VORNADO REALTY TRUST [VNO] Filings

10-Q 1 vno-20220930.htm 10-Q vno-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


			For the quarterly period ended:			September 30, 2022


☐			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:	001-11954	(Vornado Realty Trust)
Commission File Number:	001-34482	(Vornado Realty L.P.)

Vornado Realty Trust

Vornado Realty L.P.

(Exact name of registrants as specified in its charter)

Vornado Realty Trust

Maryland

22-1657560

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

Vornado Realty L.P.

Delaware

13-3925979

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)


888 Seventh Avenue,	New York,	New York	10019
(Address of principal executive offices) (Zip Code)


(212)			894-7000
(Registrants’ telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Registrant

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Vornado Realty Trust

Common Shares of beneficial interest, $.04 par value per share

VNO

New York Stock Exchange

Cumulative Redeemable Preferred Shares of beneficial interest, liquidation preference $25.00 per share:

Vornado Realty Trust

5.40% Series L

VNO/PL

New York Stock Exchange

Vornado Realty Trust

5.25% Series M

VNO/PM

New York Stock Exchange

Vornado Realty Trust

5.25% Series N

VNO/PN

New York Stock Exchange

Vornado Realty Trust

4.45% Series O

VNO/PO

New York Stock Exchange

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.

Vornado Realty Trust: Yes ☑ No ☐ Vornado Realty L.P.: Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Vornado Realty Trust: Yes ☑ No ☐ Vornado Realty L.P.: Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” "non-accelerated filer," “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Vornado Realty Trust:

☑

Large Accelerated Filer

☐

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Vornado Realty L.P.:

☐

Large Accelerated Filer

☐

Accelerated Filer

☑

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Vornado Realty Trust: Yes ☐ No ☑ Vornado Realty L.P.: Yes ☐ No ☑

As of September 30, 2022, 191,816,684 of Vornado Realty Trust’s common shares of beneficial interest are outstanding.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2022 of Vornado Realty Trust and Vornado Realty L.P. Unless stated otherwise or the context otherwise requires, references to “Vornado” refer to Vornado Realty Trust, a Maryland real estate investment trust (“REIT”), and references to the “Operating Partnership” refer to Vornado Realty L.P., a Delaware limited partnership. References to the “Company,” “we,” “us” and “our” mean collectively Vornado, the Operating Partnership and those subsidiaries consolidated by Vornado.

The Operating Partnership is the entity through which we conduct substantially all of our business and own, either directly or through subsidiaries, substantially all of our assets. Vornado is the sole general partner and also a 92.1% limited partner of the Operating Partnership. As the sole general partner of the Operating Partnership, Vornado has exclusive control of the Operating Partnership’s day-to-day management.

Under the limited partnership agreement of the Operating Partnership, unitholders may present their Class A units for redemption at any time (subject to restrictions agreed upon at the time of issuance of the units that may restrict such right for a period of time). Class A units may be tendered for redemption to the Operating Partnership for cash; Vornado, at its option, may assume that obligation and pay the holder either cash or Vornado common shares on a one-for-one basis. Because the number of Vornado common shares outstanding at all times equals the number of Class A units owned by Vornado, the redemption value of each Class A unit is equivalent to the market value of one Vornado common share, and the quarterly distribution to a Class A unitholder is equal to the quarterly dividend paid to a Vornado common shareholder. This one-for-one exchange ratio is subject to specified adjustments to prevent dilution. Vornado generally expects that it will elect to issue its common shares in connection with each such presentation for redemption rather than having the Operating Partnership pay cash. With each such exchange or redemption, Vornado’s percentage ownership in the Operating Partnership will increase. In addition, whenever Vornado issues common shares other than to acquire Class A units of the Operating Partnership, Vornado must contribute any net proceeds it receives to the Operating Partnership and the Operating Partnership must issue to Vornado an equivalent number of Class A units of the Operating Partnership. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT.

The Company believes that combining the quarterly reports on Form 10-Q of Vornado and the Operating Partnership into this single report provides the following benefits:

•enhances investors’ understanding of Vornado and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

•eliminates duplicative disclosure and provides a more streamlined and readable presentation because a substantial portion of the disclosure applies to both Vornado and the Operating Partnership; and

•creates time and cost efficiencies in the preparation of one combined report instead of two separate reports.

The Company believes it is important to understand the few differences between Vornado and the Operating Partnership in the context of how Vornado and the Operating Partnership operate as a consolidated company. The financial results of the Operating Partnership are consolidated into the financial statements of Vornado. Vornado does not have any significant assets, liabilities or operations, other than its investment in the Operating Partnership. The Operating Partnership, not Vornado, generally executes all significant business relationships other than transactions involving the securities of Vornado. The Operating Partnership holds substantially all of the assets of Vornado. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by Vornado, which are contributed to the capital of the Operating Partnership in exchange for Class A units of partnership in the Operating Partnership, and the net proceeds of debt offerings by Vornado, which are contributed to the Operating Partnership in exchange for debt securities of the Operating Partnership, as applicable, the Operating Partnership generates all remaining capital required by the Company’s business. These sources may include working capital, net cash provided by operating activities, borrowings under the revolving credit facilities, the issuance of secured and unsecured debt and equity securities and proceeds received from the disposition of certain properties.

To help investors better understand the key differences between Vornado and the Operating Partnership, certain information for Vornado and the Operating Partnership in this report has been separated, as set forth below:

•Item 1. Financial Statements (unaudited), which includes the following specific disclosures for Vornado Realty Trust and Vornado Realty L.P.:

•Note 11. Redeemable Noncontrolling Interests

•Note 12. Shareholders' Equity/Partners' Capital

•Note 18. Income Per Share/Income Per Class A Unit

•Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations includes information specific to each entity, where applicable.

This report also includes separate Part I, Item 4. Controls and Procedures and Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds sections and separate Exhibits 31 and 32 certifications for each of Vornado and the Operating Partnership in order to establish that the requisite certifications have been made and that Vornado and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.

PART I.

Financial Information:

Page Number

Item 1.

Financial Statements of Vornado Realty Trust:

Consolidated Balance Sheets (Unaudited) as of September 30, 2022 and December 31, 2021

Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021

Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021

Consolidated Statements of Changes in Equity (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021

Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2022 and 2021

Financial Statements of Vornado Realty L.P.:

Consolidated Balance Sheets (Unaudited) as of September 30, 2022 and December 31, 2021

Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021

Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021

Consolidated Statements of Changes in Equity (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021

Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2022 and 2021

Vornado Realty Trust and Vornado Realty L.P.:

Notes to Consolidated Financial Statements (Unaudited)

Reports of Independent Registered Public Accounting Firm

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II.

Other Information:

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VORNADO REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(Amounts in thousands, except unit, share, and per share amounts)	As of
	September 30, 2022		December 31, 2021
ASSETS
Real estate, at cost:
Land	$	2,477,956	$	2,540,193
Buildings and improvements	10,015,452		9,839,166
Development costs and construction in progress	802,272		718,694
Leasehold improvements and equipment	122,948		119,792
Total	13,418,628		13,217,845
Less accumulated depreciation and amortization	(3,606,986)		(3,376,347)
Real estate, net	9,811,642		9,841,498
Right-of-use assets	685,298		337,197
Cash and cash equivalents	845,423		1,760,225
Restricted cash	131,625		170,126
Investments in U.S. Treasury bills	445,165		—
Tenant and other receivables	81,004		79,661
Investments in partially owned entities	3,250,197		3,297,389
Real estate fund investments	930		7,730
220 Central Park South condominium units ready for sale	78,590		57,142
Receivable arising from the straight-lining of rents	692,733		656,318
Deferred leasing costs, net of accumulated amortization of $233,001 and $211,775	380,221		391,693
Identified intangible assets, net of accumulated amortization of $95,661 and $97,186	142,116		154,895
Other assets	630,730		512,714
	$	17,175,674	$	17,266,588
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgages payable, net	$	5,831,769	$	6,053,343
Senior unsecured notes, net	1,191,322		1,189,792
Unsecured term loan, net	792,847		797,812
Unsecured revolving credit facilities	575,000		575,000
Lease liabilities	731,674		370,206
Accounts payable and accrued expenses	475,151		613,497
Deferred revenue	41,879		48,118
Deferred compensation plan	95,681		110,174
Other liabilities	265,775		304,725
Total liabilities	10,001,098		10,062,667
Commitments and contingencies
Redeemable noncontrolling interests:
Class A units - 14,253,759 and 14,033,438 units outstanding	390,539		587,440
Series D cumulative redeemable preferred units - 141,400 units outstanding	3,535		3,535
Total redeemable noncontrolling partnership units	394,074		590,975
Redeemable noncontrolling interest in a consolidated subsidiary	89,228		97,708
Total redeemable noncontrolling interests	483,302		688,683
Shareholders' equity:
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 48,792,902 shares	1,182,459		1,182,459
Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 191,816,684 and 191,723,608 shares	7,652		7,648
Additional capital	8,362,387		8,143,093
Earnings less than distributions	(3,299,630)		(3,079,320)
Accumulated other comprehensive income (loss)	185,178		(17,534)
Total shareholders' equity	6,438,046		6,236,346
Noncontrolling interests in consolidated subsidiaries	253,228		278,892
Total equity	6,691,274		6,515,238
	$	17,175,674	$	17,266,588

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


(Amounts in thousands, except per share amounts)	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
REVENUES:
Rental revenues	$	409,144	$	369,203	$	1,211,621	$	1,048,116
Fee and other income	48,287		40,009		141,434		120,014
Total revenues	457,431		409,212		1,353,055		1,168,130
EXPENSES:
Operating	(221,596)		(212,699)		(660,434)		(594,598)
Depreciation and amortization	(134,526)		(100,867)		(370,631)		(285,998)
General and administrative	(29,174)		(25,553)		(102,292)		(100,341)
Benefit (expense) from deferred compensation plan liability	600		(799)		10,138		(7,422)
Transaction related costs and other	(996)		(9,681)		(4,961)		(10,630)
Total expenses	(385,692)		(349,599)		(1,128,180)		(998,989)

Income from partially owned entities	24,341		26,269		83,775		86,768
(Loss) income from real estate fund investments	(111)		(66)		5,421		5,107
Interest and other investment income, net	5,228		633		9,282		3,694
(Loss) income from deferred compensation plan assets	(600)		799		(10,138)		7,422
Interest and debt expense	(76,774)		(50,946)		(191,523)		(152,904)
Net gains on disposition of wholly owned and partially owned assets	—		10,087		35,384		35,811
Income before income taxes	23,823		46,389		157,076		155,039
Income tax (expense) benefit	(3,711)		25,376		(14,686)		20,551
Net income	20,112		71,765		142,390		175,590
Less net loss (income) attributable to noncontrolling interests in:
Consolidated subsidiaries	3,792		(5,425)		(4,756)		(20,323)
Operating Partnership	(606)		(2,818)		(6,382)		(6,683)
Net income attributable to Vornado	23,298		63,522		131,252		148,584
Preferred share dividends	(15,529)		(16,800)		(46,587)		(49,734)
Series K preferred share issuance costs	—		(9,033)		—		(9,033)
NET INCOME attributable to common shareholders	$	7,769	$	37,689	$	84,665	$	89,817

INCOME PER COMMON SHARE - BASIC:


Net income per common share	$	0.04	$	0.20	$	0.44	$	0.47
Weighted average shares outstanding	191,793		191,577		191,756		191,508

INCOME PER COMMON SHARE - DILUTED:


Net income per common share	$	0.04	$	0.20	$	0.44	$	0.47
Weighted average shares outstanding	192,018		192,041		192,042		192,151

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


(Amounts in thousands)	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	20,112	$	71,765	$	142,390	$	175,590
Other comprehensive income:
Change in fair value of interest rate swaps and other	117,219		5,362		200,838		25,555
Other comprehensive income of nonconsolidated subsidiaries	5,124		1,322		19,084		6,381


Comprehensive income	142,455		78,449		362,312		207,526
Less comprehensive income attributable to noncontrolling interests	(7,279)		(8,669)		(28,348)		(29,022)
Comprehensive income attributable to Vornado	$	135,176	$	69,780	$	333,964	$	178,504

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)


(Amounts in thousands, except per share amounts)													Non-controlling Interests in Consolidated Subsidiaries
											Accumulated Other Comprehensive Income
	Preferred Shares			Common Shares			Additional Capital		Earnings Less Than Distributions						Total Equity
	Shares	Amount		Shares	Amount
For the Three Months Ended September 30, 2022:
Balance as of June 30, 2022	48,793	$	1,182,459	191,775	$	7,650	$	8,339,161	$	(3,205,751)	$	73,300	$	253,994	$	6,650,813
Net income attributable to Vornado	—	—		—	—		—		23,298		—		—		23,298
Net income attributable to nonredeemable noncontrolling interests in consolidated subsidiaries	—	—		—	—		—		—		—		967		967
Dividends on common shares ($0.53 per share)	—	—		—	—		—		(101,656)		—		—		(101,656)
Dividends on preferred shares (see Note 12 for dividends per share amounts)	—	—		—	—		—		(15,529)		—		—		(15,529)
Common shares issued:
Upon redemption of Class A units, at redemption value	—	—		34	1		991		—		—		—		992
Under dividend reinvestment plan	—	—		7	—		221		—		—		—		221
Contributions	—	—		—	—		—		—		—		650		650
Distributions	—	—		—	—		—		—		—		(4,548)		(4,548)
Deferred compensation shares and options	—	—		—	—		155		—		—		—		155
Other comprehensive income of nonconsolidated subsidiaries	—	—		—	—		—		—		5,124		—		5,124
Change in fair value of interest rate swaps and other	—	—		—	—		—		—		117,219		—		117,219
Redeemable Class A unit measurement adjustment	—	—		—	—		21,857		—		—		—		21,857
Noncontrolling interests' share of above adjustments	—	—		—	—		—		—		(10,465)		2,166		(8,299)
Other	—	—		1	1		2		8		—		(1)		10
Balance as of September 30, 2022	48,793	$	1,182,459	191,817	$	7,652	$	8,362,387	$	(3,299,630)	$	185,178	$	253,228	$	6,691,274

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED

(UNAUDITED)


(Amounts in thousands, except per share amounts)											Accumulated Other Comprehensive Loss		Non-controlling Interests in Consolidated Subsidiaries
	Preferred Shares			Common Shares			Additional Capital		Earnings Less Than Distributions						Total Equity
	Shares	Amount		Shares	Amount
For the Three Months Ended September 30, 2021:
Balance as of June 30, 2021	48,793	$	1,182,291	191,561	$	7,641	$	8,069,033	$	(2,925,161)	$	(51,437)	$	285,950	$	6,568,317
Net income attributable to Vornado	—	—		—	—		—		63,522		—		—		63,522
Net income attributable to nonredeemable noncontrolling interests in consolidated subsidiaries	—	—		—	—		—		—		—		4,299		4,299
Dividends on common shares ($0.53 per share)	—	—		—	—		—		(101,527)		—		—		(101,527)
Dividends on preferred shares (see Note 12 for dividends per share amounts)	—	—		—	—		—		(16,800)		—		—		(16,800)
Series O cumulative redeemable preferred shares issuance	12,000	291,195		—	—		—		—		—		—		291,195
Common shares issued:
Upon redemption of Class A units, at redemption value	—	—		114	5		4,744		—		—		—		4,749

Under dividend reinvestment plan	—	—		6	1		223		—		—		—		224
Contributions	—	—		—	—		—		—		—		1,110		1,110
Distributions	—	—		—	—		—		—		—		(5,877)		(5,877)
Conversion of Series A preferred shares to common shares	—	(13)		1	—		13		—		—		—		—
Deferred compensation shares and options	—	—		(1)	—		226		—		—		—		226
Other comprehensive income of nonconsolidated subsidiaries	—	—		—	—		—		—		1,322		—		1,322
Change in fair value of interest rate swaps	—	—		—	—		—		—		5,360		—		5,360
Redeemable Class A unit measurement adjustment	—	—		—	—		64,100		—		—		—		64,100
Series K cumulative redeemable preferred shares called for redemption	(12,000)	(290,967)		—	—		—		(9,033)		—		—		(300,000)
Redeemable noncontrolling interests' share of above adjustments	—	—		—	—		—		—		(426)		—		(426)
Other	—	(7)		—	(1)		(2)		—		2		39		31
Balance as of September 30, 2021	48,793	$	1,182,499	191,681	$	7,646	$	8,138,337	$	(2,988,999)	$	(45,179)	$	285,521	$

VORNADO REALTY TRUST [VNO] Filings
VORNADO REALTY TRUST [VNO-PL] Filings
VORNADO REALTY TRUST [VNO-PM] Filings
VORNADO REALTY TRUST [VNO-PO] Filings
VORNADO REALTY TRUST [VNO-PN] Filings
10-Q	[2022-10-31]
10-Q	[2022-08-01]
10-Q	[2022-05-02]
10-K	[2022-02-14]
10-Q	[2021-11-01]
10-Q	[2021-08-02]
10-Q	[2021-05-03]
10-K	[2021-02-16]
10-Q	[2020-11-02]
10-Q	[2020-08-03]
10-Q	[2020-05-04]
10-K	[2020-02-18]
10-Q	[2019-10-28]
10-Q	[2019-07-29]
10-Q	[2019-04-29]
10-K	[2019-02-11]
10-Q	[2018-10-29]
10-Q	[2018-07-30]
10-Q	[2018-04-30]
10-K	[2018-02-12]
10-Q	[2017-10-30]
10-Q	[2017-07-31]
10-Q	[2017-05-01]
10-K	[2017-02-13]
10-Q	[2016-10-31]
10-Q	[2016-08-01]
10-Q	[2016-05-02]
10-K	[2016-02-16]
10-Q	[2015-11-02]
10-Q	[2015-08-03]
10-Q	[2015-05-04]
10-K	[2015-02-17]
10-Q	[2014-11-03]
10-Q	[2014-08-04]
10-Q	[2014-05-05]
10-K	[2014-02-24]
10-Q	[2013-11-04]
10-Q	[2013-08-05]
10-Q	[2013-05-06]
10-K	[2013-02-26]
10-Q	[2012-11-01]
10-Q	[2012-08-06]
10-Q	[2012-05-07]
10-K	[2012-02-27]

VORNADO REALTY TRUST [VNO] Filings

VORNADO REALTY TRUST [VNO-PL] Filings

VORNADO REALTY TRUST [VNO-PM] Filings

VORNADO REALTY TRUST [VNO-PO] Filings

VORNADO REALTY TRUST [VNO-PN] Filings