributable to Vornado

251,522 

412,663 

Preferred share dividends

(17,787)

(13,448)

NET INCOME attributable to common shareholders

$

233,735 

$

399,215 

INCOME PER COMMON SHARE - BASIC:

Income from continuing operations, net

$

0.97 

$

1.47 

Income from discontinued operations, net

0.29 

0.70 

Net income per common share

$

1.26 

$

2.17 

Weighted average shares outstanding

185,370 

183,988 

INCOME PER COMMON SHARE - DILUTED:

Income from continuing operations, net

$

0.97 

$

1.45 

Income from discontinued operations, net

0.28 

0.67 

Net income per common share

$

1.25 

$

2.12 

Weighted average shares outstanding

191,886 

191,529 

DIVIDENDS PER COMMON SHARE

$

0.69 

$

0.69 

See notes to consolidated financial statements (unaudited).

4

 


 

 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

For the Three

Months Ended March 31,

(Amounts in thousands)

2012 

2011 

Net income

$

280,264 

$

445,821 

Other comprehensive income (loss):

Change in unrealized net gain on securities available-for-sale

12,693 

68,039 

Pro rata share of other comprehensive loss of nonconsolidated subsidiaries

(21,944)

(3,791)

Change in value of interest rate swap

2,386 

(7,146)

Other

(123)

59 

Comprehensive income

273,276 

502,982 

Less comprehensive income attributable to noncontrolling interests

(28,309)

(36,759)

Comprehensive income attributable to Vornado

$

244,967 

$

466,223 

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

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

412,663 

1,350 

414,013 

Dividends on common shares

(126,936)

(126,936)

Dividends on preferred shares

(13,559)

(13,559)

Common shares issued:

Upon redemption of Class A

units, at redemption value

320 

13 

27,526 

27,539 

Under employees' share

option plan

240 

10 

15,027 

(398)

14,639 

Under dividend reinvestment plan

434 

434 

Contributions:

Real Estate Fund

92,068 

92,068 

Other

170 

170 

Distributions:

Real Estate Fund

(11,027)

(11,027)

Conversion of Series A preferred

shares to common shares

(1)

(50)

50 

Deferred compensation shares

and options

11 

2,370 

2,370 

Change in unrealized net gain

on securities available-for-sale

68,039 

68,039 

Pro rata share of other

comprehensive loss of

nonconsolidated subsidiaries

(3,791)

(3,791)

Change in value of interest rate swap

(7,146)

(7,146)

Adjustments to carry redeemable

Class A units at redemption value

(42,227)

(42,227)

Other

(105)

(173)

113 

59 

(41)

(147)

Balance, March 31, 2011

32,339 

$

782,933 

184,240 

$

7,340 

$

6,935,735 

$

(1,208,993)

$

130,614 

$

597,215 

$

7,244,844 

 

Accumulated

(Amounts in thousands)

Earnings

Other

Non-

Preferred Shares

Common Shares

Additional

Less Than

Comprehensive

controlling

Total

Shares

Amount

Shares

Amount

Capital

Distributions

Income

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

251,522 

9,597 

261,119 

Dividends on common shares

(127,973)

(127,973)

Dividends on preferred shares

(17,787)

(17,787)

Common shares issued:

Upon redemption of Class A

units, at redemption value

158 

13,022 

13,028 

Under employees' share

option plan

389 

16 

7,562 

(16,389)

(8,811)

Under dividend reinvestment plan

411 

411 

Distributions:

Real Estate Fund

(21,856)

(21,856)

Conversion of Series A preferred

shares to common shares

(2)

(105)

105 

Deferred compensation shares

and options

5,915 

(339)

5,577 

Change in unrealized net gain

on securities available-for-sale

12,693 

12,693 

Pro rata share of other

comprehensive loss of

nonconsolidated subsidiaries

(21,944)

(21,944)

Change in value of interest rate swap

2,386 

2,386 

Adjustments to carry redeemable

Class A units at redemption value

(96,061)

(96,061)

Redeemable noncontrolling interests'

share of above adjustments

433 

433 

Other

(123)

(2)

(125)

Balance, March 31, 2012

42,185 

$

1,021,555 

185,642 

$

7,396 

$

7,058,212 

$

(1,312,670)

$

67,174 

$

667,870 

$

7,509,537