Vornado Reports Results
PARAMUS, N.J.--(BUSINESS WIRE)--Aug. 1, 2006--
VORNADO REALTY TRUST (New York Stock Exchange: VNO) today reported:
Second Quarter 2006 Results
NET INCOME applicable to common shares for the quarter ended June 30, 2006 was $148.8 million, or $0.99 per diluted share, versus $172.7 million, or $1.25 per diluted share, for the quarter ended June 30, 2005. Net income for the three months ended June 30, 2006 includes a net loss of $7.9 million from our investment in Toys "R" Us ("Toys") and a $17.6 million net gain on sale of real estate. Net income for the three months ended June 30, 2005 includes a $31.6 million net gain on sale of real estate. Net income for the three months ended June 30, 2006 and 2005 also include certain other items that affect comparability which are listed in the table below. The aggregate of these items and our share of Toys' net loss, net of minority interest, increased net income applicable to common shares for the quarter ended June 30, 2006 by $55.8 million or $0.36 per diluted share and increased net income applicable to common shares for the quarter ended June 30, 2005 by $72.9 million or $0.51 per diluted share.
FUNDS FROM OPERATIONS applicable to common shares plus assumed conversions ("FFO") for the quarter ended June 30, 2006 was $230.4 million, or $1.49 per diluted share, compared to $215.8 million, or $1.51 per diluted share, for the quarter ended June 30, 2005. Adjusting FFO for certain items that affect comparability which are listed in the table below, FFO for the quarters ended June 30, 2006 and 2005 were $190.5 million and $170.9 million, or $1.23 and $1.20 per share, respectively.
For the Three
Months
(Amounts in thousands, except per share amounts) Ended June 30,
------------------
2006 2005
-------- --------
FFO applicable to common shares plus assumed
conversions (1) $230,430 $215,802
======== ========
Per Share $ 1.49 $ 1.51
======== ========
Items that affect comparability (income) expense:
Derivatives:
McDonalds shares $ 14,515 $ --
GMH warrants (4,105) (12,741)
Sears Holdings shares -- (37,860)
33% share of Alexander's:
Stock appreciation rights (4,836) 2,034
Net gain on sale of 731 Lexington Avenue
condominiums (2,722) (5,541)
Other:
Net gain on sale of Sears Canada common shares (55,438) --
H Street litigation costs 2,093 --
Prepayment penalties and write off of unamortized
financing costs 4,933 --
Senior unsecured notes consent solicitation
advisory fees 1,415 --
Impairment loss - Newkirk MLP -- 3,520
-------- --------
(44,145) (50,588)
32.9% share of Toys "R" Us FFO -- --
-------- --------
(44,145) (50,588)
Minority limited partners' share of above
adjustments 4,237 5,694
-------- --------
$(39,908)$(44,894)
======== ========
Per share $ (0.26)$ (0.31)
======== ========
FFO as adjusted for comparability $190,522 $170,908
======== ========
Per Share $ 1.23 $ 1.20
======== ========
(1) See page 4 for a reconciliation of net income to FFO for the three
months ended June 30, 2006 and 2005.
First Half 2006 Results
Net income applicable to common shares for the six months ended June 30, 2006 was $283.6 million, or $1.90 per diluted share, versus $360.1 million, or $2.63 per diluted share, for the six months ended June 30, 2005. Net income for the six months ended June 30, 2006 includes $44.9 million of earnings from our investment in Toys "R" Us ("Toys") and $33.8 million of net gains on sales of real estate, as well as certain items that affect comparability which are listed in the table below. Net income for the six months ended June 30, 2005 includes a $31.6 million net gain on sale of real estate as well as certain items that affect comparability which are listed in the table below. These items, net of minority interest, increased net income applicable to common shares for the six months ended June 30, 2006 by $61.6 million, or $0.40 per diluted share, and increased net income applicable to common shares for the six months ended June 30, 2005 by $153.7 million, or $1.11 per diluted share.
FFO(1) for the six months ended June 30, 2006 was $442.3 million, or $2.86 per diluted share, compared to $465.0 million, or $3.35 per diluted share, for the prior year's six months. Adjusting FFO for certain items that affect comparability which are listed in the table below, FFO for the six months ended June 30, 2006 and 2005 were $353.0 million and $339.2 million, or $2.28 and $2.44 per share, respectively.
For the Six Months
(Amounts in thousands, except per share amounts) Ended June 30,
-------------------
2006 2005
-------- ---------
FFO applicable to common shares plus assumed
conversions (1) $442,346 $ 465,011
======== =========
Per Share $ 2.86 $ 3.35
======== =========
Items that affect comparability (income) expense:
Derivatives:
Sears Holdings shares $(18,611)$(131,853)
GMH warrants 16,370 (2,563)
McDonalds shares 8,215 --
33% share of Alexander's:
Stock appreciation rights compensation expense 7,559 9,467
Net gain on sale of 731 Lexington Avenue
condominiums (4,580) (26,174)
Other:
Net gain on sale of Sears Canada common shares (55,438) --
Prepayment penalties and write off of
unamortized financing costs 4,933 --
H Street litigation costs 3,561 --
Senior unsecured notes consent solicitation
advisory fees 1,415 --
Write-off of perpetual preferred share and unit
issuance costs upon their redemption -- 6,052
Net gain on sale of land parcels -- (1,469)
Impairment loss - Newkirk MLP -- 4,016
-------- ---------
(36,576) (142,524)
32.9% share of Toys "R" Us FFO (62,287) --
-------- ---------
(98,863) (142,524)
Minority limited partners' share of above
adjustments 9,558 16,748
-------- ---------
$(89,305)$(125,776)
======== =========
Per share $ (0.58)$ (0.91)
======== =========
FFO as adjusted for comparability $353,041 $ 339,235
======== =========
Per Share $ 2.28 $ 2.44
======== =========
(1) See page 4 for a reconciliation of net income to FFO for the six
months ended June 30, 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 THREE AND SIX MONTHS ENDED
JUNE 30, 2006 AND 2005
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE, 30 ENDED JUNE, 30
-------------------- ---------------------
(Amounts in thousands,
except per share amounts) 2006 2005 2006 2005
--------- --------- ---------- ----------
Revenues $ 663,032 $ 591,475 $1,310,369 $1,186,724
========= ========= ========== ==========
Income from continuing
operations $ 169,105 $ 187,279 $ 322,429 $ 431,148
Income from discontinued
operations 16,762 32,930 33,497 34,616
--------- --------- ---------- ----------
Income before allocation to
limited partners 185,867 220,209 355,926 465,764
Minority limited partners'
interest in the Operating
Partnership (17,324) (23,975) (33,198) (51,170)
Perpetual preferred unit
distributions of the
Operating Partnership (5,374) (15,152) (10,347) (33,693)
--------- --------- ---------- ----------
Net income 163,169 181,082 312,381 380,901
Preferred share dividends (14,404) (8,385) (28,811) (20,771)
--------- --------- ---------- ----------
Net income applicable to
common shares $ 148,765 $ 172,697 $ 283,570 $ 360,130
========= ========= ========== ==========
Net income per common
share:
Basic $ 1.05 $ 1.33 $ 2.01 $ 2.79
========= ========= ========== ==========
Diluted $ 0.99 $ 1.25 $ 1.90 $ 2.63
========= ========= ========== ==========
Average number of
common shares and
share equivalents
outstanding:
Basic 141,418 130,178 141,275 129,254
========= ========= ========== ==========
Diluted 154,893 142,813 154,650 139,003
========= ========= ========== ==========
FFO applicable to common
shares plus assumed
conversions $ 230,430 $ 215,802 $ 442,346 $ 465,011
========= ========= ========== ==========
FFO per diluted share $ 1.49 $ 1.51 $ 2.86 $ 3.35
========= ========= ========== ==========
Average number of common
shares and share
equivalents outstanding
used for determining
FFO per diluted share 154,893 142,813 154,650 139,003
========= ========= ========== ==========
The following table reconciles net income to FFO:
(Amounts in thousands) For The Three For The Six Months
Months Ended June 30,
Ended June 30,
------------------------------------
2006 2005 2006 2005
-------- -------- -------- --------
Net income $163,169 $181,082 $312,381 $380,901
Depreciation and amortization of
real property 84,156 68,418 160,599 132,294
Net gains on sale of real estate (17,609) (31,614) (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 23,011 6,290 48,020 12,587
Net losses (gains) on sale of
real estate 658 (79) 329 (214)
Income tax effect of Toys "R"
Us adjustments included above (4,928) -- (10,841) --
Minority limited partners' share
of above adjustments (8,896) (5,244) (16,120) (14,245)
-------- -------- -------- --------
FFO 239,561 218,853 460,599 479,709
Preferred share dividends (14,404) (8,385) (28,811) (20,771)
-------- -------- -------- --------
FFO applicable to common shares 225,157 210,468 431,788 458,938
Interest on 3.875% exchangeable
senior debentures 5,094 5,094 10,188 5,578
Series A convertible preferred
share dividends 179 240 370 495
-------- -------- -------- --------
FFO applicable to common shares
plus assumed conversions $230,430 $215,802 $442,346 $465,011
======== ======== ======== ========
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