UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
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| ☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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| For the quarterly period ended: | June 30, 2020March 31, 2021
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| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the transition period from: | | to | |
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| Commission File Number: | 001-11954 | (Vornado Realty Trust) |
| Commission File Number: | 001-34482 | (Vornado Realty L.P.) |
Vornado Realty Trust
Vornado Realty L.P.
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Commission File Number: | 001-11954 | (Vornado Realty Trust) |
Commission File Number: | 001-34482 | (Vornado Realty L.P.) |
Vornado Realty Trust
Vornado Realty L.P.
(Exact name of registrants as specified in its charter)
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| Vornado Realty Trust | | Maryland | | 22-1657560 |
| | (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification Number) |
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Vornado Realty TrustL.P. | | MarylandDelaware | | 22-165756013-3925979 |
| | (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification Number) |
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Vornado Realty L.P. | | Delaware | | 13-3925979 |
| | (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification Number) |
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| 888 Seventh Avenue, | New York, | New York | 10019 |
| (Address of principal executive offices) (Zip Code) |
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| (212) | 894-7000 |
| (Registrants’ telephone number, including area code) |
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| N/A |
| (Former name, former address and former fiscal year, if changed since last report) |
.Securities registered pursuant to Section 12(b) of the Act:
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| Registrant | | Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| Vornado Realty Trust | | Common Shares of beneficial interest, $.04 par value per share | | VNO | | New York Stock Exchange |
| | Cumulative Redeemable Preferred Shares of beneficial interest, liquidation preference $25.00 per share: | | | | |
| Vornado Realty Trust | | 5.70% Series K | | VNO/PK | | New York Stock Exchange |
| Vornado Realty Trust | | 5.40% Series L | | VNO/PL | | New York Stock Exchange |
| Vornado Realty Trust | | 5.25% Series M | | VNO/PM | | New York Stock Exchange |
| Vornado Realty Trust | | 5.25% Series N | | VNO/PN | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Vornado Realty Trust: Yes ☑ No ☐ Vornado Realty L.P.: Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Vornado Realty Trust: Yes ☑ No ☐ Vornado Realty L.P.: Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” "non-accelerated filer," “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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| Vornado Realty Trust: | | |
| ☑ | Large Accelerated Filer | | ☐ | Accelerated Filer |
| ☐ | Non-Accelerated Filer | | ☐ | Smaller Reporting Company |
| | | | ☐ | Emerging Growth Company |
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| Vornado Realty L.P.: | | |
| ☐ | Large Accelerated Filer | | ☐ | Accelerated Filer |
| ☑ | Non-Accelerated Filer | | ☐ | Smaller Reporting Company |
| | | | ☐ | Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Vornado Realty Trust: Yes ☐ No ☑ Vornado Realty L.P.: Yes ☐ No ☑
Securities registered pursuant to Section 12(b) of the Act:
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Registrant | | Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Vornado Realty Trust | | Common Shares of beneficial interest, $.04 par value per share | | VNO | | New York Stock Exchange |
| | Cumulative Redeemable Preferred Shares of beneficial interest, liquidation preference $25.00 per share: | | | | |
Vornado Realty Trust | | 5.70% Series K | | VNO/PK | | New York Stock Exchange |
Vornado Realty Trust | | 5.40% Series L | | VNO/PL | | New York Stock Exchange |
Vornado Realty Trust | | 5.25% Series M | | VNO/PM | | New York Stock Exchange |
As of June 30, 2020, 191,151,142March 31, 2021, 191,464,658 of Vornado Realty Trust’s common shares of beneficial interest are outstanding.
EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2020March 31, 2021 of Vornado Realty Trust and Vornado Realty L.P. Unless stated otherwise or the context otherwise requires, references to “Vornado” refer to Vornado Realty Trust, a Maryland real estate investment trust (“REIT”), and references to the “Operating Partnership” refer to Vornado Realty L.P., a Delaware limited partnership. References to the “Company,” “we,” “us”��us” and “our” mean collectively Vornado, the Operating Partnership and those subsidiaries consolidated by Vornado.
The Operating Partnership is the entity through which we conduct substantially all of our business and own, either directly or through subsidiaries, substantially all of our assets. Vornado is the sole general partner and also a 92.7% limited partner of the Operating Partnership. As the sole general partner of the Operating Partnership, Vornado has exclusive control of the Operating Partnership’s day-to-day management.
Under the limited partnership agreement of the Operating Partnership, unitholders may present their Class A units for redemption at any time (subject to restrictions agreed upon at the time of issuance of the units that may restrict such right for a period of time). Class A units may be tendered for redemption to the Operating Partnership for cash; Vornado, at its option, may assume that obligation and pay the holder either cash or Vornado common shares on a one-for-one basis. Because the number of Vornado common shares outstanding at all times equals the number of Class A units owned by Vornado, the redemption value of each Class A unit is equivalent to the market value of one Vornado common share, and the quarterly distribution to a Class A unitholder is equal to the quarterly dividend paid to a Vornado common shareholder. This one-for-one exchange ratio is subject to specified adjustments to prevent dilution. Vornado generally expects that it will elect to issue its common shares in connection with each such presentation for redemption rather than having the Operating Partnership pay cash. With each such exchange or redemption, Vornado’s percentage ownership in the Operating Partnership will increase. In addition, whenever Vornado issues common shares other than to acquire Class A units of the Operating Partnership, Vornado must contribute any net proceeds it receives to the Operating Partnership and the Operating Partnership must issue to Vornado an equivalent number of Class A units of the Operating Partnership. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT.
The Company believes that combining the quarterly reports on Form 10-Q of Vornado and the Operating Partnership into this single report provides the following benefits:
•enhances investors’ understanding of Vornado and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
•eliminates duplicative disclosure and provides a more streamlined and readable presentation because a substantial portion of the disclosure applies to both Vornado and the Operating Partnership; and
•creates time and cost efficiencies in the preparation of one combined report instead of two separate reports.
The Company believes it is important to understand the few differences between Vornado and the Operating Partnership in the context of how Vornado and the Operating Partnership operate as a consolidated company. The financial results of the Operating Partnership are consolidated into the financial statements of Vornado. Vornado does not have any significant assets, liabilities or operations, other than its investment in the Operating Partnership. The Operating Partnership, not Vornado, generally executes all significant business relationships other than transactions involving the securities of Vornado. The Operating Partnership holds substantially all of the assets of Vornado. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by Vornado, which are contributed to the capital of the Operating Partnership in exchange for Class A units of partnership in the Operating Partnership, and the net proceeds of debt offerings by Vornado, which are contributed to the Operating Partnership in exchange for debt securities of the Operating Partnership, as applicable, the Operating Partnership generates all remaining capital required by the Company’s business. These sources may include working capital, net cash provided by operating activities, borrowings under the revolving credit facility, the issuance of secured and unsecured debt and equity securities and proceeds received from the disposition of certain properties.
To help investors better understand the key differences between Vornado and the Operating Partnership, certain information for Vornado and the Operating Partnership in this report has been separated, as set forth below:
•Item 1. Financial Statements (unaudited), which includes the following specific disclosures for Vornado Realty Trust and Vornado Realty L.P.:
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• | Note 12.•Note 10. Redeemable Noncontrolling Interests •Note 11. Shareholders' Equity/Partners' Capital •Note 17. Income Per Share/Income Per Class A Unit • |
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• | Note 13. Shareholders' Equity/Partners' Capital
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• | Note 20. (Loss) Income Per Share/(Loss) Income Per Class A Unit
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations includes information specific to each entity, where applicable.
This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of Vornado and the Operating Partnership in order to establish that the requisite certifications have been made and that Vornado and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.
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| PART I. | Financial Information: | | Page Number |
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PART I. | Financial Information: | | Page Number |
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| | Consolidated Balance Sheets (Unaudited) as of June 30, 2020March 31, 2021 and December 31, 20192020 | | |
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| | Consolidated Statements of Income (Unaudited) for the Three and Six Months Ended June 30,March 31, 2021 and 2020 and 2019 | | |
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| | Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended June 30,March 31, 2021 and 2020 and 2019 | | |
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| | Consolidated Statements of Changes in Equity (Unaudited) for the Three and Six Months Ended June 30,March 31, 2021 and 2020 and 2019 | | |
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| | Consolidated Statements of Cash Flows (Unaudited) for the SixThree Months Ended June 30,March 31, 2021 and 2020 and 2019 | | |
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| | Consolidated Balance Sheets (Unaudited) as of June 30, 2020March 31, 2021 and December 31, 20192020 | | |
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| | Consolidated Statements of Income (Unaudited) for the Three and Six Months Ended June 30,March 31, 2021 and 2020 and 2019 | | |
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| | Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended June 30,March 31, 2021 and 2020 and 2019 | | |
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| | Consolidated Statements of Changes in Equity (Unaudited) for the Three and Six Months Ended June 30,March 31, 2021 and 2020 and 2019 | | |
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| | Consolidated Statements of Cash Flows (Unaudited) for the SixThree Months Ended June 30,March 31, 2021 and 2020 and 2019 | | |
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| | Vornado Realty Trust and Vornado Realty L.P.: | | |
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| PART II. | Other Information: | | |
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| | | (Amounts in thousands, except unit, share, and per share amounts) | As of | (Amounts in thousands, except unit, share, and per share amounts) | As of |
| | June 30, 2020 | | December 31, 2019 | | March 31, 2021 | | December 31, 2020 |
| ASSETS | | | | ASSETS | | | |
| Real estate, at cost: | | | | Real estate, at cost: | |
| Land | $ | 2,588,200 |
| | $ | 2,591,261 |
| Land | $ | 2,420,054 | | | $ | 2,420,054 | |
| Buildings and improvements | 7,975,871 |
| | 7,953,163 |
| Buildings and improvements | 7,953,933 | | | 7,933,030 | |
| Development costs and construction in progress | 1,541,432 |
| | 1,490,614 |
| Development costs and construction in progress | 1,701,401 | | | 1,604,637 | |
| Moynihan Train Hall development expenditures | 1,087,669 |
| | 914,960 |
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| | Leasehold improvements and equipment | 127,685 |
| | 124,014 |
| Leasehold improvements and equipment | 132,597 | | | 130,222 | |
| Total | 13,320,857 |
| | 13,074,012 |
| Total | 12,207,985 | | | 12,087,943 | |
| Less accumulated depreciation and amortization | (3,106,393 | ) | | (3,015,958 | ) | Less accumulated depreciation and amortization | (3,220,993) | | | (3,169,446) | |
| Real estate, net | 10,214,464 |
| | 10,058,054 |
| Real estate, net | 8,986,992 | | | 8,918,497 | |
| Right-of-use assets | 376,958 |
| | 379,546 |
| Right-of-use assets | 365,929 | | | 367,365 | |
| Cash and cash equivalents | 1,768,459 |
| | 1,515,012 |
| Cash and cash equivalents | 1,636,093 | | | 1,624,482 | |
| Restricted cash | 94,882 |
| | 92,119 |
| Restricted cash | 119,517 | | | 105,887 | |
| Marketable securities | — |
| | 33,313 |
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| | Tenant and other receivables | 118,273 |
| | 95,733 |
| Tenant and other receivables | 74,590 | | | 77,658 | |
| Investments in partially owned entities | 3,648,651 |
| | 3,999,165 |
| Investments in partially owned entities | 3,363,657 | | | 3,491,107 | |
| Real estate fund investments | 17,453 |
| | 222,649 |
| Real estate fund investments | 3,739 | | | 3,739 | |
| 220 Central Park South condominium units ready for sale | 426,623 |
| | 408,918 |
| 220 Central Park South condominium units ready for sale | 130,954 | | | 128,215 | |
| Receivable arising from the straight-lining of rents | 692,931 |
| | 742,206 |
| Receivable arising from the straight-lining of rents | 668,799 | | | 674,075 | |
| Deferred leasing costs, net of accumulated amortization of $186,740 and $196,229 | 348,473 |
| | 353,986 |
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| Identified intangible assets, net of accumulated amortization of $97,489 and $98,587 | 27,660 |
| | 30,965 |
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| Deferred leasing costs, net of accumulated amortization of $198,723 and $196,972 | | Deferred leasing costs, net of accumulated amortization of $198,723 and $196,972 | 375,138 | | | 372,919 | |
| Identified intangible assets, net of accumulated amortization of $90,508 and $93,113 | | Identified intangible assets, net of accumulated amortization of $90,508 and $93,113 | 22,390 | | | 23,856 | |
| Other assets | 307,620 |
| | 355,347 |
| Other assets | 397,339 | | | 434,022 | |
| | $ | 18,042,447 |
| | $ | 18,287,013 |
| | $ | 16,145,137 | | | $ | 16,221,822 | |
| LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | | | LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | | |
| Mortgages payable, net | $ | 5,638,352 |
| | $ | 5,639,897 |
| Mortgages payable, net | $ | 5,573,626 | | | $ | 5,580,549 | |
| Senior unsecured notes, net | 446,279 |
| | 445,872 |
| Senior unsecured notes, net | 446,888 | | | 446,685 | |
| Unsecured term loan, net | 796,236 |
| | 745,840 |
| Unsecured term loan, net | 797,024 | | | 796,762 | |
| Unsecured revolving credit facilities | 1,075,000 |
| | 575,000 |
| Unsecured revolving credit facilities | 575,000 | | | 575,000 | |
| Lease liabilities | 426,059 |
| | 498,254 |
| Lease liabilities | 400,974 | | | 401,008 | |
| Moynihan Train Hall obligation | 1,087,669 |
| | 914,960 |
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| Special dividend/distribution payable | — |
| | 398,292 |
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| | Accounts payable and accrued expenses | 385,956 |
| | 440,049 |
| Accounts payable and accrued expenses | 432,035 | | | 427,202 | |
| Deferred revenue | 49,386 |
| | 59,429 |
| Deferred revenue | 36,925 | | | 40,110 | |
| Deferred compensation plan | 94,081 |
| | 103,773 |
| Deferred compensation plan | 107,889 | | | 105,564 | |
| Other liabilities | 395,604 |
| | 265,754 |
| Other liabilities | 286,961 | | | 294,520 | |
| Total liabilities | 10,394,622 |
| | 10,087,120 |
| Total liabilities | 8,657,322 | | | 8,667,400 | |
| Commitments and contingencies |
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| Commitments and contingencies | 0 | | 0 |
| Redeemable noncontrolling interests: | | | | Redeemable noncontrolling interests: | |
| Class A units - 13,773,407 and 13,298,956 units outstanding | 620,269 |
| | 884,380 |
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| Class A units - 14,004,370 and 13,583,607 units outstanding | | Class A units - 14,004,370 and 13,583,607 units outstanding | 635,658 | | | 507,212 | |
| Series D cumulative redeemable preferred units - 141,401 units outstanding | 4,535 |
| | 4,535 |
| Series D cumulative redeemable preferred units - 141,401 units outstanding | 4,535 | | | 4,535 | |
| Total redeemable noncontrolling partnership units | 624,804 |
| | 888,915 |
| Total redeemable noncontrolling partnership units | 640,193 | | | 511,747 | |
| Redeemable noncontrolling interest in a consolidated subsidiary | 94,112 |
| | — |
| Redeemable noncontrolling interest in a consolidated subsidiary | 94,437 | | | 94,520 | |
| Total redeemable noncontrolling interests | 718,916 |
| | 888,915 |
| Total redeemable noncontrolling interests | 734,630 | | | 606,267 | |
| Shareholders' equity: | | | | Shareholders' equity: | | | |
| Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 36,793,694 and 36,795,640 shares | 891,164 |
| | 891,214 |
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| Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 191,151,142 and 190,985,677 shares | 7,625 |
| | 7,618 |
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| Preferred shares of beneficial interest: 0 par value per share; authorized 110,000,000 shares; issued and outstanding 48,793,402 shares | | Preferred shares of beneficial interest: 0 par value per share; authorized 110,000,000 shares; issued and outstanding 48,793,402 shares | 1,182,311 | | | 1,182,339 | |
| Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 191,464,658 and 191,354,679 shares | | Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 191,464,658 and 191,354,679 shares | 7,638 | | | 7,633 | |
| Additional capital | 8,095,774 |
| | 7,827,697 |
| Additional capital | 8,080,392 | | | 8,192,507 | |
| Earnings less than distributions | (2,415,500 | ) | | (1,954,266 | ) | Earnings less than distributions | (2,871,681) | | | (2,774,182) | |
| Accumulated other comprehensive loss | (82,646 | ) | | (40,233 | ) | Accumulated other comprehensive loss | (60,753) | | | (75,099) | |
| Total shareholders' equity | 6,496,417 |
| | 6,732,030 |
| Total shareholders' equity | 6,337,907 | | | 6,533,198 | |
| Noncontrolling interests in consolidated subsidiaries | 432,492 |
| | 578,948 |
| Noncontrolling interests in consolidated subsidiaries | 415,278 | | | 414,957 | |
| Total equity | 6,928,909 |
| | 7,310,978 |
| Total equity | 6,753,185 | | | 6,948,155 | |
| | $ | 18,042,447 |
| | $ | 18,287,013 |
| | $ | 16,145,137 | | | $ | 16,221,822 | |
See notes to consolidated financial statements (unaudited).
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| | | (Amounts in thousands, except per share amounts) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, | (Amounts in thousands, except per share amounts) | For the Three Months Ended March 31, | |
| | 2020 | | 2019 | | 2020 | | 2019 | | 2021 | | 2020 | |
| REVENUES: | | | | | | | | REVENUES: | | | | |
| Rental revenues | $ | 315,194 |
| | $ | 421,299 |
| | $ | 716,468 |
| | $ | 921,176 |
| Rental revenues | $ | 339,317 | | | $ | 401,274 | | |
| Fee and other income | 27,832 |
| | 41,804 |
| | 71,090 |
| | 76,595 |
| Fee and other income | 40,660 | | | 43,258 | | |
| Total revenues | 343,026 |
| | 463,103 |
| | 787,558 |
| | 997,771 |
| Total revenues | 379,977 | | | 444,532 | | |
| EXPENSES: | | | | | | | | EXPENSES: | | | | |
| Operating | (174,425 | ) | | (220,752 | ) | | (404,432 | ) | | (467,647 | ) | Operating | (190,979) | | | (230,007) | | |
| Depreciation and amortization | (92,805 | ) | | (113,035 | ) | | (185,598 | ) | | (229,744 | ) | Depreciation and amortization | (95,354) | | | (92,793) | | |
| General and administrative | (35,014 | ) | | (38,872 | ) | | (87,848 | ) | | (96,892 | ) | General and administrative | (44,186) | | | (52,834) | | |
| (Expense) benefit from deferred compensation plan liability | (6,356 | ) | | (1,315 | ) | | 4,889 |
| | (6,748 | ) | (Expense) benefit from deferred compensation plan liability | (3,245) | | | 11,245 | | |
| Lease liability extinguishment gain (transaction related costs and impairment losses) | 69,221 |
| | (101,590 | ) | | 69,150 |
| | (101,739 | ) | |
| Transaction related costs and other | | Transaction related costs and other | (843) | | | (71) | | |
| Total expenses | (239,379 | ) | | (475,564 | ) | | (603,839 | ) | | (902,770 | ) | Total expenses | (334,607) | | | (364,460) | | |
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| (Loss) income from partially owned entities | (291,873 | ) | | 22,873 |
| | (272,770 | ) | | 30,193 |
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| Income from partially owned entities | | Income from partially owned entities | 29,073 | | | 19,103 | | |
| Loss from real estate fund investments | (28,042 | ) | | (15,803 | ) | | (211,505 | ) | | (15,970 | ) | Loss from real estate fund investments | (169) | | | (183,463) | | |
| Interest and other investment (loss) income, net | (2,893 | ) | | 7,840 |
| | (8,797 | ) | | 12,885 |
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| Interest and other investment income (loss), net | | Interest and other investment income (loss), net | 1,522 | | | (5,904) | | |
| Income (loss) from deferred compensation plan assets | 6,356 |
| | 1,315 |
| | (4,889 | ) | | 6,748 |
| Income (loss) from deferred compensation plan assets | 3,245 | | | (11,245) | | |
| Interest and debt expense | (58,405 | ) | | (63,029 | ) | | (117,247 | ) | | (165,492 | ) | Interest and debt expense | (50,064) | | | (58,842) | | |
| Net gain on transfer to Fifth Avenue and Times Square JV | — |
| | 2,571,099 |
| | — |
| | 2,571,099 |
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| | Net gains on disposition of wholly owned and partially owned assets | 55,695 |
| | 111,713 |
| | 124,284 |
| | 332,007 |
| Net gains on disposition of wholly owned and partially owned assets | 0 | | | 68,589 | | |
| (Loss) income before income taxes | (215,515 | ) | | 2,623,547 |
| | (307,205 | ) | | 2,866,471 |
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| Income (loss) before income taxes | | Income (loss) before income taxes | 28,977 | | | (91,690) | | |
| Income tax expense | (1,837 | ) | | (26,914 | ) | | (14,650 | ) | | (56,657 | ) | Income tax expense | (1,984) | | | (12,813) | | |
| (Loss) income from continuing operations | (217,352 | ) | | 2,596,633 |
| | (321,855 | ) | | 2,809,814 |
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| Income (loss) from discontinued operations | — |
| | 60 |
| | — |
| | (77 | ) | |
| Net (loss) income | (217,352 | ) | | 2,596,693 |
| | (321,855 | ) | | 2,809,737 |
| |
| Less net loss (income) attributable to noncontrolling interests in: | | | | | | | | |
| | Net income (loss) | | Net income (loss) | 26,993 | | | (104,503) | | |
| Less net (income) loss attributable to noncontrolling interests in: | | Less net (income) loss attributable to noncontrolling interests in: | | |
| Consolidated subsidiaries | 17,768 |
| | (21,451 | ) | | 140,155 |
| | (28,271 | ) | Consolidated subsidiaries | (6,114) | | | 122,387 | | |
| Operating Partnership | 14,364 |
| | (162,515 | ) | | 13,974 |
| | (174,717 | ) | Operating Partnership | (329) | | | (390) | | |
| Net (loss) income attributable to Vornado | (185,220 | ) | | 2,412,727 |
| | (167,726 | ) | | 2,606,749 |
| |
| Net income attributable to Vornado | | Net income attributable to Vornado | 20,550 | | | 17,494 | | |
| Preferred share dividends | (12,530 | ) | | (12,532 | ) | | (25,061 | ) | | (25,066 | ) | Preferred share dividends | (16,467) | | | (12,531) | | |
| NET (LOSS) INCOME attributable to common shareholders | $ | (197,750 | ) | | $ | 2,400,195 |
| | $ | (192,787 | ) | | $ | 2,581,683 |
| |
| | | | | | | | | |
| (LOSS) INCOME PER COMMON SHARE - BASIC: | | | | | | | | |
| Net (loss) income per common share | $ | (1.03 | ) | | $ | 12.58 |
| | $ | (1.01 | ) | | $ | 13.53 |
| |
| NET INCOME attributable to common shareholders | | NET INCOME attributable to common shareholders | $ | 4,083 | | | $ | 4,963 | | |
| | INCOME PER COMMON SHARE - BASIC: | | INCOME PER COMMON SHARE - BASIC: | | |
| | Net income per common share | | Net income per common share | $ | 0.02 | | | $ | 0.03 | | |
| Weighted average shares outstanding | 191,104 |
| | 190,781 |
| | 191,071 |
| | 190,735 |
| Weighted average shares outstanding | 191,418 | | | 191,038 | | |
| | | | | | | | | | | | | |
| (LOSS) INCOME PER COMMON SHARE - DILUTED: | | | | | | | | |
| Net (loss) income per common share | $ | (1.03 | ) | | $ | 12.56 |
| | $ | (1.01 | ) | | $ | 13.51 |
| |
| INCOME PER COMMON SHARE - DILUTED: | | INCOME PER COMMON SHARE - DILUTED: | | |
| | Net income per common share | | Net income per common share | $ | 0.02 | | | $ | 0.03 | | |
| Weighted average shares outstanding | 191,104 |
| | 191,058 |
| | 191,071 |
| | 191,030 |
| Weighted average shares outstanding | 192,031 | | | 191,113 | | |
See notes to consolidated financial statements (unaudited).
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Net (loss) income | $ | (217,352 | ) | | $ | 2,596,693 |
| | $ | (321,855 | ) | | $ | 2,809,737 |
|
| Other comprehensive income (loss): | | | | | | | |
| Increase (reduction) in value of interest rate swaps and other | 78 |
| | (28,512 | ) | | (45,399 | ) | | (45,541 | ) |
| Other comprehensive income (loss) of nonconsolidated subsidiaries | — |
| | 25 |
| | 8 |
| | (960 | ) |
Amounts reclassified from accumulated other comprehensive loss relating to a nonconsolidated subsidiary | — |
| | — |
| | — |
| | (2,311 | ) |
| Comprehensive (loss) income | (217,274 | ) | | 2,568,206 |
| | (367,246 | ) | | 2,760,925 |
|
| Less comprehensive loss (income) attributable to noncontrolling interests | 32,127 |
| | (182,160 | ) | | 157,107 |
| | (199,906 | ) |
| Comprehensive (loss) income attributable to Vornado | $ | (185,147 | ) | | $ | 2,386,046 |
| | $ | (210,139 | ) | | $ | 2,561,019 |
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, | | |
| 2021 | | 2020 | | | | |
| Net income (loss) | $ | 26,993 | | | $ | (104,503) | | | | | |
| Other comprehensive income (loss): | | | | | | | |
| Increase (reduction) in value of interest rate swaps and other | 11,641 | | | (45,477) | | | | | |
| Other comprehensive income of nonconsolidated subsidiaries | 3,591 | | | 8 | | | | | |
| | | | | | | |
| Comprehensive income (loss) | 42,225 | | | (149,972) | | | | | |
| Less comprehensive (income) loss attributable to noncontrolling interests | (7,329) | | | 124,980 | | | | | |
| Comprehensive income (loss) attributable to Vornado | $ | 34,896 | | | $ | (24,992) | | | | | |
See notes to consolidated financial statements (unaudited).
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands, except per share amounts) | | | | | | | | | | Accumulated
Other
Comprehensive
Loss | | Non-controlling Interests in Consolidated Subsidiaries | | |
| | | Preferred Shares | | Common Shares | | Additional Capital | | Earnings Less Than Distributions | | | | Total Equity |
| | Shares | | Amount | | Shares | | Amount | | | | | |
| For the Three Months Ended June 30, 2020: | | | | | | | | | | | | | | | | | | |
| Balance as of March 31, 2020 | | 36,796 |
| | $ | 891,211 |
| | 191,116 |
| | $ | 7,624 |
| | $ | 8,112,523 |
| | $ | (2,091,612 | ) | | $ | (82,719 | ) | | $ | 456,185 |
| | $ | 7,293,212 |
|
| Net loss attributable to Vornado | | — |
| | — |
| | — |
| | — |
| | — |
| | (185,220 | ) | | — |
| | — |
| | (185,220 | ) |
| Net loss attributable to nonredeemable noncontrolling interests in consolidated subsidiaries | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (17,904 | ) | | (17,904 | ) |
| Dividends on common shares ($0.66 per share) | | — |
| | — |
| | — |
| | — |
| | — |
| | (126,141 | ) | | — |
| | — |
| | (126,141 | ) |
| Dividends on preferred shares (see Note 13 for dividends per share amounts) | | — |
| | — |
| | — |
| | — |
| | — |
| | (12,530 | ) | | — |
| | — |
| | (12,530 | ) |
| Common shares issued: | | | | | | | | | | | | | | | | | |
|
| Upon redemption of Class A units, at redemption value | | — |
| | — |
| | 22 |
| | 1 |
| | 823 |
| | — |
| | — |
| | — |
| | 824 |
|
| Under dividend reinvestment plan | | — |
| | — |
| | 10 |
| | — |
| | 368 |
| | — |
| | — |
| | — |
| | 368 |
|
| Contributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1,082 |
| | 1,082 |
|
| Distributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (5,295 | ) | | (5,295 | ) |
| Conversion of Series A preferred shares to common shares | | (2 | ) | | (47 | ) | | 4 |
| | — |
| | 47 |
| | — |
| | — |
| | — |
| | — |
|
| Deferred compensation shares and options | | — |
| | — |
| | — |
| | — |
| | 304 |
| | — |
| | — |
| | — |
| | 304 |
|
| Increase in value of interest rate swaps | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 78 |
| | — |
| | 78 |
|
| Adjustments to carry redeemable Class A units at redemption value | | — |
| | — |
| | — |
| | — |
| | (18,291 | ) | | — |
| | — |
| | — |
| | (18,291 | ) |
| Redeemable noncontrolling interests' share of above adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (5 | ) | | — |
| | (5 | ) |
| Other | | — |
| | — |
| | (1 | ) | | — |
| | — |
| | 3 |
| | — |
| | (1,576 | ) | | (1,573 | ) |
| Balance as of June 30, 2020 | | 36,794 |
| | $ | 891,164 |
| | 191,151 |
| | $ | 7,625 |
| | $ | 8,095,774 |
| | $ | (2,415,500 | ) | | $ | (82,646 | ) | | $ | 432,492 |
| | $ | 6,928,909 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands, except per share amounts) | | | | | | | | | | | | Non-controlling Interests in Consolidated Subsidiaries | | |
| | | | | | | | | | | | | | Accumulated
Other
Comprehensive
Loss | | | |
| | Preferred Shares | | Common Shares | | Additional Capital | | Earnings Less Than Distributions | | | | Total Equity |
| Shares | | Amount | | Shares | | Amount | | | | | |
| Balance as of December 31, 2020 | | 48,793 | | | $ | 1,182,339 | | | 191,355 | | | $ | 7,633 | | | $ | 8,192,507 | | | $ | (2,774,182) | | | $ | (75,099) | | | $ | 414,957 | | | $ | 6,948,155 | |
| | | | | | | | | | | | | | | | | | |
| Net income attributable to Vornado | | — | | | — | | | — | | | — | | | — | | | 20,550 | | | — | | | — | | | 20,550 | |
| Net income attributable to nonredeemable noncontrolling interests in consolidated subsidiaries | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 6,197 | | | 6,197 | |
Dividends on common shares ($0.53 per share) | | — | | | — | | | — | | | — | | | — | | | (101,467) | | | — | | | — | | | (101,467) | |
| Dividends on preferred shares (see Note 11 for dividends per share amounts) | | — | | | — | | | — | | | — | | | — | | | (16,467) | | | — | | | — | | | (16,467) | |
| Common shares issued: | | | | | | | | | | | | | | | | | | |
| Upon redemption of Class A units, at redemption value | | — | | | — | | | 107 | | | 4 | | | 4,099 | | | — | | | — | | | — | | | 4,103 | |
| Under employees' share option plan | | — | | | — | | | — | | | — | | | 4 | | | — | | | — | | | — | | | 4 | |
| Under dividend reinvestment plan | | — | | | — | | | 6 | | | — | | | 211 | | | — | | | — | | | — | | | 211 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Distributions | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (5,877) | | | (5,877) | |
| | | | | | | | | | | | | | | | | | |
| Deferred compensation shares and options | | — | | | — | | | (3) | | | — | | | 224 | | | (114) | | | — | | | — | | | 110 | |
| | | | | | | | | | | | | | | | | | |
| Other comprehensive income of nonconsolidated subsidiaries | | — | | | — | | | — | | | — | | | — | | | — | | | 3,591 | | | — | | | 3,591 | |
| Increase in value of interest rate swaps | | — | | | — | | | — | | | — | | | — | | | — | | | 11,642 | | | — | | | 11,642 | |
| Unearned 2018 Out-Performance Plan awards acceleration | | — | | | — | | | — | | | — | | | 10,283 | | | — | | | — | | | — | | | 10,283 | |
| Redeemable Class A unit measurement adjustment | | — | | | — | | | — | | | — | | | (126,936) | | | — | | | — | | | — | | | (126,936) | |
| Redeemable noncontrolling interests' share of above adjustments | | — | | | — | | | — | | | — | | | — | | | — | | | (886) | | | — | | | (886) | |
| Other | | — | | | (28) | | | — | | | 1 | | | — | | | (1) | | | (1) | | | 1 | | | (28) | |
| Balance as of March 31, 2021 | | 48,793 | | | $ | 1,182,311 | | | 191,465 | | | $ | 7,638 | | | $ | 8,080,392 | | | $ | (2,871,681) | | | $ | (60,753) | | | $ | 415,278 | | | $ | 6,753,185 | |
See notes to consolidated financial statements (unaudited).
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED
(UNAUDITED)
| | | (Amounts in thousands, except per share amounts) | (Amounts in thousands, except per share amounts) | | | | | | | | | | Accumulated Other Comprehensive Loss | | Non-controlling Interests in Consolidated Subsidiaries | | | (Amounts in thousands, except per share amounts) | | Non-controlling Interests in Consolidated Subsidiaries | |
| | | Preferred Shares | | Common Shares | | Additional Capital | | Earnings Less Than Distributions | | Total Equity | | Accumulated
Other
Comprehensive
Loss | |
| | Shares | | Amount | | Shares | | Amount | | Accumulated Other Comprehensive Loss | Non-controlling Interests in Consolidated Subsidiaries | | | Preferred Shares | | Common Shares | | Additional Capital | | Earnings Less Than Distributions | | Non-controlling Interests in Consolidated Subsidiaries | Total Equity |
For the Three Months Ended
June 30, 2019: | | | | | | | | | | | | | | | |
| Balance as of March 31, 2019 | | 36,798 |
| | $ | 891,263 |
| | 190,761 |
| | $ | 7,609 |
| | $ | 7,676,770 |
| | $ | (4,120,265 | ) | | $ | (11,385 | ) | $ | 646,900 |
| $ | 5,090,892 |
| |
| | | | Shares | | Amount | | Shares | | Amount | | Additional Capital | | Earnings Less Than Distributions | | Non-controlling Interests in Consolidated Subsidiaries | Total Equity |
| | 36,796 | | | $ | 891,214 | | | 190,986 | | | $ | 7,618 | | | $ | (40,233) | | |
| Cumulative effect of accounting change | | Cumulative effect of accounting change | | — | | | — | | | — | | | — | | | — | | | (16,064) | | | — | | | (16,064) | |
| Net income attributable to Vornado | | — |
| | — |
| | — |
| | — |
| | — |
| | 2,412,727 |
| | — |
| | — |
| | 2,412,727 |
| Net income attributable to Vornado | | — | | | — | | | — | | | — | | | — | | | 17,494 | | | — | | | 17,494 | |
| Net income attributable to noncontrolling interests in consolidated subsidiaries | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 21,451 |
| | 21,451 |
| |
| Net loss attributable to noncontrolling interests in consolidated subsidiaries | | Net loss attributable to noncontrolling interests in consolidated subsidiaries | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (122,387) | | | (122,387) | |
| Dividends on common shares ($0.66 per share) | | — |
| | — |
| | — |
| | — |
| | — |
| | (125,927 | ) | | — |
| | — |
| | (125,927 | ) | Dividends on common shares ($0.66 per share) | | — | | | — | | | — | | | — | | | — | | | (126,106) | | | — | | | — | | | (126,106) | |
| Dividends on preferred shares (see Note 13 for dividends per share amounts) | | — |
| | — |
| | — |
| | — |
| | — |
| | (12,532 | ) | | — |
| | — |
| | (12,532 | ) | |
| Dividends on preferred shares (see Note 11 for dividends per share amounts) | | Dividends on preferred shares (see Note 11 for dividends per share amounts) | | — | | | — | | | — | | | — | | | — | | | (12,531) | | | — | | | — | | | (12,531) | |
| | Common shares issued: | | | | | |
| |
| |
| | | | | | | |
| Common shares issued: | |
| Upon redemption of Class A units, at redemption value | | — |
| | — |
| | 44 |
| | 2 |
| | 2,946 |
| | — |
| | — |
| | — |
| | 2,948 |
| Upon redemption of Class A units, at redemption value | | — | | | — | | | 27 | | | 1 | | | 1,639 | | | — | | | — | | | — | | | 1,640 | |
| Under employees' share option plan | | — |
| | — |
| | 3 |
| | — |
| | 174 |
| | — |
| | — |
| | — |
| | 174 |
| Under employees' share option plan | | — | | | — | | | 69 | | | 3 | | | 3,514 | | | — | | | — | | | — | | | 3,517 | |
| Under dividend reinvestment plan | | — |
| | — |
| | 5 |
| | — |
| | 361 |
| | — |
| | — |
| | — |
| | 361 |
| Under dividend reinvestment plan | | — | | | — | | | 21 | | | 1 | | | 1,381 | | | — | | | — | | | — | | | 1,382 | |
| Contributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 3,121 |
| | 3,121 |
| |
| Contributions: | | Contributions: | |
| Real estate fund investments | | Real estate fund investments | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 3,389 | | | 3,389 | |
| Other | | Other | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,397 | | | 1,397 | |
| Distributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (24,440 | ) | | (24,440 | ) | Distributions | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (5,235) | | | (5,235) | |
| | Conversion of Series A preferred shares to common shares | | (1 | ) | | (7 | ) | | 1 |
| | — |
| | 7 |
| | — |
| | — |
| | — |
| | — |
| Conversion of Series A preferred shares to common shares | | — | | | (3) | | | — | | | — | | | 3 | | | — | | | — | | | — | | | 0 | |
| Deferred compensation shares and options | | — |
| | — |
| | (1 | ) | | — |
| | 266 |
| | — |
| | — |
| | — |
| | 266 |
| Deferred compensation shares and options | | — | | | — | | | 13 | | | 1 | | | 297 | | | (137) | | | — | | | — | | | 161 | |
| | Other comprehensive income of nonconsolidated subsidiaries | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 25 |
| | — |
| | 25 |
| Other comprehensive income of nonconsolidated subsidiaries | | — | | | — | | | — | | | — | | | — | | | — | | | 8 | | | — | | | 8 | |
| Reduction in value of interest rate swaps | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (28,515 | ) | | — |
| | (28,515 | ) | Reduction in value of interest rate swaps | | — | | | — | | | — | | | — | | | — | | | — | | | (45,477) | | | — | | | (45,477) | |
| Adjustments to carry redeemable Class A units at redemption value | | — |
| | — |
| | — |
| | — |
| | 165,225 |
| | — |
| | — |
| | — |
| | 165,225 |
| |
| Unearned 2017 Out-Performance Plan awards acceleration | | Unearned 2017 Out-Performance Plan awards acceleration | | — | | | — | | | — | | | — | | | 10,824 | | | — | | | — | | | — | | | 10,824 | |
| Redeemable Class A unit measurement adjustment | | Redeemable Class A unit measurement adjustment | | — | | | — | | | — | | | — | | | 267,170 | | | — | | | — | | | — | | | 267,170 | |
| Redeemable noncontrolling interests' share of above adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1,806 |
| | — |
| | 1,806 |
| Redeemable noncontrolling interests' share of above adjustments | | — | | | — | | | — | | | — | | | — | | | — | | | 2,983 | | | — | | | 2,983 | |
| Deconsolidation of partially owned entity | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (11,441 | ) | | (11,441 | ) | |
| | Other | | — |
| | — |
| | — |
| | — |
| | (1 | ) | | 2 |
| | 3 |
| | (1 | ) | | 3 |
| Other | | — | | | — | | | — | | | — | | | (2) | | | (2) | | | — | | | 73 | | | 69 | |
| Balance as of June 30, 2019 | | 36,797 |
| | $ | 891,256 |
| | 190,813 |
| | $ | 7,611 |
| | $ | 7,845,748 |
| | $ | (1,845,995 | ) | | $ | (38,066 | ) | | $ | 635,590 |
| | $ | 7,496,144 |
| |
| Balance as of March 31, 2020 | | Balance as of March 31, 2020 | | 36,796 | | | $ | 891,211 | | | 191,116 | | | $ | 7,624 | | | $ | 8,112,523 | | | $ | (2,091,612) | | | $ | (82,719) | | | $ | 456,185 | | | $ | 7,293,212 | |
See notes to consolidated financial statements (unaudited).
10
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED
(UNAUDITED)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands, except per share amounts) | | | | | | | | | | Accumulated
Other
Comprehensive
(Loss) Income | | Non-controlling Interests in Consolidated Subsidiaries | | |
| | | Preferred Shares | | Common Shares | | Additional Capital | | Earnings Less Than Distributions | | | | Total Equity |
| | Shares | | Amount | | Shares | | Amount | | | | | |
For the Six Months Ended
June 30, 2020: | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2019 | | 36,796 |
| | $ | 891,214 |
| | 190,986 |
| | $ | 7,618 |
| | $ | 7,827,697 |
| | $ | (1,954,266 | ) | | $ | (40,233 | ) | | $ | 578,948 |
| | $ | 7,310,978 |
|
| Cumulative effect of accounting change (see Note 4) | | — |
| | — |
| | — |
| | — |
| | — |
| | (16,064 | ) | | — |
| | — |
| | (16,064 | ) |
| Net loss attributable to Vornado | | — |
| | — |
| | — |
| | — |
| | — |
| | (167,726 | ) | | — |
| | — |
| | (167,726 | ) |
| Net loss attributable to nonredeemable noncontrolling interests in consolidated subsidiaries | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (140,291 | ) | | (140,291 | ) |
| Dividends on common shares ($1.32 per share) | | — |
| | — |
| | — |
| | — |
| | — |
| | (252,247 | ) | | — |
| | — |
| | (252,247 | ) |
| Dividends on preferred shares (see Note 13 for dividends per share amounts) | | — |
| | — |
| | — |
| | — |
| | — |
| | (25,061 | ) | | — |
| | — |
| | (25,061 | ) |
| Common shares issued: | | | | | | | | | | | | | | | | | | |
| Upon redemption of Class A units, at redemption value | | — |
| | — |
| | 49 |
| | 2 |
| | 2,462 |
| | — |
| | — |
| | — |
| | 2,464 |
|
| Under employees' share option plan | | — |
| | — |
| | 69 |
| | 3 |
| | 3,514 |
| | — |
| | — |
| | — |
| | 3,517 |
|
| Under dividend reinvestment plan | | — |
| | — |
| | 31 |
| | 1 |
| | 1,749 |
| | — |
| | — |
| | — |
| | 1,750 |
|
| Contributions: | | | | | | | | | | | | | | | | | | |
| Real estate fund investments | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 3,389 |
| | 3,389 |
|
| Other | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2,479 |
| | 2,479 |
|
| Distributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (10,530 | ) | | (10,530 | ) |
| Conversion of Series A preferred shares to common shares | | (2 | ) | | (50 | ) | | 4 |
| | — |
| | 50 |
| | — |
| | — |
| | — |
| | — |
|
| Deferred compensation shares and options | | — |
| | — |
| | 13 |
| | 1 |
| | 601 |
| | (137 | ) | | — |
| | — |
| | 465 |
|
| Other comprehensive income of nonconsolidated subsidiaries | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 8 |
| | — |
| | 8 |
|
| Reduction in value of interest rate swaps | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (45,399 | ) | | — |
| | (45,399 | ) |
| Unearned 2017 Out-Performance Plan awards acceleration | | — |
| | — |
| | — |
| | — |
| | 10,824 |
| | — |
| | — |
| | — |
| | 10,824 |
|
| Adjustments to carry redeemable Class A units at redemption value | | — |
| | — |
| | — |
| | — |
| | 248,879 |
| | — |
| | — |
| | — |
| | 248,879 |
|
| Redeemable noncontrolling interests' share of above adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2,978 |
| | — |
| | 2,978 |
|
| Other | | — |
| | — |
| | (1 | ) | | — |
| | (2 | ) | | 1 |
| | — |
| | (1,503 | ) | | (1,504 | ) |
| Balance as of June 30, 2020 | | 36,794 |
| | $ | 891,164 |
| | 191,151 |
| | $ | 7,625 |
| | $ | 8,095,774 |
| | $ | (2,415,500 | ) | | $ | (82,646 | ) | | $ | 432,492 |
| | $ | 6,928,909 |
|
See notes to consolidated financial statements (unaudited).
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED
(UNAUDITED)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands, except per share amounts) | | | | | | | | | | Accumulated
Other
Comprehensive
Income (Loss) | | Non-controlling Interests in Consolidated Subsidiaries | | |
| | | Preferred Shares | | Common Shares | | Additional
Capital | | Earnings
Less Than
Distributions | | | | Total
Equity |
| | Shares | | Amount | | Shares | | Amount | | | | | |
For the Six Months Ended
June 30, 2019: | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2018 | | 36,800 |
| | $ | 891,294 |
| | 190,535 |
| | $ | 7,600 |
| | $ | 7,725,857 |
| | $ | (4,167,184 | ) | | $ | 7,664 |
| | $ | 642,652 |
| | $ | 5,107,883 |
|
| Net income attributable to Vornado | | — |
| | — |
| | — |
| | — |
| | — |
| | 2,606,749 |
| | — |
| | — |
| | 2,606,749 |
|
| Net income attributable to noncontrolling interests in consolidated subsidiaries | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 28,271 |
| | 28,271 |
|
| Dividends on common shares ($1.32 per share) | | — |
| | — |
| | — |
| | — |
| | — |
| | (251,803 | ) | | — |
| | — |
| | (251,803 | ) |
| Dividends on preferred shares (see Note 13 for dividends per share amounts) | | — |
| | — |
| | — |
| | — |
| | — |
| | (25,066 | ) | | — |
| | — |
| | (25,066 | ) |
| Common shares issued: | | | | | | | | | | | | | | | | | | |
| Upon redemption of Class A units, at redemption value | | — |
| | — |
| | 92 |
| | 4 |
| | 6,125 |
| | — |
| | — |
| | — |
| | 6,129 |
|
| Under employees' share option plan | | — |
| | — |
| | 165 |
| | 7 |
| | 1,338 |
| | (8,692 | ) | | — |
| | — |
| | (7,347 | ) |
| Under dividend reinvestment plan | | — |
| | — |
| | 10 |
| | — |
| | 701 |
| | — |
| | — |
| | — |
| | 701 |
|
| Contributions: | | | | | | | | | | | | | | | | | | |
| Real estate fund investments | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 3,384 |
| | 3,384 |
|
| Other | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 4,931 |
| | 4,931 |
|
| Distributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (32,204 | ) | | (32,204 | ) |
| Conversion of Series A preferred shares to common shares | | (2 | ) | | (38 | ) | | 3 |
| | — |
| | 38 |
| | — |
| | — |
| | — |
| | — |
|
| Deferred compensation shares and options | | — |
| | — |
| | 8 |
| | — |
| | 563 |
| | — |
| | — |
| | — |
| | 563 |
|
| Amount reclassified related to a nonconsolidated subsidiary | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (2,311 | ) | | — |
| | (2,311 | ) |
| Other comprehensive loss of nonconsolidated subsidiaries | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (960 | ) | | — |
| | (960 | ) |
| Reduction in value of interest rate swaps | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (45,544 | ) | | — |
| | (45,544 | ) |
| Unearned 2016 Out-Performance Plan awards acceleration | | — |
| | — |
| | — |
| | — |
| | 11,720 |
| | — |
| | — |
| | — |
| | 11,720 |
|
| Adjustments to carry redeemable Class A units at redemption value | | — |
| | — |
| | — |
| | — |
| | 99,407 |
| | — |
| | — |
| | — |
| | 99,407 |
|
| Redeemable noncontrolling interests' share of above adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 3,082 |
| | — |
| | 3,082 |
|
| Deconsolidation of partially owned entity | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (11,441 | ) | | (11,441 | ) |
| Other | | (1 | ) | | — |
| | — |
| | — |
| | (1 | ) | | 1 |
| | 3 |
| | (3 | ) | | — |
|
| Balance as of June 30, 2019 | | 36,797 |
| | $ | 891,256 |
| | 190,813 |
| | $ | 7,611 |
| | $ | 7,845,748 |
| | $ | (1,845,995 | ) | | $ | (38,066 | ) | | $ | 635,590 |
| | $ | 7,496,144 |
|
See notes to consolidated financial statements (unaudited).
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| | | (Amounts in thousands) | For the Six Months Ended June 30, | (Amounts in thousands) | For the Three Months Ended March 31, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| Cash Flows from Operating Activities: | | | | Cash Flows from Operating Activities: | | | |
| Net (loss) income | $ | (321,855 | ) | | $ | 2,809,737 |
| |
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | | | | |
| Equity in net loss (income) of partially owned entities | 272,770 |
| | (30,193 | ) | |
| Net unrealized loss on real estate fund investments | 211,196 |
| | 16,162 |
| |
| Net income (loss) | | Net income (loss) | $ | 26,993 | | | $ | (104,503) | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |
| Depreciation and amortization (including amortization of deferred financing costs) | 193,920 |
| | 240,866 |
| Depreciation and amortization (including amortization of deferred financing costs) | 100,034 | | | 96,913 | |
| Net gains on disposition of wholly owned and partially owned assets | (124,284 | ) | | (332,007 | ) | |
| Distributions of income from partially owned entities | 79,436 |
| | 31,820 |
| Distributions of income from partially owned entities | 61,157 | | | 48,568 | |
| Non-cash (gain on extinguishment of 608 Fifth Avenue lease liability) impairment loss on 608 Fifth Avenue right-of-use asset | (70,260 | ) | | 75,220 |
| |
| Write-off of lease receivables deemed uncollectible | 38,631 |
| | 15,382 |
| |
| Equity in net income of partially owned entities | | Equity in net income of partially owned entities | (29,073) | | | (19,103) | |
| Stock-based compensation expense | 33,468 |
| | 42,174 |
| Stock-based compensation expense | 21,225 | | | 25,765 | |
| Straight-lining of rents | 15,856 |
| | 3,733 |
| Straight-lining of rents | 5,073 | | | 10,165 | |
| Write-off of lease receivables deemed uncollectible | | Write-off of lease receivables deemed uncollectible | 3,670 | | | 1,044 | |
| Amortization of below-market leases, net | | Amortization of below-market leases, net | (3,166) | | | (4,206) | |
| Net unrealized loss on real estate fund investments | | Net unrealized loss on real estate fund investments | 494 | | | 183,520 | |
| Net gains on disposition of wholly owned and partially owned assets | | Net gains on disposition of wholly owned and partially owned assets | 0 | | | (68,589) | |
| Credit losses on loans receivable | 13,369 |
| | — |
| Credit losses on loans receivable | 0 | | | 7,261 | |
| Amortization of below-market leases, net | (9,406 | ) | | (11,168 | ) | |
| Decrease (increase) in fair value of marketable securities | 4,938 |
| | (1,773 | ) | |
| Net gain on transfer to Fifth Avenue and Times Square JV | — |
| | (2,571,099 | ) | |
| Real estate impairment losses | — |
| | 26,140 |
| |
| Prepayment penalty on redemption of senior unsecured notes due 2022 | — |
| | 22,058 |
| |
| Decrease in fair value of marketable securities | | Decrease in fair value of marketable securities | 0 | | | 4,938 | |
| Other non-cash adjustments | 4,370 |
| | 3,206 |
| Other non-cash adjustments | 1,348 | | | 3,112 | |
| Changes in operating assets and liabilities: | | | | Changes in operating assets and liabilities: | |
| Real estate fund investments | (6,000 | ) | | (4,000 | ) | Real estate fund investments | (494) | | | (6,000) | |
| Tenant and other receivables, net | (28,864 | ) | | (12,759 | ) | |
| Tenant and other receivables | | Tenant and other receivables | (1,077) | | | (20,938) | |
| Prepaid assets | 3,078 |
| | (5,702 | ) | Prepaid assets | 48,599 | | | (91,878) | |
| Other assets | (12,480 | ) | | (8,498 | ) | Other assets | (20,693) | | | (8,051) | |
| Accounts payable and accrued expenses | (26,611 | ) | | (11,482 | ) | Accounts payable and accrued expenses | 9,842 | | | (7,659) | |
| Other liabilities | (3,557 | ) | | (4,965 | ) | Other liabilities | 253 | | | 1,089 | |
| Net cash provided by operating activities | 267,715 |
| | 292,852 |
| Net cash provided by operating activities | 224,185 | | | 51,448 | |
| | | | | | | | |
| Cash Flows from Investing Activities: | | | | Cash Flows from Investing Activities: | |
| Development costs and construction in progress | | Development costs and construction in progress | (130,318) | | | (169,845) | |
| Distributions of capital from partially owned entities | | Distributions of capital from partially owned entities | 106,005 | | | 1,090 | |
| Additions to real estate | | Additions to real estate | (27,410) | | | (49,251) | |
| Investments in partially owned entities | | Investments in partially owned entities | (4,816) | | | (2,130) | |
| Proceeds from sale of condominium units at 220 Central Park South | 437,188 |
| | 690,734 |
| Proceeds from sale of condominium units at 220 Central Park South | 0 | | | 191,216 | |
| Development costs and construction in progress | (319,294 | ) | | (289,532 | ) | |
| Moynihan Train Hall expenditures | (183,007 | ) | | (205,783 | ) | Moynihan Train Hall expenditures | 0 | | | (98,794) | |
| Additions to real estate | (85,252 | ) | | (120,060 | ) | |
| Proceeds from sales of marketable securities | 28,375 |
| | 167,852 |
| Proceeds from sales of marketable securities | 0 | | | 28,375 | |
| Investments in partially owned entities | (3,157 | ) | | (15,588 | ) | |
| Distributions of capital from partially owned entities | 1,090 |
| | 24,880 |
| |
| Proceeds from transfer of interest in Fifth Avenue and Times Square JV (net of $35,562 of transaction costs and $10,899 of deconsolidated cash and restricted cash) | — |
| | 1,255,756 |
| |
| Proceeds from redemption of 640 Fifth Avenue preferred equity | — |
| | 500,000 |
| |
| Proceeds from sale of real estate and related investments | — |
| | 108,512 |
| |
| Acquisitions of real estate and other | — |
| | (3,260 | ) | |
| Net cash (used in) provided by investing activities | (124,057 | ) | | 2,113,511 |
| |
| Net cash used in investing activities | | Net cash used in investing activities | (56,539) | | | (99,339) | |
See notes to consolidated financial statements (unaudited).
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)
| | | (Amounts in thousands) | For the Six Months Ended June 30, | (Amounts in thousands) | For the Three Months Ended March 31, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| Cash Flows from Financing Activities: | | | | Cash Flows from Financing Activities: | | | |
| Repayments of borrowings | | Repayments of borrowings | $ | (358,331) | | | $ | (2,150) | |
| Proceeds from borrowings | | Proceeds from borrowings | 350,000 | | | 553,062 | |
| Dividends paid on common shares | $ | (624,627 | ) | | $ | (251,803 | ) | Dividends paid on common shares | (101,467) | | | (498,486) | |
| Proceeds from borrowings | 554,297 |
| | 458,955 |
| |
| Dividends paid on preferred shares | | Dividends paid on preferred shares | (16,467) | | | (12,531) | |
| Distributions to noncontrolling interests | | Distributions to noncontrolling interests | (13,338) | | | (40,045) | |
| Debt issuance costs | | Debt issuance costs | (2,904) | | | (124) | |
| Proceeds received from exercise of employee share options and other | | Proceeds received from exercise of employee share options and other | 215 | | | 4,899 | |
| Repurchase of shares related to stock compensation agreements and related tax withholdings and other | | Repurchase of shares related to stock compensation agreements and related tax withholdings and other | (113) | | | (137) | |
| Moynihan Train Hall reimbursement from Empire State Development | 183,007 |
| | 205,783 |
| Moynihan Train Hall reimbursement from Empire State Development | 0 | | | 98,794 | |
| Contributions from noncontrolling interests | 98,268 |
| | 8,315 |
| Contributions from noncontrolling interests | 0 | | | 4,786 | |
| Distributions to noncontrolling interests | (54,440 | ) | | (49,140 | ) | |
| Dividends paid on preferred shares | (37,593 | ) | | (25,066 | ) | |
| Repayments of borrowings | (11,347 | ) | | (1,943,157 | ) | |
| Proceeds received from exercise of employee share options and other | 5,267 |
| | 2,046 |
| |
| Debt issuance costs | (143 | ) | | (13,522 | ) | |
| Repurchase of shares related to stock compensation agreements and related tax withholdings and other | (137 | ) | | (8,692 | ) | |
| Purchase of marketable securities in connection with defeasance of mortgage payable | — |
| | (407,126 | ) | |
| Prepayment penalty on redemption of senior unsecured notes due 2022 | — |
| | (22,058 | ) | |
| Redemption of preferred shares | — |
| | (893 | ) | |
| Net cash provided by (used in) financing activities | 112,552 |
| | (2,046,358 | ) | |
| | Net cash (used in) provided by financing activities | | Net cash (used in) provided by financing activities | (142,405) | | | 108,068 | |
| Net increase in cash and cash equivalents and restricted cash | 256,210 |
| | 360,005 |
| Net increase in cash and cash equivalents and restricted cash | 25,241 | | | 60,177 | |
| Cash and cash equivalents and restricted cash at beginning of period | 1,607,131 |
| | 716,905 |
| Cash and cash equivalents and restricted cash at beginning of period | 1,730,369 | | | 1,607,131 | |
| Cash and cash equivalents and restricted cash at end of period | $ | 1,863,341 |
| | $ | 1,076,910 |
| Cash and cash equivalents and restricted cash at end of period | $ | 1,755,610 | | | $ | 1,667,308 | |
| | | | | | | | |
| Reconciliation of Cash and Cash Equivalents and Restricted Cash: | | | | Reconciliation of Cash and Cash Equivalents and Restricted Cash: | |
| Cash and cash equivalents at beginning of period | $ | 1,515,012 |
| | $ | 570,916 |
| Cash and cash equivalents at beginning of period | $ | 1,624,482 | | | $ | 1,515,012 | |
| Restricted cash at beginning of period | 92,119 |
| | 145,989 |
| Restricted cash at beginning of period | 105,887 | | | 92,119 | |
| Cash and cash equivalents and restricted cash at beginning of period | $ | 1,607,131 |
| | $ | 716,905 |
| Cash and cash equivalents and restricted cash at beginning of period | $ | 1,730,369 | | | $ | 1,607,131 | |
| | | | | | | | |
| Cash and cash equivalents at end of period | $ | 1,768,459 |
| | $ | 922,604 |
| Cash and cash equivalents at end of period | $ | 1,636,093 | | | $ | 1,586,738 | |
| Restricted cash at end of period | 94,882 |
| | 154,306 |
| Restricted cash at end of period | 119,517 | | | 80,570 | |
| Cash and cash equivalents and restricted cash at end of period | $ | 1,863,341 |
| | $ | 1,076,910 |
| Cash and cash equivalents and restricted cash at end of period | $ | 1,755,610 | | | $ | 1,667,308 | |
| | | | | | | | |
| Supplemental Disclosure of Cash Flow Information: | | | | Supplemental Disclosure of Cash Flow Information: | |
| Cash payments for interest, excluding capitalized interest of $21,255 and $39,643 | $ | 107,069 |
| | $ | 165,022 |
| |
| Cash payments for interest, excluding capitalized interest of $10,267 and $11,913 | | Cash payments for interest, excluding capitalized interest of $10,267 and $11,913 | $ | 50,394 | | | $ | 53,997 | |
| Cash payments for income taxes | $ | 9,276 |
| | $ | 28,697 |
| Cash payments for income taxes | $ | 4,002 | | | $ | 6,089 | |
| | | | | | | | |
| Non-Cash Investing and Financing Activities: | | | | Non-Cash Investing and Financing Activities: | |
| Adjustments to carry redeemable Class A units at redemption value | $ | 248,879 |
| | $ | 99,407 |
| |
Reclassification of condominium units from "development costs and construction in progress" to
"220 Central Park South condominium units ready for sale" | 240,707 |
| | 647,683 |
| |
| Redeemable Class A unit measurement adjustment | | Redeemable Class A unit measurement adjustment | $ | (126,936) | | | $ | 267,170 | |
| Accrued capital expenditures included in accounts payable and accrued expenses | 89,036 |
| | 68,900 |
| Accrued capital expenditures included in accounts payable and accrued expenses | 68,986 | | | 65,926 | |
| Write-off of fully depreciated assets | (66,931 | ) | | (93,390 | ) | Write-off of fully depreciated assets | (30,782) | | | (45,115) | |
| Lease liabilities arising from the recognition of right-of-use assets | — |
| | 526,866 |
| |
| Amounts related to our investment in Pennsylvania Real Estate Investment Trust reclassified from "investments in partially owned entities" and "accumulated other comprehensive loss" to "marketable securities" upon conversion of operating partnership units to common shares | — |
| | 54,962 |
| |
| Investments received in exchange for transfer to Fifth Avenue and Times Square JV: | | | | |
| Preferred equity | — |
| | 2,327,750 |
| |
| Common equity | — |
| | 1,449,495 |
| |
| Marketable securities transferred in connection with the defeasance of mortgage payable | — |
| | (407,126 | ) | |
| Defeasance of mortgage payable | — |
| | 390,000 |
| |
| Reclassification from "development costs and construction in progress" to "220 Central Park South condominium units ready for sale" | | Reclassification from "development costs and construction in progress" to "220 Central Park South condominium units ready for sale" | 2,739 | | | 106,479 | |
See notes to consolidated financial statements (unaudited).
VORNADO REALTY L.P.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| | | (Amounts in thousands, except unit amounts) | As of | (Amounts in thousands, except unit amounts) | As of |
| | June 30, 2020 | | December 31, 2019 | | March 31, 2021 | | December 31, 2020 |
| ASSETS | | | | ASSETS | | | |
| Real estate, at cost: | | | | Real estate, at cost: | |
| Land | $ | 2,588,200 |
| | $ | 2,591,261 |
| Land | $ | 2,420,054 | | | $ | 2,420,054 | |
| Buildings and improvements | 7,975,871 |
| | 7,953,163 |
| Buildings and improvements | 7,953,933 | | | 7,933,030 | |
| Development costs and construction in progress | 1,541,432 |
| | 1,490,614 |
| Development costs and construction in progress | 1,701,401 | | | 1,604,637 | |
| Moynihan Train Hall development expenditures | 1,087,669 |
| | 914,960 |
| |
| | Leasehold improvements and equipment | 127,685 |
| | 124,014 |
| Leasehold improvements and equipment | 132,597 | | | 130,222 | |
| Total | 13,320,857 |
| | 13,074,012 |
| Total | 12,207,985 | | | 12,087,943 | |
| Less accumulated depreciation and amortization | (3,106,393 | ) | | (3,015,958 | ) | Less accumulated depreciation and amortization | (3,220,993) | | | (3,169,446) | |
| Real estate, net | 10,214,464 |
| | 10,058,054 |
| Real estate, net | 8,986,992 | | | 8,918,497 | |
| Right-of-use assets | 376,958 |
| | 379,546 |
| Right-of-use assets | 365,929 | | | 367,365 | |
| Cash and cash equivalents | 1,768,459 |
| | 1,515,012 |
| Cash and cash equivalents | 1,636,093 | | | 1,624,482 | |
| Restricted cash | 94,882 |
| | 92,119 |
| Restricted cash | 119,517 | | | 105,887 | |
| Marketable securities | — |
| | 33,313 |
| |
| | Tenant and other receivables | 118,273 |
| | 95,733 |
| Tenant and other receivables | 74,590 | | | 77,658 | |
| Investments in partially owned entities | 3,648,651 |
| | 3,999,165 |
| Investments in partially owned entities | 3,363,657 | | | 3,491,107 | |
| Real estate fund investments | 17,453 |
| | 222,649 |
| Real estate fund investments | 3,739 | | | 3,739 | |
| 220 Central Park South condominium units ready for sale | 426,623 |
| | 408,918 |
| 220 Central Park South condominium units ready for sale | 130,954 | | | 128,215 | |
| Receivable arising from the straight-lining of rents | 692,931 |
| | 742,206 |
| Receivable arising from the straight-lining of rents | 668,799 | | | 674,075 | |
| Deferred leasing costs, net of accumulated amortization of $186,740 and $196,229 | 348,473 |
| | 353,986 |
| |
| Identified intangible assets, net of accumulated amortization of $97,489 and $98,587 | 27,660 |
| | 30,965 |
| |
| Deferred leasing costs, net of accumulated amortization of $198,723 and $196,972 | | Deferred leasing costs, net of accumulated amortization of $198,723 and $196,972 | 375,138 | | | 372,919 | |
| Identified intangible assets, net of accumulated amortization of $90,508 and $93,113 | | Identified intangible assets, net of accumulated amortization of $90,508 and $93,113 | 22,390 | | | 23,856 | |
| Other assets | 307,620 |
| | 355,347 |
| Other assets | 397,339 | | | 434,022 | |
| | $ | 18,042,447 |
| | $ | 18,287,013 |
| | $ | 16,145,137 | | | $ | 16,221,822 | |
| LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | | | LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | | |
| Mortgages payable, net | $ | 5,638,352 |
| | $ | 5,639,897 |
| Mortgages payable, net | $ | 5,573,626 | | | $ | 5,580,549 | |
| Senior unsecured notes, net | 446,279 |
| | 445,872 |
| Senior unsecured notes, net | 446,888 | | | 446,685 | |
| Unsecured term loan, net | 796,236 |
| | 745,840 |
| Unsecured term loan, net | 797,024 | | | 796,762 | |
| Unsecured revolving credit facilities | 1,075,000 |
| | 575,000 |
| Unsecured revolving credit facilities | 575,000 | | | 575,000 | |
| Lease liabilities | 426,059 |
| | 498,254 |
| Lease liabilities | 400,974 | | | 401,008 | |
| Moynihan Train Hall obligation | 1,087,669 |
| | 914,960 |
| |
| Special distribution payable | — |
| | 398,292 |
| |
| | Accounts payable and accrued expenses | 385,956 |
| | 440,049 |
| Accounts payable and accrued expenses | 432,035 | | | 427,202 | |
| Deferred revenue | 49,386 |
| | 59,429 |
| Deferred revenue | 36,925 | | | 40,110 | |
| Deferred compensation plan | 94,081 |
| | 103,773 |
| Deferred compensation plan | 107,889 | | | 105,564 | |
| Other liabilities | 395,604 |
| | 265,754 |
| Other liabilities | 286,961 | | | 294,520 | |
| Total liabilities | 10,394,622 |
| | 10,087,120 |
| Total liabilities | 8,657,322 | | | 8,667,400 | |
| Commitments and contingencies |
|
| |
|
| Commitments and contingencies | 0 | | 0 |
| Redeemable noncontrolling interests: | | | | Redeemable noncontrolling interests: | |
| Class A units - 13,773,407 and 13,298,956 units outstanding | 620,269 |
| | 884,380 |
| |
| Class A units - 14,004,370 and 13,583,607 units outstanding | | Class A units - 14,004,370 and 13,583,607 units outstanding | 635,658 | | | 507,212 | |
| Series D cumulative redeemable preferred units - 141,401 units outstanding | 4,535 |
| | 4,535 |
| Series D cumulative redeemable preferred units - 141,401 units outstanding | 4,535 | | | 4,535 | |
| Total redeemable noncontrolling partnership units | 624,804 |
| | 888,915 |
| Total redeemable noncontrolling partnership units | 640,193 | | | 511,747 | |
| Redeemable noncontrolling interest in a consolidated subsidiary | 94,112 |
| | — |
| Redeemable noncontrolling interest in a consolidated subsidiary | 94,437 | | | 94,520 | |
| Total redeemable noncontrolling interests | 718,916 |
| | 888,915 |
| Total redeemable noncontrolling interests | 734,630 | | | 606,267 | |
| Partners' equity: | | | | Partners' equity: | | | |
| Partners' capital | 8,994,563 |
| | 8,726,529 |
| Partners' capital | 9,270,341 | | | 9,382,479 | |
| Earnings less than distributions | (2,415,500 | ) | | (1,954,266 | ) | Earnings less than distributions | (2,871,681) | | | (2,774,182) | |
| Accumulated other comprehensive loss | (82,646 | ) | | (40,233 | ) | Accumulated other comprehensive loss | (60,753) | | | (75,099) | |
| Total partners' equity | 6,496,417 |
| | 6,732,030 |
| Total partners' equity | 6,337,907 | | | 6,533,198 | |
| Noncontrolling interests in consolidated subsidiaries | 432,492 |
| | 578,948 |
| Noncontrolling interests in consolidated subsidiaries | 415,278 | | | 414,957 | |
| Total equity | 6,928,909 |
| | 7,310,978 |
| Total equity | 6,753,185 | | | 6,948,155 | |
| | $ | 18,042,447 |
| | $ | 18,287,013 |
| | $ | 16,145,137 | | | $ | 16,221,822 | |
See notes to consolidated financial statements (unaudited).
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| | | (Amounts in thousands, except per unit amounts) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, | (Amounts in thousands, except per unit amounts) | For the Three Months Ended March 31, | |
| | 2020 | | 2019 | | 2020 | | 2019 | | 2021 | | 2020 | |
| REVENUES: | | | | | | | | REVENUES: | | | | |
| Rental revenues | $ | 315,194 |
| | $ | 421,299 |
| | $ | 716,468 |
| | $ | 921,176 |
| Rental revenues | $ | 339,317 | | | $ | 401,274 | | |
| Fee and other income | 27,832 |
| | 41,804 |
| | 71,090 |
| | 76,595 |
| Fee and other income | 40,660 | | | 43,258 | | |
| Total revenues | 343,026 |
| | 463,103 |
| | 787,558 |
| | 997,771 |
| Total revenues | 379,977 | | | 444,532 | | |
| EXPENSES: | | | | | | | | EXPENSES: | | | | |
| Operating | (174,425 | ) | | (220,752 | ) | | (404,432 | ) | | (467,647 | ) | Operating | (190,979) | | | (230,007) | | |
| Depreciation and amortization | (92,805 | ) | | (113,035 | ) | | (185,598 | ) | | (229,744 | ) | Depreciation and amortization | (95,354) | | | (92,793) | | |
| General and administrative | (35,014 | ) | | (38,872 | ) | | (87,848 | ) | | (96,892 | ) | General and administrative | (44,186) | | | (52,834) | | |
| (Expense) benefit from deferred compensation plan liability | (6,356 | ) | | (1,315 | ) | | 4,889 |
| | (6,748 | ) | (Expense) benefit from deferred compensation plan liability | (3,245) | | | 11,245 | | |
| Lease liability extinguishment gain (transaction related costs and impairment losses) | 69,221 |
| | (101,590 | ) | | 69,150 |
| | (101,739 | ) | |
| Transaction related costs and other | | Transaction related costs and other | (843) | | | (71) | | |
| Total expenses | (239,379 | ) | | (475,564 | ) | | (603,839 | ) | | (902,770 | ) | Total expenses | (334,607) | | | (364,460) | | |
| | | | | | | | | | | | | |
| (Loss) income from partially owned entities | (291,873 | ) | | 22,873 |
| | (272,770 | ) | | 30,193 |
| |
| Income from partially owned entities | | Income from partially owned entities | 29,073 | | | 19,103 | | |
| Loss from real estate fund investments | (28,042 | ) | | (15,803 | ) | | (211,505 | ) | | (15,970 | ) | Loss from real estate fund investments | (169) | | | (183,463) | | |
| Interest and other investment (loss) income, net | (2,893 | ) | | 7,840 |
| | (8,797 | ) | | 12,885 |
| |
| Interest and other investment income (loss), net | | Interest and other investment income (loss), net | 1,522 | | | (5,904) | | |
| Income (loss) from deferred compensation plan assets | 6,356 |
| | 1,315 |
| | (4,889 | ) | | 6,748 |
| Income (loss) from deferred compensation plan assets | 3,245 | | | (11,245) | | |
| Interest and debt expense | (58,405 | ) | | (63,029 | ) | | (117,247 | ) | | (165,492 | ) | Interest and debt expense | (50,064) | | | (58,842) | | |
| Net gain on transfer to Fifth Avenue and Times Square JV | — |
| | 2,571,099 |
| | — |
| | 2,571,099 |
| |
| | Net gains on disposition of wholly owned and partially owned assets | 55,695 |
| | 111,713 |
| | 124,284 |
| | 332,007 |
| Net gains on disposition of wholly owned and partially owned assets | 0 | | | 68,589 | | |
| (Loss) income before income taxes | (215,515 | ) | | 2,623,547 |
| | (307,205 | ) | | 2,866,471 |
| |
| Income (loss) before income taxes | | Income (loss) before income taxes | 28,977 | | | (91,690) | | |
| Income tax expense | (1,837 | ) | | (26,914 | ) | | (14,650 | ) | | (56,657 | ) | Income tax expense | (1,984) | | | (12,813) | | |
| (Loss) income from continuing operations | (217,352 | ) | | 2,596,633 |
| | (321,855 | ) | | 2,809,814 |
| |
| Income (loss) from discontinued operations | — |
| | 60 |
| | — |
| | (77 | ) | |
| Net (loss) income | (217,352 | ) | | 2,596,693 |
| | (321,855 | ) | | 2,809,737 |
| |
| Less net loss (income) attributable to noncontrolling interests in consolidated subsidiaries | 17,768 |
| | (21,451 | ) | | 140,155 |
| | (28,271 | ) | |
| Net (loss) income attributable to Vornado Realty L.P. | (199,584 | ) | | 2,575,242 |
| | (181,700 | ) | | 2,781,466 |
| |
| | Net income (loss) | | Net income (loss) | 26,993 | | | (104,503) | | |
| Less net (income) loss attributable to noncontrolling interests in consolidated subsidiaries | | Less net (income) loss attributable to noncontrolling interests in consolidated subsidiaries | (6,114) | | | 122,387 | | |
| Net income attributable to Vornado Realty L.P. | | Net income attributable to Vornado Realty L.P. | 20,879 | | | 17,884 | | |
| Preferred unit distributions | (12,571 | ) | | (12,573 | ) | | (25,143 | ) | | (25,148 | ) | Preferred unit distributions | (16,508) | | | (12,572) | | |
| NET (LOSS) INCOME attributable to Class A unitholders | $ | (212,155 | ) | | $ | 2,562,669 |
| | $ | (206,843 | ) | | $ | 2,756,318 |
| |
| | | | | | | | | |
| (LOSS) INCOME PER CLASS A UNIT - BASIC: | | | | | | | | |
| Net (loss) income per Class A unit | $ | (1.05 | ) | | $ | 12.58 |
| | $ | (1.05 | ) | | $ | 13.53 |
| |
| NET INCOME attributable to Class A unitholders | | NET INCOME attributable to Class A unitholders | $ | 4,371 | | | $ | 5,312 | | |
| | INCOME PER CLASS A UNIT - BASIC: | | INCOME PER CLASS A UNIT - BASIC: | | |
| | Net income per Class A unit | | Net income per Class A unit | $ | 0.02 | | | $ | 0 | | |
| Weighted average units outstanding | 203,512 |
| | 202,924 |
| | 203,441 |
| | 202,848 |
| Weighted average units outstanding | 204,072 | | | 203,370 | | |
| | | | | | | | | | | | | |
| (LOSS) INCOME PER CLASS A UNIT - DILUTED: | | | | | | | | |
| Net (loss) income per Class A unit | $ | (1.05 | ) | | $ | 12.54 |
| | $ | (1.05 | ) | | $ | 13.50 |
| |
| INCOME PER CLASS A UNIT - DILUTED: | | INCOME PER CLASS A UNIT - DILUTED: | | |
| | Net income per Class A unit | | Net income per Class A unit | $ | 0.02 | | | $ | 0 | | |
| Weighted average units outstanding | 203,512 |
| | 203,480 |
| | 203,441 |
| | 203,391 |
| Weighted average units outstanding | 204,901 | | | 203,516 | | |
See notes to consolidated financial statements (unaudited).
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, | | |
| 2021 | | 2020 | | | | |
| Net income (loss) | $ | 26,993 | | | $ | (104,503) | | | | | |
| Other comprehensive income (loss): | | | | | | | |
| Increase (reduction) in value of interest rate swaps and other | 11,641 | | | (45,477) | | | | | |
| Other comprehensive income of nonconsolidated subsidiaries | 3,591 | | | 8 | | | | | |
| | | | | | | |
| Comprehensive income (loss) | 42,225 | | | (149,972) | | | | | |
| Less comprehensive (income) loss attributable to noncontrolling interests in consolidated subsidiaries | (6,114) | | | 122,387 | | | | | |
| Comprehensive income (loss) attributable to Vornado Realty L.P. | $ | 36,111 | | | $ | (27,585) | | | | | |
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Net (loss) income | $ | (217,352 | ) | | $ | 2,596,693 |
| | $ | (321,855 | ) | | $ | 2,809,737 |
|
| Other comprehensive income (loss): | | | | | | | |
| Increase (reduction) in value of interest rate swaps and other | 78 |
| | (28,512 | ) | | (45,399 | ) | | (45,541 | ) |
| Other comprehensive income (loss) of nonconsolidated subsidiaries | — |
| | 25 |
| | 8 |
| | (960 | ) |
Amounts reclassified from accumulated other comprehensive loss relating to a nonconsolidated subsidiary | — |
| | — |
| | — |
| | (2,311 | ) |
| Comprehensive (loss) income | (217,274 | ) | | 2,568,206 |
| | (367,246 | ) | | 2,760,925 |
|
| Less comprehensive loss (income) attributable to noncontrolling interests in consolidated subsidiaries | 17,768 |
| | (21,451 | ) | | 140,155 |
| | (28,271 | ) |
| Comprehensive (loss) income attributable to Vornado Realty L.P. | $ | (199,506 | ) | | $ | 2,546,755 |
| | $ | (227,091 | ) | | $ | 2,732,654 |
|
See notes to consolidated financial statements (unaudited).
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands, except per unit amounts) | | | | | | | | Accumulated Other Comprehensive Loss | | Non- controlling Interests in Consolidated Subsidiaries | | |
| | | Preferred Units | | Class A Units Owned by Vornado | | Earnings Less Than Distributions | | | | Total Equity |
| | Units | | Amount | | Units | | Amount | | | | |
For the Three Months Ended
June 30, 2020: | | | | | | | | | | | | | | | | |
| Balance as of March 31, 2020 | | 36,796 |
| | $ | 891,211 |
| | 191,116 |
| | $ | 8,120,147 |
| | $ | (2,091,612 | ) | | $ | (82,719 | ) | | $ | 456,185 |
| | $ | 7,293,212 |
|
| Net loss attributable to Vornado Realty L.P. | | — |
| | — |
| | — |
| | — |
| | (199,584 | ) | | — |
| | — |
| | (199,584 | ) |
| Net loss attributable to redeemable partnership units | | — |
| | — |
| | — |
| | — |
| | 14,364 |
| | — |
| | — |
| | 14,364 |
|
| Net loss attributable to nonredeemable noncontrolling interests in consolidated subsidiaries | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (17,904 | ) | | (17,904 | ) |
Distributions to Vornado ($0.66 per unit) | | — |
| | — |
| | — |
| | — |
| | (126,141 | ) | | — |
| | — |
| | (126,141 | ) |
| Distributions to preferred unitholders (see Note 13 for distributions per unit amounts) | | — |
| | — |
| | — |
| | — |
| | (12,530 | ) | | — |
| | — |
| | (12,530 | ) |
| Class A units issued to Vornado: | | | | | | | | | | | | | | | | |
| Upon redemption of redeemable Class A units, at redemption value | | — |
| | — |
| | 22 |
| | 824 |
| | — |
| | — |
| | — |
| | 824 |
|
| Under Vornado's dividend reinvestment plan | | — |
| | — |
| | 10 |
| | 368 |
| | — |
| | — |
| | — |
| | 368 |
|
| Contributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1,082 |
| | 1,082 |
|
| Distributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (5,295 | ) | | (5,295 | ) |
| Conversion of Series A preferred units to Class A units | | (2 | ) | | (47 | ) | | 4 |
| | 47 |
| | — |
| | — |
| | — |
| | — |
|
| Deferred compensation units and options | | — |
| | — |
| | — |
| | 304 |
| | — |
| | — |
| | — |
| | 304 |
|
| Increase in value of interest rate swaps | | — |
| | — |
| | — |
| | — |
| | — |
| | 78 |
| | — |
| | 78 |
|
| Adjustments to carry redeemable Class A units at redemption value | | — |
| | — |
| | — |
| | (18,291 | ) | | — |
| | — |
| | — |
| | (18,291 | ) |
| Redeemable partnership units' share of above adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | (5 | ) | | — |
| | (5 | ) |
| Other | | — |
| | — |
| | (1 | ) | | — |
| | 3 |
| | — |
| | (1,576 | ) | | (1,573 | ) |
| Balance as of June 30, 2020 | | 36,794 |
| | $ | 891,164 |
| | 191,151 |
| | $ | 8,103,399 |
| | $ | (2,415,500 | ) | | $ | (82,646 | ) | | $ | 432,492 |
| | $ | 6,928,909 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands, except per unit amounts) | | | | | | | | Accumulated
Other
Comprehensive
Loss | | Non-controlling Interests in Consolidated Subsidiaries | | |
| | Preferred Units | | Class A Units
Owned by Vornado | | Earnings
Less Than
Distributions | | | | Total Equity |
| Units | | Amount | | Units | | Amount | | | | |
| Balance as of December 31, 2020 | | 48,793 | | | $ | 1,182,339 | | | 191,355 | | | $ | 8,200,140 | | | $ | (2,774,182) | | | $ | (75,099) | | | $ | 414,957 | | | $ | 6,948,155 | |
| Net income attributable to Vornado Realty L.P. | | — | | | — | | | — | | | — | | | 20,879 | | | — | | | — | | | 20,879 | |
| Net income attributable to redeemable partnership units | | — | | | — | | | — | | | — | | | (329) | | | — | | | — | | | (329) | |
| Net income attributable to nonredeemable noncontrolling interests in consolidated subsidiaries | | — | | | — | | | — | | | — | | | — | | | — | | | 6,197 | | | 6,197 | |
Distributions to Vornado ($0.53 per unit) | | — | | | — | | | — | | | — | | | (101,467) | | | — | | | — | | | (101,467) | |
| Distributions to preferred unitholders (see Note 11 for distributions per unit amounts) | | — | | | — | | | — | | | — | | | (16,467) | | | — | | | — | | | (16,467) | |
| Class A units issued to Vornado: | | | | | | | | | | | | | | | | |
| Upon redemption of redeemable Class A units, at redemption value | | — | | | — | | | 107 | | | 4,103 | | | — | | | — | | | — | | | 4,103 | |
| Under Vornado's employees' share option plan | | — | | | — | | | — | | | 4 | | | — | | | — | | | — | | | 4 | |
| Under Vornado's dividend reinvestment plan | | — | | | — | | | 6 | | | 211 | | | — | | | — | | | — | | | 211 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Distributions | | — | | | — | | | — | | | — | | | — | | | — | | | (5,877) | | | (5,877) | |
| | | | | | | | | | | | | | | | |
| Deferred compensation units and options | | — | | | — | | | (3) | | | 224 | | | (114) | | | — | | | — | | | 110 | |
| | | | | | | | | | | | | | | | |
| Other comprehensive income of nonconsolidated subsidiaries | | — | | | — | | | — | | | — | | | — | | | 3,591 | | | — | | | 3,591 | |
| Increase in value of interest rate swaps | | — | | | — | | | — | | | — | | | — | | | 11,642 | | | — | | | 11,642 | |
| Unearned 2018 Out-Performance Plan awards acceleration | | — | | | — | | | — | | | 10,283 | | | — | | | — | | | — | | | 10,283 | |
| Redeemable Class A unit measurement adjustment | | — | | | — | | | — | | | (126,936) | | | — | | | — | | | — | | | (126,936) | |
| Redeemable partnership units' share of above adjustments | | — | | | — | | | — | | | — | | | — | | | (886) | | | — | | | (886) | |
| Other | | — | | | (28) | | | — | | | 1 | | | (1) | | | (1) | | | 1 | | | (28) | |
| Balance as of March 31, 2021 | | 48,793 | | | $ | 1,182,311 | | | 191,465 | | | $ | 8,088,030 | | | $ | (2,871,681) | | | $ | (60,753) | | | $ | 415,278 | | | $ | 6,753,185 | |
See notes to consolidated financial statements (unaudited).
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED
(UNAUDITED)
| | | (Amounts in thousands, except per unit amounts) | (Amounts in thousands, except per unit amounts) | | | | | | Earnings Less Than Distributions | | Accumulated Other Comprehensive Loss | | Non- controlling Interests in Consolidated Subsidiaries | | | (Amounts in thousands, except per unit amounts) | | Earnings
Less Than
Distributions | | Accumulated
Other
Comprehensive
Loss | | Non-controlling Interests in Consolidated Subsidiaries | |
| | | Preferred Units | | Class A Units Owned by Vornado | | Total Equity | | | Preferred Units | | Class A Units
Owned by Vornado | | Total Equity |
| | Units | | Amount | | Units | | Amount | | Earnings Less Than Distributions | Accumulated Other Comprehensive Loss | Non- controlling Interests in Consolidated Subsidiaries | | Units | | Amount | | Units | | Amount | | Earnings
Less Than
Distributions | Accumulated
Other
Comprehensive
Loss | Non-controlling Interests in Consolidated Subsidiaries |
For the Three Months Ended
June 30, 2019: | | | | | | | | | | | |
| Balance as of March 31, 2019 | | 36,798 |
| | $ | 891,263 |
| | 190,761 |
| | $ | 7,684,379 |
| | $ | (4,120,265 | ) | $ | (11,385 | ) | $ | 646,900 |
| $ | 5,090,892 |
| |
| Balance as of December 31, 2019 | | Balance as of December 31, 2019 | | 36,796 | | | $ | 891,214 | | | 190,986 | | | $ | 7,835,315 | | | $ | (1,954,266) | | | $ | (40,233) | | | $ | 578,948 | | | $ | 7,310,978 | |
| Cumulative effect of accounting change | | Cumulative effect of accounting change | | — | | | — | | | — | | | — | | | (16,064) | | | — | | | — | | | (16,064) | |
| Net income attributable to Vornado Realty L.P. | | — |
| | — |
| | — |
| | — |
| | 2,575,242 |
| | — |
| | — |
| | 2,575,242 |
| Net income attributable to Vornado Realty L.P. | | — | | | — | | | — | | | — | | | 17,884 | | | — | | | — | | | 17,884 | |
| Net income attributable to redeemable partnership units | | — |
| | — |
| | — |
| | — |
| | (162,515 | ) | | — |
| | — |
| | (162,515 | ) | Net income attributable to redeemable partnership units | | — | | | — | | | — | | | — | | | (390) | | | — | | | — | | | (390) | |
| Net income attributable to noncontrolling interests in consolidated subsidiaries | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 21,451 |
| | 21,451 |
| |
| Net loss attributable to noncontrolling interests in consolidated subsidiaries | | Net loss attributable to noncontrolling interests in consolidated subsidiaries | | — | | | — | | | — | | | — | | | — | | | — | | | (122,387) | | | (122,387) | |
Distributions to Vornado ($0.66 per unit) | | — |
| | — |
| | — |
| | — |
| | (125,927 | ) | | — |
| | — |
| | (125,927 | ) | Distributions to Vornado ($0.66 per unit) | | — | | | — | | | — | | | — | | | (126,106) | | | — | | | — | | | (126,106) | |
| Distributions to preferred unitholders (see Note 13 for distributions per unit amounts) | | — |
| | — |
| | — |
| | — |
| | (12,532 | ) | | — |
| | — |
| | (12,532 | ) | |
| Distributions to preferred unitholders (see Note 11 for distributions per unit amounts) | | Distributions to preferred unitholders (see Note 11 for distributions per unit amounts) | | — | | | — | | | — | | | — | | | (12,531) | | | — | | | — | | | (12,531) | |
| | Class A Units issued to Vornado: | | | | | | | | | | | | | | | | | Class A Units issued to Vornado: | |
| Upon redemption of redeemable Class A units, at redemption value | | — |
| | — |
| | 44 |
| | 2,948 |
| | — |
| | — |
| | — |
| | 2,948 |
| Upon redemption of redeemable Class A units, at redemption value | | — | | | — | | | 27 | | | 1,640 | | | — | | | — | | | — | | | 1,640 | |
| Under Vornado's employees' share option plan | | — |
| | — |
| | 3 |
| | 174 |
| | — |
| | — |
| | — |
| | 174 |
| Under Vornado's employees' share option plan | | — | | | — | | | 69 | | | 3,517 | | | — | | | — | | | — | | | 3,517 | |
| Under Vornado's dividend reinvestment plan | | — |
| | — |
| | 5 |
| | 361 |
| | — |
| | — |
| | — |
| | 361 |
| Under Vornado's dividend reinvestment plan | | — | | | — | | | 21 | | | 1,382 | | | — | | | — | | | — | | | 1,382 | |
| Contributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 3,121 |
| | 3,121 |
| |
| Contributions: | | Contributions: | |
| Real estate fund investments | | Real estate fund investments | | — | | | — | | | — | | | — | | | — | | | — | | | 3,389 | | | 3,389 | |
| Other | | Other | | — | | | — | | | — | | | — | | | — | | | — | | | 1,397 | | | 1,397 | |
| Distributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (24,440 | ) | | (24,440 | ) | Distributions | | — | | | — | | | — | | | — | | | — | | | — | | | (5,235) | | | (5,235) | |
| | Conversion of Series A preferred units to Class A units | | (1 | ) | | (7 | ) | | 1 |
| | 7 |
| | — |
| | — |
| | — |
| | — |
| Conversion of Series A preferred units to Class A units | | — | | | (3) | | | — | | | 3 | | | — | | | — | | | — | | | 0 | |
| Deferred compensation units and options | | — |
| | — |
| | (1 | ) | | 266 |
| | — |
| | — |
| | — |
| | 266 |
| Deferred compensation units and options | | — | | | — | | | 13 | | | 298 | | | (137) | | | — | | | — | | | 161 | |
| | Other comprehensive income of nonconsolidated subsidiaries | | — |
| | — |
| | — |
| | — |
| | — |
| | 25 |
| | — |
| | 25 |
| Other comprehensive income of nonconsolidated subsidiaries | | — | | | — | | | — | | | — | | | — | | | 8 | | | — | | | 8 | |
| Reduction in value of interest rate swaps | | — |
| | — |
| | — |
| | — |
| | — |
| | (28,515 | ) | | — |
| | (28,515 | ) | Reduction in value of interest rate swaps | | — | | | — | | | — | | | — | | | — | | | (45,477) | | | — | | | (45,477) | |
| Adjustments to carry redeemable Class A units at redemption value | | — |
| | — |
| | — |
| | 165,225 |
| | — |
| | — |
| | — |
| | 165,225 |
| |
| Unearned 2017 Out-Performance Plan awards acceleration | | Unearned 2017 Out-Performance Plan awards acceleration | | — | | | — | | | — | | | 10,824 | | | — | | | — | | | — | | | 10,824 | |
| Redeemable Class A unit measurement adjustment | | Redeemable Class A unit measurement adjustment | | — | | | — | | | — | | | 267,170 | | | — | | | — | | | — | | | 267,170 | |
| Redeemable partnership units' share of above adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | 1,806 |
| | — |
| | 1,806 |
| Redeemable partnership units' share of above adjustments | | — | | | — | | | — | | | — | | | — | | | 2,983 | | | — | | | 2,983 | |
| Deconsolidation of partially owned entity | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (11,441 | ) | | (11,441 | ) | |
| | Other | | — |
| | — |
| | — |
| | (1 | ) | | 2 |
| | 3 |
| | (1 | ) | | 3 |
| Other | | — | | | — | | | — | | | (2) | | | (2) | | | — | | | 73 | | | 69 | |
| Balance as of June 30, 2019 | | 36,797 |
| | $ | 891,256 |
| | 190,813 |
| | $ | 7,853,359 |
| | $ | (1,845,995 | ) | | $ | (38,066 | ) | | $ | 635,590 |
| | $ | 7,496,144 |
| |
| Balance as of March 31, 2020 | | Balance as of March 31, 2020 | | 36,796 | | | $ | 891,211 | | | 191,116 | | | $ | 8,120,147 | | | $ | (2,091,612) | | | $ | (82,719) | | | $ | 456,185 | | | $ | 7,293,212 | |
See notes to consolidated financial statements (unaudited).
17
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED
(UNAUDITED)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands, except per unit amounts) | | | | | | | | Accumulated Other Comprehensive (Loss) Income | | Non- controlling Interests in Consolidated Subsidiaries | | |
| | | Preferred Units | | Class A Units Owned by Vornado | | Earnings Less Than Distributions | | | | Total Equity |
| | Units | | Amount | | Units | | Amount | | | | |
For the Six Months Ended
June 30, 2020: | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2019 | | 36,796 |
| | $ | 891,214 |
| | 190,986 |
| | $ | 7,835,315 |
| | $ | (1,954,266 | ) | | $ | (40,233 | ) | | $ | 578,948 |
| | $ | 7,310,978 |
|
| Cumulative effect of accounting change (see Note 4) | | — |
| | — |
| | — |
| | — |
| | (16,064 | ) | | — |
| | — |
| | (16,064 | ) |
| Net loss attributable to Vornado Realty L.P. | | — |
| | — |
| | — |
| | — |
| | (181,700 | ) | | — |
| | — |
| | (181,700 | ) |
| Net loss attributable to redeemable partnership units | | — |
| | — |
| | — |
| | — |
| | 13,974 |
| | — |
| | — |
| | 13,974 |
|
| Net loss attributable to nonredeemable noncontrolling interests in consolidated subsidiaries | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (140,291 | ) | | (140,291 | ) |
Distributions to Vornado ($1.32 per unit) | | — |
| | — |
| | — |
| | — |
| | (252,247 | ) | | — |
| | — |
| | (252,247 | ) |
| Distributions to preferred unitholders (see Note 13 for distributions per unit amounts) | | — |
| | — |
| | — |
| | — |
| | (25,061 | ) | | — |
| | — |
| | (25,061 | ) |
| Class A units issued to Vornado: | | | | | | | | | | | | | | | | |
| Upon redemption of redeemable Class A units, at redemption value | | — |
| | — |
| | 49 |
| | 2,464 |
| | — |
| | — |
| | — |
| | 2,464 |
|
| Under Vornado's employees' share option plan | | — |
| | — |
| | 69 |
| | 3,517 |
| | — |
| | — |
| | — |
| | 3,517 |
|
| Under Vornado's dividend reinvestment plan | | — |
| | — |
| | 31 |
| | 1,750 |
| | — |
| | — |
| | — |
| | 1,750 |
|
| Contributions: | | | | | | | | | | | | | | | | |
| Real estate fund investments | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 3,389 |
| | 3,389 |
|
| Other | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2,479 |
| | 2,479 |
|
| Distributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (10,530 | ) | | (10,530 | ) |
| Conversion of Series A preferred units to Class A units | | (2 | ) | | (50 | ) | | 4 |
| | 50 |
| | — |
| | — |
| | — |
| | — |
|
| Deferred compensation units and options | | — |
| | — |
| | 13 |
| | 602 |
| | (137 | ) | | — |
| | — |
| | 465 |
|
| Other comprehensive income of nonconsolidated subsidiaries | | — |
| | — |
| | — |
| | — |
| | — |
| | 8 |
| | — |
| | 8 |
|
| Reduction in value of interest rate swaps | | — |
| | — |
| | — |
| | — |
| | — |
| | (45,399 | ) | | — |
| | (45,399 | ) |
| Unearned 2017 Out-Performance Plan awards acceleration | | — |
| | — |
| | — |
| | 10,824 |
| | — |
| | — |
| | — |
| | 10,824 |
|
| Adjustments to carry redeemable Class A units at redemption value | | — |
| | — |
| | — |
| | 248,879 |
| | — |
| | — |
| | — |
| | 248,879 |
|
| Redeemable partnership units' share of above adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | 2,978 |
| | — |
| | 2,978 |
|
| Other | | — |
| | — |
| | (1 | ) | | (2 | ) | | 1 |
| | — |
| | (1,503 | ) | | (1,504 | ) |
| Balance as of June 30, 2020 | | 36,794 |
| | $ | 891,164 |
| | 191,151 |
| | $ | 8,103,399 |
| | $ | (2,415,500 | ) | | $ | (82,646 | ) | | $ | 432,492 |
| | $ | 6,928,909 |
|
See notes to consolidated financial statements (unaudited).
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED
(UNAUDITED)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands, except per unit amounts) | | | | | | | | Accumulated Other Comprehensive Income (Loss) | | Non- controlling Interests in Consolidated Subsidiaries | | |
| | | Preferred Units | | Class A Units Owned by Vornado | | Earnings Less Than Distributions | | | | Total Equity |
| | Units | | Amount | | Units | | Amount | | | | |
For the Six Months Ended
June 30, 2019: | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2018 | | 36,800 |
| | $ | 891,294 |
| | 190,535 |
| | $ | 7,733,457 |
| | $ | (4,167,184 | ) | | $ | 7,664 |
| | $ | 642,652 |
| | $ | 5,107,883 |
|
| Net income attributable to Vornado Realty L.P. | | — |
| | — |
| | — |
| | — |
| | 2,781,466 |
| | — |
| | — |
| | 2,781,466 |
|
| Net income attributable to redeemable partnership units | | — |
| | — |
| | — |
| | — |
| | (174,717 | ) | | — |
| | — |
| | (174,717 | ) |
| Net income attributable to noncontrolling interests in consolidated subsidiaries | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 28,271 |
| | 28,271 |
|
Distributions to Vornado ($1.32 per unit) | | — |
| | — |
| | — |
| | — |
| | (251,803 | ) | | — |
| | — |
| | (251,803 | ) |
| Distributions to preferred unitholders (see Note 13 for distributions per unit amounts) | | — |
| | — |
| | — |
| | — |
| | (25,066 | ) | | — |
| | — |
| | (25,066 | ) |
| Class A units issued to Vornado: | | | | | | | | | | | | | | | | |
| Upon redemption of redeemable Class A units, at redemption value | | — |
| | — |
| | 92 |
| | 6,129 |
| | — |
| | — |
| | — |
| | 6,129 |
|
| Under Vornado's employees' share option plan | | — |
| | — |
| | 165 |
| | 1,345 |
| | (8,692 | ) | | — |
| | — |
| | (7,347 | ) |
| Under Vornado's dividend reinvestment plan | | — |
| | — |
| | 10 |
| | 701 |
| | — |
| | — |
| | — |
| | 701 |
|
| Contributions: | | | | | | | | | | | | | | | | |
| Real estate fund investments | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 3,384 |
| | 3,384 |
|
| Other | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 4,931 |
| | 4,931 |
|
| Distributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (32,204 | ) | | (32,204 | ) |
| Preferred unit issuance | | (2 | ) | | (38 | ) | | 3 |
| | 38 |
| | — |
| | — |
| | — |
| | — |
|
| Deferred compensation units and options | | — |
| | — |
| | 8 |
| | 563 |
| | — |
| | — |
| | — |
| | 563 |
|
| Amount reclassified related to a nonconsolidated subsidiary | | — |
| | — |
| | — |
| | — |
| | — |
| | (2,311 | ) | | — |
| | (2,311 | ) |
| Other comprehensive loss of nonconsolidated subsidiaries | | — |
| | — |
| | — |
| | — |
| | — |
| | (960 | ) | | — |
| | (960 | ) |
| Reduction in value of interest rate swaps | | — |
| | — |
| | — |
| | — |
| | — |
| | (45,544 | ) | | — |
| | (45,544 | ) |
| Unearned 2016 Out-Performance Plan awards acceleration | | — |
| | — |
| | — |
| | 11,720 |
| | — |
| | — |
| | — |
| | 11,720 |
|
| Adjustments to carry redeemable Class A units at redemption value | | — |
| | — |
| | — |
| | 99,407 |
| | — |
| | — |
| | — |
| | 99,407 |
|
| Redeemable partnership units' share of above adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | 3,082 |
| | — |
| | 3,082 |
|
| Deconsolidation of partially owned entity | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (11,441 | ) | | (11,441 | ) |
| Other | | (1 | ) | | — |
| | — |
| | (1 | ) | | 1 |
| | 3 |
| | (3 | ) | | — |
|
| Balance as of June 30, 2019 | | 36,797 |
| | $ | 891,256 |
| | 190,813 |
| | $ | 7,853,359 |
| | $ | (1,845,995 | ) | | $ | (38,066 | ) | | $ | 635,590 |
| | $ | 7,496,144 |
|
See notes to consolidated financial statements (unaudited).
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
| | | | | | | |
| (Amounts in thousands) | For the Six Months Ended June 30, |
| | 2020 | | 2019 |
| Cash Flows from Operating Activities: | | | |
| Net (loss) income | $ | (321,855 | ) | | $ | 2,809,737 |
|
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | | | |
| Equity in net loss (income) of partially owned entities | 272,770 |
| | (30,193 | ) |
| Net unrealized loss on real estate fund investments | 211,196 |
| | 16,162 |
|
| Depreciation and amortization (including amortization of deferred financing costs) | 193,920 |
| | 240,866 |
|
| Net gains on disposition of wholly owned and partially owned assets | (124,284 | ) | | (332,007 | ) |
| Distributions of income from partially owned entities | 79,436 |
| | 31,820 |
|
| Non-cash (gain on extinguishment of 608 Fifth Avenue lease liability) impairment loss on 608 Fifth Avenue right-of-use asset | (70,260 | ) | | 75,220 |
|
| Write-off of lease receivables deemed uncollectible | 38,631 |
| | 15,382 |
|
| Stock-based compensation expense | 33,468 |
| | 42,174 |
|
| Straight-lining of rents | 15,856 |
| | 3,733 |
|
| Credit losses on loans receivable | 13,369 |
| | — |
|
| Amortization of below-market leases, net | (9,406 | ) | | (11,168 | ) |
| Decrease (increase) in fair value of marketable securities | 4,938 |
| | (1,773 | ) |
| Net gain on transfer to Fifth Avenue and Times Square JV | — |
| | (2,571,099 | ) |
| Real estate impairment losses | — |
| | 26,140 |
|
| Prepayment penalty on redemption of senior unsecured notes due 2022 | — |
| | 22,058 |
|
| Other non-cash adjustments | 4,370 |
| | 3,206 |
|
| Changes in operating assets and liabilities: | | | |
| Real estate fund investments | (6,000 | ) | | (4,000 | ) |
| Tenant and other receivables, net | (28,864 | ) | | (12,759 | ) |
| Prepaid assets | 3,078 |
| | (5,702 | ) |
| Other assets | (12,480 | ) | | (8,498 | ) |
| Accounts payable and accrued expenses | (26,611 | ) | | (11,482 | ) |
| Other liabilities | (3,557 | ) | | (4,965 | ) |
| Net cash provided by operating activities | 267,715 |
| | 292,852 |
|
| | | | |
| Cash Flows from Investing Activities: | | | |
| Proceeds from sale of condominium units at 220 Central Park South | 437,188 |
| | 690,734 |
|
| Development costs and construction in progress | (319,294 | ) | | (289,532 | ) |
| Moynihan Train Hall expenditures | (183,007 | ) | | (205,783 | ) |
| Additions to real estate | (85,252 | ) | | (120,060 | ) |
| Proceeds from sales of marketable securities | 28,375 |
| | 167,852 |
|
| Investments in partially owned entities | (3,157 | ) | | (15,588 | ) |
| Distributions of capital from partially owned entities | 1,090 |
| | 24,880 |
|
| Proceeds from transfer of interest in Fifth Avenue and Times Square JV (net of $35,562 of transaction costs and $10,899 of deconsolidated cash and restricted cash) | — |
| | 1,255,756 |
|
| Proceeds from redemption of 640 Fifth Avenue preferred equity | — |
| | 500,000 |
|
| Proceeds from sale of real estate and related investments | — |
| | 108,512 |
|
| Acquisitions of real estate and other | — |
| | (3,260 | ) |
| Net cash (used in) provided by investing activities | (124,057 | ) | | 2,113,511 |
|
| | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, |
| 2021 | | 2020 |
| Cash Flows from Operating Activities: | | | |
| Net income (loss) | $ | 26,993 | | | $ | (104,503) | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
| Depreciation and amortization (including amortization of deferred financing costs) | 100,034 | | | 96,913 | |
| Distributions of income from partially owned entities | 61,157 | | | 48,568 | |
| Equity in net income of partially owned entities | (29,073) | | | (19,103) | |
| Stock-based compensation expense | 21,225 | | | 25,765 | |
| Straight-lining of rents | 5,073 | | | 10,165 | |
| Write-off of lease receivables deemed uncollectible | 3,670 | | | 1,044 | |
| Amortization of below-market leases, net | (3,166) | | | (4,206) | |
| Net unrealized loss on real estate fund investments | 494 | | | 183,520 | |
| Net gains on disposition of wholly owned and partially owned assets | 0 | | | (68,589) | |
| Credit losses on loans receivable | 0 | | | 7,261 | |
| Decrease in fair value of marketable securities | 0 | | | 4,938 | |
| | | |
| | | |
| Other non-cash adjustments | 1,348 | | | 3,112 | |
| Changes in operating assets and liabilities: | | | |
| Real estate fund investments | (494) | | | (6,000) | |
| Tenant and other receivables | (1,077) | | | (20,938) | |
| Prepaid assets | 48,599 | | | (91,878) | |
| Other assets | (20,693) | | | (8,051) | |
| Accounts payable and accrued expenses | 9,842 | | | (7,659) | |
| Other liabilities | 253 | | | 1,089 | |
| Net cash provided by operating activities | 224,185 | | | 51,448 | |
| | | |
| Cash Flows from Investing Activities: | | | |
| Development costs and construction in progress | (130,318) | | | (169,845) | |
| Distributions of capital from partially owned entities | 106,005 | | | 1,090 | |
| Additions to real estate | (27,410) | | | (49,251) | |
| Investments in partially owned entities | (4,816) | | | (2,130) | |
| Proceeds from sale of condominium units at 220 Central Park South | 0 | | | 191,216 | |
| Moynihan Train Hall expenditures | 0 | | | (98,794) | |
| Proceeds from sales of marketable securities | 0 | | | 28,375 | |
| | | |
| Net cash used in investing activities | (56,539) | | | (99,339) | |
See notes to consolidated financial statements (unaudited).
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)
| | | (Amounts in thousands) | For the Six Months Ended June 30, | (Amounts in thousands) | For the Three Months Ended March 31, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| Cash Flows from Financing Activities: | | | | Cash Flows from Financing Activities: | | | |
| Repayments of borrowings | | Repayments of borrowings | $ | (358,331) | | | $ | (2,150) | |
| Proceeds from borrowings | | Proceeds from borrowings | 350,000 | | | 553,062 | |
| Distributions to Vornado | $ | (624,627 | ) | | $ | (251,803 | ) | Distributions to Vornado | (101,467) | | | (498,486) | |
| Proceeds from borrowings | 554,297 |
| | 458,955 |
| |
| Distributions to preferred unitholders | | Distributions to preferred unitholders | (16,467) | | | (12,531) | |
| Distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries | | Distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries | (13,338) | | | (40,045) | |
| Debt issuance costs | | Debt issuance costs | (2,904) | | | (124) | |
| Proceeds received from exercise of Vornado stock options and other | | Proceeds received from exercise of Vornado stock options and other | 215 | | | 4,899 | |
| Repurchase of Class A units related to stock compensation agreements and related tax withholdings and other | | Repurchase of Class A units related to stock compensation agreements and related tax withholdings and other | (113) | | | (137) | |
| Moynihan Train Hall reimbursement from Empire State Development | 183,007 |
| | 205,783 |
| Moynihan Train Hall reimbursement from Empire State Development | 0 | | | 98,794 | |
| Contributions from noncontrolling interests in consolidated subsidiaries | 98,268 |
| | 8,315 |
| Contributions from noncontrolling interests in consolidated subsidiaries | 0 | | | 4,786 | |
| Distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries | (54,440 | ) | | (49,140 | ) | |
| Distributions to preferred unitholders | (37,593 | ) | | (25,066 | ) | |
| Repayments of borrowings | (11,347 | ) | | (1,943,157 | ) | |
| Proceeds received from exercise of Vornado stock options and other | 5,267 |
| | 2,046 |
| |
| Debt issuance costs | (143 | ) | | (13,522 | ) | |
| Repurchase of Class A units related to stock compensation agreements and related tax withholdings and other | (137 | ) | | (8,692 | ) | |
| Purchase of marketable securities in connection with defeasance of mortgage payable | — |
| | (407,126 | ) | |
| Prepayment penalty on redemption of senior unsecured notes due 2022 | — |
| | (22,058 | ) | |
| Redemption of preferred units | — |
| | (893 | ) | |
| Net cash provided by (used in) financing activities | 112,552 |
| | (2,046,358 | ) | |
| | Net cash (used in) provided by financing activities | | Net cash (used in) provided by financing activities | (142,405) | | | 108,068 | |
| Net increase in cash and cash equivalents and restricted cash | 256,210 |
| | 360,005 |
| Net increase in cash and cash equivalents and restricted cash | 25,241 | | | 60,177 | |
| Cash and cash equivalents and restricted cash at beginning of period | 1,607,131 |
| | 716,905 |
| Cash and cash equivalents and restricted cash at beginning of period | 1,730,369 | | | 1,607,131 | |
| Cash and cash equivalents and restricted cash at end of period | $ | 1,863,341 |
| | $ | 1,076,910 |
| Cash and cash equivalents and restricted cash at end of period | $ | 1,755,610 | | | $ | 1,667,308 | |
| | | | | | | | |
| Reconciliation of Cash and Cash Equivalents and Restricted Cash: | | | | Reconciliation of Cash and Cash Equivalents and Restricted Cash: | |
| Cash and cash equivalents at beginning of period | $ | 1,515,012 |
| | $ | 570,916 |
| Cash and cash equivalents at beginning of period | $ | 1,624,482 | | | $ | 1,515,012 | |
| Restricted cash at beginning of period | 92,119 |
| | 145,989 |
| Restricted cash at beginning of period | 105,887 | | | 92,119 | |
| Cash and cash equivalents and restricted cash at beginning of period | $ | 1,607,131 |
| | $ | 716,905 |
| Cash and cash equivalents and restricted cash at beginning of period | $ | 1,730,369 | | | $ | 1,607,131 | |
| | | | | | | | |
| Cash and cash equivalents at end of period | $ | 1,768,459 |
| | $ | 922,604 |
| Cash and cash equivalents at end of period | $ | 1,636,093 | | | $ | 1,586,738 | |
| Restricted cash at end of period | 94,882 |
| | 154,306 |
| Restricted cash at end of period | 119,517 | | | 80,570 | |
| Cash and cash equivalents and restricted cash at end of period | $ | 1,863,341 |
| | $ | 1,076,910 |
| Cash and cash equivalents and restricted cash at end of period | $ | 1,755,610 | | | $ | 1,667,308 | |
| | | | | | | | |
| Supplemental Disclosure of Cash Flow Information: | | | | Supplemental Disclosure of Cash Flow Information: | |
| Cash payments for interest, excluding capitalized interest of $21,255 and $39,643 | $ | 107,069 |
| | $ | 165,022 |
| |
| Cash payments for interest, excluding capitalized interest of $10,267 and $11,913 | | Cash payments for interest, excluding capitalized interest of $10,267 and $11,913 | $ | 50,394 | | | $ | 53,997 | |
| Cash payments for income taxes | $ | 9,276 |
| | $ | 28,697 |
| Cash payments for income taxes | $ | 4,002 | | | $ | 6,089 | |
| | | | | | | | |
| Non-Cash Investing and Financing Activities: | �� | | | Non-Cash Investing and Financing Activities: | |
| Adjustments to carry redeemable Class A units at redemption value | $ | 248,879 |
| | $ | 99,407 |
| |
Reclassification of condominium units from "development costs and construction in progress" to
"220 Central Park South condominium units ready for sale" | 240,707 |
| | 647,683 |
| |
| Redeemable Class A unit measurement adjustment | | Redeemable Class A unit measurement adjustment | $ | (126,936) | | | $ | 267,170 | |
| Accrued capital expenditures included in accounts payable and accrued expenses | 89,036 |
| | 68,900 |
| Accrued capital expenditures included in accounts payable and accrued expenses | 68,986 | | | 65,926 | |
| Write-off of fully depreciated assets | (66,931 | ) | | (93,390 | ) | Write-off of fully depreciated assets | (30,782) | | | (45,115) | |
| Lease liabilities arising from the recognition of right-of-use assets | — |
| | 526,866 |
| |
| Amounts related to our investment in Pennsylvania Real Estate Investment Trust reclassified from "investments in partially owned entities" and "accumulated other comprehensive loss" to "marketable securities" upon conversion of operating partnership units to common shares | — |
| | 54,962 |
| |
| Investments received in exchange for transfer to Fifth Avenue and Times Square JV: | | | | |
| Preferred equity | — |
| | 2,327,750 |
| |
| Common equity | — |
| | 1,449,495 |
| |
| Marketable securities transferred in connection with the defeasance of mortgage payable | — |
| | (407,126 | ) | |
| Defeasance of mortgage payable | — |
| | 390,000 |
| |
| Reclassification from "development costs and construction in progress" to "220 Central Park South condominium units ready for sale" | | Reclassification from "development costs and construction in progress" to "220 Central Park South condominium units ready for sale" | 2,739 | | | 106,479 | |
See notes to consolidated financial statements (unaudited).
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Vornado Realty Trust (“Vornado”) is a fully-integrated real estate investment trust (“REIT”) and conducts its business through, and substantially all of its interests in properties are held by, Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”). Vornado is the sole general partner of, and owned approximately92.7% of the common limited partnership interest in the Operating Partnership as of June 30, 2020.March 31, 2021. All references to the “Company,” “we,” “us” and “our” mean, collectively, Vornado, the Operating Partnership and those subsidiaries consolidated by Vornado.
In December 2019, a novel strain of coronavirus (“COVID-19”) was identified in Wuhan, China and by March 11, 2020, the World Health Organization had declared it a global pandemic. Many states in the U.S., including New York, New Jersey, Illinois and California implemented stay-at-home orders for all "non-essential"2. COVID-19 Pandemic
Our business and activity in an aggressive effort to curb the spread of the virus. In May 2020, certain states implemented phased re-opening plans for businesses and activities that were previously ordered to close, with limitations on occupancy and certain other restrictions. It is uncertain as to how long these restrictions will continue or if additional restrictions or closures will be imposed. As a result of the COVID-19 pandemic, the U.S. economy has suffered and there has been significant volatility in the financial markets. Many U.S. industries and businesses have been negatively affected and millions of people have filed for unemployment.
Our properties, which are concentrated in New York City, and in Chicago and San Francisco, have been adversely affected as a result of the COVID-19 pandemic and the preventive measures taken to curb the spread of the virus. Some of the effects on us include the following:
•
With the exception of grocery stores and other "essential" businesses, many of our retail tenants closed their stores in March 2020 and began reopening when New York City entered phase two of its state-mandated reopening plan on June 22, 2020.2020, however, there continue to be limitations on occupancy and other restrictions that affect their ability to resume full operations.
•While our buildings remain open, many of our office tenants are working remotely.
•We have temporarily closed the Hotel Pennsylvania.Pennsylvania on April 1, 2020 and on April 5, 2021, we announced that we permanently closed the hotel.
•We have cancelled trade shows at theMART forbeginning late March of 2020 and expect to resume trade shows in the remainderthird quarter of 2020.2021.
Because certain•As of our development projects were deemed "non-essential," they were temporarily pausedApril 30, 2021, approximately 70% of the 1,293 Building Maintenance Services LLC ("BMS") employees that had been placed on furlough in March 2020 duehave returned to New York State executive orders and resumed once New York City entered phase one of its state mandated reopening plan on June 8, 2020.work.
| |
• | As of April 30, 2020, we placed 1,803 employees on temporary furlough, which included 1,293 employees of Building Maintenance Services LLC ("BMS"), a wholly owned subsidiary, which provides cleaning, security and engineering services primarily to our New York properties, 414 employees at the Hotel Pennsylvania and 96 corporate staff employees. As of July 31, 2020, 542 employees have been taken off furlough and returned to work, which included 503 employees of BMS and 39 corporate staff employees.
|
| |
• | Effective April 1, 2020, our executive officers waived portions of their annual base salary for the remainder of 2020.
|
| |
• | Effective April 1, 2020, each non-management member of our Board of Trustees agreed to forgo his or her $75,000 annual cash retainer for the remainder of 2020.
|
While we believe our tenants are required to pay rent under their leases and we have commenced legal proceedings against certain tenants that have failed to pay under their leases, in limited circumstances, we have agreed to and may continue to agree to rent deferrals and rent abatements for certain of our tenants. We have made a policy election in accordance with the Financial Accounting Standards Board (“FASB”) Staff Q&A which provides relief in accounting for leases during the COVID-19 pandemic, allowing us to continue recognizing rental revenue on a straight-line basis for rent deferrals, with no impact to revenue recognition, and to recognize rent abatements as a reduction to rental revenue in the period granted. See Note 4 - Recently Issued Accounting Literature for additional information.
For the quarter ended June 30, 2020,March 31, 2021, we collected 88% (94% including rent deferrals)96% of rent due from our tenants, comprised of 93% (98% including rent deferrals)97% from our office tenants and 72% (78% including rent deferrals)90% from our retail tenants. Rent deferrals generally require repayment in monthly installments over a period not to exceed twelve months.
Based on our assessment of the probability of rent collection of our lease receivables, we have written off $36,297,000$1,001,000 of receivables arising from the straight-lining of rents primarily for the JCPenney lease at Manhattan Mall and the New York & Company, Inc. lease at 330 West 34th Street, both tenantsthree months ended March 31, 2021. In addition, we have filed for Chapter 11 bankruptcy, and $8,822,000written off $2,910,000 of tenant receivables deemed uncollectible resultingfor the three months ended March 31, 2021. These write-offs resulted in a reduction of lease revenues and our share of income from partially owned entities for the three and six months ended June 30, 2020.entities. Prospectively, revenue recognition for these tenantslease receivables deemed uncollectible will be based on actual amounts received. See Note 5 - Revenue Recognition and Note 8 - Investment in Partially Owned Entities for additional information.
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
The accompanying consolidated financial statements are unaudited and include the accounts of Vornado and the Operating Partnership and their consolidated subsidiaries. All inter-company amounts have been eliminated and all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019,2020, as filed with the SEC.
We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three and six months ended June 30, 2020March 31, 2021 are not necessarily indicative of the operating results for the full year. In addition, certain prior year balances have been reclassified in order to conform to the current period presentation.
| |
4. | 4. Recently Issued Accounting Literature |
In June 2016,March 2020, the FASBFinancial Accounting Standards Board ("FASB") issued an update (“("ASU 2016-13”2020-04")Measurement of Credit Losses on Financial Instruments establishing Accounting Standards Codification ("ASC") Topic 326, Financial Instruments - Credit Losses ("ASC 326"), as amended by subsequent ASUs on the topic. ASU 2016-13 changes how entities account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current “incurred loss” model with an “expected loss” model that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of the financial asset. ASU 2016-13 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2019. In May 2019, the FASB issued ASU 2019-05 Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief to allow companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option for financial instruments that were previously recorded at amortized cost and are within the scope of ASC Subtopic 326-20 if the instruments are eligible for the fair value option under ASC Subtopic 825-10, Financial Instruments ("ASC 825-10"). We elected to apply the fair value option on an instrument-by-instrument basis to our loans receivable. We adopted this standard effective January 1, 2020 and recorded a $16,064,000 cumulative-effect adjustment to beginning accumulated deficit to recognize credit losses on loans receivable recorded on our consolidated balance sheets. For the three and six months ended June 30, 2020, we recorded $6,108,000 and $13,369,000, respectively, of credit losses on our loans receivable which is included in "interest and other investment (loss) income, net" on our consolidated statements of income.
In March 2020, the FASB issued an update (“ASU 2020-04”) establishing ASC Topic 848, Reference Rate Reform. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the six months ended June 30, 2020, weWe have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
In AprilAugust 2020, the FASB issued a Staff Q&A onan update ("ASU 2020-06") Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). ASU 2020-06 simplifies the accounting for leases duringconvertible instruments by reducing the COVID-19 pandemic, focused on the applicationnumber of lease guidance in ASC Topic 842, Leases ("ASC 842"). The Q&A statesaccounting models for convertible debt instruments and convertible preferred stock, removes certain settlement conditions that it would be acceptableare required for equity contracts to make a policy election regarding rent concessions resulting from COVID-19, which would not require entities to account for these rent concessions as lease modifications when total cash flows resulting from the modified contract are “substantially the same or less” than the cash flows in the original contract. During the three months ended June 30, 2020, in limited circumstances, we granted rent deferrals and rent abatements for certain of our tenants. We have made a policy election in accordance with the Staff Q&A for our portfolio allowing us to not accountqualify for the concessions as lease modifications. Accordingly, rent abatementsderivative scope exception and also simplifies the diluted earnings per share calculation in certain areas.ASU 2020-06 is effective for reporting periods beginning after December 15, 2021, with early adoption permitted. We are recognized as reductions to “rental revenues” duringcurrently evaluating the period in which they were granted. Rent deferrals result in an increase to "tenant and other receivables" duringimpact of the deferral period with noadoption of ASU 2020-06 on our consolidated financial statements, but do not believe the adoption of this standard will have a material impact on rental revenue recognition. For any concessions that do not meet the guidance contained in the Q&A, the modification guidance in accordance with ASC 842 will be applied. See Note 2 - COVID-19 Pandemic for further details.our consolidated financial statements.
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
Below is a summary of our revenues by segment. Additional financial information related to these reportable segments for the three and six months ended June 30,March 31, 2021 and 2020 and 2019 is set forth in Note 2219 - Segment Information.
| | | (Amounts in thousands) | For the Three Months Ended June 30, 2020 | | For the Three Months Ended June 30, 2019 | | (Amounts in thousands) | For the Three Months Ended March 31, 2021 | |
| | Total | | New York | | Other | | Total | | New York | | Other | | | Total | | New York | | Other | |
Property rentals(1) | $ | 308,316 |
| | $ | 241,308 |
| | $ | 67,008 |
| | $ | 372,160 |
| | $ | 300,925 |
| | $ | 71,235 |
| | |
Hotel Pennsylvania(2) | — |
| | — |
| | — |
| | 25,525 |
| | 25,525 |
| | — |
| | |
Trade shows(3) | — |
| | — |
| | — |
| | 11,547 |
| | — |
| | 11,547 |
| | |
Lease revenues(4) | 308,316 |
| | 241,308 |
| | 67,008 |
| | 409,232 |
| | 326,450 |
| | 82,782 |
| | |
| Property rentals | | Property rentals | $ | 332,058 | | | $ | 261,691 | | | $ | 70,367 | | |
| Trade shows(1) | | Trade shows(1) | 0 | | | 0 | | | 0 | | |
Lease revenues(2) | | Lease revenues(2) | 332,058 | | | 261,691 | | | 70,367 | | |
| Tenant services | 6,878 |
| | 4,341 |
| | 2,537 |
| | 12,067 |
| | 9,337 |
| | 2,730 |
| | Tenant services | 7,259 | | | 5,009 | | | 2,250 | | |
| Rental revenues | 315,194 |
| | 245,649 |
| | 69,545 |
| | 421,299 |
| | 335,787 |
| | 85,512 |
| | Rental revenues | 339,317 | | | 266,700 | | | 72,617 | | |
| BMS cleaning fees | 21,115 |
| | 22,405 |
| | (1,290 | ) | (5) | 32,570 |
| | 34,944 |
| | (2,374 | ) | (5) | BMS cleaning fees | 28,477 | | | 29,948 | | | (1,471) | | (3) |
| Management and leasing fees | 1,837 |
| | 1,701 |
| | 136 |
| | 4,500 |
| | 4,472 |
| | 28 |
| | Management and leasing fees | 5,369 | | | 5,522 | | | (153) | | |
| Other income | 4,880 |
| | 873 |
| | 4,007 |
| | 4,734 |
| | 1,178 |
| | 3,556 |
| | Other income | 6,814 | | | 1,801 | | | 5,013 | | |
| Fee and other income | 27,832 |
| | 24,979 |
| | 2,853 |
| | 41,804 |
| | 40,594 |
| | 1,210 |
| | Fee and other income | 40,660 | | | 37,271 | | | 3,389 | | |
| Total revenues | $ | 343,026 |
| | $ | 270,628 |
| | $ | 72,398 |
| | $ | 463,103 |
| | $ | 376,381 |
| | $ | 86,722 |
| | Total revenues | $ | 379,977 | | | $ | 303,971 | | | $ | 76,006 | | |
____________________
See notes below.
| | | (Amounts in thousands) | For the Six Months Ended June 30, 2020 | | For the Six Months Ended June 30, 2019 | | (Amounts in thousands) | For the Three Months Ended March 31, 2020 | |
| | Total | | New York | | Other | | Total | | New York | | Other | | | Total | | New York | | Other | |
Property rentals(1) | $ | 679,490 |
| | $ | 539,920 |
| | $ | 139,570 |
| | $ | 829,901 |
| | $ | 686,728 |
| | $ | 143,173 |
| | |
Hotel Pennsylvania(2) | 8,741 |
| | 8,741 |
| | — |
| | 38,134 |
| | 38,134 |
| | — |
| | |
Trade shows(3) | 11,303 |
| | — |
| | 11,303 |
| | 28,503 |
| | — |
| | 28,503 |
| | |
Lease revenues(4) | 699,534 |
| | 548,661 |
| | 150,873 |
| | 896,538 |
| | 724,862 |
| | 171,676 |
| | |
| Property rentals | | Property rentals | $ | 371,174 | | | $ | 298,612 | | | $ | 72,562 | | |
Hotel Pennsylvania(4) | | Hotel Pennsylvania(4) | 8,741 | | | 8,741 | | | 0 | | |
| Trade shows | | Trade shows | 11,303 | | | 0 | | | 11,303 | | |
Lease revenues(2) | | Lease revenues(2) | 391,218 | | | 307,353 | | | 83,865 | | |
| Tenant services | 16,934 |
| | 11,721 |
| | 5,213 |
| | 24,638 |
| | 18,562 |
| | 6,076 |
| | Tenant services | 10,056 | | | 7,380 | | | 2,676 | | |
| Rental revenues | 716,468 |
| | 560,382 |
| | 156,086 |
| | 921,176 |
| | 743,424 |
| | 177,752 |
| | Rental revenues | 401,274 | | | 314,733 | | | 86,541 | | |
| BMS cleaning fees | 53,581 |
| | 56,834 |
| | (3,253 | ) | (5) | 62,355 |
| | 66,701 |
| | (4,346 | ) | (5) | BMS cleaning fees | 32,466 | | | 34,429 | | | (1,963) | | (3) |
| Management and leasing fees | 4,704 |
| | 4,575 |
| | 129 |
| | 6,737 |
| | 6,723 |
| | 14 |
| | Management and leasing fees | 2,867 | | | 2,874 | | | (7) | | |
| Other income | 12,805 |
| | 4,452 |
| | 8,353 |
| | 7,503 |
| | 2,818 |
| | 4,685 |
| | Other income | 7,925 | | | 3,579 | | | 4,346 | | |
| Fee and other income | 71,090 |
| | 65,861 |
| | 5,229 |
| | 76,595 |
| | 76,242 |
| | 353 |
| | Fee and other income | 43,258 | | | 40,882 | | | 2,376 | | |
| Total revenues | $ | 787,558 |
| | $ | 626,243 |
| | $ | 161,315 |
| | $ | 997,771 |
| | $ | 819,666 |
| | $ | 178,105 |
| | Total revenues | $ | 444,532 | | | $ | 355,615 | | | $ | 88,917 | | |
____________________
| |
(1) | Reduced by $37,587 and $14,492 for the three months ended June 30, 2020 and 2019, respectively, and $38,631 and $15,382 for the six months ended June 30, 2020 and 2019, respectively, for the write-off of lease receivables deemed uncollectible (primarily write-offs of receivables arising from the straight-lining of rents). |
| |
(2) | Temporarily closed since April 1, 2020 as a result of the pandemic. |
| |
(3) | Cancelled trade shows at theMART from late March 2020 through the remainder of the year as a result of the pandemic. |
| |
(4) | The components of lease revenues were as follows: |
(1)We cancelled trade shows at theMART beginning late March of 2020 due to the COVID-19 pandemic.
|
| | | | | | | | | | | | | | | |
| | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Fixed lease revenues | $ | 312,285 |
| | $ | 377,524 |
| | $ | 649,331 |
| | $ | 807,611 |
|
| Variable lease revenues | (3,969 | ) | | 31,708 |
| | 50,203 |
| | 88,927 |
|
| Lease revenues | $ | 308,316 |
| | $ | 409,232 |
| | $ | 699,534 |
| | $ | 896,538 |
|
| | | | | | | | | | | | | | | |
| For the Three Months Ended March 31, | | |
| 2021 | | 2020 | | | | |
| Fixed billings | $ | 309,860 | | | $ | 354,314 | | | | | |
| Variable billings | 31,649 | | | 45,221 | | | | | |
| Total contractual operating lease billings | 341,509 | | | 399,535 | | | | | |
| Adjustment for straight-line rents and amortization of acquired below-market leases and other, net | (5,781) | | | (7,273) | | | | | |
| Less: write-off of straight-line rent and tenant receivables deemed uncollectible | (3,670) | | | (1,044) | | | | | |
| Lease revenues | $ | 332,058 | | | $ | 391,218 | | | | | |
(3)Represents the elimination of theMART and 555 California Street BMS cleaning fees which are included as income in the New York segment.
(4)We temporarily closed the Hotel Pennsylvania on April 1, 2020 and on April 5, 2021, we announced that we permanently closed the hotel.
22
| |
(5) | Represents the elimination of theMART and 555 California Street BMS cleaning fees which are included as income in the New York segment. |
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
| |
6. | Real Estate Fund Investments
|
We are the general partner and investment manager of Vornado Capital Partners Real Estate Fund (the “Fund”) and own a 25.0% interest in the Fund, which had an initial eight-year term ending February 2019. On January 29, 2018, the Fund's term was extended to February 2023. The Fund's three-year investment period ended in July 2013. The Fund is accounted for under ASC Topic 946, Financial Services – Investment Companies (“ASC 946”) and its investments are reported on its balance sheet at fair value, with changes in value each period recognized in earnings. We consolidate the accounts of the Fund into our consolidated financial statements, retaining the fair value basis of accounting.
We are also the general partner and investment manager of the Crowne Plaza Times Square Hotel Joint Venture (the “Crowne Plaza Joint Venture”) and own a 57.1% interest in the joint venture which owns the 24.7% interest in the Crowne Plaza Times Square Hotel not owned by the Fund. The Crowne Plaza Joint Venture is also accounted for under ASC 946 and we consolidate the accounts of the joint venture into our consolidated financial statements, retaining the fair value basis of accounting.
On June 9, 2020, the joint venture between the Fund and the Crowne Plaza Joint Venture defaulted on the $274,355,000 non-recourse loan on the Crowne Plaza Times Square Hotel. The interest-only loan, which bears interest at a floating rate of LIBOR plus 3.69% (3.90% as of June 30, 2020)March 31, 2021) and provides for additional default interest of 3.00%, was scheduled to mature on July 9, 2020. We are in negotiations with the lenders and there can be no assurance as to the timing and ultimate resolution of these negotiations.
As of June 30, 2020,March 31, 2021, we had 4 real estate fund investments through the Fund and the Crowne Plaza Joint Venture with an aggregate fair value of $17,453,000, or $324,111,000$3,739,000, $339,516,000 below cost, and had remaining unfunded commitments of $29,194,000, of which our share was $9,266,000. AtAs of December 31, 2019, we had2020, those 4 real estate fund investments withhad an aggregate fair value of $222,649,000.$3,739,000.
Below is a summary of lossincome (loss) from the Fund and the Crowne Plaza Joint Venture.
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Net investment (loss) income | $ | (366 | ) | | $ | 459 |
| | $ | (309 | ) | | $ | 192 |
|
| Net unrealized loss on held investments | (27,676 | ) | | (16,262 | ) | | (211,196 | ) | | (16,162 | ) |
| Loss from real estate fund investments | (28,042 | ) | | (15,803 | ) | | (211,505 | ) | | (15,970 | ) |
| Less loss (income) attributable to noncontrolling interests in consolidated subsidiaries | 21,953 |
| | (4,955 | ) | | 149,258 |
| | (7,692 | ) |
| Loss from real estate fund investments net of noncontrolling interests in consolidated subsidiaries | $ | (6,089 | ) | | $ | (20,758 | ) | | $ | (62,247 | ) | | $ | (23,662 | ) |
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, | | |
| 2021 | | 2020 | | | | |
| Net unrealized loss on held investments | $ | (494) | | | $ | (183,520) | | | | | |
| Net investment income | 325 | | | 57 | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Loss from real estate fund investments | (169) | | | (183,463) | | | | | |
| Less loss attributable to noncontrolling interests in consolidated subsidiaries | 429 | | | 127,305 | | | | | |
| Income (loss) from real estate fund investments net of noncontrolling interests in consolidated subsidiaries | $ | 260 | | | $ | (56,158) | | | | | |
| | | | | | | |
| | | | | | | |
7. Marketable Securities
Pennsylvania Real Estate Investment Trust (“PREIT”) (NYSE: PEI)
On January 23, 2020, we sold all of our 6,250,000 common shares of PREIT, realizing net proceeds of $28,375,000. We recorded a $4,938,000 loss (mark-to-market decrease) for the six months ended June 30, 2020.
The table below summarizes the changes of our investmentInvestments in PREIT.Partially Owned Entities
|
| | | |
| (Amounts in thousands) | For the Six Months Ended June 30, 2020 |
| Balance as of December 31, 2019 | $ | 33,313 |
|
| Sale of marketable securities on January 23, 2020 | (28,375 | ) |
Decrease in fair value of marketable securities(1) | (4,938 | ) |
| Balance as of June 30, 2020 | $ | — |
|
____________________
| |
(1) | Included in “interest and other investment (loss) income, net” on our consolidated statements of income (see Note 18 - Interest and Other Investment (Loss) Income, Net).
|
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
| |
8. | Investments in Partially Owned Entities
|
Fifth Avenue and Times Square JV
As of June 30, 2020,March 31, 2021, we own a 51.5% common interest in a joint venture ("Fifth Avenue and Times Square JV") which owns interests in properties located at 640 Fifth Avenue, 655 Fifth Avenue, 666 Fifth Avenue, 689 Fifth Avenue, 697-703 Fifth Avenue, 1535 Broadway and 1540 Broadway (collectively, the "Properties"). The remaining 48.5% common interest in the joint venture is owned by a group of institutional investors (the "Investors"). Our 51.5% common interest in the joint venture represents an effective 51.0% interest in the Properties. The 48.5% common interest in the joint venture owned by the Investors represents an effective 47.2% interest in the Properties. We provide various services to Fifth Avenue and Times Square JV in accordance with management, development, leasing and other agreements.
We also own $1.828 billion of preferred equity security interests in certain of the properties. All of theThe preferred equity has an annual coupon of 4.25% for the first five years,through April 2024, increasing to 4.75% for the nextsubsequent five years and thereafter at a formulaic rate. It can be redeemed under certain conditions on a tax deferred basis.
As of March 31, 2021, the carrying amount of our investment in the joint venture was less than our share of the equity in the net assets of the joint venture by approximately $399,434,000, the basis difference primarily resulting from non-cash impairment losses recognized during 2020. Substantially all of this basis difference was allocated, based on our estimates of the fair values of Fifth Avenue and Times Square JV was formed in April 2019, when we contributed our interests inJV’s assets and liabilities, to real estate (land and buildings). We are amortizing the Properties to the joint venture and transferred a 48.5% common interest in the joint venture to the Investors (the “Transaction”). The Transaction valued the Properties at $5.556 billion, resulting in a $2.571 billion net gain, before noncontrolling interests of $11,945,000, including a gainbasis difference related to the step up in our basis of the retained portion of the assetsbuildings into earnings as a reduction to fair value. Subsequent to the Transaction, Manhattan street retail suffered negative market conditions and was further stressed by the COVID-19 pandemic. This has resulted in a decrease in cash flows. As of June 30, 2020, wedepreciation expense over their estimated that the fair value of our investment in Fifth Avenue and Times Square JV was approximately $2,955,957,000 or $306,326,000 less than the carrying amount. In determining the fair value of our investment, we considered, among other inputs, a discounted cash flow analysis based upon market conditions and expectations of growth. As of June 30, 2020, we have concluded that the decline in the value of our investment was “other-than-temporary.” This conclusion was based on, among other factors, the significant challenges facing the retail sector and our inability to forecast a recovery in the near-term. Accordingly, we recognized a non-cash impairment loss of $306,326,000, before noncontrolling interests of $467,000, during the second quarter of 2020. The impairment loss is included in “(loss) income from partially owned entities” on our consolidated statements of income for the three and six months ended June 30, 2020.useful lives.
We provide various services to Fifth Avenue and Times Square JV in accordance with management, development, leasing and other agreements. During the three and six months ended June 30, 2020, we recognized $629,000 and $1,661,000, respectively, of property management fee income which is included in "fee and other income" on our consolidated statements of income. During the three and six months ended June 30, 2019, we recognized $830,000 of property management fee income.
BMS, our wholly-owned subsidiary, supervises cleaning, security and engineering services at certain of the Properties. During the three and six months ended June 30, 2020, we recognized $748,000 and $1,773,000, respectively, of income for these services which is included in "fee and other income" on our consolidated statements of income. During the three and six months ended June 30, 2019, we recognized $791,000 of income for these services.
Below is a summary of the latest available financial information for Fifth Avenue and Times Square JV.
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended
June 30, | | For the Six Months Ended
June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Income statement: | | | | | | | |
| Revenues | $ | 66,311 |
| | $ | 72,888 |
| | $ | 146,786 |
| | $ | 72,888 |
|
| Net income | 112 |
| | 21,466 |
| | 10,090 |
| | 21,466 |
|
| Net (loss) income attributable to Fifth Avenue and Times Square JV (after allocation to our preferred equity interests) | (19,333 | ) | | 4,079 |
| | (28,404 | ) | | 4,079 |
|
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
8.7. Investments in Partially Owned Entities - continued
Alexander’s, Inc. (“Alexander’s”) (NYSE: ALX)
As of June 30, 2020,March 31, 2021, we own 1,654,068 Alexander’s common shares, or approximately 32.4% of Alexander’s common equity. We manage, develop and lease Alexander’s properties pursuant to agreements which expire in March of each year and are automatically renewable.
As of June 30, 2020,March 31, 2021, the market value ("fair value" pursuant to ASC Topic 820, Fair Value Measurements ("ASC 820")) of our investment in Alexander’s, based on Alexander’s June 30, 2020March 31, 2021 closing share price of $240.90,$277.30, was $398,465,000,458,673,000, or $308,966,000$375,445,000 in excess of the carrying amount on our consolidated balance sheet. As of June 30, 2020,March 31, 2021, the carrying amount of our investment in Alexander’s, excluding amounts owed to us, exceedsexceeded our share of the equity in the net assets of Alexander’s by approximately $38,552,000.$38,430,000. The majority of this basis difference resulted from the excess of our purchase price for the Alexander’s common stock acquired over the book value of Alexander’s net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of Alexander’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in Alexander’s net income.
One Park Avenue
On February 26, 2021, a joint venture in which we have a 55.0% interest completed a $525,000,000 refinancing of One Park Avenue, a 943,000 square foot Manhattan office building. The basis difference relatedinterest-only loan bears a rate of LIBOR plus 1.11% (1.21% as of March 31, 2021) and matures in March 2023, with 3 one-year extension options. We realized net proceeds of $105,000,000. The loan replaces the previous $300,000,000 loan that bore interest at LIBOR plus 1.75% and was scheduled to the land will be recognized upon disposition of our investment.mature in March 2021.
Below is a schedule summarizing our investments in partially owned entities.
| | | (Amounts in thousands) | Percentage Ownership at
June 30, 2020 | | Balance as of | (Amounts in thousands) | Percentage Ownership at March 31, 2021 | | Balance as of |
| | | June 30, 2020 | | December 31, 2019 | | March 31, 2021 | | December 31, 2020 |
| Investments: | | | | | | Investments: | | | | | |
| Fifth Avenue and Times Square JV | 51.5% | | $ | 2,955,957 |
| | $ | 3,291,231 |
| |
| Fifth Avenue and Times Square JV (see page 23 for details): | | Fifth Avenue and Times Square JV (see page 23 for details): | 51.5% | | $ | 2,787,865 | | | $ | 2,798,413 | |
Partially owned office buildings/land(1) | Various | | 460,767 |
| | 464,109 |
| Partially owned office buildings/land(1) | Various | | 358,155 | | | 473,285 | |
| Alexander’s | 32.4% | | 89,499 |
| | 98,543 |
| Alexander’s | 32.4% | | 83,228 | | | 82,902 | |
Other investments(2) | Various | | 142,428 |
| | 145,282 |
| Other investments(2) | Various | | 134,409 | | | 136,507 | |
| | | $ | 3,648,651 |
| | $ | 3,999,165 |
| | $ | 3,363,657 | | | $ | 3,491,107 | |
| | | | | | | | | |
Investments in partially owned entities included in other liabilities(3): | | | | | Investments in partially owned entities included in other liabilities(3): | |
| 7 West 34th Street | 53.0% | | $ | (52,549 | ) | | $ | (54,004 | ) | 7 West 34th Street | 53.0% | | $ | (55,195) | | | $ | (55,340) | |
| 85 Tenth Avenue | 49.9% | | (9,188 | ) | | (6,186 | ) | 85 Tenth Avenue | 49.9% | | (15,728) | | | (13,080) | |
| | | $ | (61,737 | ) | | $ | (60,190 | ) | | $ | (70,923) | | | $ | (68,420) | |
____________________
| |
(1) | Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 512 West 22nd Street, 61 Ninth Avenue and others. |
| |
(2) | Includes interests in Independence Plaza, Rosslyn Plaza and others. |
| |
(3) | Our negative basis results from distributions in excess of our investment. |
(1)Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 512 West 22nd Street, 61 Ninth Avenue and others.
(2)Includes interests in Independence Plaza, Rosslyn Plaza and others.
(3)Our negative basis results from distributions in excess of our investment.
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
8.7. Investments in Partially Owned Entities - continued
Below is a schedule of (loss) income from partially owned entities.
|
| | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Percentage
Ownership at
June 30, 2020 | | For the Three Months Ended
June 30, | | For the Six Months Ended
June 30, |
| | | 2020 | | 2019 | | 2020 | | 2019 |
| Our share of net (loss) income: | | | | | | | | | |
Fifth Avenue and Times Square JV (see page 28 for details)(1): | | | | | | | | | |
| Non-cash impairment loss | | | $ | (306,326 | ) | | $ | — |
| | $ | (306,326 | ) | | $ | — |
|
| Return on preferred equity, net of our share of the expense | | | 9,330 |
| | 8,586 |
| | 18,496 |
| | 8,586 |
|
Equity in net income(2) | 51.5% | | 441 |
| | 11,217 |
| | 5,937 |
| | 11,217 |
|
| | | | (296,555 | ) | | 19,803 |
| | (281,893 | ) | | 19,803 |
|
| Alexander's (see page 29 for details): | | | | | | | | | |
| Equity in net income | 32.4% | | 3,929 |
| | 3,597 |
| | 5,345 |
| | 9,314 |
|
| Management, leasing and development fees | | | 1,222 |
| | 1,122 |
| | 2,482 |
| | 2,179 |
|
| | | | 5,151 |
| | 4,719 |
| | 7,827 |
| | 11,493 |
|
| | | | | | | | | | |
Partially owned office buildings(3) | Various | | 810 |
| | (1,451 | ) | | 2,132 |
| | (1,345 | ) |
| | | | | | | | | | |
Other investments(4) | Various | | (1,279 | ) | | (198 | ) | | (836 | ) | | 242 |
|
| | | | | | | | | | |
| | | | $ | (291,873 | ) | | $ | 22,873 |
| | $ | (272,770 | ) | | $ | 30,193 |
|
| | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Percentage Ownership at March 31, 2021 | | For the Three Months Ended March 31, | | |
| | 2021 | | 2020 | | | | |
| Our share of net income (loss): | | | | | | | | | |
| Fifth Avenue and Times Square JV (see page 23 for details): | | | | | | | | | |
| | | | | | | | | |
| Equity in net income | 51.5% | | $ | 9,606 | | | $ | 5,496 | | | | | |
| Return on preferred equity, net of our share of the expense | | | 9,226 | | | 9,166 | | | | | |
| | | 18,832 | | | 14,662 | | | | | |
| Alexander's (see page 24 for details): | | | | | | | | | |
| Equity in net income | 32.4% | | 5,729 | | | 1,416 | | | | | |
| Management, leasing and development fees | | | 575 | | | 1,260 | | | | | |
| | | 6,304 | | | 2,676 | | | | | |
| | | | | | | | | |
Partially owned office buildings(1) | Various | | 5,972 | | | 1,322 | | | | | |
| | | | | | | | | |
Other investments(2) | Various | | (2,035) | | | 443 | | | | | |
| | | | | | | | | |
| | | $ | 29,073 | | | $ | 19,103 | | | | | |
____________________
| |
(1) | Entered into on April 18, 2019. |
| |
(2) | The decrease in our share of net income for the three and six months ended June 30, 2020 compared to June 30, 2019 was primarily due to (i) (1)Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 7 West 34th Street, 512 West 22nd Street, 61 Ninth Avenue, 85 Tenth Avenue and others.$4,737 of write-offs of lease receivables deemed uncollectible during the second quarter of 2020 and (ii) a $4,360 reduction in income related to a Forever 21 lease modification at 1540 Broadway. |
| |
(3) | Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 7 West 34th Street, 330 Madison Avenue (sold on July 11, 2019), 512 West 22nd Street, 61 Ninth Avenue, 85 Tenth Avenue and others. |
| |
(4) | Includes interests in Independence Plaza, Rosslyn Plaza, Urban Edge Properties (sold on March 4, 2019), PREIT (accounted for as a marketable security from March 12, 2019 and sold on January 23, 2020) and others. |
| |
9. | 220 Central Park South ("220 CPS") |
We are completing construction of a residential condominium tower containing 397,000 salable square feet at 220 CPS. The development cost of this project (exclusive of land cost) is estimated to be approximately $1.450 billion, of which $1.419 billion has been expended as of June 30, 2020.
During the three months ended June 30, 2020, we closed on the sale of 4 condominium units at 220 CPS for net proceeds aggregating $156,972,000 resulting(2)Includes interests in a financial statement net gain of $55,695,000 which is included in "net gains on disposition of wholly ownedIndependence Plaza, Rosslyn Plaza and partially owned assets" on our consolidated statements of income. In connection with these sales, $6,690,000 of income tax expense was recognized on our consolidated statements of income. During the six months ended June 30, 2020, we closed on the sale of 11condominium units at 220 CPS for net proceeds aggregating $348,188,000 resulting in a financial statement net gain of $124,284,000. In connection with these sales, $15,368,000 of income tax expense was recognized in our consolidated statements of income. From inception to June 30, 2020, we closed on the sale of 76 units for aggregate net proceeds of $2,168,320,000 resulting in financial statement net gains of $809,901,000.others.
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
| |
10. | Identified Intangible Assets and Liabilities
|
The following summarizes our identified intangible assets (primarily above-market leases) and liabilities (primarily below-market leases).
|
| | | | | | | |
| (Amounts in thousands) | Balance as of |
| | June 30, 2020 | | December 31, 2019 |
| Identified intangible assets: | | | |
| Gross amount | $ | 125,149 |
| | $ | 129,552 |
|
| Accumulated amortization | (97,489 | ) | | (98,587 | ) |
| Total, net | $ | 27,660 |
| | $ | 30,965 |
|
| Identified intangible liabilities (included in deferred revenue): | | | |
| Gross amount | $ | 293,008 |
| | $ | 316,119 |
|
| Accumulated amortization | (249,106 | ) | | (262,580 | ) |
| Total, net | $ | 43,902 |
| | $ | 53,539 |
|
| | | | | | | | | | | |
| (Amounts in thousands) | Balance as of |
| March 31, 2021 | | December 31, 2020 |
| Identified intangible assets: | | | |
| Gross amount | $ | 112,898 | | | $ | 116,969 | |
| Accumulated amortization | (90,508) | | | (93,113) | |
| Total, net | $ | 22,390 | | | $ | 23,856 | |
| Identified intangible liabilities (included in deferred revenue): | | | |
| Gross amount | $ | 272,337 | | | $ | 273,902 | |
| Accumulated amortization | (240,283) | | | (238,541) | |
| Total, net | $ | 32,054 | | | $ | 35,361 | |
Amortization of acquired below-market leases, net of acquired above-market leases, resulted in an increase to rental revenues of $5,200,000$3,166,000 and $4,643,000$4,206,000 for the three months ended June 30,March 31, 2021 and 2020, and 2019, respectively, and $9,406,000 and $11,168,000 for the six months ended June 30, 2020 and 2019, respectively. Estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding years commencing January 1, 20212022 is as follows:
|
| | | |
| (Amounts in thousands) | |
| 2021 | $ | 10,780 |
|
| 2022 | 9,429 |
|
| 2023 | 6,900 |
|
| 2024 | 3,155 |
|
| 2025 | 1,602 |
|
| | | | | |
| (Amounts in thousands) | |
| 2022 | $ | 9,160 | |
| 2023 | 6,620 | |
| 2024 | 2,872 | |
| 2025 | 1,444 | |
| 2026 | 801 | |
Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was $1,354,000$1,326,000 and $1,935,000$1,727,000 for the three months ended June 30,March 31, 2021 and 2020, and 2019, respectively, and $3,081,000 and $5,480,000 for the six months ended June 30, 2020 and 2019, respectively. Estimated annual amortization of all other identified intangible assets including acquired in-place leases for each of the five succeeding years commencing January 1, 20212022 is as follows:
| | | | | |
| (Amounts in thousands) | |
| 2022 | $ | 3,707 | |
| 2023 | 3,620 | |
| 2024 | 3,006 | |
| 2025 | 2,132 | |
| 2026 | 1,982 | |
|
| | | |
| (Amounts in thousands) | |
| 2021 | $ | 4,377 |
|
| 2022 | 3,893 |
|
| 2023 | 3,807 |
|
| 2024 | 3,193 |
|
| 2025 | 2,277 |
|
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
On February 28, 2020,March 7, 2021, we increased our unsecured term loan balance to $800,000,000 (from $750,000,000) by exercisingentered into an accordion feature. Pursuant to an existinginterest rate swap agreement $750,000,000for our $500,000,000 PENN 11 mortgage loan, to swap the interest rate on the mortgage loan from LIBOR plus 2.75% (2.85% as of theMarch 31, 2021) to a fixed rate of 3.03% through March 2024.
On March 26, 2021, we completed a $350,000,000 refinancing of 909 Third Avenue, a 1.4 million square foot Manhattan office building. The interest-only loan bears a fixed rate of 3.23% and matures in April 2031. The loan replaces the previous $350,000,000 loan that bore interest at a fixed rate of 3.87% through October3.91% and was scheduled to mature in May 2021.
Unsecured Revolving Credit Facility
On April 15, 2021, we extended our $1.25 billion unsecured revolving credit facilityfrom January 2023 (as fully extended) to April 2026 (as fully extended). The interest rate on the extended facility was lowered to LIBOR plus 0.90% from LIBOR plus 1.00%. The facility fee remains at 20 basis points. Our $1.50 billion unsecured revolving credit facility matures in March 2024 (as fully extended) and the balance of $50,000,000 floats at aalso has an interest rate of LIBOR plus 1.00% (1.18% as0.90% and a facility fee of June 30, 2020). The entire $800,000,000 will float thereafter for the duration of the loan through February 2024.20 basis points.
The following is a summary of our debt:
| | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Weighted Average Interest Rate at March 31, 2021 | | Balance as of |
| | March 31, 2021 | | December 31, 2020 |
| Mortgages Payable: | | | | | |
| Fixed rate | 3.52% | | $ | 3,509,712 | | | $ | 3,012,643 | |
| Variable rate | 1.77% | | 2,090,415 | | | 2,595,815 | |
| Total | 2.87% | | 5,600,127 | | | 5,608,458 | |
| Deferred financing costs, net and other | | | (26,501) | | | (27,909) | |
| Total, net | | | $ | 5,573,626 | | | $ | 5,580,549 | |
| Unsecured Debt: | | | | | |
| Senior unsecured notes | 3.50% | | $ | 450,000 | | | $ | 450,000 | |
| Deferred financing costs, net and other | | | (3,112) | | | (3,315) | |
| Senior unsecured notes, net | | | 446,888 | | | 446,685 | |
| | | | | |
| Unsecured term loan | 3.70% | | 800,000 | | | 800,000 | |
| Deferred financing costs, net and other | | | (2,976) | | | (3,238) | |
| Unsecured term loan, net | | | 797,024 | | | 796,762 | |
| | | | | |
| Unsecured revolving credit facilities | 1.01% | | 575,000 | | | 575,000 | |
| | | | | |
| Total, net | | | $ | 1,818,912 | | | $ | 1,818,447 | |
|
| | | | | | | | | |
| (Amounts in thousands) | Weighted Average Interest Rate at
June 30, 2020 | | Balance as of |
| | | June 30, 2020 | | December 31, 2019 |
| Mortgages Payable: | | | | | |
| Fixed rate | 3.52% | | $ | 4,589,860 |
| | $ | 4,601,516 |
|
| Variable rate | 1.76% | | 1,072,797 |
| | 1,068,500 |
|
| Total | 3.19% | | 5,662,657 |
| | 5,670,016 |
|
| Deferred financing costs, net and other | | | (24,305 | ) | | (30,119 | ) |
| Total, net | | | $ | 5,638,352 |
| | $ | 5,639,897 |
|
| Unsecured Debt: | | | | | |
| Senior unsecured notes | 3.50% | | $ | 450,000 |
| | $ | 450,000 |
|
| Deferred financing costs, net and other | | | (3,721 | ) | | (4,128 | ) |
| Senior unsecured notes, net | | | 446,279 |
| | 445,872 |
|
| | | | | | |
| Unsecured term loan | 3.70% | | 800,000 |
| | 750,000 |
|
| Deferred financing costs, net and other | | | (3,764 | ) | | (4,160 | ) |
| Unsecured term loan, net | | | 796,236 |
| | 745,840 |
|
| | | | | | |
| Unsecured revolving credit facilities | 1.09% | | 1,075,000 |
| | 575,000 |
|
| | | | | | |
| Total, net | | | $ | 2,317,515 |
| | $ | 1,766,712 |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED | |
12. | Redeemable Noncontrolling Interests |
(UNAUDITED)
10. Redeemable Noncontrolling Interests
Redeemable Noncontrolling Partnership Units
Redeemable noncontrolling partnership units are primarily comprised of Class A Operating Partnership units held by third parties and are recorded at the greater of their carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to “additional capital” in Vornado’s consolidated statements of changes in equity and to “partners’ capital” on the consolidated balance sheets of the Operating Partnership.
Below is a table summarizing the activity of redeemable noncontrolling partnership units.
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Beginning balance | $ | 623,799 |
| | $ | 867,085 |
| | $ | 888,915 |
| | $ | 783,562 |
|
| Net (loss) income | (14,364 | ) | | 162,515 |
| | (13,974 | ) | | 174,717 |
|
| Other comprehensive income (loss) | 5 |
| | (1,806 | ) | | (2,978 | ) | | (3,082 | ) |
| Distributions | (9,100 | ) | | (8,448 | ) | | (17,998 | ) | | (16,936 | ) |
| Redemption of Class A units for Vornado common shares, at redemption value | (824 | ) | | (2,948 | ) | | (2,464 | ) | | (6,129 | ) |
| Adjustments to carry redeemable Class A units at redemption value | 18,291 |
| | (165,225 | ) | | (248,879 | ) | | (99,407 | ) |
| Other, net | 6,997 |
| | 10,889 |
| | 22,182 |
| | 29,337 |
|
| Ending balance | $ | 624,804 |
| | $ | 862,062 |
| | $ | 624,804 |
| | $ | 862,062 |
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, | | |
| 2021 | | 2020 | | | | |
| Beginning balance | $ | 511,747 | | | $ | 888,915 | | | | | |
| Net income | 329 | | | 390 | | | | | |
| Other comprehensive income (loss) | 886 | | | (2,983) | | | | | |
| Distributions | (7,461) | | | (8,898) | | | | | |
| Redemption of Class A units for Vornado common shares, at redemption value | (4,103) | | | (1,640) | | | | | |
| Redeemable Class A unit measurement adjustment | 126,936 | | | (267,170) | | | | | |
| Other, net | 11,859 | | | 15,185 | | | | | |
| Ending balance | $ | 640,193 | | | $ | 623,799 | | | | | |
As of June 30, 2020March 31, 2021 and December 31, 2019,2020, the aggregate redemption value of redeemable Class A units of the Operating Partnership, which are those units held by third parties, was $620,269,000$635,658,000 and $884,380,000, respectively.$507,212,000, respectively, based on Vornado's quarter-end closing common share price.
Redeemable noncontrolling partnership units exclude our Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units, as they are accounted for as liabilities in accordance with ASC Topic 480, Distinguishing Liabilities and Equity, because of their possible settlement by issuing a variable number of Vornado common shares. Accordingly, the fair value of these units is included as a component of “other liabilities” on our consolidated balance sheets and aggregated $50,058,000$50,249,000 and $50,561,000$50,002,000 as of June 30, 2020March 31, 2021 and December 31, 2019,2020, respectively. Changes in the value from period to period, if any, are charged to “interest and debt expense” on our consolidated statements of income.
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
| |
12. | Redeemable Noncontrolling Interests - continued |
Redeemable Noncontrolling Interest in a Consolidated Subsidiary
The consolidated joint venture in which we own a 95% interest (the remaining 5% is owned by the Related Companies ("Related")) is developing Farley Office and Retail (the "Project"). During the second quarter of 2020, a historic tax credit investor ("Tax(the "Tax Credit Investor") funded $92,400,000 of capital contributions. The Tax Credit Investor is projected to have $142,000,000 of net capital contributed after making an estimated $185,000,000 in total contributions and receiving an estimated $43,000,000is expected to make additional capital contributions in distributions from the joint venture, which includes amounts paid upon the potential exercise of their put option, as discussed below.future periods.
The arrangement includes a put option whereby the joint venture may be obligated to purchase the Tax Credit Investor’s ownership interest in the Project at a future date. The put price is calculated based on a pre-determined formula. As exercise of the put option is outside of the joint venture’s control, the Tax Credit Investor’s interest, together with the put option, have been recorded to “redeemable noncontrolling interest in a consolidated subsidiary” on our consolidated balance sheetsheets as of June 30,March 31, 2021 and December 31, 2020. The redeemable noncontrolling interest is recorded at the greater of the carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to “additional capital” in Vornado’s consolidated statements of changes in equity and to “partners’ capital” on the consolidated balance sheets of the Operating Partnership. There was no adjustment required for the three and six months ended June 30, 2020.March 31, 2021.
Below is a table summarizing the activity of the redeemable noncontrolling interest in a consolidated subsidiary.
| | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, 2021 | | |
| Beginning balance | $ | 94,520 | | | |
| Net loss | (83) | | | |
| | | |
| | | |
| Ending balance | $ | 94,437 | | | |
|
| | | |
| (Amounts in thousands) | For the Three and Six Months Ended June 30, 2020 |
| Beginning balance | $ | — |
|
| Contributions | 92,400 |
|
| Net income | 136 |
|
| Other, net | 1,576 |
|
| Ending balance | $ | 94,112 |
|
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
| |
13. | 11. Shareholders' Equity/Partners' Capital |
Common Shares (Vornado Realty Trust)
On December 18, 2019, Vornado's Board of Trustees declared a special dividend of $1.95 per share, or $372,380,000 in the aggregate, which was paid on January 15, 2020 to common shareholders of record on December 30, 2019 (the "Record Date").
Class A Units (Vornado Realty L.P.)
On January 15, 2020, distributions of $1.95 per unit, or $398,292,000 in the aggregate, were paid to Class A unitholders of the Operating Partnership as of the Record Date, of which $372,380,000 was distributed to Vornado, in connection with the special dividend declared on December 18, 2019 by Vornado's Board of Trustees.
The following table sets forth the details of our dividends/distributions per common share/Class A unit and dividends/distributions per share/unit for each class of preferred shares/units of beneficial interest.
| | | (Per share/unit) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, | (Per share/unit) | For the Three Months Ended March 31, | |
| | 2020 | | 2019 | | 2020 | | 2019 | | 2021 | | 2020 | |
| Shares/Units: | | | | | | | | Shares/Units: | | | | |
| Common shares/Class A units held by Vornado: authorized 250,000,000 shares/units | $ | 0.66 |
| | $ | 0.66 |
| | $ | 1.32 |
| | $ | 1.32 |
| Common shares/Class A units held by Vornado: authorized 250,000,000 shares/units | $ | 0.53 | | | $ | 0.66 | | |
Convertible Preferred(1): | | | | | | | | Convertible Preferred(1): | | |
6.5% Series A: authorized 13,694 and 83,977 shares/units(2) | 0.8125 |
| | 0.8125 |
| | 1.6250 |
| | 1.6250 |
| |
6.5% Series A: authorized 13,402 and 15,540 shares/units(2) | | 6.5% Series A: authorized 13,402 and 15,540 shares/units(2) | 0.8125 | | | 0.8125 | | |
Cumulative Redeemable Preferred(1): | | | | | | | | Cumulative Redeemable Preferred(1): | | | | |
5.70% Series K: authorized 12,000,000 shares/units(3) | 0.3563 |
| | 0.3563 |
| | 0.7126 |
| | 0.7126 |
| 5.70% Series K: authorized 12,000,000 shares/units(3) | 0.3563 | | | 0.3563 | | |
5.40% Series L: authorized 13,800,000 shares/units(3) | 0.3375 |
| | 0.3375 |
| | 0.6750 |
| | 0.6750 |
| 5.40% Series L: authorized 13,800,000 shares/units(3) | 0.3375 | | | 0.3375 | | |
5.25% Series M: authorized 13,800,000 shares/units(3) | 0.3281 |
| | 0.3281 |
| | 0.6562 |
| | 0.6562 |
| 5.25% Series M: authorized 13,800,000 shares/units(3) | 0.3281 | | | 0.3281 | | |
5.25% Series N: authorized 12,000,000 shares/units(3)(4) | | 5.25% Series N: authorized 12,000,000 shares/units(3)(4) | 0.3281 | | | N/A | |
____________________
| |
(1) | Dividends on preferred shares and distributions on preferred units are cumulative and are payable quarterly in arrears. |
| |
(2) | Redeemable at the option of Vornado under certain circumstances, at a redemption price of 1.9531 common shares/Class A units per Series A Preferred Share/Unit plus accrued and unpaid dividends/distributions through the date of redemption, or convertible at any time at the option of the holder for 1.9531 common shares/ Class A units per Series A Preferred Share/Unit. |
| |
(3) | Redeemable at Vornado's option at a redemption price of $25.00 per share/unit, plus accrued and unpaid dividends/distributions through the date of redemption. |
VORNADO REALTY TRUST AND VORNADO REALTY L.P.(2)Redeemable at the option of Vornado under certain circumstances, at a redemption price of 1.9531 common shares/Class A units per Series A Preferred Share/Unit plus accrued and unpaid dividends/distributions through the date of redemption, or convertible at any time at the option of the holder for 1.9531 common shares/Class A units per Series A Preferred Share/Unit.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED(3)Redeemable at Vornado's option at a redemption price of $25.00 per share/unit, plus accrued and unpaid dividends/distributions through the date of redemption.
(UNAUDITED)
(4)Issued in November 2020.
| |
13. | Shareholders' Equity/Partners' Capital - continued |
Accumulated Other Comprehensive Loss
The following tables set forth the changes in accumulated other comprehensive loss by component.
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | Accumulated other comprehensive income (loss) of nonconsolidated subsidiaries | | Interest rate swaps | | Other |
| For the three months ended June 30, 2020: | | | | | | | |
| Balance as of March 31, 2020 | $ | (82,719 | ) | | $ | 12 |
| | $ | (81,603 | ) | | $ | (1,128 | ) |
| Other comprehensive income (loss) | 73 |
| | — |
| | 78 |
| | (5 | ) |
| Balance as of June 30, 2020 | $ | (82,646 | ) | | $ | 12 |
| | $ | (81,525 | ) | | $ | (1,133 | ) |
| | | | | | | | |
| For the three months ended June 30, 2019: | | | | | | | |
| Balance as of March 31, 2019 | $ | (11,385 | ) | | $ | (43 | ) | | $ | (5,270 | ) | | $ | (6,072 | ) |
| Other comprehensive (loss) income | (26,681 | ) | | 25 |
| | (28,515 | ) | | 1,809 |
|
| Balance as of June 30, 2019 | $ | (38,066 | ) | | $ | (18 | ) | | $ | (33,785 | ) | | $ | (4,263 | ) |
| | | | | | | | |
| For the six months ended June 30, 2020: | | | | | | | |
| Balance as of December 31, 2019 | $ | (40,233 | ) | | $ | 4 |
| | $ | (36,126 | ) | | $ | (4,111 | ) |
| Other comprehensive (loss) income | (42,413 | ) | | 8 |
| | (45,399 | ) | | 2,978 |
|
| Balance as of June 30, 2020 | $ | (82,646 | ) | | $ | 12 |
| | $ | (81,525 | ) | | $ | (1,133 | ) |
| | | | | | | | |
| For the six months ended June 30, 2019: | | | | | | | |
| Balance as of December 31, 2018 | $ | 7,664 |
| | $ | 3,253 |
| | $ | 11,759 |
| | $ | (7,348 | ) |
| Other comprehensive (loss) income | (43,419 | ) | | (960 | ) | | (45,544 | ) | | 3,085 |
|
| Amount reclassified from accumulated other comprehensive loss | (2,311 | ) | | (2,311 | ) | | — |
| | — |
|
| Balance as of June 30, 2019 | $ | (38,066 | ) | | $ | (18 | ) | | $ | (33,785 | ) | | $ | (4,263 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | Accumulated other comprehensive (loss) income of nonconsolidated subsidiaries | | Interest
rate swaps | | Other |
| | | | | | | |
| Balance as of December 31, 2020 | $ | (75,099) | | | $ | (14,338) | | | $ | (66,098) | | | $ | 5,337 | |
| Other comprehensive income (loss) | 14,346 | | | 3,591 | | | 11,642 | | | (887) | |
| | | | | | | |
| Balance as of March 31, 2021 | $ | (60,753) | | | $ | (10,747) | | | $ | (54,456) | | | $ | 4,450 | |
| | | | | | | |
| Balance as of December 31, 2019 | $ | (40,233) | | | $ | 4 | | | $ | (36,126) | | | $ | (4,111) | |
| Other comprehensive (loss) income | (42,486) | | | 8 | | | (45,477) | | | 2,983 | |
| Balance as of March 31, 2020 | $ | (82,719) | | | $ | 12 | | | $ | (81,603) | | | $ | (1,128) | |
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14. | Variable Interest Entities ("VIEs") |
12. Variable Interest Entities ("VIEs")
Unconsolidated VIEs
As of June 30, 2020March 31, 2021 and December 31, 2019,2020, we have several unconsolidated VIEs. We do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities does not give us power over decisions that significantly affect these entities’ economic performance. We account for our investment in these entities under the equity method (see Note 87 – Investments in Partially Owned Entities). As of June 30, 2020March 31, 2021 and December 31, 2019,2020, the net carrying amount of our investments in these entities was $217,103,000$104,866,000 and $217,451,000,$224,754,000, respectively, and our maximum exposure to loss in these entities is limited to the carrying amount of our investments.
Consolidated VIEs
Our most significant consolidated VIEs are the Operating Partnership (for Vornado), the Farley joint venture and certain properties that have non-controlling interests. These entities are VIEs because the non-controlling interests do not have substantive kick-out or participating rights. We consolidate these entities because we control all significant business activities.
As of June 30,March 31, 2021, the total assets and liabilities of our consolidated VIEs, excluding the Operating Partnership, were $4,101,742,000 and $1,720,045,000, respectively. As of December 31, 2020, the total assets and liabilities of our consolidated VIEs, excluding the Operating Partnership, were $5,089,516,000$4,053,841,000 and $2,811,319,000, respectively. As of December 31, 2019, the total assets and liabilities of our consolidated VIEs, excluding the Operating Partnership, were $4,923,656,000 and $2,646,623,000,$1,722,719,000, respectively.
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
| |
15. | Fair Value Measurements
|
ASC 820 defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities. Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets.
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
Financial assets and liabilities that are measured at fair value on our consolidated balance sheets consist of (i) marketable securities, (ii) real estate fund investments, (iii)(ii) the assets in our deferred compensation plan (for which there is a corresponding liability on our consolidated balance sheets), (iv)(iii) loans receivable (for which we have elected the fair value option under ASC 825-10)Subtopic 825-10, Financial Instruments ("ASC 825-10")), (v)(iv) interest rate swaps and (vi)(v) mandatorily redeemable instruments (Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units). The tables below aggregate the fair values of these financial assets and liabilities by their levels in the fair value hierarchy.
| | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | As of March 31, 2021 |
| Total | | Level 1 | | Level 2 | | Level 3 |
| Real estate fund investments | $ | 3,739 | | | $ | 0 | | | $ | 0 | | | $ | 3,739 | |
| Deferred compensation plan assets ($9,773 included in restricted cash and $98,116 in other assets) | 107,889 | | | 66,250 | | | 0 | | | 41,639 | |
| Loans receivable ($43,849 included in investments in partially owned entities and $4,360 in other assets) | 48,209 | | | 0 | | | 0 | | | 48,209 | |
| Interest rate swaps (included in other assets) | 1,900 | | | 0 | | | 1,900 | | | 0 | |
| Total assets | $ | 161,737 | | | $ | 66,250 | | | $ | 1,900 | | | $ | 93,587 | |
| | | | | | | |
| Mandatorily redeemable instruments (included in other liabilities) | $ | 50,249 | | | $ | 50,249 | | | $ | 0 | | | $ | 0 | |
| Interest rate swaps (included in other liabilities) | 56,275 | | | 0 | | | 56,275 | | | 0 | |
| Total liabilities | $ | 106,524 | | | $ | 50,249 | | | $ | 56,275 | | | $ | 0 | |
| | | | | | | |
| (Amounts in thousands) | As of December 31, 2020 |
| Total | | Level 1 | | Level 2 | | Level 3 |
| Real estate fund investments | $ | 3,739 | | | $ | 0 | | | $ | 0 | | | $ | 3,739 | |
| Deferred compensation plan assets ($10,813 included in restricted cash and $94,751 in other assets) | 105,564 | | | 65,636 | | | 0 | | | 39,928 | |
| Loans receivable ($43,008 included in investments in partially owned entities and $4,735 in other assets) | 47,743 | | | 0 | | | 0 | | | 47,743 | |
| Interest rate swaps (included in other assets) | 17 | | | 0 | | | 17 | | | 0 | |
| Total assets | $ | 157,063 | | | $ | 65,636 | | | $ | 17 | | | $ | 91,410 | |
| | | | | | | |
| Mandatorily redeemable instruments (included in other liabilities) | $ | 50,002 | | | $ | 50,002 | | | $ | 0 | | | $ | 0 | |
| Interest rate swaps (included in other liabilities) | 66,033 | | | 0 | | | 66,033 | | | 0 | |
| Total liabilities | $ | 116,035 | | | $ | 50,002 | | | $ | 66,033 | | | $ | 0 | |
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | As of June 30, 2020 |
| | Total | | Level 1 | | Level 2 | | Level 3 |
| Real estate fund investments | $ | 17,453 |
| | $ | — |
| | $ | — |
| | $ | 17,453 |
|
| Deferred compensation plan assets ($12,444 included in restricted cash and $81,637 in other assets) | 94,081 |
| | 57,909 |
| | — |
| | 36,172 |
|
| Loans receivable ($41,340 included in investments in partially owned entities and $5,335 in other assets) | 46,675 |
| | — |
| | — |
| | 46,675 |
|
| Interest rate swaps (included in other assets) | 67 |
| | — |
| | 67 |
| | — |
|
| Total assets | $ | 158,276 |
| | $ | 57,909 |
| | $ | 67 |
| | $ | 100,300 |
|
| | | | | | | | |
| Mandatorily redeemable instruments (included in other liabilities) | $ | 50,058 |
| | $ | 50,058 |
| | $ | — |
| | $ | — |
|
| Interest rate swaps (included in other liabilities) | 81,502 |
| | — |
| | 81,502 |
| | — |
|
| Total liabilities | $ | 131,560 |
| | $ | 50,058 |
| | $ | 81,502 |
| | $ | — |
|
| | | | | | | | |
| (Amounts in thousands) | As of December 31, 2019 |
| | Total | | Level 1 | | Level 2 | | Level 3 |
| Marketable securities | $ | 33,313 |
| | $ | 33,313 |
| | $ | — |
| | $ | — |
|
| Real estate fund investments | 222,649 |
| | — |
| | — |
| | 222,649 |
|
| Deferred compensation plan assets ($11,819 included in restricted cash and $91,954 in other assets) | 103,773 |
| | 71,338 |
| | — |
| | 32,435 |
|
| Interest rate swaps (included in other assets) | 4,327 |
| | — |
| | 4,327 |
| | — |
|
| Total assets | $ | 364,062 |
| | $ | 104,651 |
| | $ | 4,327 |
| | $ | 255,084 |
|
| | | | | | | | |
| Mandatorily redeemable instruments (included in other liabilities) | $ | 50,561 |
| | $ | 50,561 |
| | $ | — |
| | $ | — |
|
| Interest rate swaps (included in other liabilities) | 40,354 |
| | — |
| | 40,354 |
| | — |
|
| Total liabilities | $ | 90,915 |
| | $ | 50,561 |
| | $ | 40,354 |
| | $ | — |
|
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
| |
15. | Fair Value Measurements - continued |
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued
Real Estate Fund Investments
As of June 30, 2020,March 31, 2021, we had 4 real estate fund investments with an aggregate fair value of $17,453,000, or $324,111,000$3,739,000, $339,516,000 below cost. These investments are classified as Level 3.
Significant unobservable quantitative inputs used in determining the fair value of each investment include capitalization rates and discount rates. These rates are based on the location, type and nature of each property, current and anticipated market conditions, industry publications and from the experience of our Acquisitions and Capital Markets departments. Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of these real estate fund investments.
|
| | | | | | | |
| | Range | | Weighted Average (based on fair value of investments) |
| Unobservable Quantitative Input | June 30, 2020 | | December 31, 2019 | | June 30, 2020 | | December 31, 2019 |
| Discount rates | 6.8% to 15.0% | | 8.2% to 12.0% | | 13.4% | | 9.3% |
| Terminal capitalization rates | 5.5% to 9.3% | | 4.6% to 8.2% | | 7.3% | | 5.3% |
| | | | | | | | | | | | | | | | | | | | | | | |
| Range | | Weighted Average
(based on fair value of assets) |
| Unobservable Quantitative Input | March 31, 2021 | | December 31, 2020 | | March 31, 2021 | | December 31, 2020 |
| Discount rates | 7.1% to 15.0% | | 7.6% to 15.0% | | 11.9% | | 12.7% |
| Terminal capitalization rates | 5.3% to 10.6% | | 5.5% to 10.3% | | 7.3% | | 7.9% |
The inputs above are subject to change based on changes in economic and market conditions and/or changes in use or timing of exit. Changes in discount rates and terminal capitalization rates result in increases or decreases in the fair values of these investments. The discount rates encompass, among other things, uncertainties in the valuation models with respect to terminal capitalization rates and the amount and timing of cash flows. Therefore, a change in the fair value of these investments resulting from a change in the terminal capitalization rate may be partially offset by a change in the discount rate. It is not possible for us to predict the effect of future economic or market conditions on our estimated fair values.
The table below summarizes the changes in the fair value of real estate fund investments that are classified as Level 3.
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Beginning balance | $ | 45,129 |
| | $ | 322,858 |
| | $ | 222,649 |
| | $ | 318,758 |
|
| Purchases/additional fundings | — |
| | — |
| | 6,000 |
| | 4,000 |
|
| Net unrealized loss on held investments | (27,676 | ) | | (16,262 | ) | | (211,196 | ) | | (16,162 | ) |
| Ending balance | $ | 17,453 |
| | $ | 306,596 |
| | $ | 17,453 |
| | $ | 306,596 |
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, | | |
| 2021 | | 2020 | | | | |
| Beginning balance | $ | 3,739 | | | $ | 222,649 | | | | | |
| Purchases/additional fundings | 494 | | | 6,000 | | | | | |
| Net unrealized loss on held investments | (494) | | | (183,520) | | | | | |
| Ending balance | $ | 3,739 | | | $ | 45,129 | | | | | |
Deferred Compensation Plan Assets
Deferred compensation plan assets that are classified as Level 3 consist of investments in limited partnerships and investment funds, which are managed by third parties. We receive quarterly financial reports from a third-party administrator, which are compiled from the quarterly reports provided to them from each limited partnership and investment fund. The quarterly reports provide net asset values on a fair value basis which are audited by independent public accounting firms on an annual basis. The period of time over which these underlying assets are expected to be liquidated is unknown. The third party administrator does not adjust these values in determining our share of the net assets and we do not adjust these values when reported in our consolidated financial statements.
The table below summarizes the changes in the fair value of deferred compensation plan assets that are classified as Level 3.
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, | | |
| 2021 | | 2020 | | | | |
| Beginning balance | $ | 39,928 | | | $ | 32,435 | | | | | |
| Purchases | 449 | | | 1,293 | | | | | |
| Sales | (145) | | | (2,475) | | | | | |
| Realized and unrealized gains (losses) | 1,293 | | | (1,229) | | | | | |
| Other, net | 114 | | | 544 | | | | | |
| Ending balance | $ | 41,639 | | | $ | 30,568 | | | | | |
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Beginning balance | $ | 30,568 |
| | $ | 37,562 |
| | $ | 32,435 |
| | $ | 37,808 |
|
| Purchases | 5,656 |
| | 1,969 |
| | 6,949 |
| | 2,877 |
|
| Sales | (357 | ) | | (18,041 | ) | | (2,832 | ) | | (20,155 | ) |
| Realized and unrealized gains (losses) | 38 |
| | 215 |
| | (1,191 | ) | | 738 |
|
| Other, net | 267 |
| | 286 |
| | 811 |
| | 723 |
|
| Ending balance | $ | 36,172 |
| | $ | 21,991 |
| | $ | 36,172 |
| | $ | 21,991 |
|
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
| |
15. | Fair Value Measurements - continued |
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued
Loans Receivable
Loans receivable consist of loan investments in real estate related assets for which we have elected the fair value option under ASC 825-10 as of January 1, 2020.825-10. These investments are classified as Level 3.
Significant unobservable quantitative inputs used in determining the fair value of each investment include capitalization rates and discount rates. These rates are based on the location, type and nature of each property, current and anticipated market conditions, industry publications and from the experience of our Acquisitions and Capital Markets departments. Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of these loans receivable.
|
| | | |
| | June 30, 2020 |
| | Range | | Weighted Average
(based on fair value of investments) |
| Unobservable Quantitative Input | | | |
| Discount rates | 6.0% to 6.5% | | 6.1% |
| Terminal capitalization rates | 5.0% | | 5.0% |
| | | | | | | | | | | | | | | | | | | | | | | |
| Range | | Weighted Average
(based on fair value of investments) |
| Unobservable Quantitative Input | March 31, 2021 | | December 31, 2020 | | March 31, 2021 | | December 31, 2020 |
| Discount rates | 6.5% | | 6.5% | | 6.5% | | 6.5% |
| Terminal capitalization rates | 5.0% | | 5.0% | | 5.0% | | 5.0% |
The table below summarizes the changes in fair value of loans receivable that are classified as Level 3.
|
| | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, 2020 | | For the Six Months Ended June 30, 2020 |
| Beginning balance | $ | 51,990 |
| | $ | 59,251 |
|
| Credit losses | (6,108 | ) | | (13,369 | ) |
| Interest accrual | 793 |
| | 793 |
|
| Ending balance | $ | 46,675 |
| | $ | 46,675 |
|
| | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, | | |
| 2021 | | 2020 | | |
| Beginning balance | $ | 47,743 | | | $ | 59,251 | | | |
| Credit losses | 0 | | | (7,261) | | | |
| Interest accrual | 841 | | | 0 | | | |
| Paydowns | (375) | | | 0 | | | |
| Ending balance | $ | 48,209 | | | $ | 51,990 | | | |
Derivatives and Hedging
We utilize various financial instruments to mitigate the impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies, depending on our analysis of the interest rate environment and the costs and risks of such strategies. We recognize the fair values of all derivatives in "other assets" or "other liabilities" on our consolidated balance sheets. Derivatives that are not hedges are adjusted to fair value through earnings. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedge asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. Reported net income and equity may increase or decrease prospectively, depending on future levels of interest rates and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows.
The following tables summarize our consolidated derivative instruments, all of which hedge variable rate debt, as of June 30, 2020March 31, 2021 and December 31, 2019.2020.
|
| | | | | | | | | | | | | | | | |
| (Amounts in thousands) | | As of June 30, 2020 |
| | | | | | | Variable Rate | | | | |
| Hedged Item (Interest rate swaps) | | Fair Value | | Notional Amount | | Spread over LIBOR | | Interest Rate | | Swapped Rate | | Expiration Date |
| Included in other assets: | | | | | | | | | | | | |
| Other | | $ | 67 |
| | $ | 175,000 |
| | | | | | | | |
| | | | | | | | | | | | | |
| Included in other liabilities: | | | | | | | | | | | | |
| Unsecured term loan | | $ | 68,709 |
| | $ | 750,000 |
| (1) | L+100 | | 1.18% | | 3.87% | | 10/23 |
| 33-00 Northern Boulevard mortgage loan | | 9,592 |
| | 100,000 |
| | L+180 | | 1.99% | | 4.14% | | 1/25 |
| 888 Seventh Avenue mortgage loan | | 2,355 |
| | 375,000 |
| | L+170 | | 1.88% | | 3.25% | | 12/20 |
| 770 Broadway mortgage loan | | 846 |
| | 700,000 |
| | L+175 | | 1.93% | | 2.56% | | 9/20 |
| | | $ | 81,502 |
| | $ | 1,925,000 |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | | As of March 31, 2021 |
| | | | | | Variable Rate | | | | |
| Hedged Item | | Fair Value | | Notional Amount | | Spread over LIBOR | | Interest Rate | | Swapped Rate | | Expiration Date |
| Included in other assets: | | | | | | | | | | | | |
PENN 11 mortgage loan interest rate swap(1) | | $ | 1,812 | | | $ | 500,000 | | | L+275 | | 2.85% | | 3.03% | | 3/24 |
| Various interest rate caps | | 88 | | | 175,000 | | | | | | | | | |
| | $ | 1,900 | | | $ | 675,000 | | | | | | | | | |
| | | | | | | | | | | | |
| Included in other liabilities: | | | | | | | | | | | | |
| Unsecured term loan interest rate swap | | $ | 49,827 | | | $ | 750,000 | | (2) | L+100 | | 1.11% | | 3.87% | | 10/23 |
| 33-00 Northern Boulevard mortgage loan interest rate swap | | 6,448 | | | 100,000 | | | L+180 | | 1.91% | | 4.14% | | 1/25 |
| | $ | 56,275 | | | $ | 850,000 | | | | | | | | | |
____________________
| |
(1) | (1)Entered into on March 7, 2021. (2)Remaining $50,000 balance of our unsecured term loan bears interest at a floating rate of LIBOR plus 1.00%.
$50,000 balance of our unsecured term loan bears interest at a floating rate of LIBOR plus 1.00%.
|
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
15.13. Fair Value Measurements - continued
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued
Derivatives and Hedging -continued
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | | As of December 31, 2020 |
| | | | | | Variable Rate | | | | |
| Hedged Item | | Fair Value | | Notional Amount | | Spread over LIBOR | | Interest Rate | | Swapped Rate | | Expiration Date |
| Included in other assets: | | | | | | | | | | | | |
| Various interest rate caps | | $ | 17 | | | $ | 175,000 | | | | | | | | | |
| | | | | | | | | | | | |
| Included in other liabilities: | | | | | | | | | | | | |
| Unsecured term loan interest rate swap | | $ | 57,723 | | | $ | 750,000 | | (1) | L+100 | | 1.15% | | 3.87% | | 10/23 |
| 33-00 Northern Boulevard mortgage loan interest rate swap | | 8,310 | | | 100,000 | | | L+180 | | 1.95% | | 4.14% | | 1/25 |
| | $ | 66,033 | | | $ | 850,000 | | | | | | | | | |
|
| | | | | | | | | | | | | | | | |
| (Amounts in thousands) | | As of December 31, 2019 |
| | | | | | | Variable Rate | | | | |
| Hedged Item (Interest rate swaps) | | Fair Value | | Notional Amount | | Spread over LIBOR | | Interest Rate | | Swapped Rate | | Expiration Date |
| Included in other assets: | | | | | | | | | | | | |
| 770 Broadway mortgage loan | | $ | 4,045 |
| | $ | 700,000 |
| | L+175 | | 3.46% | | 2.56% | | 9/20 |
| 888 Seventh Avenue mortgage loan | | 218 |
| | 375,000 |
| | L+170 | | 3.44% | | 3.25% | | 12/20 |
| Other | | 64 |
| | 175,000 |
| | | | | | | | |
| | | $ | 4,327 |
| | $ | 1,250,000 |
| | | | | | | | |
| | | | | | | | | | | | | |
| Included in other liabilities: | | | | | | | | | | | | |
| Unsecured term loan | | $ | 36,809 |
| | $ | 750,000 |
| | L+100 | | 2.80% | | 3.87% | | 10/23 |
| 33-00 Northern Boulevard mortgage loan | | 3,545 |
| | 100,000 |
| | L+180 | | 3.52% | | 4.14% | | 1/25 |
| | | $ | 40,354 |
| | $ | 850,000 |
| | | | | | | | |
Fair Value Measurements on a Nonrecurring Basis
As of June 30, 2020, assets measured at fair value on a nonrecurring basis (for impairment purposes) on our consolidated balance sheet consist of our investment in Fifth Avenue and Times Square JV. There were 0no assets measured at fair value on a nonrecurring basis on our consolidated balance sheet as of March 31, 2021. As of December 31, 2019.2020, assets measured at fair value on a nonrecurring basis on our consolidated balance sheet consisted of real estate assets that have been written down to estimated fair value for impairment purposes. The impairment losses primarily relate to wholly owned street retail assets.
Our estimate of the fair value of our investment in Fifth Avenue and Times Square JVthese assets was measured using awidely accepted valuation techniques including (i) discounted cash flow analysisanalyses based upon market conditions and expectations of growth and utilized unobservable quantitative inputs, including a capitalization rate of 4.5%5.0% and discount rate of 6.0%7.0%, resulting in a write-down during the three months ended June 30, 2020 of $306,326,000 before noncontrolling interests of $467,000 (see Note 8 - Investments in Partially Owned Entities).and (ii) comparable sales activity.
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | As of June 30, 2020 |
| | Total | | Level 1 | | Level 2 | | Level 3 |
| Investment in Fifth Avenue and Times Square JV | $ | 2,955,957 |
| | $ | — |
| | $ | — |
| | $ | 2,955,957 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | As of December 31, 2020 |
| Total | | Level 1 | | Level 2 | | Level 3 |
| Real estate assets | $ | 191,116 | | | $ | 0 | | | $ | 0 | | | $ | 191,116 | |
Financial Assets and Liabilities not Measured at Fair Value
Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash equivalents (primarily money market funds, which invest in obligations of the United States government), and our secured and unsecured debt. Estimates of the fair value of these instruments are determined by the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate, which is provided by a third-party specialist. For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash flows we would be required to make under the instrument. The fair value of cash equivalents and borrowings under our unsecured revolving credit facilities and unsecured term loan are classified as Level 1. The fair value of our secured debt and unsecured debt are classified as Level 2. The table below summarizes the carrying amounts and fair value of these financial instruments.
|
| | | | | | | | | | | | | | | | |
| (Amounts in thousands) | As of June 30, 2020 | | As of December 31, 2019 |
| | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
| Cash equivalents | $ | 1,494,756 |
| | $ | 1,495,000 |
| | $ | 1,276,815 |
| | $ | 1,277,000 |
|
| Debt: | | | | | | | |
| | Mortgages payable | $ | 5,662,657 |
| | $ | 5,656,000 |
| | $ | 5,670,016 |
| | $ | 5,714,000 |
|
| | Senior unsecured notes | 450,000 |
| | 450,000 |
| | 450,000 |
| | 468,000 |
|
| | Unsecured term loan | 800,000 |
| | 800,000 |
| | 750,000 |
| | 750,000 |
|
| | Unsecured revolving credit facilities | 1,075,000 |
| | 1,075,000 |
| | 575,000 |
| | 575,000 |
|
| | Total | $ | 7,987,657 |
| (1) | $ | 7,981,000 |
| | $ | 7,445,016 |
| (1) | $ | 7,507,000 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | As of March 31, 2021 | | As of December 31, 2020 |
| | Carrying
Amount | | Fair
Value | | Carrying
Amount | | Fair
Value |
| Cash equivalents | $ | 1,275,625 | | | $ | 1,276,000 | | | $ | 1,476,427 | | | $ | 1,476,000 | |
| Debt: | | | | | | | |
| Mortgages payable | $ | 5,600,127 | | | $ | 5,624,000 | | | $ | 5,608,458 | | | $ | 5,612,000 | |
| Senior unsecured notes | 450,000 | | | 474,000 | | | 450,000 | | | 476,000 | |
| Unsecured term loan | 800,000 | | | 800,000 | | | 800,000 | | | 800,000 | |
| Unsecured revolving credit facilities | 575,000 | | | 575,000 | | | 575,000 | | | 575,000 | |
| Total | $ | 7,425,127 | | (1) | $ | 7,473,000 | | | $ | 7,433,458 | | (1) | $ | 7,463,000 | |
____________________
| |
(1) | Excludes $31,790 and $38,407 of deferred financing costs, net and other as of June 30, 2020 and December 31, 2019, respectively. |
(1)Excludes $32,589 and $34,462 of deferred financing costs, net and other as of March 31, 2021 and December 31, 2020, respectively.
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
| |
16. | Stock-based Compensation |
We account for all equity-based compensation in accordance with ASC Topic 718, Compensation - Stock Compensation. Stock-based compensation expense, a component of "general and administrative" expense on our consolidated statements of income, was $7,703,000$21,225,000 and $10,520,000$25,765,000 for the three months ended June 30,March 31, 2021 and 2020, and 2019, respectively, and $33,468,000 and $42,174,000 for the six months ended June 30, 2020 and 2019, respectively.
20202021 Outperformance Plan ("20202021 OPP")
On March 30, 2020,January 12, 2021, the Compensation Committee of Vornado's Board of Trustees (the "Committee") approved the 20202021 OPP, a multi-year, $35,000,000$30,000,000 performance-based equity compensation plan of which $32,930,000 was granted to senior executives. The fair value of the 2020 OPP granted was $11,686,000, of which $7,583,000 was immediately expensed due to the acceleration of vesting for employees who are retirement eligible (have reached age 65 or age 60 with at least 20 years of service). The remaining $4,103,000 is being amortized into expense over a five-year period from the date of grant using a graded vesting attribution model.
Under the 2020 OPP, participants have the opportunity to earn compensation payable in the form of equity awards if Vornado common shares outperform a predetermined total shareholder return (“TSR”) and/or outperform the market with respect to relative total TSR during the three-year performance period (the “Performance Period”) from March 30, 2020 to March 30, 2023 (the “Measurement Date”). Specifically, awardsplan. Awards under the 20202021 OPP may potentially be earned if Vornado (i) achieves a total shareholder return ("TSR") greater than 28% over a four-year performance period (the “2021 OPP Absolute Component”), and /or (ii) achieves a TSR above a benchmark weighted index (the “Index”)the Index comprised 80% of the SNL US Office REIT Index and 20% of the SNL US Retail Index over the Performance Period (the “Relative“2021 OPP Relative Component”), and/or (ii) achieves a TSR greater than 21% over the Performance Period (the “Absolute Component”).
The value of awards under the Relative2021 OPP Absolute Component and Absolute2021 OPP Relative Component will be calculated separately and will each be subject to an aggregate $35,000,000$30,000,000 maximum award cap for all participants. The 2 components will be added together to determine the aggregate award size, which shall also be subject to the aggregate $35,000,000$30,000,000 maximum award cap for all participants. In the event awards are earned under the 2021 OPP Absolute Component, but Vornado underperforms the Index by more than 200 basis points per annum over the Performance Period (600(800 basis points over the threefour years), the amount earned under the 2021 OPP Absolute Component will be reduced based on the degree by which the Index exceeds Vornado’s TSR with the maximum payout being 50% under the 2021 OPP Absolute Component. In the event awards are earned under the 2021 OPP Relative Component, but Vornado fails to achieve a TSR of at least 2% per annum, awards earned under the 2021 OPP Relative Component will be reduced on a ratable sliding scale based on Vornado’s absolute TSR performance, with awards earnedthe maximum payout being 50% under the 2021 OPP Relative Component being reduced by a maximum of 50% in the event Vornado’s TSR during the Measurement Periodfour-year measurement period is 0% or negative. If the designated performance objectives are achieved, awards earned under the 20202021 OPP will vest ratably on the Measurement Date50% in year four and the first and second anniversary of the Measurement Date.50% in year five. In addition, all of Vornado’s Named Executive Officers (as defined in Vornado’s Proxy Statement filed on Schedule 14A with the Securities and Exchange Commission on April 3, 2020)senior executives are required to hold any earned and vested awards for one year following each such vesting date. Dividends on awards granted under the 20202021 OPP accrue during the Performance Periodfour-year performance period and are paid to participants if awards are ultimately earned based on the achievement of the designated performance objectives.
15. Interest and Other Investment Income (Loss), Net
The following table sets forth the details of interest and other investment income (loss), net:
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, | | |
| 2021 | | 2020 | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Interest on loans receivable | $ | 560 | | | $ | 1,426 | | | | | |
| Interest on cash and cash equivalents and restricted cash | 62 | | | 3,966 | | | | | |
| Credit losses on loans receivable | 0 | | | (7,261) | | | | | |
| Market-to-market decrease in the fair value of marketable security (sold on January 23, 2020) | 0 | | | (4,938) | | | | | |
| Other, net | 900 | | | 903 | | | | | |
| Total | $ | 1,522 | | | $ | (5,904) | | | | | |
16. Interest and Debt Expense
The following table sets forth the details of interest and debt expense:
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, | | |
| 2021 | | 2020 | | | | |
| Interest expense | $ | 55,651 | | | $ | 66,635 | | | | | |
| Capitalized interest and debt expense | (10,267) | | | (12,055) | | | | | |
| Amortization of deferred financing costs | 4,680 | | | 4,262 | | | | | |
| $ | 50,064 | | | $ | 58,842 | | | | | |
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
| |
17. | Lease Liability Extinguishment Gain (Transaction Related Costs and Impairment Losses)
|
The following table sets forth the details of lease liability extinguishment gain (transaction related costs and impairment losses): |
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| 608 Fifth Avenue non-cash lease liability extinguishment gain (impairment loss) (see below for details) | $ | 70,260 |
| | $ | (93,860 | ) | | $ | 70,260 |
| | $ | (93,860 | ) |
| Transaction related costs | (1,039 | ) | | (230 | ) | | (1,110 | ) | | (379 | ) |
| Other non-cash impairment losses | — |
| | (7,500 | ) | | — |
| | (7,500 | ) |
| | $ | 69,221 |
| | $ | (101,590 | ) | | $ | 69,150 |
| | $ | (101,739 | ) |
608 Fifth Avenue
During the second quarter of 2019, Arcadia Group US Ltd ("Arcadia Group"), the operator of Topshop, our retail tenant at 608 Fifth Avenue, filed for Chapter 15 bankruptcy protection in the United States. On June 28, 2019, Arcadia Group closed all of its stores in the United States. 608 Fifth Avenue was subject to a land and building lease which was set to expire in 2033. During the second quarter of 2019, we concluded that the carrying amount of the property was not recoverable and recognized a $93,860,000 non-cash impairment loss on our consolidated statements of income, of which $75,220,000 resulted from the impairment of our right-of-use asset.
On May 20, 2020, we entered into an agreement with the land and building lessor at 608 Fifth Avenue to surrender the property.17. Income Per the terms of the agreement, we were released from our obligations under the lease and assigned all of our right, title and interest in the tenant leases of 608 Fifth Avenue to the land and building lessor. In connection therewith, we removed the lease liability from our consolidated balance sheets which resulted in a $70,260,000 gain recorded on our consolidated statements of income during the second quarter of 2020.Share/Income Per Class A Unit
| |
18. | Interest and Other Investment (Loss) Income, Net
|
The following table sets forth the details of interest and other investment (loss) income, net:
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Increase (decrease) in fair value of marketable securities: | | | | | | | |
PREIT(1) | $ | — |
| | $ | 1,313 |
| | $ | (4,938 | ) | | $ | (14,336 | ) |
Lexington Realty Trust(2) | — |
| | — |
| | — |
| | 16,068 |
|
| Other | — |
| | (1 | ) | | — |
| | 41 |
|
| | — |
| | 1,312 |
| | (4,938 | ) | | 1,773 |
|
Credit losses on loans receivable(3) | (6,108 | ) | | — |
| | (13,369 | ) | | — |
|
| Interest on cash and cash equivalents and restricted cash | 1,498 |
| | 2,626 |
| | 5,464 |
| | 4,693 |
|
| Interest on loans receivable | 810 |
| | 1,635 |
| | 2,236 |
| | 3,241 |
|
| Dividends on marketable securities | — |
| | 1,313 |
| | — |
| | 1,313 |
|
| Other, net | 907 |
| | 954 |
| | 1,810 |
| | 1,865 |
|
| | $ | (2,893 | ) | | $ | 7,840 |
| | $ | (8,797 | ) | | $ | 12,885 |
|
____________________
| |
(1) | Sold on January 23, 2020 (see page 27 for details). |
| |
(2) | Sold on March 1, 2019. |
| |
(3) | See Note 4 - Recently Issued Accounting Literatureand Note 15 - Fair Value Measurementsfor details.
|
| |
19. | Interest and Debt Expense
|
The following table sets forth the details of interest and debt expense:
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
Interest expense(1) | $ | 63,545 |
| | $ | 76,605 |
| | $ | 130,180 |
| | $ | 194,252 |
|
| Capitalized interest and debt expense | (9,446 | ) | | (19,812 | ) | | (21,501 | ) | | (43,137 | ) |
| Amortization of deferred financing costs | 4,306 |
| | 6,236 |
| | 8,568 |
| | 14,377 |
|
| | $ | 58,405 |
| | $ | 63,029 |
| | $ | 117,247 |
| | $ | 165,492 |
|
____________________
| |
(1) | Thesix months ended June 30, 2019 includes $22,540 of debt prepayment costs in connection with the redemption of $400,000 5.00% senior unsecured notes which were scheduled to mature in January 2022.
|
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
| |
20. | (Loss) Income Per Share/(Loss) Income Per Class A Unit |
Vornado Realty Trust
The following table presents the calculations of (i) basic (loss) income per common share which includes the weighted average number of common shares outstanding without regard to dilutive potential common shares and (ii) diluted (loss) income per common share which includes the weighted average common shares and dilutive share equivalents. Unvested share-based payment awards that contain nonforfeitable rights to dividends, whether paid or unpaid, are accounted for as participating securities. Earnings are allocated to participating securities, which include restricted stock awards, based on the two-class method. Other potential dilutive share equivalents such as our employee stock options, restricted Operating Partnership units ("OP Units"), out-performance plan awards ("OPPs"), appreciation-only long term incentive plan units ("AO LTIP Units") and Performance Conditioned AO LTIP Units are included in the computation of diluted Earnings Per Share ("EPS") using the treasury stock method, while the dilutive effect of our Series A convertible preferred shares is reflected in diluted EPS by application of the if-converted method.
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands, except per share amounts) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Numerator: | | | | | | | |
| (Loss) income from continuing operations, net of (loss) income attributable to noncontrolling interests | $ | (185,220 | ) | | $ | 2,412,671 |
| | $ | (167,726 | ) | | $ | 2,606,821 |
|
| Income (loss) from discontinued operations | — |
| | 56 |
| | — |
| | (72 | ) |
| Net (loss) income attributable to Vornado | (185,220 | ) | | 2,412,727 |
| | (167,726 | ) | | 2,606,749 |
|
| Preferred share dividends | (12,530 | ) | | (12,532 | ) | | (25,061 | ) | | (25,066 | ) |
| Net (loss) income attributable to common shareholders | (197,750 | ) | | 2,400,195 |
| | (192,787 | ) | | 2,581,683 |
|
| Earnings allocated to unvested participating securities | (18 | ) | | (239 | ) | | (69 | ) | | (258 | ) |
| Numerator for basic (loss) income per share | (197,768 | ) | | 2,399,956 |
| | (192,856 | ) | | 2,581,425 |
|
| Impact of assumed conversions: | | | | | | | |
| Convertible preferred share dividends | — |
| | 14 |
| | — |
| | 29 |
|
| Earnings allocated to Out-Performance Plan units | — |
| | — |
| | — |
| | 9 |
|
| Numerator for diluted (loss) income per share | $ | (197,768 | ) | | $ | 2,399,970 |
| | $ | (192,856 | ) | | $ | 2,581,463 |
|
| | | | | | | | |
| Denominator: | | | | | | | |
| Denominator for basic (loss) income per share – weighted average shares | 191,104 |
| | 190,781 |
| | 191,071 |
| | 190,735 |
|
Effect of dilutive securities(1): | | | | | | | |
| Employee stock options and restricted stock awards | — |
| | 243 |
| | — |
| | 256 |
|
| Convertible preferred shares | — |
| | 34 |
| | — |
| | 35 |
|
| Out-Performance Plan units | — |
| | — |
| | — |
| | 4 |
|
| Denominator for diluted (loss) income per share – weighted average shares and assumed conversions | 191,104 |
| | 191,058 |
| | 191,071 |
| | 191,030 |
|
| | | | | | | | |
| (LOSS) INCOME PER COMMON SHARE - BASIC: | | | | | | | |
| Net (loss) income per common share | $ | (1.03 | ) | | $ | 12.58 |
| | $ | (1.01 | ) | | $ | 13.53 |
|
| | | | | | | | |
| (LOSS) INCOME PER COMMON SHARE - DILUTED: | | | | | | | |
| Net (loss) income per common share | $ | (1.03 | ) | | $ | 12.56 |
| | $ | (1.01 | ) | | $ | 13.51 |
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands, except per share amounts) | For the Three Months Ended March 31, | | |
| 2021 | | 2020 | | | | |
| Numerator: | | | | | | | |
| | | | | | | |
| | | | | | | |
| Net income attributable to Vornado | $ | 20,550 | | | $ | 17,494 | | | | | |
| Preferred share dividends | (16,467) | | | (12,531) | | | | | |
| Net income attributable to common shareholders | 4,083 | | | 4,963 | | | | | |
| Earnings allocated to unvested participating securities | (9) | | | (51) | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Numerator for diluted income per share | $ | 4,074 | | | $ | 4,912 | | | | | |
| | | | | | | |
| Denominator: | | | | | | | |
| Denominator for basic income per share – weighted average shares | 191,418 | | | 191,038 | | | | | |
Effect of dilutive securities(1): | | | | | | | |
| Out-Performance Plan units | 608 | | | 0 | | | | | |
| AO LTIP units | 4 | | | 0 | | | | | |
| Employee stock options and restricted stock awards | 1 | | | 75 | | | | | |
| | | | | | | |
| Denominator for diluted income per share – weighted average shares and assumed conversions | 192,031 | | | 191,113 | | | | | |
| | | | | | | |
| INCOME PER COMMON SHARE - BASIC: | | | | | | | |
| | | | | | | |
| | | | | | | |
| Net income per common share | $ | 0.02 | | | $ | 0.03 | | | | | |
| | | | | | | |
| INCOME PER COMMON SHARE - DILUTED: | | | | | | | |
| | | | | | | |
| | | | | | | |
| Net income per common share | $ | 0.02 | | | $ | 0.03 | | | | | |
____________________
| |
(1) | The effect of dilutive securities excluded an aggregate of 14,242 and 12,609 weighted average common shares for the three months ended June 30, 2020 and 2019, respectively, and 13,992 and 12,521 weighted average common share equivalents for the six months ended June 30, 2020 and 2019, respectively, as their effect was anti-dilutive. |
(1)The effect of dilutive securities excluded an aggregate of 13,485 and 13,543 weighted average common share equivalents for the three months ended March 31, 2021 and 2020, respectively, as their effect was anti-dilutive.
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
| |
20. | (Loss) Income Per Share/(Loss) Income Per Class A Unit - continued |
Vornado Realty L.P.
The following table presents the calculations of (i) basic (loss) income per Class A unit which includes the weighted average number of Class A units outstanding without regard to dilutive potential Class A units and (ii) diluted (loss) income per Class A unit which includes the weighted average Class A unitunits and dilutive Class A unit equivalents. Unvested share-based payment awards that contain non-forfeitable rights to dividends, whether paid or unpaid, are accounted for as participating securities. Earnings are allocated to participating securities, which include Vornado restricted stock awards, OP Units and OPPs, based on the two-class method. Other potential dilutive unit equivalents such as Vornado stock options, AO LTIP Units and Performance Conditioned AO LTIP Units are included in the computation of diluted income per unit ("EPU") using the treasury stock method, while the dilutive effect of our Series A convertible preferred units is reflected in diluted EPU by application of the if-converted method.
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands, except per unit amounts) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Numerator: | | | | | | | |
| (Loss) income from continuing operations, net of (loss) income attributable to noncontrolling interests in consolidated subsidiaries | $ | (199,584 | ) | | $ | 2,575,182 |
| | $ | (181,700 | ) | | $ | 2,781,543 |
|
| Income (loss) from discontinued operations | — |
| | 60 |
| | — |
| | (77 | ) |
| Net (loss) income attributable to Vornado Realty L.P. | (199,584 | ) | | 2,575,242 |
| | (181,700 | ) | | 2,781,466 |
|
| Preferred unit distributions | (12,571 | ) | | (12,573 | ) | | (25,143 | ) | | (25,148 | ) |
| Net (loss) income attributable to Class A unitholders | (212,155 | ) | | 2,562,669 |
| | (206,843 | ) | | 2,756,318 |
|
| Earnings allocated to unvested participating securities | (1,439 | ) | | (10,162 | ) | | (6,357 | ) | | (10,860 | ) |
| Numerator for basic (loss) income per Class A unit | (213,594 | ) | | 2,552,507 |
| | (213,200 | ) | | 2,745,458 |
|
| Impact of assumed conversions: | | | | | | | |
| Convertible preferred unit distributions | — |
| | 14 |
| | — |
| | 29 |
|
| Numerator for diluted (loss) income per Class A unit | $ | (213,594 | ) | | $ | 2,552,521 |
| | $ | (213,200 | ) | | $ | 2,745,487 |
|
| | | | | | | | |
| Denominator: | | | | | | | |
| Denominator for basic (loss) income per Class A unit – weighted average units | 203,512 |
| | 202,924 |
| | 203,441 |
| | 202,848 |
|
Effect of dilutive securities(1): | | | | | | | |
| Vornado stock options, Vornado restricted stock awards, OP Units, AO LTIP Units and OPPs | — |
| | 522 |
| | — |
| | 508 |
|
| Convertible preferred units | — |
| | 34 |
| | — |
| | 35 |
|
| Denominator for diluted (loss) income per Class A unit – weighted average units and assumed conversions | 203,512 |
| | 203,480 |
| | 203,441 |
| | 203,391 |
|
| | | | | | | | |
| (LOSS) INCOME PER CLASS A UNIT - BASIC: | | | | | | | |
| Net (loss) income per Class A unit | $ | (1.05 | ) | | $ | 12.58 |
| | $ | (1.05 | ) | | $ | 13.53 |
|
| | | | | | | | |
| (LOSS) INCOME PER CLASS A UNIT - DILUTED: | | | | | | | |
| Net (loss) income per Class A unit | $ | (1.05 | ) | | $ | 12.54 |
| | $ | (1.05 | ) | | $ | 13.50 |
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands, except per unit amounts) | For the Three Months Ended March 31, | | |
| 2021 | | 2020 | | | | |
| Numerator: | | | | | | | |
| | | | | | | |
| | | | | | | |
| Net income attributable to Vornado Realty L.P. | $ | 20,879 | | | $ | 17,884 | | | | | |
| Preferred unit distributions | (16,508) | | | (12,572) | | | | | |
| Net income attributable to Class A unitholders | 4,371 | | | 5,312 | | | | | |
| Earnings allocated to unvested participating securities | (721) | | | (4,918) | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Numerator for diluted income per Class A unit | $ | 3,650 | | | $ | 394 | | | | | |
| | | | | | | |
| Denominator: | | | | | | | |
| Denominator for basic income per Class A unit – weighted average units | 204,072 | | | 203,370 | | | | | |
Effect of dilutive securities(1): | | | | | | | |
| Vornado stock options, Vornado restricted stock awards, OP Units, AO LTIP Units and OPPs | 829 | | | 146 | | | | | |
| | | | | | | |
| Denominator for diluted income per Class A unit – weighted average units and assumed conversions | 204,901 | | | 203,516 | | | | | |
| | | | | | | |
| INCOME PER CLASS A UNIT - BASIC: | | | | | | | |
| | | | | | | |
| | | | | | | |
| Net income per Class A unit | $ | 0.02 | | | $ | 0 | | | | | |
| | | | | | | |
| INCOME PER CLASS A UNIT - DILUTED: | | | | | | | |
| | | | | | | |
| | | | | | | |
| Net income per Class A unit | $ | 0.02 | | | $ | 0 | | | | | |
____________________
| |
(1) | The effect of dilutive securities excluded an aggregate of 1,834(1)The effect of dilutive securities excluded an aggregate of 615 and 1,140 weighted average Class A unit equivalents for the three months ended March 31, 2021 and 187 Class A unit equivalents for the three months ended June 30, 2020, and 2019, respectively, and 1,622and 160 Class A unit equivalents for the six months ended June 30, 2020 and 2019, respectively, as their effect was anti-dilutive. |
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
| |
21. | Commitments and Contingencies
|
Insurance
For our properties except Farley Office and Retail,(except Farley), we maintain general liability insurance with limits of $300,000,000 per occurrence and per property, of which $235,000,000 includes communicable disease coverage, and we maintain all risk property and rental value insurance with limits of $2.0 billion per occurrence, with sub-limits for certain perils such as flood and earthquake.earthquake and effective February 15, 2021, excluding communicable disease coverage. For the period February 15, 2020 through February 14, 2021, we and the insurance carriers for our all risk property policy have disagreements as to the applicability of a $2,300,000 sub-limit for communicable disease coverage across our properties. Our California properties have earthquake insurance with coverage of $350,000,000 per occurrence and in the aggregate, subject to a deductible in the amount of 5% of the value of the affected property. We maintain coverage for certified terrorism acts with limits of $6.0 billion per occurrence and in the aggregate (as listed below), $1.2 billion for non-certified acts of terrorism, and $5.0 billion per occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological (“NBCR”) terrorism events, as defined by the Terrorism Risk Insurance Act of 2002, as amended to date and which has been extended through December 2027.
Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a portion of all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for acts of terrorism including NBCR acts. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third-party insurance companies and the Federal government with no exposure to PPIC. For NBCR acts, PPIC is responsible for a deductible of $1,430,413$1,759,257 and 20% of the balance of a covered loss and the Federal government is responsible for the remaining portion of a covered loss. We are ultimately responsible for any loss incurred by PPIC.
For Farley, Office and Retail, we maintain general liability insurance with limits of $100,000,000 per occurrence, and builder’s risk insurance including coverage for existing property and development activities of $2.8 billion per occurrence and in the aggregate. We maintain coverage for certified and non-certified terrorism acts with limits of $1.0$1.85 billion and $1.17 billion per occurrence, respectively, and in the aggregate.
We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism and other events. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material.
Our debt instruments, consisting of mortgage loans secured by our properties, senior unsecured notes and revolving credit agreements contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain it could adversely affect our ability to finance or refinance our properties and expand our portfolio.
Farley Office and Retail
The consolidated joint venture in which we own a 95% ownership interest was designated by Empire State Development ("ESD") to develop Farley Office and Retail. The joint venture entered into a development agreement with ESD and a design-build contract with Skanska Moynihan Train Hall Builders. Under the development agreement with ESD, the joint venture is obligated to build the Moynihan Train Hall, with Vornado and Related each guaranteeing the joint venture’s obligations. Under the design-build agreement, Skanska Moynihan Train Hall Builders is obligated to fulfill all of the joint venture’s obligations. The obligations of Skanska Moynihan Train Hall Builders have been bonded by Skanska USA and bear a full guaranty from Skanska AB.
In connection with the development of the property, the joint venture took in a historic tax credit investor partner. Under the terms of the historic tax credit arrangement, the joint venture is required to comply with various laws, regulations, and contractual provisions. Non-compliance with applicable requirements could result in projected tax benefits not being realized and, therefore, require a refund or reduction of the Tax Credit Investor’s capital contributions. As of June 30, 2020, the Tax Credit Investor has made $92,400,000 in capital contributions. Vornado and Related have guaranteed certain of the joint venture’s obligations to the Tax Credit Investor.
Other Commitments and Contingencies
We are from time to time involved in legal actions arising in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters is not currently expected to have a material adverse effect on our financial position, results of operations or cash flows.
Each of our properties has been subjected to varying degrees of environmental assessment at various times. The environmental assessments did not reveal any material environmental contamination. However, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites, or changes in cleanup requirements would not result in significant costs to us.
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
| |
21. | Commitments and Contingencies - continued |
Other Commitments and Contingencies - continued
In July 2018, we leased 78,000 square feet at 345 Montgomery Street in San Francisco, CA, to a subsidiary of Regus PLC, for an initial term of 15 years. The obligations under the lease were guaranteed by Regus PLC in an amount of up to $90,000,000. The tenant purported to terminate the lease prior to space delivery. We commenced a suit on October 23, 2019 seeking to enforce the lease and the guarantee.guaranty. In December 2020, following a trial, the court issued a tentative ruling in our favor and on April 7, 2021 the court issued a written proposed statement of decision and proposed judgement in our favor. On October 9, 2020, the successor to Regus PLC filed for bankruptcy in Luxembourg. We are actively pursuing claims relating to the guaranty against the successor to Regus PLC and its parent, in Luxembourg and other jurisdictions.
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
18. Commitments and Contingencies - continued
Other Commitments and Contingencies - continued
In November 2011, we entered into an agreement with the New York City Economic Development Corporation ("EDC") to lease Piers 92 and 94 (the "Piers") for a 49-year term with 5 10-year renewal options. The non-recourse lease with a single-purpose entity calls for current annual rent payments of $2,000,000 with fixed rent steps through the initial term. We operate trade shows and special events at the Piers (and sublease to others for the same uses). In February 2019, an inspection revealed that the piles supporting Pier 92 were structurally unsound (an obligation of EDC to maintain) and we were issued an order by EDC to vacate the property. We continued to make the required lease payments through February 2020, with no abatement provided by EDC for the loss of our right-to-useright to use Pier 92 or reimbursement for lost revenues. Beginning March 2020, as no resolution had been reached with EDC, we didhave not paypaid the monthly rents due under the non-recourse lease. As of June 30, 2020,March 31, 2021, we have a $46,350,000$48,036,000 lease liability and a $34,647,000$34,400,000 right-of-use asset recorded for this lease.
Our mortgage loans are non-recourse to us, except for the mortgage loans secured by 640 Fifth Avenue, 7 West 34th Street and 435 Seventh Avenue, which we guaranteed and therefore are part of our tax basis. In certain cases, we have provided guarantees or master leased tenant space. These guarantees and master leases terminate either upon the satisfaction of specified circumstances or repayment of underlying loans. In addition, we have guaranteed the rent and payments in lieu of real estate taxes due to ESD,Empire State Development, an entity of New York State, for Farley Office and Retail. As of June 30, 2020,March 31, 2021, the aggregate dollar amount of these guarantees and master leases is approximately $1,537,000,000.$1,724,000,000.
As of June 30, 2020, $17,002,000March 31, 2021, $13,549,000 of letters of credit were outstanding under one of our unsecured revolving credit facilities. Our unsecured revolving credit facilities contain financial covenants that require us to maintain minimum interest coverage and maximum debt to market capitalization ratios, and provide for higher interest rates in the event of a decline in our ratings below Baa3/BBB. Our unsecured revolving credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and also contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.
Our 95% consolidated joint venture (5% is owned by Related Companies ("Related")) is developing Farley Office and Retail. In connection with the development of the property, the joint venture took in a historic Tax Credit Investor. Under the terms of the historic tax credit arrangement, the joint venture is required to comply with various laws, regulations, and contractual provisions. Non-compliance with applicable requirements could result in projected tax benefits not being realized and, therefore, may require a refund or reduction of the Tax Credit Investor’s capital contributions. As of March 31, 2021, the Tax Credit Investor has made$92,400,000 in capital contributions. Vornado and Related have guaranteed certain of the joint venture’s obligations to the Tax Credit Investor.
As investment manager of the Fund we are entitled to an incentive allocation after the limited partners have received a preferred return on their invested capital. The incentive allocation is subject to catch-up and clawback provisions. Accordingly, based on the June 30, 2020March 31, 2021 fair value of the Fund assets, at liquidation we would be required to make a $32,000,00029,400,000 payment to the limited partners, net of amounts owed to us, representing a clawback of previously paid incentive allocations, which would have no income statement impact as it was previously accrued.
As of June 30, 2020,March 31, 2021, we expect to fund additional capital to certain of our partially owned entities aggregating approximately $11,000,000. $10,700,000.
As of June 30, 2020,March 31, 2021, we have construction commitments aggregating approximately $556,000,000.$441,000,000.
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
We operate in 2 reportable segments, New York and Other, which is based on how we manage our business.
Net operating income ("NOI") at share represents total revenues less operating expenses including our share of partially owned entities. NOI at share - cash basis represents NOI at share adjusted to exclude straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments. We consider NOI at share - cash basis to be the primary non-GAAP financial measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. As properties are bought and sold based on NOI at share - cash basis, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI at share and NOI at share - cash basis should not be considered alternatives to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies. NOI at share - cash basis includes rent that has been deferred as a result of the COVID-19 pandemic. Rent deferrals generally require repayment in monthly installments over a period of time not to exceed twelve months.
Below is a reconciliation of net income to NOI at share and NOI at share - cash basis for the three and six months ended June 30, 2020 and 2019.
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Net (loss) income | $ | (217,352 | ) | | $ | 2,596,693 |
| | $ | (321,855 | ) | | $ | 2,809,737 |
|
| Depreciation and amortization expense | 92,805 |
| | 113,035 |
| | 185,598 |
| | 229,744 |
|
| General and administrative expense | 35,014 |
| | 38,872 |
| | 87,848 |
| | 96,892 |
|
| (Lease liability extinguishment gain) transaction related costs and impairment losses | (69,221 | ) | | 101,590 |
| | (69,150 | ) | | 101,739 |
|
| Loss (income) from partially owned entities | 291,873 |
| | (22,873 | ) | | 272,770 |
| | (30,193 | ) |
| Loss from real estate fund investments | 28,042 |
| | 15,803 |
| | 211,505 |
| | 15,970 |
|
| Interest and other investment loss (income), net | 2,893 |
| | (7,840 | ) | | 8,797 |
| | (12,885 | ) |
| Interest and debt expense | 58,405 |
| | 63,029 |
| | 117,247 |
| | 165,492 |
|
| Net gain on transfer to Fifth Avenue and Times Square JV | — |
| | (2,571,099 | ) | | — |
| | (2,571,099 | ) |
| Net gains on disposition of wholly owned and partially owned assets | (55,695 | ) | | (111,713 | ) | | (124,284 | ) | | (332,007 | ) |
| Income tax expense | 1,837 |
| | 26,914 |
| | 14,650 |
| | 56,657 |
|
| (Income) loss from discontinued operations | — |
| | (60 | ) | | — |
| | 77 |
|
| NOI from partially owned entities | 69,487 |
| | 82,974 |
| | 151,368 |
| | 150,376 |
|
| NOI attributable to noncontrolling interests in consolidated subsidiaries | (15,448 | ) | | (16,416 | ) | | (30,941 | ) | | (33,819 | ) |
| NOI at share | 222,640 |
| | 308,909 |
| | 503,553 |
| | 646,681 |
|
| Non cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other | 34,190 |
| | 9,748 |
| | 37,266 |
| | 4,567 |
|
| NOI at share - cash basis | $ | 256,830 |
| | $ | 318,657 |
| | $ | 540,819 |
| | $ | 651,248 |
|
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
19. Segment Information - continued
Below is a reconciliation of net income (loss) to NOI at share and NOI at share - cash basis for the three months ended March 31, 2021 and 2020.
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, | | |
| 2021 | | 2020 | | | | |
| Net income (loss) | $ | 26,993 | | | $ | (104,503) | | | | | |
| Depreciation and amortization expense | 95,354 | | | 92,793 | | | | | |
| General and administrative expense | 44,186 | | | 52,834 | | | | | |
| Transaction related costs and other | 843 | | | 71 | | | | | |
| Income from partially owned entities | (29,073) | | | (19,103) | | | | | |
| Loss from real estate fund investments | 169 | | | 183,463 | | | | | |
| Interest and other investment (income) loss, net | (1,522) | | | 5,904 | | | | | |
| Interest and debt expense | 50,064 | | | 58,842 | | | | | |
| | | | | | | |
| | | | | | | |
| Net gains on disposition of wholly owned and partially owned assets | 0 | | | (68,589) | | | | | |
| Income tax expense | 1,984 | | | 12,813 | | | | | |
| | | | | | | |
| NOI from partially owned entities | 78,756 | | | 81,881 | | | | | |
| NOI attributable to noncontrolling interests in consolidated subsidiaries | (17,646) | | | (15,493) | | | | | |
| NOI at share | 250,108 | | | 280,913 | | | | | |
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other | (1,198) | | | 3,076 | | | | | |
| NOI at share - cash basis | $ | 248,910 | | | $ | 283,989 | | | | | |
| |
22. | Segment Information - continued |
Below is a summary of NOI at share and NOI at share - cash basisby segment for the three and six months ended June 30, 2020March 31, 2021 and 2019.2020.
| | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, 2021 |
| Total | | New York | | Other |
| Total revenues | $ | 379,977 | | | $ | 303,971 | | | $ | 76,006 | |
| Operating expenses | (190,979) | | | (160,985) | | | (29,994) | |
| NOI - consolidated | 188,998 | | | 142,986 | | | 46,012 | |
| Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries | (17,646) | | | (8,621) | | | (9,025) | |
| Add: NOI from partially owned entities | 78,756 | | | 76,773 | | | 1,983 | |
| NOI at share | 250,108 | | | 211,138 | | | 38,970 | |
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other | (1,198) | | | (973) | | | (225) | |
| NOI at share - cash basis | $ | 248,910 | | | $ | 210,165 | | | $ | 38,745 | |
| | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, 2020 |
| Total | | New York | | Other |
| Total revenues | $ | 444,532 | | | $ | 355,615 | | | $ | 88,917 | |
| Operating expenses | (230,007) | | | (183,031) | | | (46,976) | |
| NOI - consolidated | 214,525 | | | 172,584 | | | 41,941 | |
| Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries | (15,493) | | | (8,433) | | | (7,060) | |
| Add: NOI from partially owned entities | 81,881 | | | 78,408 | | | 3,473 | |
| NOI at share | 280,913 | | | 242,559 | | | 38,354 | |
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other | 3,076 | | | 1,106 | | | 1,970 | |
| NOI at share - cash basis | $ | 283,989 | | | $ | 243,665 | | | $ | 40,324 | |
|
| | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, 2020 |
| | Total | | New York | | Other |
| Total revenues | $ | 343,026 |
| | $ | 270,628 |
| | $ | 72,398 |
|
| Operating expenses | (174,425 | ) | | (140,207 | ) | | (34,218 | ) |
| NOI - consolidated | 168,601 |
| | 130,421 |
| | 38,180 |
|
| Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries | (15,448 | ) | | (8,504 | ) | | (6,944 | ) |
| Add: NOI from partially owned entities | 69,487 |
| | 67,051 |
| | 2,436 |
|
| NOI at share | 222,640 |
| | 188,968 |
| | 33,672 |
|
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other | 34,190 |
| | 32,943 |
| | 1,247 |
|
| NOI at share - cash basis | $ | 256,830 |
| | $ | 221,911 |
| | $ | 34,919 |
|
|
| | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, 2019 |
| | Total | | New York | | Other |
| Total revenues | $ | 463,103 |
| | $ | 376,381 |
| | $ | 86,722 |
|
| Operating expenses | (220,752 | ) | | (187,819 | ) | | (32,933 | ) |
| NOI - consolidated | 242,351 |
| | 188,562 |
| | 53,789 |
|
| Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries | (16,416 | ) | | (10,030 | ) | | (6,386 | ) |
| Add: NOI from partially owned entities | 82,974 |
| | 79,170 |
| | 3,804 |
|
| NOI at share | 308,909 |
| | 257,702 |
| | 51,207 |
|
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other | 9,748 |
| | 8,437 |
| | 1,311 |
|
| NOI at share - cash basis | $ | 318,657 |
| | $ | 266,139 |
| | $ | 52,518 |
|
|
| | | | | | | | | | | |
| (Amounts in thousands) | For the Six Months Ended June 30, 2020 |
| | Total | | New York | | Other |
| Total revenues | $ | 787,558 |
| | $ | 626,243 |
| | $ | 161,315 |
|
| Operating expenses | (404,432 | ) | | (323,238 | ) | | (81,194 | ) |
| NOI - consolidated | 383,126 |
| | 303,005 |
| | 80,121 |
|
| Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries | (30,941 | ) | | (16,937 | ) | | (14,004 | ) |
| Add: NOI from partially owned entities | 151,368 |
| | 145,459 |
| | 5,909 |
|
| NOI at share | 503,553 |
| | 431,527 |
| | 72,026 |
|
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other | 37,266 |
| | 34,049 |
| | 3,217 |
|
| NOI at share - cash basis | $ | 540,819 |
| | $ | 465,576 |
| | $ | 75,243 |
|
|
| | | | | | | | | | | |
| (Amounts in thousands) | For the Six Months Ended June 30, 2019 |
| | Total | | New York | | Other |
| Total revenues | $ | 997,771 |
| | $ | 819,666 |
| | $ | 178,105 |
|
| Operating expenses | (467,647 | ) | | (385,914 | ) | | (81,733 | ) |
| NOI - consolidated | 530,124 |
| | 433,752 |
| | 96,372 |
|
| Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries | (33,819 | ) | | (21,437 | ) | | (12,382 | ) |
| Add: NOI from partially owned entities | 150,376 |
| | 128,745 |
| | 21,631 |
|
| NOI at share | 646,681 |
| | 541,060 |
| | 105,621 |
|
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other | 4,567 |
| | 1,819 |
| | 2,748 |
|
| NOI at share - cash basis | $ | 651,248 |
| | $ | 542,879 |
| | $ | 108,369 |
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Trustees of Vornado Realty Trust
Results of Review of Interim Financial Information
We have reviewed the accompanying consolidated balance sheet of Vornado Realty Trust and subsidiaries (the "Company") as of June 30, 2020,March 31, 2021, the related consolidated statements of income, comprehensive income, and changes in equity, for the three-month and six-month periods ended June 30, 2020 and 2019, and of cash flows for the six-monththree-month periods ended June 30,March 31, 2021 and 2020, and 2019, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2019,2020, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended (not presented herein); and in our report dated February 18, 2020,16, 2021, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2019,2020, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ DELOITTE & TOUCHE LLP
New York, New York
AugustMay 3, 2020
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners of Vornado Realty L.P.
Results of Review of Interim Financial Information
We have reviewed the accompanying consolidated balance sheet of Vornado Realty L.P. and subsidiaries (the "Partnership") as of June 30, 2020,March 31, 2021, the related consolidated statements of income, comprehensive income, and changes in equity, for the three-month and six-month periods ended June 30, 2020 and 2019, and of cash flows for the six-monththree-month periods ended June 30,March 31, 2021 and 2020, and 2019, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Partnership as of December 31, 2019,2020, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended (not presented herein); and in our report dated February 18, 2020,16, 2021, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2019,2020, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
This interim financial information is the responsibility of the Partnership'sPartnership’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ DELOITTE & TOUCHE LLP
New York, New York
AugustMay 3, 20202021
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain statements contained in this Quarterly Report constitute forward‑lookingforward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Quarterly Report on Form 10‑Q. We also note the following forward-looking statements: in the case of our development and redevelopment projects, the estimated completion date, estimated project cost and cost to complete; and estimates of future capital expenditures, dividends to common and preferred shareholders and operating partnership distributions. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict.
Currently, one of the most significant factors is the ongoing adverse effect of the novel strain of coronavirus ("COVID-19")COVID-19 pandemic on our business, financial condition, results of operations, cash flows, operating performance and the effect it has had and may continue to have on our tenants, the global, national, regional and local economies and financial markets and the real estate market in general. The extent of the impact of the COVID-19 pandemic will depend on future developments, including the duration of the pandemic, which are highly uncertain at this time but that impact could be material. Moreover, you are cautioned that the COVID-19 pandemic will heighten many of the risks identified in "Item 1A. Risk Factors" in Part I of our Annual Report on Form 10-K for the year ended December 31, 2019, as well as the risks set forth herein.2020.
For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Item 1A. Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2019, and "Item 1A. Risk Factors" in Part II of this Quarterly Report on Form 10-Q.2020. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or the date of any document incorporated by reference. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.
Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a discussion of our consolidated financial statements for the three and six months ended June 30, 2020.March 31, 2021. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three and six months ended June 30, 2020March 31, 2021 are not necessarily indicative of the operating results for the full year. Certain prior year balances have been reclassified in order to conform to the current year presentation.
Vornado Realty Trust (“Vornado”) is a fully-integrated real estate investment trust (“REIT”) and conducts its business through, and substantially all of its interests in properties are held by, Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”). Vornado is the sole general partner of, and owned approximately 92.7% of the common limited partnership interest in the Operating Partnership as of June 30, 2020.March 31, 2021. All references to the “Company,” “we,” “us” and “our” mean, collectively, Vornado, the Operating Partnership and those subsidiaries consolidated by Vornado.
We compete with a large number of real estate investors, property owners and developers, some of which may be willing to accept lower returns on their investments. Principal factors of competition are rents charged, sales prices, attractiveness of location, the quality of the property and the breadth and the quality of services provided. Our success depends upon, among other factors, trends of the global, national, regional and local economies, the financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation, population and employment trends. See “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019 and "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q2020 for additional information regarding these factors.
In December 2019, COVID-19 was identified in Wuhan, China and by March 11, 2020, the World Health Organization had declared it a global pandemic. Many states in the U.S., including New York, New Jersey, Illinois and California implemented stay-at-home orders for all "non-essential"Our business and activity in an aggressive effort to curb the spread of the virus. In May 2020, certain states implemented phased re-opening plans for businesses and activities that were previously ordered to close, with limitations on occupancy and certain other restrictions. It is uncertain as to how long these restrictions will continue or if additional restrictions or closures will be imposed. As a result of the COVID-19 pandemic, the U.S. economy has suffered and there has been significant volatility in the financial markets. Many U.S. industries and businesses have been negatively affected and millions of people have filed for unemployment.
Our properties, which are concentrated in New York City, and in Chicago and San Francisco, have been adversely affected as a result of the COVID-19 pandemic and the preventive measures taken to curb the spread of the virus. Some of the effects on us include the following:
| |
• | With the exception of grocery stores and other "essential" businesses, many of our retail tenants closed their stores in March 2020 and began reopening when New York City entered phase two of its state-mandated reopening plan on June 22, 2020.
|
| |
• | While our buildings remain open, many of our office tenants are working remotely.
|
| |
• | We have temporarily closed the Hotel Pennsylvania.
|
| |
• | We have cancelled trade shows at theMART for the remainder of 2020.
|
| |
• | Because certain of our development projects were deemed "non-essential," they were temporarily paused in March 2020 due to New York State executive orders and resumed once New York City entered phase one of its state mandated reopening plan on June 8, 2020.
|
| |
• | As of April 30, 2020, we placed 1,803 employees on temporary furlough, which included 1,293 employees of Building Maintenance Services LLC ("BMS"), a wholly owned subsidiary, which provides cleaning, security and engineering services primarily to our New York properties, 414 employees at the Hotel Pennsylvania and 96 corporate staff employees. As of July 31, 2020, 542 employees have been taken off furlough and returned to work, which included 503 employees of BMS and 39 corporate staff employees.
|
| |
• | Effective April 1, 2020, our executive officers waived portions of their annual base salary for the remainder of 2020.
|
| |
• | Effective April 1, 2020, each non-management member of our Board of Trustees agreed to forgo his or her $75,000 annual cash retainer for the remainder of 2020.
|
•With the exception of grocery stores and other "essential" businesses, many of our retail tenants closed their stores in March 2020 and began reopening when New York City entered phase two of its state-mandated reopening plan on June 22, 2020, however, there continue to be limitations on occupancy and other restrictions that affect their ability to resume full operations.
•While our buildings remain open, many of our office tenants are working remotely.
•We temporarily closed the Hotel Pennsylvania on April 1, 2020 and on April 5, 2021, we announced that we permanently closed the hotel.
•We cancelled trade shows at theMART beginning late March of 2020 and expect to resume trade shows in the third quarter of 2021.
•As of April 30, 2021, approximately 70% of the 1,293 Building Maintenance Services LLC ("BMS") employees that had been placed on furlough in 2020 have returned to work.
While we believe our tenants are required to pay rent under their leases and we have commenced legal proceedings against certain tenants that have failed to pay under their leases, in limited circumstances, we have agreed to and may continue to agree to rent deferrals and rent abatements for certain of our tenants. We have made a policy election in accordance with the Financial Accounting Standards Board (“FASB”) Staff Q&A which provides relief in accounting for leases during the COVID-19 pandemic, allowing us to continue recognizing rental revenue on a straight-line basis for rent deferrals, with no impact to revenue recognition, and to recognize rent abatements as a reduction to rental revenue in the period granted.
For the quarter ended June 30, 2020,March 31, 2021, we collected 88% (94% including rent deferrals)96% of rent due from our tenants, comprised of 93% (98% including rent deferrals)97% from our office tenants and 72% (78% including rent deferrals)90% from our retail tenants. Rent deferrals generally require repayment in monthly installments over a period not to exceed twelve months.
Based on our assessment of the probability of rent collection of our lease receivables, we have written off $36,297,000$1,001,000 of receivables arising from the straight-lining of rents primarily for the JCPenney lease at Manhattan Mall and the New York & Company, Inc. lease at 330 West 34th Street, both tenantsthree months ended March 31, 2021. In addition, we have filed for Chapter 11 bankruptcy, and $8,822,000written off $2,910,000 of tenant receivables deemed uncollectible resultingfor the three months ended March 31, 2021. These write-offs resulted in a reduction of lease revenues and our share of income from partially owned entities for the three and six months ended June 30, 2020.entities. Prospectively, revenue recognition for these tenantslease receivables deemed uncollectible will be based on actual amounts received.
We have not experienced any material impact to our internal control over financial reporting to date as a result of most of our employees working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact to their design and operating effectiveness.
In light of the evolving health, social, economic, and business environment, governmental regulation or mandates, and business disruptions that have occurred and may continue to occur, the impact of the COVID-19 pandemic on our financial condition and operating results remains highly uncertain but thethat impact couldhas been and may continue to be material. The impact on us includes lower rental income and potentially lower occupancy levels at our properties which will result in less cash flow available for operating costs, to pay our indebtedness and for distribution to our shareholders. During the second quarter of 2020, weshareholders and unitholders. We have experienced a decrease in cash flow from operations due to the COVID-19 pandemic, including reduced collections of rents billed to certain of our tenants, the temporary closure of Hotel Pennsylvania, the cancellation of trade shows at theMART, through 2020, and lower revenues from BMS and signage. In addition, we have concluded that our investment in Fifth Avenue and Times Square JV is "other-than-temporarily" impaired and recorded a $306,326,000 non-cash impairment loss, before noncontrolling interests of $467,000, on our consolidated statements of income for the second quarter of 2020. The value of our real estate assets may continue to decline, which may result in additional non-cash impairment charges in future periods and that impact could be material.
Vornado Realty Trust
Quarter Ended June 30, 2020March 31, 2021 Financial Results Summary
Net lossincome attributable to common shareholders for the quarter ended June 30, 2020March 31, 2021 was $197,750,000,$4,083,000, or $1.03$0.02 per diluted share, compared to net income attributable to common shareholders of $2,400,195,000,$4,963,000, or $12.56$0.03 per diluted share, for the prior year’s quarter. The quarters ended June 30,March 31, 2021 and 2020 and 2019 include certain items that impact the comparability of period to period net (loss) income attributable to common shareholders, which are listed in the table on the following page.below. The aggregate of these items, net of amounts attributable to noncontrolling interests, increaseddecreased net lossincome attributable to common shareholders for the quarter ended June 30, 2020March 31, 2021 by $189,151,000,$8,363,000, or $0.99$0.04 per diluted share, and increased net income attributable to common shareholders by $2,357,643,000,$26,984,000, or $12.34$0.14 per diluted share, for the quarter ended June 30, 2019.March 31, 2020.
Funds From Operations (“FFO”) attributable to common shareholders plus assumed conversions for the quarter ended June 30, 2020March 31, 2021 was $203,256,000,$118,407,000, or $1.06$0.62 per diluted share, compared to $164,329,000,$130,360,000, or $0.86$0.68 per diluted share, for the prior year’s quarter. FFO attributable to common shareholders plus assumed conversions for the quarters ended June 30,March 31, 2021 and 2020 and 2019 include certain items that impact the comparability of period to period FFO, which are listed in the table on the following page.below. The aggregate of these items, net of amounts attributable to noncontrolling interests, increaseddecreased FFO attributable to common shareholders plus assumed conversions for the quarter ended June 30, 2020March 31, 2021 by $97,506,000,$5,952,000, or $0.51$0.03 per diluted share, and decreased FFO attributable to common shareholders plus assumed conversions by $9,446,000,$16,469,000, or $0.05$0.09 per diluted share, for the quarter ended June 30, 2019.March 31, 2020.
Six Months Ended June 30, 2020 Financial Results Summary
Net loss attributable to common shareholders for the six months ended June 30, 2020 was $192,787,000, or $1.01 per diluted share, compared to net income attributable to common shareholders of $2,581,683,000, or $13.51 per diluted share, for the six months ended June 30, 2019. The six months ended June 30, 2020 and 2019 include certain items that impact the comparability of period to period net (loss) income attributable to common shareholders, which are listed in the table on the following page. The aggregate of these items, net of amounts attributable to noncontrolling interests, increased net loss attributable to common shareholders for the six months ended June 30, 2020 by $203,491,000, or $1.07 per diluted share, and increased net income attributable to common shareholders by $2,514,217,000, or $13.16 per diluted share, for the six months ended June 30, 2019.
FFO attributable to common shareholders plus assumed conversions for the six months ended June 30, 2020 was $333,616,000, or $1.75 per diluted share, compared to $412,013,000, or $2.16 per diluted share, for the six months ended June 30, 2019. FFO attributable to common shareholders plus assumed conversions for the six months ended June 30, 2020 and 2019 include certain items that impact the comparability of period to period FFO, which are listed in the table on the following page. The aggregate of these items, net of amounts attributable to noncontrolling interests, increased FFO attributable to common shareholders plus assumed conversions for the six months ended June 30, 2020 by $90,776,000, or $0.48 per diluted share, and increased FFO attributable to common shareholders plus assumed conversions for the six months ended June 30, 2019 by $88,223,000, or $0.46 per diluted share.
The following table reconciles the difference between our net (loss) income attributable to common shareholders and our net (loss) income attributable to common shareholders, as adjusted:
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, | | |
| | 2021 | | 2020 | | | | |
| Certain expense (income) items that impact net income attributable to common shareholders: | | | | | | | |
| Hotel Pennsylvania (temporarily closed on April 1, 2020, permanently closed on April 5, 2021) | $ | 8,990 | | | $ | 12,393 | | | | | |
| Our share of (income) loss from real estate fund investments | (260) | | | 56,158 | | | | | |
| After-tax net gain on sale of 220 Central Park South ("220 CPS") condominium units | — | | | (59,911) | | | | | |
| Credit losses on loans receivable | — | | | 7,261 | | | | | |
| Mark-to-market decrease in Pennsylvania Real Estate Investment Trust ("PREIT") common shares (sold on January 23, 2020) | — | | | 4,938 | | | | | |
| Other | 194 | | | 7,896 | | | | | |
| 8,924 | | | 28,735 | | | | | |
| Noncontrolling interests' share of above adjustments | (561) | | | (1,751) | | | | | |
| Total of certain expense (income) items that impact net income attributable to common shareholders | $ | 8,363 | | | $ | 26,984 | | | | | |
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended
June 30, | | For the Six Months Ended
June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Certain expense (income) items that impact net (loss) income attributable to common shareholders: | | | | | | | |
| Non-cash impairment loss on our investment in Fifth Avenue and Times Square JV, net of $467 attributable to noncontrolling interests | $ | 305,859 |
| | $ | — |
| | $ | 305,859 |
| | $ | — |
|
| 608 Fifth Avenue non-cash (lease liability extinguishment gain) impairment loss and related write-offs | (70,260 | ) | | 101,092 |
| | (70,260 | ) | | 101,092 |
|
| After-tax net gain on sale of 220 Central Park South ("220 CPS") condominium units | (49,005 | ) | | (88,921 | ) | | (108,916 | ) | | (219,875 | ) |
| Credit losses on loans receivable resulting from a new GAAP accounting standard effective January 1, 2020 | 6,108 |
| | — |
| | 13,369 |
| | — |
|
| Our share of loss from real estate fund investments | 6,089 |
| | 20,758 |
| | 62,247 |
| | 23,662 |
|
| Net gain on transfer to Fifth Avenue and Times Square retail JV, net of $11,945 attributable to noncontrolling interests | — |
| | (2,559,154 | ) | | — |
| | (2,559,154 | ) |
| Real estate impairment losses | — |
| | 7,500 |
| | — |
| | 7,500 |
|
| Mark-to-market (increase) decrease in Pennsylvania Real Estate Investment Trust ("PREIT") common shares (accounted for as a marketable security from March 12, 2019 and sold on January 23, 2020) | — |
| | (1,313 | ) | | 4,938 |
| | 14,336 |
|
| Net gain from sale of Urban Edge Properties ("UE") common shares (sold on March 4, 2019) | — |
| | — |
| | — |
| | (62,395 | ) |
| Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 2022 | — |
| | — |
| | — |
| | 22,540 |
|
| Mark-to-market increase in Lexington Realty Trust ("Lexington") common shares (sold on March 1, 2019) | — |
| | — |
| | — |
| | (16,068 | ) |
| Other | 2,019 |
| | 2,802 |
| | 9,915 |
| | 3,954 |
|
| | 200,810 |
| | (2,517,236 | ) | | 217,152 |
| | (2,684,408 | ) |
| Noncontrolling interests' share of above adjustments | (11,659 | ) | | 159,593 |
| | (13,661 | ) | | 170,191 |
|
| Total of certain expense (income) items that impact net (loss) income attributable to common shareholders | $ | 189,151 |
| | $ | (2,357,643 | ) | | $ | 203,491 |
| | $ | (2,514,217 | ) |
The following table reconciles the difference between our FFO attributable to common shareholders plus assumed conversions and our FFO attributable to common shareholders plus assumed conversions, as adjusted:
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, | | |
| | 2021 | | 2020 | | | | |
| Certain expense (income) items that impact FFO attributable to common shareholders plus assumed conversions: | | | | | | | |
| Hotel Pennsylvania (temporarily closed on April 1, 2020, permanently closed on April 5, 2021) | $ | 6,228 | | | $ | 9,825 | | | | | |
| Our share of (income) loss from real estate fund investments | (260) | | | 56,158 | | | | | |
| After-tax net gain on sale of 220 CPS condominium units | — | | | (59,911) | | | | | |
| Credit losses on loans receivable | — | | | 7,261 | | | | | |
| Other | 383 | | | 4,205 | | | | | |
| 6,351 | | | 17,538 | | | | | |
| Noncontrolling interests' share of above adjustments | (399) | | | (1,069) | | | | | |
| Total of certain expense (income) items that impact FFO attributable to common shareholders plus assumed conversions, net | $ | 5,952 | | | $ | 16,469 | | | | | |
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended
June 30, | | For the Six Months Ended
June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions: | | | | | | | |
| 608 Fifth Avenue non-cash (lease liability extinguishment gain) impairment loss and related write-offs | $ | (70,260 | ) | | $ | 77,156 |
| | $ | (70,260 | ) | | $ | 77,156 |
|
| After-tax net gain on sale of 220 CPS condominium units | (49,005 | ) | | (88,921 | ) | | (108,916 | ) | | (219,875 | ) |
| Credit losses on loans receivable resulting from a new GAAP accounting standard effective January 1, 2020 | 6,108 |
| | — |
| | 13,369 |
| | — |
|
| Our share of loss from real estate fund investments | 6,089 |
| | 20,758 |
| | 62,247 |
| | 23,662 |
|
| Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 2022 | — |
| | — |
| | — |
| | 22,540 |
|
| Other | 2,459 |
| | 1,092 |
| | 6,664 |
| | 2,298 |
|
| | (104,609 | ) | | 10,085 |
| | (96,896 | ) | | (94,219 | ) |
| Noncontrolling interests' share of above adjustments | 7,103 |
| | (639 | ) | | 6,120 |
| | 5,996 |
|
| Total of certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions, net | $ | (97,506 | ) | | $ | 9,446 |
| | $ | (90,776 | ) | | $ | (88,223 | ) |
Vornado Realty Trust and Vornado Realty L.P.
Same Store Net Operating Income (“NOI”) At Share
The percentage (decrease) increase in same store NOI at share and same store NOI at share - cash basis of our New York segment, theMART and 555 California Street are summarized below.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended March 31, 2021 compared to March 31, 2020 | | Total | | New York | | theMART | | 555 California Street |
| Same store NOI at share % (decrease) increase | | (8.4) | % | | (8.9) | % | | (12.5) | % | | 4.7 | % |
| | | | | | | | |
| | | | | | | | |
| Same store NOI at share - cash basis % (decrease) increase | | (7.4) | % | | (6.9) | % | | (19.9) | % | | 3.4 | % |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
|
| | | | | | | | | | | | |
| | | Total | | New York | | theMART(1) | | 555 California Street |
| Same store NOI at share % (decrease) increase: | | | | | | | |
| | Three months ended June 30, 2020 compared to June 30, 2019 | (24.5 | )% | | (23.4 | )% | | (42.5 | )% | | (5.0 | )% |
| | Six months ended June 30, 2020 compared to June 30, 2019 | (13.9 | )% | | (12.9 | )% | | (29.8 | )% | | 0.1 | % |
| | Three months ended June 30, 2020 compared to March 31, 2020 | (20.3 | )% | | (22.0 | )% | | (14.0 | )% | | (4.0 | )% |
| | | | | | | | | |
| Same store NOI at share - cash basis % decrease: | | | | | | | |
| | Three months ended June 30, 2020 compared to June 30, 2019 | (10.8 | )% | | (6.4 | )% | | (44.5 | )% | | (4.3 | )% |
| | Six months ended June 30, 2020 compared to June 30, 2019 | (6.3 | )% | | (3.6 | )% | | (30.0 | )% | | (0.4 | )% |
| | Three months ended June 30, 2020 compared to March 31, 2020 | (7.8 | )% | | (7.0 | )% | | (20.3 | )% | | (2.1 | )% |
____________________
| |
(1) | The decreases in same store NOI at share and same store NOI at share - cash basis were primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year.
|
Calculations of same store NOI at share, reconciliations of our net income (loss) income to NOI at share, NOI at share - cash basis and FFO and the reasons we consider these non-GAAP financial measures useful are provided in the following pages of Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview - continued
Dispositions
PREITOne Park Avenue
On January 23, 2020,February 26, 2021, a joint venture in which we sold allhave a 55.0% interest completed a $525,000,000 refinancing of our 6,250,000 common sharesOne Park Avenue, a 943,000 square foot Manhattan office building. The interest-only loan bears a rate of PREIT, realizingLIBOR plus 1.11% (1.21% as of March 31, 2021) and matures in March 2023, with three one-year extension options. We realized net proceeds of $28,375,000. We recorded a $4,938,000 loss (mark-to-market decrease)$105,000,000. The loan replaces the previous $300,000,000 loan that bore interest at LIBOR plus 1.75% and was scheduled to mature in March 2021.
PENN 11
On March 7, 2021, we entered into an interest rate swap agreement for our $500,000,000 PENN 11 mortgage loan, to swap the six months ended June 30, 2020.
220 CPS
During the three months ended June 30, 2020, we closedinterest rate on the salemortgage loan from LIBOR plus 2.75% (2.85% as of four condominium units at 220 CPS for net proceeds aggregating $156,972,000 resulting inMarch 31, 2021) to a financial statement net gainfixed rate of $55,695,000 which is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income. In connection with these sales, $6,690,000 of income tax expense was recognized on our consolidated statements of income. During the six months ended June 30, 2020, we closed on the sale of 113.03% through March 2024.
909 condominium units at 220 CPS for net proceeds aggregating $348,188,000 resultingThird Avenue
On March 26, 2021, we completed a $350,000,000 refinancing of 909 Third Avenue, a 1.4 million square foot Manhattan office building. The interest-only loan bears a fixed rate of 3.23% and matures in a financial statement net gain of $124,284,000. In connection with these sales, $15,368,000 of income tax expense was recognized in our consolidated statements of income. From inception to June 30, 2020, we closed onApril 2031. The loan replaces the sale of 76 units for aggregate net proceeds of $2,168,320,000 resulting in financial statement net gains of $809,901,000.
Financings
Unsecured Term Loan
On February 28, 2020, we increased our unsecured termprevious $350,000,000 loan balance to $800,000,000 (from $750,000,000) by exercising an accordion feature. Pursuant to an existing swap agreement, $750,000,000 of the loan bearsthat bore interest at a fixed rate of 3.87% through October3.91% and was scheduled to mature in May 2021.
Unsecured Revolving Credit Facility
On April 15, 2021, we extended our $1.25 billion unsecured revolving credit facilityfrom January 2023 (as fully extended) to April 2026 (as fully extended). The interest rate on the extended facility was lowered to LIBOR plus 0.90% from LIBOR plus 1.00%. The facility fee remains at 20 basis points. Our $1.50 billion unsecured revolving credit facility matures in March 2024 (as fully extended) and the balance of $50,000,000 floats at aalso has an interest rate of LIBOR plus 1.00% (1.18% as0.90% and a facility fee of June 30, 2020). The entire $800,000,000 will float thereafter for the duration of the loan through February 2024.20 basis points.
Leasing Activity
The leasing activity and related statistics in the tablediscussed below are based on leases signed during the period and are not intended to coincide with the commencement of rental revenue in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Second generation relet space represents square footage that has not been vacant for more than nine months and tenant improvements and leasing commissions are based on our share of square feet leased during the period.
|
| | | | | | | | | | | | | | | | |
| (Square feet in thousands) | New York | | | | |
| | | Office | | Retail | | theMART | | 555 California Street |
| Three Months Ended June 30, 2020 | | | | | | | |
| | Total square feet leased | 304 |
| | 23 |
| | 42 |
| | 5 |
|
| | Our share of square feet leased: | 291 |
| | 23 |
| | 42 |
| | 3 |
|
| | Initial rent(1) | $ | 70.71 |
| (2) | $ | 130.92 |
| | $ | 56.03 |
| | $ | 91.00 |
|
| | Weighted average lease term (years) | 5.2 |
| | 3.8 |
| | 4.1 |
| | 5.0 |
|
| | Second generation relet space: | | | | | | | |
| | Square feet | 82 |
| | 22 |
| | 40 |
| | 3 |
|
| | GAAP basis: | | | | | | | |
| | Straight-line rent(3) | $ | 69.04 |
| (2) | $ | 115.35 |
| | $ | 53.62 |
| | $ | 93.59 |
|
| | Prior straight-line rent | $ | 61.61 |
| | $ | 115.16 |
| | $ | 53.80 |
| | $ | 74.44 |
|
| | Percentage increase (decrease) | 12.1 | % | | 0.2 | % |
| (0.3 | )% | | 25.7 | % |
| | Cash basis: | | | | | | | |
| | Initial rent(1) | $ | 73.95 |
| (2) | $ | 115.33 |
| | $ | 56.25 |
| | $ | 91.00 |
|
| | Prior escalated rent | $ | 64.83 |
| | $ | 115.25 |
| | $ | 58.03 |
| | $ | 79.12 |
|
| | Percentage increase (decrease) | 14.1 | % | | 0.1 | % | | (3.1 | )% | | 15.0 | % |
| | | | | | | | | |
| | Tenant improvements and leasing commissions: | | | | | | | |
| | Per square foot | $ | 25.63 |
| | $ | 32.67 |
| | $ | 13.69 |
| | $ | 14.38 |
|
| | Per square foot per annum | $ | 4.93 |
| | $ | 8.60 |
| | $ | 3.34 |
| | $ | 2.88 |
|
| | Percentage of initial rent | 7.0 | % | | 6.6 | % | | 6.0 | % | | 3.2 | % |
____________________
See notes•208,000 square feet of New York Office space (147,000 square feet at share) at an initial rent of $79.35 per square foot and a weighted average lease term of 15.5 years. The changes in the GAAP and cash mark-to-market rent on the following page.54,000 square feet of second generation space were positive 3.8% and 0.1%, respectively. Tenant improvements and leasing commissions were $10.45 per square foot per annum, or 13.2% of initial rent.
•46,000 square feet of New York Retail space (36,000 square feet at share) at an initial rent of $253.39 per square foot and a weighted average lease term of 9.1 years. The changes in the GAAP and cash mark-to-market rent on the 12,000 square feet of second generation space were positive 32.2% and 9.4%, respectively. Tenant improvements and leasing commissions were $15.71 per square foot per annum, or 6.2% of initial rent.
•85,000 square feet at theMART (all at share) at an initial rent of $52.76 per square foot and a weighted average lease term of 3.2 years. The changes in the GAAP and cash mark-to-market rent on the 83,000 square feet of second generation space were negative 4.3% and 2.6%, respectively. Tenant improvements and leasing commissions were $2.82 per square foot per annum, or 5.3% of initial rent.
Leasing Activity - continued
|
| | | | | | | | | | | | | | | | |
| (Square feet in thousands) | New York | | | | |
| | | Office | | Retail | | theMART | | 555 California Street |
| Six Months Ended June 30, 2020 | | | | | | | |
| | Total square feet leased | 615 |
| | 38 |
| | 273 |
| | 11 |
|
| | Our share of square feet leased: | 588 |
| | 36 |
| | 273 |
| | 8 |
|
| | Initial rent(1) | $ | 84.88 |
| (2) | $ | 236.93 |
| | $ | 48.64 |
| | $ | 105.66 |
|
| | Weighted average lease term (years) | 5.9 |
| | 5.9 |
| | 9.3 |
| | 3.0 |
|
| | Second generation relet space: | | | | | | | |
| | Square feet | 357 |
| | 31 |
| | 268 |
| | 8 |
|
| | GAAP basis: | | | | | | | |
| | Straight-line rent(3) | $ | 84.38 |
| (2) | $ | 223.95 |
| | $ | 45.87 |
| | $ | 107.37 |
|
| | Prior straight-line rent | $ | 85.00 |
| | $ | 143.79 |
| | $ | 44.95 |
| | $ | 78.53 |
|
| | Percentage (decrease) increase | (0.7 | )% | | 55.7 | % | | 2.0 | % | | 36.7 | % |
| | Cash basis: | | | | | | | |
| | Initial rent(1) | $ | 85.71 |
| (2) | $ | 221.86 |
| | $ | 48.42 |
| | $ | 105.66 |
|
| | Prior escalated rent | $ | 83.09 |
| | $ | 149.61 |
| | $ | 49.16 |
| | $ | 85.39 |
|
| | Percentage increase (decrease) | 3.2 | % | | 48.3 | % | | (1.5 | )% | | 23.7 | % |
| | | | | | | | | |
| | Tenant improvements and leasing commissions: | | | | | | | |
| | Per square foot | $ | 51.62 |
| | $ | 193.98 |
| | $ | 40.84 |
| | $ | 8.57 |
|
| | Per square foot per annum | $ | 8.75 |
| | $ | 32.88 |
| | $ | 4.39 |
| | $ | 2.86 |
|
| | Percentage of initial rent | 10.3 | % | | 13.9 | % | | 9.0 | % | | 2.7 | % |
____________________
| |
(1) | Represents the cash basis weighted average starting rent per square foot, which is generally indicative of market rents. Most leases include free rent and periodic step-ups in rent which are not included in the initial cash basis rent per square foot but are included in the GAAP basis straight-line rent per square foot. |
| |
(2) | Excludes the rent on 174,000 square feet as the starting rent will be determined in 2021 based on fair market value.
|
| |
(3) | Represents the GAAP basis weighted average rent per square foot that is recognized over the term of the respective leases and includes the effect of free rent and periodic step-ups in rent. |
Square Footage (in service) and Occupancy as of June 30, 2020March 31, 2021
| | | | | | | | | | | | | | | | | | | | | | | |
| (Square feet in thousands) | | | Square Feet (in service) | | |
| Number of
Properties | | Total
Portfolio | | Our
Share | | Occupancy % |
| New York: | | | | | | | |
| Office | 33 | | | 18,367 | | | 15,419 | | | 93.1 | % |
| Retail (includes retail properties that are in the base of our office properties) | 65 | | | 2,223 | | | 1,746 | | | 76.6 | % |
| Residential - 1,677 units | 9 | | | 1,525 | | | 793 | | | 89.4 | % |
| Alexander's, including 312 residential units | 7 | | | 2,219 | | | 718 | | | 95.2 | % |
| Hotel Pennsylvania (temporarily closed on April 1, 2020, permanently closed on April 5, 2021) | 1 | | | — | | | — | | | |
| | | 24,334 | | | 18,676 | | | 91.6 | % |
| Other: | | | | | | | |
| theMART | 4 | | | 3,692 | | | 3,683 | | | 88.9 | % |
| 555 California Street | 3 | | | 1,740 | | | 1,219 | | | 97.8 | % |
| Other | 11 | | | 2,489 | | | 1,154 | | | 92.7 | % |
| | | 7,921 | | | 6,056 | | | |
| | | | | | | |
| Total square feet as of March 31, 2021 | | | 32,255 | | | 24,732 | | | |
|
| | | | | | | | | | | | |
| (Square feet in thousands) | | | Square Feet (in service) | | | |
| | Number of Properties | | Total Portfolio | | Our Share | | Occupancy % | |
| New York: | | | | | | | | |
| Office | 35 |
| | 18,572 |
| | 15,624 |
| | 96.4 | % | |
| Retail (includes retail properties that are in the base of our office properties) | 71 |
| | 2,269 |
| | 1,801 |
| | 83.6 | % | (1) |
| Residential - 1,677 units | 9 |
| | 1,526 |
| | 793 |
| | 89.9 | % | |
| Alexander's, Inc. ("Alexander's") including 312 residential units | 7 |
| | 2,254 |
| | 730 |
| | 96.7 | % | |
| Hotel Pennsylvania (temporarily closed since April 1, 2020) | 1 |
| | — |
| | — |
| | | |
| | | | 24,621 |
| | 18,948 |
| | 95.2 | % | |
| Other: | | | | | | | | |
| theMART | 4 |
| | 3,825 |
| | 3,816 |
| | 91.4 | % | |
| 555 California Street | 3 |
| | 1,741 |
| | 1,218 |
| | 99.0 | % | |
| Other | 10 |
| | 2,490 |
| | 1,155 |
| | 93.1 | % | |
| | | | 8,056 |
| | 6,189 |
| | | |
| | | | | | | | | |
| Total square feet as of June 30, 2020 | | | 32,677 |
| | 25,137 |
| | | |
___________________________
| |
(1) | Excludes the JCPenney lease at Manhattan Mall for 154,000 square feet which was rejected effective July 31, 2020 as part of its Chapter 11 bankruptcy filing. |
Square Footage (in service) and Occupancy as of December 31, 20192020
| | | (Square feet in thousands) | | | Square Feet (in service) | | | | (Square feet in thousands) | | Square Feet (in service) | |
| | Number of properties | | Total Portfolio | | Our Share | | Occupancy % | | | Number of
properties | | Total
Portfolio | | Our
Share | | Occupancy % |
| New York: | | | | | | | | | New York: | | | | | | | |
| Office | 35 |
| | 19,070 |
| | 16,195 |
| | 96.9 | % | | Office | 33 | | | 18,361 | | | 15,413 | | | 93.4 | % |
| Retail (includes retail properties that are in the base of our office properties) | 70 |
| | 2,300 |
| | 1,842 |
| | 94.5 | % | | Retail (includes retail properties that are in the base of our office properties) | 65 | | | 2,275 | | | 1,805 | | | 78.8 | % |
| Residential - 1,679 units | 9 |
| | 1,526 |
| | 793 |
| | 97.0 | % | | |
| Residential - 1,677 units | | Residential - 1,677 units | 9 | | | 1,526 | | | 793 | | | 83.9 | % |
| Alexander's, including 312 residential units | 7 |
| | 2,230 |
| | 723 |
| | 96.5 | % | | Alexander's, including 312 residential units | 7 | | | 2,366 | | | 766 | | | 96.7 | % |
| Hotel Pennsylvania | 1 |
| | 1,400 |
| | 1,400 |
| | | | |
| Hotel Pennsylvania (temporarily closed on April 1, 2020, permanently closed on April 5, 2021) | | Hotel Pennsylvania (temporarily closed on April 1, 2020, permanently closed on April 5, 2021) | 1 | | | — | | | — | | |
| | | | 26,526 |
| | 20,953 |
| | 96.7 | % | | | 24,528 | | | 18,777 | | | 92.1 | % |
| Other: | |
| | | | | | |
| | Other: | | | | | | | |
| theMART | 4 |
| | 3,826 |
| | 3,817 |
| | 94.6 | % | | theMART | 4 | | | 3,692 | | | 3,683 | | | 89.5 | % |
| 555 California Street | 3 |
| | 1,741 |
| | 1,218 |
| | 99.8 | % | | 555 California Street | 3 | | | 1,741 | | | 1,218 | | | 98.4 | % |
| Other | 10 |
| | 2,533 |
| | 1,198 |
| | 92.7 | % | | Other | 11 | | | 2,489 | | | 1,154 | | | 92.8 | % |
| | |
| | 8,100 |
| | 6,233 |
| | |
| | | | | 7,922 | | | 6,055 | | | |
| | | | | | | | | | | | | | |
| Total square feet as of December 31, 2019 | | | 34,626 |
| | 27,186 |
| | | | |
| Total square feet as of December 31, 2020 | | Total square feet as of December 31, 2020 | | 32,450 | | | 24,832 | | |
Critical Accounting Policies
A summary of our critical accounting policies is included in Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2019.2020. For the sixthree months ended June 30, 2020,March 31, 2021, there were no material changes to these policies.
Recently Issued Accounting Literature
Refer to Note 4 - Recently Issued Accounting Literature to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for information regarding recent accounting pronouncements that may affect us.
NOI At Share by Segment for the Three Months Ended June 30,March 31, 2021 and 2020 and 2019
NOI at share represents total revenues less operating expenses including our share of partially owned entities. NOI at share - cash basis represents NOI at share adjusted to exclude straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments. We consider NOI at share - cash basis to be the primary non-GAAP financial measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. As properties are bought and sold based on NOI at share - cash basis, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI at share and NOI at share - cash basis should not be considered alternatives to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies. NOI at share - cash basis includes rent that has been deferred as a result of the COVID-19 pandemic. Rent deferrals generally require repayment in monthly installments over a period of time not to exceed twelve months.
Below is a summary of NOI at share and NOI at share - cash basisby segment for the three months ended June 30, 2020March 31, 2021 and 2019.2020.
| | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, 2021 |
| Total | | New York | | Other |
| Total revenues | $ | 379,977 | | | $ | 303,971 | | | $ | 76,006 | |
| Operating expenses | (190,979) | | | (160,985) | | | (29,994) | |
| NOI - consolidated | 188,998 | | | 142,986 | | | 46,012 | |
| Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries | (17,646) | | | (8,621) | | | (9,025) | |
| Add: NOI from partially owned entities | 78,756 | | | 76,773 | | | 1,983 | |
| NOI at share | 250,108 | | | 211,138 | | | 38,970 | |
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other | (1,198) | | | (973) | | | (225) | |
| NOI at share - cash basis | $ | 248,910 | | | $ | 210,165 | | | $ | 38,745 | |
|
| | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, 2020 |
| | Total | | New York | | Other |
| Total revenues | $ | 343,026 |
| | $ | 270,628 |
| | $ | 72,398 |
|
| Operating expenses | (174,425 | ) | | (140,207 | ) | | (34,218 | ) |
| NOI - consolidated | 168,601 |
| | 130,421 |
| | 38,180 |
|
| Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries | (15,448 | ) | | (8,504 | ) | | (6,944 | ) |
| Add: NOI from partially owned entities | 69,487 |
| | 67,051 |
| | 2,436 |
|
| NOI at share | 222,640 |
| | 188,968 |
| | 33,672 |
|
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other | 34,190 |
| | 32,943 |
| | 1,247 |
|
| NOI at share - cash basis | $ | 256,830 |
| | $ | 221,911 |
| | $ | 34,919 |
|
| | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, 2020 |
| Total | | New York | | Other |
| Total revenues | $ | 444,532 | | | $ | 355,615 | | | $ | 88,917 | |
| Operating expenses | (230,007) | | | (183,031) | | | (46,976) | |
| NOI - consolidated | 214,525 | | | 172,584 | | | 41,941 | |
| Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries | (15,493) | | | (8,433) | | | (7,060) | |
| Add: NOI from partially owned entities | 81,881 | | | 78,408 | | | 3,473 | |
| NOI at share | 280,913 | | | 242,559 | | | 38,354 | |
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other | 3,076 | | | 1,106 | | | 1,970 | |
| NOI at share - cash basis | $ | 283,989 | | | $ | 243,665 | | | $ | 40,324 | |
|
| | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, 2019 |
| | Total | | New York | | Other |
| Total revenues | $ | 463,103 |
| | $ | 376,381 |
| | $ | 86,722 |
|
| Operating expenses | (220,752 | ) | | (187,819 | ) | | (32,933 | ) |
| NOI - consolidated | 242,351 |
| | 188,562 |
| | 53,789 |
|
| Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries | (16,416 | ) | | (10,030 | ) | | (6,386 | ) |
| Add: NOI from partially owned entities | 82,974 |
| | 79,170 |
| | 3,804 |
|
| NOI at share | 308,909 |
| | 257,702 |
| | 51,207 |
|
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other | 9,748 |
| | 8,437 |
| | 1,311 |
|
| NOI at share - cash basis | $ | 318,657 |
| | $ | 266,139 |
| | $ | 52,518 |
|
NOI At Share by Segment for the Three Months Ended June 30,March 31, 2021 and 2020 and 2019 - continued
The elements of our New York and Other NOI at share for the three months ended June 30,March 31, 2021 and 2020 and 2019 are summarized below.
| | | (Amounts in thousands) | For the Three Months Ended June 30, | (Amounts in thousands) | For the Three Months Ended March 31, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| New York: | | | | New York: | | | |
Office(1) | $ | 161,444 |
| | $ | 179,592 |
| |
Retail(2) | 21,841 |
| | 57,063 |
| |
Office(1)(2) | | Office(1)(2) | $ | 166,635 | | | $ | 183,205 | |
| Retail | | Retail | 36,702 | | | 52,018 | |
| Residential | 5,868 |
| | 5,908 |
| Residential | 4,456 | | | 6,200 | |
| Alexander's | 8,331 |
| | 11,108 |
| Alexander's | 10,489 | | | 10,492 | |
Hotel Pennsylvania(3) | (8,516 | ) | | 4,031 |
| Hotel Pennsylvania(3) | (7,144) | | | (9,356) | |
| Total New York | 188,968 |
| | 257,702 |
| Total New York | 211,138 | | | 242,559 | |
| | | | | | | | |
| Other: | | | | Other: | |
theMART(4) | 17,803 |
| | 30,974 |
| theMART(4) | 18,107 | | | 21,113 | |
| 555 California Street | 14,837 |
| | 15,358 |
| 555 California Street | 16,064 | | | 15,231 | |
| Other investments | 1,032 |
| | 4,875 |
| Other investments | 4,799 | | | 2,010 | |
| Total Other | 33,672 |
| | 51,207 |
| Total Other | 38,970 | | | 38,354 | |
| | | | | | | | |
| NOI at share | $ | 222,640 |
| | $ | 308,909 |
| NOI at share | $ | 250,108 | | | $ | 280,913 | |
___________________
| |
(1) | 2020 includes $13,220 of non-cash write-offs of receivables arising from the straight-lining of rents, primarily for the New York & Company, Inc. lease at 330 West 34th Street and $940 of write-offs of tenant receivables deemed uncollectible.See notes below. |
| |
(2) | 2020 includes $20,436 of non-cash write-offs of receivables arising from the straight-lining of rents, primarily for the JCPenney lease at Manhattan Mall and $6,731 of write-offs of tenant receivables deemed uncollectible. 2019 includes $13,199 of non-cash write-offs of receivables arising from the straight-lining of rents. |
| |
(3) | The decrease in NOI at share is primarily due to the effects of the COVID-19 pandemic. The Hotel Pennsylvania has been temporarily closed since April 1, 2020 as a result of the pandemic. |
| |
(4) | The decrease in NOI at share is primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year.
|
The elements of our New York and Other NOI at share - cash basis for the three months ended June 30,March 31, 2021 and 2020 and 2019 are summarized below.
| | | (Amounts in thousands) | For the Three Months Ended June 30, | (Amounts in thousands) | For the Three Months Ended March 31, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| New York: | | | | New York: | | | |
Office(1) | $ | 175,438 |
| | $ | 178,806 |
| Office(1) | $ | 167,096 | | | $ | 187,035 | |
Retail(2) | 38,913 |
| | 66,726 |
| |
| Retail | | Retail | 34,876 | | | 49,041 | |
| Residential | 5,504 |
| | 5,303 |
| Residential | 4,011 | | | 5,859 | |
| Alexander's | 10,581 |
| | 11,322 |
| Alexander's | 11,349 | | | 11,094 | |
Hotel Pennsylvania(3) | (8,525 | ) | | 3,982 |
| Hotel Pennsylvania(3) | (7,167) | | | (9,364) | |
| Total New York | 221,911 |
| | 266,139 |
| Total New York | 210,165 | | | 243,665 | |
| | | | | | | | |
| Other: | | | | Other: | |
theMART(4) | 17,765 |
| | 31,984 |
| theMART(4) | 17,840 | | | 22,705 | |
| 555 California Street | 15,005 |
| | 15,595 |
| 555 California Street | 15,855 | | | 15,435 | |
| Other investments | 2,149 |
| | 4,939 |
| Other investments | 5,050 | | | 2,184 | |
| Total Other | 34,919 |
| | 52,518 |
| Total Other | 38,745 | | | 40,324 | |
| | | | | | | | |
| NOI at share - cash basis | $ | 256,830 |
| | $ | 318,657 |
| NOI at share - cash basis | $ | 248,910 | | | $ | 283,989 | |
___________________
| |
(1) | 2020 includes $940(1)2021 includes $2,364 of write-offs of tenant receivables deemed uncollectible. |
| |
(2) | 2020 includes $6,731 of write-offs of tenant receivables deemed uncollectible.
|
| |
(3) | The decrease in NOI at share - cash basis is primarily due to the effects of the COVID-19 pandemic. The Hotel Pennsylvania has been temporarily closed since April 1, 2020 as a result of the pandemic.
|
| |
(4) | The decrease in NOI at share - cash basis is primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year.
|
(2)2021 includes $820 of non-cash write-offs of receivables arising from the straight-lining of rents.
(3)We temporarily closed the Hotel Pennsylvania on April 1, 2020 and on April 5, 2021, we announced that we permanently closed the hotel.
(4)We cancelled trade shows at theMART beginning late March of 2020 due to the COVID-19 pandemic.
Reconciliation of Net Income (Loss) Income to NOI At Share and NOI At Share - Cash Basis for the Three Months Ended June 30,March 31, 2021 and 2020 and 2019
Below is a reconciliation of net income (loss) income to NOI at share and NOI at share - cash basis for the three months ended June 30, 2020March 31, 2021 and 2019.2020.
| | | (Amounts in thousands) | For the Three Months Ended June 30, | (Amounts in thousands) | For the Three Months Ended March 31, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| Net (loss) income | $ | (217,352 | ) | | $ | 2,596,693 |
| |
| Net income (loss) | | Net income (loss) | $ | 26,993 | | | $ | (104,503) | |
| Depreciation and amortization expense | 92,805 |
| | 113,035 |
| Depreciation and amortization expense | 95,354 | | | 92,793 | |
| General and administrative expense | 35,014 |
| | 38,872 |
| General and administrative expense | 44,186 | | | 52,834 | |
| (Lease liability extinguishment gain) transaction related costs and impairment losses | (69,221 | ) | | 101,590 |
| |
| Loss (income) from partially owned entities | 291,873 |
| | (22,873 | ) | |
| Transaction related costs and other | | Transaction related costs and other | 843 | | | 71 | |
| Income from partially owned entities | | Income from partially owned entities | (29,073) | | | (19,103) | |
| Loss from real estate fund investments | 28,042 |
| | 15,803 |
| Loss from real estate fund investments | 169 | | | 183,463 | |
| Interest and other investment loss (income), net | 2,893 |
| | (7,840 | ) | |
| Interest and other investment (income) loss, net | | Interest and other investment (income) loss, net | (1,522) | | | 5,904 | |
| Interest and debt expense | 58,405 |
| | 63,029 |
| Interest and debt expense | 50,064 | | | 58,842 | |
| Net gain on transfer to Fifth Avenue and Times Square JV | — |
| | (2,571,099 | ) | |
| | Net gains on disposition of wholly owned and partially owned assets | (55,695 | ) | | (111,713 | ) | Net gains on disposition of wholly owned and partially owned assets | — | | | (68,589) | |
| Income tax expense | 1,837 |
| | 26,914 |
| Income tax expense | 1,984 | | | 12,813 | |
| Income from discontinued operations | — |
| | (60 | ) | |
| | NOI from partially owned entities | 69,487 |
| | 82,974 |
| NOI from partially owned entities | 78,756 | | | 81,881 | |
| NOI attributable to noncontrolling interests in consolidated subsidiaries | (15,448 | ) | | (16,416 | ) | NOI attributable to noncontrolling interests in consolidated subsidiaries | (17,646) | | | (15,493) | |
| NOI at share | 222,640 |
| | 308,909 |
| NOI at share | 250,108 | | | 280,913 | |
| Non cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other | 34,190 |
| | 9,748 |
| |
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other | | Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other | (1,198) | | | 3,076 | |
| NOI at share - cash basis | $ | 256,830 |
| | $ | 318,657 |
| NOI at share - cash basis | $ | 248,910 | | | $ | 283,989 | |
NOI At Share by Region
| | | | | | | | | | | |
| For the Three Months Ended March 31, |
| 2021 | | 2020 |
| Region: | | | |
| New York City metropolitan area | 86 | % | | 87 | % |
| Chicago, IL | 7 | % | | 8 | % |
| San Francisco, CA | 7 | % | | 5 | % |
| 100 | % | | 100 | % |
|
| | | | | |
| | For the Three Months Ended June 30, |
| | 2020 | | 2019 |
| Region: | | | |
| New York City metropolitan area | 85 | % | | 85 | % |
| Chicago, IL | 8 | % | | 10 | % |
| San Francisco, CA | 7 | % | | 5 | % |
| | 100 | % | | 100 | % |
Results of Operations – Three Months Ended June 30, 2020March 31, 2021 Compared to June 30, 2019March 31, 2020
Revenues
Our revenues were $343,026,000$379,977,000 for the three months ended June 30, 2020March 31, 2021 compared to $463,103,000$444,532,000 for the prior year’s quarter, a decrease of $120,077,000.$64,555,000. Below are the details of the decrease by segment:
| | | (Amounts in thousands) | Total | | New York | | Other | (Amounts in thousands) | Total | | New York | | Other | |
| Increase (decrease) due to: | | | | | | |
| (Decrease) increase due to: | | (Decrease) increase due to: | | | | | | |
| Rental revenues: | | | | | | Rental revenues: | | |
| Acquisitions, dispositions and other | $ | 11,522 |
| | $ | 11,266 |
| | $ | 256 |
| Acquisitions, dispositions and other | $ | (6,869) | | | $ | (7,012) | | | $ | 143 | | |
| Development and redevelopment | (17,840 | ) | | (17,637 | ) | | (203 | ) | Development and redevelopment | (12,574) | | | (12,574) | | | — | | |
Hotel Pennsylvania(1) | (25,977 | ) | | (25,977 | ) | | — |
| Hotel Pennsylvania(1) | (9,518) | | | (9,518) | | | — | | |
Trade shows(2) | (11,816 | ) | | — |
| | (11,816 | ) | Trade shows(2) | (11,303) | | | — | | | (11,303) | | |
| Properties transferred to Fifth Avenue and Times Square JV | (16,163 | ) | | (16,163 | ) | | — |
| |
| | Same store operations | (45,831 | ) | (3) | (41,627 | ) | | (4,204 | ) | Same store operations | (21,693) | | | (18,929) | | | (2,764) | | |
| | | (61,957) | | | (48,033) | | | (13,924) | | |
| | | (106,105 | ) | | (90,138 | ) | | (15,967 | ) | |
| Fee and other income: | | | | | | Fee and other income: | | | | | | |
| BMS cleaning fees | (11,455 | ) | | (12,539 | ) | (4) | 1,084 |
| BMS cleaning fees | (3,989) | | | (4,481) | | | 492 | | |
| Management and leasing fees | (2,662 | ) | | (2,771 | ) | | 109 |
| Management and leasing fees | 2,502 | | | 2,648 | | | (146) | | |
| Properties transferred to Fifth Avenue and Times Square JV | (65 | ) | | (65 | ) | | — |
| |
| | Other income | 210 |
| | (240 | ) | | 450 |
| Other income | (1,111) | | | (1,778) | | | 667 | | |
| | (13,972 | ) | | (15,615 | ) | | 1,643 |
| | (2,598) | | | (3,611) | | | 1,013 | | |
| | | | | | | | | | | | | |
| Total decrease in revenues | $ | (120,077 | ) | | $ | (105,753 | ) | | $ | (14,324 | ) | Total decrease in revenues | $ | (64,555) | | | $ | (51,644) | | | $ | (12,911) | | |
______________________
See notes below.
Expenses
Our expenses were $239,379,000$334,607,000 for the three months ended June 30, 2020,March 31, 2021, compared to $475,564,000$364,460,000 for the prior year’s quarter, a decrease of $236,185,000.$29,853,000. Below are the details of the (decrease) increasedecrease by segment:
| | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | Other | |
| (Decrease) increase due to: | | | | | | |
| Operating: | | | | | | |
| Acquisitions, dispositions and other | $ | (1,270) | | | $ | (1,270) | | | $ | — | | |
| Development and redevelopment | (6,779) | | | (6,779) | | | — | | |
| Non-reimbursable expenses | 2,438 | | | 2,281 | | | 157 | | |
| Hotel Pennsylvania(1) | (11,730) | | | (11,730) | | | — | | |
| Trade shows(2) | (10,869) | | | — | | | (10,869) | | |
| BMS expenses | (4,351) | | | (4,843) | | | 492 | | |
| | | | | | | |
| Same store operations | (6,467) | | | 295 | | | (6,762) | | |
| | (39,028) | | | (22,046) | | | (16,982) | | |
| Depreciation and amortization: | | | | | | |
| Acquisitions, dispositions and other | (237) | | | (237) | | | — | | |
| Development and redevelopment | (4,305) | | | (4,305) | | | — | | |
| | | | | | | |
| Same store operations | 7,103 | | | 7,482 | | | (379) | | |
| | 2,561 | | | 2,940 | | | (379) | | |
| | | | | | |
| General and administrative | (8,648) | | (3) | (3,176) | | | (5,472) | | |
| | | | | | | |
| Expense from deferred compensation plan liability | 14,490 | | | — | | | 14,490 | | |
| | | | | | | |
| Transaction related costs | 772 | | | — | | | 772 | | |
| | | | | | | |
| Total decrease in expenses | $ | (29,853) | | | $ | (22,282) | | | $ | (7,571) | | |
______________________
(1)We temporarily closed the Hotel Pennsylvania on April 1, 2020 and on April 5, 2021, we announced that we permanently closed the hotel.
(2)We cancelled trade shows at theMART beginning late March of 2020 due to the COVID-19 pandemic.
(3)Primarily due to the overhead reduction program previously announced in December 2020.
|
| | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | Other |
| (Decrease) increase due to: | | | | | |
| Operating: | | | | | |
| | Acquisitions, dispositions and other | $ | (3,472 | ) | | $ | (2,938 | ) | | $ | (534 | ) |
| | Development and redevelopment | (11,223 | ) | | (11,227 | ) | | 4 |
|
| | Non-reimbursable expenses | (403 | ) | | (662 | ) | | 259 |
|
| | Hotel Pennsylvania(1) | (13,434 | ) | | (13,434 | ) | | — |
|
| | Trade shows(2) | (3,594 | ) | | — |
| | (3,594 | ) |
| | BMS expenses | (7,468 | ) | | (8,552 | ) | (4) | 1,084 |
|
| | Properties transferred to Fifth Avenue and Times Square JV | (3,824 | ) | | (3,824 | ) | | — |
|
| | Same store operations | (2,909 | ) | | (6,975 | ) | | 4,066 |
|
| | | (46,327 | ) | | (47,612 | ) | | 1,285 |
|
| Depreciation and amortization: | | | | | |
| | Acquisitions, dispositions and other | (2,557 | ) | | (2,557 | ) | | — |
|
| | Development and redevelopment | 219 |
| | (526 | ) | | 745 |
|
| | Properties transferred to Fifth Avenue and Times Square JV | (3,981 | ) | | (3,981 | ) | | — |
|
| | Same store operations | (13,911 | ) | | (12,621 | ) | | (1,290 | ) |
| | | (20,230 | ) | | (19,685 | ) | | (545 | ) |
| | | | | | |
| General and administrative | (3,858 | ) | | (4,498 | ) | | 640 |
|
| | | | | | | |
| Expense from deferred compensation plan liability | 5,041 |
| | — |
| | 5,041 |
|
| | | | | | | |
| (Lease liability extinguishment gain) transaction related costs and impairment losses | (170,811 | ) | | (171,620 | ) | (5) | 809 |
|
| | | | | | | |
| Total (decrease) increase in expenses | $ | (236,185 | ) | | $ | (243,415 | ) | | $ | 7,230 |
|
____________________
| |
(1) | Temporarily closed since April 1, 2020 as a result of the pandemic. |
| |
(2) | Cancelled trade shows at theMART from late March 2020 through the remainder of the year as a result of the pandemic. |
| |
(3) | 2020 includes $33,731 for the non-cash write-off of receivables arising from the straight-lining of rents, primarily for the JCPenney lease at Manhattan Mall and the New York & Company, Inc. lease at 330 West 34th Street, and $3,856 for the write-off of tenant receivables deemed uncollectible. |
| |
(4) | Primarily due to a decrease in third party cleaning services provided to retail and office tenants as a result of the pandemic. |
| |
(5) | Due to $101,360 of non-cash impairment losses, substantially 608 Fifth Avenue, recognized in the second quarter of 2019 and $70,260 of lease liability extinguishment gain in May 2020 related to 608 Fifth Avenue. |
Results of Operations – Three Months Ended June 30, 2020March 31, 2021 Compared to June 30, 2019March 31, 2020 - continued
(Loss) Income from Partially Owned Entities
Below are the components of (loss) income from partially owned entities for the three months ended June 30, 2020March 31, 2021 and 2019.2020.
|
| | | | | | | | | |
| (Amounts in thousands) | Ownership
Percentage at
June 30, 2020 | | For the Three Months Ended June 30, |
| | | 2020 | | 2019 |
| Our share of net (loss) income: | | | | | |
Fifth Avenue and Times Square JV(1): | | | | | |
Non-cash impairment loss(2) | | | $ | (306,326 | ) | | $ | — |
|
| Return on preferred equity, net of our share of the expense |
| | 9,330 |
| | 8,586 |
|
Equity in net income(3) | 51.5% | | 441 |
| | 11,217 |
|
| | | | (296,555 | ) | | 19,803 |
|
| Alexander's | 32.4% | | 5,151 |
| | 4,719 |
|
Partially owned office buildings(4) | Various | | 810 |
| | (1,451 | ) |
Other investments(5) | Various | | (1,279 | ) | | (198 | ) |
| | | | $ | (291,873 | ) | | $ | 22,873 |
|
| | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Percentage Ownership at March 31, 2021 | | For the Three Months Ended March 31, |
| | 2021 | | 2020 |
| Our share of net income (loss): | | | | | |
| Fifth Avenue and Times Square JV: | | | | | |
| | | | | |
| Equity in net income | 51.5% | | $ | 9,606 | | | $ | 5,496 | |
| Return on preferred equity, net of our share of the expense | | | 9,226 | | | 9,166 | |
| | | 18,832 | | | 14,662 | |
| Alexander's | 32.4% | | 6,304 | | | 2,676 | |
Partially owned office buildings(1) | Various | | 5,972 | | | 1,322 | |
Other investments(2) | Various | | (2,035) | | | 443 | |
| | | $ | 29,073 | | | $ | 19,103 | |
____________________
| |
(1) | Entered into on April 18, 2019. |
| |
(2) | See Note 8 - (1)Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 7 West 34th Street, 512 West 22nd Street, 61 Ninth Avenue, 85 Tenth Avenue and others.Investments in Partially Owned Entities to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for additional information. |
| |
(3) | The decrease in our share of net income was primarily due to (i) $4,737 of write-offs of lease receivables deemed uncollectible during the second quarter of 2020 and (ii) a $4,360 reduction in income related to a Forever 21 lease modification at 1540 Broadway.
|
| |
(4) | Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 7 West 34th Street, 330 Madison Avenue (sold on July 11, 2019), 512 West 22nd Street, 61 Ninth Avenue, 85 Tenth Avenue and others. |
| |
(5) | Includes interests in Independence Plaza, Rosslyn Plaza and others. |
Loss(2)Includes interests in Independence Plaza, Rosslyn Plaza and others.
Income (Loss) from Real Estate Fund Investments
Below are the components of the lossincome (loss) from our real estate fund investments for the three months ended June 30, 2020March 31, 2021 and 2019.2020.
| | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, |
| 2021 | | 2020 |
| Net unrealized loss on held investments | $ | (494) | | | $ | (183,520) | |
| Net investment income | 325 | | | 57 | |
| | | |
| | | |
| Loss from real estate fund investments | (169) | | | (183,463) | |
| Less loss attributable to noncontrolling interests in consolidated subsidiaries | 429 | | | 127,305 | |
| Income (loss) from real estate fund investments net of noncontrolling interests in consolidated subsidiaries | $ | 260 | | | $ | (56,158) | |
| | | |
| | | |
|
| | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, |
| | 2020 | | 2019 |
| Net investment (loss) income | $ | (366 | ) | | $ | 459 |
|
| Net unrealized loss on held investments | (27,676 | ) | | (16,262 | ) |
| Loss from real estate fund investments | (28,042 | ) | | (15,803 | ) |
| Less loss (income) attributable to noncontrolling interests in consolidated subsidiaries | 21,953 |
| | (4,955 | ) |
| Loss from real estate fund investments net of noncontrolling interests in consolidated subsidiaries | $ | (6,089 | ) | | $ | (20,758 | ) |
Interest and Other Investment Income (Loss) Income,, Net
Below are the components of interest and other investment income (loss) income,, net for the three months ended June 30, 2020March 31, 2021 and 2019.2020.
| | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, |
| 2021 | | 2020 |
| Interest on loans receivable | $ | 560 | | | $ | 1,426 | |
| Interest on cash and cash equivalents and restricted cash | 62 | | | 3,966 | |
| Credit losses on loans receivable | — | | | (7,261) | |
| Market-to-market decrease in the fair value of marketable security (sold on January 23, 2020) | — | | | (4,938) | |
| Other, net | 900 | | | 903 | |
| Total | $ | 1,522 | | | $ | (5,904) | |
|
| | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, |
| | 2020 | | 2019 |
Credit losses on loans receivable(1) | $ | (6,108 | ) | | $ | — |
|
| Interest on cash and cash equivalents and restricted cash | 1,498 |
| | 2,626 |
|
| Interest on loans receivable | 810 |
| | 1,635 |
|
| Dividends on marketable securities | — |
| | 1,313 |
|
| Increase in fair value of marketable securities | — |
| | 1,312 |
|
| Other, net | 907 |
| | 954 |
|
| Total | $ | (2,893 | ) | | $ | 7,840 |
|
____________________
| |
(1) | See Note 4 -
Recently Issued Accounting Literature to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for additional information.
|
Results of Operations – Three Months Ended June 30, 2020March 31, 2021 Compared to June 30, 2019March 31, 2020 - continued
Interest and Debt Expense
Interest and debt expense for the three months ended June 30, 2020 was $58,405,000 compared to $63,029,000 for the prior year’s quarter, a decrease of $4,624,000. This decrease was primarily due to (i) $6,218,000 of lower interest expense resulting from lower average interest rates on our variable rate loans (ii) $5,998,000 of lower interest expense resulting from the repayment of the mortgage payable of PENN2, (iii) $2,276,000 of lower interest expense resulting from paydowns of the 220 CPS loan, and (iv) $1,615,000 of lower interest expense resulting from the deconsolidation of mortgages payable of the properties contributed to Fifth Avenue and Times Square JV, partially offset by $10,366,000 of lower capitalized interest and debt expense.
Net Gain on Transfer to Fifth Avenue and Times Square JV
During the three months ended June 30, 2019, we recognized a $2,571,099,000 net gain from the transfer of common equity in the properties contributed to Fifth Avenue and Times Square JV, including the related step-up in our basis of the retained portion of the assets to fair value.
Net Gains on Disposition of Wholly Owned and Partially Owned Assets
Net gains on disposition of wholly owned and partially owned assets of $55,695,000 for the three months ended June 30, 2020 consisted of net gains on the sale of four condominium units at 220 CPS. Net gains on disposition of wholly owned and partially owned assets of $111,713,000 for the three months ended June 30, 2019 consisted of net gains on the sale of 11 condominium units at 220 CPS.
Income Tax Expense
Income tax expense for the three months ended June 30, 2020 was $1,837,000 compared to $26,914,000 for the prior year’s quarter, a decrease of $25,077,000. This decrease was primarily due to lower income tax expense from the sale of 220 CPS condominium units.
Net Loss (Income) Attributable to Noncontrolling Interests in Consolidated Subsidiaries
Net loss attributable to noncontrolling interests in consolidated subsidiaries was $17,768,000 for the three months ended June 30, 2020, compared to income of $21,451,000 for the prior year’s quarter, a decrease in income of $39,219,000. This decrease resulted primarily from the allocation of net loss to the noncontrolling interests of our real estate fund investments, partially offset by a $11,945,000 net gain on transfer to Fifth Avenue and Times Square JV during the second quarter of 2019.
Net Loss (Income) Attributable to Noncontrolling Interests in the Operating Partnership (Vornado Realty Trust)
Net loss attributable to noncontrolling interests in the Operating Partnership was $14,364,000 for the three months ended June 30, 2020, compared to net income of $162,515,000 for the prior year’s quarter, a decrease in income of $176,879,000.This decrease resulted primarily from lower net income subject to allocation to unitholders.
Preferred Share Dividends of Vornado Realty Trust
Preferred share dividends were $12,530,000 for the three months ended June 30, 2020, compared to $12,532,000 for the prior year’s quarter, a decrease of $2,000.
Preferred Unit Distributions of Vornado Realty L.P.
Preferred unit distributions were $12,571,000 for the three months ended June 30, 2020, compared to $12,573,000 for the prior year’s quarter, a decrease of $2,000.
Results of Operations – Three Months Ended June 30, 2020 Compared to June 30, 2019 - continued
Same Store Net Operating Income At Share
Same store NOI at share represents NOI at share from operations which are in service in both the current and prior year reporting periods. Same store NOI at share - cash basis is same store NOI at share adjusted to exclude straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments. We present these non-GAAP measures to (i) facilitate meaningful comparisons of the operational performance of our properties and segments, (ii) make decisions on whether to buy, sell or refinance properties, and (iii) compare the performance of our properties and segments to those of our peers. Same store NOI at share and same store NOI at share - cash basis should not be considered alternatives to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.
Below are reconciliations of NOI at share to same store NOI at share for our New York segment, theMART, 555 California Street and other investments for the three months ended June 30, 2020 compared to June 30, 2019.
|
| | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California Street | | Other |
| NOI at share for the three months ended June 30, 2020 | $ | 222,640 |
| | $ | 188,968 |
| | $ | 17,803 |
| | $ | 14,837 |
| | $ | 1,032 |
|
| | Less NOI at share from: | | | | | | | | | |
| | Development properties | (7,376 | ) | | (7,372 | ) | | — |
| | (4 | ) | | — |
|
| | Hotel Pennsylvania (temporarily closed beginning April 1, 2020) | 8,516 |
| | 8,516 |
| | — |
| | — |
| | — |
|
| | Other non-same store income, net | (9,373 | ) | | (8,283 | ) | | — |
| | (58 | ) | | (1,032 | ) |
| Same store NOI at share for the three months ended June 30, 2020 | $ | 214,407 |
| | $ | 181,829 |
| | $ | 17,803 |
| | $ | 14,775 |
| | $ | — |
|
| | | | | | | | | | |
| NOI at share for the three months ended June 30, 2019 | $ | 308,909 |
| | $ | 257,702 |
| | $ | 30,974 |
| | $ | 15,358 |
| | $ | 4,875 |
|
| | Less NOI at share from: | | | | | | | | | |
| | Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV | (5,479 | ) | | (5,479 | ) | | — |
| | — |
| | — |
|
| | Dispositions | (3,696 | ) | | (3,696 | ) | | — |
| | — |
| | — |
|
| | Development properties | (14,538 | ) | | (14,538 | ) | | — |
| | — |
| | — |
|
| | Hotel Pennsylvania (temporarily closed beginning April 1, 2020) | (4,031 | ) | | (4,031 | ) | | — |
| | — |
| | — |
|
| | Other non-same store expense (income), net | 2,792 |
| | 7,459 |
| | 6 |
| | 202 |
| | (4,875 | ) |
| Same store NOI at share for the three months ended June 30, 2019 | $ | 283,957 |
| | $ | 237,417 |
| | $ | 30,980 |
| | $ | 15,560 |
| | $ | — |
|
| | | | | | | | | | |
| Decrease in same store NOI at share for the three months ended June 30, 2020 compared to June 30, 2019 | $ | (69,550 | ) | | $ | (55,588 | ) | | $ | (13,177 | ) | | $ | (785 | ) | | $ | — |
|
| | | | | | | | | | | |
| % decrease in same store NOI at share | (24.5 | )% | | (23.4 | )% | | (42.5 | )% | (1) | (5.0 | )% | | — | % |
____________________
| |
(1) | The decrease is primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year. |
Results of Operations – Three Months Ended June 30, 2020 Compared to June 30, 2019 - continued
Same Store Net Operating Income At Share - continued
Below are reconciliations of NOI at share - cash basis to same store NOI at share - cash basis for our New York segment, theMART, 555 California Street and other investments for the three months ended June 30, 2020 compared to June 30, 2019.
|
| | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California Street | | Other |
| NOI at share - cash basis for the three months ended June 30, 2020 | $ | 256,830 |
| | $ | 221,911 |
| | $ | 17,765 |
| | $ | 15,005 |
| | $ | 2,149 |
|
| | Less NOI at share - cash basis from: | | | | | | | | | |
| | Development properties | (9,475 | ) | | (9,471 | ) | | — |
| | (4 | ) | | — |
|
| | Hotel Pennsylvania (temporarily closed beginning April 1, 2020) | 8,525 |
| | 8,525 |
| | — |
| | — |
| | — |
|
| | Other non-same store (income) expense, net | (13,174 | ) | | (11,072 | ) | | — |
| | 47 |
| | (2,149 | ) |
| Same store NOI at share - cash basis for the three months ended June 30, 2020 | $ | 242,706 |
| | $ | 209,893 |
| | $ | 17,765 |
| | $ | 15,048 |
| | $ | — |
|
| | | | | | | | | | | |
| NOI at share - cash basis for the three months ended June 30, 2019 | $ | 318,657 |
| | $ | 266,139 |
| | $ | 31,984 |
| | $ | 15,595 |
| | $ | 4,939 |
|
| | Less NOI at share - cash basis from: | | | | | | | | | |
| | Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV | (5,183 | ) | | (5,183 | ) | | — |
| | — |
| | — |
|
| | Dispositions | (3,879 | ) | | (3,879 | ) | | — |
| | — |
| | — |
|
| | Development properties | (23,364 | ) | | (23,364 | ) | | — |
| | — |
| | — |
|
| | Hotel Pennsylvania (temporarily closed beginning April 1, 2020) | (3,982 | ) | | (3,982 | ) | | — |
| | — |
| | — |
|
| | Other non-same store (income) expense, net | (10,214 | ) | | (5,409 | ) | | 6 |
| | 128 |
| | (4,939 | ) |
| Same store NOI at share - cash basis for the three months ended June 30, 2019 | $ | 272,035 |
| | $ | 224,322 |
| | $ | 31,990 |
| | $ | 15,723 |
| | $ | — |
|
| | | | | | | | | | |
| Decrease in same store NOI at share - cash basis for the three months ended June 30, 2020 compared to June 30, 2019 | $ | (29,329 | ) | | $ | (14,429 | ) | | $ | (14,225 | ) | | $ | (675 | ) | | $ | — |
|
| | | | | | | | | | |
| % decrease in same store NOI at share - cash basis | (10.8 | )% | | (6.4 | )% | | (44.5 | )% | (1) | (4.3 | )% | | — | % |
____________________
| |
(1) | The decrease is primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year. |
NOI At Share by Segment for the Six Months Ended June 30, 2020 and 2019
Below is a summary of NOI at share and NOI at share - cash basisby segment for the six months ended June 30, 2020 and 2019. |
| | | | | | | | | | | |
| (Amounts in thousands) | For the Six Months Ended June 30, 2020 |
| | Total | | New York | | Other |
| Total revenues | $ | 787,558 |
| | $ | 626,243 |
| | $ | 161,315 |
|
| Operating expenses | (404,432 | ) | | (323,238 | ) | | (81,194 | ) |
| NOI - consolidated | 383,126 |
| | 303,005 |
| | 80,121 |
|
| Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries | (30,941 | ) | | (16,937 | ) | | (14,004 | ) |
| Add: NOI from partially owned entities | 151,368 |
| | 145,459 |
| | 5,909 |
|
| NOI at share | 503,553 |
| | 431,527 |
| | 72,026 |
|
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other | 37,266 |
| | 34,049 |
| | 3,217 |
|
| NOI at share - cash basis | $ | 540,819 |
| | $ | 465,576 |
| | $ | 75,243 |
|
|
| | | | | | | | | | | |
| (Amounts in thousands) | For the Six Months Ended June 30, 2019 |
| | Total | | New York | | Other |
| Total revenues | $ | 997,771 |
| | $ | 819,666 |
| | $ | 178,105 |
|
| Operating expenses | (467,647 | ) | | (385,914 | ) | | (81,733 | ) |
| NOI - consolidated | 530,124 |
| | 433,752 |
| | 96,372 |
|
| Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries | (33,819 | ) | | (21,437 | ) | | (12,382 | ) |
| Add: NOI from partially owned entities | 150,376 |
| | 128,745 |
| | 21,631 |
|
| NOI at share | 646,681 |
| | 541,060 |
| | 105,621 |
|
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other | 4,567 |
| | 1,819 |
| | 2,748 |
|
| NOI at share - cash basis | $ | 651,248 |
| | $ | 542,879 |
| | $ | 108,369 |
|
NOI At Share by Segment for the Six Months Ended June 30, 2020 and 2019- continued
The elements of our New York and Other NOI at share for the six months ended June 30, 2020 and 2019 are summarized below.
|
| | | | | | | |
| (Amounts in thousands) | For the Six Months Ended June 30, |
| | 2020 | | 2019 |
| New York: | | | |
Office(1)(2) | $ | 344,649 |
| | $ | 363,132 |
|
Retail(1)(3) | 73,859 |
| | 145,330 |
|
| Residential | 12,068 |
| | 11,953 |
|
| Alexander's | 18,823 |
| | 22,430 |
|
Hotel Pennsylvania(4) | (17,872 | ) | | (1,785 | ) |
| Total New York | 431,527 |
| | 541,060 |
|
| | | | |
| Other: | | | |
theMART(5) | 38,916 |
| | 54,497 |
|
| 555 California Street | 30,068 |
| | 29,859 |
|
Other investments(6) | 3,042 |
| | 21,265 |
|
| Total Other | 72,026 |
| | 105,621 |
|
| | | | |
| NOI at share | $ | 503,553 |
| | $ | 646,681 |
|
___________________
| |
(1) | Reflects the transfer of 45.4% of common equity in the properties contributed to Fifth Avenue and Times Square JV on April 18, 2019.
|
| |
(2) | 2020 includes $13,220 of non-cash write-offs of receivables arising from the straight-lining of rents, primarily for the New York & Company, Inc. lease at 330 West 34th Street and $940 of write-offs of tenant receivables deemed uncollectible. |
| |
(3) | 2020 includes $20,436 of non-cash write-offs of receivables arising from the straight-lining of rents, primarily for the JCPenney lease at Manhattan Mall and $6,731 of write-offs of tenant receivables deemed uncollectible. 2019 includes $13,199 of non-cash write-offs of receivables arising from the straight-lining of rents. |
| |
(4) | The decrease in NOI at share is primarily due to the effects of the COVID-19 pandemic. The Hotel Pennsylvania has been temporarily closed since April 1, 2020 as a result of the pandemic. |
| |
(5) | The decrease in NOI at share is primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year.
|
| |
(6) | 2019 includes our share of PREIT (accounted for as a marketable security from March 12, 2019 and sold on January 23, 2020) and UE (sold on March 4, 2019).
|
The elements of our New York and Other NOI at share - cash basis for the six months ended June 30, 2020 and 2019 are summarized below.
|
| | | | | | | |
| (Amounts in thousands) | For the Six Months Ended June 30, |
| | 2020 | | 2019 |
| New York: | | | |
Office(1)(2) | $ | 362,473 |
| | $ | 363,176 |
|
Retail(1)(3) | 87,954 |
| | 147,662 |
|
| Residential | 11,363 |
| | 11,074 |
|
| Alexander's | 21,675 |
| | 22,849 |
|
Hotel Pennsylvania(4) | (17,889 | ) | | (1,882 | ) |
| Total New York | 465,576 |
| | 542,879 |
|
| | | | |
| Other: | | | |
theMART(5) | 40,470 |
| | 56,896 |
|
| 555 California Street | 30,440 |
| | 30,340 |
|
Other investments(6) | 4,333 |
| | 21,133 |
|
| Total Other | 75,243 |
| | 108,369 |
|
| | | | |
| NOI at share - cash basis | $ | 540,819 |
| | $ | 651,248 |
|
___________________
| |
(1) | Reflects the transfer of 45.4% of common equity in the properties contributed to Fifth Avenue and Times Square JV on April 18, 2019. |
| |
(2) | 2020 includes $940 of write-offs of tenant receivables deemed uncollectible. |
| |
(3) | 2020 includes $6,731 of write-offs of tenant receivables deemed uncollectible. |
| |
(4) | The decrease in NOI at share - cash basis is primarily due to the effects of the COVID-19 pandemic. The Hotel Pennsylvania has been temporarily closed since April 1, 2020 as a result of the pandemic. |
| |
(5) | The decrease in NOI at share - cash basis is primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year. |
| |
(6) | 2019 includes our share of PREIT (accounted for as a marketable security from March 12, 2019 and sold on January 23, 2020) and UE (sold on March 4, 2019). |
Reconciliation of Net (Loss) Income to NOI At Share for the Six Months Ended June 30, 2020 and 2019
Below is a reconciliation of net (loss) income to NOI at share and NOI at share - cash basis for the six months ended June 30, 2020 and 2019.
|
| | | | | | | |
| (Amounts in thousands) | For the Six Months Ended June 30, |
| | 2020 | | 2019 |
| Net (loss) income | $ | (321,855 | ) | | $ | 2,809,737 |
|
| Depreciation and amortization expense | 185,598 |
| | 229,744 |
|
| General and administrative expense | 87,848 |
| | 96,892 |
|
| (Lease liability extinguishment gain) transaction related costs and impairment losses | (69,150 | ) | | 101,739 |
|
| Loss (income) from partially owned entities | 272,770 |
| | (30,193 | ) |
| Loss from real estate fund investments | 211,505 |
| | 15,970 |
|
| Interest and other investment loss (income), net | 8,797 |
| | (12,885 | ) |
| Interest and debt expense | 117,247 |
| | 165,492 |
|
| Net gain on transfer to Fifth Avenue and Times Square JV | — |
| | (2,571,099 | ) |
| Net gains on disposition of wholly owned and partially owned assets | (124,284 | ) | | (332,007 | ) |
| Income tax expense | 14,650 |
| | 56,657 |
|
| Loss from discontinued operations | — |
| | 77 |
|
| NOI from partially owned entities | 151,368 |
| | 150,376 |
|
| NOI attributable to noncontrolling interests in consolidated subsidiaries | (30,941 | ) | | (33,819 | ) |
| NOI at share | 503,553 |
| | 646,681 |
|
| Non cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other | 37,266 |
| | 4,567 |
|
| NOI at share - cash basis | $ | 540,819 |
| | $ | 651,248 |
|
NOI At Share by Region
|
| | | | | |
| | For the Six Months Ended June 30, |
| | 2020 | | 2019 |
| Region: | | | |
| New York City metropolitan area | 86 | % | | 86 | % |
| Chicago, IL | 8 | % | | 9 | % |
| San Francisco, CA | 6 | % | | 5 | % |
| | 100 | % | | 100 | % |
Results of Operations – Six Months Ended June 30, 2020 Compared to June 30, 2019
Revenues
Our revenues were $787,558,000 for the six months ended June 30, 2020, compared to $997,771,000 for the prior year’s six months, a decrease of $210,213,000. Below are the details of the decrease by segment:
|
| | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | Other |
| Increase (decrease) due to: | | | | | |
| Rental revenues: | | | | | |
| | Acquisitions, dispositions and other | $ | 12,675 |
| | $ | 12,584 |
| | $ | 91 |
|
| | Development and redevelopment | (30,578 | ) | | (30,280 | ) | | (298 | ) |
| | Hotel Pennsylvania(1) | (29,633 | ) | | (29,633 | ) | | — |
|
| | Trade shows(2) | (17,061 | ) | | — |
| | (17,061 | ) |
| | Properties transferred to Fifth Avenue and Times Square JV | (100,554 | ) | | (100,554 | ) | | — |
|
| | Same store operations | (39,557 | ) | (3) | (35,159 | ) | | (4,398 | ) |
| | | (204,708 | ) | | (183,042 | ) | | (21,666 | ) |
| Fee and other income: | | | | | |
| | BMS cleaning fees | (8,774 | ) | | (9,867 | ) | (4) | 1,093 |
|
| | Management and leasing fees | (1,968 | ) | | (2,148 | ) | | 180 |
|
| | Properties transferred to Fifth Avenue and Times Square JV | (389 | ) | | (389 | ) | | — |
|
| | Other income | 5,626 |
| | 2,023 |
| | 3,603 |
|
| | | (5,505 | ) | | (10,381 | ) | | 4,876 |
|
| | | | | | | |
| Total decrease in revenues | $ | (210,213 | ) | | $ | (193,423 | ) | | $ | (16,790 | ) |
_____________
See notes on the following page.
Results of Operations – Six Months Ended June 30, 2020 Compared to June 30, 2019- continued
Expenses
Our expenses were $603,839,000 for the six months ended June 30, 2020, compared to $902,770,000 for the prior year’s six months, a decrease of $298,931,000. Below are the details of the decrease by segment:
|
| | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | Other |
| (Decrease) increase due to: | | | | | |
| Operating: | | | | | |
| | Acquisitions, dispositions and other | $ | (4,770 | ) | | $ | (4,718 | ) | | $ | (52 | ) |
| | Development and redevelopment | (16,353 | ) | | (16,207 | ) | | (146 | ) |
| | Non-reimbursable expenses | 1,256 |
| | 1,115 |
| | 141 |
|
| | Hotel Pennsylvania(1) | (13,557 | ) | | (13,557 | ) | | — |
|
| | Trade shows(2) | (6,162 | ) | | — |
| | (6,162 | ) |
| | BMS expenses | (4,916 | ) | | (6,009 | ) | (4) | 1,093 |
|
| | Properties transferred to Fifth Avenue and Times Square JV | (21,614 | ) | | (21,614 | ) | | — |
|
| | Same store operations | 2,901 |
| | (1,686 | ) | | 4,587 |
|
| | | (63,215 | ) | | (62,676 | ) | | (539 | ) |
| Depreciation and amortization: | | | | | |
| | Acquisitions, dispositions and other | (3,781 | ) | | (3,787 | ) | | 6 |
|
| | Development and redevelopment | 1,128 |
| | 340 |
| | 788 |
|
| | Properties transferred to Fifth Avenue and Times Square JV | (25,119 | ) | | (25,119 | ) | | — |
|
| | Same store operations | (16,374 | ) | | (16,032 | ) | | (342 | ) |
| | | (44,146 | ) | | (44,598 | ) | | 452 |
|
| | | | | | |
| General and administrative | (9,044 | ) | (5) | (3,605 | ) | | (5,439 | ) |
| | | | | | | |
| Benefit from deferred compensation plan liability | (11,637 | ) | | — |
| | (11,637 | ) |
| | | | | | | |
| (Lease liability extinguishment gain) transaction related costs and impairment losses | (170,889 | ) | | (171,620 | ) | (6) | 731 |
|
| | | | | | |
| Total decrease in expenses | $ | (298,931 | ) | | $ | (282,499 | ) | | $ | (16,432 | ) |
___________________
| |
(1) | Temporarily closed since April 1, 2020 as a result of the pandemic. |
| |
(2) | Cancelled trade shows at theMART from late March 2020 through the remainder of the year as a result of the pandemic. |
| |
(3) | 2020 includes $34,010 for the non-cash write-off of receivables arising from the straight-lining of rents, primarily for the JCPenney lease at Manhattan Mall and the New York & Company, Inc. lease at 330 West 34th Street, and $4,621 for the write-off of tenant receivables deemed uncollectible. |
| |
(4) | Primarily due to a decrease in third party cleaning services provided to retail and office tenants as a result of the pandemic. |
| |
(5) | Primarily due to $8,444 non-cash stock-based compensation expense for the accelerated vesting of previously issued Operating Partnership units and Vornado restricted stock in 2019 due to the removal of the time-based vesting requirements for participants who have reached 65 years of age and $844 of lower non-cash stock-based compensation expense for the time-based compensation granted in connection with the new leadership group announced in April 2019. |
| |
(6) | Due to $101,360 of non-cash impairment losses, substantially 608 Fifth Avenue, recognized in the second quarter of 2019 and $70,260 of lease liability extinguishment gain in May 2020 related to 608 Fifth Avenue. |
Results of Operations – Six Months Ended June 30, 2020 Compared to June 30, 2019- continued
(Loss) Income from Partially Owned Entities
Below are the components of (loss) income from partially owned entities for the six months ended June 30, 2020 and 2019.
|
| | | | | | | | | |
| (Amounts in thousands) | Percentage
Ownership at
June 30, 2020 | | For the Six Months Ended June 30, |
| | | 2020 | | 2019 |
| Our share of net (loss) income: | | | | | |
Fifth Avenue and Times Square JV(1): | | | | | |
Non-cash impairment loss(2) | | | $ | (306,326 | ) | | $ | — |
|
| Return on preferred equity, net of our share of the expense |
| | 18,496 |
| | 8,586 |
|
Equity in net income(3) | 51.5% | | 5,937 |
| | 11,217 |
|
| | | | (281,893 | ) | | 19,803 |
|
| Alexander's | 32.4% | | 7,827 |
| | 11,493 |
|
Partially owned office buildings(4) | Various | | 2,132 |
| | (1,345 | ) |
Other investments(5) | Various | | (836 | ) | | 242 |
|
| | | | $ | (272,770 | ) | | $ | 30,193 |
|
____________________
| |
(1) | Entered into on April 18, 2019. |
| |
(2) | See Note 8 - Investments in Partially Owned Entities to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for additional information.
|
| |
(3) | The decrease in our share of net income was primarily due to (i) $4,737 of write-offs of lease receivables deemed uncollectible during the second quarter of 2020 and (ii) a $4,360 reduction in income related to a Forever 21 lease modification at 1540 Broadway.
|
| |
(4) | Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 7 West 34th Street, 330 Madison Avenue (sold on July 11, 2019), 512 West 22nd Street, 61 Ninth Avenue, 85 Tenth Avenue and others. |
| |
(5) | Includes interests in Independence Plaza, Rosslyn Plaza, UE (sold on March 4, 2019), PREIT (accounted as a marketable security from March 12, 2019 and sold on January 23, 2020) and others. |
Loss from Real Estate Fund Investments
Below are the components of the loss from our real estate fund investments for the six months ended June 30, 2020 and 2019.
|
| | | | | | | |
| (Amounts in thousands) | For the Six Months Ended June 30, |
| | 2020 | | 2019 |
| Net investment (loss) income | $ | (309 | ) | | $ | 192 |
|
| Net unrealized loss on held investments | (211,196 | ) | | (16,162 | ) |
| Loss from real estate fund investments | (211,505 | ) | | (15,970 | ) |
| Less loss (income) attributable to noncontrolling interests in consolidated subsidiaries | 149,258 |
| | (7,692 | ) |
| Loss from real estate fund investments net of noncontrolling interests in consolidated subsidiaries | $ | (62,247 | ) | | $ | (23,662 | ) |
Interest and Other Investment (Loss) Income, net
Below are the components of interest and other investment (loss) income, net for the six months ended June 30, 2020 and 2019.
|
| | | | | | | |
| (Amounts in thousands) | For the Six Months Ended June 30, |
| | 2020 | | 2019 |
Credit losses on loans receivable(1) | $ | (13,369 | ) | | $ | — |
|
| Interest on cash and cash equivalents and restricted cash | 5,464 |
| | 4,693 |
|
(Decrease) increase in fair value of marketable securities(2) | (4,938 | ) | | 1,773 |
|
| Interest on loans receivable | 2,236 |
| | 3,241 |
|
| Dividends on marketable securities | — |
| | 1,313 |
|
| Other, net | 1,810 |
| | 1,865 |
|
| | $ | (8,797 | ) | | $ | 12,885 |
|
____________________
| |
(1) | See Note 4 - Recently Issued Accounting Literature to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for additional information.
|
| |
(2) | The six months ended June 30, 2020 includes a $4,938 mark-to-market decrease in the fair value of our PREIT common shares (sold on January 23, 2020). The six months ended June 30, 2019 primarily includes (i) a $16,068 mark-to-market increase in the fair value of our Lexington common shares (sold on March 1, 2019) partially offset by (ii) a $14,336 mark-to-market decrease in the fair value of our PREIT common shares (accounted for as marketable securities from March 12, 2019 and sold on January 23, 2020). |
Results of Operations – Six Months Ended June 30, 2020 Compared to June 30, 2019- continued
Interest and Debt Expense
Interest and debt expense was $117,247,000 for the sixthree months ended June 30, 2020,March 31, 2021 was $50,064,000 compared to $165,492,000$58,842,000 for the prior year’s six months,quarter, a decrease of $48,245,000.$8,778,000. This decrease was primarily due to (i) $22,540,000 of lower interest expense relating to debt prepayment costs relating to the redemption of our $400,000,000 5.00% senior unsecured notes in 2019, (ii) $12,530,000 of lower interest expense resulting from the deconsolidation of mortgages payable of the properties contributed to Fifth Avenue and Times Square JV, (iii) $11,970,000 of lower interest expense resulting from the repayment of the mortgage payable of PENN2, (iv) $9,482,000$6,595,000 of lower interest expense resulting from lower average interest rates on our variable rate loans (v) $7,584,000and $3,340,000 of lower interest expense resulting from paydownsdue to the interest rate swaps for certain of our mortgage loans maturing in the 220 CPS loan, and (vi) $5,045,000latter part of lower interest from the redemption of the $400,000,000 5.00% senior unsecured notes in 2019,2020, partially offset by $21,636,000$1,788,000 of lower capitalized interest and debt expense.
Net Gain on Transfer to Fifth Avenue and Times Square JV
During the six months ended June 30, 2019, we recognized a $2,571,099,000 net gain from the transfer of common equity in the properties contributed to Fifth Avenue and Times Square JV, including the related step-up in our basis of the retained portion of the assets to fair value.
Net Gains on Disposition of Wholly Owned and Partially Owned Assets
Net gains on disposition of wholly owned and partially ownedowed assets of $124,284,000 for the sixthree months ended June 30,March 31, 2020 consisted ofwere$68,589,000 due to net gains on the sale of 11 condominium units at 220 CPS. Net gains on disposition of wholly owned and partially owned assets of $332,007,000 for the six months ended June 30, 2019 consisted of (i) $269,612,000 of net gains on the sale of 23 condominium units at 220 CPS and (ii) a $62,395,000 net gain from the sale of all our UE partnership units in the first quarter of 2019.condominium units.
Income Tax Expense
Income tax expense for the sixthree months ended June 30, 2020March 31, 2021 was $14,650,000$1,984,000 compared to $56,657,000$12,813,000 for the prior year’s six months,quarter, a decrease of $42,007,000.$10,829,000. This decrease was primarily due to lower income tax expense from the sale of 220 CPS condominium units.
Net (Income) Loss (Income) Attributable to Noncontrolling Interests in Consolidated Subsidiaries
Net loss incomeattributable to noncontrolling interests in consolidated subsidiaries was $140,155,000$6,114,000 for the sixthree months ended June 30, 2020,March 31, 2021, compared to income a lossof $28,271,000$122,387,000 for the prior year’s six months,quarter, an increase in income of $128,501,000. This increase resulted primarily from a decrease in income of $168,426,000. This decrease resulted primarily from the allocation of net loss allocated to the noncontrolling interests inof our real estate fund investments.
Net (Loss) Income Attributable to Noncontrolling Interests in the Operating Partnership (Vornado Realty Trust)
Net lossincome attributable to noncontrolling interests in the Operating Partnership was $13,974,000$329,000 for the sixthree months ended June 30, 2020,March 31, 2021, compared to net income of $174,717,000$390,000 for the prior year’s six months,quarter, a decrease in income of $188,691,000.$61,000. This decrease resulted primarily from lower net income subject to allocation to Class A unitholders.
Results of Operations – Six Months Ended June 30, 2020 Compared to June 30, 2019- continued
Preferred Share Dividends of Vornado Realty Trust
Preferred share dividends were $25,061,000$16,467,000 for the sixthree months ended June 30, 2020,March 31, 2021, compared to $25,066,000$12,531,000 for the prior year’s six months, a decreasequarter, an increase of $5,000. $3,936,000 due to the issuance of 5.25% Series N cumulative redeemable preferred shares in November 2020.
Preferred Unit Distributions of Vornado Realty L.P.
Preferred unit distributions were $25,143,000$16,508,000 for the sixthree months ended June 30, 2020,March 31, 2021, compared to $25,148,000$12,572,000 for the prior year’s six months, a decreasequarter, an increase of $5,000. $3,936,000 due to the issuance of 5.25% Series N cumulative redeemable preferred units in November 2020.
Results of Operations – Three Months Ended March 31, 2021 Compared to March 31, 2020 - continued
Same Store Net Operating Income At Share
Below are reconciliations of NOI at share to sameSame store NOI at share for our New York segment, theMART, 555 California Streetrepresents NOI at share from operations which are in service in both the current and other investments for the six months ended June 30, 2020 compared to June 30, 2019.
|
| | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California Street | | Other |
| NOI at share for the six months ended June 30, 2020 | $ | 503,553 |
| | $ | 431,527 |
| | $ | 38,916 |
| | $ | 30,068 |
| | $ | 3,042 |
|
| | Less NOI at share from: | | | | | | | | | |
| | Development properties | (21,642 | ) | | (21,638 | ) | | — |
| | (4 | ) | | — |
|
| | Hotel Pennsylvania (temporarily closed beginning April 1, 2020) | 8,516 |
| | 8,516 |
| | — |
| | — |
| | — |
|
| | Other non-same store (income) expense, net | (17,533 | ) | | (14,172 | ) | | (422 | ) | | 103 |
| | (3,042 | ) |
| Same store NOI at share for the six months ended June 30, 2020 | $ | 472,894 |
| | $ | 404,233 |
| | $ | 38,494 |
| | $ | 30,167 |
| | $ | — |
|
| | | | | | | | | | |
| NOI at share for the six months ended June 30, 2019 | $ | 646,681 |
| | $ | 541,060 |
| | $ | 54,497 |
| | $ | 29,859 |
| | $ | 21,265 |
|
| | Less NOI at share from: | | | | | | | | | |
| | Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV | (35,770 | ) | | (35,770 | ) | | — |
| | — |
| | — |
|
| | Dispositions | (7,096 | ) | | (7,096 | ) | | — |
| | — |
| | — |
|
| | Development properties | (35,131 | ) | | (35,131 | ) | | — |
| | — |
| | — |
|
| | Hotel Pennsylvania (temporarily closed beginning April 1, 2020) | (4,031 | ) | | (4,031 | ) | | | | | | — |
|
| | Other non-same store (income) expense, net | (15,586 | ) | | 5,054 |
| | 345 |
| | 280 |
| | (21,265 | ) |
| Same store NOI at share for the six months ended June 30, 2019 | $ | 549,067 |
| | $ | 464,086 |
| | $ | 54,842 |
| | $ | 30,139 |
| | $ | — |
|
| | | | | | | | | | |
| (Decrease) increase in same store NOI at share for the six months ended June 30, 2020 compared to June 30, 2019 | $ | (76,173 | ) | | $ | (59,853 | ) | | $ | (16,348 | ) | | $ | 28 |
| | $ | — |
|
| | | | | | | | | | | |
| % (decrease) increase in same store NOI at share | (13.9 | )% | | (12.9 | )% | | (29.8 | )% | (1) | 0.1 | % | | — | % |
____________________
| |
(1) | The decrease is primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year. |
Results of Operations – Six Months Ended June 30, 2020 Compared to June 30, 2019 - continued
prior year reporting periods. Same Store Net Operating Income At Share - continued
Below are reconciliations ofstore NOI at share - cash basis is same store NOI at share adjusted to exclude straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments. We present these non-GAAP measures to (i) facilitate meaningful comparisons of the operational performance of our properties and segments, (ii) make decisions on whether to buy, sell or refinance properties, and (iii) compare the performance of our properties and segments to those of our peers. Same store NOI at share and same store NOI at share - cash basis for our New York segment, theMART, 555 California Streetshould not be considered alternatives to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other investments for the six months ended June 30, 2020 compared to June 30, 2019.
|
| | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California Street | | Other |
| NOI at share - cash basis for the six months ended June 30, 2020 | $ | 540,819 |
| | $ | 465,576 |
| | $ | 40,470 |
| | $ | 30,440 |
| | $ | 4,333 |
|
| | Less NOI at share - cash basis from: | | | | | | | | | |
| | Development properties | (27,591 | ) | | (27,587 | ) | | — |
| | (4 | ) | | — |
|
| | Hotel Pennsylvania (temporarily closed beginning April 1, 2020) | 8,525 |
| | 8,525 |
| | — |
| | — |
| | — |
|
| | Other non-same store income, net | (26,130 | ) | | (21,366 | ) | | (422 | ) | | (9 | ) | | (4,333 | ) |
| Same store NOI at share - cash basis for the six months ended June 30, 2020 | $ | 495,623 |
| | $ | 425,148 |
| | $ | 40,048 |
| | $ | 30,427 |
| | $ | — |
|
| | | | | | | | | | |
| NOI at share - cash basis for the six months ended June 30, 2019 | $ | 651,248 |
| | $ | 542,879 |
| | $ | 56,896 |
| | $ | 30,340 |
| | $ | 21,133 |
|
| | Less NOI at share - cash basis from: | | | | | | | | | |
| | Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV | (32,905 | ) | | (32,905 | ) | | — |
| | — |
| | — |
|
| | Dispositions | (7,460 | ) | | (7,460 | ) | | — |
| | — |
| | — |
|
| | Development properties | (47,703 | ) | | (47,703 | ) | | — |
| | — |
| | — |
|
| | Hotel Pennsylvania (temporarily closed beginning April 1, 2020) | (3,982 | ) | | (3,982 | ) | | — |
| | — |
| | — |
|
| | Other non-same store (income) expense, net | (30,379 | ) | | (9,797 | ) | | 345 |
| | 206 |
| | (21,133 | ) |
| Same store NOI at share - cash basis for the six months ended June 30, 2019 | $ | 528,819 |
| | $ | 441,032 |
| | $ | 57,241 |
| | $ | 30,546 |
| | $ | — |
|
| | | | | | | | | | |
| Decrease in same store NOI at share - cash basis for the six months ended June 30, 2020 compared to June 30, 2019 | $ | (33,196 | ) | | $ | (15,884 | ) | | $ | (17,193 | ) | | $ | (119 | ) | | $ | — |
|
| | | | | | | | | | | |
| % decrease in same store NOI at share - cash basis | (6.3 | )% | | (3.6 | )% | | (30.0 | )% | (1) | (0.4 | )% | | — | % |
____________________
| |
(1) | The decrease is primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year. |
NOI At Share by Segment for the Three Months Ended June 30, 2020 and March 31, 2020
Below is a summary of NOIat share and NOI at share - cash basis for the three months ended June 30, 2020 and March 31, 2020 by segment.
|
| | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended June 30, 2020 |
| | Total | | New York | | Other |
| Total revenues | $ | 343,026 |
| | $ | 270,628 |
| | $ | 72,398 |
|
| Operating expenses | (174,425 | ) | | (140,207 | ) | | (34,218 | ) |
| NOI - consolidated | 168,601 |
| | 130,421 |
| | 38,180 |
|
| Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries | (15,448 | ) | | (8,504 | ) | | (6,944 | ) |
| Add: NOI from partially owned entities | 69,487 |
| | 67,051 |
| | 2,436 |
|
| NOI at share | 222,640 |
| | 188,968 |
| | 33,672 |
|
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other | 34,190 |
| | 32,943 |
| | 1,247 |
|
| NOI at share - cash basis | $ | 256,830 |
| | $ | 221,911 |
| | $ | 34,919 |
|
|
| | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, 2020 |
| | Total | | New York | | Other |
| Total revenues | $ | 444,532 |
| | $ | 355,615 |
| | $ | 88,917 |
|
| Operating expenses | (230,007 | ) | | (183,031 | ) | | (46,976 | ) |
| NOI - consolidated | 214,525 |
| | 172,584 |
| | 41,941 |
|
| Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries | (15,493 | ) | | (8,433 | ) | | (7,060 | ) |
| Add: NOI from partially owned entities | 81,881 |
| | 78,408 |
| | 3,473 |
|
| NOI at share | 280,913 |
| | 242,559 |
| | 38,354 |
|
| Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other | 3,076 |
| | 1,106 |
| | 1,970 |
|
| NOI at share - cash basis | $ | 283,989 |
| | $ | 243,665 |
| | $ | 40,324 |
|
SUPPLEMENTAL INFORMATION - CONTINUED
NOI At Share by Segment for the Three Months Ended June 30, 2020 and March 31, 2020 - continued
The elements of our New York and Other NOI at share for the three months ended June 30, 2020 and March 31, 2020 are summarized below.
|
| | | | | | | |
| (Amounts in thousands) | For the Three Months Ended |
| | June 30, 2020 | | March 31, 2020 |
| New York: | | | |
Office(1) | $ | 161,444 |
| | $ | 183,205 |
|
Retail(2) | 21,841 |
| | 52,018 |
|
| Residential | 5,868 |
| | 6,200 |
|
| Alexander's | 8,331 |
| | 10,492 |
|
Hotel Pennsylvania(3) | (8,516 | ) | | (9,356 | ) |
| Total New York | 188,968 |
| | 242,559 |
|
| | | | |
| Other: | | | |
theMART(4) | 17,803 |
| | 21,113 |
|
| 555 California Street | 14,837 |
| | 15,231 |
|
| Other investments | 1,032 |
| | 2,010 |
|
| Total Other | 33,672 |
| | 38,354 |
|
| | | | |
| NOI at share | $ | 222,640 |
| | $ | 280,913 |
|
___________________
| |
(1) | The three months ended June 30, 2020 includes $13,220 of non-cash write-offs of receivables arising from the straight-lining of rents, primarily for the New York & Company, Inc. lease at 330 West 34th Street and $940 of write-offs of tenant receivables deemed uncollectible.
|
| |
(2) | The three months ended June 30, 2020 includes $20,436 of non-cash write-offs of receivables arising from the straight-lining of rents, primarily for the JCPenney lease at Manhattan Mall and $6,731 of write-offs of tenant receivables deemed uncollectible. |
| |
(3) | The decrease in NOI at share is primarily due to the effects of the COVID-19 pandemic. The Hotel Pennsylvania has been temporarily closed since April 1, 2020 as a result of the pandemic. |
| |
(4) | The decrease in NOI at share is primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year. |
The elements of our New York and Other NOI at share - cash basis for the three months ended June 30, 2020 and March 31, 2020 are summarized below.
|
| | | | | | | |
| (Amounts in thousands) | For the Three Months Ended |
| | June 30, 2020 | | March 31, 2020 |
| New York: | | | |
Office(1) | $ | 175,438 |
| | $ | 187,035 |
|
Retail(2) | 38,913 |
| | 49,041 |
|
| Residential | 5,504 |
| | 5,859 |
|
| Alexander's | 10,581 |
| | 11,094 |
|
Hotel Pennsylvania(3) | (8,525 | ) | | (9,364 | ) |
| Total New York | 221,911 |
| | 243,665 |
|
| | | | |
| Other: | | | |
theMART(4) | 17,765 |
| | 22,705 |
|
| 555 California Street | 15,005 |
| | 15,435 |
|
| Other investments | 2,149 |
| | 2,184 |
|
| Total Other | 34,919 |
| | 40,324 |
|
| | | | |
| NOI at share - cash basis | $ | 256,830 |
| | $ | 283,989 |
|
___________________
| |
(1) | The three months ended June 30, 2020 includes $940 of write-offs of tenant receivables deemed uncollectible.
|
| |
(2) | The three months ended June 30, 2020 includes $6,731 of write-offs of tenant receivables deemed uncollectible.
|
| |
(3) | The decrease in NOI at share - cash basis is primarily due to the effects of the COVID-19 pandemic. The Hotel Pennsylvania has been temporarily closed since April 1, 2020 as a result of the pandemic. |
| |
(4) | The decrease in NOI at share - cash basis is primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year.
|
SUPPLEMENTAL INFORMATION - CONTINUED
Reconciliation of Net Income to NOI At Share and NOI At Share - Cash Basis for the Three Months Ended June 30, 2020 and March 31, 2020
|
| | | | | | | |
| (Amounts in thousands) | For the Three Months Ended |
| | June 30, 2020 | | March 31, 2020 |
| Net loss | $ | (217,352 | ) | | $ | (104,503 | ) |
| Depreciation and amortization expense | 92,805 |
| | 92,793 |
|
| General and administrative expense | 35,014 |
| | 52,834 |
|
| (Lease liability extinguishment gain) transaction related costs and impairment losses | (69,221 | ) | | 71 |
|
| Loss (income) from partially owned entities | 291,873 |
| | (19,103 | ) |
| Loss from real estate fund investments | 28,042 |
| | 183,463 |
|
| Interest and other investment loss, net | 2,893 |
| | 5,904 |
|
| Interest and debt expense | 58,405 |
| | 58,842 |
|
| Net gains on disposition of wholly owned and partially owned assets | (55,695 | ) | | (68,589 | ) |
| Income tax expense | 1,837 |
| | 12,813 |
|
| NOI from partially owned entities | 69,487 |
| | 81,881 |
|
| NOI attributable to noncontrolling interests in consolidated subsidiaries | (15,448 | ) | | (15,493 | ) |
| NOI at share | 222,640 |
| | 280,913 |
|
| Non cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other | 34,190 |
| | 3,076 |
|
| NOI at share - cash basis | $ | 256,830 |
| | $ | 283,989 |
|
SUPPLEMENTAL INFORMATION - CONTINUED
Three Months Ended June 30, 2020 Compared to March 31, 2020
Same Store Net Operating Income At Sharecompanies.
Below are reconciliations of NOI at share to same store NOI at share for our New York segment, theMART, 555 California Street and other investments for the three months ended June 30, 2020March 31, 2021 compared to March 31, 2020.
|
| | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California Street | | Other |
| NOI at share for the three months ended June 30, 2020 | $ | 222,640 |
| | $ | 188,968 |
| | $ | 17,803 |
| | $ | 14,837 |
| | $ | 1,032 |
|
| | Less NOI at share from: | | | | | | | | | |
| | Development properties | (7,380 | ) | | (7,376 | ) | | — |
| | (4 | ) | | — |
|
| | Hotel Pennsylvania (temporarily closed beginning April 1, 2020) | 8,516 |
| | 8,516 |
| | — |
| | — |
| | — |
|
| | Other non-same store income, net | (9,010 | ) | | (7,920 | ) | | — |
| | (58 | ) | | (1,032 | ) |
| Same store NOI at share for the three months ended June 30, 2020 | $ | 214,766 |
| | $ | 182,188 |
| | $ | 17,803 |
| | $ | 14,775 |
| | $ | — |
|
| | | | | | | | | | |
| NOI at share for the three months ended March 31, 2020 | $ | 280,913 |
| | $ | 242,559 |
| | $ | 21,113 |
| | $ | 15,231 |
| | $ | 2,010 |
|
| | Less NOI at share from: | | | | | | | | | |
| | Development properties | (12,996 | ) | | (12,996 | ) | | — |
| | — |
| | — |
|
| | Hotel Pennsylvania (temporarily closed beginning April 1, 2020) | 9,356 |
| | 9,356 |
| | — |
| | — |
| | — |
|
| | Other non-same store (income) expense, net | (7,705 | ) | | (5,434 | ) | | (422 | ) | | 161 |
| | (2,010 | ) |
| Same store NOI at share for the three months ended March 31, 2020 | $ | 269,568 |
| | $ | 233,485 |
| | $ | 20,691 |
| | $ | 15,392 |
| | $ | — |
|
| | | | | | | | | | |
| Decrease in same store NOI at share for the three months ended June 30, 2020 compared to March 31, 2020 | $ | (54,802 | ) | | $ | (51,297 | ) | | $ | (2,888 | ) | | $ | (617 | ) | | $ | — |
|
| | | | | | | | | | | |
| % decrease in same store NOI at share | (20.3 | )% | | (22.0 | )% | | (14.0 | )% | (1) | (4.0 | )% | | — | % |
____________________
| |
(1) | The decrease is primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California Street | | Other |
| NOI at share for the three months ended March 31, 2021 | $ | 250,108 | | | $ | 211,138 | | | $ | 18,107 | | | $ | 16,064 | | | $ | 4,799 | |
| Less NOI at share from: | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Development properties | (6,287) | | | (6,287) | | | — | | | — | | | — | |
| Hotel Pennsylvania (temporarily closed on April 1, 2020, permanently closed on April 5, 2021) | 7,144 | | | 7,144 | | | — | | | — | | | — | |
| Other non-same store income, net | (5,090) | | | (291) | | | — | | | — | | | (4,799) | |
| Same store NOI at share for the three months ended March 31, 2021 | $ | 245,875 | | | $ | 211,704 | | | $ | 18,107 | | | $ | 16,064 | | | $ | — | |
| | | | | | | | | |
| NOI at share for the three months ended March 31, 2020 | $ | 280,913 | | | $ | 242,559 | | | $ | 21,113 | | | $ | 15,231 | | | $ | 2,010 | |
| Less NOI at share from: | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Development properties | (13,171) | | | (13,171) | | | — | | | — | | | — | |
| Hotel Pennsylvania (temporarily closed on April 1, 2020, permanently closed on April 5, 2021) | 9,356 | | | 9,356 | | | — | | | — | | | — | |
| Other non-same store (income) expense, net | (8,741) | | | (6,424) | | | (422) | | | 115 | | | (2,010) | |
| Same store NOI at share for the three months ended March 31, 2020 | $ | 268,357 | | | $ | 232,320 | | | $ | 20,691 | | | $ | 15,346 | | | $ | — | |
| | | | | | | | | |
| (Decrease) increase in same store NOI at share | $ | (22,482) | | | $ | (20,616) | | | $ | (2,584) | | | $ | 718 | | | $ | — | |
| | | | | | | | | | |
| % (decrease) increase in same store NOI at share | (8.4) | % | | (8.9) | % | | (12.5) | % | | 4.7 | % | | — | % |
| | | | | | | | | | |
| | | | | | | | | | |
SUPPLEMENTAL INFORMATION - CONTINUED
Results of Operations – Three Months Ended June 30, 2020March 31, 2021 Compared to March 31, 2020 - continued
Same Store Net Operating Income At Share - continued
Below are reconciliations of NOI at share - cash basis to same store NOI at share - cash basis for our New York segment, theMART, 555 California Street and other investments for the three months ended June 30, 2020March 31, 2021 compared to March 31, 2020.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California Street | | Other |
| NOI at share - cash basis for the three months ended March 31, 2021 | $ | 248,910 | | | $ | 210,165 | | | $ | 17,840 | | | $ | 15,855 | | | $ | 5,050 | |
| Less NOI at share - cash basis from: | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Development properties | (7,268) | | | (7,268) | | | — | | | — | | | — | |
| Hotel Pennsylvania (temporarily closed on April 1, 2020, permanently closed on April 5, 2021) | 7,167 | | | 7,167 | | | — | | | — | | | — | |
| Other non-same store income, net | (5,622) | | | (572) | | | — | | | — | | | (5,050) | |
| Same store NOI at share - cash basis for the three months ended March 31, 2021 | $ | 243,187 | | | $ | 209,492 | | | $ | 17,840 | | | $ | 15,855 | | | $ | — | |
| | | | | | | | | | |
| NOI at share - cash basis for the three months ended March 31, 2020 | $ | 283,989 | | | $ | 243,665 | | | $ | 22,705 | | | $ | 15,435 | | | $ | 2,184 | |
| Less NOI at share - cash basis from: | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Development properties | (17,168) | | | (17,168) | | | — | | | — | | | — | |
| Hotel Pennsylvania (temporarily closed on April 1, 2020, permanently closed on April 5, 2021) | 9,364 | | | 9,364 | | | — | | | — | | | — | |
| Other non-same store income, net | (13,557) | | | (10,848) | | | (422) | | | (103) | | | (2,184) | |
| Same store NOI at share - cash basis for the three months ended March 31, 2020 | $ | 262,628 | | | $ | 225,013 | | | $ | 22,283 | | | $ | 15,332 | | | $ | — | |
| | | | | | | | | |
| (Decrease) increase in same store NOI at share - cash basis | $ | (19,441) | | | $ | (15,521) | | | $ | (4,443) | | | $ | 523 | | | $ | — | |
| | | | | | | | | |
| % (decrease) increase in same store NOI at share - cash basis | (7.4) | % | | (6.9) | % | | (19.9) | % | | 3.4 | % | | — | % |
| | | | | | | | | | |
| | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California Street | | Other |
| NOI at share - cash basis for the three months ended June 30, 2020 | $ | 256,830 |
| | $ | 221,911 |
| | $ | 17,765 |
| | $ | 15,005 |
| | $ | 2,149 |
|
| | Less NOI at share - cash basis from: | | | | | | | | | |
| | Development properties | (9,478 | ) | | (9,474 | ) | | — |
| | (4 | ) | | — |
|
| | Hotel Pennsylvania (temporarily closed beginning April 1, 2020) | 8,525 |
| | 8,525 |
| | — |
| | — |
| | — |
|
| | Other non-same store (income) expense, net | (12,772 | ) | | (10,670 | ) | | — |
| | 47 |
| | (2,149 | ) |
| Same store NOI at share - cash basis for the three months ended June 30, 2020 | $ | 243,105 |
| | $ | 210,292 |
| | $ | 17,765 |
| | $ | 15,048 |
| | $ | — |
|
| | | | | | | | | | | |
| NOI at share - cash basis for the three months ended March 31, 2020 | $ | 283,989 |
| | $ | 243,665 |
| | $ | 22,705 |
| | $ | 15,435 |
| | $ | 2,184 |
|
| | Less NOI at share - cash basis from: | | | | | | | | | |
| | Development properties | (17,024 | ) | | (17,024 | ) | | — |
| | — |
| | — |
|
| | Hotel Pennsylvania (temporarily closed beginning April 1, 2020) | 9,364 |
| | 9,364 |
| | — |
| | — |
| | — |
|
| | Other non-same store income, net | (12,521 | ) | | (9,858 | ) | | (422 | ) | | (57 | ) | | (2,184 | ) |
| Same store NOI at share - cash basis for the three months ended March 31, 2020 | $ | 263,808 |
| | $ | 226,147 |
| | $ | 22,283 |
| | $ | 15,378 |
| | $ | — |
|
| | | | | | | | | | |
| Decrease in same store NOI at share - cash basis for the three months ended June 30, 2020 compared to March 31, 2020 | $ | (20,703 | ) | | $ | (15,855 | ) | | $ | (4,518 | ) | | $ | (330 | ) | | $ | — |
|
| | | | | | | | | | |
| % decrease in same store NOI at share - cash basis | (7.8 | )% | | (7.0 | )% | | (20.3 | )% | (1) | (2.1 | )% | | — | % |
____________________
| |
(1) | The decrease is primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year. |
Liquidity and Capital Resources
Rental revenue is our primary source of cash flow and is dependent upon the occupancy and rental rates of our properties. Our cash requirements include property operating expenses, capital improvements, tenant improvements, debt service, leasing commissions, dividends to shareholders and distributions to unitholders of the Operating Partnership, as well as acquisition and development costs. During the second quarter of 2020, weWe have experienced a decrease in cash flow from operations due to the COVID-19 pandemic, including reduced collections of rents billed to certain of our tenants, the temporary closure of Hotel Pennsylvania, the cancellation of trade shows at theMART, through 2020, and lower revenues from BMS and signage. For the quarter ended June 30, 2020,March 31, 2021, we collected 88% (94% including rent deferrals)96% of rent due from our tenants, comprised of 93% (98% including rent deferrals)97% from our office tenants and 72% (78% including rent deferrals)90% from our retail tenants. While we believe that our tenants are required to pay rent under their leases and we have implementedcommenced legal proceedings against certain tenants that have failed to pay under their leases, in limited circumstances, we have agreed to and willmay continue to consideragree to rent deferrals on a case-by-case basis.and rent abatements for certain of our tenants. Other sources of liquidity to fund cash requirements include proceeds from debt financings, including mortgage loans, senior unsecured borrowings, unsecured term loans and unsecured revolving credit facilities; proceeds from the issuance of common and preferred equity; and asset sales.
As of June 30, 2020,March 31, 2021, we have $3.6$4.0 billion of liquidity comprised of $1.9$1.8 billion of cash and cash equivalents and restricted cash and $1.7$2.175 billion available on our $2.75 billion revolving credit facilities. The challenges posed by the COVID-19 pandemic could adversely impact our cash flow from continuing operations but we anticipate that cash flow from continuing operations over the next twelve months together with cash balances on hand will be adequate to fund our business operations, cash distributions to unitholders of the Operating Partnership, cash dividends to shareholders, debt amortization and recurring capital expenditures. Capital requirements for development expenditures and acquisitions may require funding from borrowings, equity offerings and/or equity offerings.asset sales. Consequently, the Company will continue to evaluate its liquidity and financial position on an ongoing basis.
We continue closings on the sale of condominium units at 220 CPS. During the second quarter of 2020, we closed on the sale of four condominium units for net proceeds aggregating $156,972,000 and in July 2020, we closed on the sale of seven condominium units for net proceeds aggregating $250,116,000. We expect to generate additional net cash proceeds from the sale of condominium units of approximately $500,000,000 for the remainder of 2020. In the aggregate, we will have recognized over $1.0 billion after-tax net gain, of which$678,817,000 has already been recognized in our consolidated statements of income from inception to June 30, 2020.
We may from time to time purchase retire or redeem ourretire outstanding debt securities or redeem our equity securities. Such purchases, if any, will depend on prevailing market conditions, liquidity requirements and other factors. The amounts involved in connection with these transactions could be material to our consolidated financial statements.
Liquidity and Capital Resources - continued
Cash Flows for the SixThree Months Ended June 30,March 31, 2021 and 2020 and 2019
Our cash flow activities are summarized as follows:
| | | (Amounts in thousands) | For the Six Months Ended June 30, | | (Decrease) Increase in Cash Flow | (Amounts in thousands) | For the Three Months Ended March 31, | | Increase (Decrease) in Cash Flow |
| | 2020 | | 2019 | | | 2021 | | 2020 | |
| Net cash provided by operating activities | $ | 267,715 |
| | $ | 292,852 |
| | $ | (25,137 | ) | Net cash provided by operating activities | $ | 224,185 | | | $ | 51,448 | | | $ | 172,737 | |
| Net cash (used in) provided by investing activities | (124,057 | ) | | 2,113,511 |
| | (2,237,568 | ) | |
| Net cash provided by (used in) financing activities | 112,552 |
| | (2,046,358 | ) | | 2,158,910 |
| |
| Net cash used in investing activities | | Net cash used in investing activities | (56,539) | | | (99,339) | | | 42,800 | |
| Net cash (used in) provided by financing activities | | Net cash (used in) provided by financing activities | (142,405) | | | 108,068 | | | (250,473) | |
Cash and cash equivalents and restricted cash was $1,863,341,000$1,755,610,000 as of June 30, 2020,March 31, 2021, a $256,210,000$25,241,000 increase from the balance as of December 31, 2019.2020.
Net cash provided by operating activities of $267,715,000$224,185,000 for the sixthree months ended June 30, 2020March 31, 2021 was comprised of $342,149,000$187,755,000 of cash from operations, including distributions of income from partially owned entities of $79,436,000,$61,157,000, and a net decreaseincrease of $74,434,000$36,430,000 in cash due to the timing of cash receipts and payments related to changes in operating assets and liabilities.
The following table details the net cash (used in) provided byused in investing activities:
| | | (Amounts in thousands) | For the Six Months Ended June 30, | | (Decrease) Increase in Cash Flow | (Amounts in thousands) | For the Three Months Ended March 31, | | Increase (Decrease) in Cash Flow |
| | 2020 | | 2019 | | | 2021 | | 2020 | |
| Development costs and construction in progress | | Development costs and construction in progress | $ | (130,318) | | | $ | (169,845) | | | $ | 39,527 | |
| Distributions of capital from partially owned entities | | Distributions of capital from partially owned entities | 106,005 | | | 1,090 | | | 104,915 | |
| Additions to real estate | | Additions to real estate | (27,410) | | | (49,251) | | | 21,841 | |
| Investments in partially owned entities | | Investments in partially owned entities | (4,816) | | | (2,130) | | | (2,686) | |
| Proceeds from sale of condominium units at 220 Central Park South | $ | 437,188 |
| | $ | 690,734 |
| | $ | (253,546 | ) | Proceeds from sale of condominium units at 220 Central Park South | — | | | 191,216 | | | (191,216) | |
| Development costs and construction in progress | (319,294 | ) | | (289,532 | ) | | (29,762 | ) | |
| Moynihan Train Hall expenditures | (183,007 | ) | | (205,783 | ) | | 22,776 |
| Moynihan Train Hall expenditures | — | | | (98,794) | | | 98,794 | |
| Additions to real estate | (85,252 | ) | | (120,060 | ) | | 34,808 |
| |
| Proceeds from sales of marketable securities | 28,375 |
| | 167,852 |
| | (139,477 | ) | Proceeds from sales of marketable securities | — | | | 28,375 | | | (28,375) | |
| Investments in partially owned entities | (3,157 | ) | | (15,588 | ) | | 12,431 |
| |
| Distributions of capital from partially owned entities | 1,090 |
| | 24,880 |
| | (23,790 | ) | |
| Proceeds from transfer of interest in Fifth Avenue and Times Square JV (net of $35,562 of transaction costs and $10,899 of deconsolidated cash and restricted cash) | — |
| | 1,255,756 |
| | (1,255,756 | ) | |
| Proceeds from redemption of 640 Fifth Avenue preferred equity | — |
| | 500,000 |
| | (500,000 | ) | |
| Proceeds from sale of real estate and related investments | — |
| | 108,512 |
| | (108,512 | ) | |
| Acquisitions of real estate and other | — |
| | (3,260 | ) | | 3,260 |
| |
| Net cash (used in) provided by investing activities | $ | (124,057 | ) | | $ | 2,113,511 |
| | $ | (2,237,568 | ) | |
| Net cash used in investing activities | | Net cash used in investing activities | $ | (56,539) | | | $ | (99,339) | | | $ | 42,800 | |
The following table details the net cash (used in) provided by (used in) financing activities:
| | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | For the Three Months Ended March 31, | | (Decrease) Increase in Cash Flow |
| 2021 | | 2020 | |
| Repayments of borrowings | $ | (358,331) | | | $ | (2,150) | | | $ | (356,181) | |
| Proceeds from borrowings | 350,000 | | | 553,062 | | | (203,062) | |
| Dividends paid on common shares/Distributions to Vornado | (101,467) | | | (498,486) | | | 397,019 | |
| Dividends paid on preferred shares/Distributions to preferred unitholders | (16,467) | | | (12,531) | | | (3,936) | |
| Distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries | (13,338) | | | (40,045) | | | 26,707 | |
| Debt issuance costs | (2,904) | | | (124) | | | (2,780) | |
| Proceeds received from exercise of Vornado stock options and other | 215 | | | 4,899 | | | (4,684) | |
| Repurchase of shares/Class A units related to stock compensation agreements and related tax withholdings and other | (113) | | | (137) | | | 24 | |
| Moynihan Train Hall reimbursement from Empire State Development | — | | | 98,794 | | | (98,794) | |
| Contributions from noncontrolling interests in consolidated subsidiaries | — | | | 4,786 | | | (4,786) | |
| Net cash (used in) provided by financing activities | $ | (142,405) | | | $ | 108,068 | | | $ | (250,473) | |
|
| | | | | | | | | | | |
| (Amounts in thousands) | For the Six Months Ended June 30, | | (Decrease) Increase in Cash Flow |
| | 2020 | | 2019 | |
| Dividends paid on common shares/Distributions to Vornado | $ | (624,627 | ) | | $ | (251,803 | ) | | $ | (372,824 | ) |
| Proceeds from borrowings | 554,297 |
| | 458,955 |
| | 95,342 |
|
| Moynihan Train Hall reimbursement from Empire State Development | 183,007 |
| | 205,783 |
| | (22,776 | ) |
| Contributions from noncontrolling interests in consolidated subsidiaries | 98,268 |
| | 8,315 |
| | 89,953 |
|
| Distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries | (54,440 | ) | | (49,140 | ) | | (5,300 | ) |
| Dividends paid on preferred shares/Distributions to preferred unitholders | (37,593 | ) | | (25,066 | ) | | (12,527 | ) |
| Repayments of borrowings | (11,347 | ) | | (1,943,157 | ) | | 1,931,810 |
|
| Proceeds received from exercise of Vornado stock options and other | 5,267 |
| | 2,046 |
| | 3,221 |
|
| Debt issuance costs | (143 | ) | | (13,522 | ) | | 13,379 |
|
| Repurchase of shares/Class A units related to stock compensation agreements and related tax withholdings and other | (137 | ) | | (8,692 | ) | | 8,555 |
|
| Purchase of marketable securities in connection with defeasance of mortgage payable | — |
| | (407,126 | ) | | 407,126 |
|
| Prepayment penalty on redemption of senior unsecured notes due 2022 | — |
| | (22,058 | ) | | 22,058 |
|
| Redemption of preferred shares/units | — |
| | (893 | ) | | 893 |
|
| Net cash provided by (used in) financing activities | $ | 112,552 |
| | $ | (2,046,358 | ) | | $ | 2,158,910 |
|
Liquidity and Capital Resources - continued
Capital Expenditures for the SixThree Months Ended June 30, 2020March 31, 2021
Capital expenditures consist of expenditures to maintain assets, tenant improvement allowances and leasing commissions. Recurring capital expenditures include expenditures to maintain a property’s competitive position within the market and tenant improvements and leasing commissions necessary to re-lease expiring leases or renew or extend existing leases. Non-recurring capital improvements include expenditures to lease space that has been vacant for more than nine months and expenditures completed in the year of acquisition and the following two years that were planned at the time of acquisition, as well as tenant improvements and leasing commissions for space that was vacant at the time of acquisition of a property.
Below is a summary of amounts paid for capital expenditures and leasing commissions for the sixthree months ended June 30, 2020.March 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California
Street |
| Expenditures to maintain assets | $ | 15,072 | | | $ | 12,868 | | | $ | 1,661 | | | $ | 543 | |
| Tenant improvements | 8,458 | | | 6,365 | | | 2,093 | | | — | |
| Leasing commissions | 8,799 | | | 2,525 | | | 71 | | | 6,203 | |
| Recurring tenant improvements, leasing commissions and other capital expenditures | 32,329 | | | 21,758 | | | 3,825 | | | 6,746 | |
| Non-recurring capital expenditures | 1,901 | | | 1,901 | | | — | | | — | |
| Total capital expenditures and leasing commissions | $ | 34,230 | | | $ | 23,659 | | | $ | 3,825 | | | $ | 6,746 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California Street |
| Expenditures to maintain assets | $ | 34,335 |
| | $ | 28,900 |
| | $ | 4,443 |
| | $ | 992 |
|
| Tenant improvements | 35,756 |
| | 30,001 |
| | 3,624 |
| | 2,131 |
|
| Leasing commissions | 15,360 |
| | 11,415 |
| | 3,173 |
| | 772 |
|
| Recurring tenant improvements, leasing commissions and other capital expenditures | 85,451 |
| | 70,316 |
| | 11,240 |
| | 3,895 |
|
| Non-recurring capital expenditures | 11,772 |
| | 11,767 |
| | 5 |
| | — |
|
| Total capital expenditures and leasing commissions | $ | 97,223 |
| | $ | 82,083 |
| | $ | 11,245 |
| | $ | 3,895 |
|
Development and Redevelopment Expenditures for the SixThree Months Ended June 30, 2020March 31, 2021
Development and redevelopment expenditures consist of all hard and soft costs associated with the development or redevelopment of a property, including capitalized interest, debt and operating costs until the property is substantially completed and ready for its intended use. Our development project estimates below include initial leasing costs, which are reflected as non-recurring capital expenditures in the table above.
220 CPSFarley
We are completing construction of a residential condominium tower containing 397,000 salableOur 95% joint venture (5% is owned by the Related Companies ("Related")) is developing Farley Office and Retail, which will include approximately 844,000 rentable square feet at 220 CPS.of commercial space, comprised of approximately 730,000 square feet of office space and approximately 114,000 square feet of restaurant and retail space. The total development cost of this project (exclusive of land cost) is estimated to be approximately $1.450 billion,$1,120,000,000. As of which $1.419 billionMarch 31, 2021, $834,360,000 has been expended, aswhich has been reduced by $88,000,000 of June 30, 2020.historic tax credit investor contributions (at our share).
PENN District1
We are redeveloping PENN1,PENN 1, a 2,545,0002,546,000 square foot office building located on 34th Street between Seventh and Eighth Avenue. In December 2020, we entered into an agreement with the Metropolitan Transportation Authority (the “MTA”) to oversee the redevelopment of the Long Island Rail Road Concourse at Penn Station (the "Concourse"), within the footprint of PENN 1. Skanska USA Civil Northeast, Inc. will perform the redevelopment under a fixed price contract for $396,000,000 which is being funded by the MTA. In connection with the redevelopment, we entered into an agreement with the MTA which will result in the widening of the Concourse to relieve overcrowding and our trading of 15,000 square feet of back of house space for 22,000 square feet of retail frontage space. The total development cost of thisour PENN 1 project is estimated to be $325,000,000,$450,000,000. As of which $112,089,000March 31, 2021, $206,563,000 has been expended as of June 30, 2020.expended.
PENN 2
We are redeveloping PENN2,PENN 2, a 1,795,000 square foot (as expanded) office building located on the west side of Seventh Avenue between 31st and 33rd Street. The development cost of this project is estimated to be $750,000,000, of which $69,686,000$96,964,000 has been expended as of June 30, 2020March 31, 2021.
We are also making districtwide improvements within the PennPENN District. The development cost of these improvements is estimated to be $100,000,000, of which $8,735,000$26,533,000 has been expended as of June 30, 2020.
Our 95% joint venture is developing Farley Office and Retail (the "Project"), which will include approximately 844,000 rentable square feet of commercial space, comprised of approximately 730,000 square feet of office space and approximately 114,000 square feet of retail space. The total development cost of the Project is estimated to be approximately $1,030,000,000. As of June 30, 2020, $622,844,000 has been expended, which has been reduced by $88,000,000 of historic tax credit investor contributions (at our share).
The joint venture has entered into a development agreement with Empire State Development (“ESD”), an entity of New York State, to build the adjacent Moynihan Train Hall, with Vornado and Related each guaranteeing the joint venture's obligations. The joint venture has entered into a design-build contract with Skanska Moynihan Train Hall Builders pursuant to which they will build the Moynihan Train Hall, thereby fulfilling all of the joint venture's obligations to ESD. The obligations of Skanska Moynihan Train Hall Builders have been bonded by Skanska USA and bear a full guaranty from Skanska AB. The development expenditures for the Moynihan Train Hall are estimated to be approximately $1.6 billion, which will be funded by governmental agencies.
On December 19, 2019, we paid Kmart Corporation $34,000,000, of which $10,000,000 is expected to be reimbursed, to early terminate their 141,000 square foot retail space lease at PENN1 which was scheduled to expire in January 2036.
We recently entered into a development agreement with the Metropolitan Transportation Authority to oversee the development of the Long Island Rail Road 33rd Street entrance at Penn Station which Skanska USA Civil Northeast, Inc. will construct under a fixed price contract for $124,639,000.
Liquidity and Capital Resources - continued
Development and Redevelopment Expenditures for the Six Months Ended June 30, 2020 - continued
Other
We are redeveloping a 78,000 square foot Class A office building at 345 Montgomery Street, a part of our 555 California Street complex in San Francisco (70.0% interest) located at the corner of California and Pine Street. The development cost of this project is estimated to be approximately $66,000,000, of which our share is $46,000,000. As of June 30, 2020, $54,242,000 has been expended, of which our share is $37,969,000.
We are redeveloping a 165,000 square foot office building at 825 Seventh Avenue, located at the corner of 53rd Street and Seventh Avenue (50.0% interest). The redevelopment cost of this project is estimated to be approximately $30,000,000, of which our share is $15,000,000. As of June 30, 2020, $25,204,000 has been expended, of which our share is $12,602,000.March 31, 2021.
We are also evaluating other development and redevelopment opportunities at certain of our properties in Manhattan, including, in particular, the PennPENN District.
There can be no assurance that the above projects will be completed, completed on schedule or within budget.
Liquidity and Capital Resources - continued
Development and Redevelopment Expenditures for the Three Months Ended March 31, 2021 - continued
Below is a summary of amounts paid for development and redevelopment expenditures for the sixthree months ended June 30, 2020.March 31, 2021. These expenditures include interest and debt expense of $21,501,000,$10,267,000, payroll of $8,876,000$2,558,000 and other soft costs (primarily architectural and engineering fees, permits, real estate taxes and professional fees) aggregating $53,313,000,23,895,000, which were capitalized in connection with the development and redevelopment of these projects.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California
Street | | Other |
| Farley Office and Retail | $ | 62,146 | | | $ | 62,146 | | | $ | — | | | $ | — | | | $ | — | |
| PENN 1 | 35,473 | | | 35,473 | | | — | | | — | | | — | |
| PENN 2 | 12,494 | | | 12,494 | | | — | | | — | | | — | |
| 220 CPS | 8,079 | | | — | | | — | | | — | | | 8,079 | |
| 345 Montgomery Street | 1,382 | | | — | | | — | | | 1,382 | | | — | |
| Other | 10,744 | | | 10,576 | | | 168 | | | — | | | — | |
| $ | 130,318 | | | $ | 120,689 | | | $ | 168 | | | $ | 1,382 | | | $ | 8,079 | |
|
| | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California Street | | Other |
| Farley Office and Retail | $ | 127,998 |
| | $ | 127,998 |
| | $ | — |
| | $ | — |
| | $ | — |
|
| 220 CPS | 62,450 |
| | — |
| | — |
| | — |
| | 62,450 |
|
| PENN1 | 48,565 |
| | 48,565 |
| | — |
| | — |
| | — |
|
| PENN2 | 44,810 |
| | 44,810 |
| | — |
| | — |
| | — |
|
| 345 Montgomery Street | 9,775 |
| | — |
| | — |
| | 9,775 |
| | — |
|
| Other | 25,696 |
| | 23,877 |
| | 1,808 |
| | — |
| | 11 |
|
| | $ | 319,294 |
| | $ | 245,250 |
| | $ | 1,808 |
| | $ | 9,775 |
| | $ | 62,461 |
|
Capital Expenditures for the SixThree Months Ended June 30, 2019March 31, 2020
Below is a summary of amounts paid for capital expenditures and leasing commissions for the sixthree months ended June 30, 2019.March 31, 2020.
| | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California
Street |
| Expenditures to maintain assets | $ | 20,743 | | | $ | 18,012 | | | $ | 1,923 | | | $ | 808 | |
| Tenant improvements | 20,223 | | | 17,316 | | | 776 | | | 2,131 | |
| Leasing commissions | 11,137 | | | 7,237 | | | 3,153 | | | 747 | |
| Recurring tenant improvements, leasing commissions and other capital expenditures | 52,103 | | | 42,565 | | | 5,852 | | | 3,686 | |
| Non-recurring capital expenditures | 6,753 | | | 6,748 | | | 5 | | | — | |
| Total capital expenditures and leasing commissions | $ | 58,856 | | | $ | 49,313 | | | $ | 5,857 | | | $ | 3,686 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California Street |
| Expenditures to maintain assets | $ | 53,457 |
| | $ | 46,850 |
| | $ | 4,822 |
| | $ | 1,785 |
|
| Tenant improvements | 36,080 |
| | 31,068 |
| | 1,806 |
| | 3,206 |
|
| Leasing commissions | 13,009 |
| | 12,289 |
| | 376 |
| | 344 |
|
| Recurring tenant improvements, leasing commissions and other capital expenditures | 102,546 |
| | 90,207 |
| | 7,004 |
| | 5,335 |
|
| Non-recurring capital expenditures | 21,505 |
| | 19,780 |
| | 86 |
| | 1,639 |
|
| Total capital expenditures and leasing commissions | $ | 124,051 |
| | $ | 109,987 |
| | $ | 7,090 |
| | $ | 6,974 |
|
Liquidity and Capital Resources - continued
Development and Redevelopment Expenditures for the SixThree Months Ended June 30, 2019March 31, 2020
Below is a summary of amounts paid for development and redevelopment expenditures for the sixthree months ended June 30, 2019.March 31, 2020. These expenditures include interest and debt expense of $43,138,000,$12,055,000, payroll of $10,515,000$5,307,000 and other soft costs (primarily architectural and engineering fees, permits, real estate taxes and professional fees) aggregating $32,535,000,$28,394,000, which were capitalized in connection with the development and redevelopment of these projects.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California
Street | | Other |
| Farley Office and Retail | $ | 69,540 | | | $ | 69,540 | | | $ | — | | | $ | — | | | $ | — | |
| 220 CPS | 29,331 | | | — | | | — | | | — | | | 29,331 | |
| PENN 1 | 28,024 | | | 28,024 | | | — | | | — | | | — | |
| PENN 2 | 20,507 | | | 20,507 | | | — | | | — | | | — | |
| 345 Montgomery Street | 6,798 | | | — | | | — | | | 6,798 | | | — | |
| | | | | | | | | |
| | | | | | | | | |
| Other | 15,645 | | | 14,721 | | | 576 | | | — | | | 348 | |
| $ | 169,845 | | | $ | 132,792 | | | $ | 576 | | | $ | 6,798 | | | $ | 29,679 | |
|
| | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | Total | | New York | | theMART | | 555 California Street | | Other |
| Farley Office and Retail | $ | 106,980 |
| | $ | 106,980 |
| | $ | — |
| | $ | — |
| | $ | — |
|
| 220 CPS | 102,926 |
| | — |
| | — |
| | — |
| | 102,926 |
|
| PENN1 | 24,584 |
| | 24,584 |
| | — |
| | — |
| | — |
|
| 345 Montgomery Street | 9,736 |
| | — |
| | — |
| | 9,736 |
| | — |
|
| 606 Broadway | 7,464 |
| | 7,464 |
| | — |
| | — |
| | — |
|
| 1535 Broadway | 1,031 |
| | 1,031 |
| | — |
| | — |
| | — |
|
| Other | 36,811 |
| | 32,387 |
| | 1,231 |
| | 3,193 |
| | — |
|
| | $ | 289,532 |
| | $ | 172,446 |
| | $ | 1,231 |
| | $ | 12,929 |
| | $ | 102,926 |
|
Liquidity and Capital Resources - continued Insurance
For our properties (except Farley), we maintain general liability insurance with limits of $300,000,000 per occurrence and per property, of which $235,000,000 includes communicable disease coverage, and we maintain all risk property and rental value insurance with limits of $2.0 billion per occurrence, with sub-limits for certain perils such as flood and earthquake and effective February 15, 2021, excluding communicable disease coverage. For the period February 15, 2020 through February 14, 2021, we and the insurance carriers for our all risk property policy have disagreements as to the applicability of a $2,300,000 sub-limit for communicable disease coverage across our properties. Our California properties have earthquake insurance with coverage of $350,000,000 per occurrence and in the aggregate, subject to a deductible in the amount of 5% of the value of the affected property. We maintain coverage for certified terrorism acts with limits of $6.0 billion per occurrence and in the aggregate (as listed below), $1.2 billion for non-certified acts of terrorism, and $5.0 billion per occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological (“NBCR”) terrorism events, as defined by the Terrorism Risk Insurance Act of 2002, as amended to date and which has been extended through December 2027.
Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a portion of all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for acts of terrorism including NBCR acts. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third-party insurance companies and the Federal government with no exposure to PPIC. For NBCR acts, PPIC is responsible for a deductible of $1,759,257 and 20% of the balance of a covered loss and the Federal government is responsible for the remaining portion of a covered loss. We are ultimately responsible for any loss incurred by PPIC.
For Farley, we maintain general liability insurance with limits of $100,000,000 per occurrence, and builder’s risk insurance including coverage for existing property and development activities of $2.8 billion per occurrence and in the aggregate. We maintain coverage for certified and non-certified terrorism acts with limits of $1.85 billion and $1.17 billion per occurrence, respectively, and in the aggregate.
We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism and other events. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material.
Our debt instruments, consisting of mortgage loans secured by our properties, senior unsecured notes and revolving credit agreements contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain it could adversely affect our ability to finance or refinance our properties and expand our portfolio.
Other Commitments and Contingencies
Farley Office and Retail
The consolidated joint venture in which we own a 95% ownership interest was designated by Empire State Development ("ESD") to develop Farley Office and Retail. The joint venture entered into a development agreement with ESD and a design-build contract with Skanska Moynihan Train Hall Builders. Under the development agreement with ESD, the joint venture is obligated to build the Moynihan Train Hall, with Vornado and Related each guaranteeing the joint venture’s obligations. Under the design-build agreement, Skanska Moynihan Train Hall Builders is obligated to fulfill all of the joint venture’s obligations. The obligations of Skanska Moynihan Train Hall Builders have been bonded by Skanska USA and bear a full guaranty from Skanska AB.
In connection with the development of the property, the joint venture took in a historic tax credit investor partner. Under the terms of the historic tax credit arrangement, the joint venture is required to comply with various laws, regulations, and contractual provisions. Non-compliance with applicable requirements could result in projected tax benefits not being realized and, therefore, require a refund or reduction of the Tax Credit Investor’s capital contributions. As of June 30, 2020, the Tax Credit Investor has made $92,400,000 in capital contributions. Vornado and Related have guaranteed certain of the joint venture’s obligations to the Tax Credit Investor.
Other Commitments and Contingencies
We are from time to time involved in legal actions arising in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters is not currently expected to have a material adverse effect on our financial position, results of operations or cash flows.
Each of our properties has been subjected to varying degrees of environmental assessment at various times. The environmental assessments did not reveal any material environmental contamination. However, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites, or changes in cleanup requirements would not result in significant costs to us.
In July 2018, we leased 78,000 square feet at 345 Montgomery Street in San Francisco, CA, to a subsidiary of Regus PLC, for an initial term of 15 years. The obligations under the lease were guaranteed by Regus PLC in an amount of up to $90,000,000. The tenant purported to terminate the lease prior to space delivery. We commenced a suit on October 23, 2019 seeking to enforce the lease and the guarantee.guaranty. In December 2020, following a trial, the court issued a tentative ruling in our favor and on April 7, 2021 the court issued a written proposed statement of decision and proposed judgement in our favor. On October 9, 2020, the successor to Regus PLC filed for bankruptcy in Luxembourg. We are actively pursuing claims relating to the guaranty against the successor to Regus PLC and its parent, in Luxembourg and other jurisdictions.
In November 2011, we entered into an agreement with the New York City Economic Development Corporation ("EDC") to lease Piers 92 and 94 (the "Piers") for a 49-year term with five 10-year renewal options. The non-recourse lease with a single-purpose entity calls for current annual rent payments of $2,000,000 with fixed rent steps through the initial term. We operate trade shows and special events at the Piers (and sublease to others for the same uses). In February 2019, an inspection revealed that the piles supporting Pier 92 were structurally unsound (an obligation of EDC to maintain) and we were issued an order by EDC to vacate the property. We continued to make the required lease payments through February 2020, with no abatement provided by EDC for the loss of our right-to-useright to use Pier 92 or reimbursement for lost revenues. Beginning March 2020, as no resolution had been reached with EDC, we didhave not paypaid the monthly rents due under the non-recourse lease. As of June 30, 2020,March 31, 2021, we have a $46,350,000$48,036,000 lease liability and a $34,647,000$34,400,000 right-of-use asset recorded for this lease.
Liquidity and Capital Resources - continued
Other Commitments and Contingencies - continued
Our mortgage loans are non-recourse to us, except for the mortgage loans secured by 640 Fifth Avenue, 7 West 34th Street and 435 Seventh Avenue, which we guaranteed and therefore are part of our tax basis. In certain cases, we have provided guarantees or master leased tenant space. These guarantees and master leases terminate either upon the satisfaction of specified circumstances or repayment of underlying loans. In addition, we have guaranteed the rent and payments in lieu of real estate taxes due to ESD,Empire State Development, an entity of New York State, for Farley Office and Retail. As of June 30, 2020,March 31, 2021, the aggregate dollar amount of these guarantees and master leases is approximately $1,537,000,000.$1,724,000,000.
As of June 30, 2020, $17,002,000March 31, 2021, $13,549,000 of letters of credit were outstanding under one of our unsecured revolving credit facilities. Our unsecured revolving credit facilities contain financial covenants that require us to maintain minimum interest coverage and maximum debt to market capitalization ratios, and provide for higher interest rates in the event of a decline in our ratings below Baa3/BBB. Our unsecured revolving credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and also contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.
Our 95% consolidated joint venture (5% is owned by Related) is developing Farley Office and Retail. In connection with the development of the property, the joint venture took in a historic Tax Credit Investor. Under the terms of the historic tax credit arrangement, the joint venture is required to comply with various laws, regulations, and contractual provisions. Non-compliance with applicable requirements could result in projected tax benefits not being realized and, therefore, may require a refund or reduction of the Tax Credit Investor’s capital contributions. As of March 31, 2021, the Tax Credit Investor has made$92,400,000 in capital contributions. Vornado and Related have guaranteed certain of the joint venture’s obligations to the Tax Credit Investor.
As investment manager of Vornado Capital Partners Real Estatethe Fund (the "Fund") we are entitled to an incentive allocation after the limited partners have received a preferred return on their invested capital. The incentive allocation is subject to catch-up and clawback provisions.Accordingly, based on the June 30, 2020March 31, 2021 fair value of the Fund assets, at liquidation we would be required to make a $32,000,00029,400,000 payment to the limited partners, net of amounts owed to us, representing a clawback of previously paid incentive allocations, which would have no income statement impact as it was previously accrued.
As of June 30, 2020,March 31, 2021, we expect to fund additional capital to certain of our partially owned entities aggregating approximately $11,000,000. $10,700,000.
As of June 30, 2020,March 31, 2021, we have construction commitments aggregating approximately $556,000,000.
Funds From Operations (“FFO”)
Vornado Realty Trust
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 GAAP net income or loss adjusted to exclude net gains from sales of depreciable real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specified items, including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are non-GAAP financial measures used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because it excludesthey exclude the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flow as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies. The calculations of both the numerator and denominator used in the computation of (loss) income per share are disclosed in Note 2017 – (Loss) Income Per Share/(Loss) Income Per Class A Unit, in our consolidated financial statements on page 4235 of this Quarterly Report on Form 10-Q.
FFO attributable to common shareholders plus assumed conversions was $203,256,000,$118,407,000, or $1.06$0.62 per diluted share for the three months ended June 30, 2020,March 31, 2021, compared to $164,329,000,$130,360,000, or $0.86$0.68 per diluted share, for the prior year’s three months. FFO attributable to common shareholders plus assumed conversions was $333,616,000, or $1.75 per diluted share for the six months ended June 30, 2020, compared to $412,013,000, or $2.16 per diluted share, for the prior year’s six months. Details of certain adjustments to FFO are discussed in the financial results summary of our “Overview”.
| | | | | | | | | | | | | | | |
| (Amounts in thousands, except per share amounts) | For the Three Months Ended March 31, | | |
| 2021 | | 2020 | | | | |
| Reconciliation of net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions: | | | | | | | |
| Net income attributable to common shareholders | $ | 4,083 | | | $ | 4,963 | | | | | |
| Per diluted share | $ | 0.02 | | | $ | 0.03 | | | | | |
| | | | | | | |
| FFO adjustments: | | | | | | | |
| Depreciation and amortization of real property | $ | 87,719 | | | $ | 85,136 | | | | | |
| Decrease in fair value of marketable securities | — | | | 4,938 | | | | | |
| | | | | | | |
| Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO: | | | | | | | |
| Depreciation and amortization of real property | 34,858 | | | 40,423 | | | | | |
| (Increase) decrease in fair value of marketable securities | (189) | | | 3,691 | | | | | |
| 122,388 | | | 134,188 | | | | | |
| Noncontrolling interests' share of above adjustments | (8,075) | | | (8,804) | | | | | |
| FFO adjustments, net | $ | 114,313 | | | $ | 125,384 | | | | | |
| | | | | | | |
| FFO attributable to common shareholders | $ | 118,396 | | | $ | 130,347 | | | | | |
| Convertible preferred share dividends | 11 | | | 13 | | | | | |
| FFO attributable to common shareholders plus assumed conversions | $ | 118,407 | | | $ | 130,360 | | | | | |
| Per diluted share | $ | 0.62 | | | $ | 0.68 | | | | | |
| | | | | | | |
| Reconciliation of weighted average shares outstanding: | | | | | | | |
| Weighted average common shares outstanding | 191,418 | | | 191,038 | | | | | |
| Effect of dilutive securities: | | | | | | | |
| Out-Performance Plan units | 608 | | | — | | | | | |
| Convertible preferred shares | 26 | | | 30 | | | | | |
| AO LTIPs | 4 | | | — | | | | | |
| Employee stock options and restricted share awards | 1 | | | 75 | | | | | |
| Denominator for FFO per diluted share | 192,057 | | | 191,143 | | | | | |
|
| | | | | | | | | | | | | | | |
| (Amounts in thousands, except per share amounts) | For the Three Months Ended June 30, | | For the Six Months Ended
June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Reconciliation of our net (loss) income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions: | | | | | | | |
| Net (loss) income attributable to common shareholders | $ | (197,750 | ) | | $ | 2,400,195 |
| | $ | (192,787 | ) | | $ | 2,581,683 |
|
| Per diluted share | $ | (1.03 | ) | | $ | 12.56 |
| | $ | (1.01 | ) | | $ | 13.51 |
|
| | | | | | | | |
| FFO adjustments: | | | | | | | |
| Depreciation and amortization of real property | $ | 85,179 |
| | $ | 105,453 |
| | $ | 170,315 |
| | $ | 213,936 |
|
| Net gain on transfer to Fifth Avenue and Times Square JV on April 18, 2019, net of $11,945 attributable to noncontrolling interests | — |
| | (2,559,154 | ) | | — |
| | (2,559,154 | ) |
| Real estate impairment losses | — |
| | 31,436 |
| | — |
| | 31,436 |
|
| Net gain from sale of UE common shares (sold on March 4, 2019) | — |
| | — |
| | — |
| | (62,395 | ) |
| (Increase) decrease in fair value of marketable securities: | | | | | | | |
| PREIT (accounted for as a marketable security from March 12, 2019 and sold on January 23, 2020) | — |
| | (1,313 | ) | | 4,938 |
| | 14,336 |
|
| Lexington (sold on March 1, 2019) | — |
| | — |
| | — |
| | (16,068 | ) |
| Other | — |
| | 1 |
| | — |
| | (41 | ) |
| Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO: | | | | | | | |
| Non-cash impairment loss on our investment in Fifth Avenue and Times Square JV, net of $467 of noncontrolling interests | 305,859 |
| | — |
| | 305,859 |
| | — |
|
| Depreciation and amortization of real property | 39,736 |
| | 34,631 |
| | 80,159 |
| | 59,621 |
|
| (Increase) decrease in fair value of marketable securities | (565 | ) | | 1,709 |
| | 3,126 |
| | 1,697 |
|
| | 430,209 |
| | (2,387,237 | ) | | 564,397 |
| | (2,316,632 | ) |
| Noncontrolling interests' share of above adjustments | (29,215 | ) | | 151,357 |
| | (38,019 | ) | | 146,933 |
|
| FFO adjustments, net | $ | 400,994 |
| | $ | (2,235,880 | ) | | $ | 526,378 |
| | $ | (2,169,699 | ) |
| | | | | |
|
| |
|
|
| FFO attributable to common shareholders | $ | 203,244 |
| | $ | 164,315 |
| | $ | 333,591 |
| | $ | 411,984 |
|
| Convertible preferred share dividends | 12 |
| | 14 |
| | 25 |
| | 29 |
|
| FFO attributable to common shareholders plus assumed conversions | $ | 203,256 |
| | $ | 164,329 |
| | $ | 333,616 |
| | $ | 412,013 |
|
| Per diluted share | $ | 1.06 |
| | $ | 0.86 |
| | $ | 1.75 |
| | $ | 2.16 |
|
| | | | | | | | |
| Reconciliation of weighted average shares outstanding: | | | | | | | |
| Weighted average common shares outstanding | 191,104 |
| | 190,781 |
| | 191,071 |
| | 190,735 |
|
| Effect of dilutive securities: | | | | | | | |
| Convertible preferred shares | 28 |
| | 34 |
| | 29 |
| | 35 |
|
| Employee stock options and restricted share awards | — |
| | 243 |
| | 2 |
| | 256 |
|
| AO LTIPs | — |
| | — |
| | 5 |
| | — |
|
| Denominator for FFO per diluted share | 191,132 |
| | 191,058 |
| | 191,107 |
| | 191,026 |
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We have exposure to fluctuations in market interest rates. Market interest rates are sensitive to many factors that are beyond our control. Our exposure to a change in interest rates on our consolidated and non-consolidated debt (all of which arises out of non-trading activity) is as follows:
| | | (Amounts in thousands, except per share and per unit amounts) | 2020 | | 2019 | (Amounts in thousands, except per share and per unit amounts) | 2021 | | 2020 |
| | June 30,
Balance | | Weighted Average Interest Rate | | Effect of 1% Change in Base Rates | | December 31, Balance | | Weighted Average Interest Rate | | March 31, Balance | | Weighted
Average
Interest Rate | | Effect of 1%
Change in
Base Rates | | December 31,
Balance | | Weighted
Average
Interest Rate |
| Consolidated debt: | | | | | | | Consolidated debt: | | | | | | | | | |
| Variable rate | $ | 2,197,797 |
| | 1.42% | | $ | 21,978 |
| | $ | 1,643,500 |
| | 3.09% | Variable rate | $ | 2,715,415 | | | 1.59% | | $ | 27,154 | | | $ | 3,220,815 | | | 1.83% |
| Fixed rate | 5,789,860 |
| | 3.56% | | — |
| | 5,801,516 |
| | 3.57% | Fixed rate | 4,709,712 | | | 3.57% | | — | | | 4,212,643 | | | 3.70% |
| | $ | 7,987,657 |
| | 2.97% | | 21,978 |
| | $ | 7,445,016 |
| | 3.46% | | $ | 7,425,127 | | | 2.85% | | 27,154 | | | $ | 7,433,458 | | | 2.89% |
Pro rata share of debt of non-consolidated entities(1): | | | | | | | | Pro rata share of debt of non-consolidated entities(1): | | | | | | | |
| Variable rate | $ | 1,493,887 |
| | 1.80% | | 14,939 |
| | $ | 1,441,690 |
| | 3.34% | Variable rate | $ | 1,510,088 | | | 1.64% | | 15,101 | | | $ | 1,384,710 | | | 1.80% |
| Fixed rate | 1,360,980 |
| | 3.93% | | — |
| | 1,361,169 |
| | 3.93% | Fixed rate | 1,488,356 | | | 3.76% | | — | | | 1,488,464 | | | 3.76% |
| | $ | 2,854,867 |
| | 2.81% | | 14,939 |
| | $ | 2,802,859 |
| | 3.62% | | $ | 2,998,444 | | | 2.69% | | 15,101 | | | $ | 2,873,174 | | | 2.81% |
| Noncontrolling interests' share of consolidated subsidiaries | | | (361 | ) | | | | Noncontrolling interests' share of consolidated subsidiaries | | | (371) | | | | |
| Total change in annual net income attributable to the Operating Partnership | | | 36,556 |
| | | | Total change in annual net income attributable to the Operating Partnership | | 41,884 | | |
| Noncontrolling interests’ share of the Operating Partnership | | | (2,482 | ) | |
| | Noncontrolling interests’ share of the Operating Partnership | | (2,764) | | |
| Total change in annual net income attributable to Vornado | | | $ | 34,074 |
| | | | Total change in annual net income attributable to Vornado | | $ | 39,120 | | |
| Total change in annual net income attributable to the Operating Partnership per diluted Class A unit | | | $ | 0.18 |
| | | | Total change in annual net income attributable to the Operating Partnership per diluted Class A unit | | $ | 0.20 | | |
| Total change in annual net income attributable to Vornado per diluted share | | | $ | 0.18 |
| | | | Total change in annual net income attributable to Vornado per diluted share | | $ | 0.20 | | |
____________________
| |
(1) | Our pro rata share of debt of non-consolidated entities as of June 30, 2020 and December 31, 2019 is net of $16,200 and $63,409, respectively, of our share of Alexander's participation in its Rego Park II shopping center mortgage loan which is considered partially extinguished as the participation interest is a reacquisition of debt. |
(1)Our pro rata share of debt of non-consolidated entities is net of $16,200, our share of Alexander's participation in its Rego Park II shopping center mortgage loan which is considered partially extinguished as the participation interest is a reacquisition of debt. On April 7, 2021, Alexander's used its participation in the loan to reduce the loan balance.
Fair Value of Debt
The estimated fair value of our consolidated debt is calculated based on current market prices and discounted cash flows at the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt. As of June 30, 2020March 31, 2021, the estimated fair value of our consolidated debt was$7,981,000,000. $7,473,000,000.
Derivatives and Hedging
We utilize various financial instruments to mitigate the impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies, depending on our analysis of the interest rate environment and the costs and risks of such strategies. The following tables summarize our consolidated derivative instruments, all of which hedge variable rate debt, as of June 30, 2020 and DecemberMarch 31, 2019.2021.
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| | | | | | | | | | | | | | | | |
| (Amounts in thousands) | | As of June 30, 2020 |
| | | | | | | Variable Rate | | | | |
| Hedged Item (Interest rate swaps) | | Fair Value | | Notional Amount | | Spread over LIBOR | | Interest Rate | | Swapped Rate | | Expiration Date |
| Included in other assets: | | | | | | | | | | | | |
| Other | | $ | 67 |
| | $ | 175,000 |
| | | | | | | | |
| | | | | | | | | | | | | |
| Included in other liabilities: | | | | | | | | | | | | |
| Unsecured term loan | | $ | 68,709 |
| | $ | 750,000 |
| (1) | L+100 | | 1.18% | | 3.87% | | 10/23 |
| 33-00 Northern Boulevard mortgage loan | | 9,592 |
| | 100,000 |
| | L+180 | | 1.99% | | 4.14% | | 1/25 |
| 888 Seventh Avenue mortgage loan | | 2,355 |
| | 375,000 |
| | L+170 | | 1.88% | | 3.25% | | 12/20 |
| 770 Broadway mortgage loan | | 846 |
| | 700,000 |
| | L+175 | | 1.93% | | 2.56% | | 9/20 |
| | | $ | 81,502 |
| | $ | 1,925,000 |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Amounts in thousands) | | As of March 31, 2021 |
| | | | | | Variable Rate | | | | |
| Hedged Item | | Fair Value | | Notional Amount | | Spread over LIBOR | | Interest Rate | | Swapped Rate | | Expiration Date |
| Included in other assets: | | | | | | | | | | | | |
PENN 11 mortgage loan interest rate swap(1) | | $ | 1,812 | | | $ | 500,000 | | | L+275 | | 2.85% | | 3.03% | | 3/24 |
| Various interest rate caps | | 88 | | | 175,000 | | | | | | | | | |
| | $ | 1,900 | | | $ | 675,000 | | | | | | | | | |
| | | | | | | | | | | | |
| Included in other liabilities: | | | | | | | | | | | | |
| Unsecured term loan interest rate swap | | $ | 49,827 | | | $ | 750,000 | | (2) | L+100 | | 1.11% | | 3.87% | | 10/23 |
| 33-00 Northern Boulevard mortgage loan interest rate swap | | 6,448 | | | 100,000 | | | L+180 | | 1.91% | | 4.14% | | 1/25 |
| | $ | 56,275 | | | $ | 850,000 | | | | | | | | | |
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(1) | Remaining (1)Entered into on March 7, 2021.$50,000 balance of our unsecured term loan bears interest at a floating rate of LIBOR plus 1.00%. |
Item 3. Quantitative and Qualitative Disclosures About Market Risk - continued
Derivatives and Hedging - continued
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| | | | | | | | | | | | | | | | |
| (Amounts in thousands) | | As of December 31, 2019 |
| | | | | | | Variable Rate | | | | |
| Hedged Item (Interest rate swaps) | | Fair Value | | Notional Amount | | Spread over LIBOR | | Interest Rate | | Swapped Rate | | Expiration Date |
| Included in other assets: | | | | | | | | | | | | |
| 770 Broadway mortgage loan | | $ | 4,045 |
| | $ | 700,000 |
| | L+175 | | 3.46% | | 2.56% | | 9/20 |
| 888 Seventh Avenue mortgage loan | | 218 |
| | 375,000 |
| | L+170 | | 3.44% | | 3.25% | | 12/20 |
| Other | | 64 |
| | 175,000 |
| | | | | | | | |
| | | $ | 4,327 |
| | $ | 1,250,000 |
| | | | | | | | |
| | | | | | | | | | | | | |
| Included in other liabilities: | | | | | | | | | | | | |
| Unsecured term loan | | $ | 36,809 |
| | $ | 750,000 |
| | L+100 | | 2.80% | | 3.87% | | 10/23 |
| 33-00 Northern Boulevard mortgage loan | | 3,545 |
| | 100,000 |
| | L+180 | | 3.52% | | 4.14% | | 1/25 |
| | | $ | 40,354 |
| | $ | 850,000 |
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures (Vornado Realty Trust)
Disclosure Controls and Procedures: Our management, with the participation of Vornado’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a‑15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on such evaluation, Vornado’s Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2020March 31, 2021, such disclosure controls and procedures were effective.
Internal Control Over Financial Reporting: There have not been any changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Evaluation of Disclosure Controls and Procedures (Vornado Realty L.P.)
Disclosure Controls and Procedures: Vornado Realty L.P.’s management, with the participation of Vornado’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a‑15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on such evaluation, Vornado’s Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2020March 31, 2021, such disclosure controls and procedures were effective.
Internal Control Over Financial Reporting: There have not been any changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are from time to time involved in legal actions arising in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters is not currently expected to have a material adverse effect on our financial position, results of operations or cash flows.
Item 1A. Risk Factors
Except as set forth below, thereThere were no material changes to the Risk Factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.
Our business, financial condition, results of operations and cash flows have been and are expected to continue to be adversely affected by the recent COVID-19 pandemic and the impact could be material to us.
In December 2019, a novel strain of coronavirus (“COVID-19”) was identified in Wuhan, China and by March 11, 2020, the World Health Organization had declared it a global pandemic. Many states in the U.S., including New York, New Jersey, Illinois and California implemented stay-at-home orders for all "non-essential" business and activity in an aggressive effort to curb the spread of the virus. In May 2020, certain states implemented phased re-opening plans for businesses and activities that were previously ordered to close, with limitations on occupancy and certain other restrictions. It is uncertain as to how long these restrictions will continue or if additional restrictions or closures will be imposed. As a result of the COVID-19 pandemic, the U.S. economy has suffered and there has been significant volatility in the financial markets. Many U.S. industries and businesses have been negatively affected and millions of people have filed for unemployment.
Our properties, which are concentrated in New York City, and in Chicago and San Francisco, have been adversely affected as a result of the COVID-19 pandemic and the preventive measures taken to curb the spread of the virus. Some of the effects on us include the following:
With the exception of grocery stores and other "essential" businesses, many of our retail tenants closed their stores in March 2020 and began reopening when New York City entered phase two of its state-mandated reopening plan on June 22, 2020.
While our buildings remain open, many of our office tenants are working remotely.
We have temporarily closed the Hotel Pennsylvania.
We have cancelled trade shows at theMART for the remainder of 2020.
Because certain of our development projects were deemed "non-essential," they were temporarily paused in March 2020 due to New York State executive orders and resumed once New York City entered phase one of its state mandated reopening plan on June 8, 2020.
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• | As of April 30, 2020, we placed 1,803 employees on temporary furlough, which included 1,293 employees of Building Maintenance Services LLC ("BMS"), a wholly owned subsidiary, which provides cleaning, security and engineering services primarily to our New York properties, 414 employees at the Hotel Pennsylvania and 96 corporate staff employees. As of July 31, 2020, 542 employees have been taken off furlough and returned to work, which included 503 employees of BMS and 39 corporate staff employees.
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• | Effective April 1, 2020, our executive officers waived portions of their annual base salary for the remainder of 2020.
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• | Effective April 1, 2020, each non-management member of our Board of Trustees agreed to forgo his or her $75,000 annual cash retainer for the remainder of 2020.
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While we believe our tenants are required to pay rent under their leases, in limited circumstances, we have agreed to and may continue to agree to rent deferrals and rent abatements for certain of our tenants. We have made a policy election in accordance with the Financial Accounting Standards Board (“FASB”) Staff Q&A which provides relief in accounting for leases during the COVID-19 pandemic, allowing us to continue recognizing rental revenue on a straight-line basis for rent deferrals, with no impact to revenue recognition, and to recognize rent abatements as a reduction to rental revenue in the period granted.
For the quarter ended June 30, 2020, we collected 88% (94% including rent deferrals)of rent due from our tenants, comprised of 93% (98% including rent deferrals) from our office tenants and 72% (78% including rent deferrals) from our retail tenants. Rent deferrals generally require repayment in monthly installments over a period not to exceed twelve months.
Numerous Federal, state, local and industry-initiated efforts may also affect our ability to collect rent or enforce remedies for the failure to pay rent. Certain of our tenants have incurred and may continue to incur significant costs or losses as a result of the COVID-19 pandemic and/or incur other liabilities related to shelter-in-place orders, quarantines, infection or other related factors that may adversely impact their ability to pay us timely or at all.
Item 1A. Risk Factors - continued
The COVID-19 pandemic has also caused, and is likely to continue to cause, severe economic, market or other disruptions worldwide. Conditions in the bank lending, capital and other financial markets may deteriorate as a result of the pandemic, our access to capital and other sources of funding may become constrained and the ratios of our debt to asset values may deteriorate, which could adversely affect the availability and terms of future borrowings, renewals or refinancings. In addition, the deterioration of global, national, regional and local economic conditions as a result of the pandemic may ultimately decrease occupancy levels and/or rent levels across our portfolio as tenants reduce or defer their spending, which may result in less cash flow available for operating costs, to pay our indebtedness and for distribution to our shareholders and the impact could be material. In addition, we have concluded that our investment in Fifth Avenue and Times Square JV is "other-than-temporarily" impaired and recorded a $306,326,000 non-cash impairment loss on our consolidated statements of income for the three and six months ended June 30, 2020. The value of our real estate assets may continue to decline, which may result in additional non-cash impairment charges in future periods and that impact could be material. The extent of the COVID-19 pandemic's effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the outbreak and governmental responses thereto, all of which are uncertain and difficult to predict. Due to the speed with which the situation is developing, we are not able at this time to estimate the ultimate effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition and cash flows could be material. The potential effects of COVID-19 also could impact many of our risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2019 and give rise to additional risks and uncertainties currently not known to us or that we currently deem to be immaterial. However, the potential impact remains uncertain but that impact could be material to us.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Vornado Realty Trust
None.
Vornado Realty L.P.
During the quarter ended June 30, 2020,March 31, 2021, we issued 63,990 534,076Class A units in connection with equitythe exercise of awards issued pursuant to Vornado’s omnibus share plan, including with respect to grants of restricted Vornado common shares and restricted units of the Operating Partnership and upon conversion, surrender or exchange of the Operating Partnership’s units or Vornado stock options, and consideration received included $368,479$215,234 in cash proceeds. Such units were issued in reliance on an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
Exhibits required by Item 601 of Regulation S-K are filed herewith or incorporated herein by reference and are listed in the attached Exhibit Index.
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| EXHIBIT INDEX | |
| Exhibit No. | | | | |
| | | | |
EXHIBIT INDEX | |
Exhibit No. | | | | |
| | — | Amended Form of Vornado Realty Trust 2019 Omnibus Share Plan - Incorporated by reference to Annex B | |
| | | to Vornado Realty Trust’s Proxy Statement dated April 3, 2020 (File No. 001-11954), filed on April 3, 2020 | * |
| | — | Letter regarding Unaudited Interim Financial Information of Vornado Realty Trust | |
| | — | Letter regarding Unaudited Interim Financial Information of Vornado Realty L.P. | |
| | — | Rule 13a-14 (a) Certification of the Chief Executive Officer of Vornado Realty Trust | |
| | — | Rule 13a-14 (a) Certification of the Chief Financial Officer of Vornado Realty Trust | |
| | — | Rule 13a-14 (a) Certification of the Chief Executive Officer of Vornado Realty L.P. | |
| | — | Rule 13a-14 (a) Certification of the Chief Financial Officer of Vornado Realty L.P. | |
| | — | Section 1350 Certification of the Chief Executive Officer of Vornado Realty Trust | |
| | — | Section 1350 Certification of the Chief Financial Officer of Vornado Realty Trust | |
| | — | Section 1350 Certification of the Chief Executive Officer of Vornado Realty L.P. | |
| | — | Section 1350 Certification of the Chief Financial Officer of Vornado Realty L.P. | |
| 101 | | — | The following financial information from Vornado Realty Trust and Vornado Realty L.P. Quarterly Report | |
| | | on Form 10-Q for the quarter ended June 30, 2020March 31, 2021 formatted in Inline Extensible Business Reporting | |
| | | Language (iXBRL) includes: (i) consolidated balance sheets, (ii) consolidated statements of income, | |
| | | (iii) consolidated statements of comprehensive income, (iv) consolidated statements of changes in equity, | |
| | | (v) consolidated statements of cash flows, and (vi) the notes to consolidated financial statements. | |
| 104 | | — | The cover page from the Vornado Realty Trust and Vornado Realty L.P. Quarterly Report on Form 10-Q for | |
| | | the quarter ended June 30, 2020,March 31, 2021, formatted as iXBRL and contained in Exhibit 101101. | |
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| | | _________________________ | |
| | * | Incorporated by reference | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | |
| | VORNADO REALTY TRUST |
| | (Registrant) |
| | |
| | |
| Date: May 3, 2021 | By: | VORNADO REALTY TRUST |
| | (Registrant) |
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Date: August 3, 2020 | By: | /s/ Matthew Iocco |
| | Matthew Iocco, Chief Accounting Officer (duly authorized officer and principal accounting officer) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | VORNADO REALTY L.P. |
| | (Registrant) |
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| Date: May 3, 2021 | By: | VORNADO REALTY L.P. |
| | (Registrant) |
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Date: August 3, 2020 | By: | /s/ Matthew Iocco |
| | Matthew Iocco, Chief Accounting Officer of Vornado Realty Trust, sole General Partner of Vornado Realty L.P. (duly authorized officer and principal accounting officer) |