Vornado Reports Results
PARAMUS, N.J.--(BUSINESS WIRE)--Feb. 28, 2006--VORNADO REALTY TRUST (New York Stock Exchange: VNO) today reported:
Year Ended December 31, 2005 Results
NET INCOME applicable to common shares for the year ended December 31, 2005 was $493.1 million, or $3.50 per diluted share, versus $571.0 million, or $4.35 per diluted share, for the year ended December 31, 2004. Net income for the year ended December 31, 2005 includes (i) $40.5 million for the Company's share of Toys "R" Us net loss for the period from July 21, 2005 (date of acquisition) through October 29, 2005, offset by, (ii) $34.5 million of net gains on sale of real estate and (iii) certain other items that affect comparability which are listed in the table on the following page. Net income for the year ended December 31, 2004 includes $75.8 million of net gains on sale of real estate, as well as certain other items that affect comparability which are listed in the table on the following page. The aggregate of these items, net of minority interest, increased net income by $98.6 million, or $.68 per diluted share for the year ended December 31, 2005 and by $180.2 million, or $1.35 per diluted share for the year ended December 31, 2004.
FUNDS FROM OPERATIONS applicable to common shares plus assumed conversions (FFO) for the year ended December 31, 2005 was $757.2 million, or $5.21 per diluted share, compared to $750.0 million, or $5.63 per diluted share, for the prior year. Adjusting FFO for the Company's share of Toys "R" Us negative FFO of $32.9 million and for certain other items that affect comparability which are listed in the table on the following page, FFO for the years ended December 31, 2005 and 2004 were $689.4 million and $639.1 million, or $4.75 and $4.80 per share, respectively.
Quarter Ended December 31, 2005 Results
Net income applicable to common shares for the quarter ended December 31, 2005 was $105.7 million, or $.71 per diluted share, versus $233.6 million, or $1.73 per diluted share, for the quarter ended December 31, 2004. Net income for the quarter ended December 31, 2005 includes $40.0 million for the Company's share of Toys "R" Us net loss, recorded on a one quarter lag basis, for their third quarter ended October 29, 2005 and certain other items that affect comparability which are listed in the table on the following page. Net income for the quarter ended December 31, 2004 includes certain items that affect comparability which are listed in the table on the following page. The aggregate of these items, net of minority interest, increased net income by $3.1 million or $.02 per diluted share for the quarter ended December 31, 2005 and increased net income by $133.7 million of $0.99 per diluted share for the quarter ended December 31, 2004.
FFO for the quarter ended December 31, 2005 was $194.1 million, or $1.26 per diluted share, compared to $299.4 million, or $2.22 per diluted share, for the prior year's quarter. Adjusting FFO for the Company's share of Toys "R" Us negative FFO of $33.4 million and for certain other items that affect comparability which are listed in the table on the following page, FFO for the quarters ended December 31, 2005 and 2004 were $190.6 million and $165.7 million, or $1.24 and $1.23 per share, respectively.
(Amounts in thousands, For the Year Ended For the Quarter
except per share amounts) December 31, Ended December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
FFO applicable to common
shares plus assumed
conversions (1) $ 757,219 $ 750,043 $ 194,101 $ 299,441
========= ========= ========= =========
Per Share $ 5.21 $ 5.63 $ 1.26 $ 2.22
========= ========= ========= =========
Items that affect
comparability (income)
expense:
Sears and Sears Canada:
Net gain on conversion of
Sears common shares to
Sears Holding common
shares and subsequent sale
(2) $ (26,514)$ -- $ 1,137 $ --
Net gain on conversion of
Sears derivative to Sears
Holdings derivative and
mark-to-market adjustments
(2) (14,968) (81,730) 22,607 (81,730)
Income from Sears Canada
special dividend (22,885) -- (22,885) --
McDonalds:
Income from mark-to-market
of McDonalds derivative at
December 31, 2005 (17,254) -- (7,395) --
GMH Communities L.P.:
Income from mark-to-market
of GMH warrants (14,080) (24,190) (6,267) (24,190)
Net gain on exercise of
warrants in 2004 -- (29,452) -- (29,452)
Excess distributions
received on loan -- (7,809) -- (7,809)
Alexander's:
Net gain on sale of 731
Lexington Avenue
condominiums (30,895) -- (2,761) --
Stock appreciation rights 9,104 25,340 (6,324) 4,460
Bonuses to four executive
Vice Presidents in
connection with
731 Lexington Avenue
development and leasing -- 6,500 -- 6,500
Newkirk:
Net gain on disposition of
T-2 assets (16,053) -- (16,053) --
Net losses on early
extinguishment of debt
and related write-off of
deferred financing costs 9,455 -- 1,463 --
Expense from payment of
promoted obligation to
partner 8,470 -- 8,470 --
Impairment losses 6,602 2,901 -- --
Net gain on sale of Newkirk
MLP option units -- (7,494) -- --
Other:
Write-off of perpetual
preferred share and unit
issuance costs upon their
redemption 22,869 3,895 750 --
Net gain on disposition of
preferred investment in
3700 Las Vegas boulevard (12,110) -- (12,110) --
Net gain on disposition of
Prime Group common shares (9,017) -- -- --
Net gain on sale of a
portion of investment in
Americold -- (18,789) -- (18,789)
Impairment loss - Starwood
Ceruzzi joint venture -- 3,833 -- --
Other, net (1,508) 604 2,134 (255)
--------- --------- --------- ---------
(108,784) (126,391) (37,234) (151,265)
The Company's share of Toys
"R" Us negative FFO 32,918 -- 33,376 --
--------- --------- --------- ---------
(75,866) (126,391) (3,858) (151,265)
Minority limited partners'
share of above adjustments 8,098 15,404 370 17,523
--------- --------- --------- ---------
$ (67,768)$(110,987)$ (3,488)$(133,742)
========= ========= ========= =========
Per share $ (0.46)$ (0.83)$ (0.02)$ (0.99)
========= ========= ========= =========
FFO as adjusted $ 689,451 $ 639,056 $ 190,613 $ 165,699
========= ========= ========= =========
Per Share $ 4.75 $ 4.80 $ 1.24 $ 1.23
========= ========= ========= =========
(1) See page 4 for a reconciliation of net income applicable to
common shares to FFO for the quarters and years ended December 31,
2005 and 2004.
(2) The aggregate net gain recognized from inception to December 31,
2005 on the Sears Holding derivative position and owned shares was
$124,266,000.
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, 2005 AND 2004
FOR THE YEAR ENDED FOR THE QUARTER
DECEMBER 31, ENDED DECEMBER 31,
--------------------- --------------------
(Amounts in thousands,
except per share amounts) 2005 2004 2005 2004
---------- ---------- ---------- ---------
Revenues $2,547,628 $1,712,713 $ 697,219 $ 505,977
========== ========== ========== =========
Income from continuing
operations $ 641,038 $ 673,103 $ 138,459 $ 290,040
Income (loss) from
discontinued operations 32,440 77,013 (44) (51)
---------- ---------- ---------- ---------
Income before allocation to
limited partners 673,478 750,116 138,415 289,989
Minority limited partners'
interest in the Operating
Partnership (66,755) (88,091) (12,243) (32,647)
Perpetual preferred unit
distributions of the
Operating Partnership (67,119) (69,108) (6,211) (17,388)
---------- ---------- ---------- ---------
Net income 539,604 592,917 119,961 239,954
Preferred share dividends (46,501) (21,920) (14,211) (6,351)
---------- ---------- ---------- ---------
Net income applicable to
common shares $ 493,103 $ 570,997 $ 105,750 $ 233,603
========== ========== ========== =========
Net income per common
share:
Basic $ 3.69 $ 4.56 $ .75 $ 1.84
========== ========== ========== =========
Diluted $ 3.50 $ 4.35 $ .71 $ 1.73
========== ========== ========== =========
Average number of
common shares and
share equivalents
outstanding:
Basic 133,768 125,241 140,695 127,071
========== ========== ========== =========
Diluted 141,012 133,135 148,232 135,142
========== ========== ========== =========
FFO applicable to common
shares plus assumed
conversions $ 757,219 $ 750,043 $ 194,101 $ 299,441
========== ========== ========== =========
FFO per diluted share $ 5.21 $ 5.63 $ 1.26 $ 2.22
========== ========== ========== =========
Average number of
common shares and
share equivalents
outstanding used
for determining
FFO per diluted
share 145,210 133,135 153,763 135,142
========== ========== ========== =========
The following table reconciles FFO and net income:
(Amounts in thousands) For The Year For The Quarter
Ended December 31, Ended December 31,
--------------------------------------
Reconciliation of Net Income
to FFO: 2005 2004 2005 2004
--------- --------- --------- --------
Net income $ 539,604 $ 592,917 $ 119,961 $239,954
Depreciation and amortization
of real property 276,921 228,298 76,463 63,367
Net gains on sale of real
estate (31,614) (75,755) -- --
Proportionate share of
adjustments to equity in net
income of partially-owned
entities to arrive at FFO:
Depreciation and
amortization of real
property 42,052 49,440 20,474 9,817
Net losses (gains) on sale
of real estate (2,918) (3,048) 476 (226)
Income tax effect of Toys
"R" Us adjustments
included above (4,613) -- (4,284) --
Minority limited partners'
share of above adjustments (31,990) (27,991) (9,663) (9,159)
--------- --------- --------- --------
FFO 787,442 763,861 203,427 303,753
Preferred share dividends (46,501) (21,920) (14,211) (6,351)
--------- --------- --------- --------
FFO applicable to common shares 740,941 741,941 189,216 297,402
Interest on 3.875% exchangeable
senior debentures 15,335 -- 4,663 --
Series A convertible preferred
share dividends 943 1,068 222 263
Series B-1 and B-2 convertible
preferred unit distributions -- 4,710 -- 1,522
Series F-1 convertible
preferred unit distributions -- 743 -- 254
Series E-1 convertible
preferred unit distributions -- 1,581 -- --
--------- --------- --------- --------
FFO applicable to common shares
plus assumed conversions $ 757,219 $ 750,043 $ 194,101 $299,441
========= ========= ========= ========
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 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 2 of this press release.
CONTACT: For Vornado Realty Trust
Joseph Macnow, 201-587-1000
SOURCE: Vornado Realty Trust