| Vornado has multiple assets that have substantial value, but
are currently earning either no return or very low returns in
relation to their value. Some examples of these are:
| • |
Cash balances, which at year-end were $320 million, yielding 1%. |
| • |
Hotel Pennsylvania, which has been on a roller coaster,
earning EBITDA of $13 million in 1997 when we first
acquired 40% of it, peaking at $27 million in 2000, and
dropping to $4.6 million last year. (6) Mike and I believe
this asset could be sold for in excess of $250 million.
Our to-do list for 2004 includes finalizing a plan for
the Hotel Pennsylvania which may involve a sale,
conversion to apartments or even razing the building
for new construction. Any plan will involve realizing the
site's great retail potential. |
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| • |
Our FFO in 2003 from the Palisades apartment complex
represented a 1.5% return on the $95 million of proceeds
we will receive when the sale of this asset closes. |
| • |
$25 million of Prime Group Inc. common stock for which
we record no income.
The totals are $690 million of capital that earned $9 million
in 2003. As we harvest these values and reinvest proceeds
at normalized returns, our FFO will increase. Our FFO
would also increase if we refinance the $880 million portion
of our preferred shares which are approaching their
call date and are above market. On the flipside, a
100 basis point increase in LIBOR would reduce FFO by
$.08 per share. (7) |
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