<PAGE> 1
EXHIBIT INDEX ON PAGE 33
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: JUNE 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)
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)
(212) 894-7000
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
PARK 80 WEST, PLAZA II, SADDLE BROOK, NEW JERSEY 07663
--------------------------------------------------------------------------------
(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 August 1, 2000 there were 86,687,388 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 June 30, 2000 and
December 31, 1999................................................... 3
Consolidated Statements of Income for the Three and Six Months
Ended June 30, 2000 and June 30, 1999............................... 4
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2000 and June 30, 1999............................... 5
Notes to Consolidated Financial Statements.......................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................... 16
Item 3. Quantitative and Qualitative Disclosures About Market Risks......... 30
PART II. OTHER INFORMATION:
------------------
Item 1. Legal Proceedings................................................... 31
Item 4. Submission of Matters to a Vote of Security Holders................. 31
Item 6. Exhibits and Reports on Form 8-K.................................... 31
Signatures .................................................................... 32
Exhibit Index .................................................................... 33
</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>
JUNE 30, DECEMBER 31,
2000 1999
--------------- --------------
<S> <C> <C>
ASSETS
Real estate, at cost:
Land............................................ $ 821,652 $ 826,477
Buildings and improvements...................... 3,153,622 3,080,174
Leasehold improvements and
equipment.................................. 17,375 14,856
--------------- -------------
Total................................ 3,992,649 3,921,507
Less accumulated depreciation and
amortization............................... (346,081) (308,542)
--------------- -------------
Real estate, net................................ 3,646,568 3,612,965
Cash and cash equivalents, including U.S.
government obligations under repurchase
agreements of $20,714 and $43,675................. 99,137 112,630
Escrow deposits and restricted cash................... 34,216 30,571
Marketable securities................................. 134,949 106,503
Investments and advances to partially-owned
entities, including Alexander's of
$161,837 and $159,148............................. 1,398,093 1,315,387
Due from officers..................................... 19,398 17,190
Accounts receivable, net of allowance for
doubtful accounts of $7,762 and $7,292 ........... 34,580 36,408
Notes and mortgage loans receivable................... 57,377 49,719
Receivable arising from the straight-lining of
rents............................................. 94,480 79,298
Deposits in connection with real estate
acquisitions...................................... 9,148 8,128
Other assets.......................................... 149,853 110,419
--------------- -------------
TOTAL ASSETS Item 2................................... $ 5,677,799 $ 5,479,218
=============== =============
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
--------------- --------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and mortgages payable.................................... $ 2,038,952 $ 1,681,804
Revolving credit facility...................................... -- 367,000
Accounts payable and accrued expenses.......................... 98,970 107,036
Officer's compensation payable................................. 36,013 34,996
Deferred leasing fee income.................................... 8,100 8,349
Other liabilities.............................................. 2,628 2,634
--------------- -------------
Total liabilities............................. 2,184,663 2,201,819
--------------- -------------
Minority interest of unitholders in the
Operating Partnership...................................... 1,418,890 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................ 287,070 285,632
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
86,563,720 and 86,335,741 shares.................. 3,462 3,453
Additional capital...................................... 1,703,414 1,696,557
Accumulated deficit..................................... (104,227) (116,979)
--------------- -------------
2,082,672 2,061,616
Accumulated other comprehensive loss.................... (3,704) (1,448)
Due from officers for purchase of common
shares of beneficial interest..................... (4,722) (4,800)
--------------- -------------
Total shareholders' equity................... 2,074,246 2,055,368
--------------- -------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY.................................... $ 5,677,799 $ 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 FOR THE SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
-------------------- ------------------
2000 1999 2000 1999
-------------------- ------------------
<S> <C> <C> <C> <C>
Revenues:
Property rentals................ $168,575 $141,724 $334,580 $279,883
Expense reimbursements.......... 25,604 21,143 50,860 41,871
Other income (including fee
income from related parties
of $346 and $777 in each
three month period and $667
and $1,185 in each six month
period)...................... 4,566 3,321 8,584 7,998
-------- -------- -------- --------
Total revenues.................... 198,745 166,188 394,024 329,752
-------- -------- -------- --------
Expenses:
Operating...................... 74,366 65,925 150,671 130,962
Depreciation and amortization.. 24,687 19,585 47,940 38,877
General and administrative..... 10,770 10,169 20,967 19,797
-------- -------- -------- --------
Total expenses.................... 109,823 95,679 219,578 189,636
-------- -------- -------- --------
Operating income.................. 88,922 70,509 174,446 140,116
Income applicable to Alexander's.. 3,113 1,839 6,157 3,341
Income from partially-owned
entities......................... 24,026 20,978 47,639 39,578
Interest and other investment
income........................... 4,939 4,900 10,698 8,358
Interest and debt expense......... (39,335) (35,284) (78,682) (70,901)
Net gain on sale of real estate... -- -- 2,560 --
Minority interest:
Perpetual preferred unit
distributions................. (14,815) (2,080) (27,809) (3,940)
Minority limited partnership
earnings...................... (9,320) (9,194) (18,668) (15,933)
Partially-owned entities....... (577) (529) (1,067) (1,014)
-------- -------- -------- --------
Income before extraordinary item.. 56,953 51,139 115,274 99,605
Extraordinary item................ -- -- (1,125) --
-------- -------- -------- --------
Net Income........................ 56,953 51,139 114,149 99,605
Preferred stock dividends
(including accretion of
issuance expenses of $719 and
$1,438 in each three and six
month period).................. (9,672) (8,381) (19,345) (14,093)
-------- -------- -------- --------
NET INCOME applicable to common
shares........................... $ 47,281 $ 42,758 $ 94,804 $ 85,512
======== ======== ======== ========
NET INCOME PER COMMON SHARE
-BASIC......................... $ .55 $ .50 $ 1.10 $ 1.00
======== ======== ======== ========
NET INCOME PER COMMON SHARE
-DILUTED....................... $ .53 $ .49 $ 1.08 $ .98
======== ======== ======== ========
DIVIDENDS PER COMMON SHARE........ $ .48 $ .44 $ .96 $ .88
======== ======== ======== ========
</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 Six Months Ended June 30,
----------------------------------------
2000 1999
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................................ $ 114,149 $ 99,605
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization (including debt issuance costs)...... 47,940 38,877
Straight-lining of rental income................................... (15,182) (15,393)
Net gain on sale of real estate.................................... (2,560) --
Minority interest.................................................. 47,544 20,887
Extraordinary item................................................. 1,125 --
Equity in income of Alexander's,
including depreciation of $300 in each period.................... (6,157) (816)
Equity in net income of partially-owned entities................... (47,639) (39,578)
Gain on sale of marketable securities.............................. -- (382)
Changes in operating assets and liabilities........................ (34,669) (16,404)
------------- -------------
Net cash provided by operating activities................................. 104,551 86,796
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate.................................................. (73,771) (86,731)
Acquisitions of real estate and other..................................... (6,660) (45,000)
Proceeds from sale of real estate......................................... 23,992 --
Investments in partially-owned entities................................... (45,450) (13,200)
Distributions from partially-owned entities............................... 17,705 --
Proceeds from sale of Temperature Controlled Logistics assets............. -- 22,769
Investment in notes and mortgages receivable.............................. (7,595) (60,567)
Repayment of mortgage loans receivable.................................... -- 19,367
Cash restricted for tenant improvements................................... (3,645) 24,548
Purchases of securities available for sale................................ (24,412) (3,939)
Proceeds from sale or maturity of securities available for sale........... -- 6,992
Real estate deposits and other............................................ (1,020) (6,559)
------------- -------------
Net cash used in investing activities..................................... (120,856) (142,320)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings.................................................. 590,000 165,000
Repayments of borrowings.................................................. (619,444) (306,490)
Debt issuance costs....................................................... (17,996) (3,504)
Proceeds from issuance of preferred units................................. 195,639 --
Proceeds from issuance of preferred stock................................. -- 193,282
Dividends paid on common shares........................................... (82,051) (74,432)
Distributions to minority partners........................................ (47,144) (12,226)
Dividends paid on preferred shares........................................ (17,907) (12,655)
Exercise of stock options................................................. 1,715 255
------------- -------------
Net cash provided by (used in) financing activities....................... 2,812 (50,770)
------------- -------------
Net decrease in cash and cash equivalents................................. (13,493) (106,294)
Cash and cash equivalents at beginning of period.......................... 112,630 167,808
------------- -------------
Cash and cash equivalents at end of period................................ $ 99,137 $ 61,514
============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest (including capitalized interest of $5,646 in
2000 and $1,410 in 1999).............................................. $ 82,381 $ 69,222
NON-CASH TRANSACTIONS:
Financing assumed in acquisitions......................................... $ 17,640 $ 55,000
Minority interest in connection with acquisitions......................... 1,165 297,800
Unrealized gain on securities available for sale.......................... 8,039 1,353
</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 June 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 June 30, 2000, the consolidated
statements of income for the three and six months ended June 30, 2000 and 1999
and the consolidated statements of changes in cash flows for the six months
ended June 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 six months
ended June 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 Ventures
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%.
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.
The Company entered into an agreement to sell its Westport, Connecticut
property for approximately $24,000,000. The sale will result in a gain of
approximately $9,000,000 and is expected to be completed in the third quarter,
subject to customary closing conditions.
FINANCINGS
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% (7.55% at
June 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.
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% (8.10 % at June 30, 2000).
Page 7
<PAGE> 8
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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.
Page 8
<PAGE> 9
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>
June 30, 2000 December 31, 1999
----------------- -------------------
(amounts in thousands)
<S> <C> <C>
Temperature Controlled Logistics.......... $ 496,553 $ 481,808
Charles E. Smith Commercial Realty L.P.
("CESCR")............................. 322,125 317,812
Alexander's............................... 161,837 159,148
Newkirk Joint Ventures.................... 146,261 142,670
Hotel Pennsylvania (1).................... 62,256 59,176
Partially-Owned Office Buildings.......... 65,956 59,510
Fort Lee Development Project.............. 25,538 16,663
Park Laurel Development Project........... 40,282 24,695
Other..................................... 77,285 53,905
---------- ----------
$1,398,093 $1,315,387
========== ==========
</TABLE>
Income
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2000 1999 2000 1999
----------- ------------ ----------- -----------
(amounts in thousands)
<S> <C> <C> <C> <C>
Income applicable to Alexander's: (2)
33.1% share of equity in income..... $ 171 $ 534 $ 478 $ 816
Interest Income..................... 2,942 1,305 5,679 2,525
------- -------- -------- --------
$ 3,113 $ 1,839 $ 6,157 $ 3,341
======= ======== ======== ========
Temperature Controlled Logistics:
60% share of equity in net income (3) $ 5,585 $ 7,243 $ 13,660 $ 17,857
Management fee (40% of 1% per annum of
Total Combined Assets, as defined) 1,357 1,263 2,680 2,639
------- -------- -------- --------
6,942 8,506 16,340 20,496
CESCR (4)............................. 6,589 5,125 13,318 7,761
Newkirk Joint Ventures (5)............ 5,402 3,277 9,738 5,309
Hotel Pennsylvania (1)................ 2,886 2,425 3,307 2,568
Partially-Owned Office Buildings...... 978 433 1,678 750
Other................................. 1,229 1,212 3,258 2,694
------- -------- -------- --------
$24,026 $ 20,978 $ 47,639 $ 39,578
======= ======== ======== ========
</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) Fee income is included in Other.
(3) Subsequent to March 12, 1999 (date the operations of the Temperature
Controlled Logistics Companies were sold), the Company reflects its equity
in the rental income it receives from the Temperature Controlled Logistics
Companies, its tenant. Prior to that date the Company reflected its equity
in the operations. At December 31, 1999, the tenant had deferred $5,400 of
rent of which the Company's share was $3,240. In the quarter ended June 30,
2000, the tenant deferred an additional $6,700 of rent of which the
Company's share was $4,020. In the quarter ended June 30, 2000, the Company
recorded a charge for a rent receivable valuation allowance of $2,400
in connection with the probable restructuring of the leases.
(4) 9.6% interest from January 1999 to March 1999 and 34% interest thereafter.
(5) Income for the three and six months ended June 30, 2000 includes the
Company's share of an extraordinary gain of $652 resulting from the
prepayment of debt.
Page 9
<PAGE> 10
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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%.
At June 30, 2000, the Company has loans receivable from Alexander's
aggregating $95,000,000, including $50,000,000 loaned to Alexander's on October
20, 1999. The loans, which were scheduled to mature on March 15, 2000 have been
extended for one year to March 15, 2001. The interest rate has been reset from
14.18% to 15.72%, reflecting an increase in the underlying Treasury rate.
Alexander's is managed by and its properties are leased by the Company,
pursuant to agreements with a one-year term expiring in March of each year which
are automatically renewable. Subject to the payments of rents by Alexander's
tenants, the Company is due $546,000 under its leasing agreement with
Alexander's which amount is included in Investments in and Advances to
Alexander's. Included in Other income is management fee income from Alexander's
of $878,000 and $1,072,000 for the three months ended June 30, 2000 and 1999 and
$1,753,000 and $2,214,000 for the six months ended June 30, 2000 and 1999.
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 $200,000 and $195,000
for the three months ended June 30, 2000 and 1999 and $387,000 and $465,000 for
the six months ended June 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 $11,485,000 and $8,286,000 for the three months ended June
30, 2000 and 1999 and $23,418,000 and $19,297,000 for the six months ended June
30, 2000 and 1999.
Page 10
<PAGE> 11
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
------------------------- Per Unit or Annual Conversion
June 30, December 31, Liquidation Distribution Rate Into
Unit Series 2000 1999 Preference Rate Class A Units
------------- ----------- ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
Class A............................ 6,284,004 6,247,829 -- $ 1.92 (a)
Class D............................ 876,169 876,543 -- $ 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)
6.0% 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 11
<PAGE> 12
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 Six Months Ended
June 30, June 30,
-------------------------- -------------------------
2000 1999 2000 1999
------------ ------------ ---------- ------------
<S> <C> <C> <C> <C>
(amounts in thousands except per share amounts)
Numerator:
Income before extraordinary item.......... $ 56,953 $ 51,139 $ 115,274 $ 99,605
Extraordinary item........................ -- -- (1,125) --
--------- --------- ---------- ---------
Net income................................ 56,953 51,139 114,149 99,605
Preferred stock dividends................. (9,672) (8,381) (19,345) (14,093)
--------- --------- ---------- ---------
Numerator for basic and diluted income per
share - net income applicable to common
shares.................................... $ 47,281 $ 42,758 $ 94,804 $ 85,512
========= ========= ========== =========
Denominator:
Denominator for basic income per share -
weighted average shares................... 86,399 85,634 86,389 85,362
Effect of dilutive securities:
Employee stock options.................. 2,347 2,189 1,689 1,883
--------- --------- ---------- ---------
Denominator for diluted income per share -
adjusted weighted average shares and
assumed conversions..................... 88,746 87,823 88,078 87,245
========= ========= ========== =========
INCOME PER COMMON SHARE - BASIC:
Income before extraordinary item........ $ .55 $ .50 $ 1.11 $ 1.00
Extraordinary item...................... -- -- (.01) --
--------- --------- ---------- ---------
Net income per common share............. $ .55 $ .50 $ 1.10 $ 1.00
========= ========= ========== =========
INCOME PER COMMON SHARE - DILUTED:
Income before extraordinary item........ $ .53 $ .49 $ 1.09 $ .98
Extraordinary item...................... -- -- (.01) --
--------- --------- ---------- ---------
Net income per common share............. $ .53 $ .49 $ 1.08 $ .98
========= ========= ========= =========
</TABLE>
Page 12
<PAGE> 13
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 Six Months Ended
June 30, June 30,
-------------------------- -------------------------
2000 1999 2000 1999
------------ ------------ ---------- ------------
<S> <C> <C> <C> <C>
(amounts in thousands)
Net income applicable to common shares....... $ 47,281 $ 42,758 $ 94,804 $ 85,512
Other comprehensive (loss)/income............ (54,456)(1) 2,378 (2,256)(1) 1,353
--------- --------- -------- ---------
Comprehensive (loss)/income.................. $ (7,175) $ 45,136 $ 92,548 $ 86,865
========= ========= ======== =========
</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.In the first
quarter of 2000, the Company was required to record unrealized
appreciation on such securities of $52,779. In the second
quarter of this year, the value of these securities decreased by $54,456,
and accordingly, the Company was required to record such decrease.
Page 13
<PAGE> 14
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 June 30,
-------------------------------------------------------------------------------
2000
-------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(2)
---------- ----------- ---------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total revenues............... $ 198,745 $ 112,846 $ 42,957 $ 37,760 $ -- $ 5,182
Total expenses............... 109,823 62,376 18,481 20,009 -- 8,957
--------- ---------- --------- ---------- ----------- ---------
Operating income............. 88,922 50,470 24,476 17,751 -- (3,775)
Income applicable to
Alexander's............... 3,113 -- -- -- -- 3,113
Income from partially-owned
entities.................. 24,026 7,619 301 1,239 6,942(4) 7,925
Interest and other investment
income.................... 4,939 251 -- 311 -- 4,377
Interest and debt expense.... (39,335) (13,839) (13,845) (9,558) -- (2,093)
Minority interest............ (24,712) (15,356) (3,913) (3,153) (2,260) (30)
--------- ---------- --------- ---------- ----------- ---------
Net income................... 56,953 29,145 7,019 6,590 4,682 9,517
Minority interest............ 24,712 15,356 3,913 3,153 2,260 30
Interest and debt expense(3). 62,962 22,964 14,494 9,558 7,307 8,639
Depreciation and
amortization(3).......... 40,932 18,343 5,483 5,021 8,005 4,080
Straight-lining of rents(3).. (6,349) (3,985) (709) (1,485) (282) 112
Other........................ 2,707 -- -- -- 294 2,413
--------- ---------- --------- ---------- ----------- ---------
EBITDA(1).................... $ 181,917 $ 81,823 $ 30,200 $ 22,837 $ 22,266 $ 24,791
========= ========== ========= ========== =========== =========
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended June 30,
--------------------------------------------------------------------------------
1999
--------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(2)
----------- ---------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Total revenues............... $166,188 $ 87,876 $ 43,009 $ 33,367 $ -- $ 1,936
Total expenses............... 95,679 52,313 17,884 17,853 -- 7,629
---------- --------- --------- ----------- --------- ----------
Operating income............. 70,509 35,563 25,125 15,514 -- (5,693)
Income applicable to
Alexander's............... 1,839 -- -- -- -- 1,839
Income from partially-owned
entities.................. 20,978 5,670 223 728 8,506 5,851
Interest and other investment
income.................... 4,900 318 -- 69 -- 4,513
Interest and debt expense.... (35,284) (11,778) (8,085) (6,869) -- (8,552)
Minority interest............ (11,803) (5,420) (3,081) (1,697) (1,605) --
----------- --------- --------- ----------- --------- ----------
Net income................... 51,139 24,353 14,182 7,745 6,901 (2,042)
Minority interest............ 11,803 5,420 3,081 1,697 1,605 --
Interest and debt expense(3). 59,338 22,101 8,740 6,869 6,893 14,735
Depreciation and
amortization(3).......... 33,639 15,640 4,252 4,105 7,615 2,027
Straight-lining of rents(3).. (7,656) (4,902) (682) (1,172) (627) (273)
Other........................ 2,755 -- -- -- 1,114(5) 1,641
---------- --------- --------- ----------- --------- ----------
EBITDA(1).................... $151,018 $ 62,612 $ 29,573 $ 19,244 $ 23,501 $ 16,088
========== ========= ========= =========== ========= ==========
</TABLE>
--------------------
See footnotes 1-5 on page 16.
Page 14
<PAGE> 15
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(amounts in thousands)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
Six Months Ended June 30, 2000
---------------------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(2)
------------ ----------- ------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Total revenues................ $ 394,024 $ 222,420 $ 86,695 $ 74,953 $ -- $ 9,956
Total expenses................ 219,578 124,443 37,263 40,109 -- 17,763
----------- ---------- ------------ ----------- ----------- -----------
Operating income.............. 174,446 97,977 49,432 34,844 -- (7,807)
Income applicable to
Alexander's................ 6,157 -- -- -- -- 6,157
Income from partially-owned
entities................... 47,639 15,387 669 3,381 16,340(4) 11,862
Interest and other investment
income..................... 10,698 631 -- 400 -- 9,667
Interest and debt expense..... (78,682) (27,980) (24,656) (17,905) -- (8,141)
Net gain on sale of real
estate..................... 2,560 -- 2,560 -- -- --
Minority interest............. (47,544) (27,360) (8,850) (6,327) (4,977) (30)
----------- ---------- ------------ ----------- ----------- -----------
Income before extraordinary
item....................... 115,274 58,655 19,155 14,393 11,363 11,708
Extraordinary item............ (1,125) -- (1,125) -- -- --
----------- ---------- ------------ ----------- ----------- -----------
Net income.................... 114,149 58,655 18,030 14,393 11,363 11,708
Extraordinary item............ 1,125 -- 1,125 -- -- --
Minority interest............. 47,544 27,360 8,850 6,327 4,977 30
Net gain on sale of real
estate..................... (2,560) -- (2,560) -- -- --
Interest and debt expense(3).. 124,622 46,152 25,954 17,905 14,037 20,574
Depreciation and
amortization(3)............ 80,309 36,299 9,785 10,048 16,334 7,843
Straight-lining of rents(3)... (13,781) (9,286) (1,386) (2,764) (809) 464
Other 3,981 -- -- -- 809(5) 3,172
----------- ---------- ------------ ----------- ----------- -----------
EBITDA(1)..................... $ 355,389 $ 159,180 $ 59,798 $ 45,909 $ 46,711 $ 43,791
=========== ========== ============ =========== =========== ===========
<CAPTION>
June 30, 2000
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance sheet data:
Real estate, net....... $ 3,646,568 $2,234,067 $ 554,622 $ 757,392 $ -- $ 100,487
Investments and
advances to
partially-owned
entities.......... 1,398,093 389,595 2,707 41,803 496,553 467,435
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
Six Months Ended June 30, 1999
-------------------------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(2)
------------- ------------- --------------- ---------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Total revenues................ $ 329,752 $ 175,152 $ 84,366 $ 66,355 $ -- $ 3,879
Total expenses................ 189,636 103,797 35,041 36,355 -- 14,443
----------- ------------ ------------ ------------ ----------- -----------
Operating income.............. 140,116 71,355 49,325 30,000 -- (10,564)
Income applicable to
Alexander's................ 3,341 -- -- -- -- 3,341
Income from partially-owned
entities................... 39,578 8,584 423 1,904 20,496 8,171
Interest and other investment
income..................... 8,358 856 -- 367 -- 7,135
Interest and debt expense..... (70,901) (22,259) (16,117) (13,165) -- (19,360)
Net gain on sale of real
estate..................... -- -- -- -- -- --
Minority interest............. (20,887) (9,354) (5,296) (3,010) (3,227) --
----------- ------------ ------------ ------------ ----------- -----------
Income before extraordinary
item....................... 99,605 49,182 28,335 16,096 17,269 (11,277)
Extraordinary item............ -- -- -- -- -- --
----------- ------------ ------------ ------------ ----------- -----------
Net income.................... 99,605 49,182 28,335 16,096 17,269 (11,277)
Extraordinary item............ -- -- -- -- -- --
Minority interest............. 20,887 9,354 5,296 3,010 3,227 --
Net gain on sale of real
estate..................... -- -- -- -- -- --
Interest and debt expense(3).. 109,037 36,706 17,429 13,165 13,558 28,179
Depreciation and
amortization(3)............ 65,850 29,417 8,384 8,178 16,012 3,859
Straight-lining of rents(3)... (12,533) (8,615) (1,317) (2,280) (627) 306
Other 101 -- -- -- (3,009)(5) 3,110
----------- ------------ ------------ ------------ ----------- -----------
EBITDA(1)..................... $ 282,947 $ 116,044 $ 58,127 $ 38,169 $ 46,430 $ 24,177
=========== ============ ============ ============ =========== ===========
<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 1-5 on the next page.
Page 15
<PAGE> 16
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) Includes a charge for a rent receivable valuation allowance of $2,400
recorded in the quarter ended June 30, 2000 in connection with the
probable restructuring of the Temperature Controlled Logistics leases.
(5) Includes the reversal of income taxes (benefit for the six months ended
June 30, 1999) which are considered non-recurring because of the
expected conversion of the Temperature Controlled Logistics Companies to
REITs.
11. SUBSEQUENT EVENTS
On August 1, 2000, the Company provided a $50,000,000 secured line of
credit to Alexander's under the same terms and conditions as Alexander's
existing loan from the Company. The maturity date of the existing loan has been
extended to March 15, 2002, which is also the maturity date of the line of
credit.
On July 20, 2000, the Company entered into an agreement to acquire an
office building located in Chicago containing approximately 300,000 square feet
for $35,400,000. The acquisition is expected to be completed in the third
quarter, subject to customary closing conditions.
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 16
<PAGE> 17
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
Below is a summary of net income and EBITDA by segment for the three
months ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>
For The Three Months Ended June 30, 2000
-----------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(4)
---------- ---------- ------------ ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total revenues.................. $198,745 $112,846 $42,957 $ 37,760 $ -- $ 5,182
Total expenses.................. 109,823 62,376 18,481 20,009 -- 8,957
-------- -------- -------- -------- -------- -------
Operating income................ 88,922 50,470 24,476 17,751 -- (3,775)
Income applicable to Alexander's 3,113 -- -- -- -- 3,113
Income from partially-owned entities 24,026 7,619 301 1,239 6,942 7,925
Interest and other investment income 4,939 251 -- 311 -- 4,377
Interest and debt expense....... (39,335) (13,839) (13,845) (9,558) -- (2,093)
Minority interest............... (24,712) (15,356) (3,913) (3,153) (2,260) (30)
-------- -------- -------- -------- -------- -------
Net income...................... 56,953 29,145 7,019 6,590 4,682 9,517
Minority interest............... 24,712 15,356 3,913 3,153 2,260 30
Interest and debt expense (2)... 62,962 22,964 14,494 9,558 7,307 8,639
Depreciation and amortization (2) 40,932 18,343 5,483 5,021 8,005 4,080
Straight-lining of rents (2).... (6,349) (3,985) (709) (1,485) (282) 112
Other........................... 2,707 -- -- -- 294 2,413
-------- -------- -------- -------- -------- -------
EBITDA (1)...................... $181,917 $ 81,823 $30,200 $ 22,837 $ 22,266 $24,791
======== ======== ======== ======== ======== =======
<CAPTION>
For The Three Months Ended June 30, 1999
-----------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(4)
---------- ---------- ------------ ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total revenues.................. $166,188 $ 87,876 $43,009 $ 33,367 $ -- $ 1,936
Total expenses.................. 95,679 52,313 17,884 17,853 -- 7,629
-------- ------- ------- -------- ------- -------
Operating income................ 70,509 35,563 25,125 15,514 -- (5,693)
Income applicable to Alexander's 1,839 -- -- -- -- 1,839
Income from partially-owned entities 20,978 5,670 223 728 8,506 5,851
Interest and other investment income 4,900 318 -- 69 -- 4,513
Interest and debt expense....... (35,284) (11,778) (8,085) (6,869) -- (8,552)
Minority interest............... (11,803) (5,420) (3,081) (1,697) (1,605) --
-------- ------- ------- -------- ------- -------
Net income...................... 51,139 24,353 14,182 7,745 6,901 (2,042)
Minority interest............... 11,803 5,420 3,081 1,697 1,605 --
Interest and debt expense (2)... 59,338 22,101 8,740 6,869 6,893 14,735
Depreciation and amortization (2) 33,639 15,640 4,252 4,105 7,615 2,027
Straight-lining of rents (2).... (7,656) (4,902) (682) (1,172) (627) (273)
Other........................... 2,755 -- -- -- 1,114(3) 1,641
-------- -------- ------- -------- ------- -------
EBITDA (1)...................... $151,018 $ 62,612 $29,573 $ 19,244 $23,501 $16,088
======== ======== ======= ======== ======= =======
</TABLE>
--------------------------
(1) EBITDA represents income before interest, taxes, depreciation and
amortization, extraordinary or non-recurring items, gains or losses on
sales of real estate and the effect of straight-lining of property rentals
for rent escalations. 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) Includes the reversal of income taxes which are considered non-recurring
because of the expected conversion of the Temperature Controlled Logistics
Companies to REITs.
(4) 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.
Page 17
<PAGE> 18
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>
Three months ended
June 30, 1999............. $ 151,018 $ 62,612 $ 29,573 $ 19,244 $ 23,501 $ 16,088
2000 Operations:
Same store operations(1).. 17,444 11,820 1,177 3,593 (1,235)(2) 2,089
Acquisitions and other.... 13,455 7,391 (550) -- -- 6,614
--------- ---------- --------- --------- --------- ---------
Three months ended
June 30, 2000............. $ 181,917 $ 81,823 $ 30,200 $ 22,837 $ 22,266 $ 24,791
========= ========== ========= ========= ========= =========
% increase in same
store operations........ 11.6% 18.9% 4.0% 18.7% (5.2%)(2) 13.0%
</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 Temperature
Controlled Logistics Companies were sold), the Company reflects its equity
in the rental income it receives from the Temperature Controlled Logistics
Companies, its tenant. Prior to that date the Company reflected its equity
in the operations. At December 31, 1999, the tenant had deferred $5,400 of
rent, of which the Company's share was $3,240. In the quarter ended June
30, 2000, the tenant deferred an additional $6,700 of rent of which the
Company's share was $4,020. In the quarter ended June 30, 2000, the Company
has recorded a charge for a rent receivable valuation allowance of $2,400
in connection with the probable restructuring of the leases.
Revenues
The Company's revenues, which consist of property rentals, tenant expense
reimbursements and other income were $198,745 in the three months ended June
30, 2000, compared to $166,188 in the prior year's quarter, an increase of
$32,557. This increase by segment resulted from:
<TABLE>
<CAPTION>
Date of Merchandise
Acquisition Total Office Retail Mart Other
------------- ---------- ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Property Rentals:
Acquisitions:
909 Third Avenue............ July 1999 $ 8,114 $ 8,114 $ -- $ -- $ --
595 Madison Avenue.......... September 1999 3,663 3,663 -- -- --
Hotel Pennsylvania.......... August 1999 1,536 -- -- -- 1,536
Student Housing Complex..... January 2000 1,111 -- -- -- 1,111
-------- --------- -------- --------- ----------
14,424 11,777 -- -- 2,647
Disposition:
Texas shopping centers.......... (620) -- (620) -- --
Leasing activity................ 13,047 8,440 1,071 3,379 157
-------- --------- -------- --------- ----------
Total increase in property
rentals..................... 26,851 20,217 451 3,379 2,804
-------- ---------- -------- --------- ----------
Tenant expense reimbursements:
Increase in tenant expense
reimbursements due to
acquisitions................ 2,549 2,273 -- -- 276
Other........................... 1,912 1,579 (618) 871 80
-------- --------- -------- --------- ----------
Total increase in tenant
expense reimbursements...... 4,461 3,852 (618) 871 356
-------- --------- -------- --------- ----------
Other income.................... 1,245 901 115 143 86
-------- --------- -------- --------- ----------
Total increase in revenues...... $ 32,557 $ 24,970 $ (52) $ 4,393 $ 3,246
======== ========= ======== ========= ==========
</TABLE>
See Supplemental Information on page 27.
Page 18
<PAGE> 19
Expenses
The Company's expenses were $109,823 in the three months ended June 30,
2000 compared to $95,679 in the prior year's quarter, an increase of $14,144.
This increase by segment resulted from:
<TABLE>
<CAPTION>
Merchandise
Total Office Retail Mart Other
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating:
Acquisitions............ $ 6,588 $ 5,348 $ -- $ -- $ 1,240
Same store operations... 2,062 1,710 (489) 765 76
---------- ---------- ---------- ---------- ----------
8,650 7,058 (489) 765 1,316
---------- ---------- ---------- ---------- ----------
Depreciation and
amortization:
Acquisitions............ 1,669 1,147 -- -- 522
Same store operations... 3,224 1,348 704 916 256
---------- ---------- ---------- ---------- ----------
4,893 2,495 704 916 778
---------- ---------- ---------- ---------- ----------
General and administrative 601(1) 510 381 475 $ (765)
---------- ---------- ---------- ---------- ----------
$ 14,144 $ 10,063 $ 596 $ 2,156 $ 1,329
========== ========== ========== ========== ==========
</TABLE>
(1) This increase resulted from higher payroll and corporate office
expenses, partially offset by lower professional fees.
Income applicable to Alexander's (loan interest income, equity in income
and depreciation) was $3,113 in the three months ended June 30, 2000 compared
to $1,839 in the prior year's quarter, an increase of $1,274. This increase
resulted primarily from interest income on the additional $50,000 the Company
loaned to Alexander's in October 1999.
Income from partially-owned entities was $24,026 in the three months ended
June 30, 2000, compared to $20,978 in the prior year's quarter, an increase of
$3,048. 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........... $(1,564)(1) $ -- $ -- $ -- $ (1,564)(1) $ --
--
CESCR................. 1,464 1,464 -- -- -- --
Newkirk Joint
Ventures............ 2,125(2) -- -- -- -- 2,125(2)
Hotel Pennsylvania.... 461(3) -- -- - -- 461(3)
Partially-owned office
buildings........... 545 545 -- -- -- --
Other................. 17 (60) 78 511 -- (512)
-------- -------- ------- -------- -------- --------
$ 3,048 $ 1,949 $ 78 $ 511 $ (1,564) $ 2,074
======== ======== ======= ======== ======== ========
</TABLE>
-------------------------------------
(1) Includes a charge in the quarter ended June 30, 2000 for a rent receivable
valuation allowance of $2,400.
(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.
Page 19
<PAGE> 20
Interest and debt expense was $39,335 for the three months ended June 30,
2000, compared to $35,284 in the prior year's quarter, an increase of $4,051.
This increase is primarily due to higher interest rates during the period.
Minority interest was $24,712 for the three months ended June 30, 2000,
compared to $11,803 in the prior year's quarter, an increase of $12,909. This
increase is primarily due to the issuance of perpetual preferred units.
Preferred stock dividends were $9,672 for the three months ended June 30,
2000, compared to $8,381 in the prior year's quarter, an increase of $1,291.
The increase resulted from the issuance of the Company's Series C Cumulative
Redeemable Preferred Shares in May 1999.
Page 20
<PAGE> 21
SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
<TABLE>
<CAPTION>
For The Six Months Ended June 30, 2000
----------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(4)
---------- ---------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total revenues.................. $ 394,024 $ 222,420 $ 86,695 $ 74,953 $ -- $ 9,956
Total expenses.................. 219,578 124,443 37,263 40,109 -- 17,763
---------- ---------- ---------- ------------ ----------- -----------
Operating income................ 174,446 97,977 49,432 34,844 -- (7,807)
Income applicable to Alexander's 6,157 -- -- -- -- 6,157
Income from partially-owned entities 47,639 15,387 669 3,381 16,340 11,862
Interest and other investment income 10,698 631 -- 400 -- 9,667
Interest and debt expense....... (78,682) (27,980) 24,656) (17,905) -- (8,141)
Net gain on sale of real estate. 2,560 -- 2,560 -- -- --
Minority interest............... (47,544) (27,360) (8,850) (6,327) (4,583) (30)
---------- ---------- ---------- ------------ ----------- -----------
Income before extraordinary item 115,274 58,655 19,155 14,393 11,363 11,708
Extraordinary item.............. (1,125) -- (1,125) -- -- --
---------- ---------- ---------- ------------ ----------- -----------
Net income...................... 114,149 58,655 18,030 14,393 11,363 11,708
Extraordinary item.............. 1,125 -- 1,125 -- -- --
Minority interest............... 47,544 27,360 8,850 6,327 4,977 30
Net gain on sale of real estate. (2,560) -- (2,560) -- -- --
Interest and debt expense (2)... 124,622 46,152 25,954 17,905 14,037 20,574
Depreciation and amortization (2) 80,309 36,299 9,785 10,048 16,334 7,843
Straight-lining of rents (2).... (13,781) (9,286) (1,386) (2,764) (809) 464
Other........................... 3,981 -- -- -- 809 3,172
---------- ---------- ---------- ------------ ----------- -----------
EBITDA (1)...................... $ 355,389 $ 159,180 $ 59,798 $ 45,909 $ 46,711 $ 43,791
========== ========== ========== ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
For The Six Months Ended June 30, 1999
----------------------------------------------------------------------------------
Temperature
Merchandise Controlled
Total Office Retail Mart Logistics Other(4)
---------- ---------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total revenues.................. $ 329,752 $ 175,152 $ 84,366 $ 66,355 $ -- $ 3,879
Total expenses.................. 189,636 103,797 35,041 36,355 -- 14,443
---------- ---------- ---------- ------------ ----------- -----------
Operating income................ 140,116 71,355 49,325 30,000 -- (10,564)
Income applicable to Alexander's 3,341 -- -- -- -- 3,341
Income from partially-owned entities 39,578 8,584 423 1,904 20,496 8,171
Interest and other investment income 8,358 856 -- 367 -- 7,135
Interest and debt expense....... (70,901) (22,259) (16,117) (13,165) -- (19,360)
Minority interest............... (20,887) (9,354) (5,296) (3,010) (3,227) --
---------- ---------- ---------- ------------ ----------- -----------
Net income...................... 99,605 49,182 28,335 16,096 17,269 (11,277)
Minority interest............... 20,887 9,354 5,296 3,010 3,227 --
Interest and debt expense (2)... 109,037 36,706 17,429 13,165 13,558 28,179
Depreciation and amortization (2) 65,850 29,417 8,384 8,178 16,012 3,859
Straight-lining of rents (2).... (12,533) (8,615) (1,317) (2,280) (627) 306
Other........................... 101 -- -- -- (3,009)(3) 3,110
---------- ---------- ---------- ------------ ----------- -----------
EBITDA (1)...................... $ 282,947 $ 116,044 $ 58,127 $ 38,169 $ 46,430 $ 24,177
========== ========== ========== ============ =========== ===========
</TABLE>
----------------------------
(1) EBITDA represents income before interest, taxes, depreciation and
amortization, extraordinary or non-recurring items, gains or losses on
sales of real estate and the effect of straight-lining of property
rentals for rent escalations. 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) Includes the reversal of income taxes (benefit for the six months ended
June 30, 1999), which are considered non-recurring because of the
expected conversion of the Temperature Controlled Logistics Companies to
REITs.
(4) 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.
Page 21
<PAGE> 22
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>
Six months ended
June 30, 1999........ $ 282,947 $ 116,044 $ 58,127 $ 38,169 $ 46,430 $ 24,177
2000 Operations:
Same store
operations(1)....... 30,357 18,936 2,221 7,740 (1,235)(2) 2,695
Acquisitions and other 42,085 24,200 (550) -- 1,516 16,919
--------- ---------- -------- -------- --------- ---------
Six months ended
June 30, 2000........ $ 355,389 $ 159,180 $ 59,798 $ 45,909 $ 46,711 $ 43,791
========= ========== ======== ======== ========= =========
% increase in same
store operations... 10.4% 16.3% 3.8% 20.3% (2.7%)(2) 11.1%
</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 Temperature
Controlled Logistics Companies were sold), the Company reflects its equity
in the rental income it receives under its leases with the Temperature
Controlled Logistics Companies, its tenant. Prior to that date the Company
reflected its equity in the operations. At December 31, 1999, the tenant
had deferred $5,400 of rent of which the Company's share was $3,240. In
the quarter ended June 30, 2000, the tenant deferred an additional $6,700
of rent of which the Company's share was $4,020. In the quarter ended June
30, 2000, the Company recorded a charge for a rent receivable valuation
allowance of $2,400 in connection with the probable restructuring of the
leases.
Page 22
<PAGE> 23
Revenues
The Company's revenues, which consist of property rentals, tenant expense
reimbursements and other income were $394,024 in the six months ended June 30,
2000, compared to $329,752 in the prior year's six months, an increase of
$64,272. This increase by segment resulted from:
<TABLE>
<CAPTION>
Date of Merchandise
Acquisition 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 14,570 14,570 -- -- -
595 Madison Avenue September 1999 7,192 7,192 -- -- -
Hotel Pennsylvania August 1999 3,061 -- -- -- 3,061
Student Housing Complex January 2000 1,859 -- -- -- 1,859
--------- --------- ------- --------- -------
27,447 22,527 -- -- 4,920
Disposition:
Texas shopping centers... (550) -- (550) -- --
Leasing activity......... 27,800 18,458 2,614 6,345 383
--------- --------- ------- --------- -------
Total increase in property
rentals............... 54,697 40,985 2,064 6,345 5,303
--------- --------- ------- --------- -------
Tenant expense
reimbursements:
Increase in tenant expense
reimbursements due to
acquisitions....... 4,042 3,539 -- -- 503
Other................ 4,947 2,534 305 1,910 198
--------- --------- ------- --------- -------
Total increase in tenant
expense reimbursements 8,989 6,073 305 1,910 701
--------- --------- ------- --------- -------
Other income............. 586 210 (40) 343 73
--------- --------- ------- --------- -------
Total increase in revenues $ 64,272 $ 47,268 $ 2,329 $ 8,598 $ 6,077
========= ========= ======= ========= =======
</TABLE>
See Supplemental Information on page 27.
Expenses
The Company's expenses were $219,578 in the six months ended June 30, 2000
compared to $189,636 in the prior year's six months, an increase of $29,942.
This increase by segment resulted from:
<TABLE>
<CAPTION>
Merchandise
Total Office Retail Mart Other
---------- --------- --------- ----------- -------
<S> <C> <C> <C> <C> <C>
Operating:
Acquisitions......... $ 12,488 $ 10,118 $ -- $ -- $ 2,370
Same store operations 7,430 4,936 974 1,607 (87)
---------- --------- --------- ----------- -------
19,918 15,054 974 1,607 2,283
---------- --------- --------- ----------- -------
Depreciation and
amortization:
Acquisitions......... 3,781 2,776 -- -- 1,005
Same store operations 5,073 2,118 833 1,870 252
---------- --------- --------- ----------- -------
8,854 4,894 833 1,870 1,257
---------- --------- --------- ----------- -------
General and administrative 1,170(1) 698 414 277 (219)
---------- --------- --------- ----------- -------
$ 29,942 $ 20,646 $ 2,221 $ 3,754 $ 3,321
========== ========= ========= =========== =======
</TABLE>
------------------
(1)This increase resulted primarily from higher payroll.
Page 23
<PAGE> 24
Income applicable to Alexander's (loan interest income, equity in income
and depreciation) was $6,157 in the six months ended June 30, 2000, compared to
$3,341 in the prior year's six months, an increase of $2,816. This increase
resulted primarily from interest income on the additional $50,000 the Company
loaned to Alexander's in October 1999.
Income from partially-owned entities was $47,639 in the six months ended
June 30, 2000, compared to $39,578 in the prior year's six months, an increase
of $8,061. This increase by segment resulted from:
<TABLE>
<CAPTION>
Temperature
Date of Merchandise Controlled
Acquisition Total Office Retail Mart Logistics Other
------------ ---------- --------- ---------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Acquisitions:
Newkirk Joint Venture March 1999 $ 2,304 $ -- $ -- $ -- $ -- $ 2,304
Other Various (911) -- -- -- -- (911)
-------- ------- -------- -------- -------- -------
1,393 -- -- -- -- 1,393
Increase (decrease) in equity
in income:
Temperature Controlled
Logistics........... (4,156)(1) -- -- -- (4,156)(1) --
CESCR................. 5,557 5,557 -- -- -- --
Newkirk Joint Ventures 2,125(2) -- -- -- -- 2,125(2)
Hotel Pennsylvania.... 739(3) -- -- -- -- 739(3)
Partially-owned office
buildings........... 928 928 -- -- -- --
Other................. 1,475 318 246 1,477 -- (566)
------- ------- -------- -------- -------- -------
$ 8,061 $ 6,803 $ 246 $ 1,477 $ (4,156) $ 3,691
======= ======= ======== ======== ======== =======
</TABLE>
(1) The decrease in equity in income results primarily from (i) a charge in the
quarter ended June 30, 2000, for a rent receivable valuation allowance of
$2,400 and (ii) an income tax benefit of $2,390 in the prior year.
(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 (interest income on mortgage loans
receivable, other interest income, dividend income and net gains on sale of
marketable securities) was $10,698 for the six months ended June 30, 2000,
compared to $8,358 in the prior year's six months, an increase of $2,340. This
increase resulted primarily from higher average investments this year.
Interest and debt expense was $78,682 for the six months ended June 30,
2000, compared to $70,901 in the prior year's six months, an increase of $7,781.
This increase resulted primarily from higher average interest rates.
Minority interest was $47,544 for the six months ended June 30, 2000,
compared to $20,887 in the prior year's six months, an increase of $26,657. 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 the prepayment of debt.
Preferred stock dividends were $19,345 for the six months ended June 30,
2000, compared to $14,093 in the prior year's six 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 24
<PAGE> 25
LIQUIDITY AND CAPITAL RESOURCES
Six Months Ended June 30, 2000
Cash flows provided by operating activities of $104,551 was primarily
comprised of (i) income of $114,149 and (ii) adjustments for non-cash items of
$27,631, offset by (iii) the net change in operating assets and liabilities of
$34,669. The adjustments for non-cash items are primarily comprised of (i)
depreciation and amortization of $47,940 and (ii) minority interest of $47,544,
partially offset by (iii) the effect of straight-lining of rental income of
$15,182 and (iv) equity in net income of partially-owned entities and income
applicable to Alexander's of $53,796.
Net cash used in investing activities of $120,856 was primarily comprised
of (i) capital expenditures of $73,771 (see detail below), (ii) investment in
notes and mortgages receivable of $7,595 (loan to Vornado Operating Company),
(iii) acquisitions of real estate of $6,660 (see detail below), (iv) investments
in partially-owned entities of $45,450 (see detail below), partially offset by
(vi) proceeds from the sale of real estate of $23,992 and distributions from
partially-owned entities of $17,705.
Acquisitions of real estate and investments in partially-owned entities
are comprised of:
<TABLE>
<CAPTION>
Debt
Cash Assumed Investment
--------- ----------- ------------
<S> <C> <C> <C>
Real Estate:
Student Housing Complex (90% Interest)....... $ 6,660 $ 17,640 $ 24,300
======= ======== ==========
Investments in Partially-Owned Entities:
Vornado Ceruzzi Joint Venture (80% interest) $18,220 $ -- $ 18,220
Funding of Development Expenditures:
Fort Lee................................... 8,875 -- 8,875
Park Laurel................................ 15,587 -- 15,587
Other........................................ 2,768 -- 2,768
------- -------- ----------
$45,450 $ -- $ 45,450
======= ======== ==========
</TABLE>
Capital expenditures were comprised of:
<TABLE>
<CAPTION>
New York Merchandise
Total City Office Retail Mart Other
--------- ------------- -------- ----------- -----
<S> <C> <C> <C> <C> <C>
Expenditures to maintain the assets.. $ 8,068 $ 5,182 $ 331 $ 2,195 $ 360
Tenant allowances.................... 31,672 27,080 2,497 2,095 --
Redevelopment expenditures........... 24,655 13,759 1,585 9,311 --
Corporate (primarily relocation of
offices)............................ 9,376 -- -- -- 9,376
-------- -------- ------- -------- -------
$ 73,771 $ 46,021 $ 4,413 $ 13,601 $ 9,736
========== ======== ======= ========= =======
</TABLE>
Net cash provided by financing activities of $2,812 was primarily
comprised of (i) proceeds from borrowings of $590,000, (ii) proceeds from
issuance of preferred units of $195,639, partially offset by, (iii) repayments
of borrowings of $619,444, (iv) dividends paid on common shares of $82,051 (v)
dividends paid on preferred shares of $17,907, and (vi) distributions to
minority partners of $47,144.
Page 25
<PAGE> 26
Six Months Ended June 30, 1999
Cash flows provided by operating activities of $86,796 was primarily
comprised of (i) income of $99,605 and (ii) adjustments for non-cash items of
$3,977, offset by (iii) the net change in operating assets and liabilities of
$16,404. The adjustments for non-cash items are primarily comprised of (i)
depreciation and amortization of $38,877 and (ii) minority interest of $20,887,
partially offset by (iii) the effect of straight-lining of rental income of
$15,393 and (iv) equity in net income of partially-owned entities of $39,578.
The net change in operating assets and liabilities primarily reflects an
increase in prepaid expenses of $29,246.
Net cash used in investing activities of $142,320 was primarily comprised
of (i) capital expenditures of $86,731 (see detail below), (ii) investment in
notes and mortgages receivable of $60,567 (including $41,200 loan to CAPI and
$18,587 loan to Vornado Operating Company), (iii) acquisitions of real estate
of $45,000 (see detail below) and (iv) investments in partially-owned entities
of $13,200 (see detail below), partially offset by (v) the use of cash
restricted for tenant improvements of $24,548, (vi) proceeds from sale of
Temperature Controlled Logistics assets of $22,769 and (vii) proceeds from the
repayment of mortgage loans receivable of $19,367 (including $14,000 from
Vornado Operating Company).
Acquisitions of real estate and investments in partially-owned entities
are comprised of:
<TABLE>
<CAPTION>
Debt Value of
Cash Assumed Units Issued Investment
----------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Real Estate:
888 Seventh Avenue Office Building...... $ 45,000 $ 55,000 $ -- $ 100,000
======== ======== ========= ==========
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.............................. -- -- 47,800 47,800
-------- -------- --------- ----------
$ 13,200 $ -- $ 297,800 $ 311,000
======== ======== ========= ==========
</TABLE>
Capital expenditures were comprised of:
<TABLE>
<CAPTION>
New York
City Merchandise
Total Office Retail Mart Other
-------- ---------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Expenditures to maintain the assets........ $ 9,661 $ 2,338 $ 411 $ 5,433 $ 1,479
Tenant allowances.......................... 22,922 12,360 771 9,791 --
Redevelopment expenditures................. 54,148 38,097 16,051 -- --
-------- -------- -------- -------- -------
$ 86,731 $ 52,795 $ 17,233 $ 15,224 $ 1,479
======== ======== ======== ======== =======
</TABLE>
Net cash used in financing activities of $50,770 was primarily comprised
of (i) repayments of borrowings of $306,490, (ii) dividends paid on common
shares of $74,432, (iii) dividends paid on preferred shares of $12,655, and
(iv) distributions to minority partners of $12,226 partially offset by, (v)
proceeds from issuance of preferred shares of $193,282 and (vi) proceeds from
borrowings of $165,000.
Page 26
<PAGE> 27
SUPPLEMENTAL INFORMATION
The following table sets forth certain information for the properties the
Company owns directly or indirectly:
<TABLE>
<CAPTION>
Office Merchandise Mart
----------------- ----------------------
Temperature
New York Controlled
City CESCR Retail Office(1) Showroom(1) Logistics
-------- ----- ------ --------- ----------- -----------
(square feet and cubic feet in
thousands)
<S> <C> <C> <C> <C> <C> <C>
As of June 30, 2000:
Square feet.................. 14,200 3,782 11,960 2,739 4,317 18,073
Cubic feet................... -- -- -- -- -- 454,500
Number of properties......... 22 41 56 7 7 92
Occupancy rate............... 97% 98% 94% 89%(2) 99% 95%
As of March 31, 2000:
Square feet.................. 14,200 3,782 11,960 2,739 4,317(3) 17,770
Cubic feet................... -- -- -- -- -- 455,000
Number of properties......... 22 40 56 7 7 90
Occupancy rate............... 95% 95% 93% 88%(2) 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 June 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%
As of March 31,1999:
Square feet.................. 12,455 3,623 12,131 2,598 3,979 16,632
Cubic feet................... -- -- -- -- -- 416,200
Number of properties......... 21 39 59 7 7 86
Occupancy rate............... 92% 98% 93% 91% 97% 94%
</TABLE>
---------------------
(1) The office and showroom space is contained in the same mixed-use
properties.
(2) The decrease in occupancy resulted from the conversion in March of this
year of existing vacant showroom space to office space in Chicago.
(3) Reflects the expansion of an existing showroom location in Highpoint,
partially offset by the conversion of Showroom space to Office noted
above.
Page 27
<PAGE> 28
Funds from Operations for the Three and Six Months Ended June 30, 2000
and 1999
Funds from operations was $83,003 in the three months ended June 30,
2000, compared to $74,987 in the prior year's quarter, an increase of $8,016.
Funds from operations was $163,179 in the six months ended June 30, 2000,
compared to $140,414 in the prior year's six months, an increase of $22,765.
The following table reconciles funds from operations and net income:
<TABLE>
<CAPTION>
For the Three Months Ended June 30, For the Six Months Ended June 30,
------------------------------------ -----------------------------------
2000 1999 2000 1999
-------------- -------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Net income applicable to common
shares............................. $ 47,281 $ 42,758 $ 94,804 $ 85,512
Extraordinary item.................... -- -- 1,125 --
Depreciation and amortization of real
property........................... 24,263 18,945 47,078 37,697
Straight-lining of property rentals
for rent escalations.... .......... (5,999) (6,555) (13,037) (11,850)
Leasing fees received in excess of
income recognized.................. 485 421 970 801
Appreciation of securities held in
officer's deferred compensation
trust.............................. 1,150 747 1,490 1,667
Net gain on sale of real estate....... -- -- (2,560) --
Gain on sale of securities available
for sale........................... -- (89) -- (383)
Proportionate share of adjustments to
equity in net income of partially-
owned entities to arrive at funds
from operations.................... 14,585 14,490 30,460 23,854
Minority interest in excess of
preferential distributions......... (4,184) (1,153) (7,912) (2,307)
-------- -------- --------- ---------
77,581 69,564 152,334 134,991
Series A preferred shares............. 5,422 5,423 10,845 5,423
-------- -------- --------- ---------
$ 83,003 $ 74,987 $ 163,179 $ 140,414
======== ======== ========= =========
</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 June 30, For the Six Months Ended June 30,
------------------------------------ -----------------------------------
2000 1999 2000 1999
-------------- -------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Weighted average shares used for determining
diluted income per share................. 88,746 87,823 88,078 87,245
Series A preferred shares................ 8,018 8,018 8,018 4,009
------- ------- ------- -------
Shares used for determining diluted
funds from operations per share.......... 96,764 95,841 96,096 91,254
======= ======= ======= =======
</TABLE>
Page 28
<PAGE> 29
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 June 30, 1999) which is considered non-recurring because of the
expected conversion of the Temperature Controlled Logistics Companies to REITs,
(iii) the add-back of Temperature Controlled Logistics non-recurring
unification costs, and (iv) 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 June 30, For the Six Months Ended June 30,
------------------------------------ -----------------------------------
2000 1999 2000 1999
-------------- -------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Operating activities........... $ 59,302 $ 66,456 $ 104,551 $ 86,796
=========== =========== =========== ===========
Investing activities........... $ (91,606) $ (1,228) $ (120,856) $ (142,320)
=========== =========== =========== ===========
Financing activities........... $ 27,153 $ (83,853) $ 2,812 $ (50,770)
=========== =========== =========== ===========
</TABLE>
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% (8.10 % at June 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% (7.55% at
June 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.
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.
Page 29
<PAGE> 30
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
At June 30, 2000 the Company's exposure to a change in interest rates on
its wholly-owned and partially-owned debt is as follows:
<TABLE>
<CAPTION>
(amounts in thousands except per share amounts)
Weighted Effect of 1%
Average Increase In
Balance Interest Rate Base Rates
------------- -------------- --------------
<S> <C> <C> <C>
Wholly-owned debt:
Variable rate............. $ 978,242 8.01% $ 9,782
Fixed rate................ 1,060,710 7.61% --
----------- ----------
$ 2,038,952 9,782
=========== ----------
Partially-owned debt:
Variable rate............. $ 93,161 8.25% 932
Fixed rate................ 1,051,027 7.78% --
---------- ----------
$1,144,188 932
========== ----------
Minority interest............... (1,559)
----------
Total decrease in the
Company's annual net income... $ 9,155
==========
Per share-diluted........... $ .10
==========
</TABLE>
Page 30
<PAGE> 31
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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 31, 2000, the Company held its annual meeting of shareholders. The
matters on which the shareholders voted, in person or by proxy, were (i) for the
election of three nominees to serve on the Board of Trustees for a term of three
years or until their respective successors are duly elected and qualified and
(ii) an amendment to Vornado's Omnibus Share Plan (the "Plan") to authorize the
allocation of an additional 3,500,000 common shares of beneficial interest to be
reserved for issuance under the Plan. The nominees were elected and the
amendment to the Plan was approved. The results of the voting are shown below:
<TABLE>
<CAPTION>
Election of Trustees:
Votes Cast
Against or
Trustee Votes Cast For Withheld
---------------- --------------- ---------------
<S> <C>
Steven Roth 71,599,039 1,718,797
Michael D. Fascitelli 71,595,062 1,722,774
Russell B. Wight, Jr. 71,577,859 1,739,977
Amendment to Omnibus Share Plan:
Votes Cast
Against or
Votes Cast For Withheld
---------------- ---------------
51,577,859 21,739,977
</TABLE>
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 June 30, 2000, Vornado Realty Trust filed the
following reports on Form 8-K.
<TABLE>
<CAPTION>
Date of Report
(Date of
Earliest Event
Report) Item Reported Date Filed
------------------ ---------------- --------------
<S> <C> <C>
May 1, 2000 Issuance of Series D-6 Preferred Units by Vornado Realty L.P. May 19, 2000
May 25, 2000 Issuance of Series D-7 Preferred Units by Vornado Realty L.P. June 16, 2000
</TABLE>
Page 31
<PAGE> 32
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.
<TABLE>
<S> <C>
VORNADO REALTY TRUST
------------------------------------------
(Registrant)
Date: August 2, 2000 By: /s/ Irwin Goldberg
-------------------------------------------
IRWIN GOLDBERG
Vice President, Chief Financial Officer
</TABLE>
Page 32
<PAGE> 33
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO.
---------
<S> <C> <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 33
<PAGE> 34
<TABLE>
<CAPTION>
EXHIBIT
NO.
---------
<S> <C> <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 Incorporated by reference
to Exhibit 3.2 of Vornado's Current Report on Form by 8-K,
dated November 12, 1998 (File No. 001-11954), filed on
November 30, 1998................................................. *
</TABLE>
---------------------------------------
* Incorporated by reference
Page 34
<PAGE> 35
<TABLE>
<CAPTION>
EXHIBIT
NO.
---------
<S> <C> <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 Incorporated by reference to
Exhibit 3.4 of Vornado's Current Report on Form 8-K/A, dated
by 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 35
<PAGE> 36
<TABLE>
<CAPTION>
EXHIBIT
NO.
---------
<S> <C> <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..................................................... *
10.1 -- Second Amendment, dated as of June 12, 1997, to Vornado's 1993
Omnibus Share Plan, as amended - Incorporated by reference to
Vornado's Registration Statement on Form S-8 (File No.
333-29011) filed on June 12, 1997.............................. *
10.2 -- Master Agreement and Guaranty, between Vornado, Inc. and
Bradlees New Jersey, Inc. dated as of May 1, 1992 -
Incorporated by reference to Vornado's Quarterly Report on
Form 10-Q for quarter ended March 31, 1992 (File No.
001-11954), filed May 8, 1992................................... *
10.3** -- Mortgage, Security Agreement, Assignment of Leases and Rents and
Fixture Filing dated as of November 24, 1993 made by each of
the entities listed therein, as mortgagors to Vornado Finance
Corp., as mortgagee - Incorporated by reference to Vornado's
Current Report on Form 8-K dated November 24, 1993 (File No.
001-11954), filed December 1, 1993............................... *
10.4** -- 1985 Stock Option Plan as amended - Incorporated by reference to
Vornado's Quarterly Report on Form 10-Q for quarter ended May
2, 1987 (File No. 001-11954), filed June 9, 1987................. *
</TABLE>
-----------------------------------
* Incorporated by reference
** Management contract or compensatory plan
Page 36
<PAGE> 37
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<S> <C> <C>
10.5** -- Form of Stock Option Agreement for use in connection with incentive stock
options issued pursuant to Vornado, Inc. 1985 Stock Option Plan -
Incorporated by reference to Vornado's Quarterly Report on Form 10-Q for
quarter ended October 26, 1985 (File No. 001-11954), filed December 9, 1985. *
10.6** -- Form of Stock Option Agreement for use in connection with incentive stock
options issued pursuant to Vornado, Inc. 1985 Stock Option Plan--Incorporated
by reference to Vornado's Quarterly Report on Form 10-Q for quarter ended
May 2, 1987 (File No. 001-11954), filed June 9, 1987........................ *
10.7** -- Form of Stock Option Agreement for use in connection with incentive stock
options issued pursuant to Vornado, Inc. 1985 Stock Option Plan--Incorporated
by reference to Vornado's Quarterly Report on Form 10-Q for quarter ended
October 26, 1985 (File No. 001-11954), filed December 9, 1985................ *
10.8** -- Employment Agreement between Vornado Realty Trust and Joseph Macnow dated
January 1, 1998 - Incorporated by reference to Exhibit 10.7 of Vornado's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 (File
No. 001-11954), filed November 12, 1998...................................... *
10.9** -- Employment Agreement between Vornado Realty Trust and Richard Rowan dated
January 1, 1998 - Incorporated by reference to Exhibit 10.8 of Vornado's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998
(File No. 001-11954), filed November 12, 1998................................ *
10.10** -- Employment Agreement between Vornado Realty Trust and Irwin Goldberg, dated
December 11, 1997 - Incorporated by reference to Exhibit 10.10 of Vornado's
Annual Report on Form 10-K/A for the year ended December 31, 1997 (File No.
001-11954), filed on April 14, 1998.......................................... *
10.11** -- Employment Agreement between Vornado Realty Trust and Michael D. Fascitelli
dated December 2, 1996 - Incorporated by reference to Vornado's Annual Report
on Form 10-K for the year ended December 31, 1996 (File No. 001-11954), filed
March 13, 1997............................................................... *
10.12 -- Promissory Notes from Steven Roth to Vornado, Inc. dated December 29, 1992 and
January 15, 1993 - Incorporated by reference to Vornado's Annual Report on
Form 10-K for the year ended December 31, 1992 (File No. 001-11954), filed
February 16, 1993............................................................ *
10.13 -- Registration Rights Agreement between Vornado, Inc. and Steven Roth Dated
December 29, 1992 - Incorporated by reference to Vornado's Annual Report on
Form 10-K for the year ended December 31, 1992 (File No. 001-11954), filed
February 16, 1993............................................................ *
10.14 -- Stock Pledge Agreement between Vornado, Inc. and Steven Roth dated December
29, 1992 - Incorporated by reference to Vornado's Annual Report on Form 10-K
for the year ended December 31, 1992 (File No. 001-11954), filed February
16, 1993..................................................................... *
10.15 -- Promissory Note from Steven Roth to Vornado Realty Trust dated April 15, 1993
and June 17, 1993 - Incorporated by reference to Vornado's Annual Report on
Form 10-K for the year ended December 31, 1993 (File No. 001-11954), filed
March 24, 1994............................................................... *
10.16 -- Promissory Note from Richard Rowan to Vornado Realty Trust - Incorporated by
reference to Vornado's Annual Report on Form 10-K for the year ended December
31, 1993 (File No. 001-11954), filed March 24, 1994.......................... *
</TABLE>
-------------------
* Incorporated by reference
** Management contract or compensatory plan
Page 37
<PAGE> 38
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<S> <C> <C>
10.17 -- Promissory Note from Joseph Macnow to Vornado Realty Trust - Incorporated by
reference to Vornado's Annual Report on Form 10-K for the year ended
December 31, 1993 (File No. 001-11954), filed March 24, 1994................. *
10.18 -- Management Agreement between Interstate Properties and Vornado, Inc. dated
July 13, 1992 -Incorporated by reference to Vornado's Annual Report on Form
10-K for the year ended December 31, 1992 (File No. 001-11954), filed
February 16, 1993............................................................ *
10.19 -- Real Estate Retention Agreement between Vornado, Inc., Keen Realty
Consultants, Inc. and Alexander's, Inc., dated as of July 20, 1992 -
Incorporated by reference to Vornado's Annual Report on Form 10-K for the
year ended December 31, 1992 (File No. 001-11954), filed February 16, 1993... *
10.20 -- Amendment to Real Estate Retention Agreement dated February 6, 1995 -
Incorporated by reference to Vornado's Annual Report on Form 10-K for the
year ended December 31, 1994 (File No. 001-11954), filed March 23, 1995..... *
10.21 -- Stipulation between Keen Realty Consultants Inc. and Vornado Realty Trust re:
Alexander's Retention Agreement - Incorporated by reference to Vornado's
annual Report on Form 10-K for the year ended December 31, 1993 (File No.
001-11954), filed March 24, 1994............................................. *
10.22 -- Stock Purchase Agreement, dated February 6, 1995, among Vornado Realty Trust
and Citibank, N.A. Incorporated by reference to Vornado's Current Report on
Form 8-K dated February 6, 1995 (File No. 001-11954), filed February 21, 1995 *
10.23 -- Management and Development Agreement, dated as of February 6, 1995 -
Incorporated by reference to Vornado's Current Report on Form 8-K dated
February 6, 1995 (File No. 001-11954), filed February 21, 1995................ *
10.24 -- Standstill and Corporate Governance Agreement, dated as of February 6, 1995 -
Incorporated by reference to Vornado's Current Report on Form 8-K dated
February 6, 1995 (File No. 001-11954), filed February 21, 1995................ *
10.25 -- Credit Agreement, dated as of March 15, 1995, among Alexander's Inc., as
borrower, and Vornado Lending Corp., as lender - Incorporated by reference
from Annual Report on Form 10-K for the year ended December 31, 1994 (File
No. 001 - 11954), filed March 23, 1995....................................... *
10.26 -- Subordination and Intercreditor Agreement, dated as of March 15, 1995 among
Vornado Lending Corp., Vornado Realty Trust and First Fidelity Bank,
National Association - Incorporated by reference to Vornado's Annual Report
on Form 10-K for the year ended December 31, 1994 (File No. 001-11954),
filed March 23, 1995.......................................................... *
10.28 -- Form of Intercompany Agreement between Vornado Realty L.P. and Vornado
Operating, Inc. -Incorporated by reference to Exhibit 10.1 of Amendment No.
1 to Vornado Operating, Inc.'s Registration Statement on Form S-11 (File No.
333-40701), filed on January 23, 1998........................................ *
10.29 -- Form of Revolving Credit Agreement between Vornado Realty L.P. and Vornado
Operating, Inc., together with related form of Note - Incorporated by
reference to Exhibit 10.2 of Amendment No. 1 to Vornado Operating, Inc.'s
Registration Statement on Form S-11 (File No.333-40701)...................... *
</TABLE>
-------------------
* Incorporated by reference
Page 38
<PAGE> 39
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<S> <C> <C>
10.31 -- Registration Rights Agreement, dated as of April 15, 1997, between Vornado
Realty Trust and the holders of Units listed on Schedule A thereto -
Incorporated by reference to Exhibit 10.2 of Vornado's Current Report on Form
8-K (File No. 001-11954), filed on April 30, 1997........................... *
10.32 -- Noncompetition Agreement, dated as of April 15, 1997, by and among Vornado
Realty Trust, the Mendik Company, L.P., and Bernard H. Mendik -
Incorporated by reference to Exhibit 10.3 of Vornado's Current Report on Form
8-K (File No. 001-11954), filed on April 30, 1997............................ *
10.33 -- Employment Agreement, dated as of April 15, 1997, by and among Vornado Realty
Trust, The Mendik Company, L.P. and David R. Greenbaum - Incorporated by
reference to Exhibit 10.4 of Vornado's Current Report on Form 8-K (File No.
001-11954), filed on April 30, 1997.......................................... *
10.34 -- Agreement, dated September 28, 1997, between Atlanta Parent Incorporated,
Portland Parent Incorporated and Crescent Real Estate Equities, Limited
Partnership - Incorporated by reference to Exhibit 99.6 of Vornado's Current
Report on Form 8-K (File No. 001-11954), filed on October 8, 1997............ *
10.35 -- Contribution Agreement between Vornado Realty Trust, Vornado Realty L.P. and
The Contributors Signatory - thereto - Merchandise Mart Properties, Inc.
(DE) and Merchandise Mart Enterprises, Inc. Incorporated by reference to
Exhibit 10.34 of Vornado's Annual Report on Form 10-K/A for the year ended
December 31, 1997 (File No. 001-11954), filed on April 8, 1998............... *
10.36 -- Sale Agreement executed November 18, 1997, and effective December 19, 1997,
between MidCity Associates, a New York partnership, as Seller, and One Penn
Plaza LLC, a New York Limited liability company; as purchaser. Incorporated
by reference to Exhibit 10.35 of Vornado's Annual Report on Form 10-K/A for
the year ended December 31, 1997 (File No. 001-11954), filed on April 8,
1998......................................................................... *
10.37 -- Promissory Notes from Michael D. Fascitelli to Vornado Realty Trust dated
March 2, 1998 and April 30, 1998. Incorporated by reference to Exhibit
10.37 of Vornado's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998 (File No. 001-11954), filed May 13, 1998............................ *
10.38 -- Credit Agreement dated as of June 22, 1998 among One Penn Plaza, LLC, as
Borrower, The Lenders Party Hereto, The Chase Manhattan Bank, as
Administrative Agent Incorporated by reference to Exhibit 10 of Vornado's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (File No.
001-11954), filed August 13, 1998............................................ *
10.39 -- Registration Rights Agreement, dated as of April 1, 1998 between Vornado and the
Unit Holders named herein - Incorporated by reference to Exhibit 10.2 of
Amendment No. 1 to Vornado's Registration Statement on Form S-3 (File No.
333-50095), filed on May 6, 1998............................................. *
10.40 -- Underwriting Agreement, dated April 9, 1998, among Vornado, Vornado Realty
L.P. and Goldman, Sachs & Co. - Incorporated by reference to Exhibit 1.1 of
Vornado's Current Report on Form 8-K, dated April 9, 1998 (File No.
001-11954), filed on April 16, 1998.......................................... *
10.41 -- Pricing Agreement, dated April 9, 1998, between Vornado and Goldman, Sachs &
Co. - Incorporated by reference to Exhibit 1.2 of Vornado's Current Report on
Form 8-K, dated April 9, 1998 (File No. 001-11954), filed on April 16, 1998... *
</TABLE>
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* Incorporated by reference
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10.42 -- Underwriting Agreement, dated April 23, 1998, among Vornado, Vornado Realty
L.P. and Merrill Lynch, Pierce, Fenner & Smith Incorporated - Incorporated
by reference to Exhibit 1.1 of Vornado's Current Report on Form 8-K, dated
April 22, 1998 (File No. 001-11954), filed on April 28, 1998................. *
10.43 -- Registration Rights Agreement, dated as of August 5, 1998 between Vornado and
the Unit Holders named therein - Incorporated by reference to Exhibit 10.1
of Vornado's Registration Statement on Form S-3 (File No. 333-89667), filed
on October 25, 1999.......................................................... *
10.44 -- Registration Rights Agreement, dated as of July 23, 1998 between Vornado and the
Unit Holders named therein - Incorporated by reference to Exhibit 10.2 of
Vornado's Registration Statement on Form S-3 (File No. 333-89667), filed on
October 25, 1999............................................................. *
10.45 -- Underwriting Agreement, dated March 12, 1999, among Vornado, Vornado Realty
L.P., Merrill Lynch, Pierce, Fenner & Smith Incorporated - Incorporated by
reference to Exhibit 1.1 of Vornado's Current Report on Form 8-K, dated
March 3, 1999 (File No. 001-11954), filed on March 17, 1999.................. *
10.46 -- Underwriting Agreement, dated May 17, 1999, among Vornado Realty Trust,
Vornado Realty L.P., Salomon Smith Barney Inc. and the other underwriters
named therein - Incorporated by reference to Exhibit 1.1 of Vornado's
Current Report on Form 8-K, dated May 17, 1999 (File No. 001-11954), filed
on May 26, 1999.............................................................. *
10.47 -- Consolidated and Restated Mortgage, Security Agreement, Assignment of Leases
and Rents and Fixture Filing, dated as of March 1, 2000, between Entities
named therein (as Mortgagors) and Vornado (as Mortgagee) - Incorporated by
reference to Vornado's Annual Report on Form 10-K for the year ended
December 31, 1999 (File No. 001-11954), filed on March 9, 2000............... *
10.48 -- Indenture and Servicing Agreement, dated as of March 1, 2000, among Vornado,
Lasalle Bank National Association, ABN Amro Bank N.V. and Midland Loan
Services, Inc. - Incorporated by reference to Vornado's Annual Report on
Form 10-K for the year ended December 31, 1999 (File No. 001-11954), filed
on March 9, 2000............................................................. *
10.49 -- Employment Agreement, dated January 22, 2000, between Vornado Realty Trust
and Melvyn Blum - Incorporated by reference to Vornado's Annual Report on
Form 10-K for the year ended December 31, 1999 (File No. 001-11954), filed on
March 9, 2000................................................................ *
10.50 -- First Amended and Restated Promissory Note of Steven Roth, dated November 16,
1999 - Incorporated by reference to Vornado's Annual Report on Form 10-K for
the year ended December 31, 1999 (File No. 001-11954), filed on March 9, 2000 *
10.51 -- Letter agreement, dated November 16, 1999, between Steven Roth and Vornado
Realty Trust - Incorporated by reference to Vornado's Annual Report on Form
10-K for the year ended December 31, 1999 (File No. 001-11954), filed on
March 9, 2000................................................................ *
10.52 -- Promissory Note of Melvyn Blum, dated March 24, 2000 - Incorporated by reference
to Vornado's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000
(File No. 001-11954) filed on May 5, 2000....................................... *
10.53 -- Promissory Note of Melvyn Blum, dated April 4, 2000 - Incorporated by reference
to Vornado's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000
(File No. 001-11954) filed on May 5, 2000...................................... *
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10.54 -- Revolving Credit Agreement dated as of March 21, 2000 among Vornado Realty
L.P., as borrower, Vornado Realty Trust, as general partner, and UBS AG,
as Bank - Incorporated by reference to Vornado's Quarterly Report on Form
10-Q for the quarter ended March 31, 2000 (File No. 001-11954) filed on May
5, 2000...................................................................... *
27 -- Financial Data Schedule
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