Certain statements contained in this Quarterly Report 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.
Forward-looking statements are not guarantees of performance. They represent our
intentions, plans, expectations and beliefs and are subject to numerous
assumptions, risks and uncertainties. Our future results, financial condition
and business may differ materially from those expressed in these forward-looking
statements. You can find many of these statements by looking for words such as
"approximates," "believes," "expects," "anticipates," "estimates," "intends,"
"plans," "would," "may" or other similar expressions in this Quarterly Report on
Form 10­Q. We also note the following forward-looking statements: in the case of
our development and redevelopment projects, the estimated completion date,
estimated project cost and cost to complete; and estimates of future capital
expenditures, dividends to common and preferred shareholders and operating
partnership distributions. Many of the factors that will determine the outcome
of these and our other forward-looking statements are beyond our ability to
control or predict.
Currently, one of the most significant factors is the ongoing adverse effect of
the COVID-19 pandemic on our business, financial condition, results of
operations, cash flows, operating performance and the effect it has had and may
continue to have on our tenants, the global, national, regional and local
economies and financial markets and the real estate market in general. The
extent of the impact of the COVID-19 pandemic will depend on future
developments, including the duration of the pandemic, which are highly uncertain
at this time but that impact could be material. Moreover, you are cautioned that
the COVID-19 pandemic will heighten many of the risks identified in "Item 1A.
Risk Factors" in Part I of our Annual Report on Form 10-K for the year ended
December 31, 2020.
For further discussion of factors that could materially affect the outcome of
our forward-looking statements, see "Item 1A. Risk Factors" in Part I of our
Annual Report on Form 10-K for the year ended December 31, 2020. For these
statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
You are cautioned not to place undue reliance on our forward-looking statements,
which speak only as of the date of this Quarterly Report on Form 10-Q or the
date of any document incorporated by reference. All subsequent written and oral
forward-looking statements attributable to us or any person acting on our behalf
are expressly qualified in their entirety by the cautionary statements contained
or referred to in this section. We do not undertake any obligation to release
publicly any revisions to our forward-looking statements to reflect events or
circumstances occurring after the date of this Quarterly Report on Form 10-Q.
Management's Discussion and Analysis of Financial Condition and Results of
Operations includes a discussion of our consolidated financial statements for
the three months ended March 31, 2021. The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
of America requires us to make 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. The results of operations for the three months
ended March 31, 2021 are not necessarily indicative of the operating results for
the full year. Certain prior year balances have been reclassified in order to
conform to the current year presentation.
                                       42

--------------------------------------------------------------------------------

Overview

Vornado Realty Trust ("Vornado") is a fully-integrated real estate investment
trust ("REIT") and conducts its business through, and substantially all of its
interests in properties are held by, Vornado Realty L.P., a Delaware limited
partnership (the "Operating Partnership"). Vornado is the sole general partner
of, and owned approximately 92.7% of the common limited partnership interest in
the Operating Partnership as of March 31, 2021. All references to the "Company,"
"we," "us" and "our" mean, collectively, Vornado, the Operating Partnership and
those subsidiaries consolidated by Vornado.
We compete with a large number of real estate investors, property owners and
developers, some of which may be willing to accept lower returns on their
investments. Principal factors of competition are rents charged, sales prices,
attractiveness of location, the quality of the property and the breadth and the
quality of services provided. Our success depends upon, among other factors,
trends of the global, national, regional and local economies, the financial
condition and operating results of current and prospective tenants and
customers, availability and cost of capital, construction and renovation costs,
taxes, governmental regulations, legislation, population and employment
trends. See "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K
for the year ended December 31, 2020 for additional information regarding these
factors.
Our business has been adversely affected as a result of the COVID-19 pandemic
and the preventive measures taken to curb the spread of the virus. Some of the
effects on us include the following:
•With the exception of grocery stores and other "essential" businesses, many of
our retail tenants closed their stores in March 2020 and began reopening when
New York City entered phase two of its state-mandated reopening plan on June 22,
2020, however, there continue to be limitations on occupancy and other
restrictions that affect their ability to resume full operations.
•While our buildings remain open, many of our office tenants are working
remotely.
•We temporarily closed the Hotel Pennsylvania on April 1, 2020 and on April 5,
2021, we announced that we permanently closed the hotel.
•We cancelled trade shows at theMART beginning late March of 2020 and expect to
resume trade shows in the third quarter of 2021.
•As of April 30, 2021, approximately 70% of the 1,293 Building Maintenance
Services LLC ("BMS") employees that had been placed on furlough in 2020 have
returned to work.
While we believe our tenants are required to pay rent under their leases and we
have commenced legal proceedings against certain tenants that have failed to pay
under their leases, in limited circumstances, we have agreed to and may continue
to agree to rent deferrals and rent abatements for certain of our tenants.
For the quarter ended March 31, 2021, we collected 96% of rent due from our
tenants, comprised of 97% from our office tenants and 90% from our retail
tenants.
Based on our assessment of the probability of rent collection of our lease
receivables, we have written off $1,001,000 of receivables arising from the
straight-lining of rents for the three months ended March 31, 2021. In addition,
we have written off $2,910,000 of tenant receivables deemed uncollectible for
the three months ended March 31, 2021. These write-offs resulted in a reduction
of lease revenues and our share of income from partially owned entities.
Prospectively, revenue recognition for lease receivables deemed uncollectible
will be based on actual amounts received.
In light of the evolving health, social, economic, and business environment,
governmental regulation or mandates, and business disruptions that have occurred
and may continue to occur, the impact of the COVID-19 pandemic on our financial
condition and operating results remains highly uncertain but that impact has
been and may continue to be material. The impact on us includes lower rental
income and potentially lower occupancy levels at our properties which will
result in less cash flow available for operating costs, to pay our indebtedness
and for distribution to our shareholders and unitholders. We have experienced a
decrease in cash flow from operations due to the COVID-19 pandemic, including
reduced collections of rents billed to certain of our tenants, the closure of
Hotel Pennsylvania, the cancellation of trade shows at theMART, and lower
revenues from BMS and signage. The value of our real estate assets may decline,
which may result in non-cash impairment charges in future periods and that
impact could be material.

                                       43

--------------------------------------------------------------------------------



Overview - continued
Vornado Realty Trust
Quarter Ended March 31, 2021 Financial Results Summary
Net income attributable to common shareholders for the quarter ended March 31,
2021 was $4,083,000, or $0.02 per diluted share, compared to $4,963,000, or
$0.03 per diluted share, for the prior year's quarter. The quarters ended March
31, 2021 and 2020 include certain items that impact the comparability of period
to period net income attributable to common shareholders, which are listed in
the table below. The aggregate of these items, net of amounts attributable to
noncontrolling interests, decreased net income attributable to common
shareholders for the quarter ended March 31, 2021 by $8,363,000, or $0.04 per
diluted share, and $26,984,000, or $0.14 per diluted share, for the quarter
ended March 31, 2020.
Funds From Operations ("FFO") attributable to common shareholders plus assumed
conversions for the quarter ended March 31, 2021 was $118,407,000, or $0.62 per
diluted share, compared to $130,360,000, or $0.68 per diluted share, for the
prior year's quarter. FFO attributable to common shareholders plus assumed
conversions for the quarters ended March 31, 2021 and 2020 include certain items
that impact the comparability of period to period FFO, which are listed in the
table below. The aggregate of these items, net of amounts attributable to
noncontrolling interests, decreased FFO attributable to common shareholders plus
assumed conversions for the quarter ended March 31, 2021 by $5,952,000, or $0.03
per diluted share, and $16,469,000, or $0.09 per diluted share, for the quarter
ended March 31, 2020.
The following table reconciles the difference between our net income
attributable to common shareholders and our net income attributable to common
shareholders, as adjusted:

© Edgar Online, source Glimpses