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As filed with the Securities and Exchange Commission on September 28, 1998
Exhibit Index on Page 7
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): January 29, 1998
Commission File Number: 1-11954
VORNADO REALTY TRUST
(Exact name of registrant as specified in its charter)
MARYLAND 22-1657560
(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. OTHER EVENTS.
PROPOSED SPIN-OFF OF VORNADO OPERATING COMPANY
Vornado Operating Company, a Delaware corporation and a wholly
owned subsidiary of Vornado ("Vornado Operating"), was incorporated on October
30, 1997 and has had no operations to date. Vornado Operating has been formed to
own assets that Vornado could not itself own and conduct activities that Vornado
could not itself conduct. Vornado Operating is intended to function principally
as an operating company, in contrast to Vornado's principal focus on investment
in real estate assets. Vornado Operating will be able to do so because it will
be taxable as a regular corporation rather than a REIT for taxable years after
1998.
Vornado has capitalized Vornado Operating with an equity
contribution of $25 million of cash. In addition, Vornado Realty L.P. (the
"Operating Partnership"), as lender, and Vornado Operating, as borrower, intend
to enter into a $75 million unsecured five-year revolving credit agreement
subsequent to the Distribution referred to below. Vornado Operating has not yet
identified specific operating assets or operations that it will acquire. Unless
Vornado waives Vornado Operating's obligation under the Intercompany Agreement
referred to below to seek to qualify as a REIT for federal income purposes for
its taxable year ending December 31, 1998, Vornado Operating does not expect to
lease or purchase operating assets until after December 31, 1998. In the
interim, Vornado Operating expects to invest its available funds primarily in
government securities and equity securities of publicly traded REITs.
THE DISTRIBUTION. On October 16, 1998 (the "Distribution
Date"), the Operating Partnership expects to make a distribution (the
"Distribution") of one share of common stock, par value $.01 per share (the
"Common Stock"), of Vornado Operating for every 20 Class A, Class C or Class D
Units of limited partnership interest ("Units") held of record as of the close
of business on October 9, 1998 (the "Record Date"), and Vornado expects in turn
to make a distribution of one share of Common Stock for every 20 common shares
of beneficial interest of Vornado, par value $.04 per share ("Vornado Common
Shares"), held of record as of the close of business on the Record Date. No
holder of Vornado Common Shares or Units will be required to make any payment,
exchange any Vornado Common Shares or Units or take any other action in order to
receive Common Stock in the Distribution. No Common Stock will be distributed in
respect of Vornado's $3.25 Series A Convertible Preferred Shares, no par value,
liquidation preference $50.00 per share (the "Vornado Convertible Preferred
Shares"). Although not required, Vornado will adjust the Conversion Price of the
Vornado Convertible Preferred Shares to take account of the Distribution in
accordance with the anti-dilution provision in the Articles Supplementary
setting forth the terms of the Vornado Convertible Preferred Shares. A
prospectus relating to the Common Stock may be obtained from Vornado, Park 80
West, Plaza II, Saddle Brook, New Jersey 07663; attention: Secretary.
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A registration statement relating to these securities has been
filed with the Securities and Exchange Commission but has not yet become
effective. These securities may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective. This report
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration and qualification
under the securities laws of any such state.
THE INTERCOMPANY AGREEMENT. Vornado Operating and Vornado
intend to enter into an Intercompany Agreement (the "Intercompany Agreement"),
promptly after the Distribution, pursuant to which, among other things, (a)
Vornado will agree under certain circumstances to offer Vornado Operating an
opportunity to become the lessee of certain real property owned now or in the
future by Vornado (under mutually satisfactory lease terms) and (b) Vornado
Operating will agree not to make any real estate investment or other
REIT-Qualified Investment unless it first offers Vornado the opportunity to make
such investment and Vornado has rejected that opportunity.
More specifically, the Intercompany Agreement will require,
subject to certain terms, that Vornado provide Vornado Operating with an
opportunity (a "Tenant Opportunity") to become the lessee of any real property
owned now or in the future by Vornado if Vornado determines in its sole
discretion that, consistent with Vornado's status as a REIT, it is required to
enter into a "master" lease arrangement with respect to such property and that
Vornado Operating is qualified to act as lessee thereof. In general, a master
lease arrangement is an arrangement pursuant to which an entire property or
project (or a group of related properties or projects) are leased to a single
lessee. Under the Intercompany Agreement, Vornado Operating and Vornado will
negotiate with each other on an exclusive basis for 30 days regarding the terms
and conditions of the lease in respect of each Tenant Opportunity. If a mutually
satisfactory agreement cannot be reached within the 30-day period, Vornado may
for a period of one year thereafter enter into a binding agreement with respect
to such Tenant Opportunity with any third party on terms no more favorable to
the third party than the terms last offered to Vornado Operating. If Vornado
does not enter into a binding agreement with respect to such Tenant Opportunity
within such one-year period, Vornado must again offer the Tenant Opportunity to
Vornado Operating in accordance with the procedures specified above prior to
offering such Tenant Opportunity to any other party.
In addition, the Intercompany Agreement will prohibit Vornado
Operating from making (i) any investment in real estate (including the provision
of services related to real estate, real estate mortgages, real estate
derivatives or entities that invest in the foregoing) or (ii) any other
REIT-Qualified Investment, unless it has provided written notice to Vornado of
the material terms and conditions of the investment opportunity and Vornado has
determined not to pursue such investment either by providing written notice to
Vornado Operating rejecting the opportunity within 10 days from the date of
receipt of notice of the opportunity or by allowing such 10-day period to lapse.
As used herein, "REIT-Qualified Investment" means an investment, at least 95% of
the gross income from which would qualify under the 95% gross income test set
forth in section 856(c)(2) of the Code (or could be structured to so qualify)
and the ownership of which would not cause Vornado
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to violate the asset limitations set forth in Section 856(c)(4) of the Code (or
could be structured not to cause Vornado to violate the section 856(c)(4)
limitations); provided, however, that "REIT-Qualified Investment" does not
include an investment in government securities, cash or cash items (as defined
for purposes of section 856(c)(4) of the Code), money market funds, certificates
of deposit, commercial paper having a maturity of not more than 90 days,
bankers' acceptance or the property transferred to Vornado Operating by Vornado.
The Intercompany Agreement will also require Vornado Operating to assist Vornado
in structuring and consummating any such investment which Vornado elects to
pursue, on terms determined by Vornado. In addition, Vornado Operating will
agree to notify Vornado of, and make available to, Vornado investment
opportunities developed by Vornado Operating or of which Vornado Operating
becomes aware but is unable or unwilling to pursue.
Under the Intercompany Agreement, Vornado will agree to
provide Vornado Operating with certain administrative, corporate, accounting,
financial, insurance, legal, tax, data processing, human resources and
operational services. For these services, Vornado Operating will compensate
Vornado in an amount determined in good faith by Vornado as the amount an
unaffiliated third party would charge Vornado Operating for comparable services
and will reimburse Vornado for certain costs incurred and paid to third parties
on behalf of Vornado Operating.
Under the Intercompany Agreement, Vornado Operating will agree
that it will seek to qualify as a REIT for its taxable year ending December 31,
1998. Vornado Operating's qualification as a REIT for its taxable year ending
December 31, 1998 may be necessary to ensure that Vornado's status as a REIT
will not be adversely affected by the Distribution. If Vornado concludes in its
sole discretion that such qualification is not necessary, Vornado may waive such
obligation.
Vornado and Vornado Operating will each have the right to
terminate the Intercompany Agreement if the other party is in material default
of the Intercompany Agreement or upon 90 days written notice to the other party
at any time after December 31, 2003. In addition, Vornado will have the right to
terminate the Intercompany Agreement upon a change in control of Vornado
Operating.
THE COLD STORAGE COMPANIES. On October 31, 1997, partnerships
(the "Vornado/Crescent Partnerships") in which affiliates of Vornado have a 60%
interest and affiliates of Crescent Real Estate Equities Company ("Crescent")
have a 40% interest acquired each of Americold Corporation ("Americold") and URS
Logistics, Inc. ("URS," and together with Americold, the "Cold Storage
Companies"). Vornado's investments in the Vornado/Crescent Partnerships are
currently held by corporations in which Vornado owns all of the non-voting stock
and none of the voting equity ("preferred stock affiliates"). Ownership of the
non-voting stock entitles Vornado to substantially all of the economic benefits
in the preferred stock affiliates. The voting stock of the preferred stock
affiliates is owned by officers and/or trustees of Vornado. Accordingly, Vornado
is not able to elect the boards of directors of the preferred stock affiliates,
and does not have the authority to control the management and operations of such
affiliates.
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Vornado is currently considering a number of alternatives in
respect of its investments in the Cold Storage Companies, and has not yet
finalized its plans in respect of such investments. One such alternative
involves Vornado offering Vornado Operating the opportunity to negotiate to
become lessee and operator of some or all of the real estate assets and to
purchase some or all of the non-real estate assets of the Cold Storage
Companies. However, significant tax and structuring considerations must be
resolved before Vornado finalizes its plans in respect of the Cold Storage
Companies, including determining whether to provide Vornado Operating with such
an opportunity. These tax and structuring considerations include, among others,
whether the Internal Revenue Service will issue a favorable private letter
ruling in respect of certain issues that have been submitted to the Internal
Revenue Service; identifying the nature and value of individual assets currently
owned by the Cold Storage Companies; division of the assets that will be owned
by the Vornado/Crescent Partnerships and any assets that such partnerships may
wish to sell; and obtaining the necessary consent from Crescent for certain
transactions involving the Cold Storage Companies. In addition, because Vornado
holds its investments in the Vornado/Crescent Partnerships through preferred
stock affiliates, Vornado does not have the authority to control when or if
Vornado Operating is offered an opportunity to become a lessee and operator of
some or all of the real estate assets and to purchase some or all of the
non-real estate assets of the Cold Storage Companies. Moreover, unless Vornado
waives Vornado Operating's obligation under the Intercompany Agreement to seek
to qualify as a REIT for federal income purposes for its taxable year ending
December 31, 1998, Vornado Operating does not expect to lease or purchase
operating assets until after December 31, 1998. Accordingly, no assurance can be
given that Vornado will provide Vornado Operating with such an opportunity or
that Vornado and Vornado Operating will be able to agree on the terms and
conditions of any lease or purchase of assets.
ITEMS 6 - 9. NOT APPLICABLE.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VORNADO REALTY TRUST
(Registrant)
By: /s/ Irwin Goldberg
-------------------------------------
Name: Irwin Goldberg
Title: Vice President,
Chief Financial Officer
Date: September 28, 1998
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Index to Exhibits
Exhibit No. Description
99.1 Form of Intercompany Agreement between
Vornado Realty L.P. and Vornado Operating,
Inc. (incorporated by reference to Exhibit
10.1 of Amendment No. 1 to Vornado
Operating, Inc.'s Registration Statement on
Form S-11 (File No. 333-40701), filed on
January 23, 1998)
99.2 Form of Revolving Credit Agreement between
Vornado Realty L.P. and Vornado Operating,
Inc., together with related form of line of
Credit Note (incorporated by reference to
Exhibit 10.2 of Amendment No. 1 to Vornado
Operating, Inc.'s Registration Statement on
Form S-11 (File No. 333-40701), filed on
January 23, 1998)
99.3 Press Release of Vornado Realty Trust, dated
September 18, 1998
99.4 Notice to the holders of Vornado Convertible
Preferred Shares, dated September 18, 1998
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Exhibit 99.3
CONTACT: JOSEPH MACNOW [VORNADO REALTY TRUST LOGO]
(201) 587-1000
FOR IMMEDIATE RELEASE -- SEPTEMBER 18, 1998
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VORNADO REALTY TRUST ANNOUNCES THE SPIN-OFF
OF ITS "PAPER CLIP"
SADDLE BROOK, NEW JERSEY...VORNADO REALTY TRUST (NYSE:VNO) today announced
that its Board of Trustees has set a record date of October 9, 1998 and a
distribution date of October 16, 1998 for the previously announced distribution
of all the common stock of Vornado Operating Company, to holders on the record
date of Vornado Realty Trust's common shares and Operating Partnership Units.
A registration statement relating to the common stock has been filed with
the Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This press release shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration and qualification
under the securities laws of any such state. A prospectus relating to the common
stock may be obtained from Vornado, Park 80 West, Plaza II, Saddle Brook, New
Jersey 07663; attention: Robert Friedberg.
Vornado Realty Trust is a fully-integrated equity real estate investment
trust.
Certain statements contained herein may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, risks associated
with the timing of the costs associated with property improvements, financing
commitments and general comparative factors.
# # # #
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Exhibit 99.4
NOTICE
To the holders of Vornado Convertible Preferred Shares:
As previously announced, on October 16, 1998, Vornado Realty Trust, a
Maryland real estate investment trust ("Vornado"), expects to make a
distribution (the "Distribution") to its shareholders of one share of common
stock, par value $.01 per share (the "Common Stock"), of Vornado Operating
Company, a Delaware corporation, for every 20 common shares of beneficial
interest of Vornado, par value $.04 per share, held of record as of the close of
business on October 9, 1998 (the "Record Date").
No Common Stock will be distributed in respect of Vornado's $3.25 Series A
Convertible Preferred Shares of Beneficial Interest, no par value, liquidation
preference $50.00 per share (the "Vornado Convertible Preferred Shares").
Although not required, Vornado will adjust the Conversion Price of the Vornado
Convertible Preferred Shares to take account of the Distribution in accordance
with the anti-dilution provisions in the Articles Supplementary setting forth
the terms of the Vornado Convertible Preferred Shares. Vornado will, promptly
after the Record Date, calculate the adjustment to the Conversion Price and send
you a notice specifying that adjustments.
A prospectus relating to the Common Stock may be obtained from Vornado,
Park 80 West, Plaza II, Saddle Brook, New Jersey 07663; attention: Robert
Friedberg.
A registration statement relating to the Common Stock has been filed with
the Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This notice shall not constitute
an offer to sell or the solicitation of an offer to buy nor shall there be any
sale of these securities in any state in which such offer, solicitation or sale
would be unlawful prior to registration and qualification under the securities
laws of any such state.
Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
September 18, 1998
