NEW YORK, Oct. 28, 2019 (GLOBE NEWSWIRE) -- VORNADO REALTY TRUST (NYSE: VNO) reported today:

Quarter Ended September 30, 2019 Financial Results

NET INCOME attributable to common shareholders for the quarter ended September 30, 2019 was $322,906,000, or $1.69 per diluted share, compared to $190,645,000, or $1.00 per diluted share, for the prior year's quarter. Adjusting net income attributable to common shareholders for the items that impact the comparability of period-to-period net income listed in the table on the following page, net income attributable to common shareholders, as adjusted (non-GAAP) for the quarters ended September 30, 2019 and 2018 was $52,624,000 and $64,806,000, or $0.28 and $0.34 per diluted share, respectively.

FUNDS FROM OPERATIONS ("FFO") attributable to common shareholders plus assumed conversions (non-GAAP) for the quarter ended September 30, 2019 was $279,509,000, or $1.46 per diluted share, compared to $189,987,000, or $0.99 per diluted share, for the prior year's quarter. Adjusting FFO attributable to common shareholders plus assumed conversions for the items that impact the comparability of period-to-period FFO listed in the table on page 3, FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the quarters ended September 30, 2019 and 2018 was $170,966,000 and $184,280,000, or $0.89 and $0.96 per diluted share, respectively.

Nine Months Ended September 30, 2019 Financial Results

NET INCOME attributable to common shareholders for the nine months ended September 30, 2019 was $2.905 billion, or $15.20 per diluted share, compared to $284,338,000, or $1.49 per diluted share, for the nine months ended September 30, 2018. Adjusting net income attributable to common shareholders for the items that impact the comparability of period-to-period net income listed in the table on the following page, net income attributable to common shareholders, as adjusted (non-GAAP) for the nine months ended September 30, 2019 and 2018 was $120,372,000 and $189,307,000, or $0.63 and $0.99 per diluted share, respectively.

FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the nine months ended September 30, 2019 was $691,522,000, or $3.62 per diluted share, compared to $519,640,000, or $2.72 per diluted share, for the nine months ended September 30, 2018. Adjusting FFO attributable to common shareholders plus assumed conversions for the items that impact the comparability of period-to-period FFO listed in the table on page 3, FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the nine months ended September 30, 2019 and 2018 was $494,936,000 and $543,531,000, or $2.59 and $2.84 per diluted share, respectively.

The decreases in "net income attributable to common shareholders, as adjusted" and "FFO attributable to common shareholders plus assumed conversions, as adjusted" were partially due to (i) $8,986,000 (at share), or $0.04 per diluted share, from the non-cash write-off of straight-line rent receivables, (ii) $8,046,000, or $0.04 per diluted share, of non-cash expense for the time-based equity compensation granted in connection with the new leadership group announced in April 2019 and (iii) $11,055,000, or $0.05 per share, of non-cash expense for the accelerated vesting of previously issued OP Units and Vornado restricted stock due to the removal of the time-based vesting requirement for participants who have reached 65 years of age.

The following table reconciles our net income attributable to common shareholders to net income attributable to common shareholders, as adjusted (non-GAAP):

(Amounts in thousands, except per share amounts)For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,
 2019 2018 2019 2018
Net income attributable to common shareholders$322,906  $190,645  $2,904,589  $284,338 
Per diluted share$1.69  $1.00  $15.20  $1.49 
        
Certain (income) expense items that impact net income attributable to common shareholders:       
Net gains on sale of real estate (primarily our 25% interest in 330 Madison Avenue in 2019)$(178,769) $(3,350) $(178,769) $(27,786)
After-tax net gain on sale of 220 Central Park South ("220 CPS") condominium units(109,035) —  (328,910) — 
Mark-to-market decrease in Pennsylvania Real Estate Investment Trust ("PREIT") common shares (accounted for as a marketable security from March 12, 2019)4,875  —  19,211  — 
Our share of (income) loss from real estate fund investments(1,455) 748  22,207  (617)
Net gain on sale of our ownership interests in 666 Fifth Avenue Office Condominium—  (134,032) —  (134,032)
Mark-to-market decrease (increase) in Lexington Realty Trust ("Lexington") common shares (sold on March 1, 2019)—  7,942  (16,068) 24,934 
Previously capitalized internal leasing costs(1)—  (1,444) —  (3,883)
Net gain on transfer to Fifth Avenue and Times Square retail JV, net of $11,945 attributable to noncontrolling interests—  —  (2,559,154) — 
Non-cash impairment losses and related write-offs, substantially 608 Fifth Avenue—  —  108,592  — 
Net gain from sale of Urban Edge Properties ("UE") common shares (sold on March 4, 2019)—  —  (62,395) — 
Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 2022—  —  22,540  — 
Our share of disputed additional New York City transfer taxes—  —  —  23,503 
Preferred share issuance costs—  —  —  14,486 
Other(4,811) (4,035) (857) 2,061 
 (289,195) (134,171) (2,973,603) (101,334)
Noncontrolling interests' share of above adjustments18,913  8,332  189,386  6,303 
Total of certain (income) expense items that impact net income attributable to common shareholders$(270,282) $(125,839) $(2,784,217) $(95,031)
        
Net income attributable to common shareholders, as adjusted (non-GAAP)$52,624  $64,806  $120,372  $189,307 
Per diluted share (non-GAAP)$0.28  $0.34  $0.63  $0.99 

____________________________________________________________

See notes on the following page.


The following table reconciles our FFO attributable to common shareholders plus assumed conversions (non-GAAP) to FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP):

(Amounts in thousands, except per share amounts)For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,
 2019 2018 2019 2018
FFO attributable to common shareholders plus assumed conversions (non-GAAP)(2)$279,509  $189,987  $691,522  $519,640 
Per diluted share (non-GAAP)$1.46  $0.99  $3.62  $2.72 
        
Certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions:       
After-tax net gain on sale of 220 CPS condominium units$(109,035) $—  $(328,910) $— 
Our share of (income) loss from real estate fund investments(1,455) 748  22,207  (617)
Previously capitalized internal leasing costs(1)—  (1,444) —  (3,883)
Non-cash impairment loss and related write-offs on 608 Fifth Avenue—  —  77,156  — 
Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 2022—  —  22,540  — 
Our share of disputed additional New York City transfer taxes—  —  —  23,503 
Preferred share issuance costs—  —  —  14,486 
Other(5,229) (5,389) (2,931) (7,854)
 (115,719) (6,085) (209,938) 25,635 
Noncontrolling interests' share of above adjustments7,176  378  13,352  (1,744)
Total of certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions, net$(108,543) $(5,707) $(196,586) $23,891 
        
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)$170,966  $184,280  $494,936  $543,531 
Per diluted share (non-GAAP)$0.89  $0.96  $2.59  $2.84 

____________________________________________________________

  1. "Net income, as adjusted" and "FFO, as adjusted" for the three and nine months ended September 30, 2018 have been reduced by $1,444 and $3,883, or $0.01 and $0.02 per diluted share, respectively for previously capitalized internal leasing costs to present 2018 “as adjusted” financial results on a comparable basis with the current year as a result of the January 1, 2019 adoption of a new GAAP accounting standard under which internal leasing costs can no longer be capitalized.
  2. See page 10 for a reconciliation of our net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the three and nine months ended September 30, 2019 and 2018.

Dispositions:

220 CPS

During the three months ended September 30, 2019, we closed on the sale of 14 condominium units at 220 CPS for net proceeds aggregating $348,759,000 resulting in a financial statement net gain of $130,888,000 which is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income. In connection with these sales, $21,853,000 of income tax expense was recognized on our consolidated statements of income.

330 Madison Avenue

On July 11, 2019, we sold our 25% interest in 330 Madison Avenue to our joint venture partner. We received net proceeds of approximately $100,000,000 after deducting our share of the existing $500,000,000 mortgage loan resulting in a financial statement net gain of $159,292,000. The net gain is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income for the three and nine months ended September 30, 2019. The gain for tax purposes was approximately $139,000,000.

3040 M Street

On September 18, 2019, we completed the $49,750,000 sale of 3040 M Street, a 44,000 square foot retail building in Washington, DC, which resulted in a net gain of $19,477,000 which is included in “net gains on disposition of wholly owned and partially owned assets” on our consolidated statements of income for the three and nine months ended September 30, 2019. The gain for tax purposes was approximately $19,000,000.

Financings:

On July 25, 2019, a joint venture, in which we have a 50% interest, completed a $60,000,000 refinancing of 825 Seventh Avenue, a 165,000 square foot office building on the corner of 53rd Street and Seventh Avenue, of which $28,882,000 was outstanding as of September 30, 2019. The interest-only loan carries a rate of LIBOR plus 1.65% (3.78% as of September 30, 2019) and matures in 2022 with a one-year extension option. The loan replaces the previous $20,500,000 loan that bore interest at LIBOR plus 1.40% and was scheduled to mature in September 2019.

On September 5, 2019, a consolidated joint venture, in which we have a 50% interest, completed a $75,000,000 refinancing of 606 Broadway, a 35,000 square foot office and retail building on the northeast corner of Broadway and Houston Street in Manhattan, of which $67,500,000 was outstanding as of September 30, 2019. The interest-only loan carries a rate of LIBOR plus 1.80% (3.85% as of September 30, 2019) and matures in 2024. In connection therewith, the joint venture purchased an interest rate cap that caps LIBOR at a rate of 4.00%. The loan replaces the previous $65,000,000 construction loan. The construction loan bore interest at LIBOR plus 3.00% and was scheduled to mature in May 2021.

On September 27, 2019, we repaid the $575,000,000 mortgage loan on PENN2 with proceeds from our unsecured revolving credit facilities. The mortgage loan was scheduled to mature in December 2021, as fully extended. PENN2 is a 1,795,000 square foot office building located on the west side of 7th Avenue between 31st and 33rd Street currently under redevelopment.

Leasing:

  • 197,000 square feet of New York Office space (171,000 square feet at share) at an initial rent of $80.44 per square foot and a weighted average lease term of 6.5 years. The GAAP and cash mark-to-market rent on the 108,000 square feet of second generation space were positive 28.5% and 22.7%, respectively. Tenant improvements and leasing commissions were $13.13 per square foot per annum, or 16.3% of initial rent.
  • 26,000 square feet of New York Retail space (24,000 square feet at share) at an initial rent of $145.54 per square foot and a weighted average lease term of 5.4 years. The GAAP and cash mark-to-market rent on the 17,000 square feet of second generation space were positive 15.6% and 6.2%, respectively. Tenant improvements and leasing commissions were $8.31 per square foot per annum, or 5.7% of initial rent.
  • 45,000 square feet at theMART at an initial rent of $48.54 per square foot and a weighted average lease term of 5.5 years. The GAAP and cash mark-to-market rent on the 43,000 square feet of second generation space were positive 14.9% and 6.7%, respectively. Tenant improvements and leasing commissions were $10.12 per square foot per annum, or 20.9% of initial rent.
  • 50,000 square feet at 555 California Street (35,000 square feet at share) at an initial rent of $96.54 per square foot and a weighted average lease term of 8.5 years. The GAAP and cash mark-to-market rent on the 29,000 square feet of second generation space were positive 64.5% and 39.3%, respectively. Tenant improvements and leasing commissions were $9.94 per square foot per annum, or 10.3% of initial rent.

Same Store Net Operating Income ("NOI") At Share:

The percentage increase (decrease) in same store NOI at share and same store NOI at share - cash basis of our New York segment, theMART and 555 California Street are summarized below.

         
  Total New York(2) theMART 555
California
Street
Same store NOI at share % increase (decrease)(1):       
 Three months ended September 30, 2019 compared to September 30, 20180.9% 0.5% (2.8)% 13.9%
 Nine months ended September 30, 2019 compared to September 30, 20180.6% (0.2)% 2.2% 11.9%
 Three months ended September 30, 2019 compared to June 30, 2019(0.8)% 1.9% (21.2)% (1.1)%
         
Same store NOI at share - cash basis % increase (decrease)(1):       
 Three months ended September 30, 2019 compared to September 30, 20181.0% 0.3% (1.0)% 17.7%
 Nine months ended September 30, 2019 compared to September 30, 20182.7% 1.6% 5.5% 15.7%
 Three months ended September 30, 2019 compared to June 30, 2019(2.7)% (0.4)% (19.3)% (2.2)%

____________________

(1)See pages 12 through 17 for same store NOI at share and same store NOI at share - cash basis reconciliations.
  Increase 
(2)Excluding Hotel Pennsylvania, same store NOI at share % increase:  
 Three months ended September 30, 2019 compared to September 30, 20181.2% 
 Nine months ended September 30, 2019 compared to September 30, 20180.4% 
 Three months ended September 30, 2019 compared to June 30, 20192.4% 
    
 Excluding Hotel Pennsylvania, same store NOI at share - cash basis % increase:  
 Three months ended September 30, 2019 compared to September 30, 20181.0% 
 Nine months ended September 30, 2019 compared to September 30, 20182.4% 
 Three months ended September 30, 2019 compared to June 30, 20190.1% 
    

NOI At Share:

The elements of our New York and Other NOI at share for the three and nine months ended September 30, 2019 and 2018 and the three months ended June 30, 2019 are summarized below.

    
(Amounts in thousands)For the Three Months Ended For the Nine Months Ended
 September 30, June 30, 2019
 September 30,
 2019 2018  2019 2018
New York:         
Office(1)$177,469  $184,146  $179,592  $540,601  $556,169 
Retail(1)68,159  92,858  57,063  213,489  267,876 
Residential5,575  5,202  5,908  17,528  17,681 
Alexander's Inc. ("Alexander's")11,269  10,626  11,108  33,699  34,110 
Hotel Pennsylvania3,012  4,496  4,031  1,227  5,955 
Total New York265,484  297,328  257,702  806,544  881,791 
          
Other:         
theMART24,862  25,257  30,974  79,359  79,948 
555 California Street15,265  13,515  15,358  45,124  40,686 
Other investments1,919  13,524  4,875  23,184  50,664 
Total Other42,046  52,296  51,207  147,667  171,298 
          
NOI at share$307,530  $349,624  $308,909  $954,211  $1,053,089 
                    

____________________
(1)   Reflects the transfer of 45.4% of common equity in the properties contributed to the Fifth Avenue and Times Square JV on April 18, 2019.

NOI At Share - Cash Basis:

The elements of our New York and Other NOI at share - cash basis for the three and nine months ended September 30, 2019 and 2018 and the three months ended June 30, 2019 are summarized below.

    
(Amounts in thousands)For the Three Months Ended For the Nine Months Ended
 September 30, June 30, 2019
 September 30,
 2019 2018  2019 2018
New York:         
Office(1)$174,796  $181,575  $178,806  $537,972  $540,484 
Retail(1)65,636  84,976  66,726  213,298  243,704 
Residential5,057  5,358  5,303  16,131  16,420 
Alexander's11,471  11,774  11,322  34,320  35,911 
Hotel Pennsylvania2,964  4,520  3,982  1,082  6,111 
Total New York259,924  288,203  266,139  802,803  842,630 
          
Other:         
theMART26,588  26,234  31,984  83,484  81,312 
555 California Street15,325  13,070  15,595  45,665  39,704 
Other investments1,656  13,374  4,939  22,789  50,271 
Total Other43,569  52,678  52,518  151,938  171,287 
          
NOI at share - cash basis$303,493  $340,881  $318,657  $954,741  $1,013,917 
                    

____________________

(1)   Reflects the transfer of 45.4% of common equity in the properties contributed to the Fifth Avenue and Times Square JV on April 18, 2019.

Penn District - Active Development/Redevelopment Summary as of September 30, 2019

(Amounts in thousands, except square feet)  
    Property
Rentable
Sq. Ft.		         Projected
Incremental
Cash Yield
Active Penn District Projects Segment  Budget(1) Amount
Expended		 Remainder
to be
Expended		 Stabilization
Year		 
Farley (95% interest) New York 845,000  1,030,000 (2)528,080  501,920  2022 7.4%
PENN2 - as expanded New York 1,795,000  750,000  34,372  715,628  2024 8.4%
PENN1(3) New York 2,544,000  325,000  57,355  267,645  N/A 13.5%(3)(4)
Districtwide Improvements New York N/A 100,000  5,372  94,628  N/A N/A 
Total Active Penn District Projects     2,205,000  625,179  1,579,821 (5)  8.3%

__________________________

  1. Excluding debt and equity carry.
  2. Net of anticipated historic tax credits.
  3. Property is ground leased through 2098, as fully extended. Fair market value resets occur in 2023, 2048 and 2073. The 13.5% projected return is before the ground rent reset in 2023, which may be material.
  4. Achieved as existing leases roll; average remaining lease term 5.4 years.
  5. Expected to be funded from our balance sheet, principally from 220 CPS net sales proceeds.

There can be no assurance that the above projects will be completed, completed on schedule or within budget. In addition, there can be no assurance that the Company will be successful in leasing the properties on the expected schedule or at the assumed rental rates.

Conference Call and Audio Webcast

As previously announced, the Company will host a quarterly earnings conference call and an audio webcast on Tuesday, October 29, 2019 at 10:00 a.m. Eastern Time (ET). The conference call can be accessed by dialing 888-771-4371 (domestic) or 847-585-4405 (international) and indicating to the operator the passcode 49056911. A telephonic replay of the conference call will be available from 1:30 p.m. ET on October 29, 2019 through November 28, 2019. To access the replay, please dial 888-843-7419 and enter the passcode 49056911#. A live webcast of the conference call will be available on the Company’s website at www.vno.com and an online playback of the webcast will be available on the website following the conference call.

Supplemental Financial Information

Further details regarding 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, 2018. 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
CONSOLIDATED BALANCE SHEETS


(Amounts in thousands, except unit, share, and per share amounts)As of
 September 30, 2019
 December 31, 2018
ASSETS   
Real estate, at cost:   
Land$2,602,039  $3,306,280 
Buildings and improvements7,888,950  10,110,992 
Development costs and construction in progress1,805,846  2,266,491 
Moynihan Train Hall development expenditures791,703  445,693 
Leasehold improvements and equipment121,164  108,427 
Total13,209,702  16,237,883 
Less accumulated depreciation and amortization(2,945,107) (3,180,175)
Real estate, net10,264,595  13,057,708 
Right-of-use assets370,604  — 
Cash and cash equivalents1,132,491  570,916 
Restricted cash113,065  145,989 
Marketable securities35,751  152,198 
Tenant and other receivables99,499  73,322 
Investments in partially owned entities4,023,820  858,113 
Real estate fund investments306,596  318,758 
220 Central Park South condominium units ready for sale288,135  99,627 
Receivable arising from the straight-lining of rents743,646  935,131 
Deferred leasing costs, net of accumulated amortization of $191,299 and $207,529360,608  400,313 
Identified intangible assets, net of accumulated amortization of $99,623 and $172,11430,773  136,781 
Other assets446,516  431,938 
 $18,216,099  $17,180,794 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY   
Mortgages payable, net$5,640,895  $8,167,798 
Senior unsecured notes, net445,668  844,002 
Unsecured term loan, net745,585  744,821 
Unsecured revolving credit facilities655,000  80,000 
Lease liabilities490,978  — 
Moynihan Train Hall obligation791,703  445,693 
Accounts payable and accrued expenses453,331  430,976 
Deferred revenue62,583  167,730 
Deferred compensation plan99,677  96,523 
Other liabilities266,090  311,806 
Total liabilities9,651,510  11,289,349 
Commitments and contingencies   
Redeemable noncontrolling interests:   
Class A units - 13,346,927 and 12,544,477 units outstanding849,798  778,134 
Series D cumulative redeemable preferred units - 141,401 and 177,101 units outstanding4,535  5,428 
Total redeemable noncontrolling interests854,333  783,562 
Shareholders' equity:   
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 36,797,280 and 36,798,580 shares891,256  891,294 
Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 190,850,321 and 190,535,499 shares7,613  7,600 
Additional capital7,872,597  7,725,857 
Earnings less than distributions(1,649,035) (4,167,184)
Accumulated other comprehensive (loss) income(47,359) 7,664 
Total shareholders' equity7,075,072  4,465,231 
Noncontrolling interests in consolidated subsidiaries635,184  642,652 
Total equity7,710,256  5,107,883 
 $18,216,099  $17,180,794 
        

 

VORNADO REALTY TRUST
OPERATING RESULTS


(Amounts in thousands, except per share amounts)For the Three Months Ended For the Nine Months Ended
September 30,September 30,
 2019 2018 2019 2018
Revenues$465,961  $542,048  $1,463,732  $1,620,303 
        
Income from continuing operations$363,857  $219,101  $3,173,671  $324,401 
(Loss) income from discontinued operations(8) 61  (85) 381 
Net income363,849  219,162  3,173,586  324,782 
Less net (income) loss attributable to noncontrolling interests in:       
Consolidated subsidiaries(5,774) (3,312) (34,045) 31,137 
Operating Partnership(22,637) (12,671) (197,354) (18,992)
Net income attributable to Vornado335,438  203,179  2,942,187  336,927 
Preferred share dividends(12,532) (12,534) (37,598) (38,103)
Preferred share issuance costs—  —  —  (14,486)
NET INCOME attributable to common shareholders$322,906  $190,645  $2,904,589  $284,338 
        
INCOME PER COMMON SHARE – BASIC:       
Net income per common share$1.69  $1  $15.22  $1.5 
Weighted average shares outstanding190,814  190,245  190,762  190,176 
        
INCOME PER COMMON SHARE – DILUTED:       
Net income per common share$1.69  $1  $15.2  $1.49 
Weighted average shares outstanding191,024  191,327  191,027  191,292 
        
FFO attributable to common shareholders plus assumed conversions (non-GAAP)$279,509  $189,987  $691,522  $519,640 
Per diluted share (non-GAAP)$1.46  $0.99  $3.62  $2.72 
        
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)$170,966  $184,280  $494,936  $543,531 
Per diluted share (non-GAAP)$0.89  $0.96  $2.59  $2.84 
        
Weighted average shares used in determining FFO attributable to common shareholders plus assumed conversions per diluted share191,024  191,327  191,024  191,186 
                


VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS

The following table reconciles net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions:

(Amounts in thousands, except per share amounts)For the Three Months Ended For the Nine Months Ended
September 30,September 30,
 2019 2018 2019 2018
Reconciliation of our net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions:       
Net income attributable to common shareholders$322,906  $190,645  $2,904,589  $284,338 
Per diluted share$1.69  $1  $15.2  $1.49 
        
FFO adjustments:       
Depreciation and amortization of real property$89,479  $105,015  $303,415  $309,024 
Net gains on sale of real estate(178,769) (133,961) (178,769) (158,138)
Real estate impairment losses—  —  31,436  — 
Net gain on transfer to Fifth Avenue and Times Square JV, net of $11,945 attributable to noncontrolling interests—  —  (2,559,154) — 
Net gain from sale of UE common shares (sold on March 4, 2019)—  —  (62,395) — 
Decrease (increase) in fair value of marketable securities:       
PREIT4,875  —  19,211  — 
Lexington (sold on March 1, 2019)—  7,942  (16,068) 24,934 
Other(7) (243) (48) (133)
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO:       
Depreciation and amortization of real property37,696  23,688  97,317  77,282 
Net gains on sale of real estate—  (3,421) —  (3,998)
Decrease in fair value of marketable securities291  267  1,988  1,801 
 (46,435) (713) (2,363,067) 250,772 
Noncontrolling interests' share of above adjustments3,024  40  149,957  (15,517)
FFO adjustments, net$(43,411) $(673) $(2,213,110) $235,255 
        
FFO attributable to common shareholders$279,495  $189,972  $691,479  $519,593 
Convertible preferred share dividends14  15  43  47 
FFO attributable to common shareholders plus assumed conversions$279,509  $189,987  $691,522  $519,640 
Per diluted share$1.46  $0.99  $3.62  $2.72 
        
Reconciliation of Weighted Average Shares       
Weighted average common shares outstanding190,814  190,245  190,762  190,176 
Effect of dilutive securities:       
Employee stock options and restricted share awards176  1,045  227  972 
Convertible preferred shares34  37  35  38 
Denominator for FFO per diluted share191,024  191,327  191,024  191,186 
                

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 depreciable real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specified items, including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are non-GAAP financial measures 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 attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions is provided above. In addition to FFO attributable to common shareholders plus assumed conversions, we also disclose FFO attributable to common shareholders plus assumed conversions, as adjusted. Although this non-GAAP measure clearly differs from NAREIT’s definition of FFO, we believe it provides a meaningful presentation of operating performance. Reconciliations of FFO attributable to common shareholders plus assumed conversions to FFO attributable to common shareholders plus assumed conversions, as adjusted are provided on page 3 of this press release.

In accordance with the NAREIT December 2018 restated definition of FFO, we have elected to exclude the mark-to-market adjustments of marketable equity securities from the calculation of FFO. FFO for the three months ended September 30, 2018 has been adjusted to exclude the $7,966,000, or $0.04 per share, decrease in fair value of marketable equity securities previously reported. FFO for the nine months ended September 30, 2018 has been adjusted to exclude the $26,602,000, or $0.13 per share, decrease in fair value of marketable equity securities previously reported.


VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below is a reconciliation of net income to NOI at share and NOI at share - cash basis for the three and nine months ended September 30, 2019 and 2018 and the three months ended June 30, 2019.

 For the Three Months Ended For the Nine Months Ended
(Amounts in thousands)September 30, June 30, 2019
 September 30,
 2019 2018  2019 2018
Net income$363,849  $219,162  $2,596,693  $3,173,586  $324,782 
Depreciation and amortization expense96,437  113,169  113,035  326,181  333,701 
General and administrative expense33,237  31,977  38,872  130,129  108,937 
Transaction related costs, impairment losses and other1,576  2,510  101,590  103,315  16,683 
Income from partially owned entities(25,946) (7,206) (22,873) (56,139) (6,059)
(Income) loss from real estate fund investments(2,190) 190  15,803  13,780  37,973 
Interest and other investment income, net(3,045) (2,893) (7,840) (15,930) (9,401)
Interest and debt expense61,448  88,951  63,029  226,940  264,774 
Net gain on transfer to Fifth Avenue and Times Square JV—  —  (2,571,099) (2,571,099) — 
Net gains on disposition of wholly owned and partially owned assets(309,657) (141,269) (111,713) (641,664) (164,828)
Income tax expense23,885  1,943  26,914  80,542  4,964 
Loss (income) from discontinued operations8  (61) (60) 85  (381)
NOI from partially owned entities86,024  60,094  82,974  236,400  193,359 
NOI attributable to noncontrolling interests in consolidated subsidiaries(18,096) (16,943) (16,416) (51,915) (51,415)
NOI at share307,530  349,624  308,909  954,211  1,053,089 
Non cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other(4,037) (8,743) 9,748  530  (39,172)
NOI at share - cash basis$303,493  $340,881  $318,657  $954,741  $1,013,917 
                    

NOI represents total revenues less operating expenses. We consider NOI to be the primary non-GAAP financial measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. As properties are bought and sold based on NOI, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI should not be considered a substitute for net income. NOI may not be comparable to similarly titled measures employed by other companies.


VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below are reconciliations of NOI at share to same store NOI at share for our New York segment, theMART, 555 California Street and other investments for the three months ended September 30, 2019 compared to September 30, 2018.



(Amounts in thousands)Total New York theMART 555
California
Street		 Other
NOI at share for the three months ended September 30, 2019$307,530  $265,484  $24,862  $15,265  $1,919 
Less NOI at share from:          
Acquisitions (5) (5) —  —  — 
Dispositions (650) (650) —  —  — 
Development properties (14,704) (14,704) —  —  — 
Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net (627) (107) (520) —  — 
Other non-same store (income) expense, net (10,222) (8,410) (12) 119  (1,919)
Same store NOI at share for the three months ended September 30, 2019$281,322  $241,608  $24,330  $15,384  $— 
          
NOI at share for the three months ended September 30, 2018$349,624  $297,328  $25,257  $13,515  $13,524 
Less NOI at share from:          
Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV (28,972) (28,972) —  —  — 
Dispositions (3,317) (3,317) —  —  — 
Development properties (23,256) (23,242) —  (14) — 
Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net 1,578  1,797  (219) —  — 
Other non-same store (income) expense, net (16,767) (3,248) 5  —  (13,524)
Same store NOI at share for the three months ended September 30, 2018$278,890  $240,346  $25,043  $13,501  $— 
          
Increase (decrease) in same store NOI at share for the three months ended September 30, 2019 compared to September 30, 2018$2,432  $1,262  $(713) $1,883  $— 
           
% increase (decrease) in same store NOI at share0.9% 0.5%(1)(2.8)% 13.9% —%
                     

____________________
(1)   Excluding Hotel Pennsylvania, same store NOI increased by 1.2%.

Same store NOI at share represents NOI at share from property operations which are owned by us and in service in both the current and prior year reporting periods. Same store NOI at share - cash basis is NOI at share from operations before straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments which are owned by us and in service in both the current and prior year reporting periods. We present these non-GAAP measures to (i) facilitate meaningful comparisons of the operational performance of our properties and segments, (ii) make decisions on whether to buy, sell or refinance properties, and (iii) compare the performance of our properties and segments to those of our peers. Same store NOI at share and same store NOI at share - cash basis should not be considered as an alternative to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.

VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below are reconciliations of NOI at share - cash basis to same store NOI at share - cash basis for our New York segment, theMART, 555 California Street and other investments for the three months ended September 30, 2019 compared to September 30, 2018.

(Amounts in thousands)Total New York theMART 555
California
Street		 Other
NOI at share - cash basis for the three months ended September 30, 2019$303,493  $259,924  $26,588  $15,325  $1,656 
 Less NOI at share - cash basis from:         
 Acquisitions(5) (5) —  —  — 
 Dispositions(690) (690) —  —  — 
 Development properties(20,306) (20,306) —  —  — 
 Lease termination income(1,016) (157) (859) —  — 
 Other non-same store (income) expense, net(11,280) (9,658) (12) 46  (1,656)
Same store NOI at share - cash basis for the three months ended September 30, 2019$270,196  $229,108  $25,717  $15,371  $— 
           
NOI at share - cash basis for the three months ended September 30, 2018$340,881  $288,203  $26,234  $13,070  $13,374 
 Less NOI at share - cash basis from:         
 Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV(27,452) (27,452) —  —  — 
 Dispositions(3,370) (3,370) —  —  — 
 Development properties(25,061) (25,047) —  (14) — 
 Lease termination income(268) (8) (260) —  — 
 Other non-same store (income) expense, net(17,319) (3,950) 5  —  (13,374)
Same store NOI at share - cash basis for the three months ended September 30, 2018$267,411  $228,376  $25,979  $13,056  $— 
          
Increase (decrease) in same store NOI at share - cash basis for the three months ended September 30, 2019 compared to September 30, 2018$2,785  $732  $(262) $2,315  $— 
          
% increase (decrease) in same store NOI at share - cash basis1% 0.3%(1)(1.0)% 17.7% —%
                     

____________________
(1)   Excluding Hotel Pennsylvania, same store NOI at share - cash basis increased by 1.0%.


VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below are reconciliations of NOI at share to same store NOI at share for our New York segment, theMART, 555 California Street and other investments for the three months ended September 30, 2019 compared to June 30, 2019.

(Amounts in thousands)Total New York theMART 555
California
Street		 Other
NOI at share for the three months ended September 30, 2019$307,530  $265,484  $24,862  $15,265  $1,919 
 Less NOI at share from:         
 Acquisitions(5) (5) —  —  — 
 Dispositions(650) (650) —  —  — 
 Development properties(14,704) (14,704) —  —  — 
 Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net(627) (107) (520) —  — 
 Other non-same store (income) expense, net(10,220) (8,408) (12) 119  (1,919)
Same store NOI at share for the three months ended September 30, 2019$281,324  $241,610  $24,330  $15,384  $— 
          
NOI at share for the three months ended June 30, 2019$308,909  $257,702  $30,974  $15,358  $4,875 
 Less NOI at share from:         
 Acquisitions(5) (5) —  —  — 
 Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV(5,479) (5,479) —  —  — 
 Dispositions(3,401) (3,401) —  —  — 
 Development properties(19,698) (19,698) —  —  — 
 Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net2,933  2,933  —  —  — 
 Other non-same store expense (income), net214  4,983  (98) 204  (4,875)
Same store NOI at share for the three months ended June 30, 2019$283,473  $237,035  $30,876  $15,562  $— 
          
(Decrease) increase in same store NOI at share for the three months ended September 30, 2019 compared to June 30, 2019$(2,149) $4,575  $(6,546) $(178) $— 
           
% (decrease) increase in same store NOI at share(0.8)% 1.9%(1)(21.2)% (1.1)% —%
                     

____________________
(1)   Excluding Hotel Pennsylvania, same store NOI at share increased by 2.4%.


VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below are reconciliations of NOI at share - cash basis to same store NOI at share - cash basis for our New York segment, theMART, 555 California Street and other investments for the three months ended September 30, 2019 compared to June 30, 2019.

(Amounts in thousands)Total New York theMART 555
California
Street		 Other
NOI at share - cash basis for the three months ended September 30, 2019$303,493  $259,924  $26,588  $15,325  $1,656 
 Less NOI at share - cash basis from:         
 Acquisitions(5) (5) —  —  — 
 Dispositions(690) (690) —  —  — 
 Development properties(20,306) (20,306) —  —  — 
 Lease termination income(1,016) (157) (859) —  — 
 Other non-same store (income) expense, net(11,280) (9,658) (12) 46  (1,656)
Same store NOI at share - cash basis for the three months ended September 30, 2019$270,196  $229,108  $25,717  $15,371  $— 
           
NOI at share - cash basis for the three months ended June 30, 2019$318,657  $266,139  $31,984  $15,595  $4,939 
 Less NOI at share - cash basis from:         
 Acquisitions(5) (5) —  —  — 
 Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV(5,183) (5,183) —  —  — 
 Dispositions(3,600) (3,600) —  —  — 
 Development properties(22,438) (22,438) —  —  — 
 Lease termination income(247) (247) —  —  — 
 Other non-same store (income) expense, net(9,613) (4,705) (98) 129  (4,939)
Same store NOI at share - cash basis for the three months ended June 30, 2019$277,571  $229,961  $31,886  $15,724  $— 
          
Decrease in same store NOI at share - cash basis for the three months ended September 30, 2019 compared to June 30, 2019$(7,375) $(853) $(6,169) $(353) $— 
          
% decrease in same store NOI at share - cash basis(2.7)% (0.4)%(1)(19.3)% (2.2)% —%
                     

____________________
(1)   Excluding Hotel Pennsylvania, same store NOI at share - cash basis increased by 0.1%.


VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below are reconciliations of NOI at share to same store NOI at share for our New York segment, theMART, 555 California Street and other investments for the nine months ended September 30, 2019 compared to September 30, 2018.

(Amounts in thousands)Total New York theMART 555
California
Street		 Other
NOI at share for the nine months ended September 30, 2019$954,211  $806,544  $79,359  $45,124  $23,184 
 Less NOI at share from:         
 Acquisitions(225) (225) —  —  — 
 Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV(5,479) (5,479) —  —  — 
 Dispositions(7,277) (7,277) —  —  — 
 Development properties(37,806) (37,806) —  —  — 
 Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net4,362  4,882  (520) —  — 
 Other non-same store (income) expense, net(28,711) (3,983) (1,943) 399  (23,184)
Same store NOI at share for the nine months ended September 30, 2019$879,075  $756,656  $76,896  $45,523  $— 
          
NOI at share for the nine months ended September 30, 2018$1,053,089  $881,791  $79,948  $40,686  $50,664 
 Less NOI at share from:         
 Acquisitions(124) (124) —  —  — 
 Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV(55,337) (55,337) —  —  — 
 Dispositions(10,288) (10,288) —  —  — 
 Development properties(53,394) (53,380) —  (14) — 
 Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net2,394  2,655  (261) —  — 
 Other non-same store income, net(62,284) (7,188) (4,432) —  (50,664)
Same store NOI at share for the nine months ended September 30, 2018$874,056  $758,129  $75,255  $40,672  $— 
          
Increase (decrease) in same store NOI at share for the nine months ended September 30, 2019 compared to September 30, 2018$5,019  $(1,473) $1,641  $4,851  $— 
           
% increase (decrease) in same store NOI at share0.6% (0.2)%(1)2.2% 11.9% —%
                     

____________________
(1)   Excluding Hotel Pennsylvania, same store NOI at share increased by 0.4%.


VORNADO REALTY TRUST
NON-GAAP RECONCILIATIONS - CONTINUED

Below are reconciliations of NOI at share - cash basis to same store NOI at share - cash basis for our New York segment, theMART, 555 California Street and other investments for the nine months ended September 30, 2019 compared to September 30, 2018.

(Amounts in thousands)Total New York theMART 555
California
Street		 Other
NOI at share - cash basis for the nine months ended September 30, 2019$954,741  $802,803  $83,484  $45,665  $22,789 
 Less NOI at share - cash basis from:         
 Acquisitions(226) (226) —  —  — 
 Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV(5,183) (5,183) —  —  — 
 Dispositions(7,716) (7,716) —  —  — 
 Development properties(47,597) (47,597) —  —  — 
 Lease termination income(2,943) (2,084) (859) —  — 
 Other non-same store (income) expense, net(39,399) (14,919) (1,942) 251  (22,789)
Same store NOI at share - cash basis for the nine months ended September 30, 2019$851,677  $725,078  $80,683  $45,916  $— 
          
NOI at share - cash basis for the nine months ended September 30, 2018$1,013,917  $842,630  $81,312  $39,704  $50,271 
 Less NOI at share - cash basis from:         
 Acquisitions(124) (124) —  —  — 
 Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV(52,184) (52,184) —  —  — 
 Dispositions(9,933) (9,933) —  —  — 
 Development properties(57,495) (57,481) —  (14) — 
 Lease termination income(1,491) (1,069) (422) —  — 
 Other non-same store income, net(63,227) (8,524) (4,432) —  (50,271)
Same store NOI at share - cash basis for the nine months ended September 30, 2018$829,463  $713,315  $76,458  $39,690  $— 
          
Increase in same store NOI at share - cash basis for the nine months ended September 30, 2019 compared to September 30, 2018$22,214  $11,763  $4,225  $6,226  $— 
           
% increase in same store NOI at share - cash basis2.7% 1.6%(1)5.5% 15.7% —%
                     

 

____________________
(1)   Excluding Hotel Pennsylvania, same store NOI at share - cash basis increased by 2.4%.

CONTACT:
JOSEPH MACNOW
(212) 894-7000

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