Vornado Realty Trust Earnings 2020-03-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

Document

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:	March 31, 2020



☐	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)

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.

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 and post 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



Vornado Realty L.P.:
	☐	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. ☐

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 ☑

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	5.70% Series K	VNO/PK	New York Stock Exchange
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

As of March 31, 2020, 191,115,726 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 March 31, 2020 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 92.7% 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 facility, 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 12. Redeemable Noncontrolling Interests/Redeemable Partnership Units


•	Note 13. Shareholders' Equity/Partners' Capital


•	Note 19. 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 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 March 31, 2020 and December 31, 2019	6

		Consolidated Statements of Income (Unaudited) for the Three Months Ended March 31, 2020 and 2019	7

		Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months Ended March 31, 2020 and 2019	8

		Consolidated Statements of Changes in Equity (Unaudited) for the Three Months Ended March 31, 2020 and 2019	9

		Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2020 and 2019	11

		Financial Statements of Vornado Realty L.P.:

		Consolidated Balance Sheets (Unaudited) as of March 31, 2020 and December 31, 2019	13

		Consolidated Statements of Income (Unaudited) for the Three Months Ended March 31, 2020 and 2019	14

		Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months Ended March 31, 2020 and 2019	15

		Consolidated Statements of Changes in Equity (Unaudited) for the Three Months Ended March 31, 2020 and 2019	16

		Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2020 and 2019	18

		Vornado Realty Trust and Vornado Realty L.P.:

		Notes to Consolidated Financial Statements (Unaudited)	20

		Reports of Independent Registered Public Accounting Firm	41

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	43

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	69

	Item 4.	Controls and Procedures	70

PART II.		Other Information:

	Item 1.	Legal Proceedings	71

	Item 1A.	Risk Factors	71

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	72

	Item 3.	Defaults Upon Senior Securities	72

	Item 4.	Mine Safety Disclosures	72

	Item 5.	Other Information	72

	Item 6.	Exhibits	72

EXHIBIT INDEX			73

SIGNATURES			74

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
	March 31, 2020			December 31, 2019
ASSETS
Real estate, at cost:
Land	$	2,589,800		$	2,591,261
Buildings and improvements	7,946,523			7,953,163
Development costs and construction in progress	1,532,828			1,490,614
Moynihan Train Hall development expenditures	972,199			914,960
Leasehold improvements and equipment	126,910			124,014
Total	13,168,260			13,074,012
Less accumulated depreciation and amortization	(3,049,609		)	(3,015,958		)
Real estate, net	10,118,651			10,058,054
Right-of-use assets	378,257			379,546
Cash and cash equivalents	1,586,738			1,515,012
Restricted cash	80,570			92,119
Marketable securities	—			33,313
Tenant and other receivables	115,795			95,733
Investments in partially owned entities	3,970,791			3,999,165
Real estate fund investments	45,129			222,649
220 Central Park South condominium units ready for sale	393,417			408,918
Receivable arising from the straight-lining of rents	731,807			742,206
Deferred leasing costs, net of accumulated amortization of $188,976 and $196,229	353,467			353,986
Identified intangible assets, net of accumulated amortization of $100,298 and $98,587	29,123			30,965
Other assets	405,914			355,347
	$	18,209,659		$	18,287,013
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgages payable, net	$	5,643,707		$	5,639,897
Senior unsecured notes, net	446,076			445,872
Unsecured term loan, net	795,974			745,840
Unsecured revolving credit facilities	1,075,000			575,000
Lease liabilities	497,531			498,254
Moynihan Train Hall obligation	972,199			914,960
Special dividend/distribution payable	—			398,292
Accounts payable and accrued expenses	407,598			440,049
Deferred revenue	54,992			59,429
Deferred compensation plan	90,888			103,773
Other liabilities	308,683			265,754
Total liabilities	10,292,648			10,087,120
Commitments and contingencies
Redeemable noncontrolling interests:
Class A units - 13,748,709 and 13,298,956 units outstanding	619,264			884,380
Series D cumulative redeemable preferred units - 141,401 units outstanding	4,535			4,535
Total redeemable noncontrolling interests	623,799			888,915
Shareholders' equity:
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 36,795,540 and 36,795,640 shares	891,211			891,214
Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 191,115,726 and 190,985,677 shares	7,624			7,618
Additional capital	8,112,523			7,827,697
Earnings less than distributions	(2,091,612		)	(1,954,266		)
Accumulated other comprehensive loss	(82,719		)	(40,233		)
Total shareholders' equity	6,837,027			6,732,030
Noncontrolling interests in consolidated subsidiaries	456,185			578,948
Total equity	7,293,212			7,310,978
	$	18,209,659		$	18,287,013

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 March 31,
	2020			2019
REVENUES:
Rental revenues	$	401,274		$	499,877
Fee and other income	43,258			34,791
Total revenues	444,532			534,668
EXPENSES:
Operating	(230,007		)	(246,895		)
Depreciation and amortization	(92,793		)	(116,709		)
General and administrative	(52,834		)	(58,020		)
Benefit (expense) from deferred compensation plan liability	11,245			(5,433		)
Transaction related costs and other	(71		)	(149		)
Total expenses	(364,460		)	(427,206		)

Income from partially owned entities	19,103			7,320
Loss from real estate fund investments	(183,463		)	(167		)
Interest and other investment (loss) income, net	(5,904		)	5,045
(Loss) income from deferred compensation plan assets	(11,245		)	5,433
Interest and debt expense	(58,842		)	(102,463		)
Net gains on disposition of wholly owned and partially owned assets	68,589			220,294
(Loss) income before income taxes	(91,690		)	242,924
Income tax expense	(12,813		)	(29,743		)
(Loss) income from continuing operations	(104,503		)	213,181
Loss from discontinued operations	—			(137		)
Net (loss) income	(104,503		)	213,044
Less net loss (income) attributable to noncontrolling interests in:
Consolidated subsidiaries	122,387			(6,820		)
Operating Partnership	(390		)	(12,202		)
Net income attributable to Vornado	17,494			194,022
Preferred share dividends	(12,531		)	(12,534		)
NET INCOME attributable to common shareholders	$	4,963		$	181,488

INCOME PER COMMON SHARE - BASIC:
Net income per common share	$	0.03		$	0.95
Weighted average shares outstanding	191,038			190,689

INCOME PER COMMON SHARE - DILUTED:
Net income per common share	$	0.03		$	0.95
Weighted average shares outstanding	191,113			190,996

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)



(Amounts in thousands)	For the Three Months Ended March 31,
	2020			2019
Net (loss) income	$	(104,503	)	$	213,044
Other comprehensive (loss) income:
Reduction in value of interest rate swaps	(45,477		)	(17,029		)
Other comprehensive income (loss) of nonconsolidated subsidiaries	8			(985		)
Amounts reclassified from accumulated other comprehensive loss relating to a nonconsolidated subsidiary	—			(2,311		)
Comprehensive (loss) income	(149,972		)	192,719
Less comprehensive loss (income) attributable to noncontrolling interests	124,980			(17,746		)
Comprehensive (loss) income attributable to Vornado	$	(24,992	)	$	174,973

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)



(Amounts in thousands, except per share amounts)														Accumulated Other Comprehensive (Loss) Income			Non-controlling Interests in Consolidated Subsidiaries
	Preferred Shares				Common Shares			Additional Capital			Earnings Less Than Distributions									Total Equity
	Shares	Amount			Shares	Amount		Additional Capital			Earnings Less Than Distributions									Total Equity
Balance as of December 31, 2019	36,796	$	891,214		190,986	$	7,618	$	7,827,697		$	(1,954,266	)	$	(40,233	)	$	578,948		$	7,310,978
Cumulative effect of accounting change (see Note 4)	—	—			—	—		—			(16,064		)	—			—			(16,064		)
Net income attributable to Vornado	—	—			—	—		—			17,494			—			—			17,494
Net loss attributable to noncontrolling interests in consolidated subsidiaries	—	—			—	—		—			—			—			(122,387		)	(122,387		)
Dividends on common shares ($0.66 per share)	—	—			—	—		—			(126,106		)	—			—			(126,106		)
Dividends on preferred shares (see Note 13 for dividends per share amounts)	—	—			—	—		—			(12,531		)	—			—			(12,531		)
Common shares issued:
Upon redemption of Class A units, at redemption value	—	—			27	1		1,639			—			—			—			1,640
Under employees' share option plan	—	—			69	3		3,514			—			—			—			3,517
Under dividend reinvestment plan	—	—			21	1		1,381			—			—			—			1,382
Contributions:
Real estate fund investments	—	—			—	—		—			—			—			3,389			3,389
Other	—	—			—	—		—			—			—			1,397			1,397
Distributions	—	—			—	—		—			—			—			(5,235		)	(5,235		)
Conversion of Series A preferred shares to common shares	—	(3		)	—	—		3			—			—			—			—
Deferred compensation shares and options	—	—			13	1		297			(137		)	—			—			161
Other comprehensive income of nonconsolidated subsidiaries	—	—			—	—		—			—			8			—			8
Reduction in value of interest rate swaps	—	—			—	—		—			—			(45,477		)	—			(45,477		)
Unearned 2017 Out-Performance Plan awards acceleration	—	—			—	—		10,824			—			—			—			10,824
Adjustments to carry redeemable Class A units at redemption value	—	—			—	—		267,170			—			—			—			267,170
Redeemable noncontrolling interests' share of above adjustments	—	—			—	—		—			—			2,983			—			2,983
Other	—	—			—	—		(2		)	(2		)	—			73			69
Balance as of March 31, 2020	36,796	$	891,211		191,116	$	7,624	$	8,112,523		$	(2,091,612	)	$	(82,719	)	$	456,185		$	7,293,212

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

Income (Loss)

Non-controlling Interests in Consolidated Subsidiaries

Preferred Shares

Common Shares

Additional Capital

Earnings Less Than Distributions

Total Equity

Amount

Balance as of December 31, 2018

36,800

Price	64.06	EPS	17
Shares	191	P/E	4
MCap	12,237	P/FCF	31
Net Debt	601	EBIT	3,254
TEV	12,838	TEV/EBIT	4
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-03-31	Filed 2020-05-04
10-K	2019-12-31	Filed 2020-02-18
10-Q	2019-09-30	Filed 2019-10-28
10-Q	2019-06-30	Filed 2019-07-29
10-Q	2019-03-31	Filed 2019-04-29
10-K	2018-12-31	Filed 2019-02-11
10-Q	2018-09-30	Filed 2018-10-29
10-Q	2018-06-30	Filed 2018-07-30
10-Q	2018-03-31	Filed 2018-04-30
10-K	2017-12-31	Filed 2018-02-12
10-Q	2017-09-30	Filed 2017-10-30
10-Q	2017-06-30	Filed 2017-07-31
10-Q	2017-03-31	Filed 2017-05-01
10-K	2016-12-31	Filed 2017-02-13
10-Q	2016-09-30	Filed 2016-10-31
10-Q	2016-06-30	Filed 2016-08-01
10-Q	2016-03-31	Filed 2016-05-02
10-K	2015-12-31	Filed 2016-02-16
10-Q	2015-09-30	Filed 2015-11-02
10-Q	2015-06-30	Filed 2015-08-03
10-Q	2015-03-31	Filed 2015-05-04
10-K	2014-12-31	Filed 2015-02-17
10-Q	2014-09-30	Filed 2014-11-03
10-Q	2014-06-30	Filed 2014-08-04
10-Q	2014-03-31	Filed 2014-05-05
10-K	2013-12-31	Filed 2014-02-24
10-Q	2013-09-30	Filed 2013-11-04
10-Q	2013-06-30	Filed 2013-08-05
10-Q	2013-03-31	Filed 2013-05-06
10-K	2012-12-31	Filed 2013-02-26
10-Q	2012-09-30	Filed 2012-11-01
10-Q	2012-06-30	Filed 2012-08-06
10-Q	2012-03-31	Filed 2012-05-07
10-K	2011-12-31	Filed 2012-02-27
10-Q	2011-09-30	Filed 2011-11-03
10-Q	2011-06-30	Filed 2011-08-01
10-Q	2011-03-31	Filed 2011-05-03
10-Q	2010-09-30	Filed 2010-11-02
10-Q	2010-06-30	Filed 2010-08-03
10-Q	2010-03-31	Filed 2010-05-04
10-K	2009-12-31	Filed 2010-02-23

8-K	2020-07-20	Earnings, Regulation FD, Exhibits
8-K	2020-05-14
8-K	2020-05-04
8-K	2020-04-18
8-K	2020-04-03
8-K	2020-04-03
8-K	2020-03-26
8-K	2020-02-28
8-K	2020-02-18
8-K	2020-01-29
8-K	2019-10-28
8-K	2019-10-14
8-K	2019-08-07
8-K	2019-07-29
8-K	2019-07-15
8-K	2019-06-03
8-K	2019-05-16
8-K	2019-04-29
8-K	2019-04-18
8-K	2019-04-15
8-K	2019-04-08
8-K	2019-04-03
8-K	2019-03-01
8-K	2019-02-11
8-K	2019-01-23
8-K	2018-11-02
8-K	2018-10-29
8-K	2018-10-10
8-K	2018-09-24
8-K	2018-07-30
8-K	2018-07-12
8-K	2018-06-01
8-K	2018-05-17
8-K	2018-04-30
8-K	2018-04-13
8-K	2018-04-06
8-K	2018-03-15
8-K	2018-03-02
8-K	2018-03-01
8-K	2018-02-12
8-K	2018-01-12

EX-10.35	ex1035-033120.htm
EX-10.36	ex1036-033120.htm
EX-10.37	ex1037-033120.htm
EX-15.1	ex151-033120.htm
EX-15.2	ex152-033120.htm
EX-31.1	ex311-033120.htm
EX-31.2	ex312-033120.htm
EX-31.3	ex313-033120.htm
EX-31.4	ex314-033120.htm
EX-32.1	ex321-033120.htm
EX-32.2	ex322-033120.htm
EX-32.3	ex323-033120.htm
EX-32.4	ex324-033120.htm

VNO 10Q Quarterly Report

Vornado Realty Trust Earnings 2020-03-31