<PAGE> 1
Exhibit Index on Page 12
As filed with the Securities and Exchange Commission on August 12, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) JUNE 2, 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)
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ITEMS 1-4. NOT APPLICABLE
ITEM 5. On June 2, 1998 Vornado Realty Trust ("Vornado") entered into
a proposed Settlement Agreement relating to a purported class
action brought by certain limited partners of Mendik Real
Estate Limited Partnership ("Mendik RELP"), a publicly traded
limited partnership.
Under the terms of the Settlement Agreement, Vornado will
purchase from the Mendik RELP (i) the Saxon Woods Corporate
Center located in Harrison, New York, (ii) a 60% interest in
an office building located at Two Park Avenue, in Manhattan
(Vornado already owns the other 40%) and (iii) an office
building located at 330 West 34th Street, also in Manhattan
(collectively, the "Mendik RELP Properties"). The aggregate
purchase price is approximately $104 million, including
assumed debt of $39 million on the Two Park Avenue property.
The settlement, which is expected to be consummated in the
third quarter, is subject to the final negotiation and
execution of a definitive purchase and sale agreement and
court approval; accordingly, there can be no assurance that
these transactions will be completed.
These transactions will be consummated through subsidiaries of
Vornado Realty L.P. (the "Operating Partnership"), a limited
partnership of which Vornado owns a 92% limited partnership
interest at June 30, 1998 and is the sole general partner.
ITEM 6. NOT APPLICABLE
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
The Consolidated Financial Statements for Mendik Real Estate Limited
Partnership for the Year Ended December 31, 1997 and the Quarters Ended
March 31, 1998 and 1997 are included as an exhibit to the Form 8-K
filed for Vornado Realty Trust on August 12, 1998, which is
incorporated herein by reference.
There are filed herewith:
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 5, prepared to give pro forma effect to the proposed
acquisition of the Mendik RELP Properties and the previously reported
acquisitions and investments reflected in the Form 8/K-A filed with the
Securities and Exchange Commission on July 15, 1998 for the proposed
acquisition of 888 Seventh Avenue, completed acquisitions of 770
Broadway and the additional interest in 570 Lexington Avenue and 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.
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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), and the financings attributable
thereto.
<TABLE>
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PAGE
REFERENCE
---------
<S> <C>
Pro Forma financial information:
Condensed Consolidated Pro Forma Balance Sheet at
March 31, 1998 ............................................... 5
Condensed Consolidated Pro Forma Income Statement
for the Three Months Ended March 31, 1998 .................... 6
Condensed Consolidated Pro Forma Income Statement
for the Year Ended December 31, 1997 ......................... 7
Notes to Condensed Consolidated Pro Forma Financial
Statements ................................................... 8
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<S> <C>
23 Consent of KPMG Peat Marwick LLP
</TABLE>
ITEMS 8-9. NOT APPLICABLE.
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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 proposed acquisitions of the Mendik RELP
Properties with the financings attributable thereto and (ii) the previously
reported acquisitions and investments reflected in the Form 8-K/A filed with the
Securities and Exchange Commission on July 15, 1998 for the proposed acquisition
of 888 Seventh Avenue, the completed acquisition of 770 Broadway and the
additional interest in 570 Lexington Avenue and 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, 150 East 58th Street and
the Merchandise Mart Group of Properties) and the financings attributable
thereto 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, the Consolidated Financial Statements
and notes thereto included in Mendik RELP's Annual Report on Form 10-K for the
year ended December 31, 1997, and the Consolidated Financial Statements and
notes thereto of Mendik RELP's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998. In management's opinion, all adjustments necessary to
reflect these transactions have been made.
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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 $ 2,810,728 $104,000 (A) $ 2,959,834
100,000 45,106 (C)
168,000
Cash and cash equivalents 299,761 (187,000) 70,761 (30,000)(A) 70,761
(31,000) 30,000 (B)
44,000
(55,000)
Investment in partially-owned
entities, including investment in
and advances to Alexander's 487,555 30,000 548,555 (19,106)(C) 529,449
31,000
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 $ 700,000 $ 3,665,189 $ 130,000 $ 3,795,189
=========== =========== =========== ============ ===========
LIABILITIES:
Notes and mortgages payable $ 729,132 $ 327,000 $ 1,101,132 $ 39,000 (A) $ 1,166,132
45,000 26,000 (C)
Revolving credit facility 656,000 168,000 423,000 30,000 (B) 453,000
(401,000)
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
----------- ----------- ----------- ------------ -----------
1,472,210 139,000 1,611,210 95,000 1,706,210
PARTNERS' CAPITAL 1,492,979 401,000 2,053,979 35,000 (A) 2,088,979
116,000
44,000
----------- ----------- ----------- ------------ -----------
$ 2,965,189 $ 700,000 $ 3,665,189 $ 130,000 $ 3,795,189
=========== =========== =========== ============ ===========
</TABLE>
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CONDENSED CONSOLIDATED PRO FORMA INCOME STATEMENT
FOR THE QUARTER ENDED MARCH 31, 1998
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL PREVIOUSLY OPERATING HISTORICAL
OPERATING REPORTED PARTNERSHIP MENDIK PRO FORMA TOTAL
PARTNERSHIP ACQUISITIONS PRO FORMA RELP ADJUSTMENTS PRO FORMA
----------- ------------ ----------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Property rentals $ 72,365 $ 43,549 $ 115,914 $ 9,261 $ 658 (D) $ 125,833
Expense reimbursements 15,696 2,336 18,032 -- -- 18,032
Other income 2,150 1,730 3,880 -- -- 3,880
--------- --------- --------- --------- --------- ---------
90,211 47,615 137,826 9,261 658 147,745
--------- --------- --------- --------- --------- ---------
EXPENSES:
Operating 34,153 22,566 56,719 4,797 -- 61,516
Depreciation and amortization 10,366 6,065 16,431 49 569 (E) 17,049
General and administrative 4,947 -- 4,947 43 -- 4,990
--------- --------- --------- --------- --------- ---------
49,466 28,631 78,097 4,889 569 83,555
--------- --------- --------- --------- --------- ---------
Operating income 40,745 18,984 59,729 4,372 89 64,190
Income applicable to Alexander's 1,656 -- 1,656 -- -- 1,656
Income from partially owned entities 3,920 474 4,394 -- (433)(F) 3,961
Interest and other investment
income 7,566 (515) 7,051 63 -- 7,114
Interest and debt expense (19,823) (3,374) (23,197) (1,387) (488)(G) (25,072)
Minority interest -- -- -- (955) 955 (H) --
--------- --------- --------- --------- --------- ---------
Net income 34,064 15,569 49,633 2,093 123 51,849
Preferential allocations (2,577) (1,797) (2,110) -- (569)(I) (1,503)
2,264 1,176 (Q)
Preferred unit distributions (5,423) -- (5,423) -- -- (5,423)
--------- --------- --------- --------- --------- ---------
Net income applicable to
Class A units $ 26,064 $ 16,036 $ 42,100 $ 2,093 $ 730 $ 44,923
========= ========= ========= ========= ========= =========
Net income per Class A unit - basic
(based on 72,165 units and
91,979 units) $ 0.36 $ 0.49
========= =========
Net income per Class A unit - diluted
(based on 74,343 units and
94,167 units) $ 0.35 $ 0.48
========= =========
</TABLE>
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CONDENSED CONSOLIDATED PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL PREVIOUSLY OPERATING HISTORICAL
OPERATING REPORTED PARTNERSHIP MENDIK PRO FORMA TOTAL
PARTNERSHIP ACQUISITIONS PRO FORMA RELP ADJUSTMENTS PRO FORMA
----------- ------------ ----------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Property rentals $ 168,321 $ 280,815 $ 449,136 $ 36,189 $ 3,471 (J) $ 488,796
Expense reimbursements 36,652 36,991 73,643 -- -- 73,643
Other income 4,158 13,389 17,547 2,921 (2,921)(P) 17,547
--------- --------- --------- --------- --------- ---------
209,131 331,195 540,326 39,110 550 579,986
--------- --------- --------- --------- --------- ---------
EXPENSES:
Operating 74,745 158,300 233,045 20,827 -- 253,872
Depreciation and amortization 22,983 43,745 66,728 5,247 (2,780)(K) 69,195
General and administrative 13,580 4,026 17,606 636 -- 18,242
Amortization of officer's deferred
compensation expense 22,917 -- 22,917 -- -- 22,917
--------- --------- --------- --------- --------- ---------
134,225 206,071 340,296 26,710 (2,780) 364,226
--------- --------- --------- --------- --------- ---------
Operating Income 74,906 125,124 200,030 12,400 3,330 215,760
Income applicable to Alexander's 7,873 -- 7,873 -- -- 7,873
Income from partially owned entities 4,658 6,674 11,332 -- (672)(L) 10,660
Interest and other investment
income 23,767 (3,830) 19,937 245 -- 20,182
Interest and debt expense (42,888) (57,967) (100,855) (6,162) (1,950)(M) (108,967)
Minority interest -- -- -- (1,370) 1,370 (N) --
--------- --------- --------- --------- --------- ---------
Net income 68,316 70,001 138,317 5,113 2,078 145,508
Preferential allocations (7,293) (9,010) (16,303) -- (844)(O) (17,147)
Preferred unit distributions (15,549) (5,137) (20,686) -- -- (20,686)
--------- --------- --------- --------- --------- ---------
Net income applicable to
Class A units $ 45,474 $ 55,854 $ 101,328 $ 5,113 $ 1,234 $ 107,675
========= ========= ========= ========= ========= =========
Net income per Class A unit - basic
(based on 55,098 units and
84,274 units) $ 0.83 $ 1.28
========= =========
Net income per Class A unit - diluted
(based on 57,217 units and
86,462 units) $ 0.79 $ 1.25
========= =========
</TABLE>
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NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(amounts in thousands, except per unit amounts)
The column headed "Historical Mendik RELP" included in the Condensed
Consolidated Pro Forma Income Statement for the quarter ended March 31, 1998 and
the year ended December 31, 1997, includes the revenues and expenses from the
Mendik RELP's Consolidated Statement of Operations for the three months ended
March 31, 1998 as filed on Mendik RELP's Form 10-Q and the Consolidated
Statement of Operations for the year ended December 31, 1997 as filed on Mendik
RELP's Form 10-K. These amounts include the 40% interest in Two Park Avenue that
is owned by the Operating Partnership and accordingly, adjustments are required
to eliminate this equity investment. Such adjustments are included in the column
headed "Pro Forma Adjustments".
The unaudited Condensed Consolidated Pro Forma Financial Statements were
prepared to give pro forma effect to the proposed acquisition of the Mendik RELP
Properties (330 West 34th Street, Saxon Woods Corporate Center and the
additional 60% interest in Two Park Avenue), the previously reported completed
acquisitions and investments or proposed 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, 150 East 58th Street, the Merchandise Mart Group
of Properties, 888 Seventh Avenue, 770 Broadway and additional interest in 570
Lexington Avenue (all included in the column headed "Previously Reported
Acquisitions")) and the financings attributable thereto, 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 partners' capital.
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.
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NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
(amounts in thousands, except per unit amounts)
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 330 West 34th Street, the Saxon
Woods Corporate Center and the additional 60% interest in Two
Park Avenue for approximately $104 million, consisting of $30
million in cash, the issuance of $35 million of Class A units
(based upon an assumed price of $37.00 per unit) and assumed
debt of $39 million on the Two Park Avenue Property.
(B) Reflects borrowings under the revolving credit facility to
fund the cash portion of the purchase price.
(C) Reflects the reclassification of the equity investment in the
original 40% interest in Two Park Avenue into its balance
sheet components.
Pro Forma March 31, 1998 Income Statement:
(D) To adjust property rentals arising from the straight-lining of
tenant leases that contain escalations over the lease term.
(E) To adjust depreciation expense for the new basis of the
acquired assets, offset by the elimination of historical
depreciation as recorded on the Mendik RELP income statement.
(F) To eliminate income accounted for under the equity method on
the original 40% interest in Two Park Avenue included in the
Operating Partnership's historical income statement.
(G) To record interest expense from borrowings on the revolving
credit facility used to finance the cash portion of the
acquisition at an assumed borrowing rate of 6.5%.
(H) To eliminate historical minority interest in the Mendik RELP.
(I) To record preferential allocations from incremental income on
the acquired properties.
(Q) To record (i) the decrease in the preferential allocation
resulting from the conversion of Class C, D and E units to
Class A units, based upon pro forma 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.
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NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
(amounts in thousands, except per unit amounts)
Pro Forma December 31, 1998 Income Statement:
(J) To adjust property rentals arising from the straight-lining of
tenant leases that contain escalations over the lease term.
(K) To adjust depreciation expense for the new basis of the
acquired assets, offset by the elimination of historical
depreciation as recorded on the Mendik RELP income statement.
(L) To eliminate income accounted for under the equity method on
the original 40% interest in Two Park Avenue included in the
Operating Partnership's historical income statement.
(M) To record interest expense from borrowings on the revolving
credit facility used to finance the cash portion of the
acquisition at an assumed borrowing rate of 6.5%.
(N) To eliminate historical minority interest in the Mendik RELP.
(O) To record preferential allocations from incremental income on
the acquired properties.
(P) To eliminate gain which would not be a part of the proposed
future operations of the properties being acquired.
The pro forma adjustments as described above reflect the use of $30,000 in cash
for the purchase of the Saxon Woods Corporate Center and 340 West 34th Street
and the issuance $35,000 of Class A units to finance the acquisition of the
additional 60% interest in Two Park Avenue. This allocation is based upon
preliminary information. At closing, if $65,000 of cash is used to finance the
entire transaction and no units are issued, pro forma net income would be
$44,355 ($.48 per diluted Class A unit) and $105,400 ($1.23 per diluted Class A
unit) for the three months ended March 31, 1998 and the year ended December 31,
1997
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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: August 12, 1998 /s/ Irwin Goldberg
-------------------------------
IRWIN GOLDBERG
Vice President,
Chief Financial Officer
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INDEX TO EXHIBITS
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<CAPTION>
EXHIBIT NO. EXHIBIT
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<S> <C>
23 Consent of KPMG Peat Marwick LLP
</TABLE>
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EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Partners
Mendik Real Estate Limited Partnership:
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 with
respect to the consolidated balance sheets of Mendik Real Estate Limited
Partnership and consolidated venture as of December 31, 1997 and 1996, and the
related consolidated statements of operations, partners' capital (deficit), and
cash flows for each of the years in the three-year period ended December 31,
1997, which report is incorporated by reference in the Form 8-K of Vornado
Realty L.P. as filed with the Securities and Exchange Commission on August 12,
1998.
KPMG Peat Marwick LLP
Boston, Massachusetts
August 12, 1998
