<PAGE> 1
Exhibit Index on Page 18
As filed with the Securities and Exchange Commission on February 24, 1999
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) AUGUST 12, 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)
Page 1
<PAGE> 2
This Form 8-K/A amends Item 7 of Vornado Realty Trust's current report on Form
8-K, dated August 12, 1998, as previously filed with the Securities and
Exchange Commission on February 12, 1999 (the "Prior 8-K"), to replace the
Condensed Consolidated Pro Forma Financial Statements in Item 7.
ITEM 1. NOT APPLICABLE
ITEM 2. See Item 2 of the Prior 8-K.
ITEMS 3-6. NOT APPLICABLE
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
There are filed herewith the Condensed Consolidated Pro Forma
Balance Sheet of Vornado Realty Trust ("Vornado") as of September
30, 1998 and the Condensed Consolidated Pro Forma Income Statement
of Vornado for the nine months ended September 30, 1998 and the
year ended December 31, 1997 commencing on page 5, prepared to
give pro forma effect to the completed acquisitions of 689 Fifth
Avenue, the Mendik RELP Properties, the Market Square Complex, 888
Seventh Avenue, 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 completed
acquisitions of 770 Broadway and the additional interest in 570
Lexington Avenue and those previously reported acquisitions
(Mendik Company, Arbor Property Trust, 90 Park Avenue, 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. These Condensed Consolidated Pro Forma
Financial Statements replace the Condensed Consolidated Pro Forma
Financial Statements that were filed with the Prior 8-K.
Page 2
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
REFERENCE
---------
<S> <C>
Pro Forma financial information:
Condensed Consolidated Pro Forma Balance Sheet at
September 30, 1998........................................................................ 5
Condensed Consolidated Pro Forma Unaudited Income
Statement for the Nine Months Ended September 30
1998...................................................................................... 6
Condensed Combining Pro Forma Unaudited Income
Statement for the Periods in 1998 Prior to Acquisition.................................... 8
Condensed Combining Pro Forma Unaudited Income
Statement for Previously Reported Acquisitions for the
Periods in 1998 Prior to Acquisition...................................................... 9
Condensed Consolidated Pro Forma Unaudited Income
Statement for the Year Ended December 31, 1997............................................ 10
Condensed Combining Pro Forma Income Statement
for the Year Ended December 31, 1997...................................................... 12
Condensed Combining Pro Forma Unaudited Income
Statement for Previously Reported Acquisitions for the
Year Ended December 31, 1997 or the Periods in 1997
Prior to Acquisition...................................................................... 13
Notes to Condensed Consolidated Pro Forma Financial
Statements................................................................................ 14
</TABLE>
EXHIBIT NO. EXHIBIT
- ----------- -------
10.1 Item 1 of Form 10-Q of Mendik Real Estate Limited Partnership for
the nine months ended September 30, 1998 (incorporated by
reference to exhibit 10.1 to the Prior 8-K).
23.1 Consent of Friedman Alpren & Green LLP (incorporated by reference
to Exhibit 23.1 to the Prior 8-K).
23.2 Consent of Sharrard, McGee & Co., P.A.(incorporated by reference
to Exhibit 23.2 to the Prior 8-K).
23.3 Consent of KPMG Peat Marwick LLP (incorporated by reference to
Exhibit 23.3 to the Prior 8-K).
23.4 Consent of Deloitte & Touche LLP (incorporated by reference to
Exhibit 23.4 to the Prior 8-K0.
ITEM 8. NOT APPLICABLE.
Page 5
<PAGE> 4
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 Trust ("Vornado") for the year ended December 31, 1997 and for
the nine months ended September 30, 1998, as if the following had occurred on
January 1, 1997 (i) the completed acquisitions of 689 Fifth Avenue, the Mendik
RELP Properties, the Market Square Complex and 888 Seventh Avenue 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 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 Vornado as of September 30, 1998, as if all of the above
acquisitions had occurred on September 30, 1998.
The unaudited condensed consolidated pro forma financial information is
not necessarily indicative of what Vornado'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 Vornado'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 Vornado's Annual Report on Form 10-K for the year
ended December 31, 1997, the Consolidated Financial Statements and notes thereto
included in Vornado's Quarterly Report on Form 10-Q for the quarter ended
September 30, 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 September 30, 1998.
In management's opinion, all adjustments necessary to reflect these transactions
have been made.
Page 4
<PAGE> 5
CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA TOTAL
VORNADO ADJUSTMENTS PRO FORMA
------------- ------------- ------------
<S> <C> <C> <C>
ASSETS:
Real estate, net $ 2,803,795 $ 106,000 (A) $ 3,150,085
94,500 (B)
45,790 (C)
100,000 (D)
Cash and cash equivalents 269,952 (31,000)(A) 263,552
(6,400)(B)
(45,000)(D)
31,000 (E)
45,000 (E)
Investment in partially-owned
entities, including investment in
and advances to Alexander's 840,986 (19,790)(C) 821,196
Mortgage loans receivable 10,625 10,625
Receivable arising from straight-
lining of rents 41,847 41,847
Other assets 160,515 160,515
------------- ---------- ------------
$ 4,127,720 $ 320,100 $ 4,447,820
============= ========== ============
LIABILITIES:
Notes and mortgages payable $ 1,234,314 $ 46,000 (A) $ 1,405,914
44,600 (B)
26,000 (C)
55,000 (D)
Revolving credit facility 683,250 31,000 (E) 759,250
45,000 (E)
Deferred leasing fee income 9,868 9,868
Officer's deferred compensation
payable 34,664 34,664
Other liabilities 78,948 78,948
------------- ---------- ------------
2,041,044 247,600 2,288,644
------------- ---------- ------------
Minority interest of unitholders in the
Operating Partnership 302,549 43,500 (B) 346,049
------------- ---------- ------------
EQUITY:
Total equity 1,784,127 29,000 (A) 1,813,127
------------- ---------- ------------
$ 4,127,720 $ 320,100 $ 4,447,820
============= ========== ============
</TABLE>
Page 5
<PAGE> 6
CONDENSED CONSOLIDATED PRO FORMA UNAUDITED INCOME STATEMENT FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL-
PREVIOUSLY CURRENT
HISTORICAL REPORTED COMPANY ACQUISITIONS PRO FORMA TOTAL
VORNADO ACQUISITIONS PRO FORMA COMBINED ADJUSTMENTS PRO FORMA
--------- ------------ ---------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Property rentals $ 299,924 $ 40,628 $ 340,552 $ 58,080 $ 5,969 (F) $ 403,184
-- -- -- -- (1,417) (G)
Expense reimbursements 53,000 1,955 54,955 2,570 3 57,528
Other income 6,482 1,481 7,963 872 2 8,837
--------- --------- ---------- --------- --------- ----------
359,406 44,064 403,470 61,522 4,557 469,549
--------- --------- ---------- --------- --------- ----------
EXPENSES:
Operating 144,214 19,582 163,796 32,005 (1,216) (G) 194,585
Depreciation and amortization 41,605 6,049 47,654 1,159 3,848 (H) 52,661
General and administrative 18,792 -- 18,792 506 21 19,319
--------- --------- ---------- --------- --------- ----------
204,611 25,631 230,242 33,670 2,653 266,565
--------- --------- ---------- --------- --------- ----------
Operating income 154,795 18,433 173,228 27,852 1,904 202,984
Income applicable to Alexander's 806 -- 806 -- -- 806
Income from partially owned entities 20,871 (519) 20,352 -- (1,118) (I) 19,234
Interest and other investment
income 18,067 (786) 17,281 246 -- 17,527
Interest and debt expense (80,536) (12,070) (92,606) (6,888) (10,278) (J) (109,772)
Net gain from insurance settlement
and condemnation proceedings 9,649 -- 9,649 -- -- 9,649
Minority interest of unitholders in
the Operating Partnership (10,767) (1,379) (12,146) (2,714) 2,714 (K)
(2,571)(L) (14,717)
--------- --------- ---------- --------- --------- ----------
Net income 112,885 3,679 116,564 18,496 (9,349) 125,711
Preferred stock dividends (16,268) -- (16,268) -- -- (16,268)
--------- --------- ---------- --------- --------- ----------
Net income applicable to
common shares $ 96,617 $ 3,679 $100,296 $ 18,496 $ (9,349) $ 109,443
========= ========= ========== ========= ========= ==========
Net income per common share - basic
(based on 79,407 shares and
85,064 shares) $ 1.22 $ 1.29
========= ==========
Net income per common share - diluted
(based on 81,482 shares and
87,139 shares) $ 1.19 $ 1.26
========= ==========
</TABLE>
Page 6
<PAGE> 7
CONDENSED CONSOLIDATED PRO FORMA UNAUDITED INCOME STATEMENT FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL-
PREVIOUSLY CURRENT
HISTORICAL REPORTED COMPANY ACQUISITIONS PRO FORMA TOTAL
VORNADO ACQUISITIONS PRO FORMA COMBINED ADJUSTMENTS PRO FORMA
----------- ------------ --------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Funds from Operations (1):
Net income applicable to
common shares $ 96,617 $ 3,679 $ 100,296 $ 18,496 $ (9,349) $ 109,443
Depreciation and amortization
of real property 41,002 6,049 47,051 1,159 3,848 52,058
Straight-lining of property rent --
escalations (10,218) (551) (10,769) (435) (2,221) (13,425)
Leasing fees received in excess
of income recognized 1,047 -- 1,047 -- -- 1,047
Proportionate share of adjustments
to equity in net income of partially
owned entities to arrive at
funds from operations 41,691 320 42,011 -- (1,318) 40,693
Net gain from insurance settlement
and condemnation proceeding (9,649) -- (9,649) -- -- (9,649)
Minority interest in
excess of preferential
distributions (2,701) (134) (2,835) -- (1,578) (4,413)
----------- ----------- --------- -------- --------- ------------
$ 157,789 $ 9,363 $ 167,152 $ 19,220 $ (10,618) $ 175,754
=========== =========== ========= ======== ========= ============
CASH FLOW PROVIDED BY (USED IN):
Operating activities $ 99,885 $ 118,862
Investing activities $(1,184,759) $(1,267,159)
Financing activities $ 869,773 $ 945,773
</TABLE>
- -----------
(1) 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
Company'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 Company 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 Company'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.
Page 7
<PAGE> 8
CONDENSED COMBINING PRO FORMA UNAUDITED INCOME STATEMENT
FOR THE PERIODS IN 1998 PRIOR TO ACQUISITION
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 NINE MONTHS ENDED SEPTEMBER 30, 1998
---------------- ------------------------------------------ HISTORICAL-
MENDIK MARKET CURRENT
689 FIFTH RELP SQUARE 888 SEVENTH ACQUISITIONS
AVENUE (1) PROPERTIES COMPLEX AVENUE COMBINED
---------- ---------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Property rentals $ 1,650 $ 28,444 $ 10,737 $17,249 $ 58,080
Expense reimbursements 11 -- -- 2,559 2,570
Other income 7 -- -- 865 872
------- -------- -------- ------- --------
1,668 28,444 10,737 20,673 61,522
------- -------- -------- ------- --------
EXPENSES:
Operating 888 15,391 4,935 10,791 32,005
Depreciation and amortization -- 148 1,011 -- 1,159
General and administrative 83 423 -- -- 506
------- -------- -------- ------- --------
971 15,962 5,946 10,791 33,670
------- -------- -------- ------- --------
Operating income 697 12,482 4,791 9,882 27,852
Equity in net income of investees -- -- -- -- --
Interest and dividend income -- 246 -- -- 246
Interest and debt expense -- (4,157) (2,731) -- (6,888)
Minority interest -- (2,714) -- -- (2,714)
------- -------- -------- ------- --------
Net income $ 697 $ 5,857 $ 2,060 $ 9,882 $ 18,496
======= ======== ======== ======= ========
</TABLE>
(1) Certain revenue and expense items have been reclassified to conform to
Vornado's presentation.
Page 8
<PAGE> 9
CONDENSED COMBINING PRO FORMA UNAUDITED INCOME STATEMENT
FOR PREVIOUSLY REPORTED ACQUISITIONS
FOR THE PERIODS IN 1998 PRIOR TO ACQUISITION
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
MERCHANDISE PREVIOUSLY
ONE PENN 150 EAST MART GROUP 770 PRO FORMA REPORTED
PLAZA 58TH STREET OF PROPERTIES BROADWAY ADJUSTMENTS ACQUISITIONS
-------- ----------- ------------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Property rentals $4,034 $ 2,896 $ 25,729 $ 7,418 $ 551 $ 40,628
Expense reimbursements 430 427 -- 1,098 -- 1,955
Other income 661 114 580 126 -- 1,481
------ ------- -------- ------- -------- --------
5,125 3,437 26,309 8,642 551 44,064
------ ------- -------- ------- -------- --------
EXPENSES:
Operating 3,126 1,692 12,957 2,804 (997) 19,582
Depreciation and amortization -- -- -- -- 6,049 6,049
General and administrative -- -- -- -- -- --
------ ------- -------- ------- -------- --------
3,126 1,692 12,957 2,804 5,052 25,631
------ ------- -------- ------- -------- --------
Operating income 1,999 1,745 13,352 5,838 (4,501) 18,433
Equity in net income of investees -- -- -- -- (519) (519)
Interest and dividend income -- -- -- -- (786) (786)
Interest and debt expense -- -- -- -- (12,070) (12,070)
Minority interest -- -- (1,012) (367) -- (1,379)
------ ------- -------- ------- -------- --------
Net income $1,999 $ 1,745 $ 12,340 $ 5,471 $(17,876) $ 3,679
====== ======= ======== ======= ======== ========
</TABLE>
Page 9
<PAGE> 10
CONDENSED CONSOLIDATED PRO FORMA UNAUDITED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL-
PREVIOUSLY CURRENT
HISTORICAL REPORTED COMPANY ACQUISITIONS PRO FORMA TOTAL
VORNADO ACQUISITIONS PRO FORMA COMBINED ADJUSTMENTS PRO FORMA
---------- ------------ --------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Property rentals $ 168,321 $ 244,202 $ 412,523 $ 72,777 $ 9,432 (M) $ 492,261
-- -- -- -- (2,471)(N)
Expense reimbursements 36,652 33,552 70,204 3,522 -- 73,726
Other income 4,158 11,175 15,333 4,199 (2,921)(O) 16,611
--------- --------- --------- -------- --------- ---------
209,131 288,929 498,060 80,498 4,040 582,598
--------- --------- --------- -------- --------- ---------
EXPENSES:
Operating 74,745 137,769 212,514 44,567 (1,884)(N) 255,197
Depreciation and amortization 22,983 36,469 59,452 6,640 139 (P) 66,231
General and administrative 13,580 4,668 18,248 735 -- 18,983
Amortization of officer's deferred
compensation expense 22,917 (22,917) -- -- -- --
--------- --------- --------- -------- --------- ---------
134,225 155,989 290,214 51,942 (1,745) 340,411
--------- --------- --------- -------- --------- ---------
Operating income 74,906 132,940 207,846 28,556 5,785 242,187
Income applicable to Alexander's 7,873 -- 7,873 -- -- 7,873
Income from partially owned entities 4,658 16,382 21,040 -- (672)(Q) 20,368
Interest and other investment
income 23,767 (3,475) 20,292 245 -- 20,537
Interest and debt expense (42,888) (69,233) (112,121) (9,923) (14,062)(R) (136,106)
Minority interest of unitholders in
the Operating Partnership (7,293) (9,010) (16,303) (1,370) 1,370 (S)
(2,780)(T) (19,083)
--------- --------- --------- -------- --------- ---------
Net income 61,023 67,604 128,627 17,508 (10,359) 135,776
Preferred stock dividends (15,549) (5,137) (20,686) -- -- (20,686)
--------- --------- --------- -------- --------- ---------
Net income applicable to
common shares $ 45,474 $ 62,467 $ 107,941 $ 17,508 $ (10,359) $ 115,090
========= ========= ========= ======== ========= =========
Net income per common share - basic
(based on 55,098 shares and
85,064 shares) $ 0.83 $ 1.35
========= =========
Net income per common share - diluted
(based on 57,217 shares and
87,139 shares) $ 0.79 $ 1.32
========= =========
</TABLE>
Page 10
<PAGE> 11
CONDENSED CONSOLIDATED PRO FORMA UNAUDITED INCOME STATEMENT FOR THE
YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL-
PREVIOUSLY CURRENT
HISTORICAL REPORTED COMPANY ACQUISITIONS PRO FORMA TOTAL
VORNADO ACQUISITIONS PRO FORMA COMBINED ADJUSTMENTS PRO FORMA
------------ ------------ --------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Funds from Operations (1):
Net income applicable to
common shares $ 45,474 $ 62,467 $ 107,941 $ 17,508 $ (10,359) $ 115,090
Depreciation and amortization
of real property 22,413 34,368 57,781 6,640 139 63,560
Straight-lining of property rent
escalations (3,359) 4,186 827 589 (3,266) (1,850)
Leasing fees received in excess
of income recognized 1,733 -- 1,733 -- -- 1,733
Proportionate share of adjustments
to equity in net income of partially
owned entities to arrive at
funds from operations 6,358 35,639 41,997 -- (1,360) 40,637
Non-recurring lease cancellation
income and write-off of related
costs -- (11,581) (11,581) -- -- (11,581)
Minority interest in
excess of preferential
distributions -- (1,417) (1,417) -- (2,135) (3,552)
------------ --------- --------- -------- --------- ------------
$ 72,619 $ 123,662 $ 196,281 $ 24,737 $ (16,981) $ 204,037
============ ========= ========= ======== ========= ============
CASH FLOW PROVIDED BY (USED IN):
Operating activities $ 110,754 $ 271,020
Investing activities $ (1,064,484) $ (2,007,943)
Financing activities $ 1,219,988 $ 1,440,961
</TABLE>
- -----------
(1) 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
Company'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 Company 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 Company'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.
Page 11
<PAGE> 12
CONDENSED COMBINING PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL-
MENDIK MARKET CURRENT
689 FIFTH RELP SQUARE 888 SEVENTH ACQUISITIONS
AVENUE (1) PROPERTIES COMPLEX AVENUE COMBINED
---------- ---------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Property rentals $ 3,289 $ 36,189 $ 15,124 $18,175 $ 72,777
Expense reimbursements 179 -- -- 3,343 3,522
Other income 52 2,921 -- 1,226 4,199
------- -------- -------- ------- --------
3,520 39,110 15,124 22,744 80,498
------- -------- -------- ------- --------
EXPENSES:
Operating 1,596 20,827 6,323 15,821 44,567
Depreciation and amortization -- 5,247 1,393 -- 6,640
General and administrative 99 636 -- -- 735
Amortization of officer's deferred
compensation expense -- -- -- -- --
------- -------- -------- ------- --------
1,695 26,710 7,716 15,821 51,942
------- -------- -------- ------- --------
Operating income 1,825 12,400 7,408 6,923 28,556
Equity in net income of investees -- -- -- -- --
Interest and dividend income -- 245 -- -- 245
Interest and debt expense -- (6,162) (3,761) -- (9,923)
Minority interest -- (1,370) -- -- (1,370)
------- -------- -------- ------- --------
Net income $ 1,825 $ 5,113 $ 3,647 $ 6,923 $ 17,508
======= ======== ======== ======= ========
</TABLE>
(1) Certain revenue and expense items have been reclassified to conform to
Vornado's presentation.
Page 12
<PAGE> 13
CONDENSED COMBINING PRO FORMA UNAUDITED INCOME STATEMENT FOR PREVIOUSLY
REPORTED ACQUISITIONS FOR THE YEAR ENDED DECEMBER 31, 1997 OR THE
PERIODS IN 1997 PRIOR TO ACQUISITION
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
ARBOR THE
MENDIK PROPERTY 90 PARK MONTEHIEDRA THE RIESE 640 FIFTH ONE PENN
COMPANY TRUST AVENUE TOWN CENTER TRANSACTION AVENUE PLAZA
-------- -------- ------- ----------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Property rentals $ 34,928 $ 19,837 $12,418 $2,059 $ 805 $ 5,053 $48,412
Expense reimbursements 2,908 16,089 2,975 470 43 1,837 5,155
Other income 3,187 72 264 57 23 -- 7,936
-------- -------- ------- ------ ------ ------- -------
41,023 35,998 15,657 2,586 871 6,890 61,503
-------- -------- ------- ------ ------ ------- -------
EXPENSES:
Operating 12,805 16,500 6,420 585 667 4,355 37,511
Depreciation and amortization 4,682 4,301 -- -- -- -- --
General and administrative 2,684 1,539 -- -- -- -- --
Amortization of officer's deferred
compensation expense -- -- -- -- -- -- --
-------- -------- ------- ------ ------ ------- -------
20,171 22,340 6,420 585 667 4,355 37,511
-------- -------- ------- ------ ------ ------- -------
Operating income 20,852 13,658 9,237 2,001 204 2,535 23,992
Equity in net income of investees 362 -- -- -- -- -- --
Interest and dividend income 899 -- -- -- -- -- --
Interest and debt expense (7,967) (10,272) -- -- -- -- --
Minority interest (3,077) -- -- -- -- -- --
Preferred stock dividends -- -- -- -- -- -- --
-------- -------- ------- ------ ------ ------- -------
Net income $ 11,069 $ 3,386 $ 9,237 $2,001 $ 204 $ 2,535 $23,992
======== ======== ======= ====== ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
MERCHANDISE PREVIOUSLY
150 EAST MART GROUP 770 PRO FORMA REPORTED
58TH STREET OF PROPERTIES BROADWAY ADJUSTMENTS ACQUISITIONS
----------- ------------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Property rentals $ 13,901 $ 99,087 $ 14,910 $ (7,208) $ 244,202
Expense reimbursements 2,049 -- 2,026 -- 33,552
Other income 547 1,711 -- (2,622) 11,175
-------- --------- -------- --------- ---------
16,497 100,798 16,936 (9,830) 288,929
-------- --------- -------- --------- ---------
EXPENSES:
Operating 8,121 49,339 6,235 (4,769) 137,769
Depreciation and amortization -- -- -- 27,486 36,469
General and administrative -- -- -- 445 4,668
Amortization of officer's deferred
compensation expense -- -- -- (22,917) (22,917)
-------- --------- -------- --------- ---------
8,121 49,339 6,235 245 155,989
-------- --------- -------- --------- ---------
Operating income 8,376 51,459 10,701 (10,047) 132,940
Equity in net income of investees -- -- -- 16,020 16,382
Interest and dividend income -- 897 -- (5,271) (3,475)
Interest and debt expense -- -- -- (50,994) (69,233)
Minority interest -- (4,048) (734) (1,151) (9,010)
Preferred stock dividends -- -- -- (5,137) (5,137)
-------- --------- -------- --------- ---------
Net income $ 8,376 $ 48,308 $ 9,967 $ (56,608) $ 62,467
======== ========= ======== ========= =========
</TABLE>
Page 13
<PAGE> 14
NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The unaudited Condensed Consolidated Pro Forma Financial Statements were
prepared to give pro forma effect to the completed acquisitions of 689 Fifth
Avenue, the Mendik RELP Properties, the Market Square Complex, and 888 Seventh
Avenue, the previously reported completed acquisitions and investments (Mendik
Company, Arbor Property Trust, 90 Park Avenue, 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, 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 Forms 8-K previously
filed with the Securities and Exchange Commission has been updated to (i)
include information through September 30, 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.
The column headed "Historical - Current Acquisitions Combined" included in the
Condensed Consolidated Pro Forma Income Statement for the nine months ended
September 30, 1998 and the year ended December 31, 1997, includes the revenues
and expenses from the Mendik RELP's Consolidated Statement of Operations for the
nine months ended September 30, 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 Annual Report on Form 10-K. These amounts include the 40%
interest in Two Park Avenue that was owned by Vornado prior to the acquisition
of the remaining 60% interest and accordingly, adjustments are required to
eliminate this equity investment. Such adjustments are included in the column
headed "Pro Forma Adjustments".
The "Historical - Current Acquisitions Combined" column in the Condensed
Consolidated Pro Forma Unaudited Income Statement for the Nine Months Ended
September 30, 1998 reflects revenues and certain expenses for the six months
ended June 30, 1998 for 689 Fifth Avenue. This asset was acquired on August 12,
1998 and accordingly, adjustments are required to record historical revenues and
expenses from June 30, 1998 through the acquisition date. Such adjustments are
included in the Pro Forma Adjustment column. The "Historical - Current
Acquisitions Combined" column also includes the revenues and certain expenses
for the nine months ended September 30, 1998 for the Mendik RELP Properties, the
Market Square Complex and 888 Seventh Avenue.
Acquisitions were consummated through subsidiaries or preferred stock affiliates
of Vornado Realty L.P. (the "Operating Partnership") (of which Vornado owns an
approximate 88.7% limited partnership interest at December 22, 1998 and is the
sole general partner) and were recorded under the purchase method of accounting.
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.
Vornado believes that any such change will not be significant since the
allocations were principally to real estate.
Page 14
<PAGE> 15
NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following adjustments were required to give pro forma effect to the
transactions being reported:
Pro Forma September 30, 1998 Balance Sheet:
(A) Reflects the acquisition of the Mendik RELP Properties (330 West
34th Street, the Saxon Woods Corporate Center and the additional 60%
interest in Two Park Avenue) for approximately $106 million,
consisting of $31 million in cash from borrowings under the
revolving credit facility, the issuance of $29 million of
common shares and assumed debt of $46 million.
(B) To record the acquisition of the Market Square Complex for
approximately $94.5 million, consisting of $44.6 million in debt,
$43.5 million in a combination of Class A Operating Partnership
Units and Series C-1 Preferred Operating Partnership Units and
$6.4 million in cash.
(C) Reflects the reclassification of the equity investment in the
original 40% interest in Two Park Avenue into its balance sheet
components.
(D) To record the acquisition of 888 Seventh Avenue for approximately
$100 million, consisting of $45 million of cash from borrowings
under the revolving credit facility and $55 million of assumed debt.
(E) Reflects borrowings under the revolving credit facility to fund the
cash portion of the purchase price.
Pro Forma September 30, 1998 Income Statement:
(F) To adjust property rentals arising from the straight-lining of
tenant leases that contain escalations over the lease term.
(G) To eliminate revenues and expenses of non-real estate operations of
the Market Square Complex.
(H) 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 and Market Square income statements.
(I) To eliminate income accounted for under the equity method on the
original 40% interest in Two Park Avenue included in Vornado's
historical income statement.
(J) To record interest expense from assumed debt, at applicable rates,
and from borrowings on the revolving credit facility used to finance
the cash portion of the acquisitions of the Mendik RELP Properties,
689 Fifth Avenue and 888 Seventh Avenue at an assumed borrowing rate
of 6.5%.
(K) To eliminate historical minority interest in the Mendik RELP.
(L) To record minority interest in income from acquisitions.
Pro Forma December 31, 1997 Income Statement:
(M) To adjust property rentals arising from the straight-lining of
tenant leases that contain escalations over the lease term.
(N) To eliminate revenues and expenses of non-real estate operations of
the Market Square Complex.
(O) To eliminate gain relating to the Mendik RELP properties which would
not be a part of the proposed future operations of the properties
being acquired.
Page 15
<PAGE> 16
NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(P) 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 and Market Square income statements.
(Q) To eliminate income accounted for under the equity method on the
original 40% interest in Two Park Avenue included in Vornado's
historical income statement.
(R) To record interest expense from assumed debt, at applicable rates,
and from borrowings on the revolving credit facility used to finance
the cash portion of the acquisitions of the Mendik RELP Properties,
689 Fifth Avenue and 888 Seventh Avenue at an assumed borrowing rate
of 6.5%.
(S) To eliminate historical minority interest in the Mendik RELP.
(T) To record minority interest in income from acquisitions.
Page 16
<PAGE> 17
VORNADO REALTY TRUST
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)
Date: February 24, 1999 /s/ Irwin Goldberg
----------------------------------
IRWIN GOLDBERG
Vice President,
Chief Financial Officer
Page 17
<PAGE> 18
INDEX TO EXHIBITS
EXHIBIT NO. EXHIBIT
10.1 Item 1 of Form 10-Q of Mendik Real Estate Limited
Partnership for the nine months ended September 30, 1998
(incorporated by reference to Exhibit 10.1 to the Prior
8-K)
23.1 Consent of Friedman Alpren & Green LLP (incorporated by
reference to Exhibit 23.1 to the Prior 8-K)
23.2 Consent of Sharrard, McGee & Co., P.A. (incorporated by
reference to Exhibit 23.2 to the Prior 8-K)
23.3 Consent of KPMG Peat Marwick LLP (incorporated by
reference to Exhibit 23.3 to the Prior 8-K)
23.4 Consent of Deloitte & Touche LLP (incorporated by
reference to Exhibit 23.4 to the Prior 8-K)
Page 18
