<PAGE> 1
Exhibit Index on Page 28
As filed with the Securities and Exchange Commission on July 15, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) APRIL 20, 1998
Commission File Number: 000-22635
VORNADO REALTY L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3925979
(State or other jurisdiction of incorporation) (I.R.S. Employer
Identification Number)
PARK 80 WEST, PLAZA II, SADDLE BROOK, NEW JERSEY 07663
(Address of principal executive offices) (Zip Code)
(201)587-1000
(Registrant's telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Page 1
<PAGE> 2
This Form 8-K/A amends Vornado Realty L.P.'s Form 8-K's previously filed to
include certain required financial statements and pro forma financial
information.
ITEMS 1-4. NOT APPLICABLE
ITEM 5. On April 20, 1998, Vornado Realty Trust ("Vornado") increased
its interest from 5.6% to approximately 50% in 570 Lexington
Avenue, a 49 story office building located in midtown
Manhattan containing approximately 435,000 square feet. The
purchase price for the acquisition of the additional interest
was approximately $37.2 million, including $4.9 million in the
assumption of existing debt. The transaction was financed with
existing cash.
On June 2, 1998, Vornado entered into an agreement to acquire
the leasehold interest in 888 Seventh Avenue, a 46 story
office building containing approximately 847,000 square feet
located in midtown Manhattan and simultaneously acquired 40
Fulton Street, a 29 story office building containing
approximately 234,000 square feet located in downtown
Manhattan. The aggregate consideration for both buildings is
approximately $154.5 million, consisting of $109.5 million in
cash and $45 million in the assumption of existing debt. The
acquisition of 40 Fulton Street was financed with borrowings
under the revolving credit facility. The acquisition of 888
Seventh Avenue is expected to be completed not later than the
third quarter of 1999 in conjunction with other unrelated
transactions to be effected by the seller, and is subject to
customary closing conditions. The transaction is expected to
be financed with borrowings under the revolving credit
facility.
On June 15, 1998, Vornado entered into an agreement to acquire
two Manhattan office buildings, 770 Broadway, which contains
approximately 1,000,000 square feet and 314 West 40th Street
which contains approximately 75,000 square feet. The aggregate
consideration for both buildings is approximately $168
million. The acquisitions, which are subject to customary
closing conditions, are expected to be completed in the third
quarter of 1998. The acquisitions are expected to be financed
with borrowings under the revolving credit facility.
Interstate Properties ("Interstate"), a New Jersey general
partnership and its respective partners, Steven Roth
(Chairman of the Board and Chief Executive Officer of
Vornado), David Mendelbaum (a trustee of Vornado) and Russell
B. Wight, Jr. (a trustee of Vornado) own approximately two
percent of one of the sellers of 770 Broadway and 324 West
40th Street.
These transactions were arrived at through arms-length
negotiations and were, or will be consummated through
subsidiaries of Vornado Realty L.P. (the "Operating
Partnership"), a limited partnership of which Vornado owns a
91.2% limited partnership interest at May 31, 1998 and is the
sole general partner.
ITEM 6. NOT APPLICABLE
Page 2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a)-(b) There are filed herewith:
(a) the historical Statements of Revenues and Certain Expenses
for New York Equities Company and Subsidiary ("770 Broadway
and 314 West 40th Street"), 888 7th Avenue and 570
Lexington Company, L.P. and
(b) the Condensed Consolidated Pro Forma Balance Sheet of the
Operating Partnership as of March 31, 1998 and the Condensed
Consolidated Pro Forma Income Statement of the Operating
Partnership for the three months ended March 31, 1998 and the
year ended December 31, 1997 commencing on page 19, prepared
to give Pro Forma effect to the acquisitions of 888 Seventh
Avenue, 770 Broadway, 314 West 40th Street, the additional
interest in 570 Lexington Avenue and the previously reported
acquisitions and investments reflected in the Form 8/K-A filed
with the Securities and Exchange Commission on April 9, 1998
for the acquisition of the Merchandise Mart Group of
Properties, which also reflected those previously reported
acquisitions (Mendik Company, 90 Park Avenue, Arbor Property
Trust, Americold Corporation and URS Logistics, Inc., The
Montehiedra Town Center, The Riese Transaction, 15% investment
in Charles E. Smith Commercial Realty L.P., 40% investment in
The Hotel Pennsylvania, 640 Fifth Avenue, One Penn Plaza and
150 East 58th Street), and the financings attributable
thereto.
<TABLE>
<CAPTION>
PAGE
REFERENCE
---------
<S> <C>
New York Equities Company and Subsidiary
Report of Independent Certified Public Accountants........................... 6
Consolidated Statement of Revenues and Certain
Expenses for the Year Ended September 30, 1997 (audited)..................... 7
Notes to Consolidated Statements of Revenues and Certain Expenses
for the Year Ended September 30, 1997 (audited).............................. 8
Consolidated Statements of Revenues and Certain Expenses for the Three
Months Ended March 31, 1998 and 1997 (unaudited)............................. 10
</TABLE>
Page 3
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
888 7th Avenue
Independent Auditors' Report................................................. 11
Statements of Revenues and Certain Expenses for the
Year Ended December 31, 1997 (audited) and for the Three
Months Ended March 31, 1998 and 1997 (unaudited)............................. 12
Notes to Statements of Revenues and Certain Expenses
for the Year Ended December 31, 1997 (audited) and for the
Three Months Ended March 31, 1998 and 1997 (unaudited)....................... 13
570 Lexington Company, L.P.
Independent Auditors' Report................................................. 15
Statements of Revenues and Certain Expenses for the
Year Ended December 31, 1997 (audited) and for the Three
Months Ended March 31, 1998 and 1997 (unaudited)............................. 16
Notes to Statements of Revenues and Certain Expenses
for the Year Ended December 31, 1997 (audited) and for the
Three Months Ended March 31, 1998 and 1997 (unaudited)....................... 17
Pro Forma financial information:
Condensed Consolidated Pro Forma Balance Sheet at March 31, 1998............. 20
Condensed Consolidated Pro Forma Income Statement for the Three
Months Ended March 31, 1998.................................................. 21
Condensed Combining Income Statement for the Three Months Ended
March 31, 1998............................................................... 22
Condensed Consolidated Pro Forma Income Statement for the Year
Ended December 31, 1997...................................................... 23
Condensed Combining Income Statement for the Year Ended December 31, 1997.... 24
Notes to Condensed Consolidated Pro Forma Financial Statements............... 25
Page 4
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<S> <C>
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Buchbinder Tunick & Company LLP
</TABLE>
ITEMS 8-9. NOT APPLICABLE.
Page 5
<PAGE> 6
BUCHBINDER TUNICK & COMPANY LLP
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To The Trustees
Vornado Realty Trust
We have audited the consolidated statement of revenues and certain
expenses of New York Equities Company and subsidiary (the "Partnership"), as
described in Note 1, for the year ended September 30, 1997. This consolidated
financial statement is the responsibility of the Partnership's management. Our
responsibility is to express an opinion on this consolidated financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying consolidated statement of revenues and certain
expenses was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in the
filing of Form 8-K/A of Vornado Realty Trust), and is not intended to be a
complete presentation of the Partnership's revenues and expenses.
In our opinion, the financial statement referred to above presents
fairly, in all material respects, the revenues and certain expenses of New York
Equities Company and subsidiary, as described in Note 1, for the year ended
September 30, 1997, in conformity with generally accepted accounting principles.
BUCHBINDER TUNICK & COMPANY LLP
New York, NY
June 22, 1998
Page 6
<PAGE> 7
NEW YORK EQUITIES COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENT OF REVENUES AND CERTAIN EXPENSES (NOTE 1)
FOR THE YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<S> <C>
Revenues:
Rentals from real property $14,910,393
Escalation charges 2,025,677
-----------
Total revenues 16,936,070
-----------
Certain expenses:
Real estate operating expenses 3,320,989
Real estate taxes 2,914,128
-----------
Total certain expenses 6,235,117
-----------
Revenues in excess of certain expenses $10,700,953
===========
</TABLE>
See notes to consolidated statement of revenues and certain expenses.
Page 7
<PAGE> 8
NEW YORK EQUITIES COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED STATEMENT OF REVENUES AND CERTAIN EXPENSES
SEPTEMBER 30, 1997
NOTE 1 - BASIS OF PRESENTATION
New York Equities Company is a New York limited partnership which owns
and operates two commercial office buildings in New York City (770
Broadway, which contains approximately 1 million square feet and 314
West 40th Street, which contains approximately 75,000 square feet).
The consolidated statement of revenues and certain expenses includes
the accounts of New York Equities Company and its wholly-owned
subsidiary, NYE Realty, LLC. Material intercompany items and
transactions have been eliminated. The Partnership and its subsidiary
are hereinafter referred to as the "Partnership".
The accompanying consolidated financial statement has been prepared in
accordance with the applicable rules and regulations of the Securities
and Exchange Commission for the acquisition of real estate properties.
Accordingly, the consolidated financial statement excludes certain
expenses that may not be comparable to those expected to be incurred by
Vornado Realty Trust in the proposed future operations of the
Partnership. It is expected that the Partnership will be acquired by
Vornado Realty Trust in July 1998. Items excluded consist of interest,
depreciation, amortization, management fees and certain administrative
costs.
NOTE 2 - USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management 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 period. Actual results could differ
from those estimates.
Page 8
<PAGE> 9
NEW YORK EQUITIES COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED STATEMENT OF REVENUES AND CERTAIN EXPENSES (CONTINUED)
SEPTEMBER 30, 1997
NOTE 3 - RENTAL PROPERTIES
Future minimum rentals to be received by the Partnership pursuant to
noncancellable operating leases are as follows:
<TABLE>
<CAPTION>
Years Ending
September 30, Amount
------------- ------
<S> <C>
1998 $11,879,000
1999 12,841,000
2000 12,399,000
2001 10,554,000
2002 10,234,000
</TABLE>
At September 30, 1997, the Partnership recorded unbilled rent
receivable aggregating $5,886,275, representing rent reported on the
straight-line basis in excess of rental payments required under the
initial term of the leases. The unbilled rent receivable will vary
based upon the difference between the straight-line basis and the
actual cash payments due under the leases. The minimum future rentals
presented above include amounts applicable to the repayment of this
unbilled rent receivable.
A major tenant occupies premises leased from New York Equities Company
under a lease expiring in 2005 with a cancellation date, at the
tenant's discretion, of June 2000. In October 1996, the tenant
subleased a majority of said premises, effective January 4, 1997, to
NYE Realty, LLC. The tenant paid $3,000,000 to NYE Realty, LLC in
exchange for the right to enter into the sublease agreement. This
income is being amortized over the noncancellable term of the sublease.
As of September 30, 1997, $2,357,000 was included in deferred rental
income. However, the tenant remains primarily obligated to New York
Equities Company for rentals under its lease.
Page 9
<PAGE> 10
NEW YORK EQUITIES COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (unaudited)
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Revenues:
Rentals from real property $3,709,479 $3,428,599
Escalation charges 611,926 534,070
---------- ----------
Total revenues 4,321,405 3,962,669
---------- ----------
Certain expenses:
Real estate operating expenses 754,740 860,579
Real estate taxes 647,498 718,293
---------- ----------
Total certain expenses 1,402,238 1,578,872
---------- ----------
Revenues in excess of certain expenses $2,919,167 $2,383,797
========== ==========
</TABLE>
Page 10
<PAGE> 11
DELOITTE & TOUCHE LLP
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Vornado Realty Trust:
We have audited the statement of revenues and certain expenses of 888 7th
Avenue, as described in Note 1 for the year ended December 31, 1997. This
financial statement is the responsibility of management. Our responsibility is
to express an opinion on the financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission (for inclusion in the filing of Form 8-K/A of Vornado Realty
Trust) as described in Note 1 and is not intended to be a complete presentation
of 888 7th Avenue's revenues and expenses.
In our opinion, such financial statement presents fairly, in all material
respects, the revenues and certain expenses of 888 7th Avenue as described in
Note 1 for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
New York, New York
March 20, 1998
Page 11
<PAGE> 12
888 7TH AVENUE
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
YEAR THREE MONTHS ENDED
ENDED MARCH 31,
DECEMBER 31, 1997 1997 1998
----------------- ---------------------------------
(UNAUDITED)
REVENUES:
<S> <C> <C> <C>
Rentals $ 18,175,531 $ 3,999,385 $ 5,271,375
Tenant recoveries 3,343,023 743,999 929,670
Other Income 1,225,912 223,637 311,786
-------------- ------------ ------------
Total operating revenues 22,744,466 4,967,021 6,512,831
-------------- ------------ ------------
CERTAIN EXPENSES:
Building operating expenses 10,944,200 2,868,681 2,047,129
Real Estate taxes 3,929,900 969,600 940,658
Ground lease expense 375,000 93,750 93,750
Other expense (income) 572,296 32,744 (190,660)
-------------- ------------ -------------
Total certain expenses 15,821,396 3,964,775 2,890,877
-------------- ------------ ------------
REVENUES IN EXCESS OF
CERTAIN EXPENSES $ 6,923,070 $ 1,002,246 $ 3,621,954
============== ============ ============
</TABLE>
See notes to statements of revenues and certain expenses
Page 12
<PAGE> 13
888 7TH AVENUE
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
1. ORGANIZATION AND BASIS OF PRESENTATION
888 7th Avenue (the "Property") is a 46-story office building located
on Seventh Avenue at 56th Street in New York City. The Property has
aggregate net rentable area of approximately 843,000 square feet
(approximately 95% leased as of March 31, 1998). The accounting records for
the Property are maintained in accordance with generally accepted
accounting principles. The statements of revenues and certain expenses
include information related to the operations of 888 7th Avenue as recorded
by the office building's current owner.
The accompanying historical financial information is presented in
conformity with Rule 3-14 of the Securities and Exchange Commission.
Accordingly, the financial statements are not representative of the actual
operations for the periods presented as certain expenses, which may not be
comparable to the expenses expected to be incurred in the future operations
of the acquired property, have been excluded. Expenses excluded consist of
interest, depreciation and amortization, and other costs not directly
related to the future operations of the property.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates.
The statements of revenues and certain expenses for the three month
periods ended March 30, 1997 and 1998 are unaudited, however, in the
opinion of management, all adjustments (consisting solely of normal
recurring adjustments) necessary for the fair presentation of these
statements of revenues and certain expenses for the interim periods, on the
basis described above, have been included. The results of such interim
periods are not necessarily indicative of the results for an entire year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION - Rental income is recognized from leases with
scheduled rent increases on a straight-line basis over the lease term.
Escalation rents based upon payments for real estate taxes, insurance,
utilities and maintenance by tenants are estimated and accrued.
Page 13
<PAGE> 14
3. OPERATING LEASES
The Property leases office space to various tenants with lease terms
expiring in various years. The following is a schedule, by years, of the
approximate minimum future rentals required under these operating leases as
of December 31, 1997:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C> <C>
1998 $ 19,619,000
1999 18,124,000
2000 17,594,000
2001 16,704,000
2002 16,353,000
Thereafter 114,861,000
</TABLE>
4. GROUND LEASE
The office building is located on land subject to a ground lease which
expires in 2066. The annual rent is $375,000, plus real estate taxes and
other expenses. Commencing in June 1998, and continuing for a period of
five years, rent will increase by the difference between $375,000 and an
amount equal to 6% of the value of the land at May 29, 1998. The ground
lease provides that payment of this rent increase will be deferred and paid
in equal monthly installments over a five year period commencing in June
2003. To date the valuation of the land required to determine rent expense
for the period commencing June 1998 has not been obtained.
Commencing in June 2003 and continuing for a period of twenty-three years,
ground rent shall be further increased by the difference between $400,000
and an amount equal to 6% of the value of the land at May 29, 1998.
Additionally, the deferred rents referred to above will become payable in
equal monthly installments over a five year period. The ground lease
provides for further increases in rent during 2028 and 2048 based upon
increases in the value of the land.
*******
Page 14
<PAGE> 15
DELOITTE & TOUCHE LLP
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Vornado Realty Trust:
We have audited the statement of revenues and certain expenses of 570
Lexington Company, L.P., as described in Note 1 for the year ended December 31,
1997. This financial statement is the responsibility of Vornado Realty Trust's
management. Our responsibility is to express an opinion on the financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with rules and regulations of the Securities and Exchange
Commission (for inclusion in the filing of Form 8-K/A of Vornado Realty Trust)
as described in Note 1 and is not intended to be a complete presentation of 570
Lexington Company, L.P.'s revenues and expenses.
In our opinion, such financial statement presents fairly, in all material
respects, the revenues and certain expenses of 570 Lexington Company, L.P. as
described in Note 1 for the year ended December 31, 1997, in conformity with
generally accepted accounting principles.
Deloitte and Touche LLP
New York, New York
February 14, 1998
Page 15
<PAGE> 16
570 LEXINGTON COMPANY, L.P.
(A NEW YORK LIMITED PARTNERSHIP)
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
AND FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998
<TABLE>
<CAPTION>
YEAR THREE MONTHS ENDED
ENDED MARCH 31,
DECEMBER 31, 1997 1997 1998
----------------- ---- ----
(UNAUDITED)
Revenues:
<S> <C> <C> <C>
Property rentals $ 5,977,169 $ 1,064,515 $ 2,032,058
Expense reimbursements 322,244 51,710 130,265
Interest income 10,693 3,187 3,309
----------- ----------- -----------
Total operating revenues 6,310,106 1,119,412 2,165,632
----------- ----------- -----------
Certain Operating Expenses:
Real estate taxes 1,872,430 468,796 458,521
Repairs and maintenance 454,204 90,127 223,234
Utilities 950,153 288,867 313,457
Insurance 103,619 26,532 25,595
Management and leasing 174,691 38,822 40,317
Payroll 231,671 57,981 31,146
General and administrative 716,690 144,285 166,372
Other 902,137 257,134 279,555
----------- ----------- -----------
Total certain expenses 5,405,595 1,372,544 1,538,197
----------- ----------- -----------
REVENUES IN EXCESS OF
CERTAIN EXPENSES (CERTAIN
EXPENSES IN EXCESS OF REVENUES) $ 904,511 $ (253,132) $ 627,435
=========== =========== ===========
</TABLE>
See Notes to Statements of Revenue and Certain Expenses
Page 16
<PAGE> 17
570 LEXINGTON COMPANY, L.P.
(A NEW YORK LIMITED PARTNERSHIP)
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
1. ORGANIZATION AND BASIS OF PRESENTATION
570 Lexington Avenue (the "Property") is a 49-story office building
located on 50th Street and Lexington Avenue in New York City. The Property
has aggregate net rentable area of approximately 433,686 square feet
(approximately 71% leased as of March 31, 1998). The accounting records of
the Property are maintained in accordance with generally accepted
accounting principles. The statements of revenues and certain expenses
includes information related to the operations of 570 Lexington Avenue as
recorded by the office building's previous owner.
The accompanying historical financial statement information is presented
in conformity with Rule 3-14 of the Securities and Exchange Commission.
Accordingly, the financial statements are not representative of the actual
operations for the periods presented as certain expenses, which may not be
comparable to the expenses expected to be incurred in the future
operations of the acquired property, have been excluded. Expenses excluded
consist of interest, depreciation and amortization, and other costs not
directly related to the future operations of the acquired property.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The statements of revenues and certain expenses for the three month
periods ended March 31, 1997 and 1998 are unaudited, however, in the
opinion of management, all adjustments (consisting solely of normal
recurring adjustments) necessary for the fair presentation of these
statements of revenues and certain expenses for the interim periods, on
the basis described above, have been included. The results for such
interim periods are not necessarily indicative of the results for an
entire year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION - Rental income is recognized from leases with
scheduled rent increases on a straight-line basis over the lease terms.
Escalation rents based upon payments for real estate taxes, insurance,
utilities, and maintenance by tenants are estimated and accrued.
Page 17
<PAGE> 18
3. OPERATING LEASES
The Property leases office space to various tenants with lease terms
expiring in various years. The following is a schedule, by year, of the
approximate minimum future rentals required under these operating leases
as of December 31, 1997:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
<S> <C>
1998 $ 6,758,000
1999 8,368,000
2000 8,369,000
2001 8,253,000
2002 7,808,000
Thereafter 50,933,000
-----------
Total $90,489,000
===========
</TABLE>
******
Page 18
<PAGE> 19
PRO FORMA FINANCIAL INFORMATION:
The unaudited condensed consolidated pro forma financial information
attached presents: (A) the Condensed Consolidated Pro Forma Income Statements of
Vornado Realty L.P. (the "Operating Partnership") for the year ended December
31, 1997 and for the three months ended March 31, 1998, as if the following had
occurred on January 1, 1997 (i) the acquisitions of 888 Seventh Avenue, 770
Broadway, 314 West 40th Street, the additional interest in 570 Lexington Avenue
with the financings attributable thereto, (ii) the previously completed
acquisitions and investments reflected in the Form 8-K/A filed with the
Securities and Exchange Commission on April 9, 1998 for the acquisition of the
Merchandise Mart Group of Properties, which also reflected those previously
reported acquisitions (Mendik Company, 90 Park Avenue, Arbor Property Trust,
Americold Corporation and URS Logistics, Inc., The Montehiedra Town Center, The
Riese Transaction, 15% investment in Charles E. Smith Commercial Realty L.P.,
40% investment in The Hotel Pennsylvania, 640 Fifth Avenue, One Penn Plaza and
150 East 58th Street) and the financings attributable thereto and (iii) the sale
of 10 million common shares on April 15, 1998, the sale of approximately 1.1
million common shares to a unit investment trust on April 29, 1998 and the use
of proceeds therefrom and (B) the Condensed Consolidated Pro Forma Balance Sheet
of the Operating Partnership as of March 31, 1998, as if the above acquisitions
had occurred on March 31, 1998.
The unaudited condensed consolidated pro forma financial information is
not necessarily indicative of what the Operating Partnership's actual results of
operations or financial position would have been had these transactions been
consummated on the dates indicated, nor does it purport to represent the
Operating Partnership's results of operations or financial position for any
future period.
The unaudited condensed consolidated pro forma financial information
should be read in conjunction with the Consolidated Financial Statements and
notes thereto included in the Operating Partnership's Annual Report on Form 10-K
for the year ended December 31, 1997, the Consolidated Financial Statements and
notes thereto included in the Operating Partnership's Quarterly Report on Form
10-Q for the quarter ended March 31, 1998 and the Statement of Revenues and
Certain Expenses of 888 7th Avenue, 570 Lexington Company, L.P. and New York
Equities Company and Subsidiary, included herein. In management's opinion, all
adjustments necessary to reflect these transactions have been made.
Page 19
<PAGE> 20
CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
MARCH 31, 1998
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
-----------------------------
PREVIOUSLY OPERATING
OPERATING REPORTED PARTNERSHIP PRO FORMA TOTAL
PARTNERSHIP ACQUISITIONS PRO FORMA ADJUSTMENTS PRO FORMA
----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Real estate, net $ 1,942,728 $ 600,000 $ 2,542,728 $ 100,000 (A) $ 2,810,728
168,000 (B)
Cash and cash equivalents 299,761 (187,000) 112,761 (31,000) (C) 70,761
44,000 (D)
(55,000) (A)
Investment in partially-owned
entities, including investment in
and advances to Alexander's 487,555 30,000 517,555 31,000 (C) 548,555
Mortgage loans receivable 91,163 91,163 91,163
Receivable arising from straight-
lining of rents 27,776 27,776 27,776
Other assets 116,206 116,206 116,206
----------- ------------ ----------- ----------- -----------
$ 2,965,189 $ 443,000 $ 3,408,189 $ 257,000 $ 3,665,189
=========== ============ =========== =========== ===========
LIABILITIES:
Notes and mortgages payable $ 729,132 $ 327,000 $ 1,056,132 $ 45,000 (A) $ 1,101,132
Revolving credit facility 656,000 656,000 168,000 (B) 423,000
(401,000) (E)
Deferred leasing fee income 10,026 10,026 10,026
Officer's deferred compensation
payable 25,000 25,000 25,000
Other liabilities 52,052 52,052 52,052
----------- ------------ ----------- ----------- -----------
1,472,210 327,000 1,799,210 (188,000) 1,611,210
----------- ------------ ----------- ----------- -----------
PARTNERS' CAPITAL: 1,492,979 116,000 1,608,979 401,000 (E) 2,053,979
44,000 (D)
----------- ------------ ----------- ----------- -----------
$ 2,965,189 $ 443,000 $ 3,408,189 $ 257,000 $ 3,665,189
=========== ============ =========== =========== ===========
</TABLE>
Page 20
<PAGE> 21
CONDENSED CONSOLIDATED PRO FORMA INCOME STATEMENT
FOR THE QUARTER ENDED MARCH 31, 1998
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL -
HISTORICAL PREVIOUSLY OPERATING CURRENT
OPERATING REPORTED PARTNERSHIP ACQUISITIONS PRO FORMA TOTAL
PARTNERSHIP ACQUISITIONS PRO FORMA COMBINED ADJUSTMENTS PRO FORMA
------- ------------ --------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Property rentals $ 72,365 $ 33,140 $ 105,505 $ 8,980 $1,429 (I) $ 115,914
Expense reimbursements 15,696 857 16,553 1,479 18,032
Other income 2,150 1,355 3,505 375 3,880
------- ------------ --------- -------- ------- ---------
90,211 35,352 125,563 10,834 1,429 137,826
------- ------------ --------- -------- ------- ---------
EXPENSES:
Operating 34,153 18,273 52,426 4,293 56,719
Depreciation and amortization 10,366 4,652 15,018 - 1,413 (F) 16,431
General and administrative 4,947 - 4,947 - 4,947
Amortization of officer's deferred
compensation expense - - - - -
------- ------------ --------- -------- ------- ---------
49,466 22,925 72,391 4,293 1,413 78,097
------- ------------ --------- -------- ------- ---------
Operating income 40,745 12,427 53,172 6,541 16 59,729
Income applicable to Alexander's 1,656 - 1,656 - 1,656
Income from partially owned entities 3,920 919 4,839 (445) 4,394
Interest and other investment income 7,566 - 7,566 - (515) (G) 7,051
Interest and debt expense (19,823) (6,260) (26,083) - 2,886 (H) (23,197)
------- ------------ --------- -------- ------- ---------
Net income 34,064 7,086 41,150 6,096 2,387 49,633
Preferential allocations (2,577) (1,012) (3,589) - (785) (J) (2,110)
518 (P)
1,746 (Q)
Preferred stock dividends (5,423) - (5,423) - (5,423)
------- ------------ --------- -------- ------- ---------
Net income applicable to
Class A units $ 26,064 $ 6,074 $ 32,138 $ 6,096 $3,866 $ 42,100
========= ======== ========= ======= ====== =========
Net income Per Class A unit - basic (based
on 72,165 units and 87,982 units) $ 0.36 $ 0.48
========= =========
Net income Per Class A unit - diluted (based
on 74,353 units and 90,170 units) $ 0.35 $ 0.47
========= =========
</TABLE>
Page 21
<PAGE> 22
CONDENSED COMBINING INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------------------------------------------------
NEW YORK 570 CURRENT
888 7TH EQUITIES COMPANY LEXINGTON ACQUISITIONS
AVENUE AND SUBSIDIARY COMPANY, L.P. COMBINED
<S> <C> <C> <C> <C>
REVENUES:
Property rentals $ 5,271 $ 3,709 $ 8,980
Expense reimbursements 930 549 1,479
Other income 312 63 375
-------- -------- -------- --------
6,513 4,321 10,834
EXPENSES:
Operating 2,891 1,402 4,293
Depreciation and amortization --
General and administrative --
Amortization of officer's deferred --
compensation expense --
-------- -------- -------- --------
2,891 1,402 4,293
-------- -------- -------- --------
Operating income 3,622 2,919 6,541
Income applicable to Alexander's --
Income from partially owned entities $ (445) (445)
Interest and other investment income --
Interest and debt expense --
-------- -------- -------- --------
Net income (loss) 3,622 2,919 (445) 6,096
Preferential allocations
Preferred stock dividends --
-------- -------- -------- --------
Net income (loss) applicable to
Class A units $ 3,622 $ 2,919 $ (445) $ 6,096
======== ======== ======== ========
</TABLE>
Page 22
<PAGE> 23
CONDENSED CONSOLIDATED PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL -
PRO FORMA CURRENT
FILED ACQUISITIONS PRO FORMA TOTAL
APRIL 9, 1998 COMBINED ADJUSTMENTS PRO FORMA
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
REVENUES:
Property rentals $ 411,876 $ 33,085 $ 4,175 (N) $ 449,136
Expense reimbursements 68,274 5,369 73,643
Other income 16,321 1,226 17,547
---------- ---------- -------- ----------
496,471 39,680 4,175 540,326
---------- ---------- -------- ----------
EXPENSES:
Operating 210,989 22,056 233,045
Depreciation and amortization 61,078 - 5,650 (K) 66,728
General and administrative 17,606 - 17,606
Amortization of officer's deferred -
compensation expense 22,917 - 22,917
---------- ---------- -------- ----------
312,590 22,056 5,650 340,296
---------- ---------- -------- ----------
Operating income (loss) 183,881 17,624 (1,475) 200,030
Income applicable to Alexander's 7,873 - 7,873
Income from partially owned entities 13,126 (1,794) 11,332
Interest and other investment income 22,079 - (2,142) (L) 19,937
Interest and debt expense (112,400) - 11,545 (M) (100,855)
---------- ---------- -------- ----------
Net income 114,559 15,830 7,928 138,317
Preferential allocations (14,418) - (1,885) (O) (16,303)
Preferred stock dividends (20,686) - (20,686)
---------- ---------- -------- ----------
Net income applicable to
Class A units $ 79,455 $ 15,830 $ 6,043 $ 101,328
========== ========== ======== ==========
Net income per Class A unit - basic (based
on 80,874 units and 92,016 units) $ 0.98 $ 1.10
========== ==========
Net income per Class A unit - diluted (based
on 82,993 units and 94,204 units) $ 0.96 $ 1.08
========== ==========
</TABLE>
Page 23
<PAGE> 24
CONDENSED COMBINING INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------------------------------------------
NEW YORK 570 CURRENT
888 7TH EQUITIES COMPANY LEXINGTON ACQUISITIONS
AVENUE AND SUBSIDIARY COMPANY, L.P. COMBINED
------- ---------------- --------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Property rentals $18,175 $14,910 $ 33,085
Expense reimbursements 3,343 2,026 5,369
Other income 1,226 - 1,226
------- ------- -------- --------
22,744 16,936 39,680
EXPENSES:
Operating 15,821 6,235 22,056
Depreciation and amortization -
General and administrative -
Amortization of officer's deferred -
compensation expense -
------- ------- -------- --------
15,821 6,235 22,056
------- ------- -------- --------
Operating income 6,923 10,701 17,624
Income applicable to Alexander's -
Income from partially owned entities $ (1,794) (1,794)
Interest and other investment income -
Interest and debt expense -
------- ------- -------- --------
Net income (loss) 6,923 10,701 (1,794) 15,830
Preferential allocations
Preferred stock dividends -
------- ------- -------- --------
Net income (loss) applicable to
Class A units $ 6,923 $10,701 $ (1,794) $ 15,830
======= ======= ======== ========
</TABLE>
Page 24
<PAGE> 25
NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
Basis of Pro Forma:
The Condensed Consolidated Pro Forma Income Statement for the year ended
December 31, 1997 is based on the Related Pro Forma Income Statement filed as
part of the Form 8-K/A filed with the Securities and Exchange Commission on
April 9, 1998 in connection with the acquisition of the Merchandise Mart Group
of Properties. The Condensed Consolidated Pro Forma Income Statement for the
quarter ended March 31, 1998 is based on historical data as reported in
the Operating Partnership's Form 10-Q.
The unaudited Condensed Consolidated Pro Forma Financial Statements were
prepared to give Pro Forma effect to the proposed acquisition of 888 Seventh
Avenue and the completed acquisitions of 770 Broadway, 314 West 40th Street and
the additional interest in 570 Lexington Avenue, the previously reported
acquisitions and investments (Mendik Company, 90 Park Avenue, Arbor Property
Trust, Americold Corporation and URS Logistics, Inc., The Montehiedra Town
Center, The Riese Transaction, 15% investment in Charles E. Smith Commercial
Realty L.P., 40% investment in The Hotel Pennsylvania, 640 Fifth Avenue, One
Penn Plaza, 150 East 58th Street and the Merchandise Mart Group of Properties)
are included in "Historical Operating Partnership" from their respective dates
of acquisition. The column headed "Previously Reported Acquisitions" includes
the results of operations of those entities for the period of time during 1998
prior to their acquisition. The Pro Forma data for certain previously completed
acquisitions, which were disclosed in Form 8-K's previously filed with the
Securities and Exchange Commission has been updated to (i) include information
through March 31, 1998 and (ii) reflect pro forma adjustments to revenues for
straight-line rents for the period, depreciation adjustments based upon the new
basis of the acquired assets, interest expense on debt used to fund the
acquisition and additional minority interest.
Acquisitions were consummated through subsidiaries or preferred stock
affiliates of Vornado Realty Trust and were recorded under the purchase method
of accounting. Net assets have been included in these financial statements since
their respective dates of acquisition. The respective purchase costs were
allocated to acquired assets and assumed liabilities using their relative fair
values as of the closing dates, based on valuations and other studies which are
not yet complete. Accordingly, the initial valuations are subject to change as
such information is finalized. The Operating Partnership believes that any such
change will not be significant since the allocations were principally to real
estate.
The following adjustments were required to give pro forma effect to the
transactions being reported:
Pro Forma March 31, 1998 Balance Sheet:
(A) Reflects the acquisition of 888 Seventh Avenue for approximately $100
million, consisting of $55 million in cash and the assumption of $45
million in existing debt.
(B) Reflects the acquisitions of 770 Broadway and 314 West 40th Street with
borrowings under the revolving credit facility for approximately $168
million.
(C) Reflects an increased interest in 570 Lexington Avenue to approximately 50%
for $31 million.
(D) Net proceeds received from the sale of approximately 1.1 million common
shares to a unit investment trust on April 29, 1998.
(E) To record the net proceeds from the 10 million common share offering on
April 15, 1998 used to repay indebtedness under the revolving credit
facility.
Page 25
<PAGE> 26
NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
Pro Forma March 31, 1998 Income Statement:
(F) To record three months of depreciation expense related to 770 Broadway,
314 West 40th Street and 888 Seventh Avenue over the assets' expected
useful life.
(G) To reduce historical interest income for existing cash used for
acquisitions.
(H) To reduce interest expense resulting from the use of proceeds on the 10
million share offering to repay a portion of the outstanding balance
under the revolving credit facility, offset by borrowings under the
line used to fund the cash portion of certain acquisitions.
(I) To adjust rentals arising from the straight-lining of tenant leases
that contain escalations over the lease term.
(J) To record preferential allocations in income from acquisitions.
(P) To reflect Class A units issued in the Merchandise Mart Group of
Properties transaction. The calculation of net income per Class A
unit - basic and diluted has been adjusted to reflect these units.
(Q) To record (i) the decrease in preferred unit distributions resulting
from the conversion of Class C units to Class A units, based upon
proforma results and (ii) reflect the balance as a component of net
income applicable to Class A units. The calculation of net income per
Class A unit - basic and diluted has been adjusted to reflect these
units.
Pro Forma December 31, 1997 Income Statement:
(K) To record depreciation expense related to 770 Broadway, 314 West 40th
Street and 888 Seventh Avenue for the year ended December 31, 1997 over
the assets' expected useful life.
(L) To reduce historical interest income for existing cash used for
acquisitions.
(M) To reduce interest expense resulting from the use of proceeds on the 10
million share offering to repay a portion of the outstanding balance
under the revolving credit facility, offset by borrowings under the
line used to fund the cash portion of certain acquisitions.
(N) To adjust rentals arising from the straight-lining of tenant leases
that contain escalations over the lease term.
(O) To record preferential allocations in income from acquisitions.
Page 26
<PAGE> 27
VORNADO REALTY L.P.
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 hereunto duly authorized.
VORNADO REALTY L.P.
(Registrant)
Date: July 13, 1998 /s/ Irwin Goldberg
--------------------------
IRWIN GOLDBERG
Vice President,
Chief Financial Officer
Page 27
<PAGE> 28
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
PAGE
EXHIBIT NO. EXHIBIT REFERENCE
- ----------- ------- ---------
<S> <C>
23.1 Consent of Deloitte & Touche LLP............................ 29
23.2 Consent of Deloitte & Touche LLP ........................... 30
23.3 Consent of Buchbinder Tunick & Company LLP.................. 31
</TABLE>
Page 28
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Amendment No. 1 to
Registration Statement No. 333-50095 of Vornado Realty Trust on Form S-3 and
Registration Statement Nos. 333-52573, 333-29011 and 333-09159 on Form S-8 of
Vornado Realty Trust and Amendment No. 4 to Registration Statement No.
333-40787 and Amendment No. 4 to Registration Statement No. 333-29013 of
Vornado Realty Trust and Vornado Realty L.P. both on Form S-3, of our report
dated March 20, 1998 on the statement of revenues and certain expenses of 888
7th Avenue for the year ended December 31, 1997, which report appears in the
Form 8-K/A of Vornado Realty Trust and Vornado Realty L.P. filed with the
Securities and Exchange Commission on or about July 14, 1998.
DELOITTE & TOUCHE LLP
New York, New York
July 10, 1998
Page 29
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Amendment No. 1 to Registration
Statement No. 333-50095 of Vornado Realty Trust on Form S-3 and Registration
Statement Nos. 333-52573, 333-29011 and 333-09159 on Form S-8 of Vornado Realty
Trust and Amendment No. 4 to Registration Statement No. 333-40787 and Amendment
No. 4 to Registration Statement No. 333-29013 of Vornado Realty Trust and
Vornado Realty L.P. both on Form S-3, of our report dated February 14, 1998 on
the statement of revenues and certain expenses of 570 Lexington Company, L.P.
for the year ended December 31, 1997, which report appears in the Form 8-K/A of
Vornado Realty Trust and Vornado Realty L.P. filed with the Securities and
Exchange Commission on or about July 14, 1998.
DELOITTE & TOUCHE LLP
New York, New York
July 10, 1998
Page 30
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Amendment No. 1 to Registration
Statement No. 333-50095 of Vornado Realty Trust on Form S-3 and Registration
Statement Nos. 333-52573, 333-29011, 333-09159 and 33-62344 on Form S-8 of
Vornado Realty Trust and Amendment No. 4 to Registration Statement No. 333-40787
and Amendment No. 4 to Registration Statement No. 333-29013 of Vornado Realty
Trust and Vornado Realty L.P. both on Form S-3, of our report dated June 22,
1998 on the consolidated statement of revenues and certain expenses of New York
Equities Company and Subsidiary for the year ended September 30, 1997, which
report appears in the Form 8-K/A of Vornado Realty Trust and Vornado Realty L.P.
dated July 13, 1998.
Buchbinder Tunick & Company LLP
New York, NY
July 10, 1998
Page 31
