Vornado Announces Fourth Quarter 2008 Financial Results
PARAMUS, N.J.--(BUSINESS WIRE)--
VORNADO REALTY TRUST (NYSE: VNO) today reported:
Fourth Quarter 2008 Financial Results
NET LOSS applicable to common shares for the quarter ended December 31, 2008 was $216.8 million, or $1.40 per diluted share, versus net income of $90.9 million, or $0.57 per diluted share, for the quarter ended December 31, 2007. Net loss for the quarter ended December 31, 2008 and net income for the quarter ended December 31, 2007 include $1.1 million and $43.9 million, respectively, of net gains on sale of real estate and certain other items that affect comparability, which are listed in the table below. The aggregate of these items, net of minority interest, increased net loss applicable to common shares for the quarter ended December 31, 2008 by $251.8 million, or $1.63 per diluted share and increased net income applicable to common shares for the quarter ended December 31, 2007 by $20.4 million, or $0.13 per diluted share,.
FUNDS FROM OPERATIONS for the quarter ended December 31, 2008 was a negative $78.0 million, or $0.50 per diluted share, compared to a positive $193.4 million, or $1.18 per diluted share, for the prior year's quarter. Adjusting FFO for certain items that affect comparability which are listed in the table below, FFO for the quarters ended December 31, 2008 and 2007 was $175.5 million and $204.6 million, or $1.14 and $1.25 per share, respectively.
Quarter Ended December 31,
(Amounts in thousands) 2008 2007
FFO applicable to common shares plus assumed $ (77,989 ) $ 193,412
conversions (1)
Per Share $ (0.50 ) $ 1.18
Items that affect comparability (income) expense:
Non-cash asset write-downs:
Investment in Lexington Realty Trust $ 100,707 $ --
Marketable equity securities 55,471 --
Real estate development costs:
Partially owned entities 61,837 --
Wholly owned entities 73,438 1,568
MPH mezzanine loan loss accrual -- 57,000
Alexander's - reversal of stock appreciation (14,188 ) (5,289 )
rights compensation expense
Net gain on extinguishment of debt (9,820 ) --
Derivative positions in marketable equity 7,928 (36,533 )
securities
Other, net 8,426 3,418
283,799 20,164
47.6% share of Americold's FFO (Net loss of $1,494
in the three months ended December 31, 2007) - -- (6,869 )
sold in March 2008
13.8% share of GMH's FFO (Equity in net income of
$1,036 in the three months ended -- (1,036 )
December 31, 2007) - sold in June 2008
283,799 12,259
Minority limited partners' share of above (30,293 ) (1,113 )
adjustments
Total items that affect comparability $ 253,506 $ 11,146
Per share $ 1.64 $ 0.07
FFO as adjusted for comparability $ 175,517 $ 204,558
Per Share $ 1.14 $ 1.25
_____________________________
(1) See page 4 for a reconciliation of net income to FFO for the quarters ended December 31, 2008 and 2007.
Year Ended December 31, 2008 Financial Results
Net income applicable to common shares for the year ended December 31, 2008 was $338.0 million, or $2.14 per diluted share, versus $511.7 million, or $3.23 per diluted share, for the year ended December 31, 2007. Net income for the years ended December 31, 2008 and 2007 include $67.0 million and $76.3 million, respectively, for our share of net gains on sale of real estate and certain other items that affect comparability, which are listed in the table below. The aggregate of these items and net gains on sale of real estate, net of minority interest, increased net income applicable to common shares for the years ended December 31, 2008 and 2007 by $17.6 million and $131.0 million, or $0.11 and $0.83 per diluted share, respectively.
FFO for the year ended December 31, 2008 was $844.6 million, or $5.16 per diluted share, compared to $966.6 million, or $5.89 per diluted share, for the prior year. Adjusting FFO for certain items that affect comparability which are listed in the table below, FFO for the year ended December 31, 2008 and 2007 was $880.8 million and $874.7 million, or $5.38 and $5.33 per share, respectively.
Year Ended December 31,
(Amounts in thousands) 2008 2007
FFO applicable to common shares plus assumed $ 844,568 $ 966,638
conversions
Per Share $ 5.16 $ 5.89
Items that affect comparability (income) expense:
Reversal of deferred income taxes initially recorded $ (222,174 ) $ --
in connection with the H Street acquisition
Net gain on sale of our 47.6% interest in Americold (112,690 ) --
Non-cash asset write-downs:
Investment in Lexington Realty Trust 107,882 --
Marketable equity securities 76,352 --
Real estate development costs:
Partially owned entities 96,037 --
Wholly owned entities 81,447 10,375
MPH mezzanine loan loss (reversal) accrual (10,300 ) 57,000
Derivative positions in marketable equity securities 33,740 (136,593 )
Purchase price accounting adjustments:
Toys 14,900 --
Beverly Connection (4,100 ) --
Net gain on extinguishment of debt and write-off of (9,820 ) 7,562
unamortized financing costs
Alexander's - reversal of stock appreciation rights (6,583 ) (14,280 )
compensation expense
After-tax net gain on sale of residential (5,361 ) --
condominiums
Net gain on disposition of our 13.8% interest in GMH (2,038 ) --
Other, net 8,575 5,387
45,867 (70,549 )
47.6% share of Americold's FFO (Net losses of $1,076 (6,098 ) (24,693 )
and $4,342, respectively) - sold in March 2008
13.8% share of GMH's FFO (Equity in net income of -- (5,754 )
$6,463 in 2007) - sold in June 2008
39,769 (100,996 )
Minority limited partners' share of above (3,553 ) 9,021
adjustments
Total items that affect comparability $ 36,216 $ (91,975 )
Per Share $ 0.22 $ (0.56 )
FFO as adjusted for comparability $ 880,784 $ 874,663
Per Share $ 5.38 $ 5.33
__________________________
(1) See page 4 for a reconciliation of net income to FFO for the year ended December 31, 2008 and 2007.
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.
(tables to follow)
VORNADO REALTY TRUST
OPERATING RESULTS FOR THE QUARTER AND YEAR ENDED
DECEMBER 31, 2008 AND 2007
FOR THE QUARTER FOR THE YEAR
ENDED DECEMBER 31 ENDED DECEMBER 31
(Amounts in thousands,
except per share 2008 2007 2008 2007
amounts)
Revenues $ 696,259 $ 657,166 $ 2,697,051 $ 2,410,516
(Loss) income from $ (215,895 ) $ 80,044 $ 283,722 $ 577,299
continuing operations
Income from -- 33,227 154,442 58,389
discontinued operations
(Loss) income before
allocation to limited (215,895 ) 113,271 438,164 635,688
partners
Minority limited
partners' interest in 21,009 (3,238 ) (21,037 ) (47,508 )
the
Operating Partnership
Perpetual preferred
unit distributions of (7,629 ) (4,819 ) (22,084 ) (19,274 )
the
Operating Partnership
Net (loss) income (202,515 ) 105,214 395,043 568,906
Preferred share (14,271 ) (14,291 ) (57,091 ) (57,177 )
dividends
Net (loss) income
applicable to common $ (216,786 ) $ 90,923 $ 337,952 $ 511,729
shares
Net (loss) income per
common share:
Basic $ (1.40 ) $ 0.60 $ 2.20 $ 3.37
Diluted $ (1.40 ) $ 0.57 $ 2.14 $ 3.23
Average number of
common shares and
share equivalents
outstanding:
Basic 154,590 152,573 153,900 151,949
Diluted 154,590 158,302 158,119 158,558
(Negative FFO) FFO
applicable to common $ (77,989 ) $ 193,412 $ 844,568 $ 966,638
shares plus
assumed conversions
(Negative FFO) FFO per $ (0.50 ) $ 1.18 $ 5.16 $ 5.89
diluted share
Average number of
common shares and share
equivalents 154,590 163,974 163,759 164,117
outstanding used for
determining FFO per
diluted share
The following table reconciles net (loss) income to (Negative FFO) FFO:
(Amounts in thousands) For The Quarter For The Year
Ended December 31, Ended December 31,
2008 2007 2008 2007
Net (loss) income $ (202,515 ) $ 105,214 $ 395,043 $ 568,906
Depreciation and
amortization of real 129,305 125,989 509,367 451,313
property
Net gains on sale of real -- (37,869 ) (57,523 ) (60,811 )
estate
Proportionate share of
adjustments to equity in
net
income of Toys:
Depreciation and
amortization of real 15,533 16,260 66,435 85,244
property
Net gains on sale of real (555 ) (2,519 ) (719 ) (3,012 )
estate
Income tax effect of (5,242 ) (4,809 ) (23,223 ) (28,781 )
above adjustments
Proportionate share of
adjustments to equity in
net
income of partially-owned
entities, excluding
Toys:
Depreciation and
amortization of real 13,735 12,679 49,513 48,770
property
Net gains on sale of real (528 ) (3,471 ) (8,759 ) (12,451 )
estate
Minority limited
partners' share of above (13,451 ) (9,094 ) (49,683 ) (46,664 )
adjustments
FFO (63,718 ) 202,380 880,451 1,002,514
Preferred share dividends (14,271 ) (14,291 ) (57,091 ) (57,177 )
FFO applicable to common (77,989 ) 188,089 823,360 945,337
shares
Interest on 3.875%
exchangeable senior -- 5,256 21,019 21,024
debentures
Convertible preferred -- 67 189 277
share dividends
FFO applicable to common
shares plus assumed $ (77,989 ) $ 193,412 $ 844,568 $ 966,638
conversions
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