VORNADO REALTY TRUST (New York Stock Exchange: VNO) today reported:

Fourth Quarter 2010 Results

NET INCOME attributable to common shareholders for the quarter ended December 31, 2010 was $243.4 million, or $1.31 per diluted share, compared to a net loss of $151.2 million, or $0.84 per diluted share, for the quarter ended December 31, 2009. Net income for the quarter ended December 31, 2010 and net loss for the quarter ended December 31, 2009 include $62.7 million and $2.6 million, respectively, of net gains on sale of real estate. In addition, the quarters ended December 31, 2010 and 2009 include certain items that affect comparability which are listed in the table below. The aggregate of the net gains on sale of real estate and the items in the table below, net of amounts attributable to noncontrolling interests, increased net income attributable to common shareholders for the quarter ended December 31, 2010 by $169.6 million, or $0.89 per diluted share and increased net loss attributable to common shareholders for the quarter ended December 31, 2009 by $184.3 million, or $1.02 per diluted share.

FUNDS FROM OPERATIONS attributable to common shareholders plus assumed conversions (?FFO?) for the quarter ended December 31, 2010 was $335.8 million, or $1.76 per diluted share, compared to $20 thousand, or $0.00 per diluted share, for the prior year's quarter. Adjusting FFO for certain items that affect comparability which are listed in the table below, FFO for the quarters ended December 31, 2010 and 2009 was $224.2 million and $186.1 million, or $1.17 and $1.02 per diluted share, respectively.

(Amounts in thousands, except per share amounts)   For the Quarters Ended
December 31,
2010   2009
FFO (1) $ 335,759   $ 20  
Per Share $ 1.76   $ -  
 
Items that affect comparability (income) expense:
(Income) from the mark-to-market of derivative positions in marketable equity securities $ (97,904 ) $ -
Net (gain) loss on early extinguishment of debt (93,946 ) 52,911
Non-cash asset write-downs:
Real estate - development related 94,513 80,834
Other real estate assets 28,000 6,989
Partially owned entities 11,481 17,820
Marketable equity securities - 3,361
Non-cash mezzanine loans receivable loss accrual (reversal) (60,000 ) 68,000
Net (gain) resulting from Lexington's stock issuance (7,712 ) -
Acquisition costs 4,094 -
Income from terminated sale of land - (27,089 )
FFO attributable to discontinued operations (1,124 ) (3,625 )
Other, net 3,174   2,204  
(119,424 ) 201,405
Noncontrolling interests' share of above adjustments 7,835   (15,300 )
Items that affect comparability, net (income) expense $ (111,589 ) $ 186,105  
Per Share $ (0.59 ) $ 1.02  
 
FFO as adjusted for comparability $ 224,170   $ 186,125  
Per Share $ 1.17   $ 1.02  
 
(1) See page 4 for a reconciliation of our net income (loss) to FFO for the quarters ended December 31, 2010 and 2009.
 

Year Ended 2010 Results

NET INCOME attributable to common shareholders for the year ended December 31, 2010 was $596.7 million, or $3.24 per diluted share, compared to $49.1 million, or $0.28 per diluted share, for the year ended December 31, 2009. Net income for the years ended December 31, 2010 and 2009 include $63.0 million and $46.6 million, respectively, of net gains on sale of real estate. In addition, the years ended December 31, 2010 and 2009 include certain items that affect comparability which are listed in the table below. The aggregate of the net gains on sale of real estate and the items in the table below, net of amounts attributable to noncontrolling interests, increased net income attributable to common shareholders for the year ended December 31, 2010 by $175.8 million, or $0.95 per diluted share and decreased net income attributable to common shareholders for the year ended December 31, 2009 by $236.0 million, or $1.36 per diluted share.

FFO for the year ended December 31, 2010 was $1,149.8 million, or $6.05 per diluted share, compared to $583.6 million, or $3.36 per diluted share, for the prior year. Adjusting FFO for certain items that affect comparability which are listed in the table below, FFO for the year ended December 31, 2010 and 2009 was $1,022.1 million and $848.6 million, or $5.38 and $4.89 per diluted share, respectively.

(Amounts in thousands, except per share amounts)   For the Years Ended
December 31,
2010   2009
FFO (1) $ 1,149,781   $ 583,596  
Per Share $ 6.05   $ 3.36  
 
Items that affect comparability (income) expense:
(Income) from the mark-to-market of derivative positions in marketable equity securities $ (130,153 ) $ -
Net (gain) loss on early extinguishment of debt (92,150 ) 25,915
Non-cash asset write-downs:
Real estate - development related 94,513 80,834
Other real estate assets 33,000 6,989
Partially owned entities 11,481 36,941
Marketable equity securities - 3,361
Non-cash mezzanine loans receivable loss accrual (reversal) (53,100 ) 190,738
Litigation loss accrual and acquisitions costs 17,001 -
Default interest and fees accrued on three loans in special servicing 15,079 -
Net (gain) resulting from Lexington's stock issuance (13,710 ) -
Discount on redemption of preferred units and shares (11,354 ) -
Real Estate Fund organization costs 6,482 -
Our share of partially owned entities:
Toys - purchase accounting adjustments and litigation settlement income - (24,146 )
Alexander's - income tax benefit and stock appreciation rights (641 ) (24,773 )
Income from terminated sale of land - (27,089 )
Write-off of unamortized costs from the voluntary surrender of equity awards - 32,588
FFO attributable to discontinued operations (11,086 ) (21,240 )
Other, net (2,492 ) 8,063  
(137,130 ) 288,181
Noncontrolling interests' share of above adjustments 9,408   (23,174 )
Items that affect comparability, net (income) expense $ (127,722 ) $ 265,007  
Per Share $ (0.67 ) $ 1.53  
 
FFO as adjusted for comparability $ 1,022,059   $ 848,603  
Per Share $ 5.38   $ 4.89  
 
(1) See page 4 for a reconciliation of our net income to FFO for the years ended December 31, 2010 and 2009.
 

Supplemental Financial Information

Further details regarding the Company's results of operations, properties and tenants can be accessed at the Company's website www.vno.com. Vornado Realty Trust is a fully – integrated equity real estate investment trust.

Certain statements contained herein may constitute ?forward-looking statements? within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. For a discussion of factors that could materially affect the outcome of our forward-looking statements and our future results and financial condition, see ?Risk Factors? in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2010. Such factors include, among others, risks associated with the timing of and costs associated with property improvements, financing commitments and general competitive factors.

VORNADO REALTY TRUST

OPERATING RESULTS FOR THE QUARTERS AND YEARS ENDED

DECEMBER 31, 2010 AND 2009

 
  For The Quarters   For The Years
(Amounts in thousands, except per share amounts) Ended December 31, Ended December 31,
2010   2009 2010   2009
 
Revenues $ 712,957   $ 706,552   $ 2,779,727   $ 2,696,692  
 
Income (loss) from continuing operations 281,745 (134,747 ) 728,411 87,983
Income (loss) from discontinued operations 399   (8,703 ) (20,380 ) 40,467  
Net income (loss) 282,144 (143,450 ) 708,031 128,450

Net (income) loss attributable to noncontrolling interests in consolidated subsidiaries

(3,430 ) (603 ) (4,920 ) 2,839

Net (income) loss attributable to noncontrolling interests in the Operating Partnership, including unit distributions

(21,741 ) 7,130   (55,228 ) (25,120 )
Net income (loss) attributable to Vornado 256,973 (136,923 ) 647,883 106,169
Preferred share dividends (13,559 ) (14,269 ) (55,534 ) (57,076 )
Discount on preferred share redemptions -   -   4,382   -  
Net income (loss) attributable to common shareholders $ 243,414   $ (151,192 ) $ 596,731   $ 49,093  
 
Net income (loss) per common share:
Basic $ 1.33   $ (0.84 ) $ 3.27   $ 0.28  
Diluted $ 1.31   $ (0.84 ) $ 3.24   $ 0.28  
 
Weighted average shares:
Basic 183,308   179,832   182,340   171,595  
Diluted 190,849   179,832   184,159   173,503  
 
FFO attributable to common shareholders plus assumed conversions $ 335,759   $ 20   $ 1,149,781   $ 583,596  
 
FFO per diluted share $ 1.76   $ -   $ 6.05   $ 3.36  
 
Weighted average shares used in determining FFO per diluted share 190,849   182,459   189,894   173,578  
 
The following table reconciles our net income (loss) to FFO:
 
  For The Quarters   For The Years
(Amounts in thousands, except per share amounts) Ended December 31, Ended December 31,
2010   2009 2010   2009
Reconciliation of our net income (loss) to FFO:
Net income (loss) attributable to Vornado $ 256,973 $ (136,923 ) $ 647,883 $ 106,169
Depreciation and amortization of real property 124,024 133,023 505,806 508,572
Net gain on sales of real estate (57,248 ) (2,629 ) (57,248 ) (45,282 )

Proportionate share of adjustments to equity in net income of Toys, to arrive at FFO:

Depreciation and amortization of real property 16,878 15,527 70,174 65,358
Net gain on sales of real estate - - - (164 )
Income tax effect of above adjustments (5,907 ) (5,435 ) (24,561 ) (22,819 )

Proportionate share of adjustments to equity in net income of partially owned entities, excluding Toys, to arrive at FFO:

Depreciation and amortization of real property 19,596 22,692 78,151 75,200
Net gain on sales of real estate (5,470 ) (3 ) (5,784 ) (1,188 )
Noncontrolling interests' share of above adjustments (6,080 ) (11,963 ) (39,565 ) (45,344 )
FFO 342,766 14,289 1,174,856 640,502
Preferred share dividends (13,559 ) (14,269 ) (55,534 ) (57,076 )
Discount on preferred share redemptions -   -   4,382   -  
FFO attributable to common shareholders 329,207 20 1,123,704 583,426
Interest on 3.875% exchangeable senior debentures 6,512 - 25,917 -
Convertible preferred share dividends 40   -   160   170  
FFO attributable to common shareholders plus assumed conversions $ 335,759   $ 20   $ 1,149,781   $ 583,596  
 

FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (?NAREIT?). NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gains from sales of depreciated real estate assets, depreciation and amortization expense from real estate assets, extraordinary items and other specified non-cash items, including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flow as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies. A reconciliation of our net income (loss) to FFO is provided above. In addition to FFO, we also disclose FFO before certain items that affect comparability. Although this non-GAAP measure clearly differs from NAREIT's definition of FFO, we believe it provides a meaningful presentation of operating performance. A reconciliation of FFO to FFO as adjusted for comparability is provided on page 1 of this press release.

Vornado Realty Trust
Joseph Macnow, 201-587-1000