EXHIBIT INDEX ON PAGE 29
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: MARCH 31, 2001
-------------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------------ -----------------------
Commission File Number: 1-11954
--------------------------------------------------------
VORNADO REALTY TRUST
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 22-1657560
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
888 Seventh Avenue, New York, New York, 10019
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 894-7000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes [ ] No
As of May 1, 2001, 86,861,063 of the registrant's common shares
of beneficial interest outstanding.
Page 1
INDEX
Page Number
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 2001 and
December 31, 2000...................................................... 3
Consolidated Statements of Income for the Three Months Ended March 31,
2001 and March 31, 2000................................................ 4
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 2001 and March 31, 2000................................ 5
Notes to Consolidated Financial Statements............................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................. 15
Item 3. Quantitative and Qualitative Disclosures About Market Risks............ 26
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings...................................................... 27
Item 6. Exhibits and Reports on Form 8-K....................................... 27
Signatures ....................................................................... 28
Exhibit Index ....................................................................... 29
Page 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(amounts in thousands except share and per share amounts)
MARCH 31, DECEMBER 31,
2001 2000
----------- -----------
ASSETS
Real estate, at cost:
Land .............................................. $ 888,211 $ 870,023
Buildings and improvements ........................ 3,431,954 3,328,760
Development costs and construction-in-
progress .................................... 178,630 66,264
Leasehold improvements and
equipment ................................... 42,369 29,795
----------- -----------
Total ............................... 4,541,164 4,294,842
Less accumulated depreciation and
amortization ................................ (435,027) (393,787)
----------- -----------
Real estate, net .................................. 4,106,137 3,901,055
Cash and cash equivalents, including U.S.
government obligations under repurchase
agreements of $24,328 and $27,793 ................. 111,983 136,989
Escrow deposits and restricted cash ..................... 185,264 214,359
Marketable securities ................................... 119,988 120,340
Investments and advances to partially-owned
entities, including Alexander's of
$187,848 and $178,413 ............................. 1,307,145 1,459,211
Due from officers ....................................... 19,421 20,549
Accounts receivable, net of allowance for
doubtful accounts of $9,335 and $9,343 ............ 51,610 47,937
Notes and mortgage loans receivable ..................... 197,791 188,722
Receivable arising from the straight-lining of
rents ............................................. 119,945 111,504
Other assets ............................................ 255,723 169,648
----------- -----------
TOTAL ASSETS ............................................ $ 6,475,007 $ 6,370,314
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and mortgages payable ............................. $ 2,288,244 $ 2,231,897
Revolving credit facility ............................... 456,307 425,000
Accounts payable and accrued expenses ................... 134,832 130,464
Officer's compensation payable .......................... 35,382 38,424
Deferred leasing fee income ............................. 7,724 7,852
Other liabilities ....................................... 1,855 1,798
----------- -----------
Total liabilities ................... 2,924,344 2,835,435
----------- -----------
Minority interest of unitholders in the
Operating Partnership .............................. 1,463,298 1,456,159
----------- -----------
Commitments and contingencies
Shareholders' equity:
Preferred shares of beneficial interest:
no par value per share; authorized,
45,000,000 shares;
Series A: liquidation preference $50.00
per share; issued 5,788,855 shares ....... 289,207 288,507
Series B: liquidation preference $25.00
per share; issued 3,400,000 shares ....... 81,805 81,805
Series C: liquidation preference $25.00
per share; issued 4,600,000 shares ....... 111,148 111,148
Common shares of beneficial interest:
$.04 par value per share; authorized,
150,000,000 shares; issued and outstanding
86,855,243 and 86,803,770 shares ......... 3,474 3,472
Additional capital .............................. 1,710,953 1,709,284
Accumulated deficit ............................. (88,720) (90,366)
----------- -----------
2,107,867 2,103,850
Accumulated other comprehensive loss ............ (15,798) (20,426)
Due from officers for purchase of common
shares of beneficial interest ............ (4,704) (4,704)
----------- -----------
Total shareholders' equity ......... 2,087,365 2,078,720
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY ............................ $ 6,475,007 $ 6,370,314
=========== ===========
See notes to consolidated financial statements.
Page 3
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands except per share amounts)
FOR THE THREE MONTHS ENDED
MARCH 31,
---------------------------
2001 2000
--------- ---------
Revenues:
Property rentals ...................................... $ 182,816 $ 166,892
Expense reimbursements ................................ 35,092 26,807
Hotel ................................................. 11,513 --
Trade shows ........................................... 10,389 --
Other income (including fee income
from related parties of $370 and $327) .............. 2,800 1,580
--------- ---------
Total revenues ........................................... 242,610 195,279
--------- ---------
Expenses:
Operating ............................................. 100,383 76,305
Depreciation and amortization ......................... 31,865 23,253
General and administrative ............................ 14,248 10,197
Costs of acquisitions not consummated ................. 5,000 --
--------- ---------
Total expenses ........................................... 151,496 109,755
--------- ---------
Operating income ......................................... 91,114 85,524
Income applicable to Alexander's ......................... 12,304 4,107
Income from partially-owned entities ..................... 23,990 22,550
Interest and other investment income ..................... 13,473 5,759
Write-off of investment in technology company............. (4,723) --
Interest and debt expense ................................ (49,395) (39,347)
Net gain on sale of real estate .......................... -- 2,560
Minority interest:
Perpetual preferred unit distributions ................ (17,326) (12,994)
Minority limited partnership earnings ................. (9,629) (9,348)
Partially-owned entities .............................. (359) (490)
--------- ---------
Income before cumulative effect of change in accounting
principle and extraordinary item ...................... 59,449 58,321
Cumulative effect of change in accounting principle ...... (4,110) --
Extraordinary item ....................................... 1,170 (1,125)
--------- ---------
Net income ............................................... 56,509 57,196
Preferred stock dividends (including accretion of issuance
expenses of $719 in each period) ...................... (9,673) (9,673)
--------- ---------
NET INCOME applicable to common shares ................... $ 46,836 $ 47,523
========= =========
NET INCOME PER COMMON SHARE - BASIC ...................... $ .54 $ .55
========= =========
NET INCOME PER COMMON SHARE - DILUTED .................... $ .52 $ .54
========= =========
DIVIDENDS PER COMMON SHARE ............................... $ .53 $ .48
========= =========
See notes to consolidated financial statements.
Page 4
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
FOR THE THREE MONTHS ENDED MARCH 31,
---------------------------
2001 2000
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................................. $ 56,509 $ 57,196
Adjustments to reconcile net income to net
cash provided by operations:
Cumulative effect of change in accounting principle ................. 4,110 --
Extraordinary item .................................................. (1,170) 1,125
Minority interest ................................................... 27,314 22,832
Net gain on sale of real estate ..................................... -- (2,560)
Write-off of investment in technology company ....................... 4,723 --
Depreciation and amortization (including debt issuance costs) ....... 31,865 23,253
Straight-lining of rental income .................................... (7,895) (8,110)
Equity in income of Alexander's (including depreciation of
$150 in each period) ............................................. (12,304) (4,107)
Equity in net income of partially-owned entities .................... (23,990) (22,550)
Gain on sale of marketable securities ............................... (116) --
Changes in operating assets and liabilities ......................... 5,331 (21,830)
--------- ---------
Net cash provided by operating activities .................................. 84,377 45,249
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Development costs and construction in progress ............................. (40,577) (10,228)
Proceeds from sale of real estate .......................................... -- 23,992
Investments in partially-owned entities .................................... (13,378) (26,564)
Distributions from partially-owned entities ................................ 17,163 15,490
Investment in notes and mortgage loans receivable .......................... (10,069) (6,000)
Repayment of notes and mortgage loans receivable ........................... 1,000 --
Cash restricted for tenant improvements .................................... 29,095 (1,055)
Additions to real estate ................................................... (27,161) (10,380)
Purchases of marketable securities ......................................... (5,000) (7,427)
Acquisitions of real estate and other ...................................... -- (6,660)
Proceeds from sale of marketable securities ................................ 742 --
Real estate deposits and other ............................................. 1,476 --
--------- ---------
Net cash used in investing activities ...................................... (46,709) (28,832)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings ................................................... 74,160 565,000
Repayments of borrowings ................................................... (56,513) (522,506)
Debt issuance costs ........................................................ -- (17,996)
Distributions to minority partners ......................................... (27,290) (8,470)
Dividends paid on common shares ............................................ (45,191) (41,465)
Dividends paid on preferred shares ......................................... (8,972) --
Exercise of stock options .................................................. 1,132 1,096
--------- ---------
Net cash used in financing activities ...................................... (62,674) (24,341)
--------- ---------
Net decrease in cash and cash equivalents .................................. (25,006) (7,924)
Cash and cash equivalents at beginning of period ........................... 136,989 112,630
--------- ---------
Cash and cash equivalents at end of period ................................. $ 111,983 $ 104,706
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest (including capitalized interest of $3,570 in 2001
and $2,094 in 2000) .................................................... $ 50,385 $ 39,543
NON-CASH TRANSACTIONS:
Financing assumed in acquisitions .......................................... $ -- $ 17,640
Unrealized gain on securities available for sale ........................... 677 52,779
See notes to consolidated financial statements.
Page 5
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Vornado Realty Trust is a fully-integrated real estate investment trust
("REIT"). Vornado 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 86% of the common limited partnership
interest in, the Operating Partnership at March 31, 2001. All references to the
"Company" and "Vornado" refer to Vornado Realty Trust and its consolidated
subsidiaries, including the Operating Partnership.
2. BASIS OF PRESENTATION
The consolidated balance sheet as of March 31, 2001, the consolidated
statements of income for the three months ended March 31, 2001 and 2000 and the
consolidated statements of changes in cash flows for the three months ended
March 31, 2001 and 2000 are unaudited. In the opinion of management, 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 have been
condensed or omitted. These condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in Vornado's annual report on Form 10-K for the year ended
December 31, 2000 as filed with the Securities and Exchange Commission. The
results of operations for the three months ended March 31, 2001 are not
necessarily indicative of the operating results for the full year.
The accompanying consolidated financial statements include the accounts
of Vornado Realty Trust and its majority-owned subsidiary, Vornado Realty L.P.,
as well as equity interests acquired that individually (or in the aggregate with
prior interests) exceed a 50% interest and the Company exercises unilateral
control. All significant intercompany amounts have been eliminated. Equity
interests in partially-owned entities include partnerships and joint ventures
and are accounted for under the equity method of accounting as the Company
exercises significant influence. These investments are recorded initially at
cost and subsequently adjusted for net equity in income (loss) and cash
contributions and distributions. Prior to January 1, 2001, the Company's equity
interests in partially-owned entities also included investments in preferred
stock affiliates (corporations in which the Company owned all of the preferred
stock and none of the common equity). Ownership of the preferred stock entitled
the Company to substantially all of the economic benefits in the preferred stock
affiliates. On January 1, 2001, the Company acquired the common stock of the
preferred stock affiliates, which was owned by Officers and Trustees of Vornado,
and converted them to taxable REIT subsidiaries. Accordingly, the Hotel portion
of the Hotel Pennsylvania, the Company's investment in the Park Laurel
(including the minority interest for the 20% the Company does not own) and the
management companies (which provide services to the Company's business segments
and operate the Trade Show business of the Merchandise Mart division) have been
consolidated beginning January 1, 2001.
Management has 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 financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates.
Certain amounts in the prior year's financial statements have been
reclassified to conform to the current year presentation.
3. RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES, as amended, which establishes accounting and reporting
standards requiring every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value. The Statement requires
that changes in the derivative instrument's fair value be recognized currently
in earnings unless specific hedge accounting criteria are met.
The Company's investment securities include stock purchase warrants
received from companies that provide fiber-optic network and broadband access
to the Company's Office division tenants. Statement 133 requires these
warrants to be marked-to-market at each reporting period with the change in
value recognized currently in earnings.
The Company previously has marked-to market changes in value through
accumulated other comprehensive loss. Under Statement 133, those changes are
recognized through earnings, and accordingly, the Company has reclassed
$4,110,000 from accumulated other comprehensive loss to the consolidated
statement of income as of January 1, 2001. Future changes in value of such
securities will be recorded through earnings.
Page 6
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
4. FINANCINGS
On January 11, 2001, the Company completed a $105,000,000 refinancing
of its 888 Seventh Avenue office building. The loan bears interest at a fixed
rate of 6.6% and matures on February 11, 2006. A portion of the proceeds
received were used to repay the then existing mortgage of $55,000,000.
5. INVESTMENTS AND ADVANCES TO PARTIALLY-OWNED ENTITIES
The Company's investments and advances to partially-owned entities and
income recognized from such investments are as follows:
INVESTMENTS AND ADVANCES
March 31, 2001 December 31, 2000
-------------- -----------------
(amounts in thousands)
Temperature Controlled Logistics......................................... $ 477,806 $ 469,613
Charles E. Smith Commercial Realty L.P. ("CESCR")........................ 327,306 325,328
Alexander's.............................................................. 187,848 178,413
Newkirk Joint Ventures................................................... 175,602 163,157
Hotel Pennsylvania (1)................................................... -- 73,531
Partially-Owned Office Buildings......................................... 61,520 61,002
Vornado Ceruzzi Joint Ventures........................................... 26,231 28,847
Fort Lee................................................................. 29,922 28,208
Park Laurel (2).......................................................... -- 70,007
Management companies and other (2)....................................... 20,910 61,105
------------ ------------
$ 1,307,145 $ 1,459,211
============ ============
INCOME For The Three Months Ended March 31,
------------------------------------
2001 2000
(amounts in thousands) -------------- ------------
Income applicable to Alexander's:
33.1% share of equity in income............................. $ 7,156(3) $ 307
Interest Income............................................. 3,427 2,737
Management and leasing fee income........................... 1,721(3) 1,063
------------ ------------
$ 12,304 $ 4,107
============ ============
Temperature Controlled Logistics:
60% share of equity in net income........................... $ 4,464 $ 8,075
Management fee (40% of 1% per annum of
Total Combined Assets, as defined)....................... 1,484 1,323
------------ ------------
5,948 9,398
CESCR-34% share of equity in income............................ 7,367 6,729
Newkirk Joint Ventures......................................... 7,969 4,336
Hotel Pennsylvania (1)......................................... -- 421
Partially-Owned Office Buildings (4)........................... 1,264 700
Other.......................................................... 1,442 966
------------ ------------
$ 23,990 $ 22,550
============ ============
- ----------
(1) As of December 31, 2000, the Company owned 100% of the commercial portion
of the building (retail and office space) and 98% of the hotel portion
which was owned through a preferred stock affiliate. On January 1, 2001,
the Company acquired the common stock of the preferred stock affiliate and
converted it to a taxable REIT subsidiary. Accordingly, the Hotel portion
is also consolidated in 2001.
(2) On January 1, 2001, the Company acquired the common stock of the preferred
stock affiliates and converted them to taxable REIT subsidiaries.
Accordingly, the Park Laurel and the management companies are consolidated
in 2001.
(3) Equity in income includes $6,298 representing the Company's share of
Alexander's gain on sale of its Fordham Road property on January 12,
2001 and excludes $1,170 representing the Company's share of Alexander's
extraordinary gain on the early extinguishment of debt on this property
which is reflected as an extraordinary item on the consolidated
statements of income. Management and leasing fee income include a
fee of $520 paid to the Company in connection with the sale.
(4) Represents the Company's interests in 330 Madison Avenue (24.8%), and 570
Lexington Avenue (50%).
Page 7
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
TEMPERATURE CONTROLLED LOGISTICS
On February 22, 2001, the Landlord restructured the AmeriCold Logistics
leases to among other things, (i) reduce 2001's contractual rent to $146,000,000
(the same amount recognized as rental income in 2000's Funds from
Operations), (ii) reduce 2002's contractual rent to $150,000,000 (plus
additional contingent rent in certain circumstances), (iii) increase the
Landlord's share of annual maintenance capital expenditures by $4,500,000 to
$9,500,000 effective January 1, 2000 and (iv) extend the deferred rent period
to December 31, 2003 from March 11, 2002.
The tenant has advised the Landlord that its revenue for February and
March of this year from the warehouses it leases from the Landlord, is lower
than last year by 8.2% primarily due to a reduction in units stored at the
warehouses.
ALEXANDER'S
Alexander's is managed by and its properties are leased by the Company,
pursuant to agreements with a one-year term expiring in March of each year which
are automatically renewable.
At March 31, 2001, the Company has loans receivable from Alexander's of
$119,000,000 including $24,000,000 drawn under the $50,000,000 line of credit
the Company granted to Alexander's on August 1, 2000. On March 15, 2001, the
interest rate on these loans was reset from 15.72% to 13.74%, using the same
spread to treasuries as previously used.
On January 12, 2001, Alexander's sold its Fordham Road property for
$25,500,000, which resulted in a gain of $19,026,000, of which the Company's
share was $6,298,000. In addition, Alexander's paid off the mortgage on this
property at a discount, which resulted in an extraordinary gain from the
early extinguishment of debt of $3,534,000, of which the Company's share was
$1,170,000. The Company also received a commission of $520,000 in connection
with this sale.
6. OTHER RELATED PARTY TRANSACTIONS
The Company currently manages and leases the real estate assets of
Interstate Properties pursuant to a management agreement. Management fees earned
by the Company pursuant to the management agreement were $370,000 and $187,000
for the three months ended March 31, 2001 and 2000.
The Mendik Group owns an entity, which provides cleaning and related
services and security services to office properties, including the Company's
Manhattan office properties. The Company was charged fees in connection with
these contracts of $12,900,000 and $11,934,000 for the three months ended March
31, 2001 and 2000.
Page 8
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
7. MINORITY INTEREST
The minority interest represents limited partners', other than the
Company, interests in the Operating Partnership and are comprised of:
Outstanding Units at Conversion
--------------------------- Per Unit Preferred or Rate Into
March 31, December 31, Liquidation Annual Class A
Unit Series 2001 2000 Preference Distribution Rate Units
----------- ---- ---- ---------- ----------------- -----
Common:
Class A (a)................................... 6,650,248 6,456,749 -- $2.12 N/A
Class D....................................... 864,259 869,387 -- $2.12 1.0 (b)
Convertible Preferred:
5.0% B-1 Convertible Preferred................ 899,566 899,566 $ 50.00 $2.50 .914
8.0% B-2 Convertible Preferred................ 449,783 449,783 $ 50.00 $4.00 .914
6.5% C-1 Convertible Preferred................ 747,912 747,912 $ 50.00 $3.25 1.1431
6.5% E-1 Convertible Preferred................ 4,998,000 4,998,000 $ 50.00 $3.25 (c) 1.1364
Perpetual Preferred: (d)
8.5% D-1 Cumulative Redeemable Preferred...... 3,500,000 3,500,000 $ 25.00 $2.125 N/A
8.375% D-2 Cumulative Redeemable Preferred.... 549,336 549,336 $ 50.00 $4.1875 N/A
8.25% D-3 Cumulative Redeemable Preferred..... 8,000,000 8,000,000 $ 25.00 $2.0625 N/A
8.25% D-4 Cumulative Redeemable Preferred..... 5,000,000 5,000,000 $ 25.00 $2.0625 N/A
8.25% D-5 Cumulative Redeemable Preferred..... 7,480,000 7,480,000 $ 25.00 $2.0625 N/A
8.25% D-6 Cumulative Redeemable Preferred..... 840,000 840,000 $ 25.00 $2.0625 N/A
8.25% D-7 Cumulative Redeemable Preferred..... 7,200,000 7,200,000 $ 25.00 $2.0625 N/A
8.25% D-8 Cumulative Redeemable Preferred..... 360,000 360,000 $ 25.00 $2.0625 N/A
- ----------
(a) Class A units are redeemable at the option of the holder for common shares
of beneficial interest in Vornado, on a one-for-one basis, or at the
Company's option for cash.
(b) Mandatory conversion of Class D units into Class A units will occur after
four consecutive quarters of distributions of at least $.50375 per Class A
unit ($2.015 annually).
(c) Increases to $3.38 in March 2007.
(d) Convertible at the option of the holder for an equivalent amount of the
Company's preferred shares and redeemable at the Company's option after
the 5th anniversary of the date of issuance (ranging from December 1998 to
December 2000).
Page 9
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
8. INCOME PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
For The Three Months Ended
March 31,
------------------------
2001 2000
--------- --------
(amounts in thousands except per share amounts)
Numerator:
Income before cumulative effect of change in
accounting principle and extraordinary item.......................... $ 59,449 $ 58,321
Cumulative effect of change in accounting
principle............................................................ (4,110) --
Extraordinary item...................................................... 1,170 (1,125)
--------- --------
Net income.............................................................. 56,509 57,196
Preferred stock dividends............................................... (9,673) (9,673)
--------- --------
Numerator for basic and diluted income per
share - net income applicable to common shares.......................... $ 46,836 $ 47,523
========= ========
Denominator:
Denominator for basic income per share - weighted
average shares....................................................... 86,827 86,379
Effect of dilutive securities:
Employee stock options............................................... 2,554 1,376
--------- --------
Denominator for diluted income per share -
adjusted weighted average shares and
assumed conversions.................................................. 89,381 87,755
========= ========
INCOME PER COMMON SHARE - BASIC:
Income before cumulative effect of change in
accounting principle and extraordinary item....................... $ .58 $ .56
Cumulative effect of change in accounting
principle......................................................... (.05) --
Extraordinary item................................................... .01 (.01)
--------- --------
Net income per common share.......................................... $ .54 $ .55
========= ========
INCOME PER COMMON SHARE - DILUTED:
Income before cumulative effect of change in
accounting principle and extraordinary item....................... $ .56 $ .55
Cumulative effect of change in accounting
principle........................................................ (.05) --
Extraordinary item................................................... .01 (.01)
--------- --------
Net income per common share.......................................... $ .52 $ .54
========= ========
Page 10
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
9. COMPREHENSIVE INCOME
The following table sets forth the Company's comprehensive income:
For The Three Months Ended
March 31,
--------------------------
2001 2000
--------- ---------
(amounts in thousands)
Net income applicable to common shares................. $ 46,836 $ 47,523
Adjustment to record cumulative effect of change
in accounting principle........................... 4,110 --
Other comprehensive income............................. 518 52,200(1)
--------- ---------
Comprehensive income................................... $ 51,464 $ 99,723
========= =========
- ----------
(1) Primarily reflects the fluctuations in the market value of Vornado's
investments in companies that provide fiber-optic networks and broadband
access to the Company's Office division tenants. In the first quarter of
2000, the Company was required to record the unrealized appreciation on
such securities of $52,779. In the second quarter of 2000, the value of
these securities decreased by $54,456 and accordingly, the Company was
required to record such decrease.
10. OTHER
The Company was unable to reach a final agreement with the Port Authority
of NY & NJ to conclude a net lease of the World Trade Center. In the three
months ended March 31, 2001, the Company wrote-off costs of $5,000,000 primarily
associated with the World Trade Center.
Page 11
11. COMMITMENTS AND CONTINGENCIES
At March 31, 2001, in addition to the $456,307,000 balance outstanding
under the Company's revolving credit facility, the Company had utilized
$93,627,000 of availability under the facility for letters of credit and
guarantees primarily related to development and redevelopment projects.
Each of the Company's properties has been subjected to varying degrees of
environmental assessment at various times. The environmental assessments did not
reveal any material environmental contamination. However, there can be no
assurance that the identification of new areas of contamination, changes in the
extent or known scope of contamination, the discovery of additional sites, or
changes in cleanup requirements would not result in significant costs to the
Company.
From time-to-time, the Company has disposed of substantial amounts of
real estate to third parties for which, as to certain properties, it remains
contingently liable for rent payments or mortgage indebtedness.
There are various legal actions against the Company in the ordinary
course of business. In the opinion of management, after consultation with legal
counsel, the outcome of such matters will not have a material effect on the
Company's financial condition, results of operations or cash flow.
Page 12
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
12. SEGMENT INFORMATION
The Company has four business segments: Office, Retail, Merchandise Mart
Properties and Temperature Controlled Logistics. Prior to this year, income from
the Company's preferred stock affiliates was included in Income from
partially-owned entities. On January 1, 2001, the Company acquired the common
stock of its preferred stock affiliates and converted these entities to taxable
REIT subsidiaries. Accordingly, the Hotel portion of the Hotel Pennsylvania, the
Company's investment in the Park Laurel (including the minority interest for the
20% the Company does not own) and the management companies (which provide
services to the Company's business segments and operate the Trade Show business
of the Merchandise Mart division) have been consolidated. Net income and EBITDA
for the three months ended March 31, 2000 have been restated on a pro forma
basis to reflect these entities as if consolidated as of January 1, 2000.
For The Three Months Ended March 31,
----------------------------------------------------------------------------------
(amounts in thousands) 2001
----------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(2)
----- ------ ------ ---- --------- --------
Property rentals .......................... $ 182,816 $ 113,860 $ 28,137 $ 36,616 $ -- $ 4,203
Expense reimbursements .................... 35,092 19,041 11,295 3,973 -- 783
Hotel ..................................... 11,513 -- -- -- -- 11,513
Trade shows ............................... 10,389 -- -- 10,389 -- --
Other income .............................. 2,800 572 1,429 719 -- 80
----------- ----------- ----------- ----------- ----------- -----------
Total revenues ............................ 242,610 133,473 40,861 51,697 -- 16,579
----------- ----------- ----------- ----------- ----------- -----------
Operating expenses ........................ 100,383 55,761 15,412 21,132 -- 8,078
Depreciation and amortization ............. 31,865 18,644 4,463 6,442 -- 2,316
General and administrative ................ 14,248 3,370 23 4,595 -- 6,260(4)
Costs of acquisitions not consummated ..... 5,000 -- -- -- -- 5,000
----------- ----------- ----------- ----------- ----------- -----------
Total expenses ............................ 151,496 77,775 19,898 32,169 -- 21,654
----------- ----------- ----------- ----------- ----------- -----------
Operating income .......................... 91,114 55,698 20,963 19,528 -- (5,075)
Income applicable to Alexander's .......... 12,304 -- -- -- -- 12,304
Income from partially-owned entities ...... 23,990 8,695 1,897 113 5,948 7,337
Interest and other investment income ...... 13,473 2,298 -- 663 -- 10,512
Write-off of investment in technology company (4,723) -- -- -- -- (4,723)
Interest and debt expense ................. (49,395) (16,607) (14,149) (9,669) -- (8,970)
Net gain on sale of real estate ........... -- -- -- -- -- --
Minority interest ......................... (27,314) (13,589) (3,989) (3,644) (3,010) (3,082)
----------- ----------- ----------- ----------- ----------- -----------
Income before cumulative effect of change
in accounting principle and
extraordinary item ................... 59,449 36,495 4,722 6,991 2,938 8,303
Cumulative effect of change in accounting
principle ............................ (4,110) -- -- -- -- (4,110)
Extraordinary item ........................ 1,170 -- -- -- -- 1,170
----------- ----------- ----------- ----------- ----------- -----------
Net income ................................ 56,509 36,495 4,722 6,991 2,938 5,363
Extraordinary item ........................ (1,170) -- -- -- -- (1,170)
Cumulative effect of change in accounting
principle ............................ 4,110 -- -- -- -- 4,110
Minority interest ......................... 27,314 13,589 3,989 3,644 3,010 3,082
Net gain on sale of real estate ........... -- -- -- -- -- --
Interest and debt expense(3) .............. 73,254 27,447 14,791 9,669 6,713 14,634
Depreciation and amortization(3) .......... 47,918 23,644 4,727 6,442 8,408 4,697
Straight-lining of rents(3) ............... (7,737) (5,955) (161) (1,108) -- (513)
Other ..................................... (10,557) (2,090) -- -- 112 (8,579)(5)
----------- ----------- ----------- ----------- ----------- -----------
EBITDA(1) ................................. $ 189,641 $ 93,130 $ 28,068 $ 25,638 $ 21,181 $ 21,624
=========== =========== =========== =========== =========== ===========
March 31, 2001 2001
----------------------------------------------------------------------------------
Balance sheet data:
Real estate, net ..................... $ 4,106,137 $ 2,427,777 $ 610,682 $ 866,201 $ -- $ 201,477
Investments and advances to
partially-owned entities .......... 1,307,145 389,847 28,473 6,688 477,806 404,331
Capital expenditures
Acquisitions ...................... -- -- -- -- -- --
Other ............................. 27,161 18,223 340 4,040 -- 4,558
For The Three Months Ended March 31,
---------------------------------------------------------------------------------
(amounts in thousands) 2000 (Pro Forma)
---------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(2)
----- ------ ------ ---- --------- --------
Property rentals ........................... $ 163,955 $ 97,028 $ 31,965 $ 30,714 $ -- $ 4,248
Expense reimbursements ..................... 26,807 11,932 11,539 2,991 -- 345
Hotel ...................................... 11,431 -- -- -- -- 11,431
Trade shows ................................ 7,158 -- -- 7,158 -- --
Other income ............................... 4,084 1,025 1,279 1,598 -- 182
----------- ----------- ----------- ----------- -------- --------
Total revenues ............................. 213,435 109,985 44,783 42,461 -- 16,206
----------- ----------- ----------- ----------- -------- --------
Operating expenses ......................... 82,793 46,141 15,557 14,325 -- 6,770
Depreciation and amortization .............. 24,848 13,352 3,989 5,437 -- 2,070
General and administrative ................. 16,593 2,764 199 3,486 -- 10,144
Costs of acquisitions not consummated ...... -- -- -- -- -- --
----------- ----------- ----------- ----------- -------- --------
Total expenses ............................. 124,234 62,257 19,745 23,248 -- 18,984
----------- ----------- ----------- ----------- -------- --------
Operating income ........................... 89,201 47,728 25,038 19,213 -- (2,778)
Income applicable to Alexander's ........... 4,107 -- -- -- -- 4,107
Income from partially-owned entities ....... 19,853 7,725 277 -- 9,398 2,453
Interest and other investment ..............
income ................................ 5,788 384 3 111 -- 5,290
Interest and debt expense .................. (40,356) (14,323) (10,805) (8,347) -- (6,881)
Net gain on sale of real estate ............ 2,560 -- 2,560 -- -- --
Minority interest .......................... (22,832) (12,004) (4,937) (3,174) (2,717) --
----------- ----------- ----------- ----------- -------- --------
Income before cumulative effect of change
in accounting principle and
extraordinary item .................... 58,321 29,510 12,136 7,803 6,681 2,191
Cumulative effect of change in accounting
principle ............................. -- -- -- -- -- --
Extraordinary item ......................... (1,125) -- (1,125) -- -- --
----------- ----------- ----------- ----------- -------- --------
Net income ................................. 57,196 29,510 11,011 7,803 6,681 2,191
Extraordinary item ......................... 1,125 -- 1,125 -- -- --
Cumulative effect of change in accounting
principle ............................. -- -- -- -- -- --
Minority interest .......................... 22,832 12,004 4,937 3,174 2,717 --
Net gain on sale of real estate ............ (2,560) -- (2,560) -- -- --
Interest and debt expense(3) ............... 61,660 23,188 11,460 8,347 6,730 11,935
Depreciation and amortization(3) ........... 39,377 17,956 4,302 5,027 8,329 3,763
Straight-lining of rents(3) ................ (7,432) (5,301) (677) (1,279) (527) 352
Other ...................................... 1,274 -- -- -- 515 759
----------- ----------- ----------- ----------- -------- --------
EBITDA(1) .................................. $ 173,472 $ 77,357 $ 29,598 $ 23,072 $ 24,445 $ 19,000
=========== =========== =========== =========== ======== ========
December 31, 2000
--------------------------------------------------------------------------------
Balance sheet data:
Real estate, net ...................... $ 3,901,055 $ 2,388,393 $ 551,183 $ 862,003 $ -- $ 99,476
Investments and advances to
partially-owned entities ........... 1,459,211 394,089 31,660 41,670 469,613 522,179
Capital expenditures
Acquisitions ....................... 246,500 128,000 -- 89,000 -- 29,500
Other .............................. 200,181 106,689 7,251 37,362 28,582 20,297
- ----------
See footnotes 1-6 on the next page.
Page 13
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Notes to segment information:
(1) EBITDA represents income before interest, taxes, depreciation and
amortization, extraordinary or non-recurring items, gains or losses on
sales of real estate, the effect of straight-lining of property rentals
for rent escalations and minority interest. Management considers EBITDA a
supplemental measure for making decisions and assessing the performance of
its segments. EBITDA may not be comparable to similarly titled measures
employed by other companies.
(2) Other EBITDA is comprised of:
(amounts in thousands) 2001 2000
---- ----
Hotel Pennsylvania......................................... $ 5,280(4) $ 3,427
Investment in Newkirk Joint Ventures....................... 15,099(6) 9,754
Investments in other partially-owned entities
(Alexander's and other).................................. 5,805 4,430
Investment income ......................................... 10,512 5,290
Write-off of investment in technology company ............. (4,723) --
Unallocated general and administrative
expenses.............................................. (7,533) (5,812)
Costs of acquisitions not consummated...................... (5,000) --
Other...................................................... 2,184 1,911
-------- --------
Total.......................................... $ 21,624 $ 19,000
======== ========
(3) Interest and debt expense, depreciation and amortization and
straight-lining of rents included in the reconciliation of net income to
EBITDA reflects amounts which are netted in income from partially-owned
entities.
(4) Includes a $1,900 settlement from a tenant for rent previously reserved.
(5) Includes the reversal of $6,298 representing the Company's share of
Alexander's gain on sale of its Fordham Road property on January 12, 2001.
(6) Includes $3,300 from acquisitions of additional equity investments in
certain limited partnerships.
Page 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(All of the amounts presented are in thousands, except share amounts and
percentages)
Certain statements contained herein constitute forward-looking
statements as such term is defined in Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Certain factors could cause actual results to differ materially
from those in the forward-looking statements. Factors that might cause such
a material difference include, but are not limited to, (a) changes in the
general economic climate, (b) local conditions such as an oversupply of
space or a reduction in demand for real estate in the area, (c) conditions
of tenants, (d) competition from other available space, (e) increased
operating costs and interest expense, (f) the timing of and costs
associated with property improvements, (g) changes in taxation or zoning
laws, (h) government regulations, (i) failure of Vornado to continue to
qualify as a REIT, (j) availability of financing on acceptable terms, (k)
potential liability under environmental or other laws or regulations,
and (l) general competitive factors.
OVERVIEW
Below is a summary of net income and EBITDA(1) by segment for the three
months ended March 31, 2001 and 2000. Prior to this year, income from the
Company's preferred stock affiliates was included in income from partially-owned
entities. On January 1, 2001, the Company acquired the common stock of its
preferred stock affiliates and converted these entities to taxable REIT
subsidiaries. Accordingly, the Hotel portion of the Hotel Pennsylvania, the
Company's investment in the Park Laurel (including the minority interest for the
20% the Company does not own) and the management companies (which provide
services to the Company's business segments and operate the Trade Show business
of the Merchandise Mart division) have been consolidated. Net income and EBITDA
for the three months ended March 31, 2000 have been restated on a pro forma
basis to reflect these entities as if consolidated as of January 1, 2000.
March 31, 2001
-----------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(2)
----- ------ ------ ---- --------- --------
Property rentals .................................... $ 182,816 $ 113,860 $ 28,137 $ 36,616 $ -- $ 4,203
Expense reimbursements .............................. 35,092 19,041 11,295 3,973 -- 783
Hotel ............................................... 11,513 -- -- -- -- 11,513
Trade shows ......................................... 10,389 -- -- 10,389 -- --
Other income ........................................ 2,800 572 1,429 719 -- 80
--------- --------- --------- --------- --------- ---------
Total revenues ...................................... 242,610 133,473 40,861 51,697 -- 16,579
--------- --------- --------- --------- --------- ---------
Operating expenses .................................. 100,383 55,761 15,412 21,132 -- 8,078
Depreciation and amortization ....................... 31,865 18,644 4,463 6,442 -- 2,316
General and administrative .......................... 14,248 3,370 23 4,595 -- 6,260(4)
Costs of acquisitions not consummated ............... 5,000 -- -- -- -- 5,000
--------- --------- --------- --------- --------- ---------
Total expenses ...................................... 151,496 77,775 19,898 32,169 -- 21,654
--------- --------- --------- --------- --------- ---------
Operating income .................................... 91,114 55,698 20,963 19,528 -- (5,075)
Income applicable to Alexander's .................... 12,304 -- -- -- -- 12,304
Income from partially-owned entities ................ 23,990 8,695 1,897 113 5,948 7,337
Interest and other investment income ................ 13,473 2,298 -- 663 -- 10,512
Write-off of investment in technology company ....... (4,723) -- -- -- -- (4,723)
Interest and debt expense ........................... (49,395) (16,607) (14,149) (9,669) -- (8,970)
Minority interest ................................... (27,314) (13,589) (3,989) (3,644) (3,010) (3,082)
--------- --------- --------- --------- --------- ---------
Income before cumulative effect of change in
accounting principle and extraordinary item........ 59,449 36,495 4,722 6,991 2,938 8,303
Cumulative effect of change in accounting principle . (4,110) -- -- -- -- (4,110)
Extraordinary item................................... 1,170 -- -- -- -- 1,170
--------- --------- --------- --------- --------- ---------
Net income .......................................... 56,509 36,495 4,722 6,991 2,938 5,363
Extraordinary item................................... (1,170) -- -- -- -- (1,170)
Cumulative effect of change in accounting
principle ...................................... 4,110 -- -- -- -- 4,110
Minority interest ................................... 27,314 13,589 3,989 3,644 3,010 3,082
Interest and debt expense(3) ........................ 73,254 27,447 14,791 9,669 6,713 14,634
Depreciation and amortization(3) .................... 47,918 23,644 4,727 6,442 8,408 4,697
Straight-lining of rents(3) ......................... (7,737) (5,955) (161) (1,108) -- (513)
Other ............................................... (10,557) (2,090) -- -- 112 (8,579)(5)
--------- --------- --------- --------- --------- ---------
EBITDA(1) ........................................... $ 189,641 93,130 $ 28,068 $ 25,638 $ 21,181 $ 21,624
========= ========= ========= ========= ========= =========
Page 15
March 31, 2000 (Pro Forma)
--------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(2)
----- ------ ------ ---- --------- --------
Property rentals ................... $ 163,955 97,028 $ 31,965 $ 30,714 $ -- $ 4,248
Expense reimbursements ............. 26,807 11,932 11,539 2,991 -- 345
Hotel .............................. 11,431 -- -- -- -- 11,431
Trade shows ........................ 7,158 -- -- 7,158 -- --
Other income ....................... 4,084 1,025 1,279 1,598 -- 182
--------- --------- --------- --------- --------- ---------
Total revenues ..................... 213,435 109,985 44,783 42,461 -- 16,206
--------- --------- --------- --------- --------- ---------
Operating expenses ................. 82,793 46,141 15,557 14,325 -- 6,770
Depreciation and amortization ...... 24,848 13,352 3,989 5,437 -- 2,070
General and Administrative ......... 16,593 2,764 199 3,486 -- 10,144
--------- --------- --------- --------- --------- ---------
Total expenses ..................... 124,234 62,257 19,745 23,248 -- 18,984
--------- --------- --------- --------- --------- ---------
Operating income ................... 89,201 47,728 25,038 19,213 -- (2,778)
Income applicable to Alexander's ... 4,107 -- -- -- -- 4,107
Income from partially-owned entities 19,853 7,725 277 -- 9,398 2,453
Interest and other investment income 5,788 384 3 111 -- 5,290
Interest and debt expense .......... (40,356) (14,323) (10,805) (8,347) -- (6,881)
Net gain on sale of real estate .... 2,560 -- 2,560 -- -- --
Minority interest .................. (22,832) (12,004) (4,937) (3,174) (2,717) --
--------- --------- --------- --------- --------- ---------
Income before extraordinary item ... 58,321 29,510 12,136 7,803 6,681 2,191
Extraordinary item ................. (1,125) -- (1,125) -- -- --
--------- --------- --------- --------- --------- ---------
Net Income ......................... 57,196 29,510 11,011 7,803 6,681 2,191
Extraordinary item ................. 1,125 -- 1,125 -- -- --
Minority interest .................. 22,832 12,004 4,937 3,174 2,717 --
Net gain on sale of real estate .... (2,560) -- (2,560) -- -- --
Interest and debt expense(3) ....... 61,660 23,188 11,460 8,347 6,730 11,935
Depreciation and amortization(3) ... 39,377 17,956 4,302 5,027 8,329 3,763
Straight-lining of rents(3) ........ (7,432) (5,301) (677) (1,279) (527) 352
Other .............................. 1,274 -- -- -- 515 759
--------- --------- --------- --------- --------- ---------
EBITDA(1) .......................... $ 173,472 $ 77,357 $ 29,598 $ 23,072 $ 24,445 $ 19,000
========= ========= ========= ========= ========= =========
- ----------
(1) EBITDA represents income before interest, taxes, depreciation and
amortization, extraordinary or non-recurring items, gains or losses on
sales of real estate, the effect of straight-lining of property rentals
for rent escalations and minority interest. Management considers EBITDA a
supplemental measure for making decisions and assessing the performance of
its segments. EBITDA may not be comparable to similarly titled measures
employed by other companies.
(2) Other EBITDA is comprised of:
2001 2000
---- ----
Hotel Pennsylvania............................................. $ 5,280(4) $ 3,427
Investment in Newkirk Joint Ventures........................... 15,099(6) 9,754
Investments in other partially-owned entities (Alexander's and other) 5,805 4,430
Investment Income.............................................. 10,512 5,290
Write-off of investment in technology company.................. (4,723) --
Unallocated general and administrative
expenses.................................................. (7,533) (5,812)
Costs of acquisitions not consummated.......................... (5,000) --
Other.......................................................... 2,184 1,911
--------- ---------
Total.............................................. $ 21,624 $ 19,000
========= =========
(3) Interest and debt expense, depreciation and amortization and
straight-lining of rents included in the reconciliation of net income to
EBITDA reflects amounts which are netted in income from partially-owned
entities.
(4) Includes a $1,900 settlement from a tenant for rent previously reserved.
(5) Includes the reversal of $6,298 representing the Company's share of
Alexander's gain on sale of its Fordham Road property on January 12, 2001.
(6) Includes $3,300 from acquisitions of additional equity investments in
certain limited partnerships.
Page 16
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000
Below are the details of the changes by segment in EBITDA.
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other
----- ------ ------ ---- --------- -----
Three months ended March 31,2000 ........... $173,472 $ 77,357 $ 29,598 $ 23,072 $ 24,445 $ 19,000
2001 Operations:
Same store operations(1) ............. 9,811 9,590 620 1,666 (3,264)(3) 1,199
Acquisitions, dispositions and
non-recurring income and expenses 6,358 6,183 (2,150) 900 -- 1,425
-------- -------- -------- -------- -------- --------
Three months ended March 31, 2001 .......... $189,641 $ 93,130 $ 28,068 $ 25,638 $ 21,181 $ 21,624
======== ======== ======== ======== ======== ========
% increase in same
store operations .................. 5.7% 12.4%(2) 2.1% 7.2% (13.4%) 6.3%
(1) Represents operations which were owned for the same period in each year
and excludes non-recurring income and expenses.
(2) Same store percentage increase was 14.9% for the New York City office
portfolio and 4.3% for the CESCR portfolio.
(3) The Company reflects its 60% share of the Vornado/Crescent Partnerships'
("the Landlord") equity in the rental income it receives from AmeriCold
Logistics, its tenant, which leases the underlying temperature controlled
warehouses used in its business. On February 22, 2001, the Landlord
restructured the AmeriCold Logistics leases to among other things, (i)
reduce 2001's contractual rent to $146,000 (the same amount recognized as
rental income in 2000's Funds from Operations), (ii) reduce 2002's
contractual rent to $150,000 (plus additional contingent rent in certain
circumstances), (iii) increase the Landlord's share of annual maintenance
capital expenditures by $4,500 to $9,500 effective January 1, 2000 and
(iv) extend the deferred rent period to December 31, 2003 from March 11,
2002.
The tenant has advised the Landlord that its revenue for February and
March of this year from the warehouses it leases from the Landlord, is
lower than last year by 8.2% primarily due to a reduction in units stored
at the warehouses.
Page 17
REVENUES
The Company's revenues, which consist of property rentals, tenant expense
reimbursements, hotel revenues, trade show revenues and other income were
$242,610 in the three months ended March 31, 2001, compared to $213,435 in the
prior year's quarter, an increase of $29,175. This increase by segment resulted
from:
Date of Merchandise
Property Rentals: Acquisition Total Office Retail Mart Other
----------- ----- ------ ------ ---- -----
Acquisitions:
7 West 34th Street ..... November 2000 $ 3,648 $ 3,648 $ -- $ -- $ --
33 North Dearborn Street September 2000 1,415 -- -- 1,415 --
L.A. Mart .............. October 2000 3,039 -- -- 3,039 --
Student Housing Complex January 2000 1,150 -- -- -- 1,150
Dispositions and other .... (3,056) -- (3,056)(1) -- --
Leasing activity .......... 12,665 13,184 (772) 1,448 (1,195)
-------- -------- -------- -------- --------
Total increase in property
rentals ................ 18,861 16,832 (3,828) 5,902 (45)
-------- -------- -------- -------- --------
Tenant expense reimbursements:
Increase in tenant expense
reimbursements due to
acquisitions ........... 1,809 843 -- 966 --
Other ..................... 6,476 6,266 (244) 16 438
-------- -------- -------- -------- --------
Total increase in tenant
expense reimbursements . 8,285 7,109 (244) 982 438
-------- -------- -------- -------- --------
Hotel activity ............... 82 -- -- -- 82
Trade shows activity ......... 3,231 -- -- 3,231(2) --
Other income ................. (1,284) (453) 150 (879) (102)
-------- -------- -------- -------- --------
Total increase in revenues ... $ 29,175 $ 23,488 $ (3,922) $ 9,236 $ 373
======== ======== ======== ======== ========
- ----------
(1) Results primarily from Bradlees rejection of its lease at the 14th Street
and Union Square property on February 9, 2001, and the sale of the
Company's Texas properties on March 2, 2000.
(2) Results primarily from an additional trade show event in the first quarter
of 2001.
See supplemental information on page 23 for further details.
Page 18
EXPENSES
The Company's expenses were $151,496 in the three months ended March 31,
2001, compared to $124,234 in the prior year's quarter, an increase of $27,262.
This increase by segment resulted from:
Merchandise
Total Office Retail Mart Other
----- ------ ------ ---- -----
Operating:
Acquisitions ......................... $ 4,975 $ 1,494 $ -- $ 2,906 $ 575
Same store operations ................ 12,615 8,126 (145) 3,901 733
-------- -------- -------- -------- --------
17,590 9,620 (145) 6,807 1,308
-------- -------- -------- -------- --------
Depreciation and
amortization:
Acquisitions ......................... 1,262 586 -- 481 195
Same store operations ................ 5,755 4,706 474 524 51
-------- -------- -------- -------- --------
7,017 5,292 474 1,005 246
-------- -------- -------- -------- --------
General and administrative:
Depreciation in value of Vornado shares
and other securities held in officer's
deferred compensation trust .......... (2,623) -- -- -- (2,623)
Other expenses ......................... 278 606 (176) 1,109 (1,261)(1)
-------- -------- -------- -------- --------
(2,345) 606 (176) 1,109 (3,884)
-------- -------- -------- -------- --------
Costs of acquisitions not consummated ..... 5,000 -- -- -- 5,000(2)
-------- -------- -------- -------- --------
$ 27,262 $ 15,518 $ 153 $ 8,921 $ 2,670
======== ======== ======== ======== ========
- ----------
(1) Includes a $1,900 settlement from a tenant for rent previously reserved.
(2) Primarily associated with the World Trade Center.
Income applicable to Alexander's (loan interest income, equity in income
and depreciation) was $12,304 in the three months ended March 31, 2001, compared
to $4,107 in the prior year's quarter, an increase of $8,197. This increase
resulted primarily from the Company's share of Alexander's gain on sale of its
Fordham Road Property on January 12, 2001.
Income from partially-owned entities was $23,990 in the three months
ended March 31, 2001, compared to $19,853 in the prior year's quarter, an
increase of $4,137. This increase by segment resulted from:
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other
----- ------ ------ ---- --------- -----
Increase (decrease) in equity in income:
Temperature Controlled
Logistics ................... $(3,450) $ -- $ -- $ -- $(3,450) $ --
Charles E. Smith
Commercial Realty L.P. ......... 638 638 -- -- -- --
Newkirk Joint Ventures ............ 3,633 -- -- -- -- 3,633
Partially-owned
office buildings ............... 564 564 -- -- -- --
Other ............................. 2,752 (232) 1,620 113 -- 1,251
------- ------- ------- ------- ------- -------
$ 4,137 $ 970 1,620 $ 113 $(3,450) $ 4,884
======= ======= ======= ======= ======= =======
Page 19
Interest and other investment income (interest income on mortgage loans
receivable, other interest income, dividend income and net gains on sale of
marketable securities) was $13,473 for the three months ended March 31, 2001,
compared to $5,788 in the prior year's quarter, an increase of $7,685. This
increase resulted primarily from the acquisition of NorthStar subordinated
unsecured debt (22% effective rate) on September 19, 2000 and a loan to
Primestone Investment Partners, L.P. (20% effective rate) on September 28, 2000.
The Company recorded a charge of $4,723 resulting from the write-off
of an equity investment in a technology company in the three months ended
March 31, 2001.
Interest and debt expense was $49,395 for the three months ended March
31, 2001, compared to $40,356 in the prior year's quarter, an increase of
$9,039. This increase resulted from interest on higher average outstanding
loan balances, partially offset by a $500 savings from a 20 basis point
reduction in weighted average interest rates of variable rate debt. If the
current level of variable rates were to continue, interest expense inclusive
of the Company's share of partially-owned entities, would be approximately
$4,500 lower in the quarter ended June 30, 2001, as compared to the quarter
ended March 31, 2001.
Minority interest was $27,314 for the three months ended March 31, 2001,
compared to $22,832 in the prior year's quarter, an increase of $4,482. This
increase is primarily due to the issuance of perpetual preferred units in
connection with acquisitions.
The Company recorded the cumulative effect of a change in accounting
principle of $4,110 in the first quarter of 2001. The Company previously had
marked-to-market changes in value of stock purchase warrants through
accumulated other comprenensive loss. Under SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, those changes are recognized
through earnings, and accordingly, the Company has reclassed $4,110,000 from
accumulated other comprehensive loss to the consolidated statement of income
as of January 1, 2001. Future changes in value of such securities will be
recorded through earnings.
The extraordinary item of $1,170 in the three months ended March 31,
2001 represents the Company's share of Alexander's extraordinary gain from
early extinguishment of debt. The Company incurred an extraordinary loss of
$1,125 in the first quarter of 2000 due to the write-off of unamortized
financing costs in connection with the prepayment of debt.
Page 20
LIQUIDITY AND CAPITAL RESOURCES
THREE MONTHS ENDED MARCH 31, 2001
Cash flows provided by operating activities of $84,377 was primarily
comprised of (i) income of $56,509 and (ii) adjustments for non-cash items of
$22,653 partially offset by (iii) the net change in operating assets and
liabilities of $5,331. The adjustments for non-cash items are primarily
comprised of (i) cumulative effect of change in accounting principle of $4,110,
(ii) the write-off of an investment in marketable securities of $4,723, (iii)
depreciation and amortization of $31,865 and (iv) minority interest of $27,314,
partially offset by (v) the effect of straight-lining of rental income of $7,895
and (vi) equity in net income of partially-owned entities and income applicable
to Alexander's of $36,294.
Net cash used in investing activities of $46,709 was primarily
comprised of (i) recurring capital expenditures of $14,352, (ii)
non-recurring capital expenditures of $12,809 (iii) development and
redevelopment expenditures of $40,577, (iv) investment in notes and mortgages
receivable of $10,069, (v) investments in partially-owned entities of
$13,378, partially offset by, (vi) distributions from partially-owned
entities of $17,163 and (vii) a decrease in restricted cash arising primarily
from the repayment of mortgage escrows of $29,095.
Net cash used in financing activities of $62,674 was primarily comprised
of (i) proceeds from borrowings of $74,160, partially offset by, (ii) repayments
of borrowings of $56,513, (iii) dividends paid on common shares of $45,191, (iv)
dividends paid on preferred shares of $8,972, and (v) distributions to minority
partners of $27,290.
Below are the details of capital expenditures, leasing commissions. and
development and redevelopment expenditures.
Capital expenditures are categorized as follows:
Recurring -- capital improvements expended to maintain a
property's competitive position within the market and tenant
improvements and leasing commissions for costs to release expiring
leases or renew or extend existing leases.
Non-recurring -- capital improvements completed in the year of
acquisition and the following two years (which were planned at the
time of acquisition) and tenant improvements and leasing commissions
for space which was vacant at the time of acquisition of a property.
Development and Redevelopment expenditures include all hard and soft
costs associated with the development or redevelopment of a property,
including tenant improvements, leasing commissions and capitalized interest
and operating costs until the property is substantially complete and ready
for its intended use.
New York Merchandise
Total City Office Retail Mart Other
----- ----------- ------ ---- -----
Capital expenditures:
Expenditures to maintain the assets:
Recurring ....................... $ 4,434 $ 2,922 $ 96 $ 449 $ 967
Non-recurring ................... 12,775 6,694 -- 2,490 3,591
------- ------- ------- ------- -------
17,209 9,616 96 2,939 4,558
------- ------- ------- ------- -------
Tenant improvements:
Recurring ....................... 9,918 8,573 244 1,101 --
Non-recurring ................... 34 34 -- -- --
------- ------- ------- ------- -------
9,952 8,607 244 1,101 --
------- ------- ------- ------- -------
Total .............................. $27,161 $18,223 $ 340 $ 4,040 $ 4,558
======= ======= ======= ======= =======
Leasing Commissions:
Recurring .......................... $ 5,643 $ 2,769 $ 325 $ 2,414 $ 135
Non-recurring ...................... 5,527 1,906 -- 3,621 --
------- ------- ------- ------- -------
$11,170 $ 4,675 $ 325 $ 6,035 $ 135
======= ======= ======= ======= =======
Development and Redevelopment:
Expenditures: (1)
Park Laurel (80% interest) ...... $18,286 $ -- $-- $ -- $18,286
Market Square on Main Street .... 9,127 -- -- 9,127 --
Other ........................... 13,164 6,165 863 -- 6,136
------- ------- ------- ------- -------
$40,577 $ 6,165 $ 863 $ 9,127 $24,422
======= ======= ======= ======= =======
- ----------
(1) Does not include $37,592 of Fort Lee development costs during the three
months ended March 31, 2001, which were funded by a construction loan.
Page 21
THREE MONTHS ENDED MARCH 31, 2000
Cash flows provided by operating activities of $45,249 was primarily
comprised of (i) income of $57,196 and (ii) adjustments for non-cash items of
$11,318, offset by (iii) the net change in operating assets and liabilities of
$19,580. The adjustments for non-cash items are primarily comprised of (i)
depreciation and amortization of $23,253 and (ii) minority interest of $22,832,
partially offset by (iii) the effect of straight-lining of rental income of
$8,110 and (iv) equity in net income of partially-owned entities of $26,657. The
net change in operating assets and liabilities primarily reflects an increase in
prepaid expenses of $11,673.
Net cash used in investing activities of $28,832 was primarily comprised
of (i) capital expenditures of $10,380 (ii) redevelopment expenditures of
$10,228, (iii) investment in notes and mortgages receivable of $6,000 (loan to
Vornado Operating Company), (iv) acquisitions of real estate of $6,660 (see
detail below), (v) investments in partially-owned entities of $26,564 (see
detail below), (vi) investments in securities of $7,427, partially offset by
(vii) proceeds from the sale of real estate $23,992 and distributions from
partially-owned entities of $15,490.
Net cash used in financing activities of $24,341 was primarily comprised
of (i) repayment of borrowings of $522,506, (ii) dividends paid on common shares
of $41,465, (iii) debt issuance costs of $17,996, (iv) distributions to minority
partners of $8,470, partially offset by (v) proceeds from borrowings of
$565,000.
Acquisitions of real estate and investments in partially-owned entities are
comprised of:
Debt Value of
Cash Assumed Units Issued Investment
---- ------- ------------ ----------
Real Estate:
Student Housing Complex (90% interest) ..... $ 6,660 $ 17,640 $ -- $24,300
======= ============== =============== =======
Investments in Partially Owned Entities:
Vornado-Ceruzzi Joint Venture (80% interest) $15,696 $ -- $ -- $15,696
Funding of Development Expenditures ........ 9,878 -- -- 9,878
Other ...................................... 990 -- -- 990
------- -------------- --------------- -------
$26,564 -- -- $26,564
======= ============== =============== =======
Capital expenditures were comprised of:
New York Merchandise
Total City Office Retail Mart Other
----- ----------- ------ ---- -----
Expenditures to maintain the assets $ 5,881 $ 3,165 $ 35 $ 559 $ 2,122
Tenant allowances ................. 4,499 3,699 512 288 --
Redevelopment expenditures ........ 10,228 6,038 -- 4,190 --
------- ------- ------- ------- -------
Total capital expenditures ........ $20,608 $12,902 $ 547 $ 5,037 $ 2,122
======= ======= ======= ======= =======
Page 22
SUPPLEMENTAL INFORMATION
Below are the details of the changes by segment in EBITDA for the three months
ended March 31, 2001 and December 31, 2000.
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other
----------- ----------- ----------- -------------- -------------- -----------
Three months ended
December 31, 2000................... $ 197,425 $ 86,125 $ 29,627 $ 23,072 $ 23,735 $34,866
2001 Operations:
Same store operations(1)............ 2,907 4,755 (35) 2,566(4) (2,554)(3) (1,825)(4)
Acquisitions, dispositions
and other non-recurring
income and expenses................ (10,691) 2,250 (1,524) -- -- (11,417)(5)
---------- --------- --------- --------- ---------- ---------
Three months ended
March 31, 2001...................... $ 189,641 $ 93,130 $ 28,068 $ 25,638 $ 21,181 $21,624
========== ========= ========= ========= ========== =========
% increase in same
store operations................. 1.5% 5.5%(2) -- 11.1% (10.8%) (5.2%)
(1) Represents operations which were owned for the same period in each
year and excludes non-recurring income and expenses.
(2) Same store percentage increase was 5.9% for the New York City office
portfolio and 4.5% for the CESCR portfolio.
(3) The Company reflects its 60% share of the Vornado/Crescent
Partnerships' ("the Landlord") equity in the rental income it
receives from AmeriCold Logistics, its tenant, which leases the
underlying temperature controlled warehouses used in its business.
On February 22, 2001, the Landlord restructured the AmeriCold
Logistics leases to among other things, (i) reduce 2001's
contractual rent to $146,000 (the same amount recognized as rental
income in 2000's Funds from Operations), (ii) reduce 2002's
contractual rent to $150,000 (plus additional contingent rent in
certain circumstances), (iii) increase the Landlord's share of annual
maintenance capital expenditures by $4,500 to $9,500 effective
January 1, 2000 and (iv) extend the deferred rent period to
December 31, 2003 from March 11, 2002.
The tenant has advised the Landlord that its revenue for February and
March of this year from the warehouses it leases from the Landlord, is
lower than last year by 8.2% primarily due to a reduction in units
stored at the warehouses.
(4) Reflects seasonality of the Merchandise Mart trade show business and
the Hotel Pennsylvania which is included in Other.
(5) Includes the write-off of investment in marketable securities and
costs of acquisitions not consummated.
The following table sets forth certain information for the properties the
Company owns directly or indirectly, including leasing activity for space
previously occupied:
Office Merchandise Mart Temperature
-------------------------- ----------------------- Controlled
New York City CESCR Retail Office(1) Showroom(1) Logistics
--------------- ------ -------- --------- ----------- -----------
As of March 31, 2001:
Square feet..................................... 14,410 4,248 11,441 2,869 5,044 17,495
Cubic feet...................................... -- -- -- -- -- 438,900
Number of properties............................ 22 50 55 9 9 88
Occupancy rate.................................. 97% 98% 92% 91% 98% 72%
Leasing Activity:
For the quarter ended
- ---------------------------------------------------
March 31, 2001:
Square Feet.......................... 401 322 129 10 134 --
Rent per Square Foot:
Initial rent (2).................. $49.61 $31.19 $20.38 $28.35 $22.44 --
Prior escalated rent.............. $31.12 $24.39 $18.85 $24.78 $15.24 --
Percentage increase............... 59% 28% 8% 14% 47% --
As of December 31, 2000
Square feet..................................... 14,396 4,248 11,293 2,869 5,044 17,495
Cubic feet...................................... -- -- -- -- -- 438,900
Number of properties............................ 22 50 55 9 9 88
Occupancy rate.................................. 96% 98% 92% 90% 98% 82%
As of March 31, 2000:
Square feet..................................... 14,267 3,782 11,960 2,640 4,317 17,770
Cubic feet...................................... -- -- -- -- -- 445,000
Number of properties............................ 22 40 56 7 7 90
Occupancy rate.................................. 95% 95% 93% 88% 99% 83%
(1) The office and showroom space is contained in the same mixed-use
properties.
(2) Most leases include periodic step-ups in rent, which are not reflected
in the initial rent per square foot leased.
Page 23
FUNDS FROM OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
Funds from operations was $81,907 in the three months ended March 31,
2001, compared to $80,176 in the prior year's quarter, an increase of $1,731.
Funds from operations in the three months ended March 31, 2001, includes (i) a
charge of $5,000 for the write-off of costs associated with two acquisitions
which were not consummated and (ii) a charge of $4,723 resulting from the
write-off of an equity investment in a technology company. The following table
reconciles funds from operations and net income:
For the Three Months Ended March 31,
-----------------------------------------------
2001 2000
---------------------- ---------------------
Net income applicable to common shares............... $ 46,836 $ 47,523
Cumulative effect of change in accounting
principle.......................................... 4,110 --
Extraordinary item................................... (1,170) 1,125
Depreciation and amortization of real property....... 31,040 22,815
Straight-lining of property rentals for rent
escalations ....................................... (7,254) (7,038)
Leasing fees received in excess of income
recognized ........................................ (124) 485
(Depreciation) Appreciation of securities held
in officer's deferred compensation trust .......... (2,283) 340
Net gain on sale of real estate ..................... -- (2,560)
Proportionate share of adjustments to equity
in net income of partially-owned entities to
arrive at funds from operations ................... 9,266 15,791
Minority interest in excess of preferential
distributions ..................................... (3,936) (3,728)
----------------- -----------------
76,485 74,753
Series A Preferred Stock dividends................... 5,422 5,423
----------------- -----------------
$ 81,907 $ 80,176
================= =================
The number of shares that should be used for determining funds from
operations per share is as follows:
For The Three Months Ended
---------------------------------------------
March 31,
2001 2000
------------- -------------
Weighted average shares used for determining diluted income per share 89,381 87,755
Series A preferred shares........................................ 8,018 8,018
------------- -------------
Shares used for determining diluted funds from operations per share 97,399 95,773
============= =============
Page 24
Funds from operations does not represent cash generated from operating
activities in accordance with accounting principles generally accepted in the
United States of America and is not necessarily indicative of cash available
to fund cash needs which is disclosed in the Consolidated Statements of Cash
Flows for the applicable periods. There are no material legal or functional
restrictions on the use of funds from operations. Funds from operations
should not be considered as an alternative to net income as an indicator of
the Company's operating performance or as an alternative to cash flows as a
measure of liquidity. Management considers funds from operations a
supplemental measure of operating performance and along with cash flow from
operating activities, financing activities and investing activities, it
provides investors with an indication of the ability of the Company to incur
and service debt, to make capital expenditures and to fund other cash needs.
Funds from operations may not be comparable to similarly titled measures
reported by other REITs since a number of REITs, including the Company,
calculate funds from operations in a manner different from that used by
NAREIT. Funds from operations, as defined by NAREIT, represents net income
applicable to common shares before depreciation and amortization,
extraordinary items and gains or losses on sales of real estate. Funds from
operations as disclosed above has been modified from this definition to
adjust primarily for (i) the effect of straight-lining of property rentals
for rent escalations and leasing fee income, and (ii) the reversal of income
taxes (benefit) which are considered non-recurring because of the conversion
of Temperature Controlled Logistics Companies to REITs in 2000.
Below are the cash flows provided by (used in) operating, investing and
financing activities:
For the Three Months Ended March 31,
---------------------------------------------
2001 2000
-------------------- ---------------------
Operating activities............................... $ 84,377 $ 45,249
=============== ===============
Investing activities............................... $ (46,709) $ (28,832)
=============== ===============
Financing activities............................... $ (62,674) $ (24,341)
=============== ===============
FINANCINGS
The Company anticipates that cash from continuing operations will be
adequate to fund business operations and the payment of dividends and
distributions on an on-going basis for more than the next twelve months;
however, capital outlays for significant acquisitions would require funding from
borrowings or equity offerings.
Page 25
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company's exposure to a change in interest rates on its wholly-owned
and partially-owned debt (all of which arises out of non-trading activity) is as
follows:
($ in thousands, except per share amounts)
March 31, 2001 December 31, 2000
----------------------------------------------------------- --------------------------------
Weighted Average Effect of 1% Change Weighted Average
Balance Interest Rate In Base Rates Balance Interest Rate
--------------- ------------------- --------------------- ----------- -------------------
Wholly-owned debt:
Variable rate............ $ 1,590,467 6.55% $ 14,670(1) $ 1,593,751 8.00%
Fixed rate............... 1,154,084 7.52% -- 1,063,146 7.61%
------------ ---------- ------------
$ 2,744,551 14,670 $ 2,656,897
============ ========== ============
Partially-owned debt:
Variable rate............ $ 132,628 7.14% 1,326 $ 204,462 8.40%
Fixed rate............... 1,125,840 7.54% -- 1,123,926 7.54%
------------ ---------- ------------
$ 1,258,468 1,326 $ 1,328,388
============ ========== ============
Minority interest................. (2,319)
-----------
Total decrease in the
Company's annual net income.... $ 13,677
===========
Per share-diluted........... $ .15
===========
- ------------------------------------
(1) Excludes the effect of a $123,500 mortgage financing, cross-collateralized
by the Company's 770 Broadway and 595 Madison Avenue office properties, as the
proceeds are in a restricted mortgage escrow account which bears interest at the
same rate as the loan.
Page 26
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is from time to time involved in legal actions arising in the
ordinary course of its business. In the opinion of management, after
consultation with legal counsel, the outcome of such matters will not have a
material adverse effect on the Company's financial condition, results of
operations or cash flows.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K are incorporated herein by
reference and are listed in the attached Exhibit Index.
(b) Reports on Form 8-K
During the quarter ended March 31, 2001, Vornado Realty Trust filed
the following reports on Form 8-K:
Period Covered
(Date of earliest
event reported) Items Reported Date Filed
- -------------------- -------------------------------------------------------------------------------- --------------------
February 22, 2001 Press release announcing restructuring of leases with AmeriCold Logistics February 22, 2001
February 22, 2001 Press release announcing exclusive negotiating period relating to net lease of
World Trade Center Complex February 23, 2001
March 19, 2001 Press release announcing failure to conclude net lease of World Trade Center
Complex March 22, 2001
Page 27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VORNADO REALTY TRUST
--------------------------------------------------
(Registrant)
Date: May 3, 2001 By: /s/ JOSEPH MACNOW
------------------------------------------------------
Joseph Macnow, Executive Vice President -
Finance and Administration and
Chief Financial Officer
Page 28
EXHIBIT INDEX
EXHIBIT
NO.
- --------
3.1 -- Amended and Restated Declaration of Trust of Vornado, amended
April 3, 1997--Incorporated by reference to Exhibit 3.1 of
Vornado's Registration Statement on Form S-8 (File No.
333-29011), filed on June 12, 1997............................... *
3.2 -- Articles of Amendment of Declaration of Trust of Vornado, as
filed with the State Department of Assessments and Taxation of
Maryland on October 14, 1997 - Incorporated by reference to
Exhibit 3.2 of Vornado's Registration Statement on Form S-3 (File
No. 333-36080), filed on May 2, 2000............................. *
3.3 -- Articles of Amendment of Declaration of Trust of Vornado, as
filed with the State Department of Assessments and Taxation of
Maryland on April 22, 1998 - Incorporated by reference to Exhibit
3.1 of Vornado's Current Report on Form 8-K, dated April 22, 1998
(File No. 001-11954), filed on April 28, 1998.................... *
3.4 -- Articles of Amendment of Declaration of Trust of Vornado, as
filed with the State Department of Assessments and Taxation of
Maryland on November 24, 1999 - Incorporated by reference to
Exhibit 3.4 of Vornado's Registration Statement on Form S-3 (File
No. 333-36080), filed on May 2, 2000............................. *
3.5 -- Articles of Amendment of Declaration of Trust of Vornado, as
filed with the State Department of Assessments and Taxation of
Maryland on April 20, 2000 - Incorporated by reference to Exhibit
3.5 of Vornado's Registration Statement on Form S-3 (File No.
333-36080), filed on May 2, 2000................................. *
3.6 -- Articles Supplementary Classifying Vornado's $3.25 Series A
Preferred Shares of Beneficial Interest, liquidation preference
$50.00 per share - Incorporated by reference to Exhibit 4.1 of
Vornado's Current Report on Form 8-K, dated April 3, 1997 (File
No. 001-11954), filed on April 8, 1997........................... *
3.7 -- Articles Supplementary Classifying Vornado's Series D-1 8.5%
Cumulative Redeemable Preferred Shares of Beneficial Interest, no
par value (the "Series D-1 Preferred Shares") - Incorporated by
reference to Exhibit 3.1 of Vornado's Current Report on Form 8-K,
dated November 12, 1998 (File No. 001-11954), filed on November
30, 1998......................................................... *
3.8 -- Articles Supplementary Classifying Additional Series D-1
Preferred Shares - Incorporated by reference to Exhibit 3.2 of
Vornado's Current Report on Form 8-K/A, dated November 12, 1998
(File No. 001-11954), filed on February 9, 1999.................. *
3.9 -- Articles Supplementary Classifying 8.5% Series B Cumulative
Redeemable Preferred Shares of Beneficial Interest, liquidation
preference $25.00 per share, no par value - Incorporated by
reference to Exhibit 3.3 of Vornado's Current Report on Form 8-K,
dated March 3, 1999 (File No. 001-11954), filed on March 17,
1999............................................................. *
3.10 -- Articles Supplementary Classifying Vornado's Series C Preferred
Shares - Incorporated by reference to Exhibit 3.7 of Vornado's
Registration Statement on Form 8-A (File No. 001-11954), filed on
May 19, 1999..................................................... *
- -------------------------------
* Incorporated by reference
Page 29
EXHIBIT
NO.
- --------
3.11 -- Articles Supplementary Classifying Vornado Realty Trust's Series
D-2 Preferred Shares, dated as of May 27, 1999, as filed with the
State Department of Assessments and Taxation of Maryland on May
27, 1999 - Incorporated by reference to Exhibit 3.1 of Vornado's
Current Report on Form 8-K, dated May 27, 1999 (File No. 001-11954),
filed on July 7, 1999............................................ *
3.12 -- Articles Supplementary Classifying Vornado's Series D-3 Preferred
Shares, dated September 3, 1999, as filed with the State
Department of Assessments and Taxation of Maryland on September
3, 1999 - Incorporated by reference to Exhibit 3.1 of Vornado's
Current Report on Form 8-K, dated September 3, 1999 (File No.
001-11954), filed on October 25, 1999............................ *
3.13 -- Articles Supplementary Classifying Vornado's Series D-4 Preferred
Shares, dated September 3, 1999, as filed with the State
Department of Assessments and Taxation of Maryland on September
3, 1999 - Incorporated by reference to Exhibit 3.2 of Vornado's
Current Report on Form 8-K, dated September 3, 1999 (File No.
001-11954), filed on October 25, 1999............................ *
3.14 -- Articles Supplementary Classifying Vornado's Series D-5 Preferred
Shares - Incorporated by reference to Exhibit 3.1 of Vornado's
Current Report on Form 8-K, dated November 24, 1999 (File No.
001-11954), filed on December 23, 1999........................... *
3.15 -- Articles Supplementary to Declaration of Trust of Vornado Realty
Trust with respect to the Series D-6 Preferred Shares, dated May
1, 2000, as filed with the State Department of Assessments and
Taxation of Maryland on May 1, 2000 - Incorporated by reference
to Exhibit 3.1 of Vornado's Current Report on Form 8-K, dated May
1, 2000 (File No. 001-11954), filed May 19, 2000................. *
3.16 -- Articles Supplementary to Declaration of Trust of Vornado Realty
Trust with respect to the Series D-7 Preferred Shares, dated May
25, 2000, as filed with the State Department of Assessments and
Taxation of Maryland on June 1, 2000 - Incorporated by reference
to Exhibit 3.1 of Vornado's Current Report on Form 8-K, dated May
25, 2000 (File No. 001-11954), filed on June 16, 2000............ *
3.17 -- Articles Supplementary to Declaration of Trust of Vornado Realty
Trust with respect to the Series D-8 Preferred Shares -
Incorporated by reference to Exhibit 3.1 of Vornado's Current
Report on Form 8-K, dated December 8, 2000 (File No. 1-11954),
filed on December 28, 2000....................................... *
3.18 -- Amended and Restated Bylaws of Vornado, as amended on March 2,
2000 - Incorporated by reference to Exhibit 3.12 of Vornado's
Annual Report on Form 10-K for the period ended December 31, 1999
(File No. 1-11954), filed on March 9, 2000....................... *
3.19 -- Second Amended and Restated Agreement of Limited Partnership of
the Operating Partnership, dated as of October 20, 1997 -
Incorporated by reference to Exhibit 3.4 of Vornado's Annual
Report on Form 10-K for the year ended December 31, 1997 filed on
March 31, 1998 (the "1997 10-K")................................. *
3.20 -- Amendment to Second Amended and Restated Agreement of Limited
Partnership of Vornado Realty L.P., dated as of December 16,
1997--Incorporated by reference to Exhibit 3.5 of the 1997 10-K.. *
3.21 -- Second Amendment to Second Amended and Restated Agreement of
Limited Partnership of the Operating Partnership, dated as of
April 1, 1998 - Incorporated by reference to Exhibit 3.5 of
Vornado's Registration Statement on Form S-3 (File No.
333-50095), filed on April 14, 1998.............................. *
- -------------------------------
* Incorporated by reference
Page 30
EXHIBIT
NO.
- --------
3.22 -- Third Amendment to Second Amended and Restated Agreement of
Limited Partnership of the Operating Partnership, dated as of
November 12, 1998 - Incorporated by reference to Exhibit 3.2 of
Vornado's Current Report on Form 8-K, dated November 12, 1998
(File No. 001-11954), filed on November 30, 1998................. *
3.23 -- Fourth Amendment to Second Amended and Restated Agreement of
Limited Partnership of the Operating Partnership, dated as of
November 30, 1998 - Incorporated by reference to Exhibit 3.1 of
Vornado's Current Report on Form 8-K, dated December 1, 1998
(File No. 001-11954), filed on February 9, 1999.................. *
3.24 -- Exhibit A, dated as of December 22, 1998, to Second Amended and
Restated Agreement of Limited Partnership of the Operating
Partnership - Incorporated by reference to Exhibit 3.4 of
Vornado's Current Report on Form 8-K/A, dated November 12, 1998
(File No. 001-11954), filed on February 9, 1999.................. *
3.25 -- Fifth Amendment to Second Amended and Restated Agreement of
Limited Partnership of the Operating Partnership, dated as of
March 3, 1999 - Incorporated by reference to Exhibit 3.1 of
Vornado's Current Report on Form 8-K, dated March 3, 1999 (File
No. 001-11954), filed on March 17, 1999.......................... *
3.26 -- Exhibit A to Second Amended and Restated Agreement of Limited
Partnership of the Operating Partnership, dated as of March 11,
1999 - Incorporated by reference to Exhibit 3.2 of Vornado's
Current Report on Form 8-K, dated March 3, 1999 (File No.
001-11954), filed on March 17, 1999.............................. *
3.27 -- Sixth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., dated as of March 17,
1999 - Incorporated by reference to Exhibit 3.2 of Vornado's
Current Report on Form 8-K, dated May 27, 1999 (File No.
001-11954), filed on July 7, 1999................................ *
3.28 -- Seventh Amendment to Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., dated as of May 20,
1999 - Incorporated by reference to Exhibit 3.3 of Vornado's
Current Report on Form 8-K, dated May 27, 1999 (File No.
001-11954), filed on July 7, 1999................................ *
3.29 -- Eighth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., dated as of May 20,
1999 - Incorporated by reference to Exhibit 3.4 of Vornado's
Current Report on Form 8-K, dated May 27, 1999 (File No.
001-11954), filed on July 7, 1999................................ *
3.30 -- Ninth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., dated as of May 20,
1999 - Incorporated by reference to Exhibit 3.3 of Vornado's
Current Report on Form 8-K, dated September 3, 1999 (File No.
001-11954), filed on October 25, 1999............................ *
3.31 -- Tenth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., dated as of May 20,
1999 - Incorporated by reference to Exhibit 3.4 of Vornado's
Current Report on Form 8-K, dated September 3, 1999 (File No.
001-11954), filed on October 25, 1999............................ *
3.32 -- Eleventh Amendment to Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., dated as of November
24, 1999 - Incorporated by reference to Exhibit 3.2 of Vornado's
Current Report on Form 8-K, dated November 24, 1999 (File No.
001-11954), filed on December 23, 1999........................... *
- -------------------------------
* Incorporated by reference
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EXHIBIT
NO.
- --------
3.33 -- Twelfth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., dated as of May 1,
2000 - Incorporated by reference to Exhibit 3.2 of Vornado's
Current Report on Form 8-K, dated May 1, 2000 (File No.
001-11954), filed on May 19, 2000................................ *
3.34 -- Thirteenth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., dated as of May 25,
2000 - Incorporated by reference to Exhibit 3.2 of Vornado's
Current Report on Form 8-K, dated May 25, 2000 (File No.
001-11954), filed on June 16, 2000............................... *
3.35 -- Fourteenth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., dated as of December
8, 2000 - Incorporated by reference to Exhibit 3.2 of Vornado's
Current Report on Form 8-K, dated December 8, 2000 (File No.
001-11954), filed on December 28, 2000........................... *
4.1 -- Instruments defining the rights of security holders (see Exhibits
3.1 through 3.18 of this Annual Report on Form 10-K)
4.2 -- Indenture dated as of November 24, 1993 between Vornado Finance
Corp. and Bankers Trust Company, as Trustee - Incorporated by
reference to Vornado's current Report on Form 8-K dated November
24, 1993 (File No. 001-11954), filed December 1, 1993............ *
4.3 -- Specimen certificate representing Vornado's Common Shares of
Beneficial Interest, par value $0.04 per share - Incorporated by
reference to Exhibit 4.1 of Amendment No. 1 to Registration
Statement on Form S-3 (File No. 33-62395), filed on October 26,
1995............................................................. *
4.4 -- Specimen certificate representing Vornado's $3.25 Series A
Preferred Shares of Beneficial Interest, liquidation preference
$50.00 per share - Incorporated by reference to Exhibit 4.2 of
Vornado's Current Report on Form 8-K, dated April 3, 1997 (File
No. 001-11954), filed on April 8, 1997........................... *
4.5 -- Specimen certificate evidencing Vornado's Series B 8.5%
Cumulative Redeemable Preferred Shares of Beneficial Interest -
Incorporated by reference to Exhibit 4.2 of Vornado's
Registration Statement on Form 8-A (File No. 001-11954), filed on
March 15, 1999................................................... *
4.6 -- Specimen certificate evidencing Vornado's 8.5% Series C
Cumulative Redeemable Preferred Shares of Beneficial Interest,
liquidation preferences $25.00 per share, no par value -
Incorporated by reference to Exhibit 4.2 of Vornado's
Registration Statement on Form 8-A (File No. 001-11954), filed
May 19, 1999..................................................... *
4.7 -- Indenture and Servicing Agreement, dated as of March 1, 2000,
among Vornado, Lasalle Bank National Association, ABN Amro Bank
N.V. and Midland Loan Services, Inc. - Incorporated by reference
to Exhibit 10.48 of Vornado's Annual Report on Form 10-K for the
period ended December 31, 1999 (File No. 1-11954), filed on March
9, 2000.......................................................... *
11 -- Not applicable
12 -- Not applicable
13 -- Not applicable
14 -- Not applicable
15 -- Not applicable
- -------------------------------
* Incorporated by reference
Page 32
EXHIBIT
NO.
- --------
16 -- Not applicable
17 -- Not applicable
18 -- Not applicable
19 -- Not applicable
20 -- Not applicable
21 -- Not applicable
22 -- Not applicable
23 -- Not applicable
24 -- Not applicable
25 -- Not applicable
26 -- Not applicable
27 -- Not applicable
28 -- Not applicable
29 -- Not applicable
Page 33