UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-K

 

x

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

 

For the Fiscal Year Ended:

December 31, 2012

 

 

 

 

 

 

OR

 

o

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

 

 (Exact name of Registrant as specified in its charter)

 

Maryland

 

22‑1657560

(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)

 

Registrant’s telephone number including area code:

(212) 894‑7000

 

 

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

 

Title of Each Class

 

Name of Each Exchange on Which Registered

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

 

New York Stock Exchange

 

 

 

Series A Convertible Preferred Shares
of beneficial interest, no par value

 

New York Stock Exchange

 

 

 

Cumulative Redeemable Preferred Shares of beneficial
interest, no par value:

 

 

 

 

 

6.75% Series F

 

New York Stock Exchange

 

 

 

6.625% Series G

 

New York Stock Exchange

 

 

 

6.75% Series H

 

New York Stock Exchange

 

 

 

6.625% Series I

 

New York Stock Exchange

 

 

 

6.875% Series J

 

New York Stock Exchange

 

 

 

5.70% Series K

 

New York Stock Exchange

 

 

 

5.40% Series L

 

New York Stock Exchange

 

 

 

Securities registered pursuant to Section 12(g) of the Act:      NONE

 


 

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 

YES  x      NO 

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

YES  o      NO 

 

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.

YES  x      NO 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted 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).  

YES  x      NO 

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S‑K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10‑K or any amendment to this Form 10‑K.

 

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

 

x Large Accelerated Filer

 

o Accelerated Filer

o Non-Accelerated Filer (Do not check if smaller reporting company)

 

o Smaller Reporting Company

 

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

YES    NO 

 

The aggregate market value of the voting and non-voting common shares held by non‑affiliates of the registrant, i.e. by persons other than officers and trustees of Vornado Realty Trust, was $14,174,711,000 at June 30, 2012.

 

As of December 31, 2012, there were 186,734,711 of the registrant’s common shares of beneficial interest outstanding.

 

Documents Incorporated by Reference

 

Part III :  Portions of Proxy Statement for Annual Meeting of Shareholders to be held on May 23, 2013.

 

 

  

 


 

 

 

 

 

 

INDEX

 

 

 

 

 

 

 

 

 

 

 

Item

Financial Information:

 

Page Number

 

 

 

 

 

 

 

PART I.

1.

 

Business

 

 

 

 

 

 

 

 

 

 

1A.

 

Risk Factors

 

12 

 

 

 

 

 

 

 

 

 

1B.

 

Unresolved Staff Comments

 

25 

 

 

 

 

 

 

 

 

 

2.

 

Properties

 

25 

 

 

 

 

 

 

 

 

 

3.

 

Legal Proceedings

 

63 

 

 

 

 

 

 

 

 

 

4.

 

Mine Safety Disclosures

 

63 

 

 

 

 

 

 

 

PART II.

5.

 

Market for Registrant’s Common Equity, Related Stockholder Matters and

 

 

 

 

 

 

Issuer Purchases of Equity Securities

 

64 

 

 

 

 

 

 

 

 

 

6.

 

Selected Financial Data

 

66 

 

 

 

 

 

 

 

 

 

7.

 

Management's Discussion and Analysis of Financial Condition and

 

 

 

 

 

 

Results of Operations

 

68 

 

 

 

 

 

 

 

 

 

7A.

 

Quantitative and Qualitative Disclosures about Market Risk

 

125 

 

 

 

 

 

 

 

 

 

8.

 

Financial Statements and Supplementary Data

 

126 

 

 

 

 

 

 

 

 

 

9.

 

Changes in and Disagreements with Accountants on

 

 

 

 

 

 

Accounting and Financial Disclosure

 

182 

 

 

 

 

 

 

 

 

 

9A.

 

Controls and Procedures

 

182 

 

 

 

 

 

 

 

 

 

9B.

 

Other Information

 

184 

 

 

 

 

 

 

 

PART III.

10.

 

Directors, Executive Officers and Corporate Governance (1)

 

184 

 

 

 

 

 

 

 

 

 

11.

 

Executive Compensation (1)

 

185 

 

 

 

 

 

 

 

 

 

12.

 

Security Ownership of Certain Beneficial Owners and Management

 

 

 

 

 

 

and Related Stockholder Matters (1)

 

185 

 

 

 

 

 

 

 

 

 

13.

 

Certain Relationships and Related Transactions, and Director Independence (1)

 

185 

 

 

 

 

 

 

 

 

 

14.

 

Principal Accounting Fees and Services (1)

 

185 

 

 

 

 

 

 

 

PART IV.

15.

 

Exhibits, Financial Statement Schedules

 

186 

 

 

 

 

 

 

 

Signatures

 

 

 

 

187 

 

 

 

 

 

 

 

 

 

 

 

(1)

These items are omitted in whole or in part because the registrant will file a definitive Proxy Statement pursuant to Regulation 14A under the Securities Exchange Act of 1934 with the Securities and Exchange Commission no later than 120 days after December 31, 2012, portions of which are incorporated by reference herein.

2

 


 

 

Forward-Looking Statements

 

 

Certain statements contained herein 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 Annual Report on Form 10‑K. 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. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Item 1A. Risk Factors” in this Annual Report on Form 10-K.

 

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 Annual Report on Form 10-K 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 Annual Report on Form 10-K.

 

 

3

 


 

 

PART I

 

ITEM 1.        BUSINESS

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”).  Accordingly, Vornado’s cash flow and ability to pay dividends to its shareholders is dependent upon the cash flow of the Operating Partnership and the ability of its direct and indirect subsidiaries to first satisfy their obligations to creditors.  Vornado is the sole general partner of, and owned approximately 94.0% of the common limited partnership interest in the Operating Partnership at December 31, 2012.  All references to “we,” “us,” “our,” the “Company” and “Vornado” refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership.

                 

As of December 31, 2012, we own all or portions of:

 

New York:

 

·          19.7 million square feet of Manhattan office space in 31 properties and four residential properties containing 1,655 units;

 

·          2.2 million square feet of Manhattan street retail space in 49 properties;

 

·          The 1,700 room Hotel Pennsylvania located on Seventh Avenue at 33 rd Street in the heart of the Penn Plaza district;

 

·          A 32.4% interest in Alexander’s, Inc. (NYSE: ALX), which owns six properties in the greater New York metropolitan area, including 731 Lexington Avenue, the 1.3 million square foot Bloomberg, L.P. headquarters building;

 

Washington, DC:

 

·          73 properties aggregating 19.1 million square feet, including 59 office properties aggregating 16.1 million square feet and seven residential properties containing 2,414 units;

 

Retail Properties:

 

·          114 strip shopping centers and single tenant retail assets aggregating 15.6 million square feet, primarily in the northeast states and California;

 

·          Six regional malls aggregating 5.2 million square feet, located in the northeast / mid-Atlantic states and Puerto Rico;

 

 

Other Real Estate and Related Investments:

 

·          The 3.5 million square foot Merchandise Mart in Chicago;

 

·          A 70% controlling interest in 555 California Street, a three-building office complex in San Francisco’s financial district aggregating 1.8 million square feet, known as the Bank of America Center;

 

·          A 25.0% interest in Vornado Capital Partners, our $800 million real estate fund.  We are the general partner and investment manager of the fund;

 

·          A 32.6% interest in Toys “R” Us, Inc.;

 

·          A 10.7% interest in J.C. Penney Company, Inc. (NYSE: JCP); and

 

·          Other real estate and related investments and mortgage and mezzanine loans on real estate.

 

4

 


 

 

Objectives and Strategy

Our business objective is to maximize shareholder value. We intend to achieve this objective by continuing to pursue our investment philosophy and executing our operating strategies through:

 

·      Maintaining a superior team of operating and investment professionals and an entrepreneurial spirit;

·      Investing in properties in select markets, such as New York City and Washington, DC, where we believe there is a high likelihood of capital appreciation;

·      Acquiring quality properties at a discount to replacement cost and where there is a significant potential for higher rents;

·      Investing in retail properties in select under-stored locations such as the New York City metropolitan area;

·      Developing and redeveloping our existing properties to increase returns and maximize value; and

·          Investing in operating companies that have a significant real estate component.

 

We expect to finance our growth, acquisitions and investments using internally generated funds, proceeds from possible asset sales and by accessing the public and private capital markets.  We may also offer Vornado common or preferred shares or Operating Partnership units in exchange for property and may repurchase or otherwise reacquire these securities in the future.

 

 

 

VorNADO CAPITAL PARTNERS REAL ESTATE FUND (The “FUND”)

 

In February 2011, the Fund’s subscription period closed with an aggregate of $800,000,000 of capital commitments, of which we committed $200,000,000.  We are the general partner and investment manager of the Fund, which has an eight-year term and a three-year investment period.  During the investment period, which concludes in July 2013, the Fund is our exclusive investment vehicle for all investments that fit within its investment parameters, including debt, equity and other interests in real estate, and excluding (i) investments in vacant land and ground-up development; (ii) investments acquired by merger or primarily for our securities or properties; (iii) properties which can be combined with or relate to our existing properties; (iv) securities of commercial mortgage loan servicers and investments derived from any such investments; (v) non-controlling interests in equity and debt securities; and (vi) investments located outside of North America.   The Fund’s investments are reported on its balance sheet at fair value, with changes in value each period recognized in earnings.  We consolidate the accounts of the Fund into our consolidated financial statements, retaining the fair value basis of accounting. 

 

During 2012, the Fund made four investments (described below) aggregating $203,700,000.  As of December 31, 2012, the Fund has nine investments with an aggregate fair value of $600,786,000, or $67,642,000 in excess of cost, and has remaining unfunded commitments of $217,676,000, of which our share was $54,419,000.

 

          800 Corporate Pointe

 

On November 30, 2012, the Fund acquired 800 Corporate Pointe, a 243,000 square foot office building and the accompanying six-level parking structure (1,964 spaces) located in Culver City, Los Angeles, California, for $95,700,000 in cash. 

 

          501 Broadway

 

On August 20, 2012, the Fund acquired 501 Broadway, a 9,000 square foot retail property in New York for $31,000,000.  The purchase price consisted of $11,000,000 in cash and a $20,000,000 mortgage loan.  The three-year loan bears interest at LIBOR plus 2.75%, with a floor of 3.50%, and has two one-year extension options.

 

          1100 Lincoln Road

 

On July 2, 2012, the Fund acquired 1100 Lincoln Road, a 167,000 square foot retail property, the western anchor of the Lincoln Road Shopping District in Miami Beach, Florida, for $132,000,000.  The purchase price consisted of $66,000,000 in cash and a $66,000,000 mortgage loan.  The three-year loan bears interest at LIBOR plus 2.75% and has two one-year extension options.

 

          520 Broadway

 

On April 26, 2012, the Fund acquired 520 Broadway, a 112,000 square foot office building in Santa Monica, California for $61,000,000 in cash and subsequently placed a $30,000,000 mortgage loan on the property.  The three-year loan bears interest at LIBOR plus 2.25% and has two one-year extension options.

 

5

 


 

 

ACQUISITIONS and investments

 

 

Independence Plaza

 

In 2011, we acquired a 51% interest in the subordinated debt of Independence Plaza, a three-building 1,328 unit residential complex in the Tribeca submarket of Manhattan which has 54,500 square feet of retail space and 550 parking spaces, for $45,000,000 and a warrant to purchase 25% of the equity for $1,000,000.  On December 21, 2012, we acquired a 58.75% interest in the property as follows: (i) buying one of the equity partners’ 33.75% interest for $160,000,000, (ii) exercising our warrant for 25% of the equity and (iii) contributing the appreciated value of our interest in the subordinated debt as preferred equity.  In connection therewith, we recognized income of $105,366,000, comprised of $60,396,000 from the accelerated amortization of the discount on the subordinated debt immediately preceding the conversion to preferred equity, and a $44,970,000 purchase price fair value adjustment upon exercising the warrant.  The current transaction values the property at $844,800,000.  The property is currently encumbered by a $334,225,000 mortgage.  We expect to refinance the $334,225,000 mortgage in 2013, substantially decreasing our cash investment.  We manage the retail space at the property and Stellar Management, our partner, manages the residential space.

 

 

666 Fifth Avenue - Retail

 

On December 6, 2012, we acquired a retail condominium located at 666 Fifth Avenue at 53rd Street for $707,000,000 in cash. The property has 126 feet of frontage on Fifth Avenue and contains 114,000 square feet, 39,000 square feet in fee and 75,000 square feet by long-term lease from the 666 Fifth Avenue office condominium, which is 49.5% owned by us. 

 

 

Marriott Marquis Times Square - Retail and Signage

 

On July 30, 2012, we entered into a lease with Host Hotels & Resorts, Inc. (NYSE: HST) (“Host”), under which we will redevelop the retail and signage components of the Marriott Marquis Times Square Hotel.  The Marriott Marquis with over 1,900 rooms is one of the largest hotels in Manhattan.  It is located in the heart of the bow-tie of Times Square and spans the entire block front from 45th Street to 46th Street on Broadway.  The Marriott Marquis is directly across from our 1540 Broadway iconic retail property leased to Forever 21 and Disney flagship stores.  We plan to spend over $140,000,000 to redevelop and substantially expand the existing retail space, including converting the below grade parking garage into retail, and creating six-story, 300 foot wide block front, dynamic LED signs.  During the term of the lease we will pay fixed rent equal to the sum of $12,500,000, plus a portion of the property’s net cash flow after we receive a 5.2% preferred return on our invested capital.  The lease contains put/call options which, if exercised, would lead to our ownership.  Host can exercise the put option during defined periods following the conversion of the project to a condominium.  We can exercise our call option under the same terms, at any time after the fifteenth year of the lease term. 

 

6

 


 

 

Dispositions

 

 

Merchandise Mart

 

On December 31, 2012, we completed the sale of the Boston Design Center, a 554,000 square foot showroom building in Boston, Massachusetts, for $72,400,000 in cash, which resulted in a net gain of $5,252,000. 

 

On July 26, 2012, we completed the sale of the Washington Design Center, a 393,000 square foot showroom building in Washington, DC, and the Canadian Trade Shows, for an aggregate of $103,000,000 in cash.  The sale of the Canadian Trade Shows resulted in an after-tax net gain of $19,657,000. 

 

On June 22, 2012, we completed the sale of L.A. Mart, a 784,000 square foot showroom building in Los Angeles, California for $53,000,000, of which $18,000,000 was cash and $35,000,000 was nine-month seller financing at 6.0%, which was paid on December 28, 2012.

 

On January 6, 2012, we completed the sale of 350 West Mart Center, a 1.2 million square foot office building in Chicago, Illinois, for $228,000,000 in cash, which resulted in a net gain of $54,911,000.

 

 

Washington, DC

 

On November 7, 2012, we completed the sale of three office buildings (“Reston Executive”) located in suburban Fairfax County, Virginia, containing 494,000 square feet for $126,250,000, which resulted in a net gain of $36,746,000.

 

On July 26, 2012, we completed the sale of 409 Third Street S.W., a 409,000 square foot office building in Washington, DC, for $200,000,000 in cash, which resulted in a net gain of $126,621,000.  This building is contiguous to the Washington Design Center and was sold to the same purchaser.

 

 

Retail Properties

 

On February 13, 2013, we entered into an agreement to sell the Plant, a power strip shopping center in San Jose, California, for $203,000,000.  The sale will result in net proceeds of approximately $93,000,000 after repaying the existing loan and closing costs, and a financial statement gain of approximately $33,000,000.  The sale, which is subject to customary closing conditions, is expected to be completed by the second quarter of 2013.

 

On January 24, 2013, we completed the sale of the Green Acres Mall located in Valley Stream, New York, for $500,000,000, which resulted in net proceeds of $185,000,000, after repaying the existing loan and closing costs.  The financial statement gain of  $205,000,000 will be recognized in the first quarter of 2013 and the tax gain of $304,000,000 has been deferred as part of a like-kind exchange.

 

In 2012, we sold 12 non-core retail properties in separate transactions, for an aggregate of $157,000,000 in cash, which resulted in a net gain aggregating $22,266,000.  In addition, we have entered into an agreement to sell a building on Market Street, Philadelphia, which is part of the Gallery at Market East for $60,000,000, which will result in a net gain of approximately $35,000,000.  The sale, which is subject to customary closing conditions, is expected to be completed in the first quarter of 2013.

 

 

Other

 

On January 24, 2013, LNR Property LLC (“LNR”) entered into a definitive agreement to be sold.  We own 26.2% of LNR and expect to receive net proceeds of approximately $241,000,000.  The sale, which is subject to customary closing conditions, is expected to be completed in the second quarter of 2013.

7

 


 

 

Financing Activities

 

 

Secured Debt

 

On November 16, 2012, we completed a $120,000,000 refinancing of 4 Union Square South, a 206,000 square foot Manhattan retail property. The seven-year loan bears interest at LIBOR plus 2.15% (2.36% at December 31, 2012) and amortizes based on a 30-year schedule beginning in the third year. We retained net proceeds of approximately $42,000,000, after repaying the existing loan and closing costs.

 

On November 8, 2012, we completed a $950,000,000 refinancing of 1290 Avenue of the Americas (70% owned), a 2.1 million square foot Manhattan office building. The 10-year fixed rate interest-only loan bears interest at 3.34%.  The partnership retained net proceeds of approximately $522,000,000, after repaying the existing loan and closing costs.

 

On August 17, 2012, we completed a $98,000,000 refinancing of 435 Seventh Avenue, a 43,000 square foot retail property in Manhattan. The seven-year loan bears interest at LIBOR plus 2.25% (2.46% at December 31, 2012). We retained net proceeds of approximately $44,000,000, after repaying the existing loan and closing costs.

 

On July 26, 2012, we completed a $150,000,000 refinancing of 2101 L Street, a 380,000 square foot office building located in Washington, DC. The 12-year fixed rate loan bears interest at 3.97% and amortizes based on a 30-year schedule beginning in the third year.

 

On March 5, 2012, we completed a $325,000,000 refinancing of 100 West 33 rd Street, a 1.1 million square foot property located on the entire Sixth Avenue block front between 32 nd and 33 rd Streets in Manhattan.  The building contains the 257,000 square foot Manhattan Mall and 848,000 square feet of office space.  The three-year loan bears interest at LIBOR plus 2.50% (2.71% at December 31, 2012) and has two one-year extension options.  We retained net proceeds of approximately $87,000,000, after repaying the existing loan and closing costs.       

 

On January 9, 2012, we completed a $300,000,000 refinancing of 350 Park Avenue, a 559,000 square foot Manhattan office building. The five-year fixed rate loan bears interest at 3.75% and amortizes based on a 30-year schedule beginning in the third year. The proceeds of the new loan and $132,000,000 of existing cash were used to repay the existing loan and closing costs.

 

 

Senior Unsecured Debt

 

In April 2012, we redeemed all of the outstanding exchangeable and convertible senior debentures at par, for an aggregate of $510,215,000 in cash.

 

 

8

 


 

 

Financing Activities - CONTINUED

 

 

Preferred Securities

 

In July 2012 and January 2013, we sold an aggregate of $600,000,000 of cumulative redeemable preferred securities with a weighted average cost of 5.55%.  The net proceeds aggregating $581,824,000 were used primarily to redeem outstanding cumulative redeemable preferred securities with an aggregate face amount of $517,500,000 and a weighted average cost of 6.82%.  The details of these transactions are described below. 

 

On February 19, 2013, we redeemed all of the outstanding 6.75% Series F Cumulative Redeemable Preferred Shares and 6.75% Series H Cumulative Redeemable Preferred Shares at par, for an aggregate of $262,500,000 in cash, plus accrued and unpaid dividends through the date of redemption.

 

On January 25, 2013, we sold 12,000,000 5.40% Series L Cumulative Redeemable Preferred Shares at a price of $25.00 per share in an underwritten public offering pursuant to an effective registration statement.  We retained aggregate net proceeds of $290,853,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 12,000,000 Series L Preferred Units (with economic terms that mirror those of the Series L Preferred Shares).  Dividends on the Series L Preferred Shares are cumulative and payable quarterly in arrears.  The Series L Preferred Shares are not convertible into, or exchangeable for, any of our properties or securities.  On or after five years from the date of issuance (or sooner under limited circumstances), we may redeem the Series L Preferred Shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption.  The Series L Preferred Shares have no maturity date and will remain outstanding indefinitely unless redeemed by us.

 

On August 16, 2012, we redeemed all of the outstanding 7.0% Series E Cumulative Redeemable Preferred Shares at par, for an aggregate of $75,000,000 in cash, plus accrued and unpaid dividends through the date of redemption.

 

On July 19, 2012, we redeemed all of the outstanding 7.0% Series D-10 and 6.75% Series D-14 cumulative redeemable preferred units with an aggregate face amount of $180,000,000 for $168,300,000 in cash, plus accrued and unpaid distributions through the date of redemption.

 

On July 11, 2012, we sold 12,000,000 5.70% Series K Cumulative Redeemable Preferred Shares at a price of $25.00 per share in an underwritten public offering pursuant to an effective registration statement.  We retained aggregate net proceeds of $290,971,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 12,000,000 Series K Preferred Units (with economic terms that mirror those of the Series K Preferred Shares).  Dividends on the Series K Preferred Shares are cumulative and payable quarterly in arrears.  The Series K Preferred Shares are not convertible into, or exchangeable for, any of our properties or securities.  On or after five years from the date of issuance (or sooner under limited circumstances), we may redeem the Series K Preferred Shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption. The Series K Preferred Shares have no maturity date and will remain outstanding indefinitely unless redeemed by us. 

 

9

 


 

 

Development and Redevelopment Projects                  

 

In 2012, we commenced the re-tenanting and repositioning of 280 Park Avenue (50% owned), and the renovation of the 1.4 million square foot Springfield Mall, both of which are expected to be substantially completed in 2014.  We budgeted approximately $285,000,000 for these projects, of which $31,000,000 was expended in 2012 and $132,000,000 is expected to be expended in 2013 and the balance is expected to be expended in 2014.

 

During 2012, we completed the demolition of the existing residential building down to the second-level, at 220 Central Park South.

  

In addition, we continued lobby renovations at several of our office buildings in New York and Washington, as well as the re-tenanting and repositioning of a number of our strip shopping centers.

 

We are also evaluating other development and redevelopment opportunities at certain of our properties in Manhattan, including the Hotel Pennsylvania and in Washington, including 1900 Crystal Drive, Rosslyn and Pentagon City.

 

In 2010, two of our wholly owned subsidiaries entered into agreements with Cuyahoga County, Ohio (the “County”) to develop and operate the Cleveland Medical Mart and Convention Center (the “Facility”), a 1,000,000 square foot showroom, trade show and conference center in Cleveland’s central business district.  The County is funding the development of the Facility, using the proceeds it received from the issuance of general obligation bonds and other sources, up to the development budget of $418,000,000 and maintains effective control of the property.  During the 17-year development and operating period, our subsidiaries will receive net settled payments of approximately $10,000,000 per year, which are net of a $36,000,000 annual obligation to the County.  Our subsidiaries’ obligation has been pledged by the County to the bondholders, but is payable by our subsidiaries only to the extent that they first receive at least an equal payment from the County.  Construction of the Facility is expected to be completed in 2013.  As of December 31, 2012, $379,658,000 of the $418,000,000 development budget was expended.

 

 

There can be no assurance that any of our development or redevelopment projects will commence, or if commenced, be completed on schedule or within budget.

 

 

sTop & SHop settlement                   

 

On February 6, 2013, we received $124,000,000 pursuant to a settlement agreement with Stop & Shop for our claim under a 1992 agreement which provided for additional annual rent of $6,000,000 for a period potentially through 2031.  The settlement terminates our right to receive this rent under the 1992 agreement and ends litigation between the parties, which started ten years ago.  In prior years, we recognized $47,900,000 of rental income under the agreement.  This settlement will result in $59,000,000 of net income that will be recognized in the first quarter of 2013.

 

 

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SEGMENT DATA

 

We operate in the following business segments: New York, Washington, DC, Retail Properties, Merchandise Mart and Toys “R” Us (“Toys”).  Financial information related to these business segments for the years ended December 31, 2012, 2011 and 2010 is set forth in Note 26 – Segment Information to our consolidated financial statements in this Annual Report on Form 10-K.  The Toys segment has 651 locations internationally.

 

 

SEASONALITY

 

Our revenues and expenses are subject to seasonality during the year which impacts quarterly net earnings, cash flows and funds from operations, and therefore impacts comparisons of the current quarter to the previous quarter. The business of Toys is highly seasonal. Historically, Toys’ fourth quarter net income, which we record on a one-quarter lag basis in our first quarter, accounts for more than 80% of its fiscal year net income. The New York and Washington, DC segments have historically experienced higher utility costs in the first and third quarters of the year.  The Retail Properties segment revenue in the fourth quarter is typically higher due to the recognition of percentage and specialty rental income.

 

 

tenants ACCOUNTING FOR over 10% of revenues

 

None of our tenants accounted for more than 10% of total revenues in any of the years ended December 31, 2012, 2011 and 2010.

 

 

Certain Activities

 

We do not base our acquisitions and investments on specific allocations by type of property. We have historically held our properties for long‑term investment; however, it is possible that properties in the portfolio may be sold as circumstances warrant. Further, we have not adopted a policy that limits the amount or percentage of assets which could be invested in a specific property or property type. While we may seek the vote of our shareholders in connection with any particular material transaction, generally our activities are reviewed and may be modified from time to time by our Board of Trustees without the vote of shareholders.

 

 

Employees

 

As of December 31, 2012, we have approximately 4,428 employees, of which 327 are corporate staff. The New York segment has 3,308 employees, including 2,641 employees of Building Maintenance Services LLC, a wholly owned subsidiary, which provides cleaning, security and engineering services primarily to our New York and Washington, DC properties and 516 employees at the Hotel Pennsylvania. The Washington, DC, Retail Properties and Merchandise Mart segments have 456, 110 and 227 employees, respectively. The foregoing does not include employees of partially owned entities, including Toys or Alexander’s, of which we own 32.6% and 32.4%, respectively. 

 

 

principal executive offices

 

Our principal executive offices are located at 888 Seventh Avenue, New York, New York 10019; telephone (212) 894‑7000. 

 

 

MATERIALS AVAILABLE ON OUR WEBSITE

 

Copies of our Annual Report on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, and amendments to those reports, as well as Reports on Forms 3, 4 and 5 regarding officers, trustees or 10% beneficial owners of us, filed or furnished pursuant to Section 13(a), 15(d) or 16(a) of the Securities Exchange Act of 1934 are available free of charge through our website (www.vno.com) as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission. Also available on our website are copies of our Audit Committee Charter, Compensation Committee Charter, Corporate Governance and Nominating Committee Charter, Code of Business Conduct and Ethics and Corporate Governance Guidelines. In the event of any changes to these charters or the code or guidelines, changed copies will also be made available on our website.  Copies of these documents are also available directly from us free of charge.  Our website also includes other financial information, including certain non-GAAP financial measures, none of which is a part of this Annual Report on Form 10-K.  Copies of our filings under the Securities Exchange Act of 1934 are also available free of charge from us, upon request.

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ITEM 1A.     RISK FACTORS

Material factors that may adversely affect our business, operations and financial condition are summarized below.  The risks and uncertainties described herein may not be the only ones we face.  Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.  See “Forward-Looking Statements” contained herein on page 3.

 

Real Estate Investments’ Value and Income Fluctuate Due to Various Factors.

The value of real estate fluctuates depending on conditions in the general economy and the real estate business. These conditions may also adversely impact our revenues and cash flows.

 

The factors that affect the value of our real estate investments include, among other things:

·      national, regional and local economic conditions;

·      competition from other available space;

·      local conditions such as an oversupply of space or a reduction in demand for real estate in the area;

·      how well we manage our properties;

·          the development and/or redevelopment of our properties;

·      changes in market rental rates;

·      the timing and costs associated with property improvements and rentals;

·      whether we are able to pass all or portions of any increases in operating costs through to tenants;

·      changes in real estate taxes and other expenses;  

·      whether tenants and users such as customers and shoppers consider a property attractive;

·      the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;

·      availability of financing on acceptable terms or at all;

·      fluctuations in interest rates;

·      our ability to obtain adequate insurance;

·      changes in zoning laws and taxation;

·      government regulation;

·      consequences of any armed conflict involving, or terrorist attacks against, the United States;

·      potential liability under environmental or other laws or regulations;

·          natural disasters;

·      general competitive factors; and

·          climate changes.

 

The rents or sales proceeds we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of these factors. If rental revenues, sales proceeds and/or occupancy levels decline, we generally would expect to have less cash available to pay indebtedness and for distribution to shareholders. In addition, some of our major expenses, including mortgage payments, real estate taxes and maintenance costs generally do not decline when the related rents decline.

 

Capital markets and economic conditions can materially affect our financial condition and results of operations and the value of our debt and equity securities.

There are many factors that can affect the value of our debt and equity securities, including the state of the capital markets and the economy, which over the past few years have negatively affected substantially all businesses, including ours.  Demand for office and retail space may decline nationwide as it did in 2008 and 2009, due to bankruptcies, downsizing, layoffs and cost cutting.  Government action or inaction may adversely affect the state of the capital markets.  The cost and availability of credit may be adversely affected by illiquid credit markets and wider credit spreads, which may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our tenants.  Our inability or the inability of our tenants to timely refinance maturing liabilities and access the capital markets to meet liquidity needs may materially affect our financial condition and results of operations and the value of our debt and equity securities.

 

 

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Real estate is a competitive business.

Our business segments – New York, Washington, DC, Retail Properties, Merchandise Mart and Toys – operate in a highly competitive environment. We have a large concentration of properties in the New York City metropolitan area and in the Washington, DC / Northern Virginia area. We compete with a large number of property owners and developers, some of which may be willing to accept lower returns on their investments than we are. Principal factors of competition include rents charged, sales prices, attractiveness of location, the quality of the property and the breadth and quality of services provided. Our success depends upon, among other factors, trends of the national, regional and local economies, financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulation, legislation and population trends.

 

We depend on leasing space to tenants on economically favorable terms and collecting rent from tenants who may not be able to pay.

Our financial results depend significantly on leasing space in our properties to tenants on economically favorable terms. In addition, because a majority of our income comes from renting of real property, our income, funds available to pay indebtedness and funds available for distribution to shareholders will decrease if a significant number of our tenants cannot pay their rent or if we are not able to maintain occupancy levels on favorable terms. If a tenant does not pay its rent, we may not be able to enforce our rights as landlord without delays and may incur substantial legal costs.  During periods of economic adversity, there may be an increase in the number of tenants that cannot pay their rent and an increase in vacancy rates.

 

Bankruptcy or insolvency of tenants may decrease our revenue, net income and available cash.

From time to time, some of our tenants have declared bankruptcy, and other tenants may declare bankruptcy or become insolvent in the future. In the case of our shopping centers, the bankruptcy or insolvency of a major tenant could cause us to suffer lower revenues and operational difficulties, including leasing the remainder of the property. As a result, the bankruptcy or insolvency of a major tenant could result in decreased revenue, net income and funds available for the payment of indebtedness or for distribution to shareholders. 

 

We may incur costs to comply with environmental laws.

Our operations and properties are subject to various federal, state and local laws and regulations concerning the protection of the environment, including air and water quality, hazardous or toxic substances and health and safety. Under some environmental laws, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property. The owner or operator may also be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused the release. The presence of contamination or the failure to remediate contamination may impair our ability to sell or lease real estate or to borrow using the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and also govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) and underground storage tanks are also regulated by federal and state laws. We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. Our predecessor companies may be subject to similar liabilities for activities of those companies in the past.  We could incur fines for environmental compliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or tanks or related claims arising out of environmental contamination or human exposure to contamination at or from our properties.

 

Each of our properties has been subject to varying degrees of environmental assessment. The environmental assessments did not, as of this date, reveal any environmental condition material to our business. However, identification of new compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination, discovery of additional sites, human exposure to the contamination or changes in clean-up or compliance requirements could result in significant costs to us.

 

 

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Inflation or deflation may adversely affect our financial condition and results of operations.

 

Although neither inflation nor deflation has materially impacted our operations in the recent past, increased inflation could have a pronounced negative impact on our mortgages and interest rates and general and administrative expenses, as these costs could increase at a rate higher than our rents.  Inflation could also have an adverse effect on consumer spending which could impact our tenants’ sales and, in turn, our percentage rents, where applicable.  Conversely, deflation could lead to downward pressure on rents and other sources of income.  In addition, we own residential properties which are leased to tenants with one-year lease terms.  Because these are short-term leases, declines in market rents will impact our residential properties faster than if the leases were for longer terms.

 

Some of our potential losses may not be covered by insurance.

We maintain general liability insurance with limits of $300,000,000 per occurrence and all risk property and rental value insurance with limits of $2.0 billion per occurrence, including coverage for terrorist acts, with sub-limits for certain perils such as floods.  Our California properties have earthquake insurance with coverage of $180,000,000 per occurrence, subject to a deductible in the amount of 5% of the value of the affected property, up to a $180,000,000 annual aggregate.

 

Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for acts of terrorism, including nuclear, biological, chemical and radiological (“NBCR”) acts, as defined by the Terrorism Risk Insurance Program Reauthorization Act. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to PPIC.  Coverage for NBCR losses is up to $2.0 billion per occurrence, for which PPIC is responsible for a deductible of $3,200,000 and 15% of the balance of a covered loss and the Federal government is responsible for the remaining 85% of a covered loss.  We are ultimately responsible for any loss borne by PPIC.

 

We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism.  However, we cannot anticipate what coverage will be available on commercially reasonable terms in future policy years.

 

Our debt instruments, consisting of mortgage loans secured by our properties which are non-recourse to us, senior unsecured notes and revolving credit agreements contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain it could adversely affect our ability to finance our properties and expand our portfolio.

 

Because we operate a hotel, we face the risks associated with the hospitality industry.

We own and operate the Hotel Pennsylvania in New York City. The following factors, among others, are common to the hotel industry and may reduce the revenues generated by the hotel, which would reduce cash available for distribution to our shareholders:

 

·      our hotel competes for guests with other hotels, a number of which have greater marketing and financial resources;

·      if there is an increase in operating costs resulting from inflation and other factors, we may not be able to offset such increase by increasing room rates;

·      our hotel is subject to the fluctuating and seasonal demands of business travelers and tourism;

·      our hotel is subject to general and local economic and social conditions that may affect demand for travel in general, including war and terrorism; and

·      physical condition, which may require substantial additional capital.

 

Because of the ownership structure of the Hotel Pennsylvania, we face potential adverse effects from changes to the applicable tax laws.

Under the Internal Revenue Code, REITs like us are not allowed to operate hotels directly or indirectly. Accordingly, we lease the Hotel Pennsylvania to our taxable REIT subsidiary (“TRS”). While the TRS structure allows the economic benefits of ownership to flow to us, the TRS is subject to tax on its income from the operations of the hotel at the federal and state level. In addition, the TRS is subject to detailed tax regulations that affect how it may be capitalized and operated. If the tax laws applicable to a TRS are modified, we may be forced to modify the structure for owning the hotel, and such changes may adversely affect the cash flows from the hotel. In addition, the Internal Revenue Service, the United States Treasury Department and Congress frequently review federal income tax legislation, and we cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. Any such actions may prospectively or retroactively modify the tax treatment of the TRS and, therefore, may adversely affect our after-tax returns from the hotel.

 

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Compliance or failure to comply with the Americans with Disabilities Act or other safety regulations and requirements could result in substantial costs.   

The Americans with Disabilities Act (“ADA”) generally requires that public buildings, including our properties, meet certain federal requirements related to access and use by disabled persons.  Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants and/or legal fees to their counsel.  From time to time persons have asserted claims against us with respect to some of our properties under the ADA, but to date such claims have not resulted in any material expense or liability.  If, under the ADA, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations, as well as the amount of cash available for distribution to shareholders.

 

Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements.  If we fail to comply with these requirements, we could incur fines or private damage awards.  We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations.

 

We face risks associated with our tenants being designated “Prohibited Persons” by the Office of Foreign Assets Control.    

 

Pursuant to Executive Order 13224 and other laws, the Office of Foreign Assets Control of the United States Department of the Treasury (“OFAC”) maintains a list of persons designated as terrorists or who are otherwise blocked or banned (“Prohibited Persons”) from conducting business or engaging in transactions in the United States.  Our leases, loans and other agreements may require us to comply with OFAC requirements.  If a tenant or other party with whom we conduct business is placed on the OFAC list we may be required to terminate the lease or other agreement.  Any such termination could result in a loss of revenue or otherwise negatively affect our financial results and cash flows.

 

Our business and operations would suffer in the event of system failures.    

 

Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan for our internal information technology systems, our systems are vulnerable to damages from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures.  Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business.  We may also incur additional costs to remedy damages caused by such disruptions.

 

The occurrence of cyber incidents, or a deficiency in our cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.

 

A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our information resources. More specifically, a cyber incident is an intentional attack or an unintentional event that can include gaining unauthorized access to systems to disrupt operations, corrupt data, or steal confidential information. As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced. Our three primary risks that could directly result from the occurrence of a cyber incident include operational interruption, damage to our relationship with our tenants, and private data exposure.  We have implemented processes, procedures and controls to help mitigate these risks, but these measures, as well as our increased awareness of a risk of a cyber incident, do not guarantee that our financial results will not be negatively impacted by such an incident.

 

 

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Our Investments Are Concentrated in the New York CITY METROPOLITAN AREA and Washington, DC / NORTHERN VIRGINIA Area. Circumstances Affecting These Areas Generally Could Adversely Affect Our Business.

 

A significant portion of our properties are located in the New York City / New Jersey metropolitan area and Washington, DC / Northern Virginia area and are affected by the economic cycles and risks inherent to those areas.

In 2012, approximately 74% of our EBITDA, excluding items that affect comparability, came from properties located in the New York City metropolitan areas and the Washington, DC / Northern Virginia area.  We may continue to concentrate a significant portion of our future acquisitions in these areas or in other geographic real estate markets in the United States or abroad.  Real estate markets are subject to economic downturns and we cannot predict how economic conditions will impact these markets in either the short or long term. Declines in the economy or declines in real estate markets in these areas could hurt our financial performance and the value of our properties.  In addition to the factors affecting the national economic condition generally, the factors affecting economic conditions in these regions include:

 

·      financial performance and productivity of the publishing, advertising, financial, technology, retail, insurance and real estate industries;

·      space needs of, and budgetary constraints affecting, the United States Government, including the effect of a deficit reduction plan and/or base closures and repositioning under the Defense Base Closure and Realignment Act of 2005, as amended;

·      business layoffs or downsizing;

·      industry slowdowns;

·      relocations of businesses;

·      changing demographics;

·      increased telecommuting and use of alternative work places;

·      infrastructure quality; and

·      any oversupply of, or reduced demand for, real estate.

 

It is impossible for us to assess the future effects of trends in the economic and investment climates of the geographic areas in which we concentrate, and more generally of the United States, or the real estate markets in these areas.  Local, national or global economic downturns, would negatively affect our businesses and profitability.

 

Terrorist attacks, such as those of September 11, 2001 in New York City and the Washington, DC area, may adversely affect the value of our properties and our ability to generate cash flow.

We have significant investments in large metropolitan areas, including the New York, Washington, DC and San Francisco metropolitan areas. In the aftermath of a terrorist attack, tenants in these areas may choose to relocate their businesses to less populated, lower-profile areas of the United States that may be perceived to be less likely targets of future terrorist activity and fewer customers may choose to patronize businesses in these areas. This, in turn, would trigger a decrease in the demand for space in these areas, which could increase vacancies in our properties and force us to lease space on less favorable terms. As a result, the value of our properties and the level of our revenues and cash flows could decline materially.

 

Natural Disasters could have a concentrated impact on the areas where we operate and could adversely impact our results.

We have significant investments in large metropolitan areas, including the New York, Washington, DC and San Francisco metropolitan areas.  As much of our investments are concentrated along the Eastern Seaboard, natural disasters, such as those resulting from Superstorm Sandy, could impact several of our properties.  Additionally, natural disasters, including earthquakes, could impact several of our properties in other areas in which we operate.  Potentially adverse consequences of “global warming” could similarly have an impact on our properties.  As a result, we could become subject to significant losses and/or repair costs that may or may not be fully covered by insurance and to the risk of business interruption.  The incurrence of these losses, costs or business interruptions may adversely affect our operating and financial results.

 

 

 

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We May Acquire or Sell Assets or Entities or Develop Properties. Our Failure or Inability to Consummate These Transactions or Manage the Results of These Transactions Could Adversely Affect Our Operations and Financial Results.

 

We have grown substantially since 2002 through acquisitions. We may not be able to maintain this growth and our failure to do so could adversely affect our stock price.

We have grown substantially since 2002, increasing our total assets from approximately $9.0 billion at December 31, 2002 to approximately $22.0 billion at December 31, 2012. We may not be able to maintain a similar rate of growth in the future or manage growth effectively. Our failure to do so may have a material adverse effect on our financial condition and results of operations as well as the amount of cash available for distributions to shareholders.

 

We may acquire or develop properties or acquire other real estate related companies and this may create risks.

We may acquire or develop properties or acquire other real estate related companies when we believe that an acquisition or development is consistent with our business strategy. We may not, however, succeed in consummating desired acquisitions or in completing developments on time or within budget. In addition, we may face competition in pursuing acquisition or development opportunities that could increase our costs. When we do pursue a project or acquisition, we may not succeed in leasing or selling newly-developed or acquired properties at rents or sales prices sufficient to cover costs of acquisition or development and operations.  Difficulties in integrating acquisitions may prove costly or time-consuming and could divert management’s attention. Acquisitions or developments in new markets or industries where we do not have the same level of market knowledge may result in weaker than anticipated performance. We may also abandon acquisition or development opportunities that we have begun pursuing and consequently fail to recover expenses already incurred and have devoted management time to a matter not consummated. Furthermore, acquisitions of new properties or companies will expose us to the liabilities of those properties or companies, some of which we may not be aware of at the time of acquisition. Development of our existing properties presents similar risks.

 

From time to time we have made, and in the future we may seek to make, one or more material acquisitions.  The announcement of such a material acquisition may result in a rapid and significant decline in the price of our common shares.

 

We are continuously looking at material transactions that we believe will maximize shareholder value.  However, an announcement by us of one or more significant acquisitions could result in a quick and significant decline in the price of our common shares. 

 

It may be difficult to buy and sell real estate quickly, which may limit our flexibility.

Real estate investments are relatively difficult to buy and sell quickly. Consequently, we may have limited ability to vary our portfolio promptly in response to changes in economic or other conditions.

 

We may not be permitted to dispose of certain properties or pay down the debt associated with those properties when we might otherwise desire to do so without incurring additional costs.  In addition, when we dispose of or sell assets, we may not be able to reinvest the sales proceeds and earn similar returns.

As part of an acquisition of a property, or a portfolio of properties, we may agree, and in the past have agreed, not to dispose of the acquired properties or reduce the mortgage indebtedness for a long-term period, unless we pay certain of the resulting tax costs of the seller. These agreements could result in us holding on to properties that we would otherwise sell and not pay down or refinance.  In addition, when we dispose of or sell assets, we may not be able to reinvest the sales proceeds and earn returns similar to those generated by the assets that were sold.

 

From time to time we make investments in companies over which we do not have sole control. Some of these companies operate in industries that differ from our current operations, with different risks than investing in real estate.

From time to time we make debt or equity investments in other companies that we may not control or over which we may not have sole control. These investments include but are not limited to, Alexander’s, Inc. (“Alexander’s”), Toys “R” Us (“Toys”), Lexington Realty Trust (“Lexington”), J.C. Penney Company, Inc. (“J.C. Penney”), and other equity and mezzanine investments. Although these businesses generally have a significant real estate component, some of them operate in businesses that are different from our primary lines of business including, without limitation, operating or managing toy stores and department stores. Consequently, investments in these businesses, among other risks, subjects us to the operating and financial risks of industries other than real estate and to the risk that we do not have sole control over the operations of these businesses. From time to time we may make additional investments in or acquire other entities that may subject us to similar risks. Investments in entities over which we do not have sole control, including joint ventures, present additional risks such as having differing objectives than our partners or the entities in which we invest, or becoming involved in disputes, or competing with those persons.  In addition, we rely on the internal controls and financial reporting controls of these entities and their failure to maintain effectiveness or comply with applicable standards may adversely affect us.

 

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We are subject to risks that affect the general retail environment.

A substantial portion of our properties are in the retail shopping center real estate market and we have a significant investment in retailers such as Toys and J.C. Penney. This means that we are subject to factors that affect the retail environment generally, including the level of consumer spending and consumer confidence, the threat of terrorism and increasing competition from discount retailers, outlet malls, retail websites and catalog companies. These factors could adversely affect the financial condition of our retail tenants and the retailers in which we hold an investment and the willingness of retailers to lease space in our shopping centers, and in turn, adversely affect us.

 

Our investment in Toys subjects us to risks that are different from our other lines of business and may result in increased seasonality and volatility in our reported earnings.

Because Toys is a retailer, its operations subject us to the risks of a retail company that are different than those presented by our other lines of business. The business of Toys is highly seasonal. Historically, Toys fourth quarter net income accounts for more than 80% of its fiscal year net income. In addition, our fiscal year ends on December 31 whereas, as is common for retailers, Toys’ fiscal year ends on the Saturday nearest to January 31. Therefore, we record our pro rata share of Toys’ net earnings on a one-quarter lag basis. For example, our financial results for the year ended December 31, 2012 include Toys’ financial results for its first, second and third quarters ended October 29, 2012, as well as Toys’ fourth quarter results of 2011. Because of the seasonality of Toys, our reported quarterly net income shows increased volatility. We may also, in the future and from time to time, invest in other businesses that may report financial results that are more volatile than our historical financial results. 

 

We depend upon our anchor tenants to attract shoppers.

We own several regional malls and other shopping centers that are typically anchored by well-known department stores and other tenants who generate shopping traffic at the mall or shopping center. The value of our properties would be adversely affected if tenants or anchors failed to meet their contractual obligations, sought concessions in order to continue operations or ceased their operations, including as a result of bankruptcy. If the sales of stores operating in our properties were to decline significantly due to economic conditions, closing of anchors or for other reasons, tenants may be unable to pay their minimum rents or expense recovery charges. In the event of a default by a tenant or anchor, we may experience delays and costs in enforcing our rights as landlord.

 

Our decision to dispose of real estate assets would change the holding period assumption in our valuation analyses, which could result in material impairment losses and adversely affect our financial results.

 

 We evaluate real estate assets for impairment based on the projected cash flow of the asset over our anticipated holding period.  If we change our intended holding period, due to our intention to sell or otherwise dispose of an asset, then under accounting principles generally accepted in the United States of America, we must reevaluate whether that asset is impaired.  Depending on the carrying value of the property at the time we change our intention and the amount that we estimate we would receive on disposal, we may record an impairment loss that would adversely affect our financial results. This loss could be material to our results of operations in the period that it is recognized.

  

We invest in mortgage loans and subordinated or mezzanine debt of certain entities that have significant real estate assets. 

We invest, and may in the future invest, in mortgage loans and subordinated or mezzanine debt of certain entities that have significant real estate assets.  These investments are either secured by the real property or by pledges of the equity interests of the entities owning the underlying real estate.  If a borrower defaults on debt to us or on debt senior to us, or declares bankruptcy, we may not be able to recover some or all of our investment.  In addition, there may be significant delays and costs associated with the process of foreclosing on collateral securing or supporting these investments.  The value of the assets securing or supporting our investments could deteriorate over time due to factors beyond our control, including acts or omissions by owners, changes in business, economic or market conditions, or foreclosure.  Such deteriorations in value may result in the recognition of impairment losses and/or valuation allowances on our statements of income.  As of December 31, 2012, our investments in mortgage and mezzanine debt securities have an aggregate carrying amount of $225,359,000. 

 

 

 

 

 

 

 

 

 

 

 

 

 

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We evaluate the collectibility of both interest and principal of each of our loans whenever events or changes in circumstances indicate such amounts may not be recoverable.  A loan is impaired when it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient, to the value of the collateral if the loan is collateral dependent.  There can be no assurance that our estimates of collectible amounts will not change over time or that they will be representative of the amounts we will actually collect, including amounts we would collect if we chose to sell these investments before their maturity.  If we collect less than our estimates, we will record impairment losses which could be material.

 

We invest in marketable equity securities.  The value of these investments may decline as a result of operating performance or economic or market conditions. 

We invest in marketable equity securities of publicly-traded companies, such as J.C. Penney.  As of December 31, 2012, our marketable securities have an aggregate carrying amount of $398,188,000, at market.  Significant declines in the value of these investments due to, among other reasons, operating performance or economic or market conditions, may result in the recognition of impairment losses which could be material. 

 

 

Our Organizational and Financial Structure Gives Rise to Operational and Financial Risks.

We may not be able to obtain capital to make investments.

We depend primarily on external financing to fund the growth of our business. This is because one of the requirements of the Internal Revenue Code of 1986, as amended, for a REIT is that it distributes 90% of its taxable income, excluding net capital gains, to its shareholders. There is a separate requirement to distribute net capital gains or pay a corporate level tax in lieu thereof. Our access to debt or equity financing depends on the willingness of third parties to lend or make equity investments and on conditions in the capital markets generally. Although we believe that we will be able to finance any investments we may wish to make in the foreseeable future, there can be no assurance that new financing will be available or available on acceptable terms.  For information about our available sources of funds, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and the notes to the consolidated financial statements in this Annual Report on Form 10-K.

 

Vornado Realty Trust (“Vornado”) depends on dividends and distributions from its direct and indirect subsidiaries. The creditors and preferred security holders of these subsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or distributions to Vornado.

Substantially all of Vornado’s assets are held through its Operating Partnership that holds substantially all of its properties and assets through subsidiaries. The Operating Partnership’s cash flow is dependent on cash distributions to it by its subsidiaries, and in turn, substantially all of Vornado’s cash flow is dependent on cash distributions to it by the Operating Partnership. The creditors of each of Vornado’s direct and indirect subsidiaries are entitled to payment of that subsidiary’s obligations to them, when due and payable, before distributions may be made by that subsidiary to its equity holders. Thus, the Operating Partnership’s ability to make distributions to holders of its units depends on its subsidiaries’ ability first to satisfy their obligations to their creditors and then to make distributions to the Operating Partnership. Likewise, Vornado’s ability to pay dividends to holders of common and preferred shares depends on the Operating Partnership’s ability first to satisfy its obligations to its creditors and make distributions payable to holders of preferred units and then to make distributions to Vornado.

 

Furthermore, the holders of preferred units of the Operating Partnership are entitled to receive preferred distributions before payment of distributions to holders of Class A units of the Operating Partnership, including Vornado. Thus, Vornado’s ability to pay cash dividends to its shareholders and satisfy its debt obligations depends on the Operating Partnership’s ability first to satisfy its obligations to its creditors and make distributions to holders of its preferred units and then to holders of its Class A units, including Vornado.  As of December 31, 2012, there were four series of preferred units of the Operating Partnership not held by Vornado with a total liquidation value of $101,095,000.

 

In addition, Vornado’s participation in any distribution of the assets of any of its direct or indirect subsidiaries upon the liquidation, reorganization or insolvency, is only after the claims of the creditors, including trade creditors and preferred security holders, are satisfied.

 

19

 


 

 

  

We have outstanding debt, and the amount of debt and its cost may increase and refinancing may not be available on acceptable terms.

As of December 31, 2012, we had approximately $14.7 billion of total debt outstanding, including our pro rata share of debt of partially owned entities, and excluding $25.4 billion for our pro rata share of LNR’s liabilities related to its consolidated CMBS and CDO trusts, which are non-recourse to LNR and its equity holders, including us.  Our ratio of total debt to total enterprise value was approximately 46%. When we say “enterprise value” in the preceding sentence, we mean market equity value of our common and preferred securities plus total debt outstanding, including our pro rata share of debt of partially owned entities, and excluding LNR’s liabilities related to its consolidated CMBS and CDO trusts.  In the future, we may incur additional debt to finance acquisitions or property developments and thus increase our ratio of total debt to total enterprise value. If our level of indebtedness increases, there may be an increased risk of a credit rating downgrade or a default on our obligations that could adversely affect our financial condition and results of operations. In addition, in a rising interest rate environment, the cost of existing variable rate debt and any new debt or other market rate security or instrument may increase.  Furthermore, we may not be able to refinance existing indebtedness in sufficient amounts or on acceptable terms.

 

Covenants in our debt instruments could adversely affect our financial condition and our acquisitions and development activities.

The mortgages on our properties contain customary covenants such as those that limit our ability, without the prior consent of the lender, to further mortgage the applicable property or to discontinue insurance coverage. Our unsecured credit facilities, unsecured debt securities and other loans that we may obtain in the future contain, or may contain, customary restrictions, requirements and other limitations on our ability to incur indebtedness, including covenants that limit our ability to incur debt based upon the level of our ratio of total debt to total assets, our ratio of secured debt to total assets, our ratio of EBITDA to interest expense, and fixed charges, and that require us to maintain a certain level of unencumbered assets to unsecured debt. Our ability to borrow is subject to compliance with these and other covenants. In addition, failure to comply with our covenants could cause a default under the applicable debt instrument, and we may then be required to repay such debt with capital from other sources. Under those circumstances, other sources of capital may not be available to us, or may be available only on unattractive terms.

 

We rely on debt financing, including borrowings under our unsecured credit facilities, issuances of unsecured debt securities and debt secured by individual properties, to finance acquisitions and development activities and for working capital. If we are unable to obtain debt financing from these or other sources, or refinance existing indebtedness upon maturity, our financial condition and results of operations would likely be adversely affected. If we breach covenants in our debt agreements, the lenders can declare a default and, if the debt is secured, can take possession of the property securing the defaulted loan.

 

Vornado may fail to qualify or remain qualified as a REIT and may be required to pay income taxes at corporate rates.

Although we believe that we will remain organized and will continue to operate so as to qualify as a REIT for federal income tax purposes, we may fail to remain qualified in this way. Qualification as a REIT for federal income tax purposes is governed by highly technical and complex provisions of the Internal Revenue Code for which there are only limited judicial or administrative interpretations. Our qualification as a REIT also depends on various facts and circumstances that are not entirely within our control. In addition, legislation, new regulations, administrative interpretations or court decisions may significantly change the tax laws with respect to the requirements for qualification as a REIT or the federal income tax consequences of qualifying as a REIT.

 

If, with respect to any taxable year, we fail to maintain our qualification as a REIT and do not qualify under statutory relief provisions, we could not deduct distributions to shareholders in computing our taxable income and would have to pay federal income tax on our taxable income at regular corporate rates. The federal income tax payable would include any applicable alternative minimum tax. If we had to pay federal income tax, the amount of money available to distribute to shareholders and pay our indebtedness would be reduced for the year or years involved, and we would no longer be required to make distributions to shareholders. In addition, we would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost, unless we were entitled to relief under the relevant statutory provisions. Although we currently intend to operate in a manner designed to allow us to qualify as a REIT, future economic, market, legal, tax or other considerations may cause us to revoke the REIT election or fail to qualify as a REIT.

 

20

 


 

 

We face possible adverse changes in tax laws, which may result in an increase in our tax liability.

From time to time changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. The shortfall in tax revenues for states and municipalities in recent years may lead to an increase in the frequency and size of such changes. If such changes occur, we may be required to pay additional taxes on our assets or income. These increased tax costs could adversely affect our financial condition and results of operations and the amount of cash available for payment of dividends.

 

Loss of our key personnel could harm our operations and adversely affect the value of our common shares.

We are dependent on the efforts of Steven Roth, the Chairman of the Board of Trustees of Vornado, and Michael D. Fascitelli, the President and Chief Executive Officer of Vornado. While we believe that we could find replacements for these and other key personnel, the loss of their services could harm our operations and adversely affect the value of our common shares.

 

 

Vornado’s charter documents and applicable law may hinder any attempt to acquire us.

Our Amended and Restated Declaration of Trust sets limits on the ownership of our shares.

Generally, for Vornado to maintain its qualification as a REIT under the Internal Revenue Code, not more than 50% in value of the outstanding shares of beneficial interest of Vornado may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of Vornado’s taxable year. The Internal Revenue Code defines “individuals” for purposes of the requirement described in the preceding sentence to include some types of entities. Under Vornado’s Amended and Restated Declaration of Trust, as amended, no person may own more than 6.7% of the outstanding common shares of any class, or 9.9% of the outstanding preferred shares of any class, with some exceptions for persons who held common shares in excess of the 6.7% limit before Vornado adopted the limit and other persons approved by Vornado’s Board of Trustees. These restrictions on transferability and ownership may delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of the shareholders. We refer to Vornado’s Amended and Restated Declaration of Trust, as amended, as the “declaration of trust.”

 

Vornado has a classified Board of Trustees and that may reduce the likelihood of certain takeover transactions.

 

Vornado’s Board of Trustees is divided into three classes of trustees. Trustees of each class are chosen for three-year staggered terms. Staggered terms of trustees may reduce the possibility of a tender offer or an attempt to change control of Vornado, even though a tender offer or change in control might be in the best interest of Vornado’s shareholders.

 

We may issue additional shares in a manner that could adversely affect the likelihood of certain takeover transactions.

 

Vornado’s declaration of trust authorizes the Board of Trustees to:

·      cause Vornado to issue additional authorized but unissued common shares or preferred shares;

·      classify or reclassify, in one or more series, any unissued preferred shares;

·      set the preferences, rights and other terms of any classified or reclassified shares that Vornado issues; and

·      increase, without shareholder approval, the number of shares of beneficial interest that Vornado may issue.

 

The Board of Trustees could establish a series of preferred shares whose terms could delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of Vornado’s shareholders, although the Board of Trustees does not now intend to establish a series of preferred shares of this kind. Vornado’s declaration of trust and bylaws contain other provisions that may delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of our shareholders.

21

 


 

 

The Maryland General Corporation Law contains provisions that may reduce the likelihood of certain takeover transactions.

 

Under the Maryland General Corporation Law, as amended, which we refer to as the “MGCL,” as applicable to REITs, certain “business combinations,” including certain mergers, consolidations, share exchanges and asset transfers and certain issuances and reclassifications of equity securities, between a Maryland REIT and any person who beneficially owns ten percent or more of the voting power of the trust’s shares or an affiliate or an associate, as defined in the MGCL, of the trust who, at any time within the two-year period before the date in question, was the beneficial owner of ten percent or more of the voting power of the then outstanding voting shares of beneficial interest of the trust, which we refer to as an “interested shareholder,” or an affiliate of the interested shareholder, are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. After that five-year period, any business combination of these kinds must be recommended by the board of trustees of the trust and approved by the affirmative vote of at least (a) 80% of the votes entitled to be cast by holders of outstanding voting shares of beneficial interest of the trust and (b) two-thirds of the votes entitled to be cast by holders of voting shares of beneficial interest of the trust other than shares held by the interested shareholder with whom, or with whose affiliate, the business combination is to be effected or held by an affiliate or associate of the interested shareholder.  These supermajority voting requirements do not apply if the trust’s common shareholders receive a minimum price, as defined in the MGCL, for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its common shares.

 

The provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by the board of trustees of the applicable trust before the interested shareholder becomes an interested shareholder, and a person is not an interested shareholder if the board of trustees approved in advance the transaction by which the person otherwise would have become an interested shareholder.

 

In approving a transaction, the Board may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the Board.  Vornado’s Board has adopted a resolution exempting any business combination between Vornado and any trustee or officer of Vornado or its affiliates.  As a result, any trustee or officer of Vornado or its affiliates may be able to enter into business combinations with Vornado that may not be in the best interest of Vornado’s shareholders. With respect to business combinations with other persons, the business combination provisions of the MGCL may have the effect of delaying, deferring or preventing a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of the shareholders. The business combination statute may discourage others from trying to acquire control of Vornado and increase the difficulty of consummating any offer.

 

We may change our policies without obtaining the approval of our shareholders.

Our operating and financial policies, including our policies with respect to acquisitions of real estate or other companies, growth, operations, indebtedness, capitalization and dividends, are exclusively determined by our Board of Trustees. Accordingly, our shareholders do not control these policies.

 

Our Ownership Structure and Related-Party Transactions May Give Rise to Conflicts of Interest.

Steven Roth and Interstate Properties may exercise substantial influence over us. They and some of our other trustees and officers have interests or positions in other entities that may compete with us.

As of December 31, 2012, Interstate Properties, a New Jersey general partnership, and its partners owned an aggregate of approximately 6.5% of the common shares of Vornado and 26.3% of the common stock of Alexander’s, which is described below.  Steven Roth, David Mandelbaum and Russell B. Wight, Jr. are the three partners of Interstate Properties. Mr. Roth is the Chairman of the Board of Vornado, the managing general partner of Interstate Properties and the Chairman of the Board and Chief Executive Officer of Alexander’s. Messrs. Wight and Mandelbaum are trustees of Vornado and also directors of Alexander’s.

 

Because of these overlapping interests, Mr. Roth and Interstate Properties and its partners may have substantial influence over Vornado and on the outcome of any matters submitted to Vornado’s shareholders for approval. In addition, certain decisions concerning our operations or financial structure may present conflicts of interest among Messrs. Roth, Mandelbaum and Wight and Interstate Properties and our other equity or debt holders. In addition, Mr. Roth, Interstate Properties and its partners, and Alexander’s currently and may in the future engage in a wide variety of activities in the real estate business which may result in conflicts of interest with respect to matters affecting us, such as which of these entities or persons, if any, may take advantage of potential business opportunities, the business focus of these entities, the types of properties and geographic locations in which these entities make investments, potential competition between business activities conducted, or sought to be conducted, competition for properties and tenants, possible corporate transactions such as acquisitions and other strategic decisions affecting the future of these entities.

 

22

 


 

 

We currently manage and lease the real estate assets of Interstate Properties under a management agreement for which we receive an annual fee equal to 4% of base rent and percentage rent. The management agreement has a one-year term and is automatically renewable unless terminated by either of the parties on 60 days’ notice at the end of the term. Because of the relationship among Vornado, Interstate Properties and Messrs. Roth, Mandelbaum and Wight, as described above, the terms of the management agreement and any future agreements between us and Interstate Properties may not be comparable to those we could have negotiated with an unaffiliated third party.

 

There may be conflicts of interest between Alexander’s and us.

As of December 31, 2012, we owned 32.4% of the outstanding common stock of Alexander’s. Alexander’s is a REIT that has six properties, which are located in the greater New York metropolitan area.  In addition to the 2.1% that they indirectly own through Vornado, Interstate Properties, which is described above, and its partners owned 26.3% of the outstanding common stock of Alexander’s as of December 31, 2012. Mr. Roth is the Chairman of the Board of Vornado, the managing general partner of Interstate Properties, and the Chairman of the Board and Chief Executive Officer of Alexander’s.  Messrs. Wight and Mandelbaum are trustees of Vornado and also directors of Alexander’s and general partners of Interstate Properties.  Michael D. Fascitelli is the President and Chief Executive Officer of Vornado and the President of Alexander’s and Dr. Richard West is a trustee of Vornado and a director of Alexander’s.  In addition, Joseph Macnow, our Executive Vice President and Chief Financial Officer, holds the same position with Alexander’s.  Alexander’s common stock is listed on the New York Stock Exchange under the symbol “ALX.”

 

We manage, develop and lease Alexander’s properties under management and development agreements and leasing agreements under which we receive annual fees from Alexander’s. These agreements have a one-year term expiring in March of each year and are all automatically renewable. Because Vornado and Alexander’s share common senior management and because certain of the trustees of Vornado constitute a majority of the directors of Alexander’s, the terms of the foregoing agreements and any future agreements between us and Alexander’s may not be comparable to those we could have negotiated with an unaffiliated third party.

 

For a description of Interstate Properties’ ownership of Vornado and Alexander’s, see “Steven Roth and Interstate Properties may exercise substantial influence over us. They and some of our other trustees and officers have interests or positions in other entities that may compete with us” above.

 

 

23

 


 

 

The Number of Shares of Vornado Realty Trust and the Market for Those Shares Give Rise to Various Risks.

 

The trading price of our common shares has been volatile and may fluctuate. 

 

The trading price of our common shares has been volatile and may continue to fluctuate widely as a result of a number of factors, many of which are outside our control.  In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of the shares of many companies.  These broad market fluctuations have in the past and may in the future adversely affect the market price of our common shares.  Among the factors that could affect the price of our common shares are:

 

·          our financial condition and performance;

·          the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;

·          actual or anticipated quarterly fluctuations in our operating results and financial condition;

·          our dividend policy;

·          the reputation of REITs and real estate investments generally and the attractiveness of REIT equity securities in comparison to other equity securities, including securities issued by other real estate companies, and fixed income securities;

·          uncertainty and volatility in the equity and credit markets;

·          changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs;

·          failure to meet analysts’ revenue or earnings estimates;

·          speculation in the press or investment community;

·          strategic actions by us or our competitors, such as acquisitions or restructurings;

·          the extent of institutional investor interest in us;

·          the extent of short-selling of our common shares and the shares of our competitors;

·          fluctuations in the stock price and operating results of our competitors;

·          general financial and economic market conditions and, in particular, developments related to market conditions for REITs and other real estate related companies;

·          domestic and international economic factors unrelated to our performance; and

·          all other risk factors addressed elsewhere in this Annual Report on the Form 10-K. 

 

A significant decline in our stock price could result in substantial losses for shareholders.

 

Vornado has many shares available for future sale, which could hurt the market price of its shares.

The interests of our current shareholders could be diluted if we issue additional equity securities. As of December 31, 2012, we had authorized but unissued, 63,265,289 common shares of beneficial interest, $.04 par value and 58,766,023 preferred shares of beneficial interest, no par value; of which 20,705,537 common shares are reserved for issuance upon redemption of Class A Operating Partnership units, convertible securities and employee stock options and 11,200,000 preferred shares are reserved for issuance upon redemption of preferred Operating Partnership units.  Any shares not reserved may be issued from time to time in public or private offerings or in connection with acquisitions.  In addition, common and preferred shares reserved may be sold upon issuance in the public market after registration under the Securities Act or under Rule 144 under the Securities Act or other available exemptions from registration.  We cannot predict the effect that future sales of our common and preferred shares or Operating Partnership Class A and preferred units will have on the market prices of our outstanding shares.

 

Increased interest rates may hurt the value of our common and preferred shares.

We believe that investors consider the distribution rate on REIT shares, expressed as a percentage of the price of the shares, relative to interest rates as an important factor in deciding whether to buy or sell the shares. If interest rates go up, prospective purchasers of REIT shares may expect a higher distribution rate. Higher interest rates would likely increase our borrowing costs and might decrease funds available for distribution. Thus, higher interest rates could cause the market price of our common and preferred shares to decline.

24

 


 
 

 

Item 1b.     unresolved staff comments

There are no unresolved comments from the staff of the Securities Exchange Commission as of the date of this Annual Report on Form 10-K.

 

 

 

 

 

Item 2.        Properties

We operate in five business segments:  New York, Washington, DC, Retail Properties, Merchandise Mart and Toys “R” Us.  The following pages provide details of our real estate properties.

             

25

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

Under Development

 

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

 

 

or Not Available

 

Encumbrances

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

In Service

 

for Lease

 

(in thousands)

 

Major Tenants

NEW YORK:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Penn Plaza:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One Penn Plaza

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMG Columbia House, Cisco, MWB Leasing,

 

(ground leased through 2098)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Parsons Brinkerhoff, United Health Care,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States Customs Department,

 

 

-Office

 

100.0 %

 

93.8 %

 

$

55.30 

 

2,233,000 

 

2,233,000 

 

 

 

 

 

URS Corporation Group Consulting

 

 

-Retail

 

100.0 %

 

99.6 %

 

 

120.38 

 

269,000 

 

269,000 

 

 

 

 

 

Bank of America, Footaction, Kmart Corporation

 

 

 

 

100.0 %

 

94.4 %

 

 

62.29 

 

2,502,000 

 

2,502,000 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Two Penn Plaza

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LMW Associates, EMC, Forest Electric, IBI,

 

 

-Office

 

100.0 %

 

98.4 %

 

 

49.88 

 

1,560,000 

 

1,560,000 

 

 

 

 

 

Madison Square Garden, McGraw-Hill Companies, Inc.

 

 

-Retail

 

100.0 %

 

53.1 %

 

 

172.76 

 

50,000 

 

50,000 

 

 

 

 

 

Chase Manhattan Bank

 

 

 

 

100.0 %

 

97.0 %

 

 

53.70 

 

1,610,000 

 

1,610,000 

 

 

 

425,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eleven Penn Plaza

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Office

 

100.0 %

 

100.0 %

 

 

55.84 

 

1,082,000 

 

1,082,000 

 

 

 

 

 

Macy's, Madison Square Garden, Rainbow Media Holdings

 

 

-Retail

 

100.0 %

 

96.1 %

 

 

152.94 

 

17,000 

 

17,000 

 

 

 

 

 

PNC Bank National Association

 

 

 

 

100.0 %

 

99.9 %

 

 

57.35 

 

1,099,000 

 

1,099,000 

 

 

 

330,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 West 33rd Street

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Office

 

100.0 %

 

88.4 %

 

 

49.90 

 

836,000 

 

836,000 

 

 

 

223,242 

 

Draftfcb

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manhattan Mall

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

96.1 %

 

 

115.09 

 

256,000 

 

256,000 

 

 

 

101,758 

 

JCPenney, Aeropostale, Express, Victoria's Secret

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

330 West 34th Street

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(ground leased through 2148 - 34.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ownership interest in the land)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Office

 

100.0 %

 

100.0 %

 

 

33.11 

 

622,000 

 

377,000 

 

245,000 

 

 

 

 

City of New York

 

 

-Retail

 

100.0 %

 

 

 

 

13,000 

 

 

13,000 

 

 

 

 

 

 

 

 

 

100.0 %

 

100.0 %

 

 

33.11 

 

635,000 

 

377,000 

 

258,000 

 

 

50,150 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

435 Seventh Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

240.18 

 

43,000 

 

43,000 

 

 

 

98,000 

 

Hennes & Mauritz

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7 West 34th Street

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

203.75 

 

21,000 

 

21,000 

 

 

 

 

Express

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

484 Eighth Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

80.6 %

 

 

69.09 

 

16,000 

 

16,000 

 

 

 

 

T.G.I. Friday's

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

431 Seventh Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

54.33 

 

10,000 

 

10,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

488 Eighth Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

63.93 

 

6,000 

 

6,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Penn Plaza

 

 

 

 

 

 

 

 

7,034,000 

 

6,776,000 

 

258,000 

 

 

1,228,150 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

Under Development

 

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

 

 

or Not Available

 

Encumbrances

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

In Service

 

for Lease

 

(in thousands)

 

Major Tenants

NEW YORK (Continued):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Midtown East:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

909 Third Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

J.P. Morgan Securities Inc., CMGRP Inc.,

 

(ground leased through 2063)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forest Laboratories, Geller & Company, Morrison Cohen LLP,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Robeco USA Inc., United States Post Office,

 

 

-Office

 

100.0 %

 

98.5 %

 

$

55.59 

(2)

1,343,000 

 

1,343,000 

 

 

$

199,198 

 

The Procter & Gamble Distributing LLC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

150 East 58th Street

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Castle Harlan, Tournesol Realty LLC. (Peter Marino),

 

 

-Office

 

100.0 %

 

96.7 %

 

 

62.51 

 

535,000 

 

535,000 

 

 

 

 

 

Various showroom tenants

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

168.76 

 

2,000 

 

2,000 

 

 

 

 

 

 

 

 

 

 

100.0 %

 

96.8 %

 

 

62.90 

 

537,000 

 

537,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

715 Lexington

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(ground leased through 2041)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

221.85 

 

23,000 

 

23,000 

 

 

 

 

New York & Company, Zales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

968 Third Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

50.0 %

 

100.0 %

 

 

209.66 

 

6,000 

 

6,000 

 

 

 

 

Capital One Financial Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Midtown East

 

 

 

 

 

 

 

 

1,909,000 

 

1,909,000 

 

 

 

199,198 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Midtown West:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

888 Seventh Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(ground leased through 2067)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Line Realty, Soros Fund, TPG-Axon Capital,

 

 

-Office

 

100.0 %

 

96.3 %

 

 

81.58 

 

860,000 

 

860,000 

 

 

 

 

 

Vornado Executive Headquarters

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

100.37 

 

15,000 

 

15,000 

 

 

 

 

 

Redeye Grill L.P.

 

 

 

 

100.0 %

 

96.4 %

 

 

81.90 

 

875,000 

 

875,000 

 

 

 

318,554 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1740 Broadway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Office

 

100.0 %

 

100.0 %

 

 

64.01 

 

583,000 

 

583,000 

 

 

 

 

 

Davis & Gilbert, Limited Brands

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

31.50 

 

19,000 

 

19,000 

 

 

 

 

 

Brasserie Cognac, Citibank

 

 

 

 

100.0 %

 

100.0 %

 

 

62.98 

 

602,000 

 

602,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

57th Street

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Office

 

50.0 %

 

100.0 %

 

 

55.78 

 

135,000 

 

135,000 

 

 

 

 

 

Various

 

 

-Retail

 

50.0 %

 

79.8 %

 

 

52.88 

 

53,000 

 

53,000 

 

 

 

 

 

 

 

 

 

 

50.0 %

 

94.3 %

 

 

54.96 

 

188,000 

 

188,000 

 

 

 

20,434 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

825 Seventh Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Office

 

50.0 %

 

100.0 %

 

 

45.44 

 

165,000 

 

165,000 

 

 

 

 

 

Young & Rubicam

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

234.47 

 

4,000 

 

4,000 

 

 

 

 

 

Lindy's

 

 

 

 

 

 

100.0 %

 

 

49.91 

 

169,000 

 

169,000 

 

 

 

19,554 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Midtown West

 

 

 

 

 

 

 

 

1,834,000 

 

1,834,000 

 

 

 

358,542 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Park Avenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

280 Park Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cohen & Steers Inc., Credit Suisse (USA) Inc.,

 

 

-Office

 

49.5 %

 

100.0 %

 

 

86.59 

 

1,198,000 

 

668,000 

 

530,000 

 

 

 

 

General Electric Capital Corp., Investcorp International Inc.

 

 

-Retail

 

49.5 %

 

100.0 %

 

 

127.11 

 

18,000 

 

12,000 

 

6,000 

 

 

 

 

Scottrade Inc.

 

 

 

 

49.5 %

 

100.0 %

 

 

87.19 

 

1,216,000 

 

680,000 

 

536,000 

 

 

738,228 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

350 Park Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kissinger Associates Inc., Ziff Brothers Investment Inc.,

 

 

-Office

 

100.0 %

 

96.0 %

 

 

83.59 

 

550,000 

 

550,000 

 

 

 

 

 

MFA Financial Inc., M&T Bank

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

183.90 

 

17,000 

 

17,000 

 

 

 

 

 

Fidelity Investment, AT&T Wireless, Valley National Bank

 

 

 

 

100.0 %

 

96.1 %

 

 

86.59 

 

567,000 

 

567,000 

 

 

 

300,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Park Avenue

 

 

 

 

 

 

 

 

1,783,000 

 

1,247,000 

 

536,000 

 

 

1,038,228 

 

 

 

27

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

Under Development

 

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

 

 

or Not Available

 

Encumbrances

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

In Service

 

for Lease

 

(in thousands)

 

Major Tenants

NEW YORK (Continued):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grand Central:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

90 Park Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alston & Bird, Amster, Rothstein & Ebenstein,

 

 

-Office

 

100.0 %

 

96.6 %

 

$

62.71 

 

891,000 

 

891,000 

 

 

 

 

 

Capital One, First Manhattan Consulting

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

85.48 

 

26,000 

 

26,000 

 

 

 

 

 

Citibank

 

 

 

 

 

 

96.7 %

 

 

63.35 

 

917,000 

 

917,000 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

330 Madison Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acordia Northeast Inc., Artio Global Management,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dean Witter Reynolds Inc., GPFT Holdco LLC,

 

 

-Office

 

25.0 %

 

92.9 %

 

 

62.04 

 

790,000 

 

790,000 

 

 

 

 

 

HSBC Bank AFS, Jones Lang LaSalle Inc.

 

 

-Retail

 

25.0 %

 

98.4 %

 

 

141.09 

 

33,000 

 

33,000 

 

 

 

 

 

Ann Taylor Retail Inc., Citibank

 

 

 

 

25.0 %

 

93.2 %

 

 

65.21 

 

823,000 

 

823,000 

 

 

 

150,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

510 Fifth Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

91.0 %

 

 

128.57 

 

64,000 

 

64,000 

 

 

 

31,253 

 

Joe Fresh

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Grand Central

 

 

 

 

 

 

 

 

1,804,000 

 

1,804,000 

 

 

 

181,253 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Madison/Fifth:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

640 Fifth Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ROC Capital Management LP, Citibank,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fidelity Investments, Janus Capital Group Inc.,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GSL Enterprises Inc., Scout Capital Management,

 

 

-Office

 

100.0 %

 

100.0 %

 

 

77.49 

 

262,000 

 

262,000 

 

 

 

 

 

Legg Mason Investment Counsel

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

238.12 

 

62,000 

 

62,000 

 

 

 

 

 

Citibank, Hennes & Mauritz

 

 

 

 

100.0 %

 

100.0 %

 

 

108.23 

 

324,000 

 

324,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

666 Fifth Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Citibank, Fulbright & Jaworski,

 

 

-Office (Office Condo)

 

49.5 %

 

85.3 %

 

 

73.76 

 

1,362,000 

 

1,362,000 

 

 

 

 

 

Integrated Holding Group, Vinson & Elkins LLP

 

 

-Retail (Office Condo)

 

49.5 %

 

88.2 %

 

 

164.45 

 

52,000 

 

52,000 

 

 

 

 

 

HSBC Bank USA

 

 

-Retail (Retail Condo)

 

100.0 %

 

100.0 %

 

 

344.36 

 

113,000 

(3)

113,000 

 

 

 

 

 

Uniqlo, Hollister, Swatch

 

 

 

 

 

 

86.5 %

 

 

96.87 

 

1,527,000 

 

1,527,000 

 

 

 

1,109,700 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

595 Madison Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beauvais Carpets, Levin Capital Strategies LP,

 

 

-Office

 

100.0 %

 

93.4 %

 

 

67.97 

 

292,000 

 

292,000 

 

 

 

 

 

Cosmetech Mably Int'l LLC.

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

441.53 

 

30,000 

 

30,000 

 

 

 

 

 

Coach, Prada

 

 

 

 

100.0 %

 

94.0 %

 

 

102.77 

 

322,000 

 

322,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

689 Fifth Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Office

 

100.0 %

 

75.5 %

 

 

73.68 

 

75,000 

 

75,000 

 

 

 

 

 

Yamaha Artist Services Inc.

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

594.07 

 

17,000 

 

17,000 

 

 

 

 

 

MAC Cosmetics, Massimo Dutti

 

 

 

 

100.0 %

 

80.0 %

 

 

169.84 

 

92,000 

 

92,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Madison/Fifth

 

 

 

 

 

 

 

 

2,265,000 

 

2,265,000 

 

 

 

1,109,700 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United Nations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

866 United Nations Plaza

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fross Zelnick, Mission of Japan,

 

 

-Office

 

100.0 %

 

98.5 %

 

 

53.29 

 

354,000 

 

354,000 

 

 

 

 

 

The United Nations, Mission of Finland

 

 

-Retail

 

100.0 %

 

96.9 %

 

 

79.85 

 

6,000 

 

6,000 

 

 

 

 

 

Citibank

 

 

 

 

100.0 %

 

98.5 %

 

 

53.73 

 

360,000 

 

360,000 

 

 

 

44,978 

 

 

 

28

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

Under Development

 

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

 

 

or Not Available

 

Encumbrances

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

In Service

 

for Lease

 

(in thousands)

 

Major Tenants

NEW YORK (Continued):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Midtown South:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

770 Broadway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Office

 

100.0 %

 

100.0 %

 

$

58.24 

 

943,000 

 

943,000 

 

 

 

 

 

AOL, J. Crew, Structure Tone, Nielsen Company (US) Inc.

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

56.04 

 

166,000 

 

166,000 

 

 

 

 

 

Anne Taylor Retail Inc., Bank of America, Kmart Corporation

 

 

 

 

100.0 %

 

100.0 %

 

 

57.91 

 

1,109,000 

 

1,109,000 

 

 

$

353,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One Park Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coty Inc., New York University,

 

 

-Office

 

30.3 %

 

94.9 %

 

 

43.51 

 

861,000 

 

861,000 

 

 

 

 

 

Public Service Mutual Insurance

 

 

-Retail

 

30.3 %

 

90.3 %

 

 

57.69 

 

79,000 

 

79,000 

 

 

 

 

 

Bank of Baroda, Citibank, Equinox One Park Avenue Inc.

 

 

 

 

30.3 %

 

94.5 %

 

 

44.70 

 

940,000 

 

940,000 

 

 

 

250,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4 Union Square South

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

79.35 

 

206,000 

 

206,000 

 

 

 

120,000 

 

Burlington Coat Factory, Whole Foods Market, DSW, Forever 21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

692 Broadway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

46.50 

 

35,000 

 

35,000 

 

 

 

 

Equinox

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Midtown South

 

 

 

 

 

 

 

 

2,290,000 

 

2,290,000 

 

 

 

723,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rockefeller Center:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1290 Avenue of the Americas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AXA Equitable Life Insurance, Bank of New York Mellon,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadpoint Gleacher Securities Group, Bryan Cave LLP,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Microsoft Corporation, Morrison & Foerster LLP,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warner Music Group, Cushman & Wakefield, Fitzpatrick,

 

 

-Office

 

70.0 %

 

95.0 %

 

 

71.34 

 

2,037,000 

 

2,037,000 

 

 

 

 

 

Cella, Harper & Scinto, Columbia University

 

 

-Retail

 

70.0 %

 

88.2 %

 

 

111.72 

 

65,000 

 

65,000 

 

 

 

 

 

Duane Reade, JPMorgan Chase Bank, Sovereign Bank

 

 

 

 

70.0 %

 

94.8 %

 

 

72.59 

 

2,102,000 

 

2,102,000 

 

 

 

950,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

608 Fifth Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(ground leased through 2026)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Office

 

100.0 %

 

80.5 %

 

 

52.50 

 

91,000 

 

91,000 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

94.0 %

 

 

178.08 

 

30,000 

 

30,000 

 

 

 

 

 

Lacoste

 

 

 

 

100.0 %

 

85.4 %

 

 

83.64 

 

121,000 

 

121,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Rockefeller Center

 

 

 

 

 

 

 

 

2,223,000 

 

2,223,000 

 

 

 

950,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wall Street/Downtown:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20 Broad Street

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(ground leased through 2081)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Office

 

100.0 %

 

99.3 %

 

 

52.12 

 

472,000 

 

472,000 

 

 

 

 

New York Stock Exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40 Fulton Street

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Office

 

100.0 %

 

96.3 %

 

 

36.06 

 

244,000 

 

244,000 

 

 

 

 

 

Graphnet Inc., Market News International Inc., Sapient Corp.

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

28.46 

 

8,000 

 

8,000 

 

 

 

 

 

Duane Reade

 

 

 

 

100.0 %

 

96.5 %

 

 

35.82 

 

252,000 

 

252,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Wall Street/Downtown

 

 

 

 

 

 

 

 

724,000 

 

724,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Times Square:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1540 Broadway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forever 21, Planet Hollywood, Disney

 

 

-Retail

 

100.0 %

 

98.1 %

 

 

147.46 

 

160,000 

 

160,000 

 

 

 

 

MAC Cosmetics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1535 Broadway (Marriott Marquis - retail and signage)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

 

 

 

64,000 

 

 

64,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Times Square

 

 

 

 

 

 

 

 

224,000 

 

160,000 

 

64,000 

 

 

 

 

 

29

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

Under Development

 

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

 

 

or Not Available

 

Encumbrances

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

In Service

 

for Lease

 

(in thousands)

 

Major Tenants

NEW YORK (Continued):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Soho:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

478-486 Broadway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

100.0 %

 

$

126.93 

 

85,000 

 

85,000 

 

 

$

 

Top Shop, Madewell, J. Crew

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

155 Spring Street

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

93.8 %

 

 

89.60 

 

48,000 

 

48,000 

 

 

 

 

Sigrid Olsen

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

148 Spring Street

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

99.02 

 

7,000 

 

7,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

150 Spring Street

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

155.34 

 

7,000 

 

7,000 

 

 

 

 

Sandro

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Soho

 

 

 

 

 

 

 

 

147,000 

 

147,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upper East Side:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

828-850 Madison Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

492.12 

 

18,000 

 

18,000 

 

 

 

80,000 

 

Gucci, Chloe, Cartier

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

677-679 Madison Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

416.52 

 

8,000 

 

8,000 

 

 

 

 

Anne Fontaine

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40 East 66th Street

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

492.68 

 

11,000 

 

11,000 

 

 

 

 

Dennis Basso, Nespresso USA, J. Crew

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1131 Third Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

 

 

 

25,000 

 

 

25,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Upper East Side

 

 

 

 

 

 

 

 

62,000 

 

37,000 

 

25,000 

 

 

80,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Jersey:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paramus

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Office

 

100.0 %

 

85.7 %

 

 

23.35 

 

128,000 

 

128,000 

 

 

 

 

Vornado's Administrative Headquarters

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington D.C.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3040M Street

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Retail

 

100.0 %

 

100.0 %

 

 

53.05 

 

42,000 

 

42,000 

 

 

 

 

Nike, Barneys

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York Office:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

94.6%

 

$

60.29 

 

20,504,000 

 

19,729,000 

 

775,000 

 

$

5,482,038 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's Ownership Interest

 

 

 

95.9%

 

$

60.17 

 

17,259,000 

 

16,751,000 

 

508,000 

 

$

4,143,072 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

96.7%

 

$

182.92 

 

2,325,000 

 

2,217,000 

 

108,000 

 

$

431,011 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's Ownership Interest

 

 

 

96.8%

 

$

147.28 

 

2,162,000 

 

2,057,000 

 

105,000 

 

$

431,011 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

Under Development

 

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

 

 

or Not Available

 

Encumbrances

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

In Service

 

for Lease

 

(in thousands)

 

Major Tenants

NEW YORK (Continued):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALEXANDER'S, INC.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

731 Lexington Avenue, Manhattan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Office

 

32.4 %

 

100.0 %

 

$

93.02 

 

885,000 

 

885,000 

 

 

$

327,425 

 

Bloomberg

 

 

-Retail

 

32.4 %

 

100.0 %

 

 

164.35 

 

174,000 

 

174,000 

 

 

 

320,000 

 

Hennes & Mauritz, The Home Depot, The Container Store

 

 

 

 

 

 

100.0 %

 

 

104.74 

 

1,059,000 

 

1,059,000 

 

 

 

647,425 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rego Park I, Queens (4.8 acres)

 

32.4 %

 

100.0 %

 

 

36.36 

 

343,000 

 

343,000 

 

 

 

78,246 

 

Sears, Burlington Coat Factory, Bed Bath & Beyond, Marshalls

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rego Park II (adjacent to Rego Park I),

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Queens (6.6 acres)

 

32.4 %

 

96.8 %

 

 

40.02 

 

610,000 

 

610,000 

 

 

 

272,245 

 

Century 21, Costco, Kohl's, TJ Maxx, Toys "R" Us

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Flushing, Queens (4) (1.0 acre)

 

32.4 %

 

100.0 %

 

 

15.74 

 

167,000 

 

167,000 

 

 

 

 

New World Mall LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Jersey:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paramus, New Jersey

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30.3 acres ground leased to IKEA

 

32.4 %

 

100.0 %

 

 

 

 

 

 

 

68,000 

 

IKEA (ground lessee)

 

through 2041)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property to be Developed:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rego Park III (adjacent to Rego Park II),

 

32.4 %

 

 

 

 

 

 

 

 

 

 

 

Queens, NY (3.4 acres)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Alexander's

 

 

 

99.1 %

 

 

68.66 

 

2,179,000 

 

2,179,000 

 

 

 

1,065,916 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel Pennsylvania:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Hotel (1700 Keys)

 

100.0 %

 

 

 

 

1,400,000 

 

1,400,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50/70W 93rd Street (327 units)

 

49.9 %

 

95.1 %

 

 

 

284,000 

 

284,000 

 

 

 

45,825 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independence Plaza, Tribeca (1,328 units)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Residential

 

58.8 %

 

97.3 %

 

 

 

1,190,000 

 

1,190,000 

 

 

 

 

 

 

 

 

-Retail

 

58.8 %

 

100.0 %

 

 

70.21 

 

54,000 

 

54,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,244,000 

 

1,244,000 

 

 

 

334,225 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Residential

 

 

 

 

 

 

 

 

1,528,000 

 

1,528,000 

 

 

 

380,050 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

95.3%

 

$

68.73 

 

27,936,000 

 

27,053,000 

 

883,000 

 

$

7,359,015 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's Ownership Interest

 

 

 

96.2%

 

$

69.70 

 

22,400,000 

 

21,787,000 

 

613,000 

 

$

4,804,438 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Weighted Average Annual Rent PSF excludes ground rent, storage rent and garages.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

Excludes US Post Office leased through 2038 (including five five-year renewal options) for which the annual escalated rent is $9.90 PSF.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

75,000 square feet is leased from the office condo.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

Leased by Alexander's through January 2037.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

Under Development

 

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

 

 

or Not Available

 

Encumbrances

 

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

In Service

 

for Lease

 

(in thousands)

 

Major Tenants

 

WASHINGTON, DC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crystal City:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011-2451 Crystal Drive - 5 buildings

 

100.0 %

 

85.0 %

 

$

42.65 

 

2,313,000 

 

2,313,000 

 

 

$

270,922 

 

General Services Administration, Lockheed Martin,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conservation International, Smithsonian Institution,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natl. Consumer Coop. Bank, Council on Foundations,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado / Charles E. Smith Headquarters,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KBR, General Dynamics, Scitor Corp.,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food Marketing Institute, DRS Technologies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

S. Clark Street / 12th Street - 5 buildings

 

100.0 %

 

74.9 %

 

 

42.40 

 

1,527,000 

 

1,527,000 

 

 

 

87,221 

 

General Services Administration,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SAIC, Inc., Boeing, L-3 Communications,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Int'l Justice Mission

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1550-1750 Crystal Drive /

 

100.0 %

 

91.5 %

 

 

41.18 

 

1,484,000 

 

1,259,000 

 

225,000 

 

 

117,390 

 

General Services Administration,

 

 

241-251 18th Street - 4 buildings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alion Science & Technologies, Booz Allen,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arete Associates, Battelle Memorial Institute

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1800, 1851 and 1901 South Bell Street

 

100.0 %

 

95.5 %

 

 

39.30 

 

870,000 

 

507,000 

 

363,000 

 

 

 

General Services Administration,

 

 

- 3 buildings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lockheed Martin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2100 / 2200 Crystal Drive - 2 buildings

 

100.0 %

 

98.6 %

 

 

33.16 

 

529,000 

 

529,000 

 

 

 

 

General Services Administration,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Public Broadcasting Service

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

223 23rd Street / 2221 South Clark Street

 

100.0 %

 

100.0 %

 

 

39.57 

 

309,000 

 

84,000 

 

225,000 

 

 

 

General Services Administration

 

 

- 2 buildings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2001 Jefferson Davis Highway

 

100.0 %

 

72.0 %

 

 

35.94 

 

162,000 

 

162,000 

 

 

 

 

National Crime Prevention, Institute for Psychology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crystal City Shops at 2100

 

100.0 %

 

60.8 %

 

 

31.52 

 

81,000 

 

81,000 

 

 

 

 

Various

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crystal Drive Retail

 

100.0 %

 

94.5 %

 

 

45.74 

 

57,000 

 

57,000 

 

 

 

 

Various

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Crystal City

 

100.0 %

 

85.5 %

 

 

40.81 

 

7,332,000 

 

6,519,000 

 

813,000 

 

 

475,533 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Central Business District:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Universal Buildings

 

100.0 %

 

90.8 %

 

 

43.39 

 

682,000 

 

682,000 

 

 

 

93,226 

 

Family Health International

 

 

1825-1875 Connecticut Avenue, NW

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- 2 buildings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warner Building - 1299 Pennsylvania

 

55.0 %

 

64.5 %

 

 

61.25 

 

612,000 

 

612,000 

 

 

 

292,700 

 

Baker Botts LLP, General Electric, Cooley LLP

 

 

Avenue, NW

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2101 L Street, NW

 

100.0 %

 

97.7 %

 

 

61.71 

 

380,000 

 

380,000 

 

 

 

150,000 

 

Greenberg Traurig, LLP, US Green Building Council,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Insurance Association, RTKL Associates,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cassidy & Turley

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1750 Pennsylvania Avenue, NW

 

100.0 %

 

85.4 %

 

 

46.89 

 

277,000 

 

277,000 

 

 

 

 

General Services Administration, UN Foundation, AOL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1150 17th Street, NW

 

100.0 %

 

85.9 %

 

 

46.06 

 

240,000 

 

240,000 

 

 

 

28,728 

 

American Enterprise Institute

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bowen Building - 875 15th Street, NW

 

100.0 %

 

96.7 %

 

 

64.83 

 

231,000 

 

231,000 

 

 

 

115,022 

 

Paul, Hastings, Janofsky & Walker LLP,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Millennium Challenge Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1101 17th Street, NW

 

55.0 %

 

86.5 %

 

 

45.85 

 

215,000 

 

215,000 

 

 

 

31,000 

 

AFSCME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1730 M Street, NW

 

100.0 %

 

86.0 %

 

 

44.84 

 

203,000 

 

203,000 

 

 

 

14,853 

 

General Services Administration

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

Under Development

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

 

 

or Not Available

 

Encumbrances

 

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

In Service

 

for Lease

 

(in thousands)

 

Major Tenants

 

WASHINGTON, DC (Continued):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1726 M Street, NW

 

100.0 %

 

97.5 %

 

$

40.78 

 

91,000 

 

91,000 

 

 

$

 

Aptima, Inc., Nelnet Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Waterfront Station

 

2.5 %

 

 

 

 

1,058,000 

 

 

1,058,000 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1501 K Street, NW

 

5.0 %

 

98.4 %

 

 

59.60 

 

380,000 

 

380,000 

 

 

 

 

Sidley Austin LLP, UBS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1399 New York Avenue, NW

 

100.0 %

 

76.4 %

 

 

79.21 

 

128,000 

 

128,000 

 

 

 

 

Bloomberg

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Central Business District

 

 

 

87.0 %

 

 

52.61 

 

4,497,000 

 

3,439,000 

 

1,058,000 

 

 

725,529 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I-395 Corridor:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Skyline Place - 7 buildings

 

100.0 %

 

50.2 %

 

 

34.13 

 

2,125,000 

 

2,125,000 

 

 

 

564,901 

 

General Services Administration, SAIC, Inc., Analytic Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northrop Grumman, Axiom Resource Management,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Booz Allen, Jacer Corporation, Intellidyne, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One Skyline Tower

 

100.0 %

 

100.0 %

 

 

32.80 

 

518,000 

 

518,000 

 

 

 

140,056 

 

General Services Administration

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total I-395 Corridor

 

100.0 %

 

60.0 %

 

 

33.69 

 

2,643,000 

 

2,643,000 

 

 

 

704,957 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rosslyn / Ballston:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2200 / 2300 Clarendon Blvd

 

100.0 %

 

90.8 %

 

 

41.93 

 

635,000 

 

635,000 

 

 

 

47,353 

 

Arlington County, General Services Administration,

 

(Courthouse Plaza) - 2 buildings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AMC Theaters

 

(ground leased through 2062)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rosslyn Plaza - Office - 4 buildings

 

46.2 %

 

79.0 %

 

 

36.93 

 

733,000 

 

733,000 

 

 

 

 

General Services Administration, Corporate Executive Board

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Rosslyn / Ballston

 

 

 

86.7 %

 

 

40.24 

 

1,368,000 

 

1,368,000 

 

 

 

47,353 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reston:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commerce Executive - 3 buildings

 

100.0 %

`

90.7 %

 

 

29.96 

 

418,000 

 

399,000 

 

19,000 

*

 

 

L-3 Communications, Allworld Language Consultants,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BT North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rockville/Bethesda:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Democracy Plaza One

 

100.0 %

 

86.8 %

 

 

31.36 

 

216,000 

 

216,000 

 

 

 

 

National Institutes of Health

 

(ground leased through 2084)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tysons Corner:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fairfax Square - 3 buildings

 

20.0 %

 

82.2 %

 

 

38.68 

 

533,000 

 

533,000 

 

 

 

70,127 

 

Dean & Company, Womble Carlyle

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pentagon City:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fashion Centre Mall

 

7.5 %

 

99.2 %

 

 

40.21 

 

819,000 

 

819,000 

 

 

 

410,000 

 

Macy's, Nordstrom

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington Tower

 

7.5 %

 

100.0 %

 

 

45.18 

 

170,000 

 

170,000 

 

 

 

40,000 

 

The Rand Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Pentagon City

 

 

 

99.3 %

 

 

41.06 

 

989,000 

 

989,000 

 

 

 

450,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Washington, DC office properties

 

 

 

82.2 %

 

$

42.13 

 

17,996,000 

 

16,106,000 

 

1,890,000 

 

$

2,473,499 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's Ownership Interest

 

 

 

81.2 %

 

$

41.57 

 

14,495,000 

 

13,637,000 

 

858,000 

 

$

1,855,482 

 

 

 

 

33

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

Under Development

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

 

 

or Not Available

 

Encumbrances

 

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

In Service

 

for Lease

 

(in thousands)

 

Major Tenants

 

WASHINGTON, DC (Continued):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For rent residential:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Riverhouse - 3 buildings (1,670 units)

 

100.0 %

 

98.0 %

 

$

 

1,802,000 

 

1,802,000 

 

 

$

259,546 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West End 25 (283 units)

 

100.0 %

 

97.5 %

 

 

 

271,000 

 

271,000 

 

 

 

101,671 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

220 20th Street (265 units)

 

100.0 %

 

97.4 %

 

 

 

273,000 

 

273,000 

 

 

 

73,939 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rosslyn Plaza - 2 buildings (196 units)

 

43.7 %

 

97.8 %

 

 

 

253,000 

 

253,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Residential

 

 

 

97.9 %

 

 

 

2,599,000 

 

2,599,000 

 

 

 

435,156 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crystal City Hotel

 

100.0 %

 

100.0 %

 

 

 

266,000 

 

266,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warehouses - 3 buildings

 

100.0 %

 

100.0 %

 

 

 

214,000 

 

160,000 

 

54,000 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other - 3 buildings

 

100.0 %

 

100.0 %

 

 

 

11,000 

 

9,000 

 

2,000 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Other

 

 

 

100.0 %

 

 

 

 

491,000 

 

435,000 

 

56,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Washington, DC Properties

 

 

 

84.8 %

 

$

42.13 

 

21,086,000 

 

19,140,000 

 

1,946,000 

 

$

2,908,655 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's Ownership Interest

 

 

 

84.1 %

 

$

41.57 

 

17,444,000 

 

16,529,000 

 

915,000 

 

$

2,290,639 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* We do not capitalize interest or real estate taxes on this space.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Weighted Average Annual Rent PSF excludes ground rent, storage rent and garages.

 

 

 

 

 

 

 

 

 

 

34

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

In Service

 

Under Development

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

Owned by

 

Owned By

 

or Not Available

 

Encumbrances

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

Company

 

Tenant

 

for Lease

 

(in thousands)

 

Major Tenants

RETAIL PROPERTIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STRIP SHOPPING CENTERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Jersey:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wayne Town Center, Wayne

 

100.0 %

 

100.0 %

 

$

29.60 

 

717,000 

 

29,000 

 

287,000 

 

401,000 

 

$

 

 

J. C. Penney, Dick's Sporting Goods (lease not commenced)

(ground leased through 2064)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North Bergen (Tonnelle Avenue)

 

100.0 %

 

100.0 %

 

 

24.20 

 

410,000 

 

204,000 

 

206,000 

 

 

 

75,000 

 

 

Wal-Mart, BJ's Wholesale Club

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totowa

 

100.0 %

 

100.0 %

 

 

19.01 

 

271,000 

 

177,000 

 

94,000 

 

 

 

25,217 

(2)

 

The Home Depot, Bed Bath & Beyond, Marshalls

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Garfield

 

100.0 %

 

100.0 %

 

 

26.80 

 

305,000 

 

21,000 

 

149,000 

 

135,000 

 

 

 

 

Wal-Mart

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bricktown

 

100.0 %

 

94.2 %

 

 

17.74 

 

279,000 

 

276,000 

 

3,000 

 

 

 

32,525 

(2)

 

Kohl's, ShopRite, Marshalls

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Union (Route 22 and Morris Avenue)

 

100.0 %

 

99.4 %

 

 

24.97 

 

276,000 

 

113,000 

 

163,000 

 

 

 

32,916 

(2)

 

Lowe's, Toys "R" Us

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hackensack

 

100.0 %

 

72.5 %

 

 

22.61 

 

275,000 

 

269,000 

 

6,000 

 

 

 

41,283 

(2)

 

The Home Depot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bergen Town Center - East, Paramus

 

100.0 %

 

100.0 %

 

 

34.15 

 

269,000 

 

26,000 

 

167,000 

 

76,000 

 

 

 

 

Lowe's, REI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Hanover (240 Route 10 West)

 

100.0 %

 

96.8 %

 

 

17.83 

 

267,000 

 

261,000 

 

6,000 

 

 

 

29,010 

(2)

 

The Home Depot, Dick's Sporting Goods, Marshalls

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cherry Hill

 

100.0 %

 

96.3 %

 

 

13.72 

 

263,000 

 

64,000 

 

199,000 

 

 

 

14,115 

(2)

 

Wal-Mart, Toys "R" Us

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jersey City

 

100.0 %

 

100.0 %

 

 

21.79 

 

236,000 

 

66,000 

 

170,000 

 

 

 

20,642 

(2)

 

Lowe's, P.C. Richard & Son

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Brunswick (325 - 333 Route 18 South)

 

100.0 %

 

100.0 %

 

 

16.15 

 

232,000 

 

222,000 

 

10,000 

 

 

 

25,328 

(2)

 

Kohl's, Dick's Sporting Goods, P.C. Richard & Son,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

T.J. Maxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Union (2445 Springfield Avenue)

 

100.0 %

 

100.0 %

 

 

17.85 

 

232,000 

 

232,000 

 

 

 

 

29,010 

(2)

 

The Home Depot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Middletown

 

100.0 %

 

95.9 %

 

 

13.93 

 

231,000 

 

179,000 

 

52,000 

 

 

 

17,685 

(2)

 

Kohl's, Stop & Shop

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Woodbridge

 

100.0 %

 

83.9 %

 

 

22.29 

 

227,000 

 

87,000 

 

140,000 

 

 

 

21,033 

(2)

 

Wal-Mart

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North Plainfield

 

100.0 %

 

100.0 %

 

 

17.72 

 

219,000 

 

7,000 

 

 

212,000 

 

 

 

 

 

(ground leased through 2060)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marlton

 

100.0 %

 

100.0 %

 

 

13.33 

 

213,000 

 

209,000 

 

4,000 

 

 

 

17,574 

(2)

 

Kohl's (3), ShopRite, PetSmart

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manalapan

 

100.0 %

 

100.0 %

 

 

15.98 

 

208,000 

 

206,000 

 

2,000 

 

 

 

21,423 

(2)

 

Best Buy, Bed Bath & Beyond, Babies "R" Us

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Rutherford

 

100.0 %

 

100.0 %

 

 

34.22 

 

197,000 

 

42,000 

 

155,000 

 

 

 

13,836 

(2)

 

Lowe's

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Brunswick (339-341 Route 18 South)

 

100.0 %

 

100.0 %

 

 

 

196,000 

 

33,000 

 

163,000 

 

 

 

11,995 

(2)

 

Lowe's, LA Fitness (lease not commenced)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bordentown

 

100.0 %

 

80.4 %

 

 

7.25 

 

179,000 

 

83,000 

 

 

96,000 

*

 

 

 

ShopRite

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Morris Plains

 

100.0 %

 

97.2 %

 

 

20.59 

 

177,000 

 

176,000 

 

1,000 

 

 

 

21,758 

(2)

 

Kohl's, ShopRite

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dover

 

100.0 %

 

88.1 %

 

 

11.96 

 

173,000 

 

167,000 

 

6,000 

 

 

 

13,389 

(2)

 

ShopRite, T.J. Maxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delran

 

100.0 %

 

7.2 %

 

 

 

171,000 

 

40,000 

 

3,000 

 

128,000 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lodi (Route 17 North)

 

100.0 %

 

100.0 %

 

 

11.24 

 

171,000 

 

171,000 

 

 

 

 

11,548 

(2)

 

National Wholesale Liquidators

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Watchung

 

100.0 %

 

93.9 %

 

 

23.74 

 

170,000 

 

54,000 

 

116,000 

 

 

 

15,342 

(2)

 

BJ's Wholesale Club

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lawnside

 

100.0 %

 

100.0 %

 

 

14.11 

 

145,000 

 

142,000 

 

3,000 

 

 

 

10,879 

(2)

 

The Home Depot, PetSmart

 

35

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

In Service

 

Under Development

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

Owned by

 

Owned By

 

or Not Available

 

Encumbrances

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

Company

 

Tenant

 

for Lease

 

(in thousands)

 

Major Tenants

RETAIL PROPERTIES (Continued):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hazlet

 

100.0 %

 

100.0 %

 

$

2.64 

 

123,000 

 

123,000 

 

 

 

$

 

 

Stop & Shop

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kearny

 

100.0 %

 

43.5 %

 

 

16.11 

 

104,000 

 

91,000 

 

13,000 

 

 

 

 

 

Marshalls

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lodi (Washington Street)

 

100.0 %

 

64.2 %

 

 

23.99 

 

85,000 

 

85,000 

 

 

 

 

8,940 

 

 

Rite Aid

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carlstadt (ground leased through 2050)

 

100.0 %

 

90.7 %

 

 

22.42 

 

78,000 

 

78,000 

 

 

 

 

-

 

 

Stop & Shop

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Hanover (200 Route 10 West)

 

100.0 %

 

86.0 %

 

 

23.27 

 

76,000 

 

76,000 

 

 

 

 

9,930 

(2)

 

Loehmann's

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paramus (ground leased through 2033)

 

100.0 %

 

100.0 %

 

 

42.23 

 

63,000 

 

63,000 

 

 

 

 

-

 

 

24 Hour Fitness

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North Bergen (Kennedy Boulevard)

 

100.0 %

 

100.0 %

 

 

31.20 

 

62,000 

 

6,000 

 

56,000 

 

 

 

5,188 

(2)

 

Waldbaum's

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

South Plainfield (ground leased through 2039)

 

100.0 %

 

85.9 %

 

 

21.45 

 

56,000 

 

56,000 

 

 

 

 

5,216 

(2)

 

Staples

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Englewood

 

100.0 %

 

79.7 %

 

 

26.09 

 

41,000 

 

41,000 

 

 

 

 

11,924 

 

 

New York Sports Club

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Hanover (280 Route 10 West)

 

100.0 %

 

94.0 %

 

 

32.00 

 

26,000 

 

26,000 

 

 

 

 

4,631 

(2)

 

REI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Montclair

 

100.0 %

 

100.0 %

 

 

23.34 

 

18,000 

 

18,000 

 

 

 

 

2,678 

(2)

 

Whole Foods Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total New Jersey

 

 

 

 

 

 

 

 

7,441,000 

 

4,219,000 

 

2,174,000 

 

1,048,000 

 

 

550,015 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Poughkeepsie

 

100.0 %

 

85.6 %

 

 

8.62 

 

517,000 

 

517,000 

 

 

 

 

 

 

Kmart, Burlington Coat Factory, ShopRite, Hobby Lobby,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Christmas Tree Shops, Bob's Discount Furniture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bronx (Bruckner Boulevard)

 

100.0 %

 

93.0 %

 

 

21.30 

 

501,000 

 

387,000 

 

114,000 

 

 

 

 

 

Kmart, Toys "R" Us, Key Food

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Buffalo (Amherst)

 

100.0 %

 

85.6 %

 

 

8.23 

 

296,000 

 

227,000 

 

69,000 

 

 

 

 

 

BJ's Wholesale Club (lease not commenced),

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

T.J. Maxx, Toys "R" Us

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Huntington

 

100.0 %

 

97.9 %

 

 

14.09 

 

209,000 

 

209,000 

 

 

 

 

16,960 

(2)

 

Kmart, Marshalls, Old Navy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rochester

 

100.0 %

 

100.0 %

 

 

 

205,000 

 

 

205,000 

 

 

 

4,463 

(2)

 

Wal-Mart

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mt. Kisco

 

100.0 %

 

100.0 %

 

 

22.08 

 

189,000 

 

72,000 

 

117,000 

 

 

 

28,637 

 

 

Target, A&P

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Freeport (437 East Sunrise Highway)

 

100.0 %

 

100.0 %

 

 

18.61 

 

173,000 

 

173,000 

 

 

 

 

21,758 

(2)

 

The Home Depot, Staples

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Staten Island

 

100.0 %

 

94.2 %

 

 

21.47 

 

165,000 

 

165,000 

 

 

 

 

16,939 

 

 

Western Beef

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Albany (Menands)

 

100.0 %

 

74.0 %

 

 

9.00 

 

140,000 

 

140,000 

 

 

 

 

 

 

Bank of America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Hyde Park (ground and building

 

100.0 %

 

100.0 %

 

 

18.73 

 

101,000 

 

101,000 

 

 

 

 

 

 

Stop & Shop

leased through 2029)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inwood

 

100.0 %

 

97.9 %

 

 

21.00 

 

100,000 

 

100,000 

 

 

 

 

-

 

 

Stop & Shop

 

36

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

In Service

 

Under Development

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

Owned by

 

Owned By

 

or Not Available

 

Encumbrances

 

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

Company

 

Tenant

 

for Lease

 

(in thousands)

 

 

Major Tenants

RETAIL PROPERTIES (Continued):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North Syracuse

 

100.0 %

 

100.0 %

 

$

 

98,000 

 

 

98,000 

 

 

$

 

 

Wal-Mart

(ground and building leased through 2014)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West Babylon

 

100.0 %

 

83.9 %

 

 

17.19 

 

79,000 

 

79,000 

 

 

 

 

 

 

Best Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bronx (1750-1780 Gun Hill Road)

 

100.0 %

 

78.7 %

 

 

34.77 

 

77,000 

 

77,000 

 

 

 

 

 

 

ALDI, Planet Fitness, T.G.I. Friday's

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Queens

 

100.0 %

 

100.0 %

 

 

37.24 

 

56,000 

 

56,000 

 

 

 

 

 

 

New York Sports Club, Devry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commack

 

100.0 %

 

100.0 %

 

 

21.45 

 

47,000 

 

47,000 

 

 

 

 

 

 

PetSmart

(ground and building leased through 2021)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dewitt

 

100.0 %

 

100.0 %

 

 

20.46 

 

46,000 

 

46,000 

 

 

 

 

 

 

Best Buy

(ground leased through 2041)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Freeport (240 West Sunrise Highway)

 

100.0 %

 

100.0 %

 

 

20.28 

 

44,000 

 

44,000 

 

 

 

 

 

 

Bob's Discount Furniture

(ground and building leased through 2040)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oceanside

 

100.0 %

 

100.0 %

 

 

27.83 

 

16,000 

 

16,000 

 

 

 

 

 

 

Party City

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total New York

 

 

 

 

 

 

 

 

3,059,000 

 

2,456,000 

 

603,000 

 

 

 

88,757 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pennsylvania:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allentown

 

100.0 %

 

93.1 %

 

 

14.76 

 

627,000 

(3)

270,000 

 

357,000 

(3)

 

 

30,517 

(2)

 

Wal-Mart (3), ShopRite, Burlington Coat Factory,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

T.J. Maxx, Dick's Sporting Goods

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wilkes-Barre

 

100.0 %

 

83.3 %

 

 

13.33 

 

329,000 

(3)

204,000 

 

125,000 

(3)

 

 

20,201 

 

 

Target (3), Babies "R" Us, Ross Dress for Less

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lancaster

 

100.0 %

 

100.0 %

 

 

4.70 

 

228,000 

 

58,000 

 

170,000 

 

 

 

5,495 

(2)

 

Lowe's, Weis Markets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bensalem

 

100.0 %

 

98.9 %

 

 

11.49 

 

185,000 

 

177,000 

 

8,000 

 

 

 

15,147 

(2)

 

Kohl's, Ross Dress for Less, Staples

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broomall

 

100.0 %

 

100.0 %

 

 

11.09 

 

169,000 

 

147,000 

 

22,000 

 

 

 

10,879 

(2)

 

Giant Food (3), A.C. Moore, PetSmart

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bethlehem

 

100.0 %

 

95.3 %

 

 

7.07 

 

167,000 

 

164,000 

 

3,000 

 

 

 

5,691 

(2)

 

Giant Food, Petco

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

York

 

100.0 %

 

100.0 %

 

 

8.69 

 

110,000 

 

110,000 

 

 

 

 

5,300 

(2)

 

Ashley Furniture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Glenolden

 

100.0 %

 

100.0 %

 

 

25.75 

 

102,000 

 

10,000 

 

92,000 

 

 

 

6,974 

(2)

 

Wal-Mart

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wilkes-Barre

 

100.0 %

 

100.0 %

 

 

6.53 

 

81,000 

 

41,000 

 

 

40,000 

*

 

 

 

Ollie's Bargain Outlet

(ground and building leased through 2014)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Springfield

 

100.0 %

 

100.0 %

 

 

18.26 

 

47,000 

 

47,000 

 

 

 

 

 

 

PetSmart

(ground and building leased through 2025)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Pennsylvania

 

 

 

 

 

 

 

 

2,045,000 

 

1,228,000 

 

777,000 

 

40,000 

 

 

100,204 

 

 

 

 

37

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

In Service

 

Under Development

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

Owned by

 

Owned By

 

or Not Available

 

Encumbrances

 

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

Company

 

Tenant

 

for Lease

 

(in thousands)

 

 

Major Tenants

RETAIL PROPERTIES (Continued):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

California:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Jose

 

100.0 %

 

94.5 %

 

$

29.71 

 

647,000 

(3)

492,000 

 

155,000 

(3)

 

$

104,856 

 

 

Target (3), The Home Depot, Toys "R" Us, Best Buy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beverly Connection, Los Angeles

 

100.0 %

 

90.1 %

 

 

35.45 

 

335,000 

 

335,000 

 

 

 

 

 

 

Target, Marshalls, Old Navy,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nordstrom Rack, Ross Dress for Less

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pasadena (ground leased through 2077)

 

100.0 %

 

86.5 %

 

 

27.32 

 

131,000 

 

131,000 

 

 

 

 

 

 

T.J. Maxx, Trader Joe's

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco (2675 Geary Street)

 

100.0 %

 

100.0 %

 

 

50.34 

 

55,000 

 

55,000 

 

 

 

 

 

 

Best Buy

(ground and building leased through 2053)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signal Hill

 

100.0 %

 

100.0 %

 

 

24.08 

 

45,000 

 

45,000 

 

 

 

 

 

 

Best Buy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vallejo

 

100.0 %

 

100.0 %

 

 

17.51 

 

45,000 

 

45,000 

 

 

 

 

 

 

Best Buy

(ground leased through 2043)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walnut Creek (1149 South Main Street)

 

100.0 %

 

100.0 %

 

 

45.11 

 

29,000 

 

29,000 

 

 

 

 

 

 

Barnes & Noble

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walnut Creek (Mt. Diablo)

 

95.0 %

 

100.0 %

 

 

70.00 

 

7,000 

 

7,000 

 

 

 

 

 

 

Anthropologie

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total California

 

 

 

 

 

 

 

 

1,294,000 

 

1,139,000 

 

155,000 

 

 

 

104,856 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Massachusetts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chicopee

 

100.0 %

 

100.0 %

 

 

 

224,000 

 

 

224,000 

 

 

 

8,452 

(2)

 

Wal-Mart

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Springfield

 

100.0 %

 

97.8 %

 

 

16.39 

 

182,000 

 

33,000 

 

149,000 

 

 

 

5,830 

(2)

 

Wal-Mart

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Milford

 

100.0 %

 

100.0 %

 

 

8.01 

 

83,000 

 

83,000 

 

 

 

 

 

 

Kohl's

(ground and building leased through 2019)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cambridge

 

100.0 %

 

100.0 %

 

 

21.31 

 

48,000 

 

48,000 

 

 

 

 

 

 

PetSmart

(ground and building leased through 2033)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Massachusetts

 

 

 

 

 

 

 

 

537,000 

 

164,000 

 

373,000 

 

 

 

14,282 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maryland:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Baltimore (Towson)

 

100.0 %

 

97.8 %

 

 

15.57 

 

155,000 

 

155,000 

 

 

 

 

15,900 

(2)

 

Shoppers Food Warehouse, h.h.gregg, Staples,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home Goods, Golf Galaxy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annapolis

 

100.0 %

 

100.0 %

 

 

8.99 

 

128,000 

 

128,000 

 

 

 

 

 

 

The Home Depot

(ground and building leased through 2042)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rockville

 

100.0 %

 

84.4 %

 

 

23.13 

 

94,000 

 

94,000 

 

 

 

 

 

 

Regal Cinemas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wheaton

 

100.0 %

 

100.0 %

 

 

14.94 

 

66,000 

 

66,000 

 

 

 

 

 

 

Best Buy

(ground leased through 2060)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Maryland

 

 

 

 

 

 

 

 

443,000 

 

443,000 

 

 

 

 

15,900 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

In Service

 

Under Development

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

Owned by

 

Owned By

 

or Not Available

 

Encumbrances

 

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

Company

 

Tenant

 

for Lease

 

(in thousands)

 

 

Major Tenants

RETAIL PROPERTIES (Continued):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Connecticut:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Newington

 

100.0 %

 

100.0 %

 

$

14.45 

 

188,000 

 

43,000 

 

145,000 

 

 

$

11,437 

(2)

 

Wal-Mart, Staples

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Waterbury

 

100.0 %

 

100.0 %

 

 

15.02 

 

148,000 

 

143,000 

 

5,000 

 

 

 

14,226 

(2)

 

ShopRite

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Connecticut

 

 

 

 

 

 

 

 

336,000 

 

186,000 

 

150,000 

 

 

 

25,663 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Florida

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tampa (Hyde Park Village)

 

75.0 %

 

75.9 %

 

 

20.28 

 

264,000 

 

264,000 

 

 

 

 

19,126 

 

 

Pottery Barn, CineBistro, Brooks Brothers,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Williams Sonoma, Lifestyle Family Fitness

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Michigan:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Roseville

 

100.0 %

 

100.0 %

 

 

5.43 

 

119,000 

 

119,000 

 

 

 

 

 

 

JCPenney

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Battle Creek

 

100.0 %

 

 

 

 

47,000 

 

47,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Midland (ground leased through 2043)

 

100.0 %

 

83.6 %

 

 

8.97 

 

31,000 

 

31,000 

 

 

 

 

 

 

PetSmart

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Michigan

 

 

 

 

 

 

 

 

197,000 

 

197,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Virginia:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Norfolk

 

100.0 %

 

100.0 %

 

 

6.44 

 

114,000 

 

114,000 

 

 

 

 

 

 

BJ's Wholesale Club

(ground and building leased through 2069)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tyson's Corner

 

100.0 %

 

100.0 %

 

 

39.13 

 

38,000 

 

38,000 

 

 

 

 

 

 

Best Buy

(ground and building leased through 2035)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Virginia

 

 

 

 

 

 

 

 

152,000 

 

152,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Illinois:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lansing

 

100.0 %

 

100.0 %

 

 

10.00 

 

47,000 

 

47,000 

 

 

 

 

 

 

Forman Mills

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arlington Heights

 

100.0 %

 

100.0 %

 

 

9.00 

 

46,000 

 

46,000 

 

 

 

 

 

 

RVI

(ground and building leased through 2043)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chicago

 

100.0 %

 

100.0 %

 

 

12.03 

 

41,000 

 

41,000 

 

 

 

 

 

 

Best Buy

(ground and building leased through 2051)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Illinois

 

 

 

 

 

 

 

 

134,000 

 

134,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Texas:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Antonio

 

100.0 %

 

100.0 %

 

 

10.63 

 

43,000 

 

43,000 

 

 

 

 

 

 

Best Buy

(ground and building leased through 2041)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Texarkana (ground leased through 2013)

 

100.0 %

 

100.0 %

 

 

4.39 

 

31,000 

 

31,000 

 

 

 

 

 

 

Home Zone

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Texas

 

 

 

 

 

 

 

 

74,000 

 

74,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ohio:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Springdale

 

100.0 %

 

 

 

 

47,000 

 

47,000 

 

 

 

 

 

 

 

(ground and building leased through 2046)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tennessee:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Antioch

 

100.0 %

 

100.0 %

 

 

7.66 

 

45,000 

 

45,000 

 

 

 

 

 

 

Best Buy

 

39

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

In Service

 

Under Development

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

Owned by

 

Owned By

 

or Not Available

 

Encumbrances

 

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

Company

 

Tenant

 

for Lease

 

(in thousands)

 

 

Major Tenants

RETAIL PROPERTIES (Continued):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

South Carolina:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charleston

 

100.0 %

 

100.0 %

 

$

15.42 

 

45,000 

 

45,000 

 

 

 

$

 

 

Best Buy

(ground leased through 2063)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wisconsin:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fond Du Lac

 

100.0 %

 

100.0 %

 

 

7.83 

 

43,000 

 

43,000 

 

 

 

 

 

 

PetSmart

(ground leased through 2073)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Hampshire:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salem

 

100.0 %

 

100.0 %

 

 

 

37,000 

 

 

37,000 

 

 

 

 

 

Babies "R" Us

(ground leased through 2102)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kentucky:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owensboro

 

100.0 %

 

100.0 %

 

 

7.66 

 

32,000 

 

32,000 

 

 

 

 

 

 

Best Buy

(ground and building leased through 2046)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Iowa:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dubuque

 

100.0 %

 

100.0 %

 

 

9.90 

 

31,000 

 

31,000 

 

 

 

 

 

 

PetSmart

(ground leased through 2043)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CALIFORNIA SUPERMARKETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Colton (1904 North Rancho Avenue)

 

100.0 %

 

100.0 %

 

 

4.44 

 

73,000 

 

73,000 

 

 

 

 

 

 

Stater Brothers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Bernadino (1522 East Highland Avenue)

 

100.0 %

 

100.0 %

 

 

7.23 

 

40,000 

 

40,000 

 

 

 

 

 

 

Stater Brothers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Riverside (5571 Mission Boulevard)

 

100.0 %

 

100.0 %

 

 

4.97 

 

39,000 

 

39,000 

 

 

 

 

 

 

Stater Brothers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mojave (ground leased through 2079)

 

100.0 %

 

100.0 %

 

 

6.55 

 

34,000 

 

34,000 

 

 

 

 

 

 

Stater Brothers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corona (ground leased through 2079)

 

100.0 %

 

100.0 %

 

 

7.76 

 

33,000 

 

33,000 

 

 

 

 

 

 

Stater Brothers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yucaipa

 

100.0 %

 

100.0 %

 

 

4.13 

 

31,000 

 

31,000 

 

 

 

 

 

 

Stater Brothers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Barstow

 

100.0 %

 

100.0 %

 

 

7.15 

 

30,000 

 

30,000 

 

 

 

 

 

 

Stater Brothers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Moreno Valley

 

100.0 %

 

 

 

 

30,000 

 

30,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Bernadino (648 West 4th Street)

 

100.0 %

 

100.0 %

 

 

6.74 

 

30,000 

 

30,000 

 

 

 

 

 

 

Stater Brothers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Desert Hot Springs

 

100.0 %

 

100.0 %

 

 

5.61 

 

29,000 

 

29,000 

 

 

 

 

 

 

Stater Brothers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rialto

 

100.0 %

 

100.0 %

 

 

5.74 

 

29,000 

 

29,000 

 

 

 

 

 

 

Stater Brothers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total California Supermarkets

 

 

 

 

 

 

 

 

398,000 

 

398,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Strip Shopping Centers

 

 

 

93.5 %

 

$

17.40 

 

16,654,000 

 

11,297,000 

 

4,269,000 

 

1,088,000 

 

$

918,803 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's Ownership Interest

 

 

 

93.6 %

 

$

17.39 

 

16,072,000 

 

11,231,000 

 

3,753,000 

 

1,088,000 

 

$

914,022 

 

 

 

 

40

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

In Service

 

Under Development

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

Owned by

 

Owned By

 

or Not Available

 

Encumbrances

 

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

Company

 

Tenant

 

for Lease

 

(in thousands)

 

 

Major Tenants

RETAIL PROPERTIES (Continued):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REGIONAL MALLS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monmouth Mall, Eatontown, NJ

 

50.0 %

 

92.9 %

 

$

36.01 

(5)

1,462,000 

(4)

850,000 

 

612,000 

(4)

 

$

171,796 

 

 

Macy's (4), JCPenney (4), Lord & Taylor, Boscov's,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loews Theatre, Barnes & Noble

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Springfield Mall, Springfield, VA

 

97.5 %

 

100.0 %

 

 

15.73 

(5)

1,408,000 

(4)

294,000 

 

390,000 

(4)

724,000 

 

 

 

 

Macy's, JCPenney (4), Target (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadway Mall, Hicksville, NY

 

100.0 %

 

88.6 %

 

 

31.38 

(5)

1,136,000 

(4)

760,000 

 

376,000 

(4)

 

 

85,180 

 

 

Macy's, IKEA, Target (4), National Amusement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bergen Town Center - West, Paramus, NJ

 

100.0 %

 

98.9 %

 

 

47.53 

(5)

948,000 

 

897,000 

 

31,000 

 

20,000 

 

 

282,312 

 

 

Target, Century 21, Whole Foods Market, Marshalls,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nordstrom Rack, Saks Off 5th, Bloomingdale's Outlet,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nike Factory Store, Old Navy,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Neiman Marcus Last Call Studio, Blink Fitness

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Montehiedra, Puerto Rico

 

100.0 %

 

89.1 %

 

 

41.27 

(5)

540,000 

 

540,000 

 

 

 

 

120,000 

 

 

The Home Depot, Kmart, Marshalls,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Caribbean Theatres, Tiendas Capri

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Las Catalinas, Puerto Rico

 

100.0 %

 

87.6 %

 

 

58.54 

(5)

494,000 

(4)

355,000 

 

139,000 

(4)

 

 

54,101 

 

 

Kmart, Sears (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Regional Malls

 

 

 

92.8 %

 

$

40.94 

 

5,988,000 

 

3,696,000 

 

1,548,000 

 

744,000 

 

$

713,389 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's Ownership Interest

 

 

 

92.7 %

 

$

41.86 

 

4,334,000 

 

3,264,000 

 

344,000 

 

726,000 

 

$

627,491 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Retail Space

 

 

 

93.4 %

 

 

 

 

22,642,000 

 

14,993,000 

 

5,817,000 

 

1,832,000 

 

$

1,632,192 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's Ownership Interest

 

 

 

93.4 %

 

 

 

 

20,406,000 

 

14,495,000 

 

4,097,000 

 

1,814,000 

 

$

1,541,513 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* We do not capitalize interest or real estate taxes on this space.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Weighted Average Annual Rent PSF excludes ground rent, storage rent and garages.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) These encumbrances are cross-collateralized under a blanket mortgage in the amount of $633,180 as of December 31, 2012.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3) The lease for these former Bradlees locations is guaranteed by Stop & Shop.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4) Includes square footage of anchors who own the land and building.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5) Weighted Average Annual Rent PSF shown is for mall tenants only.

 

41

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

Under Development

 

 

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

 

 

or Not Available

 

Encumbrances

 

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

In Service

 

for Lease

 

(in thousands)

 

Major Tenants

 

MERCHANDISE MART:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Illinois:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise Mart, Chicago

 

100.0 %

 

95.2 %

 

$

30.45 

 

3,553,000 

 

3,553,000 

 

 

$

550,000 

 

Motorola Mobility / Google (lease not commenced),

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Intercontinental University (AIU),

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Baker, Knapp & Tubbs, Royal Bank of Canada,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CCC Information Services, Ogilvy Group (WPP),

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chicago Teachers Union, Publicis Groupe,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office of the Special Deputy Receiver, Holly Hunt Ltd.,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Razorfish, TNDP, Merchandise Mart Headquarters,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steelcase, Chicago School of Professional Psychology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

50.0 %

 

100.0 %

 

 

33.01 

 

19,000 

 

19,000 

 

 

 

23,730 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Illinois

 

 

 

95.2 %

 

 

30.47 

 

3,572,000 

 

3,572,000 

 

 

 

573,730 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7 West 34th Street

 

100.0 %

 

70.4 %

 

 

37.70 

 

419,000 

 

419,000 

 

 

 

 

Kurt Adler

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Merchandise Mart

 

 

 

92.6 %

 

$

31.22 

 

3,991,000 

 

3,991,000 

 

 

$

573,730 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's Ownership Interest

 

 

 

92.6 %

 

$

31.22 

 

3,982,000 

 

3,982,000 

 

 

$

561,865 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Weighted Average Annual Rent PSF excludes ground rent, storage rent and garages.

 

 

 

 

 

 

 

 

 

 

 

42

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

Under Development

 

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

 

 

or Not Available

 

Encumbrances

 

 

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

In Service

 

for Lease

 

(in thousands)

 

 

Major Tenants

 

555 CALIFORNIA STREET:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

555 California Street

 

70.0 %

 

91.7 %

 

$

54.89 

 

1,503,000 

 

1,503,000 

 

 

$

600,000 

 

 

Bank of America, Dodge & Cox,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goldman Sachs & Co., Jones Day,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kirkland & Ellis LLP, Morgan Stanley & Co. Inc.,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

McKinsey & Company Inc., UBS Financial Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

315 Montgomery Street

 

70.0 %

 

100.0 %

 

 

41.49 

 

228,000 

 

228,000 

 

 

 

 

 

Bank of America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

345 Montgomery Street

 

70.0 %

 

100.0 %

 

 

90.46 

 

64,000 

 

64,000 

 

 

 

 

 

Bank of America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total 555 California Street

 

 

 

93.1 %

 

$

54.53 

 

1,795,000 

 

1,795,000 

 

 

$

600,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's Ownership Interest

 

 

 

93.1 %

 

$

54.53 

 

1,257,000 

 

1,257,000 

 

 

$

420,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Weighted Average Annual Rent PSF excludes ground rent, storage rent and garages.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

Under Development

 

 

 

 

 

 

 

 

%

 

%

 

Annual Rent

 

Total

 

 

 

or Not Available

 

Encumbrances

 

 

 

Property

 

Ownership

 

Occupancy

 

PSF (1)

 

Property

 

In Service

 

for Lease

 

(in thousands)

 

Major Tenants

 

WAREHOUSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW JERSEY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Hanover - Five Buildings

 

100.0 %

 

55.9 %

 

$

4.34 

 

942,000 

 

942,000 

 

 

$

 

Foremost Groups Inc., Fidelity Paper & Supply Inc.,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Simon Distributors Inc., Givaudan Flavors Corp.,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Meyer Distributing Inc., Gardner Industries Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Warehouses

 

 

 

55.9 %

 

$

4.34 

 

942,000 

 

942,000 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's Ownership Interest

 

 

 

55.9 %

 

$

4.34 

 

942,000 

 

942,000 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Weighted Average Annual Rent PSF excludes ground rent, storage rent and garages.

 

 

 

 

 

 

 

 

 

 

 

 

44

 


 
 

 

ITEM 2.                PROPERTIES - Continued

 

 

 

 

 

 

 

Weighted

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

Under Development

 

 

 

 

 

 

 

 

Fund

 

%

 

Annual Rent

 

Total

 

 

 

or Not Available

 

Encumbrances

 

 

 

Property

 

Ownership %

 

Occupancy

 

PSF (1)

 

Property

 

In Service

 

for Lease

 

(in thousands)

 

Major Tenants

 

VORNADO CAPITAL PARTNERS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REAL ESTATE FUND:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, NY:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One Park Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coty Inc., New York University,

 

- Office

 

64.7 %

 

94.9 %

 

$

43.51 

 

861,000 

 

861,000 

 

 

 

 

 

Public Service Mutual Insurance

 

- Retail

 

64.7 %

 

90.3 %

 

 

57.69 

 

79,000 

 

79,000 

 

 

 

 

 

Bank of Baroda, Citibank, Equinox One Park Avenue Inc.

 

 

 

64.7 %

 

94.5 %

 

 

44.70 

 

940,000 

 

940,000 

 

 

$

250,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lucida, 86th Street and Lexington Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(ground leased through 2082)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Barnes & Noble, Hennes & Mauritz,

 

- Retail

 

100.0 %

 

100.0 %

 

 

124.85 

 

95,000 

 

95,000 

 

 

 

 

 

Sephora, Bank of America

 

- Residential

 

100.0 %

 

100.0 %

 

 

 

51,000 

 

51,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

146,000 

 

146,000 

 

 

 

100,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11 East 68th Street Retail

 

100.0 %

 

100.0 %

 

 

518.49 

 

9,000 

 

9,000 

 

 

 

27,790 

 

Belstaff, Joseph Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crowne Plaza Times Square

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Hotel (795 Keys)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Retail

 

38.2 %

 

100.0 %

 

 

337.28 

 

14,000 

 

14,000 

 

 

 

 

 

 

 

- Office

 

38.2 %

 

100.0 %

 

 

32.88 

 

212,000 

 

212,000 

 

 

 

 

 

American Management Association

 

 

 

 

 

 

 

 

51.74 

 

226,000 

 

226,000 

 

 

 

255,750 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

501 Broadway

 

100.0 %

 

 

 

 

9,000 

 

9,000 

 

 

 

20,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, DC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington Sports, Dean & Deluca, Anthropologie,

 

Georgetown Park Retail Shopping Center

 

50.0 %

 

100.0 %

 

 

33.06 

 

313,000 

 

113,000 

 

200,000 

 

 

50,006 

 

Hennes & Mauritz, J. Crew

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Santa Monica, CA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premier Office Centers LLC, Diversified Mercury Comm,

 

520 Broadway

 

100.0 %

 

67.2 %

 

 

47.31 

 

112,000 

 

112,000 

 

 

 

30,000 

 

Four Media Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Culver City, CA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Meredith Corp., West Publishing Corp., Symantec Corp.,

 

800 Corporate Pointe

 

100.0 %

 

44.0 %

 

 

30.59 

 

243,000 

 

243,000 

 

 

 

 

Syska Hennessy Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Miami, FL:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1100 Lincoln Road

 

100.0 %

 

97.6 %

 

 

62.65 

 

127,000 

 

127,000 

 

 

 

66,000 

 

Regal Cinema, Anthropologie, Banana Republic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Real Estate Fund

 

72.6 %

 

84.6 %

 

 

 

 

2,125,000 

 

1,925,000 

 

200,000 

 

$

799,546 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's Ownership Interest

 

18.1 %

 

84.6 %

 

 

 

 

374,000 

 

349,000 

 

25,000 

 

$

132,060 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Weighted Average Annual Rent PSF excludes ground rent, storage rent and garages.

 

 

 

 

 

45

 


 
 

 

New York

 

As of December 31, 2012, our New York segment consisted of 65 properties aggregating 27.1 million square feet, of which we own 21.9 million square feet.  The 21.9 million square feet is comprised of 16.8 million square feet of office space in 31 properties, 2.1 million square feet of retail space in 49 properties, four residential properties containing 1,655 units, the 1.4 million square foot Hotel Pennsylvania, and our interest in Alexander’s, Inc. (“Alexander’s”).  The New York segment also includes 11 garages totaling 1.7 million square feet (5,159 spaces) which are managed by, or leased to, third parties.

 

New York lease terms generally range from five to seven years for smaller tenants to as long as 20 years for major tenants, and may provide for extension options at market rates.  Leases typically provide for periodic step‑ups in rent over the term of the lease and pass through to tenants their share of increases in real estate taxes and operating expenses over a base year.  Electricity is provided to tenants on a sub-metered basis or included in rent based on surveys and adjusted for subsequent utility rate increases.  Leases also typically provide for free rent and tenant improvement allowances for all or a portion of the tenant’s initial construction costs of its premises.

 

As of December 31, 2012, the occupancy rate for our New York segment was 96.2%.  The statistics provided in the following sections include information on the office and retail space.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Occupancy and weighted average annual rent per square foot:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

 

Average Annual

 

 

 

 

 

 

 

Rentable

 

Occupancy

 

Rent Per

 

 

 

 

As of December 31,

 

Square Feet

 

Rate

 

Square Foot

 

 

 

 

2012 

 

 

16,751,000 

 

 

 

95.9 

%

 

$

60.17 

 

 

 

 

 

2011 

 

 

16,598,000 

 

 

 

96.2 

%

 

 

58.70 

 

 

 

 

 

2010 

 

 

15,348,000 

 

 

 

96.1 

%

 

56.14 

 

 

 

 

 

2009 

 

 

15,331,000 

 

 

 

97.1 

%

 

 

55.54 

 

 

 

 

 

2008 

 

 

15,266,000 

 

 

 

98.0 

%

 

 

55.00 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

 

Average Annual

 

 

 

 

 

 

 

Rentable

 

Occupancy

 

Rent Per

 

 

 

 

As of December 31,

 

Square Feet

 

Rate

 

Square Foot

 

 

 

 

2012 

 

 

2,057,000 

 

 

 

96.8 

%

 

$

147.28 

 

 

 

 

 

2011 

 

 

2,000,000 

 

 

 

95.6 

%

 

 

110.17 

 

 

 

 

 

2010 

 

 

1,924,000 

 

 

 

96.4 

%

 

106.52 

 

 

 

 

 

2009 

 

 

1,820,000 

 

 

 

97.0 

%

 

 

101.53 

 

 

 

 

 

2008 

 

 

1,787,000 

 

 

 

94.0 

%

 

 

100.84 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

46

 


 
 

 

NEW YORK – CONTINUED

 

 

 

 

 

 

 

 

 

2012 rental revenue by tenants’ industry:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industry

 

Percentage

 

 

 

Office:

 

 

 

 

 

 

 

Financial Services

 

16 

%

 

 

 

 

Legal Services

 

%

 

 

 

 

Communications

 

%

 

 

 

 

Insurance

 

%

 

 

 

 

Family Apparel

 

%

 

 

 

 

Technology

 

%

 

 

 

 

Publishing

 

%

 

 

 

 

Real Estate

 

%

 

 

 

 

Pharmaceutical

 

%

 

 

 

 

Government

 

%

 

 

 

 

Banking

 

%

 

 

 

 

Engineering, Architect & Surveying

 

%

 

 

 

 

Advertising / Marketing

 

%

 

 

 

 

Not-for-Profit

 

%

 

 

 

 

Health Services

 

%

 

 

 

 

Other

 

%

 

 

 

 

 

 

77 

%

 

 

 

Retail:

 

 

 

 

 

 

 

Family Apparel

 

%

 

 

 

 

Department Stores

 

%

 

 

 

 

Women's Apparel

 

%

 

 

 

 

Luxury Retail

 

%

 

 

 

 

Home Entertainment & Electronics

 

%

 

 

 

 

Banking

 

%

 

 

 

 

Discount Stores

 

%

 

 

 

 

Restaurants

 

%

 

 

 

 

Other

 

%

 

 

 

 

 

 

23 

%

 

 

 

 

 

 

 

 

 

 

 

Total

 

100 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenants accounting for 2% or more of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

Percentage

 

 

 

 

 

Square Feet

 

2012 

 

New York

 

of Total

 

 

Tenant

 

Leased

 

Revenues

 

Revenues

 

Revenues

 

 

AXA Equitable Life Insurance

 

423,000 

 

 

$

35,039,000 

 

2.9 

%

 

1.3 

%

 

 

Macy’s

 

598,000 

 

 

 

31,816,000 

 

2.6 

%

 

1.2 

%

 

 

Limited Brands

 

465,000 

 

 

 

26,052,000 

 

2.2 

%

 

0.9 

%

 

 

Ziff Brothers Investments, Inc.

 

287,000 

 

 

 

24,176,000 

 

2.0 

%

 

0.9 

%

 

 

McGraw-Hill Companies, Inc.

 

480,000 

 

 

 

24,155,000 

 

2.0 

%

 

0.9 

%

 

 

47

 


 

 

NEW YORK – CONTINUED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012 Leasing Activity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

 

Square

 

Initial Rent Per

 

 

 

 

Location

 

Feet

 

Square Foot (1)

 

 

 

 

 

One Penn Plaza

 

371,000 

 

$

59.37 

 

 

 

 

 

 

Two Penn Plaza

 

232,000 

 

 

47.45 

 

 

 

 

 

 

100 West 33rd Street

 

225,000 

 

 

45.79 

 

 

 

 

 

 

909 Third Avenue

 

224,000 

 

 

50.08 

 

 

 

 

 

 

350 Park Avenue

 

132,000 

 

 

78.91 

 

 

 

 

 

 

280 Park Avenue

 

126,000 

 

 

81.75 

 

 

 

 

 

 

150 East 58th Street

 

83,000 

 

 

59.84 

 

 

 

 

 

 

1290 Avenue of Americas

 

83,000 

 

 

70.00 

 

 

 

 

 

 

770 Broadway

 

80,000 

 

 

40.00 

 

 

 

 

 

 

888 Seventh Avenue

 

76,000 

 

 

79.61 

 

 

 

 

 

 

666 Fifth Avenue

 

64,000 

 

 

76.27 

 

 

 

 

 

 

866 United Nations Plaza

 

53,000 

 

 

51.38 

 

 

 

 

 

 

One Park Avenue

 

53,000 

 

 

48.00 

 

 

 

 

 

 

330 Madison Avenue

 

37,000 

 

 

75.49 

 

 

 

 

 

 

40 Fulton Street

 

25,000 

 

 

35.72 

 

 

 

 

 

 

595 Madison Avenue

 

24,000 

 

 

64.81 

 

 

 

 

 

 

57th Street

 

21,000 

 

 

60.00 

 

 

 

 

 

 

90 Park Avenue

 

15,000 

 

 

63.20 

 

 

 

 

 

 

689 Fifth Avenue

 

15,000 

 

 

57.84 

 

 

 

 

 

 

20 Broad Street

 

11,000 

 

 

35.93 

 

 

 

 

 

Total

 

1,950,000 

 

 

58.53 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's share

 

1,754,000 

 

 

57.15 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

 

Square

 

Initial Rent Per

 

 

 

 

Location

 

Feet

 

Square Foot (1)

 

 

 

 

 

4 Union Square South

 

93,000 

 

$

65.33 

 

 

 

 

 

 

1540 Broadway

 

32,000 

 

 

93.31 

 

 

 

 

 

 

Manhattan Mall

 

23,000 

 

 

94.53 

 

 

 

 

 

 

692 Broadway

 

17,000 

 

 

58.58 

 

 

 

 

 

 

One Penn Plaza

 

9,000 

 

 

150.73 

 

 

 

 

 

 

330 Madison Avenue

 

4,000 

 

 

308.46 

 

 

 

 

 

 

280 Park Avenue

 

4,000 

 

 

239.97 

 

 

 

 

 

 

150 East 58th Street

 

3,000 

 

 

337.74 

 

 

 

 

 

 

666 Fifth Avenue

 

3,000 

 

 

170.66 

 

 

 

 

 

 

Two Penn Plaza

 

1,000 

 

 

479.00 

 

 

 

 

 

 

689 Fifth Avenue

 

1,000 

 

 

2,700.00 

 

 

 

 

 

 

155 Spring Street

 

1,000 

 

 

376.45 

 

 

 

 

 

 

350 Park Avenue

 

1,000 

 

 

152.70 

 

 

 

 

 

Total

 

192,000 

 

 

114.21 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's share

 

185,000 

 

 

110.71 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Represents the cash basis weighted average starting rents per square foot, which is generally indicative of market rents. Most leases include free rent and periodic step-ups in rent, which are not included in the initial cash basis rent per square foot leased, but are included in the GAAP basis straight-line rent per square foot (see "Overview - Leasing Activity" of Management's Discussion and Analysis of Financial Condition and Results of Operations).

 

48

 


 
 

 

NEW YORK – CONTINUED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease expirations as of December 31, 2012, assuming none of the tenants exercise renewal options:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

Weighted Average Annual

 

 

 

 

Number of

 

Square Feet of

 

 

New York

 

Rent of Expiring Leases

 

Year

 

Expiring Leases

 

Expiring Leases

 

 

Square Feet

 

Total

 

Per Square Foot

 

Office:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Month to month

 

35 

 

 

55,000 

 

 

0.3 

%

 

$

2,759,000 

 

$

50.16 

 

2013 

 

 

88 

 

 

646,000 

 

 

4.0 

%

 

 

33,411,000 

 

 

51.72 

 

2014 

 

 

149 

 

 

1,203,000 

(1)

 

7.4 

%

 

 

75,086,000 

 

 

62.42 

 

2015 

 

 

171 

 

 

2,105,000 

 

 

12.9 

%

 

 

115,079,000 

 

 

54.67 

 

2016 

 

 

135 

 

 

1,214,000 

 

 

7.5 

%

 

 

71,848,000 

 

 

59.18 

 

2017 

 

 

98 

 

 

1,239,000 

 

 

7.6 

%

 

 

71,850,000 

 

 

57.99 

 

2018 

 

 

73 

 

 

1,067,000 

 

 

6.6 

%

 

 

71,529,000 

 

 

67.04 

 

2019 

 

 

62 

 

 

910,000 

 

 

5.6 

%

 

 

56,035,000 

 

 

61.58 

 

2020 

 

 

82 

 

 

1,522,000 

 

 

9.4 

%

 

 

85,580,000 

 

 

56.23 

 

2021 

 

 

54 

 

 

1,060,000 

 

 

6.5 

%

 

 

64,268,000 

 

 

60.63 

 

2022 

 

 

56 

 

 

1,177,000 

 

 

7.2 

%

 

 

72,365,000 

 

 

61.48 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Month to month

 

 

 

14,000 

 

 

0.7 

%

 

$

684,000 

 

$

48.86 

 

2013 

 

 

37 

 

 

128,000 

 

 

6.0 

%

 

 

14,003,000 

 

 

109.40 

 

2014 

 

 

23 

 

 

71,000 

 

 

3.3 

%

 

 

14,196,000 

 

 

199.94 

 

2015 

 

 

34 

 

 

104,000 

 

 

4.8 

%

 

 

22,887,000 

 

 

220.07 

 

2016 

 

 

18 

 

 

210,000 

 

 

9.8 

%

 

 

19,427,000 

 

 

92.51 

 

2017 

 

 

10 

 

 

169,000 

 

 

7.9 

%

 

 

9,211,000 

 

 

54.50 

 

2018 

 

 

31 

 

 

206,000 

 

 

9.6 

%

 

 

37,389,000 

 

 

181.50 

 

2019 

 

 

20 

 

 

95,000 

 

 

4.4 

%

 

 

20,448,000 

 

 

215.24 

 

2020 

 

 

17 

 

 

79,000 

 

 

3.7 

%

 

 

8,355,000 

 

 

105.76 

 

2021 

 

 

 

 

34,000 

 

 

1.6 

%

 

 

6,595,000 

 

 

193.97 

 

2022 

 

 

 

 

54,000 

 

 

2.5 

%

 

 

6,387,000 

 

 

118.28 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Excludes 492,000 square feet at 909 Third Avenue leased to the U.S. Post Office through 2038 (including five 5-year renewal options) for which the annual escalated rent is $9.90 per square foot.

 

 

Alexander’s

As of December 31, 2012, we own 32.4% of the outstanding common stock of Alexander’s, which owns six properties in the greater New York metropolitan area aggregating 2.2 million square feet, including 731 Lexington Avenue, the 1.3 million square foot Bloomberg L.P. headquarters building.  Alexander’s had $1.06 billion of outstanding debt at December 31, 2012, of which our pro rata share was $345 million, none of which is recourse to us.

 

Hotel Pennsylvania

We own the Hotel Pennsylvania which is located in New York City on Seventh Avenue opposite Madison Square Garden and consists of a hotel portion containing 1,000,000 square feet of hotel space with 1,700 rooms and a commercial portion containing 400,000 square feet of retail and office space.

 

 

 

 

 

Year Ended December 31,

 

 

 

 

 

 

 

 

2012 

 

 

2011 

 

 

2010 

 

 

2009 

 

 

2008 

 

 

 

 

 

Hotel:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average occupancy rate

 

89.1 

%

 

 

89.1 

%

 

 

83.2 

%

 

 

71.5 

%

 

 

84.1 

%

 

 

 

 

 

Average daily rate

$

151.22 

 

 

$

150.91 

 

 

$

143.28 

 

 

$

133.20 

 

 

$

171.32 

 

 

 

 

 

 

Revenue per available room

$

134.81 

 

 

$

134.43 

 

 

$

119.23 

 

 

$

95.18 

 

 

$

144.01 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office space:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average occupancy rate

 

33.4 

%

 

 

33.4 

%

 

 

33.4 

%

 

 

30.4 

%

 

 

30.4 

%

 

 

 

 

 

 

Weighted average annual rent per square foot

$

17.32 

 

 

$

13.49 

 

 

$

7.52 

 

 

$

20.54 

 

 

$

18.78 

 

 

 

 

 

 

Retail space:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average occupancy rate

 

64.3 

%

 

 

63.0 

%

 

 

62.3 

%

 

 

70.7 

%

 

 

69.5 

%

 

 

 

 

 

 

Weighted average annual rent per square foot

$

27.19 

 

 

$

29.01 

 

 

$

31.42 

 

 

$

35.05 

 

 

$

41.75 

 

 

 

49

 


 

 

Washington, DC

 

As of December 31, 2012, our Washington, DC segment consisted of 73 properties aggregating 19.1 million square feet, of which we own 16.5 million square feet.  The 16.5 million square feet is comprised of 13.6 million square feet of office space in 59 properties, seven residential properties containing 2,414 units, a hotel property, and 20.8 acres of undeveloped land.  The Washington, DC segment also includes 56 garages totaling approximately 8.9 million square feet (29,611 spaces) which are managed by or leased to third parties.

 

Washington, DC office lease terms generally range from five to seven years for smaller tenants to as long as 15 years for major tenants, and may provide for extension options at either pre-negotiated or market rates. Leases typically provide for periodic step-ups in rent over the term of the lease and pass through to tenants, the tenants’ share of increases in real estate taxes and certain property operating expenses over a base year. Periodic step-ups in rent are usually based upon either fixed percentage increases or the consumer price index. Leases also typically provide for free rent and tenant improvement allowances for all or a portion of the tenant’s initial construction costs of its premises.

 

As of December 31, 2012, the occupancy rate for our Washington DC segment was 84.1% and 33.0% of the occupied space was leased to various agencies of the U.S. Government.  The statistics provided in the following sections include information on the office and residential space.

 

Occupancy and weighted average annual rent per square foot:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office:

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

 

Average Annual

 

 

 

 

 

 

 

Rentable

 

Occupancy

 

Rent Per

 

 

 

 

As of December 31,

 

Square Feet

 

Rate

 

Square Foot

 

 

 

 

2012 

 

 

13,637,000 

 

 

 

81.2 

%

 

$

41.57 

 

 

 

 

 

2011 

 

 

14,162,000 

 

 

 

89.3 

%

 

 

40.80 

 

 

 

 

 

2010 

 

 

14,035,000 

 

 

 

94.8 

%

 

39.65 

 

 

 

 

 

2009 

 

 

14,035,000 

 

 

 

94.9 

%

 

 

38.46 

 

 

 

 

 

2008 

 

 

13,916,000 

 

 

 

95.1 

%

 

 

37.12 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

Number of

 

Occupancy

 

Average Monthly

 

 

 

 

As of December 31,

 

Units

 

Rate

 

Rent Per Unit

 

 

 

 

2012 

 

 

2,414 

 

 

 

97.8 

%

 

$

2,077 

 

 

 

 

 

2011 

 

 

2,414 

 

 

 

97.1 

%

 

 

1,992 

 

 

 

 

 

2010 

 

 

2,414 

 

 

 

93.8 

%

 

1,752 

 

 

 

 

 

2009 

 

 

2,075 

 

 

 

87.5 

%

 

 

1,805 

 

 

 

 

 

2008 

 

 

1,866 

 

 

 

87.2 

%

 

 

1,503 

 

 

 

 

 

 

 

 

 

 

 

2012 rental revenue by tenants’ industry:

 

 

 

 

 

 

 

 

 

 

Industry

 

Percentage

 

 

 

U.S. Government

 

33 

%

 

 

 

Government Contractors

 

19 

%

 

 

 

Membership Organizations

 

%

 

 

 

Legal Services

 

%

 

 

 

Business Services

 

%

 

 

 

Manufacturing

 

%

 

 

 

Management Consulting Services

 

%

 

 

 

State and Local Government

 

%

 

 

 

Real Estate

 

%

 

 

 

Food

 

%

 

 

 

Health Services

 

%

 

 

 

Computer and Data Processing

 

%

 

 

 

Communication

 

%

 

 

 

Education

 

%

 

 

 

Television Broadcasting

 

%

 

 

 

Other

 

14 

%

 

 

 

 

 

100 

%

 

 

 

50

 


 

 

WASHINGTON, DC – CONTINUED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenants accounting for 2% or more of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

Percentage

 

 

 

 

Square Feet

 

2012 

 

Washington, DC

 

of Total

 

 

Tenant

 

Leased

 

Revenues

 

Revenues

 

Revenues

 

 

U.S. Government

 

3,763,000 

 

 

$

165,076,000 

 

29.8 

%

 

6.0 

%

 

 

Family Health International

 

456,000 

 

 

 

18,444,000 

 

3.3 

%

 

0.7 

%

 

 

Boeing

 

377,000 

 

 

 

16,610,000 

 

3.0 

%

 

0.6 

%

 

 

Lockheed Martin

 

347,000 

 

 

 

13,625,000 

 

2.5 

%

 

0.5 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

2012 Leasing Activity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

Square

 

Initial Rent Per

 

 

 

Location

 

Feet

 

Square Foot (1)

 

 

 

2011-2451 Crystal Drive

 

340,000 

 

 

42.69 

 

 

 

 

S. Clark Street / 12th Street

 

270,000 

 

 

39.01 

 

 

 

 

Skyline Place / One Skyline Tower

 

235,000 

 

 

34.11 

 

 

 

 

1550-1750 Crystal Drive / 241-251 18th Street

 

214,000 

 

 

39.16 

 

 

 

 

Democracy Plaza One

 

163,000 

 

 

32.27 

 

 

 

 

Warner

 

148,000 

 

 

69.70 

 

 

 

 

1800, 1851 and 1901 South Bell Street

 

102,000 

 

 

40.94 

 

 

 

 

2200 / 2300 Clarendon Blvd (Courthouse Plaza)

 

100,000 

 

 

41.12 

 

 

 

 

1750 Pennsylvania Avenue, NW

 

99,000 

 

 

47.00 

 

 

 

 

2001 Jefferson Davis Highway and 223 23rd Street / 2221 South

 

 

 

 

 

 

 

 

 

 

Clark Street

 

53,000 

 

 

36.78 

 

 

 

 

Commerce Executive

 

48,000 

 

 

32.13 

 

 

 

 

1101 17th Street, NW

 

39,000 

 

 

43.75 

 

 

 

 

1726 M Street, NW

 

29,000 

 

 

39.49 

 

 

 

 

1730 M Street, NW

 

19,000 

 

 

42.65 

 

 

 

 

1150 17th Street, NW

 

19,000 

 

 

39.96 

 

 

 

 

2101 L Street, NW

 

14,000 

 

 

47.00 

 

 

 

 

Universal Buildings (1825 - 1875 Connecticut Avenue, NW)

 

10,000 

 

 

43.41 

 

 

 

 

2100 / 2200 Crystal Drive (Crystal Plaza 3 & 4)

 

3,000 

 

 

43.00 

 

 

 

 

Partially Owned Entities

 

206,000 

 

 

41.19 

 

 

 

 

Total

 

2,111,000 

 

 

41.49 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's share

 

1,901,000 

 

 

40.55 

 

 

 

____________________

 

 

 

 

 

 

 

(1) Represents the cash basis weighted average starting rents per square foot, which is generally indicative of market rents. Most leases include free rent and periodic step-ups in rent, which are not included in the initial cash basis rent per square foot leased, but are included in the GAAP basis straight-line rent per square foot (see "Overview - Leasing Activity" of Management's Discussion and Analysis of Financial Condition and Results of Operations).

 

51

 


 

 

WASHINGTON, DC – CONTINUED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease expirations as of December 31, 2012, assuming none of the tenants exercise renewal options:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

Weighted Average Annual

 

 

 

 

 

Number of

 

Square Feet of

 

Washington, DC

 

Rent of Expiring Leases

 

 

 

Year

 

Expiring Leases

 

Expiring Leases

 

Square Feet

 

Total

 

Per Square Foot

 

 

 

Month to month

 

30 

 

 

180,000 

 

1.7 

%

 

$

6,073,000 

 

$

33.74 

 

 

 

2013 

 

158 

 

 

839,000 

 

8.1 

%

 

 

33,980,000 

 

 

40.49 

 

 

 

2014 

 

147 

 

 

1,425,000 

 

13.7 

%

 

 

55,149,000 

 

 

38.70 

 

 

 

2015 

 

142 

 

 

1,488,000 

 

14.3 

%

 

 

60,412,000 

 

 

40.60 

 

 

 

2016 

 

101 

 

 

1,103,000 

 

10.6 

%

 

 

47,025,000 

 

 

42.64 

 

 

 

2017 

 

67 

 

 

625,000 

 

6.0 

%

 

 

24,260,000 

 

 

38.83 

 

 

 

2018 

 

68 

 

 

950,000 

 

9.2 

%

 

 

39,928,000 

 

 

42.01 

 

 

 

2019 

 

42 

 

 

1,073,000 

 

10.3 

%

 

 

44,566,000 

 

 

41.54 

 

 

 

2020 

 

40 

 

 

586,000 

 

5.6 

%

 

 

29,496,000 

 

 

50.35 

 

 

 

2021 

 

19 

 

 

816,000 

 

7.9 

%

 

 

35,268,000 

 

 

43.24 

 

 

 

2022 

 

28 

 

 

931,000 

 

9.0 

%

 

 

40,834,000 

 

 

43.87 

 

 

 

Base Realignment and Closure (“BRAC”)

 

          Our Washington, DC segment was and continues to be impacted by the BRAC statute, which requires the Department of Defense (“DOD”) to relocate from 2,395,000 square feet in our buildings in the Northern Virginia area to government owned military bases.  The table below summarizes the effects of BRAC on our Washington, DC segment for square feet leased by the DOD.  See page 80 for the impact on 2012 EBITDA and the estimated impact on 2013 EBITDA.

 

 

 

Rent Per

 

Square Feet

 

 

 

 

 

Square Foot

 

Total

 

Crystal City

 

Skyline

 

Rosslyn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Resolved:

 

 

 

 

 

 

 

 

 

 

 

 

Relet as of December 31, 2012

 

$

39.76 

 

521,000 

 

380,000 

 

88,000 

 

53,000 

 

Leases pending

 

 

45.00 

 

24,000 

 

24,000 

 

 

 

Taken out of service for redevelopment

 

 

 

 

348,000 

 

348,000 

 

 

 

 

 

 

 

 

 

 

893,000 

 

752,000 

 

88,000 

 

53,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

To Be Resolved:

 

 

 

 

 

 

 

 

 

 

 

 

Vacated as of December 31, 2012

 

 

35.77 

 

1,002,000 

 

519,000 

 

473,000 

 

10,000 

 

Expiring in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013 

 

 

37.39 

 

126,000 

 

 

43,000 

 

83,000 

 

 

 

2014 

 

 

32.49 

 

304,000 

 

103,000 

 

201,000 

 

 

 

 

2015 

 

 

43.04 

 

70,000 

 

65,000 

 

5,000 

 

 

 

 

 

 

 

 

 

1,502,000 

 

687,000 

 

722,000 

 

93,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total square feet subject to BRAC

 

 

 

 

2,395,000 

 

1,439,000 

 

810,000 

 

146,000 

 

 

In the first quarter of 2012, we notified the lender that due to scheduled lease expirations resulting primarily from the effects of the BRAC statute, the Skyline properties had a 26% vacancy rate and rising (49.8% as of December 31, 2012) and, accordingly, cash flows are expected to decrease.  As a result, our subsidiary that owns these properties does not have and is not expected to have for some time sufficient funds to pay all of its current obligations, including interest payments to the lender.  Based on the projected vacancy and the significant amount of capital required to re-tenant these properties, at our request, the mortgage loan was transferred to the special servicer.  In the second quarter of 2012, we entered into a forbearance agreement with the special servicer to apply cash flows of the property, before interest on the loan, towards the repayment of $4,000,000 of tenant improvements and leasing commissions we funded in connection with a new lease at these properties, which was repaid in the third quarter.  The forbearance agreement was amended January 31, 2013, to extend its maturity through April 1, 2013 and provides for interest shortfalls to be deferred and added to the principal balance of the loan and not give rise to a loan default. As of December 31, 2012, the deferred interest amounted to $26,957,000.  We continue to negotiate with the special servicer to restructure the terms of the loan.

52

 


 

 

RETAIL PROPERTIES

 

As of December 31, 2012, our Retail Properties segment consisted of 120 retail properties, of which 114 are strip shopping centers and single tenant retail assets located primarily in the Northeast, Mid-Atlantic and California and six are regional malls located in New York, New Jersey, Virginia and San Juan, Puerto Rico.  Our strip shopping centers and malls are generally located on major highways in mature, densely populated areas, and therefore attract consumers from a regional, rather than a neighborhood market place.

 

Retail Properties’ lease terms generally range from five years or less in some instances for smaller tenants to as long as 25 years for major tenants.  Leases generally provide for reimbursements of real estate taxes, insurance and common area maintenance charges (including roof and structure in strip shopping centers, unless it is the tenant’s direct responsibility), and percentage rents based on tenant sales volume.  Percentage rents accounted for less than 1% of the Retail Properties total revenues during 2012.

 

Strip Shopping Centers

 

Our strip shopping centers contain an aggregate of 15.6 million square feet, of which we own 15.0 million square feet.  These properties are substantially (approximately 70%) leased to large stores (over 20,000 square feet). Tenants include destination retailers such as discount department stores, supermarkets, home improvement stores, discount apparel stores and membership warehouse clubs. Tenants typically offer basic consumer necessities such as food, health and beauty aids, moderately priced clothing, building materials and home improvement supplies, and compete primarily on the basis of price and location.

 

Regional Malls

 

The Monmouth Mall in Eatontown, New Jersey, in which we own a 50% interest, contains 1.5 million square feet and is anchored by Macy’s, Lord & Taylor, JC Penney and Boscov’s, three of which own their stores aggregating 612,000 square feet.

 

The Springfield Mall in Springfield, Virginia, contains 1.4 million square feet and is anchored by Macy’s, JC Penney and Target, two of which own their stores aggregating 390,000 square feet.  We have commenced the renovation of the mall, which is expected to be substantially completed in 2014.

 

The Broadway Mall in Hicksville, Long Island, New York contains 1.1 million square feet and is anchored by Macy’s, Ikea, National Amusement and Target, two of which owns its store aggregating 376,000 square feet. 

 

The Bergen Town Center in Paramus, New Jersey contains 948,000 square feet and is anchored by Century 21, Whole Foods Market and Target.

 

The Montehiedra Mall in San Juan, Puerto Rico contains 540,000 square feet and is anchored by The Home Depot, Kmart and Marshalls.

 

The Las Catalinas Mall in San Juan, Puerto Rico, contains 494,000 square feet and is anchored by Kmart and Sears, which owns its 139,000 square foot store.

 

53

 


 

 

RETAIL PROPERTIES – CONTINUED

 

As of December 31, 2012, the occupancy rate for the Retail Properties segment was 93.4%.  The statistics provided in the following sections includes information on the Strip Shopping Centers and Regional Malls.

 

 

Occupancy and weighted average annual rent per square foot:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Strip Shopping Centers:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

Rentable

 

Occupancy

 

Annual Net Rent

 

 

 

 

As of December 31,

 

Square Feet

 

Rate

 

Per Square Foot

 

 

 

 

2012 

 

 

14,984,000 

 

 

 

93.6 

%

 

$

17.39 

 

 

 

 

 

2011 

 

 

15,012,000 

 

 

 

93.3 

%

 

 

17.08 

 

 

 

 

 

2010 

 

 

15,135,000 

 

 

 

92.6 

%

 

 

16.26 

 

 

 

 

 

2009 

 

 

14,373,000 

 

 

 

92.4 

%

 

 

15.63 

 

 

 

 

 

2008 

 

 

13,629,000 

 

 

 

93.4 

%

 

 

14.97 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regional Malls:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Annual

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Rent Per Square Foot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mall and

 

 

 

 

 

 

 

Rentable

 

Occupancy

 

Mall

 

Anchor

 

 

 

 

As of December 31,

 

Square Feet

 

Rate

 

Tenants

 

Tenants

 

 

 

 

2012 

 

 

3,608,000 

 

 

92.7 

%

 

$

41.86 

 

 

$

22.46 

 

 

 

 

 

2011 

 

 

3,800,000 

 

 

92.7 

%

 

 

37.68 

 

 

 

21.98 

 

 

 

 

 

2010 

 

 

3,653,000 

 

 

92.8 

%

 

 

38.08 

 

 

 

22.77 

 

 

 

 

 

2009 

 

 

3,607,000 

 

 

92.9 

%

 

 

38.11 

 

 

 

21.72 

 

 

 

 

 

2008 

 

 

3,426,000 

 

 

94.7 

%

 

 

35.75 

 

 

 

21.25 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

54

 


 

 

RETAIL PROPERTIES – CONTINUED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012 rental revenue by type of retailer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industry

 

Percentage

 

 

 

Discount Stores

 

18 

%

 

 

 

Supermarkets

 

10 

%

 

 

 

Home Improvement

 

10 

%

 

 

 

Restaurants

 

%

 

 

 

Family Apparel

 

%

 

 

 

Home Entertainment and Electronics

 

%

 

 

 

Banking and Other Business Services

 

%

 

 

 

Personal Services

 

%

 

 

 

Home Furnishings

 

%

 

 

 

Women's Apparel

 

%

 

 

 

Sporting Goods, Toys and Hobbies

 

%

 

 

 

Membership Warehouse Clubs

 

%

 

 

 

Other

 

19 

%

 

 

 

 

 

100 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenants accounting for 2% or more of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

Percentage of

 

 

 

Square Feet

 

2012 

 

Retail Properties

 

Total

 

Tenant

 

Leased

 

Revenues

 

Revenues

 

Revenues

 

The Home Depot

 

1,135,000 

 

 

$

23,037,000 

 

5.8 

%

 

0.8 

%

 

Wal-Mart

 

1,426,000 

 

 

 

17,143,000 

 

4.4 

%

 

0.6 

%

 

Stop & Shop / Koninklijke Ahold NV

 

633,000 

 

 

 

15,868,000 

 

4.0 

%

 

0.6 

%

 

Best Buy

 

575,000 

 

 

 

13,567,000 

 

3.4 

%

 

0.5 

%

 

Lowe's

 

976,000 

 

 

 

12,666,000 

 

3.2 

%

 

0.5 

%

 

The TJX Companies, Inc.

 

588,000 

 

 

 

11,285,000 

 

2.9 

%

 

0.4 

%

 

Kohl's

 

610,000 

 

 

 

8,589,000 

 

2.2 

%

 

0.3 

%

 

Sears Holding Company (Kmart Corp. and Sears Corp.)

 

637,000 

 

 

 

8,084,000 

 

2.1 

%

 

0.3 

%

 

 

55

 


 

 

RETAIL PROPERTIES – CONTINUED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012 Leasing Activity:

 

 

 

 

 

 

 

 

 

 

 

 

Strip Shopping Centers:

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

 

Initial Rent Per

 

 

 

 

Location

 

Square Feet

 

Square Foot (1)

 

 

 

 

 

Lodi (Route 17 North), NJ

 

171,000 

 

$

11.44 

 

 

 

 

 

Totowa, NJ

 

114,000 

 

 

13.32 

 

 

 

 

 

Poughkeepsie, NY

 

81,000 

 

 

14.10 

 

 

 

 

 

Inwood, NY

 

66,000 

 

 

16.45 

 

 

 

 

 

Manalapan, NJ

 

64,000 

 

 

14.85 

 

 

 

 

 

Pasadena, CA

 

61,000 

 

 

26.32 

 

 

 

 

 

Tampa (Hyde Park Village), FL

 

57,000 

 

 

20.37 

 

 

 

 

 

North Bergen (Kennedy Blvd), NJ

 

56,000 

 

 

11.42 

 

 

 

 

 

West Babylon, NY

 

47,000 

 

 

13.45 

 

 

 

 

 

Morris Plains, NJ

 

46,000 

 

 

18.94 

 

 

 

 

 

Hackensack, NJ

 

46,000 

 

 

24.72 

 

 

 

 

 

Charleston, SC

 

45,000 

 

 

14.19 

 

 

 

 

 

South Plainfield , NJ

 

35,000 

 

 

21.53 

 

 

 

 

 

Lodi (Washington Street), NJ

 

31,000 

 

 

23.40 

 

 

 

 

 

Wilkes-Barre, PA

 

31,000 

 

 

6.60 

 

 

 

 

 

Beverly Connection, Los Angeles, CA

 

30,000 

 

 

39.57 

 

 

 

 

 

Barstow, CA

 

30,000 

 

 

7.15 

 

 

 

 

 

Towson, MD

 

26,000 

 

 

19.30 

 

 

 

 

 

Bricktown, NJ

 

13,000 

 

 

34.27 

 

 

 

 

 

Dover, NJ

 

12,000 

 

 

12.51 

 

 

 

 

 

Garfield, NJ

 

25,000 

 

 

17.00 

 

 

 

 

 

Bethlehem, PA

 

23,000 

 

 

11.94 

 

 

 

 

 

Huntington, NY

 

17,000 

 

 

22.61 

 

 

 

 

 

Allentown, PA

 

17,000 

 

 

16.35 

 

 

 

 

 

Union, NJ

 

12,000 

 

 

29.81 

 

 

 

 

 

Queens, NY

 

12,000 

 

 

44.18 

 

 

 

 

 

East Brunswick (325 - 333 Route 18 South), NJ

 

10,000 

 

 

24.20 

 

 

 

 

 

Other

 

98,000 

 

 

30.14 

 

 

 

 

Total

 

1,276,000 

 

 

18.65 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's share

 

1,276,000 

 

 

18.65 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regional Malls:

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

 

Initial Rent Per

 

 

 

 

Location

 

Square Feet

 

Square Foot (1)

 

 

 

 

 

Monmouth Mall, Eatontown, NJ

 

91,000 

 

 

28.40 

 

 

 

 

 

Broadway Mall, Hicksville, NY

 

22,000 

 

 

46.35 

 

 

 

 

 

Montehiedra, Puerto Rico

 

17,000 

 

 

23.12 

 

 

 

 

 

Bergen Town Center, Paramus, NJ

 

11,000 

 

 

50.82 

 

 

 

 

 

Las Catalinas Mall, Puerto Rico

 

5,000 

 

 

124.63 

 

 

 

 

Total

 

146,000 

 

 

35.31 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado's share

 

101,000 

 

 

38.45 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Represents the cash basis weighted average starting rents per square foot, which is generally indicative of market rents. Most leases include free rent and periodic step-ups in rent, which are not included in the initial cash basis rent per square foot leased, but are included in the GAAP basis straight-line rent per square foot (see "Overview - Leasing Activity" of Management's Discussion and Analysis of Financial Condition and Results of Operations).

 

 

56

 


 

 

RETAIL PROPERTIES – CONTINUED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease expirations as of December 31, 2012, assuming none of the tenants exercise renewal options:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

Weighted Average Annual

 

 

 

Number of

 

Square Feet of

 

Retail Properties

 

Net Rent of Expiring Leases

 

Year

 

Expiring Leases

 

Expiring Leases

 

Square Feet

 

Total

 

Per Square Foot

 

Strip Shopping Centers:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Month to month

 

15 

 

 

67,000 

 

0.4 

%

 

$

1,295,000 

 

$

19.37 

 

2013 

 

79 

 

 

608,000 

 

3.6 

%

 

 

9,834,000 

 

 

16.17 

 

2014 

 

94 

 

 

1,279,000 

 

7.7 

%

 

 

15,590,000 

 

 

12.19 

 

2015 

 

66 

 

 

588,000 

 

3.5 

%

 

 

12,473,000 

 

 

21.20 

 

2016 

 

70 

 

 

771,000 

 

4.6 

%

 

 

11,516,000 

 

 

14.94 

 

2017 

 

66 

 

 

549,000 

 

3.3 

%

 

 

9,252,000 

 

 

16.86 

 

2018 

 

78 

 

 

1,613,000 

 

9.7 

%

 

 

24,907,000 

 

 

15.44 

 

2019 

 

47 

 

 

999,000 

 

6.0 

%

 

 

18,518,000 

 

 

18.54 

 

2020 

 

29 

 

 

787,000 

 

4.7 

%

 

 

10,095,000 

 

 

12.82 

 

2021 

 

40 

 

 

653,000 

 

3.9 

%

 

 

11,271,000 

 

 

17.25 

 

2022 

 

49 

 

 

961,000 

 

5.8 

%

 

 

12,071,000 

 

 

12.57 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regional Malls:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Month to month

 

18 

 

 

58,000 

 

0.3 

%

 

$

1,981,000 

 

$

34.33 

 

2013 

 

30 

 

 

84,000 

 

0.5 

%

 

 

3,959,000 

 

 

47.20 

 

2014 

 

38 

 

 

180,000 

 

1.1 

%

 

 

4,807,000 

 

 

26.73 

 

2015 

 

33 

 

 

186,000 

 

1.1 

%

 

 

5,582,000 

 

 

29.95 

 

2016 

 

42 

 

 

117,000 

 

0.7 

%

 

 

4,820,000 

 

 

41.10 

 

2017 

 

26 

 

 

348,000 

 

2.1 

%

 

 

2,879,000 

 

 

8.28 

 

2018 

 

28 

 

 

67,000 

 

0.4 

%

 

 

3,599,000 

 

 

53.72 

 

2019 

 

25 

 

 

89,000 

 

0.5 

%

 

 

4,480,000 

 

 

50.52 

 

2020 

 

21 

 

 

94,000 

 

0.6 

%

 

 

4,025,000 

 

 

42.92 

 

2021 

 

18 

 

 

414,000 

 

2.5 

%

 

 

5,492,000 

 

 

13.27 

 

2022 

 

10 

 

 

48,000 

 

0.3 

%

 

 

1,845,000 

 

 

38.75 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

57

 


 
 

 

MERCHANDISE MART

 

As of December 31, 2012, our Merchandise Mart segment consisted of the 3.5 million square foot Merchandise Mart in Chicago, 7 West 34th Street in New York City and 4 garages in Chicago totaling 558,000 square feet (1,681 spaces). 

 

In 2012, we sold four properties and the Canadian Trade Shows for an aggregate of $456,400,000, which resulted in a net gain aggregating $79,820,000. 

 

In July 2012, we leased 572,000 square feet at the Merchandise Mart to Motorola Mobility, owned by Google, as their Corporate headquarters for a 15-year term.  In the first quarter of 2013, Motorola Mobility took possession of three floors aggregating 495,000 square feet and will take possession of the remaining space in the second quarter.  As a result of this lease, the office component of the building was increased to approximately 50%. 

 

In 2014, 7 West 34th Street (currently a showroom building), will be converted to an office building and will be transferred to our New York segment.

 

As a result of certain recent organizational changes and asset sales in 2012, the Merchandise Mart segment no longer meets the criteria for it to be a separate reportable segment; accordingly, effective January 1, 2013, it will be reclassified to our Other segment.

 

In 2010, two of our wholly owned subsidiaries entered into agreements with Cuyahoga County, Ohio (the “County”) to develop and operate the Cleveland Medical Mart and Convention Center (the “Facility”), a 1,000,000 square foot showroom, trade show and conference center in Cleveland’s central business district.  The County is funding the development of the Facility, using the proceeds it received from the issuance of general obligation bonds and other sources, up to the development budget of $418,000,000 and maintains effective control of the property.  During the 17-year development and operating period, our subsidiaries will receive net settled payments of approximately $10,000,000 per year, which are net of a $36,000,000 annual obligation to the County.  Our subsidiaries’ obligation has been pledged by the County to the bondholders, but is payable by our subsidiaries only to the extent that they first receive at least an equal payment from the County.  Construction of the Facility is expected to be completed in 2013.  As of December 31, 2012, $379,658,000 of the $418,000,000 development budget was expended.

 

As of December 31, 2012, the occupancy rate for the Merchandise Mart segment was 92.6%.  The statistics provided in the following sections include information on the office and showroom spaces.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Square feet by location and use as of December 31, 2012:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

 

 

 

 

 

Showroom

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Temporary

 

 

 

 

 

 

 

Total

 

Office

 

Total

 

Permanent

 

Trade Show

 

Retail

 

 

Chicago, Illinois:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise Mart

 

3,553 

 

1,615 

 

1,853 

 

1,467 

 

386 

 

85 

 

 

 

Other

 

10 

 

 

 

 

 

10 

 

 

 

Total Chicago, Illinois

 

3,563 

 

1,615 

 

1,853 

 

1,467 

 

386 

 

95 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, New York:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7 West 34th Street

 

419 

 

52 

 

367 

 

363 

 

 

 

 

Total Merchandise Mart Properties

 

3,982 

 

1,667 

 

2,220 

 

1,830 

 

390 

 

95 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise Mart lease terms generally range from three to seven years for smaller tenants to as long as 15 years for major tenants. Leases typically provide for periodic step-ups in rent over the term of the lease and pass through to tenants their share of increases in real estate taxes and operating expenses over a base year. Electricity is provided to tenants on a sub-metered basis or included in rent and adjusted for subsequent utility rate increases. Leases also typically provide for tenant improvement allowances for all or a portion of the tenant’s initial construction of its premises.

 

The showrooms provide manufacturers and wholesalers with permanent and temporary space in which to display products for buyers, specifiers and end users. The showrooms are also used for participating in trade shows for the contract furniture, casual furniture, gift, carpet, crafts, apparel and design industries.

 

58

 


 

 

MERCHANDISE MART – CONTINUED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Occupancy and weighted average annual rent per square foot:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

 

Average Annual

 

 

 

 

 

 

 

Rentable

 

 

 

Rent Per

 

 

 

 

As of December 31,

 

Square Feet

 

Occupancy Rate

 

Square Foot

 

 

 

 

2012 

 

 

1,667,000 

 

 

 

90.0

%

 

$

24.70 

 

 

 

 

 

2011 

 

 

1,129,000 

 

 

 

90.1

%

 

 

24.18 

 

 

 

 

 

2010 

 

 

1,043,000 

 

 

 

90.9

%

 

 

23.50 

 

 

 

 

 

2009 

 

 

1,054,000 

 

 

 

93.5

%

 

 

21.84 

 

 

 

 

 

2008 

 

 

1,058,000 

 

 

 

94.2

%

 

 

21.91 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Showroom:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

 

Average Annual

 

 

 

 

 

 

 

Rentable

 

 

 

Rent Per

 

 

 

 

As of December 31,

 

Square Feet

 

Occupancy Rate

 

Square Foot

 

 

 

 

2012 

 

 

2,220,000 

 

 

 

94.7

%

 

$

33.76

 

 

 

 

 

2011 

 

 

2,715,000 

 

 

 

89.8

%

 

 

33.70

 

 

 

 

 

2010 

 

 

2,802,000 

 

 

 

95.0

%

 

 

33.55

 

 

 

 

 

2009 

 

 

2,792,000 

 

 

 

93.9

%

 

 

33.24

 

 

 

 

 

2008 

 

 

2,789,000 

 

 

 

96.4

%

 

 

32.93

 

 

 

 

2012 rental revenues by tenants’ industry:

 

 

 

 

 

Office:

 

 

 

 

 

 

 

 

 

Industry

 

Percentage

 

 

 

 

 

Advertising and Marketing

 

24 

%

 

 

 

 

 

Business Services

 

22 

%

 

 

 

 

 

Education

 

21 

%

 

 

 

 

 

Insurance

 

11 

%

 

 

 

 

 

Banking

 

%

 

 

 

 

 

Health Care

 

%

 

 

 

 

 

Telecommunications

 

%

 

 

 

 

 

Government

 

%

 

 

 

 

 

Other

 

%

 

 

 

 

 

 

 

100 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Showroom:

 

 

 

 

 

 

 

 

 

Industry

 

Percentage

 

 

 

 

 

Contract Furnishing

 

30 

%

 

 

 

 

 

Residential Design

 

23 

%

 

 

 

 

 

Gift

 

20 

%

 

 

 

 

 

Casual Furniture

 

12 

%

 

 

 

 

 

Apparel

 

10 

%

 

 

 

 

 

Building Products

 

%

 

 

 

 

 

 

 

100 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenants accounting for 2% or more of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

Percentage

 

 

 

 

Square Feet

 

2012 

Merchandise Mart

of Total

 

 

Tenant

 

Leased

 

Revenues

 

Revenues

 

Revenues

 

 

CCC Information Systems

 

109,000 

 

 

$

3,141,000 

 

2.4 

%

 

0.1 

%

 

 

WPP

 

102,000 

 

 

 

2,826,000 

 

2.1 

%

 

0.1 

%

 

                                             

 

59

 


 
 

 

MERCHANDISE MART – CONTINUED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012 Leasing Activity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In 2012, we leased 593,000 square feet of office space at a weighted average initial rent of $32.97 per square foot and 380,000 square feet of showroom space at an average initial rent of $38.67 per square foot.

 

Lease expirations as of December 31, 2012, assuming none of the tenants exercise renewal options:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise Mart

 

Weighted Average Annual

 

 

 

 

 

Number of

 

Square Feet of

 

Office

 

Rent of Expiring Leases

 

 

 

Year

 

Expiring Leases

 

Expiring Leases

 

Square Feet

 

Total

 

Per Square Foot

 

 

 

Month to month

 

 

 

2,000 

 

0.1

%

 

$

40,000 

 

$

20.86 

 

 

 

2013 

 

 

 

19,000 

 

1.3

%

 

 

462,000 

 

 

24.44 

 

 

 

2014 

 

 

 

2,000 

 

0.1

%

 

 

53,000 

 

 

27.05 

 

 

 

2015 

 

 

 

46,000 

 

3.0

%

 

 

1,457,000 

 

 

31.88 

 

 

 

2016 

 

 

 

96,000 

 

6.4

%

 

 

2,717,000 

 

 

28.35 

 

 

 

2017 

 

 

 

 

 

 

 

 

 

 

 

 

2018 

 

 

 

134,000 

 

9.0

%

 

 

3,873,000 

 

 

28.81 

 

 

 

2019 

 

 

 

 

 

 

 

 

 

 

 

 

2020 

 

 

 

128,000 

 

8.5

%

 

 

4,145,000 

 

 

32.39 

 

 

 

2021 

 

 

 

192,000 

 

12.8

%

 

 

5,430,000 

 

 

28.24 

 

 

 

2022 

 

 

 

121,000 

 

8.0

%

 

 

3,315,000 

 

 

27.48 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Showroom:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise Mart

 

Weighted Average Annual

 

 

 

 

 

Number of

 

Square Feet of

 

Showroom

 

Rent of Expiring Leases

 

 

 

Year

 

Expiring Leases

 

Expiring Leases

 

Square Feet

 

Total

 

Per Square Foot

 

 

 

Month to month

 

11 

 

 

39,000 

 

1.9

%

 

$

1,591,000 

 

$

40.86 

 

 

 

2013 

 

84 

 

 

217,000 

 

10.3

%

 

 

9,234,000 

 

 

42.47 

 

 

 

2014 

 

72 

 

 

181,000 

 

8.6

%

 

 

7,392,000 

 

 

40.81 

 

 

 

2015 

 

100 

 

 

198,000 

 

9.4

%

 

 

7,534,000 

 

 

38.02 

 

 

 

2016 

 

43 

 

 

200,000 

 

9.5

%

 

 

7,591,000 

 

 

38.00 

 

 

 

2017 

 

56 

 

 

316,000 

 

15.0

%

 

 

12,088,000 

 

 

38.31 

 

 

 

2018 

 

25 

 

 

180,000 

 

8.6

%

 

 

6,785,000 

 

 

37.66 

 

 

 

2019 

 

21 

 

 

87,000 

 

4.1

%

 

 

3,706,000 

 

 

42.83 

 

 

 

2020 

 

15 

 

 

57,000 

 

2.7

%

 

 

2,531,000 

 

 

44.78 

 

 

 

2021 

 

13 

 

 

95,000 

 

4.5

%

 

 

3,535,000 

 

 

37.10 

 

 

 

2022 

 

 

 

52,000 

 

2.5

%

 

 

1,959,000 

 

 

37.86 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

60

 


 

 

TOYS “R” US, INC. (“TOYS”)

As of December 31, 2012 we own a 32.6% interest in Toys, a worldwide specialty retailer of toys and baby products, which has a significant real estate component. Toys had $5.7 billion of outstanding debt at October 27, 2012, of which our pro rata share was $1.9 billion, none of which is recourse to us.

 

The following table sets forth the total number of stores operated by Toys as of December 31, 2012:  

 

 

 

 

 

 

 

Building

 

 

 

 

 

 

 

 

 

 

Owned on

 

 

 

 

 

 

 

 

 

Leased

 

 

 

 

 

Total

 

Owned

 

Ground

 

Leased

 

 

 

Domestic

875 

 

288 

 

224 

 

363 

 

 

 

International

651 

 

78 

 

26 

 

547 

 

 

 

Total Owned and Leased

1,526 

 

366 

 

250 

 

910 

 

 

 

Franchised Stores

155 

 

 

 

 

 

 

 

 

 

Total

1,681 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INVESTMENTS

 

555 California Street

As of December 31, 2012, we own a 70% controlling interest in a three-building office complex containing 1.8 million square feet, known as the Bank of America Center, located at California and Montgomery Streets in San Francisco’s financial district (“555 California Street”).  555 California Street is encumbered by a $600,000,000 mortgage loan that bears interest at a fixed rate of 5.10% and matures in September 2021.

 

555 California Street lease terms generally range from five to seven years for smaller tenants to as long as 15 years for major tenants, and may provide for extension options at market rates. Leases typically provide for periodic step‑ups in rent over the term of the lease and pass through to tenants their share of increases in real estate taxes and operating expenses over a base year.  Leases also typically provide for tenant improvement allowances for all or a portion of the tenant’s initial construction costs of its premises.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Occupancy and weighted average annual rent per square foot as of December 31, 2012:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

As of

 

Rentable

 

 

 

Annual Rent

 

 

 

December 31,

 

Square Feet

 

Occupancy Rate

 

Per Square Foot

 

 

 

2012 

 

 

1,257,000 

 

 

 

93.1

%

 

$

54.53

 

 

 

 

2011 

 

 

1,257,000 

 

 

 

93.1

%

 

 

54.40

 

 

 

 

2010 

 

 

1,257,000 

 

 

 

93.0

%

 

55.97

 

 

 

 

2009 

 

 

1,256,000 

 

 

 

94.8

%

 

 

57.25

 

 

 

 

2008 

 

 

1,252,000 

 

 

 

94.0

%

 

 

57.98

 

 

 

 

 

 

 

 

 

 

 

2012 rental revenue by tenants’ industry:

 

 

 

 

 

 

 

 

Industry

 

Percentage

 

 

 

Finance

 

42 

%

 

 

 

Banking

 

41 

%

 

 

 

Legal Services

 

15 

%

 

 

 

Other

 

%

 

 

 

 

 

100 

%

 

 

 

61

 


 

 

OTHER INVESTMENTS – CONTINUED

 

555 California Street - continued

 

Tenants accounting for 2% or more of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

 

 

 

 

 

 

 

 

 

 

 

555 California

 

Percentage of

 

 

 

 

 

Square

 

2012 

 

Street's

 

Total

 

 

 

Tenant

 

Feet Leased

 

Revenues

 

Revenues

 

Revenues

 

 

 

Bank of America

 

650,000 

 

$

34,840,000 

 

37.2 

%

 

1.3 

%

 

 

 

UBS Financial Services

 

106,000 

 

 

6,960,000 

 

7.4 

%

0.3 

%

 

 

 

Morgan Stanley & Company, Inc.

 

121,000 

 

 

6,668,000 

 

7.1 

%

0.2 

%

 

 

 

Kirkland & Ellis LLP

 

125,000 

 

 

6,125,000 

 

6.5 

%

0.2 

%

 

 

 

Goldman Sachs & Co.

 

90,000 

 

 

4,762,000 

 

5.1 

%

0.2 

%

 

 

 

Dodge & Cox

 

62,000 

 

 

3,907,000 

 

4.2 

%

 

0.1 

%

 

 

 

McKinsey & Company Inc.

 

54,000 

 

 

3,907,000 

 

4.2 

%

0.1 

%

 

 

 

Jones Day

 

81,000 

 

 

3,366,000 

 

3.6 

%

 

0.1 

%

 

 

 

KKR Financial LLC

 

51,000 

 

 

3,119,000 

 

3.3 

%

 

0.1 

%

 

 

 

Sidley Austin LLP

 

48,000 

 

 

1,952,000 

 

2.1 

%

 

0.1 

%

 

 

 

 

Lexington Realty Trust (“Lexington”)

As of December 31, 2012, we own 10.5% of the outstanding common shares of Lexington, which has interests in 220 properties, encompassing approximately 42.1 million square feet across 42 states, generally net-leased to major corporations.  Lexington had approximately $2.0 billion of outstanding debt at December 31, 2012, of which our pro rata share was $209 million, none of which is recourse to us.

 

 

Vornado Capital Partners Real Estate Fund (the “Fund”)

 

As of December 31, 2012, the Fund has nine investments with an aggregate fair value of approximately $600,786,000, or $67,642,000 in excess of its cost, and has remaining unfunded commitments of $217,676,000, of which our share is $54,419,000.

62

 


 

 

ITEM 3.    LEGAL PROCEEDINGS

 

 

We are from time to time involved in legal actions arising in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters, including the matter referred to below, is not expected to have a material adverse effect on our financial position, results of operations or cash flows.

 

In 2003, Stop & Shop filed an action against us in the New York Supreme Court, claiming that we had no right to reallocate and therefore continue to collect $5,000,000 ($6,000,000 beginning February 1, 2012) of annual rent from Stop & Shop pursuant to a Master Agreement and Guaranty, because of the expiration of the leases to which the annual rent was previously allocated. Stop & Shop asserted that an order of the Bankruptcy Court for the Southern District of New York, as modified on appeal by the District Court, froze our right to reallocate and effectively terminated our right to collect the annual rent from Stop & Shop.  We asserted a counterclaim seeking a judgment for all of the unpaid annual rent accruing through the date of the judgment and a declaration that Stop & Shop will continue to be liable for the annual rent as long as any of the leases subject to the Master Agreement and Guaranty remain in effect.  A trial was held in November 2010.  On November 7, 2011, the Court determined that we had a continuing right to allocate the annual rent to unexpired leases covered by the Master Agreement and Guaranty, and directed entry of a judgment in our favor ordering Stop & Shop to pay us the unpaid annual rent accrued through February 28, 2011 in the amount of $37,422,000, a portion of the annual rent due from March 1, 2011 through the date of judgment, interest, and attorneys’ fees.  On December 16, 2011, a money judgment based on the Court’s decision was entered in our favor in the amount of $56,597,000 (including interest and costs).  Stop & Shop appealed the Court’s decision and the judgment and posted a bond to secure payment of the judgment. On January 12, 2012, we commenced a new action against Stop & Shop seeking recovery of $2,500,000 of annual rent not included in the money judgment, plus additional annual rent as it accrues.  At December 31, 2012, we had a $47,900,000 receivable from Stop & Shop, which is included as a component of “tenant and other receivables” on our consolidated balance sheet.  On February 6, 2013, we received $124,000,000 pursuant to a settlement agreement with Stop & Shop.  The settlement terminates our right to receive $6,000,000 of additional annual rent under the 1992 agreement, for a period potentially through 2031.  As a result of this settlement, we collected the aforementioned $47,900,000 receivable and will recognize approximately $59,000,000 of net income in the first quarter of 2013. 

  

 

 

ITEM 4.    MINE SAFETY DISCLOSURES

 

Not applicable.

63

 


 

 

PART II

 

 

Item 5.        Market for Registrant’s Common Equity, Related STOCKholder Matters and issuer purchases of equity securities

 

Vornado’s common shares are traded on the New York Stock Exchange under the symbol “VNO.” 

 

Quarterly high and low sales prices of the common shares and dividends paid per common share for the years ended December 31, 2012 and 2011 were as follows:

 

 

 

Year Ended

 

 

Year Ended

 

 

 

 

December 31, 2012

 

 

December 31, 2011

 

 

Quarter

 

High

 

Low

 

Dividends

 

 

High

 

Low

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1st

 

$

86.21 

 

$

75.17 

 

$

0.69 

 

 

$

93.53 

 

$

82.12 

 

$

0.69 

 

 

2nd

 

 

88.50 

 

 

78.56 

 

 

0.69 

 

 

 

98.42 

 

 

86.85 

 

 

0.69 

 

 

3rd

 

 

86.56 

 

 

79.50 

 

 

0.69 

 

 

 

98.77 

 

 

72.85 

 

 

0.69 

 

 

4th

 

 

82.50 

 

 

72.64 

 

 

1.69 

(1)

 

 

84.30 

 

 

68.39 

 

 

0.69 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Comprised of a regular quarterly dividend of $0.69 per share and a special long-term capital gain dividend of $1.00 per share.

 

 

On January 17, 2013, we increased our quarterly common dividend to $0.73 per share (a new indicated annual rate of $2.92 per share).  As of February 1, 2013, there were 1,206 holders of record of our common shares.

 

 

 

Recent Sales of Unregistered Securities

 

During the fourth quarter of 2012, we issued 46,047 common shares upon the redemption of Class A units of the Operating Partnership held by persons who received units, in private placements in earlier periods, in exchange for their interests in limited partnerships that owned real estate. The common shares were issued without registration under the Securities Act of 1933 in reliance on Section 4 (2) of that Act.

 

Information relating to compensation plans under which our equity securities are authorized for issuance is set forth under Part III, Item 12 of this Annual Report on Form 10-K and such information is incorporated by reference herein.

 

 

 

Recent Purchases of Equity Securities

 

None

 

64

 


 

 

Performance Graph

 

The following graph is a comparison of the five-year cumulative return of our common shares, the Standard & Poor’s 500 Index (the “S&P 500 Index”) and the National Association of Real Estate Investment Trusts’ (“NAREIT”) All Equity Index, a peer group index.  The graph assumes that $100 was invested on December 31, 2007 in our common shares, the S&P 500 Index and the NAREIT All Equity Index and that all dividends were reinvested without the payment of any commissions.  There can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the graph below.

 

 

 

 

 

 

2007 

 

2008 

 

2009 

 

2010 

 

2011 

 

2012 

 

 

Vornado Realty Trust

 

$

100 

 

$

72 

 

$

89 

 

$

110 

 

$

105 

 

$

114 

 

 

S&P 500 Index

 

 

100 

 

 

63 

 

 

80 

 

 

92 

 

 

94 

 

 

109 

 

 

The NAREIT All Equity Index

 

 

100 

 

 

62 

 

 

80 

 

 

102 

 

 

110 

 

 

132 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65

 


 

 

ITEM 6. SELECTED FINANCIAL DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

(Amounts in thousands, except per share amounts)

2012 

 

2011 

 

 

 

2010 

 

2009 

 

2008 

Operating Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property rentals

$

2,085,582 

 

$

2,114,255 

 

 

 

$

2,093,475 

 

$

2,006,207 

 

$

1,978,454 

 

Tenant expense reimbursements

 

301,092 

 

 

314,752 

 

 

 

 

317,777 

 

 

312,689 

 

 

307,909 

 

Cleveland Medical Mart development project

 

235,234 

 

 

154,080 

 

 

 

 

 

 

 

 

 

Fee and other income

 

144,549 

 

 

149,749 

 

 

 

 

146,955 

 

 

154,590 

 

 

123,823 

Total revenues

 

2,766,457 

 

 

2,732,836 

 

 

 

 

2,558,207 

 

 

2,473,486 

 

 

2,410,186 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating

 

1,021,719 

 

 

995,586 

 

 

 

 

983,424 

 

 

954,754 

 

 

931,455 

 

Depreciation and amortization

 

517,811 

 

 

524,550 

 

 

 

 

494,898 

 

 

492,505 

 

 

492,208 

 

General and administrative

 

201,894 

 

 

208,008 

 

 

 

 

211,399 

 

 

227,715 

 

 

191,599 

 

Cleveland Medical Mart development project

 

226,619 

 

 

145,824 

 

 

 

 

 

 

 

 

 

Impairment losses, acquisition related costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and tenant buy-outs

 

120,786 

 

 

35,299 

 

 

 

 

109,458 

 

 

71,863 

 

 

81,447 

Total expenses

 

2,088,829 

 

 

1,909,267 

 

 

 

 

1,799,179 

 

 

1,746,837 

 

 

1,696,709 

Operating income

 

677,628 

 

 

823,569 

 

 

 

 

759,028 

 

 

726,649 

 

 

713,477 

Income applicable to Toys "R" Us

 

14,859 

 

 

48,540 

 

 

 

 

71,624 

 

 

92,300 

 

 

2,380 

Income (loss) from partially owned entities

 

408,267 

 

 

70,072 

 

 

 

 

20,869 

 

 

(21,471)

 

 

(160,620)

Income (loss) from Real Estate Fund

 

63,936 

 

 

22,886 

 

 

 

 

(303)

 

 

 

 

Interest and other investment (loss) income, net

 

(260,945)

 

 

148,784 

 

 

 

 

235,267 

 

 

(116,436)

 

 

(3,017)

Interest and debt expense

 

(500,361)

 

 

(526,175)

 

 

 

 

(539,370)

 

 

(597,105)

 

 

(591,419)

Net gain (loss) on extinguishment of debt

 

 

 

 

 

 

 

94,789 

 

 

(25,915)

 

 

9,820 

Net gain on disposition of wholly owned and partially

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

owned assets

 

13,347 

 

 

15,134 

 

 

 

 

81,432 

 

 

5,641 

 

 

7,757 

Income (loss) before income taxes

 

416,731 

 

 

602,810 

 

 

 

 

723,336 

 

 

63,663 

 

 

(21,622)

Income tax (expense) benefit

 

(8,132)

 

 

(23,925)

 

 

 

 

(22,137)

 

 

(20,134)

 

 

205,616 

Income from continuing operations

 

408,599 

 

 

578,885 

 

 

 

 

701,199 

 

 

43,529 

 

 

183,994 

Income from discontinued operations

 

285,942 

 

 

161,115 

 

 

 

 

6,832 

 

 

84,921 

 

 

227,451 

Net income

 

694,541 

 

 

740,000 

 

 

 

 

708,031 

 

 

128,450 

 

 

411,445 

Less net (income) loss attributable to noncontrolling interests in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated subsidiaries

 

(32,018)

 

 

(21,786)

 

 

 

 

(4,920)

 

 

2,839 

 

 

3,263 

 

Operating Partnership

 

(35,327)

 

 

(41,059)

 

 

 

 

(44,033)

 

 

(5,834)

 

 

(33,327)

 

Preferred unit distributions of the Operating Partnership

 

(9,936)

 

 

(14,853)

 

 

 

 

(11,195)

 

 

(19,286)

 

 

(22,084)

Net income attributable to Vornado

 

617,260 

 

 

662,302 

 

 

 

 

647,883 

 

 

106,169 

 

 

359,297 

Preferred share dividends

 

(76,937)

 

 

(65,531)

 

 

 

 

(55,534)

 

 

(57,076)

 

 

(57,091)

Discount on preferred share and unit redemptions

 

8,948 

 

 

5,000 

 

 

 

 

4,382 

 

 

 

 

Net income attributable to common shareholders

$

549,271 

 

$

601,771 

 

 

 

$

596,731 

 

$

49,093 

 

$

302,206 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, net - basic

$

1.50 

 

$

2.44 

 

 

 

$

3.24 

 

$

(0.16)

 

$

0.63 

 

Income (loss) from continuing operations, net - diluted

 

1.49 

 

 

2.42 

 

 

 

 

3.21 

 

 

(0.16)

 

 

0.61 

 

Net income per common share - basic

 

2.95 

 

 

3.26 

 

 

 

 

3.27 

 

 

0.28 

 

 

1.96 

 

Net income per common share - diluted

 

2.94 

 

 

3.23 

 

 

 

 

3.24 

 

 

0.28 

 

 

1.91 

 

Dividends per common share

 

3.76 

(1)

 

2.76 

 

 

 

 

2.60 

 

 

3.20 

 

 

3.65 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

21,965,975 

 

$

20,446,487 

 

 

 

$

20,517,471 

 

$

20,185,472 

 

$

21,418,048 

 

Real estate, at cost

 

18,495,359 

 

 

16,703,757 

 

 

 

 

16,454,967 

 

 

16,344,244 

 

 

16,195,706 

 

Accumulated depreciation

 

(3,097,074)

 

 

(2,894,374)

 

 

 

 

(2,530,945)

 

 

(2,228,425)

 

 

(2,212,111)

 

Debt

 

11,296,190 

 

 

10,076,607 

 

 

 

 

10,349,457 

 

 

10,103,428 

 

 

11,596,585 

 

Total equity

 

7,904,144 

 

 

7,508,447 

 

 

 

 

6,830,405 

 

 

6,649,406 

 

 

6,214,652 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes a special long-term capital gain dividend of $1.00 per share.

 

66

 


 

 

 

 

 

 

Year Ended December 31,

(Amounts in thousands)

2012 

 

2011 

 

2010 

 

2009 

 

2008 

Other Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations ("FFO") (1) :

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Vornado

$

617,260 

 

$

662,302 

 

$

647,883 

 

$

106,169 

 

$

359,297 

 

Depreciation and amortization of real property

 

504,407 

 

 

530,113 

 

 

505,806 

 

 

508,572 

 

 

509,367 

 

Net gains on sale of real estate

 

(245,799)

 

 

(51,623)

 

 

(57,248)

 

 

(45,282)

 

 

(57,523)

 

Real estate impairment losses

 

129,964 

 

 

28,799 

 

 

97,500 

 

 

23,203 

 

 

 

Proportionate share of adjustments to equity in net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of Toys, to arrive at FFO:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization of real property

 

68,483 

 

 

70,883 

 

 

70,174 

 

 

65,358 

 

 

66,435 

 

 

 

Net gains on sale of real estate

 

 

 

(491)

 

 

 

 

(164)

 

 

(719)

 

 

 

Real estate impairment losses

 

9,824 

 

 

 

 

 

 

 

 

 

 

 

Income tax effect of above adjustments

 

(27,493)

 

 

(24,634)

 

 

(24,561)

 

 

(22,819)

 

 

(23,223)

 

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

 

86,197 

 

 

99,992 

 

 

78,151 

 

 

75,200 

 

 

49,513 

 

 

 

Net gains on sale of real estate

 

(241,602)

 

 

(9,276)

 

 

(5,784)

 

 

(1,188)

 

 

(8,759)

 

 

 

Real estate impairment losses

 

1,849 

 

 

 

 

11,481 

 

 

 

 

 

Noncontrolling interests' share of above adjustments

 

(16,649)

 

 

(40,957)

 

 

(46,794)

 

 

(47,022)

 

 

(49,683)

 

FFO

 

886,441 

 

 

1,265,108 

 

 

1,276,608 

 

 

662,027 

 

 

844,705 

 

Preferred share dividends

 

(76,937)

 

 

(65,531)

 

 

(55,534)

 

 

(57,076)

 

 

(57,091)

 

Discount on preferred share and unit redemptions

 

8,948 

 

 

5,000 

 

 

4,382 

 

 

 

 

 

FFO attributable to common shareholders

 

818,452 

 

 

1,204,577 

 

 

1,225,456 

 

 

604,951 

 

 

787,614 

 

Convertible preferred share dividends

 

113 

 

 

124 

 

 

160 

 

 

170 

 

 

189 

 

Interest on 3.88% exchangeable senior debentures

 

 

 

26,272 

 

 

25,917 

 

 

-

 

 

25,261 

FFO attributable to common shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

plus assumed conversions (1)

$

818,565 

 

$

1,230,973 

 

$

1,251,533 

 

$

605,121 

 

$

813,064 

 

________________________________

(1)   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 gain from sales of depreciated real estate assets, real estate impairment losses, 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 flows as a liquidity measure.  FFO may not be comparable to similarly titled measures employed by other companies.

67

 


 
 

 

ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

 

Number

 

 

 

 

Overview

69 

 

 

 

 

Overview - Leasing activity

77 

 

 

 

 

Critical Accounting Policies

81 

 

 

 

 

Net Income and EBITDA by Segment for the Years Ended

 

 

 

 

 

 

December 31, 2012, 2011 and 2010

84 

 

 

 

 

Results of Operations:

 

 

 

 

 

 

Years Ended December 31, 2012 and 2011

90 

 

 

 

 

 

Years Ended December 31, 2011 and 2010

97 

 

 

 

 

Supplemental Information:

 

 

 

 

 

 

Net Income and EBITDA by Segment for the Three Months Ended

 

 

 

 

 

 

 

December 31, 2012 and 2011

103 

 

 

 

 

 

Three Months Ended December 31, 2012 Compared to December 31, 2011

108 

 

 

 

 

 

Three Months Ended December 31, 2012 Compared to September 30, 2012

109 

 

 

 

 

Related Party Transactions

110 

 

 

 

 

Liquidity and Capital Resources

111 

 

 

 

 

 

Financing Activities and Contractual Obligations

111 

 

 

 

 

 

Certain Future Cash Requirements

115 

 

 

 

 

 

Cash Flows for the Year Ended December 31, 2012

118 

 

 

 

 

 

Cash Flows for the Year Ended December 31, 2011

120 

 

 

 

 

 

Cash Flows for the Year Ended December 31, 2010

122 

 

 

 

 

Funds From Operations for the Three Months and Years Ended

 

 

 

 

 

 

December 31, 2012 and 2011

124 

 

 

68

 


 

 

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”).  Accordingly, Vornado’s cash flow and ability to pay dividends to its shareholders is dependent upon the cash flow of the Operating Partnership and the ability of its direct and indirect subsidiaries to first satisfy their obligations to creditors.  Vornado is the sole general partner of, and owned approximately 94.0% of the common limited partnership interest in the Operating Partnership at December 31, 2012.  All references to “we,” “us,” “our,” the “Company” and “Vornado” refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership.

 

We own and operate office and retail properties (our “core” operations) with large concentrations in the New York City metropolitan area and in the Washington, DC / Northern Virginia area. In addition, we have a 32.6% interest in Toys “R” Us, Inc. (“Toys”) which has a significant real estate component, a 32.4% interest in Alexander’s, Inc. (NYSE: ALX) (“Alexander’s”), which has six properties in the greater New York metropolitan area, as well as interests in other real estate and related investments.

 

Our business objective is to maximize shareholder value, which we measure by the total return provided to our shareholders. Below is a table comparing our performance to the Morgan Stanley REIT Index (“RMS”) and the SNL REIT Index (“SNL”) for the following periods ended December 31, 2012:

 

 

 

 

Total Return (1)

 

 

 

 

Vornado

 

RMS

 

SNL

 

 

 

One-year

9.2%

 

17.8%

 

20.2%

 

 

 

Three-year

28.2%

 

64.5%

 

67.9%

 

 

 

Five-year

9.6%

 

31.2%

 

37.3%

 

 

 

Ten-year

228.5%

 

199.1%

 

218.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Past performance is not necessarily indicative of future performance.

 

We intend to achieve our business objective by continuing to pursue our investment philosophy and executing our operating strategies through:

 

·      Maintaining a superior team of operating and investment professionals and an entrepreneurial spirit;

·      Investing in properties in select markets, such as New York City and Washington, DC, where we believe there is a high likelihood of capital appreciation;

·      Acquiring quality properties at a discount to replacement cost and where there is a significant potential for higher rents;

·      Investing in retail properties in select under-stored locations such as the New York City metropolitan area;

·      Developing and redeveloping existing properties to increase returns and maximize value; and

·      Investing in operating companies that have a significant real estate component.

 

We expect to finance our growth, acquisitions and investments using internally generated funds, proceeds from possible asset sales and by accessing the public and private capital markets.  We may also offer Vornado common or preferred shares or Operating Partnership units in exchange for property and may repurchase or otherwise reacquire these securities in the future.

 

We compete with a large number of property owners and developers, some of which may be willing to accept lower returns on their investments than we are. Principal factors of competition include 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 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 and population trends.  See “Risk Factors” in Item 1A for additional information regarding these factors.

 

69

 


 

 

Overview - continued

Year Ended December 31, 2012 Financial Results Summary

 

Net income attributable to common shareholders for the year ended December 31, 2012 was $549,271,000, or $2.94 per diluted share, compared to $601,771,000, or $3.23 per diluted share for the year ended December 31, 2011. Net income for the years ended December 31, 2012 and 2011 includes $487,401,000 and $61,390,000, respectively, of net gains on sale of real estate, and $141,637,000 and $28,799,000, respectively, of real estate impairment losses.  In addition, the years ended December 31, 2012 and 2011 include certain items that affect comparability which are listed in the table below.  The aggregate of net gains on sale of real estate, real estate impairment losses and the items in the table below, net of amounts attributable to noncontrolling interests, increased net income attributable to common shareholders by $164,907,000, or $0.88 per diluted share for the year ended December 31, 2012 and $287,678,000, or $1.55 per diluted share for the year ended December 31, 2011.

 

Funds from operations attributable to common shareholders plus assumed conversions (“FFO”) for the year ended December 31, 2012 was $818,565,000, or $4.39 per diluted share, compared to $1,230,973,000, or $6.42 per diluted share for the prior year.  FFO for the years ended December 31, 2012 and 2011 includes certain items that affect comparability which are listed in the table below. The aggregate of these items, net of amounts attributable to noncontrolling interests, decreased FFO by $145,560,000, or $0.78 per diluted share for the year ended December 31, 2012, and increased FFO by $291,700,000, or $1.52 per diluted share for the year ended December 31, 2011.

 

 

 

 

For the Year Ended

 

 

 

December 31,

(Amounts in thousands)

2012 

 

2011 

Items that affect comparability income (expense):

 

 

 

 

 

 

Non-cash impairment loss on J.C. Penney owned shares

$

(224,937)

 

$

 

(Loss) income from the mark-to-market of J.C. Penney derivative position

 

(75,815)

 

 

12,984 

 

Non-cash impairment loss on investment in Toys

 

(40,000)

 

 

 

FFO attributable to discontinued operations, including our share of discontinued operations

 

 

 

 

 

 

 

of Alexander's

 

68,501 

 

 

91,938 

 

Accelerated amortization of discount on investment in subordinated debt of Independence Plaza

 

60,396 

 

 

 

1290 Avenue of the Americas and 555 California Street priority return and income tax benefit

 

25,260 

 

 

 

After-tax net gain on sale of Canadian Trade Shows

 

19,657 

 

 

 

Net gain resulting from Lexington Realty Trust's stock issuance

 

14,116 

 

 

9,760 

 

Net gain on extinguishment of debt

 

 

 

83,907 

 

Mezzanine loan loss reversal and gain on disposition

 

 

 

82,744 

 

Recognition of disputed receivable from Stop & Shop

 

 

 

23,521 

 

Other, net

 

(2,339)

 

 

6,440 

 

 

(155,161)

 

 

311,294 

Noncontrolling interests' share of above adjustments

 

9,601 

 

 

(19,594)

Items that affect comparability, net

$

(145,560)

 

$

291,700 

 

 

The percentage increase (decrease) in GAAP basis and cash basis same store Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) of our operating segments for the year ended December 31, 2012 over the year ended December 31, 2011 is summarized below.

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

Same Store EBITDA:

 

 

New York

 

Washington, DC

 

Properties

 

Mart

 

December 31, 2012 vs. December 31, 2011

 

 

 

 

 

 

 

 

 

 

GAAP basis

 

2.0% (1)

 

(8.6%)

 

1.2%

 

4.5%

 

 

Cash basis

 

2.0% (1)

 

(9.8%)

 

1.3%

 

0.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Excluding the Hotel Pennsylvania, same store increased by 2.2% and 2.3% on a GAAP and Cash basis, respectively.

 

70

 


 

 

Overview - continued

Quarter Ended December 31, 2012  Financial Results Summary

 

Net income attributable to common shareholders for the quarter ended December 31, 2012 was $62,633,000, or $0.33 per diluted share, compared to $69,508,000, or $0.37 per diluted share for the quarter ended December 31, 2011.  Net income for the quarters ended December 31, 2012 and 2011 includes $281,549,000 and $1,916,000, respectively, of net gains on sale of real estate, and $117,883,000 and $28,799,000, respectively, of real estate impairment losses.  In addition, the quarters ended December 31, 2012 and 2011 include certain other items that affect comparability which are listed in the table below.  The aggregate of net gains on sale of real estate, real estate impairment losses and the items in the table below, net of amounts attributable to noncontrolling interests, decreased net income attributable to common shareholders by $18,670,000, or $0.10 per diluted share for the quarter ended December 31, 2012 and increased net income attributable to common shareholders by $48,566,000, or $0.26 per diluted share for the quarter ended December 31, 2011.

 

FFO for the quarter ended December 31, 2012 was $55,890,000, or $0.30 per diluted share, compared to $280,369,000, or $1.46 per diluted share for the prior year’s quarter.  FFO for the quarters ended December 31, 2012 and 2011 include certain items that affect comparability which are listed in the table below.  The aggregate of these items, net of amounts attributable to noncontrolling interests, decreased FFO by $172,670,000, or $0.92 per diluted share for the quarter ended December 31, 2012, and increased FFO by $82,493,000, or $0.43 per diluted share for the quarter ended December 31, 2011.

 

 

 

 

For the Three Months Ended

 

 

 

December 31,

(Amounts in thousands)

2012 

 

2011 

Items that affect comparability income (expense):

 

 

 

 

 

 

Non-cash impairment loss on J.C. Penney owned shares

$

(224,937)

 

$

 

(Loss) income from the mark-to-market of J.C. Penney derivative position

 

(22,472)

 

 

40,120 

 

Non-cash impairment loss on investment in Toys

 

(40,000)

 

 

 

Accelerated amortization of discount on investment in subordinated debt of Independence Plaza

 

60,396 

 

 

 

1290 Avenue of the Americas and 555 California Street priority return and income tax benefit

 

25,260 

 

 

 

Net gain resulting from Lexington Realty Trust's stock issuance

 

14,116 

 

 

 

FFO attributable to discontinued operations, including our share of discontinued operations

 

 

 

 

 

 

 

of Alexander's

 

12,736 

 

 

25,398 

 

Recognition of disputed receivable from Stop & Shop

 

 

 

23,521 

 

Other, net

 

(8,825)

 

 

(1,014)

 

 

 

 

(183,726)

 

 

88,025 

Noncontrolling interests' share of above adjustments

 

11,056 

 

 

(5,532)

Items that affect comparability, net

$

(172,670)

 

$

82,493 

 

 

The percentage increase (decrease) in GAAP basis and cash basis same store EBITDA of our operating segments for the quarter ended December 31, 2012 over the quarter ended December 31, 2011 and the trailing quarter ended September 30, 2012 are summarized below.

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

Same Store EBITDA:

 

 

New York

 

Washington, DC

 

Properties

 

Mart

 

 

December 31, 2012 vs. December 31, 2011

 

 

 

 

 

 

 

 

 

 

 

GAAP basis

 

0.2% (1)

 

(14.3%)

 

(0.1%)

 

0.2%

 

 

 

Cash basis

 

4.0% (1)

 

(14.9%)

 

(0.8%)

 

(5.7%)

 

 

December 31, 2012 vs. September 30, 2012

 

 

 

 

 

 

 

 

 

 

 

GAAP basis

 

 

4.3% (2)

 

(8.8%)

 

1.8%

 

14.0%

(3)

 

 

Cash basis

 

 

6.8% (2)

 

(7.7%)

 

1.4%

 

6.6%

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Excluding the Hotel Pennsylvania, same store increased by 0.2% and 4.4% on a GAAP and Cash basis, respectively.

(2)

Excluding the Hotel Pennsylvania, same store increased by 2.5% and 4.8% on a GAAP and Cash basis, respectively.

(3)

Primarily from the timing of trade shows.

 

Calculations of same store EBITDA, reconciliations of our net income to EBITDA and FFO and the reasons we consider these non-GAAP financial measures useful are provided in the following pages of Management’s Discussion and Analysis of the Financial Condition and Results of Operations.

 

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O verview – continued

 

 

VorNADO CAPITAL PARTNERS REAL ESTATE FUND (The “FUND”)

 

In February 2011, the Fund’s subscription period closed with an aggregate of $800,000,000 of capital commitments, of which we committed $200,000,000.  We are the general partner and investment manager of the Fund, which has an eight-year term and a three-year investment period.  During the investment period, which concludes in July 2013, the Fund is our exclusive investment vehicle for all investments that fit within its investment parameters, including debt, equity and other interests in real estate, and excluding (i) investments in vacant land and ground-up development; (ii) investments acquired by merger or primarily for our securities or properties; (iii) properties which can be combined with or relate to our existing properties; (iv) securities of commercial mortgage loan servicers and investments derived from any such investments; (v) non-controlling interests in equity and debt securities; and (vi) investments located outside of North America.   The Fund’s investments are reported on its balance sheet at fair value, with changes in value each period recognized in earnings.  We consolidate the accounts of the Fund into our consolidated financial statements, retaining the fair value basis of accounting. 

 

During 2012, the Fund made four investments (described below) aggregating $203,700,000.  As of December 31, 2012, the Fund has nine investments with an aggregate fair value of $600,786,000, or $67,642,000 in excess of cost, and has remaining unfunded commitments of $217,676,000, of which our share was $54,419,000.

 

          800 Corporate Pointe

 

On November 30, 2012, the Fund acquired 800 Corporate Pointe, a 243,000 square foot office building and the accompanying six-level parking structure (1,964 spaces) located in Culver City, Los Angeles, California, for $95,700,000 in cash. 

 

          501 Broadway

 

On August 20, 2012, the Fund acquired 501 Broadway, a 9,000 square foot retail property in New York for $31,000,000.  The purchase price consisted of $11,000,000 in cash and a $20,000,000 mortgage loan.  The three-year loan bears interest at LIBOR plus 2.75%, with a floor of 3.50%, and has two one-year extension options.

 

          1100 Lincoln Road

 

On July 2, 2012, the Fund acquired 1100 Lincoln Road, a 167,000 square foot retail property, the western anchor of the Lincoln Road Shopping District in Miami Beach, Florida, for $132,000,000.  The purchase price consisted of $66,000,000 in cash and a $66,000,000 mortgage loan.  The three-year loan bears interest at LIBOR plus 2.75% and has two one-year extension options.

 

          520 Broadway

 

On April 26, 2012, the Fund acquired 520 Broadway, a 112,000 square foot office building in Santa Monica, California for $61,000,000 in cash and subsequently placed a $30,000,000 mortgage loan on the property.  The three-year loan bears interest at LIBOR plus 2.25% and has two one-year extension options.

 

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O verview – continued

 

 

2012 Acquisitions and Investments

 

 

Independence Plaza

 

In 2011, we acquired a 51% interest in the subordinated debt of Independence Plaza, a three-building 1,328 unit residential complex in the Tribeca submarket of Manhattan which has 54,500 square feet of retail space and 550 parking spaces, for $45,000,000 and a warrant to purchase 25% of the equity for $1,000,000.  On December 21, 2012, we acquired a 58.75% interest in the property as follows: (i) buying one of the equity partners’ 33.75% interest for $160,000,000, (ii) exercising our warrant for 25% of the equity and (iii) contributing the appreciated value of our interest in the subordinated debt as preferred equity.  In connection therewith, we recognized income of $105,366,000, comprised of $60,396,000 from the accelerated amortization of the discount on the subordinated debt immediately preceding the conversion to preferred equity, and a $44,970,000 purchase price fair value adjustment upon exercising the warrant.  The current transaction values the property at $844,800,000.  The property is currently encumbered by a $334,225,000 mortgage.  We expect to refinance the $334,225,000 mortgage in 2013, substantially decreasing our cash investment.  We manage the retail space at the property and Stellar Management, our partner, manages the residential space.

 

 

666 Fifth Avenue - Retail

 

On December 6, 2012, we acquired a retail condominium located at 666 Fifth Avenue at 53rd Street for $707,000,000 in cash. The property has 126 feet of frontage on Fifth Avenue and contains 114,000 square feet, 39,000 square feet in fee and 75,000 square feet by long-term lease from the 666 Fifth Avenue office condominium, which is 49.5% owned by us. 

 

 

Marriott Marquis Times Square - Retail and Signage

 

On July 30, 2012, we entered into a lease with Host Hotels & Resorts, Inc. (NYSE: HST) (“Host”), under which we will redevelop the retail and signage components of the Marriott Marquis Times Square Hotel.  The Marriott Marquis with over 1,900 rooms is one of the largest hotels in Manhattan.  It is located in the heart of the bow-tie of Times Square and spans the entire block front from 45th Street to 46th Street on Broadway.  The Marriott Marquis is directly across from our 1540 Broadway iconic retail property leased to Forever 21 and Disney flagship stores.  We plan to spend over $140,000,000 to redevelop and substantially expand the existing retail space, including converting the below grade parking garage into retail, and creating six-story, 300 foot wide block front, dynamic LED signs.  During the term of the lease we will pay fixed rent equal to the sum of $12,500,000, plus a portion of the property’s net cash flow after we receive a 5.2% preferred return on our invested capital.  The lease contains put/call options which, if exercised, would lead to our ownership.  Host can exercise the put option during defined periods following the conversion of the project to a condominium.  We can exercise our call option under the same terms, at any time after the fifteenth year of the lease term. 

 

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O verview – continued

 

 

2012 Dispositions

 

 

Merchandise Mart

 

On December 31, 2012, we completed the sale of the Boston Design Center, a 554,000 square foot showroom building in Boston, Massachusetts, for $72,400,000 in cash, which resulted in a net gain of $5,252,000. 

 

On July 26, 2012, we completed the sale of the Washington Design Center, a 393,000 square foot showroom building in Washington, DC, and the Canadian Trade Shows, for an aggregate of $103,000,000 in cash.  The sale of the Canadian Trade Shows resulted in an after-tax net gain of $19,657,000. 

 

On June 22, 2012, we completed the sale of L.A. Mart, a 784,000 square foot showroom building in Los Angeles, California for $53,000,000, of which $18,000,000 was cash and $35,000,000 was nine-month seller financing at 6.0%, which was paid on December 28, 2012.

 

On January 6, 2012, we completed the sale of 350 West Mart Center, a 1.2 million square foot office building in Chicago, Illinois, for $228,000,000 in cash, which resulted in a net gain of $54,911,000.

 

 

Washington, DC

 

On November 7, 2012, we completed the sale of three office buildings (“Reston Executive”) located in suburban Fairfax County, Virginia, containing 494,000 square feet for $126,250,000, which resulted in a net gain of $36,746,000.

 

On July 26, 2012, we completed the sale of 409 Third Street S.W., a 409,000 square foot office building in Washington, DC, for $200,000,000 in cash, which resulted in a net gain of $126,621,000.  This building is contiguous to the Washington Design Center and was sold to the same purchaser.

 

 

Retail Properties

 

On February 13, 2013, we entered into an agreement to sell the Plant, a power strip shopping center in San Jose, California, for $203,000,000.  The sale will result in net proceeds of approximately $93,000,000 after repaying the existing loan and closing costs, and a financial statement gain of approximately $33,000,000.  The sale, which is subject to customary closing conditions, is expected to be completed by the second quarter of 2013.

 

On January 24, 2013, we completed the sale of the Green Acres Mall located in Valley Stream, New York, for $500,000,000, which resulted in net proceeds of $185,000,000, after repaying the existing loan and closing costs.  The financial statement gain of  $205,000,000 will be recognized in the first quarter of 2013 and the tax gain of $304,000,000 has been deferred as part of a like-kind exchange.

 

In 2012, we sold 12 non-core retail properties in separate transactions, for an aggregate of $157,000,000 in cash, which resulted in a net gain aggregating $22,266,000.  In addition, we have entered into an agreement to sell a building on Market Street, Philadelphia, which is part of the Gallery at Market East for $60,000,000, which will result in a net gain of approximately $35,000,000.  The sale, which is subject to customary closing conditions, is expected to be completed in the first quarter of 2013.

 

 

Other

 

On January 24, 2013, LNR Property LLC (“LNR”) entered into a definitive agreement to be sold.  We own 26.2% of LNR and expect to receive net proceeds of approximately $241,000,000.  The sale, which is subject to customary closing conditions, is expected to be completed in the second quarter of 2013.

 

 

 

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O verview – continued

 

 

2012 Financing Activities

 

 

Secured Debt

 

On November 16, 2012, we completed a $120,000,000 refinancing of 4 Union Square South, a 206,000 square foot Manhattan retail property. The seven-year loan bears interest at LIBOR plus 2.15% (2.36% at December 31, 2012) and amortizes based on a 30-year schedule beginning in the third year. We retained net proceeds of approximately $42,000,000, after repaying the existing loan and closing costs.

 

On November 8, 2012, we completed a $950,000,000 refinancing of 1290 Avenue of the Americas (70% owned), a 2.1 million square foot Manhattan office building. The 10-year fixed rate interest-only loan bears interest at 3.34%.  The partnership retained net proceeds of approximately $522,000,000, after repaying the existing loan and closing costs.

 

On August 17, 2012, we completed a $98,000,000 refinancing of 435 Seventh Avenue, a 43,000 square foot retail property in Manhattan. The seven-year loan bears interest at LIBOR plus 2.25% (2.46% at December 31, 2012). We retained net proceeds of approximately $44,000,000, after repaying the existing loan and closing costs.

 

On July 26, 2012, we completed a $150,000,000 refinancing of 2101 L Street, a 380,000 square foot office building located in Washington, DC. The 12-year fixed rate loan bears interest at 3.97% and amortizes based on a 30-year schedule beginning in the third year.

 

On March 5, 2012, we completed a $325,000,000 refinancing of 100 West 33 rd Street, a 1.1 million square foot property located on the entire Sixth Avenue block front between 32 nd and 33 rd Streets in Manhattan.  The building contains the 257,000 square foot Manhattan Mall and 848,000 square feet of office space.  The three-year loan bears interest at LIBOR plus 2.50% (2.71% at December 31, 2012) and has two one-year extension options.  We retained net proceeds of approximately $87,000,000, after repaying the existing loan and closing costs.       

 

On January 9, 2012, we completed a $300,000,000 refinancing of 350 Park Avenue, a 559,000 square foot Manhattan office building. The five-year fixed rate loan bears interest at 3.75% and amortizes based on a 30-year schedule beginning in the third year. The proceeds of the new loan and $132,000,000 of existing cash were used to repay the existing loan and closing costs.

 

 

Senior Unsecured Debt

 

In April 2012, we redeemed all of the outstanding exchangeable and convertible senior debentures at par, for an aggregate of $510,215,000 in cash.

 

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O verview – continued

 

 

2012 Financing Activities – continued

 

 

Preferred Securities

 

In July 2012 and January 2013, we sold an aggregate of $600,000,000 of cumulative redeemable preferred securities with a weighted average cost of 5.55%. The net proceeds aggregating $581,824,000 were used primarily to redeem outstanding cumulative redeemable preferred securities with an aggregate face amount of $517,500,000 and a weighted average cost of 6.82%.  The details of these transactions are described below.

 

On February 19, 2013, we redeemed all of the outstanding 6.75% Series F Cumulative Redeemable Preferred Shares and 6.75% Series H Cumulative Redeemable Preferred Shares at par, for an aggregate of $262,500,000 in cash, plus accrued and unpaid dividends through the date of redemption.

 

On January 25, 2013, we sold 12,000,000 5.40% Series L Cumulative Redeemable Preferred Shares at a price of $25.00 per share in an underwritten public offering pursuant to an effective registration statement. We retained aggregate net proceeds of $290,853,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 12,000,000 Series L Preferred Units (with economic terms that mirror those of the Series L Preferred Shares).  Dividends on the Series L Preferred Shares are cumulative and payable quarterly in arrears.  The Series L Preferred Shares are not convertible into, or exchangeable for, any of our properties or securities.  On or after five years from the date of issuance (or sooner under limited circumstances), we may redeem the Series L Preferred Shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption.  The Series L Preferred Shares have no maturity date and will remain outstanding indefinitely unless redeemed by us.

 

On August 16, 2012, we redeemed all of the outstanding 7.0% Series E Cumulative Redeemable Preferred Shares at par, for an aggregate of $75,000,000 in cash, plus accrued and unpaid dividends through the date of redemption.

 

On July 19, 2012, we redeemed all of the outstanding 7.0% Series D-10 and 6.75% Series D-14 cumulative redeemable preferred units with an aggregate face amount of $180,000,000 for $168,300,000 in cash, plus accrued and unpaid distributions through the date of redemption.

 

On July 11, 2012, we sold 12,000,000 5.70% Series K Cumulative Redeemable Preferred Shares at a price of $25.00 per share in an underwritten public offering pursuant to an effective registration statement.  We retained aggregate net proceeds of $290,971,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 12,000,000 Series K Preferred Units (with economic terms that mirror those of the Series K Preferred Shares).  Dividends on the Series K Preferred Shares are cumulative and payable quarterly in arrears.  The Series K Preferred Shares are not convertible into, or exchangeable for, any of our properties or securities.  On or after five years from the date of issuance (or sooner under limited circumstances), we may redeem the Series K Preferred Shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption.  The Series K Preferred Shares have no maturity date and will remain outstanding indefinitely unless redeemed by us.  

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Overview - continued

 

 

Leasing Activity

 

The leasing activity presented below is based on leases signed during the period and is not intended to coincide with the commencement of rental revenue in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  Tenant improvements and leasing commissions presented below are based on square feet leased during the period.  Second generation relet space represents square footage that has not been vacant for more than nine months.  The leasing activity for the New York segment excludes Alexander’s, the Hotel Pennsylvania and residential.

 

 

 

 

 

 

 

 

New York

 

Washington, DC

 

Retail Properties

 

Merchandise Mart

(Square feet in thousands)

Office

 

Retail

 

Office

 

Strips

 

Malls

 

Office

 

Showroom

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended December 31, 2012:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total square feet leased

 

457 

 

 

 

 

482 

 

 

322 

 

 

75 

 

 

 

 

 

58 

 

Our share of square feet leased

 

437 

 

 

 

 

404 

 

 

322 

 

 

51 

 

 

 

 

 

58 

 

 

Initial rent (1)

$

53.98 

 

$

308.52 

 

$

41.46 

 

$

20.46 

 

$

33.11 

 

$

 

 

$

41.19 

 

 

Weighted average lease term (years)

 

8.6 

 

 

9.2 

 

 

7.2 

 

 

7.4 

 

 

5.8 

 

 

 

 

 

6.5 

 

 

Second generation relet space:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Square feet

 

373 

 

 

 

 

246 

 

 

220 

 

 

 

 

 

 

 

58 

 

 

 

Cash basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial rent (1)

$

52.61 

 

$

459.69 

 

$

39.34 

 

$

17.03 

 

$

69.44 

 

$

 

 

$

41.19 

 

 

 

 

Prior escalated rent

$

50.86 

 

$

295.56 

 

$

40.38 

 

$

16.04 

 

$

67.89 

 

$

 

 

$

39.42 

 

 

 

 

Percentage increase (decrease)

 

3.4%

 

 

55.5%

 

 

(2.6%)

 

 

6.2%

 

 

2.3%

 

 

-%

 

 

 

4.5%

 

 

 

GAAP basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Straight-line rent (2)

$

51.46 

 

$

513.29 

 

$

37.94 

 

$

17.16 

 

$

71.83 

 

$

 

 

$

43.00 

 

 

 

 

Prior straight-line rent

$

48.62 

 

$

283.01 

 

$

38.86 

 

$

15.79 

 

$

65.06 

 

$

 

 

$

33.41 

 

 

 

 

Percentage increase (decrease)

 

5.8%

 

 

81.4%

 

 

(2.4%)

 

 

8.7%

 

 

10.4%

 

 

-%

 

 

 

28.7%

 

 

Tenant improvements and leasing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

commissions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per square foot

$

48.15 

 

$

188.84 

 

$

26.90 

 

$

4.28 

 

$

27.38 

 

$

 

 

$

7.55 

 

 

 

Per square foot per annum:

$

5.60 

 

$

20.60 

 

$

3.74 

 

$

0.58 

 

$

4.72 

 

$

 

 

$

1.16 

 

 

 

 

Percentage of initial rent

 

10.4%

 

 

6.7%

 

 

9.0%

 

 

2.8%

 

 

14.3%

 

 

 

 

 

2.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2012:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total square feet leased

 

1,950 

 

 

192 

 

 

2,111 

 

 

1,276 

 

 

146 

 

 

593 

 

 

 

380 

 

Our share of square feet leased

 

1,754 

 

 

185 

 

 

1,901 

 

 

1,276 

 

 

101 

 

 

593 

 

 

 

380 

 

 

Initial rent (1)

$

57.15 

 

$

110.71 

 

$

40.55 

 

$

18.65 

 

$

38.45 

 

$

32.97 

 

 

$

38.67 

 

 

Weighted average lease term (years)

 

9.3 

 

 

11.9 

 

 

7.3 

 

 

8.2 

 

 

5.3 

 

 

14.7 

 

 

 

6.0 

 

 

Second generation relet space:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Square feet

 

1,405 

 

 

154 

 

 

1,613 

 

 

941 

 

 

17 

 

 

20 

 

 

 

380 

 

 

 

Cash basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial rent (1)

$

57.88 

 

$

110.21 

 

$

39.27 

 

$

15.98 

 

$

64.85 

 

$

32.24 

 

 

$

38.67 

 

 

 

 

Prior escalated rent

$

55.31 

 

$

88.47 

 

$

39.13 

 

$

14.58 

 

$

60.78 

 

$

24.88 

 

 

$

39.04 

 

 

 

 

Percentage increase (decrease)

 

4.6%

 

 

24.6%

 

 

0.4%

 

 

9.6%

 

 

6.7%

 

 

29.6%

 

 

 

(0.9%)

 

 

 

GAAP basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Straight-line rent (2)

$

57.34 

 

$

115.97 

 

$

38.96 

 

$

16.49 

 

$

66.24 

 

$

32.38 

 

 

$

39.15 

 

 

 

 

Prior straight-line rent

$

54.64 

 

$

89.52 

 

$

37.67 

 

$

13.69 

 

$

58.61 

 

$

23.15 

 

 

$

35.28 

 

 

 

 

Percentage increase

 

4.9%

 

 

29.5%

 

 

3.4%

 

 

20.5%

 

 

13.0%

 

 

39.9%

 

 

 

11.0%

 

 

Tenant improvements and leasing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

commissions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per square foot

$

54.45 

 

$

32.52 

 

$

35.49 

 

$

7.48 

 

$

18.66 

 

$

96.41 

 

 

$

10.49 

 

 

 

Per square foot per annum:

$

5.85 

 

$

2.73 

 

$

4.86 

 

$

0.91 

 

$

3.52 

 

$

6.56 

(3)

 

$

1.75 

 

 

 

 

Percentage of initial rent

 

10.2%

 

 

2.5%

 

 

12.0%

 

 

4.9%

 

 

9.2%

 

 

19.9%

 

 

 

4.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes on the following page.

 

77

 


 

 

Overview - continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasing Activity - continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York

 

Washington, DC

 

Retail Properties

 

Merchandise Mart

(Square feet in thousands)

Office

 

Retail

 

Office

 

Strips

 

Malls

 

Office

 

 

Showroom

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total square feet leased

 

3,211 

 

 

61 

 

 

1,735 

 

 

1,109 

 

 

239 

 

 

241 

 

 

 

306 

 

Our share of square feet leased:

 

2,432 

 

 

61 

 

 

1,557 

 

 

1,109 

 

 

207 

 

 

241 

 

 

 

306 

 

 

Initial rent (1)

$

55.37 

 

$

133.02 

 

$

41.35 

 

$

18.03 

 

$

33.82 

 

$

26.43 

 

 

$

36.67 

 

 

Weighted average lease term (years)

 

9.2 

 

 

10.1 

 

 

5.6 

 

 

9.1 

 

 

6.0 

 

 

8.4 

 

 

 

5.6 

 

 

Second generation relet space:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Square feet

 

2,089 

 

 

52 

 

 

1,396 

 

 

470 

 

 

48 

 

 

241 

 

 

 

306 

 

 

 

Cash basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial rent (1)

$

56.21 

 

$

145.98 

 

$

41.01 

 

$

16.25 

 

$

30.65 

 

$

26.43 

 

 

$

36.67 

 

 

 

 

Prior escalated rent

$

47.66 

 

$

134.95 

 

$

38.77 

 

$

14.94 

 

$

27.79 

 

$

26.51 

 

 

$

38.60 

 

 

 

 

Percentage increase (decrease)

 

18.0%

 

 

8.2%

 

 

5.8%

 

 

8.8%

 

 

10.3%

 

 

(0.3%)

 

 

 

(5.0%)

 

 

 

GAAP basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Straight-line rent (2)

$

56.19 

 

$

150.78 

 

$

40.54 

 

$

16.46 

 

$

32.15 

 

$

26.90 

 

 

$

35.58 

 

 

 

 

Prior straight-line rent

$

47.47 

 

$

133.55 

 

$

37.47 

 

$

14.34 

 

$

27.26 

 

$

23.25 

 

 

$

35.04 

 

 

 

 

Percentage increase

 

18.4%

 

 

12.9%

 

 

8.2%

 

 

14.8%

 

 

17.9%

 

 

15.7%

 

 

 

1.5%

 

 

Tenant improvements and leasing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

commissions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per square foot

$

48.28 

 

$

40.00 

 

$

25.01 

 

$

5.67 

 

$

9.00 

 

$

64.78 

 

 

$

6.20 

 

 

 

Per square foot per annum:

$

5.25 

 

$

3.96 

 

$

4.47 

 

$

0.62 

 

$

1.50 

 

$

7.71 

 

 

$

1.11 

 

 

 

 

Percentage of initial rent

 

9.5%

 

 

3.0%

 

 

10.8%

 

 

3.4%

 

 

4.4%

 

 

29.2%

 

 

 

3.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

Represents the cash basis weighted average starting rent per square foot, which is generally indicative of market rents. Most leases include free rent and periodic step-ups in rent which are not included in the initial cash basis rent per square foot but are included in the GAAP basis straight-line rent per square foot.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

Represents the GAAP basis weighted average rent per square foot that is recognized over the term of the respective leases, and includes the effect of free rent and periodic step-ups in rent.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

 

Includes $6.50 per square foot per annum of tenant improvements and leasing commissions in connection with the 572,000 square foot Motorola Mobility / Google lease.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

78

 


 

 

Overview - continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Square footage (in service) and Occupancy as of December 31, 2012:

 

 

 

 

 

 

 

 

 

 

 

Square Feet (in service)

 

 

 

 

 

 

 

 

 

 

 

Number of

 

Total

 

Our

 

 

 

 

 

 

(Square feet in thousands)

 

 

Properties

 

Portfolio

 

Share

 

Occupancy %

 

 

 

 

New York:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

 

31 

 

19,729 

 

16,751 

 

95.9%

 

 

 

 

 

Retail

 

 

49 

 

2,217 

 

2,057 

 

96.8%

 

 

 

 

 

Alexander's

 

 

 

2,179 

 

706 

 

99.1%

 

 

 

 

 

Hotel Pennsylvania

 

 

 

1,400 

 

1,400 

 

 

 

 

 

 

 

Residential (1,655 units)

 

 

 

1,528 

 

873 

 

96.9%

 

 

 

 

 

 

 

 

 

 

 

27,053 

 

21,787 

 

96.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, DC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

 

59 

 

16,106 

 

13,637 

 

81.2%

 

 

 

 

 

Residential (2,414 units)

 

 

 

2,599 

 

2,457 

 

97.9%

 

 

 

 

 

Hotel and Warehouses

 

 

 

435 

 

435 

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

19,140 

 

16,529 

 

84.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail Properties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Strip Shopping Centers

 

 

114 

 

15,566 

 

14,984 

 

93.6%

 

 

 

 

 

Regional Malls

 

 

 

5,244 

 

3,608 

 

92.7%

 

 

 

 

 

 

 

 

 

 

 

20,810 

 

18,592 

 

93.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise Mart:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

 

 

1,771 

 

1,762 

 

90.0%

 

 

 

 

 

Showroom

 

 

 

2,220 

 

2,220 

 

94.7%

 

 

 

 

 

 

 

 

 

 

 

3,991 

 

3,982 

 

92.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

555 California Street

 

 

 

1,795 

 

1,257 

 

93.1%

 

 

 

 

 

Primarily Warehouses

 

 

 

971 

 

971 

 

55.9%

 

 

 

 

 

 

 

 

 

 

 

2,766 

 

2,228 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total square feet at December 31, 2012

 

 

 

73,760 

 

63,118 

 

 

 

 

 

 

 

Square footage (in service) and Occupancy as of December 31, 2011:

 

 

 

 

 

 

 

 

 

 

 

Square Feet (in service)

 

 

 

 

 

 

 

 

 

 

 

Number of

 

Total

 

Our

 

 

 

 

 

 

(Square feet in thousands)

 

 

Properties

 

Portfolio

 

Share

 

Occupancy %

 

 

 

 

New York:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

 

30 

 

19,571 

 

16,598 

 

96.2%

 

 

 

 

 

Retail

 

 

46 

 

2,239 

 

1,982 

 

95.6%

 

 

 

 

 

Alexander's

 

 

 

2,179 

 

706 

 

98.7%

 

 

 

 

 

Hotel Pennsylvania

 

 

 

1,400 

 

1,400 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,389 

 

20,686 

 

96.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, DC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

 

59 

 

16,623 

 

14,161 

 

89.3%

 

 

 

 

 

Residential (2,414 units)

 

 

 

2,599 

 

2,457 

 

96.6%

 

 

 

 

 

Hotel and Warehouses

 

 

 

404 

 

404 

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

19,626 

 

17,022 

 

90.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail Properties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Strip Shopping Centers

 

 

114 

 

15,595 

 

15,012 

 

93.3%

 

 

 

 

 

Regional Malls

 

 

 

5,448 

 

3,800 

 

92.7%

 

 

 

 

 

 

 

 

 

 

 

21,043 

 

18,812 

 

93.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise Mart:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

 

 

1,229 

 

1,220 

 

90.1%

 

 

 

 

 

Showroom

 

 

 

2,715 

 

2,715 

 

89.8%

 

 

 

 

 

 

 

 

 

 

 

3,944 

 

3,935 

 

89.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

555 California Street

 

 

 

1,795 

 

1,257 

 

93.1%

 

 

 

 

 

Primarily Warehouses

 

 

 

971 

 

971 

 

45.3%

 

 

 

 

 

 

 

 

 

 

 

2,766 

 

2,228 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total square feet at December 31, 2011

 

 

 

72,768 

 

62,683 

 

 

 

 

 

79

 


 

 

Overview - continued

 

 

Washington, DC Segment

 

As a result of the Base Realignment and Closure (“BRAC”) statute, we estimated that occupancy would decrease from 90% at December 31, 2011, to between 82% and 84% at December 31, 2012 and that 2012 EBITDA before discontinued operations and gains on sale of real estate would be lower than 2011 by approximately $55,000,000 to $65,000,000 (revised to $50,000,000 to $60,000,000 in the third quarter of 2012).  At December 31, 2012, occupancy was 84.1% and 2012 EBITDA before discontinued operations and gains on sale of real estate was lower than 2011 by $54,900,000. 

 

We estimate that 2013 EBITDA will be between $5,000,000 and $15,000,000 lower than 2012 EBITDA.

 

Of the 2,395,000 square feet subject to BRAC, 348,000 square feet has been taken out of service for redevelopment and 545,000 square feet has been leased or is pending.  The table below summarizes the status of the BRAC space as of December 31, 2012.

 

 

 

Rent Per

 

Square Feet

 

 

 

 

 

Square Foot

 

Total

 

Crystal City

 

Skyline

 

Rosslyn

Resolved:

 

 

 

 

 

 

 

 

 

 

 

 

Relet as of December 31, 2012

 

$

39.76 

 

521,000 

 

380,000 

 

88,000 

 

53,000 

 

Leases pending

 

 

45.00 

 

24,000 

 

24,000 

 

 

 

Taken out of service for redevelopment

 

 

 

 

348,000 

 

348,000 

 

 

 

 

 

 

 

 

893,000 

 

752,000 

 

88,000 

 

53,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

To Be Resolved:

 

 

 

 

 

 

 

 

 

 

 

 

Vacated as of December 31, 2012

 

 

35.77 

 

1,002,000 

 

519,000 

 

473,000 

 

10,000 

 

Expiring in:

 

 

 

 

 

 

 

 

 

 

 

 

 

2013 

 

 

37.39 

 

126,000 

 

 

43,000 

 

83,000 

 

 

2014 

 

 

32.49 

 

304,000 

 

103,000 

 

201,000 

 

 

 

2015 

 

 

43.04 

 

70,000 

 

65,000 

 

5,000 

 

 

 

 

 

 

1,502,000 

 

687,000 

 

722,000 

 

93,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total square feet subject to BRAC

 

 

 

 

2,395,000 

 

1,439,000 

 

810,000 

 

146,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In the first quarter of 2012, we notified the lender that due to scheduled lease expirations resulting primarily from the effects of the BRAC statute, the Skyline properties had a 26% vacancy rate and rising (49.8% as of December 31, 2012) and, accordingly, cash flows are expected to decrease.  As a result, our subsidiary that owns these properties does not have and is not expected to have for some time sufficient funds to pay all of its current obligations, including interest payments to the lender.  Based on the projected vacancy and the significant amount of capital required to re-tenant these properties, at our request, the mortgage loan was transferred to the special servicer.  In the second quarter of 2012, we entered into a forbearance agreement with the special servicer to apply cash flows of the property, before interest on the loan, towards the repayment of $4,000,000 of tenant improvements and leasing commissions we funded in connection with a new lease at these properties, which was repaid in the third quarter.  The forbearance agreement was amended January 31, 2013, to extend its maturity through April 1, 2013 and provides for interest shortfalls to be deferred and added to the principal balance of the loan and not give rise to a loan default. As of December 31, 2012, the deferred interest amounted to $26,957,000.  We continue to negotiate with the special servicer to restructure the terms of the loan.

 

80

 


 

 

Recently Issued Accounting Literature

 

 

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Update No. 2011-04, Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS (“ASU No. 2011-04”).  ASU No. 2011-04 provides a uniform framework for fair value measurements and related disclosures between GAAP and International Financial Reporting Standards (“IFRS”) and requires additional disclosures, including: (i) quantitative information about unobservable inputs used, a description of the valuation processes used, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs, for Level 3 fair value measurements; (ii) fair value of financial instruments not measured at fair value but for which disclosure of fair value is required, based on their levels in the fair value hierarchy; and (iii) transfers between Level 1 and Level 2 of the fair value hierarchy.  The adoption of this update on January 1, 2012 did not have a material impact on our consolidated financial statements, but resulted in additional fair value measurement disclosures (See Note 13 to the consolidated financial statements in this Annual Report on Form 10-K).

 

 

Critical Accounting Policies

 

 

In preparing the consolidated financial statements we have made estimates and assumptions that affect the reported amounts of 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. Set forth below is a summary of the accounting policies that we believe are critical to the preparation of our consolidated financial statements.  The summary should be read in conjunction with the more complete discussion of our accounting policies included in Note 2 to the consolidated financial statements in this Annual Report on Form 10-K.

 

Real Estate

 

Real estate is carried at cost, net of accumulated depreciation and amortization. Maintenance and repairs are expensed as incurred. Depreciation requires an estimate by management of the useful life of each property and improvement as well as an allocation of the costs associated with a property to its various components. If we do not allocate these costs appropriately or incorrectly estimate the useful lives of our real estate, depreciation expense may be misstated.  As real estate is undergoing development activities, all property operating expenses directly associated with and attributable to, the development and construction of a project, including interest expense, are capitalized to the cost of real property to the extent we believe such costs are recoverable through the value of the property.  The capitalization period begins when development activities are underway and ends when the project is substantially complete.  General and administrative costs are expensed as incurred.

 

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles such as acquired above and below-market leases and acquired in-place leases and tenant relationships) and acquired liabilities and we allocate purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information.  Estimates of future cash flows are based on a number of factors, including historical operating results, known trends and market/economic conditions. Identified intangibles are recorded at their estimated fair value, separate and apart from goodwill. Identified intangibles that are determined to have finite lives are amortized over the period in which they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired.   

 

As of December 31, 2012 and 2011, the carrying amounts of real estate, net of accumulated depreciation, were $15.4 billion and $13.8 billion, respectively.  As of December 31, 2012 and 2011, the carrying amounts of identified intangible assets (including acquired above-market leases, tenant relationships and acquired in-place leases) were $370,602,000 and $287,844,000, respectively, and the carrying amounts of identified intangible liabilities, a component of “deferred revenue” on our consolidated balance sheets, were $463,432,000 and $466,743,000, respectively.

 

Our properties, including any related intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis.  An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value.  Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared.  If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements.  The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results.  Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

81

 


 

 

Critical Accounting Policies – continued

 

 

Partially Owned Entities

 

We consolidate entities in which we have a controlling financial interest.  In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity (“VIE”) and we are the primary beneficiary.  We are deemed to be the primary beneficiary of a VIE when we have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. When the requirements for consolidation are not met, we account for investments under the equity method of accounting if we have the ability to exercise significant influence over the entity.  Equity method investments are initially recorded at cost and subsequently adjusted for our share of net income or loss and cash contributions and distributions each period. Investments that do not qualify for consolidation or equity method accounting are accounted for on the cost method. 

 

Investments in partially owned entities are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.  An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value.  Impairment analyses are based on current plans, intended holding periods and available information at the time the analyses are prepared.  The ultimate realization of our investments in partially owned entities is dependent on a number of factors, including the performance of each investment and market conditions.  If our estimates of the projected future cash flows, the nature of development activities for properties for which such activities are planned and the estimated fair value of the investment change based on market conditions or otherwise, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements.  The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. 

 

As of December 31, 2012 and 2011, the carrying amounts of investments in partially owned entities, including Toys “R” Us, was $1.704 billion and $1.740 billion, respectively.

 

 

Mortgage and Mezzanine Loans Receivable

 

We invest in mortgage and mezzanine loans of entities that have significant real estate assets.  These investments are either secured by the real property or by pledges of the equity interests of the entities owning the underlying real estate.  We record these investments at the stated principal amount net of any unamortized discount or premium.  We accrete or amortize any discount or premium over the life of the related receivable utilizing the effective interest method or straight-line method, if the result is not materially different. We evaluate the collectability of both interest and principal of each of our loans whenever events or changes in circumstances indicate such amounts may not be recoverable. A loan is impaired when it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient, to the value of the collateral if the loan is collateral dependent. If our estimates of the collectability of both interest and principal or the fair value of our loans change based on market conditions or otherwise, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. As of December 31, 2012 and 2011, the carrying amounts of mortgage and mezzanine loans receivable were $225,359,000 and $133,948,000, respectively.  

82

 


 

 

Critical Accounting Policies – continued

 

 

Allowance For Doubtful Accounts

 

We periodically evaluate the collectability of amounts due from tenants and maintain an allowance for doubtful accounts ($37,674,000 and $43,241,000 as of December 31, 2012 and 2011) for estimated losses resulting from the inability of tenants to make required payments under the lease agreements. We also maintain an allowance for receivables arising from the straight-lining of rents ($3,165,000 and $3,290,000 as of December 31, 2012 and 2011, respectively). This receivable arises from earnings recognized in excess of amounts currently due under the lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates. These estimates may differ from actual results, which could be material to our consolidated financial statements.

 

Revenue Recognition

 

We have the following revenue sources and revenue recognition policies:

 

·        Base Rent — income arising from tenant leases. These rents are recognized over the non-cancelable term of the related leases on a straight-line basis which includes the effects of rent steps and rent abatements under the leases.  We commence rental revenue recognition when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use.  In addition, in circumstances where we provide a tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of rental revenue on a straight-line basis over the term of the lease.   

 

·     Percentage Rent — income arising from retail tenant leases that is contingent upon tenant sales exceeding defined thresholds. These rents are recognized only after the contingency has been removed (i.e., when tenant sales thresholds have been achieved).

 

·     Hotel Revenue — income arising from the operation of the Hotel Pennsylvania which consists of rooms revenue, food and beverage revenue, and banquet revenue. Income is recognized when rooms are occupied. Food and beverage and banquet revenue are recognized when the services have been rendered.

 

·     Trade Shows Revenue — income arising from the operation of trade shows, including rentals of booths. This revenue is recognized when the trade shows have occurred.

 

·     Expense Reimbursements — revenue arising from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred.

 

·     Management, Leasing and Other Fees — income arising from contractual agreements with third parties or with partially owned entities. This revenue is recognized as the related services are performed under the respective agreements.

 

·       Cleveland Medical Mart — revenue arising from the development of the Cleveland Medical Mart.  This revenue is recognized as the related services are performed under the respective agreements using the criteria set forth in ASC 605-25, Multiple Element Arrangements , as we are providing development, marketing, leasing, and other property management services.

 

Before we recognize revenue, we assess, among other things, its collectibility. If our assessment of the collectibility of revenue changes, the impact on our consolidated financial statements could be material.

 

Income Taxes

 

We operate in a manner intended to enable us to continue to qualify as a Real Estate Investment Trust (“REIT”) under Sections 856-860 of the Internal Revenue Code of 1986, as amended. Under those sections, a REIT which distributes at least 90% of its REIT taxable income as a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We distribute to our shareholders 100% of our taxable income. Therefore, no provision for Federal income taxes is required. If we fail to distribute the required amount of income to our shareholders, or fail to meet other REIT requirements, we may fail to qualify as a REIT which may result in substantial adverse tax consequences.

83

 


 

 

Net Income and EBITDA by Segment for the Years Ended December 31, 2012, 2011 and 2010

Effective January 1, 2012, as a result of certain organizational and operational changes, we redefined the New York business segment to encompass all of our Manhattan assets by including the 1.0 million square feet in 21 freestanding Manhattan street retail assets (formerly in our Retail segment), and the Hotel Pennsylvania and our interest in Alexander’s, Inc. (formerly in our Other segment).  Accordingly, we have reclassified the prior period segment financial results to conform to the current year presentation.  See note (3) on page 87 for the elements of the New York segment’s EBITDA.  Below is a summary of net income and a reconciliation of net income to EBITDA (1) by segment for the years ended December 31, 2012, 2011 and 2010.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

For the Year Ended December 31, 2012

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

 

 

 

 

 

 

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Toys

 

Other

 

Property rentals

 

$

1,962,545 

 

$

1,004,078 

 

$

467,972 

 

$

276,190 

 

$

125,018 

 

$

 

$

89,287 

 

Straight-line rent adjustments

 

 

68,844 

 

 

52,117 

 

 

5,727 

 

 

9,379 

 

 

763 

 

 

 

 

858 

 

Amortization of acquired below-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

market leases, net

 

 

54,193 

 

 

31,552 

 

 

2,043 

 

 

14,902 

 

 

 

 

 

 

5,696 

 

Total rentals

 

 

2,085,582 

 

 

1,087,747 

 

 

475,742 

 

 

300,471 

 

 

125,781 

 

 

 

 

95,841 

 

Tenant expense reimbursements

 

 

301,092 

 

 

160,133 

 

 

40,742 

 

 

88,545 

 

 

4,343 

 

 

 

 

7,329 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

235,234 

 

 

 

 

 

 

 

 

235,234 

 

 

 

 

 

Fee and other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMS cleaning fees

 

 

67,584 

 

 

94,965 

 

 

 

 

 

 

 

 

 

 

(27,381)

 

 

Signage revenue

 

 

20,892 

 

 

20,892 

 

 

 

 

 

 

 

 

 

 

 

 

Management and leasing fees

 

 

21,867 

 

 

5,639 

 

 

12,775 

 

 

3,131 

 

 

231 

 

 

 

 

91 

 

 

Lease termination fees

 

 

2,361 

 

 

1,136 

 

 

643 

 

 

74 

 

 

508 

 

 

 

 

 

 

Other income

 

 

31,845 

 

 

4,472 

 

 

24,126 

 

 

1,778 

 

 

1,574 

 

 

 

 

(105)

 

Total revenues

 

 

2,766,457 

 

 

1,374,984 

 

 

554,028 

 

 

393,999 

 

 

367,671 

 

 

 

 

75,775 

 

Operating expenses

 

 

1,021,719 

 

 

602,883 

 

 

194,523 

 

 

141,732 

 

 

65,337 

 

 

 

 

17,244 

 

Depreciation and amortization

 

 

517,811 

 

 

226,653 

 

 

138,296 

 

 

76,835 

 

 

33,778 

 

 

 

 

42,249 

 

General and administrative

 

 

201,894 

 

 

30,053 

 

 

27,237 

 

 

23,654 

 

 

18,899 

 

 

 

 

102,051 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

226,619 

 

 

 

 

 

 

 

 

226,619 

 

 

 

 

 

Impairment losses, acquisition related

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

costs and tenant buy-outs

 

 

120,786 

 

 

 

 

 

 

103,400 

 

 

 

 

 

 

17,386 

 

Total expenses

 

 

2,088,829 

 

 

859,589 

 

 

360,056 

 

 

345,621 

 

 

344,633 

 

 

 

 

178,930 

 

Operating income (loss)

 

 

677,628 

 

 

515,395 

 

 

193,972 

 

 

48,378 

 

 

23,038 

 

 

 

 

(103,155)

 

Income applicable to Toys

 

 

14,859 

 

 

 

 

 

 

 

 

 

 

14,859 

 

 

 

Income (loss) from partially owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

entities

 

 

408,267 

 

 

207,773 

 

 

(5,612)

 

 

1,458 

 

 

729 

 

 

 

 

203,919 

 

Income from Real Estate Fund

 

 

63,936 

 

 

 

 

 

 

 

 

 

 

 

 

63,936 

 

Interest and other investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(loss) income, net

 

 

(260,945)

 

 

4,230 

 

 

126 

 

 

27 

 

 

 

 

 

 

(265,328)

 

Interest and debt expense

 

 

(500,361)

 

 

(147,132)

 

 

(115,574)

 

 

(62,923)

 

 

(31,393)

 

 

 

 

(143,339)

 

Net gain on disposition of wholly

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

owned and partially owned assets

 

 

13,347 

 

 

 

 

 

 

8,491 

 

 

 

 

 

 

4,856 

 

Income (loss) before income taxes

 

 

416,731 

 

 

580,266 

 

 

72,912 

 

 

(4,569)

 

 

(7,626)

 

 

14,859 

 

 

(239,111)

 

Income tax expense

 

 

(8,132)

 

 

(3,491)

 

 

(1,650)

 

 

 

 

(502)

 

 

 

 

(2,489)

 

Income (loss) from continuing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

408,599 

 

 

576,775 

 

 

71,262 

 

 

(4,569)

 

 

(8,128)

 

 

14,859 

 

 

(241,600)

 

Income (loss) from discontinued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

285,942 

 

 

(641)

 

 

167,766 

 

 

42,926 

 

 

75,144 

 

 

 

 

747 

 

Net income (loss)

 

 

694,541 

 

 

576,134 

 

 

239,028 

 

 

38,357 

 

 

67,016 

 

 

14,859 

 

 

(240,853)

 

Less net (income) loss attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interests in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated subsidiaries

 

 

(32,018)

 

 

(2,138)

 

 

 

 

1,812 

 

 

 

 

 

 

(31,692)

 

 

Operating Partnership

 

 

(35,327)

 

 

 

 

 

 

 

 

 

 

 

 

(35,327)

 

 

Preferred unit distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of the Operating Partnership

 

 

(9,936)

 

 

 

 

 

 

 

 

 

 

 

 

(9,936)

 

Net income (loss) attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado

 

 

617,260 

 

 

573,996 

 

 

239,028 

 

 

40,169 

 

 

67,016 

 

 

14,859 

 

 

(317,808)

 

Interest and debt expense (2)

 

 

760,523 

 

 

187,855 

 

 

133,625 

 

 

73,828 

 

 

35,423 

 

 

147,880 

 

 

181,912 

 

Depreciation and amortization (2)

 

 

735,293 

 

 

252,257 

 

 

157,816 

 

 

86,529 

 

 

39,596 

 

 

135,179 

 

 

63,916 

 

Income tax expense (benefit) (2)

 

 

7,026 

 

 

3,751 

 

 

1,943 

 

 

 

 

12,503 

 

 

(16,629)

 

 

5,458 

 

EBITDA (1)

 

$

2,120,102 

 

$

1,017,859 

(3)

$

532,412 

 

$

200,526 

(4)

$

154,538 

 

$

281,289 

 

$

(66,522)

(5)

 

EBITDA for the New York, Washington, DC and Retail Properties segments above include income from discontinued operations and other gains and losses that affect comparability which are described in the “Overview,” aggregating $197,998, $176,935 and $(35,875), respectively.  Excluding these items, EBITDA for the New York, Washington, DC and Retail Properties segments was $819,861, $355,477 and $236,401, respectively.

­­­­­­­­­­­­­­­­­­­­­­

___________________________________________________________­­­­­­­­­­­­­­­­­________________

See notes on page 87.

 

84

 


 

 

Net Income and EBITDA by Segment for the Years Ended December 31, 2012, 2011 and 2010 - continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

For the Year Ended December 31, 2011

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

 

 

 

 

 

 

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Toys

 

Other

 

Property rentals

 

$

2,012,292 

 

$

979,032 

 

$

531,510 

 

$

274,386 

 

$

136,404 

 

$

 

$

90,960 

 

Straight-line rent adjustments

 

 

39,858 

 

 

34,446 

 

 

(2,569)

 

 

6,723 

 

 

(1,284)

 

 

 

 

2,542 

 

Amortization of acquired below-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

market leases, net

 

 

62,105 

 

 

40,958 

 

 

2,160 

 

 

13,969 

 

 

 

 

 

 

5,018 

 

Total rentals

 

 

2,114,255 

 

 

1,054,436 

 

 

531,101 

 

 

295,078 

 

 

135,120 

 

 

 

 

98,520 

 

Tenant expense reimbursements

 

 

314,752 

 

 

165,433 

 

 

36,299 

 

 

96,805 

 

 

6,321 

 

 

 

 

9,894 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

154,080 

 

 

 

 

 

 

 

 

154,080 

 

 

 

 

 

Fee and other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMS cleaning fees

 

 

61,754 

 

 

90,033 

 

 

 

 

 

 

 

 

 

 

(28,279)

 

 

Signage revenue

 

 

19,823 

 

 

19,823 

 

 

 

 

 

 

 

 

 

 

 

 

Management and leasing fees

 

 

21,801 

 

 

5,095 

 

 

12,361 

 

 

3,990 

 

 

342 

 

 

 

 

13 

 

 

Lease termination fees

 

 

16,334 

 

 

11,839 

 

 

3,794 

 

 

467 

 

 

234 

 

 

 

 

 

 

Other income

 

 

30,037 

 

 

6,457 

 

 

19,762 

 

 

1,862 

 

 

2,218 

 

 

 

 

(262)

 

Total revenues

 

 

2,732,836 

 

 

1,353,116 

 

 

603,317 

 

 

398,202 

 

 

298,315 

 

 

 

 

79,886 

 

Operating expenses

 

 

995,586 

 

 

578,344 

 

 

188,744 

 

 

133,403 

 

 

77,492 

 

 

 

 

17,603 

 

Depreciation and amortization

 

 

524,550 

 

 

221,520 

 

 

154,142 

 

 

77,433 

 

 

28,804 

 

 

 

 

42,651 

 

General and administrative

 

 

208,008 

 

 

26,808 

 

 

26,369 

 

 

25,489 

 

 

28,040 

 

 

 

 

101,302 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

145,824 

 

 

 

 

 

 

 

 

145,824 

 

 

 

 

 

Impairment losses, acquisition related

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

costs and tenant buy-outs

 

 

35,299 

 

 

23,777 

 

 

 

 

369 

 

 

5,228 

 

 

 

 

5,925 

 

Total expenses

 

 

1,909,267 

 

 

850,449 

 

 

369,255 

 

 

236,694 

 

 

285,388 

 

 

 

 

167,481 

 

Operating income (loss)

 

 

823,569 

 

 

502,667 

 

 

234,062 

 

 

161,508 

 

 

12,927 

 

 

 

 

(87,595)

 

Income applicable to Toys

 

 

48,540 

 

 

 

 

 

 

 

 

 

 

48,540 

 

 

 

Income (loss) from partially owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

entities

 

 

70,072 

 

 

12,062 

 

 

(6,381)

 

 

2,700 

 

 

455 

 

 

 

 

61,236 

 

Income from Real Estate Fund

 

 

22,886 

 

 

 

 

 

 

 

 

 

 

 

 

22,886 

 

Interest and other investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

income (loss), net

 

 

148,784 

 

 

4,245 

 

 

199 

 

 

(32)

 

 

 

 

 

 

144,371 

 

Interest and debt expense

 

 

(526,175)

 

 

(152,386)

 

 

(115,456)

 

 

(70,952)

 

 

(31,208)

 

 

 

 

(156,173)

 

Net gain on disposition of wholly

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

owned and partially owned assets

 

 

15,134 

 

 

 

 

 

 

4,278 

 

 

 

 

 

 

10,856 

 

Income (loss) before income taxes

 

 

602,810 

 

 

366,588 

 

 

112,424 

 

 

97,502 

 

 

(17,825)

 

 

48,540 

 

 

(4,419)

 

Income tax expense

 

 

(23,925)

 

 

(2,084)

 

 

(2,690)

 

 

(34)

 

 

(1,572)

 

 

 

 

(17,545)

 

Income (loss) from continuing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

578,885 

 

 

364,504 

 

 

109,734 

 

 

97,468 

 

 

(19,397)

 

 

48,540 

 

 

(21,964)

 

Income from discontinued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

161,115 

 

 

563 

 

 

52,390 

 

 

31,815 

 

 

72,971 

 

 

 

 

3,376 

 

Net income (loss)

 

 

740,000 

 

 

365,067 

 

 

162,124 

 

 

129,283 

 

 

53,574 

 

 

48,540 

 

 

(18,588)

 

Less net (income) loss attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interests in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated subsidiaries

 

 

(21,786)

 

 

(10,042)

 

 

 

 

237 

 

 

 

 

 

 

(11,981)

 

 

Operating Partnership

 

 

(41,059)

 

 

 

 

 

 

 

 

 

 

 

 

(41,059)

 

 

Preferred unit distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of the Operating Partnership

 

 

(14,853)

 

 

 

 

 

 

 

 

 

 

 

 

(14,853)

 

Net income (loss) attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado

 

 

662,302 

 

 

355,025 

 

 

162,124 

 

 

129,520 

 

 

53,574 

 

 

48,540 

 

 

(86,481)

 

Interest and debt expense (2)

 

 

797,920 

 

 

181,740 

 

 

134,270 

 

 

82,608 

 

 

40,916 

 

 

157,135 

 

 

201,251 

 

Depreciation and amortization (2)

 

 

777,421 

 

 

247,630 

 

 

181,560 

 

 

91,040 

 

 

46,725 

 

 

134,967 

 

 

75,499 

 

Income tax expense (benefit) (2)

 

 

4,812 

 

 

2,170 

 

 

3,123 

 

 

34 

 

 

2,237 

 

 

(1,132)

 

 

(1,620)

 

EBITDA (1)

 

$

2,242,455 

 

$

786,565 

(3)

$

481,077 

 

$

303,202 

(4)

$

143,452 

 

$

339,510 

 

$

188,649 

(5)

 

EBITDA for the New York, Washington, DC and Retail Properties segments above include income from discontinued operations and other gains and losses that affect comparability which are described in the “Overview,” aggregating $(8,698), $70,743 and $73,275, respectively.  Excluding these items, EBITDA for the New York, Washington, DC and Retail Properties segments was $795,263, $410,334 and $229,927, respectively.

____________________________________

See notes on page 87.

 

85

 


 

 

Net Income and EBITDA by Segment for the Years Ended December 31, 2012, 2011 and 2010 - continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

For the Year Ended December 31, 2010

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

 

 

 

 

 

 

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Toys

 

Other

 

Property rentals

 

$

1,957,130 

 

$

944,322 

 

$

536,947 

 

$

256,654 

 

$

132,120 

 

$

 

$

87,087 

 

Straight-line rent adjustments

 

 

70,972 

 

 

51,385 

 

 

6,089 

 

 

9,401 

 

 

301 

 

 

 

 

3,796 

 

Amortization of acquired below-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

market leases, net

 

 

65,373 

 

 

44,879 

 

 

2,453 

 

 

12,384 

 

 

 

 

 

 

5,657 

 

Total rentals

 

 

2,093,475 

 

 

1,040,586 

 

 

545,489 

 

 

278,439 

 

 

132,421 

 

 

 

 

96,540 

 

Tenant expense reimbursements

 

 

317,777 

 

 

159,369 

 

 

49,792 

 

 

93,032 

 

 

5,274 

 

 

 

 

10,310 

 

Fee and other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMS cleaning fees

 

 

58,053 

 

 

84,945 

 

 

 

 

 

 

 

 

 

 

(26,892)

 

 

Signage revenue

 

 

18,618 

 

 

18,618 

 

 

 

 

 

 

 

 

 

 

 

 

Management and leasing fees

 

 

21,686 

 

 

4,427 

 

 

15,934 

 

 

1,820 

 

 

156 

 

 

 

 

(651)

 

 

Lease termination fees

 

 

14,818 

 

 

7,470 

 

 

1,148 

 

 

4,441 

 

 

459 

 

 

 

 

1,300 

 

 

Other income

 

 

33,780 

 

 

6,051 

 

 

20,594 

 

 

927 

 

 

3,068 

 

 

 

 

3,140 

 

Total revenues

 

 

2,558,207 

 

 

1,321,466 

 

 

632,957 

 

 

378,659 

 

 

141,378 

 

 

 

 

83,747 

 

Operating expenses

 

 

983,424 

 

 

556,270 

 

 

202,569 

 

 

141,116 

 

 

65,842 

 

 

 

 

17,627 

 

Depreciation and amortization

 

 

494,898 

 

 

212,903 

 

 

136,391 

 

 

71,556 

 

 

28,416 

 

 

 

 

45,632 

 

General and administrative

 

 

211,399 

 

 

25,560 

 

 

25,454 

 

 

27,676 

 

 

24,199 

 

 

 

 

108,510 

 

Impairment losses, acquisition related

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

costs and tenant buy-outs

 

 

109,458 

 

 

1,605 

 

 

 

 

70,895 

 

 

 

 

 

 

36,958 

 

Total expenses

 

 

1,799,179 

 

 

796,338 

 

 

364,414 

 

 

311,243 

 

 

118,457 

 

 

 

 

208,727 

 

Operating income (loss)

 

 

759,028 

 

 

525,128 

 

 

268,543 

 

 

67,416 

 

 

22,921 

 

 

 

 

(124,980)

 

Income applicable to Toys

 

 

71,624 

 

 

 

 

 

 

 

 

 

 

71,624 

 

 

 

Income (loss) from partially owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

entities

 

 

20,869 

 

 

13,317 

 

 

(564)

 

 

8,220 

 

 

(179)

 

 

 

 

75 

 

(Loss) from Real Estate Fund

 

 

(303)

 

 

 

 

 

 

 

 

 

 

 

 

(303)

 

Interest and other investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

income, net

 

 

235,267 

 

 

4,237 

 

 

154 

 

 

164 

 

 

 

 

 

 

230,709 

 

Interest and debt expense

 

 

(539,370)

 

 

(145,406)

 

 

(125,272)

 

 

(63,265)

 

 

(31,208)

 

 

 

 

(174,219)

 

Net gain (loss) on extinguishment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of debt

 

 

94,789 

 

 

 

 

 

 

105,571 

 

 

 

 

 

 

(10,782)

 

Net gain on disposition of wholly

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

owned and partially owned assets

 

 

81,432 

 

 

 

 

54,742 

 

 

 

 

765 

 

 

 

 

25,925 

 

Income (loss) before income taxes

 

 

723,336 

 

 

397,276 

 

 

197,603 

 

 

118,106 

 

 

(7,698)

 

 

71,624 

 

 

(53,575)

 

Income tax (expense) benefit

 

 

(22,137)

 

 

(2,167)

 

 

(1,679)

 

 

(37)

 

 

29 

 

 

 

 

(18,283)

 

Income (loss) from continuing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

701,199 

 

 

395,109 

 

 

195,924 

 

 

118,069 

 

 

(7,669)

 

 

71,624 

 

 

(71,858)

 

Income (loss) from discontinued operations

 

 

6,832 

 

 

168 

 

 

4,143 

 

 

19,061 

 

 

(20,948)

 

 

 

 

4,408 

 

Net income (loss)

 

 

708,031 

 

 

395,277 

 

 

200,067 

 

 

137,130 

 

 

(28,617)

 

 

71,624 

 

 

(67,450)

 

Less net (income) loss attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interests in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated subsidiaries

 

 

(4,920)

 

 

(9,559)

 

 

 

 

(778)

 

 

 

 

 

 

5,417 

 

 

Operating Partnership

 

 

(44,033)

 

 

 

 

 

 

 

 

 

 

 

 

(44,033)

 

 

Preferred unit distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of the Operating Partnership

 

 

(11,195)

 

 

 

 

 

 

 

 

 

 

 

 

(11,195)

 

Net income (loss) attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado

 

 

647,883 

 

 

385,718 

 

 

200,067 

 

 

136,352 

 

 

(28,617)

 

 

71,624 

 

 

(117,261)

 

Interest and debt expense (2)

 

 

828,082 

 

 

158,249 

 

 

136,174 

 

 

79,545 

 

 

61,379 

 

 

177,272 

 

 

215,463 

 

Depreciation and amortization (2)

 

 

729,426 

 

 

218,766 

 

 

159,283 

 

 

86,629 

 

 

51,064 

 

 

131,284 

 

 

82,400 

 

Income tax (benefit) expense (2)

 

 

(23,036)

 

 

1,311 

 

 

2,027 

 

 

37 

 

 

232 

 

 

(45,418)

 

 

18,775 

 

EBITDA (1)

 

$

2,182,355 

 

$

764,044 

(3)

$

497,551 

 

$

302,563 

(4)

$

84,058 

 

$

334,762 

 

$

199,377 

(5)

 

EBITDA for the New York, Washington, DC and Retail Properties segments above include income from discontinued operations and other gains and losses that affect comparability which are described in the “Overview,” aggregating $1,881, $73,526 and $78,005, respectively.  Excluding these items, EBITDA for the New York, Washington, DC and Retail Properties segments was $762,163, $424,025 and $224,558, respectively.

___________________________

See notes on the following page.

 

86

 


 

 

Net Income and EBITDA by Segment for the Years Ended December 31, 2012, 2011 and 2010 - continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to preceding tabular information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

EBITDA represents "Earnings Before Interest, Taxes, Depreciation and Amortization." We consider EBITDA a supplemental 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 a multiple of EBITDA, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. EBITDA should not be considered a substitute for net income. EBITDA may not be comparable to similarly titled measures employed by other companies.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

Interest and debt expense, depreciation and amortization and income tax expense (benefit) in the reconciliation of net income (loss) to EBITDA includes our share of these items from partially owned entities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

The elements of "New York" EBITDA are summarized below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

 

 

 

 

(Amounts in thousands)

2012 

 

2011 

 

2010 

 

 

 

 

Office (a)

$

568,518 

 

$

539,734 

 

$

510,187 

 

 

 

 

Retail (b)

 

189,484 

 

 

163,033 

 

 

180,225 

 

 

 

 

Alexander's (c)

 

231,402 

 

 

53,663 

 

 

49,869 

 

 

 

 

Hotel Pennsylvania

 

28,455 

 

 

30,135 

 

 

23,763 

 

 

 

 

 

Total New York

$

1,017,859 

 

$

786,565 

 

$

764,044 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

 

2012 includes income of $6,958, primarily from a priority return on our investment in 1290 Avenue of the Americas.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b)

 

2011 includes a $23,777 expense for tenant buy-out costs.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(c)

 

2012 includes income of $179,934 for our share of a net gain on sale of real estate.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

The elements of "Retail Properties" EBITDA are summarized below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

 

 

 

 

(Amounts in thousands)

2012 

 

2011 

 

2010 

 

 

 

 

Strip shopping centers (a)

$

172,708 

 

$

210,022 

 

$

180,323 

 

 

 

 

Regional malls (b)

 

27,818 

 

 

93,180 

 

 

122,240 

 

 

 

 

 

Total Retail properties

$

200,526 

 

$

303,202 

 

$

302,563 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

 

Includes income from discontinued operations and other gains and losses that affect comparability, aggregating $515, $44,990 and $15,541, respectively. Excluding these items, EBITDA was $172,193, $165,032 and $164,782, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b)

 

Includes income from discontinued operations and other gains and losses that affect comparability, aggregating $(36,390), $28,285 and $62,464, respectively. Excluding these items, EBITDA was $64,208, $64,895 and $59,776, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

87

 


 

 

Net Income and EBITDA by Segment for the Years Ended December 31, 2012, 2011 and 2010 - continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to preceding tabular information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)

The elements of "other" EBITDA are summarized below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

For the Year Ended December 31,

 

 

 

 

 

 

 

 

2012 

 

2011 

 

 

2010 

 

 

Our share of Real Estate Fund:

 

 

 

 

 

 

 

 

 

 

 

Income before net realized/unrealized gains

$

4,926 

 

$

4,205 

 

$

503 

 

 

 

Net unrealized gains

 

13,840 

 

 

2,999 

 

 

 

 

 

Net realized gains

 

 

 

1,348 

 

 

 

 

 

Carried interest

 

5,838 

 

 

736 

 

 

 

 

Total

 

24,604 

 

 

9,288 

 

 

503 

 

 

LNR (acquired in July 2010)

 

79,520 

 

 

47,614 

 

 

6,116 

 

 

555 California Street

 

46,167 

 

 

44,724 

 

 

46,782 

 

 

Lexington Realty Trust ("Lexington")

 

32,595 

 

 

34,779 

 

 

41,594 

 

 

Other investments

 

29,266 

 

 

33,529 

 

 

30,463 

 

 

 

 

212,152 

 

 

169,934 

 

 

125,458 

 

 

Corporate general and administrative expenses (a)

 

(90,567)

 

 

(85,922)

 

 

(90,343)

 

 

Investment income and other, net (a)

 

35,397 

 

 

52,405 

 

 

65,499 

 

 

Fee income from Alexander's (including a $6,423 sales commission in 2012)

 

13,748 

 

 

7,417 

 

 

7,556 

 

 

Non-cash impairment loss on J.C. Penney owned shares

 

(224,937)

 

 

 

 

 

 

(Loss) income from the mark-to-market of J.C. Penney derivative position

 

(75,815)

 

 

12,984 

 

 

130,153 

 

 

Purchase price fair value adjustment and accelerated amortization of

 

 

 

 

 

 

 

 

 

 

 

discount on investment in subordinated debt of Independence Plaza

 

105,366 

 

 

 

 

 

 

Net gain resulting from Lexington's stock issuance and asset acquisition

 

28,763 

 

 

9,760 

 

 

13,710 

 

 

Impairment losses and acquisition related costs

 

(17,386)

 

 

(5,925)

 

 

(36,958)

 

 

Verde Realty impairment loss

 

(4,936)

 

 

 

 

 

 

Our share of impairment losses of partially owned entities

 

(4,318)

 

 

(13,794)

 

 

 

 

Net gain on sale of residential condominiums

 

1,274 

 

 

5,884 

 

 

3,149 

 

 

Mezzanine loans loss reversal and net gain on disposition

 

 

 

82,744 

 

 

53,100 

 

 

Net gain from Suffolk Downs' sale of a partial interest

 

 

 

12,525 

 

 

 

 

Real Estate Fund placement fees

 

 

 

(3,451)

 

 

(5,937)

 

 

Net loss on extinguishment of debt

 

 

 

 

 

(10,782)

 

 

Net income attributable to noncontrolling interests in the Operating Partnership

 

(35,327)

 

 

(41,059)

 

 

(44,033)

 

 

Preferred unit distributions of the Operating Partnership

 

(9,936)

 

 

(14,853)

 

 

(11,195)

 

 

 

 

 

 

 

 

$

(66,522)

 

$

188,649 

 

$

199,377 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

The amounts in these captions (for this table only) exclude the mark-to-market of our deferred compensation plan assets and offsetting liability.

 

88

 


 

 

Net Income and EBITDA by Segment for the Years Ended December 31, 2012, 2011 and 2010 - continued

        

EBITDA by Region

 

Below is a summary of the percentages of EBITDA by geographic region (excluding discontinued operations and other gains and losses that affect comparability), from our New York, Washington, DC, Retail Properties and Merchandise Mart segments.

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

 

 

 

 

 

2012 

 

2011 

 

2010 

 

 

Region:

 

 

 

 

 

 

 

 

 

New York City metropolitan area

 

66%

 

64%

 

63%

 

 

 

Washington, DC / Northern Virginia metropolitan area

 

25%

 

28%

 

30%

 

 

 

Chicago

 

4%

 

3%

 

3%

 

 

 

California

 

2%

 

2%

 

1%

 

 

 

Puerto Rico

 

1%

 

2%

 

2%

 

 

 

Other geographies

 

2%

 

1%

 

1%

 

 

 

 

 

100%

 

100%

 

100%

 

89

 


 

 

Results of Operations – Year Ended December 31, 2012 Compared to December 31, 2011

 

Revenues

Our revenues, which consist of property rentals, tenant expense reimbursements, hotel revenues, trade shows revenues, amortization of acquired below-market leases, net of above-market leases and fee income, were $2,766,457,000 in the year ended December 31, 2012, compared to $2,732,836,000 in the prior year, an increase of $33,621,000.  Below are the details of the increase (decrease) by segment:

 

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

 

Merchandise

 

 

 

 

 

Increase (decrease) due to:

 

Total

 

 

New York

 

 

Washington, DC

 

 

Properties

 

 

Mart

 

 

Other

 

Property rentals:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions

 

$

15,139 

 

 

$

9,528 

 

 

$

5,611 

 

 

$

 

 

$

 

 

$

 

 

Development (out of service)

 

 

(29,707)

 

 

 

(5,339)

 

 

 

(22,312)

 

 

 

(2,056)

 

 

 

 

 

 

 

 

Hotel Pennsylvania

 

 

1,113 

 

 

 

1,113 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade Shows

 

 

(4,460)

 

 

 

 

 

 

 

 

 

 

 

 

(4,460)

 

 

 

 

 

Amortization of acquired below-market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

leases, net

 

 

(7,912)

 

 

 

(9,406)

 

 

 

(117)

 

 

 

933 

 

 

 

 

 

 

678 

 

 

Leasing activity (see page 77)

 

 

(2,846)

 

 

 

37,415 

 

 

 

(38,541)

 

 

 

6,516 

 

 

 

(4,879)

 

 

 

(3,357)

 

 

 

 

(28,673)

 

 

 

33,311 

 

 

 

(55,359)

 

 

 

5,393 

 

 

 

(9,339)

 

 

 

(2,679)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenant expense reimbursements:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions/development

 

 

(12,076)

 

 

 

(5,635)

 

 

 

1,081 

 

 

 

(4,835)

 

 

 

 

 

 

(2,687)

 

 

Operations

 

 

(1,584)

 

 

 

335 

 

 

 

3,362 

 

 

 

(3,425)

 

 

 

(1,978)

 

 

 

122 

 

 

 

 

 

(13,660)

 

 

 

(5,300)

 

 

 

4,443 

 

 

 

(8,260)

 

 

 

(1,978)

 

 

 

(2,565)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

81,154 

(1)

 

 

 

 

 

 

 

 

 

 

 

81,154 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee and other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMS cleaning fees

 

 

5,830 

 

 

 

4,932 

 

 

 

 

 

 

 

 

 

 

 

 

898 

 

 

Signage revenue

 

 

1,069 

 

 

 

1,069 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management and leasing fees

 

 

66 

 

 

 

544 

 

 

 

414 

 

 

 

(859)

 

 

 

(111)

 

 

 

78 

 

 

Lease termination fees

 

 

(13,973)

 

 

 

(10,703)

 

 

 

(3,151)

 

 

 

(393)

 

 

 

274 

 

 

 

 

 

Other income

 

 

1,808 

 

 

 

(1,985)

 

 

 

4,364 

 

 

 

(84)

 

 

 

(644)

 

 

 

157 

 

 

 

 

(5,200)

 

 

 

(6,143)

 

 

 

1,627 

 

 

 

(1,336)

 

 

 

(481)

 

 

 

1,133 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total increase (decrease) in revenues

 

$

33,621 

 

 

$

21,868 

 

 

$

(49,289)

 

 

$

(4,203)

 

 

$

69,356 

 

 

$

(4,111)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

This increase in income is offset by an increase in development costs expensed in the period. See note (5) on page 91.

 

90

 


 

 

Results of Operations – Year Ended December 31, 2012 Compared to December 31, 2011 - continued

 

Expenses

Our expenses, which consist primarily of operating, depreciation and amortization and general and administrative expenses, were $2,088,829,000 in the year ended December 31, 2012, compared to $1,909,267,000 in the prior year, an increase of $179,562,000.  Below are the details of the increase (decrease) by segment:

 

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

 

Merchandise

 

 

 

 

 

Increase (decrease) due to:

 

Total

 

 

New York

 

 

Washington, DC

 

 

Properties

 

 

Mart

 

 

Other

 

Operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions

 

$

7,422 

 

 

$

6,617 

 

 

$

3,492 

 

 

$

 

 

$

 

 

$

(2,687)

 

 

Development (out of service)

 

 

(9,037)

 

 

 

(1,074)

 

 

 

(4,829)

 

 

 

(3,134)

 

 

 

 

 

 

 

 

Non-reimbursable expenses, including

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

bad-debt reserves

 

 

7,745 

 

 

 

(3,347)

 

 

 

2,662 

 

 

 

15,060 

(2)

 

 

(6,630)

 

 

 

 

 

Hotel Pennsylvania

 

 

2,594 

 

 

 

2,594 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade Shows

 

 

(5,216)

 

 

 

 

 

 

 

 

 

 

 

 

(5,216)

 

 

 

 

 

BMS expenses

 

 

5,139 

 

 

 

4,241 

 

 

 

 

 

 

 

 

 

 

 

 

898 

 

 

Operations

 

 

17,486 

 

 

 

15,508 

 

 

 

4,454 

 

 

 

(3,597)

 

 

 

(309)

 

 

 

1,430 

 

 

 

 

 

26,133 

 

 

 

24,539 

 

 

 

5,779 

 

 

 

8,329 

 

 

 

(12,155)

 

 

 

(359)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions/development

 

 

(8,817)

 

 

 

2,323 

 

 

 

(10,526)

(3)

 

 

(614)

 

 

 

 

 

 

 

 

Operations

 

 

2,078 

 

 

 

2,810 

 

 

 

(5,320)

 

 

 

16 

 

 

 

4,974 

 

 

 

(402)

 

 

 

 

 

 

(6,739)

 

 

 

5,133 

 

 

 

(15,846)

 

 

 

(598)

 

 

 

4,974 

 

 

 

(402)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mark-to-market of deferred compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

plan liability (1)

 

 

5,151 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,151 

 

 

Real Estate Fund placement fees

 

 

(3,451)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,451)

 

 

Operations

 

 

(7,814)

 

 

 

3,245 

 

 

 

868 

 

 

 

(1,835)

 

 

 

(9,141)

(4)

 

 

(951)

 

 

 

 

 

(6,114)

 

 

 

3,245 

 

 

 

868 

 

 

 

(1,835)

 

 

 

(9,141)

 

 

 

749 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

80,795 

(5)

 

 

 

 

 

 

 

 

 

 

 

80,795 

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment losses, acquisition related

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

costs and tenant buy-outs

 

 

85,487 

 

 

 

(23,777)

(6)

 

 

 

 

 

103,031 

(7)

 

 

(5,228)

 

 

 

11,461 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total increase (decrease) in expenses

 

$

179,562 

 

 

$

9,140 

 

 

$

(9,199)

 

 

$

108,927 

 

 

$

59,245 

 

 

$

11,449 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

This increase in expense is entirely offset by a corresponding increase in income from the mark-to-market of the deferred compensation plan assets, a component of “interest and other investment income (loss), net” on our consolidated statements of income.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

Primarily from a $16,820 reversal of the Stop & Shop accounts receivable reserve in the prior year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

 

Primarily from depreciation expense on 1851 South Bell Street in the prior year, which was taken out of service for redevelopment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

 

Primarily from lower payroll costs due to a reduction in workforce.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)

 

This increase in expense is offset by the increase in development revenue in the period. See note (1) on page 90.

 

 

 

(6)

 

Represents the buy-out of below-market leases in the prior year.

 

 

 

(7)

 

Primarily from a non-cash impairment loss of $70,100 on the Broadway Mall.

 

91

 


 

 

Results of Operations – Year Ended December 31, 2012 Compared to December 31, 2011 - continued

 

Income Applicable to Toys

 

In the year ended December 31, 2012, we recognized net income of $14,859,000 from our investment in Toys, comprised of $45,267,000 for our 32.6% share of Toys’ net income and $9,592,000 of management fees, partially offset by a $40,000,000 non-cash impairment loss (see below).

 

In the year ended December 31, 2011, we recognized net income of $48,540,000 from our investment in Toys, comprised of $39,592,000 for our 32.7% share of Toys’ net income and $8,948,000 of management fees.

 

We account for Toys on the equity method, which means our investment is increased for our pro rata share of Toys undistributed net income.  Since our acquisition in July 2005, the carrying amount of our investment has grown from $396,000,000 to $518,041,000 after we recognized our share of Toys third quarter net loss in our fourth quarter.  We estimate that the fair value of our investment is approximately $478,000,000 at December 31, 2012.  We have concluded that the $40,000,000 decline in the value of our investment is “other-than-temporary” based on, among other factors, compression of earnings multiples of comparable retailers and our inability to forecast a recovery in the near term.  Accordingly, we recognized a non-cash impairment loss of $40,000,000 in the fourth quarter. 

 

We will continue to assess the recoverability of our investment each quarter.  To the extent that the current facts don’t change, we would recognize a non-cash impairment loss equal to our share of Toys fourth quarter net income in our 2013 first quarter.  In the first quarter of 2012, our share of Toys fourth quarter net income was approximately $114,000,000.  

 

92

 


 

 

Results of Operations – Year Ended December 31, 2012 Compared to December 31, 2011 - continued

 

Income from Partially Owned Entities

Summarized below are the components of income (loss) from partially owned entities for the years ended December 31, 2012 and 2011.

 

 

 

 

 

 

 

Percentage

 

For the Year Ended

 

 

 

 

 

 

 

 

Ownership at

 

December 31,

 

 

(Amounts in thousands)

 

December 31, 2012

 

2012 

 

2011 

 

 

Equity in Net Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

Alexander's (1)

 

32.4%

 

$

218,391 

 

 

$

32,430 

 

 

 

Lexington (2)

 

10.5%

 

 

28,740 

 

 

 

8,351 

 

 

 

LNR (see page 74) (3)

 

26.2%

 

 

66,270 

 

 

 

58,786 

 

 

 

India real estate ventures (4)

 

4.0%-36.5%

 

 

(5,008)

 

 

 

(14,881)

 

 

 

Partially owned office buildings:

 

 

 

 

 

 

 

 

 

 

 

 

 

280 Park Avenue (acquired in May 2011)

 

49.5%

 

 

(11,510)

 

 

 

(18,079)

 

 

 

 

Warner Building (5)

 

55.0%

 

 

(10,186)

 

 

 

(18,875)

 

 

 

 

666 Fifth Avenue Office Condominium (acquired in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 2011)

 

49.5%

 

 

7,009 

 

 

 

198 

 

 

 

 

330 Madison Avenue

 

 

 

25.0%

 

 

3,609 

 

 

 

2,126 

 

 

 

 

1101 17th Street

 

55.0%

 

 

2,576 

 

 

 

2,740 

 

 

 

 

One Park Avenue (acquired in March 2011)

 

 

30.3%

 

 

1,123 

 

 

 

(1,142)

 

 

 

 

West 57th Street Properties

 

50.0%

 

 

1,014 

 

 

 

876 

 

 

 

 

Rosslyn Plaza

 

 

 

43.7%-50.4%

 

 

822 

 

 

 

2,193 

 

 

 

 

Fairfax Square

 

20.0%

 

 

(132)

 

 

 

(42)

 

 

 

 

Other partially owned office buildings

 

Various

 

 

1,905 

 

 

 

7,735 

 

 

 

Other investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Independence Plaza Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(see page 73) (6)

 

n/a

 

 

111,865 

 

 

 

2,457 

 

 

 

 

Verde Realty Operating Partnership (7)

 

n/a

 

 

(5,703)

 

 

 

1,661 

 

 

 

 

Monmouth Mall

 

50.0%

 

 

1,429 

 

 

 

2,556 

 

 

 

 

Downtown Crossing, Boston

 

50.0%

 

 

(1,309)

 

 

 

(1,461)

 

 

 

 

Other investments (8)

 

Various

 

 

(2,638)

 

 

 

2,443 

 

 

 

 

 

 

 

 

$

408,267 

 

 

$

70,072 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

2012 includes $186,357 of income comprised of (i) a $179,934 net gain and (ii) $6,423 of commissions, in connection with the sale of real estate.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

2012 and 2011 include $28,763 and $9,760, respectively, of net gains resulting primarily from Lexington's stock issuances.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

 

2011 includes $27,377 of income comprised of (i) a $12,380 income tax benefit, (ii) an $8,977 tax settlement gain and (iii) $6,020 of net gains from asset sales.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

 

2011 includes $13,794 for our share of an impairment loss.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)

 

2011 includes $9,022 for our share of expense, primarily for straight-line reserves and the write-off of tenant improvements in connection with a tenant's bankruptcy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6)

 

2012 includes $105,366 of income comprised of (i) $60,396 from the accelerated amortization of discount on investment in subordinated debt of the property and (ii) a $44,970 purchase price fair value adjustment from the exercise of a warrant to acquire 25% of the equity interest in the property.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7)

 

2012 includes a $4,936 impairment loss on our equity investment, which was sold in the third quarter.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8)

 

2011 includes a $12,525 net gain from Suffolk Downs' sale of a partial interest.

 

93

 


 

 

Results of Operations – Year Ended December 31, 2012 Compared to December 31, 2011 - continued

 

 

Income from Real Estate Fund

 

Below are the components of the income from our Real Estate Fund for the year ended December 31, 2012 and 2011.

 

 

 

 

 

 

(Amounts in thousands)

 

For the Year Ended December 31,

 

 

 

 

2012 

2011 

 

 

Operating income

 

$

8,575 

 

$

5,500 

 

 

Net realized gain

 

 

 

 

5,391 

 

 

Net unrealized gains

 

 

55,361 

 

 

11,995 

 

 

Income from Real Estate Fund

 

 

63,936 

 

 

22,886 

 

 

Less (income) attributable to noncontrolling interests

 

 

(39,332)

 

 

(13,598)

 

 

Income from Real Estate Fund attributable to Vornado (1)

 

$

24,604 

 

$

9,288 

 

 

___________________________________

 

 

 

 

(1)

Excludes management, leasing and development fees of $2,780 and $2,695 for the years ended December 31, 2012 and 2011, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.

 

                   

 

Interest and Other Investment (Loss) Income, net

Interest and other investment (loss) income, net (comprised of impairment losses on marketable equity securities, the mark-to-market of derivative positions in marketable equity securities, interest income on mortgage and mezzanine loans receivable, other interest income and dividend income) was a loss of $260,945,000 in the year ended December 31, 2012, compared to income of $148,784,000 in the prior year, a decrease in income of $409,729,000. This decrease resulted from:

 

 

(Amounts in thousands)

 

 

 

 

 

 

Non-cash impairment loss on J.C. Penney owned shares in 2012

 

$

(224,937)

 

 

 

J.C. Penney derivative position ($75,815 mark-to-market loss in 2012, compared to a $12,984

 

 

 

 

 

 

 

mark-to-market gain in 2011)

 

 

(88,799)

 

 

 

Mezzanine loan loss reversal and net gain on disposition in 2011

 

 

(82,744)

 

 

 

Lower dividends and interest on marketable securities

 

 

(17,608)

 

 

 

Increase in the value of investments in our deferred compensation plan (offset by a corresponding

 

 

 

 

 

 

 

increase in the liability for plan assets in general and administrative expenses)

 

 

5,151 

 

 

 

Other, net

 

 

(792)

 

 

 

 

 

 

 

$

(409,729)

 

 

                 

 

 

Interest and Debt Expense

Interest and debt expense was $500,361,000 in the year ended December 31, 2012, compared to $526,175,000 in the prior year, a decrease of $25,814,000.  This decrease was primarily due to (i) $27,077,000 from the redemption of our exchangeable and convertible senior debentures in April 2012 and November 2011, respectively, (ii) $15,604,000 of higher capitalized interest and (iii) $12,082,000 from the refinancing of 350 Park Avenue in January 2012 (of which $7,274,000 was due to a lower rate and $4,808,000 was due to a lower outstanding loan balance), partially offset by (iv) $18,833,000 from the issuance of $400,000,000 of senior unsecured notes in November 2011, (v) $6,093,000 from the refinancing of 100 West 33 rd Street in March 2012 and (vi) $4,715,000 from borrowings under our revolving credit facilities. 

 

 

Net Gain on Disposition of Wholly Owned and Partially Owned Assets

Net gain on disposition of wholly owned and partially owned assets was $13,347,000 in the year ended December 31, 2012, compared to $15,134,000, in the prior year and resulted primarily from the sale of a land parcel in 2012 and sales of marketable securities and residential condominiums in 2012 and 2011.

 

 

Income Tax Expense

Income tax expense was $8,132,000 in the year ended December 31, 2012, compared to $23,925,000 in the prior year, a decrease of $15,793,000.  This decrease resulted primarily from the reversal of a $12,038,000 tax liability in the current year, upon liquidation of a taxable REIT subsidiary that was formed in connection with the acquisition of our 555 California Street property.

 

94

 


 

 

Results of Operations – Year Ended December 31, 2012 Compared to December 31, 2011 - continued

 

Income from Discontinued Operations

We have reclassified the revenues and expenses of the properties that were sold and that are currently held for sale to “income from discontinued operations” and the related assets and liabilities to “assets related to discontinued operations” and “liabilities related to discontinued operations” for all the periods presented in the accompanying financial statements.  The table below sets forth the combined results of assets related to discontinued operations for the years ended December 31, 2012 and 2011.

 

 

 

 

 

 

For the Year Ended

 

 

 

 

 

 

December 31,

 

 

(Amounts in thousands)

 

2012 

 

2011 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

147,404 

 

$

230,314 

 

 

Total expenses

 

 

102,479 

 

 

175,930 

 

 

 

 

 

44,925 

 

 

54,384 

 

 

Net gains on sale of real estate

 

 

245,799 

 

 

51,623 

 

 

Gain on sale of Canadian Trade Shows, net of $11,448 of

 

 

 

 

 

 

 

 

 

income taxes

 

 

 

19,657 

 

 

 

 

Impairment losses

 

 

(24,439)

 

 

(28,799)

 

 

Net gain on extinguishment of High Point debt

 

 

 

 

83,907 

 

 

Income from discontinued operations

 

$

285,942 

 

$

161,115 

 

 

 

Net Income Attributable to Noncontrolling Interests in Consolidated Subsidiaries

 

Net income attributable to noncontrolling interests in consolidated subsidiaries was $32,018,000 in the year ended December 31, 2012, compared to $21,786,000 in the prior year, an increase of $10,232,000.  This increase resulted primarily from a $25,734,000 increase in income allocated to the noncontrolling interests of our Real Estate Fund, partially offset by a $13,222,000 priority return on our investment in 1290 Avenue of the Americas and 555 California Street.

 

 

Net Income Attributable to Noncontrolling Interests in the Operating Partnership

 

Net income attributable to noncontrolling interests in the Operating Partnership was $35,327,000 in the year ended December 31, 2012, compared to $41,059,000 in the prior year, a decrease of $5,732,000.  This decrease resulted primarily from lower net income subject to allocation to unitholders.

 

 

Preferred Unit Distributions of the Operating Partnership

 

Preferred unit distributions of the Operating Partnership were $9,936,000 in the year ended December 31, 2012, compared to $14,853,000 in the year ended December 31, 2011, a decrease of $4,917,000.  This decrease resulted primarily from the redemption of the 7.0% Series D-10 and 6.75% Series D-14 cumulative redeemable preferred units in July 2012.

 

 

Preferred Share Dividends

 

Preferred share dividends were $76,937,000 in the year ended December 31, 2012, compared to $65,531,000 in the prior year, an increase of $11,406,000.  This increase resulted from the issuance of $246,000,000 of 6.875% Series J cumulative redeemable preferred shares in April 2011 and $300,000,000 of 5.70% Series K cumulative redeemable preferred shares in July 2012, partially offset by the redemption of $75,000,000 of 7.0% Series E cumulative redeemable preferred shares in August 2012.

 

 

Discount on Preferred Share and Unit Redemptions

 

Discount on preferred share and unit redemptions were $8,948,000 in the year ended December 31, 2012 and resulted primarily from the redemption of all of the 7.0% Series D-10 and 6.75% Series D-14 cumulative redeemable preferred units, compared to a $5,000,000 discount in the prior year, which resulted from the redemption of the Series D-11 cumulative redeemable preferred units. 

 

95

 


 

 

Results of Operations – Year Ended December 31, 2012 Compared to December 31, 2011 - continued

 

Same Store EBITDA

Same store EBITDA represents EBITDA from property level operations which are owned by us in both the current and prior year reporting periods.  Same store EBITDA excludes segment-level overhead expenses, which are expenses that we do not consider to be property-level expenses, as well as other non-operating items.  We present same store EBITDA on both a GAAP basis and a cash basis, which excludes income from the straight-lining of rents, amortization of below-market leases, net of above-market leases and other non-cash adjustments. We present these non-GAAP measures because we use them 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 EBITDA 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. 

 

Below are the same store EBITDA results on a GAAP and cash basis for each of our segments for the year ended December 31, 2012, compared to the year ended December 31, 2011.

 

 

 

 

 

 

 

 

Retail

 

Merchandise

(Amounts in thousands)

New York

 

Washington, DC

 

Properties

 

Mart

EBITDA for the year ended December 31, 2012

$

1,017,859 

 

$

532,412 

 

$

200,526 

 

$

154,538 

 

Add-back: non-property level overhead expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

included above

 

30,053 

 

 

27,237 

 

 

23,654 

 

 

18,899 

 

Less: EBITDA from acquisitions, dispositions and other

 

 

 

 

 

 

 

 

 

 

 

 

 

non-operating income or expenses

 

(243,481)

 

 

(183,889)

 

 

33,082 

 

 

(93,679)

GAAP basis same store EBITDA for the year ended

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2012

 

804,431 

 

 

375,760 

 

 

257,262 

 

 

79,758 

 

Less: Adjustments for straight-line rents, amortization of

 

 

 

 

 

 

 

 

 

 

 

 

 

below-market leases, net and other non-cash adjustments

 

(94,560)

 

 

(5,573)

 

 

(15,676)

 

 

(1,655)

Cash basis same store EBITDA for the year ended

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2012

$

709,871 

 

$

370,187 

 

$

241,586 

 

$

78,103 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA for the year ended December 31, 2011

$

786,565 

 

$

481,077 

 

$

303,202 

 

$

143,452 

 

Add-back: non-property level overhead expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

included above

 

26,808 

 

 

26,369 

 

 

25,489 

 

 

28,040 

 

Less: EBITDA from acquisitions, dispositions and other

 

 

 

 

 

 

 

 

 

 

 

 

 

non-operating income or expenses

 

(24,533)

 

 

(96,519)

 

 

(74,505)

 

 

(95,187)

GAAP basis same store EBITDA for the year ended

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2011

 

788,840 

 

 

410,927 

 

 

254,186 

 

 

76,305 

 

Less: Adjustments for straight-line rents, amortization of

 

 

 

 

 

 

 

 

 

 

 

 

 

below-market leases, net and other non-cash adjustments

 

(93,053)

 

 

(357)

 

 

(15,685)

 

 

1,284 

Cash basis same store EBITDA for the year ended

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2011

$

695,787 

 

$

410,570 

 

$

238,501 

 

$

77,589 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in GAAP basis same store EBITDA for

 

 

 

 

 

 

 

 

 

 

 

 

 

the year ended December 31, 2012 over the

 

 

 

 

 

 

 

 

 

 

 

 

 

year ended December 31, 2011

$

15,591 

 

$

(35,167)

 

$

3,076 

 

$

3,453 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in Cash basis same store EBITDA for

 

 

 

 

 

 

 

 

 

 

 

 

 

the year ended December 31, 2012 over the

 

 

 

 

 

 

 

 

 

 

 

 

 

year ended December 31, 2011

$

14,084 

 

$

(40,383)

 

$

3,085 

 

$

514 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% increase (decrease) in GAAP basis same store EBITDA

 

2.0%

 

 

(8.6%)

 

 

1.2%

 

 

4.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% increase (decrease) in Cash basis same store EBITDA

 

2.0%

 

 

(9.8%)

 

 

1.3%

 

 

0.7%

96

 


 

 

Results of Operations – Year Ended December 31, 2011 Compared to December 31, 2010

 

Revenues

Our revenues, which consist of property rentals, tenant expense reimbursements, hotel revenues, trade shows revenues, amortization of acquired below-market leases, net of above-market leases and fee income, were $2,732,836,000 in the year ended December 31, 2011, compared to $2,558,207,000 in the year ended December 31, 2010, an increase of $174,629,000. Below are the details of the increase (decrease) by segment:

 

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

 

Merchandise

 

 

 

 

 

Increase (decrease) due to:

 

Total

 

 

New York

 

 

Washington, DC

 

 

Properties

 

 

Mart

 

 

Other

 

Property rentals:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions, sale of partial interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and other

 

$

(10,242)

 

 

$

(1,608)

 

 

$

(26,936)

(1)

 

$

13,458 

(2)

 

$

 

 

$

4,844 

 

 

Development (out of service)

 

 

5,513 

 

 

 

 

 

 

6,100 

 

 

 

(587)

 

 

 

 

 

 

 

 

Hotel Pennsylvania

 

 

10,006 

 

 

 

10,006 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade Shows

 

 

3,062 

 

 

 

 

 

 

 

 

 

 

 

 

3,062 

 

 

 

 

 

Amortization of acquired below-market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

leases, net

 

 

(3,268)

 

 

 

(3,921)

 

 

 

(293)

 

 

 

1,585 

 

 

 

 

 

 

(639)

 

 

Leasing activity (see page 77)

 

 

15,709 

 

 

 

9,373 

 

 

 

6,741 

 

 

 

2,183 

 

 

 

(363)

 

 

 

(2,225)

 

 

 

 

20,780 

 

 

 

13,850 

 

 

 

(14,388)

 

 

 

16,639 

 

 

 

2,699 

 

 

 

1,980 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenant expense reimbursements:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions/development, sale of partial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interests and other

 

 

(5,094)

 

 

 

5,658 

 

 

 

(12,999)

(1)

 

 

2,573 

(2)

 

 

 

 

 

(326)

 

 

Operations

 

 

2,069 

 

 

 

406 

 

 

 

(494)

 

 

 

1,200 

 

 

 

1,047 

 

 

 

(90)

 

 

 

 

 

(3,025)

 

 

 

6,064 

 

 

 

(13,493)

 

 

 

3,773 

 

 

 

1,047 

 

 

 

(416)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

154,080 

(3)

 

 

 

 

 

 

 

 

 

 

 

154,080 

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee and other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMS cleaning fees

 

 

3,701 

 

 

 

5,088 

 

 

 

 

 

 

 

 

 

 

 

 

(1,387)

(4)

 

Signage revenue

 

 

1,205 

 

 

 

1,205 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management and leasing fees

 

 

115 

 

 

 

668 

 

 

 

(3,573)

(5)

 

 

2,170 

 

 

 

186 

 

 

 

664 

 

 

Lease termination fees

 

 

1,516 

 

 

 

4,369 

 

 

 

2,646 

 

 

 

(3,974)

 

 

 

(225)

 

 

 

(1,300)

 

 

Other

 

 

(3,743)

 

 

 

406 

 

 

 

(832)

 

 

 

935 

 

 

 

(850)

 

 

 

(3,402)

 

 

 

 

2,794 

 

 

 

11,736 

 

 

 

(1,759)

 

 

 

(869)

 

 

 

(889)

 

 

 

(5,425)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total increase (decrease) in revenues

 

$

174,629 

 

 

$

31,650 

 

 

$

(29,640)

 

 

$

19,543 

 

 

$

156,937 

 

 

$

(3,861)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

Primarily from the deconsolidation of the Warner Building and 1101 17th Street resulting from the sale of a partial interest.

 

 

 

(2)

 

Primarily from the consolidation of the San Jose Strip Shopping Center upon acquisition of the remaining 55% interest we did not previously own.

 

 

 

(3)

 

This income is offset by $145,824 of development cost expensed in the period. See note (7) on page 98.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

 

Primarily from the elimination of inter-company fees from operating segments upon consolidation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)

 

Primarily from leasing fees in the prior year in connection with our management of a development project.

 

97

 


 

 

Results of Operations – Year Ended December 31, 2011 Compared to December 31, 2010 - continued

 

Expenses

Our expenses, which consist primarily of operating, depreciation and amortization and general and administrative expenses, were $1,909,267,000 in the year ended December 31, 2011, compared to $1,799,179,000 in the year ended December 31, 2010, an increase of $110,088,000. Below are the details of the increase (decrease) by segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

 

Merchandise

 

 

 

 

 

Increase (decrease) due to:

 

Total

 

 

New York

 

 

Washington, DC

 

 

Properties

 

 

Mart

 

 

Other

 

Operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions, sale of partial interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and other

 

$

(374)

 

 

$

2,341 

 

 

$

(14,123)

(1)

 

$

11,734 

(2)

 

$

 

 

$

(326)

 

 

Development projects placed into service

 

 

1,006 

 

 

 

 

 

 

(248)

 

 

 

1,254 

 

 

 

 

 

 

 

 

Non-reimbursable expenses, including

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

bad-debt reserves

 

 

(16,498)

 

 

 

3,412 

 

 

 

(2,133)

 

 

 

(24,338)

(3)

 

 

6,561 

 

 

 

 

 

 

Hotel Pennsylvania

 

 

3,330 

 

 

 

3,330 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade Shows

 

 

(316)

 

 

 

 

 

 

 

 

 

 

 

 

(316)

 

 

 

 

 

BMS expenses

 

 

3,262 

 

 

 

6,349 

 

 

 

 

 

 

 

 

 

 

 

 

(3,087)

 

 

Operations

 

 

21,752 

 

 

 

6,642 

 

 

 

2,679 

 

 

 

3,637 

 

 

 

5,405 

 

 

 

3,389 

 

 

 

 

 

12,162 

 

 

 

22,074 

 

 

 

(13,825)

 

 

 

(7,713)

 

 

 

11,650 

 

 

 

(24)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions/development, sale of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

partial interests and other

 

 

(4,466)

 

 

 

786 

 

 

 

(10,261)

(1)

 

 

5,009 

(2)

 

 

 

 

 

 

 

Operations

 

 

34,118 

 

 

 

7,831 

 

 

 

28,012 

(4)

 

 

868 

 

 

 

388 

 

 

 

(2,981)

 

 

 

 

 

 

29,652 

 

 

 

8,617 

 

 

 

17,751 

 

 

 

5,877 

 

 

 

388 

 

 

 

(2,981)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mark-to-market of deferred compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

plan liability (5)

 

 

(6,391)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,391)

 

 

Real Estate Fund placement fees

 

 

(3,031)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,031)

 

 

Operations

 

 

6,031 

 

 

 

1,248 

 

 

 

915 

 

 

 

(2,187)

 

 

 

3,841 

(6)

 

 

2,214 

 

 

 

 

 

(3,391)

 

 

 

1,248 

 

 

 

915 

 

 

 

(2,187)

 

 

 

3,841 

 

 

 

(7,208)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

145,824 

(7)

 

 

 

 

 

 

 

 

 

 

 

145,824 

(7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment losses, acquisition related

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

costs and tenant buy-outs

 

 

(74,159)

 

 

 

22,172 

(8)

 

 

 

 

 

(70,526)

(9)

 

 

5,228 

 

 

 

(31,033)

(10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total increase (decrease) in expenses

 

$

110,088 

 

 

$

54,111 

 

 

$

4,841 

 

 

$

(74,549)

 

 

$

166,931 

 

 

$

(41,246)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Primarily from the deconsolidation of the Warner Building and 1101 17th Street resulting from the sale of a partial interest.

 

 

 

(2)

Primarily from the consolidation of the San Jose Strip Shopping Center upon acquisition of the remaining 55% interest we did not previously own.

 

 

 

(3)

Includes a $16,820 reversal for the Stop & Shop accounts receivable reserve.

 

 

 

(4)

Includes $25,000 of depreciation expense on 1851 South Bell Street, which was taken out of service for redevelopment.

 

 

 

(5)

The decrease in expense is entirely offset by a corresponding decrease in the income from the mark-to-market of the deferred compensation plan assets, a component of "interest and investment (loss) income, net on our consolidated statements of income.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6)

Includes $4,226 of restructuring costs.

 

 

 

(7)

This expense is entirely offset by development revenue in the year. See note (3) on page 97.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8)

Primarily from the buy-out of below market leases.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9)

Primarily from a $64,500 non-cash impairment loss on the Springfield Mall in 2010.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10)

Primarily from $30,013 of impairment losses on condominium units held for sale in 2010.

 

98

 


 

 

Results of Operations – Year Ended December 31, 2011 Compared to December 31, 2010 - continued

 

Income Applicable to Toys

 

In the year ended December 31, 2011, we recognized net income of $48,540,000 from our investment in Toys, comprised of $39,592,000 for our 32.7% share of Toys’ net income and $8,948,000 of management fees. 

 

In the year ended December 31, 2010, we recognized net income of $71,624,000 from our investment in Toys, comprised of $61,819,000 for our 32.7% share of Toys’ net income and $9,805,000 of management fees. 

 

 

Income from Partially Owned Entities

Summarized below are the components of income (loss) from partially owned entities for the years ended December 31, 2011 and 2010.

 

 

 

 

 

 

 

 

Percentage

 

For the Year Ended

 

 

 

 

 

 

 

 

Ownership at

 

December 31,

 

 

(Amounts in thousands)

 

December 31, 2011

 

2011 

 

2010 

 

 

Equity in Net Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

Alexander's

 

32.4%

 

$

32,430 

 

 

$

27,615 

 

 

 

Lexington (1)

 

12.0%

 

 

8,351 

 

 

 

11,018 

 

 

 

LNR (2)

 

26.2%

 

 

58,786 

 

 

 

1,973 

 

 

 

India real estate ventures (3)

 

4.0%-36.5%

 

 

(14,881)

 

 

 

2,581 

 

 

 

Partially owned office buildings:

 

 

 

 

 

 

 

 

 

 

 

 

 

280 Park Avenue (acquired in May 2011)

 

49.5%

 

 

(18,079)

 

 

 

 

 

 

 

Warner Building (4)

 

55.0%

 

 

(18,875)

 

 

 

(344)

 

 

 

 

666 Fifth Avenue Office Condominium (acquired in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 2011)

 

49.5%

 

 

198 

 

 

 

 

 

 

 

330 Madison Avenue

 

25.0%

 

 

2,126 

 

 

 

2,059 

 

 

 

 

1101 17th Street

 

55.0%

 

 

2,740 

 

 

 

416 

 

 

 

 

One Park Avenue (acquired in March 2011)

 

30.3%

 

 

(1,142)

 

 

 

 

 

 

 

West 57th Street Properties (5)

 

50.0%

 

 

876 

 

 

 

(10,990)

 

 

 

 

Rosslyn Plaza

 

43.7%-50.4%

 

 

2,193 

 

 

 

(2,419)

 

 

 

 

Fairfax Square

 

20.0%

 

 

(42)

 

 

 

(28)

 

 

 

 

Other partially owned office buildings

 

Various

 

 

7,735 

 

 

 

2,405 

 

 

 

Other equity method investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Verde Realty Operating Partnership

 

8.3%

 

 

1,661 

 

 

 

(537)

 

 

 

 

Independence Plaza Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(acquired in June 2011)

 

51.0%

 

 

2,457 

 

 

 

 

 

 

 

Monmouth Mall

 

50.0%

 

 

2,556 

 

 

 

1,952 

 

 

 

 

Downtown Crossing, Boston

 

50.0%

 

 

(1,461)

 

 

 

(1,155)

 

 

 

 

Other investments (6)

 

Various

 

 

2,443 

 

 

 

(13,677)

 

 

 

 

 

 

 

 

 

 

 

$

70,072 

 

 

$

20,869 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

Includes net gains of $9,760 and $13,710 in 2011 and 2010, respectively, resulting from Lexington's stock issuances.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

2011 includes $27,377 of income comprised of (i) a $12,380 income tax benefit, (ii) an $8,977 tax settlement gain and (iii) $6,020 of net gains from asset sales.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

 

2011 includes $13,794 for our share of an impairment loss.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

 

2011 includes $9,022 for our share of expense, primarily for straight-line rent reserves and the write-off of tenant-improvements in connection with a tenant's bankruptcy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)

 

2010 includes $11,481 of impairment losses.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6)

 

2011 includes a $12,525 net gain from Suffolk Downs' sale of a partial interest.

 

99

 


 

 

Results of Operations – Year Ended December 31, 2011 Compared to December 31, 2010 - continued

 

Income (loss) from Real Estate Fund

 

Below are the components of the income from our Real Estate Fund for the year ended December 31, 2011 and 2010.

 

 

 

 

 

 

(Amounts in thousands)

 

For the Year Ended December 31,

 

 

 

 

2011 

2010 

 

 

Operating income (loss)

 

$

5,500 

 

$

(303)

 

 

Net realized gain

 

 

5,391 

 

 

 

 

Net unrealized gains

 

 

11,995 

 

 

 

 

Income (loss) from Real Estate Fund

 

 

22,886 

 

 

(303)

 

 

Less (income) loss attributable to noncontrolling interests

 

 

(13,598)

 

 

806 

 

 

Income from Real Estate Fund attributable to Vornado (1)

 

$

9,288 

 

$

503 

 

 

___________________________________

 

 

 

 

(1)

Excludes management, leasing and development fees of $2,695 and $248 for the years ended December 31, 2011 and 2010, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.

 

                   

 

 

Interest and Other Investment (Loss) Income, net

 

Interest and other investment income, net was $148,784,000 in the year ended December 31, 2011, compared to $235,267,000 in the year ended December 31, 2010, a decrease of $86,483,000. This decrease resulted from:

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

 

 

 

 

 

 

J.C. Penney derivative position (mark-to-market gain of $12,984 in 2011, compared to $130,153 in 2010)

 

$

(117,169)

 

 

 

Mezzanine loans ($82,744 loss reversal and net gain on disposition in 2011, compared to $53,100 loss

 

 

 

 

 

 

 

reversal in 2010)

 

 

 

29,644 

 

 

 

Decrease in value of investments in the deferred compensation plan (offset by a corresponding decrease in

 

 

 

 

 

 

 

the liability for plan assets in general and administrative expenses)

 

 

(6,391)

 

 

 

Other, net

 

 

7,433 

 

 

 

 

 

 

 

$

(86,483)

 

 

 

Interest and Debt Expense

Interest and debt expense was $526,175,000 in the year ended December 31, 2011, compared to $539,370,000 in the year ended December 31, 2010, a decrease of $13,195,000.  This decrease was primarily due to savings of (i) $22,865,000 applicable to the repurchase and retirement of convertible senior debentures and repayment of senior unsecured notes, (ii) $18,157,000 from the repayment of the Springfield Mall mortgage at a discount in December 2010 and (iii) $14,856,000 from the deconsolidation of the Warner Building resulting from the sale of a 45% interest in October 2010, partially offset by (iv) $17,204,000 from the issuance of $660,000,000 of cross-collateralized debt secured by 40 of our strip shopping centers in August 2010, (v) $14,777,000 from the financing of 2121 Crystal Drive and Two Penn Plaza in the first quarter of 2011, (vi) $5,057,000 from the issuance of $500,000,000 of senior unsecured notes in March 2010 and (vii) $3,854,000 from the consolidation of the San Jose Shopping Center resulting from the October 2010 acquisition of the 55% interest we did not previously own.

 

 

Net Gain on Extinguishment of Debt

In the year ended December 31, 2010, we recognized a $94,789,000 net gain on the extinguishment of debt, primarily from our acquisition of the mortgage loan secured by the Springfield Mall.

 

 

Net Gain on Disposition of Wholly Owned and Partially Owned Assets

In the year ended December 31, 2011, we recognized a $15,134,000 net gain on disposition of wholly owned and partially owned assets (primarily from the sale of residential condominiums and marketable securities), compared to a $81,432,000 net gain in the year ended December 31, 2010 (primarily from the sale of a 45% interest in the Warner Building and sales of marketable securities).

 

100

 


 

 

Results of Operations – Year Ended December 31, 2011 Compared to December 31, 2010 - continued

 

 

Income Tax Expense

Income tax expense was $23,925,000 in the year ended December 31, 2011, compared to $22,137,000 in the year ended December 31, 2010 an increase of $1,788,000.  This increase resulted primarily from higher taxable income of our taxable REIT subsidiaries.

 

 

Income from Discontinued Operations

The table below sets forth the combined results of operations of assets related to discontinued operations for the years ended December 31, 2011 and 2010.

 

 

 

 

 

 

For the Year Ended December 31,

 

 

(Amounts in thousands)

 

2011 

 

2010 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

230,314 

 

$

267,008 

 

 

Total expenses

 

 

175,930 

 

 

227,626 

 

 

 

 

 

54,384 

 

 

39,382 

 

 

Net gain on extinguishment of High Point debt

 

 

83,907 

 

 

 

 

Net gains on sale of real estate

 

 

51,623 

 

 

2,506 

 

 

Impairment losses and litigation loss accrual

 

 

(28,799)

 

 

(35,056)

 

 

Income from discontinued operations

 

$

161,115 

 

$

6,832 

 

 

 

Net Income Attributable to Noncontrolling Interests in Consolidated Subsidiaries

 

Net income attributable to noncontrolling interests in consolidated subsidiaries was $21,786,000 in the year ended December 31, 2011, compared to $4,920,000 in the year ended December 31, 2010, an increase of $16,866,000.  This resulted primarily from a $14,404,000 increase in income allocated to the noncontrolling interests of our Real Estate Fund.

 

 

Net Income Attributable to Noncontrolling Interests in the Operating Partnership

 

Net income attributable to noncontrolling interests in the Operating Partnership was $41,059,000 in the year ended December 31, 2011, compared to $44,033,000 in the year ended December 31, 2010, a decrease of $2,974,000. 

 

 

Preferred Unit Distributions of the Operating Partnership

 

Preferred unit distributions of the Operating Partnership were $14,853,000 in the year ended December 31, 2011, compared to $11,195,000 in the year ended December 31, 2010, an increase of $3,658,000. 

 

 

Preferred Share Dividends

 

Preferred share dividends were $65,531,000 in the year ended December 31, 2011, compared to $55,534,000 in the year ended December 31, 2010, an increase of $9,997,000.  This increase resulted from the issuance of $246,000,000 of 6.875% Series J cumulative redeemable preferred shares in 2011, partially offset by the redemption of $40,000,000 7.0% Series D-10 cumulative redeemable preferred shares in 2010.

 

 

Discount on Preferred Share and Unit Redemptions

 

In the year ended December 31, 2011, we recognized a $5,000,000 discount from the redemption of 1,000,000 Series D-11 cumulative redeemable preferred units with a par value of $25.00 per unit, for an aggregate of $20,000,000 in cash, compared to a $4,382,000 discount in the year ended December 31, 2010 from the redemption of 1,600,000 Series D-10 cumulative redeemable preferred shares with a par value of $25.00 per share, for an aggregate of $35,618,000.

 

101

 


 

 

Results of Operations – Year Ended December 31, 2011 Compared to December 31, 2010 - continued

 

Same Store EBITDA

Below are the same store EBITDA results on a GAAP and cash basis for each of our segments for the year ended December 31, 2011, compared to the year ended December 31, 2010.

 

 

 

 

 

 

 

 

Retail

 

Merchandise

(Amounts in thousands)

New York

 

Washington, DC

 

Properties

 

Mart

EBITDA for the year ended December 31, 2011

$

786,565 

 

$

481,077 

 

$

303,202 

 

$

143,452 

 

Add-back: non-property level overhead expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

included above

 

26,808 

 

 

26,369 

 

 

25,489 

 

 

28,040 

 

Less: EBITDA from acquisitions, dispositions

 

 

 

 

 

 

 

 

 

 

 

 

 

and other non-operating income or expenses

 

(25,330)

 

 

(49,502)

 

 

(45,324)

 

 

(72,601)

GAAP basis same store EBITDA for the year ended

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2011

 

788,043 

 

 

457,944 

 

 

283,367 

 

 

98,891 

 

Less: Adjustments for straight-line rents, amortization of

 

 

 

 

 

 

 

 

 

 

 

 

 

below-market leases, net and other non-cash adjustments

 

(93,241)

 

 

(274)

 

 

(15,862)

 

 

2,642 

Cash basis same store EBITDA for the year ended

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2011

$

694,802 

 

$

457,670 

 

$

267,505 

 

$

101,533 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA for the year ended December 31, 2010

$

764,044 

 

$

497,551 

 

$

302,563 

 

$

84,058 

 

Add-back: non-property level overhead expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

included above

 

25,560 

 

 

25,454 

 

 

27,676 

 

 

24,199 

 

Less: EBITDA from acquisitions, dispositions

 

 

 

 

 

 

 

 

 

 

 

 

 

and other non-operating income or expenses

 

(14,955)

 

 

(69,278)

 

 

(52,195)

 

 

(9,866)

GAAP basis same store EBITDA for the year ended

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2010

 

774,649 

 

 

453,727 

 

 

278,044 

 

 

98,391 

 

Less: Adjustments for straight-line rents, amortization of

 

 

 

 

 

 

 

 

 

 

 

 

 

below-market leases, net and other non-cash adjustments

 

(105,013)

 

 

(4,005)

 

 

(16,301)

 

 

(307)

Cash basis same store EBITDA for the year ended

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2010

$

669,636 

 

$

449,722 

 

$

261,743 

 

$

98,084 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase in GAAP basis same store EBITDA for

 

 

 

 

 

 

 

 

 

 

 

 

 

the year ended December 31, 2011 over the

 

 

 

 

 

 

 

 

 

 

 

 

 

year ended December 31, 2010

$

13,394 

 

$

4,217 

 

$

5,323 

 

$

500 

 

 

 

 

 

 

 

 

 

 

Increase in Cash basis same store EBITDA for

 

 

 

 

 

 

 

 

 

 

 

 

 

the year ended December 31, 2011 over the

 

 

 

 

 

 

 

 

 

 

 

 

 

year ended December 31, 2010

$

25,166 

 

$

7,948 

 

$

5,762 

 

$

3,449 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% increase in GAAP basis same store EBITDA

 

1.7%

 

 

0.9%

 

 

1.9%

 

 

0.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% increase in Cash basis same store EBITDA

 

3.8%

 

 

1.8%

 

 

2.2%

 

 

3.5%

102

 


 

 

Supplemental Information

Net Income and EBITDA by Segment for the Three Months Ended December 31, 2012 and 2011

Effective January 1, 2012, as a result of certain organizational and operational changes, we redefined the New York business segment to encompass all of our Manhattan assets by including the 1.0 million square feet in 21 freestanding Manhattan street retail assets (formerly in our Retail segment), and the Hotel Pennsylvania and our interest in Alexander’s, Inc. (formerly in our Other segment).  Accordingly, we have reclassified the prior period segment financial results to conform to the current year presentation.  See note (3) on page 105 for the elements of the New York segment’s EBITDA.  Below is a summary of net income and a reconciliation of net income to EBITDA (1) by segment for the three months ended December 31, 2012 and 2011.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

For the Three Months Ended December 31, 2012

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

 

 

 

 

 

 

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Toys

 

Other

 

Property rentals

 

$

503,820 

 

$

268,491 

 

$

111,513 

 

$

70,272 

 

$

31,038 

 

$

 

$

22,506 

 

Straight-line rent adjustments

 

 

13,681 

 

 

9,783 

 

 

1,345 

 

 

2,120 

 

 

183 

 

 

 

 

250 

 

Amortization of acquired below-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

market leases, net

 

 

14,668 

 

 

7,776 

 

 

506 

 

 

4,957 

 

 

 

 

 

 

1,429 

 

Total rentals

 

 

532,169 

 

 

286,050 

 

 

113,364 

 

 

77,349 

 

 

31,221 

 

 

 

 

24,185 

 

Tenant expense reimbursements

 

 

75,734 

 

 

41,272 

 

 

10,271 

 

 

22,559 

 

 

641 

 

 

 

 

991 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

51,220 

 

 

 

 

 

 

 

 

51,220 

 

 

 

 

 

Fee and other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMS cleaning fees

 

 

18,147 

 

 

24,489 

 

 

 

 

 

 

 

 

 

 

(6,342)

 

 

Signage revenue

 

 

6,640 

 

 

6,640 

 

 

 

 

 

 

 

 

 

 

 

 

Management and leasing fees

 

 

5,333 

 

 

1,602 

 

 

2,993 

 

 

491 

 

 

43 

 

 

 

 

204 

 

 

Lease termination fees

 

 

1,189 

 

 

802 

 

 

387 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

7,222 

 

 

1,023 

 

 

5,280 

 

 

417 

 

 

353 

 

 

 

 

149 

 

Total revenues

 

 

697,654 

 

 

361,878 

 

 

132,295 

 

 

100,816 

 

 

83,478 

 

 

 

 

19,187 

 

Operating expenses

 

 

263,160 

 

 

154,973 

 

 

50,600 

 

 

35,232 

 

 

16,219 

 

 

 

 

6,136 

 

Depreciation and amortization

 

 

131,128 

 

 

58,262 

 

 

30,901 

 

 

19,545 

 

 

12,205 

 

 

 

 

10,215 

 

General and administrative

 

 

51,316 

 

 

8,073 

 

 

7,388 

 

 

4,851 

 

 

4,586 

 

 

 

 

26,418 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

49,492 

 

 

 

 

 

 

 

 

49,492 

 

 

 

 

 

Impairment losses, acquisition related

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

costs and tenant buy-outs

 

 

116,472 

 

 

 

 

 

 

103,400 

 

 

 

 

 

 

13,072 

 

Total expenses

 

 

611,568 

 

 

221,308 

 

 

88,889 

 

 

163,028 

 

 

82,502 

 

 

 

 

55,841 

 

Operating income (loss)

 

 

86,086 

 

 

140,570 

 

 

43,406 

 

 

(62,212)

 

 

976 

 

 

 

 

(36,654)

 

(Loss) applicable to Toys

 

 

(73,837)

 

 

 

 

 

 

 

 

 

 

(73,837)

 

 

 

Income (loss) from partially owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

entities

 

 

354,776 

 

 

187,428 

 

 

(1,041)

 

 

418 

 

 

169 

 

 

 

 

167,802 

 

Income from Real Estate Fund

 

 

26,364 

 

 

 

 

 

 

 

 

 

 

 

 

26,364 

 

Interest and other investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(loss) income, net

 

 

(237,961)

 

 

1,064 

 

 

29 

 

 

 

 

 

 

 

 

(239,057)

 

Interest and debt expense

 

 

(122,674)

 

 

(37,767)

 

 

(30,166)

 

 

(13,131)

 

 

(7,926)

 

 

 

 

(33,684)

 

Net gain on disposition of wholly

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

owned and partially owned assets

 

 

8,491 

 

 

 

 

 

 

8,491 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

41,245 

 

 

291,295 

 

 

12,228 

 

 

(66,431)

 

 

(6,781)

 

 

(73,837)

 

 

(115,229)

 

Income tax benefit (expense)

 

 

9,187 

 

 

(1,011)

 

 

(373)

 

 

 

 

(845)

 

 

 

 

11,416 

 

Income (loss) from continuing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

50,432 

 

 

290,284 

 

 

11,855 

 

 

(66,431)

 

 

(7,626)

 

 

(73,837)

 

 

(103,813)

 

Income (loss) from discontinued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

41,461 

 

 

(1)

 

 

36,787 

 

 

8,286 

 

 

6,272 

 

 

 

 

(9,883)

 

Net income (loss)

 

 

91,893 

 

 

290,283 

 

 

48,642 

 

 

(58,145)

 

 

(1,354)

 

 

(73,837)

 

 

(113,696)

 

Less net (income) loss attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interests in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated subsidiaries

 

 

(1,090)

 

 

5,128 

 

 

 

 

1,504 

 

 

 

 

 

 

(7,722)

 

 

Operating Partnership

 

 

(3,882)

 

 

 

 

 

 

 

 

 

 

 

 

(3,882)

 

 

Preferred unit distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of the Operating Partnership

 

 

(786)

 

 

 

 

 

 

 

 

 

 

 

 

(786)

 

Net income (loss) attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado

 

 

86,135 

 

 

295,411 

 

 

48,642 

 

 

(56,641)

 

 

(1,354)

 

 

(73,837)

 

 

(126,086)

 

Interest and debt expense (2)

 

 

193,258 

 

 

47,561 

 

 

34,139 

 

 

15,789 

 

 

8,931 

 

 

44,492 

 

 

42,346 

 

Depreciation and amortization (2)

 

 

182,499 

 

 

63,777 

 

 

34,829 

 

 

20,778 

 

 

12,630 

 

 

34,808 

 

 

15,677 

 

Income tax (benefit) expense (2)

 

 

(43,050)

 

 

1,074 

 

 

411 

 

 

 

 

845 

 

 

(34,611)

 

 

(10,769)

 

EBITDA (1)

 

$

418,842 

 

$

407,823 

(3)

$

118,021 

 

$

(20,074)

(4)

$

21,052 

 

$

(29,148)

 

$

(78,832)

(5)

 

EBITDA for the New York, Washington, DC and Retail Properties segments above include income from discontinued operations and other gains and losses that affect comparability which are described in the “Overview,” aggregating $189,571, $37,348 and $(82,967), respectively.  Excluding these items, EBITDA for the New York, Washington, DC and Retail Properties segments was $218,252, $80,673 and $62,893, respectively.

__________________­­­­________

See notes on page 105.

 

103

 


 

 

Supplemental Information – continued

Net Income and EBITDA by Segment for the Three Months Ended December 31, 2012 and 2011 - continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

For the Three Months Ended December 31, 2011

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

 

 

 

 

 

 

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Toys

 

Other

 

Property rentals

 

$

503,824 

 

$

251,146 

 

$

130,601 

 

$

69,043 

 

$

30,032 

 

$

 

$

23,002 

 

Straight-line rent adjustments

 

 

13,598 

 

 

11,810 

 

 

(431)

 

 

1,989 

 

 

(23)

 

 

 

 

253 

 

Amortization of acquired below-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

market leases, net

 

 

12,979 

 

 

7,785 

 

 

563 

 

 

2,972 

 

 

 

 

 

 

1,659 

 

Total rentals

 

 

530,401 

 

 

270,741 

 

 

130,733 

 

 

74,004 

 

 

30,009 

 

 

 

 

24,914 

 

Tenant expense reimbursements

 

 

75,745 

 

 

39,512 

 

 

9,057 

 

 

23,817 

 

 

1,333 

 

 

 

 

2,026 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

45,877 

 

 

 

 

 

 

 

 

45,877 

 

 

 

 

 

Fee and other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMS cleaning fees

 

 

15,275 

 

 

23,120 

 

 

 

 

 

 

 

 

 

 

(7,845)

 

 

Signage revenue

 

 

5,077 

 

 

5,077 

 

 

 

 

 

 

 

 

 

 

 

 

Management and leasing fees

 

 

5,141 

 

 

1,535 

 

 

2,732 

 

 

922 

 

 

(6)

 

 

 

 

(42)

 

 

Lease termination fees

 

 

3,856 

 

 

2,663 

 

 

781 

 

 

178 

 

 

234 

 

 

 

 

 

 

Other income

 

 

8,587 

 

 

3,066 

 

 

4,446 

 

 

690 

 

 

427 

 

 

 

 

(42)

 

Total revenues

 

 

689,959 

 

 

345,714 

 

 

147,749 

 

 

99,611 

 

 

77,874 

 

 

 

 

19,011 

 

Operating expenses

 

 

226,885 

 

 

142,825 

 

 

46,533 

 

 

18,504 

 

 

15,411 

 

 

 

 

3,612 

 

Depreciation and amortization

 

 

150,903 

 

 

56,489 

 

 

57,202 

 

 

19,019 

 

 

7,885 

 

 

 

 

10,308 

 

General and administrative

 

 

53,940 

 

 

6,399 

 

 

6,873 

 

 

5,443 

 

 

5,672 

 

 

 

 

29,553 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

44,187 

 

 

 

 

 

 

 

 

44,187 

 

 

 

 

 

Impairment losses, acquisition related

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

costs and tenant buy-outs

 

 

12,844 

 

 

7,219 

 

 

 

 

334 

 

 

2,188 

 

 

 

 

3,103 

 

Total expenses

 

 

488,759 

 

 

212,932 

 

 

110,608 

 

 

43,300 

 

 

75,343 

 

 

 

 

46,576 

 

Operating income (loss)

 

 

201,200 

 

 

132,782 

 

 

37,141 

 

 

56,311 

 

 

2,531 

 

 

 

 

(27,565)

 

(Loss) applicable to Toys

 

 

(32,254)

 

 

 

 

 

 

 

 

 

 

(32,254)

 

 

 

Income (loss) from partially owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

entities

 

 

15,037 

 

 

(1,258)

 

 

(343)

 

 

1,479 

 

 

163 

 

 

 

 

14,996 

 

(Loss) from Real Estate Fund

 

 

(2,605)

 

 

 

 

 

 

 

 

 

 

 

 

(2,605)

 

Interest and other investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

income (loss), net

 

 

53,698 

 

 

1,076 

 

 

80 

 

 

(33)

 

 

 

 

 

 

52,575 

 

Interest and debt expense

 

 

(131,583)

 

 

(38,005)

 

 

(29,485)

 

 

(17,528)

 

 

(7,866)

 

 

 

 

(38,699)

 

Net gain on disposition of wholly

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

owned and partially owned assets

 

 

7,159 

 

 

 

 

 

 

4,278 

 

 

 

 

 

 

2,881 

 

Income (loss) before income taxes

 

 

110,652 

 

 

94,595 

 

 

7,393 

 

 

44,507 

 

 

(5,172)

 

 

(32,254)

 

 

1,583 

 

Income tax expense

 

 

(5,377)

 

 

(447)

 

 

(635)

 

 

(29)

 

 

(49)

 

 

 

 

(4,217)

 

Income (loss) from continuing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

105,275 

 

 

94,148 

 

 

6,758 

 

 

44,478 

 

 

(5,221)

 

 

(32,254)

 

 

(2,634)

 

(Loss) income from discontinued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

(8,288)

 

 

165 

 

 

1,116 

 

 

6,948 

 

 

(17,467)

 

 

 

 

950 

 

Net income (loss)

 

 

96,987 

 

 

94,313 

 

 

7,874 

 

 

51,426 

 

 

(22,688)

 

 

(32,254)

 

 

(1,684)

 

Less net (income) loss attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interests in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated subsidiaries

 

 

(1,143)

 

 

(3,227)

 

 

 

 

41 

 

 

 

 

 

 

2,043 

 

 

Operating Partnership

 

 

(4,674)

 

 

 

 

 

 

 

 

 

 

 

 

(4,674)

 

 

Preferred unit distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of the Operating Partnership

 

 

(3,874)

 

 

 

 

 

 

 

 

 

 

 

 

(3,874)

 

Net income (loss) attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado

 

 

87,296 

 

 

91,086 

 

 

7,874 

 

 

51,467 

 

 

(22,688)

 

 

(32,254)

 

 

(8,189)

 

Interest and debt expense (2)

 

 

198,252 

 

 

49,492 

 

 

34,253 

 

 

20,464 

 

 

8,891 

 

 

35,589 

 

 

49,563 

 

Depreciation and amortization (2)

 

 

215,683 

 

 

66,019 

 

 

63,270 

 

 

22,746 

 

 

12,093 

 

 

33,105 

 

 

18,450 

 

Income tax (benefit) expense (2)

 

 

(37,323)

 

 

526 

 

 

743 

 

 

29 

 

 

26 

 

 

(31,046)

 

 

(7,601)

 

EBITDA (1)

 

$

463,908 

 

$

207,123 

(3)

$

106,140 

 

$

94,706 

(4)

$

(1,678)

 

$

5,394 

 

$

52,223 

(5)

 

EBITDA for the New York, Washington, DC and Retail Properties segments above include income from discontinued operations and other gains and losses that affect comparability which are described in the “Overview,” aggregating $(3,724), $5,526 and $33,037, respectively.  Excluding these items, EBITDA for the New York, Washington, DC and Retail Properties segments was $210,847, $100,614 and $61,669, respectively.

__________________________

See notes on the following page.

 

104

 


 

 

Supplemental Information – continued

Net Income and EBITDA by Segment for the Three Months Ended December 31, 2012 and 2011 - continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to preceding tabular information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

EBITDA represents "Earnings Before Interest, Taxes, Depreciation and Amortization." We consider EBITDA a supplemental 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 a multiple of EBITDA, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. EBITDA should not be considered a substitute for net income. EBITDA may not be comparable to similarly titled measures employed by other companies.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

Interest and debt expense, depreciation and amortization and income tax (benefit) expense in the reconciliation of net income (loss) to EBITDA includes our share of these items from partially owned entities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

The elements of "New York" EBITDA are summarized below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31,

 

 

 

 

(Amounts in thousands)

2012 

 

2011 

 

 

 

 

Office (a)

$

151,613 

 

$

141,325 

 

 

 

 

Retail (b)

 

52,576 

 

 

40,414 

 

 

 

 

Alexander's (c)

 

191,925 

 

 

13,631 

 

 

 

 

Hotel Pennsylvania

 

11,709 

 

 

11,753 

 

 

 

 

 

Total New York

$

407,823 

 

$

207,123 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

 

2012 includes income of $7,599 from a priority return on our investment in 1290 Avenue of the Americas.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b)

 

2011 includes a $7,219 expense for tenant buy-out costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(c)

 

2012 includes income of $179,934 for our share of a net gain on sale of real estate.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

The elements of "Retail Properties" EBITDA are summarized below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31,

 

 

 

 

(Amounts in thousands)

2012 

 

2011 

 

 

 

 

Strip shopping centers (a)

$

24,154 

 

$

68,269 

 

 

 

 

Regional malls (b)

 

(44,228)

 

 

26,437 

 

 

 

 

 

Total Retail properties

$

(20,074)

 

$

94,706 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

 

Includes income from discontinued operations and other gains and losses that affect comparability, aggregating $(21,520) and $25,281, respectively. Excluding these items, EBITDA was $45,674 and $42,988, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b)

 

Includes income from discontinued operations and other gains and losses that affect comparability, aggregating $(61,447) and $7,756, respectively. Excluding these items, EBITDA was $17,219 and $18,681, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

105

 


 

 

Supplemental Information – continued

Net Income and EBITDA by Segment for the Three Months Ended December 31, 2012 and 2011 - continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to preceding tabular information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)

The elements of "other" EBITDA from continuing operations are summarized below.

 

 

 

 

 

 

 

 

 

 

For the Three Months

 

 

 

(Amounts in thousands)

Ended December 31,

 

 

 

 

 

 

 

 

 

 

2012 

 

 

2011 

 

 

 

Our share of Real Estate Fund:

 

 

 

 

 

 

 

 

 

Income before net realized/unrealized gains

$

764 

 

$

1,655 

 

 

 

 

Net unrealized gain (loss)

 

5,456 

 

 

(1,803)

 

 

 

 

Net realized gain

 

 

 

577 

 

 

 

 

Carried interest

 

5,838 

 

 

(929)

 

 

 

Total

 

12,058 

 

 

(500)

 

 

 

LNR

 

33,514 

 

 

9,045 

 

 

 

555 California Street

 

14,761 

 

 

12,116 

 

 

 

Lexington

 

7,815 

 

 

6,809 

 

 

 

Other investments

 

(2,678)

 

 

3,518 

 

 

 

 

 

 

 

 

 

 

65,470 

 

 

30,988 

 

 

 

Corporate general and administrative expenses (a)

 

(23,627)

 

 

(22,958)

 

 

 

Investment income and other, net (a)

 

6,532 

 

 

15,121 

 

 

 

Fee income from Alexander's (including a $6,423 sales commission in 2012)

 

8,131 

 

 

1,872 

 

 

 

Non-cash impairment loss on J.C. Penney owned shares

 

(224,937)

 

 

 

 

 

(Loss) income from the mark-to-market of J.C. Penney derivative position

 

(22,472)

 

 

40,120 

 

 

 

Purchase price fair value adjustment and accelerated amortization of discount on

 

 

 

 

 

 

 

 

 

investment in subordinated debt of Independence Plaza

 

105,366 

 

 

 

 

 

Net gain resulting from Lexington's stock issuance and asset acquisition

 

28,763 

 

 

 

 

 

Impairment losses and acquisition related costs

 

(13,072)

 

 

(3,103)

 

 

 

Our share of impairment losses of partially owned entities

 

(4,318)

 

 

(13,794)

 

 

 

Net gain from Suffolk Downs' sale of a partial interest

 

 

 

12,525 

 

 

 

Net income attributable to noncontrolling interests in the Operating Partnership

 

(3,882)

 

 

(4,674)

 

 

 

Preferred unit distributions of the Operating Partnership

 

(786)

 

 

(3,874)

 

 

 

 

 

 

 

 

 

$

(78,832)

 

$

52,223 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

 

The amounts in these captions (for this table only) exclude the mark-to-market of our deferred compensation plan assets and offsetting liability.

 

106

 


 

 

Supplemental Information – continued

 

Net Income and EBITDA by Segment for the Three Months Ended December 31, 2012 and 2011 - continued

 

 

EBITDA by Region

 

Below is a summary of the percentages of EBITDA by geographic region (excluding discontinued operations and other gains and losses that affect comparability), from our New York, Washington, DC, Retail Properties and Merchandise Mart segments.

 

 

 

 

 

For the Three Months

 

 

 

 

 

 

Ended December 31,

 

 

 

 

 

 

2012 

 

2011 

 

 

 

Region:

 

 

 

 

 

 

 

 

New York City metropolitan area

 

69%

 

66%

 

 

 

 

Washington, DC / Northern Virginia metropolitan area

 

22%

 

26%

 

 

 

 

Chicago

 

4%

 

3%

 

 

 

 

California

 

2%

 

2%

 

 

 

 

Puerto Rico

 

1%

 

1%

 

 

 

 

Other geographies

 

2%

 

2%

 

 

 

 

 

 

100%

 

100%

 

 

107

 


 

 

Supplemental Information – continued

Three Months Ended December 31, 2012 Compared to December 31, 2011

 

Same Store EBITDA

Same store EBITDA represents EBITDA from property level operations which are owned by us in both the current and prior year reporting periods.  Same store EBITDA excludes segment-level overhead expenses, which are expenses that we do not consider to be property-level expenses, as well as other non-operating items.  We present same store EBITDA on both a GAAP basis and a cash basis, which excludes income from the straight-lining of rents, amortization of below-market leases, net of above-market leases and other non-cash adjustments. We present these non-GAAP measures because we use them 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 EBITDA 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. 

 

Below are the same store EBITDA results on a GAAP and cash basis for each of our segments for the three months ended December 31, 2012, compared to the three months ended December 31, 2011.

 

 

 

 

 

 

 

 

Retail

 

Merchandise

(Amounts in thousands)

New York

 

Washington, DC

 

Properties

 

Mart

EBITDA for the three months ended December 31, 2012

$

407,823 

 

$

118,021 

 

$

(20,074)

 

$

21,052 

 

Add-back: non-property level overhead expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

included above

 

8,073 

 

 

7,388 

 

 

4,851 

 

 

4,586 

 

Less: EBITDA from acquisitions, dispositions

 

 

 

 

 

 

 

 

 

 

 

 

 

and other non-operating income or expenses

 

(205,738)

 

 

(39,787)

 

 

80,891 

 

 

(6,894)

GAAP basis same store EBITDA for the three months

 

 

 

 

 

 

 

 

 

 

 

 

 

ended December 31, 2012

 

210,158 

 

 

85,622 

 

 

65,668 

 

 

18,744 

 

Less: Adjustments for straight-line rents, amortization of

 

 

 

 

 

 

 

 

 

 

 

 

 

below-market leases, net and other non-cash adjustments

 

(19,668)

 

 

(705)

 

 

(4,161)

 

 

(1,075)

Cash basis same store EBITDA for the three months

 

 

 

 

 

 

 

 

 

 

 

 

 

ended December 31, 2012

$

190,490 

 

$

84,917 

 

$

61,507 

 

$

17,669 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA for the three months ended December 31, 2011

$

207,123 

 

$

106,140 

 

$

94,706 

 

$

(1,678)

 

Add-back: non-property level overhead expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

included above

 

6,399 

 

 

6,873 

 

 

5,443 

 

 

5,672 

 

Less: EBITDA from acquisitions, dispositions

 

 

 

 

 

 

 

 

 

 

 

 

 

and other non-operating income or expenses

 

(3,801)

 

 

(13,146)

 

 

(34,388)

 

 

14,716 

GAAP basis same store EBITDA for the three months

 

 

 

 

 

 

 

 

 

 

 

 

 

ended December 31, 2011

 

209,721 

 

 

99,867 

 

 

65,761 

 

 

18,710 

 

Less: Adjustments for straight-line rents, amortization of

 

 

 

 

 

 

 

 

 

 

 

 

 

below-market leases, net and other non-cash adjustments

 

(26,637)

 

 

(66)

 

 

(3,768)

 

 

24 

Cash basis same store EBITDA for the three months

 

 

 

 

 

 

 

 

 

 

 

 

 

ended December 31, 2011

$

183,084 

 

$

99,801 

 

$

61,993 

 

$

18,734 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) increase in GAAP basis same store EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

for the three months ended December 31, 2012 over

 

 

 

 

 

 

 

 

 

 

 

 

 

the three months ended December 31, 2011

$

437 

 

$

(14,245)

 

$

(93)

 

$

34 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in Cash basis same store EBITDA for

 

 

 

 

 

 

 

 

 

 

 

 

 

the three months ended December 31, 2012 over the

 

 

 

 

 

 

 

 

 

 

 

 

 

three months ended December 31, 2011

$

7,406 

 

$

(14,884)

 

$

(486)

 

$

(1,065)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% increase (decrease) in GAAP basis same store EBITDA

 

0.2%

 

 

(14.3%)

 

 

(0.1%)

 

 

0.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% increase (decrease) in Cash basis same store EBITDA

 

4.0%

 

 

(14.9%)

 

 

(0.8%)

 

 

(5.7%)

108

 


 

 

Supplemental Information – continued

 

Three Months Ended December 31, 2012 Compared to September 30, 2012

 

Below are the same store EBITDA results on a GAAP and cash basis for each of our segments for the three months ended December 31, 2012, compared to the three months ended September 30, 2012.

 

 

 

 

 

 

 

 

Retail

 

Merchandise

(Amounts in thousands)

New York

 

Washington, DC

 

Properties

 

Mart

EBITDA for the three months ended December 31, 2012

$

407,823 

 

$

118,021 

 

$

(20,074)

 

$

21,052 

 

Add-back: non-property level overhead expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

included above

 

8,073 

 

 

7,388 

 

 

4,851 

 

 

4,586 

 

Less: EBITDA from acquisitions, dispositions

 

 

 

 

 

 

 

 

 

 

 

 

 

and other non-operating income or expenses

 

(202,180)

 

 

(38,604)

 

 

80,891 

 

 

(6,285)

GAAP basis same store EBITDA for the three months

 

 

 

 

 

 

 

 

 

 

 

 

ended December 31, 2012

 

213,716 

 

 

86,805 

 

 

65,668 

 

 

19,353 

 

Less: Adjustments for straight-line rents, amortization of

 

 

 

 

 

 

 

 

 

 

 

 

 

below-market leases, net and other non-cash adjustments

 

(23,066)

 

 

(775)

 

 

(4,161)

 

 

(1,075)

Cash basis same store EBITDA for the three months

 

 

 

 

 

 

 

 

 

 

 

 

ended December 31, 2012

$

190,650 

 

$

86,030 

 

$

61,507 

 

$

18,278 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA for the three months ended September 30, 2012 (1)

$

206,663 

 

$

217,567 

 

$

73,505 

 

$

44,942 

 

Add-back: non-property level overhead expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

included above

 

6,739 

 

 

6,668 

 

 

6,103 

 

 

4,120 

 

Less: EBITDA from acquisitions, dispositions

 

 

 

 

 

 

 

 

 

 

 

 

 

and other non-operating income or expenses

 

(8,565)

 

 

(129,014)

 

 

(15,117)

 

 

(32,087)

GAAP basis same store EBITDA for the three months

 

 

 

 

 

 

 

 

 

 

 

 

ended September 30, 2012

 

204,837 

 

 

95,221 

 

 

64,491 

 

 

16,975 

 

Less: Adjustments for straight-line rents, amortization of

 

 

 

 

 

 

 

 

 

 

 

 

 

below-market leases, net and other non-cash adjustments

 

(26,331)

 

 

(2,020)

 

 

(3,833)

 

 

171 

Cash basis same store EBITDA for the three months

 

 

 

 

 

 

 

 

 

 

 

 

ended September 30, 2012

$

178,506 

 

$

93,201 

 

$

60,658 

 

$

17,146 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in GAAP basis same store EBITDA for

 

 

 

 

 

 

 

 

 

 

 

 

the three months ended December 31, 2012 over the

 

 

 

 

 

 

 

 

 

 

 

 

three months ended September 30, 2012

$

8,879 

 

$

(8,416)

 

$

1,177 

 

$

2,378 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in Cash basis same store EBITDA for

 

 

 

 

 

 

 

 

 

 

 

 

the three months ended December 31, 2012 over the

 

 

 

 

 

 

 

 

 

 

 

 

three months ended September 30, 2012

$

12,144 

 

$

(7,171)

 

$

849 

 

$

1,132 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% increase (decrease) in GAAP basis same store EBITDA

 

4.3%

 

 

(8.8%)

 

 

1.8%

 

 

14.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% increase (decrease) in Cash basis same store EBITDA

 

6.8%

 

 

(7.7%)

 

 

1.4%

 

 

6.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Below is the reconciliation of net income to EBITDA for the three months ended September 30, 2012.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

(Amounts in thousands)

New York

 

Washington, DC

 

Properties

 

Mart

Net income attributable to Vornado for the three months

 

 

 

 

 

 

 

 

 

 

 

 

ended September 30, 2012

$

96,064 

 

$

149,241 

 

$

34,661 

 

$

19,083 

Interest and debt expense

 

46,823 

 

 

33,280 

 

 

17,499 

 

 

8,916 

Depreciation and amortization

 

62,905 

 

 

35,071 

 

 

21,345 

 

 

7,662 

Income tax expense (benefit)

 

871 

 

 

(25)

 

 

 

 

9,281 

EBITDA for the three months ended September 30, 2012

$

206,663 

 

$

217,567 

 

$

73,505 

 

$

44,942 

109

 


 

 

Related Party Transactions

 

 

Alexander’s

 

We own 32.4% of Alexander’s. Steven Roth, the Chairman of our Board, and Michael D. Fascitelli, our President and Chief Executive Officer, are officers and directors of Alexander’s.  We provide various services to Alexander’s in accordance with management, development and leasing agreements.  These agreements are described in Note 6 - Investments in Partially Owned Entities to our consolidated financial statements in this Annual Report on Form 10-K.

 

 

Interstate Properties (“Interstate”)

 

Interstate is a general partnership in which Mr. Roth is the managing general partner. David Mandelbaum and Russell B. Wight, Jr., Trustees of Vornado and Directors of Alexander’s, are Interstate’s two other partners. As of December 31, 2012, Interstate and its partners beneficially owned an aggregate of approximately 6.5% of the common shares of beneficial interest of Vornado and 26.3% of Alexander’s common stock.

 

We manage and lease the real estate assets of Interstate pursuant to a management agreement for which we receive an annual fee equal to 4% of annual base rent and percentage rent. The management agreement has a term of one year and is automatically renewable unless terminated by either of the parties on 60 days’ notice at the end of the term. We believe, based upon comparable fees charged by other real estate companies, that the management agreement terms are fair to us.

 

 

Other

 

On March 8, 2012, Mr. Roth repaid his $13,122,500 outstanding loan from the Company.

110

 


 
 

 

Liquidity and Capital Resources

 

 

Property rental income is our primary source of cash flow and is dependent upon the occupancy and rental rates of our properties. Our cash requirements include property operating expenses, capital improvements, tenant improvements, debt service, leasing commissions, dividends to shareholders and distributions to unitholders of the Operating Partnership, as well as acquisition and development costs.    Other sources of liquidity to fund cash requirements include proceeds from debt financings, including mortgage loans, senior unsecured borrowings, and our revolving credit facilities; proceeds from the issuance of common and preferred equity; and asset sales. 

 

We anticipate that cash flow from continuing operations over the next twelve months will be adequate to fund our business operations, cash distributions to unitholders of the Operating Partnership, cash dividends to shareholders, debt amortization and recurring capital expenditures.  Capital requirements for development expenditures and acquisitions (excluding Fund acquisitions) may require funding from borrowings and/or equity offerings.  Our Real Estate Fund has aggregate unfunded equity commitments of $217,676,000 for acquisitions, including $54,419,000 from us.

 

We may from time to time purchase or retire outstanding debt securities.  Such purchases, if any will depend on prevailing market conditions, liquidity requirements and other factors.  The amounts involved in connection with these transactions could be material to our consolidated financial statements.

 

                 

Dividends

 

On January 17, 2013, we increased our quarterly common dividend to $0.73 per share (a new indicated annual rate of $2.92 per share).  This dividend, if continued for all of 2013, would require us to pay out approximately $545,000,000 of cash for common share dividends.  In addition, during 2013, we expect to pay approximately $81,500,000 of cash dividends on outstanding preferred shares and approximately $36,000,000 of cash distributions to unitholders of the Operating Partnership.

 

 

Financing Activities and Contractual Obligations

 

We have an effective shelf registration for the offering of our equity and debt securities that is not limited in amount due to our status as a “well-known seasoned issuer.”  Our revolving credit facilities contain financial covenants that require us to maintain minimum interest coverage and maximum debt to market capitalization ratios, and provides for higher interest rates in the event of a decline in our ratings below Baa3/BBB.  Our credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and also contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.  As of December 31, 2012, we are in compliance with all of the financial covenants required by our revolving credit facilities.

 

 

As of December 31, 2012, we had $960,319,000 of cash and cash equivalents and $1,307,193,000 of borrowing capacity under our revolving credit facilities, net of outstanding borrowings of $1,170,000,000 and letters of credit of $22,807,000.  A summary of our consolidated debt as of December 31, 2012 and 2011 is presented below.  

 

 

 

2012 

 

 

2011 

 

 

(Amounts in thousands)

 

 

 

Weighted

 

 

 

 

 

Weighted

 

 

 

 

 

December 31,

 

Average

 

 

December 31,

 

Average

 

 

Consolidated debt:

Balance

 

Interest Rate

 

 

Balance

 

Interest Rate

 

 

 

Variable rate

$

3,167,181 

 

1.93%

 

 

$

1,881,948 

 

2.35%

 

 

 

Fixed rate

 

8,129,009 

 

5.18%

 

 

 

8,194,659 

 

5.55%

 

 

 

 

 

$

11,296,190 

 

4.27%

 

 

$

10,076,607 

 

4.95%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

During 2013 and 2014, $1,069,682,000 and $240,001,000, respectively, of our outstanding debt matures. We may refinance maturing debt as it comes due or choose to repay it using cash and cash equivalents or our revolving credit facilities.  We may also refinance or prepay other outstanding debt depending on prevailing market conditions, liquidity requirements and other factors.  The amounts involved in connection with these transactions could be material to our consolidated financial statements.

 

111

 


 

 

Liquidity and Capital Resources – continued

 

 

Financing Activities and Contractual Obligations – continued  

 

 

Below is a schedule of our contractual obligations and commitments at December 31, 2012.

 

(Amounts in thousands)

 

 

 

Less than

 

 

 

 

 

 

 

 

 

 

Contractual cash obligations (principal and interest (1) ):

Total

 

1 Year

 

1 – 3 Years

 

3 – 5 Years

 

Thereafter

 

 

Notes and mortgages payable

$

10,775,483 

 

$

1,519,315 

 

$

1,495,932 

 

$

3,377,676 

$

4,382,560 

 

 

Operating leases

 

1,429,110 

 

 

41,524 

 

 

83,395 

 

 

75,022 

 

 

1,229,169 

 

 

Senior unsecured notes due 2039 (PINES)

 

1,429,019 

 

 

36,225 

 

 

72,450 

 

 

72,450 

 

 

1,247,894 

 

 

Revolving credit facilities

 

1,251,178 

 

 

17,316 

 

 

40,716 

 

 

1,193,146 

 

 

 

 

Senior unsecured notes due 2022

 

580,833 

 

 

20,000 

 

 

40,000 

 

 

40,000 

 

 

480,833 

 

 

Senior unsecured notes due 2015

 

547,813 

 

 

21,250 

 

 

526,563 

 

 

 

 

 

 

Capital lease obligations

 

422,292 

 

 

12,500 

 

 

25,000 

 

 

25,000 

 

 

359,792 

 

 

Purchase obligations, primarily construction commitments

 

196,722 

 

 

194,034 

 

 

2,588 

 

 

100 

 

 

 

 

 

Total contractual cash obligations

$

16,632,450 

 

$

1,862,164 

 

$

2,286,644 

 

$

4,783,394 

 

$

7,700,248 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital commitments to partially owned entities

$

163,130 

 

$

101,199 

 

$

61,931 

 

$

 

$

 

 

Standby letters of credit

 

22,807 

 

 

22,327 

 

 

480 

 

 

 

 

 

 

 

Total commitments

$

185,937 

 

$

123,526 

 

$

62,411 

 

$

 

$

 

________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

Interest on variable rate debt is computed using rates in effect at December 31, 2012.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Details of 2012 financing activities are provided in the “Overview” of Management’s Discussion and Analysis of Financial Conditions and Results of Operations.  Details of 2011 financing activities are discussed below.

 

 

Senior Unsecured Debt

 

On November 30, 2011, we completed a public offering of $400,000,000 aggregate principal amount of 5.0%, ten-year senior unsecured notes and retained net proceeds of approximately $395,584,000. The notes were sold at 99.546% of their face amount to yield 5.057%.

 

In 2011, we renewed both of our unsecured revolving credit facilities aggregating $2,500,000,000. The first facility, which was renewed in June 2011, bears interest on drawn amounts at LIBOR plus 1.35% and has a 0.30% facility fee (drawn or undrawn). The second facility, which was renewed in November 2011, bears interest on drawn amounts at LIBOR plus 1.25% and has a 0.25% facility fee (drawn or undrawn). The LIBOR spread and facility fee on both facilities are based on our credit ratings. Both facilities mature in four years and have one-year extension options.

112

 


 

 

Liquidity and Capital Resources – continued

 

 

Financing Activities and Contractual Obligations – continued  

 

Secured Debt

 

On December 28, 2011, we completed a $330,000,000 refinancing of Eleven Penn Plaza, a 1.1 million square foot Manhattan office building. The seven-year loan bears interest at LIBOR plus 2.35% and amortizes based on a 30-year schedule beginning in the fourth year. We retained net proceeds of approximately $126,000,000, after repaying the existing loan and closing costs.

 

On September 1, 2011, we completed a $600,000,000 refinancing of 555 California Street, a three-building office complex aggregating 1.8 million square feet in San Francisco’s financial district, known as the Bank of America Center, in which we own a 70% controlling interest. The 10-year fixed rate loan bears interest at 5.10% and amortizes based on a 30-year schedule beginning in the fourth year. The proceeds of the new loan and $45,000,000 of existing cash were used to repay the existing loan and closing costs.

 

On May 11, 2011, we repaid the outstanding balance of the construction loan on West End 25, and closed on a $101,671,000 mortgage at a fixed rate of 4.88%. The loan has a 10-year term and amortizes based on a 30-year schedule beginning in the sixth year.

 

On February 11, 2011, we completed a $425,000,000 refinancing of Two Penn Plaza, a 1.6 million square foot Manhattan office building. The seven-year loan bears interest at LIBOR plus 2.00%, which was swapped for the term of the loan to a fixed rate of 5.13%. The loan amortizes based on a 30-year schedule beginning in the fourth year. We retained net proceeds of approximately $139,000,000, after repaying the existing loan and closing costs.

 

On February 10, 2011, we completed a $150,000,000 financing of 2121 Crystal Drive, a 506,000 square foot office building located in Crystal City, Arlington, Virginia. The 12-year fixed rate loan bears interest at 5.51% and amortizes based on a 30-year schedule beginning in the third year. This property was previously unencumbered.

 

On January 18, 2011, we repaid the outstanding balance of the construction loan on 220 20th Street and closed on a $76,100,000 mortgage at a fixed rate of 4.61%. The loan has a seven-year term and amortizes based on a 30-year schedule.

 

On January 10, 2011, we completed a $75,000,000 financing of North Bergen (Tonnelle Avenue), a 410,000 square foot strip shopping center. The seven-year fixed rate loan bears interest rate at 4.59% and amortizes based on a 25-year schedule beginning in the sixth year. This property was previously unencumbered.

 

On January 6, 2011, we completed a $60,000,000 financing of land under a portion of the Borgata Hotel and Casino complex. The 10-year fixed rate loan bears interest at 5.14% and amortizes based on a 30-year schedule beginning in the third year.

 

 

Preferred Securities

 

On April 20, 2011, we sold 7,000,000 6.875% Series J Cumulative Redeemable Preferred Shares at a price of $25.00 per share, in an underwritten public offering pursuant to an effective registration statement. On April 21, 2011, the underwriters exercised their option to purchase an additional 1,050,000 shares to cover over-allotments. On May 5, 2011 and August 5, 2011 we sold an additional 800,000 and 1,000,000 shares, respectively, at a price of $25.00 per share. We retained aggregate net proceeds of $238,842,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 9,850,000 Series J Preferred Units (with economic terms that mirror those of the Series J Preferred Shares).

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Liquidity and Capital Resources – continued

 

 

Acquisitions and Investments

 

 

Details of 2012 acquisitions and investments are provided in the “Overview” of Management’s Discussion and Analysis of Financial Conditions and Results of Operations.  Details of 2011 acquisitions and investments are discussed below.

 

 

1399 New York Avenue (the “Executive Tower”)

 

On December 23, 2011, we acquired the 97.5% interest that we did not already own in the Executive Tower, an 11-story, 128,000 square foot Class A office building located in the Washington, CBD East End submarket close to the White House, for $104,000,000 in cash.

 

666 Fifth Avenue Office

 

On December 16, 2011, we formed a joint venture with an affiliate of the Kushner Companies to recapitalize the office portion of 666 Fifth Avenue, a 39-story, 1.4 million square foot Class A office building in Manhattan, located on the full block front of Fifth Avenue between 52nd and 53rd Street. We acquired a 49.5% interest in the property from the Kushner Companies, the current owner. In connection therewith, the existing $1,215,000,000 mortgage loan was modified by LNR, the special servicer, into a $1,100,000,000 A-Note and a $115,000,000 B-Note and extended to February 2019; and a portion of the current pay interest was deferred to the B-Note. We and the Kushner Companies have committed to lend the joint venture an aggregate of $110,000,000 (of which our share is $80,000,000) for tenant improvements and working capital for the property, which is senior to the $115,000,000 B-Note. In addition, we have provided the A-Note holders a limited recourse and cooperation guarantee of up to $75,000,000 if an event of default occurs and is ongoing.

 

Independence Plaza

 

On June 17, 2011, a joint venture in which we are a 51% partner invested $55,000,000 in cash (of which we contributed $35,000,000) to acquire a face amount of $150,000,000 of mezzanine loans and a $35,000,000 participation in a senior loan on Independence Plaza, a three-building 1,328 unit residential complex in the Tribeca submarket of Manhattan.

 

280 Park Avenue Joint Venture

 

On March 16, 2011, we formed a 50/50 joint venture with SL Green Realty Corp to own the mezzanine debt of 280 Park Avenue, a 1.2 million square foot office building located between 48th and 49th Streets in Manhattan (the “Property”). We contributed our mezzanine loan with a face amount of $73,750,000 and they contributed their mezzanine loans with a face amount of $326,250,000 to the joint venture. We equalized our interest in the joint venture by paying our partner $111,250,000 in cash and assuming $15,000,000 of their debt. On May 17, 2011, as part of the recapitalization of the Property, the joint venture contributed its debt position for 99% of the common equity of a new joint venture which owns the Property. The new joint venture’s investment is subordinate to $710,000,000 of third party debt.

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Liquidity and Capital Resources – continued

 

 

Certain Future Cash Requirements

 

Capital Expenditures

 

The following table summarizes anticipated 2013 capital expenditures.

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

(Amounts in millions, except square foot data)

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Other (2)

Expenditures to maintain assets

$

112.0 

 

$

60.0 

 

$

28.0 

 

$

4.0 

 

$

12.0 

 

$

8.0 

Tenant improvements

 

108.0 

 

 

43.0 

 

 

41.0 

 

 

9.0 

 

 

10.0 

 

 

5.0 

Leasing commissions

 

36.0 

 

 

21.0 

 

 

10.0 

 

 

3.0 

 

 

1.0 

 

 

1.0 

 

Total capital expenditures and leasing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

commissions

$

256.0 

 

$

124.0 

 

$

79.0 

 

$

16.0 

 

$

23.0 

 

$

14.0 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Square feet budgeted to be leased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

900 

 

 

1,250 

 

 

800 

 

 

250 

 

 

 

Weighted average lease term (years)

 

 

 

 

10 

 

 

 

 

 

 

 

 

Tenant improvements and leasing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

commissions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per square foot

 

 

 

$

71.00 

(1)

$

41.00 

 

$

15.00 

 

$

44.00 

 

 

 

 

 

Per square foot per annum

 

 

 

$

7.10 

(1)

$

5.86 

 

$

2.50 

 

$

7.33 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

Comprised of tenant improvements and leasing commissions of $65.00 per square foot ($6.50 per square foot per annum) and $100.00 per square foot ($10.00 per square foot per annum) for the office and retail components of our New York segment, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

Primarily 555 California Street and Warehouses.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The table above excludes anticipated capital expenditures of each of our partially owned non-consolidated subsidiaries, as these entities fund their capital expenditures without additional equity contributions from us.  

 

 

Development and Redevelopment Expenditures

 

 

In 2012, we commenced the re-tenanting and repositioning of 280 Park Avenue (50% owned), and the renovation of the 1.4 million square foot Springfield Mall, both of which are expected to be substantially completed in 2014.  We budgeted approximately $285,000,000 for these projects, of which $31,000,000 was expended in 2012 and $132,000,000 is expected to be expended in 2013 and the balance is expected to be expended in 2014.

 

During 2012, we completed the demolition of the existing residential building down to the second-level, at 220 Central Park South.

 

In addition, we continued lobby renovations at several of our office buildings in New York and Washington, as well as the re-tenanting and repositioning of a number of our strip shopping centers.

 

We are also evaluating other development and redevelopment opportunities at certain of our properties in Manhattan, including the Hotel Pennsylvania and in Washington, including 1900 Crystal Drive, Rosslyn and Pentagon City.

 

There can be no assurance that any of our development or redevelopment projects will commence, or if commenced, be completed on schedule or within budget.

 

115

 


 

 

Liquidity and Capital Resources – continued

 

 

Insurance

 

We maintain general liability insurance with limits of $300,000,000 per occurrence and all risk property and rental value insurance with limits of $2.0 billion per occurrence, including coverage for terrorist acts, with sub-limits for certain perils such as floods.  Our California properties have earthquake insurance with coverage of $180,000,000 per occurrence, subject to a deductible in the amount of 5% of the value of the affected property, up to a $180,000,000 annual aggregate.

 

Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for acts of terrorism, including nuclear, biological, chemical and radiological (“NBCR”) acts, as defined by the Terrorism Risk Insurance Program Reauthorization Act. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to PPIC.  Coverage for NBCR losses is up to $2.0 billion per occurrence, for which PPIC is responsible for a deductible of $3,200,000 and 15% of the balance of a covered loss and the Federal government is responsible for the remaining 85% of a covered loss.  We are ultimately responsible for any loss borne by PPIC.

 

We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism.  However, we cannot anticipate what coverage will be available on commercially reasonable terms in future policy years.

 

Our debt instruments, consisting of mortgage loans secured by our properties which are non-recourse to us, senior unsecured notes and revolving credit agreements contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain it could adversely affect our ability to finance our properties and expand our portfolio.

 

 

Other Commitments and Contingencies

 

Our mortgage loans are non-recourse to us.  However, in certain cases we have provided guarantees or master leased tenant space.  These guarantees and master leases terminate either upon the satisfaction of specified circumstances or repayment of the underlying loans.  As of December 31, 2012, the aggregate dollar amount of these guarantees and master leases is approximately $310,249,000.

 

At December 31, 2012, $22,807,000 of letters of credit were outstanding under one of our revolving credit facilities.  Our credit facilities contain financial covenants that require us to maintain minimum interest coverage and maximum debt to market capitalization ratios, and provide for higher interest rates in the event of a decline in our ratings below Baa3/BBB. Our credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and also contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.

 

Each of our properties has been subjected to varying degrees of environmental assessment at various times. The environmental assessments did not reveal any material environmental contamination. However, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites, or changes in cleanup requirements would not result in significant costs to us.

 

Two of our wholly owned subsidiaries that are contracted to develop and operate the Cleveland Medical Mart and Convention Center, in Cleveland, Ohio, are required to fund $11,500,000, primarily for tenant improvements, and they are responsible for operating expenses and are entitled to the net operating income, if any, upon the completion of development and the commencement of operations.  As of December 31, 2012, our subsidiaries have funded $1,100,000 of the commitment. 

 

As of December 31, 2012, we expect to fund additional capital to certain of our partially owned entities aggregating approximately $163,130,000.

116

 


 

 

Liquidity and Capital Resources – continued

 

 

Litigation

 

We are from time to time involved in legal actions arising in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters, including the matter referred to below, is not expected to have a material adverse effect on our financial position, results of operations or cash flows.

 

In 2003, Stop & Shop filed an action against us in the New York Supreme Court, claiming that we had no right to reallocate and therefore continue to collect $5,000,000 ($6,000,000 beginning February 1, 2012) of annual rent from Stop & Shop pursuant to a Master Agreement and Guaranty, because of the expiration of the leases to which the annual rent was previously allocated. Stop & Shop asserted that an order of the Bankruptcy Court for the Southern District of New York, as modified on appeal by the District Court, froze our right to reallocate and effectively terminated our right to collect the annual rent from Stop & Shop.  We asserted a counterclaim seeking a judgment for all of the unpaid annual rent accruing through the date of the judgment and a declaration that Stop & Shop will continue to be liable for the annual rent as long as any of the leases subject to the Master Agreement and Guaranty remain in effect.  A trial was held in November 2010.  On November 7, 2011, the Court determined that we had a continuing right to allocate the annual rent to unexpired leases covered by the Master Agreement and Guaranty, and directed entry of a judgment in our favor ordering Stop & Shop to pay us the unpaid annual rent accrued through February 28, 2011 in the amount of $37,422,000, a portion of the annual rent due from March 1, 2011 through the date of judgment, interest, and attorneys’ fees.  On December 16, 2011, a money judgment based on the Court’s decision was entered in our favor in the amount of $56,597,000 (including interest and costs).  Stop & Shop appealed the Court’s decision and the judgment and posted a bond to secure payment of the judgment. On January 12, 2012, we commenced a new action against Stop & Shop seeking recovery of $2,500,000 of annual rent not included in the money judgment, plus additional annual rent as it accrues.  At December 31, 2012, we had a $47,900,000 receivable from Stop & Shop, which is included as a component of “tenant and other receivables” on our consolidated balance sheet.  On February 6, 2013, we received $124,000,000 pursuant to a settlement agreement with Stop & Shop.  The settlement terminates our right to receive $6,000,000 of additional annual rent under the 1992 agreement, for a period potentially through 2031.  As a result of this settlement, we collected the aforementioned $47,900,000 receivable and will recognize approximately $59,000,000 of net income in the first quarter of 2013. 

  

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Liquidity and Capital Resources – continued

 

 

Cash Flows for the Year Ended December 31, 2012

 

Our cash and cash equivalents were $960,319,000 at December 31, 2012, a $353,766,000 increase over the balance at December 31, 2011.  Our consolidated outstanding debt was $11,296,190,000 at December 31, 2012, a $1,219,583,000 increase over the balance at December 31, 2011.  As of December 31, 2012 and December 31, 2011, $1,170,000,000 and $138,000,000, respectively, was outstanding under our revolving credit facilities.  During 2013 and 2014, $1,069,682,000 and $240,001,000 of our outstanding debt matures, respectively. We may refinance this maturing debt as it comes due or choose to repay it. 

 

Cash flows provided by operating activities of $825,049,000 was comprised of (i) net income of $694,541,000, (ii) distributions of income from partially owned entities of $226,172,000, (iii) return of capital from Real Estate Fund investments of $63,762,000, and (iv) $151,954,000 of non-cash adjustments, which include depreciation and amortization expense, impairment loss on J.C. Penney owned shares, the effect of straight-lining of rental income, equity in net income of partially owned entities and net gains on sale of real estate, partially offset by (v) the net change in operating assets and liabilities of $311,380,000, including $262,537,000 related to Real Estate Fund investments.

 

Net cash used in investing activities of $642,262,000 was comprised of (i) $673,684,000 of acquisitions of real estate and other, (ii) $205,652,000 of additions to real estate, (iii) $191,330,000 for the funding of the J.C. Penney derivative collateral, (iv) $156,873,000 of development costs and construction in progress, (v) $134,994,000 of investments in partially owned entities, (vi) $94,094,000 investments in mortgage and mezzanine loans receivable and other, and (vii) $75,138,000 of changes in restricted cash, partially offset by (viii) $445,683,000 of proceeds from sales of real estate and related investments, (ix) $144,502,000 of capital distributions from partially owned entities, (x) $134,950,000 from the return of the J.C. Penney derivative collateral, (xi) $60,258,000 of proceeds from the sale of marketable securities, (xii) $52,504,000 of proceeds from the sale of the Canadian Trade Shows, (xiii) $38,483,000 of proceeds from repayments of mezzanine loans receivable and other, and (xiv) $13,123,000 of proceeds from the repayment of loan to officer.

 

Net cash provided by financing activities of $170,979,000 was comprised of (i) $3,593,000,000 of proceeds from borrowings, (ii) $290,971,000 of proceeds from the issuance of preferred shares, (iii) $213,132,000 of contributions from noncontrolling interests in consolidated subsidiaries, and (iv) $11,853,000 of proceeds from exercise of employee share options, partially offset by (v) $2,747,694,000 for the repayments of borrowings, (vi) $699,318,000 of dividends paid on common shares, (vii) $243,300,000 for purchases of outstanding preferred units and shares, (viii) $104,448,000 of distributions to noncontrolling interests, (ix) $73,976,000 of dividends paid on preferred shares, (x) $39,073,000 of debt issuance and other costs, and (xi) $30,168,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings.

 

118

 


 

 

Liquidity and Capital Resources - continued

 

 

Capital Expenditures in the Year Ended December 31, 2012

 

Capital expenditures consist of expenditures to maintain assets, tenant improvement allowances and leasing commissions.  Recurring capital improvements include expenditures to maintain a property’s competitive position within the market and tenant improvements and leasing commissions necessary to re-lease expiring leases or renew or extend existing leases.  Non-recurring capital improvements include expenditures to lease space that has been vacant for more than nine months and expenditures completed in the year of acquisition and the following two years that were planned at the time of acquisition, as well as tenant improvements and leasing commissions for space that was vacant at the time of acquisition of a property.  Below is a summary of capital expenditures, leasing commissions and a reconciliation of total expenditures on an accrual basis to the cash expended in the year ended December 31, 2012.

 

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

(Amounts in thousands)

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Other

Expenditures to maintain assets

$

69,912 

 

$

27,434 

 

$

20,582 

 

$

4,676 

 

$

10,635 

 

$

6,585 

Tenant improvements

 

177,743 

 

 

71,572 

 

 

50,384 

 

 

9,052 

 

 

46,316 

 

 

419 

Leasing commissions

 

57,961 

 

 

27,573 

 

 

13,151 

 

 

2,368 

 

 

14,774 

 

 

95 

Non-recurring capital expenditures

 

6,902 

 

 

5,822 

 

 

 

 

 

 

 

 

1,080 

Total capital expenditures and leasing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

commissions (accrual basis)

 

312,518 

 

 

132,401 

 

 

84,117 

 

 

16,096 

 

 

71,725 

 

 

8,179 

Adjustments to reconcile to cash basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenditures in the current year

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

applicable to prior periods

 

105,350 

 

 

41,975 

 

 

24,370 

 

 

10,353 

 

 

21,867 

 

 

6,785 

 

 

Expenditures to be made in future

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

periods for the current period

 

(170,744)

 

 

(76,283)

 

 

(43,600)

 

 

(7,754)

 

 

(42,688)

 

 

(419)

Total capital expenditures and leasing

 

 

 

 

 

 

 

 

 

 

 

 

commissions (cash basis)

$

247,124 

 

$

98,093 

 

$

64,887 

 

$

18,695 

 

$

50,904 

 

$

14,545 

Tenant improvements and leasing commissions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per square foot per annum

$

4.44 

 

$

5.48 

 

$

4.86 

 

$

1.04 

 

$

5.56  (1)

 

$

 

Percentage of initial rent

 

10.6%

 

 

8.8%

 

 

12.0%

 

 

5.2%

 

 

15.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

Includes $6.50 per square foot per annum of tenant improvements and leasing commissions in connection with the 572,000 square foot Motorola Mobility / Google lease.

 

Development and Redevelopment Expenditures in the Year Ended December 31, 2012

 

Development and redevelopment expenditures consist of all hard and soft costs associated with the development or redevelopment of a property, including tenant improvements, leasing commissions, capitalized interest and operating costs until the property is substantially completed and ready for its intended use.  Below is a summary of development and redevelopment expenditures incurred in the year ended December 31, 2012.

 

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

(Amounts in thousands)

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Other

Springfield Mall

$

18,278 

 

$

 

$

 

$

18,278 

 

$

 

$

1290 Avenue of the Americas

 

16,778 

 

 

16,778 

 

 

 

 

 

 

 

 

Crystal Square 5

 

15,039 

 

 

 

 

15,039 

 

 

 

 

 

 

220 Central Park South

 

12,191 

 

 

 

 

 

 

 

 

 

 

12,191 

Bergen Town Center

 

11,404 

 

 

 

 

 

 

11,404 

 

 

 

 

510 Fifth Avenue

 

10,206 

 

 

10,206 

 

 

 

 

 

 

 

 

Marriott Marquis Times Square - retail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and signage

 

9,092 

 

 

9,092 

 

 

 

 

 

 

 

 

1851 South Bell Street (1900 Crystal Drive)

 

6,243 

 

 

 

 

6,243 

 

 

 

 

 

 

Amherst, New York

 

5,585 

 

 

 

 

 

 

5,585 

 

 

 

 

Other

 

52,057 

 

 

15,484 

 

 

18,052 

 

 

18,279 

 

 

167 

 

 

75 

 

 

 

 

$

156,873 

 

$

51,560 

 

$

39,334 

 

$

53,546 

 

$

167 

 

$

12,266 

119

 


 

 

Liquidity and Capital Resources – continued

 

 

Cash Flows for the Year Ended December 31, 2011

 

Our cash and cash equivalents were $606,553,000 at December 31, 2011, a $84,236,000 decrease over the balance at December 31, 2010.  Our consolidated outstanding debt was $10,076,607,000 at December 31, 2011, a $272,850,000 decrease from the balance at December 31, 2010. 

 

Cash flows provided by operating activities of $702,499,000 was comprised of (i) net income of $740,000,000, (ii) distributions of income from partially owned entities of $93,635,000, and (iii) $151,745,000 of non-cash adjustments, including depreciation and amortization expense, the effect of straight-lining of rental income, equity in net income of partially owned entities, income from the mark-to-market of derivative positions in marketable equity securities, impairment losses and tenant buy-out costs, net realized and unrealized gains on Real Estate Fund assets and net gain on early extinguishment of debt, partially offset by (iv) the net change in operating assets and liabilities of $282,881,000, of which $184,841,000 relates to Real Estate Fund investments.

 

Net cash used in investing activities of $164,761,000 was comprised of (i) $571,922,000 of investments in partially owned entities, (ii) $165,680,000 of additions to real estate, (iii) $98,979,000 of investments in mortgage and mezzanine loans receivable and other, (iv) $93,066,000 of development costs and construction in progress, (v) $90,858,000 of acquisitions of real estate and other, and (vi) $43,850,000 for the funding of collateral for the J.C. Penney derivative, partially offset by (vii) $318,966,000 of capital distributions from partially owned entities, (viii) $187,294,000 of proceeds from sales and repayments of mortgage and mezzanine loans receivable and other, (ix) $140,186,000 of proceeds from sales of real estate and related investments, (x) changes in restricted cash of $126,380,000, (xi) $70,418,000 of proceeds from sales of marketable securities, and (xii) $56,350,000 from the return of derivative collateral.

 

Net cash used in financing activities of $621,974,000 was comprised of (i) $3,740,327,000 for the repayments of borrowings, (ii) $508,745,000 of dividends paid on common shares, (iii) $116,510,000 of distributions to noncontrolling interests, (iv) $61,464,000 of dividends paid on preferred shares, (v) $47,395,000 of debt issuance and other costs, (vi) $28,000,000 for the purchase of outstanding preferred units and shares, and (vii) $964,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings, partially offset by (viii) $3,412,897,000 of proceeds from borrowings, (ix) $238,842,000 of proceeds from the issuance of Series J preferred shares, (x) $204,185,000 of contributions from noncontrolling interests, and (xi) $25,507,000 of proceeds received from exercise of employee share options.

120

 


 

 

Liquidity and Capital Resources – continued

 

 

Capital Expenditures in the Year Ended December 31, 2011

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

(Amounts in thousands)

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Other

Expenditures to maintain assets

$

58,463 

 

$

22,698 

 

$

18,939 

 

$

6,448 

 

$

5,918 

 

$

4,460 

Tenant improvements

 

138,076 

 

 

76,493 

 

 

33,803 

 

 

6,515 

 

 

15,221 

 

 

6,044 

Leasing commissions

 

43,613 

 

 

28,072 

 

 

9,114 

 

 

2,114 

 

 

2,794 

 

 

1,519 

Non-recurring capital expenditures

 

19,442 

 

 

17,157 

 

 

 

 

 

 

 

 

2,285 

Total capital expenditures and leasing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

commissions (accrual basis)

 

259,594 

 

 

144,420 

 

 

61,856 

 

 

15,077 

 

 

23,933 

 

 

14,308 

Adjustments to reconcile to cash basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenditures in the current year

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

applicable to prior periods

 

90,799 

 

 

43,392 

 

 

13,517 

 

 

9,705 

 

 

15,256 

 

 

8,929 

 

 

Expenditures to be made in future

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

periods for the current period

 

(146,062)

 

 

(79,941)

 

 

(33,530)

 

 

(7,058)

 

 

(14,185)

 

 

(11,348)

Total capital expenditures and leasing

 

 

 

 

 

 

 

 

 

 

 

 

commissions (cash basis)

$

204,331 

 

$

107,871 

 

$

41,843 

 

$

17,724 

 

$

25,004 

 

$

11,889 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenant improvements and leasing commissions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per square foot per annum

$

3.81 

 

$

5.21 

 

$

4.47 

 

$

0.71 

 

$

3.95 

 

$

 

Percentage of initial rent

 

9.1%

 

9.1%

 

10.8%

 

3.3%

 

12.3%

 

 

 

Development and Redevelopment Expenditures in the Year Ended December 31, 2011

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

(Amounts in thousands)

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Other

Bergen Town Center

$

23,748 

 

$

 

$

 

$

23,748 

 

$

 

$

510 Fifth Avenue

 

8,833 

 

 

8,833 

 

 

 

 

 

 

 

 

Other

 

48,903 

 

 

6,627 

 

 

20,496 

 

 

18,580 

 

 

898 

 

 

2,302 

 

 

 

 

$

81,484 

 

$

15,460 

 

$

20,496 

 

$

42,328 

 

$

898 

 

$

2,302 

121

 


 

 

Liquidity and Capital Resources – continued

 

 

Cash Flow for the Year Ended December 31, 2010

 

Our cash and cash equivalents were $690,789,000 at December 31, 2010, a $155,310,000 increase over the balance at December 31, 2009.  Our consolidated outstanding debt was $10,349,457,000 at December 31, 2010, a $246,029,000 increase from the balance at December 31, 2009. 

 

Cash flows provided by operating activities of $771,086,000 was comprised of (i) net income of $708,031,000, (ii) $129,491,000 of non-cash adjustments, including depreciation and amortization expense, the effect of straight-lining of rental income, equity in net income of partially owned entities, income from the mark-to-market of derivative positions in marketable equity securities, litigation loss accrual and impairment losses, net gain on early extinguishment of debt, (iii) distributions of income from partially owned entities of $61,037,000, (iv) interest received on repayment on mezzanine loan of $40,467,000, partially offset by (v) the net change in operating assets and liabilities of $167,940,000, of which $144,423,000 relates to Real Estate Fund investments.

 

Net cash used in investing activities of $520,361,000 was comprised of (i) purchases of marketable equity securities, including J.C. Penney Company, Inc. common shares, of $491,596,000, (ii) acquisitions of real estate of $173,413,000, (iii) investments in partially owned entities of $165,170,000, (iv) development and redevelopment expenditures of $156,775,000, (v) additions to real estate of $144,794,000, (vi) investments in mortgage and mezzanine loans receivable and other of $85,336,000, and (vii) $12,500,000 for the funding of collateral for the J.C. Penney derivative, partially offset by (viii) proceeds from the sale of marketable securities of $280,462,000, (ix) restricted cash of $138,586,000, (x) proceeds from sales of real estate and related investments of $127,736,000, (xi) proceeds received from repayment of mortgage and mezzanine loans receivable of $70,762,000, (xii) distributions of capital from investments in partially owned entities of $51,677,000, and (xiii) proceeds from maturing short-term investments of $40,000,000.

 

Net cash used in financing activities of $95,415,000 was comprised of (i) repayments of borrowing, including the purchase of our senior unsecured notes, of $2,004,718,000, (ii) dividends paid on common shares of $474,299,000 (iii) purchases of outstanding preferred units of $78,954,000, (iv) dividends paid on preferred shares of $55,669,000, (v) distributions to noncontrolling interests of $53,842,000, (vi) repurchase of shares related to stock compensation agreements and related tax withholdings of $25,660,000, (vii) debt issuance costs of $14,980,000 partially offset by (viii) proceeds from borrowings of $2,481,883,000, (ix) contributions from noncontrolling interests of $103,831,000 and (x) proceeds received from exercise of employee share options of $26,993,000.

122

 


 

 

Liquidity and Capital Resources – continued

 

 

Capital Expenditures in the Year Ended December 31, 2010

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

(Amounts in thousands)

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Other

Expenditures to maintain assets

$

53,051 

 

$

21,511 

 

$

17,532 

 

$

3,799 

 

$

6,099 

 

$

4,110 

Tenant improvements

 

116,939 

 

 

51,137 

 

 

17,464 

 

 

9,077 

 

 

31,742 

 

 

7,519 

Leasing commissions

 

30,351 

 

 

16,070 

 

 

6,044 

 

 

1,470 

 

 

4,761 

 

 

2,006 

Non-recurring capital expenditures

 

5,381 

 

 

3,192 

 

 

 

 

795 

 

 

 

 

1,394 

Total capital expenditures and leasing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

commissions (accrual basis)

 

205,722 

 

 

91,910 

 

 

41,040 

 

 

15,141 

 

 

42,602 

 

 

15,029 

Adjustments to reconcile to cash basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenditures in the current year

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

applicable to prior periods

 

64,216 

 

 

37,161 

 

 

13,296 

 

 

4,617 

 

 

4,825 

 

 

4,317 

 

 

Expenditures to be made in future

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

periods for the current period

 

(87,289)

 

 

(36,332)

 

 

(13,989)

 

 

(10,077)

 

 

(20,580)

 

 

(6,311)

Total capital expenditures and leasing

 

 

 

 

 

 

 

 

 

 

 

 

commissions (cash basis)

$

182,649 

 

$

92,739 

 

$

40,347 

 

$

9,681 

 

$

26,847 

 

$

13,035 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenant improvements and leasing commissions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per square foot per annum

$

3.73 

 

$

6.60 

 

$

2.92 

 

$

1.28 

 

$

4.01 

 

$

 

Percentage of initial rent

 

10.0%

 

12.7%

 

7.6%

 

5.7%

 

11.5%

 

 

 

Development and Redevelopment Expenditures in the Year Ended December 31, 2010

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

(Amounts in thousands)

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Other

220 Central Park South

$

46,769 

 

$

 

$

 

$

 

$

 

$

46,769 

Bergen Town Center

 

18,783 

 

 

 

 

 

 

18,783 

 

 

 

 

Residential condominiums

 

15,600 

 

 

 

 

 

 

 

 

 

 

15,600 

West End 25

 

9,997 

 

 

 

 

9,997 

 

 

 

 

 

 

1540 Broadway

 

8,091 

 

 

8,091 

 

 

 

 

 

 

 

 

Green Acres Mall

 

7,679 

 

 

 

 

 

 

7,679 

 

 

 

 

Other

 

49,856 

 

 

12,054 

 

 

16,592 

 

 

17,899 

 

 

2,667 

 

 

644 

 

 

 

 

$

156,775 

 

$

20,145 

 

$

26,589 

 

$

44,361 

 

$

2,667 

 

$

63,013 

123

 


 

 

Funds From Operations (“FFO”)

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, real estate impairment losses, 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 flows as a liquidity measure.  FFO may not be comparable to similarly titled measures employed by other companies. 

 

FFO attributable to common shareholders plus assumed conversions was $818,565,000, or $4.39 per diluted share for the year ended December 31, 2012, compared to $1,230,973,000, or $6.42 per diluted share for the year ended December 31, 2011. FFO attributable to common shareholders plus assumed conversions was $55,890,000, or $0.30 per diluted share for the three months ended December 31, 2012, compared to $280,369,000, or $1.46 per diluted share for the three months ended December 31, 2011.  Details of certain items that affect comparability are discussed in the financial results summary of our “Overview.”

 

 

For The Year

 

For The Three Months

(Amounts in thousands, except per share amounts)

Ended December 31,

 

Ended December 31,

Reconciliation of our net income to FFO:

2012 

 

2011 

 

2012 

 

2011 

Net income attributable to Vornado

$

617,260 

 

$

662,302 

 

$

86,135 

 

$

87,296 

Depreciation and amortization of real property

 

504,407 

 

 

530,113 

 

 

125,069 

 

 

152,655 

Net gains on sale of real estate

 

(245,799)

 

 

(51,623)

 

 

(41,998)

 

 

Real estate impairment losses

 

129,964 

 

 

28,799 

 

 

116,453 

 

 

28,799 

Proportionate share of adjustments to equity in net income of

 

 

 

 

 

 

 

 

 

 

 

 

Toys, to arrive at FFO:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization of real property

 

68,483 

 

 

70,883 

 

 

17,777 

 

 

18,039 

 

 

Net gains on sale of real estate

 

 

 

(491)

 

 

 

 

 

 

Real estate impairment losses

 

9,824 

 

 

 

 

1,430 

 

 

 

 

Income tax effect of above adjustments

 

(27,493)

 

 

(24,634)

 

 

(6,728)

 

 

(6,314)

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

 

86,197 

 

 

99,992 

 

 

20,387 

 

 

26,699 

 

 

Net gains on sale of real estate

 

(241,602)

 

 

(9,276)

 

 

(239,551)

 

 

(1,916)

 

 

Real estate impairment losses

 

1,849 

 

 

 

 

 

 

Noncontrolling interests' share of above adjustments

 

(16,649)

 

 

(40,957)

 

 

418 

 

 

(13,733)

FFO

 

886,441 

 

 

1,265,108 

 

 

79,392 

 

 

291,525 

Preferred share dividends

 

(76,937)

 

 

(65,531)

 

 

(20,750)

 

 

(17,788)

Discount on preferred share and unit redemptions

 

8,948 

 

 

5,000 

 

 

(2,752)

 

 

FFO attributable to common shareholders

 

818,452 

 

 

1,204,577 

 

 

55,890 

 

 

273,737 

Interest on 3.88% exchangeable senior debentures

 

 

 

26,272 

 

 

 

 

6,602 

Convertible preferred share dividends

 

113 

 

 

124 

 

 

 

 

30 

FFO attributable to common shareholders plus assumed conversions

$

818,565 

 

$

1,230,973 

 

$

55,890 

 

$

280,369 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Weighted Average Shares

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

185,810 

 

 

184,308 

 

 

186,267 

 

 

184,571 

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee stock options and restricted share awards

 

670 

 

 

1,658 

 

 

599 

 

 

1,392 

 

 

Convertible preferred shares

 

50 

 

 

55 

 

 

 

 

52 

 

 

3.88% exchangeable senior debentures

 

 

 

5,736 

 

 

 

 

5,736 

 

Denominator for FFO per diluted share

 

186,530 

 

 

191,757 

 

 

186,866 

 

 

191,751 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO attributable to common shareholders plus assumed conversions per diluted share

$

4.39 

 

$

6.42 

 

$

0.30 

 

$

1.46 

124

 


 

 

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have exposure to fluctuations in market interest rates. Market interest rates are sensitive to many factors that are beyond our control. Our exposure to a change in interest rates on our consolidated and non-consolidated debt (all of which arises out of non-trading activity) is as follows:

 

(Amounts in thousands, except per share amounts)

2012 

 

2011 

 

 

 

 

 

 

 

Weighted

 

Effect of 1%

 

 

 

 

Weighted

 

 

 

December 31,

 

 

Average

 

Change In

 

December 31,

 

Average

Consolidated debt:

Balance

 

 

Interest Rate

 

Base Rates

 

Balance

 

Interest Rate

 

Variable rate

$

3,167,181 

 

 

1.93%

 

$

31,672 

 

$

1,881,948 

 

2.35%

 

Fixed rate

 

8,129,009 

 

 

5.18%

 

 

 

 

8,194,659 

 

5.55%

 

 

 

$

11,296,190 

 

 

4.27%

 

 

31,672 

 

$

10,076,607 

 

4.95%

Prorata share of debt of non-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

consolidated entities (non-recourse):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable rate – excluding Toys

$

264,531 

 

 

2.88%

 

 

2,645 

 

$

284,372 

 

2.85%

 

Variable rate – Toys

 

703,922 

 

 

5.69%

 

 

7,039 

 

 

706,301 

 

4.83%

 

Fixed rate (including $1,148,407 and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$1,270,029 of Toys debt in 2012 and 2011)

 

3,030,476 

(1)

 

7.04%

 

 

 

 

3,208,472 

 

6.96%

 

 

 

$

3,998,929 

 

 

6.53%

 

 

9,684 

 

$

4,199,145 

 

6.32%

Redeemable noncontrolling interests’ share of above

 

 

 

 

 

 

 

(2,564)

 

 

 

 

 

Total change in annual net income

 

 

 

 

 

 

$

38,792 

 

 

 

 

 

Per share-diluted

 

 

 

 

 

 

$

0.21 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Excludes $25.4 billion for our 26.2% pro rata share of LNR's liabilities related to consolidated CMBS and CDO trusts which are non-recourse to LNR and its equity holders, including us.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

We may utilize various financial instruments to mitigate the impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies, depending on our analysis of the interest rate environment and the costs and risks of such strategies. As of December 31, 2012, we have one interest rate cap with a principal amount of $60,000,000 and a weighted average interest rate of 2.36%.  This cap is based on a notional amount of $60,000,000 and caps LIBOR at a rate of 7.00%.  In addition, we have one interest rate swap on a $425,000,000 mortgage loan that swapped the rate from LIBOR plus 2.00% (2.21% at December 31, 2012) to a fixed rate of 5.13% for the remaining six-year term of the loan. 

 

 

Fair Value of Debt

 

The estimated fair value of our consolidated debt is calculated based on current market prices and discounted cash flows at the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt.  As of December 31, 2012, the estimated fair value of our consolidated debt was $11,433,000,000.

 

 

Derivative Instruments

 

We have, and may in the future enter into, derivative positions that do not qualify for hedge accounting treatment, including our economic interest in J.C. Penney common shares.  Because these derivatives do not qualify for hedge accounting treatment, the gains or losses resulting from their mark-to-market at the end of each reporting period are recognized as an increase or decrease in “interest and other investment income (loss), net” on our consolidated statements of income. In addition, we are, and may in the future be, subject to additional expense based on the notional amount of the derivative positions and a specified spread over LIBOR. Because the market value of these instruments can vary significantly between periods, we may experience significant fluctuations in the amount of our investment income or expense in any given period.  In the years ended December 31, 2012 and 2011, we recognized a loss of $75,815,000 and income of $12,984,000, respectively, from derivative instruments.  

125

 


 

 

ITEM 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

INDEX TO FINANCIAL STATEMENTS

 

 

 

Page

 

Number

 

 

 

 

Report of Independent Registered Public Accounting Firm

127 

 

 

 

 

Consolidated Balance Sheets at December 31, 2012 and 2011

128 

 

 

 

 

Consolidated Statements of Income for the years ended December 31, 2012, 2011 and 2010

129 

 

 

 

 

Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011 and 2010

130 

 

 

 

 

Consolidated Statements of Changes in Equity for the years ended December 31, 2012, 2011 and 2010

131 

 

 

 

 

Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010

134 

 

 

 

 

Notes to Consolidated Financial Statements

136 

 

 

 

126

 


 
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

Shareholders and Board of Trustees

Vornado Realty Trust

New York, New York

 

We have audited the accompanying consolidated balance sheets of Vornado Realty Trust (the “Company”) as of December 31, 2012 and 2011, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2012. Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Vornado Realty Trust at December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

 

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2012, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2013 expressed an unqualified opinion on the Company’s internal control over financial reporting.

 

/s/ DELOITTE & TOUCHE LLP

 

Parsippany, New Jersey

February 26, 2013

127

 


 

 

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

 

VORNADO REALTY TRUST

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

(Amounts in thousands, except share and per share amounts)

 

December 31,

 

December 31,

ASSETS

 

2012 

 

2011 

Real estate, at cost:

 

 

 

 

 

 

 

Land

 

$

4,553,978 

 

$

4,399,419 

 

Buildings and improvements

 

 

12,895,355 

 

 

12,062,001 

 

Development costs and construction in progress

 

 

920,662 

 

 

116,126 

 

Leasehold improvements and equipment

 

 

125,364 

 

 

126,211 

 

 

Total

 

 

18,495,359 

 

 

16,703,757 

 

Less accumulated depreciation and amortization

 

 

(3,097,074)

 

 

(2,894,374)

Real estate, net

 

 

15,398,285 

 

 

13,809,383 

Cash and cash equivalents

 

 

960,319 

 

 

606,553 

Restricted cash

 

 

183,256 

 

 

98,068 

Marketable securities

 

 

398,188 

 

 

741,321 

Tenant and other receivables, net of allowance for doubtful accounts of $37,674 and $43,241

 

 

195,718 

 

 

171,798 

Investments in partially owned entities

 

 

1,226,256 

 

 

1,233,650 

Investment in Toys "R" Us

 

 

478,041 

 

 

506,809 

Real Estate Fund investments

 

 

600,786 

 

 

346,650 

Mortgage and mezzanine loans receivable

 

 

225,359 

 

 

133,948 

Receivable arising from the straight-lining of rents, net of allowance of $3,165 and $3,290

 

 

765,518 

 

 

702,360 

Deferred leasing and financing costs, net of accumulated amortization of $225,163 and $237,730

 

 

408,092 

 

 

364,753 

Identified intangible assets, net of accumulated amortization of $356,379 and $343,318

 

 

370,602 

 

 

287,844 

Assets related to discontinued operations

 

 

374,476 

 

 

1,049,643 

Due from officers

 

 

 

 

13,127 

Other assets

 

 

381,079 

 

 

380,580 

 

 

 

 

$

21,965,975 

 

$

20,446,487 

 

 

 

 

 

 

 

 

 

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

 

 

 

 

 

 

Mortgages payable

 

$

8,768,182 

 

$

8,072,880 

Senior unsecured notes

 

 

1,358,008 

 

 

1,357,661 

Revolving credit facility debt

 

 

1,170,000 

 

 

138,000 

Exchangeable senior debentures

 

 

 

 

497,898 

Convertible senior debentures

 

 

 

 

10,168 

Accounts payable and accrued expenses

 

 

484,746 

 

 

423,512 

Deferred revenue

 

 

498,510 

 

 

515,816 

Deferred compensation plan

 

 

105,200 

 

 

95,457 

Deferred tax liabilities

 

 

15,305 

 

 

13,315 

Liabilities related to discontinued operations

 

 

315,448 

 

 

506,960 

Other liabilities

 

 

402,280 

 

 

145,696 

 

Total liabilities

 

 

13,117,679 

 

 

11,777,363 

Commitments and contingencies

 

 

 

 

 

 

Redeemable noncontrolling interests:

 

 

 

 

 

 

 

Class A units - 11,215,682 and 12,160,771 units outstanding

 

 

898,152 

 

 

934,677 

 

Series D cumulative redeemable preferred units - 1,800,001 and 9,000,001 units outstanding

 

 

46,000 

 

 

226,000 

 

 

Total redeemable noncontrolling interests

 

 

944,152 

 

 

1,160,677 

Vornado shareholders' equity:

 

 

 

 

 

 

 

Preferred shares of beneficial interest: no par value per share; authorized 110,000,000

 

 

 

 

 

 

 

 

shares; issued and outstanding 51,184,609 and 42,186,709 shares

 

 

1,240,278 

 

 

1,021,660 

 

Common shares of beneficial interest: $.04 par value per share; authorized

 

 

 

 

 

 

 

 

250,000,000 shares; issued and outstanding 186,734,711 and 185,080,020 shares

 

 

7,440 

 

 

7,373 

 

Additional capital

 

 

7,195,438 

 

 

7,127,258 

 

Earnings less than distributions

 

 

(1,573,275)

 

 

(1,401,704)

 

Accumulated other comprehensive (loss) income

 

 

(18,946)

 

 

73,729 

 

 

Total Vornado shareholders' equity

 

 

6,850,935 

 

 

6,828,316 

Noncontrolling interests in consolidated subsidiaries

 

 

1,053,209 

 

 

680,131 

 

Total equity

 

 

7,904,144 

 

 

7,508,447 

 

 

 

 

$

21,965,975 

 

$

20,446,487 

 

 

 

 

 

 

 

 

 

See notes to the consolidated financial statements.

128

 


 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

 

2012 

 

2011 

 

2010 

(Amounts in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

Property rentals

 

$

2,085,582 

 

$

2,114,255 

 

$

2,093,475 

 

Tenant expense reimbursements

 

 

301,092 

 

 

314,752 

 

 

317,777 

 

Cleveland Medical Mart development project

 

 

235,234 

 

 

154,080 

 

 

 

Fee and other income

 

 

144,549 

 

 

149,749 

 

 

146,955 

Total revenues

 

 

2,766,457 

 

 

2,732,836 

 

 

2,558,207 

EXPENSES:

 

 

 

 

 

 

 

 

 

 

Operating

 

 

1,021,719 

 

 

995,586 

 

 

983,424 

 

Depreciation and amortization

 

 

517,811 

 

 

524,550 

 

 

494,898 

 

General and administrative

 

 

201,894 

 

 

208,008 

 

 

211,399 

 

Cleveland Medical Mart development project

 

 

226,619 

 

 

145,824 

 

 

 

Impairment losses, acquisition related costs

 

 

 

 

 

 

 

 

 

 

 

and tenant buy-outs

 

 

120,786 

 

 

35,299 

 

 

109,458 

Total expenses

 

 

2,088,829 

 

 

1,909,267 

 

 

1,799,179 

Operating income

 

 

677,628 

 

 

823,569 

 

 

759,028 

Income applicable to Toys "R" Us

 

 

14,859 

 

 

48,540 

 

 

71,624 

Income from partially owned entities

 

 

408,267 

 

 

70,072 

 

 

20,869 

Income (loss) from Real Estate Fund

 

 

63,936 

 

 

22,886 

 

 

(303)

Interest and other investment (loss) income, net

 

 

(260,945)

 

 

148,784 

 

 

235,267 

Interest and debt expense

 

 

(500,361)

 

 

(526,175)

 

 

(539,370)

Net gain on extinguishment of debt

 

 

 

 

 

 

94,789 

Net gain on disposition of wholly owned and partially owned assets

 

 

13,347 

 

 

15,134 

 

 

81,432 

Income before income taxes

 

 

416,731 

 

 

602,810 

 

 

723,336 

Income tax expense

 

 

(8,132)

 

 

(23,925)

 

 

(22,137)

Income from continuing operations

 

 

408,599 

 

 

578,885 

 

 

701,199 

Income from discontinued operations

 

 

285,942 

 

 

161,115 

 

 

6,832 

Net income

 

 

694,541 

 

 

740,000 

 

 

708,031 

Less net income attributable to noncontrolling interests in:

 

 

 

 

 

 

 

 

 

 

Consolidated subsidiaries

 

 

(32,018)

 

 

(21,786)

 

 

(4,920)

 

Operating Partnership

 

 

(35,327)

 

 

(41,059)

 

 

(44,033)

 

Preferred unit distributions of the Operating Partnership

 

 

(9,936)

 

 

(14,853)

 

 

(11,195)

Net income attributable to Vornado

 

 

617,260 

 

 

662,302 

 

 

647,883 

Preferred share dividends

 

 

(76,937)

 

 

(65,531)

 

 

(55,534)

Discount on preferred share and unit redemptions

 

 

8,948 

 

 

5,000 

 

 

4,382 

NET INCOME attributable to common shareholders

 

$

549,271 

 

$

601,771 

 

$

596,731 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME PER COMMON SHARE - BASIC:

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net

 

$

1.50 

 

$

2.44 

 

$

3.24 

 

 

Income from discontinued operations, net

 

 

1.45 

 

 

0.82 

 

 

0.03 

 

 

Net income per common share

 

$

2.95 

 

$

3.26 

 

$

3.27 

 

 

Weighted average shares outstanding

 

 

185,810 

 

 

184,308 

 

 

182,340 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME PER COMMON SHARE - DILUTED:

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net

 

$

1.49 

 

$

2.42 

 

$

3.21 

 

 

Income from discontinued operations, net

 

 

1.45 

 

 

0.81 

 

 

0.03 

 

 

Net income per common share

 

$

2.94 

 

$

3.23 

 

$

3.24 

 

 

Weighted average shares outstanding

 

 

186,530 

 

 

186,021 

 

 

184,159 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to consolidated financial statements.

129

 


 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

(Amounts in thousands)

 

2012 

 

2011 

 

2010 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

694,541 

 

$

740,000 

 

$

708,031 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

Change in unrealized net (loss) gain on securities available-for-sale

 

 

(283,649)

 

 

41,657 

 

 

55,891 

 

Amounts reclassified from accumulated other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Non-cash impairment loss on J.C. Penney owned shares

 

 

224,937 

 

 

 

 

 

 

Gain on sale of securities available-for-sale

 

 

(3,582)

 

 

(5,020)

 

 

(22,604)

 

Pro rata share of other comprehensive (loss) income of

 

 

 

 

 

 

 

 

 

 

 

nonconsolidated subsidiaries

 

 

(31,758)

 

 

12,859 

 

 

11,853 

 

Change in value of interest rate swap

 

 

(5,659)

 

 

(43,704)

 

 

 

Other

 

 

329 

 

 

(5,245)

 

 

(136)

Comprehensive income

 

 

595,159 

 

 

740,547 

 

 

753,035 

Less comprehensive income attributable to noncontrolling interests

 

 

(70,574)

 

 

(77,969)

 

 

(63,343)

Comprehensive income attributable to Vornado

 

$

524,585 

 

$

662,578 

 

$

689,692 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

130

 


 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings

 

Other

 

Non-

 

 

 

 

 

 

 

Preferred Shares

 

Common Shares

 

Additional

 

Less Than

 

Comprehensive

 

controlling

 

Total

 

 

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Distributions

 

Income (Loss)

 

Interests

 

Equity

Balance, December 31, 2009

 

 

33,952 

 

$

823,686 

 

 

181,214 

 

$

7,218 

 

$

6,961,007 

 

$

(1,577,591)

 

$

28,449 

 

$

406,637 

 

$

6,649,406 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

647,883 

 

 

 

 

4,920 

 

 

652,803 

Dividends on common shares

 

 

 

 

 

 

 

 

 

 

 

 

(474,299)

 

 

 

 

 

 

(474,299)

Dividends on preferred shares

 

 

 

 

 

 

 

 

 

 

 

 

(55,669)

 

 

 

 

 

 

(55,669)

Redemption of preferred shares

 

 

(1,600)

 

 

(39,982)

 

 

 

 

 

 

 

 

4,382 

 

 

 

 

 

 

(35,600)

Common shares issued:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upon redemption of Class A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

units, at redemption value

 

 

 

 

 

 

1,548 

 

 

62 

 

 

126,702 

 

 

 

 

 

 

 

 

126,764 

 

Under Omnibus share plan

 

 

 

 

 

 

812 

 

 

33 

 

 

25,290 

 

 

(25,584)

 

 

 

 

 

 

(261)

 

Under dividend reinvestment plan

 

 

 

 

 

 

22 

 

 

 

 

1,656 

 

 

 

 

 

 

 

 

1,657 

Contributions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

93,583 

 

 

93,583 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,783 

 

 

8,783 

Conversion of Series A preferred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

shares to common shares

 

 

(12)

 

 

(616)

 

 

18 

 

 

 

 

615 

 

 

 

 

 

 

 

 

Deferred compensation shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and options

 

 

 

 

 

 

48 

 

 

 

 

9,345 

 

 

 

 

 

 

 

 

9,347 

Change in unrealized net gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

on securities available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

55,891 

 

 

 

 

55,891 

Gain on sale of securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,604)

 

 

 

 

 

(22,604)

Pro rata share of other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

comprehensive income of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

nonconsolidated subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,853 

 

 

 

 

11,853 

Adjustments to carry redeemable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A units at redemption value

 

 

 

 

 

 

 

 

 

 

(191,826)

 

 

 

 

 

 

 

 

(191,826)

Other

 

 

 

 

 

 

 

 

 

 

(61)

 

 

 

 

(136)

 

 

772 

 

 

577 

Balance, December 31, 2010

 

 

32,340 

 

$

783,088 

 

 

183,662 

 

$

7,317 

 

$

6,932,728 

 

$

(1,480,876)

 

$

73,453 

 

$

514,695 

 

$

6,830,405 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to consolidated financial statements.

 

131

 


 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings

 

Other

 

Non-

 

 

 

 

 

 

 

Preferred Shares

 

Common Shares

 

Additional

 

Less Than

 

Comprehensive

 

controlling

 

Total

 

 

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Distributions

 

Income (Loss)

 

Interests

 

Equity

Balance, December 31, 2010

 

 

32,340 

 

$

783,088 

 

 

183,662 

 

$

7,317 

 

$

6,932,728 

 

$

(1,480,876)

 

$

73,453 

 

$

514,695 

 

$

6,830,405 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

662,302 

 

 

 

 

21,786 

 

 

684,088 

Dividends on common shares

 

 

 

 

 

 

 

 

 

 

 

 

(508,745)

 

 

 

 

 

 

(508,745)

Dividends on preferred shares

 

 

 

 

 

 

 

 

 

 

 

 

(65,694)

 

 

 

 

 

 

(65,694)

Issuance of Series J preferred shares

 

 

9,850 

 

 

238,842 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

238,842 

Common shares issued:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upon redemption of Class A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

units, at redemption value

 

 

 

 

 

 

798 

 

 

32 

 

 

64,798 

 

 

 

 

 

 

 

 

64,830 

 

Under Omnibus share plan

 

 

 

 

 

 

590 

 

 

23 

 

 

23,705 

 

 

(13,289)

 

 

 

 

 

 

10,439 

 

Under dividend reinvestment plan

 

 

 

 

 

 

21 

 

 

 

 

1,771 

 

 

 

 

 

 

 

 

1,772 

Contributions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

203,407 

 

 

203,407 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

778 

 

 

778 

Distributions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(49,422)

 

 

(49,422)

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,604)

 

 

(15,604)

Conversion of Series A preferred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

shares to common shares

 

 

(3)

 

 

(165)

 

 

 

 

 

 

165 

 

 

 

 

 

 

 

 

Deferred compensation shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and options

 

 

 

 

 

 

 

 

 

 

10,608 

 

 

(523)

 

 

 

 

 

 

10,085 

Change in unrealized net gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

on securities available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

41,657 

 

 

 

 

41,657 

Gain on sale of securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,020)

 

 

 

 

(5,020)

Pro rata share of other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

comprehensive income of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

nonconsolidated subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,859 

 

 

 

 

12,859 

Change in value of interest rate swap

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(43,704)

 

 

 

 

(43,704)

Adjustments to carry redeemable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A units at redemption value

 

 

 

 

 

 

 

 

 

 

98,092 

 

 

 

 

 

 

 

 

98,092 

Redeemable noncontrolling interests'

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

share of above adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(271)

 

 

 

 

(271)

Other

 

 

 

 

(105)

 

 

 

 

 

 

(4,609)

 

 

5,121 

 

 

(5,245)

 

 

4,491 

 

 

(347)

Balance, December 31, 2011

 

 

42,187 

 

$

1,021,660 

 

 

185,080 

 

$

7,373 

 

$

7,127,258 

 

$

(1,401,704)

 

$

73,729 

 

$

680,131 

 

$

7,508,447 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to consolidated financial statements.

 

132

 


 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings

 

Other

 

Non-

 

 

 

 

 

 

 

Preferred Shares

 

Common Shares

 

Additional

 

Less Than

 

Comprehensive

 

controlling

 

Total

 

 

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Distributions

 

Income (Loss)

 

Interests

 

Equity

Balance, December 31, 2011

 

 

42,187 

 

$

1,021,660 

 

 

185,080 

 

$

7,373 

 

$

7,127,258 

 

$

(1,401,704)

 

$

73,729 

 

$

680,131 

 

$

7,508,447 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

617,260 

 

 

 

 

32,018 

 

 

649,278 

Dividends on common shares

 

 

 

 

 

 

 

 

 

 

 

 

(699,318)

 

 

 

 

 

 

(699,318)

Dividends on preferred shares

 

 

 

 

 

 

 

 

 

 

 

 

(76,937)

 

 

 

 

 

 

(76,937)

Issuance of Series K preferred shares

 

 

12,000 

 

 

290,971 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

290,971 

Redemption of Series E preferred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

shares

 

 

(3,000)

 

 

(72,248)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(72,248)

Common shares issued:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upon redemption of Class A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

units, at redemption value

 

 

 

 

 

 

1,121 

 

 

45 

 

 

89,717 

 

 

 

 

 

 

 

 

89,762 

 

Under Omnibus share plan

 

 

 

 

 

 

434 

 

 

18 

 

 

9,521 

 

 

(16,389)

 

 

 

 

 

 

(6,850)

 

Under dividend reinvestment plan

 

 

 

 

 

 

29 

 

 

 

 

2,306 

 

 

 

 

 

 

 

 

2,307 

 

Upon acquisition of real estate

 

 

 

 

 

 

64 

 

 

 

 

5,121 

 

 

 

 

 

 

 

 

5,124 

Contributions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

195,029 

 

 

195,029 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,103 

 

 

18,103 

Distributions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(48,138)

 

 

(48,138)

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(59)

 

 

(59)

Conversion of Series A preferred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

shares to common shares

 

 

(2)

 

 

(105)

 

 

 

 

 

 

105 

 

 

 

 

 

 

 

 

Deferred compensation shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and options

 

 

 

 

 

 

 

 

 

 

13,527 

 

 

(473)

 

 

 

 

 

 

13,054 

Change in unrealized net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

on securities available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(283,649)

 

 

 

 

(283,649)

Impairment loss on J.C. Penney

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

owned shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

224,937 

 

 

 

 

224,937 

Gain on sale of securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,582)

 

 

 

 

(3,582)

Pro rata share of other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

comprehensive loss of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

nonconsolidated subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,758)

 

 

 

 

(31,758)

Change in value of interest rate swap

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,659)

 

 

 

 

(5,659)

Adjustments to carry redeemable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A units at redemption value

 

 

 

 

 

 

 

 

 

 

(52,117)

 

 

 

 

 

 

 

 

(52,117)

Redeemable noncontrolling interests'

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

share of above adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,707 

 

 

 

 

6,707 

Discount on redemption of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

preferred shares and units

 

 

 

 

 

 

 

 

 

 

 

 

8,948 

 

 

 

 

 

 

8,948 

Consolidation of partially owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

entity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

176,132 

 

 

176,132 

Other

 

 

 

 

 

 

 

 

 

 

 

 

(4,662)

 

 

329 

 

 

(7)

 

 

(4,340)

Balance, December 31, 2012

 

 

51,185 

 

$

1,240,278 

 

 

186,735 

 

$

7,440 

 

$

7,195,438 

 

$

(1,573,275)

 

$

(18,946)

 

$

1,053,209 

 

$

7,904,144 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to consolidated financial statements.

133

 


 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

 

2012 

 

2011 

 

2010 

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

694,541 

 

$

740,000 

 

$

708,031 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization (including amortization of deferred financing costs)

 

 

557,888 

 

 

580,990 

 

 

556,312 

 

Equity in net income of partially owned entities, including Toys “R” Us

 

 

(423,126)

 

 

(118,612)

 

 

(92,493)

 

Net gains on sale of real estate

 

 

(245,799)

 

 

(51,623)

 

 

(2,506)

 

Distributions of income from partially owned entities

 

 

226,172 

 

 

93,635 

 

 

61,037 

 

Non-cash impairment loss on J.C. Penney owned shares

 

 

224,937 

 

 

 

 

 

Impairment losses, tenant buy-outs and litigation loss accrual

 

 

133,977 

 

 

58,173 

 

 

137,367 

 

Loss (income) from the mark-to-market of J.C. Penney derivative position

 

 

75,815 

 

 

(12,984)

 

 

(130,153)

 

Straight-lining of rental income

 

 

(69,648)

 

 

(45,788)

 

 

(76,926)

 

Return of capital from Real Estate Fund investments

 

 

63,762 

 

 

 

 

 

Net realized and unrealized gains on Real Estate Fund assets

 

 

(55,361)

 

 

(17,386)

 

 

 

Amortization of below-market leases, net

 

 

(54,359)

 

 

(63,044)

 

 

(66,202)

 

Other non-cash adjustments

 

 

52,082 

 

 

27,325 

 

 

36,352 

 

Gain on sale of Canadian Trade Shows

 

 

(31,105)

 

 

 

 

 

Net gain on disposition of wholly owned and partially owned assets

 

 

(13,347)

 

 

(15,134)

 

 

(81,432)

 

Net gain on extinguishment of debt

 

 

 

 

(83,907)

 

 

(97,728)

 

Mezzanine loans loss reversal and net gain on disposition

 

 

 

 

(82,744)

 

 

(53,100)

 

Recognition of disputed account receivable from Stop & Shop

 

 

 

 

(23,521)

 

 

 

Interest received on repayment of mezzanine loan

 

 

 

 

 

 

40,467 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

Real Estate Fund investments

 

 

(262,537)

 

 

(184,841)

 

 

(144,423)

 

 

Tenant and other receivables, net

 

 

(23,271)

 

 

8,869 

 

 

2,019 

 

 

Prepaid assets

 

 

(10,549)

 

 

(7,779)

 

 

6,321 

 

 

Other assets

 

 

(46,573)

 

 

(89,186)

 

 

(68,305)

 

 

Accounts payable and accrued expenses

 

 

21,595 

 

 

(28,699)

 

 

2,645 

 

 

Other liabilities

 

 

9,955 

 

 

18,755 

 

 

33,803 

Net cash provided by operating activities

 

 

825,049 

 

 

702,499 

 

 

771,086 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

 

 

Acquisitions of real estate and other

 

 

(673,684)

 

 

(90,858)

 

 

(173,413)

 

Proceeds from sales of real estate and related investments

 

 

445,683 

 

 

140,186 

 

 

127,736 

 

Additions to real estate

 

 

(205,652)

 

 

(165,680)

 

 

(144,794)

 

Funding of J.C. Penney derivative collateral

 

 

(191,330)

 

 

(43,850)

 

 

(12,500)

 

Return of J.C. Penney derivative collateral

 

 

134,950 

 

 

56,350 

 

 

 

Development costs and construction in progress

 

 

(156,873)

 

 

(93,066)

 

 

(156,775)

 

Distributions of capital from partially owned entities

 

 

144,502 

 

 

318,966 

 

 

51,677 

 

Investments in partially owned entities

 

 

(134,994)

 

 

(571,922)

 

 

(165,170)

 

Investments in mortgage and mezzanine loans receivable and other

 

 

(94,094)

 

 

(98,979)

 

 

(85,336)

 

Restricted cash

 

 

(75,138)

 

 

126,380 

 

 

138,586 

 

Proceeds from sales of, and return of investment in, marketable securities

 

 

60,258 

 

 

70,418 

 

 

280,462 

 

Proceeds from the sale of Canadian Trade Shows

 

 

52,504 

 

 

 

 

 

Proceeds from sales and repayments of mortgage and mezzanine loans

 

 

 

 

 

 

 

 

 

 

 

receivable and other

 

 

38,483 

 

 

187,294 

 

 

70,762 

 

Proceeds from the repayment of loan to officer

 

 

13,123 

 

 

13,123 

 

 

 

Loan to officer

 

 

 

 

(13,123)

 

 

 

Purchases of marketable securities including J.C. Penney common

 

 

 

 

 

 

 

 

 

 

 

shares and other

 

 

 

 

 

 

(491,596)

 

Proceeds from maturing short-term investments

 

 

 

 

 

 

40,000 

Net cash used in investing activities

 

 

(642,262)

 

 

(164,761)

 

 

(520,361)

 

 

 

 

 

 

 

 

 

 

 

 

See notes to consolidated financial statements.

 

134

 


 

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

 

2012 

 

2011 

 

2010 

(Amounts in thousands)

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

 

Proceeds from borrowings

$

3,593,000 

 

$

3,412,897 

 

$

2,481,883 

 

Repayments of borrowings

 

(2,747,694)

 

 

(3,740,327)

 

 

(1,564,143)

 

Dividends paid on common shares

 

(699,318)

 

 

(508,745)

 

 

(474,299)

 

Proceeds from the issuance of preferred shares

 

290,971 

 

 

238,842 

 

 

 

Purchases of outstanding preferred units and shares

 

(243,300)

 

 

(28,000)

 

 

(78,954)

 

Contributions from noncontrolling interests

 

213,132 

 

 

204,185 

 

 

103,831 

 

Distributions to noncontrolling interests

 

(104,448)

 

 

(116,510)

 

 

(53,842)

 

Dividends paid on preferred shares

 

(73,976)

 

 

(61,464)

 

 

(55,669)

 

Debt issuance and other costs

 

(39,073)

 

 

(47,395)

 

 

(14,980)

 

Repurchase of shares related to stock compensation agreements and related

 

 

 

 

 

 

 

 

 

 

tax withholdings

 

(30,168)

 

 

(964)

 

 

(25,660)

 

Proceeds received from exercise of employee share options

 

11,853 

 

 

25,507 

 

 

26,993 

 

Acquisition of convertible senior debentures and senior unsecured notes

 

 

 

 

 

(440,575)

Net cash provided by (used in) financing activities

 

170,979 

 

 

(621,974)

 

 

(95,415)

Net increase (decrease) in cash and cash equivalents

 

353,766 

 

 

(84,236)

 

 

155,310 

Cash and cash equivalents at beginning of period

 

606,553 

 

 

690,789 

 

 

535,479 

Cash and cash equivalents at end of period

$

960,319 

 

$

606,553 

 

$

690,789 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

 

 

 

 

Cash payments for interest (net of amounts capitalized of $16,801, $1,197 and $864)

$

491,869 

 

$

531,174 

 

$

549,327 

 

Cash payments for income taxes

$

21,709 

 

$

26,187 

 

$

23,960 

 

 

 

 

 

 

 

 

 

 

Non-Cash Investing and Financing Activities:

 

 

 

 

 

 

 

 

 

Adjustments to carry redeemable Class A units at redemption value

$

(52,117)

 

$

98,092 

 

$

(191,826)

 

Contribution of mezzanine loan receivable to joint venture

 

 

 

73,750 

 

 

 

Write-off of fully depreciated assets

 

(177,367)

 

 

(72,279)

 

 

(63,007)

 

Common shares issued upon redemption of Class A units at redemption value

 

89,762 

 

 

64,830 

 

 

126,764 

 

Change in unrealized net gain on securities available-for-sale

 

(283,649)

 

 

41,657 

 

 

55,891 

 

Like-kind exchange of real estate:

 

 

 

 

 

 

 

 

 

 

Acquisitions

 

230,913 

 

 

21,999 

 

 

 

 

Dispositions

 

(230,913)

 

 

(45,625)

 

 

 

Financing assumed in acquisitions

 

 

 

 

 

102,616 

 

Financing transferred in dispositions

 

(163,144)

 

 

 

 

 

L.A. Mart seller financing

 

35,000 

 

 

 

 

 

Marriott Marquis Times Square - retail and signage capital lease:

 

 

 

 

 

 

 

 

 

 

Asset (included in development costs and construction in progress)

 

240,000 

 

 

 

 

 

 

Liability (included in other liabilities)

 

(240,000)

 

 

 

 

 

Increase in assets and liabilities resulting from the consolidation of partially

 

 

 

 

 

 

 

 

 

 

owned entities:

 

 

 

 

 

 

 

 

 

 

 

Real estate, net

 

342,919 

 

 

 

 

102,804 

 

 

 

Notes and mortgages payable

 

334,225 

 

 

 

 

57,563 

 

Decrease in assets and liabilities resulting from the deconsolidation of discontinued

 

 

 

 

 

 

 

 

 

 

operations and/or investments that were previously consolidated:

 

 

 

 

 

 

 

 

 

 

 

Real estate, net

 

 

 

(145,333)

 

 

(401,857)

 

 

 

Notes and mortgages payable

 

 

 

(232,502)

 

 

(316,490)

 

 

 

 

 

 

 

 

 

 

 

 

See notes to consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

135

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

1.     Organization and Business

 

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”).  Accordingly, Vornado’s cash flow and ability to pay dividends to its shareholders is dependent upon the cash flow of the Operating Partnership and the ability of its direct and indirect subsidiaries to first satisfy their obligations to creditors.  Vornado is the sole general partner of, and owned approximately 94.0% of the common limited partnership interest in the Operating Partnership at December 31, 2012.  All references to “we,” “us,” “our,” the “Company” and “Vornado” refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership.

                 

As of December 31, 2012, we own all or portions of:

 

New York:

 

·          19.7 million square feet of Manhattan office space in 31 properties and four residential properties containing 1,655 units;

 

·          2.2 million square feet of Manhattan street retail space in 49 properties;

 

·          The 1,700 room Hotel Pennsylvania located on Seventh Avenue at 33 rd Street in the heart of the Penn Plaza district;

 

·          A 32.4% interest in Alexander’s, Inc. (NYSE: ALX), which owns six properties in the greater New York metropolitan area, including 731 Lexington Avenue, the 1.3 million square foot Bloomberg, L.P. headquarters building;

 

Washington, DC:

 

·          73 properties aggregating 19.1 million square feet, including 59 office properties aggregating 16.1 million square feet and seven residential properties containing 2,414 units;

 

Retail Properties:

 

·          114 strip shopping centers and single tenant retail assets aggregating 15.6 million square feet, primarily in the northeast states and California;

 

·          Six regional malls aggregating 5.2 million square feet, located in the northeast / mid-Atlantic states and Puerto Rico;

 

 

Other Real Estate and Related Investments:

 

·          The 3.5 million square foot Merchandise Mart in Chicago;

 

·          A 70% controlling interest in 555 California Street, a three-building office complex in San Francisco’s financial district aggregating 1.8 million square feet, known as the Bank of America Center;

 

·          A 25.0% interest in Vornado Capital Partners, our $800 million real estate fund.  We are the general partner and investment manager of the fund;

 

·          A 32.6% interest in Toys “R” Us, Inc.;

 

·          A 10.7% interest in J.C. Penney Company, Inc. (NYSE: JCP); and

 

·          Other real estate and related investments and mortgage and mezzanine loans on real estate.

136

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

2.    Basis of Presentation and Significant Accounting Policies

 

 

Basis of Presentation

 

The accompanying consolidated financial statements include the accounts of Vornado and the Operating Partnership. All inter-company amounts have been eliminated. We account for unconsolidated partially owned entities under the equity method of accounting, when we have the ability to exercise significant influence over the entity.  Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require 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.

 

 

Recently Issued Accounting Literature

 

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Update No. 2011-04, Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS (“ASU No. 2011-04”).  ASU No. 2011-04 provides a uniform framework for fair value measurements and related disclosures between GAAP and International Financial Reporting Standards (“IFRS”) and requires additional disclosures, including: (i) quantitative information about unobservable inputs used, a description of the valuation processes used, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs, for Level 3 fair value measurements; (ii) fair value of financial instruments not measured at fair value but for which disclosure of fair value is required, based on their levels in the fair value hierarchy; and (iii) transfers between Level 1 and Level 2 of the fair value hierarchy.  The adoption of this update on January 1, 2012 did not have a material impact on our consolidated financial statements, but resulted in additional fair value measurement disclosures (See Note 13 - Fair Value Measurements).

 

 

Significant Accounting Policies

 

Real Estate:  Real estate is carried at cost, net of accumulated depreciation and amortization. Betterments, major renewals and certain costs directly related to the improvement and leasing of real estate are capitalized. Maintenance and repairs are expensed as incurred. For redevelopment of existing operating properties, the net book value of the existing property under redevelopment plus the cost for the construction and improvements incurred in connection with the redevelopment are capitalized to the extent the capitalized costs of the property do not exceed the estimated fair value of the redeveloped property when complete. If the cost of the redeveloped property, including the undepreciated net book value of the property carried forward, exceeds the estimated fair value of redeveloped property, the excess is charged to expense. Depreciation is provided on a straight-line basis over estimated useful lives which range from 7 to 40 years. Tenant allowances are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets. Additions to real estate include interest expense capitalized during construction of $16,801,000 and $1,197,000 for the years ended December 31, 2012 and 2011, respectively.

 

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above and below-market leases and acquired in-place leases and tenant relationships) and acquired liabilities and we allocate the purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information.  Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions.  We record acquired intangible assets (including acquired above-market leases, tenant relationships and acquired in-place leases) and acquired intangible liabilities (including below–market leases) at their estimated fair value separate and apart from goodwill. We amortize identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired.

 

137

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

2.    Basis of Presentation and Significant Accounting Policies - continued

 

 

Our properties, including any related intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis.  An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value.  Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared.  If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements.  The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results.  Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.  The table below summarizes the impairment losses, acquisition related costs and tenant buy-outs in the years ended December 31, 2012, 2011 and 2010.

 

 

(Amounts in thousands)

 

 

For the Year Ended December 31,

 

 

 

 

 

 

 

2012 

 

 

2011 

 

 

2010 

 

 

 

Impairment losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate assets

 

$

107,000 

 

$

 

$

72,500 

 

 

 

 

Development projects

 

 

 

 

3,040 

 

 

 

 

 

 

Condominium units held for sale (see page 140)

 

 

2,538 

 

 

 

 

30,013 

 

 

 

Acquisition related costs and tenant buy-outs

 

 

11,248 

 

 

32,259 

 

 

6,945 

 

 

 

 

 

 

$

120,786 

 

$

35,299 

 

$

109,458 

 

 

 

 

Partially Owned Entities:   We consolidate entities in which we have a controlling financial interest.  In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity (“VIE”) and we are the primary beneficiary.  We are deemed to be the primary beneficiary of a VIE when we have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. We generally do not control a partially owned entity if the entity is not considered a VIE and the approval of all of the partners/members is contractually required with respect to major decisions, such as operating and capital budgets, the sale, exchange or other disposition of real property, the hiring of a chief executive officer, the commencement, compromise or settlement of any lawsuit, legal proceeding or arbitration or the placement of new or additional financing secured by assets of the venture.  We account for investments under the equity method when the requirements for consolidation are not met, and we have significant influence over the operations of the investee. Equity method investments are initially recorded at cost and subsequently adjusted for our share of net income or loss and cash contributions and distributions each period. Investments that do not qualify for consolidation or equity method accounting are accounted for on the cost method. 

 

Investments in partially owned entities are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value.  Impairment analyses are based on current plans, intended holding periods and available information at the time the analyses are prepared.  In the years ended December 31, 2012, 2011 and 2010, we recognized non-cash impairment losses on investments in partially owned entities, excluding Toys, aggregating $4,936,000, $13,794,000 and $11,481,000, respectively.

 

138

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

2.    Basis of Presentation and Significant Accounting Policies – continued

 

 

Mortgage and Mezzanine Loans Receivable: We invest in mortgage and mezzanine loans of entities that have significant real estate assets.  These investments are either secured by the real property or by pledges of the equity interests of the entities owning the underlying real estate.  We record these investments at the stated principal amount net of any unamortized discount or premium. We accrete or amortize any discount or premium over the life of the related receivable utilizing the effective interest method or straight-line method, if the result is not materially different.  We evaluate the collectibility of both interest and principal of each of our loans whenever events or changes in circumstances indicate such amounts may not be recoverable. A loan is impaired when it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient, to the value of the collateral if the loan is collateral dependent.  Interest on impaired loans is recognized when received in cash.

 

 

Cash and Cash Equivalents:   Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less and are carried at cost, which approximates fair value due to their short-term maturities.  The majority of our cash and cash equivalents consists of (i) deposits at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation limit, (ii) United States Treasury Bills, and (iii) Certificate of Deposits placed through an Account Registry Service (“CDARS”).  To date, we have not experienced any losses on our invested cash.

 

 

Restricted Cash:   Restricted cash consists of security deposits, cash restricted in connection with our deferred compensation plan and cash escrowed under loan agreements for debt service, real estate taxes, property insurance and capital improvements.

 

  

Allowance for Doubtful Accounts:   We periodically evaluate the collectibility of amounts due from tenants and maintain an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under the lease agreements. We also maintain an allowance for receivables arising from the straight-lining of rents. This receivable arises from earnings recognized in excess of amounts currently due under the lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates.  As of December 31, 2012 and 2011, we had $37,674,000 and $43,241,000, respectively, in allowances for doubtful accounts.  In addition, as of December 31, 2012 and 2011, we had $3,165,000 and $3,290,000, respectively, in allowances for receivables arising from the straight-lining of rents.

 

 

Deferred Charges: Direct financing costs are deferred and amortized over the terms of the related agreements as a component of interest expense. Direct costs related to successful leasing activities are capitalized and amortized on a straight line basis over the lives of the related leases. All other deferred charges are amortized on a straight line basis, which approximates the effective interest rate method, in accordance with the terms of the agreements to which they relate.

 

 

Stock-Based Compensation:   Stock-based compensation consists of awards to certain employees and officers and consists of stock options, restricted stock, restricted Operating Partnership units and out-performance plan awards.  We account for all stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation

 

139

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

2.    Basis of Presentation and Significant Accounting Policies – continued

 

 

Revenue Recognition:   We have the following revenue sources and revenue recognition policies:

•      Base Rent — income arising from tenant leases. These rents are recognized over the non-cancelable term of the related leases on a straight-line basis which includes the effects of rent steps and rent abatements under the leases.  We commence rental revenue recognition when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use.  In addition, in circumstances where we provide a tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of rental revenue on a straight-line basis over the term of the lease.

    

•      Percentage Rent — income arising from retail tenant leases that is contingent upon tenant sales exceeding defined thresholds. These rents are recognized only after the contingency has been removed (i.e., when tenant sales thresholds have been achieved).

 

•      Hotel Revenue — income arising from the operation of the Hotel Pennsylvania which consists of rooms revenue, food and beverage revenue, and banquet revenue. Income is recognized when rooms are occupied. Food and beverage and banquet revenue is recognized when the services have been rendered.

 

•      Trade Shows Revenue — income arising from the operation of trade shows, including rentals of booths. This revenue is recognized when the trade shows have occurred.

 

•      Expense Reimbursements — revenue arising from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred.

 

•      Management, Leasing and Other Fees — income arising from contractual agreements with third parties or with partially owned entities. This revenue is recognized as the related services are performed under the respective agreements.

 

•      Cleveland Medical Mart — revenue arising from the development of the Cleveland Medical Mart.  This revenue is recognized as the related services are performed under the respective agreements using the criteria set forth in ASC 605-25, Multiple Element Arrangements , as we are providing development, marketing, leasing, and other property management services.   

 

 

Condominium Units Held For Sale:  Condominium units held for sale are carried at the lower of cost or fair value less costs to sell and are included in “other assets” on our consolidated balance sheet.  As of December 31, 2012 and 2011, the carrying amount of these units were $53,737,000 and $60,785,000, respectively, and consist of substantially completed units at Granite Park in Pasadena and The Bryant in Boston.  Revenue from condominium unit sales is recognized upon closing of the sale (the “completed contract method”), as all conditions for full profit recognition have been met at that time.  We use the relative sales value method to allocate costs to individual condominium units.  Net gains on sales of condominiums units are included in “net gain on disposition of wholly owned and partially owned assets” on our consolidated statements of income and were $1,274,000, $5,884,000 and $3,149,000 in the years ended December 31, 2012, 2011 and 2010, respectively.  Impairment losses on condominium units are included in “impairment losses, acquisition related costs and tenant buy-outs” on our consolidated statements of income and were $2,538,000, $0 and $30,013,000 in the years ended December 31, 2012, 2011 and 2010, respectively. 

 

140

 


 
 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

2.    Basis of Presentation and Significant Accounting Policies – continued

 

 

Derivative Instruments and Hedging Activities:  ASC 815, Derivatives and Hedging , as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. As of December 31, 2012 and 2011, our derivative instruments consisted primarily of a portion of our investment in J.C. Penney common shares (see Note 5 – Marketable Securities and Derivative Instruments), an interest rate cap and an interest rate swap.  We record all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

 

For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (loss) (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. We assess the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. For derivatives not designated as hedges, changes in fair value are recognized in earnings.

 

Income Per Share:   Basic income per share is computed based on weighted average shares outstanding. Diluted income per share considers the effect of all potentially dilutive share equivalents, including outstanding employee stock options, restricted shares and convertible or redeemable securities.

 

Income Taxes: We operate in a manner intended to enable us to continue to qualify as a REIT under Sections 856‑860 of the Internal Revenue Code of 1986, as amended. Under those sections, a REIT which distributes at least 90% of its REIT taxable income as a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We distribute to shareholders 100% of taxable income and therefore, no provision for Federal income taxes is required.  Dividends distributed for the year ended December 31, 2012, were characterized, for federal income tax income tax purposes, as 62.7% ordinary income and 37.3% long term capital gain.  Dividend distributions for the year ended December 31, 2011, were characterized, for Federal income tax purposes, as 93.2% ordinary income and 6.8% long-term capital gain.  Dividend distributions for the year ended December 31, 2010 were characterized, for Federal income tax purposes, as 95.9% ordinary income, 2.8% long-term capital gain and 1.3% return of capital.

 

We have elected to treat certain consolidated subsidiaries, and may in the future elect to treat newly formed subsidiaries, as taxable REIT subsidiaries pursuant to an amendment to the Internal Revenue Code that became effective January 1, 2001.  Taxable REIT subsidiaries may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to Federal and State income tax at regular corporate tax rates. Our taxable REIT subsidiaries had a combined current income tax expense of approximately $20,336,000 and $26,645,000 at December 31, 2012 and 2011, respectively, and have immaterial differences between the financial reporting and tax basis of assets and liabilities.  The following table reconciles net income attributable to common shareholders to estimated taxable income for the years ended December 31, 2012, 2011 and 2010.

 

 

(Amounts in thousands)

 

 

For the Year Ended December 31,

 

 

 

 

 

 

2012 

 

 

2011 

 

 

2010 

 

 

Net income attributable to common shareholders

 

$

549,271 

 

$

601,771 

 

$

596,731 

 

 

Book to tax differences (unaudited):

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

205,155 

 

 

225,802 

 

 

216,473 

 

 

 

Impairment losses on marketable equity securities

 

 

211,328 

 

 

 

 

 

 

 

Straight-line rent adjustments

 

 

(64,679)

 

 

(38,800)

 

 

(70,606)

 

 

 

Earnings of partially owned entities

 

 

(60,049)

 

 

(96,178)

 

 

(62,315)

 

 

 

Stock options

 

 

(28,701)

 

 

(27,697)

 

 

(48,399)

 

 

 

Sale of real estate

 

 

(123,905)

 

 

(18,766)

 

 

12,899 

 

 

 

Derivatives

 

 

71,228 

 

 

(12,160)

 

 

(121,120)

 

 

 

Mortgage and mezzanine loans receivable

 

 

 

 

(82,512)

 

 

(104,727)

 

 

 

Other, net

 

 

17,080 

 

 

(6,223)

 

 

48,915 

 

 

Estimable taxable income

 

$

776,728 

 

$

545,237 

 

$

467,851 

 

 

The net basis of our assets and liabilities for tax reporting purposes is approximately $3.8 billion lower than its amount reported in our consolidated financial statements.

141

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

3.     Acquisitions

 

Independence Plaza

 

In 2011, we acquired a 51% interest in the subordinated debt of Independence Plaza, a three-building 1,328 unit residential complex in the Tribeca submarket of Manhattan which has 54,500 square feet of retail space and 550 parking spaces, for $45,000,000 and a warrant to purchase 25% of the equity for $1,000,000.  On December 21, 2012, we acquired a 58.75% interest in the property as follows: (i) buying one of the equity partners’ 33.75% interest for $160,000,000, (ii) exercising our warrant for 25% of the equity and (iii) contributing the appreciated value of our interest in the subordinated debt as preferred equity.  In connection therewith, we recognized income of $105,366,000, comprised of $60,396,000 from the accelerated amortization of the discount on the subordinated debt immediately preceding the conversion to preferred equity, and a $44,970,000 purchase price fair value adjustment upon exercising the warrant.  The current transaction values the property at $844,800,000.  The property is currently encumbered by a $334,225,000 mortgage.  We expect to refinance the $334,225,000 mortgage in 2013, substantially decreasing our cash investment.  We manage the retail space at the property and Stellar Management, our partner, manages the residential space.  We consolidate the accounts of this entity from the date of acquisition as it is a VIE, and we are deemed to be the primary beneficiary.  We are currently in the process of analyzing the fair value of the acquired leases; accordingly, our purchase price allocation is preliminary and subject to change.

 

666 Fifth Avenue - Retail

 

On December 6, 2012, we acquired a retail condominium located at 666 Fifth Avenue at 53rd Street for $707,000,000. The property has 126 feet of frontage on Fifth Avenue and contains 114,000 square feet, 39,000 square feet in fee and 75,000 square feet by long-term lease from the 666 Fifth Avenue office condominium, which is 49.5% owned by us.  We consolidate the accounts of the property into our consolidated financial statements from the date of acquisition.  We are currently in the process of analyzing the fair value of the acquired leases; accordingly, our purchase price allocation is preliminary and subject to change.

 

 

Disclosure of the Company’s unaudited proforma information for the current and prior reporting periods as though the above acquisitions of Independence Plaza and 666 Fifth Avenue – Retail had occurred at the beginning of the prior annual reporting period is not considered practicable, as the Company does not have, and is unable to obtain, certain information required for such disclosure.

 

Marriott Marquis Times Square – Retail and Signage

 

On July 30, 2012, we entered into a lease with Host Hotels & Resorts, Inc. (NYSE: HST) (“Host”), under which we will redevelop the retail and signage components of the Marriott Marquis Times Square Hotel.  The Marriott Marquis with over 1,900 rooms is one of the largest hotels in Manhattan.  It is located in the heart of the bow-tie of Times Square and spans the entire block front from 45th Street to 46th Street on Broadway.  The Marriott Marquis is directly across from our 1540 Broadway iconic retail property leased to Forever 21 and Disney flagship stores.  We plan to spend over $140,000,000 to redevelop and substantially expand the existing retail space, including converting the below grade parking garage into retail, and creating six-story, 300 foot wide block front, dynamic LED signs.  During the term of the lease we will pay fixed rent equal to the sum of $12,500,000, plus a portion of the property’s net cash flow after we receive a 5.2% preferred return on our invested capital.  The lease contains put/call options which, if exercised, would lead to our ownership.  Host can exercise the put option during defined periods following the conversion of the project to a condominium.  We can exercise our call option under the same terms, at any time after the fifteenth year of the lease term.  We are accounting for this lease as a “capital lease” and have recorded a $240,000,000 capital lease asset and liability, which are included as a component of “development costs and construction in progress” and “other liabilities,” respectively, on our consolidated balance sheet.  Although we have commenced paying the annual rent, there will be no income statement activity until the redevelopment is substantially complete.

142

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

4.     Vornado Capital Partners Real Estate Fund (the “Fund”)

 

 

In February 2011, the Fund’s subscription period closed with an aggregate of $800,000,000 of capital commitments, of which we committed $200,000,000.  We are the general partner and investment manager of the Fund, which has an eight-year term and a three-year investment period.   During the investment period, which concludes in July 2013, the Fund is our exclusive investment vehicle for all investments that fit within its investment parameters, including debt, equity and other interests in real estate, and excluding (i) investments in vacant land and ground-up development; (ii) investments acquired by merger or primarily for our securities or properties; (iii) properties which can be combined with or relate to our existing properties; (iv) securities of commercial mortgage loan servicers and investments derived from any such investments; (v) non-controlling interests in equity and debt securities; and (vi) investments located outside of North America.  The Fund’s investments are reported on its balance sheet at fair value, with changes in value each period recognized in earnings.  We consolidate the accounts of the Fund into our consolidated financial statements, retaining the fair value basis of accounting. 

 

 

During 2012, the Fund made the following investments:

 

800 Corporate Pointe

 

On November 30, 2012, the Fund acquired 800 Corporate Pointe, a 243,000 square foot office building and the accompanying six-level parking structure (1,964 spaces) located in Culver City, Los Angeles, California, for $95,700,000 in cash.

 

501 Broadway

 

On August 20, 2012, the Fund acquired 501 Broadway, a 9,000 square foot retail property in New York for $31,000,000.  The purchase price consisted of $11,000,000 in cash and a $20,000,000 mortgage loan.  The three-year loan bears interest at LIBOR plus 2.75%, with a floor of 3.50%, and has two one-year extension options.

 

1100 Lincoln Road

 

On July 2, 2012, the Fund acquired 1100 Lincoln Road, a 167,000 square foot retail property, the western anchor of the Lincoln Road Shopping District in Miami Beach, Florida, for $132,000,000.  The purchase price consisted of $66,000,000 in cash and a $66,000,000 mortgage loan.  The three-year loan bears interest at LIBOR plus 2.75% and has two one-year extension options.

 

520 Broadway

 

On April 26, 2012, the Fund acquired 520 Broadway, a 112,000 square foot office building in Santa Monica, California for $61,000,000 in cash and subsequently placed a $30,000,000 mortgage loan on the property.  The three-year loan bears interest at LIBOR plus 2.25% and has two one-year extension options.

 

143

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

4.     Vornado Capital Partners Real Estate Fund (the “Fund”) – continued

 

 

At December 31, 2012, the Fund had nine investments with an aggregate fair value of $600,786,000, or $67,642,000 in excess of cost, and has remaining unfunded commitments of $217,676,000, of which our share was $54,419,000.  At December 31, 2011, the Fund had five investments with an aggregate fair value of $346,650,000.

 

Below is a summary of income (loss) from the Fund for the years ended December 31, 2012 , 2011  and 2010 .   

 

(Amounts in thousands)

 

For the Year Ended December 31,

 

 

 

 

 

 

2012 

 

2011 

 

2010 

 

Operating income (loss)

 

$

8,575 

 

$

5,500 

 

$

(303)

 

Net realized gains

 

 

 

 

5,391 

 

 

 

Net unrealized gains

 

 

55,361 

 

 

11,995 

 

 

 

Income (loss) from Real Estate Fund

 

 

63,936 

 

 

22,886 

 

 

(303)

 

Less (income) loss attributable to noncontrolling interests

 

 

(39,332)

 

 

(13,598)

 

 

806 

 

Income from Real Estate Fund attributable to Vornado (1)

 

$

24,604 

 

$

9,288 

 

$

503 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

Excludes $2,780, $2,695 and $248 of management, leasing and development fees in the years ended December 31, 2012, 2011 and 2010, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.    Marketable Securities and Derivative Instruments

 

Our portfolio of marketable securities is comprised of equity securities that are classified as available-for-sale.  Available-for-sale securities are presented on our consolidated balance sheets at fair value.  Unrealized gains and losses resulting from the mark-to-market of these securities are included in “other comprehensive (loss) income.”  Realized gains and losses are recognized in earnings only upon the sale of the securities and are recorded based on the weighted average cost of such securities.

 

During 2012, 2011 and 2010 we sold certain marketable securities for aggregate proceeds of $58,718,000, $69,559,000, and $281,486,000, respectively resulting in net gains of $3,582,000, $5,020,000, and $22,604,000, respectively, which are included as a component of “net gain on disposition of wholly owned and partially owned assets” on our consolidated statements of income. 

 

We evaluate our portfolio of marketable securities for impairment each reporting period.  For each of the securities in our portfolio with unrealized losses, we review the underlying cause of the decline in value and the estimated recovery period, as well as the severity and duration of the decline.  In our evaluation, we consider our ability and intent to hold these investments for a reasonable period of time sufficient for us to recover our cost basis.  We also evaluate the near-term prospects for each of these investments in relation to the severity and duration of the decline.  In the year ended December 31, 2012, we recognized a $224,937,000 impairment loss on our investment in J.C. Penney (see below).  No impairment losses were recognized in the years ended December 31, 2011 and 2010.

 

144

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

5.    Marketable Securities and Derivative Instruments - continued

 

Investment in J.C. Penney Company, Inc. (“J.C. Penney”) (NYSE: JCP)

 

We own 23,400,000 J.C. Penney common shares, or 10.7% of its outstanding common shares.  Below are the details of our investment.

 

We own 18,584,010 common shares at an average economic cost of $25.76 per share, or $478,691,000 in the aggregate.  Of these shares, 15,500,000 were acquired through the exercise of a call option in November 2010.  Upon the exercise of the call option, we recognized $112,537,000 of income, which increased the GAAP cost of these shares to $591,228,000.  As of December 31, 2012, based on J.C. Penney’s December 31, 2012 closing share price of $19.71 per share, these shares have an aggregate fair value of $366,291,000, or $224,937,000 below our GAAP basis.  We have concluded that our investment in J.C. Penney is “other-than-temporarily” impaired and have recorded a $224,937,000 impairment loss in the fourth quarter.  Our conclusion was based on the severity of the decline in the stock price and our inability to forecast a recovery in the near term.

  

We also own an economic interest in 4,815,990 J.C. Penney common shares through a forward contract at a weighted average strike price of $29.10 per share, or $140,138,000 in the aggregate.  The forward contract was amended on October 8, 2012, such that, among other things, the contract may be settled, at our election, in cash or common shares, in whole or in part, at any time prior to October 9, 2014, or any anniversary thereof, or in the event we were to receive a credit downgrade.  The forward contract strike price increases at an annual rate of LIBOR plus 95 basis points during the first two years of the contract and LIBOR plus 80 basis points thereafter.  The contract is a derivative instrument that does not qualify for hedge accounting treatment.  Gains and losses from the mark-to-market of the underlying common shares are recognized in “interest and other investment (loss) income, net” on our consolidated statements of income.  In the year ended December 31, 2012, we recognized a loss of $75,815,000 from the mark-to-market of the underlying common shares. In the years ended December 31, 2011 and 2010, we recognized gains of $12,984,000 and $17,616,000, respectively, from the mark-to-market of the underlying common shares.

  

We review our investment in J.C. Penney on a continuing basis.  Depending on various factors, including, without limitation, J.C. Penney’s financial position and strategic direction, actions taken by its board, price levels of its common shares, other investment opportunities available to us, market conditions and general economic and industry conditions, we may take such actions with respect to J.C. Penney as we deem appropriate, including (i) purchasing additional common shares or other financial instruments related to J.C. Penney, (ii) selling some or all of our beneficial or economic holdings, or (iii) engaging in hedging or similar transactions. 

 

 

Below is a summary of our marketable securities portfolio as of December 31, 2012 and 2011.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2012

 

As of December 31, 2011

 

 

 

 

 

 

 

 

GAAP

 

Unrealized

 

 

 

 

 

 

GAAP

 

Unrealized

 

 

 

Maturity

 

Fair Value

 

Cost

 

Gain

 

Maturity

 

Fair Value

 

Cost

 

Gain

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

J.C. Penney

 

n/a

 

$

366,291 

 

$

366,291 

 

$

 

n/a

 

$

653,228 

 

$

591,069 

 

$

62,159 

 

Other

 

n/a

 

 

31,897 

 

 

12,021 

 

 

19,876 

 

n/a

 

 

30,568 

 

 

14,585 

 

 

15,983 

Debt securities

 

n/a

 

 

 

 

 

 

 

04/13 - 10/18

 

 

57,525 

 

 

53,941 

 

 

3,584 

 

 

 

 

 

$

398,188 

 

$

378,312 

 

$

19,876 

 

 

 

$

741,321 

 

$

659,595 

 

$

81,726 

145

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

6.    Investments in Partially Owned Entities

 

 

The following is a summary of condensed combined financial information for all of our partially owned entities, including Toys “R” Us, Alexander’s, Inc., Lexington Realty Trust and LNR Property Corporation, as of December 31, 2012 and 2011 and for the years ended December 31, 2012, 2011 and 2010.

 

 

(Amounts in thousands)

 

 

 

 

December 31,

 

 

 

Balance Sheet:

 

 

 

 

2012 

 

2011 

 

 

 

 

Assets (1)

 

 

 

 

$

122,692,000 

 

$

153,861,000 

 

 

 

 

Liabilities (1)

 

 

 

 

 

117,064,000 

 

 

147,854,000 

 

 

 

 

Noncontrolling interests

 

 

 

 

 

88,000 

 

 

132,000 

 

 

 

 

Equity

 

 

 

 

 

5,540,000 

 

 

5,875,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

 

 

 

Income Statement:

 

2012 

 

2011 

 

2010 

 

 

 

 

Total revenue

 

$

15,119,000 

 

$

15,321,000 

 

$

14,962,000 

 

 

 

 

Net income (2)

 

 

1,091,000 

 

 

199,000 

 

 

63,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

2012 and 2011 include $97 billion and $127 billion, respectively, of assets and liabilities of LNR related to consolidated CMBS and CDO trusts which are non-recourse to LNR and its equity holders, including us.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

2012 includes a $600,000 net gain on sale of real estate.

 

 

 

Toys “R” Us (“Toys”)

As of December 31, 2012, we own 32.6% of Toys.  The business of Toys is highly seasonal.  Historically, Toys’ fourth quarter net income accounts for more than 80% of its fiscal year net income.  We account for our investment in Toys under the equity method and record our 32.6% share of Toys net income or loss on a one-quarter lag basis because Toys’ fiscal year ends on the Saturday nearest January 31, and our fiscal year ends on December 31. 

 

Since our acquisition in July 2005, the carrying amount of our investment has grown from $396,000,000 to $518,041,000 after we recognized our share of Toys third quarter net loss in our fourth quarter.  We estimate that the fair value of our investment is approximately $478,000,000 at December 31, 2012.  We have concluded that the $40,000,000 decline in the value of our investment is “other-than-temporary” based on, among other factors, compression of earnings multiples of comparable retailers and our inability to forecast a recovery in the near term.  Accordingly, we recognized a non-cash impairment loss of $40,000,000 in the fourth quarter. 

 

We will continue to assess the recoverability of our investment each quarter.  To the extent that the current facts don’t change, we would recognize a non-cash impairment loss equal to our share of Toys fourth quarter net income in our 2013 first quarter.

 

Below is a summary of Toys’ latest available financial information on a purchase accounting basis:

 

 

(Amounts in thousands)

 

 

 

 

 

 

Balance as of

 

 

 

Balance Sheet:

 

 

 

 

 

October 27, 2012

 

October 29, 2011

 

 

 

 

Assets

 

 

 

 

 

 

$

12,953,000 

 

$

13,221,000 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

11,190,000 

 

 

11,530,000 

 

 

 

 

Noncontrolling interests

 

 

 

 

 

 

 

44,000 

 

 

 

 

 

 

Toys “R” Us, Inc. equity

 

 

 

 

 

 

 

1,719,000 

 

 

1,691,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Twelve Months Ended

 

 

 

Income Statement:

 

October 27, 2012

 

October 29, 2011

October 30, 2010

 

 

 

 

Total revenues

 

 

 

$

13,698,000 

 

$

13,956,000 

 

$

13,749,000 

 

 

 

 

Net income attributable to Toys

 

 

 

 

138,000 

 

121,000 

 

 

189,000 

 

 

 

146

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

6.    Investments in Partially Owned Entities – continued

 

 

Alexander’s, Inc. (“Alexander’s”) (NYSE: ALX)

 

As of December 31, 2012, we own 1,654,068 Alexander’s commons shares, or approximately 32.4% of Alexander’s common equity.  We manage, lease and develop Alexander’s properties pursuant to the agreements described below which expire in March of each year and are automatically renewable.  As of December 31, 2012, Alexander’s owed us an aggregate of $46,445,000 pursuant to such agreements. 

 

On November 28, 2012, Alexander’s completed the sale of its Kings Plaza Regional Shopping Center located in Brooklyn, New York, for $751,000,000.  Upon completion of the sale, we recognized our share of the financial statement gain of $179,934,000.  Alexander’s distributed the taxable gain to its stockholders in December 2012 as a special long-term capital gain dividend, of which our share was $201,796,000, and we in turn paid a $1.00 per Vornado share special long-term capital gain dividend to our common shareholders in December 2012. 

 

As of December 31, 2012 the market value (“fair value” pursuant to ASC 820) of our investment in Alexander’s, based on Alexander’s December 31, 2012 closing share price of $330.80, was $547,166,000, or $376,153,000 in excess of the carrying amount on our consolidated balance sheet.  As of December 31, 2012, the carrying amount of our investment in Alexander’s, excluding amounts owed to us, exceeds our share of the equity in the net assets of Alexander’s by approximately $43,383,000.  The majority of this basis difference resulted from the excess of our purchase price for the Alexander’s common stock acquired over the book value of Alexander’s net assets.  Substantially all of this basis difference was allocated, based on our estimates of the fair values of Alexander’s assets and liabilities, to real estate (land and buildings).  We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives.  This depreciation is not material to our share of equity in Alexander’s net income.  The basis difference related to the land will be recognized upon disposition of our investment.

 

Management and Development Agreements

 

Effective December 1, 2012, as a result of the sale of the Kings Plaza Regional Shopping Center, the management and development agreement with Alexander’s was amended.  Pursuant to the amended agreement, we receive an annual fee for managing Alexander’s and all of its properties equal to the sum of (i) $2,800,000, (ii) 2% of the gross income from the Rego Park II Shopping Center, (iii) $0.50 per square foot of the tenant-occupied office and retail space at 731 Lexington Avenue, and (iv) $264,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue.

 

In addition, we are entitled to a development fee of 6% of development costs, as defined.

 

Leasing Agreements

 

We provide Alexander’s with leasing services for a fee of 3% of rent for the first ten years of a lease term, 2% of rent for the eleventh through twentieth year of a lease term and 1% of rent for the twenty-first through thirtieth year of a lease term, subject to the payment of rents by Alexander’s tenants.  In the event third-party real estate brokers are used, our fee increases by 1% and we are responsible for the fees to the third-parties.  We are also entitled to a commission upon the sale of any of Alexander’s assets equal to 3% of gross proceeds, as defined, for asset sales less than $50,000,000, or 1% of gross proceeds, as defined, for asset sales of $50,000,000 or more.  The total of these amounts is payable to us in annual installments in an amount not to exceed $4,000,000 with interest on the unpaid balance at one-year LIBOR plus 1.0% (2.13% at December 31, 2012).  As a result of the sale of Kings Plaza, we earned a $6,423,000 sales commission, which is net of a third party broker fee.

 

Other Agreements

 

Building Maintenance Services (“BMS”), our wholly-owned subsidiary, supervises the cleaning, engineering and security services at Alexander’s 731 Lexington Avenue property for an annual fee of the costs for such services plus 6%.  During the years ended December 31, 2012, 2011 and 2010, we recognized $2,934,000, $2,970,000 and $2,775,000 of income, respectively, under these agreements.

 

147

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

6.    Investments in Partially Owned Entities - continued

Below is a summary of Alexander’s latest available financial information:

 

 

(Amounts in thousands)

 

 

 

 

 

Balance as of December 31,

 

 

 

Balance Sheet:

 

 

 

 

 

2012

 

2011

 

 

 

 

Assets

 

 

 

 

 

$

1,482,000 

 

$

1,771,000 

 

 

 

 

Liabilities

 

 

 

 

 

 

1,150,000 

 

 

1,408,000 

 

 

 

 

Noncontrolling interests

 

 

 

 

 

 

 

 

4,000 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

332,000 

 

 

359,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

 

 

 

Income Statement:

 

2012

 

2011

 

2010

 

 

 

 

Total revenues

 

 

$

191,000 

 

$

185,000 

 

$

174,000 

 

 

 

 

Net income attributable to Alexander’s (1)

 

 

 

674,000 

 

 

79,000 

 

 

66,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

2012 includes a $600,000 net gain on sale of real estate.

 

 

 

 

 

 

 

Lexington Realty Trust (“Lexington”) (NYSE: LXP)

 

As of December 31, 2012, we own 18,468,969 Lexington common shares, or approximately 10.5% of Lexington’s common equity.  We account for our investment in Lexington on the equity method because we believe we have the ability to exercise significant influence over Lexington’s operating and financial policies, based on, among other factors, our representation on Lexington’s Board of Trustees and the level of our ownership in Lexington as compared to other shareholders.  We record our pro rata share of Lexington’s net income or loss on a one-quarter lag basis because we file our consolidated financial statements on Form 10-K and 10-Q prior to the time that Lexington files its financial statements. 

 

Based on Lexington’s December 31, 2012 closing share price of $10.45, the market value (“fair value” pursuant to ASC 820) of our investment in Lexington was $193,001,000, or $117,459,000 in excess of the December 31, 2012 carrying amount on our consolidated balance sheet.  As of December 31, 2012, the carrying amount of our investment in Lexington was less than our share of the equity in the net assets of Lexington by approximately $31,427,000.   This basis difference resulted primarily from $107,882,000 of non-cash impairment charges recognized during 2008, partially offset by purchase accounting for our acquisition of an additional 8,000,000 common shares of Lexington in October 2008, of which the majority relates to our estimate of the fair values of Lexington’s real estate (land and buildings) as compared to the carrying amounts in Lexington’s consolidated financial statements.  The basis difference related to the buildings is being amortized over their estimated useful lives as an adjustment to our equity in net income or loss of Lexington.  This amortization is not material to our share of equity in Lexington’s net income or loss.  The basis difference attributable to the land will be recognized upon disposition of our investment. 

 

Below is a summary of Lexington’s latest available financial information:

 

 

(Amounts in thousands)

 

 

 

 

 

 

Balance as of September 30,

 

 

 

Balance Sheet:

 

 

 

 

 

 

2012

 

2011

 

 

 

 

Assets

 

 

 

 

 

$

3,386,000 

 

$

3,164,000 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

2,211,000 

 

 

1,888,000 

 

 

 

 

Noncontrolling interests

 

 

 

 

 

 

 

27,000 

 

 

59,000 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

1,148,000 

 

 

1,217,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Twelve Months Ended September 30,

 

 

 

Income Statement:

 

 

2012 

 

2011 

 

2010 

 

 

 

 

Total revenues

 

 

 

$

333,000 

 

$

315,000 

 

$

330,000 

 

 

 

 

Net income (loss) attributable to Lexington

 

 

 

 

196,000 

 

(81,000)

 

 

(90,000)

 

 

 

148

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

6.    Investments in Partially Owned Entities – continued

 

 

LNR Property Corporation (“LNR”)

 

On January 24, 2013, LNR entered into a definitive agreement to be sold.  We own 26.2% of LNR and expect to receive net proceeds of $241,000,000.  The sale, which is subject to customary closing conditions, is expected to be completed in the second quarter of 2013.

As of December 31, 2012, we own a 26.2% equity interest in LNR.  We account for our investment in LNR under the equity method and record our 26.2% share of LNR’s net income or loss on a one-quarter lag basis because we file our consolidated financial statements on Form 10-K and 10-Q prior to receiving LNR’s consolidated financial statements.

LNR consolidates certain commercial mortgage-backed securities (“CMBS”) and Collateralized Debt Obligation (“CDO”) trusts for which it is the primary beneficiary.  The assets of these trusts (primarily commercial mortgage loans), which aggregate approximately $97 billion as of September 30, 2012, are the sole source of repayment of the related liabilities, which are non-recourse to LNR and its equity holders, including us.  Changes in the fair value of these assets each period are offset by changes in the fair value of the related liabilities through LNR’s consolidated income statement.  As of December 31, 2012, the carrying amount of our investment in LNR does not materially differ from our share of LNR’s equity.

 

 

Below is a summary of LNR’s latest available financial information:

 

 

(Amounts in thousands)

 

 

 

 

Balance as of September 30,

 

 

 

Balance Sheet:

 

 

 

 

2012

 

2011

 

 

 

 

Assets

 

 

 

 

$

98,530,000 

 

$

128,536,000 

 

 

 

 

Liabilities

 

 

 

 

 

97,643,000 

 

 

127,809,000 

 

 

 

 

Noncontrolling interests

 

 

 

 

 

8,000 

 

 

55,000 

 

 

 

 

LNR Property Corporation equity

 

 

 

 

 

879,000 

 

 

672,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Twelve

 

For the Twelve

 

For the Period

 

 

 

 

 

 

Months Ended

 

Months Ended

 

July 29, 2010 to

 

 

 

Income Statement:

 

September 30, 2012

 

September 30, 2011

 

September 30, 2010

 

 

 

 

Total revenue

 

$

238,000 

 

$

208,000 

 

$

23,000 

 

 

 

 

Net income attributable to LNR

 

 

266,000 

 

 

224,000 

 

 

8,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

149

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

6.    Investments in Partially Owned Entities - continued

 

 

Below is a schedule of our investments in partially owned entities as of December 31, 2012 and 2011. 

 

 

 

 

 

 

 

 

 

Percentage

 

 

 

 

 

 

 

(Amounts in thousands)

 

Ownership at

 

As of December 31,

 

Investments:

 

December 31, 2012

 

2012 

 

2011 

 

Toys

 

 

 

32.6 % (1)

 

$

478,041 

 

$

506,809 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alexander’s

 

 

 

32.4 %

 

$

171,013 

 

$

189,775 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lexington

 

 

 

10.5 % (2)

 

 

75,542 

 

 

57,402 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LNR

 

 

 

26.2 %

 

 

224,724 

 

 

174,408 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

India real estate ventures

 

 

 

4.0%-36.5%

 

 

95,516 

 

 

80,499 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partially owned office buildings:

 

 

 

 

 

 

 

 

 

 

 

 

280 Park Avenue

 

 

 

49.5 %

 

 

197,516 

 

 

184,516 

 

 

Rosslyn Plaza

 

 

 

43.7%-50.4%

 

 

62,627 

 

 

53,333 

 

 

West 57th Street properties

 

 

 

50.0 %

 

 

57,033 

 

 

58,529 

 

 

One Park Avenue

 

 

 

30.3 %

 

 

50,509 

 

 

47,568 

 

 

666 Fifth Avenue Office Condominium

 

 

 

49.5 %

 

 

35,527 

 

 

23,655 

 

 

330 Madison Avenue

 

 

 

25.0 %

 

 

30,277 

 

 

20,353 

 

 

Warner Building

 

 

 

55.0 %

 

 

8,775 

 

 

2,715 

 

 

Fairfax Square

 

 

 

20.0 %

 

 

5,368 

 

 

6,343 

 

 

1101 17th Street

 

 

 

55.0 %

 

 

 

 

20,407 

 

 

Other partially owned office buildings

 

 

 

Various

 

 

9,315 

 

 

11,547 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other investments:

 

 

 

 

 

 

 

 

 

 

 

 

Downtown Crossing, Boston

 

 

 

50.0 %

 

 

48,122 

 

 

46,691 

 

 

Monmouth Mall

 

 

 

50.0 %

 

 

7,205 

 

 

7,536 

 

 

Verde Realty Operating Partnership (3)

 

 

 

n/a

 

 

 

 

59,801 

 

 

Independence Plaza Partnership (4)

 

 

 

n/a

 

 

 

 

48,511 

 

 

Other investments (5)

 

 

 

Various

 

 

147,187 

 

 

140,061 

 

 

 

 

 

 

 

$

1,226,256 

 

$

1,233,650 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

___________________________________

 

 

 

 

 

 

 

 

 

 

 

(1)

 

 

32.7% at December 31, 2011.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

 

12.0% at December 31, 2011.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

 

 

In 2012, we converted our 2,015,151 units in Verde Realty Operating Partnership into 2,015,151 common shares of Verde Realty ("Verde"), which we sold for $13.85 per share, or $27,910 in the aggregate. Accordingly, we recognized a $4,936 impairment loss in the third quarter, based on the difference between the carrying amount of the investment and the cash received. We have reclassified the $25,000 of convertible senior debentures that we continue to own to "other assets" on our consolidated balance sheets.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

 

 

On December 21, 2012, we acquired a 58.75% interest in Independence Plaza and began to consolidate the accounts of the property into our consolidated financial statements from the date of acquisition (see page 142 for details).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)

 

 

Includes interests in 85 10th Avenue, Farley Project, Suffolk Downs, Dune Capital L.P., Fashion Centre Mall and others.

 

150

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

6.    Investments in Partially Owned Entities – continued

 

Below is a schedule of income from partially owned entities for the years ended December 31, 2012, 2011 and 2010.

 

 

 

 

 

 

Percentage

 

 

 

 

 

 

(Amounts in thousands)

Ownership at

 

For the Year Ended December 31,

 

Our Share of Net Income (Loss):

December 31, 2012

 

2012 

 

2011 

 

2010 

 

Toys:

 

32.6 %

 

 

 

 

 

 

 

 

 

 

 

Equity in net income before income taxes

 

 

 

$

28,638 

 

$

38,460 

 

$

16,401 

 

 

Income tax benefit

 

 

 

 

16,629 

 

 

1,132 

 

 

45,418 

 

 

Equity in net income

 

 

 

 

45,267 

 

 

39,592 

 

 

61,819 

 

 

Non-cash impairment loss (see page 146 for details)

 

 

 

 

(40,000)

 

 

 

 

 

 

Management fees

 

 

 

 

9,592 

 

 

8,948 

 

 

9,805 

 

 

 

 

 

 

 

 

 

 

$

14,859 

$

48,540 

 

$

71,624 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alexander's:

 

32.4 %

 

 

 

 

 

 

 

 

 

 

 

Equity in net income

 

 

 

$

24,709 

 

$

25,013 

 

$

20,059 

 

 

Management, leasing and development fees (1)

 

 

 

 

13,748 

 

 

7,417 

 

 

7,556 

 

 

Gain on sale of real estate

 

 

 

 

179,934 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

218,391 

 

 

32,430 

 

 

27,615 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lexington:

 

10.5 %

 

 

 

 

 

 

 

 

 

 

 

Equity in net (loss)

 

 

 

 

(23)

 

 

(1,409)

 

 

(2,692)

 

 

Net gain resulting from Lexington's stock issuance and asset acquisition

 

 

 

 

28,763 

 

 

9,760 

 

 

13,710 

 

 

 

 

 

 

 

 

 

 

 

28,740 

 

 

8,351 

 

 

11,018 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LNR (acquired in July 2010):

 

26.2 %

 

 

 

 

 

 

 

 

 

 

 

Equity in net income

 

 

 

 

66,270 

 

 

31,409 

 

 

1,973 

 

 

Income tax benefit, assets sales and tax settlement gains

 

 

 

 

 

 

27,377 

 

 

 

 

 

 

 

 

 

66,270 

 

 

58,786 

 

 

1,973 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

India real estate ventures

 

4.0%-36.5%

 

 

 

 

 

 

 

 

 

 

Equity in net (loss)

 

 

 

 

(5,008)

 

 

(1,087)

 

 

2,581 

 

 

Impairment loss

 

 

 

 

 

 

(13,794)

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,008)

 

 

(14,881)

 

 

2,581 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partially owned office buildings:

 

 

 

 

 

 

 

 

 

 

 

 

 

Warner Building:

 

55.0 %

 

 

 

 

 

 

 

 

 

 

 

 

Equity in net (loss)

 

 

 

 

(10,186)

 

 

(9,853)

 

 

(344)

 

 

 

Straight-line reserves and write-off of tenant improvements

 

 

 

 

 

 

(9,022)

 

 

 

 

 

 

 

 

 

 

 

(10,186)

 

 

(18,875)

 

 

(344)

 

 

280 Park Avenue (acquired in May 2011)

 

49.5 %

 

 

(11,510)

 

 

(18,079)

 

 

 

 

666 Fifth Avenue Office Condominium (acquired in December 2011)

 

49.5 %

 

 

7,009 

 

 

198 

 

 

 

 

330 Madison Avenue

 

25.0 %

 

 

3,609 

 

 

2,126 

 

 

2,059 

 

 

1101 17th Street

 

55.0 %

 

 

2,576 

 

 

2,740 

 

 

416 

 

One Park Avenue (acquired in March 2011)

 

30.3 %

 

 

1,123 

 

 

(1,142)

 

 

 

 

West 57th Street properties

 

50.0 %

 

 

1,014 

 

 

876 

 

 

(10,990)

 

 

Rosslyn Plaza

 

43.7%-50.4%

 

 

822 

 

 

2,193 

 

 

(2,419)

 

 

Fairfax Square

 

20.0 %

 

 

(132)

 

 

(42)

 

 

(28)

 

 

Other partially owned office buildings

 

Various

 

 

1,905 

 

 

7,735 

 

 

2,405 

 

 

 

 

 

 

 

(3,770)

 

 

(22,270)

 

 

(8,901)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Independence Plaza Partnership (acquired in June 2011) (2)

 

n/a

 

 

111,865 

 

 

2,457 

 

 

 

 

Verde Realty Operating Partnership (3)

 

n/a

 

 

(5,703)

 

 

1,661 

 

 

(537)

 

 

Monmouth Mall

 

50.0 %

 

 

1,429 

 

 

2,556 

 

 

1,952 

 

 

Downtown Crossing, Boston

 

50.0 %

 

 

(1,309)

 

 

(1,461)

 

 

(1,155)

 

 

Other investments (4)

 

Various

 

 

(2,638)

 

 

2,443 

 

 

(13,677)

 

 

 

 

 

 

 

103,644 

 

 

7,656 

 

 

(13,417)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

408,267 

$

70,072 

 

$

20,869 

___________________________________

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

 

2012 includes $6,423 of commissions in connection with the sale of real estate.

(2)

 

 

2012 includes $105,366 of income comprised of (i) $60,396 from the accelerated amortization of discount on investment in subordinated debt of the property and (ii) a $44,970 purchase price fair value adjustment from the exercise of a warrant to acquire 25% of the equity interest in the property (see page 142 for details).

(3)

 

 

2012 includes a $4,936 impairment loss (see note 3 on page 150).

(4)

 

 

2011 includes a $12,525 net gain from Suffolk Downs' sale of a partial interest.

 

151

 


 
 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

6.    Investments in Partially Owned Entities - continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Below is a summary of the debt of our partially owned entities as of December 31, 2012 and 2011, none of which is recourse to us.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage

 

 

 

Interest

 

100% of

 

 

 

Ownership at

 

 

 

Rate at

 

Partially Owned Entities’ Debt at

(Amounts in thousands)

December 31,

 

 

 

December 31,

 

December 31,

 

December 31,

 

2012 

 

Maturity

 

2012 

 

2012 

 

2011 

Toys:

32.6 % (1)

 

 

 

 

 

 

 

 

 

 

 

Notes, loans and mortgages payable

 

 

2013-2021

 

7.34 %

 

$

5,683,733 

 

$

6,047,521 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alexander's:

32.4 %

 

 

 

 

 

 

 

 

 

 

 

Mortgages payable

 

 

2013-2018

 

3.87 %

 

$

1,065,916 

 

$

1,330,932 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lexington:

10.5 % (2)

 

 

 

 

 

 

 

 

 

 

 

Mortgages payable

 

 

2015-2037

 

5.29 %

 

$

1,994,179 

 

$

1,712,750 

 

 

 

 

 

 

 

 

 

 

 

 

 

LNR:

26.2 %

 

 

 

 

 

 

 

 

 

 

 

Mortgages payable

 

 

2013-2031

 

4.62 %

 

$

309,787 

 

$

353,504 

 

Liabilities of consolidated CMBS and CDO trusts

 

 

n/a

 

5.40 %

 

 

97,211,734 

 

 

127,348,336 

 

 

 

 

 

 

 

 

 

$

97,521,521 

 

$

127,701,840 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partially owned office buildings:

 

 

 

 

 

 

 

 

 

 

 

 

666 Fifth Avenue Office Condominium mortgage

49.5 %

 

02/19

 

6.76 %

 

$

1,109,700 

 

$

1,035,884 

 

 

payable

 

 

 

 

 

 

 

 

 

 

 

 

280 Park Avenue mortgage payable

49.5 %

 

06/16

 

6.65 %

 

 

738,228 

 

 

737,678 

 

Warner Building mortgage payable

55.0 %

 

05/16

 

6.26 %

 

 

292,700 

 

 

292,700 

 

One Park Avenue mortgage payable

30.3 %

 

03/16

 

5.00 %

 

 

250,000 

 

 

250,000 

 

330 Madison Avenue mortgage payable

25.0 %

 

06/15

 

1.71 %

 

 

150,000 

 

 

150,000 

 

Fairfax Square mortgage payable

20.0 %

 

12/14

 

7.00 %

 

 

70,127 

 

 

70,974 

 

1101 17th Street mortgage payable

55.0 %

 

01/18

 

1.46 %

 

 

31,000 

 

 

 

West 57th Street properties mortgages payable

50.0 %

 

02/14

 

4.94 %

 

 

20,434 

 

 

21,864 

 

Rosslyn Plaza mortgage payable

43.7%-50.4%

 

01/12

 

n/a

 

 

 

 

56,680 

 

Other

Various

 

Various

 

6.37 %

 

 

69,704 

 

 

70,230 

 

 

 

 

 

 

 

 

 

$

2,731,893 

 

$

2,686,010 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

India Real Estate Ventures:

 

 

 

 

 

 

 

 

 

 

 

 

TCG Urban Infrastructure Holdings mortgages

 

 

 

 

 

 

 

 

 

 

 

 

 

payable

25.0 %

 

2013-2022

 

13.22 %

 

$

236,579 

 

$

226,534 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other:

 

 

 

 

 

 

 

 

 

 

 

 

Monmouth Mall mortgage payable

50.0 %

 

09/15

 

5.44 %

 

$

159,896 

 

$

162,153 

 

Verde Realty Operating Partnership mortgages

 

 

 

 

 

 

 

 

 

 

 

 

 

payable

n/a

 

n/a

 

n/a

 

 

 

 

340,378 

 

Other (3)

Various

 

Various

 

5.02 %

 

 

990,647 

 

 

992,872 

 

 

 

 

 

 

 

 

 

$

1,150,543 

 

$

1,495,403 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

32.7% at December 31, 2011.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

12.0% at December 31, 2011.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

 

Includes interests in Suffolk Downs, Fashion Centre Mall and others.

 

         Based on our ownership interest in the partially owned entities above, our pro rata share of the debt of these partially owned entities, was $29,443,128,000 and $37,531,298,000 as of December 31, 2012 and 2011, respectively.  Excluding our pro rata share of LNR’s liabilities related to consolidated CMBS and CDO trusts, which are non-recourse to LNR and its equity holders, including us, our pro rata share of partially owned entities debt was $3,998,929,000 and $4,199,145,000 at December 31, 2012 and 2011, respectively.

152

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

7.    Mortgage and Mezzanine Loans Receivable

 

On October 19, 2012, we acquired a 25% participation in a $475,000,000 first mortgage and mezzanine loan for the acquisition and redevelopment of a 10-story retail building at 701 Seventh Avenue in Times Square.  The loan has an interest rate of LIBOR plus 10.2%, with a LIBOR floor of 1.0%.  Of the $475,000,000, we have funded $93,750,000, representing our 25% share of the $375,000,000 that has been funded.  $25,000,000, our 25% share of the remaining $100,000,000, will be funded during the development of the property.

 

As of December 31, 2012 and 2011, the carrying amount of mortgage and mezzanine loans receivable was $225,359,000 and $133,948,000, respectively.  These loans have a weighted average interest rate of 10.28% and maturities ranging from August 2014 to May 2016.

 

 

8.    Discontinued Operations

     

2012 Activity

 

Merchandise Mart

 

On January 6, 2012, we completed the sale of 350 West Mart Center, a 1.2 million square foot office building in Chicago, Illinois, for $228,000,000 in cash, which resulted in a net gain of $54,911,000.

 

On June 22, 2012, we completed the sale of L.A. Mart, a 784,000 square foot showroom building in Los Angeles, California, for $53,000,000, of which $18,000,000 was cash and $35,000,000 was nine-month seller financing at 6.0%, which was paid on December 28, 2012.

 

On July 26, 2012, we completed the sale of the Washington Design Center, a 393,000 square foot showroom building in Washington, DC and the Canadian Trade Shows, for an aggregate of $103,000,000 in cash.  The sale of the Canadian Trade Shows resulted in an after-tax net gain of $19,657,000.

 

On December 31, 2012, we completed the sale of the Boston Design Center, a 554,000 square foot showroom building in Boston, Massachusetts, for $72,400,000 in cash, which resulted in a net gain of $5,252,000.

 

Washington, DC

 

On July 26, 2012, we completed the sale of 409 Third Street S.W., a 409,000 square foot office building in Washington, DC, for $200,000,000 in cash, which resulted in a net gain of $126,621,000.  This building is contiguous to the Washington Design Center and was sold to the same purchaser.

 

On November 7, 2012, we completed the sale of three office buildings (“Reston Executive”) located in suburban Fairfax County, Virginia, containing 494,000 square feet for $126,250,000, which resulted in a net gain of $36,746,000.

 

Retail Properties

 

On February 13, 2013, we entered into an agreement to sell the Plant, a power strip shopping center in San Jose, California, for $203,000,000.  The sale will result in net proceeds of approximately $93,000,000 after repaying the existing loan and closing costs, and a financial statement gain of approximately $33,000,000.  The sale, which is subject to customary closing conditions, is expected to be completed by the second quarter of 2013.

 

On January 24, 2013, we completed the sale of the Green Acres Mall located in Valley Stream, New York, for $500,000,000, which resulted in net proceeds of $185,000,000, after repaying the existing loan and closing costs.  The financial statement gain of  $205,000,000 will be recognized in the first quarter of 2013 and the tax gain of $304,000,000 has been deferred as part of a like-kind exchange.

 

In 2012, we sold 12 non-core retail properties in separate transactions, for an aggregate of $157,000,000 in cash, which resulted in a net gain aggregating $22,266,000.  In addition, we have entered into an agreement to sell a building on Market Street, Philadelphia, which is part of the Gallery at Market East for $60,000,000, which will result in a net gain of approximately $35,000,000.  The sale, which is subject to customary closing conditions, is expected to be completed in the first quarter of 2013.

 

153

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

8.    Discontinued Operations- continued

 

2011 Activity

 

During 2011, we completed the disposition of the High Point Complex in North Carolina, which resulted in an $83,907,000 net gain on extinguishment of debt and sold three non-core retail properties and two office buildings in Washington, DC for an aggregate of $168,000,000 in cash, which resulted in a net gain aggregating $51,623,000.

 

2010 Activity

 

During 2010, we completed the disposition of the Cannery, a retail property in California, and sold the fee interest in land located in Arlington County, Virginia, known as Pentagon Row, to the tenants for an aggregate of $14,992,000 in cash. 

  

 

In accordance with the provisions of ASC 360, Property, Plant, and Equipment , we have reclassified the revenues and expenses of all the properties discussed above, as well as certain other properties that are currently held for sale to “income from discontinued operations” and the related assets and liabilities to “assets related to discontinued operations” and “liabilities related to discontinued operations” for all of the periods presented in the accompanying financial statements.  The net gains resulting from the sale of the properties below are included in “income from discontinued operations” on our consolidated statements of income. 

 

The tables below set forth the assets and liabilities related to discontinued operations at December 31, 2012 and 2011, and their combined results of operations for the years ended December 31, 2012, 2011 and 2010.

 

 

 

 

 

Assets Related to

 

Liabilities Related to

 

 

(Amounts in thousands)

 

Discontinued Operations as of

 

Discontinued Operations as of

 

 

 

 

 

December 31,

 

December 31,

 

 

 

 

 

2012 

 

2011 

 

2012 

 

2011 

 

 

Retail

 

$

340,977 

 

$

474,402 

 

$

315,448 

 

$

339,724 

 

 

Washington, DC

 

 

 

 

152,568 

 

 

 

 

93,000 

 

 

Merchandise Mart

 

 

7,759 

 

 

385,381 

 

 

 

 

74,236 

 

 

Other

 

 

25,740 

 

 

37,292 

 

 

 

 

 

 

Total

 

$

374,476 

 

$

1,049,643 

 

$

315,448 

 

$

506,960 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

 

For the Year Ended December 31,

 

 

 

 

2012 

 

2011 

 

2010 

 

 

Total revenues

 

$

147,404 

 

$

230,314 

 

$

267,008 

 

 

Total expenses

 

 

102,479 

 

 

175,930 

 

 

227,626 

 

 

 

 

 

44,925 

 

 

54,384 

 

 

39,382 

 

 

Net gains on sale of real estate

 

 

245,799 

 

 

51,623 

 

 

2,506 

 

 

Gain on sale of Canadian Trade Shows, net of $11,448 of

 

 

 

 

 

 

 

 

 

 

 

 

income taxes

 

 

19,657 

 

 

 

 

 

 

Impairment losses and litigation loss accrual

 

 

(24,439)

 

 

(28,799)

 

 

(35,056)

 

 

Net gain on extinguishment of High Point debt

 

 

 

 

83,907 

 

 

 

 

Income from discontinued operations

 

$

285,942 

 

$

161,115 

 

$

6,832 

 

154

 


 
 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

9.    Identified Intangible Assets and Liabilities

The following summarizes our identified intangible assets (primarily acquired above-market leases) and liabilities (primarily acquired below-market leases) as of December 31, 2012 and 2011.

 

 

Balance as of

 

 

 

December 31,

 

December 31,

 

 

(Amounts in thousands)

2012 

 

2011 

 

 

Identified intangible assets:

 

 

 

 

 

 

 

Gross amount

$

726,981 

 

$

631,162 

 

 

Accumulated amortization

 

(356,379)

 

 

(343,318)

 

 

Net

$

370,602 

 

$

287,844 

 

 

Identified intangible liabilities (included in deferred revenue):

 

 

 

 

 

 

 

Gross amount

$

805,811 

 

$

838,103 

 

 

Accumulated amortization

 

(342,379)

 

 

(371,360)

 

 

Net

$

463,432 

 

$

466,743 

 

 

Amortization of acquired below-market leases, net of acquired above-market leases resulted in an increase to rental income of $54,193,000, $62,105,000 and $65,373,000 for the years ended December 31, 2012, 2011 and 2010, respectively.  Estimated annual amortization of acquired below-market leases, net of acquired above-market leases for each of the five succeeding years commencing January 1, 2013 is as follows:

 

 

(Amounts in thousands)

 

 

 

 

2013 

$

45,098 

 

 

2014 

 

39,304 

 

 

2015 

 

36,533 

 

 

2016 

 

34,088 

 

 

2017 

 

28,610 

 

 

Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was $51,244,000, $54,126,000 and $56,949,000 for the years ended December 31, 2012, 2011 and 2010, respectively.  Estimated annual amortization of all other identified intangible assets including acquired in-place leases, customer relationships, and third party contracts for each of the five succeeding years commencing January 1, 2013 is as follows:

 

 

(Amounts in thousands)

 

 

 

 

2013 

$

47,959 

 

 

2014 

 

29,785 

 

 

2015 

 

24,812 

 

 

2016 

 

22,300 

 

 

2017 

 

19,735 

 

 

We are a tenant under ground leases at certain properties.  Amortization of these acquired below-market leases, net of above-market leases resulted in an increase to rent expense of $1,712,000, $1,377,000 and $2,157,000 for the years ended December 31, 2012, 2011 and 2010, respectively.  Estimated annual amortization of these below-market leases, net of above-market leases for each of the five succeeding years commencing January 1, 2013 is as follows:

 

 

(Amounts in thousands)

 

 

 

 

2013 

$

2,933 

 

 

2014 

 

2,918 

 

 

2015 

 

2,918 

 

 

2016 

 

2,918 

 

 

2017 

 

2,918 

 

155

 


 
 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

10.    Debt

 

The following is a summary of our debt:

 

 

 

 

Interest

 

 

 

 

 

 

 

(Amounts in thousands)

 

 

Rate at

 

Balance at

 

 

 

 

 

 

December 31,

 

December 31,

 

December 31,

 

Mortgages payable:

Maturity (1)

 

2012 

 

2012 

 

2011 

 

Fixed rate:

 

 

 

 

 

 

 

 

 

 

New York:

 

 

 

 

 

 

 

 

 

 

 

 

1290 Avenue of the Americas (70% owned) (2)

11/22

 

3.34 %

 

$

950,000 

 

$

413,111 

 

 

 

Two Penn Plaza

03/18

 

5.13 %

 

 

425,000 

 

 

425,000 

 

 

 

770 Broadway

03/16

 

5.65 %

 

 

353,000 

 

 

353,000 

 

 

 

888 Seventh Avenue

01/16

 

5.71 %

 

 

318,554 

 

 

318,554 

 

 

 

350 Park Avenue (3)

01/17

 

3.75 %

 

 

300,000 

 

 

430,000 

 

 

 

909 Third Avenue

04/15

 

5.64 %

 

 

199,198 

 

 

203,217 

 

 

 

828-850 Madison Avenue Condominium - retail

06/18

 

5.29 %

 

 

80,000 

 

 

80,000 

 

 

 

510 5th Avenue - retail

01/16

 

5.60 %

 

 

31,253 

 

 

31,732 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, DC:

 

 

 

 

 

 

 

 

 

 

 

 

Skyline Properties (4)

02/17

 

5.74 %

 

 

704,957 

 

 

678,000 

 

 

 

River House Apartments

04/15

 

5.43 %

 

 

195,546 

 

 

195,546 

 

 

 

2101 L Street (5)

08/24

 

3.97 %

 

 

150,000 

 

 

 

 

 

2121 Crystal Drive

03/23

 

5.51 %

 

 

150,000 

 

 

150,000 

 

 

 

Bowen Building

06/16

 

6.14 %

 

 

115,022 

 

 

115,022 

 

 

 

1215 Clark Street, 200 12th Street and 251 18th Street

01/25

 

7.09 %

 

 

105,724 

 

 

108,423 

 

 

 

West End 25

06/21

 

4.88 %

 

 

101,671 

 

 

101,671 

 

 

 

Universal Buildings

04/14

 

6.50 %

 

 

93,226 

 

 

98,239 

 

 

 

2011 Crystal Drive

08/17

 

7.30 %

 

 

79,624 

 

 

80,486 

 

 

 

1550 and 1750 Crystal Drive

11/14

 

7.08 %

 

 

74,053 

 

 

76,624 

 

 

 

220 20th Street

02/18

 

4.61 %

 

 

73,939 

 

 

75,037 

 

 

 

2231 Crystal Drive

08/13

 

7.08 %

 

 

41,298 

 

 

43,819 

 

 

 

1225 Clark Street

08/13

 

7.08 %

 

 

24,834 

 

 

26,211 

 

 

 

1235 Clark Street

n/a

 

n/a

 

 

 

 

51,309 

 

 

 

1750 Pennsylvania Avenue

n/a

 

n/a

 

 

 

 

44,330 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail Properties:

 

 

 

 

 

 

 

 

 

 

 

 

Cross-collateralized mortgages on 40 strip shopping centers

09/20

 

4.23 %

 

 

573,180 

 

 

585,398 

 

 

 

Montehiedra Town Center

07/16

 

6.04 %

 

 

120,000 

 

 

120,000 

 

 

 

Broadway Mall

07/13

 

5.30 %

 

 

85,180 

 

 

87,750 

 

 

 

North Bergen (Tonnelle Avenue)

01/18

 

4.59 %

 

 

75,000 

 

 

75,000 

 

 

 

Las Catalinas Mall

11/13

 

6.97 %

 

 

54,101 

 

 

55,912 

 

 

 

Other

06/14-05/36

 

5.12%-7.30%

 

 

86,641 

 

 

95,541 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise Mart:

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise Mart

12/16

 

5.57 %

 

 

550,000 

 

 

550,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other:

 

 

 

 

 

 

 

 

 

 

 

 

555 California Street (70% owned)

09/21

 

5.10 %

 

 

600,000 

 

 

600,000 

 

 

 

Borgata Land

02/21

 

5.14 %

 

 

60,000 

 

 

60,000 

 

Total fixed rate mortgages payable

 

 

5.07 %

 

$

6,771,001 

 

$

6,328,932 

 

___________________

 

 

 

 

 

 

 

 

 

 

 

See notes on page 158.

 

 

 

 

 

 

 

 

 

 

156

 


 
 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

10.    Debt - continued

 

 

 

 

 

 

 

 

Interest

 

 

 

 

 

 

 

 

(Amounts in thousands)

 

 

 

Rate at

 

Balance at

 

 

 

 

 

 

Spread over

 

December 31,

 

December 31,

 

December 31,

 

 

Mortgages payable:

Maturity (1)

 

LIBOR

 

2012 

 

2012 

 

2011 

 

 

Variable rate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independence Plaza (58.75% owned)

08/13

 

L+92 

 

1.15 %

 

$

334,225 

 

$

 

 

 

 

Eleven Penn Plaza

01/19

 

L+235 

 

2.56 %

 

 

330,000 

 

 

330,000 

 

 

 

 

100 West 33rd Street - office and retail (6)

03/17

 

L+250 

 

2.71 %

 

 

325,000 

 

 

232,000 

 

 

 

 

4 Union Square South - retail (7)

11/19

 

L+215 

 

2.36 %

 

 

120,000 

 

 

75,000 

 

 

 

 

435 Seventh Avenue (8)

08/19

 

L+225 

 

2.46 %

 

 

98,000 

 

 

51,353 

 

 

 

 

866 UN Plaza

05/16

 

L+125 

 

1.46 %

 

 

44,978 

 

 

44,978 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, DC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

River House Apartments

04/18

 

n/a (9)

 

1.63 %

 

 

64,000 

 

 

64,000 

 

 

 

 

2200/2300 Clarendon Boulevard

01/15

 

L+75 

 

0.96 %

 

 

47,353 

 

 

53,344 

 

 

 

 

1730 M and 1150 17th Street

06/14

 

L+140 

 

1.61 %

 

 

43,581 

 

 

43,581 

 

 

 

 

2101 L Street (5)

n/a

 

n/a

 

n/a

 

 

 

 

150,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail Properties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bergen Town Center

03/13

 

L+150 

 

1.71 %

 

 

282,312 

 

 

283,590 

 

 

 

 

San Jose Strip Center

03/13

 

L+400 

 

4.25 %

 

 

104,856 

 

 

112,476 

 

 

 

 

Cross-collateralized mortgages on 40 strip

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

shopping centers (10)

09/20

 

L+136  (10)

 

2.36 %

 

 

60,000 

 

 

60,000 

 

 

 

 

Beverly Connection

n/a

 

n/a

 

n/a

 

 

 

 

100,000 

 

 

 

 

Other

03/13

 

L+375 

 

3.97 %

 

 

19,126 

 

 

19,876 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

220 Central Park South

10/13

 

L+275 

 

2.96 %

 

 

123,750 

 

 

123,750 

 

 

 

Total variable rate mortgages payable

 

 

 

 

2.22 %

 

 

1,997,181 

 

 

1,743,948 

 

 

 

Total mortgages payable

 

 

 

 

4.42 %

 

$

8,768,182 

 

$

8,072,880 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior unsecured notes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior unsecured notes due 2015

04/15

 

 

 

4.25 %

 

$

499,627 

 

$

499,462 

 

 

 

Senior unsecured notes due 2039 (11)

10/39

 

 

 

7.88 %

 

 

460,000 

 

 

460,000 

 

 

 

Senior unsecured notes due 2022

01/22

 

 

 

5.00 %

 

 

398,381 

 

 

398,199 

 

 

 

Total senior unsecured notes

 

 

 

 

5.70 %

 

$

1,358,008 

 

$

1,357,661 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured revolving credit facilities (12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$1.25 billion unsecured revolving credit facility

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($22,807 reserved for outstanding letters of credit)

06/16

 

L+135 

 

1.53 %

 

$

20,000 

 

$

 

 

 

$1.25 billion unsecured revolving credit facility

11/16

 

L+125 

 

1.43 %

 

 

1,150,000 

 

 

138,000 

 

 

 

Total unsecured revolving credit facilities

 

 

 

 

1.43 %

 

$

1,170,000 

 

$

138,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.88% Exchangeable senior debentures (13)

n/a

 

 

 

n/a

 

$

 

$

497,898 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.85% Convertible senior debentures (13)

n/a

 

 

 

n/a

 

$

 

$

10,168 

 

 

___________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes on the following page.

 

 

 

 

 

 

 

 

 

 

 

 

 

157

 


 
 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

10.    Debt - continued

 

 

Notes to preceding tabular information (Amounts in thousands):

 

 

 

 

(1)

Represents the extended maturity for certain loans in which we have the unilateral right, ability and intent to extend.

 

 

 

 

(2)

On November 8, 2012, we completed a $950,000 refinancing of this property. The 10-year fixed rate interest-only loan bears interest at 3.34%. The partnership retained net proceeds of approximately $522,000, after repaying the existing loan and closing costs.

 

 

 

 

(3)

On January 9, 2012, we completed a $300,000 refinancing of this property. The five-year fixed rate loan bears interest at 3.75% and amortizes based on a 30-year schedule beginning in the third year. The proceeds of the new loan and $132,000 of existing cash were used to repay the existing loan and closing costs.

 

 

 

 

(4)

In the first quarter of 2012, we notified the lender that due to scheduled lease expirations resulting primarily from the effects of the Base Realignment and Closure statute, the Skyline properties had a 26% vacancy rate and rising (49.8% as of December 31, 2012) and, accordingly, cash flows are expected to decrease. As a result, our subsidiary that owns these properties does not have and is not expected to have for some time sufficient funds to pay all of its current obligations, including interest payments to the lender. Based on the projected vacancy and the significant amount of capital required to re-tenant these properties, at our request, the mortgage loan was transferred to the special servicer. In the second quarter of 2012, we entered into a forbearance agreement with the special servicer to apply cash flows of the property, before interest on the loan, towards the repayment of $4,000 of tenant improvements and leasing commissions we funded in connection with a new lease at these properties, which was repaid in the third quarter. The forbearance agreement was amended January 31, 2013, to extend its maturity through April 1, 2013 and provides for interest shortfalls to be deferred and added to the principal balance of the loan and not give rise to a loan default. As of December 31, 2012, the deferred interest amounted to $26,957. We continue to negotiate with the special servicer to restructure the terms of the loan.

 

 

 

 

(5)

On July 26, 2012, we completed a $150,000 refinancing of this property. The 12-year fixed rate loan bears interest at 3.97% and amortizes based on a 30-year schedule beginning in the third year.

 

 

 

 

(6)

On March 5, 2012, we completed a $325,000 refinancing of this property. The three-year loan bears interest at LIBOR plus 2.50% and has two one-year extension options. We retained net proceeds of approximately $87,000, after repaying the existing loan and closing costs.

 

 

 

 

(7)

On November 16, 2012, we completed a $120,000 refinancing of this property. The seven-year loan bears interest at LIBOR plus 2.15% and amortizes based on a 30-year schedule beginning in the third year. We retained net proceeds of approximately $42,000, after repaying the existing loan and closing costs.

 

 

 

 

(8)

On August 17, 2012, we completed a $98,000 refinancing of this property. The seven-year loan bears interest at LIBOR plus 2.25%. We retained net proceeds of approximately $44,000, after repaying the existing loan and closing costs.

 

 

 

 

(9)

Interest at the Freddie Mac Reference Note Rate plus 1.53%.

 

 

 

 

(10)

LIBOR floor of 1.00%.

 

 

 

 

(11)

May be redeemed at our option in whole or in part beginning on October 1, 2014, at a price equal to the principal amount plus accrued interest.

 

 

 

 

(12)

Our unsecured revolving credit facilities that mature in June 2016 and November 2016 require us to pay facility fees (drawn or undrawn) of 0.30% and 0.25%, respectively.

 

 

 

 

(13)

In April 2012, we redeemed all of the outstanding exchangeable and convertible senior debentures at par, for an aggregate of $510,215 in cash.

 

158

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

10.    Debt – continued

 

        The net carrying amount of properties collateralizing the mortgages payable amounted to $10.4 billion at December 31, 2012.  As of December 31, 2012, the principal repayments required for the next five years and thereafter are as follows:

 

 

 

 

 

 

 

 

Senior Unsecured

 

 

 

 

 

 

 

 

 

Debt and

 

 

 

(Amounts in thousands)

 

 

 

 

 

Revolving Credit

 

 

 

Year Ending December 31,

 

 

Mortgages Payable

 

 

Facilities

 

 

 

2013 

 

$

1,150,439 

 

$

 

 

 

2014 

 

 

231,117 

 

 

 

 

 

2015 

 

 

584,802 

 

 

500,000 

 

 

 

2016 

 

 

1,585,247 

 

 

1,170,000 

 

 

 

2017 

 

 

1,347,018 

 

 

 

 

 

Thereafter

 

 

3,874,900 

 

 

860,000 

 

 

 

We may refinance our maturing debt as it comes due or choose to repay it.

 

 

11.    Redeemable Noncontrolling Interests

 

Redeemable noncontrolling interests on our consolidated balance sheets represent Operating Partnership units held by third parties and are comprised of Class A units and Series D-15 and D-16 cumulative redeemable preferred units.  Class A units may be tendered for redemption to the Operating Partnership for cash; we, at our 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.  Below are the details of Operating Partnership units held by third-parties that are included in “redeemable noncontrolling interests” as of December 31, 2012 and 2011.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands, except units and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred or

per unit amounts)

 

Balance as of

 

Units Outstanding at

 

Per Unit

 

Annual

 

 

 

December 31,

 

December 31,

 

Liquidation

 

Distribution

Unit Series

 

2012 

 

 

2011 

 

2012 

 

2011 

 

Preference

 

Rate

Common:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

$

898,152 

 

$

934,677 

 

11,215,682 

 

12,160,771 

 

 

N/A

 

$

2.76 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Perpetual Preferred: (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.875% D-15 Cumulative Redeemable

 

$

45,000 

 

$

45,000 

 

1,800,000 

 

1,800,000 

 

$

25.00 

 

$

1.71875 

 

5.00% D-16 Cumulative Redeemable

 

 

1,000 

 

 

1,000 

 

 

 

$

1,000,000.00 

 

$

50,000.00 

 

7.00% D-10 Cumulative Redeemable (2)

 

 

 

 

80,000 

 

 

3,200,000 

 

$

25.00 

 

$

1.75 

 

6.75% D-14 Cumulative Redeemable (2)

 

 

 

 

100,000 

 

 

4,000,000 

 

$

25.00 

 

$

1.6875 

 

 

 

$

46,000 

 

$

226,000 

 

1,800,001 

 

9,000,001 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Holders may tender units for redemption to the Operating Partnership for cash at their stated redemption amount; we, at our option, may assume that obligation and pay the holders either cash or Vornado preferred shares on a one-for-one basis. These units are redeemable at our option at any time.

(2)

On July 19, 2012, we redeemed all of the outstanding 7.0% Series D-10 and 6.75% Series D-14 cumulative redeemable preferred units with an aggregate face amount of $180,000 for $168,300 in cash, plus accrued and unpaid distributions through the date of redemption.

 

159

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

11.    Redeemable Noncontrolling Interests - continued

 

Redeemable noncontrolling interests on our consolidated balance sheets are recorded at the greater of their carrying amount or redemption value at the end of each reporting period.  Changes in the value from period to period are charged to “additional capital” in our consolidated statements of changes in equity.  Below is a table summarizing the activity of redeemable noncontrolling interests.

 

 

(Amounts in thousands)

 

 

 

 

Balance at December 31, 2010

$

1,327,974 

 

 

Net income

 

55,912 

 

 

Distributions

 

(50,865)

 

 

Conversion of Class A units into common shares, at redemption value

 

(64,830)

 

 

Adjustment to carry redeemable Class A units at redemption value

 

(98,092)

 

 

Redemption of Series D-11 redeemable units

 

(28,000)

 

 

Other, net

 

18,578 

 

 

Balance at December 31, 2011

 

1,160,677 

 

 

Net income

 

45,263 

 

 

Distributions

 

(54,315)

 

 

Conversion of Class A units into common shares, at redemption value

 

(89,762)

 

 

Adjustment to carry redeemable Class A units at redemption value

 

52,117 

 

 

Redemption of Series D-10 and Series D-14 redeemable units

 

(168,300)

 

 

Other, net

 

(1,528)

 

 

Balance at December 31, 2012

$

944,152 

 

 

Redeemable noncontrolling interests exclude our Series G convertible preferred units and Series D-13 cumulative redeemable preferred units, as they are accounted for as liabilities in accordance with ASC 480, Distinguishing Liabilities and Equity , because of their possible settlement by issuing a variable number of Vornado common shares.  Accordingly, the fair value of these units is included as a component of “other liabilities” on our consolidated balance sheets and aggregated $55,011,000 and $54,865,000 as of December 31, 2012 and 2011, respectively. 

 

 

12.    Shareholders’ Equity

 

 

Common Shares

 

As of December 31, 2012, there were 186,734,711 common shares outstanding.  During 2012, we paid an aggregate of $699,318,000 of common dividends comprised of quarterly common dividends of $0.69 per share, and a special long-term capital gain dividend of $1.00 per share.  On January 17, 2013, we increased our quarterly common dividend to $0.73 per share (a new indicated annual rate of $2.92 per share).

 

160

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

12.    Shareholders’ Equity – continued

 

 

Preferred Shares

 

On July 11, 2012, we sold 12,000,000 5.70% Series K Cumulative Redeemable Preferred Shares at a price of $25.00 per share in an underwritten public offering pursuant to an effective registration statement.  We retained aggregate net proceeds of $290,971,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 12,000,000 Series K Preferred Units (with economic terms that mirror those of the Series K Preferred Shares).  Dividends on the Series K Preferred Shares are cumulative and payable quarterly in arrears.  The Series K Preferred Shares are not convertible into, or exchangeable for, any of our properties or securities.  On or after five years from the date of issuance (or sooner under limited circumstances), we may redeem the Series K Preferred Shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption. The Series K Preferred Shares have no maturity date and will remain outstanding indefinitely unless redeemed by us.

 

On August 16, 2012, we redeemed all of the outstanding 7.0% Series E Cumulative Redeemable Preferred Shares at par, for an aggregate of $75,000,000 in cash, plus accrued and unpaid dividends through the date of redemption.

 

The following table sets forth the details of our preferred shares of beneficial interest as of December 31, 2012 and 2011.

 

(Amounts in thousands, except share and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

per share amounts)

 

Balance as of

 

Shares Outstanding at

 

Per Share

 

Annual

 

 

 

December 31,

 

December 31,

 

Liquidation

 

Dividend

Preferred Shares

 

2012 

2011 

 

2012 

2011 

 

Preference

 

Rate (1)

Convertible Preferred:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.5% Series A: authorized 83,977 shares (2)

 

$

1,682 

 

$

1,787 

 

34,609 

 

36,709 

 

$

50.00 

 

$

3.25 

Cumulative Redeemable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.75% Series F: authorized 6,000,000 shares (3)

 

 

144,720 

 

 

144,720 

 

6,000,000 

 

6,000,000 

 

$

25.00 

 

$

1.6875 

 

6.625% Series G: authorized 8,000,000 shares (4)

 

 

193,135 

 

 

193,135 

 

8,000,000 

 

8,000,000 

 

$

25.00 

 

$

1.656 

 

6.75% Series H: authorized 4,500,000 shares (3)

 

 

108,549 

 

 

108,549 

 

4,500,000 

 

4,500,000 

 

$

25.00 

 

$

1.6875 

 

6.625% Series I: authorized 10,800,000 shares (4)

 

 

262,379 

 

 

262,379 

 

10,800,000 

 

10,800,000 

 

$

25.00 

 

$

1.656 

 

6.875% Series J: authorized 9,850,000 shares (4)

 

 

238,842 

 

 

238,842 

 

9,850,000 

 

9,850,000 

 

$

25.00 

 

$

1.71875 

 

5.70% Series K: authorized 12,000,000 shares (4)

 

 

290,971 

 

 

 

12,000,000 

 

 

$

25.00 

 

$

1.425 

 

7.0% Series E: authorized 3,000,000 shares (4)

 

 

 

 

72,248 

 

 

3,000,000 

 

$

25.00 

 

$

1.75 

 

 

 

$

1,240,278 

 

$

1,021,660 

 

51,184,609 

 

42,186,709 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Dividends on preferred shares are cumulative and are payable quarterly in arrears.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

Redeemable at our option, under certain circumstances, at a redemption price plus accrued and unpaid dividends or, convertible at anytime at the option of the holder for 1.4334 common shares per Series A Preferred Share.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

Redeemed on February 19, 2013 (See Note 25 - Subsequent Events ). 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

Redeemable at our option at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption.

 

 

Accumulated Other Comprehensive Income

 

Accumulated other comprehensive (loss) income was $(18,946,000) and $73,729,000 as of December 31, 2012 and 2011, respectively, and primarily consists of (i) accumulated unrealized gains from the mark-to-market of marketable securities classified as available-for-sale, (ii) our pro rata share of other comprehensive income of non-consolidated subsidiaries and (iii) changes in the value of our interest rate swap.

161

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

13.  Fair Value Measurements

 

 

ASC 820, Fair Value Measurement and Disclosures defines fair value and establishes a framework for measuring fair value.  The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price).   ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value.  Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities.  Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets.   

 

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

 

Financial assets and liabilities that are measured at fair value on our consolidated balance sheets consist of (i) marketable securities, (ii) Real Estate Fund investments, (iii) the assets in our deferred compensation plan (for which there is a corresponding liability on our consolidated balance sheet), (iv) derivative positions in marketable equity securities, (v) interest rate swaps and (vi) mandatorily redeemable instruments (Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units).  The tables below aggregate the fair values of these financial assets and liabilities by their levels in the fair value hierarchy at December 31, 2012 and 2011, respectively. 

 

 

 

 

As of December 31, 2012

(Amounts in thousands)

Total

 

Level 1

 

Level 2

 

Level 3

 

Marketable securities

$

398,188 

 

$

398,188 

 

$

 

$

 

Real Estate Fund investments (75% of which is attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interests)

 

600,786 

 

 

 

 

 

 

600,786 

 

Deferred compensation plan assets (included in other assets)

 

105,200 

 

 

42,569 

 

 

 

 

62,631 

 

J.C. Penney derivative position (included in other assets) (1)

 

11,165 

 

 

 

 

11,165 

 

 

 

 

Total assets

$

1,115,339 

 

$

440,757 

 

$

11,165 

 

$

663,417 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mandatorily redeemable instruments (included in other liabilities)

$

55,011 

 

$

55,011 

 

$

 

$

 

Interest rate swap (included in other liabilities)

 

50,070 

 

 

 

 

50,070 

 

 

 

 

Total liabilities

$

105,081 

 

$

55,011 

 

$

50,070 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Represents the cash deposited with the counterparty in excess of the mark-to-market loss on the derivative position.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2011

(Amounts in thousands)

Total

 

Level 1

 

Level 2

 

Level 3

 

Marketable securities

$

741,321 

 

$

741,321 

 

$

 

$

 

Real Estate Fund investments (75% of which is attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interests)

 

346,650 

 

 

 

 

 

 

346,650 

 

Deferred compensation plan assets (included in other assets)

 

95,457 

 

 

39,236 

 

 

 

 

56,221 

 

J.C. Penney derivative position (included in other assets) (1)

 

30,600 

 

 

 

 

30,600 

 

 

 

 

Total assets

$

1,214,028 

 

$

780,557 

 

$

30,600 

 

$

402,871 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mandatorily redeemable instruments (included in other liabilities)

$

54,865 

 

$

54,865 

 

$

 

$

 

Interest rate swap (included in other liabilities)

 

41,114 

 

 

 

 

41,114 

 

 

 

 

Total liabilities

$

95,979 

 

$

54,865 

 

$

41,114 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Represents the mark-to-market gain on the derivative position.

 

162

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

13.  Fair Value Measurements - continued

 

 

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued

 

Real Estate Fund Investments

 

At December 31, 2012, our Real Estate Fund had nine investments with an aggregate fair value of $600,786,000, or $67,642,000 in excess of cost.  These investments are classified as Level 3.  We use a discounted cash flow valuation technique to estimate the fair value of each of these investments, which is updated quarterly by personnel responsible for the management of each investment and reviewed by senior management at each reporting period.  The discounted cash flow valuation technique requires us to estimate cash flows for each investment over the anticipated holding period, which currently ranges from 1.6 to 6.2 years.  Cash flows are derived from property rental revenue (base rents plus reimbursements) less operating expenses, real estate taxes and capital and other costs, plus projected sales proceeds in the year of exit.  Property rental revenue is based on leases currently in place and our estimates for future leasing activity, which are based on current market rents for similar space plus a projected growth factor.  Similarly, estimated operating expenses and real estate taxes are based on amounts incurred in the current period plus a projected growth factor for future periods.  Anticipated sales proceeds at the end of an investment’s expected holding period are determined based on the net cash flow of the investment in the year of exit, divided by a terminal capitalization rate, less estimated selling costs. 

 

The fair value of each property is calculated by discounting the future cash flows (including the projected sales proceeds), using an appropriate discount rate and then reduced by the property’s outstanding debt, if any, to determine the fair value of the equity in each investment. Significant unobservable quantitative inputs used in determining the fair value of each investment include capitalization rates and discount rates.  These rates are based on the location, type and nature of each property, and current and anticipated market conditions, which are derived from original underwriting assumptions, industry publications and from the experience of our Acquisitions and Capital Markets departments.  Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of these Fund investments at December 31, 2012.    

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

 

 

(based on fair

 

 

Unobservable Quantitative Input

 

Range

 

value of investments)

 

 

 

Discount rates

 

12.5% to 19.0%

 

14.7%

 

 

 

Terminal capitalization rates

 

5.3% to 6.3%

 

5.8%

 

 

The above inputs are subject to change based on changes in economic and market conditions and/or changes in use or timing of exit.  Changes in discount rates and terminal capitalization rates result in increases or decreases in the fair values of these investments.  The discount rates encompass, among other things, uncertainties in the valuation models with respect to terminal capitalization rates and the amount and timing of cash flows.  Therefore, a change in the fair value of these investments resulting from a change in the terminal capitalization rate, may be partially offset by a change in the discount rate.  It is not possible for us to predict the effect of future economic or market conditions on our estimated fair values.

 

The table below summarizes the changes in the fair value of Fund investments that are classified as Level 3, for the years ended December 31, 2012 and 2011.

 

 

 

 

 

Real Estate Fund Investments

 

 

 

 

 

 

For The Year Ended December 31,

 

 

 

(Amounts in thousands)

 

2012 

 

2011 

 

 

 

Beginning balance

 

$

346,650 

 

$

144,423 

 

 

 

Purchases

 

 

262,251 

 

 

248,803 

 

 

 

Sales/Returns

 

 

(63,762)

 

 

(48,355)

 

 

 

Realized gains

 

 

 

 

5,391 

 

 

 

Unrealized gains

 

 

55,361 

 

 

11,995 

 

 

 

Other, net

 

 

286 

 

 

(15,607)

 

 

 

Ending balance

 

$

600,786 

 

$

346,650 

 

 

 

163

 


 
 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

13.  Fair Value Measurements - continued

 

 

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued

 

Deferred Compensation Plan Assets

 

Deferred compensation plan assets that are classified as Level 3 consist of investments in limited partnerships and investment funds, which are managed by third parties.  We receive quarterly financial reports from a third-party administrator, which are compiled from the quarterly reports provided to them from each limited partnership and investment fund.  The quarterly reports provide net asset values on a fair value basis which are audited by independent public accounting firms on an annual basis.  The third-party administrator does not adjust these values in determining our share of the net assets and we do not adjust these values when reported in our consolidated financial statements.

 

The table below summarizes the changes in the fair value of Deferred Compensation Plan Assets that are classified as Level 3, for the years ended December 31, 2012 and 2011.

 

 

 

 

 

Deferred Compensation Plan Assets

 

 

 

 

 

 

For The Year Ended December 31,

 

 

 

(Amounts in thousands)

 

2012 

 

2011 

 

 

 

Beginning balance

 

$

56,221 

 

$

47,850 

 

 

 

Purchases

 

 

9,951 

 

 

25,692 

 

 

 

Sales

 

 

(8,367)

 

 

(18,801)

 

 

 

Realized and unrealized gains

 

 

4,703 

 

 

1,232 

 

 

 

Other, net

 

 

123 

 

 

248 

 

 

 

Ending balance

 

$

62,631 

 

$

56,221 

 

 

 

 

Fair Value Measurements on a Nonrecurring Basis

 

Assets measured at fair value on a nonrecurring basis on our consolidated balance sheets consist primarily of our investment in Toys "R" Us and real estate assets that have been written-down to estimated fair value during 2012 and 2011.  See Note 2 – Basis of Presentation and Significant Accounting Policies for details of impairment losses recognized during 2012 and 2011.  The fair values of these assets are determined using widely accepted valuation techniques, including (i) discounted cash flow analysis, which considers, among other things, leasing assumptions, growth rates, discount rates and terminal capitalization rates, (ii) income capitalization approach, which considers prevailing market capitalization rates, and (iii) comparable sales activity.  Generally, we consider multiple valuation techniques when measuring fair values but in certain circumstances, a single valuation technique may be appropriate.  The tables below aggregate the fair values of these assets by their levels in the fair value hierarchy.

 

 

 

 

 

As of December 31, 2012

 

 

(Amounts in thousands)

Total

 

Level 1

 

Level 2

 

Level 3

 

 

 

Investment in Toys"R" Us

$

478,041 

 

$

 

 

$

 

 

$

478,041 

 

 

 

Real estate assets

 

189,529 

 

 

 

 

 

 

189,529 

 

 

 

Condominium units (included in other assets)

 

52,142 

 

 

 

 

 

 

52,142 

 

 

 

 

Total assets

$

719,712 

 

$

 

$

 

$

719,712 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2011

 

 

(Amounts in thousands)

Total

 

Level 1

 

Level 2

 

Level 3

 

 

 

Real estate assets

$

62,033 

 

$

 

$

 

$

62,033 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

164

 


 
 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

13.  Fair Value Measurements – continued

 

 

Financial Assets and Liabilities not Measured at Fair Value

 

 Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash equivalents (primarily U.S. Treasury Bills), mortgage and mezzanine loans receivable and our secured and unsecured debt.  Estimates of the fair value of these instruments are determined by the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate, which is provided by a third-party specialist.  For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash flows we would be required to make under the instrument.  The fair value of cash equivalents is classified as Level 1 and the fair value of our mortgage and mezzanine loans receivable is classified as Level 3.  The fair value of our secured and unsecured debt are classified as Level 2.  The table below summarizes the carrying amounts and fair value of these financial instruments as of December 31, 2012 and 2011.

 

 

 

 

 

As of December 31, 2012

 

As of December 31, 2011

 

 

 

 

 

Carrying

 

Fair

 

Carrying

 

Fair

 

 

(Amounts in thousands)

Amount

 

Value

 

Amount

 

Value

 

 

 

 

Cash equivalents

$

543,000 

 

$

543,000 

 

$

 

$

 

 

 

 

Mortgage and mezzanine loans receivable

 

225,359 

 

 

221,446 

 

 

133,948 

 

 

128,581 

 

 

 

 

 

$

768,359 

 

$

764,446 

 

$

133,948 

 

$

128,581 

 

 

 

Debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgages payable

$

8,768,182 

 

$

8,795,000 

 

$

8,072,880 

 

$

8,188,000 

 

 

 

 

Senior unsecured notes

 

1,358,008 

 

 

1,468,000 

 

 

1,357,661 

 

 

1,426,000 

 

 

 

 

Revolving credit facility debt

 

1,170,000 

 

 

1,170,000 

 

 

138,000 

 

 

138,000 

 

 

 

 

Exchangeable senior debentures

 

 

 

 

 

497,898 

 

 

510,000 

 

 

 

 

Convertible senior debentures

 

 

 

 

 

10,168 

 

 

10,000 

 

 

 

 

 

$

11,296,190 

 

$

11,433,000 

 

$

10,076,607 

 

$

10,272,000 

 

 

 

14.  Variable Interest Entities

 

 

Consolidated Variable Interest Entities

 

As of December 31, 2012, we have variable interests in Independence Plaza (comprised of our equity interest and our preferred equity interest), which we acquired in December 2012 (see Note 3 – Acquisitions ).  We are required to consolidate our interests in this entity because we are deemed to be the primary beneficiary and have the power to direct the activities of the entity that most significantly affect economic performance and the obligation to absorb losses and right to receive benefits that could potentially be significant to the entity.  The table below summarizes the assets and liabilities of the entity.  The liabilities are secured only by the assets of the entity, and are non-recourse to us.

 

 

 

 

 

As of December 31,

 

 

 

(Amounts in thousands)

2012 

 

 

2011 

 

 

 

Total assets

$

858,656 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

$

344,820 

 

 

$

 

 

 

Unconsolidated Variable Interest Entities

 

As of December 31, 2012, we also have a variable interest in the Warner Building.  We are not required to consolidate our interest in this entity because we are not deemed to be the primary beneficiary and the nature of our involvement in the activities of the entity does not give us power over decisions that significantly affect the entity’s economic performance.  We account for our interest in the entity under the equity method of accounting (see Note 6 – Investments in Partially Owned Entities ).  As of December 31, 2012 and 2011, the carrying amount of our investment in this entity was $8,775,000 and $2,715,000, respectively, and our maximum exposure to loss is limited to our investment in the entity.   

165

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

15.    Stock-based Compensation

 

 

Our Omnibus Share Plan (the “Plan”), which was approved in May 2010, provides the Compensation Committee of the Board (the “Committee”) the ability to grant incentive and non-qualified stock options, restricted stock, restricted Operating Partnership units and out-performance plan rewards to certain of our employees and officers.  Under the Plan, awards may be granted up to a maximum of 6,000,000 shares, if all awards granted are Full Value Awards, as defined, and up to 12,000,000 shares, if all of the awards granted are Not Full Value Awards, as defined, plus shares in respect of awards forfeited after May 2010 that were issued pursuant to our 2002 Omnibus Share Plan.  Full Value Awards are awards of securities, such as restricted shares, that, if all vesting requirements are met, do not require the payment of an exercise price or strike price to acquire the securities.  Not Full Value Awards are awards of securities, such as options, that do require the payment of an exercise price or strike price.  This means, for example, if the Committee were to award only restricted shares, it could award up to 6,000,000 restricted shares.  On the other hand, if the Committee were to award only stock options, it could award options to purchase up to 12,000,000 shares (at the applicable exercise price).  The Committee may also issue any combination of awards under the Plan, with reductions in availability of future awards made in accordance with the above limitations.  As of December 31, 2012, we have approximately 5,136,000  shares available for future grants under the Plan, if all awards granted are Full Value Awards, as defined.

 

On March 30, 2012, the Committee approved the 2012 formulaic annual incentive program for our senior executive management team.  Under the program, our senior executive management team, including our Chairman and our President and Chief Executive Officer, will have the ability to earn annual incentive payments (cash or equity) if and only if we achieve comparable funds from operations (“Comparable FFO”) of at least 80% or more of the prior year Comparable FFO.  Moreover, even if we achieve the stipulated Comparable FFO performance requirement, the Committee retains the right, consistent with best practices, to elect to make no payments under the program.  Comparable FFO excludes the impact of certain non-recurring items such as income or loss from discontinued operations, the sale or mark-to-market of marketable securities or derivatives and early extinguishment of debt, restructuring costs and non-cash impairment losses, among others, and thus the Committee believes provides a better metric than total FFO for assessing management’s performance for the year.  Aggregate incentive awards earned under the program are subject to a cap of 1.25% of Comparable FFO for the year, with individual award allocations determined by the Committee based on an assessment of individual and overall performance.

 

In the years ended December 31, 2012, 2011 and 2010, we recognized an aggregate of $30,588,000, $28,853,000 and $34,614,000, respectively, of stock-based compensation expense, which is included as a component of “general and administrative” expenses on our consolidated statements of income.  The details of the various components of our stock-based compensation are discussed below.

 

 

Out-Performance Plans (“OPP Units”)

 

On March 30, 2012, the Committee also approved the 2012 Out-Performance Plan, a multi-year, performance-based equity compensation plan (the “2012 OPP”).  The aggregate notional amount of the 2012 OPP is $40,000,000.  Under the 2012 OPP, participants, including our Chairman and our President and Chief Executive Officer, have the opportunity to earn compensation payable in the form of equity awards if and only if we outperform a predetermined total shareholder return (“TSR”) and/or outperform the market with respect to a relative TSR in any year during a three-year performance period.   Specifically, awards under our 2012 OPP may be earned if we (i) achieve a TSR above that of the SNL US REIT Index (the “Index”) over a one-year, two-year or three-year performance period (the “Relative Component”), and/or (ii) achieve a TSR level greater than 7% per annum, or 21% over the three-year performance period (the “Absolute Component”).  To the extent awards would be earned under the Absolute Component of the 2012 OPP but we underperform the Index, such awards would be reduced (and potentially fully negated) based on the degree to which we underperform the Index.  In certain circumstances, in the event we outperform the Index but awards would not otherwise be earned under the Absolute Component, awards may still be earned under the Relative Component.  To the extent awards would otherwise be earned under the Relative Component but we fail to achieve at least a 6% per annum absolute TSR level, such awards would be reduced based on our absolute TSR performance, with no awards being earned in the event our TSR during the applicable measurement period is 0% or negative, irrespective of the degree to which we may outperform the Index.  If the designated performance objectives are achieved, OPP Units are also subject to time-based vesting requirements. Dividends on awards issued accrue during the performance period and are paid to participants if and only if awards are ultimately earned based on the achievement of the designated performance objectives.  Awards earned under the 2012 OPP vest 33% in year three, 33% in year four and 34% in year five.  The fair value of the 2012 OPP on the date of grant, as adjusted for estimated forfeitures, was $12,250,000, and is being amortized into expense over a five-year period from the date of grant, using a graded vesting attribution model.

 

In the years ended December 31, 2012, 2011 and 2010, we recognized $2,826,000, $740,000 and $5,062,000, respectively, of compensation expense related to OPP Units.  As of December 31, 2012, there was $9,435,000 of total unrecognized compensation cost related to OPP Units, which will be recognized over a weighted-average period of 2.2 years.  Distributions paid on unvested OPP Units are charged to “net income attributable to noncontrolling interests in the Operating Partnership” on our consolidated statements of income and amounted to $8,000, $32,000 and $815,000 in 2012, 2011 and 2010, respectively.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

15.    Stock-based Compensation - continued

 

 

Stock Options      

 

Stock options are granted at an exercise price equal to the average of the high and low market price of our common shares on the NYSE on the date of grant, generally vest over four years and expire 10 years from the date of grant.  Compensation expense related to stock option awards is recognized on a straight-line basis over the vesting period.  In the years ended December 31, 2012, 2011 and 2010, we recognized $8,638,000, $8,794,000 and $7,916,000, respectively, of compensation expense related to stock options that vested during each year.  As of December 31, 2012, there was $12,300,000 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 1.4 years.

 

 

Below is a summary of our stock option activity for the year ended December 31, 2012.

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

Average

 

 

 

 

 

 

 

 

 

 

Average

 

 

Remaining

 

Aggregate

 

 

 

 

 

 

 

Exercise

 

 

Contractual

 

Intrinsic

 

 

 

 

 

Shares

 

Price

 

 

Term

 

Value

 

 

 

Outstanding at January 1, 2012

4,514,341 

 

$

60.96 

 

 

 

 

 

 

 

 

 

Granted

47,720 

 

 

82.86 

 

 

 

 

 

 

 

 

 

Exercised

(1,120,193)

 

42.34 

 

 

 

 

 

 

 

 

 

Cancelled or expired

(81,796)

 

74.39 

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2012

3,360,072 

$

67.16 

 

 

6.1 

 

$

56,414,000 

 

 

 

Options vested and expected to vest at

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2012

3,353,953

 

$

67.16 

 

 

6.1 

 

$

56,313,000 

 

 

 

Options exercisable at December 31, 2012

1,970,247 

 

$

68.02 

 

 

5.4 

 

$

32,914,000 

 

 

 

The fair value of each option grant is estimated on the date of grant using an option-pricing model with the following weighted-average assumptions for grants in the years ended December 31, 2012, 2011 and 2010.

 

 

December 31,

 

 

 

 

2012 

 

2011 

 

2010 

 

 

 

Expected volatility

36.00 %

 

35.00 %

 

35.00 %

 

 

 

Expected life

5.0 years

 

7.1 years

 

7.9 years

 

 

 

Risk free interest rate

1.05 %

 

2.90 %

 

3.60 %

 

 

 

Expected dividend yield

4.30 %

 

4.40 %

 

4.90 %

 

 

 

The weighted average grant date fair value of options granted during the years ended December 31, 2012, 2011 and 2010 was $17.50, $21.42 and $16.96, respectively.  Cash received from option exercises for the years ended December 31, 2012, 2011 and 2010 was $9,546,000, $23,736,000 and $25,338,000, respectively.  The total intrinsic value of options exercised during the years ended December 31, 2012, 2011 and 2010 was $40,887,000, $39,348,000 and $60,923,000, respectively.

 

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VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

15.    Stock-based Compensation - continued

 

 

Restricted Stock

 

Restricted stock awards are granted at the average of the high and low market price of our common shares on the NYSE on the date of grant and generally vest over four years.  Compensation expense related to restricted stock awards is recognized on a straight-line basis over the vesting period.  In the years ended December 31, 2012, 2011 and 2010, we recognized $1,604,000, $1,814,000 and $1,432,000, respectively, of compensation expense related to restricted stock awards that vested during each year.  As of December 31, 2012, there was $2,823,000 of total unrecognized compensation cost related to unvested restricted stock, which is expected to be recognized over a weighted-average period of 1.6 years.  Dividends paid on unvested restricted stock are charged directly to retained earnings and amounted to $200,000, $185,000 and $115,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

Below is a summary of our restricted stock activity under the Plan for the year ended December 31, 2012.

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

 

 

Grant-Date

 

 

 

Unvested Shares

 

Shares

 

Fair Value

 

 

 

 

Unvested at January 1, 2012

 

61,228 

 

$

79.28 

 

 

 

 

Granted

 

11,060 

 

 

83.96 

 

 

 

 

Vested

 

(22,297)

 

83.61 

 

 

 

 

Cancelled or expired

 

(1,971)

 

72.97 

 

 

 

 

Unvested at December 31, 2012

 

48,020 

 

 

78.61 

 

 

 

 

Restricted stock awards granted in 2012, 2011 and 2010 had a fair value of $929,000, $1,042,000 and $3,922,000, respectively.  The fair value of restricted stock that vested during the years ended December 31, 2012, 2011 and 2010 was $1,864,000, $2,031,000 and $2,186,000, respectively.

 

 

Restricted Operating Partnership Units (“OP Units”)

 

OP Units are granted at the average of the high and low market price of our common shares on the NYSE on the date of grant, vest ratably over four years and are subject to a taxable book-up event, as defined.  Compensation expense related to OP Units is recognized ratably over the vesting period using a graded vesting attribution model.  In the years ended December 31, 2012, 2011 and 2010, we recognized $17,520,000, $17,505,000 and $20,204,000, respectively, of compensation expense related to OP Units that vested during each year.  As of December 31, 2012, there was $16,853,000 of total remaining unrecognized compensation cost related to unvested OP Units, which is expected to be recognized over a weighted-average period of 1.5 years.  Distributions paid on unvested OP Units are charged to “net income attributable to noncontrolling interests in the Operating Partnership” on our consolidated statements of income and amounted to $3,203,000, $2,567,000 and $2,285,000 in 2012, 2011 and 2010, respectively.   

 

Below is a summary of restricted OP unit activity under the Plan for the year ended December 31, 2012.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

 

 

Grant-Date

 

 

 

Unvested Units

 

Units

 

Fair Value

 

 

 

 

Unvested at January 1, 2012

 

699,659 

 

$

65.29 

 

 

 

 

Granted

 

209,663 

 

 

78.52 

 

 

 

 

Vested

 

(235,245)

 

63.82 

 

 

 

 

Cancelled or expired

 

(33,407)

 

75.93 

 

 

 

 

Unvested at December 31, 2012

 

640,670 

 

 

69.61 

 

 

 

 

OP Units granted in 2012, 2011 and 2010 had a fair value of $16,464,000, $18,727,000 and $31,437,000, respectively.  The fair value of OP Units that vested during the years ended December 31, 2012, 2011 and 2010 was $15,014,000, $10,260,000 and $14,087,000, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

16.    Fee and Other Income

         The following table sets forth the details of our fee and other income:

 

 

 

 

 

(Amounts in thousands)

For the Year Ended December 31,

 

2012 

2011 

 

2010 

 

BMS cleaning fees

$

67,584 

 

$

61,754 

 

$

58,053 

 

Signage revenue

 

20,892 

 

 

19,823 

 

 

18,618 

 

Management and leasing fees

 

21,867 

 

 

21,801 

 

 

21,686 

 

Lease termination fees

 

2,361 

 

 

16,334 

 

 

14,818 

 

Other income

 

31,845 

 

 

30,037 

 

 

33,780 

 

 

$

144,549 

 

$

149,749 

 

$

146,955 

 

 

Management and leasing fees include management fees from Interstate Properties, a related party, of $794,000, $787,000, and $815,000 for the years ended December 31, 2012, 2011, and 2010, respectively.  The above table excludes fee income from partially owned entities, which is typically included in “income from partially owned entities” (see Note 6 – Investments in Partially Owned Entities ). 

 

 

 

17.     Interest and Other Investment (Loss) Income, Net

          The following table sets forth the details of our interest and other investment (loss) income:

 

 

 

(Amounts in thousands)

 

For the Year Ended December 31,

 

 

 

 

2012 

 

2011 

 

2010 

Non-cash impairment loss on J.C. Penney owned shares

 

$

(224,937)

 

$

 

$

(Loss) income from the mark-to-market of J.C. Penney derivative position

 

 

(75,815)

 

 

12,984 

 

 

130,153 

Interest on mortgage and mezzanine loans

 

 

13,861 

 

 

14,023 

 

 

10,319 

Dividends and interest on marketable securities

 

 

11,979 

 

 

29,587 

 

 

25,772 

Mark-to-market of investments in our deferred compensation plan (1)

 

 

6,809 

 

 

1,658 

 

 

8,049 

Mezzanine loans loss reversal and net gain on disposition

 

 

 

 

82,744 

 

 

53,100 

Other, net

 

 

7,158 

 

 

7,788 

 

 

7,874 

 

 

$

(260,945)

 

$

148,784 

 

$

235,267 

 

 

 

 

 

 

 

 

 

 

 

 

__________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

This income is entirely offset by the expense resulting from the mark-to-market of the deferred compensation plan liability, which is included in "general and administrative" expense.

 

 

18.     Interest and Debt Expense

          The following table sets forth the details of our interest and debt expense.

 

 

 

(Amounts in thousands)

 

For the Year Ended December 31,

 

 

 

 

2012 

 

2011 

 

2010 

Interest expense

 

$

493,067 

 

$

507,387 

 

$

523,905 

Amortization of deferred financing costs

 

 

24,095 

 

 

19,985 

 

 

16,329 

Capitalized interest

 

 

(16,801)

 

 

(1,197)

 

 

(864)

 

 

$

500,361 

 

$

526,175 

 

$

539,370 

 

 

 

 

 

 

 

 

 

 

 

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

19.    Income Per Share

The following table provides a reconciliation of both net income and the number of common shares used in the computation of (i) basic income per common share - which utilizes the weighted average number of common shares outstanding without regard to dilutive potential common shares, and (ii) diluted income per common share - which includes the weighted average common shares and dilutive share equivalents. Dilutive share equivalents may include our Series A convertible preferred shares, employee stock options and restricted stock and exchangeable senior debentures in 2011 and 2010.

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands, except per share amounts)

 

Year Ended December 31,

 

 

 

 

 

 

2012 

 

2011 

 

2010 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of income attributable to noncontrolling interests

 

$

347,392 

 

$

511,478 

 

$

641,520 

 

 

Income from discontinued operations, net of income attributable to noncontrolling

 

 

 

 

 

 

 

 

 

 

 

 

interests

 

 

269,868 

 

 

150,824 

 

 

6,363 

 

 

Net income attributable to Vornado

 

 

617,260 

 

 

662,302 

 

 

647,883 

 

 

Preferred share dividends

 

 

(76,937)

 

 

(65,531)

 

 

(55,534)

 

 

Discount on preferred share and unit redemptions

 

 

8,948 

 

 

5,000 

 

 

4,382 

 

 

Net income attributable to common shareholders

 

 

549,271 

 

 

601,771 

 

 

596,731 

 

 

Earnings allocated to unvested participating securities

 

 

(202)

 

 

(221)

 

 

(120)

 

 

Numerator for basic income per share

 

 

549,069 

 

 

601,550 

 

 

596,611 

 

 

Impact of assumed conversions:

 

 

 

 

 

 

 

 

 

 

 

 

Convertible preferred share dividends

 

 

113 

 

 

124 

 

 

160 

 

 

Numerator for diluted income per share

 

$

549,182 

 

$

601,674 

 

$

596,771 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

Denominator for basic income per share –

 

 

 

 

 

 

 

 

 

 

 

 

weighted average shares

 

 

185,810 

 

 

184,308 

 

 

182,340 

 

 

Effect of dilutive securities (1) :

 

 

 

 

 

 

 

 

 

 

 

 

Employee stock options and restricted share awards

 

 

670 

 

 

1,658 

 

 

1,748 

 

 

 

Convertible preferred shares

 

 

50 

 

 

55 

 

 

71 

 

 

Denominator for diluted income per share –

 

 

 

 

 

 

 

 

 

 

 

 

weighted average shares and assumed conversions

 

 

186,530 

 

 

186,021 

 

 

184,159 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME PER COMMON SHARE – BASIC:

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net

 

$

1.50 

 

$

2.44 

 

$

3.24 

 

 

Income from discontinued operations, net

 

 

1.45 

 

 

0.82 

 

 

0.03 

 

 

Net income per common share

 

$

2.95 

 

$

3.26 

 

$

3.27 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME PER COMMON SHARE – DILUTED:

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net

 

$

1.49 

 

$

2.42 

 

$

3.21 

 

 

Income from discontinued operations, net

 

 

1.45 

 

 

0.81 

 

 

0.03 

 

 

Net income per common share

 

$

2.94 

 

$

3.23 

 

$

3.24 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

The effect of dilutive securities in the years ended December 31, 2012, 2011 and 2010 excludes an aggregate of 14,400, 18,896 and 19,684 weighted average common share equivalents, respectively, as their effect was anti-dilutive.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

20.  Leases

As lessor:

We lease space to tenants under operating leases. Most of the leases provide for the payment of fixed base rentals payable monthly in advance. Office building leases generally require the tenants to reimburse us for operating costs and real estate taxes above their base year costs. Shopping center leases provide for pass-through to tenants the tenant’s share of real estate taxes, insurance and maintenance. Shopping center leases also provide for the payment by the lessee of additional rent based on a percentage of the tenants’ sales. As of December 31, 2012, future base rental revenue under non-cancelable operating leases, excluding rents for leases with an original term of less than one year and rents resulting from the exercise of renewal options, are as follows:

 

 

 

 

 

 

 

(Amounts in thousands)

 

 

 

 

 

Year Ending December 31:

 

 

 

 

 

2013 

$

1,842,355 

 

 

 

2014 

 

1,738,439 

 

 

 

2015 

 

1,578,559 

 

 

 

2016 

 

1,400,020 

 

 

 

2017 

 

1,249,904 

 

 

 

Thereafter

 

6,134,903 

 

 

 

These amounts do not include percentage rentals based on tenants’ sales.  These percentage rents approximated $8,466,000, $7,995,000 and $7,339,000, for the years ended December 31, 2012, 2011 and 2010, respectively.

 

None of our tenants accounted for more than 10% of total revenues in any of the years ended December 31, 2012, 2011 and 2010.

 

 

Former Bradlees Locations

 

Pursuant to a Master Agreement and Guaranty, dated May 1, 1992, we were due $5,000,000 of annual rent from Stop & Shop which was allocated to certain Bradlees former locations.  On December 31, 2002, prior to the expiration of the leases to which the additional rent was allocated, we reallocated this rent to other former Bradlees leases also guaranteed by Stop & Shop.  Stop & Shop contested our right to reallocate the rent.  On November 7, 2011, the Court determined that we had a continuing right to allocate the annual rent to unexpired leases covered by the Master Agreement and Guaranty and directed entry of a judgment in our favor ordering Stop & Shop to pay us the unpaid annual rent.  At December 31, 2012, we had a $47,900,000 receivable from Stop and Shop, which is included as a component of “tenant and other receivables” on our consolidated balance sheet.  On February 6, 2013, we received $124,000,000 pursuant to a settlement agreement with Stop & Shop (see Note 22 – Commitments and Contingencies – Litigation ).   

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

20.  Leases - continued

As lessee:

We are a tenant under operating leases for certain properties.  These leases have terms that expire during the next thirty years.  Future minimum lease payments under operating leases at December 31, 2012 are as follows:

 

 

 

 

 

 

 

 

(Amounts in thousands)

 

 

 

 

 

Year Ending December 31:

 

 

 

 

 

2013 

$

41,524 

 

 

 

2014 

 

42,321 

 

 

 

2015 

 

41,074 

 

 

 

2016 

 

37,054 

 

 

 

2017 

 

37,968 

 

 

 

Thereafter

 

1,229,169 

 

 

 

Rent expense was $43,528,000, $35,436,000 and $34,611,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

We are also a lessee under a capital lease under which we will redevelop the retail and signage components of the Marriot Marquis Times Square Hotel.  The lease has put/call options, which if exercised would lead to our ownership.  Capitalized leases are recorded at the present value of future minimum lease payments or the fair market value of the property.  Capitalized leases are depreciated on a straight-line basis over the estimated life of the asset or life of the related lease.  Depreciation expense on capital leases is included in “depreciation and amortization” on our consolidated statements of income.  As of December 31, 2012, future minimum lease payments under this capital lease are as follows:

 

 

 

 

 

 

 

 

(Amounts in thousands)

 

 

 

 

 

Year Ending December 31:

 

 

 

 

 

2013 

$

12,500 

 

 

 

2014 

 

12,500 

 

 

 

2015 

 

12,500 

 

 

 

2016 

 

12,500 

 

 

 

2017 

 

12,500 

 

 

 

Thereafter

 

359,792 

 

 

 

Total minimum obligations

 

422,292 

 

 

 

Interest portion

 

(182,292)

 

 

 

Present value of net minimum payments

$

240,000 

 

 

 

At December 31, 2012, the carrying amount of the property leased under the capital lease was $249,285,000, which is included as a component of “development costs and construction in progress” on our consolidated balance sheet and present value of net minimum payments of $240,000,000 is included in “other liabilities” on our consolidated balance sheet. 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

21.  Multiemployer Benefit Plans

 

Our subsidiaries make contributions to certain multiemployer defined benefit plans (“Multiemployer Pension Plans”) and health plans (“Multiemployer Health Plans”) for our union represented employees, pursuant to the respective collective bargaining agreements.

 

Multiemployer Pension Plans

 

Multiemployer Pension Plans differ from single-employer pension plans in that (i) contributions to multiemployer plans may be used to provide benefits to employees of other participating employers and (ii) if other participating employers fail to make their contributions, each of our participating subsidiaries may be required to bear its then pro rata share of unfunded obligations.  If a participating subsidiary withdraws from a plan in which it participates, it may be subject to a withdrawal liability.  As of December 31, 2012, our subsidiaries’ participation in these plans were not significant to our consolidated financial statements.

 

In the years ended December 31, 2012, 2011 and 2010, our subsidiaries contributed $10,683,000, $10,168,000 and $9,629,000, respectively, towards Multiemployer Pension Plans, which is included as a component of “operating” expenses on our consolidated statements of income.  Our subsidiaries’ contributions did not represent more than 5% of total employer contributions in any of these plans for the years ended December 31, 2012, 2011 and 2010.

 

Multiemployer Health Plans

 

Multiemployer Health Plans in which our subsidiaries participate provide health benefits to eligible active and retired employees.  In the years ended December 31, 2012, 2011 and 2010, our subsidiaries contributed $26,759,000, $23,847,000 and $21,664,000, respectively, towards these plans, which is included as a component of “operating” expenses on our consolidated statements of income.

 

 

22.  Commitments and Contingencies

 

Insurance

 

We maintain general liability insurance with limits of $300,000,000 per occurrence and all risk property and rental value insurance with limits of $2.0 billion per occurrence, including coverage for terrorist acts, with sub-limits for certain perils such as floods.  Our California properties have earthquake insurance with coverage of $180,000,000 per occurrence, subject to a deductible in the amount of 5% of the value of the affected property, up to a $180,000,000 annual aggregate.

 

Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for acts of terrorism, including nuclear, biological, chemical and radiological (“NBCR”) acts, as defined by Terrorism Risk Insurance Program Reauthorization Act.  Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to PPIC.  Coverage for NBCR losses is up to $2.0 billion per occurrence, for which PPIC is responsible for a deductible of $3,200,000 and 15% of the balance of a covered loss and the Federal government is responsible for the remaining 85% of a covered loss.  We are ultimately responsible for any loss borne by PPIC.

 

We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism.  However, we cannot anticipate what coverage will be available on commercially reasonable terms in future policy years.

 

Our debt instruments, consisting of mortgage loans secured by our properties which are non-recourse to us, senior unsecured notes and revolving credit agreements contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain it could adversely affect our ability to finance our properties and expand our portfolio.

 

173

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

22.  Commitments and Contingencies – continued

 

Other Commitments and Contingencies

 

Our mortgage loans are non-recourse to us.  However, in certain cases we have provided guarantees or master leased tenant space.  These guarantees and master leases terminate either upon the satisfaction of specified circumstances or repayment of the underlying loans.  As of December 31, 2012, the aggregate dollar amount of these guarantees and master leases is approximately $310,249,000.

 

At December 31, 2012, $22,807,000 of letters of credit were outstanding under one of our revolving credit facilities.  Our credit facilities contain financial covenants that require us to maintain minimum interest coverage and maximum debt to market capitalization ratios, and provide for higher interest rates in the event of a decline in our ratings below Baa3/BBB. Our credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and also contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.

 

Each of our properties has been subjected to varying degrees of environmental assessment at various times. The environmental assessments did not reveal any material environmental contamination. However, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites, or changes in cleanup requirements would not result in significant costs to us.

 

Two of our wholly owned subsidiaries that are contracted to develop and operate the Cleveland Medical Mart and Convention Center, in Cleveland, Ohio, are required to fund $11,500,000, primarily for tenant improvements, and they are responsible for operating expenses and are entitled to the net operating income, if any, upon the completion of development and the commencement of operations.  As of December 31, 2012, our subsidiaries have funded $1,100,000 of the commitment. 

 

As of December 31, 2012, w e expect to fund additional capital to certain of our partially owned entities aggregating approximately $163,130,000.

 

 

Litigation  

 

We are from time to time involved in legal actions arising in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters, including the matter referred to below, is not expected to have a material adverse effect on our financial position, results of operations or cash flows.

 

In 2003, Stop & Shop filed an action against us in the New York Supreme Court, claiming that we had no right to reallocate and therefore continue to collect $5,000,000 ($6,000,000 beginning February 1, 2012) of annual rent from Stop & Shop pursuant to a Master Agreement and Guaranty, because of the expiration of the leases to which the annual rent was previously allocated. Stop & Shop asserted that an order of the Bankruptcy Court for the Southern District of New York, as modified on appeal by the District Court, froze our right to reallocate and effectively terminated our right to collect the annual rent from Stop & Shop.  We asserted a counterclaim seeking a judgment for all of the unpaid annual rent accruing through the date of the judgment and a declaration that Stop & Shop will continue to be liable for the annual rent as long as any of the leases subject to the Master Agreement and Guaranty remain in effect.  A trial was held in November 2010.  On November 7, 2011, the Court determined that we had a continuing right to allocate the annual rent to unexpired leases covered by the Master Agreement and Guaranty, and directed entry of a judgment in our favor ordering Stop & Shop to pay us the unpaid annual rent accrued through February 28, 2011 in the amount of $37,422,000, a portion of the annual rent due from March 1, 2011 through the date of judgment, interest, and attorneys’ fees.  On December 16, 2011, a money judgment based on the Court’s decision was entered in our favor in the amount of $56,597,000 (including interest and costs).  Stop & Shop appealed the Court’s decision and the judgment and posted a bond to secure payment of the judgment. On January 12, 2012, we commenced a new action against Stop & Shop seeking recovery of $2,500,000 of annual rent not included in the money judgment, plus additional annual rent as it accrues.  At December 31, 2012, we had a $47,900,000 receivable from Stop & Shop, which is included as a component of “tenant and other receivables” on our consolidated balance sheet.  On February 6, 2013, we received $124,000,000 pursuant to a settlement agreement with Stop & Shop.  The settlement terminates our right to receive $6,000,000 of additional annual rent under the 1992 agreement, for a period potentially through 2031.  As a result of this settlement, we collected the aforementioned $47,900,000 receivable and will recognize approximately $59,000,000 of net income in the first quarter of 2013.

174

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

23.  Related Party Transactions

 

 

Alexander’s

 

We own 32.4% of Alexander’s. Steven Roth, the Chairman of our Board, and Michael D. Fascitelli, our President and Chief Executive Officer, are officers and directors of Alexander’s.  We provide various services to Alexander’s in accordance with management, development and leasing agreements.  These agreements are described in Note 6 - Investments in Partially Owned Entities .  

  

Interstate Properties (“Interstate”)

 

Interstate is a general partnership in which Mr. Roth is the managing general partner. David Mandelbaum and Russell B. Wight, Jr., Trustees of Vornado and Directors of Alexander’s, are Interstate’s two other partners. As of December 31, 2012, Interstate and its partners beneficially owned an aggregate of approximately 6.5% of the common shares of beneficial interest of Vornado and 26.3% of Alexander’s common stock.

 

We manage and lease the real estate assets of Interstate pursuant to a management agreement for which we receive an annual fee equal to 4% of annual base rent and percentage rent. The management agreement has a term of one year and is automatically renewable unless terminated by either of the parties on 60 days’ notice at the end of the term. We believe, based upon comparable fees charged by other real estate companies, that the management agreement terms are fair to us. We earned $794,000, $787,000, and $815,000 of management fees under the agreement for the years ended December 31, 2012, 2011 and 2010.

 

Other

 

On March 8, 2012, Mr. Roth repaid his $13,122,500 outstanding loan from the Company.

 

 

 

24.  Summary of Quarterly Results (Unaudited)

The following summary represents the results of operations for each quarter in 2012 and 2011:

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable

 

Net Income Per

 

 

 

 

 

 

 

 

 

to Common

 

Common Share (2)

 

 

 

(Amounts in thousands, except per share amounts)

Revenues

 

Shareholders (1)

 

Basic

 

Diluted

 

 

 

 

2012 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31

$

697,654 

 

$

62,633 

 

$

0.34 

 

$

0.33 

 

 

 

 

September 30

 

710,538 

 

 

232,393 

 

 

1.25 

 

 

1.24 

 

 

 

 

 

June 30

 

683,985 

 

 

20,510 

 

 

0.11 

 

 

0.11 

 

 

 

 

March 31

 

674,280 

 

 

233,735 

 

 

1.26 

 

 

1.25 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31

$

689,959 

 

$

69,508 

$

0.38 

$

0.37 

 

 

 

 

September 30

 

689,190 

 

 

41,135 

 

 

0.22 

 

 

0.22 

 

 

 

 

 

June 30

 

679,084 

 

 

91,913 

 

0.50 

 

0.49 

 

 

 

 

 

March 31

 

674,603 

 

 

399,215 

 

 

2.17 

 

 

2.12 

 

 

_______________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Fluctuations among quarters resulted primarily from non-cash impairment losses, mark-to-market of derivative instruments, net gains on sale of real estate and from seasonality of business operations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

The total for the year may differ from the sum of the quarters as a result of weighting.

175

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

25.  Subsequent Events

 

 

On February 19, 2013, we redeemed all of the outstanding 6.75% Series F Cumulative Redeemable Preferred Shares and 6.75% Series H Cumulative Redeemable Preferred Shares at par, for an aggregate of $262,500,000 in cash, plus accrued and unpaid dividends through the date of redemption.

 

On January 25, 2013, we sold 12,000,000 5.40% Series L Cumulative Redeemable Preferred Shares at a price of $25.00 per share in an underwritten public offering pursuant to an effective registration statement.  We retained aggregate net proceeds of $290,853,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 12,000,000 Series L Preferred Units (with economic terms that mirror those of the Series L Preferred Shares).  Dividends on the Series L Preferred Shares are cumulative and payable quarterly in arrears.  The Series L Preferred Shares are not convertible into, or exchangeable for, any of our properties or securities.  On or after five years from the date of issuance (or sooner under limited circumstances), we may redeem the Series L Preferred Shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption. The Series L Preferred Shares have no maturity date and will remain outstanding indefinitely unless redeemed by us.

176

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

26.    Segment Information

Effective January 1, 2012, as a result of certain organizational and operational changes, we redefined the New York business segment to encompass all of our Manhattan assets by including the 1.0 million square feet in 21 freestanding Manhattan street retail assets (formerly in our Retail segment), and the Hotel Pennsylvania and our interest in Alexander’s, Inc. (formerly in our Other segment).  Accordingly, we have reclassified the prior period segment financial results to conform to the current year presentation.  See note (4) on page 180 for the elements of the New York segment’s EBITDA.   

 

 

(Amounts in thousands)

For the Year Ended December 31, 2012

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

 

 

 

 

 

 

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Toys

 

Other

 

Property rentals

 

$

1,962,545 

 

$

1,004,078 

 

$

467,972 

 

$

276,190 

 

$

125,018 

 

$

 

$

89,287 

 

Straight-line rent adjustments

 

 

68,844 

 

 

52,117 

 

 

5,727 

 

 

9,379 

 

 

763 

 

 

 

 

858 

 

Amortization of acquired below-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

market leases, net

 

 

54,193 

 

 

31,552 

 

 

2,043 

 

 

14,902 

 

 

 

 

 

 

5,696 

 

Total rentals

 

 

2,085,582 

 

 

1,087,747 

 

 

475,742 

 

 

300,471 

 

 

125,781 

 

 

 

 

95,841 

 

Tenant expense reimbursements

 

 

301,092 

 

 

160,133 

 

 

40,742 

 

 

88,545 

 

 

4,343 

 

 

 

 

7,329 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

235,234 

 

 

 

 

 

 

 

 

235,234 

 

 

 

 

 

Fee and other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMS cleaning fees

 

 

67,584 

 

 

94,965 

 

 

 

 

 

 

 

 

 

 

(27,381)

 

 

Signage revenue

 

 

20,892 

 

 

20,892 

 

 

 

 

 

 

 

 

 

 

 

 

Management and leasing fees

 

 

21,867 

 

 

5,639 

 

 

12,775 

 

 

3,131 

 

 

231 

 

 

 

 

91 

 

 

Lease termination fees

 

 

2,361 

 

 

1,136 

 

 

643 

 

 

74 

 

 

508 

 

 

 

 

 

 

Other income

 

 

31,845 

 

 

4,472 

 

 

24,126 

 

 

1,778 

 

 

1,574 

 

 

 

 

(105)

 

Total revenues

 

 

2,766,457 

 

 

1,374,984 

 

 

554,028 

 

 

393,999 

 

 

367,671 

 

 

 

 

75,775 

 

Operating expenses

 

 

1,021,719 

 

 

602,883 

 

 

194,523 

 

 

141,732 

 

 

65,337 

 

 

 

 

17,244 

 

Depreciation and amortization

 

 

517,811 

 

 

226,653 

 

 

138,296 

 

 

76,835 

 

 

33,778 

 

 

 

 

42,249 

 

General and administrative

 

 

201,894 

 

 

30,053 

 

 

27,237 

 

 

23,654 

 

 

18,899 

 

 

 

 

102,051 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

226,619 

 

 

 

 

 

 

 

 

226,619 

 

 

 

 

 

Impairment losses, acquisition related

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

costs and tenant buy-outs

 

 

120,786 

 

 

 

 

 

 

103,400 

 

 

 

 

 

 

17,386 

 

Total expenses

 

 

2,088,829 

 

 

859,589 

 

 

360,056 

 

 

345,621 

 

 

344,633 

 

 

 

 

178,930 

 

Operating income (loss)

 

 

677,628 

 

 

515,395 

 

 

193,972 

 

 

48,378 

 

 

23,038 

 

 

 

 

(103,155)

 

Income applicable to Toys

 

 

14,859 

 

 

 

 

 

 

 

 

 

 

14,859 

 

 

 

Income (loss) from partially owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

entities

 

 

408,267 

 

 

207,773 

 

 

(5,612)

 

 

1,458 

 

 

729 

 

 

 

 

203,919 

 

Income from Real Estate Fund

 

 

63,936 

 

 

 

 

 

 

 

 

 

 

 

 

63,936 

 

Interest and other investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(loss) income, net

 

 

(260,945)

 

 

4,230 

 

 

126 

 

 

27 

 

 

 

 

 

 

(265,328)

 

Interest and debt expense

 

 

(500,361)

 

 

(147,132)

 

 

(115,574)

 

 

(62,923)

 

 

(31,393)

 

 

 

 

(143,339)

 

Net gain on disposition of wholly

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

owned and partially owned assets

 

 

13,347 

 

 

 

 

 

 

8,491 

 

 

 

 

 

 

4,856 

 

Income (loss) before income taxes

 

 

416,731 

 

 

580,266 

 

 

72,912 

 

 

(4,569)

 

 

(7,626)

 

 

14,859 

 

 

(239,111)

 

Income tax expense

 

 

(8,132)

 

 

(3,491)

 

 

(1,650)

 

 

 

 

(502)

 

 

 

 

(2,489)

 

Income (loss) from continuing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

408,599 

 

 

576,775 

 

 

71,262 

 

 

(4,569)

 

 

(8,128)

 

 

14,859 

 

 

(241,600)

 

Income (loss) from discontinued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

285,942 

 

 

(641)

 

 

167,766 

 

 

42,926 

 

 

75,144 

 

 

 

 

747 

 

Net income (loss)

 

 

694,541 

 

 

576,134 

 

 

239,028 

 

 

38,357 

 

 

67,016 

 

 

14,859 

 

 

(240,853)

 

Less net (income) loss attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interests in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated subsidiaries

 

 

(32,018)

 

 

(2,138)

 

 

 

 

1,812 

 

 

 

 

 

 

(31,692)

 

 

Operating Partnership

 

 

(35,327)

 

 

 

 

 

 

 

 

 

 

 

 

(35,327)

 

 

Preferred unit distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of the Operating Partnership

 

 

(9,936)

 

 

 

 

 

 

 

 

 

 

 

 

(9,936)

 

Net income (loss) attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado

 

 

617,260 

 

 

573,996 

 

 

239,028 

 

 

40,169 

 

 

67,016 

 

 

14,859 

 

 

(317,808)

 

Interest and debt expense (2)

 

 

760,523 

 

 

187,855 

 

 

133,625 

 

 

73,828 

 

 

35,423 

 

 

147,880 

 

 

181,912 

 

Depreciation and amortization (2)

 

 

735,293 

 

 

252,257 

 

 

157,816 

 

 

86,529 

 

 

39,596 

 

 

135,179 

 

 

63,916 

 

Income tax expense (benefit) (2)

 

 

7,026 

 

 

3,751 

 

 

1,943 

 

 

 

 

12,503 

 

 

(16,629)

 

 

5,458 

 

EBITDA (1)

 

$

2,120,102 

 

$

1,017,859 

(3)

$

532,412 

 

$

200,526 

(4)

$

154,538 

 

$

281,289 

 

$

(66,522)

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate at cost

 

$

18,495,359 

 

$

8,915,981 

 

$

4,171,879 

 

$

3,009,816 

 

$

772,372 

 

$

 

$

1,625,311 

 

Investments in partially owned entities

 

 

1,704,297 

 

 

576,336 

 

 

95,670 

 

 

7,083 

 

 

3,567 

 

 

478,041 

 

 

543,600 

 

Total assets

 

 

21,965,975 

 

 

9,116,364 

 

 

4,196,694 

 

 

3,589,633 

 

 

1,246,975 

 

 

478,041 

 

 

3,338,268 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes on page 180.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

177

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

26.    Segment Information – continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

For the Year Ended December 31, 2011

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

 

 

 

 

 

 

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Toys

 

Other

 

Property rentals

 

$

2,012,292 

 

$

979,032 

 

$

531,510 

 

$

274,386 

 

$

136,404 

 

$

 

$

90,960 

 

Straight-line rent adjustments

 

 

39,858 

 

 

34,446 

 

 

(2,569)

 

 

6,723 

 

 

(1,284)

 

 

 

 

2,542 

 

Amortization of acquired below-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

market leases, net

 

 

62,105 

 

 

40,958 

 

 

2,160 

 

 

13,969 

 

 

 

 

 

 

5,018 

 

Total rentals

 

 

2,114,255 

 

 

1,054,436 

 

 

531,101 

 

 

295,078 

 

 

135,120 

 

 

 

 

98,520 

 

Tenant expense reimbursements

 

 

314,752 

 

 

165,433 

 

 

36,299 

 

 

96,805 

 

 

6,321 

 

 

 

 

9,894 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

154,080 

 

 

 

 

 

 

 

 

154,080 

 

 

 

 

 

Fee and other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMS cleaning fees

 

 

61,754 

 

 

90,033 

 

 

 

 

 

 

 

 

 

 

(28,279)

 

 

Signage revenue

 

 

19,823 

 

 

19,823 

 

 

 

 

 

 

 

 

 

 

 

 

Management and leasing fees

 

 

21,801 

 

 

5,095 

 

 

12,361 

 

 

3,990 

 

 

342 

 

 

 

 

13 

 

 

Lease termination fees

 

 

16,334 

 

 

11,839 

 

 

3,794 

 

 

467 

 

 

234 

 

 

 

 

 

 

Other income

 

 

30,037 

 

 

6,457 

 

 

19,762 

 

 

1,862 

 

 

2,218 

 

 

 

 

(262)

 

Total revenues

 

 

2,732,836 

 

 

1,353,116 

 

 

603,317 

 

 

398,202 

 

 

298,315 

 

 

 

 

79,886 

 

Operating expenses

 

 

995,586 

 

 

578,344 

 

 

188,744 

 

 

133,403 

 

 

77,492 

 

 

 

 

17,603 

 

Depreciation and amortization

 

 

524,550 

 

 

221,520 

 

 

154,142 

 

 

77,433 

 

 

28,804 

 

 

 

 

42,651 

 

General and administrative

 

 

208,008 

 

 

26,808 

 

 

26,369 

 

 

25,489 

 

 

28,040 

 

 

 

 

101,302 

 

Cleveland Medical Mart development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

project

 

 

145,824 

 

 

 

 

 

 

 

 

145,824 

 

 

 

 

 

Impairment losses, acquisition related

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

costs and tenant buy-outs

 

 

35,299 

 

 

23,777 

 

 

 

 

369 

 

 

5,228 

 

 

 

 

5,925 

 

Total expenses

 

 

1,909,267 

 

 

850,449 

 

 

369,255 

 

 

236,694 

 

 

285,388 

 

 

 

 

167,481 

 

Operating income (loss)

 

 

823,569 

 

 

502,667 

 

 

234,062 

 

 

161,508 

 

 

12,927 

 

 

 

 

(87,595)

 

Income applicable to Toys

 

 

48,540 

 

 

 

 

 

 

 

 

 

 

48,540 

 

 

 

Income (loss) from partially owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

entities

 

 

70,072 

 

 

12,062 

 

 

(6,381)

 

 

2,700 

 

 

455 

 

 

 

 

61,236 

 

Income from Real Estate Fund

 

 

22,886 

 

 

 

 

 

 

 

 

 

 

 

 

22,886 

 

Interest and other investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

income (loss), net

 

 

148,784 

 

 

4,245 

 

 

199 

 

 

(32)

 

 

 

 

 

 

144,371 

 

Interest and debt expense

 

 

(526,175)

 

 

(152,386)

 

 

(115,456)

 

 

(70,952)

 

 

(31,208)

 

 

 

 

(156,173)

 

Net gain on disposition of wholly

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

owned and partially owned assets

 

 

15,134 

 

 

 

 

 

 

4,278 

 

 

 

 

 

 

10,856 

 

Income (loss) before income taxes

 

 

602,810 

 

 

366,588 

 

 

112,424 

 

 

97,502 

 

 

(17,825)

 

 

48,540 

 

 

(4,419)

 

Income tax expense

 

 

(23,925)

 

 

(2,084)

 

 

(2,690)

 

 

(34)

 

 

(1,572)

 

 

 

 

(17,545)

 

Income (loss) from continuing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

578,885 

 

 

364,504 

 

 

109,734 

 

 

97,468 

 

 

(19,397)

 

 

48,540 

 

 

(21,964)

 

Income from discontinued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

161,115 

 

 

563 

 

 

52,390 

 

 

31,815 

 

 

72,971 

 

 

 

 

3,376 

 

Net income (loss)

 

 

740,000 

 

 

365,067 

 

 

162,124 

 

 

129,283 

 

 

53,574 

 

 

48,540 

 

 

(18,588)

 

Less net (income) loss attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interests in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated subsidiaries

 

 

(21,786)

 

 

(10,042)

 

 

 

 

237 

 

 

 

 

 

 

(11,981)

 

 

Operating Partnership

 

 

(41,059)

 

 

 

 

 

 

 

 

 

 

 

 

(41,059)

 

 

Preferred unit distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of the Operating Partnership

 

 

(14,853)

 

 

 

 

 

 

 

 

 

 

 

 

(14,853)

 

Net income (loss) attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado

 

 

662,302 

 

 

355,025 

 

 

162,124 

 

 

129,520 

 

 

53,574 

 

 

48,540 

 

 

(86,481)

 

Interest and debt expense (2)

 

 

797,920 

 

 

181,740 

 

 

134,270 

 

 

82,608 

 

 

40,916 

 

 

157,135 

 

 

201,251 

 

Depreciation and amortization (2)

 

 

777,421 

 

 

247,630 

 

 

181,560 

 

 

91,040 

 

 

46,725 

 

 

134,967 

 

 

75,499 

 

Income tax expense (benefit) (2)

 

 

4,812 

 

 

2,170 

 

 

3,123 

 

 

34 

 

 

2,237 

 

 

(1,132)

 

 

(1,620)

 

EBITDA (1)

 

$

2,242,455 

 

$

786,565 

(3)

$

481,077 

 

$

303,202 

(4)

$

143,452 

 

$

339,510 

 

$

188,649 

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate at cost

 

$

16,703,757 

 

$

7,070,026 

 

$

4,176,894 

 

$

3,102,983 

 

$

746,498 

 

$

 

$

1,607,356 

 

Investments in partially owned entities

 

 

1,740,459 

 

 

536,393 

 

 

113,536 

 

 

7,747 

 

 

3,589 

 

 

506,809 

 

 

572,385 

 

Total assets

 

 

20,446,487 

 

 

7,130,240 

 

 

4,150,140 

 

 

3,748,303 

 

 

1,226,084 

 

 

506,809 

 

 

3,684,911 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes on page 180.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

178

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

26.    Segment Information – continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

For the Year Ended December 31, 2010

 

 

 

 

 

 

 

 

 

 

Retail

 

Merchandise

 

 

 

 

 

 

 

 

 

Total

 

New York

 

Washington, DC

 

Properties

 

Mart

 

Toys

 

Other

 

Property rentals

 

$

1,957,130 

 

$

944,322 

 

$

536,947 

 

$

256,654 

 

$

132,120 

 

$

 

$

87,087 

 

Straight-line rent adjustments

 

 

70,972 

 

 

51,385 

 

 

6,089 

 

 

9,401 

 

 

301 

 

 

 

 

3,796 

 

Amortization of acquired below-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

market leases, net

 

 

65,373 

 

 

44,879 

 

 

2,453 

 

 

12,384 

 

 

 

 

 

 

5,657 

 

Total rentals

 

 

2,093,475 

 

 

1,040,586 

 

 

545,489 

 

 

278,439 

 

 

132,421 

 

 

 

 

96,540 

 

Tenant expense reimbursements

 

 

317,777 

 

 

159,369 

 

 

49,792 

 

 

93,032 

 

 

5,274 

 

 

 

 

10,310 

 

Fee and other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMS cleaning fees

 

 

58,053 

 

 

84,945 

 

 

 

 

 

 

 

 

 

 

(26,892)

 

 

Signage revenue

 

 

18,618 

 

 

18,618 

 

 

 

 

 

 

 

 

 

 

 

 

Management and leasing fees

 

 

21,686 

 

 

4,427 

 

 

15,934 

 

 

1,820 

 

 

156 

 

 

 

 

(651)

 

 

Lease termination fees

 

 

14,818 

 

 

7,470 

 

 

1,148 

 

 

4,441 

 

 

459 

 

 

 

 

1,300 

 

 

Other income

 

 

33,780 

 

 

6,051 

 

 

20,594 

 

 

927 

 

 

3,068 

 

 

 

 

3,140 

 

Total revenues

 

 

2,558,207 

 

 

1,321,466 

 

 

632,957 

 

 

378,659 

 

 

141,378 

 

 

 

 

83,747 

 

Operating expenses

 

 

983,424 

 

 

556,270 

 

 

202,569 

 

 

141,116 

 

 

65,842 

 

 

 

 

17,627 

 

Depreciation and amortization

 

 

494,898 

 

 

212,903 

 

 

136,391 

 

 

71,556 

 

 

28,416 

 

 

 

 

45,632 

 

General and administrative

 

 

211,399 

 

 

25,560 

 

 

25,454 

 

 

27,676 

 

 

24,199 

 

 

 

 

108,510 

 

Impairment losses, acquisition related

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

costs and tenant buy-outs

 

 

109,458 

 

 

1,605 

 

 

 

 

70,895 

 

 

 

 

 

 

36,958 

 

Total expenses

 

 

1,799,179 

 

 

796,338 

 

 

364,414 

 

 

311,243 

 

 

118,457 

 

 

 

 

208,727 

 

Operating income (loss)

 

 

759,028 

 

 

525,128 

 

 

268,543 

 

 

67,416 

 

 

22,921 

 

 

 

 

(124,980)

 

Income applicable to Toys

 

 

71,624 

 

 

 

 

 

 

 

 

 

 

71,624 

 

 

 

Income (loss) from partially owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

entities

 

 

20,869 

 

 

13,317 

 

 

(564)

 

 

8,220 

 

 

(179)

 

 

 

 

75 

 

(Loss) from Real Estate Fund

 

 

(303)

 

 

 

 

 

 

 

 

 

 

 

 

(303)

 

Interest and other investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

income, net

 

 

235,267 

 

 

4,237 

 

 

154 

 

 

164 

 

 

 

 

 

 

230,709 

 

Interest and debt expense

 

 

(539,370)

 

 

(145,406)

 

 

(125,272)

 

 

(63,265)

 

 

(31,208)

 

 

 

 

(174,219)

 

Net gain (loss) on extinguishment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of debt

 

 

94,789 

 

 

 

 

 

 

105,571 

 

 

 

 

 

 

(10,782)

 

Net gain on disposition of wholly

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

owned and partially owned assets

 

 

81,432 

 

 

 

 

54,742 

 

 

 

 

765 

 

 

 

 

25,925 

 

Income (loss) before income taxes

 

 

723,336 

 

 

397,276 

 

 

197,603 

 

 

118,106 

 

 

(7,698)

 

 

71,624 

 

 

(53,575)

 

Income tax (expense) benefit

 

 

(22,137)

 

 

(2,167)

 

 

(1,679)

 

 

(37)

 

 

29 

 

 

 

 

(18,283)

 

Income (loss) from continuing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

701,199 

 

 

395,109 

 

 

195,924 

 

 

118,069 

 

 

(7,669)

 

 

71,624 

 

 

(71,858)

 

Income (loss) from discontinued operations

 

 

6,832 

 

 

168 

 

 

4,143 

 

 

19,061 

 

 

(20,948)

 

 

 

 

4,408 

 

Net income (loss)

 

 

708,031 

 

 

395,277 

 

 

200,067 

 

 

137,130 

 

 

(28,617)

 

 

71,624 

 

 

(67,450)

 

Less net (income) loss attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interests in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated subsidiaries

 

 

(4,920)

 

 

(9,559)

 

 

 

 

(778)

 

 

 

 

 

 

5,417 

 

 

Operating Partnership

 

 

(44,033)

 

 

 

 

 

 

 

 

 

 

 

 

(44,033)

 

 

Preferred unit distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of the Operating Partnership

 

 

(11,195)

 

 

 

 

 

 

 

 

 

 

 

 

(11,195)

 

Net income (loss) attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vornado

 

 

647,883 

 

 

385,718 

 

 

200,067 

 

 

136,352 

 

 

(28,617)

 

 

71,624 

 

 

(117,261)

 

Interest and debt expense (2)

 

 

828,082 

 

 

158,249 

 

 

136,174 

 

 

79,545 

 

 

61,379 

 

 

177,272 

 

 

215,463 

 

Depreciation and amortization (2)

 

 

729,426 

 

 

218,766 

 

 

159,283 

 

 

86,629 

 

 

51,064 

 

 

131,284 

 

 

82,400 

 

Income tax (benefit) expense (2)

 

 

(23,036)

 

 

1,311 

 

 

2,027 

 

 

37 

 

 

232 

 

 

(45,418)

 

 

18,775 

 

EBITDA (1)

 

$

2,182,355 

 

$

764,044 

(3)

$

497,551 

 

$

302,563 

(4)

$

84,058 

 

$

334,762 

 

$

199,377 

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate at cost

 

$

16,454,967 

 

$

6,999,784 

 

$

4,040,491 

 

$

3,076,114 

 

$

741,188 

 

$

 

$

1,597,390 

 

Investments in partially owned entities

 

 

1,375,006 

 

 

273,536 

 

 

149,295 

 

 

6,251 

 

 

4,183 

 

 

447,334 

 

 

494,407 

 

Total assets

 

 

20,517,471 

 

 

6,611,632 

 

 

3,872,209 

 

 

3,591,244 

 

 

1,435,714 

 

 

447,334 

 

 

4,559,338 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes on the following page.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

179

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

26. Segment Information - continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to preceding tabular information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

EBITDA represents "Earnings Before Interest, Taxes, Depreciation and Amortization." We consider EBITDA a supplemental 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 a multiple of EBITDA, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. EBITDA should not be considered a substitute for net income. EBITDA may not be comparable to similarly titled measures employed by other companies.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

Interest and debt expense, depreciation and amortization and income tax expense (benefit) in the reconciliation of net income (loss) to EBITDA includes our share of these items from partially owned entities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

The elements of "New York" EBITDA are summarized below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

 

 

 

 

(Amounts in thousands)

2012 

 

2011 

 

2010 

 

 

 

 

Office

$

568,518 

 

$

539,734 

 

$

510,187 

 

 

 

 

Retail

 

189,484 

 

 

163,033 

 

 

180,225 

 

 

 

 

Alexander's

 

231,402 

 

 

53,663 

 

 

49,869 

 

 

 

 

Hotel Pennsylvania

 

28,455 

 

 

30,135 

 

 

23,763 

 

 

 

 

 

Total New York

$

1,017,859 

 

$

786,565 

 

$

764,044 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

The elements of "Retail Properties" EBITDA are summarized below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

 

 

 

 

(Amounts in thousands)

2012 

 

2011 

 

2010 

 

 

 

 

Strip shopping centers

$

172,708 

 

$

210,022 

 

$

180,323 

 

 

 

 

Regional malls

 

27,818 

 

 

93,180 

 

 

122,240 

 

 

 

 

 

Total Retail properties

$

200,526 

 

$

303,202 

 

$

302,563 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

180

 


 

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

26. Segment Information - continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to preceding tabular information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)

The elements of "other" EBITDA from continuing operations are summarized below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

For the Year Ended December 31,

 

 

 

 

 

 

 

 

2012 

 

2011 

 

 

2010 

 

 

Our share of Real Estate Fund:

 

 

 

 

 

 

 

 

 

 

 

Income before net realized/unrealized gains

$

4,926 

 

$

4,205 

 

$

503 

 

 

 

Net unrealized gains

 

13,840 

 

 

2,999 

 

 

 

 

 

Net realized gains

 

 

 

1,348 

 

 

 

 

 

Carried interest

 

5,838 

 

 

736 

 

 

 

 

Total

 

24,604 

 

 

9,288 

 

 

503 

 

 

LNR (acquired in July 2010)

 

79,520 

 

 

47,614 

 

 

6,116 

 

 

555 California Street

 

46,167 

 

 

44,724 

 

 

46,782 

 

 

Lexington

 

32,595 

 

 

34,779 

 

 

41,594 

 

 

Other investments

 

29,266 

 

 

33,529 

 

 

30,463 

 

 

 

 

212,152 

 

 

169,934 

 

 

125,458 

 

 

Corporate general and administrative expenses (a)

 

(90,567)

 

 

(85,922)

 

 

(90,343)

 

 

Investment income and other, net (a)

 

35,397 

 

 

52,405 

 

 

65,499 

 

 

Fee income from Alexander's (including a $6,423 sales commission in 2012)

 

13,748 

 

 

7,417 

 

 

7,556 

 

 

Non-cash impairment loss on J.C. Penney owned shares

 

(224,937)

 

 

 

 

 

 

(Loss) income from the mark-to-market of J.C. Penney derivative position

 

(75,815)

 

 

12,984 

 

 

130,153 

 

 

Purchase price fair value adjustment and accelerated amortization of

 

 

 

 

 

 

 

 

 

 

 

discount on investment in subordinated debt of Independence Plaza

 

105,366 

 

 

 

 

 

 

Net gain resulting from Lexington's stock issuance and asset acquisition

 

28,763 

 

 

9,760 

 

 

13,710 

 

 

Acquisition related costs and impairment losses

 

(17,386)

 

 

(5,925)

 

 

(36,958)

 

 

Verde Realty impairment loss

 

(4,936)

 

 

 

 

 

 

Our share of impairment losses of partially owned entities

 

(4,318)

 

 

(13,794)

 

 

 

 

Net gain on sale of residential condominiums

 

1,274 

 

 

5,884 

 

 

3,149 

 

 

Mezzanine loans loss reversal and net gain on disposition

 

 

 

82,744 

 

 

53,100 

 

 

Net gain from Suffolk Downs' sale of a partial interest

 

 

 

12,525 

 

 

 

 

Real Estate Fund placement fees

 

 

 

(3,451)

 

 

(5,937)

 

 

Net loss on extinguishment of debt

 

 

 

 

 

(10,782)

 

 

Net income attributable to noncontrolling interests in the Operating Partnership

 

(35,327)

 

 

(41,059)

 

 

(44,033)

 

 

Preferred unit distributions of the Operating Partnership

 

(9,936)

 

 

(14,853)

 

 

(11,195)

 

 

 

 

 

 

 

 

$

(66,522)

 

$

188,649 

 

$

199,377 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

The amounts in these captions (for this table only) exclude the mark-to-market of our deferred compensation plan assets and offsetting liability.

181

 


 

  

ITEM 9.        changes in and disagreements with accountants on accounting and financial disclosure

None.

 

 

ITEM 9A.     Controls and procedures

Disclosure Controls and Procedures:  Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a‑15 (e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this annual report on Form 10-K. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.

 

Internal Control Over Financial Reporting:  There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934, as amended) during the fourth quarter of the fiscal year to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Management’s Report on Internal Control over Financial Reporting

 

Management of Vornado Realty Trust, together with its consolidated subsidiaries (the “Company”), is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed under the supervision of our principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.

 

As of December 31, 2012, management conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that our internal control over financial reporting as of December 31, 2012 was effective.

 

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States, and that receipts and expenditures are being made only in accordance with authorizations of management and our trustees; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

 

The effectiveness of our internal control over financial reporting as of December 31, 2012 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing on page 183, which expresses an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2012.

182

 


 

  

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

Shareholders and Board of Trustees

Vornado Realty Trust

New York, New York

 

We have audited the internal control over financial reporting of Vornado Realty Trust, together with its consolidated subsidiaries (the “Company”) as of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

 

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of trustees, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and trustees of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

 

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

 

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2012 of the Company and our report dated February 26, 2013 expressed an unqualified opinion on those financial statements and financial statement schedules.

 

/s/ DELOITTE & TOUCHE LLP

 

Parsippany, New Jersey

February 26, 2013

183

 


 

  

ITEM 9B.     Other information

 

None.

PART III

 

ITEM 10.      Directors, Executive Officers and Corporate Governance

Information relating to trustees of the Registrant, including its audit committee and audit committee financial expert, will be contained in a definitive Proxy Statement involving the election of trustees under the caption “Election of Trustees” which the Registrant will file with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934 not later than 120 days after December 31, 2012, and such information is incorporated herein by reference. Also incorporated herein by reference is the information under the caption “16(a) Beneficial Ownership Reporting Compliance” of the Proxy Statement.

 

The following is a list of the names, ages, principal occupations and positions with Vornado of the executive officers of Vornado and the positions held by such officers during the past five years. All executive officers of Vornado have terms of office that run until the next succeeding meeting of the Board of Trustees of Vornado following the Annual Meeting of Shareholders unless they are removed sooner by the Board.

 

 

 

 

 

PRINCIPAL OCCUPATION, POSITION AND OFFICE

Name

 

Age

 

(Current and during past five years with Vornado unless otherwise stated)

 

 

 

 

 

Steven Roth

 

71 

 

Chairman of the Board; Chief Executive Officer from May 1989 to May 2009; Managing General Partner of Interstate Properties, an owner of shopping centers and an investor in securities and partnerships; Chief Executive Officer of Alexander’s, Inc. since March 1995, a Director since 1989, and Chairman since May 2004.

 

 

 

 

 

Michael D. Fascitelli

 

56 

 

Chief Executive Officer since May 2009; President and a Trustee since December 1996; President of Alexander’s Inc. since August 2000 and Director since December 1996; Partner at Goldman, Sachs & Co. in charge of its real estate practice from December 1992 to December 1996; and Vice President at Goldman, Sachs & Co., prior to December 1992.

 

 

 

 

 

Michael J. Franco

 

44 

 

Executive Vice President - Co-Head of Acquisitions and Capital Markets since November 2010; Managing Director (2003-2010) and Executive Director (2001-2003) of the Real Estate Investing Group of Morgan Stanley.

 

 

 

 

 

David R. Greenbaum

 

61 

 

President of the New York Division since April 1997 (date of our acquisition); President of Mendik Realty (the predecessor to the New York Office division) from 1990 until April 1997.

 

 

 

 

 

Joseph Macnow

 

67 

 

Executive Vice President - Finance and Administration since January 1998 and Chief Financial Officer since March 2001; Vice President and Chief Financial Officer of the Company from 1985 to January 1998; Executive Vice President and Chief Financial Officer of Alexander's Inc. since August 1995.

 

 

 

 

 

Mitchell N. Schear

 

54 

 

President of Vornado/Charles E. Smith L.P. (our Washington, DC division) since April 2003; President of the Kaempfer Company from 1998 to April 2003 (date acquired by us).

 

 

 

 

 

Wendy Silverstein

 

52 

 

Executive Vice President - Co-Head of Acquisitions and Capital Markets since November 2010; Executive Vice President of Capital Markets since 1998; Senior Credit Officer of Citicorp Real Estate and Citibank, N.A. from 1986 to 1998.

 

 

The Registrant has adopted a Code of Business Conduct and Ethics that applies to, among others, Michael Fascitelli, its principal executive officer, and Joseph Macnow, its principal financial and accounting officer. This Code is available on our website at www.vno.com.

184

 


 

  

ITEM 11.      Executive Compensation

Information relating to executive officer and director compensation will be contained in the Proxy Statement referred to above in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Executive Compensation” and such information is incorporated herein by reference.

 

 

 

ITEM 12.      Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information relating to security ownership of certain beneficial owners and management will be contained in the Proxy Statement referred to in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Principal Security Holders” and such information is incorporated herein by reference.

 

                      Equity compensation plan information

The following table provides information as of December 31, 2012 regarding our equity compensation plans.

 

 

 

 

 

 

 

 

 

 

Number of securities remaining

 

 

 

 

Number of securities to be

 

 

 

Weighted-average

 

available for future issuance

 

 

 

 

issued upon exercise of

 

 

 

exercise price of

 

under equity compensation plans

 

 

 

 

outstanding options,

 

 

 

outstanding options,

 

(excluding securities reflected in

 

Plan Category

 

warrants and rights

 

 

 

warrants and rights

 

the second column)

 

Equity compensation plans approved

 

 

 

 

 

 

 

 

 

 

by security holders

 

4,625,981 

(1)

 

$

67.16 

 

5,136,249 

(2)

Equity compensation awards not

 

 

 

 

 

 

 

 

 

 

approved by security holders

 

 

 

 

 

 

Total

 

4,625,981 

 

 

$

67.16 

 

5,136,249 

 

___________________________

 

 

 

 

 

 

 

 

 

(1)

Includes an aggregate of 1,265,909 shares/units, comprised of (i) 48,020 restricted common shares, (ii) 832,425 restricted Operating Partnership units and (iii) 385,464 Out-Performance Plan units, which do not have an exercise price.

 

 

 

 

 

 

 

 

 

 

 

(2)

Based on awards being granted as "Full Value Awards," as defined. If we were to grant "Not Full Value Awards," as defined, the number of securities available for future grants would be 10,272,498.

 

 

 

ITEM 13.      Certain Relationships and Related Transactions, and Director Independence

Information relating to certain relationships and related transactions will be contained in the Proxy Statement referred to in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Certain Relationships and Related Transactions” and such information is incorporated herein by reference.

 

 

 

ITEM 14.      Principal Accounting Fees and Services

Information relating to Principal Accounting fees and services will be contained in the Proxy Statement referred to in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Ratification of Selection of Independent Auditors” and such information is incorporated herein by reference.

185

 


 

  

PART IV

 

Item 15.              Exhibits, Financial Statement Schedules

(a)     The following documents are filed as part of this report:

 

1.     The consolidated financial statements are set forth in Item 8 of this Annual Report on Form 10-K.

 

The following financial statement schedules should be read in conjunction with the financial statements included in Item 8 of this Annual Report on Form 10-K.

 

 

Pages in this

 

 

 

Annual Report

 

 

 

on Form 10-K

 

 

II--Valuation and Qualifying Accounts--years ended December 31, 2012, 2011 and 2010

188 

 

 

III--Real Estate and Accumulated Depreciation as of December 31, 2012

189 

 

 

Schedules other than those listed above are omitted because they are not applicable or the information required is included in the consolidated financial statements or the notes thereto.

 

The following exhibits listed on the Exhibit Index, which is incorporated herein by reference, are filed with this Annual Report on Form 10-K.

 

Exhibit No.

 

 

 

10.45

 

 

Form of Vornado Realty Trust 2012 Outperformance Plan Award Agreement

12

 

 

Computation of Ratios

21

 

 

Subsidiaries of Registrant

23

 

 

Consent of Independent Registered Public Accounting Firm

31.1

 

 

Rule 13a-14 (a) Certification of Chief Executive Officer

31.2

 

 

Rule 13a-14 (a) Certification of Chief Financial Officer

32.1

 

 

Section 1350 Certification of the Chief Executive Officer

32.2

 

 

Section 1350 Certification of the Chief Financial Officer

101.INS

 

 

XBRL Instance Document

101.SCH

 

 

XBRL Taxonomy Extension Schema

101.CAL

 

 

XBRL Taxonomy Extension Calculation Linkbase

101.DEF

 

 

XBRL Taxonomy Extension Definition Linkbase

101.LAB

 

 

XBRL Taxonomy Extension Label Linkbase

101.PRE

 

 

XBRL Taxonomy Extension Presentation Linkbase

 

 

 

 

 

 

 

 

186

 


 

  

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

VORNADO REALTY TRUST

 

 

(Registrant)

 

 

 

 

 

 

Date: February 26, 2013

By:

/s/ Joseph Macnow

 

 

Joseph Macnow, Executive Vice President -
Finance and Administration and
Chief Financial Officer (duly authorized officer
and principal financial and accounting officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

 

 

Signature

 

Title

 

Date

 

 

 

 

 

 

By:

/s/Steven Roth

 

Chairman of the Board of Trustees

 

February 26, 2013

 

     (Steven Roth)

 

 

 

 

 

 

 

 

 

 

By:

/s/Michael D. Fascitelli

 

President and Chief Executive Officer

 

February 26, 2013

 

     (Michael D. Fascitelli)

 

     (Principal Executive Officer)

 

 

 

 

 

 

 

 

By:

/s/Candace K. Beinecke

 

Trustee

 

February 26, 2013

 

     (Candace K. Beinecke)

 

 

 

 

 

 

 

 

 

 

By:

/s/Robert P. Kogod

 

Trustee

 

February 26, 2013

 

     (Robert P. Kogod)

 

 

 

 

 

 

 

 

 

 

By:

/s/Michael Lynne

 

Trustee

 

February 26, 2013

 

     (Michael Lynne)

 

 

 

 

 

 

 

 

 

 

By:

/s/David Mandelbaum

 

Trustee

 

February 26, 2013

 

     (David Mandelbaum)

 

 

 

 

 

 

 

 

 

 

By:

/s/Ronald G. Targan

 

Trustee

 

February 26, 2013

 

     (Ronald G. Targan)

 

 

 

 

 

 

 

 

 

 

By:

/s/Daniel R. Tisch

 

Trustee

 

February 26, 2013

 

     (Daniel R. Tisch)

 

 

 

 

 

 

 

 

 

 

By:

/s/Richard R. West

 

Trustee

 

February 26, 2013

 

     (Richard R. West)

 

 

 

 

 

 

 

 

 

 

By:

/s/Russell B. Wight

 

Trustee

 

February 26, 2013

 

     (Russell B. Wight, Jr.)

 

 

 

 

 

 

 

 

 

 

By:

/s/Joseph Macnow

 

Executive Vice President — Finance and

 

February 26, 2013

 

     (Joseph Macnow)

 

     Administration and Chief Financial Officer
     (Principal Financial and Accounting Officer)

 

 

187

 


 
 

  

VORNADO REALTY TRUST

 

SCHEDULE II

 

VALUATION AND QUALIFYING ACCOUNTS

 

December 31, 2012

 

(Amounts in Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Column A

 

Column B

 

Column C

 

Column D

 

Column E

 

 

 

 

 

 

 

 

 

 

 

Additions

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

 

Charged

 

Uncollectible

 

Balance

 

 

 

 

 

 

 

 

Beginning

 

Against

 

Accounts

 

at End

 

 

 

 

 

Description

 

of Year

 

Operations

 

Written-off

 

of Year

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2012:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for doubtful accounts

 

$

46,531 

 

$

9,697 

 

$

(15,389)

 

$

40,839 

 

 

 

 

 

Year Ended December 31, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for doubtful accounts

 

$

140,780 

 

$

(56,995)

 

$

(37,254)

 

$

46,531 

 

 

 

 

 

Year Ended December 31, 2010:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for doubtful accounts

 

$

239,785 

 

$

(23,893)

 

$

(75,112)

 

$

140,780 

 

 

 

188

 


 
 

  

VORNADO REALTY TRUST

 

SCHEDULE III

 

REAL ESTATE AND ACCUMULATED DEPRECIATION

 

(Amounts in thousands)

 

COLUMN A

 

COLUMN B

 

COLUMN C

 

 

COLUMN D

 

 

COLUMN E

 

 

COLUMN F

 

COLUMN G

 

COLUMN H

 

COLUMN I

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross amount at which

 

 

 

 

 

 

 

 

Life on which

 

 

 

 

 

 

 

 

 

Initial cost to company (1)

 

 

 

 

carried at close of period

 

 

 

 

 

 

 

 

depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

in latest

 

 

 

 

 

 

 

 

 

 

 

 

Building

 

 

capitalized

 

 

 

 

Buildings

 

 

 

 

depreciation

 

 

 

 

 

income

 

 

 

 

 

 

 

 

 

 

 

 

and

 

 

subsequent

 

 

 

 

and

 

 

 

 

and

 

Date of

 

Date

 

statement

 

Description

Encumbrances

 

Land

 

improvements

 

 

to acquisition

 

 

Land

 

improvements

 

Total (2)

 

amortization

 

construction (3)

 

acquired

 

is computed

 

 

New York

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manhattan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1290 Avenue of the Americas

$

950,000 

 

$

515,539 

 

$

923,653 

 

$

106,998 

 

$

515,539 

 

$

1,030,651 

 

$

1,546,190 

 

$

155,820 

 

1963 

 

2007 

 

(4)

 

 

 

 

350 Park Avenue

 

300,000 

 

 

265,889 

 

 

363,381 

 

 

29,732 

 

 

265,889 

 

 

393,113 

 

 

659,002 

 

 

59,956 

 

1960 

 

2006 

 

(4)

 

 

 

 

666 Fifth Avenue (Retail Condo)

 

 

 

188,359 

 

 

469,461 

 

 

 

 

188,359 

 

 

469,461 

 

 

657,820 

 

 

997 

 

 

2012

 

(4)

 

 

 

 

One Penn Plaza

 

 

 

 

 

412,169 

 

 

167,875 

 

 

 

 

580,044 

 

 

580,044 

 

 

209,069 

 

1972

 

1998

 

(4)

 

 

 

 

100 West 33rd Street (Manhattan Mall)

 

223,242 

 

 

242,776 

 

 

247,970 

 

 

8,644 

 

 

242,776 

 

 

256,614 

 

 

499,390 

 

 

37,742 

 

1911 

 

2007

 

(4)

 

 

 

 

1540 Broadway

 

 

 

105,914 

 

 

214,208 

 

 

23,267 

 

 

105,914 

 

 

237,475 

 

 

343,389 

 

 

22,664 

 

 

2006

 

(4)

 

 

 

 

Two Penn Plaza

 

425,000 

 

 

53,615 

 

 

164,903 

 

 

79,375 

 

 

52,689 

 

 

245,204 

 

 

297,893 

 

 

109,603 

 

1968

 

1997

 

(4)

 

 

 

 

Manhattan Mall

 

101,758 

 

 

88,595 

 

 

113,473 

 

 

72,532 

 

 

88,597 

 

 

186,003 

 

 

274,600 

 

 

31,710 

 

2009

 

2007

 

(4)

 

 

 

 

1535 Broadway (Marriott Marquis)

 

 

 

 

 

240,000 

 

 

9,285 

 

 

 

 

249,285 

 

 

249,285 

 

 

 

 

2012

 

(4)

 

 

 

 

770 Broadway

 

353,000 

 

 

52,898 

 

 

95,686 

 

 

85,669 

 

 

52,898 

 

 

181,355 

 

 

234,253 

 

 

65,263 

 

1907

 

1998

 

(4)

 

 

 

 

90 Park Avenue

 

 

 

8,000 

 

 

175,890 

 

 

37,203 

 

 

8,000 

 

 

213,093 

 

 

221,093 

 

 

84,188 

 

1964

 

1997

 

(4)

 

 

 

 

888 Seventh Avenue

 

318,554 

 

 

 

 

117,269 

 

 

100,034 

 

 

 

 

217,303 

 

 

217,303 

 

 

82,773 

 

1980

 

1998

 

(4)

 

 

 

 

Eleven Penn Plaza

 

330,000 

 

 

40,333 

 

 

85,259 

 

 

54,046 

 

 

40,333 

 

 

139,305 

 

 

179,638 

 

 

55,524 

 

1923

 

1997

 

(4)

 

 

 

 

909 Third Avenue

 

199,198 

 

 

 

 

120,723 

 

 

56,945 

 

 

 

 

177,668 

 

 

177,668 

 

 

55,447 

 

1969

 

1999

 

(4)

 

 

 

 

640 Fifth Avenue

 

 

 

38,224 

 

 

25,992 

 

 

113,339 

 

 

38,224 

 

 

139,331 

 

 

177,555 

 

 

57,145 

 

1950

 

1997

 

(4)

 

 

 

 

1740 Broadway

 

 

 

26,971 

 

 

102,890 

 

 

38,241 

 

 

26,971 

 

 

141,131 

 

 

168,102 

 

 

51,424 

 

1950

 

1997

 

(4)

 

 

 

 

150 East 58th Street

 

 

 

39,303 

 

 

80,216 

 

 

29,327 

 

 

39,303 

 

 

109,543 

 

 

148,846 

 

 

41,540 

 

1969

 

1998

 

(4)

 

 

 

 

595 Madison Avenue

 

 

 

62,731 

 

 

62,888 

 

 

18,772 

 

 

62,731 

 

 

81,660 

 

 

144,391 

 

 

26,006 

 

1968

 

1999

 

(4)

 

 

 

 

828-850 Madison Avenue

 

80,000 

 

 

107,937 

 

 

28,261 

 

 

10 

 

 

107,937 

 

 

28,271 

 

 

136,208 

 

 

5,418 

 

 

2005 

 

(4)

 

 

 

 

4 Union Square South

 

120,000 

 

 

24,079 

 

 

55,220 

 

 

2,507 

 

 

24,079 

 

 

57,727 

 

 

81,806 

 

 

12,152 

 

1965/2004

 

1993 

 

(4)

 

 

 

 

866 United Nations Plaza

 

44,978 

 

 

32,196 

 

 

37,534 

 

 

9,088 

 

 

32,196 

 

 

46,622 

 

 

78,818 

 

 

19,111 

 

1966

 

1997

 

(4)

 

 

 

 

510 Fifth Avenue

 

31,253 

 

 

34,602 

 

 

18,728 

 

 

17,631 

 

 

34,602 

 

 

36,359 

 

 

70,961 

 

 

1,764 

 

 

2010 

 

(4)

 

 

 

 

478-482 Broadway

 

 

 

20,000 

 

 

13,375 

 

 

27,766 

 

 

20,000 

 

 

41,141 

 

 

61,141 

 

 

4,395 

 

2009 

 

2007 

 

(4)

 

 

 

 

20 Broad Street

 

 

 

 

 

28,760 

 

 

27,419 

 

 

 

 

56,179 

 

 

56,179 

 

 

17,293 

 

1956

 

1998

 

(4)

 

 

 

 

40 Fulton Street

 

 

 

15,732 

 

 

26,388 

 

 

10,863 

 

 

15,732 

 

 

37,251 

 

 

52,983 

 

 

12,384 

 

1987

 

1998

 

(4)

 

 

 

 

40 East 66th Street

 

 

 

13,616 

 

 

34,635 

 

 

121 

 

 

13,616 

 

 

34,756 

 

 

48,372 

 

 

6,067 

 

 

2005 

 

(4)

 

 

 

 

155 Spring Street

 

 

 

13,700 

 

 

30,544 

 

 

2,363 

 

 

13,700 

 

 

32,907 

 

 

46,607 

 

 

4,772 

 

 

2007 

 

(4)

 

 

 

 

689 Fifth Avenue

 

 

 

19,721 

 

 

13,446 

 

 

8,932 

 

 

19,721 

 

 

22,378 

 

 

42,099 

 

 

7,658 

 

1925

 

1998

 

(4)

 

 

 

 

435 Seventh Avenue

 

98,000 

 

 

19,893 

 

 

19,091 

 

 

37 

 

 

19,893 

 

 

19,128 

 

 

39,021 

 

 

4,995 

 

2002

 

1997 

 

(4)

 

 

 

 

692 Broadway

 

 

 

6,053 

 

 

22,908 

 

 

2,884 

 

 

6,053 

 

 

25,792 

 

 

31,845 

 

 

4,591 

 

 

 

2005 

 

(4)

 

 

 

 

715 Lexington Avenue

 

 

 

 

 

26,903 

 

 

 

 

 

 

26,903 

 

 

26,903 

 

 

5,174 

 

1923 

 

2001 

 

(4)

 

 

 

 

677-679 Madison Avenue

 

 

 

13,070 

 

 

9,640 

 

 

388 

 

 

13,070 

 

 

10,028 

 

 

23,098 

 

 

1,632 

 

 

 

2006

 

(4)

 

 

 

 

484-486 Broadway

 

 

 

10,000 

 

 

6,688 

 

 

4,756 

 

 

10,000 

 

 

11,444 

 

 

21,444 

 

 

1,122 

 

2009

 

2007 

 

(4)

 

 

 

 

431 Seventh Avenue

 

 

 

16,700 

 

 

2,751 

 

 

 

 

16,700 

 

 

2,751 

 

 

19,451 

 

 

395 

 

 

 

2007 

 

(4)

 

 

 

 

330 West 34th Street

 

 

 

 

 

8,599 

 

 

7,067 

 

 

 

 

15,666 

 

 

15,666 

 

 

5,165 

 

 

 

1998

 

(4)

 

 

 

 

1135 Third Avenue

 

 

 

7,844 

 

 

7,844 

 

 

(2,295)

 

 

 

 

13,393 

 

 

13,393 

 

 

 

 

 

1997 

 

(4)

 

 

 

 

1540 Broadway Garage

 

 

 

4,086 

 

 

8,914 

 

 

 

 

4,086 

 

 

8,914 

 

 

13,000 

 

 

1,461 

 

 

 

2006 

 

(4)

 

 

 

 

148 Spring Street

 

 

 

3,200 

 

 

8,112 

 

 

284 

 

 

3,200 

 

 

8,396 

 

 

11,596 

 

 

946 

 

 

 

2008 

 

(4)

 

 

 

 

150 Spring Street

 

 

 

3,200 

 

 

5,822 

 

 

137 

 

 

3,200 

 

 

5,959 

 

 

9,159 

 

 

703 

 

 

 

2008 

 

(4)

 

 

189

 


 
 

  

VORNADO REALTY TRUST

 

SCHEDULE III

 

REAL ESTATE AND ACCUMULATED DEPRECIATION

 

(Amounts in thousands)

 

COLUMN A

 

COLUMN B

 

COLUMN C

 

 

COLUMN D

 

 

COLUMN E

 

 

COLUMN F

 

COLUMN G

 

COLUMN H

 

COLUMN I

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross amount at which

 

 

 

 

 

 

 

 

Life on which

 

 

 

 

 

 

 

 

 

Initial cost to company (1)

 

 

 

 

carried at close of period

 

 

 

 

 

 

 

 

depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

in latest

 

 

 

 

 

 

 

 

 

 

 

 

Building

 

 

capitalized

 

 

 

 

Buildings

 

 

 

 

depreciation

 

 

 

 

 

income

 

 

 

 

 

 

 

 

 

 

 

 

and

 

 

subsequent

 

 

 

 

and

 

 

 

 

and

 

Date of

 

Date

 

statement

 

Description

Encumbrances

 

Land

 

improvements

 

 

to acquisition

 

 

Land

 

improvements

 

Total (2)

 

amortization

 

construction (3)

 

acquired

 

is computed

 

 

 

 

334 Canal Street

$

 

$

1,693 

 

$

6,507 

 

$

545 

 

$

 

$

8,745 

 

$

8,745 

 

$

 

 

2011

 

(4)

 

 

 

 

488 Eighth Avenue

 

 

 

10,650 

 

 

1,767 

 

 

(4,674)

 

 

6,859 

 

 

884 

 

 

7,743 

 

 

112 

 

 

2007 

 

(4)

 

 

 

 

608 Fifth Avenue

 

 

 

 

 

 

 

5,513 

 

 

 

 

5,513 

 

 

5,513 

 

 

 

1932

 

2012

 

(4)

 

 

 

 

484 Eighth Avenue

 

 

 

3,856 

 

 

762 

 

 

18 

 

 

3,856 

 

 

780 

 

 

4,636 

 

 

304 

 

 

1997 

 

(4)

 

 

 

 

825 Seventh Avenue

 

 

 

1,483 

 

 

697 

 

 

33 

 

 

1,483 

 

 

730 

 

 

2,213 

 

 

279 

 

 

1997 

 

(4)

 

 

 

 

Other (Primarily Signage)

 

 

 

 

 

5,548 

 

 

75,473 

 

 

36,096 

 

 

44,925 

 

 

81,021 

 

 

6,611 

 

 

 

 

 

 

 

 

 

 

 

Total New York

 

3,574,983 

 

 

2,112,458 

 

 

4,445,475 

 

 

1,228,150 

 

 

2,134,302 

 

 

5,651,781 

 

 

7,786,083 

 

 

1,271,375 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independence Plaza

 

334,225 

 

 

309,848 

 

 

527,588 

 

 

(10)

 

 

309,848 

 

 

527,578 

 

 

837,426 

 

 

366 

 

1974

 

2012

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Jersey

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paramus

 

 

 

 

 

 

 

24,254 

 

 

1,033 

 

 

23,221 

 

 

24,254 

 

 

14,991 

 

1967 

 

1987 

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel Pennsylvania

 

 

 

29,904 

 

 

121,712 

 

 

75,865 

 

 

29,904 

 

 

197,577 

 

 

227,481 

 

 

74,266 

 

1919

 

1997

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total New York

 

3,909,208 

 

 

2,452,210 

 

 

5,094,775 

 

 

1,328,259 

 

 

2,475,087 

 

 

6,400,157 

 

 

8,875,244 

 

 

1,360,998 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, DC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, DC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011-2451 Crystal Drive

 

270,922 

 

 

100,935 

 

 

409,920 

 

 

121,589 

 

 

100,228 

 

 

532,216 

 

 

632,444 

 

 

162,833 

 

1984-1989

 

2002 

 

(4)

 

 

 

 

2001 Jefferson Davis Highway,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2100/2200 Crystal Drive, 223 23rd

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Street, 2221 South Clark Street, Crystal

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

City Shops at 2100, 220 20th Street

 

73,939 

 

 

57,213 

 

 

131,206 

 

 

192,915 

 

 

57,070 

 

 

324,264 

 

 

381,334 

 

 

77,865 

 

1964-1969

 

2002 

 

(4)

 

 

 

 

1550-1750 Crystal Drive/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

241-251 18th Street

 

117,390 

 

 

64,817 

 

 

218,330 

 

 

66,934 

 

 

64,652 

 

 

285,429 

 

 

350,081 

 

 

81,804 

 

1974-1980

 

2002 

 

(4)

 

 

 

 

Riverhouse Apartments

 

259,546 

 

 

118,421 

 

 

125,078 

 

 

60,515 

 

 

138,696 

 

 

165,318 

 

 

304,014 

 

 

24,203 

 

 

2007 

 

(4)

 

 

 

 

Skyline Place (6 buildings)

 

460,093 

 

 

41,986 

 

 

221,869 

 

 

26,615 

 

 

41,862 

 

 

248,608 

 

 

290,470 

 

 

71,548 

 

1973-1984

 

2002 

 

(4)

 

 

 

 

1215, 1225 S. Clark Street/ 200, 201

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12th Street S.

 

87,221 

 

 

47,594 

 

 

177,373 

 

 

27,022 

 

 

47,465 

 

 

204,524 

 

 

251,989 

 

 

60,481 

 

1983-1987

 

2002 

 

(4)

 

 

 

 

1229-1231 25th Street (West End 25)

 

101,671 

 

 

67,049 

 

 

5,039 

 

 

105,980 

 

 

68,198 

 

 

109,870 

 

 

178,068 

 

 

8,647 

 

 

2007 

 

(4)

 

 

 

 

2101 L Street

 

150,000 

 

 

32,815 

 

 

51,642 

 

 

82,520 

 

 

39,768 

 

 

127,209 

 

 

166,977 

 

 

21,412 

 

1975 

 

2003 

 

(4)

 

 

 

 

1800, 1851 and 1901 South Bell Street

 

 

 

37,551 

 

 

118,806 

 

 

(13,719)

 

 

37,551 

 

 

105,087 

 

 

142,638 

 

 

28,021 

 

1968 

 

2002 

 

(4)

 

 

 

 

2200 / 2300 Clarendon Blvd

 

47,353 

 

 

 

 

105,475 

 

 

31,720 

 

 

 

 

137,195 

 

 

137,195 

 

 

43,164 

 

1988-1989

 

2002 

 

(4)

 

 

 

 

Bowen Building - 875 15th Street, NW

 

115,022 

 

 

30,077 

 

 

98,962 

 

 

1,335 

 

 

30,176 

 

 

100,198 

 

 

130,374 

 

 

19,192 

 

2004 

 

2005 

 

(4)

 

 

 

 

One Skyline Tower

 

140,056 

 

 

12,266 

 

 

75,343 

 

 

34,625 

 

 

12,231 

 

 

110,003 

 

 

122,234 

 

 

30,706 

 

1988 

 

2002 

 

(4)

 

 

 

 

1875 Connecticut Ave, NW

 

46,860 

 

 

36,303 

 

 

82,004 

 

 

3,704 

 

 

35,886 

 

 

86,125 

 

 

122,011 

 

 

15,617 

 

1963 

 

2007 

 

(4)

 

 

 

 

1399 New York Avenue, NW

 

 

 

33,481 

 

 

67,363 

 

 

2,439 

 

 

34,178 

 

 

69,105 

 

 

103,283 

 

 

2,432 

 

 

2011 

 

(4)

 

 

 

 

H Street - North 10-1D Land Parcel

 

 

 

104,473 

 

 

55 

 

 

(10,212)

 

 

87,666 

 

 

6,650 

 

 

94,316 

 

 

 

 

2007 

 

(4)

 

 

 

 

1825 Connecticut Ave, NW

 

46,366 

 

 

33,090 

 

 

61,316 

 

 

(5,311)

 

 

32,726 

 

 

56,369 

 

 

89,095 

 

 

10,246 

 

1956 

 

2007 

 

(4)

 

 

 

 

Warehouses

 

 

 

106,946 

 

 

1,326 

 

 

(21,224)

 

 

83,400 

 

 

3,648 

 

 

87,048 

 

 

1,330 

 

 

2007 

 

(4)

 

 

190

 


 
 

  

VORNADO REALTY TRUST

 

SCHEDULE III

 

REAL ESTATE AND ACCUMULATED DEPRECIATION

 

(Amounts in thousands)

 

COLUMN A

 

COLUMN B

 

COLUMN C

 

 

COLUMN D

 

 

COLUMN E

 

 

COLUMN F

 

COLUMN G

 

COLUMN H

 

COLUMN I

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross amount at which

 

 

 

 

 

 

 

 

Life on which

 

 

 

 

 

 

 

 

 

Initial cost to company (1)

 

 

 

 

carried at close of period

 

 

 

 

 

 

 

 

depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

in latest

 

 

 

 

 

 

 

 

 

 

 

 

Building

 

 

capitalized

 

 

 

 

Buildings

 

 

 

 

depreciation

 

 

 

 

 

income

 

 

 

 

 

 

 

 

 

 

 

 

and

 

 

subsequent

 

 

 

 

and

 

 

 

 

and

 

Date of

 

Date

 

statement

 

Description

Encumbrances

 

Land

 

improvements

 

 

to acquisition

 

 

Land

 

improvements

 

Total (2)

 

amortization

 

construction (3)

 

acquired

 

is computed

 

 

 

 

1235 S. Clark Street

$

 

$

15,826 

 

$

53,894 

 

$

16,089 

 

$

15,826 

 

$

69,983 

 

$

85,809 

 

$

17,726 

 

1981 

 

2002 

 

(4)

 

 

 

 

Commerce Executive

 

 

 

13,401 

 

 

58,705 

 

 

13,471 

 

 

13,363 

 

 

72,214 

 

 

85,577 

 

 

22,476 

 

1985-1989

 

2002 

 

(4)

 

 

 

 

Seven Skyline Place

 

104,808 

 

 

10,292 

 

 

58,351 

 

 

(2,859)

 

 

10,262 

 

 

55,522 

 

 

65,784 

 

 

14,530 

 

2001 

 

2002 

 

(4)

 

 

 

 

Crystal City Hotel

 

 

 

8,000 

 

 

47,191 

 

 

8,945 

 

 

8,000 

 

 

56,136 

 

 

64,136 

 

 

11,232 

 

1968 

 

2004 

 

(4)

 

 

 

 

1150 17th Street

 

28,728 

 

 

23,359 

 

 

24,876 

 

 

14,859 

 

 

24,723 

 

 

38,371 

 

 

63,094 

 

 

12,148 

 

1970 

 

2002 

 

(4)

 

 

 

 

1750 Pennsylvania Avenue

 

 

 

20,020 

 

 

30,032 

 

 

1,951 

 

 

21,170 

 

 

30,833 

 

 

52,003 

 

 

8,454 

 

1964 

 

2002 

 

(4)

 

 

 

 

1730 M Street

 

14,853 

 

 

10,095 

 

 

17,541 

 

 

9,701 

 

 

10,687 

 

 

26,650 

 

 

37,337 

 

 

9,054 

 

1963 

 

2002 

 

(4)

 

 

 

 

1726 M Street

 

 

 

9,450 

 

 

22,062 

 

 

2,969 

 

 

9,455 

 

 

25,026 

 

 

34,481 

 

 

4,290 

 

1964 

 

2006 

 

(4)

 

 

 

 

Democracy Plaza One

 

 

 

 

 

33,628 

 

 

(732)

 

 

 

 

32,896 

 

 

32,896 

 

 

13,558 

 

1987 

 

2002 

 

(4)

 

 

 

 

Crystal Drive Retail

 

 

 

 

 

20,465 

 

 

5,952 

 

 

 

 

26,417 

 

 

26,417 

 

 

9,130 

 

2004 

 

2004 

 

(4)

 

 

 

 

1109 South Capitol Street

 

 

 

11,541 

 

 

178 

 

 

(207)

 

 

11,597 

 

 

(85)

 

 

11,512 

 

 

 

 

 

2007 

 

(4)

 

 

 

 

South Capitol

 

 

 

4,009 

 

 

6,273 

 

 

(2,410)

 

 

 

 

7,872 

 

 

7,872 

 

 

 

 

 

2005 

 

(4)

 

 

 

 

H Street

 

 

 

1,763 

 

 

641 

 

 

41 

 

 

1,763 

 

 

682 

 

 

2,445 

 

 

126 

 

 

 

2005 

 

(4)

 

 

 

 

Other

 

 

 

 

 

51,767 

 

 

(48,216)

 

 

 

 

3,551 

 

 

3,551 

 

 

11 

 

 

 

 

 

 

 

 

Total Washington, DC

 

2,064,828 

 

 

1,052,773 

 

 

2,376,711 

 

 

727,001 

 

 

1,038,599 

 

 

3,117,886 

 

 

4,156,485 

 

 

782,236 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

California

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles (Beverly Connection)

 

 

 

72,996 

 

 

131,510 

 

 

24,412 

 

 

72,996 

 

 

155,922 

 

 

228,918 

 

 

22,556 

 

2008

 

2005

 

(4)

 

 

 

 

San Jose

 

104,856 

 

 

42,836 

 

 

104,262 

 

 

990 

 

 

42,836 

 

 

105,252 

 

 

148,088 

 

 

6,568 

 

2008

 

2010

 

(4)

 

 

 

 

Walnut Creek (1149 S. Main St)

 

 

 

2,699 

 

 

19,930 

 

 

 

 

2,699 

 

 

19,930 

 

 

22,629 

 

 

3,577 

 

 

 

2006

 

(4)

 

 

 

 

Pasadena

 

 

 

 

 

18,337 

 

 

2,248 

 

 

 

 

20,585 

 

 

20,585 

 

 

2,862 

 

 

 

2007

 

(4)

 

 

 

 

Signal Hill

 

 

 

9,652 

 

 

2,940 

 

 

 

 

9,652 

 

 

2,941 

 

 

12,593 

 

 

459 

 

 

 

2006

 

(4)

 

 

 

 

Walnut Creek (1556 Mount Diablo Blvd)

 

 

 

5,909 

 

 

 

 

1,304 

 

 

5,908 

 

 

1,305 

 

 

7,213 

 

 

11 

 

 

 

2007

 

(4)

 

 

 

 

San Bernadino (1522 E. Highland Ave)

 

 

 

1,651 

 

 

1,810 

 

 

(675)

 

 

1,329 

 

 

1,457 

 

 

2,786 

 

 

307 

 

 

 

2004

 

(4)

 

 

 

 

Corona

 

 

 

 

 

3,073 

 

 

 

 

 

 

3,073 

 

 

3,073 

 

 

647 

 

 

 

2004

 

(4)

 

 

 

 

Vallejo

 

 

 

 

 

2,945 

 

 

 

 

 

 

2,945 

 

 

2,945 

 

 

457 

 

 

 

2006

 

(4)

 

 

 

 

San Bernadino (648 W. 4th St)

 

 

 

1,597 

 

 

1,119 

 

 

(1,204)

 

 

889 

 

 

623 

 

 

1,512 

 

 

132 

 

 

 

2004

 

(4)

 

 

 

 

Mojave

 

 

 

 

 

2,250 

 

 

 

 

 

 

2,250 

 

 

2,250 

 

 

473 

 

 

 

2004

 

(4)

 

 

 

 

Barstow

 

 

 

856 

 

 

1,367 

 

 

(460)

 

 

679 

 

 

1,084 

 

 

1,763 

 

 

229 

 

 

 

2004

 

(4)

 

 

 

 

Colton (1904 North Rancho Avenue)

 

 

 

1,239 

 

 

954 

 

 

 

 

1,239 

 

 

954 

 

 

2,193 

 

 

201 

 

 

 

2004

 

(4)

 

 

 

 

Moreno Valley

 

 

 

639 

 

 

1,156 

 

 

 

 

639 

 

 

1,164 

 

 

1,803 

 

 

243 

 

 

 

2004

 

(4)

 

 

 

 

Rialto

 

 

 

434 

 

 

1,173 

 

 

(355)

 

 

338 

 

 

914 

 

 

1,252 

 

 

193 

 

 

 

2004

 

(4)

 

 

 

 

Desert Hot Springs

 

 

 

197 

 

 

1,355 

 

 

 

 

197 

 

 

1,355 

 

 

1,552 

 

 

285 

 

 

 

2004

 

(4)

 

 

 

 

Yucaipa

 

 

 

663 

 

 

426 

 

 

 

 

663 

 

 

426 

 

 

1,089 

 

 

90 

 

 

 

2004

 

(4)

 

 

 

 

Riverside (5571 Mission Blvd)

 

 

 

209 

 

 

704 

 

 

 

 

209 

 

 

704 

 

 

913 

 

 

148 

 

 

 

2004

 

(4)

 

 

 

 

 

Total California

 

104,856 

 

 

141,577 

 

 

295,311 

 

 

26,269 

 

 

140,273 

 

 

322,884 

 

 

463,157 

 

 

39,438 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Connecticut

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Waterbury

 

14,226 

 

 

667 

 

 

4,504 

 

 

4,853 

 

 

667 

 

 

9,357 

 

 

10,024 

 

 

6,041 

 

1969

 

1969

 

(4)

 

 

 

 

Newington

 

11,437 

 

 

2,421 

 

 

1,200 

 

 

872 

 

 

2,421 

 

 

2,072 

 

 

4,493 

 

 

821 

 

1965

 

1965

 

(4)

 

 

 

 

 

Total Connecticut

 

25,663 

 

 

3,088 

 

 

5,704 

 

 

5,725 

 

 

3,088 

 

 

11,429 

 

 

14,517 

 

 

6,862 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Florida

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tampa (Hyde Park Village)

 

19,126 

 

 

8,000 

 

 

23,293 

 

 

5,841 

 

 

6,724 

 

 

30,410 

 

 

37,134 

 

 

6,005 

 

 

 

2005

 

(4)

 

 

191

 


 
 

  

VORNADO REALTY TRUST

 

SCHEDULE III

 

REAL ESTATE AND ACCUMULATED DEPRECIATION

 

(Amounts in thousands)

 

COLUMN A

 

COLUMN B

 

COLUMN C

 

 

COLUMN D

 

 

COLUMN E

 

 

COLUMN F

 

COLUMN G

 

COLUMN H

 

COLUMN I

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross amount at which

 

 

 

 

 

 

 

 

Life on which

 

 

 

 

 

 

 

 

 

Initial cost to company (1)

 

 

 

 

carried at close of period

 

 

 

 

 

 

 

 

depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

in latest

 

 

 

 

 

 

 

 

 

 

 

 

Building

 

 

capitalized

 

 

 

 

Buildings

 

 

 

 

depreciation

 

 

 

 

 

income

 

 

 

 

 

 

 

 

 

 

 

 

and

 

 

subsequent

 

 

 

 

and

 

 

 

 

and

 

Date of

 

Date

 

statement

 

Description

Encumbrances

 

Land

 

improvements

 

 

to acquisition

 

 

Land

 

improvements

 

Total (2)

 

amortization

 

construction (3)

 

acquired

 

is computed

 

 

 

Illinois

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lansing

$

 

$

2,135 

 

$

1,064 

 

$

71 

 

$

2,135 

 

$

1,135 

 

$

3,270 

 

$

175 

 

 

 

2006

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Iowa

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dubuque

 

 

 

 

 

1,479 

 

 

 

 

 

 

1,479 

 

 

1,479 

 

 

230 

 

 

 

2006

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maryland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rockville

 

 

 

3,470 

 

 

20,599 

 

 

100 

 

 

3,470 

 

 

20,699 

 

 

24,169 

 

 

4,032 

 

 

 

2005 

 

(4)

 

 

 

 

Baltimore (Towson)

 

15,900 

 

 

581 

 

 

3,227 

 

 

10,109 

 

 

581 

 

 

13,336 

 

 

13,917 

 

 

4,781 

 

1968 

 

1968 

 

(4)

 

 

 

 

Annapolis

 

 

 

 

 

9,652 

 

 

 

 

 

 

9,652 

 

 

9,652 

 

 

2,454 

 

 

 

2005 

 

(4)

 

 

 

 

Wheaton

 

 

 

 

 

5,367 

 

 

 

 

 

 

5,367 

 

 

5,367 

 

 

839 

 

 

 

2006

 

(4)

 

 

 

 

 

Total Maryland

 

15,900 

 

 

4,051 

 

 

38,845 

 

 

10,209 

 

 

4,051 

 

 

49,054 

 

 

53,105 

 

 

12,106 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Massachusetts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Springfield

 

5,830 

 

 

2,797 

 

 

2,471 

 

 

592 

 

 

2,797 

 

 

3,063 

 

 

5,860 

 

 

849 

 

1993

 

1966

 

(4)

 

 

 

 

Chicopee

 

8,452 

 

 

895 

 

 

 

 

 

 

895 

 

 

 

 

895 

 

 

 

1969

 

1969

 

(4)

 

 

 

 

Cambridge

 

 

 

 

 

 

 

260 

 

 

 

 

260 

 

 

260 

 

 

121 

 

 

 

 

 

 

 

 

 

 

 

Total Massachusetts

 

14,282 

 

 

3,692 

 

 

2,471 

 

 

852 

 

 

3,692 

 

 

3,323 

 

 

7,015 

 

 

970 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Michigan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Roseville

 

 

 

30 

 

 

6,128 

 

 

1,461 

 

 

30 

 

 

7,589 

 

 

7,619 

 

 

2,005 

 

 

 

2005

 

(4)

 

 

 

 

Battle Creek

 

 

 

1,264 

 

 

2,144 

 

 

(2,443)

 

 

264 

 

 

701 

 

 

965 

 

 

109 

 

 

 

2006

 

(4)

 

 

 

 

Midland

 

 

 

 

 

133 

 

 

86 

 

 

 

 

219 

 

 

219 

 

 

92 

 

 

 

2006

 

(4)

 

 

 

 

 

Total Michigan

 

 

 

1,294 

 

 

8,405 

 

 

(896)

 

 

294 

 

 

8,509 

 

 

8,803 

 

 

2,206 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Hampshire

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salem

 

 

 

6,083 

 

 

 

 

 

 

6,083 

 

 

 

 

6,083 

 

 

 

 

 

2006

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Jersey

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paramus (Bergen Town Center)

 

282,312 

 

 

19,884 

 

 

81,723 

 

 

370,825 

 

 

37,635 

 

 

434,797 

 

 

472,432 

 

 

55,752 

 

1957/2009

 

2003

 

(4)

 

 

 

 

North Bergen (Tonnelle Ave)

 

75,000 

 

 

24,493 

 

 

 

 

64,346 

 

 

31,806 

 

 

57,033 

 

 

88,839 

 

 

6,070 

 

2009

 

2006

 

(4)

 

 

 

 

Union (Springfield Avenue)

 

29,010 

 

 

19,700 

 

 

45,090 

 

 

 

 

19,700 

 

 

45,090 

 

 

64,790 

 

 

6,294 

 

 

 

2007

 

(4)

 

 

 

 

East Rutherford

 

13,836 

 

 

 

 

36,727 

 

 

60 

 

 

 

 

36,787 

 

 

36,787 

 

 

3,880 

 

2007

 

2007

 

(4)

 

 

 

 

Wayne Towne Center

 

 

 

 

 

26,137 

 

 

6,190 

 

 

 

 

32,327 

 

 

32,327 

 

 

1,519 

 

 

 

2010

 

(4)

 

 

 

 

East Hanover I and II

 

43,571 

 

 

2,232 

 

 

18,241 

 

 

10,563 

 

 

2,671 

 

 

28,365 

 

 

31,036 

 

 

14,016 

 

1962

 

1962/1998

 

(4)

 

 

 

 

Garfield

 

 

 

45 

 

 

8,068 

 

 

21,646 

 

 

45 

 

 

29,714 

 

 

29,759 

 

 

3,942 

 

2009

 

1998

 

(4)

 

 

 

 

Lodi (Washington Street)

 

8,940 

 

 

7,606 

 

 

13,125 

 

 

313 

 

 

7,606 

 

 

13,438 

 

 

21,044 

 

 

2,680 

 

 

 

2004

 

(4)

 

 

 

 

Englewood

 

11,924 

 

 

2,300 

 

 

17,245 

 

 

(6,827)

 

 

1,495 

 

 

11,223 

 

 

12,718 

 

 

1,568 

 

 

 

2007

 

(4)

 

 

 

 

Bricktown

 

32,525 

 

 

1,391 

 

 

11,179 

 

 

6,175 

 

 

1,391 

 

 

17,354 

 

 

18,745 

 

 

10,987 

 

1968

 

1968

 

(4)

 

 

 

 

North Plainfield

 

 

 

500 

 

 

13,983 

 

 

2,696 

 

 

500 

 

 

16,679 

 

 

17,179 

 

 

12,719 

 

1955

 

1989

 

(4)

 

 

 

 

Hazlet

 

 

 

7,400 

 

 

9,413 

 

 

 

 

7,400 

 

 

9,413 

 

 

16,813 

 

 

1,314 

 

 

 

2007

 

(4)

 

 

 

 

Totowa

 

25,217 

 

 

120 

 

 

11,994 

 

 

4,561 

 

 

120 

 

 

16,555 

 

 

16,675 

 

 

11,897 

 

1957/1999

 

1957

 

(4)

 

 

 

 

Carlstadt

 

 

 

 

 

16,457 

 

 

12 

 

 

 

 

16,469 

 

 

16,469 

 

 

2,133 

 

 

 

2007

 

(4)

 

 

192

 


 
 

  

VORNADO REALTY TRUST

 

SCHEDULE III

 

REAL ESTATE AND ACCUMULATED DEPRECIATION

 

(Amounts in thousands)

 

COLUMN A

 

COLUMN B

 

COLUMN C

 

 

COLUMN D

 

 

COLUMN E

 

 

COLUMN F

 

COLUMN G

 

COLUMN H

 

COLUMN I

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross amount at which

 

 

 

 

 

 

 

 

Life on which

 

 

 

 

 

 

 

 

 

Initial cost to company (1)

 

 

 

 

carried at close of period

 

 

 

 

 

 

 

 

depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

in latest

 

 

 

 

 

 

 

 

 

 

 

 

Building

 

 

capitalized

 

 

 

 

Buildings

 

 

 

 

depreciation

 

 

 

 

 

income

 

 

 

 

 

 

 

 

 

 

 

 

and

 

 

subsequent

 

 

 

 

and

 

 

 

 

and

 

Date of

 

Date

 

statement

 

Description

Encumbrances

 

Land

 

improvements

 

 

to acquisition

 

 

Land

 

improvements

 

Total (2)

 

amortization

 

construction (3)

 

acquired

 

is computed

 

 

 

 

East Brunswick II (339-341 Route 18 S.)

$

11,995 

 

$

2,098 

 

$

10,949 

 

$

2,888 

 

$

2,098 

 

$

13,837 

 

$

15,935 

 

$

8,536 

 

1972

 

1972

 

(4)

 

 

 

 

Marlton

 

17,574 

 

 

1,611 

 

 

3,464 

 

 

10,122 

 

 

1,611 

 

 

13,586 

 

 

15,197 

 

 

7,220 

 

1973

 

1973

 

(4)

 

 

 

 

Manalapan

 

21,423 

 

 

725 

 

 

7,189 

 

 

5,620 

 

 

1,046 

 

 

12,488 

 

 

13,534 

 

 

8,124 

 

1971

 

1971

 

(4)

 

 

 

 

Union (Route 22 and Morris Ave)

 

32,916 

 

 

3,025 

 

 

7,470 

 

 

2,469 

 

 

3,025 

 

 

9,939 

 

 

12,964 

 

 

4,815 

 

1962

 

1962

 

(4)

 

 

 

 

Hackensack

 

41,283 

 

 

692 

 

 

10,219 

 

 

1,687 

 

 

692 

 

 

11,906 

 

 

12,598 

 

 

8,971 

 

1963

 

1963

 

(4)

 

 

 

 

Cherry Hill

 

14,115 

 

 

5,864 

 

 

2,694 

 

 

3,637 

 

 

4,864 

 

 

7,331 

 

 

12,195 

 

 

4,050 

 

1964

 

1964

 

(4)

 

 

 

 

South Plainfield

 

5,216 

 

 

 

 

10,044 

 

 

1,469 

 

 

 

 

11,513 

 

 

11,513 

 

 

1,438 

 

 

 

2007

 

(4)

 

 

 

 

Watchung

 

15,342 

 

 

4,178 

 

 

5,463 

 

 

1,545 

 

 

4,441 

 

 

6,745 

 

 

11,186 

 

 

3,665 

 

1994

 

1959

 

(4)

 

 

 

 

Dover

 

13,389 

 

 

559 

 

 

6,363 

 

 

2,986 

 

 

559 

 

 

9,349 

 

 

9,908 

 

 

6,057 

 

1964

 

1964

 

(4)

 

 

 

 

Lodi (Route 17 N.)

 

11,548 

 

 

238 

 

 

9,446 

 

 

 

 

238 

 

 

9,446 

 

 

9,684 

 

 

3,127 

 

1999

 

1975

 

(4)

 

 

 

 

East Brunswick I (325-333 Route 18 S.)

 

25,328 

 

 

319 

 

 

6,220 

 

 

2,764 

 

 

319 

 

 

8,984 

 

 

9,303 

 

 

8,777 

 

1957

 

1957

 

(4)

 

 

 

 

Jersey City

 

20,642 

 

 

652 

 

 

7,495 

 

 

468 

 

 

652 

 

 

7,963 

 

 

8,615 

 

 

2,428 

 

1965

 

1965

 

(4)

 

 

 

 

Morris Plains

 

21,758 

 

 

1,104 

 

 

6,411 

 

 

952 

 

 

1,104 

 

 

7,363 

 

 

8,467 

 

 

6,620 

 

1961

 

1985

 

(4)

 

 

 

 

Middletown

 

17,685 

 

 

283 

 

 

5,248 

 

 

1,951 

 

 

283 

 

 

7,199 

 

 

7,482 

 

 

5,254 

 

1963

 

1963

 

(4)

 

 

 

 

Woodbridge

 

21,033 

 

 

1,509 

 

 

2,675 

 

 

1,779 

 

 

1,539 

 

 

4,424 

 

 

5,963 

 

 

2,496 

 

1959

 

1959

 

(4)

 

 

 

 

Delran

 

 

 

756 

 

 

4,468 

 

 

734 

 

 

756 

 

 

5,202 

 

 

5,958 

 

 

5,152 

 

1972

 

1972

 

(4)

 

 

 

 

Lawnside

 

10,879 

 

 

851 

 

 

3,164 

 

 

1,220 

 

 

851 

 

 

4,384 

 

 

5,235 

 

 

4,099 

 

1969

 

1969

 

(4)

 

 

 

 

Kearny

 

 

 

309 

 

 

3,376 

 

 

1,211 

 

 

309 

 

 

4,587 

 

 

4,896 

 

 

3,392 

 

1938

 

1959

 

(4)

 

 

 

 

Bordentown

 

 

 

498 

 

 

3,176 

 

 

1,178 

 

 

713 

 

 

4,139 

 

 

4,852 

 

 

4,022 

 

1958

 

1958

 

(4)

 

 

 

 

North Bergen (Kennedy Blvd)

 

5,188 

 

 

2,308 

 

 

636 

 

 

48 

 

 

2,308 

 

 

684 

 

 

2,992 

 

 

428 

 

1993

 

1959

 

(4)

 

 

 

 

Montclair

 

2,678 

 

 

66 

 

 

419 

 

 

381 

 

 

66 

 

 

800 

 

 

866 

 

 

674 

 

1972

 

1972

 

(4)

 

 

 

 

 

Total New Jersey

 

832,327 

 

 

113,316 

 

 

425,971 

 

 

525,669 

 

 

137,843 

 

 

927,113 

 

 

1,064,956 

 

 

234,116 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bronx (Bruckner Blvd)

 

 

 

66,100 

 

 

259,503 

 

 

512 

 

 

66,100 

 

 

260,015 

 

 

326,115 

 

 

38,965 

 

 

 

2007

 

(4)

 

 

 

 

Hicksville (Broadway Mall)

 

85,180 

 

 

126,324 

 

 

48,904 

 

 

(65,818)

 

 

75,179 

 

 

34,231 

 

 

109,410 

 

 

6,007 

 

 

 

2005 

 

(4)

 

 

 

 

Poughkeepsie

 

 

 

12,733 

 

 

12,026 

 

 

17,142 

 

 

8,469 

 

 

33,432 

 

 

41,901 

 

 

4,506 

 

2009

 

2005 

 

(4)

 

 

 

 

Huntington

 

16,960 

 

 

21,200 

 

 

33,667 

 

 

191 

 

 

21,200 

 

 

33,858 

 

 

55,058 

 

 

4,375 

 

 

 

2007 

 

(4)

 

 

 

 

Mt. Kisco

 

28,637 

 

 

22,700 

 

 

26,700 

 

 

416 

 

 

23,297 

 

 

26,519 

 

 

49,816 

 

 

3,351 

 

 

 

2007

 

(4)

 

 

 

 

Bronx (1750-1780 Gun Hill Road)

 

 

 

6,427 

 

 

11,885 

 

 

18,541 

 

 

6,428 

 

 

30,425 

 

 

36,853 

 

 

3,165 

 

2009

 

2005 

 

(4)

 

 

 

 

Staten Island

 

16,939 

 

 

11,446 

 

 

21,262 

 

 

787 

 

 

11,446 

 

 

22,049 

 

 

33,495 

 

 

4,921 

 

 

 

2004 

 

(4)

 

 

 

 

Inwood

 

 

 

12,419 

 

 

19,097 

 

 

519 

 

 

12,419 

 

 

19,616 

 

 

32,035 

 

 

3,881 

 

 

 

2004

 

(4)

 

 

 

 

Queens (99-01 Queens Blvd)

 

 

 

7,839 

 

 

20,392 

 

 

2,099 

 

 

7,839 

 

 

22,491 

 

 

30,330 

 

 

4,925 

 

 

 

2004 

 

(4)

 

 

 

 

West Babylon

 

 

 

6,720 

 

 

13,786 

 

 

69 

 

 

6,720 

 

 

13,855 

 

 

20,575 

 

 

2,003 

 

 

 

2007

 

(4)

 

 

 

 

Buffalo (Amherst)

 

 

 

5,743 

 

 

4,056 

 

 

8,520 

 

 

5,107 

 

 

13,212 

 

 

18,319 

 

 

4,718 

 

1968

 

1968

 

(4)

 

 

 

 

Freeport (437 E. Sunrise Highway)

 

21,758 

 

 

1,231 

 

 

4,747 

 

 

1,419 

 

 

1,231 

 

 

6,166 

 

 

7,397 

 

 

5,029 

 

1981

 

1981

 

(4)

 

 

 

 

Dewitt

 

 

 

 

 

7,116 

 

 

 

 

 

 

7,116 

 

 

7,116 

 

 

1,101 

 

 

 

2006

 

(4)

 

 

 

 

Oceanside

 

 

 

2,710 

 

 

2,306 

 

 

 

 

2,710 

 

 

2,306 

 

 

5,016 

 

 

322 

 

 

 

2007

 

(4)

 

 

193

 


 
 

  

VORNADO REALTY TRUST

 

SCHEDULE III

 

REAL ESTATE AND ACCUMULATED DEPRECIATION

 

(Amounts in thousands)

 

COLUMN A

 

COLUMN B

 

COLUMN C

 

 

COLUMN D

 

 

COLUMN E

 

 

COLUMN F

 

COLUMN G

 

COLUMN H

 

COLUMN I

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross amount at which

 

 

 

 

 

 

 

 

Life on which

 

 

 

 

 

 

 

 

 

Initial cost to company (1)

 

 

 

 

carried at close of period

 

 

 

 

 

 

 

 

depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

in latest

 

 

 

 

 

 

 

 

 

 

 

 

Building

 

 

capitalized

 

 

 

 

Buildings

 

 

 

 

depreciation

 

 

 

 

 

income

 

 

 

 

 

 

 

 

 

 

 

 

and

 

 

subsequent

 

 

 

 

and

 

 

 

 

and

 

Date of

 

Date

 

statement

 

Description

Encumbrances

 

Land

 

improvements

 

 

to acquisition

 

 

Land

 

improvements

 

Total (2)

 

amortization

 

construction (3)

 

acquired

 

is computed

 

 

 

 

Albany (Menands)

$

 

$

460 

 

$

2,091 

 

$

2,340 

 

$

460 

 

$

4,431 

 

$

4,891 

 

$

3,476 

 

1965

 

1965

 

(4)

 

 

 

 

Rochester

 

4,463 

 

 

2,172 

 

 

 

 

 

 

2,172 

 

 

 

 

2,172 

 

 

 

1966

 

1966

 

(4)

 

 

 

 

Freeport (240 West Sunrise Highway)

 

 

 

 

 

 

 

260 

 

 

 

 

260 

 

 

260 

 

 

106 

 

 

 

2005

 

(4)

 

 

 

 

Commack

 

 

 

 

 

43 

 

 

207 

 

 

 

 

250 

 

 

250 

 

 

 

 

 

2006

 

(4)

 

 

 

 

New Hyde Park

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1970

 

1976

 

(4)

 

 

 

 

 

Total New York

 

173,937 

 

 

306,224 

 

 

487,585 

 

 

(12,796)

 

 

250,777 

 

 

530,236 

 

 

781,013 

 

 

90,861 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pennsylvania

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wilkes-Barre

 

20,201 

 

 

6,053 

 

 

26,646 

 

 

375 

 

 

6,053 

 

 

27,021 

 

 

33,074 

 

 

3,408 

 

 

 

2007 

 

(4)

 

 

 

 

Allentown

 

30,517 

 

 

187 

 

 

15,580 

 

 

479 

 

 

187 

 

 

16,059 

 

 

16,246 

 

 

12,569 

 

1957

 

1957

 

(4)

 

 

 

 

Bensalem

 

15,147 

 

 

2,727 

 

 

6,698 

 

 

1,840 

 

 

2,727 

 

 

8,538 

 

 

11,265 

 

 

3,212 

 

1972/1999

 

1972

 

(4)

 

 

 

 

Bethlehem

 

5,691 

 

 

827 

 

 

5,200 

 

 

513 

 

 

839 

 

 

5,701 

 

 

6,540 

 

 

5,485 

 

1966

 

1966

 

(4)

 

 

 

 

York

 

5,300 

 

 

409 

 

 

2,568 

 

 

1,772 

 

 

409 

 

 

4,340 

 

 

4,749 

 

 

3,704 

 

1970

 

1970

 

(4)

 

 

 

 

Broomall

 

10,879 

 

 

850 

 

 

2,171 

 

 

1,425 

 

 

850 

 

 

3,596 

 

 

4,446 

 

 

2,832 

 

1966

 

1966

 

(4)

 

 

 

 

Lancaster

 

5,495 

 

 

3,140 

 

 

63 

 

 

564 

 

 

3,140 

 

 

627 

 

 

3,767 

 

 

422 

 

1966

 

1966

 

(4)

 

 

 

 

Glenolden

 

6,974 

 

 

850 

 

 

1,820 

 

 

568 

 

 

850 

 

 

2,388 

 

 

3,238 

 

 

1,941 

 

1975

 

1975

 

(4)

 

 

 

 

Springfield

 

 

 

 

 

 

 

80 

 

 

 

 

80 

 

 

80 

 

 

 

 

 

2005

 

(4)

 

 

 

 

 

Total Pennsylvania

 

100,204 

 

 

15,043 

 

 

60,746 

 

 

7,616 

 

 

15,055 

 

 

68,350 

 

 

83,405 

 

 

33,573 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

South Carolina

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charleston

 

 

 

 

 

3,634 

 

 

 

 

 

 

3,634 

 

 

3,634 

 

 

568 

 

 

 

2006

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tennessee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Antioch

 

 

 

1,521 

 

 

2,386 

 

 

 

 

1,521 

 

 

2,386 

 

 

3,907 

 

 

373 

 

 

 

2006

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Texas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Texarkana

 

 

 

 

 

458 

 

 

33 

 

 

 

 

491 

 

 

491 

 

 

491 

 

 

 

2006

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Virginia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Springfield (Springfield Mall)

 

 

 

49,516 

 

 

265,964 

 

 

(58,248)

 

 

849 

 

 

256,383 

 

 

257,232 

 

 

543 

 

 

 

2006

 

(4)

 

 

 

 

Norfolk

 

 

 

 

 

3,927 

 

 

15 

 

 

 

 

3,942 

 

 

3,942 

 

 

2,484 

 

 

 

2005

 

(4)

 

 

 

 

 

Total Virginia

 

 

 

49,516 

 

 

269,891 

 

 

(58,233)

 

 

849 

 

 

260,325 

 

 

261,174 

 

 

3,027 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, DC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3040 M Street

 

 

 

7,830 

 

 

27,490 

 

 

2,478 

 

 

7,830 

 

 

29,968 

 

 

37,798 

 

 

4,961 

 

 

 

2006

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wisconsin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fond Du Lac

 

 

 

 

 

174 

 

 

102 

 

 

 

 

276 

 

 

276 

 

 

79 

 

 

 

2006

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

194

 


 
 

  

VORNADO REALTY TRUST

 

SCHEDULE III

 

REAL ESTATE AND ACCUMULATED DEPRECIATION

 

(Amounts in thousands)

 

COLUMN A

 

COLUMN B

 

COLUMN C

 

 

COLUMN D

 

 

COLUMN E

 

 

COLUMN F

 

COLUMN G

 

COLUMN H

 

COLUMN I

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross amount at which

 

 

 

 

 

 

 

 

Life on which

 

 

 

 

 

 

 

 

 

Initial cost to company (1)

 

 

 

 

carried at close of period

 

 

 

 

 

 

 

 

depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

in latest

 

 

 

 

 

 

 

 

 

 

 

 

Building

 

 

capitalized

 

 

 

 

Buildings

 

 

 

 

depreciation

 

 

 

 

 

income

 

 

 

 

 

 

 

 

 

 

 

 

and

 

 

subsequent

 

 

 

 

and

 

 

 

 

and

 

Date of

 

Date

 

statement

 

Description

Encumbrances

 

Land

 

improvements

 

 

to acquisition

 

 

Land

 

improvements

 

Total (2)

 

amortization

 

construction (3)

 

acquired

 

is computed

 

 

 

Puerto Rico

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Las Catalinas

$

54,101 

 

$

15,280 

 

$

64,370 

 

$

8,916 

 

$

15,281 

 

$

73,285 

 

$

88,566 

 

$

26,746 

 

1996

 

2002

 

(4)

 

 

 

 

Montehiedra

 

120,000 

 

 

9,182 

 

 

66,751 

 

 

5,830 

 

 

9,267 

 

 

72,496 

 

 

81,763 

 

 

27,961 

 

1996

 

1997

 

(4)

 

 

 

 

 

Total Puerto Rico

 

174,101 

 

 

24,462 

 

 

131,121 

 

 

14,746 

 

 

24,548 

 

 

145,781 

 

 

170,329 

 

 

54,707 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

5,345 

 

 

 

 

5,345 

 

 

5,345 

 

 

374 

 

 

 

 

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Retail Properties

 

1,460,396 

 

 

687,832 

 

 

1,786,028 

 

 

533,031 

 

 

604,763 

 

 

2,402,128 

 

 

3,006,891 

 

 

491,122 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise Mart

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Illinois

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise Mart, Chicago

 

550,000 

 

 

64,528 

 

 

319,146 

 

 

199,701 

 

 

64,535 

 

 

518,840 

 

 

583,375 

 

 

168,346 

 

1930 

 

1998 

 

(4)

 

 

 

 

527 W. Kinzie, Chicago

 

 

 

5,166 

 

 

 

 

 

 

5,166 

 

 

 

 

5,166 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Illinois

 

550,000 

 

 

69,694 

 

 

319,146 

 

 

199,701 

 

 

69,701 

 

 

518,840 

 

 

588,541 

 

 

168,346 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7 West 34th Street

 

 

 

34,614 

 

 

94,167 

 

 

34,101 

 

 

34,614 

 

 

128,268 

 

 

162,882 

 

 

36,573 

 

1901 

 

2000 

 

(4)

 

 

 

 

MMPI Piers

 

 

 

 

 

 

 

10,826 

 

 

 

 

10,826 

 

 

10,826 

 

 

525 

 

 

 

2008 

 

(4)

 

 

 

 

 

Total New York

 

 

 

34,614 

 

 

94,167 

 

 

44,927 

 

 

34,614 

 

 

139,094 

 

 

173,708 

 

 

37,098 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ohio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cleveland Medical Mart

 

 

 

 

 

 

 

167 

 

 

 

 

167 

 

 

167 

 

 

 

 

 

2009 

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Merchandise Mart

 

550,000 

 

 

104,308 

 

 

413,313 

 

 

244,795 

 

 

104,315 

 

 

658,101 

 

 

762,416 

 

 

205,444 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warehouse/Industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Jersey

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Hanover

 

 

 

576 

 

 

7,752 

 

 

9,030 

 

 

691 

 

 

16,667 

 

 

17,358 

 

 

13,785 

 

1972

 

1972

 

(4)

 

 

Total Warehouse/Industrial

 

 

 

576 

 

 

7,752 

 

 

9,030 

 

 

691 

 

 

16,667 

 

 

17,358 

 

 

13,785 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

555 California Street

 

600,000 

 

 

221,903 

 

 

893,324 

 

 

47,495 

 

 

221,903 

 

 

940,819 

 

 

1,162,722 

 

 

142,842 

 

1922/1969/1970

 

2007 

 

(4)

 

 

 

 

220 Central Park South

 

123,750 

 

 

115,720 

 

 

16,420 

 

 

122,145 

 

 

 

 

254,285 

 

 

254,285 

 

 

 

 

 

2005

 

(4)

 

 

 

 

Borgata Land, Atlantic City, NJ

 

60,000 

 

 

83,089 

 

 

 

 

(4)

 

 

83,089 

 

 

 

 

83,092 

 

 

 

 

 

2010

 

(4)

 

 

 

 

40 East 66th Residential

 

 

 

29,199 

 

 

85,798 

 

 

(77,582)

 

 

14,541 

 

 

22,874 

 

 

37,415 

 

 

3,745 

 

 

 

2005

 

(4)

 

 

 

 

677-679 Madison

 

 

 

1,462 

 

 

1,058 

 

 

284 

 

 

1,626 

 

 

1,178 

 

 

2,804 

 

 

243 

 

 

 

2006

 

(4)

 

 

 

 

Other

 

 

 

28,052 

 

 

 

 

(16,769)

 

 

9,364 

 

 

1,919 

 

 

11,283 

 

 

 

 

 

2005

 

(4)

 

 

Total Other

 

783,750 

 

 

479,425 

 

 

996,607 

 

 

75,569 

 

 

330,523 

 

 

1,221,078 

 

 

1,551,601 

 

 

146,833 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasehold Improvements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment and Other

 

 

 

 

 

 

 

125,364 

 

 

 

 

125,364 

 

 

125,364 

 

 

96,656 

 

 

 

 

 

 

 

 

 

Total December 31, 2012

$

8,768,182 

 

$

4,777,124 

 

$

10,675,186 

 

$

3,043,049 

 

$

4,553,978 

 

$

13,941,381 

 

$

18,495,359 

 

$

3,097,074 

 

 

 

 

 

 

 

195

 


 
 

  

VORNADO REALTY TRUST

 

SCHEDULE III

 

REAL ESTATE AND ACCUMULATED DEPRECIATION

 

 

 

 

 

Notes:

 

 

 

 

 

 

 

(1)

 

Initial cost is cost as of January 30, 1982 (the date on which Vornado commenced real estate operations) unless acquired subsequent to that date see Column H.

 

(2)

 

The net basis of the Company’s assets and liabilities for tax purposes is approximately $3.8 billion lower than the amount reported for financial statement purposes.

 

(3)

 

Date of original construction –– many properties have had substantial renovation or additional construction –– see Column D.

 

(4)

 

Depreciation of the buildings and improvements are calculated over lives ranging from the life of the lease to forty years.

 

 

196

 


 

  

VORNADO REALTY TRUST

 

SCHEDULE III

 

REAL ESTATE AND ACCUMULATED DEPRECIATION

 

(AMOUNTS IN THOUSANDS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following is a reconciliation of real estate assets and accumulated depreciation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

 

 

 

 

2012 

 

2011 

2010 

 

 

 

 

Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

16,703,757 

 

$

16,454,967 

 

$

16,344,244 

 

 

 

 

 

Additions during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land

 

514,950 

 

 

33,481 

 

 

347,345 

 

 

 

 

 

 

Buildings & improvements

 

1,615,077 

 

 

315,762 

 

 

324,114 

 

 

 

 

 

 

 

 

18,833,784 

 

 

16,804,210 

 

 

17,015,703 

 

 

 

 

 

Less: Assets sold and written-off

 

338,425 

 

 

100,453 

 

 

560,736 

 

 

 

 

 

Balance at end of period

$

18,495,359 

 

$

16,703,757 

 

$

16,454,967 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

2,894,374 

 

$

2,530,945 

 

$

2,228,425 

 

 

 

 

 

Additions charged to operating expenses

 

427,189 

 

 

452,793 

 

 

428,788 

 

 

 

 

 

 

 

 

3,321,563 

 

 

2,983,738 

 

 

2,657,213 

 

 

 

 

 

Less: Accumulated depreciation on assets sold and written-off

 

224,489 

 

 

89,364 

 

 

126,268 

 

 

 

 

 

Balance at end of period

$

3,097,074 

 

$

2,894,374 

 

$

2,530,945 

 

 

 

197

 


 

  

 

EXHIBIT INDEX

Exhibit No.

3.1 

-

Articles of Restatement of Vornado Realty Trust, as filed with the State

*

Department of Assessments and Taxation of Maryland on July 30, 2007 - Incorporated

by reference to Exhibit 3.75 to Vornado Realty Trust’s Quarterly Report on Form 10-Q

for the quarter ended June 30, 2007 (File No. 001-11954), filed on July 31, 2007

3.2 

-

Amended and Restated Bylaws of Vornado Realty Trust, as amended on March 2, 2000 -

*

Incorporated by reference to Exhibit 3.12 to Vornado Realty Trust’s Annual Report on

Form 10-K for the year ended December 31, 1999 (File No. 001-11954), filed on

March 9, 2000

3.3 

-

Articles Supplementary, 6.875% Series J Cumulative Redeemable Preferred Shares of

*

Beneficial Interest, liquidation preference $25.00 per share, no par value - Incorporated by

reference to Exhibit 3.2 of Vornado Realty Trust's Registration Statement on Form 8-A

(File No. 001-11954), filed on April 20, 2011

3.4 

-

Second Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P.,

*

dated as of October 20, 1997 (the “Partnership Agreement”) – Incorporated by reference

to Exhibit 3.26 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for the quarter

ended March 31, 2003 (File No. 001-11954), filed on May 8, 2003

3.5 

-

Amendment to the Partnership Agreement, dated as of December 16, 1997 – Incorporated by

*

reference to Exhibit 3.27 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for

the quarter ended March 31, 2003 (File No. 001-11954), filed on May 8, 2003

3.6 

-

Second Amendment to the Partnership Agreement, dated as of April 1, 1998 – Incorporated

*

by reference to Exhibit 3.5 to Vornado Realty Trust’s Registration Statement on Form S-3

(File No. 333-50095), filed on April 14, 1998

3.7 

-

Third Amendment to the Partnership Agreement, dated as of November 12, 1998 -

*

Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on

Form 8-K (File No. 001-11954), filed on November 30, 1998

3.8 

-

Fourth Amendment to the Partnership Agreement, dated as of November 30, 1998 -

*

Incorporated by reference to Exhibit 3.1 to Vornado Realty Trust’s Current Report on

Form 8-K (File No. 001-11954), filed on February 9, 1999

3.9 

-

Fifth Amendment to the Partnership Agreement, dated as of March 3, 1999 - Incorporated by

*

reference to Exhibit 3.1 to Vornado Realty Trust’s Current Report on Form 8-K

(File No. 001-11954), filed on March 17, 1999

3.10

-

Sixth Amendment to the Partnership Agreement, dated as of March 17, 1999 - Incorporated

*

by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on Form 8-K

(File No. 001-11954), filed on July 7, 1999

3.11 

-

Seventh Amendment to the Partnership Agreement, dated as of May 20, 1999 - Incorporated

*

by reference to Exhibit 3.3 to Vornado Realty Trust’s Current Report on Form 8-K

(File No. 001-11954), filed on July 7, 1999

3.12 

-

Eighth Amendment to the Partnership Agreement, dated as of May 27, 1999 - Incorporated

*

by reference to Exhibit 3.4 to Vornado Realty Trust’s Current Report on Form 8-K

(File No. 001-11954), filed on July 7, 1999

3.13 

-

Ninth Amendment to the Partnership Agreement, dated as of September 3, 1999 -

*

Incorporated by reference to Exhibit 3.3 to Vornado Realty Trust’s Current Report on

Form 8-K (File No. 001-11954), filed on October 25, 1999

_______________________

*

Incorporated by reference.

 

198

 


 

  

 

3.14

-

Tenth Amendment to the Partnership Agreement, dated as of September 3, 1999 -

*

Incorporated by reference to exhibit 3,4 to Vornado Realty Trust's Current Report on

Form 8-K (File No. 001-11954), filed on October 25, 1999

3.15

-

Eleventh Amendment to the Partnership Agreement, dated as of November 24, 1999 -

*

Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on

Form 8-K (File No. 001-11954), filed on December 23, 1999

3.16

-

Twelfth Amendment to the Partnership Agreement, dated as of May 1, 2000 - Incorporated

*

by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on Form 8-K

(File No. 001-11954), filed on May 19, 2000

3.17

-

Thirteenth Amendment to the Partnership Agreement, dated as of May 25, 2000 -

*

Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on

Form 8-K (File No. 001-11954), filed on June 16, 2000

3.18

-

Fourteenth Amendment to the Partnership Agreement, dated as of December 8, 2000 -

*

Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on

Form 8-K (File No. 001-11954), filed on December 28, 2000

3.19

-

Fifteenth Amendment to the Partnership Agreement, dated as of December 15, 2000 -

*

Incorporated by reference to Exhibit 4.35 to Vornado Realty Trust’s Registration

Statement on Form S-8 (File No. 333-68462), filed on August 27, 2001

3.20

-

Sixteenth Amendment to the Partnership Agreement, dated as of July 25, 2001 - Incorporated

*

by reference to Exhibit 3.3 to Vornado Realty Trust’s Current Report on Form 8-K

(File No. 001 11954), filed on October 12, 2001

3.21

-

Seventeenth Amendment to the Partnership Agreement, dated as of September 21, 2001 -

*

Incorporated by reference to Exhibit 3.4 to Vornado Realty Trust’s Current Report on

Form 8 K (File No. 001-11954), filed on October 12, 2001

3.22

-

Eighteenth Amendment to the Partnership Agreement, dated as of January 1, 2002 -

*

Incorporated by reference to Exhibit 3.1 to Vornado Realty Trust’s Current Report on

Form 8-K/A (File No. 001-11954), filed on March 18, 2002

3.23

-

Nineteenth Amendment to the Partnership Agreement, dated as of July 1, 2002 - Incorporated

*

by reference to Exhibit 3.47 to Vornado Realty Trust’s Quarterly Report on Form 10-Q

for the quarter ended June 30, 2002 (File No. 001-11954), filed on August 7, 2002

3.24

-

Twentieth Amendment to the Partnership Agreement, dated April 9, 2003 - Incorporated by

*

reference to Exhibit 3.46 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for

the quarter ended March 31, 2003 (File No. 001-11954), filed on May 8, 2003

3.25

-

Twenty-First Amendment to the Partnership Agreement, dated as of July 31, 2003 -

*

Incorporated by reference to Exhibit 3.47 to Vornado Realty Trust’s Quarterly Report

on Form 10-Q for the quarter ended September 30, 2003 (File No. 001-11954), filed on

November 7, 2003

3.26

-

Twenty-Second Amendment to the Partnership Agreement, dated as of November 17, 2003 –

*

Incorporated by reference to Exhibit 3.49 to Vornado Realty Trust’s Annual Report on

Form 10-K for the year ended December 31, 2003 (File No. 001-11954), filed on

March 3, 2004

3.27

-

Twenty-Third Amendment to the Partnership Agreement, dated May 27, 2004 – Incorporated

*

by reference to Exhibit 99.2 to Vornado Realty Trust’s Current Report on Form 8-K

(File No. 001-11954), filed on June 14, 2004

_______________________

*

Incorporated by reference.

 

199

 


 

  

 

3.28

-

Twenty-Fourth Amendment to the Partnership Agreement, dated August 17, 2004 –

*

Incorporated by reference to Exhibit 3.57 to Vornado Realty Trust and Vornado Realty

L.P.’s Registration Statement on Form S-3 (File No. 333-122306), filed on

January 26, 2005

3.29

-

Twenty-Fifth Amendment to the Partnership Agreement, dated November 17, 2004 –

*

Incorporated by reference to Exhibit 3.58 to Vornado Realty Trust and Vornado Realty

L.P.’s Registration Statement on Form S-3 (File No. 333-122306), filed on

January 26, 2005

3.30

-

Twenty-Sixth Amendment to the Partnership Agreement, dated December 17, 2004 –

*

Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on

Form 8-K (File No. 000-22685), filed on December 21, 2004

3.31

-

Twenty-Seventh Amendment to the Partnership Agreement, dated December 20, 2004 –

*

Incorporated by reference to Exhibit 3.2 to Vornado Realty L.P.’s Current Report on

Form 8-K (File No. 000-22685), filed on December 21, 2004

3.32

-

Twenty-Eighth Amendment to the Partnership Agreement, dated December 30, 2004 -

*

Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on

Form 8-K (File No. 000-22685), filed on January 4, 2005

3.33

-

Twenty-Ninth Amendment to the Partnership Agreement, dated June 17, 2005 - Incorporated

*

by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on Form 8-K

(File No. 000-22685), filed on June 21, 2005

3.34

-

Thirtieth Amendment to the Partnership Agreement, dated August 31, 2005 - Incorporated by

*

reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on Form 8-K

(File No. 000-22685), filed on September 1, 2005

3.35

-

Thirty-First Amendment to the Partnership Agreement, dated September 9, 2005 -

*

Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on

Form 8-K (File No. 000-22685), filed on September 14, 2005

3.36

-

Thirty-Second Amendment and Restated Agreement of Limited Partnership, dated as of

*

December 19, 2005 – Incorporated by reference to Exhibit 3.59 to Vornado Realty L.P.’s

Quarterly Report on Form 10-Q for the quarter ended March 31, 2006

(File No. 000-22685), filed on May 8, 2006

3.37

-

Thirty-Third Amendment to Second Amended and Restated Agreement of Limited

*

Partnership, dated as of April 25, 2006 – Incorporated by reference to Exhibit 10.2 to

Vornado Realty Trust’s Form 8-K (File No. 001-11954), filed on May 1, 2006

3.38

-

Thirty-Fourth Amendment to Second Amended and Restated Agreement of Limited

*

Partnership, dated as of May 2, 2006 – Incorporated by reference to Exhibit 3.1 to

Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on

May 3, 2006

3.39

-

Thirty-Fifth Amendment to Second Amended and Restated Agreement of Limited

*

Partnership, dated as of August 17, 2006 – Incorporated by reference to Exhibit 3.1 to

Vornado Realty L.P.’s Form 8-K (File No. 000-22685), filed on August 23, 2006

3.40

-

Thirty-Sixth Amendment to Second Amended and Restated Agreement of Limited

*

Partnership, dated as of October 2, 2006 – Incorporated by reference to Exhibit 3.1 to

Vornado Realty L.P.’s Form 8-K (File No. 000-22685), filed on January 22, 2007

_______________________

*

Incorporated by reference.

 

200

 


 
 

  

 

3.41

-

Thirty-Seventh Amendment to Second Amended and Restated Agreement of Limited

*

Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.1 to

Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on

June 27, 2007

3.42

-

Thirty-Eighth Amendment to Second Amended and Restated Agreement of Limited

*

Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.2 to

Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on

June 27, 2007

3.43

-

Thirty-Ninth Amendment to Second Amended and Restated Agreement of Limited

*

Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.3 to

Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on

June 27, 2007

3.44

-

Fortieth Amendment to Second Amended and Restated Agreement of Limited

*

Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.4 to

Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on

June 27, 2007

3.45

-

Forty-First Amendment to Second Amended and Restated Agreement of Limited

*

Partnership, dated as of March 31, 2008 – Incorporated by reference to Exhibit 3.44 to

Vornado Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31,

2008 (file No. 001-11954), filed on May 6, 2008

3.46

-

Forty-Second Amendment to Second Amended and Restated Agreement of Limited Partnership,

*

dated as of December 17, 2010 – Incorporated by reference to Exhibit 99.1 to Vornado

Realty L.P.'s Current Report on Form 8-K (File No. 000-22685), filed on December 21, 2010

3.47

-

Forty-Third Amendment to Second Amended and Restated Agreement of Limited Partnership,

*

dated as of April 20, 2011 – Incorporated by reference to Exhibit 3.1 to Vornado

Realty L.P.'s Current Report on Form 8-K (File No. 000-22685), filed on April 21, 2011

 

3.48

-

Forty-Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership

*

dated as of July 18, 2012 – Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s

Current Report on Form 8-K (File No. 001-34482), filed on July 18, 2012

 

4.1

-

Indenture, dated as of November 25, 2003, between Vornado Realty L.P. and The Bank of

*

New York, as Trustee - Incorporated by reference to Exhibit 4.10 to Vornado Realty

Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005

(File No. 001-11954), filed on April 28, 2005

4.2

-

Indenture, dated as of November 20, 2006, among Vornado Realty Trust, as Issuer, Vornado

*

Realty L.P., as Guarantor and The Bank of New York, as Trustee – Incorporated by

reference to Exhibit 4.1 to Vornado Realty Trust’s Current Report on Form 8-K

(File No. 001-11954), filed on November 27, 2006

Certain instruments defining the rights of holders of long-term debt securities of Vornado

Realty Trust and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation

S-K. Vornado Realty Trust hereby undertakes to furnish to the Securities and Exchange

_______________________

*

 

Incorporated by reference.

 

201

 


 

  

10.1

-

Master Agreement and Guaranty, between Vornado, Inc. and Bradlees New Jersey, Inc. dated

*

as of May 1, 1992 - Incorporated by reference to Vornado, Inc.’s Quarterly Report on

Form 10-Q for the quarter ended March 31, 1992 (File No. 001-11954), filed May 8, 1992

 

 

10.2

-

Registration Rights Agreement between Vornado, Inc. and Steven Roth, dated December 29,

*

1992 - Incorporated by reference to Vornado Realty Trust’s Annual Report on Form 10-K

for the year ended December 31, 1992 (File No. 001-11954), filed February 16, 1993

 

 

 

 

 

 

 

 

10.3 

**

-

Stock Pledge Agreement between Vornado, Inc. and Steven Roth dated December 29, 1992

*

- Incorporated by reference to Vornado, Inc.’s Annual Report on Form 10-K for the year

ended December 31, 1992 (File No. 001-11954), filed February 16, 1993

 

10.4 

**

-

Management Agreement between Interstate Properties and Vornado, Inc. dated July 13, 1992

*

- Incorporated by reference to Vornado, Inc.’s Annual Report on Form 10-K for the year

ended December 31, 1992 (File No. 001-11954), filed February 16, 1993

10.5 

**

-

Employment Agreement, dated as of April 15, 1997, by and among Vornado Realty Trust,

*

The Mendik Company, L.P. and David R. Greenbaum - Incorporated by reference to

Exhibit 10.4 to Vornado Realty Trust’s Current Report on Form 8-K

(File No. 001-11954), filed on April 30, 1997

10.6 

**

-

Letter agreement, dated November 16, 1999, between Steven Roth and Vornado Realty Trust

*

- Incorporated by reference to Exhibit 10.51 to Vornado Realty Trust’s Annual Report on

Form 10-K for the year ended December 31, 1999 (File No. 001-11954), filed on

March 9, 2000

10.7 

 

-

Agreement and Plan of Merger, dated as of October 18, 2001, by and among Vornado Realty

*

Trust, Vornado Merger Sub L.P., Charles E. Smith Commercial Realty L.P., Charles E.

Smith Commercial Realty L.L.C., Robert H. Smith, individually, Robert P. Kogod,

individually, and Charles E. Smith Management, Inc. - Incorporated by reference to

 

 

 

 

Exhibit 2.1 to Vornado Realty Trust’s Current Report on Form 8-K (File No. 001-11954),

 

 

 

 

 

filed on January 16, 2002

 

10.8 

-

Tax Reporting and Protection Agreement, dated December 31, 2001, by and among Vornado,

*

Vornado Realty L.P., Charles E. Smith Commercial Realty L.P. and Charles E. Smith

Commercial Realty L.L.C. - Incorporated by reference to Exhibit 10.3 to Vornado Realty

Trust’s Current Report on Form 8-K/A (File No. 1-11954), filed on March 18, 2002

10.9 

-

Employment Agreement between Vornado Realty Trust and Michael D. Fascitelli, dated

*

March 8, 2002 - Incorporated by reference to Exhibit 10.7 to Vornado Realty Trust’s

Quarterly Report on Form 10-Q for the quarter ended March 31, 2002

(File No. 001-11954), filed on May 1, 2002

10.10

-

First Amendment, dated October 31, 2002, to the Employment Agreement between Vornado

*

Realty Trust and Michael D. Fascitelli, dated March 8, 2002 - Incorporated by reference

to Exhibit 99.6 to the Schedule 13D filed by Michael D. Fascitelli on November 8, 2002

10.11 

**

-

Amendment to Real Estate Retention Agreement, dated as of July 3, 2002, by and between

*

Alexander’s, Inc. and Vornado Realty L.P. - Incorporated by reference to Exhibit

10(i)(E)(3) to Alexander’s Inc.’s Quarterly Report for the quarter ended June 30, 2002

 

 

 

 

(File No. 001-06064), filed on August 7, 2002

 

10.12 

**

-

59th Street Real Estate Retention Agreement, dated as of July 3, 2002, by and between

*

Vornado Realty L.P., 731 Residential LLC and 731 Commercial LLC - Incorporated by

reference to Exhibit 10(i)(E)(4) to Alexander’s Inc.’s Quarterly Report for the quarter

ended June 30, 2002 (File No. 001-06064), filed on August 7, 2002

 

 

 

 

 

_______________________

 

*

Incorporated by reference.

**

Management contract or compensatory agreement.

               

 

202

 


 
 

  

 

10.13

 

-

Amended and Restated Management and Development Agreement, dated as of July 3, 2002,

*

 

 

 

 

by and between Alexander's, Inc., the subsidiaries party thereto and Vornado

 

 

 

 

 

Management Corp. - Incorporated by reference to Exhibit 10(i)(F)(1) to Alexander's

 

 

 

 

 

Inc.'s Quarterly Report for the quarter ended June 30, 2002 (File No. 001-06064),

 

 

 

 

 

filed on August 7, 2002

 

 

 

 

 

 

 

 

10.14

-

Amendment dated May 29, 2002, to the Stock Pledge Agreement between Vornado Realty

*

Trust and Steven Roth dated December 29, 1992 - Incorporated by reference to Exhibit 5

of Interstate Properties’ Schedule 13D/A dated May 29, 2002 (File No. 005-44144), filed

on May 30, 2002

10.15

**

-

Vornado Realty Trust’s 2002 Omnibus Share Plan - Incorporated by reference to Exhibit 4.2

*

to Vornado Realty Trust’s Registration Statement on Form S-8 (File No. 333-102216)

filed December 26, 2002

10.16

**

-

Form of Stock Option Agreement between the Company and certain employees –

*

Incorporated by reference to Exhibit 10.77 to Vornado Realty Trust’s

Annual Report on Form 10-K for the year ended December 31, 2004

 

 

 

 

(File No. 001-11954), filed on February 25, 2005

 

10.17

**

-

Form of Restricted Stock Agreement between the Company and certain employees –

*

Incorporated by reference to Exhibit 10.78 to Vornado Realty Trust’s Annual Report on

Form 10-K for the year ended December 31, 2004 (File No. 001-11954), filed on

February 25, 2005

10.18

**

-

Amendment, dated March 17, 2006, to the Vornado Realty Trust Omnibus Share Plan –

*

Incorporated by reference to Exhibit 10.50 to Vornado Realty Trust’s Quarterly Report on

Form 10-Q for the quarter ended March 31, 2006 (File No. 001-11954), filed on

May 2, 2006

10.19

**

-

Form of Vornado Realty Trust 2006 Out-Performance Plan Award Agreement, dated as of

*

April 25, 2006 – Incorporated by reference to Exhibit 10.1 to Vornado Realty Trust’s

Form 8-K (File No. 001-11954), filed on May 1, 2006

10.20

**

-

Form of Vornado Realty Trust 2002 Restricted LTIP Unit Agreement – Incorporated by

*

reference to Vornado Realty Trust’s Form 8-K (Filed No. 001-11954), filed on

May 1, 2006

10.21

**

-

Amendment No.2, dated May 18, 2006, to the Vornado Realty Trust Omnibus Share Plan

*

– Incorporated by reference to Exhibit 10.53 to Vornado Realty Trust’s Quarterly

Report on Form 10-Q for the quarter ended June 30, 2006 (File No. 001-11954), filed

 

 

 

 

on August 1, 2006

 

10.22

**

-

Amended and Restated Employment Agreement between Vornado Realty Trust and Joseph

*

Macnow dated July 27, 2006 – Incorporated by reference to Exhibit 10.54 to Vornado

Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006

(File No. 001-11954), filed on August 1, 2006

10.23

**

-

Amendment, dated October 26, 2006, to the Vornado Realty Trust Omnibus Share Plan –

*

Incorporated by reference to Exhibit 10.54 to Vornado Realty Trust’s Quarterly Report

on Form 10-Q for the quarter ended September 30, 2006 (File No. 001-11954), filed on

October 31, 2006

10.24

** 

-

Amendment to Real Estate Retention Agreement, dated January 1, 2007, by and between

*

Vornado Realty L.P. and Alexander’s Inc. – Incorporated by reference to Exhibit 10.55

to Vornado Realty Trust’s Annual Report on Form 10-K for the year ended

December 31, 2006 (File No. 001-11954), filed on February 27, 2007

_______________________

*

Incorporated by reference.

**

Management contract or compensatory agreement.

 

203

 


 
 

  

10.25

**

-

Amendment to 59th Street Real Estate Retention Agreement, dated January 1, 2007, by and

*

 

among Vornado Realty L.P., 731 Retail One LLC, 731 Restaurant LLC, 731 Office One

 

LLC and 731 Office Two LLC. – Incorporated by reference to Exhibit 10.56 to

 

 

 

 

 

Vornado Realty Trust’s Annual Report on Form 10-K for the year ended

 

 

December 31, 2006 (File No. 001-11954), filed on February 27, 2007

 

 

10.26

**

-

Employment Agreement between Vornado Realty Trust and Mitchell Schear, as of April 19,

*

 

2007 – Incorporated by reference to Exhibit 10.46 to Vornado Realty Trust’s Quarterly

 

Report on Form 10-Q for the quarter ended March 31, 2007 (File No. 001-11954),

 

filed on May 1, 2007

 

 

10.27

**

-

Form of Vornado Realty Trust 2002 Omnibus Share Plan Non-Employee Trustee Restricted

*

 

LTIP Unit Agreement – Incorporated by reference to Exhibit 10.45 to Vornado Realty

 

Trust’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No.

 

001-11954) filed on February 26, 2008

 

 

10.28

**

-

Form of Vornado Realty Trust 2008 Out-Performance Plan Award Agreement – Incorporated

*

 

by reference to Exhibit 10.46 to Vornado Realty Trust’s Quarterly Report on Form 10-Q

 

for the quarter ended March 31, 2008 (File No. 001-11954) filed on May 6, 2008

 

 

10.29

**

-

Amendment to Employment Agreement between Vornado Realty Trust and Michael D.

*

 

Fascitelli, dated December 29, 2008. Incorporated by reference to Exhibit 10.47 to

 

Vornado Realty Trust’s Annual Report on Form 10-K for the year ended December 31,

 

 

 

 

 

2008 (File No. 001-11954) filed on February 24, 2009

 

 

 

 

 

10.30

**

-

Amendment to Employment Agreement between Vornado Realty Trust and Joseph Macnow,

*

 

dated December 29, 2008. Incorporated by reference to Exhibit 10.48 to Vornado Realty

 

Trust’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No.

 

001-11954) filed on February 24, 2009

 

 

 

 

 

 

 

 

 

 

10.31

**

-

Amendment to Employment Agreement between Vornado Realty Trust and David R.

*

 

 

 

Greenbaum, dated December 29, 2008. Incorporated by reference to Exhibit 10.49 to

 

 

 

Vornado Realty Trust’s Annual Report on Form 10-K for the year ended December 31,

 

 

 

2008 (File No. 001-11954) filed on February 24, 2009

 

 

 

 

 

 

 

 

 

 

10.32

**

-

Amendment to Indemnification Agreement between Vornado Realty Trust and David R.

*

 

 

 

Greenbaum, dated December 29, 2008. Incorporated by reference to Exhibit 10.50 to

 

 

 

Vornado Realty Trust’s Annual Report on Form 10-K for the year ended December 31,

 

 

 

2008 (File No. 001-11954) filed on February 24, 2009

 

 

 

 

 

 

 

 

 

 

10.33

**

-

Amendment to Employment Agreement between Vornado Realty Trust and Mitchell N.

*

 

 

 

Schear, dated December 29, 2008. Incorporated by reference to Exhibit 10.51 to Vornado

 

 

 

Realty Trust’s Annual Report on Form 10-K for the year ended December 31, 2008 (File

 

 

 

No. 001-11954) filed on February 24, 2009

 

 

 

 

 

 

 

 

 

 

10.34

**

-

Vornado Realty Trust's 2010 Omnibus Share Plan. Incorporated by reference to Exhibit 10.41 to

*

 

 

 

Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010

 

 

 

(File No. 001-11954) filed on August 3, 2010

 

 

 

 

 

 

 

10.35

**

-

Employment Agreement between Vornado Realty Trust and Michael J. Franco, dated

*

September 24, 2010. Incorporated by reference to Exhibit 10.42 to Vornado Realty Trust's

 

 

 

 

 

Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 (File No. 001-11954)

 

filed on November 2, 2010

 

_______________________

 

*

Incorporated by reference.

 

**

Management contract or compensatory agreement.

 

                   

 

204

 


 
 

  

10.36

**

-

Form of Vornado Realty Trust 2010 Omnibus Share Plan Incentive / Non-Qualified Stock Option

*

Agreement. Incorporated by reference to Exhibit 99.1 to Vornado Realty Trust's Current

Report on Form 8-K (File No. 001-11954) filed on April 5, 2012

 

 

10.37

**

-

Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted Stock Agreement.

*

 

 

 

 

Incorporated by reference to Exhibit 99.2 to Vornado Realty Trust's Current Report on Form

 

 

 

 

 

8-K (File No. 001-11954) filed on April 5, 2012

 

 

 

 

 

 

 

10.38

**

-

Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted LTIP Unit Agreement.

*

 

Incorporated by reference to Exhibit 99.3 to Vornado Realty Trust's Current Report on Form

 

8-K (File No. 001-11954) filed on April 5, 2012

10.39

**

-

Letter Agreement between Vornado Realty Trust and Michelle Felman, dated December 21, 2010.

*

Incorporated by reference to Exhibit 10.45 to Vornado Realty Trust's Annual Report on Form

10-K for the year ended December 31, 2010 (File No. 001-11954) filed on February 23, 2011

10.40

**

-

Waiver and Release between Vornado Realty Trust and Michelle Felman, dated December 21,

*

2010. Incorporated by reference to Exhibit 10.46 to Vornado Realty Trust's Annual Report

 

 

 

 

on Form 10-K for the year ended December 31, 2010 (File No. 001-11954) filed on

 

February 23, 2011

10.41

**

-

Revolving Credit Agreement dated as of June 8, 2011, by and among Vornado Realty L.P. as

*

borrower, Vornado Realty Trust as General Partner, the Banks listed on the signature pages

thereof, and J.P. Morgan Chase Bank N.A., as Administrative Agent for the Banks.

 

 

 

 

Incorporated by reference to Exhibit 10.46 to Vornado Realty Trust's Quarterly Report on

 

Form 10-Q for the quarter ended June 30, 2011 (File No. 001-11954) filed on August 1, 2011

 

 

 

 

 

 

10.42

**

-

Letter Agreement between Vornado Realty Trust and Christopher G. Kennedy, dated August 5,

*

2011. Incorporated by reference to Exhibit 10.47 to Vornado Realty Trust’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2011 (File No. 001-11954) filed on
November 3, 2011

10.43

**

-

Waiver and Release between Vornado Realty Trust and Christopher G. Kennedy, dated August 5,

*

2011. Incorporated by reference to Exhibit 10.48 to Vornado Realty Trust’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2011 (File No. 001-11954) filed on
November 3, 2011

 

10.44

-

Revolving Credit Agreement dated on November 7, 2011, by and among Vornado Realty L.P. as

*

 

borrower, Vornado Realty Trust as General Partner, the Banks listed on the signature pages

 

 

 

 

 

thereof, and JP Morgan Chase Bank N.A., as administrative agent for the Banks.

 

 

 

 

 

 

Incorporated by reference to Exhibit 10.1 to Vornado Realty Trust’s Current Report on

 

 

Form 8-K (File No. 001-11954) filed on November 11, 2011

 

 

 

 

 

 

 

10.45

**

-

Form of Vornado Realty Trust 2012 Outperformance Plan Award Agreement

 

 

 

 

 

 

 

 

 

 

 

 

_______________________

 

*

Incorporated by reference.

**

Management contract or compensatory agreement.

 

205

 


 
 

  

 

 

 

 

 

 

 

12

 

-

Computation of Ratios

 

 

 

 

 

 

 

 

21

 

-

Subsidiaries of the Registrant

 

 

 

 

 

 

 

 

23

 

-

Consent of Independent Registered Public Accounting Firm

 

 

 

 

 

 

 

31.1

-

Rule 13a-14 (a) Certification of the Chief Executive Officer

31.2

-

Rule 13a-14 (a) Certification of the Chief Financial Officer

32.1

-

Section 1350 Certification of the Chief Executive Officer

32.2

-

Section 1350 Certification of the Chief Financial Officer

101.INS

-

XBRL Instance Document

101.SCH

-

XBRL Taxonomy Extension Schema

101.CAL

-

XBRL Taxonomy Extension Calculation Linkbase

101.DEF

-

XBRL Taxonomy Extension Definition Linkbase

101.LAB

-

XBRL Taxonomy Extension Label Linkbase

101.PRE

-

XBRL Taxonomy Extension Presentation Linkbase

206

 

Exhibit 10.45

FORM OF VORNADO REALTY TRUST
2012 OUTPERFORMANCE PLAN
AWARD AGREEMENT

2012 OUTPERFORMANCE PLAN AWARD AGREEMENT made as of the date set forth on Schedule A hereto between VORNADO REALTY TRUST, a Maryland real estate investment trust (the “ Company ”), its subsidiary VORNADO REALTY L.P., a Delaware limited partnership and the entity through which the Company conducts substantially all of its operations (the “ Partnership ”), and the party listed on Schedule A (the “ Grantee ”). 

RECITALS

A.        The Grantee is an employee or trustee of, or a consultant or advisor to, the Company or one of its Affiliates and provides services to the Partnership.

B.        The Compensation Committee (the “ Committee ”) of the Board of Trustees of the Company (the “ Board ”) approved this and other 2012 outperformance plan (“ 2012 OPP ”) awards pursuant to the Company’s 2010 Omnibus Share Plan, as amended (as amended, restated and supplemented from time to time, the “ 2010 Plan ”) to provide certain trustees, consultants, advisors, officers and key employees of the Company or its Affiliates, including the Grantee, in connection with their employment or other service relationship with the incentive compensation described in this Award Agreement (this “ Agreement ”) and thereby provide additional incentive for them to promote the progress and success of the business of the Company and its Affiliates, including the Partnership.  2012 OPP awards were approved by the Committee pursuant to authority delegated to it by the Board, including authority to make grants of equity interests in the Partnership which may, under certain circumstances, become exchangeable for the Company’s Common Shares reserved for issuance under the 2010 Plan, or in the event the 2010 Plan has been replaced by a successor equity plan prior to the date of issuance of such Common Shares, under such successor equity plan (the 2010 Plan and any such successor plan, as each may be amended, modified or supplemented from time to time, are collectively referred to herein as the “ Share Plan ”).  This Agreement evidences one award (this “ Award ”) in a series of substantially identical 2012 OPP awards and is subject to the terms and conditions set forth herein and in the Partnership Agreement (as defined herein).

C.        The Committee, effective as of the grant date specified in Schedule A hereto, awarded to the Grantee the 2012 OPP participation percentage in the various outperformance pools provided herein set forth in Schedule A

NOW, THEREFORE, the Company, the Partnership and the Grantee agree as follows:

1.                   Administration.    This Award and all other 2012 OPP awards shall be administered by the Committee, which in the administration of the 2012 OPP awards and this Award shall have all the powers and authority it has in the administration of the Share Plan as set forth in the Share Plan; provided that all powers of the Committee hereunder can be exercised by the full Board if the Board so elects.  The Committee, in its sole and absolute discretion, may make at any time any provision for lapse of forfeiture restrictions and/or accelerated vesting under this

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Agreement of some or all of the Grantee’s unvested Award OPP Units that have not previously been forfeited.

2.                   Definitions.    Capitalized terms used herein without definitions shall have the meanings given to those terms in the Share Plan.  In addition, as used herein: “2002 Plan” means the Company’s 2002 Omnibus Share Plan, as amended, “2006 OPP” means the Company’s 2006 Outperformance Plan under the 2002 Plan as approved by the Board on March 17, 2006 and “2008 OPP” means the Company’s 2008 Outperformance Plan under the 2002 Plan as approved by the Board on March 31, 2008.

2006 OPP Units ” means those Partnership Units issued pursuant to the 2006 OPP.

2008 OPP Units ” means those Partnership Units issued pursuant to the 2008 OPP.

2012 OPP Units ” means those Partnership Units issued pursuant to this and all other 2012 OPP.

Additional Share Baseline Value ” means, with respect to each Additional Share, the gross proceeds received by the Company or the Partnership upon the issuance of such Additional Share, which amount shall be deemed to equal, as applicable:  (A) if such Additional Share is issued for cash in a public offering or private placement, the gross price to the public or to the purchaser(s); (B) if such Additional Share is issued in exchange for assets or securities of another Person or upon the acquisition of another Person, the cash value imputed to such Additional Share for purposes of such transaction by the parties thereto, as determined by the Committee, or, if no such value was imputed, the mean between the high and low sale prices of a Common Share on the national securities exchange or established securities market on which the Common Shares are listed on the date of issuance of such Additional Share, or, if no sale of Common Shares is reported on such date, on the next preceding day on which any sale shall have been reported; and (C) if such Additional Share is issued upon conversion or exchange of equity or debt securities of the Company, the Partnership or any other Subsidiary, which securities were not previously counted as either Initial Shares or Additional Shares, the conversion or exchange price in effect as of the date of conversion or exchange pursuant to the terms of the security being exchanged or converted.

Additional Shares ” means (without double-counting), as of a particular date of determination, the sum of:  (A) the number of Common Shares; plus  (B) the Shares Amount for all of the Units (assuming that such Units were converted, exercised, exchanged or redeemed for Partnership Units as of such date of determination at the applicable conversion, exercise, exchange or redemption rate (or rate deemed applicable by the Committee if there is no such stated rate) and such Partnership Units were then tendered to the Partnership for redemption pursuant to Section 8.6 of the Partnership Agreement as of such date), other than those held by the Company, but only, in the case of each (A) and (B), to the extent such Common Shares or Units are issued after the Effective Date, and on or before such date of determination: (i) in a capital raising transaction; (ii) in exchange for assets or securities or upon the acquisition of another Person; (iii) upon conversion or exchange of equity or debt securities of the Company, the Partnership or any other Subsidiary of the Company, which securities were not previously counted as either Initial Shares or Additional Shares; or (iv) through the reinvestment of

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dividends or other distributions.  For the avoidance of doubt, “Additional Shares” shall exclude, without limitation:  (w) Common Shares issued after the Effective Date upon exercise of stock options or upon the exchange (directly or indirectly) of LTIP Units, OPP Units or other Units issued to employees, non-employee trustees, consultants, advisors or other persons or entities as incentive or other compensation; (x) Common Shares awarded after the Effective Date to employees, non-employee trustees, consultants, advisors or other persons or entities as incentive or other compensation for services provided or to be provided to the Company or any of its Affiliates; (y) LTIP Units, OPP Units or other Units awarded after the Effective Date to employees, non-employee trustees, consultants, advisors or other persons or entities as incentive or other compensation; and (z) any securities included in “Initial Shares.”

Affiliate ” means, with respect to the Company, any company or other trade or business that controls, is controlled by or is under common control with the Company within the meaning of Rule 405 of Regulation C under the Securities Act, including, without limitation, any Subsidiary.

Award OPP Units ” has the meaning set forth in Section 3

Award Partnership Units ” has the meaning set forth in Section 7

Baseline Value ” means $84.20.

Buyback Shares ” means (without double-counting), as of a particular date of determination:  (A) Common Shares; and (B) the Shares Amount for Units (assuming that such Units were converted, exercised, exchanged or redeemed for Partnership Units as of such date at the applicable conversion, exercise, exchange or redemption rate (or rate deemed applicable by the Committee if there is no such stated rate) and such Partnership Units were then tendered to the Partnership for redemption pursuant to Section 8.6 of the Partnership Agreement as of such date), other than those held by the Company, but only, in the case of each (A) and (B), to the extent repurchased or redeemed by the Company after the Effective Date and on or before such date of determination in a stock buyback transaction or in a redemption of Units for cash pursuant to Section 8.6 of the Partnership Agreement.

Cause ” for termination of the Grantee’s Continuous Service for purposes of Section 3 and Section 4 means:  (A) if the Grantee is a party to a Service Agreement immediately prior to such termination, and “cause” is defined therein, then “cause” shall have the meaning set forth in such Service Agreement; or (B) if the Grantee is not party to a Service Agreement immediately prior to such termination or the Grantee’s Service Agreement does not define “cause” or a substantially equivalent term, then “cause” shall mean:  (i) conviction of, or plea of guilty or nolo contendre to, a felony pertaining or otherwise relating to his or her employment with the Company or an Affiliate; or (ii) willful misconduct that is materially economically injurious to the Company or any of its Affiliates, in each case as determined in the Company’s sole discretion.

Change in Control ” means:

(i)         individuals who, on the Effective Date, constitute the Board (the “ Incumbent Trustees ”) cease for any reason to constitute at least a majority of the Board,

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provided that any person becoming a trustee subsequent to the Effective Date whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Trustees then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for trustee, without objection to such nomination) shall be an Incumbent Trustee; provided , however , that no individual initially elected or nominated as a trustee of the Company as a result of an actual or threatened election contest with respect to trustees or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be an Incumbent Trustee; or

(ii)        any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes, after the Effective Date, a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “ Company Voting Securities ”); provided , however , that an event described in this paragraph (ii) shall not be deemed to be a Change in Control if any of following becomes such a beneficial owner:  (A) the Company or any majority-owned subsidiary of the Company ( provided  that this exclusion applies solely to the ownership levels of the Company or the majority-owned subsidiary), (B) any tax-qualified, broad-based employee benefit plan sponsored or maintained by the Company or any such majority-owned subsidiary, (C) any underwriter temporarily holding securities pursuant to an offering of such securities, (D) any person pursuant to a Non-Qualifying Transaction (as defined in paragraph (iii)), (E) (I) any of the partners (as of the Effective Date) in Interstate Properties (“ Interstate ”) including immediate family members and family trusts or family-only partnerships and any charitable foundations of such partners (the “ Interstate Partners ”), (II) any entities the majority of the voting interests of which are beneficially owned by the Interstate Partners, or (III) any “group” (as described in Rule 13d-5(b)(i) under the Exchange Act) including the Interstate Partners (the persons in (I), (II) and (III) shall be individually and collectively referred to herein as, “ Interstate Holders ”); or

(iii)       the consummation of a merger, consolidation, share exchange or similar form of transaction involving the Company or any of its subsidiaries, or the sale of all or substantially all of the Company’s assets (a “ Business Transaction ”), unless immediately following such Business Transaction (A) more than 50% of the total voting power of the entity resulting from such Business Transaction or the entity acquiring the Company’s assets in such Business Transaction (the “ Surviving Corporation ”) is beneficially owned, directly or indirectly, by the Interstate Holders or the Company’s shareholders immediately prior to any such Business Transaction, and (B) no person (other than the persons set forth in clauses (A), (B), (C), or (F) of paragraph (ii) above or any tax-qualified, broad-based employee benefit plan of the Surviving Corporation or its affiliates) beneficially owns, directly or indirectly, 30% or more of the total voting power of the Surviving Corporation (a “ Non-Qualifying Transaction ”); or

(iv)       Board approval of a liquidation or dissolution of the Company, unless the common equity interests of an ongoing entity (other than a liquidating trust) are beneficially owned, directly or indirectly, by the Company’s shareholders in substantially the same proportions as such shareholders owned the Company’s Company Voting Securities immediately

4

 


 

 

prior to such liquidation and such ongoing entity assumes all existing obligations of the Company to the Grantee under this Agreement.

Class A Units ” has the meaning set forth in the Partnership Agreement.

CoC Fraction ” means:  (A) for application pursuant to the proviso  clauses in the definitions of “Stage One Absolute Baseline” and “Stage One Hurdle Rate,” the number of calendar days that have elapsed since the Effective Date to and including the date as of which a Change in Control is consummated (or, with respect to a Transactional Change in Control, the date of the Public Announcement of such Transactional Change in Control), divided by 365; (B) for application pursuant to the proviso  clauses in the definitions of “Stage Two Absolute Baseline” and “Stage Two Hurdle Rate,” the number of calendar days that have elapsed since the Effective Date to and including the date as of which a Change in Control is consummated (or, with respect to a Transactional Change in Control, the date of the Public Announcement of such Transactional Change in Control), divided by 730; and (C) for application pursuant to the proviso  clauses in the definitions of “Final Absolute Baseline” and “Final Hurdle Rate,” the number of calendar days that have elapsed since the Effective Date to and including the date as of which a Change in Control is consummated (or, with respect to a Transactional Change in Control, the date of the Public Announcement of such Transactional Change in Control), divided by 1,095.

Code ” means the Internal Revenue Code of 1986, as amended.

Common Shares ” means the Company’s common shares of beneficial interest, par value $0.04 per share.

Common Share Price ” means, as of a particular date, the average of the Fair Market Value of one Common Share over the thirty (30) consecutive trading days ending on, and including, such date (or, if such date is not a trading day, the most recent trading day immediately preceding such date); provided , however , that if such date is the date of the Public Announcement of a Transactional Change in Control, the Common Share Price as of such date shall be equal to the fair market value, as determined by the Committee, of the total consideration payable in the transaction that ultimately results in the Transactional Change in Control for one Common Share.

Continuous Service ” means the continuous service, without interruption or termination, as an employee, director, trustee, manager or member of, or with the approval of the Committee, consultant or advisor to the Company or an Affiliate.  Continuous Service shall not be considered interrupted in the case of:  (A) any approved leave of absence; (B) transfers among the Company and any Affiliate, or any successor, in any capacity of trustee, director, employee, manager, member, or with the approval of the Committee, consultant or advisor; or (C) any change in status as long as the individual remains in the service of the Company or any Affiliate of the Company in any capacity of employee, director, trustee, manager, member or similar function of, or (if the Committee specifically agrees that the Continuous Service is not uninterrupted) a consultant or advisor.  An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave.  Subject to the preceding sentence, whether a termination of

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Continuous Service shall have occurred for purposes of this Agreement shall be determined by the Committee, which determination shall be final, binding and conclusive.

Disability ” means:  (A) if the Grantee is a party to a Service Agreement immediately prior to the applicable event, and “disability” is defined therein, then “disability” shall have the meaning set forth in such definition; or (B)  if the Grantee is not party to a Service Agreement immediately prior to such event or the Grantee’s Service Agreement does not define “disability” or a substantially equivalent term, then “disability” shall mean a disability which renders the Grantee incapable of performing all of his or her material duties for a period of at least 180 consecutive or non-consecutive days during any consecutive twelve-month period.

Dividend Payment ” means, as of a particular date, for each distribution declared and paid on one Class A Unit between the Effective Date and such date (excluding dividends and distributions paid in the form of additional Common Shares and Class A Units unless adjustment is otherwise made pursuant to Section 8 hereof) the amount of such distribution.

Effective Date ” means March 30, 2012.

Exchange Act ” means the Securities Exchange Act of 1934, as amended.

Ex-Dividend Common Share Price ”  means, as of an “ex-dividend” date with respect to a Common Share, (A) the average of the high and low price of the Common Shares as reported by New York Stock Exchange, The NASDAQ Stock Market, Inc. or another national securities exchange or an established securities market, on which the Common Shares are listed, as applicable (if there is more than one such exchange or market, the Committee shall determine the appropriate exchange or market), on such “ex-dividend” date (or if there is no such reported high and low price, the Ex-Dividend Common Share Price shall be the average of the highest bid and lowest asked prices on such “ex-dividend” date) or, if no sale of Common Shares is reported for such trading day, on the next preceding day on which any sale shall have been reported; or (B) if the Common Shares are not listed on such an exchange, quoted on such system or traded on such a market, Ex-Dividend Common Share Price of the Common Share shall be the value of the Common Shares as determined by the Committee in good faith in a manner consistent with Code Section 409A.

Fair Market Value ” means, as of any given date, the fair market value of a security determined by the Committee using any reasonable method and in good faith (such determination will be made in a manner that satisfies Section 409A of the Code and in good-faith as required by Section 422(c)(1) of the Code); provided  that with respect to a Common Share “Fair Market Value” means the value of such Common Share determined as follows:  (A) if on the determination date the Common Shares are listed on the New York Stock Exchange, The NASDAQ Stock Market, Inc. or another national securities exchange or is publicly traded on an established securities market, the Fair Market Value of a Common Share shall be the closing price of the Common Shares on such exchange or in such market (if there is more than one such exchange or market, the Committee shall determine the appropriate exchange or market) on the determination date (or if there is no such reported closing price, the Fair Market Value shall be the mean between the highest bid and lowest asked prices or between the high and low sale prices on such trading day) or, if no sale of Common Shares is reported for such trading day, on

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the next preceding day on which any sale shall have been reported; or (B) if the Common Shares are not listed on such an exchange, quoted on such system or traded on such a market, Fair Market Value of the Common Share shall be the value of the Common Shares as determined by the Committee in good faith in a manner consistent with Code Section 409A.

Family Member ” means a person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive relationships, of the Grantee, any person sharing the Grantee’s household (other than a tenant or employee), a trust in which any one or more of these persons have more than fifty percent (50%) of the beneficial interest, a foundation in which any one or more of these persons (or the Grantee) control the management of assets, and any other entity in which one or more of these persons (or the Grantee) own more than fifty percent (50%) of the voting interests.

Final Absolute Baseline ” means, as of the Final Valuation Date, an amount representing (without double-counting) the sum of:

(A)       the Baseline Value multiplied by

(i)         the difference between (x) the Initial Shares and (y) all Buyback Shares repurchased or redeemed between the Effective Date and the Final Valuation Date; and then multiplied by

(ii)        the sum of (x) one hundred percent (100%) plus  (y) the Target Final Absolute Return Percentage; plus   

(B)       with respect to each Additional Share issued after the Effective Date, the Additional Share Baseline Value of such Additional Share, multiplied by : the sum of:

 (i)        one hundred percent (100%); plus   

(ii)        the product of the Target Final Absolute Return Percentage multiplied by a fraction (x) the numerator of which is the number of days from the issuance of such Additional Share to and including the Final Valuation Date and (y) the denominator of which is the number of days from and including the Effective Date to and including the Final Valuation Date; plus 

(C)       with respect to each Buyback Share repurchased or redeemed after the Effective Date, the Baseline Value, multiplied by the sum of:

(i)         one hundred percent (100%); plus   

(ii)        the product of the Target Final Absolute Return Percentage multiplied by a fraction (x) the numerator of which is the number of days from the Effective Date to and including the date such Buyback Share was repurchased or redeemed and (y) the denominator of which is the number of days from and including the Effective Date to and including the Final Valuation Date;

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provided that if the Final Valuation Date occurs prior to March 30, 2015 as a result of a Change in Control, then for purposes of this definition in connection with the calculation of the Final Absolute TRS Pool as of the Final Valuation Date, then the Target Final Absolute Return Percentage to be used in such calculation shall be reduced to twenty-one percent (21%), multiplied by the CoC Fraction calculated pursuant to clause (C) of the definition thereof.  If the Company consummates multiple issuances of Additional Shares and/or repurchases of Buyback Shares during any one monthly or quarterly period, such that it would be impractical to track the precise issuance date and issuance price of each individual Additional Share and/or repurchase or redemption date of each individual Buyback Share, the Compensation Committee may in its discretion approve timing and calculation conventions (such as net-at-end-of-period or average-during-the-period) reasonably designed to simplify the administration of this Award.

Final Absolute TRS Pool ” means, as of the Final Valuation Date, a dollar amount calculated as follows (or, if the resulting amount is a negative number, zero (0)):  (A) subtract the Final Absolute Baseline from the Final Total Return, in each case as of the Final Valuation Date; and (B) multiply  the resulting amount by two percent (2%); provided  that in no event shall the Final Absolute TRS Pool exceed the difference between (i) the Maximum Final Outperformance Pool Amount and (ii) the sum of (x) the Stage One Total Outperformance Pool and (y) the Stage Two Total Outperformance Pool.

Final Adjustment Factor ” means a factor carried out to the sixth decimal determined by a straight-line interpolation between:  (A) zero (0) if the Final Hurdle Rate is zero percent (0%) or a negative factor; and (B) one (1) if the Final Hurdle Rate is eighteen percent (18%) or more.

Final Hurdle Rate ” means a percentage consisting of the Company’s TRS Percentage over the period starting on the Effective Date and ending on the Final Valuation Date; provided  that if the Final Valuation Date occurs prior to March 30, 2015 as a result of a Change in Control, then for purposes of determining the Final Adjustment Factor to be used in calculating the Final Relative TRS Pool as of the Final Valuation Date, the Final Hurdle Rate shall instead be:  (A) the Company’s TRS Percentage over the period starting on the Effective Date and ending on the date of the Change in Control (or, with respect to a Transactional Change in Control, the date of the Public Announcement of such Transactional Change in Control); divided  by (B) the CoC Fraction.

Final OPP Unit Equivalent ” has the meaning set forth in Section 3

Final Relative Adjusted Return ” a dollar amount, calculated as of the Final Valuation Date, using the same definition as for the “Final Relative Baseline,” except that in clauses (A)(ii), (B)(ii) and (C)(ii) thereof instead of the Index Return Percentage for the applicable period, the Threshold Return Percentage shall be used.

Final Relative Baseline ” means, as of the Final Valuation Date, an amount representing (without double-counting) the sum of:

(A)       the Baseline Value multiplied by

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(i)         the difference between (x) the Initial Shares and (y) all Buyback Shares repurchased or redeemed between the Effective Date and the Final Valuation Date, and then multiplied by

(ii)        the sum of one hundred percent (100%) plus  the Index Return Percentage for the period beginning on the Effective Date and ending on the Final Valuation Date; plus 

(B)       with respect to each Additional Share issued after the Effective Date, the Additional Share Baseline Value of such Additional Share multiplied by the sum of (i) one hundred percent (100%) plus (ii) the Index Return Percentage for the period beginning on the date of issuance of such Additional Share and ending on the Final Valuation Date; plus

(C)       with respect to each Buyback Share repurchased or redeemed after the Effective Date, the Baseline Value multiplied by the sum of (i) one hundred percent (100%) plus (ii) the Index Return Percentage for the period beginning on the Effective Date and ending on the date such Buyback Share was repurchased or redeemed.

If the Company consummates multiple issuances of Additional Shares and/or repurchases of Buyback Shares during any one monthly or quarterly period, such that it would be impractical to track the precise issuance date and issuance price of each individual Additional Share and/or repurchase or redemption date of each individual Buyback Share, the Compensation Committee may in its discretion approve timing and calculation conventions (such as net-at-end-of-period or average-during-the-period) reasonably designed to simplify the administration of this Award.

Final Relative Offset Amount ” means, if the Final Total Return as of the Final Valuation Date is less than the Final Relative Adjusted Return, an amount equal to two percent (2%) of the difference between the Final Total Return and the Final Relative Adjusted Return as of the Final Valuation Date.  For the avoidance of doubt, the Final Relative Offset Amount will always be a negative amount.

 “ Final Relative TRS Pool ” means, as of the Final Valuation Date, a dollar amount (or, if the resulting amount is a negative number, zero (0)) calculated as follows:  (A) subtract the Final Relative Baseline from the Final Total Return, in each case as of the Final Valuation Date; (B)  multiply  the resulting amount by two percent (2%); and (C) multiply  the lesser of (i) the resulting amount or (ii) $40,000,000 by the Final Adjustment Factor; provided  that in no event shall the Final Relative TRS Pool exceed the difference between (x) the Maximum Final Outperformance Pool Amount and (y) the sum of (I) the Stage One Total Outperformance Pool and (II) the Stage Two Total Outperformance Pool.

Final Total Outperformance Pool ” means, as of the Final Valuation Date, a dollar amount calculated as follows:  (A) take the algebraic sum of (i) the Final Absolute TRS Pool (either zero or a positive amount), (ii) the Final Relative TRS Pool (either zero or a positive amount), and (iii) the Final Relative Offset Amount (either zero or a negative amount); and (B) subtract from the resulting amount the sum of (i) the Stage One Total Outperformance Pool and (ii) the Stage Two Total Outperformance Pool, if any; provided  that if the resulting amount is a negative number, then the Final Total Outperformance Pool shall be zero; and provided , further ,  

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that in no event shall the Final Total Outperformance Pool exceed the difference between (x) the Maximum Final Outperformance Pool Amount and (y) the sum of (I) the Stage One Total Outperformance Pool and (II) the Stage Two Total Outperformance Pool.  It being understood that Final Total Outperformance Pool excludes the amounts which are calculated pursuant to Section 3(e) which are not subject to a cap.

Final Total Return ” means (without double-counting), as of the Final Valuation Date, an amount equal to the sum of:  (A) the Final Total Shares multiplied by the highest Common Share Price among those calculated as of every day within the period of one hundred and twenty (120) consecutive days immediately preceding the Final Valuation Date; plus  (B) an amount equal to the sum of the total dividends and other distributions actually declared between the Effective Date and the Final Valuation Date (excluding dividends and distributions paid in the form of additional Common Shares or Units) so long as the “ex-dividend” date with respect thereto falls prior to the Final Valuation Date, in respect of Common Shares and Class A Units (it being understood, for the avoidance of doubt, that such total dividends and distributions shall be calculated by multiplying the amount of each per share dividend or distribution declared by the actual number of securities outstanding as of each record date with respect to the applicable dividend or distribution payment date, and not by multiplying the aggregate amount of distributions paid on one Partnership Unit that was outstanding as of the Effective Date between the Effective Date and the Final Valuation Date by the number of Final Total Shares).

Final Total Shares ” means (without double-counting), as of the Final Valuation Date, the algebraic sum of:  (A) the Initial Shares, minus  (B) all Buyback Shares repurchased or redeemed between the Effective Date and the Final Valuation Date, plus  (C) all Additional Shares issued between the Effective Date and the Final Valuation Date.

Final Valuation Date ” means the earliest of:  (A) March 30, 2015; or (B) in the event of a Change in Control that is not a Transactional Change in Control, the date on which such Change in Control shall occur; or (C) in the event of a Transactional Change in Control and subject to the consummation of such Transactional Change in Control, the date of the Public Announcement of such Transactional Change in Control.

  Good Reason ” for termination of the Grantee’s employment for purposes of Section 3 and Section 4 means:  (A) if the Grantee is a party to a Service Agreement immediately prior to such termination, and “good reason” is defined therein, then “good reason” shall have the meaning set forth in such Service Agreement, or (B) if the Grantee is not party to a Service Agreement immediately prior to such termination or the Grantee’s Service Agreement does not define “good reason” or a substantially equivalent term, then “good reason” shall mean: (i) the assignment to the Grantee of duties materially and adversely inconsistent with the Grantee’s status as of the Effective Date or a material and adverse alteration in the nature of the Grantee’s duties, responsibilities or authority; (ii) a reduction in the Grantee’s base salary; or (iii) a relocation of the Grantee’s own office location to a location more than thirty (30) miles from its location as of  the Effective Date.

Index Return Percentage ” means, for any period, the total percentage return for the SNL Equity REIT Index from the start of such period to the end of such period, as calculated by a consultant engaged by the Committee and as approved by the Committee in its reasonable

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discretion for purposes of calculating the Stage One Relative Baseline, Stage Two Relative Baseline or Final Relative Baseline, as applicable.

Initial Shares ” means 197,102,697 Common Shares, which includes:  (A) 185,584,022 Common Shares outstanding as of the Effective Date (other than currently unvested restricted Common Shares previously granted to employees or other persons or entities in exchange for services provided to the Company); plus  (B) 11,342,128 Common Shares representing the Shares Amount for all of the Partnership Units (other than LTIP Units or OPP Units and excluding Partnership Units held by the Company) outstanding as of the Effective Date assuming that all of such Partnership Units were tendered to the Partnership for redemption pursuant to Section 8.6 of the Partnership Agreement as of such date; plus  (C) 176,547 Common Shares representing the Shares Amount for all of the Partnership Units into which all LTIP Units, 2006 OPP Units and 2008 OPP Units outstanding as of the Effective Date could be converted without regard to the book capital account associated with them (but only to the extent such LTIP Units, 2006 OPP Units or 2008 OPP Units are currently vested, and excluding all 2012 OPP Units), assuming that all of such Partnership Units were tendered to the Partnership for redemption pursuant to Section 8.6 of the Partnership Agreement as of such date.  For the avoidance of doubt, Initial Shares (i) includes (x) currently vested Common Shares and (y) currently vested LTIP Units, 2006 OPP Units and 2008 OPP Units previously granted to employees or other persons or entities in exchange for services provided to the Company, and (ii) excludes (x) all Common Shares issuable upon exercise of stock options or upon the exchange (directly or indirectly) of unvested LTIP Units, 2006 OPP Units, 2008 OPP Units and 2012 OPP Units or other unvested Units issued to employees, non-employee trustees, consultants, advisors or other persons or entities as incentive compensation, and (y) currently unvested restricted Common Shares previously granted to employees, non-employee trustees, consultants, advisors or other persons or entities in exchange for services provided to the Company.

LTIP Units ” means LTIP Units, as such term is defined in the Partnership Agreement.

Maximum Final Outperformance Pool Amount ” means $40,000,000 minus the sum of (i) the Stage One Total Outperformance Pool, if any, and (ii) the Stage Two Total Outperformance Pool, if any.

Maximum Stage One Outperformance Pool Amount ” means $8,000,000.

Maximum Stage Two Outperformance Pool Amount ” means $16,000,000 minus the Stage One Total Outperformance Pool, if any.

OPP Units ” means collectively all 2006 OPP Units, all 2008 OPP Units and all 2012 OPP Units.

Partial Service Factor ” means a factor carried out to the sixth decimal to be used in calculating the Grantee’s adjusted Stage One OPP Unit Equivalent, Stage Two OPP Unit Equivalent and Total OPP Unit Equivalent pursuant to Section 4(b)(ii) hereof in the event of a Qualified Termination of the Grantee’s Continuous Service prior to the Final Valuation Date or pursuant to Section 4(e) in the event of a termination of the Grantee’s Continuous Service by reason of death or Disability prior to the Final Valuation Date, determined as follows:

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(A)       for application pursuant to Section 4(b)(ii)(I) or Section 4(e)(ii)(I) hereof, the number of calendar days that have elapsed since the Effective Date to and including the effective date of such Qualified Termination or the date of death or Disability, divided by 365 (it being understood that if such Qualified Termination or death or Disability occurs after the Stage One Valuation Date, then the Partial Service Factor to be used for purposes of Section 4(b)(ii)(I) or Section 4(e)(ii)(I) shall be one (1)); provided , however , that if, after the effective date of such Qualified Termination or the date of death or Disability and before March 30, 2013, a Change in Control occurs, then there shall be subtracted from the foregoing denominator ( i.e.  365) a number of days equal to the days that would elapse between the date as of which the Change in Control is consummated (or, with respect to a Transactional Change in Control, the date of the Public Announcement of the Transactional Change in Control) and March 30, 2013;

(B)       for application pursuant to Section 4(b)(ii)(II) or Section 4(e)(ii)(II) hereof, the number of calendar days that have elapsed since the Effective Date to and including the effective date of such Qualified Termination or the date of death or Disability, divided by 730 (it being understood that if such Qualified Termination or death or Disability occurs after the Stage Two Valuation Date, then the Partial Service Factor to be used for purposes of Section 4(b)(ii)(II) or Section 4(e)(ii)(II) shall be one (1)); provided , however , that if, after the effective date of such Qualified Termination or the date of death or Disability and before March 30, 2014, a Change in Control occurs, then there shall be subtracted from the foregoing denominator ( i.e.  730) a number of days equal to the days that would elapse between the date as of which the Change in Control is consummated (or, with respect to a Transactional Change in Control, the date of the Public Announcement of the Transactional Change in Control) and March 30, 2014; and

(C)       for application pursuant to Section 4(b)(ii)(III) or Section 4(e)(ii)(III) hereof, the number of calendar days that have elapsed since the Effective Date to and including the effective date of such Qualified Termination or the date of death or Disability, divided by 1,095; provided , however , that if, after the effective date of such Qualified Termination or the date of death or Disability and before March 30, 2015, a Change in Control occurs, then there shall be subtracted from the foregoing denominator ( i.e.  1,095) a number of days equal to the days that would elapse between the date as of which the Change in Control is consummated (or, with respect to a Transactional Change in Control, the date of the Public Announcement of the Transactional Change in Control) and March 30, 2015.

Participation Percentage ” means the percentage set forth opposite such term on Schedule A hereto.

Partnership Agreement ” means the Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of October 20, 1997, among the Company, as general partner, and the limited partners who are parties thereto, as amended from time to time.

Partnership Units ” has the meaning set forth in the Partnership Agreement.

Person ” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, other entity or “group” (as defined in the Exchange Act).

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Public Announcement ” means, with respect to a Transactional Change in Control, the earliest press release, filing with the SEC or other publicly available or widely disseminated communication issued by the Company or another Person who is a party to such transaction which discloses the consideration payable in and other material terms of the transaction that ultimately results in the Transactional Change in Control; provided , however , that if such consideration is subsequently increased or decreased, then the term “Public Announcement” shall be deemed to refer to the most recent such press release, filing or communication disclosing a change in consideration whereby the final consideration and material terms of the transaction that ultimately results in the Transactional Change in Control are announced.  For the avoidance of doubt, the foregoing definition is intended to provide the Committee in the application of the proviso  clause in the definition of “Common Share Price” with the information required to determine the fair market value of the consideration payable in the transaction that ultimately results in the Transactional Change in Control as of the earliest time when such information is publicly disseminated, particularly if the transaction consists of an unsolicited tender offer or a contested business combination where the terms of the transaction change over time.

Qualified Termination ” has the meaning set forth in Section 4

Retirement ” means:  (A) if the Grantee is a party to a Service Agreement immediately prior to such event, and “Retirement” is defined therein, then “Retirement” shall have the meaning set forth in such Service Agreement, or (B) if the Grantee is not party to a Service Agreement immediately prior to such event and/or the Grantee’s Service Agreement does not define “Retirement” or a substantially equivalent term, then “Retirement” shall mean the Grantee’s termination of his or her Continuous Service with the Company and its Subsidiaries after attainment of age 65.

SEC ” means the U.S. Securities and Exchange Commission.

Securities Act ” means the Securities Act of 1933, as amended.

Service Agreement ” means, as of a particular date, any employment, consulting or similar service agreement (including without limitation a separation, severance or similar agreement if any) then in effect between the Grantee, on the one hand, and the Company or one of its Affiliates, on the other hand, as amended or supplemented through such date.

Shares Amount ” has the meaning set forth in the Partnership Agreement.

SNL Equity REIT Index ” means the SNL Equity REIT Index as published from time to time (or a successor index including a comparable universe of publicly traded U.S. real estate investment trusts), provided that if (A) the SNL Equity REIT Index ceases to exist or be published prior to the Stage One Valuation Date, Stage Two Valuation Date, or Final Valuation Date, as applicable, and the Committee determines that there is no successor to such index or (B) the Committee reasonably determines that the SNL Equity REIT Index is no longer suitable for the purposes of this Agreement, then the Committee in its good faith reasonable discretion shall select for subsequent periods, or if the Committee in its reasonable good faith discretion so determines, for any portion of or the entire period from the Effective Date to the Final Valuation

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Date, a substitute comparable index for purposes of calculating the Stage One Relative Baseline, Stage Two Relative Baseline or Final Relative Baseline, as applicable.

Stage One Absolute Baseline ” means, as of the Stage One Valuation Date, an amount representing (without double-counting) the sum of:

(A)       the Baseline Value multiplied by

(i)         the difference between (x) the Initial Shares and (y) all Buyback Shares repurchased or redeemed between the Effective Date and the Stage One Valuation Date; and then multiplied by

(ii)        the sum of (x) one hundred percent (100%) plus (y) the Target Stage One Absolute Return Percentage; plus 

(B)       with respect to each Additional Share issued between the Effective Date and the Stage One Valuation Date, the Additional Share Baseline Value of such Additional Share, multiplied by : the sum of:

(i)         one hundred percent (100%); plus   

(ii)        the product of the Target Stage One Absolute Return Percentage multiplied by a fraction (x) the numerator of which is the number of days from the issuance of such Additional Share to and including the Stage One Valuation Date and (y) the denominator of which is the number of days from and including the Effective Date to and including the Stage One Valuation Date; plus 

(C)       with respect to each Buyback Share repurchased or redeemed between the Effective Date and the Stage One Valuation Date, the Baseline Value, multiplied by : the sum of:

(i)         one hundred percent (100%); plus   

(ii)        the product of the Target Stage One Absolute Return Percentage multiplied by a fraction (x) the numerator of which is the number of days from the Effective Date to and including the date such Buyback Share was repurchased or redeemed and (y) the denominator of which is the number of days from and including the Effective Date to and including the Stage One Valuation Date;

provided that if the Stage One Valuation Date occurs prior to March 30, 2013 as a result of a Change in Control, then for purposes of this definition in connection with the calculation of the Stage One Absolute TRS Pool as of the Stage One Valuation Date, then the Target Stage One Absolute Return Percentage to be used in such calculation shall be reduced to seven percent (7%) multiplied by the CoC Fraction calculated pursuant to clause (A) of the definition thereof.  If the Company consummates multiple issuances of Additional Shares and/or repurchases of Buyback Shares during any one monthly or quarterly period, such that it would be impractical to track the precise issuance date and issuance price of each individual Additional Share and/or repurchase or redemption date of each individual Buyback Share, the Compensation Committee

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may in its discretion approve timing and calculation conventions (such as net-at-end-of-period or average-during-the-period) reasonably designed to simplify the administration of this Award.

Stage One Absolute TRS Pool ” means, as of the Stage One Valuation Date, a dollar amount calculated as follows (or, if the resulting amount is a negative number, zero):  (A) subtract the Stage One Absolute Baseline from the Stage One Total Return, in each case as of the Stage One Valuation Date; and (B) multiply  the resulting amount by two percent (2%); provided  that in no event shall the Stage One Absolute TRS Pool exceed the Maximum Stage One Outperformance Pool Amount.

“Stage One Adjusted Return ” means a dollar amount, calculated as of the Stage One Valuation Date, using the same definition as for the “Stage One Relative Baseline,” except that in clauses (A)(ii), (B)(ii) and (C)(ii) thereof instead of the Index Return Percentage for the applicable period, the Threshold Return Percentage shall be used.

Stage One Adjustment Factor ” means a factor carried out to the sixth decimal determined by a straight-line interpolation between:  (A) zero (0) if the Stage One Hurdle Rate is zero percent (0%) or a negative factor; and (B) one (1) if the Stage One Hurdle Rate is six percent (6%) or more.

Stage One Hurdle Rate ” means a percentage consisting of the Company’s TRS Percentage over the period starting on the Effective Date and ending on the Stage One Valuation Date; provided  that if the Stage One Valuation Date occurs prior to March 30, 2013 as a result of a Change in Control, then for purposes of determining the Stage One Adjustment Factor to be used in calculating the Stage One Relative TRS Pool as of the Stage One Valuation Date, the Stage One Hurdle Rate shall instead be:  (A) the Company’s TRS Percentage over the period starting on the Effective Date and ending on the date of the Change in Control (or, with respect to a Transactional Change in Control, the date of the Public Announcement of such Transactional Change in Control); divided by (B) the CoC Fraction.

Stage One OPP Unit Equivalent ” has the meaning set forth in Section 3

Stage One Relative Baseline ” means, as of the Stage One Valuation Date, an amount representing (without double-counting) the sum of:

(A)       the Baseline Value multiplied by

(i)         the difference between (x) the Initial Shares and (y) all Buyback Shares repurchased or redeemed between the Effective Date and the Stage One Valuation Date, and then multiplied by

(ii)        the sum of one hundred percent (100%) plus  the Index Return Percentage for the period beginning on the Effective Date and ending on the Stage One Valuation Date; plus 

(B)       with respect to each Additional Share issued after the Effective Date, the Additional Share Baseline Value of such Additional Share, multiplied by : the sum of:

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(i)         one hundred percent (100%); plus   

(ii)        the Index Return Percentage for the period beginning on the date of issuance of such Additional Share and ending on the Stage One Valuation Date; plus 

(C)       with respect to each Buyback Share repurchased or redeemed after the Effective Date, the Baseline Value multiplied by : the sum of:

(i)         one hundred percent (100%); plus   

(ii)        the Index Return Percentage for the period beginning on the Effective Date and ending on the date such Buyback Share was repurchased or redeemed.

If the Company consummates multiple issuances of Additional Shares and/or repurchases of Buyback Shares during any one monthly or quarterly period, such that it would be impractical to track the precise issuance date and issuance price of each individual Additional Share and/or repurchase or redemption date of each individual Buyback Share, the Compensation Committee may in its discretion approve timing and calculation conventions (such as net-at-end-of-period or average-during-the-period) reasonably designed to simplify the administration of this Award.

Stage One Relative Offset Amount ” means, if the Stage One Total Return as of the Stage One Valuation Date is less than the Stage One Adjusted Return, an amount equal to two percent (2%) of the difference between the Stage One Total Return and the Stage One Adjusted Return as of the Stage One Valuation Date.  For the avoidance of doubt, the Stage One Offset Amount will always be a negative amount.

 “ Stage One Relative TRS Pool ” means, as of the Stage One Valuation Date, a dollar amount (or, if the resulting amount is a negative number, zero (0)) calculated as follows:  (A) subtract the Stage One Relative Baseline from the Stage One Total Return, in each case as of the Stage One Valuation Date; (B) multiply  the difference by two percent (2%); and (C)  multiply  the lesser of (i) the product of (B) or (ii) the Maximum Stage One Outperformance Pool Amount by the Stage One Adjustment Factor.

Stage One Total Outperformance Pool ” means, as of the Stage One Valuation Date, a dollar amount equal to the sum of:  (A) the Stage One Absolute TRS Pool (if a positive amount); (B) the Stage One Relative TRS Pool (if a positive amount); and (C) the Stage One Relative Offset Amount (if a negative amount); provided  that if the resulting amount is a negative number, then the Stage One Total Outperformance Pool shall be zero; and provided , further , that in no event shall the Stage One Total Outperformance Pool exceed the Maximum Stage One Outperformance Pool Amount.  It being understood that Stage One Total Outperformance Pool excludes the amounts which are calculated pursuant to Section 3(e) which are not subject to a cap.

 “ Stage One Total Return ” means (without double-counting), as of the Stage One Valuation Date, an amount equal to the sum of:  (A) the Stage One Total Shares multiplied by the highest Common Share Price among those calculated as of every day within the period of one hundred and twenty (120) consecutive days immediately preceding the Stage One Valuation Date; plus  (B) an amount equal to the sum of the total dividends and other distributions actually

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declared between the Effective Date and the Stage One Valuation Date (excluding dividends and distributions paid in the form of additional Common Shares or Units) so long as the “ex-dividend” date with respect thereto falls prior to the Stage One Valuation Date, with respect to Common Shares and Class A Units (it being understood, for the avoidance of doubt, that such total dividends and distributions shall be calculated by multiplying the amount of each per share dividend or per Class A Unit distribution declared by the actual number of securities outstanding as of each record date with respect to the applicable dividend or distribution payment date, and not by multiplying the aggregate amount of distributions paid on one Partnership Unit that was outstanding as of the Effective Date between the Effective Date and the Stage One Valuation Date by the number of Stage One Total Shares).

Stage One Total Shares ” means (without double-counting), as of the Stage One Valuation Date, the algebraic sum of:  (A) the Initial Shares, minus  (B) all Buyback Shares repurchased or redeemed between the Effective Date and the Stage One Valuation Date, plus  (C) all Additional Shares issued between the Effective Date and the Stage One Valuation Date.

Stage One Valuation Date ” means the earliest of:  (A) March 30, 2013; or (B) in the event of a Change in Control that is not a Transactional Change in Control, the date on which such Change in Control shall occur; or (C) in the event of a Transactional Change in Control and subject to the consummation of such Transactional Change in Control, the date of the Public Announcement of such Transactional Change in Control.

Stage Two Absolute Baseline ” means, as of the Stage Two Valuation Date, an amount representing (without double-counting) the sum of:

(A)       the Baseline Value multiplied by:

(i)         the difference between (x) the Initial Shares and (y) all Buyback Shares repurchased or redeemed between the Effective Date and the Stage Two Valuation Date; and then multiplied by

(ii)        the sum of (x) one hundred percent (100%) plus (y) the Target Stage Two Absolute Return Percentage; plus 

(B)       with respect to each Additional Share issued between the Effective Date and the Stage Two Valuation Date, the Additional Share Baseline Value of such Additional Share, multiplied by : the sum of:

(i)         one hundred percent (100%); plus   

(ii)        the product of the Target Stage Two Absolute Return Percentage multiplied by : a fraction (x) the numerator of which is the number of days from the issuance of such Additional Share to and including the Stage Two Valuation Date and (y) the denominator of which is the number of days from and including the Effective Date to and including the Stage Two Valuation Date; plus 

(C)       with respect to each Buyback Share repurchased or redeemed between the Effective Date and the Stage Two Valuation Date, the Baseline Value, multiplied by : the sum of:

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(i)         one hundred percent (100%); plus   

(ii)        the product of the Target Stage Two Absolute Return Percentage multiplied by a fraction (x) the numerator of which is the number of days from the Effective Date to and including the date such Buyback Share was repurchased or redeemed and (y) the denominator of which is the number of days from and including the Effective Date to and including the Stage Two Valuation Date;

provided that if the Stage Two Valuation Date occurs prior to March 30, 2014 as a result of a Change in Control, then for purposes of this definition in connection with the calculation of the Stage Two Absolute TRS Pool as of the Stage Two Valuation Date, then the Target Stage Two Absolute Return Percentage to be used in such calculation shall be reduced to fourteen percent (14%) multiplied by the CoC Fraction calculated pursuant to clause (B) of the definition thereof.  If the Company consummates multiple issuances of Additional Shares and/or repurchases of Buyback Shares during any one monthly or quarterly period, such that it would be impractical to track the precise issuance date and issuance price of each individual Additional Share and/or repurchase or redemption date of each individual Buyback Share, the Compensation Committee may in its discretion approve timing and calculation conventions (such as net-at-end-of-period or average-during-the-period) reasonably designed to simplify the administration of this Award.

Stage Two Absolute TRS Pool ” means, as of the Stage Two Valuation Date, a dollar amount calculated as follows (or, if the resulting amount is a negative number, zero):  (A) subtract the Stage Two Absolute Baseline from the Stage Two Total Return, in each case as of the Stage Two Valuation Date; and (B) multiply  the resulting amount by two percent (2%); provided  that in no event shall the Stage Two Absolute TRS Pool exceed the Maximum Stage Two Outperformance Pool Amount.

“Stage Two Adjusted Return ” a dollar amount, calculated as of the Stage Two Valuation Date, using the same definition as for the “Stage Two Relative Baseline,” except that in clauses (A)(ii), (B)(ii) and (C)(ii) thereof instead of the Index Return Percentage for the applicable period, the Threshold Return Percentage shall be used.

Stage Two Adjustment Factor ” means a factor carried out to the sixth decimal determined by a straight-line interpolation between:  (A) zero (0) if the Stage Two Hurdle Rate is zero percent (0%) or a negative factor; and (B) one (1) if the Stage Two Hurdle Rate is twelve percent (12%) or more.

Stage Two Hurdle Rate ” means a percentage consisting of the Company’s TRS Percentage over the period starting on the Effective Date and ending on the Stage Two Valuation Date; provided  that if the Stage Two Valuation Date occurs prior to March 30, 2014 as a result of a Change in Control, then for purposes of determining the Stage Two Adjustment Factor to be used in calculating the Stage Two Relative TRS Pool as of the Stage Two Valuation Date, the Stage Two Hurdle Rate shall instead be:  (A) the Company’s TRS Percentage over the period starting on the Effective Date and ending on the date of the Change in Control (or, with respect to a Transactional Change in Control, the date of the Public Announcement of such Transactional Change in Control); divided by (B) the CoC Fraction.

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Stage Two OPP Unit Equivalent ” has the meaning set forth in Section 3

Stage Two Relative Baseline ” means, as of the Stage Two Valuation Date, an amount representing (without double-counting) the sum of:

(A)       the Baseline Value multiplied by

(i)         the difference between (x) the Initial Shares and (y) all Buyback Shares repurchased or redeemed between the Effective Date and the Stage Two Valuation Date, and then multiplied by  

(ii)        the sum of one hundred percent (100%) plus  the Index Return Percentage for the period beginning on the Effective Date and ending on the Stage Two Valuation Date; plus 

(B)       with respect to each Additional Share issued after the Effective Date, the Additional Share Baseline Value of such Additional Share, multiplied by : the sum of:

 (i)        one hundred percent (100%); plus   

(ii)        the Index Return Percentage for the period beginning on the date of issuance of such Additional Share and ending on the Stage Two Valuation Date; plus 

(C)       with respect to each Buyback Share repurchased or redeemed after the Effective Date, the Baseline Value multiplied by the sum of:

 (i)        one hundred percent (100%); plus   

(ii)        the Index Return Percentage for the period beginning on the Effective Date and ending on the date such Buyback Share was repurchased or redeemed.

If the Company consummates multiple issuances of Additional Shares and/or repurchases of Buyback Shares during any one monthly or quarterly period, such that it would be impractical to track the precise issuance date and issuance price of each individual Additional Share and/or repurchase or redemption date of each individual Buyback Share, the Compensation Committee may in its discretion approve timing and calculation conventions (such as net-at-end-of-period or average-during-the-period) reasonably designed to simplify the administration of this Award.

Stage Two Relative Offset Amount ” means, if the Stage Two Total Return as of the Stage Two Valuation Date is less than the Stage Two Adjusted Return, an amount equal to two percent (2%) of the difference between the Stage Two Total Return and the Stage Two Adjusted Return as of the Stage Two Valuation Date.  For the avoidance of doubt, the Stage Two Offset Amount will always be a negative amount.

 “ Stage Two Relative TRS Pool ” means, as of the Stage Two Valuation Date, a dollar amount (or, if the resulting amount is a negative number, zero (0)) calculated as follows:  (A) subtract the Stage Two Relative Baseline from the Stage Two Total Return, in each case as of the Stage Two Valuation Date; (B) multiply  the resulting difference by two percent (2%); and

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(C) multiply  the lesser of (i) the product of (B) or (ii) the Maximum Stage Two Outperformance Pool Amount by the Stage Two Adjustment Factor.

Stage Two Total Outperformance Pool ” means, as of the Stage Two Valuation Date, a dollar amount equal to (A) take the algebraic sum of (i) the Stage Two Absolute TRS Pool (if a positive amount), (ii) the Stage Two Relative TRS Pool (if a positive amount), and (iii) the Stage Two Relative Offset Amount (if a negative amount); and (B) subtract from the resulting amount the Stage One Outperformance Pool, if any; provided  that if the resulting sum is a negative number, then the Stage Two Total Outperformance Pool shall be zero; and provided , further , that in no event shall the Stage Two Total Outperformance Pool exceed the Maximum Stage Two Outperformance Pool Amount.  It being understood that Stage Two Total Outperformance Pool excludes the amounts which are calculated pursuant to Section 3(e) which are not subject to a cap.

 “ Stage Two Total Return ” means (without double-counting), as of the Stage Two Valuation Date, an amount equal to the sum of:  (A) the Stage Two Total Shares multiplied by the highest Common Share Price among those calculated as of every day within the period of one hundred and twenty (120) consecutive days immediately preceding the Stage Two Valuation Date; plus  (B) an amount equal to the sum of the total dividends and other distributions actually declared between the Effective Date and the Stage Two Valuation Date (excluding dividends and distributions paid in the form of additional Common Shares or Units) so long as the “ex-dividend” date with respect thereto falls prior to the Stage Two Valuation Date, with respect to Common Shares and Class A Units (it being understood, for the avoidance of doubt, that such total dividends and distributions shall be calculated by multiplying the amount of each per share dividend or per Class A Unit distribution declared by the actual number of securities outstanding as of each record date with respect to the applicable dividend or distribution payment date, and not by multiplying the aggregate amount of distributions paid on one Partnership Unit that was outstanding as of the Effective Date between the Effective Date and the Stage Two Valuation Date by the number of Stage Two Total Shares).

Stage Two Total Shares ” means (without double-counting), as of the Stage Two Valuation Date, the algebraic sum of:  (A) the Initial Shares, minus  (B) all Buyback Shares repurchased or redeemed between the Effective Date and the Stage Two Valuation Date, plus  (C) all Additional Shares issued between the Effective Date and the Stage Two Valuation Date.

Stage Two Valuation Date ” means the earliest of:  (A) March 30, 2014; or (B) in the event of a Change in Control that is not a Transactional Change in Control, the date on which such Change in Control shall occur; or (C) in the event of a Transactional Change in Control and subject to the consummation of such Transactional Change in Control, the date of the Public Announcement of such Transactional Change in Control; provided  that the Stage Two Valuation Date cannot be after the Final Valuation Date.

Subsidiary ” means any “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code.

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Target Final Absolute Return Percentage ” means twenty-one percent (21%), except as otherwise defined for purposes of the definition of Final Absolute Baseline in certain circumstances, as described in the proviso  clause of such definition.

Target Stage One Absolute Return Percentage ” means seven percent (7%), except as otherwise defined for purposes of the definition of Stage One Absolute Baseline in certain circumstances, as described in the proviso  clause in such definition.

Target Stage Two Absolute Return Percentage ” means fourteen percent (14%), except as otherwise defined for purposes of the definition of Stage Two Absolute Baseline in certain circumstances, as described in the proviso  clause in such definition.

Threshold Return Percentage ” means, for any period, the applicable Index Return Percentage reduced by an annualized 200 basis points from the start of such period to the end of such period, as calculated by a consultant engaged by the Committee and as approved by the Committee in its reasonable discretion for purposes of calculating the Stage One Relative Offset Amount, Stage Two Relative Offset Amount and Final Relative Offset Amount, as applicable.  For the avoidance of doubt, if the calculation period were three years, the reduction in the Index Return Percentage to arrive at the Threshold Return Percentage would be 600 basis points, whereas if the calculation period were 219 days, the reduction would be 120 basis points.

Total OPP Unit Equivalent ” means the sum of:  (A) Stage One OPP Unit Equivalent, if any, plus  (B) the Stage Two OPP Unit Equivalent, if any; plus  (C) the Final OPP Unit Equivalent, if any.

Transactional Change in Control ” means (A) a Change in Control described in clause (ii) of the definition thereof where the “person” or “group” makes a tender offer for Common Shares, or (B) a Change in Control described in clause (iii) of the definition thereof where the Company is not the Surviving Corporation; provided  that if the applicable definition of “Change in Control” (or similar term) in the applicable Service Agreement does not track such clauses (ii) or (iii), then the term “Transactional Change in Control” shall mean a Change in Control meeting the substantive criteria set forth in such clauses, as reasonably determined in good faith by the Committee.

Transfer ” has the meaning set forth in Section 7

TRS Percentage ” means, with respect to the Company, for any period, the total percentage return per share achieved by one Common Share from the start of such period to the end of such period, as calculated by a consultant engaged by the Committee and as approved by the Committee in its reasonable discretion using the data for the Company included in the SNL Equity REIT Index for such period.

Units ” means all Partnership Units (as defined in the Partnership Agreement), including LTIP Units, with economic attributes substantially similar to Partnership Units as determined by the Committee that are outstanding or are issuable upon the conversion, exercise, exchange or redemption of any securities of any kind convertible, exercisable, exchangeable or redeemable for Partnership Units; provided  that all Units that are not convertible into or exchangeable for Class A Units shall be excluded from the definition of “Units.”

 

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3.                   Outperformance Award; Vesting; Change in Control. 

(a)                 The Grantee is hereby granted this Award consisting of the number of 2012 OPP Units set forth on Schedule A hereto (the “ Award OPP Units ”), which (A) will be subject to forfeiture to the extent provided in this Section 3 and (B) will be subject to vesting as provided in Sections 3(f) hereof.  At any time prior to the Final Valuation Date, the Committee may grant additional 2012 OPP awards to the extent that the sum of all the 2012 OPP grantees’ Participation Percentages is less than one hundred percent (100%) as a result of either reservation of a portion of the 2012 OPP Participation Percentage for future awards or forfeiture of granted 2012 OPP awards.  At any time prior to or in connection with the calculation of the Final OPP Unit Equivalent, the Partnership may issue additional LTIP Units to the Grantee as provided in this Section 3 that shall also be considered Award OPP Units and subject to all of the terms and conditions of this Agreement; provided  that such issuance will be subject to the Grantee executing and delivering such documents, comparable to the documents executed and delivered in connection with this Agreement, as the Company and/or the Partnership may reasonably request in order to comply with all applicable legal requirements, including, without limitation, federal and state securities laws.  The Award OPP Units shall be eligible for vesting over a five-year period, except as otherwise provided in Section 4 hereof, based on a combination of (i) the Company’s performance over a three-year period (or a shorter period in certain circumstances as provided herein) as indicated by the calculations required by this Section 3  and (ii) the passage of time (five years or a shorter period in certain circumstances as provided herein) as provided in Section 3(f) .  Vesting will occur at the times, in the amounts and upon the conditions set forth in this Section 3 and in Section 4 , provided  that, except as otherwise expressly set forth in this Agreement, the Continuous Service of the Grantee continues through and on the each applicable vesting date.

(b)                As soon as practicable following the Stage One Valuation Date, but as of the Stage One Valuation Date, the Committee will:

(i)                  determine the Stage One Absolute TRS Pool (if any);

(ii)                determine the Stage One Relative TRS Pool (if any);

(iii)              determine the Stage One Relative Offset Amount (if any);

(iv)              determine the Stage One Total Outperformance Pool (if any);

(v)                multiply  (x) the Stage One Total Outperformance Pool calculated as of the Stage One Valuation Date by  (y) the Grantee’s Participation Percentage as of the Stage One Valuation Date; and

(vi)              divide  the resulting amount by the highest Common Share Price among those calculated as of every day within the period of one hundred and twenty (120) days immediately preceding the Stage One Valuation Date (appropriately adjusted to the extent that the Shares Amount for one Partnership Unit is greater or less than one Common Share).

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The resulting number is hereafter referred to as the “ Stage One OPP Unit Equivalent ”. A number of Award OPP Units equal to the Stage One OPP Unit Equivalent shall thereafter no longer be subject to forfeiture pursuant to this Section 3 , but shall still be subject to vesting pursuant to Section 3(f) hereof.  If the Stage One OPP Unit Equivalent is smaller than the number of Award OPP Units previously issued to the Grantee pursuant to Section 3(a) hereof, then the balance of the Award OPP Units shall continue to be subject to forfeiture pursuant to this Section 3 .  If the Stage One OPP Unit Equivalent is greater than the number of Award OPP Units previously issued to the Grantee, then, upon the performance of the calculations set forth in this Section 3(b) :  (A)   the Company shall cause the Partnership to issue to the Grantee, as of the Stage One Valuation Date, a number of additional LTIP Units equal to the difference; (B) such additional LTIP Units shall be added to the Award OPP Units previously issued, if any, and thereby become part of this Award; (C) the Company and the Partnership shall take such corporate and Partnership action as is necessary to accomplish the grant of such additional LTIP Units; and (D) thereafter the term Award OPP Units will refer collectively to the Award OPP Units, if any, issued prior to such additional grant plus  such additional LTIP Units; provided  that such issuance will be subject to the Grantee executing and delivering such documents, comparable to the documents executed and delivered in connection with this Agreement, as the Company and/or the Partnership may reasonably request in order to comply with all applicable legal requirements, including, without limitation, federal and state securities laws.

(c)                 As soon as practicable following the Stage Two Valuation Date, but as of the Stage Two Valuation Date, the Committee will:

(i)                  determine the Stage Two Absolute TRS Pool (if any);

(ii)                determine the Stage Two Relative TRS Pool (if any);

(iii)              determine the Stage Two Relative Offset Amount (if any);

(iv)              determine the Stage Two Total Outperformance Pool (if any);

(v)                multiply  (x) the Stage Two Total Outperformance Pool calculated as of the Stage Two Valuation Date by (y) the Grantee’s Participation Percentage as of the Stage Two Valuation Date; and

(vi)              divide  the resulting amount by the highest Common Share Price among those calculated as of every day within the period of one hundred and twenty (120) days immediately preceding the Stage Two Valuation Date (appropriately adjusted to the extent that the Shares Amount for one Partnership Unit is greater or less than one Common Share).

The resulting number is hereafter referred to as the “ Stage Two OPP Unit Equivalent ”.  A number of Award OPP Units equal to the Stage Two OPP Unit Equivalent ( plus  the Stage One OPP Unit Equivalent, if any) shall thereafter no longer be subject to forfeiture pursuant to this Section 3 , but shall still be subject to vesting pursuant to Section 3(f)  hereof.  If the Stage Two OPP Unit Equivalent (plus the Stage One OPP Unit Equivalent, if any) is smaller than the number of Award OPP Units previously issued to the Grantee, (including any additional LTIP Units added to the Award OPP Units under Section 3(b) above) then the balance of the Award

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OPP Units shall continue to be subject to forfeiture pursuant to this Section 3 .  If the Stage Two OPP Unit Equivalent ( plus  the Stage One OPP Unit Equivalent, if any) is greater than the number of Award OPP Units previously issued to the Grantee, then, upon the performance of the calculations set forth in this Section 3(c) :  (A) the Company shall cause the Partnership to issue to the Grantee, as of the Second Valuation Date, a number of additional LTIP Units equal to the difference; (B) such additional LTIP Units shall be added to the Award OPP Units previously issued, if any, and thereby become part of this Award; (C) the Company and the Partnership shall take such corporate and Partnership action as is necessary to accomplish the grant of such additional LTIP Units; and (D) thereafter the term Award OPP Units will refer collectively to the Award OPP Units, if any, issued prior to such additional grant plus  such additional LTIP Units; provided  that such issuance will be subject to the Grantee executing and delivering such documents, comparable to the documents executed and delivered in connection with this Agreement, as the Company and/or the Partnership reasonably request in order to comply with all applicable legal requirements, including, without limitation, federal and state securities laws.

(d)                As soon as practicable following the Final Valuation Date, but as of the Final Valuation Date, the Committee will:

(i)                  determine the Final Absolute TRS Pool (if any);

(ii)                determine the Final Relative TRS Pool (if any);

(iii)              determine the Final Relative Offset Amount (if any);

(iv)              determine the Final Total Outperformance Pool (if any);

(v)                multiply  (x) the Final Total Outperformance Pool calculated as of the Final Valuation Date by (y) the Grantee’s Participation Percentage as of the Final Valuation Date; and

(vi)              divide  the resulting amount by the highest Common Share Price among those calculated as of every day within the period of one hundred and twenty (120) days immediately preceding the Final Valuation Date (appropriately adjusted to the extent that the Shares Amount for one Partnership Unit is greater or less than one Common Share).

The resulting number is hereafter referred to as the “ Final OPP Unit Equivalent ”.  If the Final OPP Unit Equivalent ( plus  the Stage One OPP Unit Equivalent and Stage Two OPP Unit Equivalent, if any) is smaller than the number of Award OPP Units previously issued to the Grantee, then the Grantee, as of the Final Valuation Date, shall forfeit a number of Award OPP Units equal to the difference, and thereafter the term Award OPP Units will refer only to the remaining Award OPP Units that were not so forfeited.  If the Final OPP Unit Equivalent ( plus  the Stage One OPP Unit Equivalent and Stage Two OPP Unit Equivalent, if any) is greater than the number of Award OPP Units previously issued to the Grantee (including any additional LTIP Units added to the Award OPP Units under Section 3(b)  or (3)(c)  above), then, upon the performance of the calculations set forth in this Section 3(d) :  (A) the Company shall cause the Partnership to issue to the Grantee, as of the Final Valuation Date, a number of additional LTIP Units equal to the difference; (B) such additional LTIP Units shall be added to the Award OPP

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Units previously issued, if any, and thereby become part of this Award; (C) the Company and the Partnership shall take such corporate and Partnership action as is necessary to accomplish the grant of such additional LTIP Units; and (D) thereafter the term Award OPP Units will refer collectively to the Award OPP Units, if any, issued prior to such additional grant plus  such additional LTIP Units; provided  that such issuance will be subject to the Grantee executing and delivering such documents, comparable to the documents executed and delivered in connection with this Agreement, as the Company and/or the Partnership reasonably request in order to comply with all applicable legal requirements, including, without limitation, federal and state securities laws.  If the Final OPP Unit Equivalent ( plus  the Stage One OPP Unit Equivalent and Stage Two OPP Unit Equivalent, if any) is the same as the number of Award OPP Units previously issued to the Grantee, then there will be no change to the number of Award OPP Units under this Award pursuant to this Section 3

(e)                 If the Grantee earns any Award OPP Units as of the Stage One Valuation Date, the Stage Two Valuation Date or the Final Valuation Date pursuant to the calculations set forth in Section 3(b) , 3(c)  or 3(d)  hereof, respectively, then, as of the date on which such Award OPP Units are earned, the Grantee will also earn an additional number of Award OPP Units equal to the sum of the following calculations, which will be performed by the Committee:

I.       For each Dividend Payment between the Effective Date and the date as of which such Award OPP units are earned, calculate the following numbers of additional Award OPP Units:

 

(W*X)

 

 

Z

 

 

Where:

W = the number of Award OPP Units earned as of such date pursuant to Section 3(b) , 3(c)  or 3(d)  hereof, as applicable (appropriately adjusted to the extent that the Shares Amount for one partnership Unit is greater or less than one Common Share);

X = 90% of the Dividend Payment; and

Z = The Ex-Dividend Common Share Price on the “ex-dividend” date for such Dividend Payment.

II.     Add all the amounts calculated pursuant to I. above together.

The resulting number of Award OPP Units earned pursuant to the calculation set forth in this Section 3(e) shall be added to the Stage One OPP Unit Equivalent, Stage Two OPP Unit Equivalent or Final OPP Unit Equivalent, as applicable, and be subject to vesting pursuant to Section 3(f) hereof and all the provisions of Section 4 hereof applicable to such other 2012 OPP Units.   If the total number of Award OPP Units so earned is greater than the number of Award OPP Units previously issued to the Grantee, then, upon the performance of the calculations set forth in this Section 3(e) :  (A)  the Company shall cause the Partnership to issue to the Grantee,

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as of the Stage One Valuation Date, Stage Two OPP Unit Date or Final OPP Unit Date, as applicable, a number of additional LTIP Units equal to the difference; (B) such additional LTIP Units shall be added to the Award OPP Units previously issued, if any, and thereby become part of this Award; (C) the Company and the Partnership shall take such corporate and Partnership action as is necessary to accomplish the grant of such additional LTIP Units; and (D) thereafter the term Award OPP Units will refer collectively to the Award OPP Units, if any, issued prior to such additional grant plus such additional LTIP Units; provided that such issuance will be subject to the Grantee executing and delivering such documents, comparable to the documents executed and delivered in connection with this Agreement, as the Company and/or the Partnership may reasonably request in order to comply with all applicable legal requirements, including, without limitation, federal and state securities laws.

(f)                 If any of the Award OPP Units have been earned based on performance as provided in Section 3(b) , 3(c)  or 3(d) , subject to Section 4 hereof, the Total OPP Unit Equivalent shall become vested in the following amounts and at the following times, provided  that the Continuous Service of the Grantee continues through and on the applicable vesting date or the accelerated vesting date provided in Section 4 hereof, as applicable:

(i)                  thirty-three and one-third percent (33.33%) of the Total OPP Unit Equivalent shall become vested on March 30, 2015;

(ii)                thirty-three and one-third percent (33.33%) of the Total OPP Unit Equivalent shall become vested on March 30, 2016; and

(iii)              thirty-three and one-third percent (33.33%) of the Total OPP Unit Equivalent shall become vested on March 30, 2017.

To the extent that Schedule A provides for amounts or schedules of vesting that conflict with the provisions of this Section 3(f), the provisions of Schedule A will govern.  For the avoidance of doubt, vesting pursuant to this Section 3(f) shall not distinguish between Award OPP Units that have ceased to be subject to forfeiture as part of the Stage One OPP Unit Equivalent, Stage Two OPP Unit Equivalent or Final OPP Unit Equivalent.

(g)                Any Award OPP Units that do not become vested pursuant to Section 3(f) or Section 4 hereof shall, without payment of any consideration by the Partnership, automatically and without notice be forfeited and be and become null and void, and neither the Grantee nor any of his or her successors, heirs, assigns, or personal representatives will thereafter have any further rights or interests in such unvested Award OPP Units.

(h)                Upon the occurrence of (a) a Change in Control, and (b) the termination of employment of the Grantee with the Company or its Affiliates within 24 months of such Change in Control (i) by the Company (or its successor) without Cause or (ii) by the Grantee with Good Reason, then any Award OPP Units that have not been previously forfeited (after giving effect to any forfeiture of Award OPP Units pursuant to the calculations set forth in this Section 3 hereof occurring in connection with such Change in Control) shall vest immediately.

(i)                  In the event of a Change in Control, the Committee will make any determinations and certifications required by this Agreement and any provisions necessary with

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respect to the lapse of forfeiture restrictions and/or acceleration of vesting of this Award within a period of time that enables (i) the Grantee to exercise election, voting or other rights in connection with such Change in Control on the same basis as a Class A Unit holder and (ii) the Company to take any action or make any deliveries or payments it is obligated to make hereunder or under the Partnership Agreement not later than the date of consummation of the Change in Control.  For avoidance of doubt, in the event of a Change in Control, the performance of all calculations and actions pursuant to Section 3(b) , 3(c)  and 3(d)  hereof and the exercise of any election, voting or other rights pursuant to this Section 3(i)  shall be conditioned upon the final consummation of such Change in Control.

4.                   Termination of Grantee’s Continuous Service; Death and Disability.

(a)                 If the Grantee is a party to a Service Agreement and his or her Continuous Service terminates, the provisions of Sections 4(b) , 4(c) , 4(d) , 4(e) , 4(f)  and 4(g)  hereof shall govern the treatment of the Grantee’s Award OPP Units exclusively, unless the Service Agreement contains provisions that expressly refer to this Section 4(a) and provides that those provisions of the Service Agreement shall instead govern the treatment of the Grantee’s Award OPP Units upon such termination.  The foregoing sentence will be deemed an amendment to any applicable Service Agreement to the extent required to apply its terms consistently with this Section 4 , such that, by way of illustration, any provisions of the Service Agreement with respect to accelerated vesting or payout or the lapse of forfeiture restrictions relating to the Grantee’s incentive or other compensation awards in the event of certain types of termination of the Grantee’s Continuous Service with the Company (such as, for example, termination at the end of the term, termination without Cause by the employer or termination for Good Reason by the employee) shall not be interpreted as requiring that any calculations set forth in Section 3 hereof be performed, or vesting occur with respect to this Award other than as specifically provided in this Section 4 .  In the event that an entity to which the Grantee provides services ceases to be an Affiliate of the Company, such action shall be deemed to be a termination of the Grantee’s Continuous Service for purposes of this Agreement, provided  that the Committee, in its sole and absolute discretion, may make provision in such circumstances for the lapse of forfeiture restrictions and/or accelerated vesting of some or all of the Grantee’s unvested Award OPP Units that have not previously been forfeited, effective immediately prior to such event, or determine that the Grantee’s Continuous Service to the Company or any other of its Affiliates has not been terminated.  Notwithstanding any of the foregoing, in the event of any conflict between the provisions of the Grantee’s Service Agreement, if any, and the provisions of this Section 4 with respect to death or Disability, the provisions of such Service Agreement shall govern the treatment of the Grantee’s Award OPP Units in the event of death or Disability.

(b)                In the event of termination of the Grantee’s Continuous Service by (A) the Company without Cause, (B) the Grantee for Good Reason, or (C) the Grantee upon Retirement (each a “ Qualified Termination ”) prior to the Final Valuation Date, then the Grantee will not forfeit the Award OPP Units upon such termination, but the following provisions of this Section 4(b)  shall modify the calculations required to determine the Total OPP Unit Equivalent and/or the vesting of the Total OPP Unit Equivalent, as applicable, with respect to the Grantee only:

 

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(i)                  the calculations provided in Section 3(b) , Section 3(c) and Section 3(d)  hereof shall be performed as of the Stage One Valuation Date, Stage Two Valuation Date and Final Valuation Date, respectively, as if the Qualified Termination had not occurred;

(ii)                each of (I) the Stage One OPP Unit Equivalent calculated pursuant to Section 3(b) , (II) the Stage Two OPP Unit Equivalent calculated pursuant to Section 3(c)  and (III) the Final OPP Unit Equivalent calculated pursuant to Section 3(d) shall be multiplied by the applicable Partial Service Factor (with the resulting numbers being rounded to the nearest whole LTIP Unit or, in the case of 0.5 of a unit, up to the next whole unit), and such adjusted number of LTIP Units shall be deemed the Grantee’s Stage One OPP Unit Equivalent, Stage Two OPP Unit Equivalent and Final OPP Unit Equivalent, respectively, for all purposes under this Agreement; and

(iii)              the Grantee’s Stage One OPP Unit Equivalent, Stage Two OPP Unit Equivalent and Total OPP Unit Equivalent as adjusted pursuant to Section 4(b)(ii) above shall no longer be subject to forfeiture pursuant to Section 3(f) hereof; provided  that, notwithstanding that no Continuous Service requirement pursuant to Section 3(f) hereof will apply to the Grantee after the effective date of a Qualified Termination, the Grantee will not have the right to Transfer (as defined in Section 7 hereof) his or her Award OPP Units or request redemption of his or her Award Partnership Units under the Partnership Agreement until such dates as of which his or her Total OPP Unit Equivalent, as adjusted pursuant to Section 4(b)(ii) above, would have become vested pursuant to Section 3(f) hereof absent a Qualified Termination.  For the avoidance of doubt, the purpose of this Section 4(b)(iii)  is to prevent a situation where grantees of 2012 OPP awards who have had a Qualified Termination would be able to realize the value of their Award OPP Units or Award Partnership Units (through Transfer or redemption) before other grantees of 2012 OPP awards whose Continuous Service continues through the applicable vesting dates set forth in Section 3(f) hereof.

(c)                 In the event of Qualified Termination on or after the Final Valuation Date, then all of the Grantee’s unvested Award OPP Units that have not previously been forfeited pursuant to the calculations set forth in Section 3(b) , Section 3(c) or Section 3(d) hereof, but remain subject to time-based vesting pursuant to Section 3(f) hereof as of the time of such Qualified Termination shall no longer be subject to forfeiture pursuant to Section 3(f) hereof; provided  that, notwithstanding that no Continuous Service requirement pursuant to Section 3(f) hereof will apply to the Grantee after the effective date of a Qualified Termination, the Grantee will not have the right to Transfer (as defined in Section 7 hereof) his or her Award OPP Units or request redemption of his or her Award Partnership Units under the Partnership Agreement until such dates as of which his or her Total OPP Unit Equivalent would have become vested pursuant to Section 3(f) absent a Qualified Termination.  For the avoidance of doubt, the purpose of this Section 4(c) is to prevent a situation where grantees of 2012 OPP awards who have had a Qualified Termination would be able to realize the value of their Award OPP Units or Award Partnership Units (through Transfer or redemption) before other grantees of OPP awards whose Continuous Service continues through the applicable vesting dates set forth in Section 3(f) hereof.

 

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(d)                Notwithstanding the foregoing, in the event any payment to be made hereunder after giving effect to this Section 4 is determined to constitute “nonqualified deferred compensation” subject to Section 409A of the Code, then, to the extent the Grantee is a “specified employee” under Section 409A of the Code subject to the six-month delay thereunder, any such payments to be made during the six-month period commencing on the Grantee’s “separation from service” (as defined in Section 409A of the Code) shall be delayed until the expiration of such six-month period.

(e)                 In the event of a termination of the Grantee’s Continuous Service as a result of his or her death or Disability prior to the Final Valuation Date, the Grantee will not forfeit the Award OPP Units, but the following provisions of this Section 4(e) shall apply:

(i)                  the calculations provided in Section 3(b) , Section 3(c) and Section 3(d)  hereof shall be performed as of the Stage One Valuation Date, Stage Two Valuation Date and Final Valuation Date, respectively, as if the Grantee’s death or Disability had not occurred; and

(ii)                each of (I) the Stage One OPP Unit Equivalent calculated pursuant to Section 3(b) , (II) the Stage Two OPP Unit Equivalent calculated pursuant to Section 3(c)  and (III) the Final OPP Unit Equivalent calculated pursuant to Section 3(d) shall be multiplied by the applicable Partial Service Factor (with the resulting numbers being rounded to the nearest whole LTIP Unit or, in the case of 0.5 of a unit, up to the next whole unit), and such adjusted number of LTIP Units shall be deemed the Grantee’s Stage One OPP Unit Equivalent, Stage Two OPP Unit Equivalent and Final OPP Unit Equivalent, respectively, for all purposes under this Agreement;

(iii)              100% of the Grantee’s Stage One OPP Unit Equivalent as adjusted pursuant to Section 4(e)(ii) above shall no longer be subject to forfeiture pursuant to Section 3(f) hereof and shall automatically and immediately vest as of the Stage One Valuation Date;

(iv)              100% of the Grantee’s Stage Two OPP Unit Equivalent as adjusted pursuant to Section 4(e)(ii) above shall no longer be subject to forfeiture pursuant to Section 3(f) hereof and shall automatically and immediately vest as of the Stage Two Valuation Date; and

(v)                100% of the Grantee’s Total OPP Unit Equivalent as adjusted pursuant to Section 4(e)(ii) above shall no longer be subject to forfeiture pursuant to Section 3(f) hereof and shall automatically and immediately vest as of the Final Valuation Date.

(f)                 In the event of a termination of the Grantee’s Continuous Service as a result of his or her death or Disability after the Final Valuation Date, 100% of the Grantee’s Total OPP Unit Equivalent shall no longer be subject to forfeiture pursuant to Section 3(f) hereof and shall automatically and immediately vest as of such termination date.

(g)                In the event of a termination of the Grantee’s Continuous Service other than a Qualified Termination or by reason of death or Disability, all Award OPP Units except for

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those that, as of the date at such termination, both  (i) have ceased to be subject to forfeiture pursuant to Sections 3(b) , 3(c) and/or 3(d)  hereof, as applicable, and  (ii) have vested pursuant to Section 3(f) hereof shall, without payment of any consideration by the Partnership, automatically and without notice terminate, be forfeited and be and become null and void, and neither the Grantee nor any of his or her successors, heirs, assigns, or personal representatives will thereafter have any further rights or interests in such Award OPP Units.

5.                   Payments by Award Recipients; Status as Partner.   No amount shall be payable to the Company or the Partnership by the Grantee at any time in respect of this Agreement.  The Grantee shall have no rights with respect to this Agreement (and the Award evidenced hereby) unless he or she shall have accepted this Agreement by (i) signing and delivering to the Partnership a copy of this Agreement and (ii) unless the Grantee is already a Partner (as defined in the Partnership Agreement), signing, as a Limited Partner, and delivering to the Partnership a counterpart signature page to the Partnership Agreement (attached hereto as Exhibit A).  Upon acceptance of this Agreement by the Grantee, the Partnership Agreement shall be amended to reflect the issuance to the Grantee of the LTIP Units so accepted.  Thereupon, the Grantee shall have all the rights of a Limited Partner of the Partnership with respect to the number of 2012 OPP Units specified on Schedule A hereto, as set forth in the Partnership Agreement, subject, however, to the restrictions and conditions specified herein.  Award OPP Units constitute and shall be treated for all purposes as the property of the Grantee, subject to the terms of this Agreement and the Partnership Agreement.

6.                   Distributions. 

(a)                 The holder of the Award OPP Units shall be entitled to receive distributions with respect to such Award OPP Units to the extent provided for in the Partnership Agreement as modified hereby.

(b)                The Distribution Participation Date (as defined in the Partnership Agreement) for the Stage One OPP Unit Equivalent, the Stage Two OPP Unit Equivalent and the Final OPP Unit Equivalent (to the extent provided in Section 6(c) below) shall be the Stage One Valuation Date, the Stage Two Valuation Date or the Final Valuation Date, respectively, except that if the provisions of Section 4(b) hereof become applicable to the Grantee, the Distribution Participation Date for the Grantee shall be accelerated to the date the calculations provided in Section 3 hereof are performed with respect to the Award OPP Units that are no longer subject to forfeiture pursuant to Section 4(b) hereof.

(c)                 Following each applicable Distribution Participation Date, the Grantee shall be entitled to receive one hundred percent (100%) of the same distributions payable with respect to Class A Units on the number of Award OPP Units which equals:

(i)                  if the Distribution Participation Date is the Stage One Valuation Date, the Stage One OPP Unit Equivalent;

(ii)                if the Distribution Participation Date is the Stage Two Valuation Date, the Stage Two OPP Unit Equivalent; and

 

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(iii)              if the Distribution Participation Date is the Final Valuation Date (or an earlier date if the Distribution Participation Date is accelerated pursuant to Section 6(b) ), the Total OPP Unit Equivalent.

(d)                Each Award OPP Unit shall be considered a Special LTIP Unit (as defined in the Partnership Agreement) and as such: (i) the LTIP Unit Initial Sharing Percentage (as defined in the Partnership Agreement) shall be ten percent (10%) and (ii) the Award OPP Units shall not be entitled to receive distributions prior to the applicable Distribution Participation Date.  On the applicable Distribution Participation Date, Award OPP Units shall be entitled to a Special LTIP Unit Distribution (as defined in the Partnership Agreement) to the extent provided in the Partnership Agreement.  The Distribution Measurement Date (as defined in the Partnership Agreement) with respect to the Award OPP Units shall be the Effective Date and all of the Award OPP Units granted pursuant to this Agreement shall be deemed to have been issued as part of the Same Award (as defined in the Partnership Agreement).

(e)                 For the avoidance of doubt, after the applicable Distribution Participation Date, Award OPP Units, both vested and (until and unless forfeited pursuant to Section 3(g) and 4(g)  hereof) unvested, shall be entitled to receive the same distributions payable with respect to Class A Units if the payment date for such distributions is after the applicable Distribution Participation Date, even though the record date for such distributions is before the applicable Distribution Participation Date.

(f)                 All distributions paid with respect to Award OPP Units, whether at the rate provided in Sections 6(d) hereof prior to the applicable Distribution Participation Date or at the rate provided in Sections 6(c) hereof after the applicable Distribution Participation Date, shall be fully vested and non-forfeitable when paid, regardless of the fact that the underlying 2012 OPP Units may be subject to forfeiture or have not yet become, or never become, vested pursuant to Sections 3 and hereof.

7.                   Restrictions on Transfer.   Except as otherwise permitted by the Committee, none of the Award OPP Units granted hereunder nor any of the Partnership Units of the Partnership into which such Award OPP Units may be converted (the “ Award Partnership Units ”) shall be sold, assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of, encumbered, whether voluntarily or by operation of law (each such action a “ Transfer ”), and the Redemption Right (as defined in the Partnership Agreement) may not be exercised with respect to the Award Partnership Units, provided that, at any time after the date that (a) the Award OPP Units vest and (b) is at least two (2) years after the Effective Date, (i) Award OPP Units or Award Partnership Units may be Transferred to the Grantee’s Family Members by gift or pursuant to domestic relations order in settlement of marital property rights; (ii) Award OPP Units or Award Partnership Units may be Transferred to an entity in which fifty percent (50%) of the voting interests are owned by Family Members (or the Grantee) in exchange for an interest in such entity; and (iii) the Redemption Right may be exercised with respect to Award Partnership Units, and Award Partnership Units may be Transferred to the Partnership or the Company in connection with the exercise of the Redemption Right, in accordance with and to the extent otherwise permitted by the terms of the Partnership Agreement.  Additionally, the transferee must agree in writing with the Company and the Partnership to be bound by all the terms and conditions of this Agreement and that subsequent transfers shall be prohibited except those in

31

 


 

 

accordance with this Section 7 and all Transfers of Award OPP Units or Award Partnership Units must be in compliance with all applicable securities laws (including, without limitation, the Securities Act) and the applicable terms and conditions of the Partnership Agreement.  In connection with any Transfer of Award OPP Units or Award Partnership Units, the Partnership may require the Grantee to provide an opinion of counsel, satisfactory to the Partnership, that such Transfer is in compliance with all federal and state securities laws (including, without limitation, the Securities Act).  Any attempted Transfer of Award OPP Units or Award Partnership Units not in accordance with the terms and conditions of this Section 7 shall be null and void, and the Partnership shall not reflect on its records any change in record ownership of any Award OPP Units or Award Partnership Units as a result of any such Transfer, shall otherwise refuse to recognize any such Transfer and shall not in any way give effect to any such Transfer of any Award OPP Units or Award Partnership Units.  Except as provided expressly in this Section 7 , this Agreement is personal to the Grantee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution.

8.                   Changes in Capital Structure.   If (i) the Company shall at any time be involved in a merger, consolidation, dissolution, liquidation, reorganization, exchange of shares, sale of all or substantially all of the assets or stock of the Company or other transaction similar thereto, (ii) any stock dividend, stock split, reverse stock split, stock combination, reclassification, recapitalization, significant repurchases of stock, or other similar change in the capital stock of the Company or any other event that constitutes a change in stock under the terms of the Share Plan shall occur, (iii) any extraordinary dividend or other distribution to holders of Common Shares or Class A Units shall be declared and paid other than in the ordinary course, or (iv) any other event shall occur that in each case in the good faith judgment of the Committee necessitates action by way of appropriate equitable or proportionate adjustment in the terms of this Award, this Agreement or the 2012 OPP Units to avoid distortion in the value of this Award, then the Committee shall take such action as it deems necessary to maintain the Grantee’s rights hereunder so that they are substantially proportionate to the rights existing under this Award and the terms of the 2012 OPP Units prior to such event, including, without limitation:  (A) interpretations of or modifications to any defined term in this Agreement; (B) adjustments in any calculations provided for in this Agreement, and (C) substitution of other awards under the Share Plan or otherwise.

9.                   Miscellaneous. 

(a)                 Amendment .  This Agreement may be amended or modified only with the consent of the Company and the Partnership acting through the Committee; provided  that any such amendment or modification materially and adversely affecting the rights of the Grantee hereunder must be consented to by the Grantee to be effective as against him.  Notwithstanding the foregoing, this Agreement may be amended in writing signed only by the Company and the Partnership to correct any errors or ambiguities in this Agreement and/or to make such changes that do not materially adversely affect the Grantee’s rights hereunder.  This grant shall in no way affect the Grantee’s participation or benefits under any other plan or benefit program maintained or provided by the Company or the Partnership. 

 

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(b)                Incorporation of Share Plan; Committee Determinations .  The provisions of the Share Plan are hereby incorporated by reference as if set forth herein.  In the event of a conflict between this Agreement and the Share Plan, the Share Plan shall govern.  The Committee will make the determinations and certifications required by this Award as promptly as reasonably practicable following the occurrence of the event or events necessitating such determinations or certifications.

(c)                 Status of 2012 OPP Units under the Share Plan .  This Award and the other 2012 OPP awards constitute awards of OP Units (as defined in the 2010 Plan) by the Company under the 2010 Plan.  The Award OPP Units are interests in the Partnership.  The number of Common Shares reserved for issuance under the Share Plan underlying outstanding Award OPP Units will be determined by the Committee in light of all applicable circumstances, including calculations made or to be made under Section 3 hereof, vesting, capital account allocations and/or balances under the Partnership Agreement, the conversion ratio in effect between LTIP Units and Class A Units and the exchange ratio in effect between Class A Units and Common Shares.  The Company will have the right at its option, as set forth in the Partnership Agreement, to issue Common Shares in exchange for Award Partnership Units in accordance with the Partnership Agreement, subject to certain limitations set forth in the Partnership Agreement, and such Common Shares, if issued, will be issued under the Share Plan.  The Grantee must be eligible to receive the Award OPP Units in compliance with applicable federal and state securities laws and to that effect is required to complete, execute and deliver certain covenants, representations and warranties (attached as Exhibit B ).  The Grantee acknowledges that the Grantee will have no right to approve or disapprove such determination by the Committee.

(d)                Legend .  The records of the Partnership evidencing the Award OPP Units shall bear an appropriate legend, as determined by the Partnership in its sole discretion, to the effect that such 2012 OPP Units are subject to restrictions as set forth herein, in the Share Plan, and in the Partnership Agreement.

(e)                 Compliance With Law .  The Partnership and the Grantee will make reasonable efforts to comply with all applicable securities laws.  In addition, notwithstanding any provision of this Agreement to the contrary, no 2012 OPP Units will become vested or be paid at a time that such vesting or payment would result in a violation of any such law.

(f)                 Investment Representations; Registration .  The Grantee hereby makes the covenants, representations and warranties set forth on Exhibit B attached hereto.  All of such covenants, warranties and representations shall survive the execution and delivery of this Agreement by the Grantee.  The Partnership will have no obligation to register under the Securities Act any 2012 OPP Units or any other securities issued pursuant to this Agreement or upon conversion or exchange of 2012 OPP Units.  The Grantee agrees that any resale of the shares of Common Shares received upon the exchange of Units into which 2012 OPP Units may be converted shall not occur during the “blackout periods” forbidding sales of Company securities, as set forth in the then applicable Company employee manual or insider trading policy.  In addition, any resale shall be made in compliance with the registration requirements of the Securities Act or an applicable exemption therefrom, including, without limitation, the exemption provided by Rule 144 promulgated thereunder (or any successor rule).

 

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(g)                Section 83(b) Election .  In connection with each separate issuance of LTIP Units under this Award pursuant to Section 3 hereof the Grantee hereby agrees to make an election to include in gross income in the year of transfer the applicable Award OPP Units pursuant to Section 83(b) of the Code substantially in the form attached hereto as Exhibit C and to supply the necessary information in accordance with the regulations promulgated thereunder.  The Grantee agrees to file the election (or to permit the Partnership to file such election on the Grantee’s behalf) within thirty (30) days after the award of the 2012 OPP Units hereunder with the IRS Service Center at which such Grantee files his personal income tax returns, and to file a copy of such election with the Grantee’s U.S. federal income tax return for the taxable year in which the 2012 OPP Units are awarded to the Grantee.

(h)                Severability .  If, for any reason, any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not so held invalid, and each such other provision shall to the full extent consistent with law continue in full force and effect.  If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision not held so invalid, and the rest of such provision, together with all other provisions of this Agreement, shall to the full extent consistent with law continue in full force and effect.

(i)                  Governing Law .  This Agreement is made under, and will be construed in accordance with, the laws of State of New York, without giving effect to the principles of conflict of laws of such State.

(j)                  No Obligation to Continue Position as an Employee, Consultant or Advisor .  Neither the Company nor any Affiliate is obligated by or as a result of this Agreement to continue to have the Grantee as an employee, consultant or advisor and this Agreement shall not interfere in any way with the right of the Company or any Affiliate to terminate the Grantee’s Continuous Service at any time.

(k)                Notices .  Any notice to be given to the Company shall be addressed to the Secretary of the Company at 888 Seventh Avenue, New York, New York 10019 and any notice to be given the Grantee shall be addressed to the Grantee at the Grantee’s address as it appears on the employment records of the Company, or at such other address as the Company or the Grantee may hereafter designate in writing to the other.

(l)                  Withholding and Taxes .  No later than the date as of which an amount first becomes includible in the gross income of the Grantee for income tax purposes or subject to the Federal Insurance Contributions Act withholding with respect to this Award, the Grantee will pay to the Company or, if appropriate, any of its Affiliates, or make arrangements satisfactory to the Committee regarding the payment of, any United States federal, state or local or foreign taxes of any kind required by law to be withheld with respect to such amount; provided , however , that if any Award OPP Units or Award Partnership Units are withheld (or returned), the number of Award OPP Units or Award Partnership Units so withheld (or returned) shall be limited to a number which has a fair market value on the date of withholding equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income.  The obligations of the Company under this Agreement will be conditional on such

34

 


 

 

payment or arrangements, and the Company and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Grantee.

(m)              Headings .  The headings of paragraphs hereof are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

(n)                Counterparts .  This Agreement may be executed in multiple counterparts with the same effect as if each of the signing parties had signed the same document.  All counterparts shall be construed together and constitute the same instrument.

(o)                Successors and Assigns .  This Agreement shall be binding upon and inure to the benefit of the parties hereto and any successors to the Company and the Partnership, on the one hand, and any successors to the Grantee, on the other hand, by will or the laws of descent and distribution, but this Agreement shall not otherwise be assignable or otherwise subject to hypothecation by the Grantee. 

(p)                Section 409A .  This Agreement shall be construed, administered and interpreted in accordance with a good faith interpretation of Section 409A of the Code.  Any provision of this Agreement that is inconsistent with Section 409A of the Code, or that may result in penalties under Section 409A of the Code, shall be amended, with the reasonable cooperation of the Grantee, the Company and the Partnership, to the extent necessary to exempt it from, or bring it into compliance with Section 409A of the Code.

[signature page follows]

 

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IN WITNESS WHEREOF , the undersigned have caused this Award Agreement to be executed as of the 30 th day of March, 2012.

VORNADO REALTY TRUST

 

 

By:  ______________________

Name:  Joseph Macnow

Title:    Executive Vice President and Chief Financial Officer

 

VORNADO REALTY L.P.

 

 

By:  Vornado Realty Trust, its sole general partner:

 

 

By:  ______________________

Name:  Joseph Macnow

Title:    Executive Vice President and Chief Financial Officer

 

GRANTEE

 

 

Name: 

 

 

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EXHIBIT A

FORM OF LIMITED PARTNER SIGNATURE PAGE

The Grantee, desiring to become one of the within named Limited Partners of Vornado Realty L.P., hereby accepts all of the terms and conditions of (including, without limitation, the Section 15.11 “Power of Attorney” thereof), and becomes a party to, the Agreement of Limited Partnership, dated as of October 20, 1997, of Vornado Realty L.P., as amended (the “ Partnership Agreement ”).  The Grantee agrees that this signature page may be attached to any counterpart of the Partnership Agreement and further agrees as follows (where the term “ Limited Partner ” refers to the Grantee):

1.                   The Limited Partner hereby confirms that it has reviewed the terms of the Partnership Agreement and affirms and agrees that it is bound by each of the terms and conditions of the Partnership Agreement, including, without limitation, the provisions thereof relating to limitations and restrictions on the transfer of Partnership Units (as defined in the Partnership Agreement).

2.                   The Limited Partner hereby confirms that it is acquiring the Partnership Units for its own account as principal, for investment and not with a view to resale or distribution, and that the Partnership Units may not be transferred or otherwise disposed of by the Limited Partner otherwise than in a transaction pursuant to a registration statement filed by the Partnership (which it has no obligation to file) or that is exempt from the registration requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), and all applicable state and foreign securities laws, and the General Partner (as defined in the Partnership Agreement) may refuse to transfer any Partnership Units as to which evidence of such registration or exemption from registration satisfactory to the General Partner is not provided to it, which evidence may include the requirement of a legal opinion regarding the exemption from such registration.  If the General Partner delivers to the Limited Partner Common Shares of Beneficial Interest of the General Partner (“ Common Shares ”) upon redemption of any Partnership Units, the Common Shares will be acquired for the Limited Partner’s own account as principal, for investment and not with a view to resale or distribution, and the Common Shares may not be transferred or otherwise disposed of by the Limited Partner otherwise than in a transaction pursuant to a registration statement filed by the General Partner with respect to such Common Shares (which it has no obligation under the Partnership Agreement to file) or that is exempt from the registration requirements of the Securities Act and all applicable state and foreign securities laws, and the General Partner may refuse to transfer any Common Shares as to which evidence of such registration or exemption from such registration satisfactory to the General Partner is not provided to it, which evidence may include the requirement of a legal opinion regarding the exemption from such registration.

3.                   The Limited Partner hereby affirms that it has appointed the General Partner, any Liquidator (as defined in the Partnership Agreement) and authorized officers and attorneys-in-fact of each, and each of those acting singly, in each case with full power of substitution, as its true and lawful agent and attorney-in-fact, with full power and authority in its name, place and stead, in accordance with Section 15.11 of the Partnership Agreement, which section is hereby incorporated by reference.  The foregoing power of attorney is hereby declared to be irrevocable

 


 

 

and a power coupled with an interest, and it shall survive and not be affected by the death, incompetency, dissolution, disability, incapacity, bankruptcy or termination of the Limited Partner and shall extend to the Limited Partner’s heirs, executors, administrators, legal representatives, successors and assigns.

4.                   The Limited Partner hereby confirms that, notwithstanding any provisions of the Partnership Agreement to the contrary, the Award OPP Units shall not be redeemable by the Limited Partner pursuant to Section 8.6 of the Partnership Agreement.

5.                   (a)        The Limited Partner hereby irrevocably consents in advance to any amendment to the Partnership Agreement, as may be recommended by the General Partner, intended to avoid the Partnership being treated as a publicly-traded partnership within the meaning of Section 7704 of the Internal Revenue Code, including, without limitation, (x) any amendment to the provisions of Section 8.6 of the Partnership Agreement intended to increase the waiting period between the delivery of a Notice of Redemption (as defined in the Partnership Agreement) and the Specified Redemption Date (as defined in the Partnership Agreement) and/or the Valuation Date (as defined in the Partnership Agreement) to up to sixty (60) days or (y) any other amendment to the Partnership Agreement intended to make the redemption and transfer provisions, with respect to certain redemptions and transfers, more similar to the provisions described in Treasury Regulations Section 1.7704-1(f).

(b)        The Limited Partner hereby appoints the General Partner, any Liquidator and authorized officers and attorneys-in-fact of each, and each of those acting singly, in each case with full power of substitution, as its true and lawful agent and attorney-in-fact, with full power and authority in its name, place and stead, to execute and deliver any amendment referred to in the foregoing paragraph 5(a) on the Limited Partner’s behalf.  The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, and it shall survive and not be affected by the death, incompetency, dissolution, disability, incapacity, bankruptcy or termination of the Limited Partner and shall extend to the Limited Partner’s heirs, executors, administrators, legal representatives, successors and assigns.

6.                   The Limited Partner agrees that it will not transfer any interest in the Partnership Units (x) through (i) a national, non-U.S., regional, local or other securities exchange, (ii) PORTAL or (iii) an over-the-counter market (including an interdealer quotation system that regularly disseminates firm buy or sell quotations by identified brokers or dealers by electronic means or otherwise) or (y) to or through (a) a person, such as a broker or dealer, that makes a market in, or regularly quotes prices for, interests in the Partnership or (b) a person that regularly makes available to the public (including customers or subscribers) bid or offer quotes with respect to any interests in the Partnership and stands ready to effect transactions at the quoted prices for itself or on behalf of others. 

7.                   The Limited Partner acknowledges that the General Partner shall be a third party beneficiary of the representations, covenants and agreements set forth in Sections 4 and 6 hereof.  The Limited Partner agrees that it will transfer, whether by assignment or otherwise, Partnership Units only to the General Partner or to transferees that provide the Partnership and the General Partner with the representations and covenants set forth in Sections 4 and 6 hereof.

 


 

 

8.                   This Acceptance shall be construed and enforced in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of law.

Signature Line for Limited Partner:

 

 

Name:  ______________________

Date:  __________ __, 2012

 

Address of Limited Partner:

                                                          

                                                          

 

 

 


 

 

EXHIBIT B

GRANTEE’S COVENANTS, REPRESENTATIONS AND WARRANTIES

The Grantee hereby represents, warrants and covenants as follows:

(a)        The Grantee has received and had an opportunity to review the following documents (the “ Background Documents ”): 

(i)         The Company’s latest Annual Report to Stockholders;

(ii)        The Company’s Proxy Statement for its most recent Annual Meeting of Stockholders;

(iii)       The Company’s Report on Form 10-K for the fiscal year most recently ended;

(iv)       The Company’s Form 10-Q, if any, for the most recently ended quarter if one has been filed by the Company with the Securities and Exchange Commission since the filing of the Form 10-K described in clause (iii) above;

(v)        Each of the Company’s Current Report(s) on Form 8-K, if any, filed since the end of the fiscal year most recently ended for which a Form 10-K has been filed by the Company;

(vi)       The Partnership Agreement;

(vii)      The Share Plan; and

(viii)     The Company’s Declaration of Trust, as amended.

The Grantee also acknowledges that any delivery of the Background Documents and other information relating to the Company and the Partnership prior to the determination by the Partnership of the suitability of the Grantee as a holder of LTIP Units shall not constitute an offer of LTIP Units until such determination of suitability shall be made.

(b)        The Grantee hereby represents and warrants that

(i)         The Grantee either (A) is an “accredited investor” as defined in Rule 501(a) under the Securities Act of 1933, as amended (the “ Securities Act ”), or (B) by reason of the business and financial experience of the Grantee, together with the business and financial experience of those persons, if any, retained by the Grantee to represent or advise him with respect to the grant to him of LTIP Units, the potential conversion of LTIP Units into Class A Units of the Partnership (“ Common Units ”) and the potential redemption of such Common Units for the Company’s Common Shares (“ REIT Shares ”), has such knowledge, sophistication and experience in financial and business matters and in making investment decisions of this type that the Grantee (I) is capable of evaluating the merits and risks of an investment in the Partnership and potential investment in the Company and of making an informed investment

 


 

 

decision, (II) is capable of protecting his own interest or has engaged representatives or advisors to assist him in protecting his interests, and (III) is capable of bearing the economic risk of such investment.

(ii)        The Grantee understands that (A) the Grantee is responsible for consulting his own tax advisors with respect to the application of the U.S. federal income tax laws, and the tax laws of any state, local or other taxing jurisdiction to which the Grantee is or by reason of the award of LTIP Units may become subject, to his particular situation; (B) the Grantee has not received or relied upon business or tax advice from the Company, the Partnership or any of their respective employees, agents, consultants or advisors, in their capacity as such; (C) the Grantee provides or will provide services to the Partnership on a regular basis and in such capacity has access to such information, and has such experience of and involvement in the business and operations of the Partnership, as the Grantee believes to be necessary and appropriate to make an informed decision to accept this Award of LTIP Units; and (D) an investment in the Partnership and/or the Company involves substantial risks.  The Grantee has been given the opportunity to make a thorough investigation of matters relevant to the LTIP Units and has been furnished with, and has reviewed and understands, materials relating to the Partnership and the Company and their respective activities (including, but not limited to, the Background Documents).  The Grantee has been afforded the opportunity to obtain any additional information (including any exhibits to the Background Documents) deemed necessary by the Grantee to verify the accuracy of information conveyed to the Grantee.  The Grantee confirms that all documents, records, and books pertaining to his receipt of LTIP Units which were requested by the Grantee have been made available or delivered to the Grantee.  The Grantee has had an opportunity to ask questions of and receive answers from the Partnership and the Company, or from a person or persons acting on their behalf, concerning the terms and conditions of the LTIP Units.  The Grantee has relied upon, and is making its decision solely upon, the Background Documents and other written information provided to the Grantee by the Partnership or the Company.

(iii)       The LTIP Units to be issued, the Common Units issuable upon conversion of the LTIP Units and any REIT Shares issued in connection with the redemption of any such Common Units will be acquired for the account of the Grantee for investment only and not with a current view to, or with any intention of, a distribution or resale thereof, in whole or in part, or the grant of any participation therein, without prejudice, however, to the Grantee’s right (subject to the terms of the LTIP Units, the Share Plan and this Agreement) at all times to sell or otherwise dispose of all or any part of his LTIP Units, Common Units or REIT Shares in compliance with the Securities Act, and applicable state securities laws, and subject, nevertheless, to the disposition of his assets being at all times within his control. 

(iv)       The Grantee acknowledges that (A) neither the LTIP Units to be issued, nor the Common Units issuable upon conversion of the LTIP Units, have been registered under the Securities Act or state securities laws by reason of a specific exemption or exemptions from registration under the Securities Act and applicable state securities laws and, if such LTIP Units or Common Units are represented by certificates, such certificates will bear a legend to such effect, (B) the reliance by the Partnership and the Company on such exemptions is predicated in part on the accuracy and completeness of the representations and warranties of the Grantee contained herein, (C) such LTIP Units or Common Units, therefore, cannot be resold unless registered under the Securities Act and applicable state securities laws, or unless an exemption

 


 

 

from registration is available, (D) there is no public market for such LTIP Units and Common Units and (E) neither the Partnership nor the Company has any obligation or intention to register such LTIP Units or the Common Units issuable upon conversion of the LTIP Units under the Securities Act or any state securities laws or to take any action that would make available any exemption from the registration requirements of such laws, except, that, upon the redemption of the Common Units for REIT Shares, the Company may issue such REIT Shares under the Share Plan and pursuant to a Registration Statement on Form S-8 under the Securities Act, to the extent that (I) the Grantee is eligible to receive such REIT Shares under the Share Plan at the time of such issuance, (II) the Company has filed a Form S-8 Registration Statement with the Securities and Exchange Commission registering the issuance of such REIT Shares and (III) such Form S-8 is effective at the time of the issuance of such REIT Shares.  The Grantee hereby acknowledges that because of the restrictions on transfer or assignment of such LTIP Units acquired hereby and the Common Units issuable upon conversion of the LTIP Units which are set forth in the Partnership Agreement or this Agreement, the Grantee may have to bear the economic risk of his ownership of the LTIP Units acquired hereby and the Common Units issuable upon conversion of the LTIP Units for an indefinite period of time.

(v)        The Grantee has determined that the LTIP Units are a suitable investment for the Grantee.

(vi)       No representations or warranties have been made to the Grantee by the Partnership or the Company, or any officer, trustee, shareholder, agent, or Affiliate of any of them, and the Grantee has received no information relating to an investment in the Partnership or the LTIP Units except the information specified in paragraph (b) above.

(c)        So long as the Grantee holds any LTIP Units, the Grantee shall disclose to the Partnership in writing such information as may be reasonably requested with respect to ownership of LTIP Units as the Partnership may deem reasonably necessary to ascertain and to establish compliance with provisions of the Code, applicable to the Partnership or to comply with requirements of any other appropriate taxing authority.

(d)       The address set forth on the signature page of this Agreement is the address of the Grantee’s principal residence, and the Grantee has no present intention of becoming a resident of any country, state or jurisdiction other than the country and state in which such residence is sited. 

 

 


 

 

EXHIBIT C

ELECTION TO INCLUDE IN GROSS INCOME IN YEAR OF TRANSFER OF PROPERTY PURSUANT TO SECTION 83(b) OF THE INTERNAL REVENUE CODE

The undersigned hereby makes an election pursuant to Section 83(b) of the Internal Revenue Code with respect to the property described below and supplies the following information in accordance with the regulations promulgated thereunder:

1.                   The name, address and taxpayer identification number of the undersigned are:

Name:       ___________________________________ (the “ Taxpayer ”) 

Address:                                                                                                     

                                                                                                                   

Social Security No./Taxpayer Identification No.:  _________________

2.                   Description of property with respect to which the election is being made:

The election is being made with respect to ____________ LTIP Units in Vornado Realty, L.P. (the “ Partnership ”). 

3.                   The date on which the LTIP Units were transferred is ________ __, 2012.  The taxable year to which this election relates is calendar year 2012.

4.                   Nature of restrictions to which the LTIP Units are subject:

(a)        With limited exceptions, until the LTIP Units vest, the Taxpayer may not transfer in any manner any portion of the LTIP Units without the consent of the Partnership. 

(b)        The Taxpayer’s LTIP Units vest in accordance with the vesting provisions described in the Schedule attached hereto.  Unvested LTIP Units are forfeited in accordance with the vesting provisions described in the Schedule attached hereto.

5.                   The fair market value at time of transfer (determined without regard to any restrictions other than restrictions which by their terms will never lapse) of the LTIP Units with respect to which this election is being made was $0 per LTIP Unit.

6.                   The amount paid by the Taxpayer for the LTIP Units was $0 per LTIP Unit.

7.                   A copy of this statement has been furnished to the Partnership and Vornado Realty Trust.

Dated:  _____________________     Name:  _____________________________

 

 


 

 

SCHEDULE TO EXHIBIT C

Vesting Provisions of LTIP Units

The LTIP Units are subject to time-based and performance-based vesting with the final vesting percentage equaling the product of the time-based vesting percentage and the performance-based vesting percentage.  Performance-based vesting will be from zero percent (0%) to one hundred percent (100%) based on Vornado Realty Trust’s (the “ Company’s ”) per-share total return to shareholders for the period from March 30, 2012 to March 30, 2015 (or earlier under certain circumstances).  Under the time-based vesting hurdles, thirty-three and one-third percent (33.33%) of the LTIP Units will vest on each of March 30, 2015, March 30, 2016 and March 30, 2017, provided  that the Taxpayer continues his or her service relationship with the Company, the Partnership or an affiliate of the Company through such dates, subject to acceleration in the event of certain extraordinary transactions or termination of the Taxpayer’s service relationship with the Company under specified circumstances.  Unvested LTIP Units are subject to forfeiture in the event of failure to vest based on the passage of time and the determination of the performance-based percentage.

 

 


 

 

SCHEDULE A TO 2012 OUTPERFORMANCE PLAN AWARD AGREEMENT

Date of Award Agreement:

 

Name of Grantee:

 

Participation Percentage:

___%

Number of LTIP Units Subject to Grant:

 

Grant Date:

 

 

Initials of Company representative:  _________

Initials of Grantee:  _________

 

 

 

EXHIBIT 12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPUTATION OF RATIOS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Our consolidated ratios of earnings to fixed charges and earnings to combined fixed charges and preference dividends for each of the fiscal years ended December 31, 2012, 2011, 2010, 2009 and 2008 are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

(Amounts in thousands)

2012 

 

2011 

 

2010 

 

2009 

 

2008 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from continuing operations before income taxes and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

income from partially owned entities

$

(6,395)

 

$

484,198 

 

$

630,843 

 

$

(7,166)

 

$

136,618 

Fixed charges

 

541,607 

 

 

556,037 

 

 

569,963 

 

 

645,098 

 

 

683,333 

Income distributions from partially owned entities

 

226,172 

 

 

93,635 

 

 

61,037 

 

 

30,473 

 

 

44,690 

Capitalized interest

 

(16,801)

 

 

(1,197)

 

 

(864)

 

 

(17,256)

 

 

(63,063)

Preferred unit distributions

 

(9,936)

 

 

(16,853)

 

 

(18,192)

 

 

(19,658)

 

 

(19,743)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings - Numerator

$

734,647 

 

$

1,115,820 

 

$

1,242,787 

 

$

631,491 

 

$

781,835 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and debt expense

$

500,361 

 

$

526,175 

 

$

539,370 

 

$

597,105 

 

$

591,419 

Capitalized interest

 

16,801 

 

 

1,197 

 

 

864 

 

 

17,256 

 

 

63,063 

1/3 of rental expense – interest factor

 

14,509 

 

 

11,812 

 

 

11,537 

 

 

11,079 

 

 

9,108 

Preferred unit distributions

 

9,936 

 

 

16,853 

 

 

18,192 

 

 

19,658 

 

 

19,743 

Fixed charges - Denominator

 

541,607 

 

 

556,037 

 

 

569,963 

 

 

645,098 

 

 

683,333 

Preferred share dividends

 

76,937 

 

 

65,531 

 

 

55,534 

 

 

57,076 

 

 

57,091 

Combined fixed charges and preference dividends - Denominator

$

618,544 

 

$

621,568 

 

$

625,497 

 

$

702,174 

 

$

740,424 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of earnings to fixed charges

 

1.36 

 

 

2.01 

 

 

2.18 

 

 

0.98 

 

 

1.14 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of earnings to combined fixed charges and preference dividends

 

1.19 

 

 

1.80 

 

 

1.99 

 

 

0.90 

 

 

1.06 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings equals (i) income from continuing operations before income taxes and income from partially owned entities, plus, (ii) fixed charges, (iii) income distributions from partially owned entities, minus (iv) capitalized interest and (v) preferred unit distributions of the Operating Partnership. Fixed charges equals (i) interest and debt expense, plus (ii) capitalized interest, (iii) the portion of operating lease rental expense that is representative of the interest factor, which is one-third of operating lease rentals and (iv) preferred unit distributions of the Operating Partnership. Combined fixed charges and preference dividends equals fixed charges plus preferred share dividends.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT 21

VORNADO REALTY TRUST

SUBSIDIARIES OF THE REGISTRANT

As of December 31, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State of

Name of Subsidiary

 

 

 

Organization

 

 

 

 

 

11 East 68th Parallel REIT LLC

 

 

 

Delaware

11 East 68th REIT Holding LLC

 

 

 

Delaware

11 East 68th REIT LLC

 

 

 

Delaware

11 East 68th Street I Corp.

 

 

 

British Virgin Islands

11 East 68th Street II Corp.

 

 

 

British Virgin Islands

11 East 68th TRS LLC

 

 

 

Delaware

1227/1229 Management LLC

 

 

 

Delaware

1290 Management II, LLC

 

 

 

Delaware

148 Spring Street, LLC

 

 

 

Delaware

14th Street Acquisition LLC

 

 

 

Delaware

150 East 58th Street, L.L.C.

 

 

 

New York

150 Spring Street LLC

 

 

 

Delaware

1535 Broadway LLC

 

 

 

Delaware

1740 Broadway Associates L.P.

 

 

 

Delaware

201 East 66th Street LLC

 

 

 

New York

220 S 20th Street Developer LLC

 

 

 

Delaware

280 Park Administration LLC

 

 

 

Delaware

280 Park Cleaning LLC

 

 

 

Delaware

29 West 57th Street Owner LLC

 

 

 

Delaware

31 West 57th Street Owner LLC

 

 

 

Delaware

330 Madison Company LLC

 

 

 

New York

334 Canal Street LLC

 

 

 

Delaware

350 North Orleans, L.L.C.

 

 

 

Delaware

350 Park EAT LLC

 

 

 

Delaware

375 PE LLC

 

 

 

Delaware

4 USS Member LLC

 

 

 

Delaware

40 East 14 Realty Associates General Partnership

 

 

 

New York

40 East 14 Realty Associates, L.L.C.

 

 

 

New York

40 Fulton Street LLC

 

 

 

New York

401 Commercial Son II LLC

 

 

 

Delaware

401 Commercial Son, LLC

 

 

 

New York

401 Commercial, L.P.

 

 

 

New York

401 General Partner, L.L.C.

 

 

 

New York

401 Hotel General Partner, L.L.C.

 

 

 

New York

401 Hotel REIT, LLC

 

 

 

Delaware

401 Hotel TRS, Inc.

 

 

 

Delaware

401 Hotel, L.P.

 

 

 

New York

426 Washington Street Hotel Owner LLC

 

 

 

Delaware

426 Washington Street Office Owner LLC

 

 

 

Delaware

426 Washington Street Owner II LLC

 

 

 

Delaware

426 Washington Street Owner III LLC

 

 

 

Delaware

426 Washington Street Owner IV LLC

 

 

 

Delaware

426 Washington Street Owner LLC

 

 

 

Delaware

426 Washington Street Parking Owner LLC

 

 

 

Delaware

426 Washington Street Residential Owner LLC

 

 

 

Delaware

426 Washington Street Retail Owner LLC

 

 

 

Delaware

480-486 Broadway, LLC

 

 

 

Delaware

 

 


 

 

 

488 Eighth Avenue Owner LLC

 

 

 

Delaware

49 West 57th Street Owner LLC

 

 

 

Delaware

501 Broadway Parallel REIT LLC

 

 

 

Delaware

501 Broadway REIT LLC

 

 

 

Delaware

520 Broadway Parallel REIT LLC

 

 

 

Delaware

520 Broadway REIT LLC

 

 

 

Delaware

527 West Kinzie LLC

 

 

 

Delaware

58 Central Park III LLC

 

 

 

Delaware

666 Fifth Administration LLC

 

 

 

Delaware

666 Fifth Cleaning LLC

 

 

 

Delaware

666 Fifth Management LLC

 

 

 

Delaware

689 Fifth Avenue LLC

 

 

 

New York

7 West 34th Street LLC

 

 

 

New York

713-715 Sunrise LLC

 

 

 

Delaware

715 Lexington Avenue LLC

 

 

 

New York

770 Broadway Company LLC

 

 

 

New York

770 Broadway Mezzanine LLC

 

 

 

Delaware

770 Broadway Owner LLC

 

 

 

Delaware

825 Seventh Avenue Holding Corporation

 

 

 

New York

825 Seventh Avenue Holding L.L.C.

 

 

 

New York

85 Tenth Junior Mezz LLC

 

 

 

Delaware

85 Tenth Senior Mezz LLC

 

 

 

Delaware

866 U.N. Plaza Associates LLC

 

 

 

New York

888 Seventh Avenue LLC

 

 

 

Delaware

909 Third Avenue Assignee LLC

 

 

 

New York

909 Third Company, L.P.

 

 

 

New York

909 Third GP, LLC

 

 

 

Delaware

947 Lincoln Acquisitions LLC

 

 

 

Delaware

968 Third, L.L.C.

 

 

 

New York

AG Georgetown Park Owner I LLC

 

 

 

Delaware

AG Georgetown Park Owner II LLC

 

 

 

Delaware

Alexander's, Inc.

 

 

 

New York

Allentown VF L.L.C.

 

 

 

Pennsylvania

Altius Management Advisors Pvt. Ltd.

 

 

 

Foreign

Amherst II VF L.L.C.

 

 

 

New York

Amherst VF L.L.C.

 

 

 

New York

Arbor Property, L.P.

 

 

 

Delaware

Arna-Eads, Inc.

 

 

 

Delaware

Arna-Fern, Inc.

 

 

 

Delaware

Atlantic City Holding L.L.C.

 

 

 

New Jersey

Balena Real Estate Development LLC

 

 

 

Delaware

BDC Special Member LLC

 

 

 

Delaware

Bengal Intelligent Parks Pvt. Ltd.

 

 

 

Foreign

Bensalem Holding Company, L.L.C.

 

 

 

Delaware

Bensalem Holding Company, L.P.

 

 

 

Pennsylvania

Bensalem VF, L.L.C.

 

 

 

Pennsylvania

Bethlehem Holding Company, L.L.C.

 

 

 

Delaware

Bethlehem Holding Company, L.P.

 

 

 

Pennsylvania

Bethlehem Properties Holding Company, L.L.C.

 

 

 

Pennsylvania

Bethlehem Properties Holding Company, L.P.

 

 

 

Pennsylvania

Bethlehem VF, L.L.C.

 

 

 

Pennsylvania

Bethlehem VF, L.P.

 

 

 

Pennsylvania

Bevcon Holdings LLC

 

 

 

Delaware

Bevcon I Investors LLC

 

 

 

Delaware

 

 


 

 

 

Bevcon I LLC

 

 

 

Delaware

Bevcon I Managers Inc.

 

 

 

Delaware

Bevcon II LLC

 

 

 

Delaware

BIP Developers Pvt. Ltd.

 

 

 

Foreign

Bordentown II VF, L.L.C.

 

 

 

Foreign

Bordentown VF, L.L.C.

 

 

 

New Jersey

Boston Design Center LLC

 

 

 

New Jersey

Boulevard Services Pvt. Ltd.

 

 

 

Delaware

Bowen Building, L.P.

 

 

 

Foreign

Bricktown VF L.L.C.

 

 

 

Delaware

Bricktown VF Member LLC

 

 

 

New Jersey

Bridgeland Warehouses L.L.C.

 

 

 

Delaware

Building Maintenance Service LLC

 

 

 

Foreign

Canadian Craft Show LTD.

 

 

 

Delaware

CESC 1101 17th Street L.L.C.

 

 

 

Canada

CESC 1101 17th Street Limited Partnership

 

 

 

Delaware

CESC 1101 17th Street Manager L.L.C.

 

 

 

Maryland

CESC 1140 Connecticut Avenue Holding LLC

 

 

 

Delaware

CESC 1140 Connecticut Avenue L.L.C.

 

 

 

Delaware

CESC 1140 Connecticut Avenue Limited Partnership

 

 

 

Delaware

CESC 1140 Connecticut Avenue Manager L.L.C.

 

 

 

District of Columbia

CESC 1150 17th Street L.L.C.

 

 

 

Delaware

CESC 1150 17th Street Limited Partnership

 

 

 

Delaware

CESC 1150 17th Street Manager L.L.C.

 

 

 

District of Columbia

CESC 1730 M Street L.L.C.

 

 

 

Delaware

CESC 1750 Pennsylvania Avenue L.L.C.

 

 

 

Delaware

CESC 2101 L Street L.L.C.

 

 

 

Delaware

CESC Commerce Executive Park L.L.C.

 

 

 

Delaware

CESC Crystal Square Four L.L.C.

 

 

 

Delaware

CESC Crystal/Rosslyn L.L.C.

 

 

 

Delaware

CESC District Holdings L.L.C.

 

 

 

Delaware

CESC Downtown Member L.L.C.

 

 

 

Delaware

CESC Engineering TRS Inc.

 

 

 

Delaware

CESC Fairfax Square Manager L.L.C.

 

 

 

Delaware

CESC Gateway One L.L.C.

 

 

 

Delaware

CESC Gateway Two Limited Partnership

 

 

 

Virginia

CESC Gateway Two Manager L.L.C.

 

 

 

Delaware

CESC Gateway/Square L.L.C.

 

 

 

Virginia

CESC Gateway/Square Member L.L.C.

 

 

 

Virginia

CESC H Street L.L.C.

 

 

 

Delaware

CESC Mall L.L.C.

 

 

 

Delaware

CESC Mall Land, L.L.C.

 

 

 

Delaware

CESC One Courthouse Plaza Holdings, LLC

 

 

 

Virginia

CESC One Courthouse Plaza L.L.C.

 

 

 

Delaware

CESC One Democracy Plaza L.P.

 

 

 

Delaware

CESC One Democracy Plaza Manager LLC

 

 

 

Delaware

CESC Park Five Land L.L.C.

 

 

 

Maryland

CESC Park Five Manager L.L.C.

 

 

 

Delaware

CESC Park Four Land L.L.C.

 

 

 

Delaware

CESC Park Four Manager L.L.C.

 

 

 

Virginia

CESC Park One Land L.L.C.

 

 

 

Delaware

CESC Park One Manager L.L.C.

 

 

 

Virginia

CESC Park Three Land L.L.C.

 

 

 

Delaware

CESC Park Three Manager L.L.C.

 

 

 

Delaware

CESC Park Two L.L.C.

 

 

 

Delaware

CESC Park Two Land L.L.C.

 

 

 

Virginia

 

 


 

 

 

CESC Park Two Manager L.L.C.

 

 

 

Delaware

CESC Plaza Five Limited Partnership

 

 

 

Delaware

CESC Plaza Limited Partnership

 

 

 

Virginia

CESC Plaza Manager, L.L.C.

 

 

 

Virginia

CESC Plaza Parking L.L.C.

 

 

 

Virginia

CESC Realty Park Five L.L.C.

 

 

 

Virginia

CESC Realty Park Three L.L.C.

 

 

 

Delaware

CESC Reston Executive Center L.L.C.

 

 

 

Virginia

CESC Skyline LLC

 

 

 

Virginia

CESC Square L.L.C.

 

 

 

Delaware

CESC Square Land L.L.C.

 

 

 

Delaware

CESC TRS, Inc.

 

 

 

Virginia

CESC Two Courthouse Plaza Limited Partnership

 

 

 

Delaware

CESC Two Courthouse Plaza Manager, L.L.C.

 

 

 

Virginia

CESC Water Park L.L.C.

 

 

 

Delaware

Charles E. Smith Commercial Realty, L.P.

 

 

 

Delaware

Cherry Hill VF L.L.C.

 

 

 

Delaware

Cherry Hill VF Member LLC

 

 

 

Virginia

Chicopee Holding L.L.C.

 

 

 

Delaware

Cinderella Homes Pvt. Ltd.

 

 

 

Delaware

Cleveland Developer LLC

 

 

 

Delaware

Cleveland MMCC L.L.C

 

 

 

Virginia

Cleveland Operator LLC

 

 

 

Delaware

CM Medical LLC

 

 

 

New Jersey

Commerce Executive Park Association of Co-Owners

 

 

 

Delaware

Conrans VF L.L.C.

 

 

 

Massachusetts

Conrans VF Member LLC

 

 

 

Foreign

CP Culver City Parallel REIT LLC

 

 

 

Delaware

CP Culver City REIT LLC

 

 

 

Delaware

CP Parallel TRS LLC

 

 

 

Delaware

CP TRS LLC

 

 

 

Delaware

CPTS Domestic Owner LLC

 

 

 

Delaware

CPTS Hotel Lessee LLC

 

 

 

Delaware

CPTS Hotel Lessee Mezz 1 LLC

 

 

 

Delaware

CPTS Hotel Lessee Mezz 2 LLC

 

 

 

Delaware

CPTS Hotel Lessee Mezz 3 LLC

 

 

 

Delaware

CPTS Mezz Holding LLC

 

 

 

Delaware

CPTS Mezz I LLC

 

 

 

Delaware

CPTS Mezz II LLC

 

 

 

Delaware

CPTS Parallel Owner LLC

 

 

 

Delaware

CPTS TRS LLC

 

 

 

Delaware

Cumberland Holding L.L.C.

 

 

 

Delaware

Delran VF L.L.C.

 

 

 

Delaware

Design Center Owner (D.C.), L.L.C.

 

 

 

Delaware

Dover VF L.L.C.

 

 

 

Delaware

Dover VF Member LLC

 

 

 

Virginia

DSAC L.L.C.

 

 

 

New Jersey

Durham Leasing II L.L.C.

 

 

 

Delaware

Durham Leasing L.L.C.

 

 

 

New Jersey

East Brunswick VF L.L.C.

 

 

 

New Jersey

East Brunswick VF Member LLC

 

 

 

Delaware

Eatontown Monmouth Mall (Junior Mezz) LLC

 

 

 

New Jersey

Eatontown Monmouth Mall (Senior Mezz) LLC

 

 

 

Delaware

Eatontown Monmouth Mall LLC

 

 

 

Texas

Eleven Penn Plaza LLC

 

 

 

Maryland

Everest Infrastructure Development Mauritius Limited

 

 

 

New Jersey

 

 


 

 

 

Fairfax Square L.L.C

 

 

 

New Jersey

Fairfax Square Partners

 

 

 

New Jersey

Fifth Crystal Park Associates Limited Partnership

 

 

 

Delaware

First Crystal Park Associates Limited Partnership

 

 

 

Delaware

Fourth Crystal Park Associates Limited Partnership

 

 

 

Delaware

Franconia GP, L.L.C.

 

 

 

New York

Freeport VF L.L.C.

 

 

 

Foreign

Freeport VF Member LLC

 

 

 

Delaware

Fuller Madison LLC

 

 

 

Delaware

Gallery Market Holding Company, L.L.C.

 

 

 

Virginia

Gallery Market Holding Company, L.P.

 

 

 

Virginia

Gallery Market Properties Holding Company, L.L.C.

 

 

 

Foreign

Gallery Market Properties Holding Company, L.P.

 

 

 

Virginia

Garfield Parcel L.L.C.

 

 

 

Delaware

Geneva Associates Owner LLC

 

 

 

Delaware

Glen Bernie VF LLC

 

 

 

New York

Green Acres 666 Fifth Retail EAT TIC Owner LLC

 

 

 

Delaware

Green Acres 666 Fifth Retail TIC Owner LLC

 

 

 

Delaware

Green Acres Mall, L.L.C.

 

 

 

Delaware

Guard Management Service Corp.

 

 

 

New York

H Street Building Corporation

 

 

 

Pennsylvania

H Street JP Fashion LLC

 

 

 

Delaware

H Street Management, L.L.C.

 

 

 

Pennsylvania

Hackensack VF L.L.C.

 

 

 

Pennsylvania

Hackensack VF Member LLC

 

 

 

New Jersey

Hanover Holding L.L.C.

 

 

 

Maryland

Hanover Industries L.L.C.

 

 

 

Pennsylvania

Hanover Leasing L.L.C.

 

 

 

Delaware

Hanover Public Warehousing L.L.C.

 

 

 

New York

Hanover VF L.L.C.

 

 

 

Delaware

Hanover VF Member LLC

 

 

 

Delaware

HBR Annapolis Properties, L.L.C.

 

 

 

New Jersey

HBR Norfolk Properties, L.L.C.

 

 

 

Delaware

HBR Properties Pennsylvania LLC

 

 

 

Maryland

HBR Properties Roseville LLC

 

 

 

New Jersey

HBR Properties, L.L.C.

 

 

 

New Jersey

Henrietta Holding L.L.C.

 

 

 

New Jersey

HWA Holdings LLC

 

 

 

New Jersey

International Biotech Park Ltd.

 

 

 

New Jersey

Jersey City VF L.L.C.

 

 

 

Delaware

Jersey City VF Member LLC

 

 

 

Foreign

Juggernaut Homes Pvt. Ltd.

 

 

 

Delaware

Kearny Holding VF L.L.C.

 

 

 

Delaware

Kearny Leasing VF L.L.C.

 

 

 

Delaware

L.A. Mart Properties L.L.C.

 

 

 

Delaware

Lancaster Leasing Company, L.L.C.

 

 

 

Foreign

Lancaster Leasing Company, L.P.

 

 

 

New Jersey

Landthorp Enterprises L.L.C.

 

 

 

Delaware

LaSalle Hubbard L.L.C.

 

 

 

Foreign

Lawnside VF L.L.C.

 

 

 

Delaware

Lawnside VF Member LLC

 

 

 

Foreign

Lewisville TC L.L.C.

 

 

 

New Jersey

Lincoln Road II LLC

 

 

 

Delaware

Lincoln Road Management LLC

 

 

 

Delaware

Lincoln Road Parallel REIT LLC

 

 

 

Delaware

Lincoln Road REIT LLC

 

 

 

Delaware

 

 


 

 

 

Littleton Holding L.L.C.

 

 

 

New Jersey

Lodi II VF L.L.C.

 

 

 

Foreign

Lodi II VF Member LLC

 

 

 

Foreign

Lodi VF L.L.C.

 

 

 

Delaware

Lodi VF Member LLC

 

 

 

Delaware

M 330 Associates L.P.

 

 

 

Delaware

M 393 Associates LLC

 

 

 

Delaware

Manalapan VF L.L.C.

 

 

 

New Jersey

Manalapan VF Member LLC

 

 

 

Delaware

Market Square - Furniture Plaza Inc.

 

 

 

Texas

Market Square - Furniture Plaza L.P.

 

 

 

New Jersey

Market Square - Hamilton Market LP

 

 

 

New Jersey

Market Square - Main Street L.P.

 

 

 

Delaware

Market Square Group LP

 

 

 

New Jersey

Market Square Group Mezz L.P.

 

 

 

Delaware

Market Square Group Mezz LLC

 

 

 

Foreign

Market Square Group, Inc.

 

 

 

New York

Market Square II LLC

 

 

 

New York

Market Square L.P.

 

 

 

New Jersey

Market Square Management LLC

 

 

 

Delaware

Marlton VF L.L.C.

 

 

 

Delaware

Marlton VF Member LLC

 

 

 

Delaware

Marple Holding Company, L.L.C.

 

 

 

Delaware

Marple Holding Company, L.P.

 

 

 

Delaware

Mart Franchise Center, Inc.

 

 

 

Delaware

Mart Parking II, LLC

 

 

 

Delaware

Mart Parking LLC

 

 

 

Delaware

Mart REIT, L.L.C.

 

 

 

Delaware

Mart Trade Show L.L.C.

 

 

 

Delaware

Menands VF L.L.C.

 

 

 

Delaware

Merchandise Mart Enterprises, Inc. (Canada)

 

 

 

Delaware

Merchandise Mart First Mezzanine Borrower L.L.C.

 

 

 

New Jersey

Merchandise Mart Holdco L.L.C.

 

 

 

Delaware

Merchandise Mart L.L.C.

 

 

 

Delaware

Merchandise Mart Properties, Inc.

 

 

 

Pennsylvania

Merchandise Mart Second Mezzanine Borrower L.L.C.

 

 

 

Illinois

Mesquite TC L.L.C.

 

 

 

Delaware

Middletown VF L.L.C.

 

 

 

Delaware

Middletown VF Member LLC

 

 

 

Delaware

MMCC Foodservice LLC

 

 

 

Delaware

MMPI Cleveland Development L.L.C.

 

 

 

Delaware

MMPI Piers LLC

 

 

 

Delaware

MMPI Piers MTS L.L.C.

 

 

 

New York

MMPI Volta LLC

 

 

 

Canada

Monmouth Mall License LLC

 

 

 

Delaware

Monmouth Mall LLC

 

 

 

Delaware

Montclair VF L.L.C.

 

 

 

Delaware

Montclair VF Member LLC

 

 

 

Delaware

Morris Plains Holding VF L.L.C.

 

 

 

Delaware

Morris Plains Holding VF Member LLC

 

 

 

Delaware

Morris Plains Leasing VF L.L.C.

 

 

 

Texas

Morris Plains Leasing VF Member LLC

 

 

 

New Jersey

Mortgage Owner LLC

 

 

 

Delaware

MTS-HP L.P.

 

 

 

Delaware

MTS-MM L.L.C.

 

 

 

Delaware

MW Hyde Park LLC

 

 

 

Delaware

 

 


 

 

 

National Furniture Mart (NC) L.P.

 

 

 

Delaware

New Bridgeland Warehouse LLC

 

 

 

Delaware

New Hanover Holding LLC

 

 

 

Delaware

New Hanover Industries LLC

 

 

 

Delaware

New Hanover Leasing LLC

 

 

 

New Jersey

New Hanover LLC

 

 

 

Delaware

New Hanover Member LLC

 

 

 

New Jersey

New Hanover Public Warehousing LLC

 

 

 

Delaware

New Hyde Park VF L.L.C.

 

 

 

New Jersey

New Jersey GL LLC

 

 

 

Delaware

New Kaempfer 1501 LLC

 

 

 

Delaware

New Kaempfer IB LLC

 

 

 

Delaware

New Kaempfer Waterfront LLC

 

 

 

Delaware

New Landthorp Enterprises LLC

 

 

 

Delaware

New TG Hanover LLC

 

 

 

Delaware

New Towmed LLC

 

 

 

Delaware

New Vornado/Saddle Brook LLC

 

 

 

Delaware

New Woodbridge II Member LLC

 

 

 

Delaware

New Woodbridge II, LLC

 

 

 

Delaware

Newington VF L.L.C.

 

 

 

Delaware

Newington VF Member LLC

 

 

 

Delaware

NFM Corp.

 

 

 

New York

NFM Partners L.P.

 

 

 

Delaware

Ninety Park Lender LLC

 

 

 

Delaware

Ninety Park Lender QRS, Inc.

 

 

 

Delaware

Ninety Park Manager LLC

 

 

 

Delaware

Ninety Park Property LLC

 

 

 

Delaware

North Bergen VF L.L.C.

 

 

 

Delaware

North Bergen VF Member LLC

 

 

 

Delaware

North Plainfield VF L.L.C.

 

 

 

Delaware

Office Acquisition Finance L.L.C.

 

 

 

Delaware

Office Center Owner (D.C.) L.L.C.

 

 

 

Delaware

One Penn Plaza LLC

 

 

 

Delaware

One Penn Plaza TRS, Inc.

 

 

 

New Jersey

Orleans Hubbard LLC

 

 

 

Connecticut

Palisades 1399 New York Avenue TIC Owner LLC

 

 

 

Delaware

Palisades 14th Street L.L.C.

 

 

 

Delaware

Paris Associates Owner LLC

 

 

 

Delaware

Park Four Member LLC

 

 

 

Delaware

Park One Member L.L.C.

 

 

 

Delaware

Patson Vornado GP LLC

 

 

 

New York

Patson Vornado LLC

 

 

 

Delaware

PCJ I Inc.

 

 

 

New York

Peak Power One LLC

 

 

 

New York

Penn Plaza Insurance Company, L.L.C.

 

 

 

New York

Philadelphia Holding Company, L.L.C.

 

 

 

New Jersey

Philadelphia Holding Company, L.P.

 

 

 

Delaware

Philadelphia VF L.L.C.

 

 

 

New Jersey

Philadelphia VF L.P.

 

 

 

Delaware

Pike Holding Company, L.L.C.

 

 

 

Delaware

Pike Holding Company, L.P.

 

 

 

New York

Pike VF L.L.C.

 

 

 

Delaware

Pike VF L.P.

 

 

 

Delaware

Powerspace & Services, Inc.

 

 

 

Delaware

Rahway Leasing L.L.C.

 

 

 

Delaware

Realty Services Trustee Company Pvt. Ltd.

 

 

 

Delaware

 

 


 

 

 

Restaurant Corp Lessor LLC

 

 

 

Delaware

River House Corporation

 

 

 

Delaware

Rochester Holding L.L.C.

 

 

 

Delaware

Rochester Holding Member LLC

 

 

 

Delaware

Rockville Acquisition, LLC

 

 

 

Delaware

RTR JP Fashion LLC

 

 

 

Delaware

RTR VW LLC

 

 

 

Delaware

Shenandoah DC Holding, LLC

 

 

 

Pennsylvania

SMB Administration LLC

 

 

 

Pennsylvania

SMB Tenant Services LLC

 

 

 

Pennsylvania

SO Hudson 555 Management, Inc.

 

 

 

Pennsylvania

SO Hudson Holding LLC

 

 

 

Delaware

SO Hudson Westside I Corp.

 

 

 

Pennsylvania

South Capitol, L.L.C.

 

 

 

Pennsylvania

Springfield Member VF L.L.C.

 

 

 

Pennsylvania

Springfield Town Center Lessee LLC

 

 

 

Delaware

Springfield VF L.L.C.

 

 

 

New York

T.G. Hanover L.L.C.

 

 

 

Delaware

T53 Condominium, L.L.C.

 

 

 

Delaware

TCG Developments India Pvt. Ltd.

 

 

 

Delaware

TCG Real Estate Investment Management Company Pvt. Ltd.

 

 

New York

TCG Software Parks Pvt. Ltd.

 

 

 

Delaware

TCG Urban Infrastructure Holdings Ltd.

 

 

 

Delaware

Techna Infrastructure Pvt. Ltd.

 

 

 

Delaware

TGSI L.L.C

 

 

 

Delaware

The Armory Show Inc.

 

 

 

Foreign

The Palisades A/V Company, L.L.C.

 

 

 

Delaware

The Park Laurel Condominium

 

 

 

Delaware

The Second Rochester Holding L.L.C.

 

 

 

Delaware

The Second Rochester Holding Member LLC

 

 

 

California

Thebes I LLC

 

 

 

Delaware

Third Crystal Park Associates Limited Partnership

 

 

 

Delaware

TMO 1 LLC

 

 

 

Delaware

Totowa VF L.L.C.

 

 

 

Delaware

Totowa VF Member LLC

 

 

 

Massachusetts

Towson II VF LLC

 

 

 

Foreign

Towson VF L.L.C.

 

 

 

Foreign

Towson VF Member LLC

 

 

 

New Jersey

Trees Acquisition Subsidiary, Inc.

 

 

 

New York

Turnersville VF L.L.C.

 

 

 

Foreign

Two Guys From Harrison Holding Company L.L.C.

 

 

 

Foreign

Two Guys From Harrison Holding Company L.P.

 

 

 

Foreign

Two Guys from Harrison N.Y. (DE), L.L.C.

 

 

 

Foreign

Two Guys From Harrison N.Y. L.L.C.

 

 

 

Foreign

Two Guys From Harrison NY Member LLC

 

 

 

Maryland

Two Guys Mass. LLC

 

 

 

New York

Two Guys-Connecticut Holding L.L.C.

 

 

 

New Jersey

Two Penn Plaza REIT JP Fashion LLC

 

 

 

Delaware

Two Penn Plaza REIT, Inc.

 

 

 

New York

UBI Management, L.L.C.

 

 

 

New York

Union VF L.L.C.

 

 

 

Delaware

Union VF Member LLC

 

 

 

Delaware

Universal Building North, Inc.

 

 

 

Virginia

Universal Building, Inc.

 

 

 

New Jersey

Upper Moreland Holding Company, L.L.C.

 

 

 

Delaware

Upper Moreland Holding Company, L.P.

 

 

 

Delaware

           

 

 


 

 

 

Upper Moreland VF, L.L.C.

 

 

 

Delaware

VBL Company, L.L.C.

 

 

 

Delaware

VCP COI One Park LP

 

 

 

Delaware

VCP CP Culver City LLC

 

 

 

Delaware

VCP CP Culver City Parking LLC

 

 

 

Delaware

VCP IM L.L.C.

 

 

 

Maryland

VCP Lincoln Road LLC

 

 

 

Delaware

VCP LP L.L.C.

 

 

 

Delaware

VCP Mezz Loan LLC

 

 

 

Delaware

VCP One Park Parallel REIT LLC

 

 

 

Delaware

VCP One Park REIT LLC

 

 

 

Delaware

VCP Parallel COI One Park LP

 

 

 

Delaware

VFC Connecticut Holding, L.L.C.

 

 

 

Delaware

VFC Massachusetts Holding, L.L.C.

 

 

 

New Jersey

VFC New Jersey Holding, L.L.C.

 

 

 

Delaware

VFC Pennsylvania Holding, L.L.C.

 

 

 

Pennsylvania

VFC Pennsylvania Holding, L.P.

 

 

 

Delaware

Virgin Sign L.L.C.

 

 

 

New York

VM Kushner JV Member LLC

 

 

 

Delaware

VM Kushner LLC

 

 

 

Massachusetts

VMS Lender LLC

 

 

 

Connecticut

VNK L.L.C.

 

 

 

New York

VNO 1 Franklin JV Member LLC

 

 

 

Delaware

VNO 100 West 33rd Street LLC

 

 

 

New York

VNO 11 East 68th Street Holding Company LLC

 

 

 

Delaware

VNO 11 East 68th Street LLC

 

 

 

Delaware

VNO 11 East 68th Street Mezz LLC

 

 

 

Delaware

VNO 11 East 68th Street Property Owner LLC

 

 

 

Delaware

VNO 1105 State Highway 36 LLC

 

 

 

Delaware

VNO 1227 25th Street LLC

 

 

 

New York

VNO 1229-1231 25th Street LLC

 

 

 

New Jersey

VNO 1399 GP LLC

 

 

 

Delaware

VNO 1399 Holding LLC

 

 

 

Delaware

VNO 154 Spring Street LLC

 

 

 

Delaware

VNO 155 Spring Street LLC

 

 

 

Delaware

VNO 1657 Broadway LLC

 

 

 

Delaware

VNO 1800 Park LLC

 

 

 

Delaware

VNO 1920 L Street LLC

 

 

 

Delaware

VNO 195 North Bedford Road LLC

 

 

 

Pennsylvania

VNO 220 S. 20th Street LLC

 

 

 

Pennsylvania

VNO 220 S. 20th Street Member LLC

 

 

 

Pennsylvania

VNO 2445 Springfield Avenue LLC

 

 

 

Delaware

VNO 280 Park JV Member LLC

 

 

 

Delaware

VNO 3098 Long Beach Road LLC

 

 

 

Delaware

VNO 33 West 57th Street LLC

 

 

 

Delaware

VNO 3500 US Highway 9 LLC

 

 

 

Delaware

VNO 375 Mezz LLC

 

 

 

Delaware

VNO 375 Park LLC

 

 

 

Delaware

VNO 386 West Broadway LLC

 

 

 

Delaware

VNO 386 West Broadway Member LLC

 

 

 

Delaware

VNO 387 West Broadway LLC

 

 

 

Delaware

VNO 401 Commercial Leasee LLC

 

 

 

Delaware

VNO 426 Washington Street Developer LLC

 

 

 

Delaware

VNO 426 Washington Street JV LLC

 

 

 

Delaware

VNO 426 West Broadway Member, LLC

 

 

 

Delaware

VNO 426 West Broadway, LLC

 

 

 

Delaware

           

 

 


 

 

 

VNO 431 Seventh Avenue LLC

 

 

 

Delaware

VNO 435 Seventh Avenue LLC

 

 

 

Delaware

VNO 443 Broadway Holdings II LLC

 

 

 

Delaware

VNO 443 Broadway Holdings III LLC

 

 

 

Delaware

VNO 443 Broadway LLC

 

 

 

Delaware

VNO 49 West 57th Street LLC

 

 

 

Delaware

VNO 501 Broadway LLC

 

 

 

Delaware

VNO 510 Fifth LLC

 

 

 

Delaware

VNO 520 Broadway LLC

 

 

 

Delaware

VNO 520 Management LLC

 

 

 

Delaware

VNO 530 Broadway B/C LLC

 

 

 

Delaware

VNO 530 Broadway Mezz II LLC

 

 

 

Delaware

VNO 530 Broadway Mezz LLC

 

 

 

Delaware

VNO 530 Broadway Mezzanine I LLC

 

 

 

Delaware

VNO 535-545 5th Loan LLC

 

 

 

Delaware

VNO 555 Fifth LLC

 

 

 

Delaware

VNO 5760 Broadway LLC

 

 

 

Delaware

VNO 63rd Street LLC

 

 

 

Delaware

VNO 6417 Loisdale Road LLC

 

 

 

Delaware

VNO 666 Fifth Lender LLC

 

 

 

Delaware

VNO 666 Fifth Member LLC

 

 

 

Delaware

VNO 666 Fifth Retail TIC Lessee LLC

 

 

 

Delaware

VNO 675 Paterson Avenue LLC

 

 

 

Delaware

VNO 7000 Hadley Road LLC

 

 

 

Delaware

VNO 701 Seventh Avenue Mezz LLC

 

 

 

Delaware

VNO 701 Seventh Avenue TRS LLC

 

 

 

Delaware

VNO 757 Third Avenue LLC

 

 

 

Delaware

VNO 839 New York Avenue LLC

 

 

 

California

VNO 86 Lex LLC

 

 

 

Delaware

VNO 866 UN Plaza TRS L.L.C.

 

 

 

Delaware

VNO 93rd Street LLC

 

 

 

Delaware

VNO 99-01 Queens Boulevard LLC

 

 

 

Delaware

VNO AC LLC

 

 

 

Delaware

VNO AP 195 N. Bedford Road LLC

 

 

 

Delaware

VNO Ashley House LLC

 

 

 

Delaware

VNO Ashley House Member LLC

 

 

 

Delaware

VNO Brick LLC

 

 

 

Delaware

VNO Broad Street LLC

 

 

 

Delaware

VNO Bruckner Plaza Lender LLC

 

 

 

Delaware

VNO Bruckner Plaza LLC

 

 

 

Delaware

VNO Building Acquisition LLC

 

 

 

Delaware

VNO Capital Partners REIT LLC

 

 

 

Delaware

VNO Capital Partners TRS LLC

 

 

 

Delaware

VNO Courthouse I LLC

 

 

 

Delaware

VNO Courthouse II LLC

 

 

 

Delaware

VNO Courthouse Place Mezz LLC

 

 

 

Delaware

VNO CPPIB Member LLC

 

 

 

Delaware

VNO Crystal City Marriott, Inc.

 

 

 

Delaware

VNO Crystal City Restaurant L.L.C.

 

 

 

New York

VNO Crystal City TRS, Inc.

 

 

 

Delaware

VNO EAT 666 Fifth Retail LLC

 

 

 

Delaware

VNO Eatontown Seamans Plaza LLC

 

 

 

Delaware

VNO Fashion LLC

 

 

 

Delaware

VNO Fulton Street Brooklyn LLC

 

 

 

Delaware

VNO GT Manager LLC

 

 

 

Delaware

VNO GT Owner LLC

 

 

 

Delaware

 

 


 

 

 

VNO GT Property Manager LLC

 

 

 

Delaware

VNO Harlem Park Developer LLC

 

 

 

Delaware

VNO HM Pool 1 LLC

 

 

 

Delaware

VNO HM Pool 2 LLC

 

 

 

Delaware

VNO Hotel L.L.C.

 

 

 

New Jersey

VNO IF Delaware PI LLC

 

 

 

Delaware

VNO IF GP LLC

 

 

 

Delaware

VNO IF II, L.L.C.

 

 

 

Delaware

VNO IF LLC

 

 

 

Delaware

VNO IF PI LLC

 

 

 

Delaware

VNO IP Equity LLC

 

 

 

Delaware

VNO IP Warrant LLC

 

 

 

Delaware

VNO Island Global LLC

 

 

 

Delaware

VNO James House Member LLC

 

 

 

Delaware

VNO James House, LLC

 

 

 

Delaware

VNO JCP LLC

 

 

 

Delaware

VNO LF 50 West 57th Street Holding LLC

 

 

 

Delaware

VNO LF 50 West 57th Street JV LLC

 

 

 

Delaware

VNO LF 50 West 57th Street LLC

 

 

 

Delaware

VNO LF 50 West 57th Street Management LLC

 

 

 

Delaware

VNO LNR Holdco, L.L.C.

 

 

 

Delaware

VNO Loan Acquisition LLC

 

 

 

Delaware

VNO MM License LLC

 

 

 

Delaware

VNO Morris Avenue GL LLC

 

 

 

Delaware

VNO Mundy Street LLC

 

 

 

Delaware

VNO One Park LLC

 

 

 

Delaware

VNO One Park Management LLC

 

 

 

Delaware

VNO Paterson Plank Road LLC

 

 

 

Delaware

VNO Patson Geary, L.P.

 

 

 

Delaware

VNO Patson Investor LLC

 

 

 

Delaware

VNO Patson LLC

 

 

 

Delaware

VNO Patson Mt. Diablo A L.P.

 

 

 

Delaware

VNO Patson Walnut Creek L.P.

 

 

 

Delaware

VNO Pentagon City LLC

 

 

 

Delaware

VNO Pentagon Plaza LLC

 

 

 

Delaware

VNO Potomac House LLC

 

 

 

Delaware

VNO Potomac House Member LLC

 

 

 

Delaware

VNO Pune Township LLC

 

 

 

Delaware

VNO Rockville, LLC

 

 

 

Delaware

VNO Roosevelt Hotel Mezz II LLC

 

 

 

Delaware

VNO Roosevelt Hotel Mezz LLC

 

 

 

Delaware

VNO RTR AP, LLC

 

 

 

Delaware

VNO Second Building Acquisition LLC

 

 

 

Delaware

VNO Shoppes on Dean LLC

 

 

 

Delaware

VNO Shops on Lake LLC

 

 

 

Delaware

VNO SM GP LLC

 

 

 

Delaware

VNO SM LLC

 

 

 

Delaware

VNO SMOH LLC

 

 

 

Delaware

VNO SMOH TRS LLC

 

 

 

Delaware

VNO South Capitol LLC

 

 

 

Delaware

VNO Surplus 2006 LLC

 

 

 

Delaware

VNO T-Hotel Loan LLC

 

 

 

Delaware

VNO TRU 25 1/2 Road LLC

 

 

 

Delaware

VNO TRU Alewife Brook Pkwy. LLC

 

 

 

Delaware

VNO TRU Allstate Road LLC

 

 

 

Delaware

VNO TRU Baltimore Park L.P.

 

 

 

Delaware

 

 


 

 

 

VNO TRU Beckley Road LLC

 

 

 

Delaware

VNO TRU Bellis Fair Pkwy, LLC

 

 

 

Delaware

VNO TRU CA LLC

 

 

 

Delaware

VNO TRU Callahan Drive L.P.

 

 

 

Delaware

VNO TRU Cherry Avenue L.P.

 

 

 

Delaware

VNO TRU Coral Way LLC

 

 

 

Delaware

VNO TRU Dale Mabry LLC

 

 

 

Delaware

VNO TRU Eastman Avenue LLC

 

 

 

Delaware

VNO TRU Erie Blvd. LLC

 

 

 

Delaware

VNO TRU Frederica Street LLC

 

 

 

Delaware

VNO TRU Geary Street L.P.

 

 

 

Delaware

VNO TRU Georgia Avenue LLC

 

 

 

Delaware

VNO TRU Hickory Hollow L.P.

 

 

 

Delaware

VNO TRU Hilltop Drive L.P.

 

 

 

Delaware

VNO TRU Jericho Turnpike LLC

 

 

 

Delaware

VNO TRU Kennedy Road LLC

 

 

 

Delaware

VNO TRU Lafayette Street LLC

 

 

 

Delaware

VNO TRU Leesburg Pike LLC

 

 

 

Delaware

VNO TRU Mall Drive L.P.

 

 

 

Delaware

VNO TRU MICH L.P.

 

 

 

Delaware

VNO TRU Military Road L.P.

 

 

 

Delaware

VNO TRU Olive Avenue L.P.

 

 

 

Delaware

VNO TRU PA LLC

 

 

 

Delaware

VNO TRU Princeton Road LLC

 

 

 

Delaware

VNO TRU Rand Road LLC

 

 

 

Delaware

VNO TRU Riverdale Road LLC

 

 

 

Delaware

VNO TRU Rolling Meadows Drive LLC

 

 

 

Delaware

VNO TRU Route 50 LLC

 

 

 

Delaware

VNO TRU Sam Rittenburg Blvd. LLC

 

 

 

Delaware

VNO TRU South Wadsworth Avenue LLC

 

 

 

Delaware

VNO TRU Torrence Avenue LLC

 

 

 

Delaware

VNO TRU TX LLC

 

 

 

Delaware

VNO TRU University Drive LLC

 

 

 

Delaware

VNO TRU West Sunrise Hwy. LLC

 

 

 

Delaware

VNO VE LLC

 

 

 

Delaware

VNO Wayne License II LLC

 

 

 

Delaware

VNO Wayne License LLC

 

 

 

Delaware

VNO Wayne Towne Center Holding LLC

 

 

 

Delaware

VNO Wayne Towne Center LLC

 

 

 

Delaware

VNO-MM Mezzanine Lender LLC

 

 

 

Delaware

Vornado - KC License L.L.C.

 

 

 

Delaware

Vornado / Charles E. Smith L.P.

 

 

 

Delaware

Vornado / Charles E. Smith Management L.L.C.

 

 

 

Delaware

Vornado 1399 LLC

 

 

 

Delaware

Vornado 1540 Broadway LLC

 

 

 

Delaware

Vornado 1726 M Street LLC

 

 

 

Delaware

Vornado 1740 Broadway LLC

 

 

 

Delaware

Vornado 17th Street Holdings LP

 

 

 

Delaware

Vornado 17th Street LLC

 

 

 

Delaware

Vornado 20 Broad Acquisition LLC

 

 

 

Delaware

Vornado 220 Central Park South II LLC

 

 

 

Delaware

Vornado 220 Central Park South LLC

 

 

 

Delaware

Vornado 25W14 LLC

 

 

 

Delaware

Vornado 280 Park Mezz LLC

 

 

 

Delaware

Vornado 3040 M Street LLC

 

 

 

Delaware

Vornado 330 W 34 Mezz LLC

 

 

 

Delaware

 

 


 

 

 

Vornado 330 West 34th Street L.L.C.

 

 

 

Delaware

Vornado 40 East 66th Street LLC

 

 

 

Delaware

Vornado 40 East 66th Street Member LLC

 

 

 

Delaware

Vornado 40 East 66th Street TRS LLC

 

 

 

Delaware

Vornado 401 Commercial LLC

 

 

 

Delaware

Vornado 447 South Broadway LLC

 

 

 

Delaware

Vornado 601 Madison Avenue, L.L.C.

 

 

 

Delaware

Vornado 620 Sixth Avenue L.L.C.

 

 

 

Delaware

Vornado 640 Fifth Avenue L.L.C.

 

 

 

Delaware

Vornado 677 Madison LLC

 

 

 

Delaware

Vornado 692 Broadway, L.L.C.

 

 

 

Delaware

Vornado 800 17th Street, LLC

 

 

 

Delaware

Vornado 90 Park Avenue L.L.C.

 

 

 

Delaware

Vornado 90 Park Member L.L.C.

 

 

 

Delaware

Vornado 90 Park QRS, Inc.

 

 

 

Delaware

Vornado Acquisition Co. LLC

 

 

 

Delaware

Vornado Auto L.L.C.

 

 

 

Delaware

Vornado B&B L.L.C.

 

 

 

Delaware

Vornado BAP LLC

 

 

 

Delaware

Vornado Bergen East LLC

 

 

 

Delaware

Vornado Bergen Mall License II LLC

 

 

 

Delaware

Vornado Bergen Mall License LLC

 

 

 

Virginia

Vornado Bergen Mall LLC

 

 

 

Virginia

Vornado Bevcon I LLC

 

 

 

Delaware

Vornado Beverly Connection LLC

 

 

 

Delaware

Vornado Beverly LLC

 

 

 

Delaware

Vornado Bowen GP LLC

 

 

 

Delaware

Vornado Bowen II LLC

 

 

 

New York

Vornado Bowen, LLC

 

 

 

Delaware

Vornado Broadway Mall LLC

 

 

 

Delaware

Vornado Burnside Plaza LLC

 

 

 

Delaware

Vornado Caguas GP, Inc.

 

 

 

Delaware

Vornado Caguas Holding, L.P.

 

 

 

Delaware

Vornado Caguas Holding, LLC

 

 

 

Delaware

Vornado Caguas L.L.C.

 

 

 

Delaware

Vornado Caguas L.P.

 

 

 

Delaware

Vornado Capital Partners Parallel GP LLC

 

 

 

New York

Vornado Capital Partners Parallel LP

 

 

 

Delaware

Vornado Capital Partners Parallel REIT LLC

 

 

 

Delaware

Vornado Capital Partners, G.P. LLC

 

 

 

Delaware

Vornado Capital Partners, L.P.

 

 

 

New York

Vornado Catalinas GP, Inc.

 

 

 

Delaware

Vornado Catalinas Holding, L.P.

 

 

 

New York

Vornado Catalinas Holding, LLC

 

 

 

Delaware

Vornado Catalinas L.L.C.

 

 

 

Delaware

Vornado Catalinas L.P.

 

 

 

New York

Vornado CCA Gainesville, L.L.C.

 

 

 

Delaware

Vornado CESCR Gen-Par, LLC

 

 

 

Delaware

Vornado Cogen Holdings LLC

 

 

 

Delaware

Vornado Communications, LLC

 

 

 

New York

Vornado Condominium Management LLC

 

 

 

Delaware

Vornado Crystal City L.L.C.

 

 

 

New York

Vornado Crystal Park Loan, L.L.C.

 

 

 

Delaware

Vornado DC Holding LLC

 

 

 

Delaware

Vornado DP LLC

 

 

 

Delaware

Vornado Dune LLC

 

 

 

New York

 

 


 

 

 

Vornado EF Borrower LLC

 

 

 

Delaware

Vornado Eleven Penn Plaza LLC

 

 

 

Delaware

Vornado Everest Lender, L.L.C.

 

 

 

Delaware

Vornado Everest, L.L.C.

 

 

 

Delaware

Vornado Farley LLC

 

 

 

New Jersey

Vornado Finance GP II L.L.C.

 

 

 

Delaware

Vornado Finance GP L.L.C.

 

 

 

Delaware

Vornado Finance II L.P.

 

 

 

Delaware

Vornado Finance L.P.

 

 

 

Delaware

Vornado Finance SPE, Inc.

 

 

 

Delaware

Vornado Forest Plaza L.L.C.

 

 

 

Delaware

Vornado Forest Plaza Member L.L.C.

 

 

 

Delaware

Vornado Fort Lee L.L.C.

 

 

 

Delaware

Vornado Fortress LLC

 

 

 

Delaware

Vornado Georgetown Park LLC

 

 

 

Delaware

Vornado Green Acres Acquisition L.L.C.

 

 

 

Delaware

Vornado Green Acres Delaware L.L.C.

 

 

 

Delaware

Vornado Green Acres Funding L.L.C.

 

 

 

Delaware

Vornado Green Acres Holdings L.L.C.

 

 

 

Delaware

Vornado Green Acres SPE Managing Member, Inc.

 

 

 

Delaware

Vornado Gun Hill Road LLC

 

 

 

Delaware

Vornado Harlem Park LLC

 

 

 

Delaware

Vornado Hinjewadi Township Private Limited

 

 

 

Delaware

Vornado HP B Note Holder LLC

 

 

 

Delaware

Vornado IB Holdings LLC

 

 

 

Delaware

Vornado India Lender LLC

 

 

 

Delaware

Vornado India Retail LLC

 

 

 

Delaware

Vornado India Retail Management LLC

 

 

 

Delaware

Vornado Investment Corp.

 

 

 

Delaware

Vornado Investments L.L.C.

 

 

 

Delaware

Vornado KMS Holdings LLC

 

 

 

Delaware

Vornado Lending Corp.

 

 

 

Delaware

Vornado Lending L.L.C.

 

 

 

Delaware

Vornado Lodi Delaware Member, LLC

 

 

 

Delaware

Vornado Lodi Delaware, LLC

 

 

 

Delaware

Vornado Lodi L.L.C.

 

 

 

Delaware

Vornado LXP, L.L.C.

 

 

 

New York

Vornado M 330 L.L.C.

 

 

 

Delaware

Vornado M 393 L.L.C.

 

 

 

Delaware

Vornado Management Corp.

 

 

 

Delaware

Vornado Manhattan House Mortgage LLC

 

 

 

Delaware

Vornado Mauritius Advisors LLC

 

 

 

Delaware

Vornado Mauritius II LLC

 

 

 

Delaware

Vornado Maywood License LLC

 

 

 

Delaware

Vornado Monmouth Mall, L.L.C.

 

 

 

Delaware

Vornado Montehiedra Acquisition L.P.

 

 

 

Delaware

Vornado Montehiedra Acquisition LLC

 

 

 

Delaware

Vornado Montehiedra Holding II L.P.

 

 

 

Delaware

Vornado Montehiedra Holding L.P.

 

 

 

Delaware

Vornado Montehiedra Holding LLC

 

 

 

Delaware

Vornado Montehiedra Inc.

 

 

 

Delaware

Vornado Montehiedra Lender LLC

 

 

 

Delaware

Vornado Montehiedra OP L.P.

 

 

 

Delaware

Vornado Montehiedra OP LLC

 

 

 

Delaware

Vornado Montehiedra Out Parcel LLC

 

 

 

Delaware

Vornado New York RR One L.L.C.

 

 

 

Delaware

 

 


 

 

 

Vornado Newkirk Advisory LLC

 

 

 

New Jersey

Vornado Newkirk L.L.C.

 

 

 

Delaware

Vornado NK Loan L.L.C.

 

 

 

Delaware

Vornado North Bergen Tonelle Plaza LLC

 

 

 

Delaware

Vornado Office Inc.

 

 

 

Delaware

Vornado Office Management LLC

 

 

 

Delaware

Vornado Paramus License LLC

 

 

 

Delaware

Vornado PC LLC

 

 

 

Delaware

Vornado Property Advisor LLC

 

 

 

Delaware

Vornado Realty L.L.C.

 

 

 

Delaware

Vornado Realty, L.P.

 

 

 

Delaware

Vornado Records 2006, L.L.C.

 

 

 

Delaware

Vornado Retail Finance Manager LLC

 

 

 

Delaware

Vornado Retail Management LLC

 

 

 

Delaware

Vornado Retail Manager LLC

 

 

 

Foreign

Vornado Rockaway L.L.C.

 

 

 

Delaware

Vornado Rockville, LLC

 

 

 

Delaware

Vornado Rosslyn LLC

 

 

 

Delaware

Vornado RTR DC LLC

 

 

 

Delaware

Vornado RTR Urban Development LLC

 

 

 

Delaware

Vornado RTR Urban Development TMP LLC

 

 

 

New York

Vornado RTR, Inc.

 

 

 

Delaware

Vornado San Jose LLC

 

 

 

Delaware

Vornado Savanna LLC

 

 

 

New Jersey

Vornado Savanna SM LLC

 

 

 

New Jersey

Vornado SB 1 L.P.

 

 

 

Delaware

Vornado SB 10 L.P.

 

 

 

Delaware

Vornado SB 11 L.P.

 

 

 

New Jersey

Vornado SB 14 L.P.

 

 

 

New York

Vornado SB 17 L.P.

 

 

 

New York

Vornado SB 2 L.P.

 

 

 

New Jersey

Vornado SB 24 L.P.

 

 

 

Delaware

Vornado SB 25 L.P.

 

 

 

Delaware

Vornado SB 3 L.P.

 

 

 

New Jersey

Vornado SB 8 L.P.

 

 

 

Delaware

Vornado SB 9 L.P.

 

 

 

Delaware

Vornado SB LLC

 

 

 

Delaware

Vornado SC Properties II LLC

 

 

 

Delaware

Vornado SC Properties LLC

 

 

 

Delaware

Vornado Shenandoah Holdings LLC

 

 

 

Delaware

Vornado Sign LLC

 

 

 

New York

Vornado South Hills, LLC

 

 

 

Delaware

Vornado Springfield Mall LLC

 

 

 

Delaware

Vornado Springfield Mall Manager LLC

 

 

 

Massachusetts

Vornado Square Mile LLC

 

 

 

Delaware

Vornado Suffolk LLC

 

 

 

New York

Vornado Sun LLC

 

 

 

New York

Vornado Thompson LLC

 

 

 

Delaware

Vornado Title L.L.C.

 

 

 

Delaware

Vornado TOA-Baja II LLC

 

 

 

Delaware

Vornado TOA-Baja LLC

 

 

 

Delaware

Vornado Toys Bridge LLC

 

 

 

Delaware

Vornado Truck LLC

 

 

 

Delaware

Vornado TSQ LLC

 

 

 

New Jersey

Vornado Two Penn Plaza L.L.C.

 

 

 

Delaware

Vornado Two Penn Property L.L.C.

 

 

 

Delaware

 

 


 

 

 

Vornado Warner Acquisition LLC

 

 

 

Delaware

Vornado Warner GP LLC

 

 

 

Delaware

Vornado Warner Holdings LP

 

 

 

Delaware

Vornado Warner LLC

 

 

 

Delaware

Vornado Waterfront Holdings LLC

 

 

 

Delaware

Vornado West Babylon LLC

 

 

 

Delaware

Vornado Westbury Retail II LLC

 

 

 

Delaware

Vornado Westbury Retail LLC

 

 

 

Delaware

VRT Development Rights LLC

 

 

 

Delaware

VRT Massachusetts Holding L.L.C.

 

 

 

Delaware

VRT New Jersey Holding L.L.C.

 

 

 

Delaware

VSPS I LLC

 

 

 

Delaware

VSPS LLC

 

 

 

Delaware

Warner Investments, L.P.

 

 

 

Delaware

Washington CESC TRS, Inc.

 

 

 

Delaware

Washington Design Center L.L.C.

 

 

 

Delaware

Washington Design Center Subsidiary L.L.C.

 

 

 

Delaware

Washington Mart SPE LLC

 

 

 

Delaware

Washington Mart TRS, Inc.

 

 

 

Delaware

Washington Office Center L.L.C.

 

 

 

Delaware

Watchung VF L.L.C.

 

 

 

Delaware

Watchung VF Member LLC

 

 

 

Delaware

Waterbury VF L.L.C.

 

 

 

Delaware

Waterbury VF Member LLC

 

 

 

Delaware

Wayne VF L.L.C.

 

 

 

Delaware

WDC 666 Fifth Retail TIC Owner LLC

 

 

 

Delaware

Wells Kinzie L.L.C.

 

 

 

Delaware

West 57th Street Holding LLC

 

 

 

Delaware

West 57th Street JV LLC

 

 

 

Delaware

West 57th Street Management LLC

 

 

 

Delaware

West Coast Industrial Products LLC

 

 

 

Delaware

West End 25 Developer LLC

 

 

 

Delaware

WOC 666 Fifth Retail TIC Owner LLC

 

 

 

Delaware

Woodbridge VF Member LLC

 

 

 

Delaware

Woodbridge VF, L.L.C.

 

 

 

Delaware

WPV San Jose LLC

 

 

 

Delaware

WREC Acquisition LLC

 

 

 

Delaware

WREC Columbus Ave LLC

 

 

 

Delaware

WREC Hyde Park LLC

 

 

 

Delaware

WREC Lido LLC

 

 

 

Delaware

WREC Lido Venture LLC

 

 

 

Delaware

WREC Quadrille LLC

 

 

 

Delaware

WREC San Pasqual LLC

 

 

 

Delaware

York Holding Company, L.L.C.

 

 

 

Delaware

York Holding Company, L.P.

 

 

 

Delaware

York VF L.L.C.

 

 

 

Delaware

 

 

 

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements of our reports dated February 26, 2013, relating to the consolidated financial statements and financial statement schedules of Vornado Realty Trust, and the effectiveness of Vornado Realty Trust’s internal control over financial reporting, appearing in the Annual Report on Form 10-K of Vornado Realty Trust for the year ended December 31, 2012:

 

Registration Statement No. 333-68462 on Form S-8

Amendment No. 1 to Registration Statement No. 333-36080 on Form S-3

Registration Statement No. 333-64015 on Form S-3

Amendment No.1 to Registration Statement No. 333-50095 on Form S-3

Registration Statement No. 333-52573 on Form S-8

Registration Statement No. 333-29011 on Form S-8

Registration Statement No. 333-09159 on Form S-8

Registration Statement No. 333-76327 on Form S-3

Amendment No.1 to Registration Statement No. 333-89667 on Form S-3

Registration Statement No. 333-81497 on Form S-8

Registration Statement No. 333-102216 on Form S-8

Amendment No.1 to Registration Statement No. 333-102215 on Form S-3

Amendment No.1 to Registration Statement No. 333-102217 on Form S-3

Registration Statement No. 333-105838 on Form S-3

Registration Statement No. 333-107024 on Form S-3

Registration Statement No. 333-109661 on Form S-3

Registration Statement No. 333-114146 on Form S-3

Registration Statement No. 333-114807 on Form S-3

Registration Statement No. 333-121929 on Form S-3

Amendment No. 1 to Registration Statement No. 333-120384 on Form S-3

Registration Statement No. 333-126963 on Form S-3

Registration Statement No. 333-139646 on Form S-3

Registration Statement No. 333-141162 on Form S-3

Registration Statement No. 333-150592 on Form S-3

Registration Statement No. 333-150593 on Form S-8

Registration Statement No. 333-166856 on Form S-3

Registration Statement No. 333-172880 on Form S-8

and in the following joint registration statements of Vornado Realty Trust and Vornado Realty L.P.:

Amendment No. 4 to Registration Statement No. 333-40787 on Form S-3

Amendment No. 4 to Registration Statement No. 333-29013 on Form S-3

Registration Statement No. 333-108138 on Form S-3

Registration Statement No. 333-122306 on Form S-3

Registration Statement No. 333-138367 on Form S-3

Registration Statement No. 333-162775 on Form S-3

Registration Statement No. 333-180640 on Form S-3

 

 

 

/s/ DELOITTE & TOUCHE LLP

 

Parsippany, New Jersey

February 26, 2013

 

 

 

EXHIBIT 31.1

CERTIFICATION

I, Michael D. Fascitelli, certify that:

1.     I have reviewed this Annual Report on Form 10-K of Vornado Realty Trust;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure control and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

February 26, 2013

 

 


/s/ Michael D. Fascitelli

 

 

Michael D. Fascitelli

 

 

President and Chief Executive Officer

 

 

 

 

EXHIBIT 31.2

CERTIFICATION

I, Joseph Macnow, certify that:

1.     I have reviewed this Annual Report on Form 10-K of Vornado Realty Trust;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure control and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

February 26, 2013

 

 


/s/ Joseph Macnow

 

 

Joseph Macnow

 

 

Executive Vice President – Finance and Administration
and Chief Financial Officer

 

 

 

 

EXHIBIT 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsection (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code)

 

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of Vornado Realty Trust (the “Company”), hereby certifies, to such officer’s knowledge, that

 

The Annual Report on Form 10-K for year ended December 31, 2012 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

 

 


February 26, 2013

 

 


/s/ Michael D. Fascitelli

 

 

Name:

Michael D. Fascitelli

 

 

Title:

President and Chief Executive Officer

 

 

 

 

 

EXHIBIT 32.2

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsection (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code)

 

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of Vornado Realty Trust (the “Company”), hereby certifies, to such officer’s knowledge, that

 

The Annual Report on Form 10-K for year ended December 31, 2012 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

 

 


February 26, 2013

 

 


/s/ Joseph Macnow

 

 

Name:

Joseph Macnow

 

 

Title:

Executive Vice President – Finance and Administration
and Chief Financial Officer