Vornado Announces Fourth Quarter 2006 FFO of $1.34 Per Share and Full Year FFO of $5.51 Per Share
PARAMUS, N.J.--(BUSINESS WIRE)--
VORNADO REALTY TRUST (New York Stock Exchange: VNO) today reported:
Fourth Quarter 2006 Results
NET INCOME applicable to common shares for the quarter ended December 31, 2006 was $105.4 million, or $0.69 per diluted share, versus $105.7 million, or $0.71 per diluted share, for the quarter ended December 31, 2005. Net income for the quarters ended December 31, 2006 and 2005 include certain other items that affect comparability which are listed in the table below. The aggregate of these items, net of minority interest, increased net income applicable to common shares for the quarters ended December 31, 2006 and 2005 by $51.1 million and $33.7 million, or $0.32 and $0.22 per diluted share, respectively.
FUNDS FROM OPERATIONS applicable to common shares plus assumed conversions ("FFO") for the quarter ended December 31, 2006 was $211.8 million, or $1.34 per diluted share, compared to $194.1 million, or $1.26 per diluted share, for the quarter ended December 31, 2005. Adjusting FFO for certain items that affect comparability which are listed in the table below, FFO for the quarters ended December 31, 2006 and 2005 was $162.8 million and $160.4 million, or $1.03 and $1.04 per share, respectively.
For the Three
Months
(Amounts in thousands, except per share amounts) Ended December 31,
-------------------
2006 2005
--------- ---------
FFO applicable to common shares plus assumed
conversions (1) $211,812 $194,101
========= =========
Per Share $ 1.34 $ 1.26
========= =========
Items that affect comparability (income) expense:
Derivatives:
McDonalds shares $(78,234) $ (7,395)
GMH warrants -- (6,267)
Sears Holdings shares -- 23,744
Other (9,386) --
33% share of Alexander's:
Stock appreciation rights compensation expense 30,687 (6,324)
Net gain on sale of 731 Lexington Avenue
condominiums -- (2,761)
Other:
Net gain recognized upon merger of Newkirk
Realty Trust and Lexington Realty Trust (10,794) --
Prepayment penalties and write-off of
unamortized financing costs 8,513 --
H Street litigation costs 2,998 2,134
Net gain on disposition of preferred investment
in 3700 Las Vegas Boulevard -- (12,110)
Newkirk - gain on disposition of T-2 assets,
net of losses on early extinguishment
of debt and expense from payment of promoted
obligation to partner -- (6,120)
Income from Sears Canada special dividend -- (22,885)
Other, net 2,000 750
--------- ---------
(54,216) (37,234)
Minority limited partners' share of above
adjustments 5,202 3,572
--------- ---------
$(49,014) $(33,662)
========= =========
Per share $ (0.31) $ (0.22)
========= =========
FFO as adjusted for comparability $162,798 $160,439
========= =========
Per share $ 1.03 $ 1.04
========= =========
(1) See page 4 for a reconciliation of net income to FFO for the
quarters ended December 31, 2006 and 2005.
Year Ended December 31, 2006 Results
Net income applicable to common shares for the year ended December 31, 2006 was $502.6 million, or $3.35 per diluted share, versus $493.1 million, or $3.50 per diluted share, for the year ended December 31, 2005. Net income for the year ended December 31, 2006 includes income of $137.8 million for certain items that affect comparability which are listed in the table below, net gains of $46.9 million on sales of real estate and a net loss of $47.5 million from our investment in Toys "R" Us. Net income for the year ended December 31, 2005 includes income of $108.8 million for certain items that affect comparability which are listed in the table below, net gains on sale of real estate of $34.5 million and a net loss of $40.5 million from our investment in Toys. The aggregate of these items, net of minority interest, increased net income applicable to common shares for the years ended December 31, 2006 and 2005 by $123.0 million and $91.8 million, or $0.79 and $0.63 per diluted share, respectively.
FFO for the year ended December 31, 2006 was $858.7 million, or $5.51 per diluted share, compared to $757.2 million, or $5.21 per diluted share, for the prior year. Adjusting FFO for certain items that affect comparability which are listed in the table below, FFO for the years ended December 31, 2006 and 2005 was $743.4 million and $689.5 million, or $4.77 and $4.75 per share, respectively.
For the Year
(Amounts in thousands, except per share amounts) Ended December 31,
---------------------
2006 2005
---------- ----------
FFO applicable to common shares plus assumed
conversions (1) $ 858,693 $ 757,219
========== ==========
Per Share $ 5.51 $ 5.21
========== ==========
Items that affect comparability (income) expense:
Derivatives:
McDonalds shares $(138,815) $ (17,254)
Sears Holdings shares (18,611) (41,482)
GMH warrants 16,370 (14,080)
Other (12,153) --
33% share of Alexander's:
Stock appreciation rights compensation
expense 49,043 9,104
Net gain on sale of 731 Lexington Avenue
condominiums (4,580) (30,895)
Newkirk:
Net gain recognized upon merger of Newkirk
Realty Trust and Lexington Realty Trust (10,362) --
Net gain on disposition of T-2 assets -- (16,053)
Net losses on early extinguishment of debt
and related write-off of deferred financing
costs -- 9,455
Expense from payment of promoted obligation
partner -- 8,470
Impairment losses -- 6,602
Other:
Net gain on sale of Sears Canada common
shares (55,438) (22,885)
Prepayment penalties and write off of
unamortized financing costs resulting from
refinancings 21,994 --
H Street litigation costs 9,592 2,134
Senior unsecured notes consent solicitation
advisory fees 1,415 --
Write-off of perpetual preferred share and
unit issuance costs 1,125 22,869
Net gain on disposition of preferred
investment in 3700 Las Vegas Boulevard -- (12,110)
Net gain on disposition of Prime Group common
shares -- (9,017)
Other, net 2,586 (3,642)
---------- ----------
(137,834) (108,784)
32.9% share of Toys "R" Us FFO in 2006 and
negative FFO in 2005 10,289 32,918
---------- ----------
(127,545) (75,866)
Minority limited partners' share of above
adjustments 12,219 8,098
---------- ----------
$(115,326) $ (67,768)
========== ==========
Per share $ (0.74) $ (0.46)
========== ==========
FFO as adjusted for comparability $ 743,367 $ 689,451
========== ==========
Per share $ 4.77 $ 4.75
========== ==========
(1) See page 4 for a reconciliation of net income to FFO for the years
ended December 31, 2006 and 2005.
Supplemental Financial Information
Further details regarding the Company's results of operations, properties and tenants can be accessed at the Company's website www.vno.com. Vornado Realty Trust is a fully - integrated equity real estate investment trust.
Certain statements contained herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, risks associated with the timing of and costs associated with property improvements, financing commitments and general competitive factors.
VORNADO REALTY TRUST
OPERATING RESULTS FOR THE QUARTER AND YEAR ENDED
DECEMBER 31, 2006 AND 2005
----------------------------------------------------------------------
FOR THE QUARTER FOR THE YEAR
ENDED DECEMBER 31, ENDED DECEMBER 31,
------------------- -----------------------
(Amounts in thousands,
except per share amounts) 2006 2005 2006 2005
--------- --------- ----------- -----------
Revenues $723,252 $694,514 $2,712,095 $2,534,702
========= ========= =========== ===========
Income from continuing
operations $137,102 $138,745 $ 607,292 $ 637,963
(Loss) income from
discontinued operations,
net (97) (330) 33,408 35,515
--------- --------- ----------- -----------
Income before allocation
to limited partners 137,005 138,415 640,700 673,478
Minority limited partners'
interest in the Operating
Partnership (12,411) (12,243) (58,712) (66,755)
Perpetual preferred unit
distributions of the
Operating Partnership (4,818) (6,211) (21,848) (67,119)
--------- --------- ----------- -----------
Net income 119,776 119,961 560,140 539,604
Preferred share dividends (14,349) (14,211) (57,511) (46,501)
--------- --------- ----------- -----------
Net income applicable to
common shares $105,427 $105,750 $ 502,629 $ 493,103
========= ========= =========== ===========
Net income per common share:
Basic $ 0.73 $ 0.75 $ 3.54 $ 3.69
========= ========= =========== ===========
Diluted $ 0.69 $ 0.71 $ 3.35 $ 3.50
========= ========= =========== ===========
Average number of common shares
and share equivalents outstanding:
Basic 144,319 140,695 142,145 133,768
========= ========= =========== ===========
Diluted 152,338 148,232 150,410 141,012
========= ========= =========== ===========
FFO applicable to common
shares plus assumed
conversions $211,812 $194,101 $ 858,693 $ 757,219
========= ========= =========== ===========
FFO per diluted share $ 1.34 $ 1.26 $ 5.51 $ 5.21
========= ========= =========== ===========
Average number of common
shares and share
equivalents outstanding
used for determining
FFO per diluted share 157,897 153,763 155,802 145,210
========= ========= =========== ===========
The following table reconciles net income to FFO:
(Amounts in thousands) For The Quarter For The Year
Ended December 31, Ended December 31,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Net income $119,776 $119,961 $560,140 $539,604
Depreciation and amortization
of real property 90,896 76,463 337,730 276,921
Net gains on sale of real
estate -- -- (33,769) (31,614)
Proportionate share of
adjustments to equity in net
income of partially-owned
entities to arrive at FFO:
Depreciation and
amortization of real
property 30,083 20,474 105,629 42,052
Net (gains) losses on sale
of real estate (2,324) 476 (13,166) (2,918)
Income tax effect of Toys
"R" Us adjustments included
above (5,007) (4,284) (21,038) (4,613)
Minority limited partners'
share of above adjustments (11,960) (9,663) (39,809) (31,990)
--------- --------- --------- ---------
FFO 221,464 203,427 895,717 787,442
Preferred share dividends (14,349) (14,211) (57,511) (46,501)
--------- --------- --------- ---------
FFO applicable to common
shares 207,115 189,216 838,206 740,941
Interest on 3.875%
exchangeable senior
debentures 4,575 4,663 19,856 15,335
Series A convertible preferred
share dividends 122 222 631 943
--------- --------- --------- ---------
FFO applicable to common
shares plus assumed
conversions $211,812 $194,101 $858,693 $757,219
========= ========= ========= =========
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 net income or loss determined in accordance with Generally Accepted Accounting Principles ("GAAP"), excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO and FFO per diluted share are used by management, investors and industry analysts as supplemental measures of operating performance of equity REITs. FFO and FFO per diluted share should be evaluated along with GAAP net income and income per diluted share (the most directly comparable GAAP measures), as well as cash flow from operating activities, investing activities and financing activities, in evaluating the operating performance of equity REITs. Management believes that FFO and FFO per diluted share are helpful to investors as supplemental performance measures because these measures exclude the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs which implicitly assumes that the value of real estate diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, these non-GAAP measures can facilitate comparisons of operating performance between periods and among other equity REITs. FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs as disclosed in the Company's Consolidated Statements of Cash Flows. FFO should not be considered as an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flows as a measure of liquidity. In addition to FFO, the Company also discloses FFO before certain items that affect comparability. Although this non-GAAP measure clearly differs from NAREIT's definition of FFO, the Company believes it provides a meaningful presentation of operating performance. A reconciliation of net income to FFO is provided above. In addition, a reconciliation of FFO to FFO before certain items that affect comparability is provided on page 1 and 2 of this press release.
Source: Vornado Realty Trust
Contact: Vornado Realty Trust Joseph Macnow, 201-587-1000