Press Release

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Stephen Theriot
Work(201) 587-1000
February 26, 2013
Vornado Announces Fourth Quarter 2012 Financial Results.

PARAMUS, NEW JERSEY......VORNADO REALTY TRUST (New York Stock Exchange: VNO) filed its Form 10-K for the year ended December 31, 2012 today and reported:

Fourth Quarter 2012 Results

      NET INCOME attributable to common shareholders for the quarter ended December 31, 2012 was $62.6 million, or $0.33 per diluted share, compared to $69.5 million, or $0.37 per diluted share for the quarter ended December 31, 2011. Net income for the quarters ended December 31, 2012 and 2011 includes $281.5 million and $1.9 million, respectively, of net gains on sale of real estate, and $117.9 million and $28.8 million, respectively, of real estate impairment losses. In addition, the quarters ended December 31, 2012 and 2011 include certain other items that affect comparability which are listed in the table below. Adjusting net income attributable to common shareholders for net gains on sale of real estate, real estate impairment losses and the items in the table below, net of amounts attributable to noncontrolling interests, net income attributable to common shareholders for the quarters ended December 31, 2012 and 2011 was $81.3 million and $20.9 million, or $0.43 and $0.11 per diluted share, respectively.

      FUNDS FROM OPERATIONS attributable to common shareholders plus assumed conversions ("FFO") for the quarter ended December 31, 2012 was $55.9 million, or $0.30 per diluted share, compared to $280.4 million, or $1.46 per diluted share for the prior year's quarter. Adjusting FFO for certain items that affect comparability which are listed in the table below, FFO for the quarters ended December 31, 2012 and 2011 was $228.6 million and $197.9 million, or $1.22 and $1.03 per diluted share, respectively.

(Amounts in thousands, except per share amounts) For the Quarters Ended December 31,  
  2012   2011  
FFO (1) $ 55,890   $ 280,369  
Per Share $ 0.30   $ 1.46  
 
Items that affect comparability income (expense):            
     Non-cash impairment loss on J.C. Penney owned shares $ (224,937 ) $ -  
     (Loss) income from the mark-to-market of J.C. Penney derivative position   (22,472 )   40,120  
     Non-cash impairment loss on investment in Toys   (40,000 )   -  
     Accelerated amortization of discount on investment in subordinated debt of Independence Plaza   60,396     -  
     1290 Avenue of the Americas and 555 California Street priority return and income tax benefit   25,260     -  
     Net gain resulting from Lexington Realty Trust's stock issuance   14,116     -  
     FFO attributable to discontinued operations, including our share of discontinued operations of Alexander's   12,736     25,398  
     Recognition of disputed receivable from Stop & Shop   -     23,521  
     Other, net   (8,825 )   (1,014 )
    (183,726 )   88,025  
Noncontrolling interests' share of above adjustments   11,056     (5,532 )
Items that affect comparability, net $ (172,670 ) $ 82,493  
FFO as adjusted for comparability $ 228,560   $ 197,876  
Per Share $ 1.22   $ 1.03  

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(1) See page 4 for a reconciliation of our net income to FFO for the quarters ended December 31, 2012 and 2011.

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Year Ended 2012 Results

      NET INCOME attributable to common shareholders for the year ended December 31, 2012 was $549.3 million, or $2.94 per diluted share, compared to $601.8 million, or $3.23 per diluted share for the year ended December 31, 2011. Net income for the years ended December 31, 2012 and 2011 includes $487.4 million and $61.4 million, respectively, of net gains on sale of real estate, and $141.6 million and $28.8 million, respectively, of real estate impairment losses. In addition, the years ended December 31, 2012 and 2011 include certain other items that affect comparability which are listed in the table below. Adjusting net income attributable to common shareholders for net gains on sale of real estate, real estate impairment losses and the items in the table below, net of amounts attributable to noncontrolling interests, net income attributable to common shareholders for the years ended December 31, 2012 and 2011 was $384.4 million and $314.1 million, or $2.06 and $1.68 per diluted share, respectively.

      FFO for the year ended December 31, 2012 was $818.6 million, or $4.39 per diluted share, compared to $1,231.0 million, or $6.42 per diluted share for the prior year. Adjusting FFO for certain items that affect comparability which are listed in the table below, FFO for the years ended December 31, 2012 and 2011 was $964.1 million and $939.3 million, or $5.17 and $4.90 per diluted share, respectively.

(Amounts in thousands, except per share amounts) For the Years Ended December 31,  
  2012   2011  
FFO (1) $ 818,565   $ 1,230,973  
Per Share $ 4.39   $ 6.42  
 
Items that affect comparability income (expense):            
     Non-cash impairment loss on J.C. Penney owned shares $ (224,937 ) $ -  
     (Loss) income from the mark-to-market of J.C. Penney derivative position   (75,815 )   12,984  
     Non-cash impairment loss on investment in Toys   (40,000 )   -  
     FFO attributable to discontinued operations, including our share of discontinued operations of Alexander's   68,501     91,938  
     Accelerated amortization of discount on investment in subordinated debt of Independence Plaza   60,396     -  
     1290 Avenue of the Americas and 555 California Street priority return and income tax benefit   25,260     -  
     After-tax net gain on sale of Canadian Trade Shows   19,657     -  
     Net gain resulting from Lexington Realty Trust's stock issuance   14,116     9,760  
     Net gain on extinguishment of debt   -     83,907  
     Mezzanine loan loss reversal and gain on disposition   -     82,744  
     Recognition of disputed receivable from Stop & Shop   -     23,521  
     Other, net   (2,339 )   6,440  
    (155,161 )   311,294  
Noncontrolling interests' share of above adjustments   9,601     (19,594 )
Items that affect comparability, net $ (145,560 ) $ 291,700  
FFO as adjusted for comparability $ 964,125   $ 939,273  
Per Share $ 5.17   $ 4.90  

__________________________________________

(1) See page 4 for a reconciliation of our net income to FFO for the years ended December 31, 2012 and 2011.

 

     Supplemental Financial Information

     Further details regarding the Company's 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, 2012. Such factors include, among others, risks associated with the timing of and costs associated with property improvements, financing commitments and general competitive factors.

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VORNADO REALTY TRUST
OPERATING RESULTS FOR THE QUARTERS AND YEARS ENDED
DECEMBER 31, 2012 AND 2011

(Amounts in thousands, except per share amounts) For The Quarters
Ended December 31,
    For The Years
Ended December 31,
 
  2012    2011   2012    2011  
 
Revenues $ 697,654   $ 689,959   $ 2,766,457   $ 2,732,836  
 
Income from continuing operations $ 50,432   $ 105,275   $ 408,599   $ 578,885  
Income (loss) from discontinued operations   41,461     (8,288 )   285,942     161,115  
Net income   91,893     96,987     694,541     740,000  
Less net income attributable to noncontrolling interests in:                        
      Consolidated Subsidiaries   (1,090 )   (1,143 )   (32,018 )   (21,786 )
      Operating Partnership   (3,882 )   (4,674 )   (35,327 )   (41,059 )
      Preferred unit distributions of the Operating Partnership   (786 )   (3,874 )   (9,936 )   (14,853 )
Net income attributable to Vornado   86,135     87,296     617,260     662,302  
Preferred share dividends   (20,750 )   (17,788 )   (76,937 )   (65,531 )
Discount on preferred share and unit redemptions   (2,752 )   -     8,948     5,000  
Net income attributable to common shareholders $ 62,633   $ 69,508   $ 549,271   $ 601,771  
 
Net income per common share:                        
      Basic $ 0.34   $ 0.38   $ 2.95   $ 3.26  
      Diluted $ 0.33   $ 0.37   $ 2.94   $ 3.23  
 
Weighted average shares:                        
      Basic   186,267     184,571     185,810     184,308  
      Diluted   186,866     185,963     186,530     186,021  
 
FFO attributable to common shareholders plus assumed conversions $ 55,890   $ 280,369   $ 818,565   $ 1,230,973  
Per diluted share $ 0.30   $ 1.46   $ 4.39   $ 6.42  
 
FFO as adjusted for comparability $ 228,560   $ 197,876   $ 964,125   $ 939,273  
Per diluted share $ 1.22   $ 1.03   $ 5.17   $ 4.90  
 
Weighted average shares used in determining FFO per diluted share   186,866     191,751     186,530     191,757  

 

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     The following table reconciles our net income to FFO:

  For The Quarters   For The Years  
(Amounts in thousands) Ended December 31,   Ended December 31,  
  2012   2011   2012   2011  
Reconciliation of our net income to FFO:
Net income attributable to Vornado $ 86,135   $ 87,296   $ 617,260   $ 662,302  
Depreciation and amortization of real property   125,069     152,655     504,407     530,113  
Net gains on sale of real estate   (41,998 )   -     (245,799 )   (51,623 )
Real estate impairment losses   116,453     28,799     129,964     28,799  
Proportionate share of adjustments to equity in net income of                        
  Toys, to arrive at FFO:                        
     Depreciation and amortization of real property   17,777     18,039     68,483     70,883  
     Net gains on sale of real estate   -     -     -     (491 )
     Real estate impairment losses   1,430     -     9,824     -  
     Income tax effect of above adjustments   (6,728 )   (6,314 )   (27,493 )   (24,634 )
Proportionate share of adjustments to equity in net income of                        
  partially owned entities, excluding Toys, to arrive at FFO:                        
     Depreciation and amortization of real property   20,387     26,699     86,197     99,992  
     Net gains on sale of real estate   (239,551 )   (1,916 )   (241,602 )   (9,276 )
     Real estate impairment losses   -     -     1,849     -  
Noncontrolling interests' share of above adjustments   418     (13,733 )   (16,649 )   (40,957 )
FFO   79,392     291,525     886,441     1,265,108  
Preferred share dividends   (20,750 )   (17,788 )   (76,937 )   (65,531 )
Discount on preferred share and unit redemptions   (2,752 )   -     8,948     5,000  
FFO attributable to common shareholders   55,890     273,737     818,452     1,204,577  
Interest on 3.88% exchangeable senior debentures   -     6,602     -     26,272  
Convertible preferred share dividends   -     30     113     124  
FFO attributable to common shareholders plus assumed conversions $ 55,890   $ 280,369   $ 818,565   $ 1,230,973  

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      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 gain from sales of depreciated real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets, extraordinary items and other specified non-cash items, including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are 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 flows as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies. A reconciliation of our net income to FFO is provided above. In addition to FFO, we also disclose FFO before certain items that affect comparability. Although this non-GAAP measure clearly differs from NAREIT's definition of FFO, we believe it provides a meaningful presentation of operating performance. A reconciliation of FFO to FFO as adjusted for comparability is provided on page 1 and page 2 of this press release.

Conference Call and Audio Webcast

      As previously announced, the Company will host a quarterly earnings conference call and audio webcast on February 27, 2013 at 10:00 a.m. Eastern Time (ET). The conference call can be accessed by dialing 800-446-2782 (domestic) or 847-413-3235 (international) and indicating to the operator the passcode 34178055. A telephonic replay of the conference call will be available from 12:30 p.m. ET on February 27, 2013 through March 29, 2013. To access the replay, please dial 888-843-7419 and enter the passcode 34178055#. 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 for 90 days following the conference call.

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