Exhibit 99.1
VORNADO REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
On January 15, 2015, Vornado Realty Trust (“Vornado”) completed the spin-off of Urban Edge Properties (“UE”), which owns the shopping center business previously owned and operated by Vornado, through a tax-free distribution to its shareholders (the “Distribution”). Vornado common shareholders and Vornado Realty L.P. (“VRLP”) common limited partners at the close of business on January 7, 2015 (the “Record Date”) received on January 15, 2015, a distribution of one UE common share for every two Vornado common shares or VRLP common limited partnership units held as of the Record Date. Fractional shares of UE were not distributed, and instead Vornado common shareholders and VRLP common limited partners will receive cash in lieu of any fractional shares they would otherwise have been entitled to receive in the Distribution. Subsequent to the Distribution, Vornado will no longer consolidate the financial results of UE for the purpose of its own financial reporting. After the date of the Distribution, the historical financial results of UE will be reflected in Vornado’s consolidated financial statements as discontinued operations for all periods presented through the Distribution date, beginning with the financial statements to be filed for the quarter ending March 31, 2015.
The accompanying unaudited pro forma consolidated balance sheet of Vornado as of September 30, 2014 is presented as if the Distribution had occurred on September 30, 2014. The accompanying unaudited pro forma consolidated statements of income of Vornado for the nine months ended September 30, 2014 and 2013 and for the years ended December 31, 2013, 2012 and 2011 are presented as if the Distribution had occurred on January 1, 2011.
The accompanying unaudited pro forma financial information reflects all adjustments that, in the opinion of management, are necessary to present fairly the pro forma results of operations and financial position of Vornado as of and for the periods indicated. In management’s opinion, these pro forma adjustments have been developed on a reasonable and rational basis; however, the retrospectively adjusted results of operations and financial position for the indicated periods when reported in Vornado’s post-Distribution periodic reports will differ from the pro forma financial information presented herein. The accompanying unaudited pro forma consolidated financial information is presented for illustrative and informational purposes only and is not intended to represent or be indicative of the financial condition or results of operations that would have actually occurred had the Distribution taken place during the periods presented or for the full year ended December 31, 2014. In addition, the accompanying unaudited pro forma financial information does not reflect actions that may be undertaken by Vornado after the Distribution. The unaudited pro forma financial information should be read in conjunction with the notes thereto and with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical consolidated financial statements and accompanying notes thereto included in Vornado’s Annual Report on Form 10-K for the year ended December 31, 2013 and its Quarterly Report on Form 10-Q for the period ended September 30, 2014.
The following is a brief description of the amounts recorded under each of the column headings in the accompanying unaudited pro forma consolidated balance sheet and the unaudited pro forma consolidated statements of income:
As Reported
This column reflects Vornado’s historical financial position as of September 30, 2014 and historical results of operations for the nine months ended September 30, 2014 and 2013, and for the three years ended December 31, 2013, 2012 and 2011, prior to any adjustment for the Distribution and the pro forma adjustments described under the headings “Distribution of Urban Edge Properties” and “Other Adjustments” discussed below.
Distribution of Urban Edge Properties
This column reflects UE’s historical combined financial position as of September 30, 2014 and its historical combined operating results for the nine months ended September 30, 2014 and 2013 and for the years ended December 31, 2013, 2012 and 2011, prior to the pro forma adjustments described under the heading “Other Adjustments” below.
Other Adjustments
This column represents pro forma adjustments for transactions between Vornado and UE that were previously eliminated in consolidation and will no longer be eliminated subsequent to the Distribution or that arise as a direct result of the Distribution. These adjustments are more fully described in the notes to the accompanying unaudited pro forma consolidated financial information.
2
VORNADO REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2014
(Unaudited)
(Amounts in thousands)
| | As Reported | | Distribution of
Urban Edge
Properties (1) | | Other
Adjustments | | Pro Forma | |
ASSETS | | | | | | | | | |
Real estate, at cost: | | | | | | | | | |
Land | | $ | 4,137,278 | | $ | (378,096 | ) | $ | — | | $ | 3,759,182 | |
Buildings and improvements | | 12,609,463 | | (1,619,242 | ) | — | | 10,990,221 | |
Development costs and construction in progress | | 1,680,202 | | (5,507 | ) | — | | 1,674,695 | |
Leasehold improvements and equipment | | 128,982 | | (4,146 | ) | — | | 124,836 | |
Total | | 18,555,925 | | (2,006,991 | ) | — | | 16,548,934 | |
Less accumulated depreciation and amortization | | (3,613,098 | ) | 456,753 | | — | | (3,156,345 | ) |
Real estate, net | | 14,942,827 | | (1,550,238 | ) | — | | 13,392,589 | |
Cash and cash equivalents | | 1,683,142 | | (132,825 | ) | (119,175 | )(2) | 1,431,142 | |
Restricted cash | | 160,848 | | (9,687 | ) | — | | 151,161 | |
Marketable securities | | 184,154 | | — | | — | | 184,154 | |
Tenant and other receivables, net of allowance for doubtful accounts | | 118,636 | | (11,045 | ) | — | | 107,591 | |
Investments in partially owned entities | | 1,268,066 | | — | | 133,844 | (3) | 1,401,910 | |
Investment in Toys “R” Us | | — | | — | | — | | — | |
Real Estate Fund investments | | 495,392 | | — | | — | | 495,392 | |
Mortgage and mezzanine loans receivable, net of allowance | | 17,085 | | — | | — | | 17,085 | |
Receivable arising from the straight-lining of rents, net of allowance | | 873,901 | | (88,601 | ) | — | | 785,300 | |
Deferred leasing and financing costs, net of accumulated amortization | | 483,902 | | (29,979 | ) | — | | 453,923 | |
Identified intangible assets, net of accumulated amortization | | 280,207 | | (35,445 | ) | — | | 244,762 | |
Assets related to discontinued operations | | — | | — | | — | | — | |
Other assets | | 492,355 | | (15,775 | ) | — | | 476,580 | |
| | $ | 21,000,515 | | $ | (1,873,595 | ) | $ | 14,669 | | $ | 19,141,589 | |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | | | | | | | | |
Mortgages payable | | $ | 9,273,212 | | $ | (1,292,075 | ) | $ | — | | $ | 7,981,137 | |
Senior unsecured notes | | 1,791,987 | | — | | — | | 1,791,987 | |
Revolving credit facility debt | | 88,138 | | — | | — | | 88,138 | |
Accounts payable and accrued expenses | | 498,565 | | (32,287 | ) | — | | 466,278 | |
Deferred revenue | | 489,250 | | (163,641 | ) | — | | 325,609 | |
Deferred compensation plan | | 113,549 | | — | | — | | 113,549 | |
Liabilities related to discontinued operations | | — | | — | | — | | — | |
Other liabilities | | 380,843 | | (8,818 | ) | — | | 372,025 | |
Total liabilities | | 12,635,544 | | (1,496,821 | ) | — | | 11,138,723 | |
Commitments and contingencies | | — | | | | | | | |
Redeemable noncontrolling interests: | | — | | | | | | | |
Class A units | | 1,139,052 | | — | | — | | 1,139,052 | |
Series D cumulative redeemable preferred units | | 1,000 | | — | | — | | 1,000 | |
Total redeemable non-controlling interests | | 1,140,052 | | — | | — | | 1,140,052 | |
Vornado shareholders’ equity: | | | | | | | | | |
Preferred shares of beneficial interest | | 1,277,026 | | — | | — | | 1,277,026 | |
Common shares of beneficial interest | | 7,487 | | — | | — | | 7,487 | |
Additional capital | | 7,040,538 | | — | | — | | 7,040,538 | |
Earnings less than distributions | | (1,878,125 | ) | (376,439 | ) | 14,669 | | (2,239,895 | ) |
Accumulated other comprehensive income | | 69,580 | | — | | — | | 69,580 | |
Total Vornado shareholders’ equity | | 6,516,506 | | (376,439 | ) | 14,669 | | 6,154,736 | |
Noncontrolling interests in consolidated subsidiaries | | 708,413 | | (335 | ) | — | | 708,078 | |
Total equity | | 7,224,919 | | (376,774 | ) | 14,669 | | 6,862,814 | |
| | $ | 21,000,515 | | $ | (1,873,595 | ) | $ | 14,669 | | $ | 19,141,589 | |
3
VORNADO REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014
(Unaudited)
(Amounts in thousands, except share and per share amounts)
| | As Reported | | Distribution of
Urban Edge
Properties (1) | | Other
Adjustments | | Pro Forma | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 1,606,120 | | $ | (173,175 | ) | $ | 614 | (4) | $ | 1,433,559 | |
Tenant expense reimbursements | | 248,964 | | (61,751 | ) | — | | 187,213 | |
Cleveland Medical Mart development project | | — | | — | | — | | — | |
Fee and other income | | 142,618 | | (1,224 | ) | — | | 141,394 | |
Total revenues | | 1,997,702 | | (236,150 | ) | 614 | | 1,762,166 | |
EXPENSES: | | | | | | | | | |
Operating | | 802,505 | | (79,812 | ) | 715 | (5) | 723,408 | |
Depreciation and amortization | | 406,868 | | (40,586 | ) | — | | 366,282 | |
General and administrative | | 141,273 | | (19,250 | ) | 9,481 | (6) | 131,504 | |
Cleveland Medical Mart development project | | — | | — | | — | | — | |
Impairment losses, acquisition and transaction related costs | | 32,972 | | (4,683 | ) | — | | 28,289 | |
Total expenses | | 1,383,618 | | (144,331 | ) | 10,196 | | 1,249,483 | |
Operating income | | 614,084 | | (91,819 | ) | (9,582 | ) | 512,683 | |
(Loss) applicable to Toys “R” Us | | (74,162 | ) | — | | — | | (74,162 | ) |
(Loss) income from partially owned entities | | (3,264 | ) | — | | 4,124 | (7) | 860 | |
Income from Real Estate Fund | | 142,418 | | — | | — | | 142,418 | |
Interest and other investment income (loss), net | | 28,930 | | (25 | ) | — | | 28,905 | |
Interest and debt expense | | (341,613 | ) | 40,769 | | — | | (300,844 | ) |
Net gain on disposition of wholly owned and partially owned assets | | 13,205 | | — | | — | | 13,205 | |
Income before income taxes | | 379,598 | | (51,075 | ) | (5,458 | ) | 323,065 | |
Income tax expense | | (8,358 | ) | 1,575 | | — | | (6,783 | ) |
Income from continuing operations | | 371,240 | | (49,500 | ) | (5,458 | ) | 316,282 | |
Income from discontinued operations | | 61,800 | | — | | — | | 61,800 | |
Net income | | 433,040 | | (49,500 | ) | (5,458 | ) | 378,082 | |
Less net income attributable to noncontrolling interests in: | | | | | | | | | |
Consolidated subsidiaries | | (85,239 | ) | 16 | | — | | (85,223 | ) |
Operating Partnership | | (16,514 | ) | — | | 3,297 | (8) | (13,217 | ) |
Preferred unit distributions of the Operating Partnership | | (38 | ) | — | | — | | (38 | ) |
Net income attributable to Vornado | | 331,249 | | (49,484 | ) | (2,161 | ) | 279,604 | |
Preferred share dividends | | (61,099 | ) | — | | — | | (61,099 | ) |
Preferred share redemptions | | — | | — | | — | | — | |
NET INCOME attributable to common shareholders | | $ | 270,150 | | $ | (49,484 | ) | $ | (2,161 | ) | $ | 218,505 | |
INCOME PER COMMON SHARE - BASIC: | | | | | | | | | |
Income from continuing operations, net | | $ | 1.13 | | | | | | $ | 0.85 | |
Income from discontinued operations, net | | 0.31 | | | | | | 0.31 | |
Net income per common share | | $ | 1.44 | | | | | | $ | 1.16 | |
Weighted average shares outstanding | | 187,503 | | | | | | 187,503 | |
INCOME PER COMMON SHARE - DILUTED: | | | | | | | | | |
Income from continuing operations, net | | $ | 1.12 | | | | | | $ | 0.85 | |
Income from discontinued operations, net | | 0.31 | | | | | | 0.31 | |
Net income per common share | | $ | 1.43 | | | | | | $ | 1.16 | |
Weighted average shares outstanding | | 188,592 | | | | | | 188,592 | |
4
VORNADO REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013
(Unaudited)
(Amounts in thousands, except share and per share amounts)
| | As Reported | | Distribution of
Urban Edge
Properties (1) | | Other
Adjustments | | Pro Forma | |
| | | | | | | | | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 1,589,038 | | $ | (170,557 | ) | $ | 614 | (4) | $ | 1,419,095 | |
Tenant expense reimbursements | | 229,938 | | (54,711 | ) | — | | 175,227 | |
Cleveland Medical Mart development project | | 34,026 | | — | | — | | 34,026 | |
Fee and other income | | 205,523 | | (61,121 | ) | — | | 144,402 | |
Total revenues | | 2,058,525 | | (286,389 | ) | 614 | | 1,772,750 | |
EXPENSES: | | | | | | | | | |
Operating | | 785,992 | | (71,818 | ) | 715 | (5) | 714,889 | |
Depreciation and amortization | | 394,579 | | (38,445 | ) | — | | 356,134 | |
General and administrative | | 145,871 | | (19,323 | ) | 9,481 | (6) | 136,029 | |
Cleveland Medical Mart development project | | 29,764 | | — | | — | | 29,764 | |
Impairment losses, acquisition and transaction related costs | | 6,769 | | — | | — | | 6,769 | |
Total expenses | | 1,362,975 | | (129,586 | ) | 10,196 | | 1,243,585 | |
Operating income | | 695,550 | | (156,803 | ) | (9,582 | ) | 529,165 | |
(Loss) applicable to Toys “R” Us | | (69,311 | ) | — | | — | | (69,311 | ) |
Income from partially owned entities | | 23,691 | | — | | 7,279 | (7) | 30,970 | |
Income from Real Estate Fund | | 73,947 | | — | | — | | 73,947 | |
Interest and other investment (loss), net | | (32,935 | ) | (3 | ) | — | | (32,938 | ) |
Interest and debt expense | | (360,679 | ) | 42,269 | | — | | (318,410 | ) |
Net (loss) on disposition of wholly owned and partially owned assets | | (20,581 | ) | — | | — | | (20,581 | ) |
Income before income taxes | | 309,682 | | (114,537 | ) | (2,303 | ) | 192,842 | |
Income tax expense | | (6,172 | ) | 2,459 | | — | | (3,713 | ) |
Income from continuing operations | | 303,510 | | (112,078 | ) | (2,303 | ) | 189,129 | |
Income from discontinued operations | | 299,989 | | — | | — | | 299,989 | |
Net income | | 603,499 | | (112,078 | ) | (2,303 | ) | 489,118 | |
Less net income attributable to noncontrolling interests in: | | | | | | | | | |
Consolidated subsidiaries | | (50,049 | ) | 20 | | — | | (50,029 | ) |
Operating Partnership | | (27,814 | ) | — | | 6,863 | (8) | (20,951 | ) |
Preferred unit distributions of the Operating Partnership | | (1,146 | ) | — | | — | | (1,146 | ) |
Net income attributable to Vornado | | 524,490 | | (112,058 | ) | 4,560 | | 416,992 | |
Preferred share dividends | | (62,439 | ) | — | | — | | (62,439 | ) |
Preferred share redemptions | | (1,130 | ) | — | | — | | (1,130 | ) |
NET INCOME attributable to common shareholders | | $ | 460,921 | | $ | (112,058 | ) | $ | 4,560 | | $ | 353,423 | |
INCOME PER COMMON SHARE - BASIC: | | | | | | | | | |
Income from continuing operations, net | | $ | 0.97 | | | | | | $ | 0.39 | |
Income from discontinued operations, net | | 1.50 | | | | | | 1.50 | |
Net income per common share | | $ | 2.47 | | | | | | $ | 1.89 | |
Weighted average shares outstanding | | 186,885 | | | | | | 186,885 | |
INCOME PER COMMON SHARE - DILUTED: | | | | | | | | | |
Income from continuing operations, net | | $ | 0.96 | | | | | | $ | 0.38 | |
Income from discontinued operations, net | | 1.50 | | | | | | 1.50 | |
Net income per common share | | $ | 2.46 | | | | | | $ | 1.88 | |
Weighted average shares outstanding | | 187,679 | | | | | | 187,679 | |
5
VORNADO REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2013
(Unaudited)
(Amounts in thousands, except share and per share amounts)
| | As Reported | | Distribution of
Urban Edge
Properties (1) | | Other
Adjustments | | Pro Forma | |
| | | | | | | | | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 2,155,963 | | $ | (228,282 | ) | $ | 819 | (4) | $ | 1,928,500 | |
Tenant expense reimbursements | | 317,345 | | (73,170 | ) | — | | 244,175 | |
Cleveland Medical Mart development project | | 36,369 | | — | | — | | 36,369 | |
Fee and other income | | 251,232 | | (61,543 | ) | — | | 189,689 | |
Total revenues | | 2,760,909 | | (362,995 | ) | 819 | | 2,398,733 | |
EXPENSES: | | | | | | | | | |
Operating | | 1,054,897 | | (96,858 | ) | 953 | (5) | 958,992 | |
Depreciation and amortization | | 531,212 | | (54,043 | ) | — | | 477,169 | |
General and administrative | | 211,100 | | (25,881 | ) | 11,893 | (6) | 197,112 | |
Cleveland Medical Mart development project | | 32,210 | | — | | — | | 32,210 | |
Impairment losses, acquisition and transaction related costs | | 57,300 | | (19,000 | ) | — | | 38,300 | |
Total expenses | | 1,886,719 | | (195,782 | ) | 12,846 | | 1,703,783 | |
Operating income | | 874,190 | | (167,213 | ) | (12,027 | ) | 694,950 | |
(Loss) applicable to Toys “R” Us | | (362,377 | ) | — | | — | | (362,377 | ) |
Income from partially owned entities | | 23,592 | | — | | 7,720 | (7) | 31,312 | |
Income from Real Estate Fund | | 102,898 | | — | | — | | 102,898 | |
Interest and other investment (loss), net | | (24,699 | ) | (11 | ) | — | | (24,710 | ) |
Interest and debt expense | | (483,190 | ) | 55,789 | | — | | (427,401 | ) |
Net gain on disposition of wholly owned and partially owned assets | | 3,407 | | — | | — | | 3,407 | |
Income before income taxes | | 133,821 | | (111,435 | ) | (4,307 | ) | 18,079 | |
Income tax expense | | 6,406 | | 2,100 | | — | | 8,506 | |
Income from continuing operations | | 140,227 | | (109,335 | ) | (4,307 | ) | 26,585 | |
Income from discontinued operations | | 424,513 | | — | | — | | 424,513 | |
Net income | | 564,740 | | (109,335 | ) | (4,307 | ) | 451,098 | |
Less net income attributable to noncontrolling interests in: | | | | | | | | | |
Consolidated subsidiaries | | (63,952 | ) | 21 | | — | | (63,931 | ) |
Operating Partnership | | (23,659 | ) | — | | 6,818 | (8) | (16,841 | ) |
Preferred unit distributions of the Operating Partnership | | (1,158 | ) | — | | — | | (1,158 | ) |
Net income attributable to Vornado | | 475,971 | | (109,314 | ) | 2,511 | | 369,168 | |
Preferred share dividends | | (82,807 | ) | — | | — | | (82,807 | ) |
Preferred share redemptions | | (1,130 | ) | — | | — | | (1,130 | ) |
NET INCOME attributable to common shareholders | | $ | 392,034 | | $ | (109,314 | ) | $ | 2,511 | | $ | 285,231 | |
INCOME PER COMMON SHARE - BASIC: | | | | | | | | | |
(Loss) from continuing operations, net | | $ | (0.03 | ) | | | | | $ | (0.60 | ) |
Income from discontinued operations, net | | 2.13 | | | | | | 2.13 | |
Net income per common share | | $ | 2.10 | | | | | | $ | 1.53 | |
Weighted average shares outstanding | | 186,941 | | | | | | 186,941 | |
INCOME PER COMMON SHARE - DILUTED: | | | | | | | | | |
(Loss) from continuing operations, net | | $ | (0.03 | ) | | | | | $ | (0.60 | ) |
Income from discontinued operations, net | | 2.12 | | | | | | 2.12 | |
Net income per common share | | $ | 2.09 | | | | | | $ | 1.52 | |
Weighted average shares outstanding | | 187,709 | | | | | | 187,709 | |
6
VORNADO REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2012
(Unaudited)
(Amounts in thousands, except share and per share amounts)
| | As Reported | | Distribution of
Urban Edge
Properties (1) | | Other
Adjustments | | Pro Forma | |
| | | | | | | | | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 2,062,061 | | $ | (232,031 | ) | $ | 819 | (4) | $ | 1,830,849 | |
Tenant expense reimbursements | | 294,584 | | (70,453 | ) | — | | 224,131 | |
Cleveland Medical Mart development project | | 235,234 | | — | | — | | 235,234 | |
Fee and other income | | 144,353 | | (1,749 | ) | — | | 142,604 | |
Total revenues | | 2,736,232 | | (304,233 | ) | 819 | | 2,432,818 | |
EXPENSES: | | | | | | | | | |
Operating | | 1,017,331 | | (93,098 | ) | 953 | (5) | 925,186 | |
Depreciation and amortization | | 510,383 | | (52,960 | ) | — | | 457,423 | |
General and administrative | | 202,444 | | (27,209 | ) | 11,579 | (6) | 186,814 | |
Cleveland Medical Mart development project | | 226,619 | | — | | — | | 226,619 | |
Impairment losses, acquisition and transaction related costs | | 114,886 | | (6,000 | ) | — | | 108,886 | |
Total expenses | | 2,071,663 | | (179,267 | ) | 12,532 | | 1,904,928 | |
Operating income | | 664,569 | | (124,966 | ) | (11,713 | ) | 527,890 | |
Income applicable to Toys “R” Us | | 14,859 | | — | | — | | 14,859 | |
Income from partially owned entities | | 408,267 | | — | | 5,369 | (7) | 413,636 | |
Income from Real Estate Fund | | 63,936 | | — | | — | | 63,936 | |
Interest and other investment (loss), net | | (260,945 | ) | (20 | ) | — | | (260,965 | ) |
Interest and debt expense | | (493,713 | ) | 53,772 | | — | | (439,941 | ) |
Net gain on disposition of wholly owned and partially owned assets | | 13,347 | | — | | — | | 13,347 | |
Income before income taxes | | 410,320 | | (71,214 | ) | (6,344 | ) | 332,762 | |
Income tax expense | | (8,132 | ) | 1,364 | | — | | (6,768 | ) |
Income from continuing operations | | 402,188 | | (69,850 | ) | (6,344 | ) | 325,994 | |
Income from discontinued operations | | 292,353 | | — | | — | | 292,353 | |
Net income | | 694,541 | | (69,850 | ) | (6,344 | ) | 618,347 | |
Less net income attributable to noncontrolling interests in: | | | | | | | | | |
Consolidated subsidiaries | | (32,018 | ) | 13 | | — | | (32,005 | ) |
Operating Partnership | | (35,327 | ) | — | | 4,572 | (8) | (30,755 | ) |
Preferred unit distributions of the Operating Partnership | | (9,936 | ) | — | | — | | (9,936 | ) |
Net income attributable to Vornado | | 617,260 | | (69,837 | ) | (1,772 | ) | 545,651 | |
Preferred share dividends | | (76,937 | ) | — | | — | | (76,937 | ) |
Preferred share redemptions | | 8,948 | | — | | — | | 8,948 | |
NET INCOME attributable to common shareholders | | $ | 549,271 | | $ | (69,837 | ) | $ | (1,772 | ) | $ | 477,662 | |
INCOME PER COMMON SHARE - BASIC: | | | | | | | | | |
Income from continuing operations, net | | $ | 1.46 | | | | | | $ | 1.08 | |
Income from discontinued operations, net | | 1.49 | | | | | | 1.49 | |
Net income per common share | | $ | 2.95 | | | | | | $ | 2.57 | |
Weighted average shares outstanding | | 185,810 | | | | | | 185,810 | |
INCOME PER COMMON SHARE - DILUTED: | | | | | | | | | |
Income from continuing operations, net | | $ | 1.46 | | | | | | $ | 1.08 | |
Income from discontinued operations, net | | 1.48 | | | | | | 1.48 | |
Net income per common share | | $ | 2.94 | | | | | | $ | 2.56 | |
Weighted average shares outstanding | | 186,530 | | | | | | 186,530 | |
7
VORNADO REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2011
(Unaudited)
(Amounts in thousands, except share and per share amounts)
| | As Reported | | Distribution of
Urban Edge
Properties (1) | | Other
Adjustments | | Pro Forma | |
| | | | | | | | | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 2,091,488 | | $ | (223,883 | ) | $ | 819 | (4) | $ | 1,868,424 | |
Tenant expense reimbursements | | 307,609 | | (73,863 | ) | — | | 233,746 | |
Cleveland Medical Mart development project | | 154,080 | | — | | — | | 154,080 | |
Fee and other income | | 149,631 | | (2,110 | ) | — | | 147,521 | |
Total revenues | | 2,702,808 | | (299,856 | ) | 819 | | 2,403,771 | |
EXPENSES: | | | | | | | | | |
Operating | | 984,707 | | (77,139 | ) | 953 | (5) | 908,521 | |
Depreciation and amortization | | 516,222 | | (50,981 | ) | — | | 465,241 | |
General and administrative | | 208,530 | | (27,698 | ) | 11,208 | (6) | 192,040 | |
Cleveland Medical Mart development project | | 145,824 | | — | | — | | 145,824 | |
Impairment losses, acquisition and transaction related costs | | 35,299 | | — | | — | | 35,299 | |
Total expenses | | 1,890,582 | | (155,818 | ) | 12,161 | | 1,746,925 | |
Operating income | | 812,226 | | (144,038 | ) | (11,342 | ) | 656,846 | |
Income applicable to Toys “R” Us | | 48,540 | | — | | — | | 48,540 | |
Income from partially owned entities | | 70,072 | | — | | 6,330 | (7) | 76,402 | |
Income from Real Estate Fund | | 22,886 | | — | | — | | 22,886 | |
Interest and other investment income, net | | 148,783 | | — | | — | | 148,783 | |
Interest and debt expense | | (519,157 | ) | 55,138 | | — | | (464,019 | ) |
Net gain on disposition of wholly owned and partially owned assets | | 15,134 | | — | | — | | 15,134 | |
Income before income taxes | | 598,484 | | (88,900 | ) | (5,012 | ) | 504,572 | |
Income tax expense | | (23,925 | ) | 1,440 | | — | | (22,485 | ) |
Income from continuing operations | | 574,559 | | (87,460 | ) | (5,012 | ) | 482,087 | |
Income from discontinued operations | | 165,441 | | — | | — | | 165,441 | |
Net income | | 740,000 | | (87,460 | ) | (5,012 | ) | 647,528 | |
Less net income attributable to noncontrolling interests in: | | | | | | | | | |
Consolidated subsidiaries | | (21,786 | ) | (3 | ) | — | | (21,789 | ) |
Operating Partnership | | (41,059 | ) | — | | 6,011 | (8) | (35,048 | ) |
Preferred unit distributions of the Operating Partnership | | (14,853 | ) | — | | — | | (14,853 | ) |
Net income attributable to Vornado | | 662,302 | | (87,463 | ) | 999 | | 575,838 | |
Preferred share dividends | | (65,531 | ) | — | | — | | (65,531 | ) |
Preferred share redemptions | | 5,000 | | — | | — | | 5,000 | |
NET INCOME attributable to common shareholders | | $ | 601,771 | | $ | (87,463 | ) | $ | 999 | | $ | 515,307 | |
INCOME PER COMMON SHARE - BASIC: | | | | | | | | | |
Income from continuing operations, net | | $ | 2.42 | | | | | | $ | 1.95 | |
Income from discontinued operations, net | | 0.84 | | | | | | 0.84 | |
Net income per common share | | $ | 3.26 | | | | | | $ | 2.79 | |
Weighted average shares outstanding | | 184,308 | | | | | | 184,308 | |
INCOME PER COMMON SHARE - DILUTED: | | | | | | | | | |
Income from continuing operations, net | | $ | 2.40 | | | | | | $ | 1.94 | |
Income from discontinued operations, net | | 0.83 | | | | | | 0.83 | |
Net income per common share | | $ | 3.23 | | | | | | $ | 2.77 | |
Weighted average shares outstanding | | 186,021 | | | | | | 186,021 | |
8
Notes to Unaudited Pro Forma Consolidated Financial Information
(1) Distribution of Urban Edge Properties:
Consolidated Balance Sheet
As a result of the Distribution, shares of Urban Edge Properties (“UE”) were distributed to Vornado Realty Trust (“Vornado”) shareholders and Vornado Realty L.P. (“VRLP”) unitholders at a ratio of one UE common share for every two Vornado common shares/units. This adjustment reflects the elimination of the historical combined assets and liabilities of UE as of September 30, 2014.
Consolidated Statements of Income
Represents the elimination of the historical combined results of UE’s operations for the nine months ended September 30, 2014 and 2013 and for the years ended December 31, 2013, 2012 and 2011.
(2) Cash:
Reflects Vornado’s contribution of $225 million to UE and includes $27 million of transaction costs payable at the time of the Distribution by Vornado.
(3) Investment in Partially Owned Entities:
Reflects Vornado’s 5.4% noncontrolling interest in UE as a result of the issuance of common limited partnership units by Urban Edge Properties LP to VRLP in exchange for seven of VRLP’s retail properties with a net book basis of $133.8 million.
(4) Property Rentals:
Reflects adjustments related to office space leased by Vornado to UE in New York and New Jersey.
(5) Operating Expenses:
Reflects adjustments related to UE management and leasing of Springfield Town Center and 22 retail assets which Vornado plans to sell; management and leasing of Alexander’s Inc. (32.4% owned by Vornado) non-Manhattan retail properties; and the management of certain assets of Interstate Properties. Fees are based on property management and leasing services agreements between Vornado and UE.
(6) General and Administrative Expenses:
Reversal of certain general corporate overhead expenses that were allocated by Vornado to UE in UE’s historical combined carve-out financial statements.
(7) Income from Partially Owned Entities:
Reflects adjustments to record (i) Vornado’s 5.4% proportionate share of UE’s net income, (ii) transition services fees that Vornado will earn from UE for various services including human resources, information technology, public reporting and tax reporting, and (iii) reductions of management and leasing fees from Alexander’s Inc. for its non-Manhattan retail properties and from the Monmouth Mall, which will be managed by UE.
| | Nine Months
Ended
September
30, 2014 | | Nine Months
Ended
September
30, 2013 | | Year Ended
December
31, 2013 | | Year Ended
December
31, 2012 | | Year Ended
December
31, 2011 | |
| | | | | | | | | | | |
Vornado’s 5.4% proportionate share of UE income | | $ | 2,952 | | $ | 6,107 | | $ | 6,157 | | $ | 3,806 | | $ | 4,767 | |
Transition services fees | | 2,515 | | 2,515 | | 3,354 | | 3,354 | | 3,354 | |
Alexander’s Inc. management fee | | (1,075 | ) | (1,075 | ) | (1,433 | ) | (1,433 | ) | (1,433 | ) |
Monmouth Mall management fee | | (268 | ) | (268 | ) | (358 | ) | (358 | ) | (358 | ) |
| | $ | 4,124 | | $ | 7,279 | | $ | 7,720 | | $ | 5,369 | | $ | 6,330 | |
(8) Noncontrolling Interests Share of Adjustments:
Represents the noncontrolling interests in VRLP’s share of pro forma adjustments.
9
