<PAGE> 1
EXHIBIT INDEX ON PAGE 35
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: SEPTEMBER 30, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________________________________ to
________________________________________
Commission File Number: 1-11954
VORNADO REALTY TRUST
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MARYLAND 22-1657560
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
888 SEVENTH AVENUE, NEW YORK, NEW YORK 10019
(Address of principal executive offices) (Zip Code)
</TABLE>
(212) 894-7000
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes [ ] No
As of November 1, 2000 there were 86,847,813 common shares of the
registrant's shares of beneficial interest outstanding.
Page 1
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements: Page Number
-----------
<S> <C>
Consolidated Balance Sheets as of September 30, 2000 and
December 31, 1999......................................................... 3
Consolidated Statements of Income for the Three and Nine Months
Ended September 30, 2000 and September 30, 1999........................... 4
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2000 and September 30, 1999........................... 5
Notes to Consolidated Financial Statements................................ 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................. 17
Item 3. Quantitative and Qualitative Disclosures About Market Risks............... 32
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings......................................................... 33
Item 6. Exhibits and Reports on Form 8-K.......................................... 33
Signatures .......................................................................... 34
Exhibit Index ......................................................................... 35
</TABLE>
Page 2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(amounts in thousands except share amounts)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
ASSETS
<S> <C> <C>
Real estate, at cost:
Land .................................... $ 825,735 $ 826,477
Buildings and improvements .............. 3,203,362 3,080,174
Leasehold improvements and
equipment ........................... 19,042 14,856
----------- -----------
Total ......................... 4,048,139 3,921,507
Less accumulated depreciation and
amortization ........................ (368,883) (308,542)
----------- -----------
Real estate, net ........................ 3,679,256 3,612,965
Cash and cash equivalents, including U.S.
government obligations under repurchase
agreements of $23,303 and $43,675 ........ 164,284 112,630
Escrow deposits and restricted cash .......... 213,950 30,571
Marketable securities ........................ 123,660 106,503
Investments and advances to partially-owned
entities, including Alexander's of
$172,254 and $159,148 .................... 1,455,974 1,315,387
Due from officers ............................ 19,504 17,190
Accounts receivable, net of allowance for
doubtful accounts of $8,180 and $7,292 ... 49,471 36,408
Notes and mortgage loans receivable .......... 187,841 49,719
Receivable arising from the straight-lining of
rents ................................... 104,666 79,298
Deposits in connection with real estate
acquisitions ............................ 17,353 8,128
Other assets ................................. 168,305 110,419
----------- -----------
TOTAL ASSETS ................................. $ 6,184,264 $ 5,479,218
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Notes and mortgages payable .................. $ 2,225,589 $ 1,681,804
Revolving credit facility .................... 278,000 367,000
Accounts payable and accrued expenses ........ 104,181 107,036
Officer's compensation payable ............... 37,799 34,996
Deferred leasing fee income .................. 7,976 8,349
Other liabilities ............................ 2,683 2,634
----------- -----------
Total liabilities ............. 2,656,228 2,201,819
----------- -----------
Minority interest of unitholders in the
Operating Partnership .................... 1,446,657 1,222,031
----------- -----------
Commitments and contingencies
Shareholders' equity:
Preferred shares of beneficial interest:
No par value per share; authorized,
45,000,000 shares;
Series A: liquidation preference $50.00
per share; issued 5,789,239 shares 287,788 285,632
Series B: liquidation preference $25.00
per share; issued 3,400,000 shares 81,805 81,805
Series C: liquidation preference $25.00
per share; issued 4,600,000 shares 111,148 111,148
Common shares of beneficial interest:
$.04 par value per share; authorized,
150,000,000 shares; issued and
outstanding 86,794,315 and 86,335,741
shares 3,472 3,453
Additional capital ..................... 1,709,625 1,696,557
Deferred compensation .................. (4,165) --
Accumulated deficit .................... (86,906) (116,979)
----------- -----------
2,102,767 2,061,616
Accumulated other comprehensive loss ... (16,705) (1,448)
Due from officers for purchase of common
shares of beneficial interest ..... (4,683) (4,800)
----------- -----------
Total shareholders' equity ... 2,081,379 2,055,368
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY ................... $ 6,184,264 $ 5,479,218
=========== ===========
</TABLE>
See notes to consolidated financial statements.
Page 3
<PAGE> 4
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands except per share amounts)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
---------------------------- ----------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Property rentals .......................... $ 178,159 $ 153,598 $ 512,739 $ 434,215
Expense reimbursements .................... 32,074 24,841 82,934 66,712
Other income (including fee income
from related parties of $637 and $500
in each three month period and $1,304
and $1,314 in each nine month period) ... 5,422 4,382 14,006 12,380
--------- --------- --------- ---------
Total revenues ............................... 215,655 182,821 609,679 513,307
--------- --------- --------- ---------
Expenses:
Operating ................................. 82,700 74,644 233,371 206,340
Depreciation and amortization ............. 25,026 21,438 72,966 60,315
General and administrative ................ 13,304 7,722 34,271 27,519
--------- --------- --------- ---------
Total expenses ............................... 121,030 103,804 340,608 294,174
--------- --------- --------- ---------
Operating income ............................. 94,625 79,017 269,071 219,133
Income applicable to Alexander's ............. 1,306 1,610 7,463 4,951
Income from partially-owned entities ......... 26,808 18,717 74,447 58,295
Interest and other investment income ......... 7,571 4,222 18,269 12,580
Interest and debt expense .................... (42,558) (35,085) (121,240) (105,986)
Net gain on sale of real estate .............. 8,405 -- 10,965 --
Minority interest:
Perpetual preferred unit distributions .... (17,140) (4,520) (44,949) (8,460)
Minority limited partnership earnings ..... (10,494) (9,363) (29,163) (25,296)
Partially-owned entities .................. (404) (439) (1,470) (1,453)
--------- --------- --------- ---------
Income before extraordinary item ............. 68,119 54,159 183,393 153,764
Extraordinary item ........................... -- -- (1,125) --
--------- --------- --------- ---------
Net income ................................... 68,119 54,159 182,268 153,764
Preferred stock dividends (including accretion
of issuance expenses of $719 and $2,156
in each three and nine month period) ...... (9,672) (9,672) (29,017) (23,765)
--------- --------- --------- ---------
NET INCOME applicable to common shares ....... $ 58,447 $ 44,487 $ 153,251 $ 129,999
========= ========= ========= =========
NET INCOME PER COMMON SHARE
- BASIC .................................. $ .68 $ .52 $ 1.77 $ 1.52
========= ========= ========= =========
NET INCOME PER COMMON SHARE
-DILUTED .................................. $ .65 $ .51 $ 1.73 $ 1.49
========= ========= ========= =========
DIVIDENDS PER COMMON SHARE ................... $ .48 $ .44 $ 1.44 $ 1.32
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
Page 4
<PAGE> 5
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
<TABLE>
<CAPTION>
For The Nine Months Ended
September 30,
------------------------------
2000 1999
----------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................................ $ 182,268 $ 153,764
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization (including debt issuance costs) .... 72,966 60,315
Straight-lining of rental income ................................. (25,368) (23,387)
Net gain on sale of real estate .................................. (10,965) --
Minority interest ................................................ 75,582 35,209
Extraordinary item ............................................... 1,125 --
Equity in income of Alexander's,
including depreciation of $450 in each period .................. 1,467 (1,146)
Equity in net income of partially-owned entities ................. (74,447) (46,130)
Gain on sale of marketable securities ............................ -- (382)
Changes in operating assets and liabilities ...................... (77,480) (50,140)
----------- ---------
Net cash provided by operating activities ............................. 145,148 127,833
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate .............................................. (106,579) (113,945)
Acquisitions of real estate and other ................................. (27,360) (182,400)
Proceeds from sale of real estate ..................................... 46,832 --
Investments in partially-owned entities ............................... (74,694) (35,845)
Distributions from partially-owned entities ........................... 14,870 --
Investment in notes and mortgages receivable .......................... (142,251) (53,380)
Repayment of mortgage loans receivable ................................ 4,222 14,000
Cash restricted, primarily mortgage escrows ........................... (183,379) 25,785
Purchases of securities available for sale ............................ (25,861) (3,939)
Proceeds from sale of Temperature Controlled Logistics assets ......... -- 22,769
Proceeds from sale or maturity of securities available for sale ....... -- 12,498
Real estate deposits and other ........................................ (9,225) (23,782)
----------- ---------
Net cash used in investing activities ................................. (503,425) (338,239)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings .............................................. 1,048,036 205,000
Repayments of borrowings .............................................. (629,891) (394,975)
Debt issuance costs ................................................... (18,319) (8,059)
Proceeds from issuance of units ....................................... 195,847 343,155
Proceeds from issuance of preferred stock ............................. -- 193,282
Dividends paid on common shares ....................................... (124,501) (112,390)
Distributions to minority partners .................................... (53,548) (23,491)
Dividends paid on preferred shares .................................... (17,907) (21,608)
Exercise of stock options ............................................. 10,214 2,436
----------- ---------
Net cash provided by financing activities ............................. 409,931 183,350
----------- ---------
Net increase/(decrease) in cash and cash equivalents .................. 51,654 (27,056)
Cash and cash equivalents at beginning of period ...................... 112,630 167,808
----------- ---------
Cash and cash equivalents at end of period ............................ $ 164,284 $ 140,752
=========== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest (including capitalized interest of $8,054 in
2000 and $4,379 in 1999) ........................................... $ 120,045 $ 108,713
NON-CASH TRANSACTIONS:
Financing assumed in acquisitions ..................................... $ 36,640 $ 188,000
Minority interest in connection with acquisitions ..................... -- 299,390
Unrealized loss/(gain) on securities available for sale ............... 14,680 (8,493)
</TABLE>
See notes to consolidated financial statements.
Page 5
<PAGE> 6
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Vornado Realty Trust is a fully integrated real estate investment trust
("REIT"). Vornado conducts its business through Vornado Realty L.P., a Delaware
limited partnership (the "Operating Partnership"). Vornado is the sole general
partner of, and owned approximately 86% of the common limited partnership
interest in, the Operating Partnership at September 30, 2000. All references to
the "Company" and "Vornado" refer to Vornado Realty Trust and its consolidated
subsidiaries, including the Operating Partnership.
2. BASIS OF PRESENTATION
The consolidated balance sheet as of September 30, 2000, the consolidated
statements of income for the three and nine months ended September 30, 2000 and
1999 and the consolidated statements of changes in cash flows for the nine
months ended September 30, 2000 and 1999 are unaudited. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
changes in cash flows have been made. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
These condensed consolidated financial statements 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, 1999 as
filed with the Securities and Exchange Commission. The results of operations for
the nine months ended September 30, 2000 are not necessarily indicative of the
operating results for the full year.
The accompanying consolidated financial statements include the accounts of
Vornado Realty Trust and its majority-owned subsidiary, Vornado Realty L.P., as
well as equity interests acquired that individually (or in the aggregate with
prior interests) exceed a 50% interest and the Company exercises unilateral
control. All significant intercompany amounts have been eliminated. Equity
interests in partially-owned entities include partnerships, joint ventures and
preferred stock affiliates (corporations in which the Company owns all of the
preferred stock and none of the common equity) and are accounted for under the
equity method of accounting as the Company exercises significant influence.
These investments are recorded initially at cost and subsequently adjusted for
net equity in income (loss) and cash contributions and distributions. Ownership
of the preferred stock entitles the Company to substantially all of the economic
benefits in the preferred stock affiliates. The common stock of the preferred
stock affiliates is owned by Officers and Trustees of Vornado.
Management has made estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
Certain amounts in the prior year's financial statements have been
reclassified to conform to the current year presentation.
Page 6
<PAGE> 7
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
3. ACQUISITIONS, DISPOSITIONS AND FINANCINGS
ACQUISITIONS
Vornado-Ceruzzi Joint Venture
In the first quarter of 2000, the Company and its joint venture partner
acquired 2 fee interests containing 210,000 square feet and 6 leasehold
interests containing 567,000 square feet in properties located in Pennsylvania,
Virginia, Maryland and Ohio formerly occupied by Hechinger, Inc., a home
improvement retailer which was liquidated. The purchase price was $21,700,000,
of which the Company's share was 80%.
Student Housing Complex
On January 28, 2000, the Company and its joint venture partner, acquired a
252-unit student housing complex in Gainesville, Florida, for approximately
$27,000,000, of which $19,600,000 was indebtedness. The Company's share of this
investment is 90%.
Loan to NorthStar Partnership L.P.
On September 19, 2000, the Company acquired $75,000,000 of subordinated
unsecured debt of NorthStar Partnership, L.P. ("NorthStar"), a private real
estate company, for $65,000,000. The loan bears interest at 11.5% per annum,
requires quarterly principal payments of $2,500,000 and matures in May 2002. The
effective rate on the loan is approximately 22% including the amortization of
the discount. NorthStar has filed suit against the Company seeking to enjoin
Vornado from taking any action with respect to the debt, to rescind the
Company's acquisition of the debt and collect damages. In the opinion of
management, after consultation with legal counsel, NorthStar's suit is without
merit and the Company intends to vigorously defend against it.
33 N. Dearborn Street
On September 21, 2000, the Company acquired a 350,000 square foot office
building in Chicago for approximately $35,000,000 of which $19,000,000 was
indebtedness.
Loan to Primestone Investment Partners, L.P.
On September 28, 2000, the Company made a $62,000,000 subordinated loan to
Primestone Investment Partners, L.P. secured by partnership units in Prime Group
Realty LP, the operating partnership of Prime Group Realty Trust (NYSE:PGE). The
Company has received a 1% upfront fee and will be entitled to receive certain
other fees aggregating approximately 3% upon repayment of the loan. The debt
bears interest at 16% per annum and matures on October 26, 2001 with an eleven
month extension option. The effective rate on the loan is approximately 20%
including the fees.
Page 7
<PAGE> 8
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DISPOSITIONS
On March 2, 2000, the Company sold its three Texas shopping center
properties containing 221,000 square feet, for $25,750,000, resulting in a gain
of $2,560,000.
On August 30, 2000, the Company sold its Westport, Connecticut office
property for $24,000,000, resulting in a gain of $8,405,000.
FINANCINGS
CORPORATE
REMIC Refinancing
On March 1, 2000, the Company completed a $500,000,000 private placement
of 10-year, 7.93% mortgage notes, cross-collateralized by 42 shopping center
properties, resulting in net proceeds of approximately $490,000,000. In
connection therewith, the Company repaid $228,000,000 of existing mortgage debt
scheduled to mature on December 1, 2000 and $262,000,000 outstanding under its
revolving credit facility. The Company incurred an extraordinary loss of
approximately $1,125,000 in the three months ended March 31, 2000 due to the
write-off of unamortized financing costs in connection with the prepayment of
the existing debt.
Revolving Credit Facility
On March 21, 2000, the Company renewed its $1,000,000,000 revolving credit
facility for an additional three years. The covenants of the facility include,
among others, maximum loan to value ratio, minimum debt service coverage and
minimum capitalization requirements. Interest is at LIBOR plus .90% (7.54% at
September 30, 2000). The Company paid origination fees of $6,700,000 and pays a
commitment fee quarterly, over the remaining term of the facility of .15% per
annum on the facility amount.
Offerings of Preferred Units
On May 1, 2000, the Company sold an aggregate of $21,000,000 of 8.25%
Series D-6 Cumulative Redeemable Preferred Units in the Operating Partnership to
an institutional investor in a private placement, resulting in net proceeds of
approximately $20,475,000. The perpetual preferred units may be called without
penalty at the option of the Operating Partnership commencing on May 1, 2005.
On May 25, 2000, the Company sold an aggregate of $180,000,000 of 8.25%
Series D-7 Cumulative Redeemable Units in the Operating Partnership to an
institutional investor in a private placement, resulting in net proceeds of
approximately $175,500,000. The perpetual preferred units may be called without
penalty at the option of the Operating Partnership commencing on May 25, 2005.
OFFICE
Two Park Avenue Refinancing
On March 1, 2000, the Company refinanced its Two Park Avenue office
building for $90,000,000. On such date, the Company received proceeds of
$65,000,000 and repaid the then existing debt in the same amount. The balance of
the proceeds was received on April 18, 2000. The new 3-year debt matures on
February 28, 2003 and bears interest at LIBOR + 1.45% (8.09% at September 30,
2000).
770 Broadway and 595 Madison Avenue
On August 11, 2000, the Company completed a $173,500,000 mortgage
financing, cross-collateralized by its 770 Broadway and 595 Madison Avenue
office buildings. The loan bears interest at LIBOR + .40% (7.04% at September
30, 2000) and matures on August 1, 2002. At September 30, 2000, the proceeds of
the loan are in a restricted mortgage escrow account, which bears interest at
the same rate as the loan.
Page 8
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VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
4. INVESTMENTS AND ADVANCES TO PARTIALLY-OWNED ENTITIES
The Company's investments and advances to partially-owned entities and
income recognized from such investments are as follows:
Investments and Advances
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
------------------ -----------------
(amounts in thousands)
<S> <C> <C>
Temperature Controlled Logistics................... $ 504,494 $ 481,808
Charles E. Smith Commercial Realty L.P.
("CESCR")..................................... 323,212 317,812
Alexander's........................................ 172,254 159,148
Newkirk Joint Ventures............................. 160,960 142,670
Hotel Pennsylvania (1)............................. 64,755 59,176
Partially-Owned Office Buildings................... 60,823 59,510
Fort Lee Development Project....................... 26,561 16,663
Park Laurel Development Project.................... 55,040 24,695
Other.............................................. 87,875 53,905
----------- -----------
$ 1,455,974 $ 1,315,387
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Income Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- -------------------------
2000 1999 2000 1999
-------- ---------- --------- ----------
(amounts in thousands)
<S> <C> <C> <C> <C>
Income applicable to Alexander's:
33.1% share of equity in income............. $ (1,945) $ 330 $ (1,467) $ 1,146
Interest income............................. 3,251 1,280 8,930 3,805
-------- ---------- --------- ----------
$ 1,306 $ 1,610 $ 7,463 $ 4,951
======== ========== ========= ==========
Temperature Controlled Logistics:
60% share of equity in income............... $ 6,964 $ 5,811 $ 20,624 $ 22,361
Management fee (40% of 1% per annum of
Total Combined Assets, as defined)....... 1,380 1,655 4,060 5,601
-------- ---------- --------- ----------
8,344 7,466 24,684 27,962
CESCR (2)..................................... 5,630 4,393 18,948 12,154
Newkirk Joint Ventures (3).................... 8,687 5,778 18,425 11,087
Hotel Pennsylvania (1)........................ 1,911 830 5,218 3,398
Partially-Owned Office Buildings.............. 850 626 2,528 1,376
Other......................................... 1,386 (376) 4,644 2,318
-------- ---------- --------- ----------
$ 26,808 $ 18,717 $ 74,447 $ 58,295
======== ========== ========= ==========
</TABLE>
(1) The Company owns 100% of the commercial portion of the building (retail and
office space) and 98% of the hotel portion, which is owned through a
preferred stock affiliate.
(2) 9.6% interest from January 1999 to March 1999 and 34% interest thereafter.
(3) Includes the Company's share of an extraordinary gain of $652 resulting
from the prepayment of debt in the second quarter of this year.
Page 9
<PAGE> 10
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Temperature Controlled Logistics
Subsequent to March 12, 1999 (date the operations of the AmeriCold
Logistics Company were sold), the Company reflects its 60% share of the
Vornado/Crescent Partnerships' ("the Landlord") equity in the rental income it
receives from AmeriCold Logistics Company, its tenant, which leases the
underlying temperature controlled warehouses used in its business. Prior to that
date the Company reflected its equity in the operations.
Total rent was $42,617,000 and $128,728,000 for the third quarter and the
nine months ended September 30, 2000, of which the tenant deferred $4,800,000
and $11,500,000. As at September 30, 2000, the balance of the tenant's deferred
rent is as follows:
<TABLE>
<CAPTION>
The Company's
Total Share
-------------- -------------
<S> <C> <C>
2000:
Quarter ended September 30 $ 4,800,000 $ 2,880,000
Quarter ended June 30 6,700,000 4,020,000
-------------- -------------
11,500,000 6,900,000
1999:
Quarter ended December 31 5,400,000 3,240,000
-------------- -------------
$ 16,900,000 $ 10,140,000
============== =============
</TABLE>
Based on the Company's policy of recognizing rental income when earned and
collection is reasonably assured or cash is received, the Company did not
recognize $2,880,000 of income from this tenant in the quarter ended September
30, 2000 and $5,280,000 in the nine months ended September 30, 2000. The
Company and this tenant are in discussions regarding the restructuring of the
leases.
Alexander's
On March 31, 2000, the Company increased its ownership in Alexander's from
32% to 32.9% by acquiring 41,500 shares of Alexander's common stock for
approximately $2,740,000. On April 11, 2000, the Company acquired an additional
10,400 shares of Alexander's common stock for approximately $674,000, thereby
increasing its ownership interest to 33.1%.
Alexander's is managed by and its properties are redeveloped and leased by
the Company, pursuant to agreements with a one-year term expiring in March of
each year which are automatically renewable. Under these agreements, the Company
recorded management fee income from Alexander's of $1,057,000 and $1,057,000 for
the three months ended September 30, 2000 and 1999 and $3,181,000 and $3,271,000
for the nine months ended September 30, 2000 and 1999, which is included in
other income from partially-owned entities.
The Company's equity in the income of Alexander's for the three and nine
months ended September 30, 2000, is net of its share of stock appreciation
rights compensation expense of $1,947,000 and $2,272,000, based on Alexander's
closing stock price of $81.75 at September 30, 2000.
At September 30, 2000, the Company has loans receivable from Alexander's
of $110,000,000, including $15,000,000 under the line of credit discussed below.
The Company recorded interest income on these loans of $3,251,000 and $1,280,000
in the three months ended September 30, 2000 and 1999 and $8,930,000 and
$3,805,000 in the nine months ended September 30, 2000 and 1999.
Page 10
<PAGE> 11
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
On August 1, 2000, Vornado provided a $50,000,000 secured line of credit
to Alexander's under the same terms and conditions as Alexander's existing
$95,000,000 loan from the Company, including the interest rate of 15.72%. The
maturity date of the existing $95,000,000 loan has been extended to March 15,
2002, which is also the maturity date of the new line of credit. The interest
rate on the loan and line of credit will reset on March 15, 2001, using the same
spread to treasuries as presently exists.
5. OTHER RELATED PARTY TRANSACTIONS
The Company loaned an executive officer of the Company $1,000,000 on March
24, 2000 and an additional $1,000,000 on April 4, 2000 in accordance with the
terms of an employment agreement. The loans have a five year term and bear
interest, payable quarterly at a rate of 6.63% and 6.55%, respectively (based on
the mid-term applicable federal rate provided under the Internal Revenue Code).
The Company currently manages and leases the real estate assets of
Interstate Properties pursuant to a management agreement. Management fees earned
by the Company pursuant to the management agreement were $477,000 and $352,000
for the three months ended September 30, 2000 and 1999 and $864,000 and $817,000
for the nine months ended September 30, 2000 and 1999.
The Mendik Group owns an entity, which provides cleaning and related
services and security services to office properties, including the Company's
Manhattan office properties. The Company was charged fees in connection with
these contracts of $11,443,000 and $10,280,000 for the three months ended
September 30, 2000 and 1999 and $34,862,000 and $29,577,000 for the nine months
ended September 30, 2000 and 1999.
Page 11
<PAGE> 12
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
6. MINORITY INTEREST
The minority interest represents limited partners', other than the
Company, interests in the Operating Partnership and are comprised of:
<TABLE>
<CAPTION>
Outstanding Units at Preferred or
------------------------------ Per Unit Annual Conversion
September 30, December 31, Liquidation Distribution Rate Into
Unit Series 2000 1999 Preference Rate Class A Units
----------------- ------------- ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Class A ...................................... 6,407,258 6,247,829 -- $ 1.92 (a)
Class D ...................................... 869,387 876,543 -- $ 2.015 1.0 (b)
5.0% B-1 Convertible Preferred ............... 899,566 899,566 $ 50.00 $ 2.50 .914
8.0% B-2 Convertible Preferred ............... 449,783 449,783 $ 50.00 $ 4.00 .914
6.5% C-1 Convertible Preferred ............... 747,912 747,912 $ 50.00 $ 3.25 1.1431
8.5% D-1 Cumulative Redeemable Preferred ..... 3,500,000 3,500,000 $ 25.00 $ 2.125 (c)
8.375% D-2 Cumulative Redeemable Preferred.... 549,336 549,336 $ 50.00 $4.1875 (c)
8.25% D-3 Cumulative Redeemable Preferred..... 8,000,000 8,000,000 $ 25.00 $2.0625 (c)
8.25% D-4 Cumulative Redeemable Preferred..... 5,000,000 5,000,000 $ 25.00 $2.0625 (c)
8.25% D-5 Cumulative Redeemable Preferred..... 7,480,000 7,480,000 $ 25.00 $2.0625 (c)
8.25% D-6 Cumulative Redeemable Preferred..... 840,000 -- $ 25.00 $2.0625 (c)
8.25% D-7 Cumulative Redeemable Preferred..... 7,200,000 -- $ 25.00 $2.0625 (c)
6.25% E-1 Convertible Preferred .......... 4,998,000 4,998,000 $ 50.00 $ 3.125(d) 1.1364
</TABLE>
(a) Class A units are redeemable at the option of the holder for cash or, at
the Company's option, for one common share of beneficial interest in
Vornado.
(b) Mandatory conversion of Class D units into Class A units will occur after
four consecutive quarters of distributions of at least $.50375 per Class A
unit ($2.015 annually).
(c) Redeemable for an equivalent of the Company's preferred shares.
(d) Increases to $3.25 on March 3, 2001, and fixes at $3.375 on March 3, 2006.
Page 12
<PAGE> 13
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
7. COMMITMENTS AND CONTINGENCIES
There are various legal actions against the Company in the ordinary course
of business. In the opinion of management, after consultation with legal
counsel, the outcome of such matters will not have a material effect on the
Company's financial condition, results of operations or cash flows.
8. INCOME PER SHARE
The following table sets forth the computation of basic and diluted income
per share:
<TABLE>
<CAPTION>
For The Three Months Ended For The Nine Months Ended
September 30, September 30,
--------------------------- ----------------------------
2000 1999 2000 1999
----------- ----------- ------------ -----------
(amounts in thousands except per share amounts)
<S> <C> <C> <C> <C>
Numerator:
Income before extraordinary item................... $ 68,119 $ 54,159 $ 183,393 $ 153,764
Extraordinary item................................. -- -- (1,125) --
----------- ----------- ------------ -----------
Net income......................................... 68,119 54,159 182,268 153,764
Preferred stock dividends.......................... (9,672) (9,672) (29,017) (23,765)
----------- ----------- ------------ -----------
Numerator for basic and diluted income per
share - net income applicable to common
shares............................................. $ 58,447 $ 44,487 $ 153,251 $ 129,999
=========== =========== ============ ===========
Denominator:
Denominator for basic income per share - weighted
average shares................................... 86,584 85,936 86,455 85,555
Effect of dilutive securities:
Employee stock options........................... 3,129 1,553 2,168 1,783
----------- ----------- ------------ -----------
Denominator for diluted income per share -
adjusted weighted average shares and
assumed conversions.............................. 89,713 87,489 88,623 87,338
=========== =========== ============ ===========
INCOME PER COMMON SHARE - BASIC:
Income before extraordinary item................. $ .68 $ .52 $ 1.78 $ 1.52
Extraordinary item............................... -- -- (.01) --
----------- ----------- ------------ -----------
Net income per common share...................... $ .68 $ .52 $ 1.77 $ 1.52
=========== =========== ============ ===========
INCOME PER COMMON SHARE - DILUTED:
Income before extraordinary item................. $ .65 $ .51 $ 1.74 $ 1.49
Extraordinary item............................... -- -- (.01) --
----------- ----------- ------------ -----------
Net income per common share...................... $ .65 $ .51 $ 1.73 $ 1.49
=========== =========== ============ ===========
</TABLE>
Page 13
<PAGE> 14
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
9. COMPREHENSIVE INCOME
The following table sets forth the Company's comprehensive income:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ---------- -----------
(amounts in thousands)
<S> <C> <C> <C> <C>
Net income applicable to common shares................. $ 58,447 $ 44,487 $ 153,251 $ 129,999
Other comprehensive loss............................... (13,001)(1) (2,623) (15,257)(1) (1,270)
----------- ----------- ---------- -----------
Comprehensive income................................... $ 45,446 $ 41,864 $ 137,994 $ 128,729
=========== =========== ========== ===========
</TABLE>
(1) Primarily reflects the fluctuations in the market value of Vornado's
investments in companies that provide fiber-optic networks and broadband
access to the Company's Office division tenants.
Page 14
<PAGE> 15
Page 16
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
10. SEGMENT INFORMATION
The Company has four business segments: Office, Retail, Merchandise Mart
Properties and Temperature Controlled Logistics.
(amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended September 30, 2000
--------------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(2)
----------- --------- -------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Total revenues .............. $ 215,655 $ 129,165 $ 43,969 $ 37,212 $ -- $ 5,309
Total expenses .............. 121,030 73,286 16,596 19,010 -- 12,138
--------- --------- -------- -------- -------- --------
Operating income ............ 94,625 55,879 27,373 18,202 -- (6,829)
Income applicable to
Alexander's ............. 1,306 -- -- -- -- 1,306(6)
Income from partially-owned
entities ................ 26,808 7,201 318 1,371 8,344(4) 9,574
Interest and other
investment income ....... 7,571 2,030 -- 319 -- 5,222
Interest and debt expense ... (42,558) (16,850) (8,477) (9,955) -- (7,276)
Net gain on sale of real
estate .................. 8,405 8,405 -- -- -- --
Minority interest ........... (28,038) (16,059) (4,817) (3,899) (3,257) (6)
--------- --------- -------- -------- -------- --------
Net income .................. 68,119 40,606 14,397 6,038 5,087 1,991
Minority interest ........... 28,038 16,059 4,817 3,899 3,257 6
Net gain on sale of real
estate .................. (8,405) (8,405) -- -- -- --
Interest and debt expense(3) 65,196 24,912 9,124 9,955 6,909 14,296
Depreciation and
amortization(3) ......... 40,046 19,260 4,392 4,744 8,088 3,562
Straight-lining of rents(3) . (10,360) (6,531) (591) (1,759) (176) (1,303)
Other ....................... 2,983 (252) 269 -- (451) 3,417
--------- --------- -------- -------- -------- --------
EBITDA(1) ................... $ 185,617 $ 85,649 $ 32,408 $ 22,877 $ 22,714 $ 21,969
========= ========= ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended September 30, 1999
-----------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(2)
--------- --------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Total revenues .............. $ 182,821 $ 100,701 $ 43,318 $ 35,622 $ -- $ 3,180
Total expenses .............. 103,804 61,248 18,161 19,352 -- 5,043
--------- --------- -------- -------- -------- --------
Operating income ............ 79,017 39,453 25,157 16,270 -- (1,863)
Income applicable to
Alexander's ............. 1,610 -- -- -- -- 1,610
Income from partially-owned
entities ................ 18,717 5,029 217 (703) 7,466 6,708
Interest and other
investment income ....... 4,222 436 -- 199 -- 3,587
Interest and debt expense ... (35,085) (13,185) (5,486) (8,166) -- (8,248)
Net gain on sale of real
estate .................. -- -- -- -- -- --
Minority interest ........... (14,322) (6,808) (4,126) (1,693) (1,695) --
--------- --------- -------- -------- -------- --------
Net income .................. 54,159 24,925 15,762 5,907 5,771 1,794
Minority interest ........... 14,322 6,808 4,126 1,693 1,695 --
Net gain on sale of real
estate .................. -- -- -- -- -- --
Interest and debt expense(3) 58,870 22,465 6,139 8,166 6,532 15,568
Depreciation and
amortization(3) ......... 36,045 16,460 4,144 4,463 7,591 3,387
Straight-lining of rents(3) . (7,532) (4,503) (684) (1,224) (544) (577)
Other ....................... 1,126 (42) -- -- 2,757(5) (1,589)
--------- --------- -------- -------- -------- --------
EBITDA(1) ................... $ 156,990 $ 66,113 $ 29,487 $ 19,005 $ 23,802 $ 18,583
========= ========= ======== ======== ======== ========
</TABLE>
-------------------
See footnotes on page 17.
Page 15
<PAGE> 16
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(amounts in thousands)
<TABLE>
<CAPTION>
Nine Months Ended September 30, 2000
-----------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(2)
--------- --------- --------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Total revenues ..................... $ 609,679 $ 351,585 $ 130,664 $ 112,165 $ -- $ 15,265
Total expenses ..................... 340,608 197,729 53,859 59,119 -- 29,901
--------- --------- --------- --------- -------- --------
Operating income ................... 269,071 153,856 76,805 53,046 -- (14,636)
Income applicable to Alexander's ... 7,463 -- -- -- -- 7,463(6)
Income from partially-owned
entities ...................... 74,447 22,588 987 4,752 24,684(4) 21,436
Interest and other investment
income ......................... 18,269 2,661 -- 719 -- 14,889
Interest and debt expense .......... (121,240) (44,830) (33,133) (27,860) -- (15,417)
Net gain on sale of real
Estate ......................... 10,965 8,405 2,560 -- -- --
Minority interest .................. (75,582) (43,419) (13,667) (10,226) (8,234) (36)
--------- --------- --------- --------- -------- --------
Income before extraordinary item ... 183,393 99,261 33,552 20,431 16,450 13,699
Extraordinary item ................. (1,125) -- (1,125) -- -- --
--------- --------- --------- --------- -------- --------
Net income ......................... 182,268 99,261 32,427 20,431 16,450 13,699
Extraordinary item ................. 1,125 -- 1,125 -- -- --
Minority interest .................. 75,582 43,419 13,667 10,226 8,234 36
Net gain on sale of real
Estate ......................... (10,965) (8,405) (2,560) -- -- --
Interest and debt expense(3) ...... 189,818 71,064 35,078 27,860 20,946 34,870
Depreciation and
Amortization(3) ................ 120,355 55,559 14,177 14,792 24,422 11,405
Straight-lining of rents(3) ........ (24,141) (15,817) (1,977) (4,523) (985) (839)
Other .............................. 6,964 (252) 269 -- 358 6,589
--------- --------- --------- --------- -------- --------
EBITDA(1) .......................... $ 541,006 $ 244,829 $ 92,206 $ 68,786 $ 69,425 $ 65,760
========= ========= ========= ========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1999
-----------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(2)
--------- --------- --------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Total revenues ................. $ 513,307 $ 275,853 $ 127,684 $ 102,711 $ -- $ 7,059
Total expenses ................. 294,174 165,045 53,202 56,441 -- 19,486
--------- --------- --------- --------- -------- --------
Operating income ............... 219,133 110,808 74,482 46,270 -- (12,427)
Income applicable to Alexander's 4,951 -- -- -- -- 4,951
Income from partially-owned
entities .................. 58,295 13,613 640 1,201 27,962 14,879
Interest and other investment
income ......................... 12,580 1,292 -- 566 -- 10,722
Interest and debt expense ...... (105,986) (35,444) (21,603) (21,331) -- (27,608)
Net gain on sale of real
estate ..................... -- -- -- -- -- --
Minority interest .............. (35,209) (16,162) (9,422) (4,703) (4,922) --
--------- --------- --------- --------- -------- --------
Income before extraordinary item 153,764 74,107 44,097 22,003 23,040 (9,483)
Extraordinary item ............. -- -- -- -- -- --
--------- --------- --------- --------- -------- --------
Net income ..................... 153,764 74,107 44,097 22,003 23,040 (9,483)
Extraordinary item ............. -- -- -- -- -- --
Minority interest .............. 35,209 16,162 9,422 4,703 4,922 --
Net gain on sale of real
estate ..................... -- -- -- -- -- --
Interest and debt expense(3) .. 167,907 59,171 23,568 21,331 20,090 43,747
Depreciation and
amortization(3) ............ 101,895 45,877 12,528 12,641 23,603 7,246
Straight-lining of rents(3) .... (20,065) (13,118) (2,001) (3,504) (1,171) (271)
Other .......................... 1,227 (42) -- -- (252)(5) 1,521
--------- --------- --------- --------- -------- --------
EBITDA(1) ...................... 439,937 $ 182,157 $ 87,614 $ 57,174 $ 70,232 $ 42,760
========= ========= ========= ========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
September 30, 2000
---------------------------------------------------------------------------------------
Balance sheet data:
<S> <C> <C> <C> <C> <C> <C>
Real estate, net... $3,679,256 $2,230,645 $551,306 $797,177 $ -- $100,128
Investments and
advances to
partially-owned
entities ........ 1,455,974 392,757 2,449 45,052 504,494 511,222
</TABLE>
<TABLE>
<CAPTION>
December 31, 1999
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance sheet data:
Real estate, net... $3,612,965 $2,208,510 $575,633 $753,416 $ -- $ 75,406
Investments and
advances to
partially-owned
entities ........ 1,315,387 382,417 3,057 32,524 481,808 415,581
</TABLE>
--------------------
See footnotes on the next page.
Page 16
<PAGE> 17
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Notes to segment information:
(1) EBITDA represents income before interest, taxes, depreciation and
amortization, extraordinary or non-recurring items, gains or losses on
sales of real estate, the effect of straight-lining of property
rentals for rent escalations and minority interest. Management
considers EBITDA a supplemental measure for making decisions and
assessing the performance of its segments. EBITDA may not be
comparable to similarly titled measures employed by other companies.
(2) Other includes primarily (i) the operations of the Company's warehouse
and industrial properties, (ii) investments in the Hotel Pennsylvania,
Alexander's, and Newkirk Joint Ventures, (iii) corporate general and
administrative expenses and (iv) unallocated investment income and
interest and debt expense.
(3) Interest and debt expense, depreciation and amortization and
straight-lining of rents included in the reconciliation of net income
to EBITDA reflects amounts which are netted in income from
partially-owned entities.
(4) Net of $2,880 and $5,280 of rent in the three and nine months ended
September 30, 2000 not recognized as income.
(5) Includes the reversal of income taxes (benefit for the nine months
ended September 30, 1999) which are considered non-recurring because
of the expected conversion of the Temperature Controlled Logistics
Companies to REITs.
(6) Net of $2,272, the Company's share of Alexander's stock appreciation
rights expense.
11. SUBSEQUENT EVENTS
On October 2, 2000, the Company acquired the 720,000 square foot Gift and
Furniture Mart building in Los Angeles and its 9.3 acre site. The purchase price
was approximately $54,000,000 of which $10,000,000 was indebtedness.
On November 1, 2000, the Company acquired 7 W. 34th Street, a Manhattan
office building containing approximately 425,000 square feet, for $128,000,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(All of the amounts presented are in thousands, except share amounts
and percentages)
Certain statements contained herein constitute forward-looking
statements as such term is defined in Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Certain factors could cause actual results to differ materially from those in
the forward-looking statements. Factors that might cause such a material
difference include, but are not limited to, (a) changes in the general economic
climate, (b) local conditions such as an oversupply of space or a reduction in
demand for real estate in the area, (c) conditions of tenants, (d) competition
from other available space, (e) increased operating costs and interest expense,
(f) the timing of and costs associated with property improvements, (g) changes
in taxation or zoning laws, (h) government regulations, (i) failure of Vornado
to continue to qualify as a REIT, (j) availability of financing on acceptable
terms, (k) potential liability under environmental or other laws or regulations,
and (l) general competitive factors.
Page 17
<PAGE> 18
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
Below is a summary of net income and EBITDA by segment for the three
months ended September 30, 2000 and 1999:
<TABLE>
<CAPTION>
For The Three Months Ended September 30, 2000
-----------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(3)
--------- --------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Total revenues ..................... $ 215,655 $ 129,165 $ 43,969 $ 37,212 $ -- $ 5,309
Total expenses ..................... 121,030 73,286 16,596 19,010 -- 12,138
--------- --------- -------- -------- -------- --------
Operating income ................... 94,625 55,879 27,373 18,202 -- (6,829)
Income applicable to Alexander's ... 1,306 -- -- -- -- 1,306(6)
Income from partially-owned entities 26,808 7,201 318 1,371 8,344(4) 9,574
Interest and other investment income 7,571 2,030 -- 319 -- 5,222
Interest and debt expense .......... (42,558) (16,850) (8,477) (9,955) -- (7,276)
Net gain on sale of real estate .... 8,405 8,405 -- -- -- --
Minority interest .................. (28,038) (16,059) (4,817) (3,899) (3,257) (6)
--------- --------- -------- -------- -------- --------
Net income ......................... 68,119 40,606 14,397 6,038 5,087 1,991
Minority interest .................. 28,038 16,059 4,817 3,899 3,257 6
Net gain on sale of real estate .... (8,405) (8,405) -- -- -- --
Interest and debt expense (2) ...... 65,196 24,912 9,124 9,955 6,909 14,296
Depreciation and amortization (2) .. 40,046 19,260 4,392 4,744 8,088 3,562
Straight-lining of rents (2) ....... (10,360) (6,531) (591) (1,759) (176) (1,303)
Other .............................. 2,983 (252) 269 -- (451) 3,417
--------- --------- -------- -------- -------- --------
EBITDA(1) .......................... $ 185,617 $ 85,649 $ 32,408 $ 22,877 $ 22,714 $ 21,969
========= ========= ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
For the Three Months Ended September 30, 1999
-----------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(3)
--------- --------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Total revenues ..................... $ 182,821 $ 100,701 $ 43,318 $ 35,622 $ -- $ 3,180
Total expenses ..................... 103,804 61,248 18,161 19,352 -- 5,043
--------- --------- -------- -------- -------- --------
Operating income ................... 79,017 39,453 25,157 16,270 -- (1,863)
Income applicable to Alexander's ... 1,610 -- -- -- -- 1,610
Income (loss) from partially-owned
entities ....................... 18,717 5,029 217 (703) 7,466 6,708
Interest and other investment income 4,222 436 -- 199 -- 3,587
Interest and debt expense .......... (35,085) (13,185) (5,486) (8,166) -- (8,248)
Minority interest .................. (14,322) (6,808) (4,126) (1,693) (1,695) --
--------- --------- -------- -------- -------- --------
Net income ......................... 54,159 24,925 15,762 5,907 5,771 1,794
Minority interest .................. 14,322 6,808 4,126 1,693 1,695 --
Interest and debt expense (2) ...... 58,870 22,465 6,139 8,166 6,532 15,568
Depreciation and amortization (2) .. 36,045 16,460 4,144 4,463 7,591 3,387
Straight-lining of rents (2) ....... (7,532) (4,503) (684) (1,224) (544) (577)
Other .............................. 1,126 (42) -- -- 2,757(5) (1,589)
--------- --------- -------- -------- -------- --------
EBITDA (1) ......................... $ 156,990 $ 66,113 $ 29,487 $ 19,005 $ 23,802 $ 18,583
========= ========= ======== ======== ======== ========
</TABLE>
---------------------------
(1) EBITDA represents income before interest, taxes, depreciation and
amortization, extraordinary or non-recurring items, gains or losses on
sales of real estate, the effect of straight-lining of property rentals
for rent escalations and minority interest. Management considers EBITDA a
supplemental measure for making decisions and assessing the performance of
its segments. EBITDA may not be comparable to similarly titled measures
employed by other companies.
(2) Interest and debt expense, depreciation and amortization and
straight-lining of rents included in the reconciliation of net income to
EBITDA reflects amounts which are netted in income from partially-owned
entities.
(3) Other includes primarily (i) the operations of the Company's warehouse and
industrial properties, (ii) investment in the Hotel Pennsylvania,
Alexander's and Newkirk Joint Ventures, (iii) corporate general and
administrative expenses and (iv) unallocated investment income and interest
and debt expense.
(4) Net of $2,880 of rent not recognized as income.
(5) Includes the reversal of income taxes which are considered non-recurring
because of the expected conversion of the Temperature Controlled Logistics
Companies to REITs.
(6) Net of $1,947, the Company's share of Alexander's stock appreciation rights
expense.
Page 18
<PAGE> 19
Below are the details of the changes by segment in EBITDA.
<TABLE>
<CAPTION>
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other
----------- -------- ----------- ----------- ------------ --------
Three months ended
<S> <C> <C> <C> <C> <C> <C>
September 30, 1999........ $ 156,990 $ 66,113 $ 29,487 $ 19,005 $ 23,802 $ 18,583
2000 Operations:
Same store operations(1).. 18,087 13,041 1,537 3,472 (1,088)(2) 1,125
Acquisitions and other.... 10,540 6,495 1,384 400 -- 2,261
----------- -------- ----------- -------- -------- --------
Three months ended
September 30, 2000........ $ 185,617 $ 85,649 $ 32,408 $ 22,877 $ 22,714 $ 21,969
=========== ======== =========== ======== ======== ========
% increase in same
store operations........ 11.5% 19.7% 5.2% 18.3% (4.6%)(2) 6.0%
</TABLE>
---------------------------
(1) Represents operations, which were owned for the same period in each year.
(2) Subsequent to March 12, 1999 (date the operations of the AmeriCold
Logistics Company were sold), the Company reflects its 60% share of the
Vornado/Crescent Partnerships' ("the Landlord") equity in the rental income
it receives from AmeriCold Logistics Company, its tenant, which leases the
underlying temperature controlled warehouses used in its business. Prior to
that date the Company reflected its equity in the operations.
Total rent was $42,617 and $128,728 for the third quarter and the nine
months ended September 30, 2000, of which the tenant deferred $4,800 and
$11,500. As at September 30, 2000, the balance of the tenant's deferred
rent is as follows:
<TABLE>
<CAPTION>
The Company's
Total Share
----- -----
<S> <C> <C>
2000:
Quarter ended September 30 $ 4,800 $ 2,880
Quarter ended June 30 6,700 4,020
-------- ---------
11,500 6,900
1999:
Quarter ended December 31 5,400 3,240
-------- ---------
$ 16,900 $ 10,140
======== =========
</TABLE>
Based on the Company's policy of recognizing rental income when earned and
collection is assured or cash is received, the Company did not recognize $2,880
of income from this tenant in the quarter ended September 30, 2000 and $5,280 in
the nine months ended September 30, 2000. The Company and this tenant are in
discussions regarding the restructuring of the leases.
Page 19
<PAGE> 20
Revenues
--------
The Company's revenues, which consist of property rentals, tenant expense
reimbursements and other income were $215,655 in the three months ended
September 30, 2000, compared to $182,821 in the prior year's quarter, an
increase of $32,834. This increase by segment resulted from:
<TABLE>
<CAPTION>
Date of
Acquisition/ Merchandise
Disposition Total Office Retail Mart Other
------------ ------- ------- ------- ----------- -------
Property Rentals:
Acquisitions:
<S> <C> <C> <C> <C> <C> <C>
909 Third Avenue July 99 $ 1,653 $ 1,653 $ -- $ -- $ --
595 Madison Avenue........... September 1999 3,003 3,003 -- -- --
Hotel Pennsylvania........... August 1999 1,577 -- -- -- 1,577
Student Housing Complex...... January 2000 1,130 -- -- -- 1,130
33 N. Dearborn Street........ September 2000 149 -- -- 149 --
------- ------- ------- ------- -------
7,512 4,656 -- 149 2,707
Dispositions:
Texas shopping centers....... March 2000 (1,074) -- (1,074) -- --
Westport, CT property........ August 2000 (257) (257) -- -- --
Leasing activity ................ 18,380 15,816 1,498 2,277 (1,211)
------- ------- ------- ------- -------
Total increase in property
rentals .................... 24,561 20,215 424 2,426 1,496
------- ------- ------- ------- -------
Tenant expense reimbursements:
Increase in tenant expense
reimbursements due to
acquisitions ............... 5,690 5,382 -- 48 260
Other ........................... 1,543 2,711 (282) (1,102) 216
------- ------- ------- ------- -------
Total increase in tenant
expense reimbursements ..... 7,233 8,093 (282) (1,054) 476
------- ------- ------- ------- -------
Other income .................... 1,040 156 509 218 157
------- ------- ------- ------- -------
Total increase in revenues ...... $32,834 $28,464 $ 651 $ 1,590 $ 2,129
======= ======= ======= ======= =======
</TABLE>
See Supplemental Information on page 29.
Page 20
<PAGE> 21
Expenses
--------
The Company's expenses were $121,030 in the three months ended September
30, 2000 compared to $103,804 in the prior year's quarter, an increase of
$17,226. This increase by segment resulted from:
<TABLE>
<CAPTION>
Merchandise
Total Office Retail Mart Other
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Operating:
Acquisitions .................. $ 7,572 $ 5,981 $ -- $ 106 $ 1,485
Same store operations ......... 275 3,221 (1,982) (390) (574)
-------- -------- -------- -------- --------
7,847 9,202 (1,982) (284) 911
======== ======== ======== ======== ========
Depreciation and
amortization:
Acquisitions .................. 1,098 569 -- 21 508
Same store operations ......... 2,699 1,918 716 260 (195)
-------- -------- -------- -------- --------
3,797 2,487 716 281 313
-------- -------- -------- -------- --------
General and administrative ........ 5,582 349 (299) (339) $ 5,871(1)
-------- -------- -------- -------- --------
$ 17,226 $ 12,038 $ (1,565) $ (342) $ 7,095
======== ======== ======== ======== ========
</TABLE>
----------
(1) This increase resulted primarily from amounts earned under a deferred
compensation arrangement, higher payroll and professional fees.
Income applicable to Alexander's (loan interest income, equity in
income and depreciation) was $1,306 in the three months ended September 30, 2000
compared to $1,610 in the prior year's quarter, a decrease of $304. This
decrease resulted primarily from the Company's share of Alexander's stock
appreciation rights compensation expense of $1,947 in the three months ended
September 30, 2000 based on Alexander's closing stock price of $81.75 at
September 30, 2000, partially offset by interest income on higher outstanding
loan balances to Alexander's.
Income from partially-owned entities was $26,808 in the three months
ended September 30, 2000, compared to $18,717 in the prior year's quarter, an
increase of $8,091. This increase by segment resulted from:
<TABLE>
<CAPTION>
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other
------- ------- ------- ----------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in equity
in income:
Temperature Controlled
Logistics ........................... $ 878(1) $ -- $ -- $ -- $ 878(1) $--
CESCR ................................. 1,237 1,237 -- -- -- --
Newkirk Joint
Ventures ............................ 2,909 -- -- -- -- 2,909
Hotel Pennsylvania .................... 1,081(2) -- -- -- 1,081(2)
Partially-owned office
buildings ........................... 224 224 -- -- -- --
Other ................................. 1,762 711 101 2,074 -- (1,124)
------- ------- ------- ------- ------- -------
$ 8,091 $ 2,172 $ 101 $ 2,074 $ 878 $ 2,866
======= ======= ======= ======= ======= =======
</TABLE>
----------
(1) Net of $2,880 of rent not recognized as income for the three months ended
September 30, 2000.
(2) Reflects the elimination of the Company's equity in income of the
commercial portion of the Hotel Pennsylvania which was wholly-owned as of
August 5, 1999, and accordingly consolidated.
Page 21
<PAGE> 22
Interest and other investment income (interest income on mortgage loans
receivable, other interest income, dividend income and net gains on sale of
marketable securities) was $7,571 for the three months ended September 30, 2000
compared to $4,222 in the prior year's quarter, an increase of $3,349. This
increase resulted primarily from higher average investments this year.
Interest and debt expense was $42,558 for the three months ended
September 30, 2000, compared to $35,085 in the prior year's quarter, an increase
of $7,473. This increase is primarily due to higher interest rates during the
period.
Net gain on sale of real estate of $8,405 resulted from the sale of the
Company's Westport, Connecticut office property on August 30, 2000 for
$24,000.
Minority interest was $28,038 for the three months ended September 30,
2000, compared to $14,322 in the prior year's quarter, an increase of $13,716.
The increase is primarily due to the issuance of perpetual preferred units.
Page 22
<PAGE> 23
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
For The Nine Months Ended September 30, 2000
-------------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(3)
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total revenues ....................... $ 609,679 $ 351,585 $ 130,664 $ 112,165 $ -- $ 15,265
Total expenses ....................... 340,608 197,729 53,859 59,119 -- 29,901
--------- --------- --------- --------- --------- ---------
Operating income ..................... 269,071 153,856 76,805 53,046 -- (14,636)
Income applicable to Alexander's ..... 7,463 -- -- -- -- 7,463(6)
Income from partially-owned entities . 74,447 22,588 987 4,752 24,684(4) 21,436
Interest and other investment income . 18,269 2,661 -- 719 -- 14,889
Interest and debt expense ............ (121,240) (44,830) (33,133) (27,860) -- (15,417)
Net gain on sale of real estate ...... 10,965 8,405 2,560 -- -- --
Minority interest .................... (75,582) (43,419) (13,667) (10,226) (8,234) (36)
--------- --------- --------- --------- --------- ---------
Income before extraordinary item ..... 183,393 99,261 33,552 20,431 16,450 13,699
Extraordinary item ................... (1,125) -- (1,125) -- -- --
--------- --------- --------- --------- --------- ---------
Net income ........................... 182,268 99,261 32,427 20,431 16,450 13,699
Extraordinary item ................... 1,125 -- 1,125 -- -- --
Minority interest .................... 75,582 43,419 13,667 10,226 8,234 36
Net gain on sale of real estate ...... (10,965) (8,405) (2,560) -- -- --
Interest and debt expense (2) ........ 189,818 71,064 35,078 27,860 20,946 34,870
Depreciation and amortization (2) .... 120,355 55,559 14,177 14,792 24,422 11,405
Straight-lining of rents (2) ......... (24,141) (15,817) (1,977) (4,523) (985) (839)
Other ................................ 6,964 (252) 269 -- 358 6,589
--------- --------- --------- --------- --------- ---------
EBITDA (1) ........................... $ 541,006 $ 244,829 $ 92,206 $ 68,786 $ 69,425 $ 65,760
========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months Ended September 30, 1999
----------------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(3)
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total revenues ....................... $ 513,307 $ 275,853 $ 127,684 $ 102,711 $ -- $ 7,059
Total expenses ....................... 294,174 165,045 53,202 56,441 -- 19,486
--------- --------- --------- --------- --------- ---------
Operating income ..................... 219,133 110,808 74,482 46,270 -- (12,427)
Income applicable to Alexander's ..... 4,951 -- -- -- -- 4,951
Income from partially-owned entities . 58,295 13,613 640 1,201 27,962 14,879
Interest and other investment income . 12,580 1,292 -- 566 -- 10,722
Interest and debt expense ............ (105,986) (35,444) (21,603) (21,331) -- (27,608)
Minority interest .................... (35,209) (16,162) (9,422) (4,703) (4,922) --
--------- --------- --------- --------- --------- ---------
Net income ........................... 153,764 74,107 44,097 22,003 23,040 (9,483)
Minority interest .................... 35,209 16,162 9,422 4,703 4,922 --
Interest and debt expense (2) ........ 167,907 59,171 23,568 21,331 20,090 43,747
Depreciation and amortization (2) .... 101,895 45,877 12,528 12,641 23,603 7,246
Straight-lining of rents (2) ......... (20,065) (13,118) (2,001) (3,504) (1,171) (271)
Other ................................ 1,227 (42) -- -- (252)(5) 1,521
--------- --------- --------- --------- --------- ---------
EBITDA (1) ........................... $ 439,937 $ 182,157 $ 87,614 $ 57,174 $ 70,232 $ 42,760
========= ========= ========= ========= ========= =========
</TABLE>
----------
(1) EBITDA represents income before interest, taxes, depreciation and
amortization, extraordinary or non-recurring items, gains or losses on
sales of real estate, the effect of straight-lining of property rentals for
rent escalations and minority interest. Management considers EBITDA a
supplemental measure for making decisions and assessing the performance of
its segments. EBITDA may not be comparable to similarly titled measures
employed by other companies.
(2) Interest and debt expense, depreciation and amortization and
straight-lining of rents included in the reconciliation of net income to
EBITDA reflects amounts which are netted in income from partially-owned
entities.
(3) Other includes primarily (i) the operations of the Company's warehouse and
industrial properties, (ii) investment in the Hotel Pennsylvania,
Alexander's and Newkirk Joint Ventures, (iii) corporate general and
administrative expenses and (iv) unallocated investment income and interest
and debt expense.
(4) Net of $5,280 of rent not recognized as income.
(5) Includes the reversal of income taxes (benefit for the nine months ended
September 30, 1999) which are considered non-recurring because of the
expected conversion of the Temperature Controlled Logistics Companies to
REITs.
(6) Net $2,272, of the Company's share of Alexander's stock appreciation rights
expense.
Page 23
<PAGE> 24
Below are the details of the changes by segment in EBITDA.
<TABLE>
<CAPTION>
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other
-------- -------- -------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Nine months ended
September 30, 1999 ............... $439,937 $182,157 $ 87,614 $ 57,174 $ 70,232 42,760
2000 Operations:
Same store operations(1).......... 48,444 31,977 3,758 11,212 (2,323)(2) 3,820
Acquisitions and other ........... 52,625 30,695 834 400 1,516 19,180
-------- -------- -------- ----------- ----------- --------
Nine months ended
September 30, 2000 ............... $541,006 $244,829 $ 92,206 $ 68,786 $ 69,425 $ 65,760
======== ======== ======== ======== ======== ========
% increase in same store operations ... 11.0% 17.6% 4.3% 19.6% (3.3%)(2) 8.9%
</TABLE>
----------
(1) Represents operations which were owned for the same period in each year.
(2) Net of $5,280 of rent not recognized as income.
Page 24
<PAGE> 25
Revenues
--------
The Company's revenues, which consist of property rentals, tenant expense
reimbursements and other income were $609,679 in the nine months ended September
30, 2000, compared to $513,307 in the prior year's nine months, an increase of
$96,372. This increase by segment resulted from:
<TABLE>
<CAPTION>
Date of
Acquisition/ Merchandise
Disposition Total Office Retail Mart Other
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Property Rentals:
Acquisitions:
888 Seventh Avenue.......... January 1999 $ 765 $ 765 $ -- $ -- $ --
909 Third Avenue............ July 1999 16,223 16,223 -- -- --
595 Madison Avenue.......... September 1999 10,195 10,195 -- -- --
Hotel Pennsylvania.......... August 1999 4,638 -- -- -- 4,638
Student Housing Complex..... January 2000 2,989 -- -- -- 2,989
33 N. Dearborn Street....... September 2000 149 -- -- 149 --
-------- -------- -------- -------- --------
34,959 27,183 -- 149 7,627
Dispositions:
Texas shopping centers.... March 2000 (1,624) -- (1,624) -- --
Westport, CT property..... August 2000 (257) (257) -- -- --
Leasing activity.............. 45,446 34,274 4,112 7,888 (828)
-------- -------- -------- -------- --------
Total increase in property
rentals................... 78,524 61,200 2,488 8,037 6,799
-------- -------- -------- -------- --------
Tenant expense reimbursements:
Increase in tenant expense
reimbursements due to
acquisitions........... 9,732 8,921 -- 48 763
Other.................... 6,490 5,245 23 808 414
-------- -------- -------- -------- --------
Total increase in tenant
expense reimbursements.... 16,222 14,166 23 856 1,177
-------- -------- -------- -------- --------
Other income.................. 1,626 366 469 561 230
-------- -------- -------- -------- --------
Total increase in revenues.... $ 96,372 $ 75,732 $ 2,980 $ 9,454 $ 8,206
======== ======== ======== ======== ========
</TABLE>
See Supplemental Information on page 29.
Expenses
--------
The Company's expenses were $340,608 in the nine months ended September
30, 2000 compared to $294,174 in the prior year's nine months, an increase of
$46,434. This increase by segment resulted from:
<TABLE>
<CAPTION>
Merchandise
Total Office Retail Mart Other
-------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Operating:
Acquisitions .......... $ 20,060 $ 16,099 $ -- $ 106 $ 3,855
Same store operations.. 6,971 8,157 (1,008) 483 (661)
-------- -------- -------- -------- --------
27,031 24,256 (1,008) 589 3,194
-------- -------- -------- -------- --------
Depreciation and
amortization:
Acquisitions............ 4,879 3,345 -- 21 1,513
Same store operations... 7,772 4,036 1,549 2,130 57
-------- -------- -------- -------- --------
12,651 7,381 1,549 2,151 1,570
-------- -------- -------- -------- --------
General and administrative.. 6,752 1,047 116 (62) 5,651(1)
-------- -------- -------- -------- --------
$ 46,434 $ 32,684 $ 657 $ 2,678 $ 10,415
======== ======== ======== ======== ========
</TABLE>
(1) This increase resulted primarily from amounts earned under a deferred
compensation arrangement, higher payroll and professional fees.
Page 25
<PAGE> 26
Income applicable to Alexander's (loan interest income, equity in income
and depreciation) was $7,463 in the nine months ended September 30, 2000,
compared to $4,951 in the prior year's nine months, an increase of $2,512. This
increase resulted primarily from interest income on higher outstanding loan
balances to Alexander's, partially offset by the Company's share of Alexander's
stock appreciation rights compensation expense of $2,272 in the nine months
ended September 30, 2000, based on Alexander's closing stock price of $81.75 at
September 30, 2000.
Income from partially-owned entities was $74,447 in the nine months ended
September 30, 2000, compared to $58,295 in the prior year's nine months, an
increase of $16,152. This increase by segment resulted from:
<TABLE>
<CAPTION>
Temperature
Date of Merchandise Controlled
Acquisition Total Office Retail Mart Logistics Other
------------ -------- -------- -------- ----------- ---------- ----------
Acquisitions:
<S> <C> <C> <C> <C> <C> <C> <C>
Newkirk Joint Ventures ......... March 1999 $ 2,304 $ -- $ -- $ -- $ -- $ 2,304
Other .......................... Various (911) -- -- -- (911)
-------- -------- -------- -------- -------- --------
1,393 1,393
Increase (decrease) in equity
in income:
Temperature Controlled
Logistics .................. (3,278)(1) -- -- -- (3,278)(1) --
CESCR ........................ 6,794 6,794 -- -- -- --
Newkirk Joint Ventures ....... 5,034 (2) -- -- -- -- 5,034(2)
Hotel Pennsylvania ........... 1,820 (3) -- -- -- -- 1,820(3)
Partially-owned office .......
buildings .................... 1,152 1,152 -- -- -- --
Other ........................ 3,237 1,029 347 3,551 -- (1,690)
-------- -------- -------- -------- -------- --------
$ 16,152 $ 8,975 $ 347 $ 3,551 $ (3,278) $ 6,557
======== ======== ======== ======== ======== ========
</TABLE>
-------------
(1) Net of $5,280 of rent not recognized as income in the nine months ended
September 30, 2000.
(2) Includes the Company's share of an extraordinary gain of $652 resulting
from the prepayment of debt.
(3) Reflects the elimination of the Company's equity in income of the
commercial portion of the Hotel Pennsylvania which was wholly-owned as of
August 5, 1999 and accordingly consolidated.
Interest and other investment income was $18,269 for the nine months ended
September 30, 2000, compared to $12,580 in the prior year's nine months, an
increase of $5,689. This increase resulted primarily from higher average
investments this year.
Interest and debt expense was $121,240 for the nine months ended September
30, 2000, compared to $105,986 prior year's nine months, an increase of $15,254.
This increase resulted primarily from higher average interest rates.
Net gain on sale of real estate of $10,965, resulted from (i) sale of
three Texas shopping center properties on March 2, 2000, for $25,750, resulting
in a gain of $2,560 and (ii) the sale of the Company's Westport, Connecticut
office property on August 30, 2000 for $24,000, resulting in a gain of $8,405.
Minority interest was $75,582 for the nine months ended September 30,
2000, compared to $35,209 in the prior year's nine months, an increase of
$40,373. This increase is primarily due to the issuance of perpetual preferred
units.
The Company incurred an extraordinary loss of $1,125 in the first quarter
of this year due to the write-off of unamortized financing costs in connection
with prepayment of debt.
Preferred stock dividends were $29,017 for the nine months ended September
30, 2000, compared to $23,765 in the prior year's nine months, an increase of
$5,252. This increase resulted from the issuance of the Company's Series B
Cumulative Redeemable Preferred Shares in March 1999 and its Series C Cumulative
Redeemable Preferred Shares in May 1999.
Page 26
<PAGE> 27
LIQUIDITY AND CAPITAL RESOURCES
Nine Months Ended September 30, 2000
Cash flows provided by operating activities of $145,148 was primarily
comprised of (i) income of $182,268 and (ii) adjustments for non-cash items of
$32,340, offset by (iii) the net change in operating assets and liabilities of
$77,480 and (iv) the net gain on sale of real estate of $10,965. The adjustments
for non-cash items are primarily comprised of (i) depreciation and amortization
of $72,966 and (ii) minority interest of $75,582, partially offset by (iii) the
effect of straight-lining of rental income of $25,368 and (iv) equity in net
income of partially-owned entities and income applicable to Alexander's of
$72,980.
Net cash used in investing activities of $503,425 was primarily comprised
of (i) capital expenditures of $106,579, (ii) investment in notes and mortgages
receivable of $142,251, (iii) acquisitions of real estate of $27,360, (iv)
investments in partially-owned entities of $74,694, (v) cash restricted of
$183,379, of which $173,500 represents funds escrowed in connection with a
mortgage financing, partially offset by (vi) proceeds from the sale of real
estate of $46,832 and distributions from partially-owned entities of $14,870.
Below are the details of acquisitions of real estate, investments in
partially-owned entities, investments in notes and mortgages receivable and
capital expenditures.
<TABLE>
<CAPTION>
Debt Value of
Cash Assumed Units Issued Investment
--------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Acquisitions of Real Estate:
Student Housing Complex (90% Interest)................ $ 6,660 $ 17,640 $ -- $ 24,300
33 N. Dearborn Street................................. 16,000 19,000 -- 35,000
Other................................................. 4,700 -- -- 4,700
--------- ---------- ------------- -------------
$ 27,360 $ 36,640 $ -- $ 64,000
========= ========== ============= =============
Investments in Partially-Owned Entities:
Vornado Ceruzzi Joint Venture (80% interest).......... $ 18,220 $ -- $ -- $ 18,220
Additional investment in Newkirk...................... 1,231 -- 6,119 7,350
Loan to Alexander's................................... 15,000 -- -- 15,000
Funding of Development Expenditures:
Fort Lee (75% interest)............................. 9,898 -- -- 9,898
Park Laurel (80% interest).......................... 30,345 -- -- 30,345
--------- ---------- ------------- -------------
$ 74,694 $ -- $ 6,119 $ 80,813
========= ========== ============= =============
Investments in Notes and Mortgages receivable:
Loan to NorthStar Partnership L.P..................... $ 65,000 $ -- $ -- $ 65,000
Loan to Primestone Investment Partners, L.P........... 62,000 -- -- 62,000
Advances to Vornado Operating Company................. 15,251 -- -- 15,251
--------- ---------- ------------- -------------
$ 142,251 $ -- $ -- $ 142,251
========= ========== ============= =============
</TABLE>
<TABLE>
<CAPTION>
New York Merchandise
Total City Office Retail Mart Other
---------- ----------- ------ ----------- --------
<S> <C> <C> <C> <C> <C>
Capital expenditures:
Expenditures to maintain the assets....... $ 12,735 $ 8,068 $ 542 $ 4,010 $ 115
Tenant allowances......................... 42,808 36,901 2,651 3,044 212
Redevelopment and development
expenditures............................ 34,293 18,465 1,883 13,945 --
Corporate (primarily relocation of
offices)............................... 16,743 -- -- -- 16,743
---------- --------- ------ -------- --------
$ 106,579 $ 63,434 $5,076 $ 20,999 $ 17,070
========== ========= ====== ======== ========
</TABLE>
Net cash provided by financing activities of $409,931 was primarily
comprised of (i) proceeds from borrowings of $1,048,036, (ii) proceeds from
issuance of preferred units of $195,847, partially offset by, (iii) repayments
of borrowings of $629,891, (iv) dividends paid on common shares of $124,501 (v)
dividends paid on preferred shares of $17,907, and (vi) distributions to
minority partners of $53,548.
Page 27
<PAGE> 28
Nine Months Ended September 30, 1999
Cash flows provided by operating activities of $127,833 was primarily
comprised of (i) net income of $153,764 and (ii) adjustments for non-cash items
of $17,251, offset by (iii) the net change in operating assets and liabilities
of $50,410 (primarily prepaid expenses). The adjustments for non-cash items are
primarily comprised of (i) depreciation and amortization of $60,315 and (ii)
minority interest of $35,209, partially offset by (iii) the effect of
straight-lining of rental income of $23,387 and (iv) equity in net income of
partially-owned entities in excess of distributions of $47,276.
Net cash used in investing activities of $338,239 was primarily comprised
of (i) capital expenditures of $113,945 (see detail below), (ii) investment in
notes and mortgages receivable of $53,380 (including $41,200 loan to CAPI and
$18,587 loan to Vornado Operating Company), (iii) acquisitions of real estate of
$182,400 (see detail below) and (iv) investments in partially-owned entities of
$35,845 (see detail below), partially offset by (v) the use of cash restricted
for tenant improvements of $25,785, (vi) proceeds from the sale of Cold Storage
assets of $22,769 and (vii) proceeds from the repayment of mortgage loans
receivable of $14,000 (Vornado Operating Company).
Acquisitions of real estate and investments in partially-owned entities
are comprised of:
<TABLE>
<CAPTION>
Debt Value of Units Assets
Cash Assumed Issued Acquired
---------- ---------- -------------- -------------
Real Estate:
<S> <C> <C> <C> <C>
595 Madison Avenue Office Building................ $ 125,000 $ -- $ -- $ 125,000
909 Third Avenue Office Building.................. 12,400 109,000 1,600 123,000
888 Seventh Avenue Office Building................ 45,000 55,000 -- 100,000
---------- ---------- ----------- -------------
$ 182,400 $ 164,000 $ 1,600 $ 348,000
========== ========== =========== =============
Investments in Partially-Owned Entities:
Charles E. Smith Commercial Realty L.P.:
Additional investment........................... $ -- $ -- $ 242,000 $ 242,000
Reacquired units from Vornado Operating
Company....................................... 13,200 -- -- 13,200
Crystal City hotel land......................... -- -- 8,000 8,000
Additional investment in Newkirk Joint Ventures... 4,645 -- 47,790 52,435
Additional 20% investment in Hotel Pennsylvania... 18,000 24,000 -- 42,000
---------- ---------- ----------- -------------
$ 35,845 $ 24,000 $ 297,790 $ 357,635
========== ========== =========== =============
</TABLE>
Capital expenditures were comprised of:
<TABLE>
<CAPTION>
New
York City Merchandise
Office Retail Mart Other Total
--------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C>
Expenditures to maintain the assets................... $ 8,564 $ 984 $ 5,433 $ 4,912 $ 19,893
Tenant allowances..................................... 14,604 953 11,294 -- 26,851
Redevelopment expenditures............................ 43,854 17,745 5,602 -- 67,201
-------- -------- -------- -------- --------
$ 67,022 $ 19,682 $ 22,329 $ 4,912 $113,945
======== ======== ======== ======== ========
</TABLE>
Net cash provided by financing activities of $183,350 was primarily
comprised of (i) repayments of borrowings of $394,975, (ii) dividends paid on
common shares of $112,390, (iii) dividends paid on preferred shares of $21,608,
and (iv) distributions to minority partners of $23,491 partially offset by, (v)
proceeds from issuance of preferred shares of $193,282, (vi) proceeds from
issuance of units of $343,155 and (vii) proceeds from borrowings of $205,000.
Page 28
<PAGE> 29
SUPPLEMENTAL INFORMATION
The following table sets forth certain information for properties the
Company owns directly or indirectly, including leasing activity for space
previously occupied:
<TABLE>
<CAPTION>
Office Merchandise Mart
--------------------- ---------------------- Temperature
New York Controlled
City CESCR(1) Retail Office(2) Showroom(2) Logistics
-------- ------- ------ -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
(square feet and cubic feet in thousands)
As of September 30, 2000:
Square feet.................................... 14,294 4,083 11,960 3,079 4,390 17,943
Cubic feet..................................... -- -- -- -- -- 450,900
Number of properties........................... 22 47 56 8 7 91
Occupancy rate................................. 97% 98% 94% 93% 97% 95%
Leasing Activity:
For the three months ended September 30, 2000:
Square Feet................................ 249 159 107 43 185 --
Rent per Square Foot:
Initial rent (3)......................... $ 49.80 $ 29.20 $ 14.49 $ 26.00 $ 18.20 --
Prior escalated rent..................... $ 35.82 $ 26.70 $ 12.90 $ 17.58 $ 13.28 --
Percentage increase..................... 39% 9% 12% 48% 37% --
For the nine months ended September 30, 2000:
Square Feet................................ 1,024 592 557(4) 60 532 --
Rent per Square Foot:
Initial rent (3)......................... $ 45.25 $ 28.71 $ 17.14 $ 24.87 $ 20.41 --
Prior escalated rent..................... $ 31.43 $ 26.03 $ 14.01 $ 21.11 $ 16.91 --
Percentage increase..................... 44% 10% 22%(4) 18% 21% --
As of June 30, 2000:
Square feet.................................... 14,200 3,943 11,960 2,739 4,317 18,073
Cubic feet..................................... -- -- -- -- -- 454,500
Number of properties........................... 22 44 56 7 7 92
Occupancy rate................................. 97% 98% 94% 89% 99% 95%
As of March 31, 2000:
Square feet.................................... 14,200 3,782 11,960 2,739 4,317 17,770
Cubic feet..................................... -- -- -- -- -- 455,000
Number of properties........................... 22 40 56 7 7 90
Occupancy rate................................. 95% 95% 93% 88% 99% 95%
As of December 31, 1999:
Square feet.................................... 14,028 3,623 11,960 2,414 4,174 16,998
Cubic feet..................................... -- -- -- -- -- 428,300
Number of properties........................... 22 39 56 7 7 89
Occupancy rate................................. 95% 99% 92% 93% 98% 95%
As of September 30, 1999:
Square feet.................................... 12,479 3,620 12,133 2,322 4,457 16,687
Cubic feet..................................... -- -- -- -- -- 423,100
Number of properties........................... 21 38 59 7 7 87
Occupancy rate................................. 92% 98% 93% 95% 96% 92%
</TABLE>
-------------------------------
(1) Represents the Company's 34% interest.
(2) The office and showroom space is contained in the same mixed-use
properties.
(3) Most leases include periodic step-ups in rent, which are not reflected in
the initial rent per square foot leased.
(4) Includes an increase in rent of $1,200 per annum to $4,600 per annum from
the extension of Bradlees' 232 square foot lease at the 14th Street and
Union Square property. Excluding the effect of this increase in rent the
initial rent would be $15.22, a 12% increase over the prior escalated rent.
Page 29
<PAGE> 30
Funds from Operations for the Three and Nine Months Ended September 30,
2000 and 1999
Funds from operations was $84,629 in the three months ended September 30,
2000, compared to $76,462 in the prior year's quarter, an increase of $8,167.
Funds from operations was $247,808 in the nine months ended September 30, 2000,
compared to $216,876 in the prior year's nine months, an increase of $30,932.
The following table reconciles funds from operations and net income:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2000 1999 2000 1999
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net income applicable to common shares...... $ 58,447 $ 44,487 $ 153,251 $ 129,999
Extraordinary item.......................... -- -- 1,125 --
Depreciation and amortization of real
property................................ 24,587 21,623 71,665 59,320
Straight-lining of property rentals for
rent escalations........................ (9,429) (6,467) (22,466) (18,317)
Leasing fees received in excess of income
recognized.............................. 409 727 1,379 1,528
Appreciation of securities held in officer's
deferred compensation trust............. 2,183 (2,007) 3,673 (340)
Net gain on sale of real estate............. (8,405) -- (10,965) --
Gain on sale of securities available
for sale................................ -- -- -- (383)
Proportionate share of adjustments to equity
in net income of partially-owned entities
to arrive at funds from operations...... 14,820 16,492 45,196 40,346
Minority interest in excess of preferential
distributions........................... (3,405) (3,815) (11,317) (6,122)
--------- --------- --------- ---------
79,207 71,040 231,541 206,031
Series A preferred shares................... 5,422 5,422 16,267 10,845
--------- --------- --------- ---------
$ 84,629 $ 76,462 $ 247,808 $ 216,876
========= ========= ========= =========
</TABLE>
The number of shares that should be used for determining funds from
operations per share is as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Weighted average shares used for determining
diluted income per share................. 89,713 87,489 88,624 87,338
Series A preferred shares................ 8,018 8,018 8,018 5,345
------ ------ ------ ------
Shares used for determining diluted
funds from operations per share.......... 97,731 95,507 96,642 92,683
====== ====== ====== ======
</TABLE>
Page 30
<PAGE> 31
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 reported by other REITs since a number of REITs, including the
Company, calculate funds from operations in a manner different from that used by
the National Association of Real Estate Investment Trusts ("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 from this definition to adjust for (i) the effect of
straight-lining of property rentals for rent escalations and leasing fee income
(ii) the reversal of income taxes (benefit for the period ended September 30,
1999) which is considered non-recurring because of the expected conversion of
the Temperature Controlled Logistics Companies to REITs, and (iii) the
exclusion of a reduction in interest expense in 2000 resulting from the
amortization of the excess of fair value of Newkirk Joint Venture limited
partnership's debt over its face amount at date of acquisition.
Below are the cash flows provided by (used in) operating, investing and
financing activities:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operating activities................. $ 40,597 $ 41,037 $ 145,148 $ 127,833
============== ============== ============== ==============
Investing activities................. $ (382,569) $ (195,919) $ (494,495) $ (338,239)
============== ============== ============== ==============
Financing activities................. $ 407,119 $ 234,120 $ 409,931 $ 183,350
============== ============== ============== ==============
</TABLE>
The Company is currently engaged in planning development and redevelopment
projects in the Penn Plaza area in which it owns approximately 6,700,000 square
feet of office, retail and hotel space. These projects include the redevelopment
of the Hotel Pennsylvania, the redevelopment of retail space and the creation of
new retail space at Two Penn Plaza, the development of retail space at the
GreenPoint site adjacent to One Penn Plaza, and the redevelopment of two prime
retail sites, one at the corner of 34th Street and Seventh Avenue and the other
at the corner of 34th Street and Eighth Avenue. Three of these projects, which
will take one to two years to complete, are expected to commence in the next
twelve months: (i) the construction of approximately 40,000 square feet of
retail space and the redevelopment of 48,000 square feet of existing retail
space at Two Penn Plaza, (ii) the demolition of existing buildings at 34th
Street and 7th Avenue and the construction of 40,000 square feet of retail
space and 140,000 square feet of office space and (iii) the redevelopment of an
existing building at the Green Point site adjacent to One Penn Plaza and
construction of approximately 60,000 square feet of retail space. The estimated
capital required for these projects is approximately $160,000.
In addition, the construction of 435,000 square feet of new showrooms in
High Point North Carolina has commenced. This project is estimated to cost
$40,000 (approximately $4,000 has been expended through September 30, 2000) and
is expected to be completed in Fall 2001.
No cash requirements have been budgeted for the development or
redevelopment projects of Alexander's or CESCR, which are partially-owned by the
Company. These investees are expected to fund their own cash requirements.
Page 31
<PAGE> 32
Financings
On March 1, 2000, the Company completed a $500 million private placement
of 10-year, 7.93% mortgage notes, cross-collateralized by 42 shopping center
properties, resulting in net proceeds of approximately $490 million. In
connection therewith, the Company repaid $228 million of existing mortgage debt
scheduled to mature on December 1, 2000 and $262 million outstanding under its
revolving credit facility.
On March 1, 2000, the Company refinanced its Two Park Avenue office
building for $90 million. On such date, the Company received proceeds of $65
million and repaid the then existing debt in the same amount. The balance of the
proceeds was received on April 18, 2000. The new 3-year debt matures on February
28, 2003 and bears interest at LIBOR + 1.45% (8.09% at September 30, 2000).
On March 21, 2000, the Company renewed its $1 billion revolving credit
facility for an additional three years. The covenants of the facility include,
among others, maximum loan to value ratio, minimum debt service coverage and
minimum capitalization requirements. Interest is at LIBOR plus .90% (7.54% at
September 30, 2000). The Company paid origination fees of $6.7 million and pays
a commitment fee quarterly, over the remaining term of the facility of .15% per
annum on the facility amount.
On August 11, 2000, the Company completed a $173,500 mortgage financing,
cross-collateralized by its 770 Broadway and 595 Madison Avenue office
buildings. The loan bears interest at LIBOR + .40% (7.04% at September 30, 2000)
and matures on August 1, 2002. At September 30, 2000, the proceeds of the loan
are in a restricted cash account, which bears interest at the same rate as the
loan.
The Company anticipates that cash from continuing operations will be
adequate to fund business operations and the payment of dividends and
distributions on an on-going basis for more than the next twelve months;
however, capital outlays for significant acquisitions would require funding from
borrowings or equity offerings.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
At September 30, 2000 the Company's exposure to a change in interest rates
on its wholly-owned and partially-owned debt is as follows:
(amounts in thousands except per share amounts)
<TABLE>
<CAPTION>
Weighted Effect of 1%
Average Increase In
Balance Interest Rate Base Rates
------- ------------- ------------
<S> <C> <C> <C>
Wholly-owned debt:
Variable rate............... $1,448,173 7.93% $ 12,747(1)
Fixed rate.................. 1,055,416 7.61% --
---------- -----------
$2,503,589 12,747
========== -----------
Partially-owned debt:
Variable rate............... $ 191,418 8.27% 1,914
Fixed rate.................. 1,057,990 7.73% --
---------- -----------
$1,249,408 1,914
========== -----------
Minority interest.................. (2,140)
-----------
Total decrease in the
Company's annual net income...... $ 12,521
===========
Per share-diluted............. $ .14
===========
</TABLE>
---------
(1) Excludes the effect of a $173,500 mortgage financing, cross-collateralized
by the Company's 770 Broadway and 595 Madison Avenue office buildings, as
the proceeds are in a restricted mortgage escrow account which bears
interest at the same rate as the loan.
Page 32
<PAGE> 33
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is from time to time involved in legal actions arising in the
ordinary course of its business. In the opinion of management, after
consultation with legal counsel, the outcome of such matters will not have a
material adverse effect on the Company's financial condition, results of
operations or cash flows.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K are incorporated herein
by reference and are listed in the attached Exhibit Index.
(b) Reports on Form 8-K
During the quarter ended September 30, 2000, Vornado Realty Trust filed no
reports on Form 8-K.
Page 33
<PAGE> 34
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 thereunto duly authorized.
VORNADO REALTY TRUST
-------------------------------------------
(Registrant)
Date: November 2, 2000 By: /s/ Irwin Goldberg
-------------------------------------------
IRWIN GOLDBERG
Vice President, Chief Financial Officer
Page 34
<PAGE> 35
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<S> <C> <C>
3.1 -- Amended and Restated Declaration of Trust of Vornado, amended April 3, 1997--Incorporated by
reference to Exhibit 3.1 of Vornado's Registration Statement on Form S-8 (File No. 333-29011),
filed on June 12, 1997......................................................................... *
3.2 -- Articles of Amendment of Declaration of Trust of Vornado, as filed with the State Department of
Assessments and Taxation of Maryland on October 14, 1997 - Incorporated by reference to
Exhibit 3.2 of Vornado's Registration Statement on Form S-3 (File No. 333-36080), filed on May
2, 2000........................................................................................ *
3.3 -- Articles of Amendment of Declaration of Trust of Vornado, as filed with the State Department of
Assessments and Taxation of Maryland on April 22, 1998 - Incorporated by reference to Exhibit
3.1 of Vornado's Current Report on Form 8-K, dated April 22, 1998 (File No. 001-11954), filed
on April 28, 1998.............................................................................. *
3.4 -- Articles of Amendment of Declaration of Trust of Vornado, as filed with the State Department of
Assessments and Taxation of Maryland on November 24, 1999 - Incorporated by reference to
Exhibit 3.4 of Vornado's Registration Statement on Form S-3 (File No. 333-36080), filed on May
2, 2000........................................................................................ *
3.5 -- Articles of Amendment of Declaration of Trust of Vornado, as filed with the State Department of
Assessments and Taxation of Maryland on April 20, 2000 - Incorporated by reference to Exhibit
3.5 of Vornado's Registration Statement on Form S-3 (File No. 333-36080), filed on May 2, 2000. *
3.6 -- Articles Supplementary Classifying Vornado's $3.25 Series A Preferred Shares of Beneficial
Interest, liquidation preference $50.00 per share - Incorporated by reference to Exhibit 4.1
of Vornado's Current Report on Form 8-K, dated April 3, 1997 (File No. 001-11954), filed on
April 8, 1997.................................................................................. *
3.7 -- Articles Supplementary Classifying Vornado's Series D-1 8.5% Cumulative Redeemable Preferred
Shares of Beneficial Interest, no par value (the "Series D-1 Preferred Shares") - Incorporated
by reference to Exhibit 3.1 of Vornado's Current Report on Form 8-K, dated November 12, 1998
(File No. 001-11954), filed on November 30, 1998............................................... *
3.8 -- Articles Supplementary Classifying Additional Series D-1 Preferred Shares - Incorporated by
reference to Exhibit 3.2 of Vornado's Current Report on Form 8-K/A, dated November 12, 1998
(File No. 001-11954), filed on February 9, 1999................................................ *
3.9 -- Articles Supplementary Classifying 8.5% Series B Cumulative Redeemable Preferred Shares of
Beneficial Interest, liquidation preference $25.00 per share, no par value - Incorporated by
reference to Exhibit 3.3 of Vornado's Current Report on Form 8-K, dated March 3, 1999 (File
No. 001-11954), filed on March 17, 1999........................................................ *
3.10 -- Articles Supplementary Classifying Vornado's Series C Preferred Shares - Incorporated by
reference to Exhibit 3.7 of Vornado's Registration Statement on Form 8-A (File No. 001-11954),
filed on May 19, 1999.......................................................................... *
</TABLE>
-------
* Incorporated by reference
Page 35
<PAGE> 36
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<S> <C> <C>
3.11 -- Articles Supplementary Classifying Vornado Realty Trust's Series D-2 Preferred Shares, dated as
of May 27, 1999, as filed with the State Department of Assessments and Taxation of Maryland on
May 27, 1999 - Incorporated by reference to Exhibit 3.1 of Vornado's Current Report on Form
8-K, dated May 27, 1999 (File No. 001-11954), filed on July 7, 1999............................ *
3.12 -- Articles Supplementary Classifying Vornado's Series D-3 Preferred Shares, dated September 3,
1999, as filed with the State Department of Assessments and Taxation of Maryland on September
3, 1999 - Incorporated by reference to Exhibit 3.1 of Vornado's Current Report on Form 8-K,
dated September 3, 1999 (File No. 001-11954), filed on October 25, 1999........................ *
3.13 -- Articles Supplementary Classifying Vornado's Series D-4 Preferred Shares, dated September 3,
1999, as filed with the State Department of Assessments and Taxation of Maryland on September
3, 1999 - Incorporated by reference to Exhibit 3.2 of Vornado's Current Report on Form 8-K,
dated September 3, 1999 (File No. 001-11954), filed on October 25, 1999........................ *
3.14 -- Articles Supplementary Classifying Vornado's Series D-5 Preferred Shares - Incorporated by
reference to Exhibit 3.1 of Vornado's Current Report on Form 8-K, dated November 24, 1999
(File No. 001-11954), filed on December 23, 1999............................................... *
3.15 -- Articles Supplementary to Declaration of Trust of Vornado Realty Trust with respect to the
Series D-6 Preferred Shares, dated May 1, 2000, as filed with the State Department of
Assessments and Taxation of Maryland on May 1, 2000 - Incorporated by reference to Exhibit 3.1
of Vornado's Current Report on Form 8-K, dated May 1, 2000 (File No. 001-11954), filed May 19,
2000........................................................................................... *
3.16 -- Articles Supplementary to Declaration of Trust of Vornado Realty Trust with respect to the
Series D-7 Preferred Shares, dated May 25, 2000, as filed with the State Department of
Assessments and Taxation of Maryland on June 1, 2000 - Incorporated by reference to Exhibit
3.1 of Vornado's Current Report on Form 8-K, dated May 25, 2000 (File No. 001-11954) filed on
June 16, 2000.................................................................................. *
3.17 -- Amended and Restated Bylaws of Vornado, as amended on March 2, 2000 - Incorporated by reference
to Exhibit 3.12 of Vornado's Annual Report on Form 10-K for the period ended December 31, 1999
(File No. 1-11954), filed on March 9, 2000..................................................... *
3.18 -- Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated
as of October 20, 1997 - Incorporated by reference to Exhibit 3.4 of Vornado's Annual Report
on Form 10-K for the year ended December 31, 1997 filed on March 31, 1998 (the "1997 10-K").... *
3.19 -- Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado Realty
L.P., dated as of December 16, 1997--Incorporated by reference to Exhibit 3.5 of the 1997 10-K. *
3.20 -- Second Amendment to Second Amendment and Restated Agreement of Limited Partnership of the
Operating Partnership of the Operating Partnership, dated as of April 1, 1998 - Incorporated
by reference to Exhibit 3.5 of Vornado's Registration Statement on Form S-3 (File No.
333-50095), filed on April 14, 1998............................................................ *
3.21 -- Third Amendment to Second Amended and Restated Agreement of Limited Partnership of the Operating
Partnership, dated as of November 12, 1998 - Incorporated by reference to Exhibit 3.2 of
Vornado's Current Report on Form 8-K, dated November 12, 1998 (File No. 001-11954), filed on
November 30, 1998.............................................................................. *
</TABLE>
--------------
* Incorporated by reference
Page 36
<PAGE> 37
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<S> <C> <C>
3.22 -- Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership of the
Operating Partnership, dated as of November 30, 1998 - Incorporated by reference to Exhibit
3.1 of Vornado's Current Report on Form 8-K, dated December 1, 1998 (File No. 001-11954),
filed on February 9, 1999...................................................................... *
3.23 -- Exhibit A, dated as of December 22, 1998, to Second Amended and Restated Agreement of Limited
Partnership of the Operating Partnership - Incorporated by reference to Exhibit 3.4 of
Vornado's Current Report on Form 8-K/A, dated November 12, 1998 (File No. 001-11954), filed on
February 9, 1999............................................................................... *
3.24 -- Fifth Amendment to Second Amended and Restated Agreement of Limited Partnership of the Operating
Partnership, dated as of March 3, 1999 - Incorporated by reference to Exhibit 3.1 of Vornado's
Current Report on Form 8-K, dated March 3, 1999 (File No. 001-11954), filed on March 17, 1999... *
3.25 -- Exhibit A to Second Amended and Restated Agreement of Limited Partnership of the Operating
Partnership, dated as of March 11, 1999 - Incorporated by reference to Exhibit 3.2 of
Vornado's Current Report on Form 8-K, dated March 3, 1999 (File No. 001-11954), filed on March
17, 1999....................................................................................... *
3.26 -- Sixth Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado
Realty L.P., dated as of March 17, 1999 - Incorporated by reference to Exhibit 3.2 of Vornado's
Current Report on Form 8-K, dated May 27, 1999 (File No. 001-11954), filed on July 7, 1999....... *
3.27 -- Seventh Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado
Realty L.P., dated as of May 20, 1999 - Incorporated by reference to Exhibit 3.3 of Vornado's
Current Report on Form 8-K, dated May 27, 1999 (File No. 001-11954), filed on July 7, 1999....... *
3.28 -- Eighth Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado
Realty L.P., dated as of May 20, 1999 - Incorporated by reference to Exhibit 3.4 of Vornado's
Current Report on Form 8-K, dated May 27, 1999 (File No. 001-11954), filed on July 7, 1999....... *
3.29 -- Ninth Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado
Realty L.P., dated as of September 3, 1999 - Incorporated by reference to Exhibit 3.3 of
Vornado's Current Report on Form 8-K, dated September 3, 1999 (File No. 001-11954), filed on
October 25, 1999................................................................................. *
3.30 -- Tenth Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado
Realty L.P., dated as of September 3, 1999 - Incorporated by reference to Exhibit 3.4 of
Vornado's Current Report on Form 8-K, dated September 3, 1999 (File No. 001-11954), filed on
October 25, 1999................................................................................. *
3.31 -- Eleventh Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado
Realty L.P., dated as of November 24, 1999 - Incorporated by reference to Exhibit 3.2 of
Vornado's Current Report on Form 8-K, dated November 24, 1999 (File No. 001-11954), filed on
December 23, 1999................................................................................ *
</TABLE>
---------
* Incorporated by reference
Page 37
<PAGE> 38
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<S> <C> <C>
3.32 -- Twelfth Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado
Realty L.P., dated as of May 1, 2000 - Incorporated by reference to Exhibit 3.2 of Vornado's
Current Report of Form 8-K, dated May 1, 2000 (File No. 001-11954), filed on May 19, 2000...... *
3.33 -- Thirteenth Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado
Realty L.P., dated as of May 25, 2000 - Incorporated by reference to Exhibit 3.2 of Vornado's
Current Report on Form 8-K, dated May 25, 2000 (File No. 001-11954), filed on June 16, 2000.... *
4.1 -- Instruments defining the rights of security holders (see Exhibits 3.1 through 3.33 of this
Quarterly Report on Form 10-Q)
4.2 -- Indenture dated as of November 24, 1993 between Vornado Finance Corp. and Bankers Trust Company,
as Trustee - Incorporated by reference to Vornado's current Report on Form 8-K dated November
24, 1993 (File No. 001-11954), filed December 1, 1993.......................................... *
4.3 -- Specimen certificate representing Vornado's Common Shares of Beneficial Interest, par value
$0.04 per share - Incorporated by reference to Exhibit 4.1 of Amendment No. 1 to Registration
Statement on Form S-3 (File No. 33-62395), filed on October 26, 1995........................... *
4.4 -- Specimen certificate representing Vornado's $3.25 Series A Preferred Shares of Beneficial
Interest, liquidation preference $50.00 per share - Incorporated by reference to Exhibit 4.2
of Vornado's Current Report on Form 8-K, dated April 3, 1997 (File No. 001-11954), filed on
April 8, 1997.................................................................................. *
4.5 -- Specimen certificate evidencing Vornado's Series B 8.5% Cumulative Redeemable Preferred Shares
of Beneficial Interest - Incorporated by reference to Exhibit 4.2 of Vornado's Registration
Statement on Form 8-A (File No. 001-11954), filed on March 15, 1999............................ *
4.6 -- Specimen certificate evidencing Vornado's 8.5% Series C Cumulative Redeemable Preferred Shares
of Beneficial Interest, liquidation preferences $25.00 per share, no par value - Incorporated
by reference to Exhibit 4.2 of Vornado's Registration Statement on Form 8-A (File No.
001-11954), filed May 19, 1999................................................................. *
27 -- Financial Data Schedule
</TABLE>
---------
* Incorporated by reference
Page 38
