Document and Entity Information
Document and Entity Information | |
3 Months Ended
Mar. 31, 2010 | |
Entity Registrant Name | VORNADO REALTY TRUST |
Entity Central Index Key | 0000899689 |
Document Type | 10-Q |
Document Period End Date | 2010-03-31 |
Document Fiscal Year Focus | 2,010 |
Document Fiscal Period Focus | Q1 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 181,913,554 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Thousands | 3 Months Ended
Mar. 31, 2010 | 12 Months Ended
Dec. 31, 2009 |
Real estate, at cost: | ||
Land | $4,610,165 | $4,606,065 |
Buildings and improvements | 13,003,703 | 12,902,086 |
Development costs and construction in progress | 244,486 | 313,310 |
Leasehold improvements and equipment | 129,600 | 128,056 |
Total | 17,987,954 | 17,949,517 |
Less accumulated depreciation and amortization | (2,597,709) | (2,494,441) |
Real estate, net | 15,390,245 | 15,455,076 |
Cash and cash equivalents | 788,940 | 535,479 |
Short-term investments | 15,000 | 40,000 |
Restricted cash | 307,849 | 293,950 |
Marketable securities | 413,954 | 380,652 |
Accounts receivable, net of allowance for doubtful accounts of $50,797 and $46,708 | 159,805 | 157,325 |
Investments in partially owned entities, including Alexander's of $197,181 and $193,174 | 839,476 | 799,832 |
Investment in Toys "R" Us | 517,497 | 409,453 |
Mezzanine loans receivable, net of allowance of $185,738 and $190,738 | 126,777 | 203,286 |
Receivable arising from the straight-lining of rents, net of allowance of $5,108 and $4,680 | 701,733 | 681,526 |
Deferred leasing and financing costs, net of accumulated amortization of $201,565 and $183,224 | 326,743 | 311,825 |
Due from officers | 13,182 | 13,150 |
Other assets | 818,492 | 903,918 |
Total Assets | 20,419,693 | 20,185,472 |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | ||
Notes and mortgages payable | 8,432,533 | 8,445,766 |
Senior unsecured notes | 1,224,790 | 711,716 |
Exchangeable senior debentures | 486,061 | 484,457 |
Convertible senior debentures | 447,261 | 445,458 |
Revolving credit facility debt | 500,217 | 852,218 |
Accounts payable and accrued expenses | 491,464 | 475,242 |
Deferred credit | 671,366 | 682,384 |
Deferred compensation plan | 84,028 | 80,443 |
Deferred tax liabilities | 17,789 | 17,842 |
Other liabilities | 100,057 | 88,912 |
Total liabilities | 12,455,566 | 12,284,438 |
Commitments and contingencies | ||
Redeemable noncontrolling interests: | ||
Total redeemable noncontrolling interests | 1,339,748 | 1,251,628 |
Vornado shareholders' equity: | ||
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 33,949,584 and 33,952,324 shares | 823,549 | 823,686 |
Common shares of beneficial interest: $.04 par value per share; authorized, 250,000,000 shares; issued and outstanding 181,913,554 and 181,214,161 shares | 7,247 | 7,218 |
Additional capital | 6,877,529 | 6,961,007 |
Earnings less than distributions | (1,520,690) | (1,577,591) |
Accumulated other comprehensive income | 29,953 | 28,449 |
Total Vornado shareholders' equity | 6,217,588 | 6,242,769 |
Noncontrolling interests in consolidated subsidiaries | 406,791 | 406,637 |
Total equity | 6,624,379 | 6,649,406 |
Total liabilities, redeemable noncontrolling interests and equity | 20,419,693 | 20,185,472 |
Redeemable noncontrolling interests units outstanding - Class A [member] | ||
Redeemable noncontrolling interests: | ||
Class A units - 14,080,613 and 13,892,313 units outstanding | 1,065,902 | 971,628 |
Redeemable noncontrolling interests units outstanding - Series D [member] | ||
Redeemable noncontrolling interests: | ||
Series D cumulative redeemable preferred units - 10,953,847 and 11,200,000 units outstanding | $273,846 | $280,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | ||
In Thousands, except Share data | Mar. 31, 2010
| Dec. 31, 2009
|
ASSETS | ||
Accounts receivable, allowance for doubtful accounts | $50,797 | $46,708 |
Investments in partially owned entities, Alexander's | 197,181 | 193,174 |
Mezzanine loans receivable, allowance | 185,738 | 190,738 |
Receivable arising from the straight-lining of rents, allowance | 5,108 | 4,680 |
Deferred leasing and financing costs, accumulated amortization | $201,565 | $183,224 |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | ||
Preferred shares of beneficial interest: authorized shares | 110,000,000 | 110,000,000 |
Preferred shares of beneficial interest: issued shares | 33,949,584 | 33,952,324 |
Preferred shares of beneficial interest: outstanding shares | 33,949,584 | 33,952,324 |
Common shares of beneficial interest: par value per share | 0.04 | 0.04 |
Common shares of beneficial interest: authorized shares | 250,000,000 | 250,000,000 |
Common shares of beneficial interest: issued shares | 181,913,554 | 181,214,161 |
Common shares of beneficial interest: outstanding shares | 181,913,554 | 181,214,161 |
Redeemable noncontrolling interests units outstanding - Class A [member] | ||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | ||
Redeemable noncontrolling interests units outstanding | 14,080,613 | 13,892,313 |
Redeemable noncontrolling interests units outstanding - Series D [member] | ||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | ||
Redeemable noncontrolling interests units outstanding | 10,953,847 | 11,200,000 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (USD $) | ||
In Thousands, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
REVENUES: | ||
Property rentals | $560,950 | $549,787 |
Tenant expense reimbursements | 92,921 | 98,029 |
Fee and other income | 42,460 | 30,750 |
Total revenues | 696,331 | 678,566 |
EXPENSES: | ||
Operating | 279,055 | 278,898 |
Depreciation and amortization | 135,824 | 131,656 |
General and administrative | 48,730 | 79,065 |
Litigation loss accrual | 10,056 | |
Total expenses | 473,665 | 489,619 |
Operating income | 222,666 | 188,947 |
Income applicable to Alexander's | 6,460 | 18,133 |
Income applicable to Toys "R" Us | 125,870 | 97,147 |
Income (loss) from partially owned entities | 4,884 | (7,543) |
Interest and other investment income, net | 14,708 | 14,059 |
Interest and debt expense (including amortization of deferred financing costs of $4,426 and $4,049) | (139,735) | (157,760) |
Net gains on disposition of wholly owned and partially owned assets other than depreciable real estate | 3,305 | |
Net gain on early extinguishment of debt | 5,905 | |
Income before income taxes | 238,158 | 158,888 |
Income tax expense | (5,614) | (5,049) |
Income from continuing operations | 232,544 | 153,839 |
Income from discontinued operations | 2,592 | |
Net income | 232,544 | 156,431 |
Net income attributable to noncontrolling interests, including unit distributions | (17,992) | (16,321) |
Net income attributable to Vornado | 214,552 | 140,110 |
Dividends paid on preferred shares | (14,267) | (14,269) |
NET INCOME attributable to common shareholders | $200,285 | $125,841 |
INCOME PER COMMON SHARE - BASIC: | ||
Income from continuing operations, net | 1.1 | 0.79 |
Income from discontinued operations, net | 0.02 | |
Net income per common share | 1.1 | 0.81 |
Weighted average shares | 181,542 | 155,991 |
INCOME PER COMMON SHARE - DILUTED: | ||
Income from continuing operations, net | 1.09 | 0.78 |
Income from discontinued operations, net | 0.02 | |
Net income per common share | 1.09 | 0.8 |
Weighted average shares | 183,445 | 157,103 |
DIVIDENDS PER COMMON SHARE | 0.65 | 0.95 |
1_CONSOLIDATED STATEMENTS OF IN
CONSOLIDATED STATEMENTS OF INCOME (Parentheticals) (USD $) | ||
In Thousands | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Amortization of deferred financing costs | $4,426 | $4,049 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) | |||||||
In Thousands | Preferred Shares
| Common Shares
| Additional Capital
| Earnings Less Than Distributions
| Accumulated Other Comprehensive Income (Loss)
| Non-controlling Interests
| Total
|
Balance, value at Dec. 31, 2008 | $823,807 | $6,195 | $6,025,976 | ($1,047,340) | ($6,899) | $412,913 | $6,214,652 |
Balance, shares at Dec. 31, 2008 | 33,954 | 155,286 | |||||
Net income (loss) | 140,110 | (463) | 139,647 | ||||
Dividends paid on common shares, shares | 2,761 | ||||||
Dividends paid on common shares | 110 | 88,453 | (147,678) | (59,115) | |||
Dividends paid on preferred shares | (14,269) | (14,269) | |||||
Conversion of Series A preferred shares to common shares, value | (90) | 90 | |||||
Conversion of Series A preferred shares to common shares, shares | (2) | 3 | |||||
Deferred compensation shares and options, value | 2 | 23,288 | 23,290 | ||||
Common shares issued: | |||||||
Upon redemption of Class A Operating Partnership units, at redemption value | 8 | 10,938 | 10,946 | ||||
Upon redemption of Class A Operating Partnership units, shares | 221 | ||||||
Under employees' share option plan, value | (14) | 505 | (435) | 56 | |||
Under employees' share option plan, shares | 7 | ||||||
Unrealized net gain (loss) on securities available for sale | (39,305) | (39,305) | |||||
Voluntary surrender of equity awards on March 31, 2009 | 13,722 | 13,722 | |||||
Adjustments to redeemable Class A Operating Partnership units at redemption value | 271,856 | 271,856 | |||||
Other | (113) | 5 | (593) | (701) | |||
Balance, value at Mar. 31, 2009 | 823,717 | 6,301 | 6,434,715 | (1,069,607) | (46,797) | 412,450 | 6,560,779 |
Balance, shares at Mar. 31, 2009 | 33,952 | 158,278 | |||||
Balance, value at Dec. 31, 2009 | 823,686 | 7,218 | 6,961,007 | (1,577,591) | 28,449 | 406,637 | 6,649,406 |
Balance, shares at Dec. 31, 2009 | 33,952 | 181,214 | |||||
Net income (loss) | 214,552 | 213 | 214,765 | ||||
Dividends paid on common shares | (117,958) | (117,958) | |||||
Dividends paid on preferred shares | (14,267) | (14,267) | |||||
Conversion of Series A preferred shares to common shares, value | (137) | 137 | |||||
Conversion of Series A preferred shares to common shares, shares | (2) | 4 | |||||
Deferred compensation shares and options, value | 2 | 1,644 | 1,646 | ||||
Deferred compensation shares and options, shares | 17 | ||||||
Common shares issued: | |||||||
Upon redemption of Class A Operating Partnership units, at redemption value | 11 | 18,117 | 18,128 | ||||
Upon redemption of Class A Operating Partnership units, shares | 268 | ||||||
Under employees' share option plan, value | 16 | 541 | (25,428) | (24,871) | |||
Under employees' share option plan, shares | 405 | ||||||
Under dividend reinvestment plan, value | 390 | 390 | |||||
Under dividend reinvestment plan, shares | 6 | ||||||
Unrealized net gain (loss) on securities available for sale | 17,588 | 17,588 | |||||
Our share of partially owned entities OCI adjustments | (15,688) | (15,688) | |||||
Adjustments to redeemable Class A Operating Partnership units at redemption value | (104,247) | (104,247) | |||||
Other | (60) | 2 | (396) | (59) | (513) | ||
Balance, value at Mar. 31, 2010 | $823,549 | $7,247 | $6,877,529 | ($1,520,690) | $29,953 | $406,791 | $6,624,379 |
Balance, shares at Mar. 31, 2010 | 33,950 | 181,914 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
In Thousands | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Cash Flows from Operating Activities: | ||
Net income | $232,544 | $156,431 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization (including amortization of deferred financing costs) | 140,250 | 136,178 |
Equity in income of partially owned entities, including Alexander's and Toys "R" Us | (130,812) | (107,737) |
Straight-lining of rental income | (20,922) | (27,138) |
Amortization of below market leases, net | (15,907) | (17,982) |
Litigation loss accrual | 10,056 | |
Distributions of income from partially owned entities | 7,123 | 8,381 |
Net gain resulting from Lexington Realty Trust's March 2010 stock issuance | (5,998) | |
Net gain on dispositions of assets other than depreciable real estate | (3,305) | |
Other non-cash adjustments | 1,848 | 19,522 |
Net gain on early extinguishment of debt | (5,905) | |
Write-off of unamortized costs from the voluntary surrender of equity awards | 32,588 | |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (2,480) | 7,469 |
Accounts payable and accrued expenses | 26,137 | 14,887 |
Other assets | 37,391 | (40,320) |
Other liabilities | 12,123 | (6,562) |
Net cash provided by operating activities | 288,048 | 169,812 |
Cash Flows from Investing Activities: | ||
Proceeds received from repayment of mezzanine loans receivable | 101,839 | 3,593 |
Proceeds from sales of real estate and related investments | 38,879 | 20,858 |
Development costs and construction in progress | (37,598) | (132,529) |
Investments in partially owned entities | (36,741) | (9,582) |
Additions to real estate | (30,247) | (38,916) |
Investments in mezzanine loans receivable and other | (28,873) | |
Proceeds from maturing short-term investments | 25,000 | |
Purchases of marketable securities | (13,917) | (9,882) |
Restricted cash | (13,899) | (27,298) |
Distributions of capital from partially owned entities | 7,617 | 7,504 |
Deposits in connection with real estate acquisitions | (5,003) | (9) |
Proceeds from sales of, and return of investment in, marketable securities | 285 | 7,835 |
Net cash provided by (used in) investing activities | 7,342 | (178,426) |
Cash Flows from Financing Activities: | ||
Proceeds from borrowings | 660,335 | 353,856 |
Repayments of borrowings | (525,246) | (138,291) |
Dividends paid on common shares | (117,958) | (59,115) |
Repurchase of shares related to stock compensation arrangements and related tax withholdings | (24,360) | (32) |
Dividends paid on preferred shares | (14,267) | (14,269) |
Distributions to noncontrolling interests | (13,082) | (10,514) |
Purchase of outstanding Preferred Units | (4,000) | (24,330) |
Debt issuance costs | (3,351) | (94) |
Net cash (used in) provided by financing activities | (41,929) | 107,211 |
Net increase in cash and cash equivalents | 253,461 | 98,597 |
Cash and cash equivalents at beginning of period | 535,479 | 1,526,853 |
Cash and cash equivalents at end of period | 788,940 | 1,625,450 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash payments for interest (including capitalized interest of $614 and $4,569) | 121,573 | 132,208 |
Cash payments for income taxes | 1,701 | 1,150 |
Non-Cash Transactions: | ||
Adjustments to redeemable Class A Operating Partnership units at redemption value | (104,247) | 271,856 |
Conversion of Class A Operating Partnership units to common shares, at redemption value | 18,128 | 10,946 |
Dividends paid in common shares | 88,563 | |
Unit distributions paid in Class A units | 8,213 | |
Unrealized net gain (loss) on securities available for sale | $17,588 | ($39,305) |
2_CONSOLIDATED STATEMENTS OF CA
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parentheticals) (USD $) | ||
In Thousands | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Capitalized interest | $614 | $4,569 |
Organization and Business
Organization and Business | |
3 Months Ended
Mar. 31, 2010 | |
Organization and Business | 1. Organization Vornado Realty Trust ("Vornado") is a fully-integrated real estate investment trust ("REIT") and conducts its business through Vornado Realty L.P., a Delaware limited partnership (the "Operating Partnership"). Vornado is the sole general partner of, and owned approximately 92.4% of the common limited partnership interest in the Operating Partnership at March 31, 2010. All references to "we," "us," "our," the "Company" and "Vornado" refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership. Substantially all of Vornado's assets are held through subsidiaries of the Operating Partnership. Accordingly, Vornado's cash flow and ability to pay dividends to its shareholders is dependent upon the cash flow of the Operating Partnership and the ability of its direct and indirect subsidiaries to first satisfy their obligations to creditors. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | |
3 Months Ended
Mar. 31, 2010 | |
Basis of Presentation and Significant Accounting Policies | 2. Basis of Presentation The accompanying consolidated financial statements are unaudited and include the accounts of Vornado, and the Operating Partnership and its consolidated partially owned entities. All significant inter-company amounts have been eliminated. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted. We have made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (the "SEC") and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Reports on Form 10-K and Form 10-K/A for the year ended December 31, 2009, as filed with the SEC. The results of operations for the three months ended March 31, 2010 are not necessarily indicative of the operating results for the full year. |
Recently Issued Accounting Lite
Recently Issued Accounting Literature | |
3 Months Ended
Mar. 31, 2010 | |
Recently Issued Accounting Literature | 3. Recently Issued Accounting Literature On January 21, 2010, the Financial Accounting Standards Board ("FASB") issued an update to Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures, adding new requirements for disclosures about transfers into and out of Levels 1 and 2 fair value measurements and additional disclosures about the activity within Level 3 fair value measurements. The retrospective application of this guidance on January 1, 2010 did not have a material effect on our consolidated financial statements. In June 2009, the FASB issued an update to ASC 810, Consolidation, which modifies the existing quantitative guidance used in determining the primary beneficiary of a variable interest entity ("VIE") by requiring entities to qualitatively assess whether an enterprise is a primary beneficiary, based on whether the entity has (i) power over the significant activities of the VIE, and (ii) an obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. The adoption of this guidance on January 1, 2010 did not have a material effect on our consolidated financial statements. |
Investments in Partially Owned
Investments in Partially Owned Entities | |
3 Months Ended
Mar. 31, 2010 | |
Investments in Partially Owned Entities | 4. Investments in Partially Owned Entities Toys "R" Us ("Toys") As of March 31, 2010, we own 32.7% of Toys. The business of Toys is highly seasonal. Historically, Toys' fourth quarter net income accounts for more than 80% of its fiscal year net income. We account for our investment in Toys under the equity method and record our 32.7% share of Toys net income or loss on a lag basis because Toys' fiscal year ends on the Saturday nearest January 31, and our fiscal year ends on December 31. As of March 31, 2010, the carrying amount of our investment in Toys does not differ materially from our share of the equity in the net assets of Toys on a purchase accounting basis. Below is a summary of Toys' latest available financial information on a purchase accounting basis: (Amounts in thousands) Balance as of Balance Sheet: January 30, 2010 October 31, 2009 Assets $ 11,770,000 $ 12,589,000 Liabilities 10,138,000 11,198,000 Noncontrolling interests 32,000 112,000 Toys "R" Us, Inc. equity 1,600,000 1,279,000 For the Three Months Ended Income Statement: January 30, 2010 January 31, 2009 Total revenue $ 5,857,000 $ 5,461,000 Net income attributable to Toys 379,000 291,000 Alexander's, Inc. ("Alexander's") (NYSE: ALX) As of March 31, 2010, we own 32.4% of the outstanding common stock of Alexander's. We manage, lease and develop Alexander's properties pursuant to agreements which expire in March of each year and are automatically renewable. As of March 31, 2010, Alexander's owed us $58,660,000 in fees under these agreements. Based on Alexander's March 31, 2010 closing share price of $299.13, the market value ("fair value" pursuant to ASC 820) of our investment in Alexander's is $494,781,000, or $297,600,000 in excess of the March 31, 2010 carrying amount on our consolidated balance sheet. As of March 31, 2010, the carrying amount of our investment in Alexander's, excluding amounts owed to us, exceeds our share of the equity in the net assets of Alexander's by approximately $60,226,000. The majority of this basis difference resulted from the excess of our purchase price for the Alexander's common stock acquired over the book value of Alexander's net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of Alexander's assets and liabilities, to their real estate (land and buildings). We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in Alexander's net income or loss. The basis difference related to the land will be recognized upon disposition of our investment. Below is a summary of Alexander's latest available financial information: (Amounts in thousands) Balance as of Balance Sheet: March 31, 2010 December 30, 2009 Assets $ 1,696,000 $ 1,704,000 Liabilities 1,366,000 1,389,000 Noncontrolling interests 2,000 2,000 Shareholders' equity 328,000 313,000 For the Three M |
Marketable Securities
Marketable Securities | |
3 Months Ended
Mar. 31, 2010 | |
Marketable Securities | 5. Marketable Securities The carrying amount of marketable securities on our consolidated balance sheets and their corresponding fair values at March 31, 2010 and December 31, 2009 are as follows: As of March 31, 2010 As of December 31, 2009 (Amounts in thousands) Carrying Amount FairValue Carrying Amount FairValue Marketable equity securities $ 111,023 $ 111,023 $ 79,925 $ 79,925 Debt securities held-to-maturity 302,931 324,946 300,727 319,393 $ 413,954 $ 435,969 $ 380,652 $ 399,318 At March 31, 2010, aggregate unrealized gains and losses were $30,177,000 and $922,000, respectively. At December 31, 2009, aggregate unrealized gains and losses were $13,026,000 and $1,223,000, respectively. |
Mezzanine Loans Receivable
Mezzanine Loans Receivable | |
3 Months Ended
Mar. 31, 2010 | |
Mezzanine Loans Receivable | 6. Mezzanine Loans Receivable The following is a summary of our investments in mezzanine loans as of March 31, 2010 and December 31, 2009. (Amounts in thousands) Interest Rate as of Carrying Amount as of Mezzanine Loans Receivable: Maturity March 31,2010 March 31, 2010 December 31,2009 Riley HoldCo Corp. 02/15 10.00% $ 74,437 $ 74,437 Tharaldson Lodging Companies 04/11 4.47% 73,839 74,701 280 Park Avenue 06/16 10.25% 72,282 73,750 Equinox (1) (1) (1) 97,968 Other, net 11/11-8/15 1.35% - 8.95% 91,957 73,168 312,515 394,024 Valuation allowance (2) (185,738 ) (190,738 ) $ 126,777 $ 203,286 _____________________ (1) In January 2010, Equinox pre-paid the entire balance of this loan which was scheduled to mature in February 2013. We received $99,314, including accrued interest, for our 50% interest in the loan which we acquired in 2006 for $57,500. (2) Represents loan loss accruals on certain mezzanine loans based on our estimate of the net realizable value of each loan. Our estimates are based on the present value of expected cash flows, discounted at each loan's effective interest rate, or if a loan is collateralized, based on the fair value of the underlying collateral, adjusted for estimated costs to sell. The excess of the carrying amount over the net realizable value of a loan is recognized as a reduction of "interest and other investment income, net" in our consolidated statement of income. |
Identified Intangible Assets
Identified Intangible Assets | |
3 Months Ended
Mar. 31, 2010 | |
Identified Intangible Assets | 7. Identified Intangible Assets and Intangible Liabilities The following summarizes our identified intangible assets (primarily acquired above-market leases) and intangible liabilities (primarily acquired below-market leases) as of March 31, 2010 and December 31, 2009. Balance as of (Amounts in thousands) March 31, 2010 December 31, 2009 Identified intangible assets (included in other assets): Gross amount $ 755,075 $ 755,467 Accumulated amortization (330,693 ) (312,957 ) Net $ 424,382 $ 442,510 Identified intangible liabilities (included in deferred credit): Gross amount $ 942,917 $ 942,968 Accumulated amortization (327,505 ) (309,476 ) Net $ 615,412 $ 633,492 Amortization of acquired below-market leases, net of acquired above-market leases resulted in an increase to rental income of $15,907,000 and $17,982,000 for the three months ended March 31, 2010 and 2009, respectively. Estimated annual amortization of acquired below-market leases, net of acquired above-market leases for each of the five succeeding years commencing January 1, 2011 is as follows: (Amounts in thousands) 2011 $ 58,723 2012 54,430 2013 46,496 2014 40,537 2015 37,686 Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was $14,914,000 and $15,786,000 for the three months ended March 31, 2010 and 2009, respectively. Estimated annual amortization of all other identified intangible assets including acquired in-place leases, customer relationships, and third party contracts for each of the five succeeding years commencing January 1, 2011 is as follows: (Amounts in thousands) 2011 $ 51,775 2012 46,446 2013 38,957 2014 20,149 2015 15,043 We are a tenant under ground leases for certain properties. Amortization of these acquired below-market leases resulted in an increase to rent expense of $509,000 and $533,000 for the three months ended March 31, 2010 and 2009, respectively. Estimated annual amortization of these below-market leases for each of the five succeeding years commencing January 1, 2011 is as follows: (Amounts in thousands) 2011 $ 2,157 2012 2,157 2013 2,157 2014 2,157 2015 2,157 |
Debt
Debt | |
3 Months Ended
Mar. 31, 2010 | |
Debt | 8. Debt The following is a summary of our debt: (Amounts in thousands) Balance at Notes and mortgages payable: Maturity (1) Interest Rate atMarch 31, 2010 March 31, 2010 December 31, 2009 Fixed rate: New York Office: 1290 avenue of the Americas 01/13 5.97% $ 431,976 $ 434,643 350 Park Avenue 01/12 5.48% 430,000 430,000 770 Broadway 03/16 5.65% 353,000 353,000 888 Seventh Avenue 01/16 5.71% 318,554 318,554 Two Penn Plaza 02/11 4.97% 281,182 282,492 909 Third Avenue 04/15 5.64% 209,735 210,660 Eleven Penn Plaza 12/11 5.20% 202,211 203,198 Washington, DC Office: Skyline Place 02/17 5.74% 678,000 678,000 Warner Building 05/16 6.26% 292,700 292,700 River House Apartments 04/15 5.43% 195,546 195,546 1215 Clark Street, 200 12th Street and 251 18th Street 01/25 7.09% 112,872 113,267 Bowen Building 06/16 6.14% 115,022 115,022 Reston Executive I, II, and III 01/13 5.57% 93,000 93,000 1101 17th, 1140 Connecticut, 1730 M and 1150 17th Street 08/10 6.74% 85,392 85,910 1550 and 1750 Crystal Drive 11/14 7.08% 81,235 81,822 Universal Buildings 04/14 6.35% 105,746 106,630 1235 Clark Street 07/12 6.75% 53,011 53,252 2231 Crystal Drive 08/13 7.08% 48,004 48,533 1750 Pennsylvania Avenue 06/12 7.26% 45,685 45,877 241 18th Street 10/10 6.82% 45,345 45,609 2011 Crystal Drive 08/17 7.30% 82,046 82,178 1225 Clark Street 08/13 7.08% 28,714 28,925 1800, 1851 and 1901 South Bell Street 12/11 6.91% 17,104 19,338 Retail: Springfield Mall (including present value of purchase option) (2) 10/12-04/13 5.45% 242,031 242,583 Montehiedra Town Center 07/16 6.04% 120,000 120,000 Broadway Mall 07/13 5.33% 91,997 92,601 828-850 Madison Avenue Condominium 06/18 5.29% 80,000 80,000 Las Catalinas Mall 11/13 6.97% 58,923 59,304 Other (3) 12/10-05/36 4.75%-12.40% 155,955 156,709 Merchandise Mart: Merchandise Mart 12/16 5.57% 550,000 550,000 High Point Complex (4) 09/16 10.35% 217,136 217,815 Boston Design Center 09/15 5.02% 69,378 69,667 Washington Design Center 11/11 6.95% 44,042 44,247 Other: 555 California Street 05/10-09/11 5.94% 664,750 664,117 Industrial Warehouses 10/11 6.95% 24,731 24,813 Total fixed interest notes and mortgages payable 6.01% $ 6,625,023 $ 6,640,012 (Amounts in thousands) Balance at Notes and mortgages payable: Maturity (1) Spread over LIBOR Interest Rate atMarch 31, 2010 March 31, 2010 December 31, 2009 Variable rate: New York Office: Manhattan Mall 02/12 L+55 0.78% $ 232,000 $ 232,000 866 UN Plaza 05/11 L+40 0 |
Redeemable Noncontrolling Inter
Redeemable Noncontrolling Interests | |
3 Months Ended
Mar. 31, 2010 | |
Redeemable Noncontrolling Interests | 9. Redeemable Noncontrolling Interests Redeemable noncontrolling interests on our consolidated balance sheets represent Operating Partnership units held by third parties and are comprised of Class A units and Series D-10, D-11, D12, D-14 and D-15 (collectively, "Series D") cumulative redeemable preferred units. Redeemable noncontrolling interests on our consolidated balance sheets are recorded at the greater of their carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to "additional capital" in our consolidated statements of changes in equity. Below is a table summarizing the activity of redeemable noncontrolling interests. (Amounts in thousands) Balance at December 31, 2008 $ 1,177,978 Net income 16,821 Distributions (18,733 ) Conversion of Class A redeemable units into common shares, at redemption value (10,946 ) Adjustment to carry Class A redeemable units at redemption value (271,856 ) Other, net 14,045 Balance at March 31, 2009 $ 907,309 Balance at December 31, 2009 $ 1,251,628 Net income 17,779 Distributions (13,082 ) Conversion of Class A redeemable units into common shares, at redemption value (18,128 ) Adjustment to carry Class A redeemable units at redemption value 104,247 Redemption of Series D-12 redeemable units (4,000 ) Other, net 1,304 Balance at March 31, 2010 $ 1,339,748 As of March 31, 2010 and December 31, 2009, the aggregate redemption value of our Class A operating partnership units was $1,065,902,000 and $971,628,000, respectively. Redeemable noncontrolling interests exclude our Series G convertible preferred units and Series D-13 cumulative redeemable preferred units, as they are accounted for as liabilities in accordance with ASC 480, Distinguishing Liabilities and Equity, because of their possible settlement by issuing a variable number of Vornado common shares. Accordingly the fair value of these units is included as a component of "other liabilities" on our consolidated balance sheets and aggregated $60,925,000 and $60,271,000 as of March 31, 2010 and December 31, 2009, respectively. On March 5, 2010, we redeemed 246,153 Series D-12 cumulative redeemable preferred units for $16.25 per unit in cash, or $4,000,000 in the aggregate. In connection therewith, we recognized a $2,154,000 net gain which is included as a component of "net income attributable to noncontrolling interests, including unit distributions," on our consolidated statement of income. |
Fair Value Measurements
Fair Value Measurements | |
3 Months Ended
Mar. 31, 2010 | |
Fair Value Measurements | 10. Fair Value Measurements ASC 820, Fair Value Measurement and Disclosures defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities. Accordingly, there can be no assurance that the fair values we present herein are indicative of amounts that may ultimately be realized upon sale or other disposition of these assets. Financial Assets and Liabilities Measured at Fair Value Financial assets and liabilities that are measured at fair value in our consolidated financial statements consist primarily of (i) marketable equity securities, (ii) the assets of our deferred compensation plan, which are primarily marketable equity securities and equity investments in limited partnerships, (iii) short-term investments (CDARS classified as available-for-sale) and (iv) mandatorily redeemable instruments (Series G convertible preferred units and Series D-13 cumulative redeemable preferred units). The tables below aggregate the fair values of financial assets and liabilities by the levels in the fair value hierarchy at March 31, 2010 and December 31, 2009, respectively. As of March 31, 2010 (Amounts in thousands) Total Level 1 Level 2 Level 3 Marketable equity securities $ 111,023 $ 111,023 $ $ Deferred compensation plan assets (included in other assets) 84,028 40,765 43,263 Short-term investments 15,000 15,000 Total assets $ 210,051 $ 166,788 $ $ 43,263 Mandatorily redeemable instruments (included in other liabilities) $ 60,925 $ 60,925 $ $ As of December 31, 2009 (Amounts in thousands) Total Level 1 Level 2 Level 3 Marketable equity securities $ 79,925 $ 79,925 $ $ Deferred compensation plan assets (included in other assets) 80,443 40,854 39,589 Short-term investments 40,000 40,000 Total assets $ 200,368 $ 160,779 $ $ 39,5 |
Discontinued Operations
Discontinued Operations | |
3 Months Ended
Mar. 31, 2010 | |
Discontinued Operations | 11. Discontinued Operations The table below sets forth the combined results of operations of assets related to discontinued operations for the three months ended March 31, 2010 and 2009 and include the operating results of 1999 K Street, which was sold on September 1, 2009 and 15 other retail properties, which were sold during 2009. (Amounts in thousands) For the Three MonthsEnded March 31, 2010 2009 Total revenues $ $ 3,448 Total expenses 856 Income from discontinued operations $ $ 2,592 |
Stock-based Compensation
Stock-based Compensation | |
3 Months Ended
Mar. 31, 2010 | |
Stock-based Compensation | 12. Stock-based Compensation Our Share Option Plan (the "Plan") provides for grants of incentive and non-qualified stock options, restricted stock, restricted Operating Partnership units and out-performance plan awards to certain of our employees and officers. We account for all stock-based compensation in accordance ASC 718, Compensation Stock Compensation. Stock-based compensation expense for the three months ended March 31, 2010 and 2009 consists of stock option awards, restricted stock awards, Operating Partnership unit awards and out-performance plan awards. In the three months ended March 31, 2010 and 2009, we recognized $6,477,000 and $10,249,000 of stock-based compensation expense, respectively. On March 31, 2009, our nine most senior executives voluntarily surrendered their 2007 and 2008 stock option awards and their 2008 out-performance plan awards. Accordingly, we recognized $32,588,000 of expense in the first quarter of 2009 representing the unamortized portion of these awards, which is included as a component of "general and administrative" expense on our consolidated statement of income. |
Fee and Other Income
Fee and Other Income | |
3 Months Ended
Mar. 31, 2010 | |
Fee and Other Income | 13. Fee and Other Income The following table sets forth the details of our fee and other income: (Amounts in thousands) For the Three Months Ended March 31, 2010 2009 Tenant cleaning fees $ 13,652 $ 14,294 Management and leasing fees 9,140 2,401 Lease termination fees 6,435 1,624 Other income 13,233 12,431 $ 42,460 $ 30,750 Fee and other income above includes management fee income from Interstate Properties, a related party, of $200,000 and $198,000 for the three months ended March 31, 2010 and 2009, respectively. The above table excludes fee income from partially owned entities, which is included in income from partially owned entities (see Note 4 Investments in Partially Owned Entities). |
Interest and Other Investment
Interest and Other Investment (Loss) Income, net | |
3 Months Ended
Mar. 31, 2010 | |
Interest and Other Investment (Loss) Income, net | 14. Interest and Other Investment Income, net The following table sets forth the details of our interest and other investment income: (Amounts in thousands) For the Three Months Ended March 31, 2010 2009 Dividends and interest on marketable securities $ 7,245 $ 6,418 Interest on mezzanine loans 2,715 10,324 Mark-to-market of investments in our deferred compensation plan (1) 2,763 (5,794 ) Other, net 1,985 3,111 $ 14,708 $ 14,059 __________________________ (1) This income (loss) is entirely offset by the expense (income) resulting from the mark-to-market of the deferred compensation plan liability, which is included in "general and administrative" expense. |
Income Per Share
Income Per Share | |
3 Months Ended
Mar. 31, 2010 | |
Income Per Share | 15. Income Per Share The following table provides a reconciliation of both net income and the number of common shares used in the computation of (i) basic income per common share - which utilizes the weighted average number of common shares outstanding without regard to dilutive potential common shares, and (ii) diluted income per common share - which includes the weighted average common shares and potentially dilutive share equivalents. Potentially dilutive share equivalents include our Series A convertible preferred shares, employee stock options, restricted stock and exchangeable senior debentures due 2025. (Amounts in thousands, except per share amounts) For The Three Months Ended March 31, 2010 2009 Numerator: Income from continuing operations, net of income attributable to noncontrolling interests $ 214,552 $ 137,518 Income from discontinued operations, net of income attributable to noncontrolling interests 2,592 Net income attributable to Vornado 214,552 140,110 Preferred share dividends (14,267 ) (14,269 ) Net income attributable to common shareholders 200,285 125,841 Earnings allocated to unvested participating securities (20 ) (41 ) Numerator for basic income per share 200,265 125,800 Impact of assumed conversions: Convertible preferred share dividends 41 43 Net income attributable to common shareholders $ 200,306 $ 125,843 Denominator: Denominator for basic income per share weighted average shares 181,542 155,991 Effect of dilutive securities (1): Employee stock options and restricted share awards 1,831 1,038 Convertible preferred shares 72 74 Denominator for diluted income per share adjusted weighted average shares and assumed conversions 183,445 157,103 INCOME PER COMMON SHARE BASIC: Income from continuing operations, net $ 1.10 $ 0.79 Income from discontinued operations, net 0.02 Net income per common share $ 1.10 $ 0.81 INCOME PER COMMON SHARE DILUTED: Income from continuing operations, net $ 1.09 $ 0.78 Income from discontinued operations, net 0.02 Net income per common share $ 1.09 $ 0.80 __________________ (1) The effect of dilutive securities in the three months ended March 31, 2010 and 2009 excludes an aggregate of 21,029 and 21,576 weighted average common share equivalents, respectively, as their effect was anti-dilutive. |
Comprehensive Income
Comprehensive Income | |
3 Months Ended
Mar. 31, 2010 | |
Comprehensive Income | 16. Comprehensive Income (Amounts in thousands) For The Three Months Ended March 31, 2010 2009 Net income $ 232,544 $ 156,431 Other comprehensive income (loss) 1,504 (39,898 ) Comprehensive income 234,048 116,533 Less: Comprehensive income attributable to noncontrolling interests 18,098 12,846 Comprehensive income attributable to Vornado $ 215,950 $ 103,687 Substantially all of other comprehensive income (loss) for the three months ended March 31, 2010 and 2009 relates to income or losses from the mark-to-market of marketable equity securities classified as available-for-sale and our share of other comprehensive income or losses of partially owned entities. |
Retirement Plan
Retirement Plan | |
3 Months Ended
Mar. 31, 2010 | |
Retirement Plans | 17. Retirement Plan In the first quarter of 2009, we finalized the termination of the Merchandise Mart Properties Pension Plan, which resulted in a $2,800,000 pension settlement expense that is included as a component of "general and administrative" expense on our consolidated statement of income. |
Commitments and Contingencies
Commitments and Contingencies | |
3 Months Ended
Mar. 31, 2010 | |
Commitments and Contingencies | 18. Commitments and Contingencies Insurance We maintain general liability insurance with limits of $300,000,000 per occurrence and all risk property and rental value insurance with limits of $2.0 billion per occurrence, including coverage for terrorist acts, with sub-limits for certain perils such as floods. Our California properties have earthquake insurance with coverage of $150,000,000 per occurrence, subject to a deductible in the amount of 5% of the value of the affected property, upto a $150,000,000 annual aggregate. Penn Plaza Insurance Company, LLC ("PPIC"), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a portion of our earthquake insurance coverage and as a direct insurer for coverage for acts of terrorism, including nuclear, biological, chemical and radiological ("NBCR") acts, as defined by TRIPRA. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to PPIC. Our coverage for NBCR losses is up to $2 billion per occurrence, for which PPIC is responsible for a deductible of $3,200,000 and 15% of the balance of a covered loss and the Federal government is responsible for the remaining 85% of a covered loss. We are ultimately responsible for any loss borne by PPIC. We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism. However, we cannot anticipate what coverage will be available on commercially reasonable terms in future policy years. Our debt instruments, consisting of mortgage loans secured by our properties which are non-recourse to us, senior unsecured notes, exchangeable senior debentures, convertible senior debentures and revolving credit agreements contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain it could adversely affect our ability to finance and/or refinance our properties and expand our portfolio. Other Commitments and Contingencies Our mortgage loans are non-recourse to us. However, in certain cases we have provided guarantees or master leased tenant space. These guarantees and master leases terminate either upon the satisfaction of specified circumstances or repayment of the underlying loans. As of March 31, 2010, the aggregate dollar amount of these guarantees and master leases is approximately $130,646,000. At March 31, 2010, $30,652,000 of letters of credit were outstanding under one of our revolving credit facilities. Our credit facilities contain financial covenants that require us to maintain minimum interest coverage and maximum debt to market capitalization ratios, and provide for higher interest rates in the event of a decline in our ratings below Baa3/BBB. Our credit facilities also contain customary conditions precedent to borrowing, including representations and warranties and also contain customary events of default tha |
Segment Information
Segment Information | |
3 Months Ended
Mar. 31, 2010 | |
Segment Information | 19. Segment Information Below is a summary of net income and a reconciliation of net income to EBITDA(1) by segment for the three months ended March 31, 2010 and 2009. (Amounts in thousands) For the Three Months Ended March 31, 2010 Total New York Office Washington, DCOffice Retail MerchandiseMart Toys Other (3) Property rentals $ 524,121 $ 192,604 $ 139,880 $ 95,764 $ 61,444 $ $ 34,429 Straight-line rents: Contractual rent increases 13,500 6,893 2,197 3,836 383 191 Amortization of free rent 7,422 901 2,457 2,540 1,114 410 Amortization of acquired below-market leases, net 15,907 9,205 732 4,541 (121 ) 1,550 Total rentals 560,950 209,603 145,266 106,681 62,820 36,580 Tenant expense reimbursements 92,921 33,252 15,750 37,643 4,087 2,189 Fee and other income: Tenant cleaning fees 13,652 20,418 (6,766 ) Management and leasing fees 9,140 1,457 8,096 224 14 (651 ) Lease termination fees 6,435 728 446 3,408 1,853 Other 13,233 4,410 5,867 740 2,000 216 Total revenues 696,331 269,868 175,425 148,696 70,774 31,568 Operating expenses 279,055 115,049 56,663 53,574 39,219 14,550 Depreciation and amortization 135,824 43,707 36,683 27,981 13,355 14,098 General and administrative 48,730 4,579 5,897 7,005 7,230 24,019 Litigation loss accrual 10,056 10,056 Total expenses 473,665 163,335 109,299 88,560 59,804 52,667 Operating income (loss) 222,666 106,533 66,126 60,136 10,970 (21,099 ) Income applicable to Alexander's 6,460 193 211 6,056 Income applicable to Toys 125,870 125,870 Income (loss) from partially owned entities 4,884 1,110 (192 ) 1,180 176 2,610 Interest and other investment income, net 14,708 164 27 5 13 14,499 Interest and debt expense (139,735 ) (32,686 ) (34,484 ) (17,899 ) (12,787 ) (41,879 ) Net gain on dispostion of wholly owned and partially owned assets other than depreciable real estate 3,305 796 2,509 Income (loss) before income taxes 238,158 75,314 31,477 43,633 (832 ) 125,870 (37,304 ) Income tax expense (5,614 ) (474 ) (720 ) (35 ) (194 ) (4,191 ) Net income (loss) 232,544 74,840 30,757 43,598 (1,026 ) 125,870 (41,495 ) Net (income) loss attributable to noncontrolling interests, includingunit distributions (17,992 ) (2,292 ) 242 (15,942 ) Net income (loss) attributable to Vornado 214,552 72,548 30,757 43,840 (1,026 ) 125,870 (57,437 ) Interest and debt expense (2) 196,187 30,992 35,171 19,354 13,009 41,140 56,521 Depreciation and amortization(2) 186,149 42,074 39,84 |