<PAGE> 1
Exhibit Index on Page 16
As filed with the Securities and Exchange Commission on April 9, 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) APRIL 1, 1998
Commission File Number: 000-22685
VORNADO REALTY L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3925979
(State or other jurisdiction (I.R.S. Employer
of incorporation) 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
ITEM 1. NOT APPLICABLE.
ITEM 2. On April 1, 1998, Vornado Realty Trust ("Vornado") closed
its previously announced acquisition of a real estate
portfolio from the Kennedy Family for approximately $630
million, consisting of $187 million in cash, $116 million in
Operating Partnership Units, $77 million in existing debt and
$250 million of newly issued debt. The transaction was
financed with borrowings under the Company's revolving credit
facility.
The acquired real estate assets consist of a portfolio of
properties used for office, retail and trade showroom space
which aggregate approximately 5.3 million square feet and
include the Merchandise Mart in Chicago. The transaction also
includes the acquisition of Merchandise Mart Properties, Inc.
which manages the properties and trade shows.
This transaction was arrived at through an arms-length
negotiation and was consummated through a subsidiary of
Vornado Realty L.P., a limited partnership of which Vornado
owns 92.7% and is the sole general partner.
ITEMS 3-6. 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 Combined Statements of Revenues and Certain
Operating Expenses of The Merchandise Mart Group of Properties
and
(b) the Condensed Consolidated Pro Forma Balance Sheet of Vornado
Realty L.P. as of December 31, 1997 and the Condensed
Consolidated Pro Forma Income Statement of Vornado Realty L.P.
for the year ended December 31, 1997 commencing on page 11,
prepared to give Pro Forma effect to the acquisition of The
Merchandise Mart Group of Properties and the previously
completed acquisitions and investments (Mendik Company, 90
Park Avenue, Arbor Property Trust, Americold Corporation and
URS Logistics, Inc., The Montehiedra Town Center, The Riese
Transaction, Charles E. Smith Commercial Realty L.P., The
Hotel Pennsylvania, 640 Fifth Avenue, One Penn Plaza and 150
East 58th Street). The Pro Forma data also includes
information updated through December 31, 1997 for certain
previously completed acquisitions which were disclosed in Form
8-K's previously filed with the Securities and Exchange
Commission.
<TABLE>
<CAPTION>
PAGE
REFERENCE
<S> <C>
The Merchandise Mart Group of Properties
Independent Auditors' Report ......................................................... 4
Audited Combined Statements of Revenues and Certain Operating
Expenses for the Year Ended December 31, 1997 ....................................... 5
Notes to Statements of Revenues and Certain Operating Expenses
for the Year Ended December 31, 1997 ................................................ 6
Pro Forma financial information
Condensed Consolidated Pro Forma Balance Sheet at
December 31, 1997 .................................................................. 11
Condensed Consolidated Pro Forma Income Statement
for the Year Ended December 31, 1997 ............................................... 12
Notes to Condensed Consolidated Pro Forma Financial Statements ....................... 14
</TABLE>
EXHIBIT NO. EXHIBIT
99.1 Press release dated April 2, 1998, of Vornado Realty Trust,
announcing the completion of its acquisition of The Merchandise
Mart and other properties from the Kennedy Family.
ITEM 7A. NOT APPLICABLE.
ITEM 8-9. NOT APPLICABLE.
Page 3
<PAGE> 4
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of the Partnerships and Members of the LLC's:
We have audited the accompanying combined statement of revenue and certain
operating expenses (described in Note 2) of THE MERCHANDISE MART GROUP OF
PROPERTIES ("Properties")(See Note 1) for the year ended December 31, 1997.
This financial statement is the responsibility of the Properties' management.
Our responsibility is to express an opinion on this 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 combined statement of revenue and certain expenses was prepared
for the purpose of complying with Rule 3-14 of Regulation S-X of the Securities
and Exchange Commission for inclusion in the Form 8-K of Vornado Realty Trust
and is not intended to be a complete presentation of the Properties' revenue and
certain expenses.
In our opinion, the combined financial statement referred to above presents
fairly, in all material respects, the revenue and certain operating expenses of
The Merchandise Mart Group of Properties (See Note 1) for the year ended
December 31, 1997, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 8, 1998
Page 4
<PAGE> 5
THE MERCHANDISE MART GROUP OF PROPERTIES
(SEE NOTE 1)
COMBINED STATEMENTS OF REVENUES AND
CERTAIN OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997
------------
<S> <C>
REVENUES:
Rentals, net $96,451,473
Parking revenues 1,124,720
Interest income 897,384
Other income 602,528
-----------
Total operating revenues 99,076,105
-----------
CERTAIN OPERATING EXPENSES:
Operating 14,414,929
Real estate taxes 14,186,862
Marketing 8,572,659
Utilities 7,048,119
Administrative 3,703,852
Management fees (Note 5) 2,095,183
-----------
Total certain expenses 50,021,604
-----------
REVENUE IN EXCESS OF CERTAIN
OPERATING EXPENSES $49,054,501
===========
</TABLE>
Page 5
<PAGE> 6
THE MERCHANDISE MART GROUP OF PROPERTIES
NOTES TO STATEMENTS OF REVENUE AND CERTAIN OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
1. ORGANIZATION
The accompanying statement includes the accounts of the properties known as
"The Merchandise Mart" owned by Merchandise Mart Owners, Ltd. ("MMOL"),
"The Apparel Center" owned by World Trade Center Chicago, L.L.C. ("WTCC"),
"The Washington Office Center" of which the building is owned by WDC
Associates Limited Partnerships ("WDCLP"), and the land is owned by Fourth
and D Street Partners Limited Partnership ("FDS"), and "The Washington
Design Center", of which the building is owned by Washington Design Center
Limited Liability Company ("WDCLLC") and the land is owned by FDS (80.7514%
interest) and Virginia Avenue Limited Partnership ("VALP")(19.4286%
interest)(collectively referred to as the "Properties"). All of these
properties are owned by the various interests of the Joseph P. Kennedy
family, and all of these properties were sold to Vornado Realty Trust on
April 1, 1998.
A breakdown of the occupied space of the Properties as of December 31, 1997
is as follows:
<TABLE>
<CAPTION>
PERCENT SQUARE FOOTAGE 1997
-----------------------------------
Apparel
MMOL Center WDCLP WDCLLC
---- ---- ----- ------
<S> <C> <C> <C> <C>
Office/Retail 39% 59% 100% 6%
Home furnishing 21 -- -- 82
Contract furnishings 17 -- -- 12
Gift 13 -- -- --
Apparel -- 41 -- --
Expo Center 8 -- -- --
Building products 2 -- -- --
--- --- --- ---
100% 100% 100% 100%
</TABLE>
2. BASIS OF PRESENTATION
The combined statement of revenue and certain operating expenses for the
year ended December 31, 1997 relates to the operations of the Properties.
The accompanying financial statement excludes certain expenses, such as
interest, depreciation and amortization, professional fees, revenue and
expenses related to land held for development which is not being sold to
Vornado Realty Trust, and other costs not directly related to the
operations of the Properties, in accordance with Rule 3-14 of Regulation
S-X of the Securities and Exchange Commission. Management is not aware of
any material factors relating to the Properties which would cause the
reported financial information not to be necessarily indicative of future
operating results.
Page 6
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF REPORTING -- The financial statement is presented on the
accrual basis of accounting.
b. RENTAL REVENUE -- Rentals from tenants with scheduled rent increases
and rent abatements are recognized as revenue on a straight-line basis
over the respective lease term.
c. 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 revenues and expenses during the reporting period. Actual
results could differ from those estimates.
4. HOTEL LEASE
WTCC is a party to a lease with a hotel operator whereby the operator, at
its own expense, constructed a hotel atop The Apparel Center. The lease,
which has a term of 65 years commencing January, 1977, provides for an
annual base rental of $159,600, additional rent payable based on hotel
revenue, as defined, and an allocation of certain real estate taxes,
rehabilitation and maintenance costs.
5. TRANSACTIONS WITH AFFILIATES
Merchandise Mart Properties, Inc. (Delaware)("MMPI-(Del.)"), which is owned
by certain of the owners of the Properties, owns Merchandise Mart
Properties, Inc. ("MMPI"). As a convenience, certain amounts are disbursed
or collected by one entity on behalf of another.
a. The Properties reimburse MMPI for certain payroll-related expenses
incurred on behalf of The Properties.
b. The Properties paid MMPI management fees of $1,992,255 during 1997.
Fees are calculated using various percentages of gross revenues as
adjusted for uncollectible accounts and as summarized below:
<TABLE>
<CAPTION>
APPLICABLE
TYPE OF REVENUE PERCENTAGE
--------------------------------- -------------
<S> <C>
Showroom (Chicago) 3.0%
Showroom (Washington, D.C.) 2.0%
Office, retail, exposition, hotel
parking and tenant services 1.5%
</TABLE>
Beginning in 1996, MMPI became a tenant of MMOL. MMPI is master leasing the
entire 8th floor for the development and operations of the new market suite
showrooms. The space consisted of 163,133 rentable square feet. The lease period
commenced June 1, 1996 through December 31, 2006, a term of 10 years, 7 months.
In 1997, the market suite showrooms added an additional 102,366 square feet on
the 8th and 12th floors. The area was added by lease amendment and is
coterminous with the original lease. MMPI shall pay to MMOL a monthly amount
equal to the base rent, as defined. MMPI paid MMOL $4,070,112 during 1997.
Mart Franchise Center, Inc., a subsidiary of MMPI, doing business as
Franchising and Licensing World Center ("FLWC"), Inc., is currently master
leasing 35,498
Page 7
<PAGE> 8
rentable square feet located on the 2nd floor of MMOL. The FLWC is a
permanent exhibition/sales facility for the franchising and licensing
industries as well as provides related support services. The lease period
commenced January 1, 1996, and continues through March 31, 2016, a term of
20 years, 3 months. FLWC's monthly base rent is equal to $32,000 as
required by the lease.
6. FUTURE MINIMUM RENTALS UNDER TENANT LEASES
The Properties lease showroom, office and retail space under noncancellable
operating leases with terms ranging from 1 to 15 years. Future minimum
rentals to be received as of December 31, 1997, are summarized as follows:
<TABLE>
<CAPTION>
Year ending December 31 --
<S> <C>
1998 $ 80,145,725
1999 76,239,847
2000 70,328,042
2001 62,426,073
2002 56,035,641
Future years 256,707,314
-----------
Total future minimum rentals $601,882,642
===========
</TABLE>
7. PROPERTY DAMAGE INSURANCE
Property damage insurance for The Apparel Center and The Merchandise Mart
is written on a combined, agreed amount basis. The combined, agreed amount
exceeds the replacement value of The Apparel Center. However, based on
management's evaluation, the combined replacement of The Apparel
Center and The Merchandise Mart structures and other personal property
exceeds the insured coverage.
8. SALE OF EQUIPMENT
On December 31, 1996, pursuant to the Asset Purchase Agreement, MMOL sold
and transferred to Unicom Thermal Technologies, Inc. ("UTT") certain
fixtures and equipment to be used by UTT in the production of chilled
water.
The purchase price for the fixtures and equipment was, in the aggregate,
$7,680,000. Payment of the purchase price is divided into three equal
installments of $2,560,000. The first installment was received by MMOL on
December 31, 1996. The second installment was received on December 30, 1997
and the third installment is due on December 31, 1998.
Contemporaneously with the sale of fixtures and equipment, MMOL and UTT
entered into a lease, pursuant to which MMOL will lease certain space to
UTT in The Merchandise Mart and a chilled water service agreement by which
UTT will provide The Merchandise Mart with chilled water.
Page 8
<PAGE> 9
Pursuant to the chilled water service agreement UTT agreed to meet MMOL's
cooling needs in the building up to the contract capacity on the terms and
subject to the conditions set forth within the chilled water service agreement.
MMOL is obligated to pay UTT the contract capacity charge equal to $90,735
usage charge or any other charges every month with respect to service during
the term of this agreement.
The commencement date was January 1, 1997. The term of this agreement is for
twenty (20) years subject to early termination or extension as provided for
within the agreement, as defined. The lease term is the same as specifically
provided in the chilled water service agreement. Commencing on January 1, 2002
(the rent commencement date) UTT shall pay to MMOL an annual base rent equal to
$155,000, payable in equal monthly installments. The base rent shall be adjusted
on an annual basis in accordance with the escalation provision, as defined.
UTT is obligated to pay all costs of the operation of UTT's business in the
building, including utility charges. Following the expiration or termination of
the chilled water service agreement, certain fixtures and equipment purchased
by UTT pursuant to the asset purchase agreement are required to be returned to
MMOL.
Page 9
<PAGE> 10
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, as if (i) the acquisition of The Merchandise Mart Group of Properties
("Merchandise Mart") and (ii) the previously completed acquisitions and
investments (Mendik Company, 90 Park Avenue, Arbor Property Trust, Americold
Corporation and URS Logistics, Inc., The Montehiedra Town Center, The Riese
Transaction, Charles E. Smith Commercial Realty L.P., The Hotel Pennsylvania,
640 Fifth Avenue, One Penn Plaza and 150 East 58th Street) and the financings
attributable thereto, had occurred on January 1, 1997 and (B) the condensed
consolidated pro forma balance sheet of the Operating Partnership as of December
31, 1997, as if the above acquisitions had occurred on December 31, 1997. The
Pro Forma data also includes information updated through December 31, 1997 for
certain previously completed acquisitions which were disclosed in Form 8-K's
previously filed with the Securities and Exchange Commission.
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 and the Combined Statements of Revenues and
Certain Operating Expenses of The Merchandise Mart Group of Properties included
herein. In management's opinion, all adjustments necessary to reflect these
transactions have been made.
Page 10
<PAGE> 11
CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
DECEMBER 31, 1997
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------------
PREVIOUSLY ADJUSTMENTS
OPERATING COMPLETED COMPANY FOR MERCHANDISE TOTAL
PARTNERSHIP ACQUISITIONS PRO FORMA MART ACQUISITION PRO FORMA
---------- --------- ---------- --------- ----------
ASSETS:
<S> <C> <C> <C> <C> <C>
Real estate, net $1,390,659 $ 410,000 $1,918,659 $ 600,000(A) $2,518,659
118,000
Cash and cash equivalents 417,502 (118,000) 299,502 (187,000)(A) 112,502
Investment in partially-owned
entities, including investment in
and advances to Alexander's 482,787 482,787 30,000(A) 512,787
Mortgage loans receivable 88,663 88,663 88,663
Receivable arising from straight-
lining of rents 24,127 24,127 24,127
Other assets 120,351 120,351 120,351
========== ========= ========== ========= ==========
$2,524,089 $ 410,000 $2,934,089 $ 443,000 $3,377,089
========== ========= ========== ========= ==========
LIABILITIES:
Notes and mortgages payable $ 956,654 $ 410,000 $1,366,654 $ 327,000(A) $1,693,654
Deferred leasing fee income 9,927 9,927 9,927
Officer's deferred compensation
payable 25,000 25,000 25,000
Other liabilities 40,179 40,179 40,179
---------- --------- ---------- --------- ----------
1,031,760 410,000 1,441,760 327,000 1,768,760
---------- --------- ---------- --------- ----------
PARTNERS' EQUITY 1,492,329 1,492,329 116,000(A) 1,608,329
========== ========= ========== ========= ==========
$2,524,089 $ 410,000 $2,934,089 $ 443,000 $3,377,089
========== ========= ========== ========= ==========
</TABLE>
11
<PAGE> 12
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
HISTORICAL PREVIOUSLY MERCHANDISE ADJUSTMENTS
OPERATING COMPLETED COMPANY MART FOR MERCHANDISE TOTAL
PARTNERSHIP ACQUISITIONS(1) PRO FORMA ACQUISITION MART ACQUISITION PRO FORMA
--------- --------- --------- --------- --------- ---------
REVENUES:
<S> <C> <C> <C> <C> <C> <C>
Property rentals $ 168,321 $ 145,182 $ 313,503 $ 96,451 $ 1,922(B) $ 411,876
Expense reimbursements 36,652 31,622 68,274 -- 68,274
Other income 4,158 9,538 13,696 2,625 16,321
--------- --------- --------- --------- --------- ---------
209,131 186,342 395,473 99,076 1,922 496,471
--------- --------- --------- --------- --------- ---------
EXPENSES:
Operating 74,745 88,215 162,960 50,022 (1,993)(C) 210,989
Depreciation and amortization 22,983 26,703 49,686 -- 11,392(D) 61,078
General and administrative 13,580 4,026 17,606 -- 17,606
Amortization of officer's deferred
compensation expense 22,917 -- 22,917 22,917
--------- --------- --------- --------- --------- ---------
134,225 118,944 253,169 50,022 9,399 312,590
--------- --------- --------- --------- --------- ---------
Operating income (loss) 74,906 67,398 142,304 49,054 (7,477) 183,881
Income applicable to Alexander's 7,873 7,873 7,873
Income from partially owned entities 4,658 8,468 13,126 13,126
Interest and other investment
income 23,767 (1,688) 22,079 22,079
Interest and debt expense (42,888) (33,114) (76,002) (36,398)(E) (112,400)
--------- --------- --------- --------- --------- ---------
Net income (loss) 68,316 41,064 109,380 49,054 (43,875) 114,559
Preferred unit distributions (15,549) (5,137) (20,686) (20,686)
Preferred allocations (7,293) (3,077) (10,370) (4,048)(F) (14,418)
--------- --------- --------- --------- --------- ---------
Net income (loss) applicable to
common units $ 45,474 $ 32,850 $ 78,324 $ 49,054 $ (47,923) $ 79,455
========= ========= ========= ========= ========= =========
Net income per common unit - basic
(based upon 55,098 units and
82,480 units) $ 0.83 $ .96
========= =========
Net income per common unit - diluted
(based upon 57,217 units and
84,599 units) $ 0.79 $ .94
========= =========
</TABLE>
12
<PAGE> 13
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
HISTORICAL PREVIOUSLY MERCHANDISE ADJUSTMENTS
OPERATING COMPLETED COMPANY MART FOR MERCHANDISE TOTAL
PARTNERSHIP ACQUISITIONS(1) PRO FORMA ACQUISITION MART ACQUISITION PRO FORMA
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Funds from Operations (2):
Net income (loss) applicable to
common units $ 45,474 $ 32,850 $ 78,324 $ 49,054 $ (47,923) $ 79,455
Depreciation and amortization
of real property 22,413 24,602 47,015 -- 11,867 58,882
Straight-lining of property rent
escalations (3,359) (7,134) (10,493) (3,807) (1,922) (16,222)
Leasing fees received in excess
of income recognized 1,733 -- 1,733 -- -- 1,733
Proportionate share of adjustments
to income from equity
investments to arrive at FFO 6,358 30,964 37,322 -- -- 37,322
Non-recurring lease cancellation
income and write-off of related
costs -- (11,581) (11,581) -- -- (11,581)
=========== =========== =========== =========== =========== ===========
$ 72,619 $ 69,701 $ 142,320 $ 45,247 $ (37,978) $ 149,589
=========== =========== =========== =========== =========== ===========
CASH FLOW PROVIDED BY (USED IN):
Operating activities $ 110,754 $ 58,328 $ 169,082 $ 45,247 $ (37,978) $ 176,351
Investing activities $(1,064,484) $ (285,384) $(1,349,868) $ -- $(1,217,000) $(2,566,868)
Financing activities $ 1,219,988 $ 283,384 $ 1,503,372 $ -- $ 1,125,000 $ 2,628,372
</TABLE>
- -----------
(1) Certain revenue and expense items have been reclassified to conform to
the Operating Partnership's presentation.
(2) Funds from operations does not represent cash generated from operating
activities in accordance with generally accepted accounting principles
and is not necessarily indicative of cash available to fund cash needs
which is disclosed in the Consolidated Statements of Cash Flows for the
applicable periods. There are no material legal or functional
restrictions on the use of funds from operations. Funds from operations
should not be considered as an alternative to net income as an
indicator of the Operating Partnership's operating performance or as an
alternative to cash flows as a measure of liquidity. Management
considers funds from operations a supplemental measure of operating
performance and along with cash flow from operating activities,
financing activities, and investing activities, it provides investors
with an indication of the ability of the Operating Partnership to incur
and service debt, to make capital expenditures and to fund other cash
needs. Funds from operations may not be comparable to similarly titled
measures employed by other REITs since a number of REITs, including the
Operating Partnership's, method of calculating funds from operations is
different from that used by NAREIT. Funds from operations, as defined
by NAREIT, represents net income applicable to common shares before
depreciation and amortization, extraordinary items and gains or losses
on sales of real estate. Funds from operations as disclosed above has
been modified to adjust for the effect of straight-lining of property
rentals for rent escalations and leasing fee income.
13
<PAGE> 14
NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
Basis of Pro Forma:
The unaudited Condensed Consolidated Pro Forma Financial Statements were
prepared to give Pro Forma effect to the acquisition of The Merchandise Mart
Group of Properties ("Merchandise Mart") and the previously completed
acquisitions and investments (Mendik Company, 90 Park Avenue, Arbor Property
Trust, Americold Corporation and URS Logistics, Inc., The Montehiedra Town
Center, The Riese Transaction, Charles E. Smith Commercial Realty L.P., The
Hotel Pennsylvania, 640 Fifth Avenue, One Penn Plaza and 150 East 58th Street)
are included in "Historical Vornado" from their respective dates of acquisition.
The column headed "Previously Completed Acquisitions" includes the results of
operations of those entities for the period of time during 1997 prior to their
acquisition. The Pro Forma data also includes information updated through
December 31, 1997 for certain previously completed acquisitions which were
disclosed in Form 8-K's previously filed with the Securities and Exchange
Commission.
Acquisitions were consummated through subsidiaries or preferred stock
affiliates of the Operating Partnership 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
Merchandise Mart acquisition:
Pro Forma December 31, 1997 Balance Sheet:
(A) Reflects the acquisition of a real estate portfolio from the Kennedy
Family for approximately $630 million (including $30 million for the
acquisition of Merchandise Mart Properties, Inc. which manages the
properties and trade shows), consisting of $187 million in cash, $116
million in Operating Partnership Units, $77 million in existing debt
and $250 million of newly issued debt.
Pro Forma December 31, 1997 Income Statement:
(B) To adjust rentals for the year ended December 31, 1997 arising from
the straight-lining of tenant leases that contain escalations over
the lease term.
(C) To record equity in Management Company equal to management fees
charged to properties.
(D) Adjustment to depreciation expense for the year ended December 31,
1997 for the acquisition of The Merchandise Mart Group of Properties.
(E) To reflect (i) interest for newly issued debt of approximately
$250,000 at LIBOR plus 1.35% (6.85% at January 1, 1997), (ii)
historical interest for existing debt of approximately $77,000 and
(iii) interest on the revolving credit facility at LIBOR plus .83%
(6.8% at December 31, 1997).
(F) To reflect preferred dividend at a blended rate of 6.0% on $67,467 of
preferred units.
Page 14
<PAGE> 15
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: April 9, 1998 /s/ Irwin Goldberg
--------------------------
IRWIN GOLDBERG
Vice President,
Chief Financial Officer
Page 15
<PAGE> 16
INDEX TO EXHIBITS
PAGE
EXHIBIT NO. EXHIBIT REFERENCE
99.1 Press release dated April 2, 1998, of Vornado Realty Trust,
announcing the completion of its acquisition of The
Merchandise Mart and other properties from the Kennedy
Family ....................................................... 17
Page 16
<PAGE> 1
EXHIBIT 99.1
CONTACT: JOSEPH MACNOW
(201) 587-1000
Park 80 West, Plaza II
Saddle Brook, NJ 07663
FOR IMMEDIATE RELEASE - APRIL 2, 1998
VORNADO REALTY TRUST COMPLETES THE ACQUISITION OF
THE MERCHANDISE MART AND OTHER PROPERTIES
FROM THE KENNEDY FAMILY
SADDLE BROOK, NEW JERSEY.....VORNADO REALTY TRUST (NYSE:VNO) today
announced that it has closed its previously announced acquisition of a real
estate portfolio from the Kennedy Family for approximately $630 million,
consisting of $187 million in cash, $116 million in Operating Partnership Units,
$77 million in existing debt and $250 million of newly issued debt.
The acquired real estate assets consist of a portfolio of properties
used for office, retail and trade showroom space which aggregate approximately
5.3 million square feet and include the famed Merchandise Mart in Chicago. The
transaction also includes the acquisition of Merchandise Mart Properties, Inc.
which manages the properties and trade shows.
Vornado is a fully-integrated equity real estate investment trust.
Certain statements contained herein may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, risks associated
with the timing of and costs associated with property improvements, financing
commitments and general competitive factors.
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