Exhibit 99.1
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
On July 17, 2017, Vornado Realty Trust (“VNO”) and Vornado Realty L.P. (“VRLP” and collectively, “Vornado) completed the spin-off of JBG SMITH Properties (“JBGS”) and JBG SMITH Properties LP (“JBGSLP”), which own assets of Vornado’s former Washington, DC segment, through a tax-free distribution to Vornado shareholders and unitholders (the “Distribution”), pursuant to the definitive agreement to combine JBGS with the management business and certain Washington, DC metropolitan assets of The JBG Companies (“JBG”). VNO common shareholders and VRLP common limited partners at the close of business on July 7, 2017 (the “Record Date”) received on July 17, 2017, a distribution of one JBGS common share for every two VNO common shares, and a distribution of one JBGSLP common limited partnership unit for every two VRLP common limited partnership units, held as of the Record Date. Fractional shares of JBGS and fractional units of JBGSLP were not distributed, and instead VNO common shareholders and VRLP common limited partners received cash in lieu of any fractional shares/units they would otherwise have been entitled to receive in the Distribution. Subsequent to the Distribution, VNO and VRLP will no longer consolidate the financial results of JBGS. After the date of the Distribution, the historical financial results of JBGS will be reflected in VNO’s and VRLP’s consolidated financial statements as discontinued operations for all periods presented through the Distribution date, beginning with the consolidated financial statements for the quarter ending September 30, 2017.
The accompanying unaudited pro forma consolidated balance sheets of VNO and VRLP as of March 31, 2017 are presented as if the Distribution had occurred on March 31, 2017. The accompanying unaudited pro forma consolidated statements of income of VNO and VRLP for the three months ended March 31, 2017 and 2016 and for the years ended December 31, 2016, 2015 and 2014 are presented as if the Distribution had occurred on January 1, 2014.
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 VNO and VRLP 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 VNO and VRLP’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. In addition, the accompanying unaudited pro forma financial information does not reflect actions that may be undertaken by VNO and VRLP 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 the combined VNO and VRLP Annual Report on Form 10-K for the year ended December 31, 2016 and the combined Quarterly Report on Form 10-Q for the period ended March 31, 2017.
1
The following is a brief description of the amounts recorded under each of the column headings in the accompanying unaudited pro forma consolidated balance sheets and the unaudited pro forma consolidated statements of income:
As Reported
This column reflects VNO and VRLP’s historical financial positions as of March 31, 2017 and historical results of operations for the three months ended March 31, 2017 and 2016, and for the three years ended December 31, 2016, 2015 and 2014, prior to any adjustment for the Distribution and the pro forma adjustments described under the headings “Distribution of JBG SMITH Properties” and “Other Adjustments” discussed below.
Distribution of JBG SMITH Properties
This column reflects the historical combined financial position as of March 31, 2017 of Vornado’s former Washington, DC segment which was contributed to JBGS and the historical combined operating results for the three months ended March 31, 2017 and 2016 and for the years ended December 31, 2016, 2015 and 2014, 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 JBGS 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
AS OF MARCH 31, 2017
(Amounts in thousands)
| | | | Distribution of | | | | | |
| | | | JBG SMITH | | Other | | | |
| | As Reported | | Properties (1) | | Adjustments (2) | | Pro Forma | |
ASSETS | | | | | | | | | |
Real estate, at cost: | | | | | | | | | |
Land | | $ | 4,056,666 | | $ | (934,317 | ) | $ | — | | $ | 3,122,349 | |
Buildings and improvements | | 12,727,776 | | (3,053,802 | ) | — | | 9,673,974 | |
Development costs and construction in progress | | 1,564,647 | | (167,248 | ) | — | | 1,397,399 | |
Leasehold improvements and equipment | | 117,246 | | (22,698 | ) | — | | 94,548 | |
Total | | 18,466,335 | | (4,178,065 | ) | — | | 14,288,270 | |
Less accumulated depreciation and amortization | | (3,604,348 | ) | 957,270 | | — | | (2,647,078 | ) |
Real estate, net | | 14,861,987 | | (3,220,795 | ) | — | | 11,641,192 | |
Cash and cash equivalents | | 1,484,814 | | (50,712 | ) | (185,786 | ) | 1,248,316 | |
Restricted cash | | 98,191 | | (4,728 | ) | — | | 93,463 | |
Marketable securities | | 188,695 | | — | | — | | 188,695 | |
Tenant and other receivables, net of allowance for doubtful accounts | | 86,753 | | (28,442 | ) | — | | 58,311 | |
Investments in partially owned entities | | 1,415,747 | | (49,958 | ) | — | | 1,365,789 | |
Real estate fund investments | | 454,946 | | — | | — | | 454,946 | |
Receivable arising from the straight-lining of rents, net of allowance | | 1,048,940 | | (140,329 | ) | — | | 908,611 | |
Deferred leasing costs, net of accumulated amortization | | 452,187 | | (102,356 | ) | — | | 349,831 | |
Identified intangible assets, net of accumulated amortization | | 184,009 | | (2,904 | ) | — | | 181,105 | |
Assets related to discontinued operations | | 4,416 | | — | | — | | 4,416 | |
Other assets | | 450,763 | | (10,085 | ) | — | | 440,678 | |
| | $ | 20,731,448 | | $ | (3,610,309 | ) | $ | (185,786 | ) | $ | 16,935,353 | |
| | | | | | | | | |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | | | | | | | | |
Mortgages payable, net | | $ | 9,281,280 | | $ | (1,161,984 | ) | $ | — | | $ | 8,119,296 | |
Senior unsecured notes, net | | 845,932 | | — | | — | | 845,932 | |
Unsecured term loan, net | | 372,595 | | — | | — | | 372,595 | |
Unsecured revolving credit facilities | | 115,630 | | — | | (115,630 | ) | — | |
Accounts payable and accrued expenses | | 451,156 | | (42,227 | ) | (25,577 | ) | 383,352 | |
Deferred revenue | | 274,477 | | (11,216 | ) | — | | 263,261 | |
Deferred compensation plan | | 124,933 | | (285 | ) | — | | 124,648 | |
Liabilities related to discontinued operations | | 2,670 | | — | | — | | 2,670 | |
Other liabilities | | 433,374 | | (254,010 | ) | 237,634 | | 416,998 | |
Total liabilities | | 11,902,047 | | (1,469,722 | ) | 96,427 | | 10,528,752 | |
Commitments and contingencies | | | | | | | | | |
Redeemable noncontrolling interests: | | | | | | | | | |
Class A units | | 1,260,646 | | — | | — | | 1,260,646 | |
Series D cumulative redeemable preferred units | | 5,428 | | — | | — | | 5,428 | |
Total redeemable noncontrolling interests | | 1,266,074 | | — | | — | | 1,266,074 | |
Vornado shareholders’ equity: | | | | | | | | | |
Preferred shares of beneficial interest | | 1,038,049 | | — | | — | | 1,038,049 | |
Common shares of beneficial interest | | 7,551 | | — | | — | | 7,551 | |
Additional capital | | 7,183,324 | | — | | — | | 7,183,324 | |
Earnings less than distributions | | (1,506,236 | ) | (2,140,292 | ) | (282,213 | ) | (3,928,741 | ) |
Accumulated other comprehensive income | | 119,019 | | — | | — | | 119,019 | |
Total Vornado shareholders’ equity | | 6,841,707 | | (2,140,292 | ) | (282,213 | ) | 4,419,202 | |
Noncontrolling interests in consolidated subsidiaries | | 721,620 | | (295 | ) | — | | 721,325 | |
Total equity | | 7,563,327 | | (2,140,587 | ) | (282,213 | ) | 5,140,527 | |
| | $ | 20,731,448 | | $ | (3,610,309 | ) | $ | (185,786 | ) | $ | 16,935,353 | |
3
VORNADO REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2017
(Amounts in thousands, except per share amounts)
| | | | Distribution of | | | | | |
| | | | JBG SMITH | | Other | | | |
| | As reported | | Properties(1) | | Adjustments(2) | | Pro Forma | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 513,818 | | $ | (99,024 | ) | $ | — | | $ | 414,794 | |
Tenant expense reimbursements | | 67,670 | | (8,637 | ) | — | | 59,033 | |
Fee and other income | | 39,360 | | (8,611 | ) | — | | 30,749 | |
Total revenues | | 620,848 | | (116,272 | ) | — | | 504,576 | |
EXPENSES: | | | | | | | | | |
Operating | | 260,907 | | (43,353 | ) | — | | 217,554 | |
Depreciation and amortization | | 138,811 | | (33,782 | ) | — | | 105,029 | |
General and administrative | | 56,658 | | (13,690 | ) | 6,754 | | 49,722 | |
Acquisition and transaction related costs | | 8,005 | | (5,841 | ) | — | | 2,164 | |
Total expenses | | 464,381 | | (96,666 | ) | 6,754 | | 374,469 | |
Operating income | | 156,467 | | (19,606 | ) | (6,754 | ) | 130,107 | |
Income from partially owned entities | | 1,445 | | (88 | ) | — | | 1,357 | |
Income from real estate fund investments | | 268 | | — | | — | | 268 | |
Interest and other investment income, net | | 9,228 | | (896 | ) | 831 | | 9,163 | |
Interest and debt expense | | (94,285 | ) | 13,918 | | (2,356 | ) | (82,723 | ) |
Net gain on disposition of wholly owned and partially owned assets | | 501 | | — | | — | | 501 | |
Income before income taxes | | 73,624 | | (6,672 | ) | (8,279 | ) | 58,673 | |
Income tax expense | | (2,205 | ) | 354 | | — | | (1,851 | ) |
Income from continuing operations | | 71,419 | | (6,318 | ) | (8,279 | ) | 56,822 | |
Income from discontinued operations | | 2,428 | | — | | — | | 2,428 | |
Net income | | 73,847 | | (6,318 | ) | (8,279 | ) | 59,250 | |
Less net income attributable to noncontrolling interests in: | | | | | | | | | |
Consolidated subsidiaries | | (6,737 | ) | — | | — | | (6,737 | ) |
Operating Partnership | | (3,229 | ) | — | | 911 | | (2,318 | ) |
Net income attributable to Vornado | | 63,881 | | (6,318 | ) | (7,368 | ) | 50,195 | |
Preferred share dividends | | (16,129 | ) | — | | — | | (16,129 | ) |
NET INCOME attributable to common shareholders | | $ | 47,752 | | $ | (6,318 | ) | $ | (7,368 | ) | $ | 34,066 | |
INCOME PER COMMON SHARE - BASIC: | | | | | | | | | |
Income from continuing operations, net | | $ | 0.24 | | | | | | $ | 0.17 | |
Income from discontinued operations, net | | 0.01 | | | | | | 0.01 | |
Net income per common share | | $ | 0.25 | | | | | | $ | 0.18 | |
Weighted average shares outstanding | | 189,210 | | | | | | 189,210 | |
INCOME PER COMMON SHARE - DILUTED: | | | | | | | | | |
Income from continuing operations, net | | $ | 0.24 | | | | | | $ | 0.17 | |
Income from discontinued operations, net | | 0.01 | | | | | | 0.01 | |
Net income per common share | | $ | 0.25 | | | | | | $ | 0.18 | |
Weighted average shares outstanding | | 190,372 | | | | | | 190,372 | |
4
VORNADO REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2016
(Amounts in thousands, except per share amounts)
| | | | Distribution of | | | | | |
| | | | JBG SMITH | | Other | | | |
| | As reported | | Properties(1) | | Adjustments(2) | | Pro Forma | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 519,492 | | $ | (97,371 | ) | $ | — | | $ | 422,121 | |
Tenant expense reimbursements | | 59,575 | | (9,481 | ) | — | | 50,094 | |
Fee and other income | | 33,970 | | (9,932 | ) | — | | 24,038 | |
Total revenues | | 613,037 | | (116,784 | ) | — | | 496,253 | |
EXPENSES: | | | | | | | | | |
Operating | | 256,349 | | (44,198 | ) | — | | 212,151 | |
Depreciation and amortization | | 142,957 | | (34,289 | ) | — | | 108,668 | |
General and administrative | | 48,704 | | (14,021 | ) | 6,074 | | 40,757 | |
Skyline properties impairment loss | | 160,700 | | — | | — | | 160,700 | |
Acquisition and transaction related costs | | 4,607 | | — | | — | | 4,607 | |
Total expenses | | 613,317 | | (92,508 | ) | 6,074 | | 526,883 | |
Operating loss | | (280 | ) | (24,276 | ) | (6,074 | ) | (30,630 | ) |
Loss from partially owned entities | | (4,240 | ) | 1,179 | | — | | (3,061 | ) |
Income from real estate fund investments | | 11,284 | | — | | — | | 11,284 | |
Interest and other investment income, net | | 3,518 | | (800 | ) | 743 | | 3,461 | |
Interest and debt expense | | (100,489 | ) | 12,086 | | (756 | ) | (89,159 | ) |
Net gain on disposition of wholly owned and partially owned assets | | 714 | | — | | — | | 714 | |
Loss before income taxes | | (89,493 | ) | (11,811 | ) | (6,087 | ) | (107,391 | ) |
Income tax expense | | (2,831 | ) | 264 | | — | | (2,567 | ) |
Loss from continuing operations | | (92,324 | ) | (11,547 | ) | (6,087 | ) | (109,958 | ) |
Income from discontinued operations | | 716 | | — | | — | | 716 | |
Net loss | | (91,608 | ) | (11,547 | ) | (6,087 | ) | (109,242 | ) |
Less net (income) loss attributable to noncontrolling interests in: | | | | | | | | | |
Consolidated subsidiaries | | (9,678 | ) | — | | — | | (9,678 | ) |
Operating Partnership | | 7,487 | | — | | 1,092 | | 8,579 | |
Net loss attributable to Vornado | | (93,799 | ) | (11,547 | ) | (4,995 | ) | (110,341 | ) |
Preferred share dividends | | (20,364 | ) | — | | — | | (20,364 | ) |
NET LOSS attributable to common shareholders | | $ | (114,163 | ) | $ | (11,547 | ) | $ | (4,995 | ) | $ | (130,705 | ) |
| | | | | | | | | |
LOSS PER COMMON SHARE - BASIC: | | | | | | | | | |
Loss from continuing operations, net | | $ | (0.61 | ) | | | | | $ | (0.69 | ) |
Income from discontinued operations, net | | — | | | | | | — | |
Net loss per common share | | $ | (0.61 | ) | | | | | $ | (0.69 | ) |
Weighted average shares outstanding | | 188,658 | | | | | | 188,658 | |
| | | | | | | | | |
LOSS PER COMMON SHARE - DILUTED: | | | | | | | | | |
Loss from continuing operations, net | | $ | (0.61 | ) | | | | | $ | (0.69 | ) |
Income from discontinued operations, net | | — | | | | | | — | |
Net loss per common share | | $ | (0.61 | ) | | | | | $ | (0.69 | ) |
Weighted average shares outstanding | | 188,658 | | | | | | 188,658 | |
5
VORNADO REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2016
(Amounts in thousands, except per share amounts)
| | | | Distribution of | | | | | |
| | | | JBG SMITH | | Other | | | |
| | As reported | | Properties(1) | | Adjustments(2) | | Pro Forma | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 2,103,728 | | $ | (401,577 | ) | $ | — | | $ | 1,702,151 | |
Tenant expense reimbursements | | 260,667 | | (38,291 | ) | — | | 222,376 | |
Fee and other income | | 141,807 | | (38,651 | ) | — | | 103,156 | |
Total revenues | | 2,506,202 | | (478,519 | ) | — | | 2,027,683 | |
EXPENSES: | | | | | | | | | |
Operating | | 1,024,336 | | (175,491 | ) | — | | 848,845 | |
Depreciation and amortization | | 565,059 | | (133,343 | ) | — | | 431,716 | |
General and administrative | | 179,279 | | (50,416 | ) | 20,756 | | 149,619 | |
Skyline properties impairment loss | | 160,700 | | — | | — | | 160,700 | |
Acquisition and transaction related costs | | 26,037 | | (6,476 | ) | — | | 19,561 | |
Total expenses | | 1,955,411 | | (365,726 | ) | 20,756 | | 1,610,441 | |
Operating income | | 550,791 | | (112,793 | ) | (20,756 | ) | 417,242 | |
Income from partially owned entities | | 165,389 | | 1,242 | | — | | 166,631 | |
Loss from real estate fund investments | | (23,602 | ) | — | | — | | (23,602 | ) |
Interest and other investment income, net | | 29,546 | | (3,287 | ) | 3,287 | | 29,546 | |
Interest and debt expense | | (402,674 | ) | 51,781 | | (5,190 | ) | (356,083 | ) |
Gain on extinguishment of Skyline properties debt | | 487,877 | | — | | — | | 487,877 | |
Net gain on disposition of wholly owned and partially owned assets | | 175,735 | | — | | — | | 175,735 | |
Income before income taxes | | 983,062 | | (63,057 | ) | (22,659 | ) | 897,346 | |
Income tax expense | | (8,312 | ) | 1,083 | | — | | (7,229 | ) |
Income from continuing operations | | 974,750 | | (61,974 | ) | (22,659 | ) | 890,117 | |
Income from discontinued operations | | 7,172 | | — | | — | | 7,172 | |
Net income | | 981,922 | | (61,974 | ) | (22,659 | ) | 897,289 | |
Less net income attributable to noncontrolling interests in: | | | | | | | | | |
Consolidated subsidiaries | | (21,351 | ) | — | | — | | (21,351 | ) |
Operating Partnership | | (53,654 | ) | — | | 5,162 | | (48,492 | ) |
Net income attributable to Vornado | | 906,917 | | (61,974 | ) | (17,497 | ) | 823,666 | |
Preferred share dividends | | (75,903 | ) | — | | — | | (75,903 | ) |
Preferred share issuance costs (Series J redemption) | | (7,408 | ) | — | | — | | (7,408 | ) |
NET INCOME attributable to common shareholders | | $ | 823,606 | | $ | (61,974 | ) | $ | (17,497 | ) | $ | 744,135 | |
| | | | | | | | | |
INCOME PER COMMON SHARE - BASIC: | | | | | | | | | |
Income from continuing operations, net | | $ | 4.32 | | | | | | $ | 3.90 | |
Income from discontinued operations, net | | 0.04 | | | | | | 0.04 | |
Net income per common share | | $ | 4.36 | | | | | | $ | 3.94 | |
Weighted average shares outstanding | | 188,837 | | | | | | 188,837 | |
| | | | | | | | | |
INCOME PER COMMON SHARE - DILUTED: | | | | | | | | | |
Income from continuing operations, net | | $ | 4.30 | | | | | | $ | 3.87 | |
Income from discontinued operations, net | | 0.04 | | | | | | 0.04 | |
Net income per common share | | $ | 4.34 | | | | | | $ | 3.91 | |
Weighted average shares outstanding | | 190,173 | | | | | | 190,173 | |
6
VORNADO REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2015
(Amounts in thousands, except per share amounts)
| | | | Distribution of | | | | | |
| | | | JBG SMITH | | Other | | | |
| | As reported | | Properties(1) | | Adjustments(2) | | Pro Forma | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 2,076,586 | | $ | (389,792 | ) | $ | — | | $ | 1,686,794 | |
Tenant expense reimbursements | | 260,976 | | (41,047 | ) | — | | 219,929 | |
Fee and other income | | 164,705 | | (39,768 | ) | — | | 124,937 | |
Total revenues | | 2,502,267 | | (470,607 | ) | — | | 2,031,660 | |
EXPENSES: | | | | | | | | | |
Operating | | 1,011,249 | | (176,989 | ) | — | | 834,260 | |
Depreciation and amortization | | 542,952 | | (144,984 | ) | — | | 397,968 | |
General and administrative | | 175,307 | | (46,037 | ) | 20,057 | | 149,327 | |
Acquisition and transaction related costs | | 12,511 | | — | | — | | 12,511 | |
Total expenses | | 1,742,019 | | (368,010 | ) | 20,057 | | 1,394,066 | |
Operating income | | 760,248 | | (102,597 | ) | (20,057 | ) | 637,594 | |
Loss from partially owned entities | | (12,630 | ) | 4,434 | | — | | (8,196 | ) |
Income from real estate fund investments | | 74,081 | | — | | — | | 74,081 | |
Interest and other investment income, net | | 26,978 | | (2,708 | ) | 2,708 | | 26,978 | |
Interest and debt expense | | (378,025 | ) | 50,823 | | (4,983 | ) | (332,185 | ) |
Net gain on disposition of wholly owned and partially owned assets | | 251,821 | | — | | — | | 251,821 | |
Income before income taxes | | 722,473 | | (50,048 | ) | (22,332 | ) | 650,093 | |
Income tax benefit | | 84,695 | | 420 | | — | | 85,115 | |
Income from continuing operations | | 807,168 | | (49,628 | ) | (22,332 | ) | 735,208 | |
Income from discontinued operations | | 52,262 | | — | | — | | 52,262 | |
Net income | | 859,430 | | (49,628 | ) | (22,332 | ) | 787,470 | |
Less net income attributable to noncontrolling interests in: | | | | | | | | | |
Consolidated subsidiaries | | (55,765 | ) | — | | — | | (55,765 | ) |
Operating Partnership | | (43,231 | ) | — | | 4,318 | | (41,891 | ) |
Net income attributable to Vornado | | 760,434 | | (49,628 | ) | (18,014 | ) | 692,792 | |
Preferred share dividends | | (80,578 | ) | — | | — | | (80,578 | ) |
NET INCOME attributable to common shareholders | | $ | 679,856 | | $ | (49,628 | ) | $ | (18,014 | ) | $ | 612,214 | |
| | | | | | | | | |
INCOME PER COMMON SHARE - BASIC: | | | | | | | | | |
Income from continuing operations, net | | $ | 3.35 | | | | | | $ | 2.99 | |
Income from discontinued operations, net | | 0.26 | | | | | | 0.26 | |
Net income per common share | | $ | 3.61 | | | | | | $ | 3.25 | |
Weighted average shares outstanding | | 188,353 | | | | | | 188,353 | |
| | | | | | | | | |
INCOME PER COMMON SHARE - DILUTED: | | | | | | | | | |
Income from continuing operations, net | | $ | 3.33 | | | | | | $ | 2.97 | |
Income from discontinued operations, net | | 0.26 | | | | | | 0.26 | |
Net income per common share | | $ | 3.59 | | | | | | $ | 3.23 | |
Weighted average shares outstanding | | 189,564 | | | | | | 189,564 | |
7
VORNADO REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2014
(Amounts in thousands, except per share amounts)
| | | | Distribution of | | | | | |
| | | | JBG SMITH | | Other | | | |
| | As reported | | Properties(1) | | Adjustments(2) | | Pro Forma | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 1,911,487 | | $ | (390,576 | ) | $ | — | | $ | 1,520,911 | |
Tenant expense reimbursements | | 245,819 | | (41,243 | ) | — | | 204,576 | |
Fee and other income | | 155,206 | | (41,104 | ) | — | | 114,102 | |
Total revenues | | 2,312,512 | | (472,923 | ) | — | | 1,839,589 | |
EXPENSES: | | | | | | | | | |
Operating | | 953,611 | | (174,589 | ) | — | | 779,022 | |
Depreciation and amortization | | 481,303 | | (112,046 | ) | — | | 369,257 | |
General and administrative | | 169,270 | | (47,669 | ) | 20,404 | | 142,005 | |
Acquisition and transaction related costs | | 18,435 | | — | | — | | 18,435 | |
Total expenses | | 1,622,619 | | (334,304 | ) | 20,404 | | 1,308,719 | |
Operating income | | 689,893 | | (138,619 | ) | (20,404 | ) | 530,870 | |
Loss from partially owned entities | | (59,861 | ) | 1,279 | | — | | (58,582 | ) |
Income from real estate fund investments | | 163,034 | | — | | — | | 163,034 | |
Interest and other investment income, net | | 38,752 | | (1,338 | ) | 1,172 | | 38,586 | |
Interest and debt expense | | (412,755 | ) | 57,137 | | (2,183 | ) | (357,801 | ) |
Net gain on disposition of wholly owned and partially owned assets | | 13,568 | | — | | — | | 13,568 | |
Income before income taxes | | 432,631 | | (81,541 | ) | (21,415 | ) | 329,675 | |
Income tax expense | | (9,281 | ) | 242 | | — | | (9,039 | ) |
Income from continuing operations | | 423,350 | | (81,299 | ) | (21,415 | ) | 320,636 | |
Income from discontinued operations | | 585,676 | | — | | — | | 585,676 | |
Net income | | 1,009,026 | | (81,299 | ) | (21,415 | ) | 906,312 | |
Less net income attributable to noncontrolling interests in: | | | | | | | | | |
Consolidated subsidiaries | | (96,561 | ) | — | | — | | (96,561 | ) |
Operating Partnership | | (47,613 | ) | — | | 5,855 | | (41,758 | ) |
Net income attributable to Vornado | | 864,852 | | (81,299 | ) | (15,560 | ) | 767,993 | |
Preferred share dividends | | (81,464 | ) | — | | — | | (81,464 | ) |
NET INCOME attributable to common shareholders | | $ | 783,388 | | $ | (81,299 | ) | $ | (15,560 | ) | $ | 686,529 | |
| | | | | | | | | |
INCOME PER COMMON SHARE - BASIC: | | | | | | | | | |
Income from continuing operations, net | | $ | 1.23 | | | | | | $ | 0.71 | |
Income from discontinued operations, net | | 2.95 | | | | | | 2.95 | |
Net income per common share | | $ | 4.18 | | | | | | $ | 3.66 | |
Weighted average shares outstanding | | 187,572 | | | | | | 187,572 | |
| | | | | | | | | |
INCOME PER COMMON SHARE - DILUTED: | | | | | | | | | |
Income from continuing operations, net | | $ | 1.22 | | | | | | $ | 0.71 | |
Income from discontinued operations, net | | 2.93 | | | | | | 2.93 | |
Net income per common share | | $ | 4.15 | | | | | | $ | 3.64 | |
Weighted average shares outstanding | | 188,690 | | | | | | 188,690 | |
8
VORNADO REALTY L.P.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2017
(Amounts in thousands)
| | | | Distribution of | | | | | |
| | | | JBG SMITH | | Other | | | |
| | As Reported | | Properties (1) | | Adjustments (2) | | Pro Forma | |
ASSETS | | | | | | | | | |
Real estate, at cost: | | | | | | | | | |
Land | | $ | 4,056,666 | | $ | (934,317 | ) | $ | — | | $ | 3,122,349 | |
Buildings and improvements | | 12,727,776 | | (3,053,802 | ) | — | | 9,673,974 | |
Development costs and construction in progress | | 1,564,647 | | (167,248 | ) | — | | 1,397,399 | |
Leasehold improvements and equipment | | 117,246 | | (22,698 | ) | — | | 94,548 | |
Total | | 18,466,335 | | (4,178,065 | ) | — | | 14,288,270 | |
Less accumulated depreciation and amortization | | (3,604,348 | ) | 957,270 | | — | | (2,647,078 | ) |
Real estate, net | | 14,861,987 | | (3,220,795 | ) | — | | 11,641,192 | |
Cash and cash equivalents | | 1,484,814 | | (50,712 | ) | (185,786 | ) | 1,248,316 | |
Restricted cash | | 98,191 | | (4,728 | ) | — | | 93,463 | |
Marketable securities | | 188,695 | | — | | — | | 188,695 | |
Tenant and other receivables, net of allowance for doubtful accounts | | 86,753 | | (28,442 | ) | — | | 58,311 | |
Investments in partially owned entities | | 1,415,747 | | (49,958 | ) | — | | 1,365,789 | |
Real estate fund investments | | 454,946 | | — | | — | | 454,946 | |
Receivable arising from the straight-lining of rents, net of allowance | | 1,048,940 | | (140,329 | ) | — | | 908,611 | |
Deferred leasing costs, net of accumulated amortization | | 452,187 | | (102,356 | ) | — | | 349,831 | |
Identified intangible assets, net of accumulated amortization | | 184,009 | | (2,904 | ) | — | | 181,105 | |
Assets related to discontinued operations | | 4,416 | | — | | — | | 4,416 | |
Other assets | | 450,763 | | (10,085 | ) | — | | 440,678 | |
| | $ | 20,731,448 | | $ | (3,610,309 | ) | $ | (185,786 | ) | $ | 16,935,353 | |
| | | | | | | | | |
LIABILITIES, REDEEMABLE PARTNERSHIP UNITS AND EQUITY | | | | | | | | | |
Mortgages payable, net | | $ | 9,281,280 | | $ | (1,161,984 | ) | $ | — | | $ | 8,119,296 | |
Senior unsecured notes, net | | 845,932 | | — | | — | | 845,932 | |
Unsecured term loan, net | | 372,595 | | — | | — | | 372,595 | |
Unsecured revolving credit facilities | | 115,630 | | — | | (115,630 | ) | — | |
Accounts payable and accrued expenses | | 451,156 | | (42,227 | ) | (25,577 | ) | 383,352 | |
Deferred revenue | | 274,477 | | (11,216 | ) | — | | 263,261 | |
Deferred compensation plan | | 124,933 | | (285 | ) | — | | 124,648 | |
Liabilities related to discontinued operations | | 2,670 | | — | | — | | 2,670 | |
Other liabilities | | 433,374 | | (254,010 | ) | 237,634 | | 416,998 | |
Total liabilities | | 11,902,047 | | (1,469,722 | ) | 96,427 | | 10,528,752 | |
Commitments and contingencies | | | | | | | | | |
Redeemable partnership units: | | | | | | | | | |
Class A units | | 1,260,646 | | — | | — | | 1,260,646 | |
Series D cumulative redeemable preferred units | | 5,428 | | — | | — | | 5,428 | |
Total redeemable noncontrolling interests | | 1,266,074 | | — | | — | | 1,266,074 | |
Equity: | | | | | | | | | |
Partners’ capital | | 8,228,924 | | — | | — | | 8,228,924 | |
Earnings less than distributions | | (1,506,236 | ) | (2,140,292 | ) | (282,213 | ) | (3,928,741 | ) |
Accumulated other comprehensive income | | 119,019 | | — | | — | | 119,019 | |
Total Vornado Realty L.P. equity | | 6,841,707 | | (2,140,292 | ) | (282,213 | ) | 4,419,202 | |
Noncontrolling interests in consolidated subsidiaries | | 721,620 | | (295 | ) | — | | 721,325 | |
Total equity | | 7,563,327 | | (2,140,587 | ) | (282,213 | ) | 5,140,527 | |
| | $ | 20,731,448 | | $ | (3,610,309 | ) | $ | (185,786 | ) | $ | 16,935,353 | |
9
VORNADO REALTY L.P.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2017
(Amounts in thousands, except per unit amounts)
| | | | Distribution of | | | | | |
| | | | JBG SMITH | | Other | | | |
| | As reported | | Properties(1) | | Adjustments(2) | | Pro Forma | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 513,818 | | $ | (99,024 | ) | $ | — | | $ | 414,794 | |
Tenant expense reimbursements | | 67,670 | | (8,637 | ) | — | | 59,033 | |
Fee and other income | | 39,360 | | (8,611 | ) | — | | 30,749 | |
Total revenues | | 620,848 | | (116,272 | ) | — | | 504,576 | |
EXPENSES: | | | | | | | | | |
Operating | | 260,907 | | (43,353 | ) | — | | 217,554 | |
Depreciation and amortization | | 138,811 | | (33,782 | ) | — | | 105,029 | |
General and administrative | | 56,658 | | (13,690 | ) | 6,754 | | 49,722 | |
Acquisition and transaction related costs | | 8,005 | | (5,841 | ) | — | | 2,164 | |
Total expenses | | 464,381 | | (96,666 | ) | 6,754 | | 374,469 | |
Operating income | | 156,467 | | (19,606 | ) | (6,754 | ) | 130,107 | |
Income from partially owned entities | | 1,445 | | (88 | ) | — | | 1,357 | |
Income from real estate fund investments | | 268 | | — | | — | | 268 | |
Interest and other investment income, net | | 9,228 | | (896 | ) | 831 | | 9,163 | |
Interest and debt expense | | (94,285 | ) | 13,918 | | (2,356 | ) | (82,723 | ) |
Net gain on disposition of wholly owned and partially owned assets | | 501 | | — | | — | | 501 | |
Income before income taxes | | 73,624 | | (6,672 | ) | (8,279 | ) | 58,673 | |
Income tax expense | | (2,205 | ) | 354 | | — | | (1,851 | ) |
Income from continuing operations | | 71,419 | | (6,318 | ) | (8,279 | ) | 56,822 | |
Income from discontinued operations | | 2,428 | | — | | — | | 2,428 | |
Net income | | 73,847 | | (6,318 | ) | (8,279 | ) | 59,250 | |
Less net income attributable to noncontrolling interests in consolidated subsidiaries | | (6,737 | ) | — | | — | | (6,737 | ) |
Net income attributable to Vornado Realty L.P. | | 67,110 | | (6,318 | ) | (8,279 | ) | 52,513 | |
Preferred unit distributions | | (16,178 | ) | — | | — | | (16,178 | ) |
NET INCOME attributable to Class A unitholders | | $ | 50,932 | | $ | (6,318 | ) | $ | (8,279 | ) | $ | 36,335 | |
| | | | | | | | | |
INCOME PER CLASS A UNIT - BASIC: | | | | | | | | | |
Income from continuing operations, net | | $ | 0.24 | | | | | | $ | 0.17 | |
Income from discontinued operations, net | | 0.01 | | | | | | 0.01 | |
Net income per Class A unit | | $ | 0.25 | | | | | | $ | 0.18 | |
Weighted average units outstanding | | 200,845 | | | | | | 200,845 | |
| | | | | | | | | |
INCOME PER CLASS A UNIT - DILUTED: | | | | | | | | | |
Income from continuing operations, net | | $ | 0.24 | | | | | | $ | 0.17 | |
Income from discontinued operations, net | | 0.01 | | | | | | 0.01 | |
Net income per Class A unit | | $ | 0.25 | | | | | | $ | 0.18 | |
Weighted average units outstanding | | 202,647 | | | | | | 202,647 | |
10
VORNADO REALTY L.P.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2016
(Amounts in thousands, except per unit amounts)
| | | | Distribution of | | | | | |
| | | | JBG SMITH | | Other | | | |
| | As reported | | Properties(1) | | Adjustments(2) | | Pro Forma | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 519,492 | | $ | (97,371 | ) | $ | — | | $ | 422,121 | |
Tenant expense reimbursements | | 59,575 | | (9,481 | ) | — | | 50,094 | |
Fee and other income | | 33,970 | | (9,932 | ) | — | | 24,038 | |
Total revenues | | 613,037 | | (116,784 | ) | — | | 496,253 | |
EXPENSES: | | | | | | | | | |
Operating | | 256,349 | | (44,198 | ) | — | | 212,151 | |
Depreciation and amortization | | 142,957 | | (34,289 | ) | — | | 108,668 | |
General and administrative | | 48,704 | | (14,021 | ) | 6,074 | | 40,757 | |
Skyline properties impairment loss | | 160,700 | | — | | — | | 160,700 | |
Acquisition and transaction related costs | | 4,607 | | — | | — | | 4,607 | |
Total expenses | | 613,317 | | (92,508 | ) | 6,074 | | 526,883 | |
Operating loss | | (280 | ) | (24,276 | ) | (6,074 | ) | (30,630 | ) |
Loss from partially owned entities | | (4,240 | ) | 1,179 | | — | | (3,061 | ) |
Income from real estate fund investments | | 11,284 | | — | | — | | 11,284 | |
Interest and other investment income, net | | 3,518 | | (800 | ) | 743 | | 3,461 | |
Interest and debt expense | | (100,489 | ) | 12,086 | | (756 | ) | (89,159 | ) |
Net gain on disposition of wholly owned and partially owned assets | | 714 | | — | | — | | 714 | |
Loss before income taxes | | (89,493 | ) | (11,811 | ) | (6,087 | ) | (107,391 | ) |
Income tax expense | | (2,831 | ) | 264 | | — | | (2,567 | ) |
Loss from continuing operations | | (92,324 | ) | (11,547 | ) | (6,087 | ) | (109,958 | ) |
Income from discontinued operations | | 716 | | — | | — | | 716 | |
Net loss | | (91,608 | ) | (11,547 | ) | (6,087 | ) | (109,242 | ) |
Less net income attributable to noncontrolling interests in consolidated subsidiaries | | (9,678 | ) | — | | — | | (9,678 | ) |
Net loss attributable to Vornado Realty L.P. | | (101,286 | ) | (11,547 | ) | (6,087 | ) | (118,920 | ) |
Preferred unit distributions | | (20,412 | ) | — | | — | | (20,412 | ) |
NET LOSS attributable to Class A unitholders | | $ | (121,698 | ) | $ | (11,547 | ) | $ | (6,087 | ) | $ | (139,332 | ) |
| | | | | | | | | |
LOSS PER CLASS A UNIT - BASIC: | | | | | | | | | |
Loss from continuing operations, net | | $ | (0.61 | ) | | | | | $ | (0.70 | ) |
Income from discontinued operations, net | | — | | | | | | — | |
Net loss per Class A unit | | $ | (0.61 | ) | | | | | $ | (0.70 | ) |
Weighted average units outstanding | | 200,072 | | | | | | 200,072 | |
| | | | | | | | | |
LOSS PER CLASS A UNIT - DILUTED: | | | | | | | | | |
Loss from continuing operations, net | | $ | (0.61 | ) | | | | | $ | (0.70 | ) |
Income from discontinued operations, net | | — | | | | | | — | |
Net loss per Class A unit | | $ | (0.61 | ) | | | | | $ | (0.70 | ) |
Weighted average units outstanding | | 200,072 | | | | | | 200,072 | |
11
VORNADO REALTY L.P.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2016
(Amounts in thousands, except per unit amounts)
| | | | Distribution of | | | | | |
| | | | JBG SMITH | | Other | | | |
| | As reported | | Properties(1) | | Adjustments(2) | | Pro Forma | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 2,103,728 | | $ | (401,577 | ) | $ | — | | $ | 1,702,151 | |
Tenant expense reimbursements | | 260,667 | | (38,291 | ) | — | | 222,376 | |
Fee and other income | | 141,807 | | (38,651 | ) | — | | 103,156 | |
Total revenues | | 2,506,202 | | (478,519 | ) | — | | 2,027,683 | |
EXPENSES: | | | | | | | | | |
Operating | | 1,024,336 | | (175,491 | ) | — | | 848,845 | |
Depreciation and amortization | | 565,059 | | (133,343 | ) | — | | 431,716 | |
General and administrative | | 179,279 | | (50,416 | ) | 20,756 | | 149,619 | |
Skyline properties impairment loss | | 160,700 | | — | | — | | 160,700 | |
Acquisition and transaction related costs | | 26,037 | | (6,476 | ) | — | | 19,561 | |
Total expenses | | 1,955,411 | | (365,726 | ) | 20,756 | | 1,610,441 | |
Operating income | | 550,791 | | (112,793 | ) | (20,756 | ) | 417,242 | |
Income from partially owned entities | | 165,389 | | 1,242 | | — | | 166,631 | |
Loss from real estate fund investments | | (23,602 | ) | — | | — | | (23,602 | ) |
Interest and other investment income, net | | 29,546 | | (3,287 | ) | 3,287 | | 29,546 | |
Interest and debt expense | | (402,674 | ) | 51,781 | | (5,190 | ) | (356,083 | ) |
Gain on extinguishment of Skyline properties debt | | 487,877 | | — | | — | | 487,877 | |
Net gain on disposition of wholly owned and partially owned assets | | 175,735 | | — | | — | | 175,735 | |
Income before income taxes | | 983,062 | | (63,057 | ) | (22,659 | ) | 897,346 | |
Income tax expense | | (8,312 | ) | 1,083 | | — | | (7,229 | ) |
Income from continuing operations | | 974,750 | | (61,974 | ) | (22,659 | ) | 890,117 | |
Income from discontinued operations | | 7,172 | | — | | — | | 7,172 | |
Net income | | 981,922 | | (61,974 | ) | (22,659 | ) | 897,289 | |
Less net income attributable to noncontrolling interests in consolidated subsidiaries | | (21,351 | ) | — | | — | | (21,351 | ) |
Net income attributable to Vornado Realty L.P. | | 960,571 | | (61,974 | ) | (22,659 | ) | 875,938 | |
Preferred unit distributions | | (76,097 | ) | — | | — | | (76,097 | ) |
Preferred unit issuance costs (Series J redemption) | | (7,408 | ) | — | | — | | (7,408 | ) |
NET INCOME attributable to Class A unitholders | | $ | 877,066 | | $ | (61,974 | ) | $ | (22,659 | ) | $ | 792,433 | |
| | | | | | | | | |
INCOME PER CLASS A UNIT - BASIC: | | | | | | | | | |
Income from continuing operations, net | | $ | 4.32 | | | | | | $ | 3.92 | |
Income from discontinued operations, net | | 0.04 | | | | | | 0.04 | |
Net income per Class A unit | | $ | 4.36 | | | | | | $ | 3.96 | |
Weighted average units outstanding | | 200,350 | | | | | | 200,350 | |
| | | | | | | | | |
INCOME PER CLASS A UNIT - DILUTED: | | | | | | | | | |
Income from continuing operations, net | | $ | 4.29 | | | | | | $ | 3.89 | |
Income from discontinued operations, net | | 0.03 | | | | | | 0.03 | |
Net income per Class A unit | | $ | 4.32 | | | | | | $ | 3.92 | |
Weighted average units outstanding | | 202,017 | | | | | | 202,017 | |
12
VORNADO REALTY L.P.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2015
(Amounts in thousands, except per unit amounts)
| | | | Distribution of | | | | | |
| | | | JBG SMITH | | Other | | | |
| | As reported | | Properties(1) | | Adjustments(2) | | Pro Forma | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 2,076,586 | | $ | (389,792 | ) | $ | — | | $ | 1,686,794 | |
Tenant expense reimbursements | | 260,976 | | (41,047 | ) | — | | 219,929 | |
Fee and other income | | 164,705 | | (39,768 | ) | — | | 124,937 | |
Total revenues | | 2,502,267 | | (470,607 | ) | — | | 2,031,660 | |
EXPENSES: | | | | | | | | | |
Operating | | 1,011,249 | | (176,989 | ) | — | | 834,260 | |
Depreciation and amortization | | 542,952 | | (144,984 | ) | — | | 397,968 | |
General and administrative | | 175,307 | | (46,037 | ) | 20,057 | | 149,327 | |
Acquisition and transaction related costs | | 12,511 | | — | | — | | 12,511 | |
Total expenses | | 1,742,019 | | (368,010 | ) | 20,057 | | 1,394,066 | |
Operating income | | 760,248 | | (102,597 | ) | (20,057 | ) | 637,594 | |
Loss from partially owned entities | | (12,630 | ) | 4,434 | | — | | (8,196 | ) |
Income from real estate fund investments | | 74,081 | | — | | — | | 74,081 | |
Interest and other investment income, net | | 26,978 | | (2,708 | ) | 2,708 | | 26,978 | |
Interest and debt expense | | (378,025 | ) | 50,823 | | (4,983 | ) | (332,185 | ) |
Net gain on disposition of wholly owned and partially owned assets | | 251,821 | | — | | — | | 251,821 | |
Income before income taxes | | 722,473 | | (50,048 | ) | (22,332 | ) | 650,093 | |
Income tax benefit | | 84,695 | | 420 | | — | | 85,115 | |
Income from continuing operations | | 807,168 | | (49,628 | ) | (22,332 | ) | 735,208 | |
Income from discontinued operations | | 52,262 | | — | | — | | 52,262 | |
Net income | | 859,430 | | (49,628 | ) | (22,332 | ) | 787,470 | |
Less net income attributable to noncontrolling interests in consolidated subsidiaries | | (55,765 | ) | — | | — | | (55,765 | ) |
Net income attributable to Vornado Realty L.P. | | 803,665 | | (49,628 | ) | (22,332 | ) | 731,705 | |
Preferred unit distributions | | (80,736 | ) | — | | — | | (80,736 | ) |
NET INCOME attributable to Class A unitholders | | $ | 722,929 | | $ | (49,628 | ) | $ | (22,332 | ) | $ | 650,969 | |
| | | | | | | | | |
INCOME PER CLASS A UNIT - BASIC: | | | | | | | | | |
Income from continuing operations, net | | $ | 3.35 | | | | | | $ | 3.01 | |
Income from discontinued operations, net | | 0.26 | | | | | | 0.26 | |
Net income per Class A unit | | $ | 3.61 | | | | | | $ | 3.27 | |
Weighted average units outstanding | | 199,309 | | | | | | 199,309 | |
| | | | | | | | | |
INCOME PER CLASS A UNIT - DILUTED: | | | | | | | | | |
Income from continuing operations, net | | $ | 3.31 | | | | | | $ | 2.98 | |
Income from discontinued operations, net | | 0.26 | | | | | | 0.26 | |
Net income per Class A unit | | $ | 3.57 | | | | | | $ | 3.24 | |
Weighted average units outstanding | | 201,158 | | | | | | 201,158 | |
13
VORNADO REALTY L.P.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2014
(Amounts in thousands, except per unit amounts)
| | | | Distribution of | | | | | |
| | | | JBG SMITH | | Other | | | |
| | As reported | | Properties(1) | | Adjustments(2) | | Pro Forma | |
REVENUES: | | | | | | | | | |
Property rentals | | $ | 1,911,487 | | $ | (390,576 | ) | $ | — | | $ | 1,520,911 | |
Tenant expense reimbursements | | 245,819 | | (41,243 | ) | — | | 204,576 | |
Fee and other income | | 155,206 | | (41,104 | ) | — | | 114,102 | |
Total revenues | | 2,312,512 | | (472,923 | ) | — | | 1,839,589 | |
EXPENSES: | | | | | | | | | |
Operating | | 953,611 | | (174,589 | ) | — | | 779,022 | |
Depreciation and amortization | | 481,303 | | (112,046 | ) | — | | 369,257 | |
General and administrative | | 169,270 | | (47,669 | ) | 20,404 | | 142,005 | |
Acquisition and transaction related costs | | 18,435 | | — | | — | | 18,435 | |
Total expenses | | 1,622,619 | | (334,304 | ) | 20,404 | | 1,308,719 | |
Operating income | | 689,893 | | (138,619 | ) | (20,404 | ) | 530,870 | |
Loss from partially owned entities | | (59,861 | ) | 1,279 | | — | | (58,582 | ) |
Income from real estate fund investments | | 163,034 | | — | | — | | 163,034 | |
Interest and other investment income, net | | 38,752 | | (1,338 | ) | 1,172 | | 38,586 | |
Interest and debt expense | | (412,755 | ) | 57,137 | | (2,183 | ) | (357,801 | ) |
Net gain on disposition of wholly owned and partially owned assets | | 13,568 | | — | | — | | 13,568 | |
Income before income taxes | | 432,631 | | (81,541 | ) | (21,415 | ) | 329,675 | |
Income tax expense | | (9,281 | ) | 242 | | — | | (9,039 | ) |
Income from continuing operations | | 423,350 | | (81,299 | ) | (21,415 | ) | 320,636 | |
Income from discontinued operations | | 585,676 | | — | | — | | 585,676 | |
Net income | | 1,009,026 | | (81,299 | ) | (21,415 | ) | 906,312 | |
Less net income attributable to noncontrolling interests in consolidated subsidiaries | | (96,561 | ) | — | | — | | (96,561 | ) |
Net income attributable to Vornado Realty L.P. | | 912,465 | | (81,299 | ) | (21,415 | ) | 809,751 | |
Preferred unit distributions | | (81,514 | ) | — | | — | | (81,514 | ) |
NET INCOME attributable to Class A unitholders | | $ | 830,951 | | $ | (81,299 | ) | $ | (21,415 | ) | $ | 728,237 | |
| | | | | | | | | |
INCOME PER CLASS A UNIT - BASIC: | | | | | | | | | |
Income from continuing operations, net | | $ | 1.22 | | | | | | $ | 0.72 | |
Income from discontinued operations, net | | 2.95 | | | | | | 2.95 | |
Net income per Class A unit | | $ | 4.17 | | | | | | $ | 3.67 | |
Weighted average units outstanding | | 198,213 | | | | | | 198,213 | |
| | | | | | | | | |
INCOME PER CLASS A UNIT - DILUTED: | | | | | | | | | |
Income from continuing operations, net | | $ | 1.21 | | | | | | $ | 0.71 | |
Income from discontinued operations, net | | 2.93 | | | | | | 2.93 | |
Net income per Class A unit | | $ | 4.14 | | | | | | $ | 3.64 | |
Weighted average units outstanding | | 199,813 | | | | | | 199,813 | |
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VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
(AMOUNTS IN THOUSANDS)
(1) Distribution of JBG SMITH Properties
As a result of the Distribution, VNO common shareholders and VRLP common limited partners received a distribution of one JBGS common share for every two VNO common shares and a distribution of one JBGSLP common limited partnership unit for every two VRLP common limited partnership units.
Pro Forma Consolidated Balance Sheet
Represents the elimination of the historical combined assets and liabilities of JBGS as of March 31, 2017. “Other liabilities” is inclusive of a net $213,696 intercompany payable to Vornado comprised of a $289,590 payable to Vornado and a $75,894 payable by Vornado to JBGS.
Pro Forma Consolidated Statements of Income
Represents the elimination of the historical combined results of JBGS’ operations for the three months ended March 31, 2017 and 2016 and for the years ended December 31, 2016, 2015 and 2014.
(2) Pro Forma Consolidated Balance Sheet - Other Adjustments
Cash and Cash Equivalents / Unsecured Revolving Credit Facilities / Accounts Payable and Accrued Expenses / Other Liabilities / Earnings Less Than Distributions
Reflects (i) Vornado’s cash contribution to JBGS and the payment by Vornado of its payable to JBGS, (ii) the paydown of unsecured revolving credit facilities by JBGS, (iii) Vornado’s contribution of a note receivable to JBGS, (iv) the reimbursement by JBGS for certain costs incurred by Vornado in connection with the transaction, (v) profit and reimbursement of overhead related to transition services provided to JBGS for a period less than one year and (vi) a reclassification. These adjustments are summarized below:
(Amounts in thousands)
| | As of March 31, 2017 | |
| | | | Paydown of | | | | | | | | | | | |
| | | | Unsecured | | | | Reimbursement | | | | | | | |
| | | | Revolving | | Contribution | | by JBGS | | | | | | | |
| | VNO Cash | | Credit | | of JBGS | | of Certain | | | | | | Total | |
| | Contribution | | Facilities | | Note | | Transaction | | Transition | | | | Other | |
| | to JBGS(1) | | by JBGS | | Receivable | | Costs | | Services | | Reclassification | | Adjustments | |
ASSETS | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | (222,860 | ) | $ | — | | $ | — | | $ | 36,554 | | $ | 520 | | $ | — | | $ | (185,786 | ) |
| | | | | | | | | | | | | | | |
LIABILITIES AND EQUITY | | | | | | | | | | | | | | | |
Unsecured revolving credit | | | | | | | | | | | | | | | |
facilities | | $ | — | | $ | (115,630 | ) | $ | — | | $ | — | | $ | — | | $ | — | | $ | (115,630 | ) |
Accounts payable and accrued | | | | | | | | | | | | | | | |
expenses | | — | | (1,639 | ) | — | | — | | — | | (23,938 | ) | (25,577 | ) |
Other liabilities | | (75,894 | ) | 117,269 | | 172,321 | | — | | — | | 23,938 | | 237,634 | |
Earnings less than distributions | | (146,966 | ) | — | | (172,321 | ) | 36,554 | | 520 | | — | | (282,213 | ) |
| | $ | (222,860 | ) | $ | — | | $ | — | | $ | 36,554 | | $ | 520 | | $ | — | | $ | (185,786 | ) |
(1) Represents Vornado’s cash contribution of $275,000 (including the $75,894 payment by Vornado of its payable to JBGS) less $50,712 of consolidated cash and $11,230 of our share of unconsolidated joint venture cash which is included in the distribution of JBGS plus $9,802 as a credit for tenant security deposits.
15
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
(AMOUNTS IN THOUSANDS)
(2) Pro Forma Consolidated Statements of Income - Other Adjustments
General and Administrative Expenses
Reflects the reversal of the allocation of fixed Vornado corporate general and administrative expenses to the Washington, DC segment recognized by JBGS in the amounts of $6,738 and $6,058 for the three months ended March 31, 2017 and 2016, respectively, and $20,691, $19,992 and $20,339 for the years ended December 31, 2016, 2015 and 2014, respectively.
Reflects the aggregate annual amount of fees of $65 ($16 quarterly) to be paid by Vornado to JBGS in connection with the Management Agreement under which JBGS will provide property management, asset management, leasing brokerage and other similar services with respect to any Vornado real property asset that is located in the Washington, DC metropolitan area that is excluded from the separation and combination.
Interest and Other Investment Income, Net
Reflects the intercompany interest income recognized by JBGS related to the payment of Vornado’s payable of $831 and $743 for the three months ended March 31, 2017 and 2016, respectively, and $3,287, $2,708 and $1,172 for the years ended December 31, 2016, 2015 and 2014, respectively, which is included in the distribution of JBGS.
Interest and Debt Expense
Reflects the intercompany interest expense recognized by JBGS related to JBGS’s payables to Vornado in the amounts of $2,356 and $756 for the three months ended March 31, 2017 and 2016, respectively, and $5,190, $4,983 and $2,183 for the years ended December 31, 2016, 2015 and 2014, respectively, which is included in the distribution of JBGS.
Net Income Attributable to Noncontrolling Interests in the Operating Partnership (Vornado Realty Trust)
Reflects the adjustment made to the net income attributable to noncontrolling interests in VRLP resulting from the pro forma adjustments discussed above in the amounts of $911 and $1,092 for the three months ended March 31, 2017 and 2016, respectively, and $5,162, $4,318 and $5,855 for the years ended December 31, 2016, 2015 and 2014, respectively.
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