Press Release

Contact:

Joseph Macnow
Work(212) 894-7000
April 29, 2019
Vornado Announces First Quarter 2019 Financial Results

NEW YORK.......VORNADO REALTY TRUST (NYSE: VNO) reported today:

Quarter Ended March 31, 2019 Financial Results

NET INCOME attributable to common shareholders for the quarter ended March 31, 2019 was $181.5 million, or $0.95 per diluted share, compared to net loss attributable to common shareholders of $17.8 million, or $0.09 per diluted share, for the prior year's quarter. Adjusting net income (loss) attributable to common shareholders for the items that impact the comparability of period-to-period net income (loss) listed in the table on the following page, net income attributable to common shareholders, as adjusted (non-GAAP) for the quarters ended March 31, 2019 and 2018 was $24.8 million and $55.3 million, or $0.13 and $0.29 per diluted share, respectively. The decrease in net income, as adjusted was partially due to $16.2 million, or $0.08 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 to participants who have reached 65 years of age. The right to sell such awards remains subject to original terms of grant. The increase in expense in the first quarter of 2019 will be completely offset by lower non-cash stock-based compensation expense of $2.6 million in each of the second, third and fourth quarters of 2019 and $8.4 million thereafter.

FUNDS FROM OPERATIONS ("FFO") attributable to common shareholders plus assumed conversions (non-GAAP) for the quarter ended March 31, 2019 was $247.7 million, or $1.30 per diluted share, compared to $135.0 million, or $0.71 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 March 31, 2019 and 2018 was $149.9 million and $172.9 million, or $0.79 and $0.91 per diluted share, respectively. The decrease in FFO, as adjusted was partially due to $16.2 million, or $0.08 per share, of non-cash expense for the accelerated vesting of previously issued OP Units and Vornado restricted stock, as described above.
 
1
The following table reconciles our net income (loss) 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 March 31,
 
2019
 
2018
Net income (loss) attributable to common shareholders
$
181,488

 
$
(17,841
)
Per diluted share
$
0.95

 
$
(0.09
)
 
 
 
 
Certain (income) expense items that impact net income (loss) attributable to common shareholders:
 
 
 
After-tax net gain on sale of 220 Central Park South ("220 CPS") condominium units
$
(130,954
)
 
$

Net gain from sale of Urban Edge Properties ("UE") common shares
(62,395
)
 

Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 2022
22,540

 

Mark-to-market (increase) decrease in Lexington Realty Trust ("Lexington") common shares (sold on March 1, 2019)
(16,068
)
 
32,875

Mark-to-market decrease in Pennsylvania Real Estate Investment Trust ("PREIT") common shares (accounted for as a marketable security from March 12, 2019)
15,649

 

Our share of disputed additional New York City transfer taxes based on a Tax Tribunal interpretation

 
23,503

Preferred share issuance costs

 
14,486

Previously capitalized internal leasing costs(1)

 
(1,348
)
Other
4,056

 
8,666

 
(167,172
)
 
78,182

Noncontrolling interests' share of above adjustments
10,498

 
(5,001
)
Total of certain (income) expense items that impact net income (loss) attributable to common shareholders
$
(156,674
)
 
$
73,181

 
 
 
 
Net income attributable to common shareholders, as adjusted (non-GAAP)
$
24,814

 
$
55,340

Per diluted share (non-GAAP)
$
0.13

 
$
0.29

____________________
(1)
See note on the following page.
 
 
2
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
March 31,
 
2019
 
2018
FFO attributable to common shareholders plus assumed conversions (non-GAAP)(2)
$
247,684

 
$
135,000

Per diluted share (non-GAAP)
$
1.30

 
$
0.71

 
 
 
 
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
$
(130,954
)
 
$

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 based on a Tax Tribunal interpretation

 
23,503

Preferred share issuance costs

 
14,486

Previously capitalized internal leasing costs(1)

 
(1,348
)
Other
4,110

 
3,607

 
(104,304
)
 
40,248

Noncontrolling interests' share of above adjustments
6,559

 
(2,341
)
Total of certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions, net
$
(97,745
)
 
$
37,907

 
 
 
 
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)
$
149,939

 
$
172,907

Per diluted share (non-GAAP)
$
0.79

 
$
0.91

____________________________________________________________
(1)
"Net income, as adjusted" and "FFO, as adjusted" for the three months ended March 31, 2018 have been reduced by $1,348, or $0.01 per diluted share, 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 11 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 months ended March 31, 2019 and 2018.
 
3
First Quarter Activity:

Dispositions:

220 CPS

During the first quarter of 2019, we closed on the sale of 12 condominium units at 220 CPS for net proceeds aggregating $425,484,000 and resulting in a financial statement net gain of $157,899,000 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, $26,945,000 of income tax expense was recognized in our consolidated statements of income. From inception to March 31, 2019, we closed on the sale of 23 units for aggregate net proceeds of $640,260,000 which was used to pay $637,000,000 of the $950,000,000 220 CPS loan.
 
Lexington

On March 1, 2019, we sold all of our 18,468,969 common shares of Lexington realizing net proceeds of $167,698,000. For the three months ended March 31, 2019, we recorded a $16,068,000 mark-to-market increase in the fair value of our common shares for the period from January 1, 2019 through the date of sale, which is included in "interest and other investment income (loss), net" on our consolidated statements of income.

UE

On March 4, 2019, we converted to common shares and sold all of our 5,717,184 partnership units of UE, realizing net proceeds of $108,512,000. The sale resulted in a net gain of $62,395,000 which is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income for the three months ended March 31, 2019.

Fifth Avenue and Times Square JV

On April 18, 2019 ("Closing Date"), we entered into a transaction agreement (the "Transaction Agreement") with a group of institutional investors (the "Investors"). The Transaction Agreement provides for a series of transactions (collectively, the "Transaction") pursuant to which (i) prior to the Closing Date, the Operating Partnership contributed its interests in properties located at 640 Fifth Avenue, 655 Fifth Avenue, 666 Fifth Avenue, 689 Fifth Avenue, 697-703 Fifth Avenue, 1535 Broadway and 1540 Broadway (collectively, the “Properties”) to subsidiaries of a newly formed joint venture ("Fifth Avenue and Times Square JV") and (ii) on the Closing Date, transferred a 48.5% common interest in Fifth Avenue and Times Square JV to the Investors. The 48.5% common interest in the joint venture represents an effective 47.2% interest in the Properties. The Properties include approximately 489,000 square feet of retail space, 327,000 square feet of office space, signage associated with 1535 and 1540 Broadway, the parking garage at 1540 Broadway and the theatre at 1535 Broadway.

We retained the remaining 51.5% common interest in Fifth Avenue and Times Square JV which represents an effective 51.0% interest in the Properties and an aggregate $1.828 billion of preferred equity interests in certain of the properties. The preferred equity has an annual coupon of 4.25% for the first five years, increasing to 4.75% for the next five years and thereafter at a formulaic rate. It can be redeemed under certain conditions on a tax deferred basis.

Net cash proceeds to us from the Transaction are approximately $1.198 billion, after (i) deductions for the repayment of a $390,000,000 mortgage loan on 666 Fifth Avenue and a $140,000,000 mortgage loan on 655 Fifth Avenue, (ii) anticipated proceeds from a new $500,000,000 mortgage loan on 640 Fifth Avenue, (iii) approximately $26,000,000 used to purchase noncontrolling investors' interests and (iv) approximately $56,000,000 of estimated transaction costs. Until the new mortgage closes, Vornado will retain $500 million of preferred equity interests in addition to the $1.828 billion referenced above.

The Transaction values the Properties at $5.556 billion resulting in a financial statement net gain of approximately $2.6 billion from the Transaction and the related step-up in our basis of the assets to fair value. The net gain will be recognized in our consolidated statements of income for the three months ended June 30, 2019. Our tax gain is approximately $735,000,000. We continue to manage the Properties and share control over major decisions of the joint venture. Accordingly, the Properties will be deconsolidated and the joint venture will be accounted for under the equity method from the date of transfer. As of March 31, 2019, the assets and liabilities associated with the Properties were classified as “assets held for sale” and “liabilities related to assets held for sale”, respectively, on our consolidated balance sheets.
 
4
First Quarter Activity - continued:

Financings:

On January 28, 2019, the joint venture, in which we have a 45.1% interest, completed a $167,500,000 refinancing of 61 Ninth Avenue, a 166,000 square foot newly constructed office and retail property in the Meatpacking district of Manhattan which is fully leased to Aetna and Starbucks. The seven-year interest only loan carries a rate of LIBOR plus 1.35% (3.85% as of March 31, 2019) and matures in January 2026. We realized net proceeds of approximately $31,000,000. The loan replaces the previous $90,000,000 construction loan that bore interest at LIBOR plus 3.05% and was scheduled to mature in 2021.

On February 4, 2019, we completed a $95,700,000 refinancing of 435 Seventh Avenue, a 43,000 square foot Manhattan retail property. The interest-only loan carries a rate of LIBOR plus 1.30% (3.78% as of March 31, 2019) and matures in 2024. The recourse loan replaces the previous $95,700,000 loan that bore interest at LIBOR plus 2.25% and was scheduled to mature in August 2019.

On February 12, 2019, we completed a $580,000,000 refinancing of 100 West 33rd Street, a 1.1 million square foot Manhattan property comprised of 859,000 square feet of office space and the 256,000 square foot Manhattan Mall. The interest-only loan carries a rate of LIBOR plus 1.55% (4.03% as of March 31, 2019) and matures in April 2024, with two one-year extension options. The loan replaces the previous $580,000,000 loan that bore interest at LIBOR plus 1.65% and was scheduled to mature in July 2020.

On March 1, 2019, we called for redemption all of our $400,000,000 5.00% senior unsecured notes. The notes, which were scheduled to mature in January 2022, were redeemed on April 1, 2019 at a redemption price of 105.51% of the principal amount plus accrued interest. In connection therewith, we expensed $22,540,000 relating to debt prepayment costs which is included in "interest and debt expense" on our consolidated statements of income for the three months ended March 31, 2019.

On March 26, 2019, we increased to $1.5 billion (from $1.25 billion) and extended to March 2024 (as fully extended) from February 2022 one of our two unsecured revolving credit facilities. The interest rate on the extended facility was lowered from LIBOR plus 1.00% to LIBOR plus 0.90%. The facility fee remains unchanged at 20 basis points.
 
 
5
First Quarter Activity - continued:

Leasing:

   
396,000 square feet of New York Office space (350,000 square feet at share) at an initial rent of $75.91 per square foot and a weighted average term of 9 years. The GAAP and cash mark-to-market rent on the 312,000 square feet of second generation space were positive 0.9% and 1.8%, respectively. Tenant improvements and leasing commissions were $9.67 per square foot per annum, or 12.7% of initial rent.

   
49,000 square feet of New York Retail space (43,000 square feet at share) at an initial rent of $113.37 per square foot and a weighted average term of 3.4 years. The GAAP and cash mark-to-market rent on the 38,000 square feet of second generation space were positive 2.2% and negative 8.5%, respectively. Tenant improvements and leasing commissions were $5.93 per square foot per annum, or 5.2% of initial rent.

   
159,000 square feet at theMART at an initial rent of $46.67 per square foot and a weighted average term of 7.0 years. The GAAP and cash mark-to-market rent on the 157,000 square feet of second generation space were positive 11.3% and 6.2%, respectively. Tenant improvements and leasing commissions were $5.03 per square foot per annum, or 10.8% of initial rent.

   
61,000 square feet at 555 California Street (43,000 square feet at share) at an initial rent of $81.05 per square foot and a weighted average term of 5.1 years. The GAAP and cash mark-to-market rent on the 43,000 square feet of second generation space were positive 68.9% and 37.6%, respectively. Tenant improvements and leasing commissions were $9.64 per square foot per annum, or 11.9% of initial rent.

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

The percentage (decrease) increase 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 % (decrease) increase(1):
 
 
 
 
 
 
 
 
Three months ended March 31, 2019 compared to March 31, 2018
(0.1
)%
 
(0.1
)%
 
(4.3
)%
 
7.3
%
 
Three months ended March 31, 2019 compared to December 31, 2018
1.0
 %
 
(3.0
)%
 
106.2
 %
(3) 
3.4
%
 
 
 
 
 
 
 
 
 
Same store NOI at share - cash basis % increase (decrease)(1):
 
 
 
 
 
 
 
 
Three months ended March 31, 2019 compared to March 31, 2018
3.0
 %
 
2.6
 %
 
0.9
 %
 
15.0
%
 
Three months ended March 31, 2019 compared to December 31, 2018
0.2
 %
 
(4.2
)%
 
88.6
 %
(3) 
6.9
%
____________________
 
         
(1)
See pages 13 through 16 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 March 31, 2019 compared to March 31, 2018
0.5
%
 
 
Three months ended March 31, 2019 compared to December 31, 2018
1.2
%
 
 
 
 
 
 
Excluding Hotel Pennsylvania, same store NOI at share - cash basis % increase:
 
 
 
Three months ended March 31, 2019 compared to March 31, 2018
3.3
%
 
 
Three months ended March 31, 2019 compared to December 31, 2018
0.2
%
 
 
 
 
 
(3)
The three months ended December 31, 2018 includes an additional $12,124,000 real estate tax expense accrual due to an increase in the tax-assessed value of theMART.
 
6
NOI At Share:

The elements of our New York and Other NOI at share for the three months ended March 31, 2019 and 2018 and December 31, 2018 are summarized below.
                         
(Amounts in thousands)
For the Three Months Ended
 
 
March 31,
 
December 31, 2018
 
 
2019
 
2018
 
 
New York:
 
 
 
 
 
 
Office
$
183,540

 
$
187,156

 
$
186,832

 
Retail
88,267

 
87,909

 
85,549

 
Residential
6,045

 
6,141

 
5,834

 
Alexander's Inc. ("Alexander's")
11,322

 
11,575

 
11,023

 
Hotel Pennsylvania
(5,816
)
 
(4,185
)
 
5,961

 
Total New York
283,358

 
288,596

 
295,199

 
 
 
 
 
 
 
 
Other:
 
 
 
 
 
 
theMART
23,523

 
26,875

 
10,981

(1) 
555 California Street
14,501

 
13,511

 
14,005

 
Other investments
16,390

 
20,054

 
9,346

 
Total Other
54,414

 
60,440

 
34,332

 
 
 
 
 
 
 
 
NOI at share
$
337,772

 
$
349,036

 
$
329,531

 
____________________
(1)
Includes additional real estate tax expense accruals of $12,124 for the three months ended December 31, 2018 due to an increase in the tax-assessed value of theMART.

NOI At Share - Cash Basis:

The elements of our New York and Other NOI at share - cash basis for the three months ended March 31, 2019 and 2018 and December 31, 2018 are summarized below.
 
                         
(Amounts in thousands)
For the Three Months Ended
 
 
March 31,
 
December 31, 2018
 
 
2019
 
2018
 
 
New York:
 
 
 
 
 
 
Office
$
184,370

 
$
178,199

 
$
185,624

 
Retail
80,936

 
79,589

 
80,515

 
Residential
5,771

 
5,599

 
5,656

 
Alexander's
11,527

 
12,039

 
11,129

 
Hotel Pennsylvania
(5,864
)
 
(4,153
)
 
6,009

 
Total New York
276,740

 
271,273

 
288,933

 
 
 
 
 
 
 
 
Other:
 
 
 
 
 
 
theMART
24,912

 
27,079

 
12,758

(1) 
555 California Street
14,745

 
12,826

 
13,784

 
Other investments
16,194

 
19,910

 
8,524

 
Total Other
55,851

 
59,815

 
35,066

 
 
 
 
 
 
 
 
NOI at share - cash basis
$
332,591

 
$
331,088

 
$
323,999

 
____________________
(1)
Includes additional real estate tax expense accruals of $12,124 for the three months ended December 31, 2018 due to an increase in the tax-assessed value of theMART.
 
7
Development/Redevelopment as of March 31, 2019
                                             
(Amounts in thousands, except square feet)
 
 
 
 
 
(At Share)
 
 
 
 
 
 
 
 
Full
Quarter
Stabilized
Operations
 
 
 
 
Property
Rentable
Sq. Ft.
 
Excluding Land Costs
 
 
 
 
 
 
Available for Occupancy
 
Current Projects
 
Segment
 
 
Incremental
Budget
 
Amount
Expended
 
 
%
Complete
 
Start
 
 
220 CPS - residential condominiums
 
Other
 
397,000

 
$
1,400,000

 
$
1,251,815

(1) 
 
89.4%
 
Q3 2012
 
N/A
 
N/A
Farley Office and Retail Building - (95.0% interest)
 
New York
 
850,000

 
760,000

 
196,759

(2) 
 
25.9%
 
Q2 2017
 
Q3 2020
 
Q2 2022
PENN1(3)
 
New York
 
2,543,000

 
200,000

(4) 
41,872

 
 
20.9%
 
Q4 2018
 
N/A
 
N/A
512 West 22nd Street - office (55.0% interest)
 
New York
 
173,000

 
72,000

 
54,288

(5) 
 
75.4%
 
Q4 2015
 
Q1 2019
 
Q3 2020
345 Montgomery Street (555 California Street) (70.0% interest)
 
Other
 
78,000

 
32,000

 
16,442

(6) 
 
51.4%
 
Q1 2018
 
Q3 2019
 
Q3 2020
606 Broadway - office/retail (50.0% interest)
 
New York
 
35,000

 
30,000

 
26,920

(7) 
 
89.7%
 
Q2 2016
 
Q4 2018
 
Q2 2020
825 Seventh Avenue - office (50.0% interest)
 
New York
 
165,000

 
15,000

 
7,133

 
 
47.6%
 
Q2 2018
 
Q1 2020
 
Q1 2021
Total current projects
 
 
 
 
 
$
2,509,000

 
$
1,595,229

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future Opportunities
 
Segment
 
Property
Zoning
Sq. Ft.
 
 
 
 
 
 
 
 
 
 
 
 
 
Penn District - multiple opportunities - office/residential/retail
 
New York
 
TBD
 
 
 
 
 
 
 
 
 
 
 
 
 
PENN2 - office/retail
 
New York
 
TBD
 
 
 
 
 
 
 
 
 
 
 
 
 
Hotel Pennsylvania
 
New York
 
2,052,000

 
 
 
 
 
 
 
 
 
 
 
 
 
260 Eleventh Avenue - office(8)
 
New York
 
280,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Undeveloped Land
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
29, 31, 33 West 57th Street (50.0% interest)
 
New York
 
150,000

 
 
 
 
 
 
 
 
 
 
 
 
 
484, 486 Eighth Avenue and 265, 267 West 34th Street
 
New York
 
125,000

 
 
 
 
 
 
 
 
 
 
 
 
 
527 West Kinzie, Chicago
 
Other
 
330,000

 
 
 
 
 
 
 
 
 
 
 
 
 
Rego Park III (32.4% interest)
 
New York
 
TBD

 
 
 
 
 
 
 
 
 
 
 
 
 
Total undeveloped land
 
 
 
605,000

 
 
 
 
 
 
 
 
 
 
 
 
 
_______________________
(1)
Excludes land and acquisition costs of $515,426.
(2)
Excludes our share of the upfront contribution of $230,000 and net of anticipated historic tax credits. The building and land are subject to a lease which expires in 2116.
(3)
The building is subject to a ground lease which expires in 2098 assuming all renewal options are exercised.
(4)
We expect the final budget will exceed $200,000 after anticipated scope changes.
(5)
Excludes land and acquisition costs of $57,000.
(6)
Excludes land and building costs of $31,000.
(7)
Excludes land and acquisition costs of $22,703.
(8)
The building is subject to a ground lease which expires in 2114.


Conference Call and Audio Webcast

As previously announced, the Company will host a quarterly earnings conference call and an audio webcast on Tuesday, April 30, 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 48545290. A telephonic replay of the conference call will be available from 1:30 p.m. ET on April 30, 2019 through May 30, 2019. To access the replay, please dial 888-843-7419 and enter the passcode 48545290#. 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.

 
8
VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEET
               
(Amounts in thousands, except unit, share, and per share amounts)
As of
 
March 31, 2019
 
December 31, 2018
ASSETS
 
 
 
Real estate, at cost:
 
 
 
Land
$
2,608,770

 
$
3,306,280

Buildings and improvements
7,821,301

 
10,110,992

Development costs and construction in progress
1,961,512

 
2,266,491

Moynihan Train Hall development expenditures
550,996

 
445,693

Leasehold improvements and equipment
115,756

 
108,427

Total
13,058,335

 
16,237,883

Less accumulated depreciation and amortization
(2,845,120
)
 
(3,180,175
)
Real estate, net
10,213,215

 
13,057,708

Assets held for sale
3,027,058

 

Right-of-use assets
457,662

 

Cash and cash equivalents
307,047

 
570,916

Restricted cash
593,759

 
145,989

Marketable securities
39,866

 
152,198

Tenant and other receivables, net of allowance for doubtful accounts of $4,154 as of December 31, 2018
73,404

 
73,322

Investments in partially owned entities
730,264

 
858,113

Real estate fund investments
322,858

 
318,758

220 Central Park South condominium units ready for sale
229,567

 
99,627

Receivable arising from the straight-lining of rents, net of allowance of $1,644 as of December 31, 2018
766,634

 
935,131

Deferred leasing costs, net of accumulated amortization of $180,953 and $207,529
345,241

 
400,313

Identified intangible assets, net of accumulated amortization of $97,749 and $172,114
34,161

 
136,781

Other assets
497,219

 
431,938

 
$
17,637,955

 
$
17,180,794

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
 
 
 
Mortgages payable, net
$
6,519,189

 
$
8,167,798

Senior unsecured notes, net
845,261

 
844,002

Unsecured term loan, net
745,076

 
744,821

Unsecured revolving credit facilities
530,000

 
80,000

Liabilities related to assets held for sale
1,097,350

 

Lease liabilities
484,173

 

Moynihan Train Hall obligation
550,996

 
445,693

Accounts payable and accrued expenses
442,496

 
430,976

Deferred revenue
71,328

 
167,730

Deferred compensation plan
101,922

 
96,523

Other liabilities
292,187

 
311,806

Total liabilities
11,679,978

 
11,289,349

Commitments and contingencies
 
 
 
Redeemable noncontrolling interests:
 
 
 
Class A units - 12,789,891 and 12,544,477 units outstanding
862,550

 
778,134

Series D cumulative redeemable preferred units - 141,401 and 177,101 units outstanding
4,535

 
5,428

Total redeemable noncontrolling interests
867,085

 
783,562

Shareholders' equity:
 
 
 
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 36,797,580 and 36,798,580 shares
891,263

 
891,294

Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 190,761,498 and 190,535,499 shares
7,609

 
7,600

Additional capital
7,676,770

 
7,725,857

Earnings less than distributions
(4,120,265
)
 
(4,167,184
)
Accumulated other comprehensive (loss) income
(11,385
)
 
7,664

Total shareholders' equity
4,443,992

 
4,465,231

Noncontrolling interests in consolidated subsidiaries
646,900

 
642,652

Total equity
5,090,892

 
5,107,883

 
$
17,637,955

 
$
17,180,794

 
9
VORNADO REALTY TRUST
OPERATING RESULTS

               
(Amounts in thousands, except per share amounts)
For the Three Months Ended
March 31,
 
2019
 
2018
Revenues
$
534,668

 
$
536,437

 
 
 
 
Income from continuing operations
$
213,181

 
$
645

Loss from discontinued operations
(137
)
 
(363
)
Net income
213,044

 
282

Less net (income) loss attributable to noncontrolling interests in:
 
 
 
Consolidated subsidiaries
(6,820
)
 
8,274

Operating Partnership
(12,202
)
 
1,124

Net income attributable to Vornado
194,022

 
9,680

Preferred share dividends
(12,534
)
 
(13,035
)
Preferred share issuance costs

 
(14,486
)
NET INCOME (LOSS) attributable to common shareholders
$
181,488

 
$
(17,841
)
 
 
 
 
INCOME (LOSS) PER COMMON SHARE – BASIC:
 
 
 
Net income (loss) per common share
$
0.95

 
$
(0.09
)
Weighted average shares outstanding
190,689

 
190,081

 
 
 
 
INCOME (LOSS) PER COMMON SHARE – DILUTED:
 
 
 
Net income (loss) per common share
$
0.95

 
$
(0.09
)
Weighted average shares outstanding
190,996

 
190,081

 
 
 
 
FFO attributable to common shareholders plus assumed conversions (non-GAAP)
$
247,684

 
$
135,000

Per diluted share (non-GAAP)
$
1.30

 
$
0.71

 
 
 
 
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)
$
149,939

 
$
172,907

Per diluted share (non-GAAP)
$
0.79

 
$
0.91

 
 
 
 
Weighted average shares used in determining FFO per diluted share
190,996

 
191,057

 
10
VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS

The following table reconciles net income (loss) 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
March 31,
 
2019
 
2018
Net income (loss) attributable to common shareholders
$
181,488

 
$
(17,841
)
Per diluted share
$
0.95

 
$
(0.09
)
 
 
 
 
FFO adjustments:
 
 
 
Depreciation and amortization of real property
$
108,483

 
$
100,410

Net gain from sale of UE common shares
(62,395
)
 

(Increase) decrease in fair value of marketable securities:


 


Lexington
(16,068
)
 
32,875

PREIT
15,649

 

Other
(42
)
 
111

Proportionate share of adjustments to equity in net income (loss) of partially owned entities to arrive at FFO:
 
 
 
Depreciation and amortization of real property
24,990

 
28,106

Net gains on sale of real estate

 
(305
)
(Increase) decrease in fair value of marketable securities
(12
)
 
1,674

 
70,605

 
162,871

Noncontrolling interests' share of above adjustments
(4,424
)
 
(10,046
)
FFO adjustments, net
$
66,181

 
$
152,825

 
 
 
 
FFO attributable to common shareholders (non-GAAP)
$
247,669

 
$
134,984

Convertible preferred share dividends
15

 
16

FFO attributable to common shareholders plus assumed conversions (non-GAAP)
$
247,684

 
$
135,000

Per diluted share (non-GAAP)
$
1.30

 
$
0.71


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. Our FFO for the three months ended March 31, 2018 has been adjusted to exclude the $34,660,000, or $0.17 per share, decrease in fair value of marketable equity securities previously reported.

 
11
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 months ended March 31, 2019 and 2018 and December 31, 2018.

                       
 
For the Three Months Ended
(Amounts in thousands)
March 31,
 
December 31, 2018
 
2019
 
2018
 
Net income
$
213,044

 
$
282

 
$
97,821

 
 
 
 
 
 
Deduct:
 
 
 
 
 
(Income) loss from partially owned entities
(7,320
)
 
9,904

 
(3,090
)
Interest and other investment (income) loss, net
(5,045
)
 
24,384

 
(7,656
)
Net gains on disposition of wholly owned and partially owned assets
(220,294
)
 

 
(81,203
)
Purchase price fair value adjustment

 

 
(44,060
)
NOI attributable to noncontrolling interests in consolidated subsidiaries
(17,403
)
 
(17,312
)
 
(19,771
)
 
 
 
 
 
 
Add:
 
 
 
 
 
Loss from real estate fund investments
167

 
8,807

 
51,258

Depreciation and amortization expense
116,709

 
108,686

 
112,869

General and administrative expense
58,020

 
42,533

 
32,934

Transaction related costs, impairment loss and other
149

 
13,156

 
14,637

NOI from partially owned entities
67,402

 
67,513

 
60,205

Interest and debt expense
102,463

 
88,166

 
83,175

Loss (income) from discontinued operations
137

 
363

 
(257
)
Income tax expense
29,743

 
2,554

 
32,669

NOI at share
337,772

 
349,036

 
329,531

Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other
(5,181
)
 
(17,948
)
 
(5,532
)
NOI at share - cash basis
$
332,591

 
$
331,088

 
$
323,999


NOI represents total revenues less operating expenses. We consider NOI to be the primary non-GAAP financial measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. As properties are bought and sold based on NOI, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI should not be considered a substitute for net income. NOI may not be comparable to similarly titled measures employed by other companies.
 
12
VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below are reconciliations of NOI at share to same store NOI at share for our New York segment, theMART, 555 California Street and other investments for the three months ended March 31, 2019 compared to March 31, 2018.
                                         
(Amounts in thousands)
Total
 
New York
 
theMART
 
555
California
Street
 
Other
NOI at share for the three months ended March 31, 2019
$
337,772

 
$
283,358

 
$
23,523

 
$
14,501

 
$
16,390

Less NOI at share from:
 
 
 
 
 
 
 
 
 
 
Acquisitions
 
(227
)
 
(227
)
 

 

 

Dispositions
 
2

 
2

 

 

 

Development properties
 
(11,710
)
 
(11,710
)
 

 

 

Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net
 
1,902

 
1,902

 

 

 

Other non-same store income, net
 
(18,779
)
 
(558
)
 
(1,831
)
 

 
(16,390
)
Same store NOI at share for the three months ended March 31, 2019
$
308,960

 
$
272,767

 
$
21,692

 
$
14,501

 
$

 
 
 
 
 
 
 
 
 
 
NOI at share for the three months ended March 31, 2018
$
349,036

 
$
288,596

 
$
26,875

 
$
13,511

 
$
20,054

Less NOI at share from:
 
 
 
 
 
 
 
 
 
 
Acquisitions
 
(121
)
 
(121
)
 

 

 

Dispositions
 
(62
)
 
(62
)
 

 

 

Development properties
 
(13,686
)
 
(13,686
)
 

 

 

Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net
 
(1,127
)
 
(1,127
)
 

 

 

Other non-same store income, net
 
(24,805
)
 
(551
)
 
(4,200
)
 

 
(20,054
)
Same store NOI at share for the three months ended March 31, 2018
$
309,235

 
$
273,049

 
$
22,675

 
$
13,511

 
$

 
 
 
 
 
 
 
 
 
 
(Decrease) increase in same store NOI at share for the three months ended March 31, 2019 compared to March 31, 2018
$
(275
)
 
$
(282
)
 
$
(983
)
 
$
990

 
$

 
 
 
 
 
 
 
 
 
 
 
% (decrease) increase in same store NOI at share
(0.1
)%
 
(0.1
)%
(1) 
(4.3
)%
 
7.3
%
 
%
____________________
(1)
Excluding Hotel Pennsylvania, same store NOI at share increased by 0.5%.


Same store NOI at share represents NOI at share from property operations which are owned by us and in service in both the current and prior year reporting periods. Same store NOI at share - cash basis is NOI at share from operations before straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments which are owned by us and in service in both the current and prior year reporting periods. We present these non-GAAP measures to (i) facilitate meaningful comparisons of the operational performance of our properties and segments, (ii) make decisions on whether to buy, sell or refinance properties, and (iii) compare the performance of our properties and segments to those of our peers. Same store NOI at share and same store NOI at share - cash basis should not be considered as an alternative to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.
 
13
VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below are reconciliations of NOI at share - cash basis to same store NOI at share - cash basis for our New York segment, theMART, 555 California Street and other investments for the three months ended March 31, 2019 compared to March 31, 2018.
                                         
(Amounts in thousands)
Total
 
New York
 
theMART
 
555
California
Street
 
Other
NOI at share - cash basis for the three months ended March 31, 2019
$
332,591

 
$
276,740

 
$
24,912

 
$
14,745

 
$
16,194

 
Less NOI at share - cash basis from:
 
 
 
 
 
 
 
 
 
 
Acquisitions
(228
)
 
(228
)
 

 

 

 
Dispositions
2

 
2

 

 

 

 
Development properties
(14,286
)
 
(14,286
)
 

 

 

 
Lease termination income
(429
)
 
(429
)
 

 

 

 
Other non-same store income, net
(18,585
)
 
(560
)
 
(1,831
)
 

 
(16,194
)
Same store NOI at share - cash basis for the three months ended March 31, 2019
$
299,065

 
$
261,239

 
$
23,081

 
$
14,745

 
$

 
 
 
 
 
 
 
 
 
 
 
NOI at share - cash basis for the three months ended March 31, 2018
$
331,088

 
$
271,273

 
$
27,079

 
$
12,826

 
$
19,910

 
Less NOI at share - cash basis from:
 
 
 
 
 
 
 
 
 
 
Acquisitions
(121
)
 
(121
)
 

 

 

 
Dispositions
(65
)
 
(65
)
 

 

 

 
Development properties
(14,945
)
 
(14,945
)
 

 

 

 
Lease termination income
(1,061
)
 
(1,061
)
 

 

 

 
Other non-same store income, net
(24,661
)
 
(551
)
 
(4,200
)
 

 
(19,910
)
Same store NOI at share - cash basis for the three months ended March 31, 2018
$
290,235

 
$
254,530

 
$
22,879

 
$
12,826

 
$

 
 
 
 
 
 
 
 
 
 
Increase (decrease) in same store NOI at share - cash basis for the three months ended March 31, 2019 compared to March 31, 2018
$
8,830

 
$
6,709

 
$
202

 
$
1,919

 
$

 
 
 
 
 
 
 
 
 
 
% increase (decrease) in same store NOI at share - cash basis
3.0
%
 
2.6
%
(1) 
0.9
%
 
15.0
%
 
%
____________________
(1)
Excluding Hotel Pennsylvania, same store NOI at share - cash basis increased by 3.3%.
 
14
VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below are reconciliations of NOI at share to same store NOI at share for our New York segment, theMART, 555 California Street and other investments for the three months ended March 31, 2019 compared to December 31, 2018.
                                         
(Amounts in thousands)
Total
 
New York
 
theMART
 
555
California
Street
 
Other
NOI at share for the three months ended March 31,
2019
$
337,772

 
$
283,358

 
$
23,523

 
$
14,501

 
$
16,390

 
Less NOI at share from:
 
 
 
 
 
 
 
 
 
 
Dispositions
2

 
2

 

 

 

 
Development properties
(11,710
)
 
(11,710
)
 

 

 

 
Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net
1,902

 
1,902

 

 

 

 
Other non-same store income, net
(18,780
)
 
(559
)
 
(1,831
)
 

 
(16,390
)
Same store NOI at share for the three months ended March 31, 2019
$
309,186

 
$
272,993

 
$
21,692

 
$
14,501

 
$

 
 
 
 
 
 
 
 
 
 
NOI at share for the three months ended December 31, 2018
$
329,531

 
$
295,199

 
$
10,981

 
$
14,005

 
$
9,346

 
Less NOI at share from:
 
 
 
 
 
 
 
 
 
 
Dispositions
19

 
19

 

 

 

 
Development properties
(12,986
)
 
(13,000
)
 

 
14

 

 
Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net
(95
)
 
368

 
(463
)
 

 

 
Other non-same store income, net
(10,414
)
 
(1,068
)
 

 

 
(9,346
)
Same store NOI at share for the three months ended December 31, 2018
$
306,055

 
$
281,518

 
$
10,518

 
$
14,019

 
$

 
 
 
 
 
 
 
 
 
 
Increase (decrease) in same store NOI at share for the three months ended March 31, 2019 compared to December 31, 2018
$
3,131

 
$
(8,525
)
 
$
11,174

 
$
482

 
$

 
 
 
 
 
 
 
 
 
 
 
% increase (decrease) in same store NOI at share
1.0
%
 
(3.0
)%
(1) 
106.2
%
(2) 
3.4
%
 
%
____________________
(1)
Excluding Hotel Pennsylvania, same store NOI at share increased by 1.2%.
(2)
The three months ended December 31, 2018 includes an additional $12,124 real estate tax expense accrual due to an increase in the tax-assessed value of theMART.
 
15
VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below are reconciliations of NOI at share - cash basis to same store NOI at share - cash basis for our New York segment, theMART, 555 California Street and other investments for the three months ended March 31, 2019 compared to December 31, 2018.
 
                                         
(Amounts in thousands)
Total
 
New York
 
theMART
 
555
California
Street
 
Other
NOI at share - cash basis for the three months ended March 31, 2019
$
332,591

 
$
276,740

 
$
24,912

 
$
14,745

 
$
16,194

 
Less NOI at share - cash basis from:
 
 
 
 
 
 
 
 
 
 
Dispositions
2

 
2

 

 

 

 
Development properties
(14,286
)
 
(14,286
)
 

 

 

 
Lease termination income
(429
)
 
(429
)
 

 

 

 
Other non-same store income, net
(18,585
)
 
(560
)
 
(1,831
)
 

 
(16,194
)
Same store NOI at share - cash basis for the three months ended March 31, 2019
$
299,293

 
$
261,467

 
$
23,081

 
$
14,745

 
$

 
 
 
 
 
 
 
 
 
 
 
NOI at share - cash basis for the three months ended December 31, 2018
$
323,999

 
$
288,933

 
$
12,758

 
$
13,784

 
$
8,524

 
Less NOI at share - cash basis from:
 
 
 
 
 
 
 
 
 
 
Dispositions
19

 
19

 

 

 

 
Development properties
(15,041
)
 
(15,055
)
 

 
14

 

 
Lease termination income
(563
)
 
(43
)
 
(520
)
 

 

 
Other non-same store income, net
(9,590
)
 
(1,066
)
 

 

 
(8,524
)
Same store NOI at share - cash basis for the three months ended December 31, 2018
$
298,824

 
$
272,788

 
$
12,238

 
$
13,798

 
$

 
 
 
 
 
 
 
 
 
 
Increase (decrease) in same store NOI at share - cash basis for the three months ended March 31, 2019 compared to December 31, 2018
$
469

 
$
(11,321
)
 
$
10,843

 
$
947

 
$

 
 
 
 
 
 
 
 
 
 
% increase (decrease) in same store NOI at share - cash basis
0.2
%
 
(4.2
)%
(1) 
88.6
%
(2) 
6.9
%
 
%
____________________
(1)
Excluding Hotel Pennsylvania, same store NOI at share - cash basis increased by 0.2%.
(2)
The three months ended December 31, 2018 includes an additional $12,124 real estate tax expense accrual due to an increase in the tax-assessed value of theMART.
 
16