Vornado Reports Third Quarter Results
PARAMUS, N.J.--(BUSINESS WIRE)--Nov. 1, 2005--VORNADO REALTY TRUST (New York Stock Exchange: VNO) today reported:
Third Quarter 2005 Results
NET INCOME applicable to common shares for the quarter ended September 30, 2005 was $27.2 million, or $.19 per diluted share, versus $104.5 million, or $0.79 per diluted share, for the quarter ended September 30, 2004. Net income for the three months ended September 30, 2005 includes $3.5 million of net gains on sales of real estate of partially-owned entities, as well as certain items that affect comparability which are listed in the table below. Net income for the three months ended September 30, 2004 includes $9.9 million of net gains 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, reduced net income by $58.4 million or $0.41 per diluted share for the quarter ended September 30, 2005 and had no impact on the prior year's quarter.
FUNDS FROM OPERATIONS applicable to common shares plus assumed conversions (FFO)(1) for the quarter ended September 30, 2005 was $93.3 million(1), or $0.65 per diluted share, compared to $156.7 million(1), or $1.18 per diluted share, for the prior year's quarter. Adjusting FFO for certain items that affect comparability, third quarter 2005 FFO is 12.9% lower than third quarter 2004 on a per share basis, as detailed below:
FOR THE THREE MONTHS ENDED
-------------------------------------------
(Amounts in thousands,
except per share amounts) September 30, 2005September 30, 2004
--------------------- ---------------------
Amount Per Share Amount Per Share
---------- ---------- ---------- ----------
FFO as shown above (1) $ 93,272 $ 0.65 $ 156,703 $ 1.18
========== ==========
Adjustments:
Expense from mark-to-
market of Sears Holdings
derivative position 66,627 --
Write-off of perpetual
preferred share and unit
issuance costs 16,067 --
Loss on early
extinguishment of debt
of partially owned
entities - Newkirk MLP 7,992 --
Alexander's stock
appreciation rights
compensation expense 5,961 8,796
Impairment losses of
partially-owned
entities - Newkirk MLP 2,586 759
Income from mark-to-
market of McDonalds
derivative position (9,859) --
Net gain on disposition
of Prime Group common
shares (9,017) --
Income from mark-to-
market of GMH
Communities LP warrants (5,250) --
Net gain on sale of
Alexander's condominiums (1,960) --
Income from Monmouth Mall
prepayment penalty (2,173) --
Costs of acquisition not
consummated -- 1,475
Gain on sale of land
parcels - Alexander's -- (1,274)
Limited partners' share
of above adjustments (9,495) (1,250)
---------- ----------
FFO, as adjusted for
comparability $ 154,751 $ 1.08 $ 165,209 $ 1.24
========== ========== ========== ==========
(1) See page 4 for a reconciliation of net income applicable to common
shares to FFO for the quarters ended September 30, 2005 and 2004.
Nine Months Ended September 30, 2005 Results
Net income applicable to common shares for the nine months ended September 30, 2005 was $387.4 million, or $2.79 per diluted share, versus $337.4 million, or $2.59 per diluted share, for the nine months ended September 30, 2004. Net income for the nine months ended September 30, 2005 includes $35.3 million of net gains on sale of real estate, as well as certain items that affect comparability which are listed in the table below. Net income for the nine months ended September 30, 2004 includes $78.6 million of net gains 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 by $95.1 million, or $0.67 per diluted share in the nine months ended September 30, 2005 and decreased net income by $46.7 million, or $.36 per diluted share in the nine months ended September 30, 2004.
FFO(1) for the nine months ended September 30, 2005 was $563.4 million, or $3.95 per diluted share, compared to $446.9 million, or $3.41 per diluted share, for the prior year's nine months. Adjusting FFO for certain items that affect comparability, the nine months ended 2005 FFO is 2.0% lower than the nine months ended 2004 on a per share basis, as detailed below:
FOR THE NINE MONTHS ENDED
-------------------------------------------
(Amounts in thousands,
except per share amounts) September 30, 2005September 30, 2004
--------------------- ---------------------
Amount Per Share Amount Per Share
---------- ---------- ---------- ----------
FFO as shown above $ 563,377 $ 3.95 $ 446,925 $ 3.41
========== ==========
Adjustments:
Net gain on conversion of
Sears common shares and
derivative position to
Sears Holdings common
shares and derivative
position (2) (86,094) --
Net gain on sale of
Alexander's condominiums (28,134) --
Income from mark-to-market
of McDonalds derivative
position (9,859) --
Net gain on disposition of
Prime Group common shares (9,017) --
Income from mark-to-market
of GMH Communities LP
warrants (7,813) --
Income from Monmouth Mall
prepayment penalty (2,173) --
Net gain on sales of land
parcels and condominiums (1,469) (2,050)
Write-off of perpetual
preferred share and unit
issuance costs 22,119 3,895
Expense from mark-to-
market of Sears Holdings
derivative position (2) 20,868 --
Alexander's stock
appreciation rights
compensation expense 15,428 20,880
Losses on early
extinguishment of debt of
partially-owned entities 7,992 1,434
Impairment losses of
partially-owned entities 6,602 6,734
Net gain on sale of
Newkirk MLP option units -- (7,494)
Costs of acquisition not
consummated -- 1,475
Limited partners' share of
above adjustments 7,896 (3,449)
---------- ----------
FFO, as adjusted for
comparability $ 499,723 $ 3.50 $ 468,350 $ 3.57
========== ========== ========== ==========
(1) See page 4 for a reconciliation of net income applicable to common
shares to FFO for the nine months ended September 30, 2005 and
2004.
(2) The aggregate net gain recognized on the shares directly held by
the Company and the derivative position was $146,955,000 from
inception to September 30, 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 NINE MONTHS ENDED
SEPTEMBER 30, 2005 AND 2004
FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED
ENDED SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
(Amounts in
thousands, except
per share amounts) 2005 2004 2005 2004
------------ ------------ ------------ ------------
Revenues $ 656,955 $ 415,295 $ 1,850,409 $ 1,206,736
============ ============ ============ ============
Income from
continuing
operations $ 69,321 $ 132,088 $ 502,579 $ 383,063
(Loss) income from
discontinued
operations (22) 9,885 32,484 77,064
------------ ------------ ------------ ------------
Income before
allocation to
limited partners 69,299 141,973 535,063 460,127
Limited partners'
interest in the
Operating
Partnership (3,342) (16,116) (54,512) (55,584)
Perpetual preferred
unit distributions
of the Operating
Partnership (27,215) (17,334) (60,908) (51,580)
------------ ------------ ------------ ------------
Net income 38,742 108,523 419,643 352,963
Preferred share
dividends (11,519) (4,022) (32,290) (15,569)
------------ ------------ ------------ ------------
Net income
applicable to
common shares $ 27,223 $ 104,501 $ 387,353 $ 337,394
============ ============ ============ ============
Net income per
common share:
Basic $ 0.20 $ 0.83 $ 2.94 $ 2.71
============ ============ ============ ============
Diluted $ 0.19 $ 0.79 $ 2.79 $ 2.59
============ ============ ============ ============
Average number
of common
shares and
share
equivalents
outstanding:
Basic 136,452 126,397 131,682 124,624
============ ============ ============ ============
Diluted 143,811 132,477 138,876 131,043
============ ============ ============ ============
FFO applicable to
common shares plus
assumed
conversions $ 93,272 $ 156,703 $ 563,377 $ 446,925
============ ============ ============ ============
FFO per diluted
share $ 0.65 $ 1.18 $ 3.95 $ 3.41
============ ============ ============ ============
Average number
of common
shares and
share
equivalents
outstanding
used for
determining
FFO per
diluted share 144,197 132,477 142,589 131,043
============ ============ ============ ============
The following table reconciles FFO and net income:
For The Three Months For The Nine Months
(Amounts in thousands) Ended September 30, Ended September 30,
--------------------- ---------------------
Reconciliation of Net
Income to FFO: 2005 2004 2005 2004
---------- ---------- ---------- ----------
Net income $ 38,742 $ 108,523 $ 419,643 $ 352,963
Depreciation and
amortization of real
property 68,164 56,799 200,458 164,931
Net gain on sale of real
estate -- (9,850) (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 9,250 13,080 21,837 39,623
Net gain on sale of
real estate (3,509) (43) (3,723) (2,822)
Limited partners' share of
above adjustments (8,082) (8,050) (22,327) (18,832)
---------- ---------- ---------- ----------
FFO 104,565 160,459 584,274 460,108
Preferred share dividends (11,519) (4,022) (32,290) (15,569)
---------- ---------- ---------- ----------
FFO applicable to common
shares 93,046 156,437 551,984 444,539
Interest on 3.875%
exchangeable senior
debentures -- -- 10,672 --
Series A convertible
preferred share dividends 226 266 721 805
Series E-1 convertible
preferred unit
distributions -- -- -- 1,581
---------- ---------- ---------- ----------
FFO applicable to common
shares plus
assumed conversions $ 93,272 $ 156,703 $ 563,377 $ 446,925
========== ========== ========== ==========
(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 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 pages 1 and 2 of this press release.
CONTACT: Vornado Realty Trust
Joseph Macnow, 201-587-1000
SOURCE: Vornado Realty Trust