UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended:
September 30, 2011
Or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
For the transition period from:
to
Commission File Number:
001-11954
VORNADO REALTY TRUST
(Exact name of registrant as specified in its charter)
Maryland
22-1657560
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer 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)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
x Large Accelerated Filer
o Accelerated Filer
o Non-Accelerated Filer (Do not check if smaller reporting company)
o Smaller Reporting Company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of September 30, 2011, 184,496,038 of the registrant’s common shares of beneficial interest are outstanding.
PART I.
Financial Information:
Page Number
Item 1.
Financial Statements:
Consolidated Balance Sheets (Unaudited) as of
September 30, 2011 and December 31, 2010
3
Consolidated Statements of Income (Unaudited) for the
Three and Nine Months Ended September 30, 2011 and 2010
4
Consolidated Statements of Comprehensive Income (Unaudited) for the
5
Consolidated Statements of Changes in Equity (Unaudited) for the
Nine Months Ended September 30, 2011 and 2010
6
Consolidated Statements of Cash Flows (Unaudited) for the
7
Notes to the Consolidated Financial Statements (Unaudited)
9
Report of Independent Registered Public Accounting Firm
36
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
37
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
73
Item 4.
Controls and Procedures
74
PART II.
Other Information:
Legal Proceedings
75
Item 1A.
Risk Factors
76
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Item 5.
Other Information
Item 6.
Exhibits
Signatures
77
Exhibit Index
78
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in thousands, except share and per share amounts)
September 30,
December 31,
ASSETS
2011
2010
Real estate, at cost:
Land
$
4,524,930
4,535,042
Buildings and improvements
12,573,880
12,510,244
Development costs and construction in progress
225,098
217,505
Leasehold improvements and equipment
127,294
124,910
Total
17,451,202
17,387,701
Less accumulated depreciation and amortization
(2,975,075)
(2,715,046)
Real estate, net
14,476,127
14,672,655
Cash and cash equivalents
585,183
690,789
Restricted cash
124,984
200,822
Marketable securities
631,361
766,116
Accounts receivable, net of allowance for doubtful accounts of $76,935 and $62,979
145,854
157,146
Investments in partially owned entities
1,157,326
927,672
Investment in Toys "R" Us
546,258
447,334
Real Estate Fund investments
261,417
144,423
Mezzanine loans receivable, net
156,365
202,412
Receivable arising from the straight-lining of rents, net of allowance of $8,973 and $7,316
724,483
695,486
Deferred leasing and financing costs, net of accumulated amortization of $236,859 and $219,965
360,056
354,864
Identified intangible assets, net of accumulated amortization of $356,118 and $335,113
334,878
346,157
Assets related to discontinued operations
253,352
519,285
Due from officers
13,185
13,187
Other assets
417,399
379,123
20,188,228
20,517,471
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Notes and mortgages payable
8,462,191
8,255,101
Senior unsecured notes
959,421
1,082,928
Exchangeable senior debentures
496,139
491,000
Convertible senior debentures
188,799
186,413
Revolving credit facility debt
300,000
874,000
Accounts payable and accrued expenses
469,024
438,479
Deferred credit
532,221
575,836
Deferred compensation plan
94,623
91,549
Deferred tax liabilities
13,814
13,278
Liabilities related to discontinued operations
8,954
267,652
Other liabilities
139,353
82,856
Total liabilities
11,664,539
12,359,092
Commitments and contingencies
Redeemable noncontrolling interests:
Class A units - 12,526,395 and 12,804,202 units outstanding
934,720
1,066,974
Series D cumulative redeemable preferred units - 9,000,001 and 10,400,001 units outstanding
226,000
261,000
Total redeemable noncontrolling interests
1,160,720
1,327,974
Vornado shareholders' equity:
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000
shares; issued and outstanding 42,186,709 and 32,340,009 shares
1,021,855
783,088
Common shares of beneficial interest: $.04 par value per share; authorized
250,000,000 shares; issued and outstanding 184,496,038 and 183,661,875 shares
7,350
7,317
Additional capital
7,112,004
6,932,728
Earnings less than distributions
(1,330,405)
(1,480,876)
Accumulated other comprehensive (loss) income
(59,019)
73,453
Total Vornado shareholders' equity
6,751,785
6,315,710
Noncontrolling interests in consolidated subsidiaries
611,184
514,695
Total equity
7,362,969
6,830,405
See notes to consolidated financial statements (unaudited).
CONSOLIDATED STATEMENTS OF INCOME
For the Three
For the Nine
Months Ended September 30,
(Amounts in thousands, except per share amounts)
REVENUES:
Property rentals
561,149
559,518
1,688,551
1,661,967
Tenant expense reimbursements
94,053
95,341
264,857
271,040
Cleveland Medical Mart development project
35,135
-
108,203
Fee and other income
37,006
32,266
112,239
104,838
Total revenues
727,343
687,125
2,173,850
2,037,845
EXPENSES:
Operating
285,659
275,077
841,266
802,927
Depreciation and amortization
134,074
130,599
393,846
393,259
General and administrative
46,452
55,200
155,566
153,231
33,419
101,637
Tenant buy-outs and other acquisition related costs
2,288
921
22,455
2,851
Total expenses
501,892
461,797
1,514,770
1,352,268
Operating income
225,451
225,328
659,080
685,577
(Loss) income applicable to Toys "R" Us
(9,304)
(2,557)
80,794
102,309
Income (loss) from partially owned entities
13,552
(1,996)
56,239
13,800
Income (loss) from Real Estate Fund (of which $3,675 and ($1,091) is
attributable to noncontrolling interests, in each three-month
period, respectively, and $15,703 and ($1,091) in each
nine-month period, respectively)
5,353
(1,410)
25,491
Interest and other investment (loss) income, net
(29,994)
47,096
95,121
65,676
Interest and debt expense (including amortization of deferred
financing costs of $4,828 and $5,170 in each three-month
period, respectively, and $14,696 and $14,085 in each
(136,672)
(145,561)
(408,532)
(423,354)
Net (loss) on extinguishment of debt
(724)
(1,796)
Net gain on disposition of wholly owned and partially owned assets
1,298
5,072
7,975
12,759
Income before income taxes
69,684
125,248
516,168
453,561
Income tax expense
(7,144)
(5,449)
(19,448)
(15,993)
Income from continuing operations
62,540
119,799
496,720
437,568
Income (loss) from discontinued operations
3,683
(3,667)
146,293
(11,681)
Net income
66,223
116,132
643,013
425,887
Less:
Net income attributable to noncontrolling interests in
consolidated subsidiaries
(5,636)
(296)
(20,643)
(1,490)
Net income attributable to noncontrolling interests in the
Operating Partnership, including unit distributions
(6,825)
(11,584)
(47,364)
(33,487)
Net income attributable to Vornado
53,762
104,252
575,006
390,910
Preferred share dividends
(17,627)
(13,442)
(47,743)
(41,975)
Discount on preferred share and unit redemptions
5,000
4,382
NET INCOME attributable to common shareholders
41,135
95,192
532,263
353,317
INCOME PER COMMON SHARE - BASIC:
Income from continuing operations, net
0.20
0.54
2.14
2.00
Income (loss) from discontinued operations, net
0.02
(0.02)
0.75
(0.06)
Net income per common share
0.22
0.52
2.89
1.94
Weighted average shares
184,398
182,462
184,220
182,014
INCOME PER COMMON SHARE - DILUTED:
2.12
1.98
0.74
2.86
1.92
186,065
184,168
186,039
183,826
DIVIDENDS PER COMMON SHARE
0.69
0.65
2.07
1.95
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
Other comprehensive (loss) income:
Change in unrealized net (loss) gain on securities available-for-sale
(161,178)
8,966
(120,334)
34,497
Pro rata share of other comprehensive income (loss) of
nonconsolidated subsidiaries
112
3,885
26,477
(12,080)
Change in value of interest rate swap
(24,424)
(42,458)
Other
(69)
(5,176)
(5,114)
(5,594)
Comprehensive (loss) income
(119,336)
123,807
501,584
442,710
Comprehensive income attributable to noncontrolling interests
(400)
(12,414)
(59,050)
(36,148)
Comprehensive (loss) income attributable to Vornado
(119,736)
111,393
442,534
406,562
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated
Earnings
Non-
Preferred Shares
Common Shares
Additional
Less Than
Comprehensive
controlling
Shares
Amount
Capital
Distributions
Income (Loss)
Interests
Equity
Balance, December 31, 2009
33,952
823,686
181,214
7,218
6,961,007
(1,577,591)
28,449
406,637
6,649,406
1,490
392,400
Dividends on common shares
(354,937)
Dividends on preferred shares
(42,100)
Redemption of preferred shares
(1,600)
(39,982)
(35,600)
Common shares issued:
Upon redemption of Class A
units, at redemption value
822
33
62,573
62,606
Under employees' share
option plan
596
24
10,922
(25,583)
(14,637)
Under dividend reinvestment plan
17
1
1,231
1,232
Contributions:
Real Estate Fund
37,698
188
Conversion of Series A preferred
shares to common shares
(3)
(177)
177
Deferred compensation shares
and options
6,155
6,156
Change in unrealized net gain
on securities available-for-sale
Pro rata share of other
comprehensive (loss) of
Adjustments to carry redeemable
Class A units at redemption value
(232,099)
(61)
30
670
(4,955)
Balance, September 30, 2010
32,349
783,527
182,671
7,277
6,809,905
(1,604,889)
45,272
446,683
6,487,775
Balance, December 31, 2010
32,340
183,662
20,643
595,649
(381,382)
(47,905)
Issuance of Series J preferred shares
9,850
239,037
435
38,203
38,220
369
15
21,603
(397)
21,221
1,329
1,330
109,241
364
Distributions:
(22,713)
(15,604)
(165)
165
10
7,866
Change in unrealized net loss
comprehensive income of
114,628
Redeemable noncontrolling interests'
share of above adjustments
8,957
(105)
(4,518)
5,149
4,558
(30)
Balance, September 30, 2011
42,187
184,496
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended
Cash Flows from Operating Activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of deferred financing costs)
414,992
419,638
Equity in net income of partially owned entities, including Toys “R” Us
(137,033)
(116,109)
Net (gain) loss on extinguishment of debt
(83,907)
1,796
Mezzanine loans loss (reversal) accrual and net gain on disposition
(82,744)
6,900
Distributions of income from partially owned entities
75,612
36,829
Net gain on sales of real estate
(51,623)
Amortization of below-market leases, net
(49,988)
(49,144)
Straight-lining of rental income
(38,262)
(55,581)
Loss (income) from the mark-to-market of J.C. Penney derivative position
27,136
(32,249)
Other non-cash adjustments
20,261
36,058
Unrealized gain on Real Estate Fund assets
(19,209)
(7,975)
(12,759)
Litigation loss accrual and impairment losses
15,197
Changes in operating assets and liabilities:
(97,785)
(62,500)
Accounts receivable, net
11,292
(6,468)
Prepaid assets
(68,558)
(45,104)
(43,413)
(59,614)
32,227
78,153
22,635
13,791
Net cash provided by operating activities
566,671
594,721
Cash Flows from Investing Activities:
(440,865)
(159,053)
Distributions of capital from partially owned entities
274,283
45,613
Proceeds from sales of real estate and related investments
135,762
48,998
121,463
125,204
Additions to real estate
(109,963)
(98,789)
Proceeds from sales and repayments of mezzanine loans
100,525
109,594
(52,816)
(86,871)
Investments in mezzanine loans receivable and other
(44,215)
(75,697)
Funding of collateral for J.C. Penney derivative
(33,850)
Return of derivative collateral
28,700
Proceeds from sales of marketable securities
19,301
126,015
Proceeds from maturing short-term investments
40,000
Purchases of marketable securities
(13,917)
Acquisitions of real estate and other
(10,000)
Net cash (used in) provided by investing activities
(1,675)
51,097
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Cash Flows from Financing Activities:
Repayments of borrowings
(2,666,610)
(1,462,652)
Proceeds from borrowings
2,184,167
1,603,359
Dividends paid on common shares
Proceeds from the issuance of Series J preferred shares
Contributions from noncontrolling interests
109,605
39,351
Distributions to noncontrolling interests
(77,330)
(41,055)
Dividends paid on preferred shares
(43,675)
Debt issuance and other costs
(28,614)
(14,942)
Purchases of outstanding preferred units and shares
(28,000)
(48,600)
Proceeds received from exercise of employee share options
22,947
12,192
Repurchase of shares related to stock compensation agreements and related
tax withholdings
(747)
(25,659)
Net cash used in financing activities
(670,602)
(335,043)
Net (decrease) increase in cash and cash equivalents
(105,606)
310,775
Cash and cash equivalents at beginning of period
535,479
Cash and cash equivalents at end of period
846,254
Supplemental Disclosure of Cash Flow Information:
Cash payments for interest (including capitalized interest of $0 and $875)
388,938
409,953
Cash payments for income taxes
10,299
5,348
Non-Cash Investing and Financing Activities:
Adjustments to carry redeemable Class A units at redemption value
Common shares issued upon redemption of Class A units, at redemption value
Contribution of mezzanine loan receivable to a joint venture
73,750
Like-kind exchange of real estate
(45,625)
Extinguishment of a liability in connection with the acquisition of real estate
20,500
Investment in J.C. Penney, Inc.
271,372
Decrease in assets and liabilities resulting from deconsolidation
of discontinued operations:
(145,333)
(232,502)
Write-off of fully depreciated assets
(58,279)
(50,785)
8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
Vornado Realty Trust (“Vornado”) is a fully‑integrated real estate investment trust (“REIT”) and conducts its business through, and substantially all of its interests in properties are held by, Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”). Accordingly, Vornado’s cash flow and ability to pay dividends to its shareholders is dependent upon the cash flow of the Operating Partnership and the ability of its direct and indirect subsidiaries to first satisfy their obligations to creditors. Vornado is the sole general partner of, and owned approximately 93.3% of the common limited partnership interest in the Operating Partnership at September 30, 2011. All references to “we,” “us,” “our,” the “Company” and “Vornado” refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership.
The accompanying consolidated financial statements are unaudited and include the accounts of Vornado, and the Operating Partnership and its consolidated partially owned entities. All intercompany amounts have been eliminated. In our opinion, 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 accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (the “SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2010, as filed with the SEC.
We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three and nine months ended September 30, 2011 are not necessarily indicative of the operating results for the full year.
3. Recently Issued Accounting Literature
In June 2011, the Financial Accounting Standards Board (“FASB”) issued an update to Accounting Standards Codification (“ASC”) 220, Comprehensive Income, which requires, among other things, presentation of the components of net income and other comprehensive income in one continuous statement or in two separate but consecutive statements. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. We believe that the adoption of this guidance on January 1, 2012 will not have a material effect on our consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. Vornado Capital Partners, L.P. and Vornado Capital Partners Parallel, L.P. (the “Fund”)
We are the general partner and investment manager of an $800,000,000 real estate investment Fund, to which we have committed $200,000,000. The Fund has a term of eight years and is our exclusive investment vehicle during its three-year investment period, which concludes in July 2013, for all investments that fit within the Fund’s investment parameters, as defined. The Fund is accounted for under the AICPA Audit and Accounting Guide for Investment Companies and its investments are reported on its balance sheet at fair value, with changes in value each period recognized in earnings. We consolidate the accounts of the Fund into our consolidated financial statements.
From inception through September 30, 2011, the Fund received aggregate capital contributions from partners of $256,100,000, including $64,031,000 from us, and as of September 30, 2011, has five investments with an aggregate fair value of approximately $261,417,000. Below is a summary of income (loss) from the Fund for the three and nine months ended September 30, 2011 and 2010.
For the Three Months
For the Nine Months
Ended September 30,
Operating (loss) income
(286)
3,197
Net realized gains
3,085
Net unrealized gains
5,639
19,209
Income (loss) from Real Estate Fund
(Income) loss attributable to noncontrolling interests
(3,675)
1,091
(15,703)
Income (loss) from Real Estate Fund attributable to Vornado (1)
1,678
(319)
9,788
___________________________________
(1)
Excludes $378 and $1,803 of management, leasing and development fees in the three and nine months ended September 30, 2011, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.
One Park Avenue
On March 1, 2011, we as a co-investor, together with the Fund, acquired a 95% interest in One Park Avenue, a 932,000 square foot office building located between 32nd and 33rd Streets in New York, for $374,000,000. The purchase price consisted of $137,000,000 in cash and 95% of a new $250,000,000 five-year mortgage that bears interest at 5.0%. The Fund accounts for its 64.7% interest in the property at fair value in accordance with the AICPA Audit and Accounting Guide for Investment Companies. We account for our directly owned 30.3% equity interest under the equity method of accounting.
5. Marketable Securities and Derivative InstrumentsMarketable Securities
Our portfolio of marketable securities is comprised of debt and equity securities that are classified as available for sale. Available for sale securities are presented on our consolidated balance sheets at fair value. Gains and losses resulting from the mark-to-market of these securities are included in “other comprehensive (loss) income.” Gains and losses are recognized in earnings only upon the sale of the securities and are recorded based on the weighted average cost of such securities.
In the nine months ended September 30, 2011 and 2010, we sold certain marketable securities for aggregate proceeds of $19,301,000 and $155,118,000, resulting in net gains of $2,139,000 and $8,960,000, respectively, of which $0 and $5,052,000 was recognized in the three months ended September 30, 2011 and 2010, respectively.
5. Marketable Securities and Derivative Instruments- continued
Marketable Securities-continued
Below is a summary of our marketable securities portfolio as of September 30, 2011 and December 31, 2010.
As of September 30, 2011
As of December 31, 2010
GAAP
Unrealized
Maturity
Fair Value
Cost
(Loss) Gain
Gain
Equity securities:
J.C. Penney
n/a
497,680
590,366
(92,686)
600,600
10,234
26,769
13,561
13,208
47,248
26,481
20,767
Debt securities
04/13 - 10/18
106,912
102,679
4,233
08/11 - 10/18
118,268
104,180
14,088
706,606
(75,245)
721,027
45,089
Investment in J.C. Penney Company, Inc. (“J.C. Penney”) (NYSE: JCP)
We own an economic interest in 23,400,000 J.C. Penney common shares, or 10.9% of J.C. Penney’s outstanding common shares. Below are the details of our investment.
We own 18,584,010 common shares at an average economic cost of $25.71 per share or $477,829,000 in the aggregate. As of September 30, 2011, these shares have an aggregate fair value of $497,680,000, based on J.C. Penney’s closing share price of $26.78 per share at September 30, 2011. Of these shares, 15,500,000 were acquired through the exercise of a call option that was acquired on September 28, 2010 and settled on November 9, 2010. During the period in which the call option was outstanding and classified as a derivative instrument, we recognized $112,537,000 of income. Upon exercise of the call option, the GAAP basis of the 18,584,010 common shares we own increased to $31.77 per share, or $590,366,000 in the aggregate. These shares are included in marketable equity securities on our consolidated balance sheet and are classified as “available for sale.” During the nine months ended September 30, 2011, we recognized a $102,920,000 loss from the mark-to-market of these shares, which is included in “other comprehensive (loss) income,” based on the difference between the carrying amount of these shares of $600,600,000 at December 31, 2010 and the fair value of $497,680,000 at September 30, 2011.
We also own an economic interest in 4,815,990 common shares through a forward contract executed on October 7, 2010, at a weighted average strike price of $28.76 per share, or $138,492,000 in the aggregate. The contract may be settled, at our election, in cash or common shares, in whole or in part, at any time prior to October 9, 2012. The counterparty may accelerate settlement, in whole or in part, upon one year’s notice to us. The strike price per share increases at an annual rate of LIBOR plus 80 basis points. The contract is a derivative instrument that does not qualify for hedge accounting treatment. Mark-to-market adjustments on the underlying common shares are recognized in “interest and other investment (loss) income, net” on our consolidated statements of income. During the three and nine months ended September 30, 2011, we recognized losses of $37,537,000 and $27,136,000, respectively, from the mark-to-market of the underlying common shares, based on J.C. Penney’s closing share price of $26.78 per share at September 30, 2011.
On September 16, 2011, we entered into an agreement with J.C. Penney which enables us to increase our beneficial and/or economic ownership to up to 15.4% of J.C. Penney’s outstanding common shares. We have agreed to vote any common shares we hold in excess of 9.9% of J.C. Penney’s outstanding common shares in accordance with either the recommendation of the board of directors of J.C. Penney or in direct proportion to the vote of all other public shareholders of J.C. Penney (excluding shares affiliated with Pershing Square Capital Management L.P.).
We review our investment in J.C. Penney on a continuing basis. Depending on various factors, including, without limitation, J.C. Penney’s financial position and strategic direction, actions taken by its board, price levels of its common stock, other investment opportunities available to us, market conditions and general economic and industry conditions, we may take such actions with respect to J.C. Penney as we deem appropriate, including (i) purchasing additional common stock or other financial instruments related to J.C. Penney, subject to our agreement with J.C. Penney as described in the preceding paragraph, or (ii) selling some or all of our beneficial or economic holdings, or (iii) engaging in hedging or similar transactions.
11
6. Investments in Partially Owned Entities
Toys “R” Us (“Toys”)
As of September 30, 2011, we own 32.7% of Toys. The business of Toys is highly seasonal. Historically, Toys’ fourth quarter net income accounts for more than 80% of its fiscal year net income. We account for our investment in Toys under the equity method and record our 32.7% share of Toys net income or loss on a one-quarter lag basis because Toys’ fiscal year ends on the Saturday nearest January 31, and our fiscal year ends on December 31. As of September 30, 2011, the carrying amount of our investment in Toys does not differ materially from our share of the equity in the net assets of Toys on a purchase accounting basis.
On May 28, 2010, Toys filed a registration statement, as amended, with the SEC for the offering and sale of its common stock. The offering, if completed, would result in a reduction of our percentage ownership of Toys’ equity. The size of the offering and its completion are subject to market and other conditions.
Below is a summary of Toys’ latest available financial information on a purchase accounting basis:
Balance as of
Balance Sheet:
July 30, 2011
October 30, 2010
Assets
11,778,000
12,810,000
Liabilities
9,969,000
11,317,000
Toys “R” Us, Inc. equity
1,809,000
1,493,000
For the Three Months Ended
Income Statement:
July 31, 2010
2,648,000
2,565,000
11,256,000
11,030,000
Net (loss) income attributable to Toys
(36,000)
(16,000)
227,000
292,000
As of September 30, 2011, we own 1,654,068 Alexander’s common shares, or approximately 32.4% of Alexander’s common equity. We manage, lease and develop Alexander’s properties pursuant to the agreements described below which expire in March of each year and are automatically renewable. As of September 30, 2011, Alexander’s owed us $43,308,000 in fees under these agreements.
As of September 30, 2011, the fair value of our investment in Alexander’s, based on Alexander’s September 30, 2011 closing share price of $361.02, was $597,152,000, or $406,875,000 in excess of the carrying amount on our consolidated balance sheet. As of September 30, 2011, the carrying amount of our investment in Alexander’s, excluding amounts owed to us, exceeds our share of the equity in the net assets of Alexander’s by approximately $59,188,000. The majority of this basis difference resulted from the excess of our purchase price for the Alexander’s common stock acquired over the book value of Alexander’s net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of Alexander’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in Alexander’s net income. The basis difference related to the land will be recognized upon disposition of our investment.
Below is a summary of Alexander’s latest available financial information:
December 31, 2010
1,785,000
1,679,000
1,427,000
1,335,000
Noncontrolling interests
4,000
3,000
Stockholders' equity
354,000
341,000
September 30, 2010
65,000
61,000
190,000
179,000
Net income attributable to Alexander’s
20,000
18,000
59,000
49,000
12
6. Investments in Partially Owned Entities – continued
Lexington Realty Trust (“Lexington”) (NYSE: LXP)
As of September 30, 2011, we own 18,468,969 Lexington common shares, or approximately 11.7% of Lexington’s common equity. We account for our investment in Lexington under the equity method because we believe we have the ability to exercise significant influence over Lexington’s operating and financial policies, based on, among other factors, our representation on Lexington’s Board of Trustees and the level of our ownership in Lexington as compared to other shareholders. We record our pro rata share of Lexington’s net income or loss on a one-quarter lag basis because we file our consolidated financial statements on Form 10-K and 10-Q prior to the time that Lexington files its consolidated financial statements.
Based on Lexington’s September 30, 2011 closing share price of $6.54, the fair value of our investment in Lexington was $120,787,000, or $59,472,000 in excess of the September 30, 2011 carrying amount on our consolidated balance sheet. As of September 30, 2011, the carrying amount of our investment in Lexington was less than our share of the equity in the net assets of Lexington by approximately $48,861,000. This basis difference resulted primarily from $107,882,000 of non-cash impairment charges recognized during 2008, partially offset by purchase accounting for our acquisition of an additional 8,000,000 common shares of Lexington in October 2008, of which the majority relates to our estimate of the fair values of Lexington’s real estate (land and buildings) as compared to the carrying amounts in Lexington’s consolidated financial statements. The basis difference related to the buildings is being amortized over their estimated useful lives as an adjustment to our equity in net income or loss of Lexington. This amortization is not material to our share of equity in Lexington’s net income or loss. The basis difference attributable to the land will be recognized upon disposition of our investment.
Below is a summary of Lexington’s latest available financial information:
June 30, 2011
3,240,000
3,385,000
1,910,000
2,115,000
60,000
71,000
Shareholders’ equity
1,270,000
1,199,000
June 30, 2010
83,000
81,000
252,000
249,000
Net (loss) attributable to Lexington
(44,000)
(24,000)
(49,000)
(97,000)
LNR Property LLC (“LNR”)
As of September 30, 2011, we own a 26.2% equity interest in LNR, which we acquired in July 2010. We account for our investment in LNR under the equity method and record our 26.2% share of LNR’s net income or loss on a one-quarter lag basis because we file our consolidated financial statements on Form 10-K and 10-Q prior to receiving LNR’s consolidated financial statements.
LNR consolidates certain commercial mortgage-backed securities (“CMBS”) and Collateralized Debt Obligation (“CDO”) trusts for which it is the primary beneficiary. The assets of these trusts (primarily commercial mortgage loans), which aggregate approximately $138.5 billion as of June 30, 2011, are the sole source of repayment of the related liabilities, which are non-recourse to LNR and its equity holders, including us. Changes in the fair value of these assets each period are offset by changes in the fair value of the related liabilities through LNR’s consolidated income statement. As of September 30, 2011, the carrying amount of our investment in LNR does not materially differ from our share of LNR’s equity.
13
LNR Property LLC (“LNR”) – continued
Below is a summary of LNR’s latest available financial information:
139,731,000
143,266,000
139,025,000
142,720,000
43,000
37,000
LNR equity
663,000
509,000
73,000
156,000
Net income attributable to LNR
52,000
152,000
280 Park Avenue Joint Venture
On March 16, 2011, we formed a 50/50 joint venture with SL Green Realty Corp (“SL Green”) to own the mezzanine debt of 280 Park Avenue, a 1.2 million square foot office building located between 48th and 49th Streets in Manhattan (the “Property”). We contributed our mezzanine loan with a face amount of $73,750,000, and they contributed their mezzanine loans with a face amount of $326,250,000 to the joint venture. We equalized our interest in the joint venture with SL Green by paying them $111,250,000 in cash and assuming $15,000,000 of their debt. On May 17, 2011, as part of the recapitalization of the Property, the joint venture contributed its debt position for 99% of the common equity of a new joint venture which owns the Property. The new joint venture expects to spend $150,000,000 for re-tenanting and repositioning the Property. We account for our 49.5% equity interest in the Property under the equity method of accounting from the date of recapitalization.
Independence Plaza
On June 17, 2011, a joint venture in which we are a 51% partner invested $55,000,000 in cash (of which we contributed $35,000,000) to acquire a face amount of $150,000,000 of mezzanine loans and a $35,000,000 participation in a senior loan on Independence Plaza, a residential complex comprised of three 39-story buildings in the Tribeca submarket of Manhattan. We share control over major decisions with our joint venture partner. Accordingly, we account for our 51% interest in the joint venture under the equity method of accounting from the date of acquisition.
14
6. Investments in Partially Owned Entities - continued
Investments in partially owned entities as of September 30, 2011 and December 31, 2010 and income (loss) recognized from these investments for the three and nine months ended September 30, 2011 and 2010 are as follows:
Percentage
Ownership as of
Investments:
Toys
32.7 %
Alexander’s
32.4 %
190,277
186,811
Lexington
11.7 %
61,315
57,270
LNR
26.2 %
156,090
132,973
India real estate ventures
4%-36.5%
101,155
127,193
Partially owned office buildings (1)
Various
452,284
181,838
Other equity method investments (2)
196,205
241,587
Our Share of Net Income (Loss):
Toys – 32.7% share of:
Equity in net (loss) income before income taxes
(26,773)
(32,574)
104,049
93,662
Income tax benefit (expense)
15,135
27,501
(29,914)
1,914
Equity in net (loss) income
(11,638)
(5,073)
74,135
95,576
Interest and other income
2,334
2,516
6,659
6,733
Alexander’s – 32.4% share of:
Equity in net income
6,437
5,612
18,507
14,309
Management, leasing and development fees
2,170
1,945
6,749
6,774
8,607
7,557
25,256
21,083
Lexington – 11.7% share in 2011 and 13.8% share
in 2010 of equity in net (loss) income (3)
(617)
(2,301)
10,209
3,316
LNR – 26.2% share of equity in net income (acquired in
July 2010) (4)
13,656
39,913
India real estate ventures – 4% to 36.5% range in our
share of equity in net (loss) income
(690)
(195)
(692)
2,062
Partially owned office buildings (5)
(6,839)
86
(13,829)
1,864
Other equity method investments
(565)
(7,143)
(4,618)
(14,525)
Includes interests in 330 Madison Avenue (25%), One Park Avenue (30.3%), 280 Park Avenue (49.5%), 825 Seventh Avenue (50%), Warner Building and 1101 17th Street (55%), Fairfax Square (20%), Rosslyn Plaza (46%) and West 57th Street properties (50%).
(2)
Includes interests in Monmouth Mall, Verde Realty Operating Partnership, 85 10th Avenue Associates and others.
Includes net gains of $9,760 and $5,998 in the nine months ended September 30, 2011 and 2010, respectively, resulting from Lexington's stock issuances.
(4)
The nine months ended September 30, 2011 includes $6,020 for our share of net gains from asset sales and $8,977 for our share of a tax settlement gain.
(5)
The nine months ended September 30, 2011 includes $9,022 for our share of expense, primarily for straight-line rent reserves and the write-off of tenant improvements in connection with a tenant's bankruptcy at the Warner Building.
Below is a summary of the debt of our partially owned entities as of September 30, 2011 and December 31, 2010, none of which is recourse to us.
Interest
100% of
Rate at
Partially Owned Entities’ Debt at
Toys (32.7% interest) (as of July 30, 2011 and October 30, 2010,
respectively):
Senior unsecured notes (Face value – $950,000)
07/17
10.75 %
929,773
928,045
Senior unsecured notes (Face value – $725,000)
12/17
8.50 %
716,325
715,577
$700 million secured term loan facility
09/16
6.00 %
685,595
689,757
Senior U.K. real estate facility
04/13
5.02 %
573,207
561,559
$400 million secured term loan facility
05/18
5.25 %
396,082
7.875% senior notes (Face value – $400,000)
9.50 %
390,135
386,167
7.375% senior secured notes (Face value – $350,000)
7.38 %
358,147
350,000
7.375% senior notes (Face value – $400,000)
10/18
9.99 %
347,238
343,528
Japan bank loans
03/12-02/16
1.85%-2.85%
194,376
180,500
Spanish real estate facility
02/13
4.51 %
183,857
179,511
$1.85 billion credit facility
08/15
2.91 %
173,000
519,810
Japan borrowings
06/12-06/13
0.98 %
108,149
141,360
Junior U.K. real estate facility
6.81%-7.84%
99,850
98,266
French real estate facility
88,696
86,599
European and Australian asset-based revolving credit facility
03/16
2.89 %
32,852
25,767
8.750% debentures (Face value – $21,600)
09/21
9.17 %
21,080
21,054
7.625% bonds (Face value – $500,000)
495,943
170,806
156,853
5,469,168
5,880,296
Alexander’s (32.4% interest):
731 Lexington Avenue mortgage note payable, collateralized by
the office space
02/14
5.33 %
342,928
351,751
the retail space
07/15
4.93 %
320,000
Rego Park construction loan payable
12/11
1.42 %
277,200
Kings Plaza Regional Shopping Center mortgage note payable (1)
06/16
2.04 %
250,000
151,214
Rego Park mortgage note payable
03/12
0.75 %
78,246
Paramus mortgage note payable(2)
10/11
5.92 %
68,000
1,336,374
1,246,411
Lexington (11.7% interest) (as of June 30, 2011 and
September 30, 2010, respectively):
Mortgage loans collateralized by Lexington’s real estate
2011-2037
5.80 %
1,728,515
1,927,729
LNR (26.2% interest) (as of June 30, 2011 and
September 30, 2010):
Mortgage notes payable
2011-2043
4.75 %
331,411
508,547
Liabilities of consolidated CMBS and CDO trusts
5.30 %
138,541,030
142,001,333
138,872,441
142,509,880
On June 10, 2011, Alexander's completed a $250,000 refinancing of this loan. The five-year interest only loan is at LIBOR plus 1.70%.
On October 5, 2011, this loan, which was scheduled to mature in October 2011, was refinanced for the same amount. The new seven-year interest only loan has a fixed rate of 2.90%.
16
Partially owned office buildings:
280 Park Avenue (49.5% interest) mortgage notes payable
(Face value - $740,000 at 6.37%)
3.93 %
818,564
One Park Avenue (30.3% interest) mortgage note payable
5.00 %
Warner Building (55% interest) mortgage note payable
05/16
6.26 %
292,700
330 Madison Avenue (25% interest) mortgage note payable
06/15
1.77 %
150,000
Kaempfer Properties (2.5% and 5.0% interests in two partnerships)
mortgage notes payable, collateralized by the partnerships’ real estate
11/11-12/11
5.86 %
137,460
139,337
Fairfax Square (20% interest) mortgage note payable
12/14
7.00 %
71,176
71,764
Rosslyn Plaza (46% interest) mortgage note payable
1.22 %
56,680
330 West 34th Street (34.8% interest) mortgage note payable,
collateralized by land
07/22
5.71 %
50,150
West 57th Street (50% interest) mortgage note payable
4.94 %
22,060
22,922
825 Seventh Avenue (50% interest) mortgage note payable
10/14
8.07 %
20,205
20,565
India Real Estate Ventures:
TCG Urban Infrastructure Holdings (25% interest) mortgage notes
payable, collateralized by the entity’s real estate
2011-2022
11.81 %
238,957
196,319
Other:
Verde Realty Operating Partnership (8.3% interest) mortgage notes
payable, collateralized by the partnerships’ real estate
2013-2025
6.18 %
353,346
581,086
Green Courte Real Estate Partners, LLC (8.3% interest) (as of
June 30, 2011 and September 30, 2010), mortgage notes
2011-2018
5.57 %
294,292
296,991
Monmouth Mall (50% interest) mortgage note payable
02/14-09/15
5.35 %
171,755
164,474
Wells/Kinzie Garage (50% interest) mortgage note payable
14,856
15,022
Orleans Hubbard Garage (50% interest) mortgage note payable
9,403
9,508
Waterfront Station (2.5% interest)
217,106
4.61 %
663,162
418,339
Based on our ownership interest in the partially owned entities above, our pro rata share of the debt of these partially owned entities was $39,802,179,000 and $40,443,346,000 as of September 30, 2011 and December 31, 2010, respectively. Excluding our pro rata share of LNR’s liabilities related to consolidated CMBS and CDO trusts which are non-recourse to LNR and its equity holders, including us, our pro rata share of partially owned entities debt is $3,540,451,000 and $3,275,917,000 at September 30, 2011 and December 31, 2010, respectively.
7. Mezzanine Loans Receivable
On March 2, 2011, we sold our mezzanine loan in the Tharaldson Lodging Companies for $70,848,000 in cash, which had a carrying amount of $60,416,000 and recognized a net gain of $10,474,000. The gain is included as a component of “interest and other investment income, net” on our consolidated statement of income.
In the first quarter of 2011, we recognized $72,270,000 of income, representing the difference between the fair value of our 280 Park Avenue Mezzanine Loan of $73,750,000, and its carrying amount of $1,480,000. The $72,270,000 of income, which is included in “interest and other investment income, net” on our consolidated statement of income, is comprised of $63,145,000 from the reversal of the loan loss reserve and $9,125,000 of previously unrecognized interest income. Our decision to reverse the loan loss reserve was based on the increase in value of the underlying collateral. On March 16, 2011, we contributed this mezzanine loan to a 50/50 joint venture with SL Green (see Note 6 – Investments in Partially Owned Entities).
7. Mezzanine Loans Receivable - continued
As of September 30, 2011 and December 31, 2010, the carrying amount of mezzanine loans receivable was $156,365,000 and $202,412,000, respectively, net of allowances of $0 and $73,216,000, respectively. These loans have a weighted average interest rate of 5.57% and maturities ranging from November 2011 to August 2015.
8. Discontinued Operations
On March 31, 2011, the receiver completed the disposition of the High Point Complex in North Carolina. In connection therewith, the property and related debt were removed from our consolidated balance sheet and we recognized a net gain of $83,907,000 on the extinguishment of debt.
During 2011, we sold 1140 Connecticut Avenue and 1227 25th Street for $127,000,000 in cash, which resulted in a $45,862,000 net gain, and three retail properties in separate transactions for an aggregate of $40,990,000 in cash, which resulted in net gains aggregating $5,761,000.
In the third quarter of 2011, we reclassified the assets and liabilities and the combined results of operations of 350 West Mart Center, a 1.2 million square feet office building in Chicago, Illinois which is a part of our Merchandise Mart Properties segment and four retail properties, as “discontinued operations.”
The tables below set forth the assets and liabilities related to discontinued operations at September 30, 2011 and December 31, 2010, and their combined results of operations for the three and nine months ended September 30, 2011 and 2010.
Assets Related to
Liabilities Related to
Discontinued Operations as of
350 West Mart Center
170,333
162,984
1,128
Retail properties
83,019
121,837
7,826
11,730
High Point
154,563
236,974
1227 25th Street
43,630
1140 Connecticut Avenue
36,271
18,948
9,744
20,163
36,486
61,883
6,061
18,830
25,723
58,508
1,333
10,763
3,375
Net gain on extinguishment of High Point debt
83,907
Net gain on sale of 1140 Connecticut Avenue
and 1227 25th Street
45,862
Net gain on sales of other real estate
5,761
Litigation loss accrual and impairment loss
(5,000)
(15,056)
18
9. Identified Intangible Assets and Liabilities
The following summarizes our identified intangible assets (primarily acquired above-market leases) and liabilities (primarily acquired below-market leases) as of September 30, 2011 and December 31, 2010.
Identified intangible assets:
Gross amount
690,996
681,270
Accumulated amortization
(356,118)
(335,113)
Net
Identified intangible liabilities (included in deferred credit):
861,696
856,689
(380,198)
(335,317)
481,498
521,372
Amortization of acquired below-market leases, net of acquired above-market leases, resulted in an increase to rental income of $16,100,000 and $16,756,000 for the three months ended September 30, 2011 and 2010, respectively, and $49,387,000 and $48,476,000 for the nine months ended September 30, 2011 and 2010, respectively. Estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding years commencing January 1, 2012 is as follows:
2012
51,092
2013
43,174
2014
37,419
2015
34,673
2016
31,281
Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was $16,059,000 and $15,032,000 for the three months ended September 30, 2011 and 2010, respectively, and $43,782,000 and $45,317,000 for the nine months ended September 30, 2011 and 2010, respectively. Estimated annual amortization of all other identified intangible assets including acquired in-place leases, customer relationships, and third party contracts for each of the five succeeding years commencing January 1, 2012 is as follows:
47,168
39,703
21,398
16,471
13,924
We are a tenant under ground leases for certain properties. Amortization of these acquired below-market leases, net of above-market leases resulted in an increase to rent expense of $344,000 and $539,000 for the three months ended September 30, 2011 and 2010, respectively, and $1,033,000 and $1,618,000 for the nine months ended September 30, 2011 and 2010, respectively. Estimated annual amortization of these below-market leases, net of above-market leases, for each of the five succeeding years commencing January 1, 2012 is as follows:
1,377
19
10. Debt
The following is a summary of our debt:
Balance at
Notes and mortgages payable:
Maturity (1)
Fixed rate:
New York Office:
350 Park Avenue
01/12
5.48 %
430,000
Two Penn Plaza (2)
03/18
5.13 %
425,000
277,347
1290 Avenue of the Americas
01/13
5.97 %
415,934
424,136
770 Broadway
5.65 %
353,000
888 Seventh Avenue
01/16
318,554
909 Third Avenue
04/15
5.64 %
204,203
207,045
Eleven Penn Plaza
5.20 %
196,253
199,320
Washington, DC Office:
Skyline Place
02/17
5.74 %
678,000
River House Apartments
5.43 %
195,546
2121 Crystal Drive (3)
03/23
5.51 %
Bowen Building
6.14 %
115,022
1215 Clark Street, 200 12th Street and 251 18th Street
01/25
7.09 %
109,067
110,931
West End 25 (4)
06/21
4.88 %
101,671
Universal Buildings
04/14
6.42 %
99,456
103,049
Reston Executive I, II, and III
93,000
2011 Crystal Drive
08/17
7.30 %
80,711
81,362
1550 and 1750 Crystal Drive
11/14
7.08 %
77,292
79,411
220 20th Street (5)
02/18
75,323
1235 Clark Street
07/12
6.75 %
51,569
52,314
2231 Crystal Drive
08/13
44,422
46,358
1750 Pennsylvania Avenue
06/12
7.26 %
44,538
45,132
1225 Clark Street
26,571
27,616
1800, 1851 and 1901 South Bell Street
6.91 %
2,610
10,099
Retail:
Cross-collateralized mortgages on 40 strip shopping centers
09/20
4.20 %
588,377
597,138
Montehiedra Town Center
07/16
6.04 %
120,000
Broadway Mall
07/13
88,383
90,227
828-850 Madison Avenue Condominium
06/18
5.29 %
80,000
North Bergen (Tonnelle Avenue) (6)
01/18
4.59 %
75,000
Las Catalinas Mall
11/13
6.97 %
56,488
57,737
510 5th Avenue
5.60 %
31,850
32,189
03/12-05/36
5.12%-7.30%
95,962
97,054
Merchandise Mart:
Merchandise Mart
12/16
550,000
Boston Design Center
09/15
67,655
68,538
Washington Design Center
43,447
555 California Street (7)
5.10 %
600,000
640,911
Borgata Land (8)
02/21
5.14 %
Industrial Warehouses
24,358
Total fixed rate notes and mortgages payable
5.52 %
6,701,457
6,248,841
___________________
See notes on page 22.
20
10. Debt - continued
Spread over
LIBOR
Variable rate:
Manhattan Mall
02/12
L+55
0.78 %
232,000
866 UN Plaza (9)
L+125 (9)
1.52 %
44,978
2101 L Street
L+120
1.45 %
04/18
n/a (10)
1.53 %
64,000
2200/2300 Clarendon Boulevard
01/15
L+75
54,833
59,278
1730 M and 1150 17th Street
06/14
L+140
1.72 %
43,581
95,220
83,573
Green Acres Mall
1.73 %
325,045
335,000
Bergen Town Center
03/13
L+150
1.76 %
279,044
San Jose Strip Center
L+400
4.25 %
113,641
120,863
Beverly Connection (11)
L+350 (11)
100,000
4 Union Square South
L+325
3.52 %
Cross-collateralized mortgages on 40 strip
shopping centers (12)
L+136 (12)
2.36 %
435 Seventh Avenue (13)
08/14
L+300 (13)
51,479
51,844
11/12
L+375
3.97 %
20,983
21,862
220 Central Park South(14)
L+235–L+245 (14)
2.61 %
123,750
11/11
L+250
2.75 %
22,400
66,267
Total variable rate notes and mortgages payable
2.19 %
1,760,734
2,006,260
Total notes and mortgages payable
4.83 %
Senior unsecured notes:
Senior unsecured notes due 2015
499,421
499,296
Senior unsecured notes due 2039 (15)
10/39
7.88 %
460,000
Floating rate senior unsecured notes due 2011
23,250
Senior unsecured notes due 2011
100,382
Total senior unsecured notes
5.99 %
3.88% exchangeable senior debentures due 2025
(see page 23)
04/12
5.32 %
Convertible senior debentures: (see page 23)
3.63% due 2026
178,696
176,499
2.85% due 2027
5.45 %
10,103
9,914
Total convertible senior debentures (16)
Unsecured revolving credit facilities:
$1.595 billion unsecured revolving credit facility (17)
09/12
669,000
$1.25 billion unsecured revolving credit facility
($22,085 reserved for outstanding letters of credit) (18)
L+135
205,000
Total unsecured revolving credit facilities
___________________________
See notes on the following page.
21
Notes to preceding tabular information (Amounts in thousands):
Represents the extended maturity for certain loans in which we have the unilateral right, ability and intent to extend. In the case of our convertible and exchangeable debt, represents the earliest date holders may require us to repurchase the debentures.
On February 11, 2011, we completed a $425,000 refinancing of this property. The seven-year loan bears interest at LIBOR plus 2.00%, which was swapped for the term of the loan to a fixed rate of 5.13%. The loan amortizes based on a 30-year schedule beginning in the fourth year. We retained net proceeds of approximately $139,000, after repaying the existing loan and closing costs.
On February 10, 2011, we completed a $150,000 financing of this property. The 12-year fixed rate loan bears interest at 5.51% and amortizes based on a 30-year schedule beginning in the third year. This property was previously unencumbered.
In May 2011, we repaid the outstanding balance of the variable-rate construction loan on this property and closed on a $101,671 mortgage at a fixed rate of 4.88%. The loan has a 10-year term and amortizes based on a 30-year schedule beginning in the sixth year.
On January 18, 2011, we repaid the outstanding balance of the variable-rate construction loan on this property and closed on a $76,100 mortgage at a fixed rate of 4.61%. The loan has a seven-year term and amortizes based on a 30-year schedule.
(6)
On January 10, 2011, we completed a $75,000 financing of this property. The seven-year fixed rate loan bears interest at 4.59% and amortizes based on a 25-year schedule beginning in the sixth year. This property was previously unencumbered.
(7)
On September 1, 2011, we completed a $600,000 refinancing of this property. The 10-year fixed rate loan bears interest at 5.10% and amortizes based on a 30-year schedule beginning in the fourth year.
(8)
In January 2011, we completed a $60,000 financing of this property. The 10-year fixed rate loan bears interest at 5.14% and amortizes based on a 30-year schedule beginning in the third year.
(9)
On May 10, 2011, we refinanced this loan for the same amount. The five-year interest only loan is at LIBOR plus 1.25%.
(10)
This loan bears interest at the Freddie Mac Reference Note Rate plus 1.53%.
(11)
In October 2011, this loan was refinanced in the same amount for one year, with two one-year extension options. The interest rate on the new loan is at LIBOR plus 4.25% with a LIBOR floor of 0.50%.
(12)
This loan has a LIBOR floor of 1.00%.
(13)
This loan has a LIBOR floor of 2.00%.
(14)
In October 2011, we extended the maturity date of this loan to October 2012, with a provision for a one-year extension option.
(15)
These notes may be redeemed at our option in whole or in part beginning on October 1, 2014, at a price equal to the principal amount plus accrued interest.
(16)
The net proceeds from the offering of these debentures were contributed to the Operating Partnership in the form of an inter-company loan and the Operating Partnership fully and unconditionally guaranteed payment of these debentures. There are no restrictions which limit the Operating Partnership from making distributions to Vornado and Vornado has virtually no independent assets or operations outside of the Operating Partnership.
(17)
We are in the process of renewing this facility and expect to enter into a new $1,250,000 facility that has a four-year term, with a one-year extension option and bears interest on drawn amounts at LIBOR plus 1.25% and has a .25% facility fee (drawn or undrawn), based on our credit ratings.
(18)
On June 8, 2011, we renewed this facility and increased it to $1,250,000 from $1,000,000. The renewed facility matures in four years, has a one-year extension option and bears interest on drawn amounts at LIBOR plus 1.35% and has a .30% facility fee (drawn or undrawn), based on our credit ratings.
22
10. Debt – continued
Pursuant to the provisions of Accounting Standards Codification (“ASC”) 470-20, Debt with Conversion and Other Options, below is a summary of required disclosures related to our convertible and exchangeable senior debentures.
2.85% Convertible
3.63% Convertible
3.88% Exchangeable
Senior Debentures due 2027
Senior Debentures due 2026
Senior Debentures due 2025
Principal amount of debt component
10,233
179,052
499,982
Unamortized discount
(130)
(356)
(2,553)
(3,843)
(8,982)
Carrying amount of debt component
Carrying amount of equity component
956
9,604
32,301
Effective interest rate
Maturity date (period through which
discount is being amortized)
4/1/12
11/15/11
4/15/12
Conversion price per share, as adjusted
157.18
148.46
87.17
Number of shares on which the
aggregate consideration to be
delivered upon conversion is
determined
- (1)
5,736
__________________
Our convertible senior debentures require that upon conversion, the entire principal amount is to be settled in cash, and at our option, any excess value above the principal amount may be settled in cash or common shares. Based on the September 30, 2011 closing share price of our common shares and the conversion prices in the table above, there was no excess value; accordingly, no common shares would be issued if these securities were settled on this date. The number of common shares on which the aggregate consideration that would be delivered upon conversion is 65 and 1,206 common shares, respectively.
Three Months Ended
Nine Months Ended
2.85% Convertible Senior Debentures due 2027:
Coupon interest
160
219
480
Discount amortization – original issue
23
69
Discount amortization – ASC 470-20 implementation
52
110
156
325
137
293
408
874
3.63% Convertible Senior Debentures due 2026:
1,623
3,523
4,868
11,328
202
417
598
1,320
540
1,117
1,599
3,533
2,365
5,057
7,065
16,181
3.88% Exchangeable Senior Debentures due 2025:
4,843
4,844
14,531
14,532
410
389
1,213
1,151
1,326
1,258
3,926
3,724
6,579
6,491
19,670
19,407
11. Redeemable Noncontrolling Interests
Redeemable noncontrolling interests on our consolidated balance sheets represent Operating Partnership units held by third parties and are comprised of Class A units and Series D-10, D-14, D-15 and D-16 (collectively, “Series D”) cumulative redeemable preferred units. Redeemable noncontrolling interests on our consolidated balance sheets are recorded at the greater of their carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to “additional capital” in our consolidated statements of changes in equity. Below is a table summarizing the activity of redeemable noncontrolling interests.
Balance at December 31, 2009
1,251,628
33,487
(40,702)
Conversion of Class A units into common shares, at redemption value
(62,606)
232,099
Redemption of Series D-12 redeemable units
(13,000)
Other, net
16,316
Balance at September 30, 2010
1,417,222
Balance at December 31, 2010
47,364
(38,393)
(38,220)
(114,628)
Redemption of Series D-11 redeemable units
4,623
Balance at September 30, 2011
As of September 30, 2011 and December 31, 2010, the aggregate redemption value of redeemable Class A units was $934,720,000 and $1,066,974,000, respectively.
Redeemable noncontrolling interests exclude our Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units, as they are accounted for as liabilities in accordance with ASC 480, Distinguishing Liabilities and Equity, because of their possible settlement by issuing a variable number of Vornado common shares. Accordingly the fair value of these units is included as a component of “other liabilities” on our consolidated balance sheets and aggregated $55,052,000 and $55,097,000 as of September 30, 2011 and December 31, 2010, respectively.
In 2011, we redeemed 1,400,000 Series D-11 cumulative redeemable preferred units with a par value of $25.00 per unit, for an aggregate of $28,000,000 in cash. In 2010, we redeemed 800,000 Series D-12 cumulative redeemable preferred units with a par value of $25.00 per unit, for an aggregate of $13,000,000 in cash.
12. Shareholders’ Equity
On April 20, 2011, we sold 7,000,000 6.875% Series J Cumulative Redeemable Preferred Shares at a price of $25.00 per share, in an underwritten public offering pursuant to an effective registration statement. On April 21, 2011, the underwriters exercised their option to purchase an additional 1,050,000 shares to cover over-allotments. On May 5, 2011 and August 5, 2011, we sold an additional 800,000 and 1,000,000 shares, respectively, at a price of $25.00 per share. We retained aggregate net proceeds of $239,037,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 9,850,000 Series J Preferred Units (with economic terms that mirror those of the Series J Preferred Shares). Dividends on the Series J Preferred Shares are cumulative and payable quarterly in arrears. The Series J Preferred Shares are not convertible into, or exchangeable for, any of our properties or securities. On or after five years from the date of issuance (or sooner under limited circumstances), we, at our option, may redeem the Series J Preferred Shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption. The Series J Preferred Shares have no maturity date and will remain outstanding indefinitely unless redeemed by us.
13. Fair Value Measurements
ASC 820, Fair Value Measurement and Disclosures defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities. Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets.
Financial Assets and Liabilities Measured at Fair Value
Financial assets and liabilities that are measured at fair value in our consolidated financial statements consist of (i) marketable securities, (ii) derivative positions in marketable equity securities, (iii) the assets of our deferred compensation plan, which are primarily marketable equity securities and equity investments in limited partnerships, (iv) Real Estate Fund investments, and (v) mandatorily redeemable instruments (Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units). The tables below aggregate the fair values of financial assets and liabilities by the levels in the fair value hierarchy at September 30, 2011 and December 31, 2010, respectively.
Level 1
Level 2
Level 3
Real Estate Fund investments (75% of which is attributable to
noncontrolling interests)
Deferred compensation plan assets (included in other assets)
40,736
53,887
Total assets
987,401
672,097
315,304
Mandatorily redeemable instruments (included in other liabilities)
55,052
43,699
47,850
Derivative positions in marketable equity securities
(included in other assets)
17,616
1,019,704
809,815
192,273
55,097
25
13. Fair Value Measurements - continued
Financial Assets and Liabilities Measured at Fair Value - continued
The tables below summarize the changes in the fair value of the Level 3 assets above, by category, for the three and nine months ended September 30, 2011 and 2010.
Real Estate Fund Investments:
Beginning balance
255,795
Purchases
42,500
123,047
Sales
(12,831)
Realized and unrealized gains
22,294
(15,516)
Ending balance
Deferred Compensation Plan Assets:
53,724
43,598
39,589
3,155
9,802
22,259
16,144
(1,044)
(7,850)
(18,538)
(11,430)
Realized and unrealized (losses) gains
(2,051)
487
2,166
1,637
103
150
97
46,037
Financial Assets and Liabilities not Measured at Fair Value
Financial assets and liabilities that are not measured at fair value in our consolidated financial statements include mezzanine loans receivable and debt. Estimates of the fair values of these instruments are based on our assessments of available market information and valuation methodologies, including discounted cash flow analyses. The table below summarizes the carrying amounts and fair values of these financial instruments as of September 30, 2011 and December 31, 2010.
Carrying
Fair
Value
Mezzanine loans receivable
150,226
197,581
Debt:
8,576,512
8,446,791
1,011,602
1,119,512
514,981
554,355
189,816
191,510
10,406,550
10,592,911
10,889,442
11,186,168
26
14. Stock-based Compensation
Our Share Option Plan (the “Plan”) provides for grants of incentive and non-qualified stock options, restricted stock, restricted Operating Partnership units and out-performance plan rewards to certain of our employees and officers. We account for all stock-based compensation in accordance ASC 718, Compensation – Stock Compensation. Stock-based compensation expense for the three months ended September 30, 2011 and 2010 consists of stock option awards, restricted stock awards, Operating Partnership unit awards and out-performance plan awards. Stock-based compensation expense was $7,320,000 and $11,210,000 in the three months ended September 30, 2011 and 2010, respectively, and $21,384,000 and $26,167,000 in the nine months ended September 30, 2011 and 2010, respectively.
15. Fee and Other Income
The following table sets forth the details of our fee and other income:
Tenant cleaning fees
15,647
13,613
46,479
40,733
Management and leasing fees
4,361
3,555
15,456
16,075
Lease termination fees
4,803
2,301
12,478
10,112
Other income
12,195
12,797
37,826
37,918
Fee and other income above includes management fee income from Interstate Properties, a related party, of $195,000 and $192,000 for the three months ended September 30, 2011 and 2010, respectively, and $586,000 and $584,000 for the nine months ended September 30, 2011 and 2010, respectively. The above table excludes management fee income from partially owned entities which is included in income from partially owned entities (see Note 6 – Investments in Partially Owned Entities).
16. Interest and Other Investment (Loss) Income, Net
The following table sets forth the details of our interest and other investment income:
Mezzanine loans loss reversal (accrual) and net gain on disposition
82,744
(6,900)
Dividends and interest on marketable securities
7,605
6,445
22,941
21,068
Interest on mezzanine loans
3,442
2,620
9,169
7,660
Mark-to-market of investments in our deferred compensation plan (1)
(5,243)
3,907
1,502
5,684
(Loss) income from the mark-to-market of J.C. Penney derivative position
(37,537)
32,249
(27,136)
1,739
1,875
5,901
5,915
__________________________
This (loss) income is entirely offset by the revenue/expense resulting from the mark-to-market of the deferred compensation plan liability, which is included in "general and administrative" expense.
27
17. Income Per Share
The following table provides a reconciliation of both net income and the number of common shares used in the computation of (i) basic income per common share - which utilizes the weighted average number of common shares outstanding without regard to dilutive potential common shares, and (ii) diluted income per common share - which includes the weighted average common shares and dilutive share equivalents. Dilutive share equivalents may include our Series A convertible preferred shares, employee stock options, restricted stock and exchangeable senior debentures.
Numerator:
Income from continuing operations, net of income
attributable to noncontrolling interests
50,314
107,919
437,576
402,591
Income (loss) from discontinued operations, net of income
3,448
137,430
Net income attributable to common shareholders
Earnings allocated to unvested participating securities
(48)
(29)
(199)
(79)
Numerator for basic income per share
41,087
95,163
532,064
353,238
Impact of assumed conversions:
Convertible preferred share dividends
94
121
Numerator for diluted income per share
532,158
353,359
Denominator:
Denominator for basic income per share –
weighted average shares
Effect of dilutive securities (1):
Employee stock options and restricted share awards
1,667
1,706
1,764
1,741
Convertible preferred shares
55
71
Denominator for diluted income per share –
weighted average shares and assumed conversions
INCOME PER COMMON SHARE – BASIC:
INCOME PER COMMON SHARE – DILUTED:
The effect of dilutive securities above excludes anti-dilutive weighted average common share equivalents of 18,857 and 19,837 in the three months ended September 30, 2011 and 2010, respectively, and 18,687 and 19,843 in the nine months ended September 30, 2011 and 2010, respectively.
28
18. Cleveland Medical Mart Development Project
During 2010, two of our wholly owned subsidiaries entered into agreements with Cuyahoga County, Ohio (the “County”) to develop and operate the Cleveland Medical Mart and Convention Center (the “Facility”), a 1,000,000 square foot showroom, trade show and conference center in Cleveland’s central business district. The County will fund the development of the Facility, using the proceeds it received from the issuance of general obligation bonds and other sources, up to the development budget of $465,000,000 and maintain effective control of the property. During the 17-year development and operating period, our subsidiaries will receive net settled payments of approximately $10,000,000 per year, which are net of its $36,000,000 annual obligation to the County. Our subsidiaries’ obligation has been pledged by the County to the bondholders, but is payable by our subsidiaries only to the extent that they first receive at least an equal payment from the County. Our subsidiaries engaged a contractor to construct the Facility pursuant to a guaranteed maximum price contract; although our subsidiaries are ultimately responsible for cost overruns, the contractor is responsible for all costs incurred in excess of its contract and has provided a completion guaranty. Construction of the Facility is expected to be completed in 2013. Upon completion, our subsidiaries are required to fund $11,500,000, primarily for tenant improvements, and they are responsible for operating expenses and are entitled to the net operating income, if any, of the Facility. The County may terminate the operating agreement five years from the completion of development and periodically thereafter, if our subsidiaries fail to achieve certain performance thresholds.
We account for these agreements using criteria set forth in ASC 605-25, Multiple-Element Arrangements, as our subsidiaries are providing development, marketing, leasing, and other property management related services over the 17-year term. We recognize development fees using the percentage of completion method of accounting. In the three and nine months ended September 30, 2011, we recognized $35,135,000 and $108,203,000 of revenue, respectively, which is offset by development costs expensed of $33,419,000 and $101,637,000, respectively.
19. Commitments and Contingencies
Insurance
We maintain general liability insurance with limits of $300,000,000 per occurrence and all risk property and rental value insurance with limits of $2.0 billion per occurrence, including coverage for terrorist acts, with sub-limits for certain perils such as floods. Our California properties have earthquake insurance with coverage of $180,000,000 per occurrence, subject to a deductible in the amount of 5% of the value of the affected property, up to a $180,000,000 annual aggregate.
Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for acts of terrorism, including nuclear, biological, chemical and radiological (“NBCR”) acts, as defined by the Terrorism Risk Insurance Program Reauthorization Act. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to PPIC. Coverage for NBCR losses is up to $2 billion per occurrence, for which PPIC is responsible for a deductible of $3,200,000 and 15% of the balance of a covered loss and the Federal government is responsible for the remaining 85% of a covered loss. We are ultimately responsible for any loss borne by PPIC.
We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism. However, we cannot anticipate what coverage will be available on commercially reasonable terms in future policy years.
Our debt instruments, consisting of mortgage loans secured by our properties which are non-recourse to us, senior unsecured notes, exchangeable senior debentures, convertible senior debentures and revolving credit agreements contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain it could adversely affect our ability to finance our properties and expand our portfolio.
29
19. Commitments and Contingencies – continued
Other Commitments and Contingencies
Our mortgage loans are non-recourse to us. However, in certain cases we have provided guarantees or master leased tenant space. These guarantees and master leases terminate either upon the satisfaction of specified circumstances or repayment of the underlying loans. As of September 30, 2011, the aggregate dollar amount of these guarantees and master leases is approximately $151,959,000.
At September 30, 2011, $22,085,000 of letters of credit were outstanding under one of our revolving credit facilities. Our credit facilities contain financial covenants that require us to maintain minimum interest coverage and maximum debt to market capitalization ratios, and provide for higher interest rates in the event of a decline in our ratings below Baa3/BBB. Our credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and also contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.
Each of our properties has been subjected to varying degrees of environmental assessment at various times. The environmental assessments did not reveal any material environmental contamination. However, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites, or changes in cleanup requirements would not result in significant costs to us.
As part of the process of obtaining the required approvals to demolish and develop our 220 Central Park South property into a new residential tower, we have committed to fund the estimated project cost of approximately $400,000,000 to $425,000,000. In addition, we expect to fund additional capital to certain of our partially owned entities aggregating approximately $264,000,000.
Litigation
We are from time to time involved in legal actions arising in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters, including the matter referred to below, is not expected to have a material adverse effect on our financial position, results of operations or cash flows.
On January 8, 2003, Stop & Shop filed a complaint with the United States District Court for the District of New Jersey (“USDC-NJ”) claiming that we had no right to reallocate and therefore continue to collect the $5,000,000 of annual rent from Stop & Shop pursuant to the Master Agreement and Guaranty, because of the expiration of the East Brunswick, Jersey City, Middletown, Union and Woodbridge leases to which the $5,000,000 of additional rent was previously allocated. Stop & Shop asserted that a prior order of the Bankruptcy Court for the Southern District of New York dated February 6, 2001, as modified on appeal to the District Court for the Southern District of New York on February 13, 2001, froze our right to reallocate which effectively terminated our right to collect the additional rent from Stop & Shop. On March 3, 2003, after we moved to dismiss for lack of jurisdiction, Stop & Shop voluntarily withdrew its complaint. On March 26, 2003, Stop & Shop filed a new complaint in New York State Supreme Court, asserting substantially the same claims as in its USDC-NJ complaint. We removed the action to the United States District Court for the Southern District of New York. In January 2005, that court remanded the action to the New York State Supreme Court. On February 14, 2005, we served an answer in which we asserted a counterclaim seeking a judgment for all the unpaid additional rent accruing through the date of the judgment and a declaration that Stop & Shop will continue to be liable for the additional rent as long as any of the leases subject to the Master Agreement and Guaranty remain in effect. On May 17, 2005, we filed a motion for summary judgment. On July 15, 2005, Stop & Shop opposed our motion and filed a cross-motion for summary judgment. On December 13, 2005, the Court issued its decision denying the motions for summary judgment. Both parties appealed the Court’s decision and on December 14, 2006, the Appellate Court division issued a decision affirming the Court’s decision. On January 16, 2007, we filed a motion for the reconsideration of one aspect of the Appellate Court’s decision which was denied on March 13, 2007. A trial was held in November 2010 and closing arguments were held in March 2011. As of September 30, 2011, we have a $40,733,000 receivable from Stop & Shop, of which $23,105,000 has been reserved. We believe, after consultation with counsel, that the maximum reasonably possible loss is up to the total amount of the receivable of $40,733,000.
20. Segment Information
Below is a summary of net income and a reconciliation of net income to EBITDA(1) by segment for the three and nine months ended September 30, 2011 and 2010.
For the Three Months Ended September 30, 2011
New York
Washington, DC
Merchandise
Office
Retail
Mart
Other(3)
530,086
196,123
133,156
105,788
46,278
48,741
Straight-line rent adjustments
14,963
3,998
6,673
4,696
(1,006)
602
Amortization of acquired below-
market leases, net
16,100
8,153
547
6,268
1,111
Total rentals
208,274
140,376
116,752
45,293
50,454
43,025
9,328
36,297
2,972
2,431
Cleveland Medical Mart development
project
Fee and other income:
24,047
(8,400)
1,653
2,670
541
45
(548)
3,540
1,002
261
5,212
5,232
1,155
988
(392)
285,751
158,608
155,006
84,433
43,545
Operating expenses
129,472
51,791
57,412
30,803
47,038
33,885
30,080
10,372
12,699
4,461
6,505
6,721
9,534
19,231
Tenant buy-outs and other acquisition
related costs
1,593
695
180,971
92,181
95,806
84,128
48,806
Operating income (loss)
104,780
66,427
59,200
305
(5,261)
(Loss) applicable to Toys
Income (loss) from partially owned
entities
(5,136)
(1,356)
889
38
19,117
Income from Real Estate Fund
Interest and other investment
(loss) income, net
146
39
(30,199)
Interest and debt expense
(35,395)
(30,256)
(23,176)
(9,365)
(38,480)
Net gain on disposition of wholly
owned and partially owned assets
Income (loss) before income taxes
64,395
34,854
36,916
(9,005)
(48,172)
(678)
(960)
(890)
(4,616)
Income (loss) from continuing
operations
63,717
33,894
(9,895)
(52,788)
Income from discontinued
818
2,700
Net income (loss)
63,882
37,734
(7,195)
Net (income) loss attributable to
noncontrolling interests in
(2,219)
(3,527)
Net (income) attributable to
noncontrolling interests in the
Operating Partnership, including
unit distributions
Net income (loss) attributable to
Vornado
61,663
37,844
(63,140)
Interest and debt expense(2)
197,864
39,526
33,703
24,368
9,523
38,018
52,726
Depreciation and amortization(2)
193,394
53,936
38,085
30,946
12,230
34,293
23,904
Income tax (benefit) expense(2)
(7,350)
736
925
890
(15,135)
5,234
EBITDA(1)
437,670
155,861
106,607
93,158
15,448
47,872
18,724
See notes on page 35.
31
20. Segment Information – continued
For the Three Months Ended September 30, 2010
526,776
194,815
146,439
97,625
42,774
45,123
15,986
7,573
347
7,441
(457)
1,082
16,756
8,936
594
5,820
1,391
211,324
147,380
110,886
42,332
47,596
40,387
15,129
35,688
2,784
1,353
21,721
(8,108)
1,428
2,772
214
(857)
1,220
728
346
5,505
5,554
1,016
800
(78)
281,585
171,563
148,150
45,921
39,906
124,152
58,327
52,309
26,391
13,898
44,131
36,764
26,329
9,853
13,522
4,504
5,984
8,843
6,010
29,859
172,787
101,075
87,481
42,254
58,200
108,798
70,488
60,669
3,667
(18,294)
(Loss) income from partially owned
1,705
(1,095)
833
(3,447)
(Loss) from Real Estate Fund
income (loss), net
139
81
(46)
46,911
(33,293)
(33,367)
(24,199)
(9,556)
(45,146)
Net (loss) on extinguishment
of debt
77,349
36,107
37,257
(5,870)
(17,038)
Income tax (expense) benefit
(861)
(1,001)
714
(4,299)
76,488
35,106
37,255
(5,156)
(21,337)
(Loss) income from discontinued
1,410
(3,642)
(1,465)
76,518
36,516
33,613
(6,621)
(2,442)
397
1,749
74,076
34,010
(31,172)
208,294
31,817
34,241
26,395
15,883
40,558
59,400
179,148
42,531
41,394
28,024
12,782
30,079
24,338
(23,013)
861
1,054
(714)
(27,501)
3,285
468,681
149,285
113,205
88,431
21,330
40,579
55,851
32
For the Nine Months Ended September 30, 2011
1,604,451
586,797
413,810
316,729
154,485
132,630
34,713
15,777
5,962
12,556
(2,059)
2,477
49,387
24,549
1,525
19,899
3,359
627,123
421,297
349,184
152,481
138,466
108,267
27,561
111,519
9,121
8,389
71,156
(24,677)
5,260
9,629
2,439
348
(2,220)
9,176
3,013
289
15,078
15,894
4,241
2,832
(219)
836,060
477,394
467,672
272,985
119,739
367,291
150,375
173,623
99,266
50,711
138,837
101,634
85,653
29,113
38,609
14,389
19,504
22,034
23,855
75,784
16,593
3,040
2,822
520,517
271,513
297,903
256,911
167,926
315,543
205,881
169,769
16,074
(48,187)
Income applicable to Toys
(4,893)
(6,038)
2,131
292
64,747
income, net
466
119
35
94,496
(103,514)
(89,911)
(69,482)
(28,140)
(117,485)
207,602
110,051
102,423
(11,739)
27,037
(1,637)
(2,267)
(2,211)
(13,328)
205,965
107,784
102,418
(13,950)
13,709
Income from discontinued operations
398
46,466
9,217
90,212
206,363
154,250
111,635
76,262
(6,815)
196
(14,024)
199,548
111,831
(47,679)
599,668
108,473
100,017
32,025
121,546
164,607
561,738
146,650
118,290
88,322
34,632
101,862
71,982
Income tax expense(2)
42,135
1,695
2,380
2,211
29,914
5,930
1,778,547
456,366
374,937
273,158
145,130
334,116
194,840
For the Nine Months Ended September 30, 2010
1,560,473
582,090
426,217
284,808
145,206
122,152
53,018
22,642
5,519
21,699
628
2,530
48,476
27,312
1,836
14,897
(91)
4,522
632,044
433,572
321,404
145,743
129,204
105,968
42,592
107,799
8,876
5,805
62,778
(22,045)
4,278
13,252
759
(2,245)
4,245
1,256
4,182
429
14,428
16,452
2,284
3,471
1,283
823,741
507,124
436,428
158,550
112,002
349,934
163,097
159,131
85,915
44,850
131,911
108,994
80,550
30,111
41,693
13,824
18,079
22,591
20,252
78,485
495,669
290,170
262,272
136,278
167,879
328,072
216,954
174,156
22,272
(55,877)
4,345
(1,099)
3,353
239
6,962
130
143
64,902
(99,026)
(101,592)
(62,047)
(28,383)
(132,306)
765
11,994
233,857
114,393
115,605
(5,072)
(107,531)
(1,670)
(1,092)
(37)
118
(13,312)
232,187
113,301
115,568
(4,954)
(120,843)
(Loss) income from discontinued operations
106
(5,776)
(1,539)
(4,472)
232,293
107,525
114,029
(9,426)
(7,290)
895
4,905
225,003
114,924
(149,425)
611,993
94,404
104,355
68,275
45,370
123,791
175,798
549,400
127,341
120,929
85,335
39,049
76,896
Income tax expense (benefit)(2)
13,553
1,670
1,161
(59)
(1,914)
12,658
1,565,856
448,418
333,970
268,571
74,934
324,036
115,927
34
20. Segment Information - continued
Notes to preceding tabular information:
EBITDA represents "Earnings Before Interest, Taxes, Depreciation and Amortization." We consider EBITDA a supplemental measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. As properties are bought and sold based on a multiple of EBITDA, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. EBITDA should not be considered a substitute for net income. EBITDA may not be comparable to similarly titled measures employed by other companies.
Interest and debt expense, depreciation and amortization and income tax (benefit) expense in the reconciliation of net income (loss) to EBITDA includes our share of these items from partially owned entities.
The components of other EBITDA are summarized below. The totals for each of the columns below agree to the total EBITDA for the "other" column in the preceding EBITDA by segment reconciliations.
Our share of Real Estate Fund:
Operations
743
2,550
4,802
771
Carried interest (reversal) accrual
(475)
1,665
Alexander's
14,588
13,288
45,577
41,947
LNR (acquired in July 2010) (1)
15,769
38,569
Lexington (2)
8,424
8,092
37,730
37,375
555 California Street
11,220
11,797
32,608
34,421
Hotel Pennsylvania
9,773
8,080
18,382
14,249
Other investments
10,075
4,004
30,011
22,619
71,527
44,942
212,665
150,292
Corporate general and administrative expenses (3)
(21,585)
(20,712)
(62,964)
(60,668)
Investment income and other, net (3)
12,530
15,808
38,860
41,876
(Loss) income from the mark-to-market of J.C. Penney derivative
position
Net gain on sale of condominiums
5,884
3,149
Acquisition related costs
(684)
(921)
(4,398)
(2,851)
Real Estate Fund placement fees
(3,207)
(3,451)
(5,937)
Net loss on extinguishment of debt
Net income attributable to noncontrolling interests in the Operating
Partnership, including unit distributions
The amounts in these captions (for this table only) exclude the mark-to-market of our deferred compensation plan assets and offsetting liability.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders and Board of Trustees
Vornado Realty Trust
New York, New York
We have reviewed the accompanying consolidated balance sheet of Vornado Realty Trust (the “Company”) as of September 30, 2011, and the related consolidated statements of income and comprehensive income for the three-month and nine-month periods ended September 30, 2011 and 2010, and of changes in equity and cash flows for the nine-month periods ended September 30, 2011 and 2010. These interim financial statements are the responsibility of the Company’s management.
We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Vornado Realty Trust as of December 31, 2010, and the related consolidated statements of income, changes in equity, and cash flows for the year then ended (not presented herein); and in our report dated February 23, 2011, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2010 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
November 3, 2011
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain statements contained in this Quarterly Report 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. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Quarterly Report on Form 10‑Q. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or the date of any document incorporated by reference. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.
Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a discussion of our consolidated financial statements for the three and nine months ended September 30, 2011. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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.
Critical Accounting Policies
A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2010 in Management’s Discussion and Analysis of Financial Condition. There have been no significant changes to our policies during 2011.
Overview
Business Objective and Operating Strategy
Our business objective is to maximize shareholder value, which we measure by the total return provided to our shareholders. Below is a table comparing our performance to the Morgan Stanley REIT Index (“RMS”) and the SNL REIT Index (“SNL”) for the following periods ended September 30, 2011:
Total Return(1)
RMS
SNL
One-year
(9.9%)
1.3%
1.2%
Three-year
(9.2%)
(5.0%)
(4.0%)
Five-year
(18.7%)
(12.2%)
(8.9%)
Ten-year
196.5%
139.6%
149.5%
(1) Past performance is not necessarily indicative of future performance.
We intend to achieve our business objective by continuing to pursue our investment philosophy and executing our operating strategies through:
· Maintaining a superior team of operating and investment professionals and an entrepreneurial spirit;
· Investing in properties in select markets, such as New York City and Washington, DC, where we believe there is a high likelihood of capital appreciation;
· Acquiring quality properties at a discount to replacement cost and where there is a significant potential for higher rents;
· Investing in retail properties in select under-stored locations such as the New York City metropolitan area;
· Developing and redeveloping existing properties to increase returns and maximize value; and
· Investing in operating companies that have a significant real estate component.
We expect to finance our growth, acquisitions and investments using internally generated funds, proceeds from possible asset sales and by accessing the public and private capital markets. We may also offer Vornado common or preferred shares or Operating Partnership units in exchange for property and may repurchase or otherwise reacquire our shares or any other securities in the future.
We compete with a large number of real estate property owners and developers, some of which may be willing to accept lower returns on their investments. Principal factors of competition are rents charged, attractiveness of location, the quality of the property and the breadth and the quality of services provided. Our success depends upon, among other factors, trends of the national, regional and local economies, the financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation and population trends. See “Item 1A. Risk Factors” in our Annual Report on Form 10-K, as amended, for additional information regarding these factors.
Overview - continued
Recently Issued Accounting Literature
2011 Acquisitions and Investments
On March 1, 2011, we as a co-investor, together with the Fund, acquired a 95% interest in One Park Avenue, a 932,000 square foot office building located between 32nd and 33rd Streets in New York, for $374,000,000. The purchase price consisted of $137,000,000 in cash and 95% of a new $250,000,000 five-year mortgage that bears interest at 5.0%.
On March 16, 2011, we formed a 50/50 joint venture with SL Green Realty Corp (“SL Green”) to own the mezzanine debt of 280 Park Avenue, a 1.2 million square foot office building located between 48th and 49th Streets in Manhattan (the “Property”). We contributed our mezzanine loan with a face amount of $73,750,000 and they contributed their mezzanine loans with a face amount of $326,250,000 to the joint venture. We equalized our interest in the joint venture with SL Green by paying them $111,250,000 in cash and assuming $15,000,000 of their debt. On May 17, 2011, as part of the recapitalization of the Property, the joint venture contributed its debt position for 99% of the common equity of a new joint venture which owns the Property. The new joint venture expects to spend $150,000,000 for re-tenanting and repositioning the Property.
On June 17, 2011, a joint venture in which we are a 51% partner invested $55,000,000 in cash (of which we contributed $35,000,000) to acquire a face amount of $150,000,000 of mezzanine loans and a $35,000,000 participation in a senior loan on Independence Plaza, a residential complex comprised of three 39-story buildings in the Tribeca submarket of Manhattan.
2011 Dispositions
2011 Financing Activities
In January 2011, we completed a $60,000,000 financing of land under a portion of the Borgata Hotel and Casino complex. The 10-year fixed rate loan bears interest at 5.14% and amortizes based on a 30-year schedule beginning in the third year.
On January 10, 2011, we completed a $75,000,000 financing of North Bergen (Tonnelle Avenue), a 410,000 square foot strip shopping center. The seven-year fixed rate loan bears interest rate at 4.59% and amortizes based on a 25-year schedule beginning in the sixth year. This property was previously unencumbered.
On January 18, 2011, we repaid the outstanding balance of the construction loan on 220 20th Street and closed on a $76,100,000 mortgage at a fixed rate of 4.61%. The loan has a seven-year term and amortizes based on a 30-year schedule.
On February 10, 2011, we completed a $150,000,000 financing of 2121 Crystal Drive, a 506,000 square foot office building located in Crystal City, Arlington, Virginia. The 12-year fixed rate loan bears interest at 5.51% and amortizes based on a 30-year schedule beginning in the third year. This property was previously unencumbered.
On February 11, 2011, we completed a $425,000,000 refinancing of Two Penn Plaza, a 1.6 million square foot Manhattan office building. The seven-year loan bears interest at LIBOR plus 2.00%, which was swapped for the term of the loan to a fixed rate of 5.13%. The loan amortizes based on a 30-year schedule beginning in the fourth year. We retained net proceeds of approximately $139,000,000 after repaying the existing loan and closing costs.
On April 20, 2011, we sold 7,000,000 6.875% Series J Cumulative Redeemable Preferred Shares at a price of $25.00 per share, in an underwritten public offering pursuant to an effective registration statement. On April 21, 2011, the underwriters exercised their option to purchase an additional 1,050,000 shares to cover over-allotments. On May 5, 2011 and August 5, 2011 we sold an additional 800,000 and 1,000,000 shares, respectively, at a price of $25.00 per share. We retained aggregate net proceeds of $239,037,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 9,850,000 Series J Preferred Units (with economic terms that mirror those of the Series J Preferred Shares). Dividends on the Series J Preferred Shares are cumulative and payable quarterly in arrears. The Series J Preferred Shares are not convertible into, or exchangeable for, any of our properties or securities. On or after five years from the date of issuance (or sooner under limited circumstances), we, at our option, may redeem the Series J Preferred Shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption. The Series J Preferred Shares have no maturity date and will remain outstanding indefinitely unless redeemed by us.
In May 2011, we repaid the outstanding balance of the construction loan on West End 25, and closed on a $101,671,000 mortgage at a fixed rate of 4.88%. The loan has a 10-year term and amortizes based on a 30-year schedule beginning in the sixth year.
On June 8, 2011, we renewed one of our two unsecured revolving credit facilities, and increased it to $1,250,000,000 from $1,000,000,000. The renewed facility matures in four years, has a one-year extension option and bears interest on drawn amounts at LIBOR plus 1.35% and has a .30% facility fee (drawn or undrawn), based on our credit ratings. We plan to renew our second revolving credit facility of $1,595,000,000, which matures in September 2012, with a new $1,250,000,000 facility that has a four-year term, with a one-year extension option and bears interest on drawn amounts at LIBOR plus 1.25% and has a .25% facility fee (drawn or undrawn), based on our credit ratings.
On September 1, 2011, we completed a $600,000,000 refinancing of 555 California Street, a three-building office complex aggregating 1.8 million square feet in San Francisco’s financial district, known as the Bank of America center, in which we own a 70% controlling interest. The 10-year loan bears interest at 5.10% and amortizes based on a 30-year schedule beginning in the fourth year. The proceeds of the new loan and $45,000,000 of existing cash were used to repay the existing loan and closing costs.
40
Quarter Ended September 30, 2011 Financial Results Summary
Net income attributable to common shareholders for the quarter ended September 30, 2011 was $41,135,000, or $0.22 per diluted share, compared to $95,192,000, or $0.52 per diluted share, for the quarter ended September 30, 2010. Net income for the quarter ended September 30, 2011 includes $3,591,000 of net gains on sale of real estate. In addition, the quarters ended September 30, 2011 and 2010 include certain other items that affect comparability, which are listed in the table below. The aggregate of net gains on sale of real estate and the items in the table below, net of amounts attributable to noncontrolling interests, decreased net income attributable to common shareholders by $26,352,000, or $0.14 per diluted share for the quarter ended September 30, 2011 and increased net income attributable to common shareholders for the quarter ended September 30, 2010 by 22,274,000, or $0.12 per diluted share.
Funds From Operations attributable to common shareholders plus assumed conversions (“FFO”) for the quarter ended September 30, 2011 was $195,125,000, or $1.05 per diluted share, compared to $248,964,000, or $1.31 per diluted share, for the prior year’s quarter. FFO for the quarters ended September 30, 2011 and 2010 include certain items that affect comparability which are listed in the table below. The aggregate of these items, net of amounts attributable to noncontrolling interests, decreased FFO by $27,759,000, or $0.15 per diluted share for the quarter ended September 30, 2011 and increased FFO for the quarter ended September 30, 2010 by $27,464,000, or $0.14 per diluted share.
Items that affect comparability income (expense):
Merchandise Mart restructuring costs
(3,722)
Buy-out of a below market lease
(1,593)
Acquisitions costs and impairment losses
(5,921)
(3,752)
Default interest and fees accrued on loans in special servicing
(5,887)
FFO attributable to discontinued operations
5,777
10,117
1,780
(1,647)
(29,681)
29,541
Noncontrolling interests' share of above adjustments
1,922
(2,077)
Items that affect comparability, net
(27,759)
27,464
The percentage increase (decrease) in GAAP basis and cash basis same store Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) of our operating segments for the quarter ended September 30, 2011 over the quarter ended September 30, 2010 and the trailing quarter ended June 30, 2011 are summarized below.
Same Store EBITDA:
September 30, 2011 vs. September 30, 2010
GAAP basis
(1.1%)
0.4%
0.9%
(2.2%)
Cash Basis
1.6%
1.1%
0.5%
September 30, 2011 vs. June 30, 2011
(0.3%)
(0.9%)
(21.8%)
0.7%
(0.6%)
(1.9%)
(20.2%)
Primarily due to the timing of Trade Shows.
41
Nine Months Ended September 30, 2011 Financial Results Summary
Net income attributable to common shareholders for the nine months ended September 30, 2011 was $532,263,000, or $2.86 per diluted share, compared to $353,317,000, or $1.92 per diluted share, for the nine months ended September 30, 2010. Net income for the nine months ended September 30, 2011 and 2010 include $59,474,000 and $307,000, respectively, of net gains on sale of real estate. In addition, nine months ended September 30, 2011 and 2010 include certain items that affect comparability which are listed in the table below. The aggregate of net gains on sale of real estate and the items in the table below, net of amounts attributable to noncontrolling interests, increased net income attributable to common shareholders by $208,608,000 or $1.12 per diluted share for the nine months ended September 30, 2011 and $16,206,000, or $0.09 per diluted share for the nine months ended September 30, 2010.
FFO for the nine months ended September 30, 2011 was $951,054,000, or $4.96 per diluted share, compared to $814,030,000, or $4.29 per diluted share, for the nine months ended September 30, 2010. FFO for nine months ended September 30, 2011 and 2010 includes certain items that affect comparability which are listed in the table below. The aggregate of these items, net of amounts attributable to noncontrolling interests, increased FFO by $159,303,000 or $0.83 per diluted share for the nine months ended September 30, 2011 and $31,685,000, or $0.17 per diluted share for the nine months ended September 30, 2010.
Net gain (loss) on extinguishment of debt
Our share of LNR's asset sales and tax settlement gains
14,997
Net gain resulting from Lexington's stock issuances
9,760
5,998
7,000
11,354
Buy-out of below-market leases
(16,593)
Acquisition costs, litigation loss accrual and impairment losses
(17,907)
(6,482)
(12,445)
17,188
26,308
3,828
524
170,008
34,052
(10,705)
(2,367)
159,303
31,685
The percentage increase (decrease) in GAAP basis and cash basis same store EBITDA of our operating segments for the nine months ended September 30, 2011 over the nine months ended September 30, 2010 is summarized below.
(1.3%)
2.1%
3.3%
(1.5%)
2.5%
6.5%
2.0%
Calculations of same store EBITDA, reconciliations of our net income to EBITDA and FFO and the reasons we consider these non-GAAP financial measures useful are provided in the following pages of Management’s Discussion and Analysis of the Financial Condition and Results of Operations.
42
The leasing activity presented below is based on leases signed during the period and is not intended to coincide with the commencement of rental revenue in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Tenant improvements and leasing commissions presented below are based on our share of square feet leased during the period.
(Square feet in thousands)
As of September 30, 2011:
Retail (4)
Showroom
Total square feet (in service)
19,206
20,596
25,379
1,524
4,046
Our share of square feet (in service)
16,795
17,860
23,154
Number of properties
82
155
Occupancy rate
95.4%
90.4%(3)
92.3%
91.3%
91.9%
Leasing Activity:
Quarter Ended September 30, 2011:
Total square feet leased
839
392
427
149
144
Our share of square feet leased:
723
359
425
Initial rent (1)
55.05
42.51
26.65
27.34
38.28
Weighted average lease term (years)
9.7
4.5
10.1
7.2
6.5
Relet space (included above):
Square feet
708
331
167
Cash basis:
54.98
42.91
31.66
Prior escalated rent
41.58
39.82
28.73
28.63
39.31
Percentage increase (decrease)
32.2%
7.8%
10.2%
(4.5%)
(2.6%)
GAAP basis:
Straight-line rent (2)
55.38
42.18
32.82
27.69
38.13
Prior straight-line rent
42.78
38.14
28.36
25.53
34.99
Percentage increase
29.4%
10.6%
15.7%
8.5%
9.0%
Tenant improvements and leasing
commissions:
Per square foot
51.45
23.29
7.54
56.01
12.68
Per square foot per annum:
5.30
5.18
7.79
1.96
Percentage of initial rent
9.6%
12.2%
2.8%
28.5%
5.1%
Nine Months Ended September 30, 2011:
2,073
1,179
1,172
189
358
1,507
1,031
1,140
58.06
40.27
25.48
27.96
36.06
8.7
7.0
6.1
1,257
929
439
60.30
40.14
21.73
48.94
38.47
19.70
28.55
37.35
23.2%
4.3%
10.3%
(2.1%)
(3.5%)
60.26
39.74
22.49
28.26
35.09
49.24
36.77
19.22
25.19
33.92
22.4%
8.1%
17.0%
3.4%
50.76
19.72
7.03
52.09
7.10
5.23
4.38
0.81
7.41
1.16
10.9%
3.2%
26.5%
See notes on the following table.
43
As of June 30, 2011:
19,386
20,550
25,443
1,462
4,107
16,966
17,821
23,472
158
95.6%
93.1% (3)
93.5%
As of December 31, 2010:
17,454
21,149
25,557
1,448
4,122
16,194
17,823
23,453
161
94.3% (3)
91.8%
93.8%
As of September 30, 2010:
17,432
21,205
25,298
1,446
4,123
16,180
18,247
22,907
163
96.0%
94.7% (3)
92.5%
91.5%
93.2%
Represents the cash basis weighted average starting rent per square foot, which is generally indicative of market rents. Most leases include free rent and periodic step-ups in rent which are not included in the initial cash basis rent per square foot but are included in the GAAP basis straight-line rent per square foot.
Represents the GAAP basis weighted average rent per square foot that is recognized over the term of the respective leases, and includes the effect of free rent and periodic step-ups in rent.
Excluding residential and other properties, occupancy rates for the office properties were as follows.
89.0%
(See Base Realignment and Closure ("BRAC") discussion below)
92.2%
94.0%
94.3%
Mall sales per square foot, including partially owned malls, for the trailing twelve months ended September 30, 2011 and 2010 were $464 and
$470, respectively.
BRAC
The tables below summarize the effect of BRAC on our Washington, DC Office Properties segment for square feet leased by the Department of Defense (“DOD”).
Square Feet
DOD leases subject to BRAC
2,395,000
Less square feet already vacated
(396,000)
Less square feet to be taken out of service for redevelopment
(348,000)
Less square feet to be relet by the General Services Administration (leases pending)
(313,000)
DOD leases subject to BRAC expiring in the future per table below (see details below for expiration)
1,338,000
Annual Escalated
Rent of
Expiring Leases
Square Feet of Expiring Leases
Year
Per Square Foot
Crystal City
Skyline
Rosslyn
Fourth Quarter 2011
30.43
First Quarter 2012
241,000
203,000
38,000
Second Quarter 2012
39.60
171,000
Third Quarter 2012
41.47
380,000
251,000
119,000
10,000
Fourth Quarter 2012
Total 2012
40.05
792,000
625,000
157,000
36.85
183,000
140,000
32.76
330,000
128,000
202,000
40.09
26,000
6,000
773,000
415,000
44
Net Income and EBITDA by Segment for the Three Months Ended September 30, 2011 and 2010
Below is a summary of net income and a reconciliation of net income to EBITDA(1) by segment for the three months ended September 30, 2011 and 2010.
____________________
See notes on page 47.
Net Income and EBITDA by Segment for the Three Months Ended September 30, 2011 and 2010 - continued
46
(1) EBITDA represents “Earnings Before Interest, Taxes, Depreciation and Amortization.” We consider EBITDA a supplemental measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. As properties are bought and sold based on a multiple of EBITDA, we utilize these measures to make investment decisions as well as to compare the performance of our assets to that of our peers. EBITDA should not be considered a substitute for net income. EBITDA may not be comparable to similarly titled measures employed by other companies.
(2) Interest and debt expense, depreciation and amortization and income tax (benefit) expense in the reconciliation of our net income (loss) to EBITDA includes our share of these items from partially owned entities.
(3) The components of other EBITDA are summarized below. The totals for each of the columns below agree to the total EBITDA for the “other” column in the preceding EBITDA by segment reconciliations.
Carried interest reversal
LNR (acquired in July 2010)
Corporate general and administrative expenses (1)
Investment income and other, net (1)
Net income attributable to noncontrolling interests in the Operating Partnership,
including unit distributions
The amounts in these captions (for this table only) exclude the mark-to-market of our deferred compensation plan assets
and offsetting liability.
47
Below is a summary of the percentages of EBITDA by geographic region (excluding discontinued operations and other gains and losses that affect comparability), from our New York Office, Washington DC Office, Retail and Merchandise Mart segments.
Region:
New York City metropolitan area
62%
Washington, DC / Northern Virginia metropolitan area
30%
31%
California
2%
1%
Chicago
3%
Puerto Rico
Other geographies
100%
48
Results of Operations – Three Months Ended September 30, 2011 Compared to September 30, 2010
Our revenues, which consist of property rentals, tenant expense reimbursements, hotel revenues, trade shows revenues, amortization of acquired below-market leases, net of above-market leases and fee income, were $727,343,000 for the three months ended September 30, 2011, compared to $687,125,000 in the prior year’s quarter, an increase of $40,218,000, of which $35,135,000 relates to the Cleveland Medical Mart development project. Below are the details of the increase (decrease) by segment:
Increase (decrease) due to:
Property rentals:
Acquisitions, sale of partial interests
and other
(3,076)
(800)
(8,406)
4,787
1,343
Development
411
1,055
(644)
2,637
Trade Shows
2,566
Amortization of acquired below-market
leases, net
(656)
(783)
(47)
448
(280)
Leasing activity (see page 43)
(251)
(1,467)
394
1,275
(842)
1,631
(3,050)
(7,004)
5,866
2,961
2,858
Tenant expense reimbursements:
Acquisitions/development, sale of partial
interests and other
867
3,831
(3,690)
726
(2,155)
(1,193)
(2,111)
(117)
1,078
(1,288)
2,638
(5,801)
609
BMS cleaning fees
2,034
2,326
(292)
806
225
(102)
327
309
Lease cancellation fee income
2,502
2,320
274
(85)
(602)
(293)
(322)
(314)
4,740
4,578
(150)
381
228
(297)
Total increase (decrease) in revenues
40,218
4,166
(12,955)
6,856
38,512
3,639
This income is offset by $33,419 of development costs expensed in the quarter. See note (4) on page 50.
49
Results of Operations – Three Months Ended September 30, 2011 Compared to September 30, 2010 - continued
Expenses
Our expenses, which consist primarily of operating, depreciation and amortization and general and administrative expenses, were $501,892,000 for the three months ended September 30, 2011, compared to $461,797,000 in the prior year’s quarter, an increase of $40,095,000, of which $33,419,000 relates to the Cleveland Medical Mart development project. Below are the details of the increase (decrease) by segment:
Operating:
(3,432)
6,216
Development/redevelopment
131
(142)
273
Non-reimbursable expenses, including
bad debt reserves
5,993
3,351
(1,597)
355
3,884
853
1,218
BMS expenses
2,302
(2,699)
(333)
(1,365)
(1,741)
1,430
10,582
5,320
(6,536)
5,103
4,412
2,283
Depreciation and amortization:
469
(2,684)
3,153
3,006
2,907
519
(823)
3,475
(2,879)
3,751
General and administrative:
Mark-to-market of deferred compensation
plan liability (1)
(9,150)
4,154
(43)
521
(2,122)
3,524
2,274
(8,748)
(10,628)
1,367
(226)
Total increase (decrease) in expenses
40,095
8,184
(8,894)
8,325
41,874
(9,394)
This decrease in expense is entirely offset by a corresponding decrease in income from the mark-to-market of the deferred compensation plan assets, a component of “interest and other investment (loss) income, net” on our consolidated statements of income.
Includes $3,722 of restructuring costs.
Primarily from higher payroll costs and stock-based compensation.
This expense is entirely offset by development revenue in the quarter. See note (1) on page 49.
Represents the buy-out of a below-market lease.
50
Loss Applicable to Toys
In the three months ended September 30, 2011, we recognized net loss of $9,304,000 from our investment in Toys, comprised of $11,638,000 for our 32.7% share of Toys’ net loss ($26,773,000 before our share of Toys’ income tax benefit) and $2,334,000 of interest and other income.
In the three months ended September 30, 2010, we recognized net loss of $2,557,000 from our investment in Toys, comprised of $5,073,000 for our 32.7% share of Toys’ net loss ($32,574,000 before our share of Toys’ income tax benefit) and $2,516,000 of interest and other income.
Income (loss) from Partially Owned Entities
Summarized below are the components of income (loss) from partially owned entities for the three months ended September 30, 2011 and 2010.
Equity in Net Income (Loss):
Alexander's - 32.4% share of equity in net income
Lexington - 11.7% share in 2011 and 13.8% share in 2010 of equity in net loss
LNR - 26.2% share of equity in net income (acquired in July 2010)
India real estate ventures - 4% to 36.5% range in our share of equity in net loss
Partially owned office buildings
Other equity method investments (1)
Represents our equity in net income or loss in Verde Realty Operating Partnership, 85 10th Avenue Associates and others.
In the three months ended September 30, 2011, we recognized $5,353,000 of income from the Fund, including $5,639,000 of net unrealized gains from the mark-to-market of investments in the Fund. Of the $5,353,000, $3,675,000 was attributable to noncontrolling interests. Accordingly, our share of the Fund’s income was $1,678,000. In addition, we recognized $378,000 of management, leasing and development fees which are included as a component of “fee and other income.”
In the three months ended September 30, 2010, we recognized a $1,410,000 loss from the Fund, primarily due to $1,500,000 of organization costs. Of this loss, $1,091,000 was attributable to noncontrolling interests.
51
Interest and Other Investment (Loss) Income, net
Interest and other investment (loss) income, net (comprised of the mark-to-market of derivative positions in marketable equity securities, interest income on mezzanine loans receivable, other interest income and dividend income) was a loss of $29,994,000 in the three months ended September 30, 2011, compared to income of $47,096,000 in the prior year’s quarter, a decrease of $77,090,000. This decrease resulted from:
J.C. Penney derivative position ($37,537 mark-to-market loss in 2011, compared to a $32,249
mark-to-market gain in 2010)
(69,786)
Decrease in the value of investments in our deferred compensation plan (offset by a corresponding
decrease in the liability for plan assets in general and administrative expenses)
Other, net (primarily dividends and interest on marketable securities and mezzanine loans)
1,846
(77,090)
Interest and Debt Expense
Interest and debt expense was $136,672,000 in the three months ended September 30, 2011, compared to $145,561,000 in the prior year’s quarter, a decrease of $8,889,000. This decrease was primarily due to savings of (i) $7,206,000 from the repayment of the Springfield Mall mortgage at a discount in December 2010, (ii) $6,079,000 applicable to the repurchase and retirement of convertible senior debentures and repayment of senior unsecured notes, and (iii), 4,680,000 from the deconsolidation of the Warner Building resulting from the sale of a 45% interest in October 2010, partially offset by (iv) $4,745,000 from the financing of 2121 Crystal Drive and Two Penn Plaza in the first quarter of 2011, (v) $3,374,000 from the issuance of $660,000,000 of cross-collateralized debt secured by 40 of our strip shopping centers in August 2010 and (vi) $1,251,000 from the consolidation of the San Jose Shopping Center resulting from the October 2010 acquisition of the 55% interest we did not previously own.
Net Loss on Extinguishment of Debt
In the three months ended September 30, 2010, we recognized a $724,000 net loss on early extinguishment of debt resulting from the acquisition and retirement of convertible senior debentures and senior unsecured notes.
Net Gain on Disposition of Wholly Owned and Partially Owned Assets
Net gain on disposition of wholly owned and partially owned assets was $1,298,000 in the three months ended September 30, 2011, compared to $5,072,000 in the prior year’s quarter and resulted primarily from the sale of residential condominiums and marketable securities.
Income Tax Expense
Income tax expense was $7,144,000 in the three months ended September 30, 2011, compared to $5,449,000 in the prior year’s quarter, an increase of $1,695,000. This increase resulted primarily from higher taxable income of our taxable REIT subsidiaries.
Income (Loss) from Discontinued Operations
The table below sets forth the combined results of assets related to discontinued operations for the three months ended September 30, 2011 and 2010.
Impairment loss
Net Income Attributable to Noncontrolling Interests in Consolidated Subsidiaries
Net income attributable to noncontrolling interests in consolidated subsidiaries was $5,636,000 in the three months ended September 30, 2011, compared to $296,000 in the prior year’s quarter, an increase of $5,340,000. This resulted primarily from a $4,766,000 increase in income allocated to the noncontrolling interests of our Real Estate Fund.
Net Income Attributable to Noncontrolling Interests in the Operating Partnership, including Unit Distributions
Net income attributable to noncontrolling interests in the Operating Partnership, including unit distributions for the three months ended September 30, 2011 and 2010 is primarily comprised of allocations of income to redeemable noncontrolling interests of $2,797,000 and $7,119,000, respectively, and preferred unit distributions of the Operating Partnership of $4,028,000 and $4,465,000, respectively. The decrease of $4,322,000 in allocations of income to redeemable noncontrolling interests resulted primarily from lower net income subject to allocation to unitholders.
Preferred Share Dividends
Preferred share dividends were $17,627,000 for the three months ended September 30, 2011, compared to $13,442,000 for the prior year’s quarter, an increase of $4,185,000. This increase resulted from the issuance of Series J preferred shares during 2011, partially offset by the redemption of the Series D-10 preferred shares in 2010.
Discount of Preferred Share and Unit Redemptions
In the three months ended September 30, 2011, we recognized a $5,000,000 discount from the redemption of 1,000,000 Series D-11 preferred units, compared to a $4,382,000 discount in the prior year’s quarter from the redemption of 1,600,000 Series D-10 preferred shares.
53
Same Store EBITDA
Same store EBITDA represents EBITDA from property level operations which are owned by us in both the current and prior year reporting periods. Same store EBITDA excludes segment-level overhead expenses, which are expenses that we do not consider to be property-level expenses, as well as other non-operating items. We present same store EBITDA on both a GAAP basis and a cash basis, which excludes income from the straight-lining of rents, amortization of below-market leases, net of above-market leases and other non-cash adjustments. We present these non-GAAP measures to (i) facilitate meaningful comparisons of the operational performance of our properties and segments, (ii) make decisions on whether to buy, sell or refinance properties, and (iii) compare the performance of our properties and segments to those of our peers. Same store EBITDA should not be considered as an alternative to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.
Below are the same store EBITDA results on a GAAP and cash basis for each of our segments for the three months ended September 30, 2011, compared to the three months ended September 30, 2010.
EBITDA for the three months ended September 30, 2011
Add-back: non-property level overhead
expenses included above
Less: EBITDA from acquisitions, dispositions
and other non-operating income or expenses
(7,408)
1,500
(3,961)
(5,530)
GAAP basis same store EBITDA for the three months
ended September 30, 2011
152,914
114,612
95,918
19,452
Less: Adjustments for straight-line rents,
amortization of below-market leases, net, and other
non-cash adjustments
(10,863)
998
(9,485)
985
Cash basis same store EBITDA for the three months
142,051
115,610
86,433
20,437
EBITDA for the three months ended September 30, 2010
819
(5,067)
(2,200)
(7,453)
ended September 30, 2010
154,608
114,122
95,074
19,887
(14,845)
(9,611)
440
139,763
114,164
85,463
20,327
(Decrease) increase in GAAP basis same store EBITDA for
the three months ended September 30, 2011 over the
three months ended September 30, 2010
(1,694)
490
844
(435)
Increase in Cash basis same store EBITDA for
970
% (decrease) increase in GAAP basis same store EBITDA
% increase in Cash basis same store EBITDA
54
Net Income and EBITDA by Segment for the Nine Months Ended September 30, 2011 and 2010
Below is a summary of net income and a reconciliation of net income to EBITDA(1) by segment for the nine months ended September 30, 2011 and 2010.
See notes on page 57.
Net Income and EBITDA by Segment for the Nine Months Ended September 30, 2011 and 2010 - continued
56
Carried interest accrual
Includes $6,020 for our share of net gains from asset sales and $8,977 for our share of a tax settlement gain.
Includes net gains of $9,760 and $5,998 in the nine months ended September 30, 2011 and 2010, respectively, resulting from
Lexington's stock issuances.
57
61%
4%
58
Results of Operations – Nine Months Ended September 30, 2011 Compared to September 30, 2010
Revenues
Our revenues, which consist of property rentals, tenant expense reimbursements, hotel revenues, trade shows revenues, amortization of acquired below-market leases, net of above-market leases and fee income, were $2,173,850,000 for the nine months ended September 30, 2011, compared to $2,037,845,000 in the prior year’s nine months, an increase of $136,005,000, of which $108,203,000 relates to the Cleveland Medical Mart development project. Below are the details of the increase (decrease) by segment:
(8,822)
(2,719)
(25,200)
14,768
4,329
5,191
5,556
(365)
7,709
5,541
911
(2,763)
(311)
5,002
(1,163)
16,054
561
7,680
8,375
1,051
(1,613)
26,584
(4,921)
(12,275)
27,780
6,738
9,262
(2,446)
(11,099)
2,135
2,687
(3,737)
(1,532)
(3,932)
1,585
245
(103)
(6,183)
2,299
(15,031)
3,720
2,584
5,746
8,378
(2,632)
(619)
982
(3,623)
1,680
317
2,366
4,931
1,757
(3,893)
(429)
(92)
650
(558)
1,957
(639)
(1,502)
7,401
14,941
(2,424)
(256)
(751)
(4,109)
136,005
12,319
(29,730)
31,244
114,435
7,737
This income is offset by $101,637 of development costs expensed in the period. See note (4) on page 60.
Primarily from the elimination of intercompany fees from operating segments upon consolidation.
Primarily from leasing fees in the prior year in connection with our management of a development project.
59
Results of Operations – Nine Months Ended September 30, 2011 Compared to September 30, 2010 - continued
Our expenses, which consist primarily of operating, depreciation and amortization and general and administrative expenses, were $1,514,770,000 for the nine months ended September 30, 2011, compared to $1,352,268,000 in the prior year’s nine months, an increase of $162,502,000, of which $101,637,000 relates to the Cleveland Medical Mart development project. Below are the details of the increase (decrease) by segment:
3,347
(12,997)
13,657
674
(317)
991
10,301
4,205
(321)
(2,374)
8,791
3,332
3,220
7,739
9,726
5,413
913
2,218
1,340
(158)
38,339
17,357
(12,722)
14,492
13,351
5,861
(4,083)
(9,732)
5,649
4,670
6,926
2,372
(546)
(998)
(3,084)
587
(7,360)
(4,182)
(3,031)
9,548
565
1,425
(557)
3,603
4,512
2,335
(2,701)
19,604
162,502
24,848
(18,657)
35,631
120,633
This decrease in expense is entirely offset by a corresponding decrease in income from the mark-to-market of the deferred compensation plan assets, a component of “interest and other investment income (loss), net” on our consolidated statements of income.
Primarily from higher payroll costs and stock-based compensation expense.
This expense is entirely offset by development revenue in the period. See note (1) on page 59.
Represents the buy-out of below-market leases.
60
Income Applicable to Toys
In the nine months ended September 30, 2011, we recognized net income of $80,794,000 from our investment in Toys, comprised of $74,135,000 for our 32.7% share of Toys’ net income ($104,049,000 before our share of Toys’ income tax expense) and $6,659,000 of interest and other income.
In the nine months ended September 30, 2010, we recognized net income of $102,309,000 from our investment in Toys, comprised of $95,576,000 for our 32.7% share of Toys’ net income ($93,662,000 before our share of Toys’ income tax benefit) and $6,733,000 of interest and other income.
Income from Partially Owned Entities
Summarized below are the components of income (loss) from partially owned entities for the nine months ended September 30, 2011 and 2010.
Lexington - 11.7% share in 2011 and 13.8% share in 2010 of equity in net income (1)
LNR - 26.2% share of equity in net income (acquired in July 2010) (2)
India real estate ventures - 4% to 36.5% range in our share of equity in net (loss) income
Partially owned office buildings (3)
Other equity method investments (4)
In the nine months ended September 30, 2011, we recognized $25,491,000 of income from the Fund, including $19,209,000 of net unrealized gains from the mark-to-market of investments in the Fund, and $3,085,000 of net realized gains from the disposition of an investment. Of the $25,491,000, $15,703,000 was attributable to noncontrolling interests. Accordingly, our share of the Fund’s income was $9,788,000 and includes $1,665,000 of accrued carried interest. In addition, we recognized $1,803,000 of management, leasing and development fees which are included as a component of “fee and other income,” and incurred $3,451,000 of placement fees in connection with the February 2011 closing of the Fund, which is included in “general and administrative” expenses.
In the nine months ended September 30, 2010, we recognized a $1,410,000 loss from the Fund, primarily due to $1,500,000 of organization costs. Of this loss, $1,091,000 was attributable to noncontrolling interests.
61
Interest and other investment income, net (comprised of the mark-to-market of derivative positions in marketable equity securities, interest income on mezzanine loans receivable, other interest income and dividend income) was $95,121,000 in the nine months ended September 30, 2011, compared to $65,676,000 in the prior year’s nine months, an increase of $29,445,000. This increase resulted from:
Mezzanine loans ($82,744 loss reversal and net gain on disposition in 2011, compared to a $6,900
loss accrual in 2010)
89,644
J.C. Penney derivative position ($27,136 mark-to-market loss in 2011, compared to a $32,249
(59,385)
3,368
29,445
Interest and debt expense was $408,532,000 in the nine months ended September 30, 2011, compared to $423,354,000 in the prior year’s nine months, a decrease of $14,822,000. This decrease was primarily due to savings of (i) $18,157,000 from the repayment of the Springfield Mall mortgage at a discount in December 2010, (ii) $13,946,000 applicable to the repurchase and retirement of convertible senior debentures and repayment of senior unsecured notes, and (iii) $13,899,000 from the deconsolidation of the Warner Building resulting from the sale of a 45% interest in October 2010, partially offset by (iv) $16,568,000 from the issuance of $660,000,000 of cross-collateralized debt secured by 40 of our strip shopping centers in August 2010, (v) $10,375,000 from the financing of 2121 Crystal Drive and Two Penn Plaza in the first quarter of 2011, and (vi) $3,783,000 from the consolidation of the San Jose Shopping Center resulting from the October 2010 acquisition of the 55% interest we did not previously own.
In the nine months ended September 30, 2010, we recognized a $1,796,000 net loss on extinguishment of debt resulting from the acquisition and retirement of convertible senior debentures and senior unsecured notes.
Net gain on disposition of wholly owned and partially owned assets was $7,975,000 in the nine months ended September 30, 2011, compared to $12,759,000 in the prior year’s nine months and resulted primarily from the sale of residential condominiums and marketable securities.
Income tax expense was $19,448,000 in the nine months ended September 30, 2011, compared to $15,993,000 in the prior year’s nine months, an increase of $3,455,000. This increase resulted primarily from higher taxable income of our taxable REIT subsidiaries.
62
The table below sets forth the combined results of assets related to discontinued operations for the nine months ended September 30, 2011 and 2010.
Net gain on sale of 1140 Connecticut Avenue and 1227 25th Street
Net income attributable to noncontrolling interests in consolidated subsidiaries was $20,643,000 in the nine months ended September 30, 2011, compared to $1,490,000 in the prior year’s nine months, an increase of $19,153,000. This resulted primarily from a $16,794,000 increase in income allocated to the noncontrolling interests of our Real Estate Fund.
Net income attributable to noncontrolling interests in the Operating Partnership, including unit distributions for the nine months ended September 30, 2011 and 2010 is primarily comprised of allocations of income to redeemable noncontrolling interests of $36,385,000 and $26,785,000, respectively, and preferred unit distributions of the Operating Partnership of $10,979,000 and $6,702,000, respectively. The increase of $9,600,000 in allocations of income to redeemable noncontrolling interests resulted primarily from higher net income subject to allocation to unitholders.
Preferred share dividends were $47,743,000 for the nine months ended September 30, 2011, compared to $41,975,000 for the prior year’s nine months, an increase of $5,768,000. This increase resulted from the issuance of Series J preferred shares during 2011, partially offset by the redemption of Series D-10 preferred shares in 2010.
In the nine months ended September 30, 2011, we recognized a $5,000,000 discount from the redemption of 1,000,000 Series D-11 preferred units with a par value of $25.00 per unit, for an aggregate of $20,000,000 in cash, compared to a $4,382,000 discount in the prior year from the redemption of 1,600,000 Series D-10 preferred shares with a par value of $25.00 per unit for an aggregate of $35,618,000.
63
Below are the same store EBITDA results on a GAAP and cash basis for each of our segments for the nine months ended September 30, 2011, compared to the nine months ended September 30, 2010.
EBITDA for the nine months ended September 30, 2011
(16,953)
(48,045)
(8,702)
(96,528)
GAAP basis same store EBITDA for the nine months
453,802
346,396
286,490
72,457
(37,187)
(3,358)
(21,507)
2,004
Cash basis same store EBITDA for the nine months
416,615
343,038
264,983
74,461
EBITDA for the nine months ended September 30, 2010
(2,544)
(12,870)
(13,908)
(21,627)
459,698
339,179
277,254
73,559
(45,031)
(4,624)
(28,434)
(537)
414,667
334,555
248,820
73,022
the nine months ended September 30, 2011 over the
nine months ended September 30, 2010
(5,896)
7,217
9,236
(1,102)
1,948
8,483
16,163
1,439
64
SUPPLEMENTAL INFORMATION
Three Months Ended September 30, 2011 vs. Three Months Ended June 30, 2011
Our revenues and expenses are subject to seasonality during the year which impacts quarterly net earnings, cash flows and funds from operations, and therefore impacts comparisons of the current quarter to the previous quarter. The business of Toys is highly seasonal. Historically, Toys’ fourth quarter net income, which we record on a one-quarter lag basis in our first quarter, accounts for more than 80% of Toys’ fiscal year net income. The Office and Merchandise Mart segments have historically experienced higher utility costs in the first and third quarters of the year. The Merchandise Mart segment also has experienced higher earnings in the second and fourth quarters of the year due to major trade shows occurring in those quarters. The Retail segment revenue in the fourth quarter is typically higher due to the recognition of percentage rental income.
Below are the same store EBITDA results on a GAAP and cash basis for each of our segments for the three months ended September 30, 2011, compared to the three months ended June 30, 2011.
Add-back: non-property level overhead expenses
included above
(5,447)
(2,378)
(4,445)
154,875
97,501
20,537
Less: Adjustments for straight-line rents, amortization of
below-market leases, net, and other non-cash adjustments
(10,862)
1,468
(8,898)
144,013
116,080
88,603
21,522
EBITDA for the three months ended June 30, 2011(1)
157,016
111,517
96,507
23,998
4,568
6,462
7,291
6,776
(6,302)
(2,348)
(7,149)
(4,515)
ended June 30, 2011
155,282
115,631
96,649
26,259
(12,286)
1,095
(6,355)
722
142,996
116,726
90,294
26,981
three months ended June 30, 2011
(407)
(1,019)
852
(5,722)
Increase (decrease) in Cash basis same store EBITDA for
1,017
(646)
(1,691)
(5,459)
% increase (decrease) in Cash basis same store EBITDA
Below is the reconciliation of net income to EBITDA for the three months ended June 30, 2011.
Net income attributable to Vornado for the three months
72,002
38,511
43,639
2,265
36,953
34,093
24,468
9,595
47,621
38,306
28,400
11,227
607
EBITDA for the three months ended June 30, 2011
65
LIQUIDITY AND CAPITAL RESOURCES
We anticipate that cash flow from continuing operations over the next twelve months will be adequate to fund our business operations, cash distributions to unitholders of the Operating Partnership, cash dividends to shareholders, debt amortization and recurring capital expenditures. Capital requirements for development expenditures and acquisitions (excluding Fund acquisitions) may require funding from borrowings and/or equity offerings. In addition, the Fund has aggregate unfunded equity commitments of $543,900,000 for acquisitions, including $135,969,000 from us. We may from time to time purchase or retire outstanding debt securities. Such purchases, if any, will depend on prevailing market conditions, liquidity requirements and other factors. The amounts involved in connection with these transactions could be material to our consolidated financial statements.
Property rental income is our primary source of cash flow and is dependent upon the occupancy and rental rates of our properties. Other sources of liquidity to fund cash requirements include proceeds from debt financings, including mortgage loans, senior unsecured borrowings, and our revolving credit facilities; proceeds from the issuance of common and preferred equity; and asset sales. Our cash requirements include property operating expenses, capital improvements, tenant improvements, leasing commissions, dividends to shareholders, distributions to unitholders of the Operating Partnership, as well as acquisition and development costs.
Cash Flows for the Nine Months Ended September 30, 2011
Our cash and cash equivalents were $585,183,000 at September 30, 2011, a $105,606,000 decrease over the balance at December 31, 2010. This decrease was primarily due to cash flows from financing activities, partially offset by cash flows from operating activities, as discussed below.
Our consolidated outstanding debt was $10,406,550,000 at September 30, 2011, a $482,892,000 decrease over the balance at December 31, 2010. As of September 30, 2011 and December 31, 2010, $300,000,000 and $874,000,000, respectively, was outstanding under our revolving credit facilities. During the remainder of 2011 and 2012 $624,000,000 and $1,593,000,000, respectively, of our outstanding debt matures; we may refinance this maturing debt as it comes due or choose to repay it using a portion of our $3,130,183,000 of available capacity (comprised of $585,183,000 of cash and cash equivalents and $2,545,000,000 of availability under our revolving credit facilities).
Cash flows provided by operating activities of $566,671,000 was comprised of (i) net income of $643,013,000 and (ii) distributions of income from partially owned entities of $75,612,000, partially offset by (iii) $8,352,000 of non-cash adjustments, which include depreciation and amortization expense, the effect of straight-lining of rental income and equity in net income of partially owned entities, and (iv) the net change in operating assets and liabilities of $143,602,000, including $97,785,000 related to Real Estate Fund investments.
Net cash used in investing activities of $1,675,000 was comprised of (i) $440,865,000 of investments in partially owned entities, (ii) $109,963,000 of additions to real estate, (iii) $52,816,000 of development costs and construction in progress, (iv) $44,215,000 of investments in mezzanine loans receivable and other, and (v) $33,850,000 for the funding of collateral for the J.C. Penney derivative, partially offset by (vi) $274,283,000 of capital distributions from partially owned entities, (vii) $135,762,000 of proceeds from sales of real estate and related investments, (viii) changes in restricted cash of $121,463,000, (ix) $100,525,000 of proceeds from sales and repayments of mezzanine loans, (x) $28,700,000 from the return of derivative collateral, and (xi) $19,301,000 of proceeds from sales of marketable securities
Net cash used in financing activities of $670,602,000 was comprised of (i) $2,666,610,000 for the repayments of borrowings, (ii) $381,382,000 of dividends paid on common shares, (iii) $77,330,000 of distributions to noncontrolling interests, (iv) $43,675,000 of dividends paid on preferred shares, (v) $28,614,000 of debt issuance and other costs, (vi) $28,000,000 for the purchase of outstanding preferred units and shares, and (vii) $747,000 for the repurchase of shares related to stock compensation agreements and related tax holdings, partially offset by (viii) $2,184,167,000 of proceeds from borrowings, (ix) $239,037,000 of proceeds from the issuance of Series J preferred shares, (x) $109,605,000 of contributions from noncontrolling interests, and (xi) $22,947,000 of proceeds received from exercise of employee share options.
66
LIQUIDITY AND CAPITAL RESOURCES – continued
Cash Flows for the Nine Months Ended September 30, 2010
Our cash and cash equivalents were $846,254,000 at September 30, 2010, a $310,775,000 increase over the balance at December 31, 2009. This increase resulted from $594,721,000 of net cash provided by operating activities and $51,097,000 of net cash provided by investing activities, partially offset by $335,043,000 of net cash used in financing activities.
Cash flows provided by operating activities of $594,721,000 was comprised of (i) net income of $425,887,000, (ii) $213,747,000 of non-cash adjustments, including depreciation and amortization expense, the effect of straight-lining of rental income and equity in net income of partially owned entities and (iii) distributions of income from partially owned entities of $36,829,000, partially offset by (iv) the net change in operating assets and liabilities of $81,742,000, of which $62,500,000 related to Real Estate Fund investments.
Net cash provided by investing activities of $51,097,000 was comprised of (i) proceeds from sales of marketable securities of $126,015,000, (ii) restricted cash of $125,204,000, (iii) proceeds from sales and repayments of mezzanine loans receivable of $109,594,000, (iv) proceeds from the sale of real estate and related investments of $48,998,000, (v) distributions of capital from partially owned entities of $45,613,000 and (vi) proceeds from maturing short-term investments of $40,000,000, partially offset by (vii) investments in partially owned entities of $159,053,000, (viii) additions to real estate of $98,789,000, (ix) development and redevelopment expenditures of $86,871,000, (x) investments in mezzanine loans receivable and other of $75,697,000, (xi) purchases of marketable securities of $13,917,000 and (xii) acquisitions of real estate and other of $10,000,000.
Net cash used in financing activities of $335,043,000 was comprised of (i) repayments of borrowings, including the purchase of our senior unsecured notes, of $1,462,652,000, (ii) dividends paid on common shares of $354,937,000, (iii) purchases of outstanding preferred units and shares of $48,600,000, (iv) dividends paid on preferred shares of $42,100,000, (v) distributions to noncontrolling interests of $41,055,000, (vi) repurchase of shares related to stock compensation arrangements and related tax withholdings of $25,659,000 and (vii) debt issuance costs of $14,942,000, partially offset by (viii) proceeds from borrowings of $1,603,359,000, (ix) contributions from noncontrolling interests of $39,351,000 and (x) $12,192,000 of proceeds received from the exercise of employee share options.
67
LIQUIDITY AND CAPITAL RESOURCES - continued
Capital Expenditures
Capital expenditures consist of expenditures to maintain assets, tenant improvement allowances and leasing commissions. Recurring capital improvements include expenditures to maintain a property’s competitive position within the market and tenant improvements and leasing commissions necessary to re-lease expiring leases or renew or extend existing leases. Non-recurring capital improvements include expenditures to lease space that has been vacant for more than nine months and expenditures completed in the year of acquisition and the following two years that were planned at the time of acquisition, as well as tenant improvements and leasing commissions for space that was vacant at the time of acquisition of a property. Below is a summary of capital expenditures, leasing commissions and a reconciliation of total expenditures on an accrual basis to the cash expended in the nine months ended September 30, 2011.
Expenditures to maintain assets
31,347
11,361
8,760
5,162
3,495
2,569
Tenant improvements
82,537
48,105
18,671
4,734
10,705
322
Leasing commissions
23,762
16,567
1,315
1,575
123
Non-recurring capital expenditures
17,044
12,220
1,967
2,857
Total capital expenditures and leasing
commissions (accrual basis)
154,690
88,253
31,613
13,178
15,775
5,871
Adjustments to reconcile to cash basis:
Expenditures in the current year
applicable to prior periods
69,717
26,814
11,363
14,018
11,993
5,529
Expenditures to be made in future
periods for the current period
(97,374)
(57,532)
(17,794)
(7,693)
(9,711)
(4,644)
commissions (cash basis)
127,033
57,535
25,182
19,503
18,057
6,756
Tenant improvements and leasing commissions:
Per square foot per annum
3.59
3.53
8.6%
Development and Redevelopment Expenditures
Development and redevelopment expenditures consist of all hard and soft costs associated with the development or redevelopment of a property, including tenant improvements, leasing commissions, capitalized interest and operating costs until the property is substantially completed and ready for its intended use. Below is a summary of development and redevelopment expenditures incurred in the nine months ended September 30, 2011.
17,145
3,443
510 Fifth Avenue
2,367
West End 25
1,897
North Bergen, New Jersey
1,746
Crystal City Hotel
1,556
Crystal Square
Crystal Plaza 5
1,346
Poughkeepsie, New York
936
20,878
3,011
7,249
5,102
412
5,104
52,816
13,550
30,739
As of September 30, 2011, the estimated costs to complete the above projects are approximately $23,927,000. We have also committed to fund the estimated project cost of approximately $400,000,000 to $425,000,000 to develop our 220 Central Park South property into a new residential tower. In addition, during 2012, we plan to redevelop 1851 South Bell Street, a 348,000 square foot office building in Crystal City, into a new 700,000 square foot office building (readdressed as 1900 Crystal Drive). The estimated cost of this project is approximately $300,000,000, or $425 per square foot. There can be no assurance that these projects will commence, or, if commenced, be completed on schedule or within budget.
68
Below is a summary of capital expenditures and leasing commissions and a reconciliation of total expenditures on an accrual basis to the cash expended in the nine months ended September 30, 2010.
32,861
14,233
7,263
3,032
4,360
3,973
98,465
41,678
11,146
11,701
28,905
5,035
23,884
12,560
4,352
1,702
3,982
1,288
5,514
915
4,599
160,724
68,471
22,761
17,350
37,247
14,895
55,822
29,758
12,781
5,793
4,085
3,405
(97,385)
(38,665)
(13,045)
(13,027)
(27,159)
(5,489)
119,161
59,564
22,497
10,116
14,173
12,811
3.69
6.78
2.58
1.40
4.43
14.0%
6.7%
5.8%
12.9%
Below is a summary of development and redevelopment expenditures incurred in the nine months ended September 30, 2010.
12,588
Residential condominiums
11,806
9,011
1540 Broadway
7,493
6,991
220 20th Street
3,946
Beverly Connection
3,452
2,396
29,188
4,702
8,115
10,515
1,180
4,676
86,871
21,072
43,435
16,482
70
Other Commitments and Contingencies - continued
On January 8, 2003, Stop & Shop filed a complaint with the United States District Court for the District of New Jersey (“USDC-NJ”) claiming that we had no right to reallocate and therefore continue to collect the $5,000,000 of annual rent from Stop & Shop pursuant to the Master Agreement and Guaranty, because of the expiration of the East Brunswick, Jersey City, Middletown, Union and Woodbridge leases to which the $5,000,000 of additional rent was previously allocated. Stop & Shop asserted that a prior order of the Bankruptcy Court for the Southern District of New York dated February 6, 2001, as modified on appeal to the District Court for the Southern District of New York on February 13, 2001, froze our right to reallocate which effectively terminated our right to collect the additional rent from Stop & Shop. On March 3, 2003, after we moved to dismiss for lack of jurisdiction, Stop & Shop voluntarily withdrew its complaint. On March 26, 2003, Stop & Shop filed a new complaint in New York State Supreme Court, asserting substantially the same claims as in its USDC-NJ complaint. We removed the action to the United States District Court for the Southern District of New York. In January 2005, that court remanded the action to the New York State Supreme Court. On February 14, 2005, we served an answer in which we asserted a counterclaim seeking a judgment for all the unpaid additional rent accruing through the date of the judgment and a declaration that Stop & Shop will continue to be liable for the additional rent as long as any of the leases subject to the Master Agreement and Guaranty remain in effect. On May 17, 2005, we filed a motion for summary judgment. On July 15, 2005, Stop & Shop opposed our motion and filed a cross-motion for summary judgment. On December 13, 2005, the Court issued its decision denying the motions for summary judgment. Both parties appealed the Court’s decision and on December 14, 2006, the Appellate Court division issued a decision affirming the Court’s decision. On January 16, 2007, we filed a motion for the reconsideration of one aspect of the Appellate Court’s decision which was denied on March 13, 2007. A trial was held in November 2010 and closing arguments were held in March 2011. As of September 30, 2011, we have a $40,733,000 receivable from Stop and Shop, of which $23,105,000 has been reserved. We believe, after consultation with counsel, that the maximum reasonably possible loss is up to the total amount of the receivable of $40,733,000.
FUNDS FROM OPERATIONS (“FFO”)
FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gain from sales of depreciated real estate assets, depreciation and amortization expense from real estate assets, extraordinary items and other specified non-cash items, including the pro-rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flows as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies. The calculations of both the numerator and denominator used in the computation of income per share are disclosed in footnote 17 – Income per Share, in the notes to our consolidated financial statements on page 28 of this Quarterly Report on Form 10-Q.
FFO for the Three and Nine Months Ended September 30, 2011 and 2010
FFO attributable to common shareholders plus assumed conversions was $195,125,000, or $1.05 per diluted share for the three months ended September 30, 2011, compared to $248,964,000, or $1.31 per diluted share, for the prior year’s quarter. FFO attributable to common shareholders plus assumed conversions was $951,054,000, or $4.96 per diluted share, for the nine months ended September 30, 2011, compared to $814,030,000, or $4.29 per diluted share for the prior year’s nine months. Details of certain items that affect comparability are discussed in the financial results summary of our “Overview.”
For The Three Months
For The Nine Months
Reconciliation of our net income to FFO:
Depreciation and amortization of real property
128,811
126,987
377,458
381,782
Proportionate share of adjustments to equity in net income of Toys,
to arrive at FFO:
17,947
18,132
52,844
53,296
(491)
Income tax effect of above adjustments
(6,280)
(6,347)
(18,320)
(18,654)
Proportionate share of adjustments to equity in net income of partially
owned entities, excluding Toys, to arrive at FFO:
27,541
19,481
73,743
58,555
(3,591)
(307)
(10,468)
(11,011)
(27,224)
(33,485)
FFO
207,722
251,494
974,033
832,097
FFO attributable to common shareholders
195,095
242,434
931,290
794,504
Interest on 3.88% exchangeable senior debentures
6,490
19,405
FFO attributable to common shareholders plus assumed conversions
195,125
248,964
951,054
814,030
Reconciliation of Weighted Average Shares
Weighted average common shares outstanding
Effect of dilutive securities:
3.88% exchangeable senior debentures
Denominator for FFO per diluted share
186,119
189,974
191,775
189,562
per diluted share
1.05
1.31
4.96
4.29
72
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We have exposure to fluctuations in market interest rates. Market interest rates are sensitive to many factors that are beyond our control. Our exposure to a change in interest rates on our consolidated and non-consolidated debt (all of which arises out of non-trading activity) is as follows:
Weighted
Effect of 1%
Average
Change In
Consolidated debt:
Balance
Interest Rate
Base Rates
Variable rate
2,060,734
1.98%
20,607
2,903,510
1.76%
Fixed rate
8,345,816
5.56%
7,985,932
5.66%
4.85%
4.62%
Pro-rata share of debt of non-consolidated
entities (non-recourse):
Variable rate – excluding Toys
284,305
2.68%
2,843
345,308
1.39%
Variable rate – Toys
512,084
5.48%
5,121
501,623
4.95%
Fixed rate (including $1,275,787,000 and
$1,421,820 of Toys debt in 2011 and 2010)
2,744,062
6.50%
2,428,986
6.86%
3,540,451
6.04%
7,964
3,275,917
5.99%
Noncontrolling interests’ share of above
(1,857)
Total change in annual net income
26,714
Per share-diluted
0.14
Excludes $36.3 billion for our 26.2% pro rata shares of liabilities related to consolidated CMBS and CDO trusts which are non-recourse to LNR and its equity holders, including us.
We may utilize various financial instruments to mitigate the impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies, depending on our analysis of the interest rate environment and the costs and risks of such strategies. As of September 30, 2011, variable rate debt with an aggregate principal amount of $557,120,000 and a weighted average interest rate of 2.81% was subject to LIBOR caps. These caps are based on a notional amount of $558,479,000 and cap LIBOR at a weighted average rate of 5.68%. In addition, we have one interest rate swap on a $425,000,000 loan that swapped the rate from LIBOR plus 2.00% (2.24% at September 30, 2011) to a fixed rate of 5.13% for the remaining seven-year term of the loan.
As of September 30, 2011, we have investments in mezzanine loans with an aggregate carrying amount of $76,362,000 that are based on variable interest rates which partially mitigate our exposure to a change in interest rates on our variable rate debt.
Fair Value of Debt
The estimated fair value of our consolidated debt is calculated based on current market prices and discounted cash flows at the rate at which similar loans could be made currently to borrowers with similar credit ratings, for the remaining term of such debt. As of September 30, 2011, the estimated fair value of our consolidated debt was $10,592,911,000.
Derivative Instruments
We have, and may in the future enter into, derivative positions that do not qualify for hedge accounting treatment, including our economic interest in J.C. Penney common shares. Because these derivatives do not qualify for hedge accounting treatment, the gains or losses resulting from their mark-to-market at the end of each reporting period are recognized as an increase or decrease in “interest and other investment income, net” on our consolidated statements of income. In addition, we are, and may in the future be, subject to additional expense based on the notional amount of the derivative positions and a specified spread over LIBOR. Because the market value of these instruments can vary significantly between periods, we may experience significant fluctuations in the amount of our investment income or expense in any given period. During the nine months ended September 30, 2011 we recognized a $27,136,000 loss from derivative instruments.
Item 4. Controls and Procedures
Disclosure Controls and Procedures: The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a‑15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2011, such disclosure controls and procedures were effective.
Internal Control Over Financial Reporting: There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934, as amended) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 1. Legal Proceedings
Item 1A. Risk Factors
There were no material changes to the Risk Factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2010.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
In the third quarter of 2011, we issued 12,085 common shares upon the redemption of Class A units of the Operating Partnership held by persons who received units, in private placements in earlier periods, in exchange for their interests in limited partnerships that owned real estate. The common shares were issued without registration under the Securities Act of 1933 in reliance on Section 4 (2) of that Act.
Information relating to compensation plans under which our equity securities are authorized for issuance is set forth under Part III, Item 12 of the Annual Report on Form 10-K for the year ended December 31, 2010, and such information is incorporated by reference herein.
Item 3. Defaults Upon Senior Securities
None.
Item 5. Other Information
Item 6. Exhibits
Exhibits required by Item 601 of Regulation S-K are filed herewith or incorporated herein by reference and are listed in the attached Exhibit Index.
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.
(Registrant)
Date: November 3, 2011
By:
/s/ Joseph Macnow
Joseph Macnow, Executive Vice President -Finance and Administration andChief Financial Officer (duly authorized officer and principal financial and accounting officer)
EXHIBIT INDEX
Exhibit No.
3.1
Articles of Restatement of Vornado Realty Trust, as filed with the State
*
Department of Assessments and Taxation of Maryland on July 30, 2007 - Incorporated
by reference to Exhibit 3.75 to Vornado Realty Trust’s Quarterly Report on Form 10-Q
for the quarter ended June 30, 2007 (File No. 001-11954), filed on July 31, 2007
3.2
Amended and Restated Bylaws of Vornado Realty Trust, as amended on March 2, 2000 -
Incorporated by reference to Exhibit 3.12 to Vornado Realty Trust’s Annual Report on
Form 10-K for the year ended December 31, 1999 (File No. 001-11954), filed on
March 9, 2000
3.3
Articles Supplementary, 6.875% Series J Cumulative Redeemable Preferred Shares of
Beneficial Interest, liquidation preference $25.00 per share, no par value - Incorporated by
reference to Exhibit 3.2 of Vornado Realty Trust's Registration Statement on Form 8-A
(File No. 001-11954), filed on April 20, 2011
3.4
Second Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P.,
dated as of October 20, 1997 (the “Partnership Agreement”) – Incorporated by reference
to Exhibit 3.26 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2003 (File No. 001-11954), filed on May 8, 2003
3.5
Amendment to the Partnership Agreement, dated as of December 16, 1997 – Incorporated by
reference to Exhibit 3.27 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2003 (File No. 001-11954), filed on May 8, 2003
3.6
Second Amendment to the Partnership Agreement, dated as of April 1, 1998 – Incorporated
by reference to Exhibit 3.5 to Vornado Realty Trust’s Registration Statement on Form S-3
(File No. 333-50095), filed on April 14, 1998
3.7
Third Amendment to the Partnership Agreement, dated as of November 12, 1998 -
Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on
Form 8-K (File No. 001-11954), filed on November 30, 1998
3.8
Fourth Amendment to the Partnership Agreement, dated as of November 30, 1998 -
Incorporated by reference to Exhibit 3.1 to Vornado Realty Trust’s Current Report on
Form 8-K (File No. 001-11954), filed on February 9, 1999
3.9
Fifth Amendment to the Partnership Agreement, dated as of March 3, 1999 - Incorporated by
reference to Exhibit 3.1 to Vornado Realty Trust’s Current Report on Form 8-K
(File No. 001-11954), filed on March 17, 1999
3.10
Sixth Amendment to the Partnership Agreement, dated as of March 17, 1999 - Incorporated
by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on Form 8-K
(File No. 001-11954), filed on July 7, 1999
3.11
Seventh Amendment to the Partnership Agreement, dated as of May 20, 1999 - Incorporated
by reference to Exhibit 3.3 to Vornado Realty Trust’s Current Report on Form 8-K
3.12
Eighth Amendment to the Partnership Agreement, dated as of May 27, 1999 - Incorporated
by reference to Exhibit 3.4 to Vornado Realty Trust’s Current Report on Form 8-K
3.13
Ninth Amendment to the Partnership Agreement, dated as of September 3, 1999 -
Incorporated by reference to Exhibit 3.3 to Vornado Realty Trust’s Current Report on
Form 8-K (File No. 001-11954), filed on October 25, 1999
_______________________
Incorporated by reference.
3.14
Tenth Amendment to the Partnership Agreement, dated as of September 3, 1999 -
Incorporated by reference to exhibit 3,4 to Vornado Realty Trust's Current Report on
3.15
Eleventh Amendment to the Partnership Agreement, dated as of November 24, 1999 -
Form 8-K (File No. 001-11954), filed on December 23, 1999
3.16
Twelfth Amendment to the Partnership Agreement, dated as of May 1, 2000 - Incorporated
(File No. 001-11954), filed on May 19, 2000
3.17
Thirteenth Amendment to the Partnership Agreement, dated as of May 25, 2000 -
Form 8-K (File No. 001-11954), filed on June 16, 2000
3.18
Fourteenth Amendment to the Partnership Agreement, dated as of December 8, 2000 -
Form 8-K (File No. 001-11954), filed on December 28, 2000
3.19
Fifteenth Amendment to the Partnership Agreement, dated as of December 15, 2000 -
Incorporated by reference to Exhibit 4.35 to Vornado Realty Trust’s Registration
Statement on Form S-8 (File No. 333-68462), filed on August 27, 2001
3.20
Sixteenth Amendment to the Partnership Agreement, dated as of July 25, 2001 - Incorporated
(File No. 001 11954), filed on October 12, 2001
3.21
Seventeenth Amendment to the Partnership Agreement, dated as of September 21, 2001 -
Incorporated by reference to Exhibit 3.4 to Vornado Realty Trust’s Current Report on
Form 8 K (File No. 001-11954), filed on October 12, 2001
3.22
Eighteenth Amendment to the Partnership Agreement, dated as of January 1, 2002 -
Form 8-K/A (File No. 001-11954), filed on March 18, 2002
3.23
Nineteenth Amendment to the Partnership Agreement, dated as of July 1, 2002 - Incorporated
by reference to Exhibit 3.47 to Vornado Realty Trust’s Quarterly Report on Form 10-Q
for the quarter ended June 30, 2002 (File No. 001-11954), filed on August 7, 2002
3.24
Twentieth Amendment to the Partnership Agreement, dated April 9, 2003 - Incorporated by
reference to Exhibit 3.46 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for
3.25
Twenty-First Amendment to the Partnership Agreement, dated as of July 31, 2003 -
Incorporated by reference to Exhibit 3.47 to Vornado Realty Trust’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2003 (File No. 001-11954), filed on
November 7, 2003
3.26
Twenty-Second Amendment to the Partnership Agreement, dated as of November 17, 2003 –
Incorporated by reference to Exhibit 3.49 to Vornado Realty Trust’s Annual Report on
Form 10-K for the year ended December 31, 2003 (File No. 001-11954), filed on
March 3, 2004
3.27
Twenty-Third Amendment to the Partnership Agreement, dated May 27, 2004 – Incorporated
by reference to Exhibit 99.2 to Vornado Realty Trust’s Current Report on Form 8-K
(File No. 001-11954), filed on June 14, 2004
79
3.28
Twenty-Fourth Amendment to the Partnership Agreement, dated August 17, 2004 –
Incorporated by reference to Exhibit 3.57 to Vornado Realty Trust and Vornado Realty
L.P.’s Registration Statement on Form S-3 (File No. 333-122306), filed on
January 26, 2005
3.29
Twenty-Fifth Amendment to the Partnership Agreement, dated November 17, 2004 –
Incorporated by reference to Exhibit 3.58 to Vornado Realty Trust and Vornado Realty
3.30
Twenty-Sixth Amendment to the Partnership Agreement, dated December 17, 2004 –
Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on
Form 8-K (File No. 000-22685), filed on December 21, 2004
3.31
Twenty-Seventh Amendment to the Partnership Agreement, dated December 20, 2004 –
Incorporated by reference to Exhibit 3.2 to Vornado Realty L.P.’s Current Report on
3.32
Twenty-Eighth Amendment to the Partnership Agreement, dated December 30, 2004 -
Form 8-K (File No. 000-22685), filed on January 4, 2005
3.33
Twenty-Ninth Amendment to the Partnership Agreement, dated June 17, 2005 - Incorporated
by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on Form 8-K
(File No. 000-22685), filed on June 21, 2005
3.34
Thirtieth Amendment to the Partnership Agreement, dated August 31, 2005 - Incorporated by
reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on Form 8-K
(File No. 000-22685), filed on September 1, 2005
3.35
Thirty-First Amendment to the Partnership Agreement, dated September 9, 2005 -
Form 8-K (File No. 000-22685), filed on September 14, 2005
3.36
Thirty-Second Amendment and Restated Agreement of Limited Partnership, dated as of
December 19, 2005 – Incorporated by reference to Exhibit 3.59 to Vornado Realty L.P.’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2006
(File No. 000-22685), filed on May 8, 2006
3.37
Thirty-Third Amendment to Second Amended and Restated Agreement of Limited
Partnership, dated as of April 25, 2006 – Incorporated by reference to Exhibit 10.2 to
Vornado Realty Trust’s Form 8-K (File No. 001-11954), filed on May 1, 2006
3.38
Thirty-Fourth Amendment to Second Amended and Restated Agreement of Limited
Partnership, dated as of May 2, 2006 – Incorporated by reference to Exhibit 3.1 to
Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on
May 3, 2006
3.39
Thirty-Fifth Amendment to Second Amended and Restated Agreement of Limited
Partnership, dated as of August 17, 2006 – Incorporated by reference to Exhibit 3.1 to
Vornado Realty L.P.’s Form 8-K (File No. 000-22685), filed on August 23, 2006
3.40
Thirty-Sixth Amendment to Second Amended and Restated Agreement of Limited
Partnership, dated as of October 2, 2006 – Incorporated by reference to Exhibit 3.1 to
Vornado Realty L.P.’s Form 8-K (File No. 000-22685), filed on January 22, 2007
80
3.41
Thirty-Seventh Amendment to Second Amended and Restated Agreement of Limited
Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.1 to
June 27, 2007
3.42
Thirty-Eighth Amendment to Second Amended and Restated Agreement of Limited
Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.2 to
3.43
Thirty-Ninth Amendment to Second Amended and Restated Agreement of Limited
Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.3 to
3.44
Fortieth Amendment to Second Amended and Restated Agreement of Limited
Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.4 to
3.45
Forty-First Amendment to Second Amended and Restated Agreement of Limited
Partnership, dated as of March 31, 2008 – Incorporated by reference to Exhibit 3.44 to
Vornado Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31,
2008 (file No. 001-11954), filed on May 6, 2008
3.46
Forty-Second Amendment to Second Amended and Restated Agreement of Limited Partnership,
dated as of December 17, 2010 – Incorporated by reference to Exhibit 99.1 to Vornado
Realty L.P.'s Current Report on Form 8-K (File No. 000-22685), filed on December 21, 2010
3.47
Forty-Third Amendment to Second Amended and Restated Agreement of Limited Partnership,
dated as of April 20, 2011 – Incorporated by reference to Exhibit 3.1 to Vornado
Realty L.P.'s Current Report on Form 8-K (File No. 000-22685), filed on April 21, 2011
4.1
Indenture, dated as of November 25, 2003, between Vornado Realty L.P. and The Bank of
New York, as Trustee - Incorporated by reference to Exhibit 4.10 to Vornado Realty
Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005
(File No. 001-11954), filed on April 28, 2005
4.2
Indenture, dated as of November 20, 2006, among Vornado Realty Trust, as Issuer, Vornado
Realty L.P., as Guarantor and The Bank of New York, as Trustee – Incorporated by
reference to Exhibit 4.1 to Vornado Realty Trust’s Current Report on Form 8-K
(File No. 001-11954), filed on November 27, 2006
Certain instruments defining the rights of holders of long-term debt securities of Vornado
Realty Trust and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation
S-K. Vornado Realty Trust hereby undertakes to furnish to the Securities and Exchange
Commission, upon request, copies of any such instruments.
Master Agreement and Guaranty, between Vornado, Inc. and Bradlees New Jersey, Inc. dated
as of May 1, 1992 - Incorporated by reference to Vornado, Inc.’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 1992 (File No. 001-11954), filed May 8, 1992
10.2
Registration Rights Agreement between Vornado, Inc. and Steven Roth, dated December 29,
1992 - Incorporated by reference to Vornado Realty Trust’s Annual Report on Form 10-K
for the year ended December 31, 1992 (File No. 001-11954), filed February 16, 1993
______________________
10.3
**
Stock Pledge Agreement between Vornado, Inc. and Steven Roth dated December 29, 1992
- Incorporated by reference to Vornado, Inc.’s Annual Report on Form 10-K for the year
ended December 31, 1992 (File No. 001-11954), filed February 16, 1993
10.4
Management Agreement between Interstate Properties and Vornado, Inc. dated July 13, 1992
10.5
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 to Vornado Realty Trust’s Current Report on Form 8-K
(File No. 001-11954), filed on April 30, 1997
10.6
Promissory Note from Steven Roth to Vornado Realty Trust, dated December 23, 2005 –
Incorporated by reference to Exhibit 10.15 to Vornado Realty Trust Annual Report on
Form 10-K for the year ended December 31, 2005 (File No. 001-11954), filed on
February 28, 2006
10.7
Letter agreement, dated November 16, 1999, between Steven Roth and Vornado Realty Trust
- Incorporated by reference to Exhibit 10.51 to Vornado Realty Trust’s Annual Report on
10.8
Agreement and Plan of Merger, dated as of October 18, 2001, by and among Vornado Realty
Trust, Vornado Merger Sub L.P., Charles E. Smith Commercial Realty L.P., Charles E.
Smith Commercial Realty L.L.C., Robert H. Smith, individually, Robert P. Kogod,
individually, and Charles E. Smith Management, Inc. - Incorporated by reference to
Exhibit 2.1 to Vornado Realty Trust’s Current Report on Form 8-K (File No. 001-11954),
filed on January 16, 2002
10.9
Tax Reporting and Protection Agreement, dated December 31, 2001, by and among Vornado,
Vornado Realty L.P., Charles E. Smith Commercial Realty L.P. and Charles E. Smith
Commercial Realty L.L.C. - Incorporated by reference to Exhibit 10.3 to Vornado Realty
Trust’s Current Report on Form 8-K/A (File No. 1-11954), filed on March 18, 2002
10.10
Employment Agreement between Vornado Realty Trust and Michael D. Fascitelli, dated
March 8, 2002 - Incorporated by reference to Exhibit 10.7 to Vornado Realty Trust’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2002
(File No. 001-11954), filed on May 1, 2002
10.11
First Amendment, dated October 31, 2002, to the Employment Agreement between Vornado
Realty Trust and Michael D. Fascitelli, dated March 8, 2002 - Incorporated by reference
to Exhibit 99.6 to the Schedule 13D filed by Michael D. Fascitelli on November 8, 2002
10.12
Amendment to Real Estate Retention Agreement, dated as of July 3, 2002, by and between
Alexander’s, Inc. and Vornado Realty L.P. - Incorporated by reference to Exhibit
10(i)(E)(3) to Alexander’s Inc.’s Quarterly Report for the quarter ended June 30, 2002
(File No. 001-06064), filed on August 7, 2002
10.13
59th Street Real Estate Retention Agreement, dated as of July 3, 2002, by and between
Vornado Realty L.P., 731 Residential LLC and 731 Commercial LLC - Incorporated by
reference to Exhibit 10(i)(E)(4) to Alexander’s Inc.’s Quarterly Report for the quarter
ended June 30, 2002 (File No. 001-06064), filed on August 7, 2002
Management contract or compensatory agreement.
10.14
Amended and Restated Management and Development Agreement, dated as of July 3, 2002,
by and between Alexander's, Inc., the subsidiaries party thereto and Vornado
Management Corp. - Incorporated by reference to Exhibit 10(i)(F)(1) to Alexander's
Inc.'s Quarterly Report for the quarter ended June 30, 2002 (File No. 001-06064),
filed on August 7, 2002
10.15
Amendment dated May 29, 2002, to the Stock Pledge Agreement between Vornado Realty
Trust and Steven Roth dated December 29, 1992 - Incorporated by reference to Exhibit 5
of Interstate Properties’ Schedule 13D/A dated May 29, 2002 (File No. 005-44144), filed
on May 30, 2002
10.16
Vornado Realty Trust’s 2002 Omnibus Share Plan - Incorporated by reference to Exhibit 4.2
to Vornado Realty Trust’s Registration Statement on Form S-8 (File No. 333-102216)
filed December 26, 2002
10.17
Form of Stock Option Agreement between the Company and certain employees –
Incorporated by reference to Exhibit 10.77 to Vornado Realty Trust’s
Annual Report on Form 10-K for the year ended December 31, 2004
(File No. 001-11954), filed on February 25, 2005
10.18
Form of Restricted Stock Agreement between the Company and certain employees –
Incorporated by reference to Exhibit 10.78 to Vornado Realty Trust’s Annual Report on
Form 10-K for the year ended December 31, 2004 (File No. 001-11954), filed on
February 25, 2005
10.19
Amendment, dated March 17, 2006, to the Vornado Realty Trust Omnibus Share Plan –
Incorporated by reference to Exhibit 10.50 to Vornado Realty Trust’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2006 (File No. 001-11954), filed on
May 2, 2006
10.20
Form of Vornado Realty Trust 2006 Out-Performance Plan Award Agreement, dated as of
April 25, 2006 – Incorporated by reference to Exhibit 10.1 to Vornado Realty Trust’s
Form 8-K (File No. 001-11954), filed on May 1, 2006
10.21
Form of Vornado Realty Trust 2002 Restricted LTIP Unit Agreement – Incorporated by
reference to Vornado Realty Trust’s Form 8-K (Filed No. 001-11954), filed on
May 1, 2006
10.22
Amendment No.2, dated May 18, 2006, to the Vornado Realty Trust Omnibus Share Plan
– Incorporated by reference to Exhibit 10.53 to Vornado Realty Trust’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2006 (File No. 001-11954), filed
on August 1, 2006
10.23
Amended and Restated Employment Agreement between Vornado Realty Trust and Joseph
Macnow dated July 27, 2006 – Incorporated by reference to Exhibit 10.54 to Vornado
Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006
(File No. 001-11954), filed on August 1, 2006
10.24
Guaranty, made as of June 28, 2006, by Vornado Realty Trust, for the benefit of JP Morgan
Chase Bank - Incorporated by reference to Exhibit 10.53 to Vornado Realty Trust's
Quarterly Report on Form 10-Q for the quarter ended September 30, 2006
(File No. 001-11954), filed on October 31, 2006
83
10.25
Amendment, dated October 26, 2006, to the Vornado Realty Trust Omnibus Share Plan –
Incorporated by reference to Exhibit 10.54 to Vornado Realty Trust’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2006 (File No. 001-11954), filed on
October 31, 2006
10.26
Amendment to Real Estate Retention Agreement, dated January 1, 2007, by and between
Vornado Realty L.P. and Alexander’s Inc. – Incorporated by reference to Exhibit 10.55
to Vornado Realty Trust’s Annual Report on Form 10-K for the year ended
December 31, 2006 (File No. 001-11954), filed on February 27, 2007
10.27
Amendment to 59th Street Real Estate Retention Agreement, dated January 1, 2007, by and
among Vornado Realty L.P., 731 Retail One LLC, 731 Restaurant LLC, 731 Office One
LLC and 731 Office Two LLC. – Incorporated by reference to Exhibit 10.56 to
Vornado Realty Trust’s Annual Report on Form 10-K for the year ended
10.28
Employment Agreement between Vornado Realty Trust and Mitchell Schear, as of April 19,
2007 – Incorporated by reference to Exhibit 10.46 to Vornado Realty Trust’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2007 (File No. 001-11954),
filed on May 1, 2007
10.29
Revolving Credit Agreement, dated as of September 28, 2007, among Vornado Realty L.P. as
borrower, Vornado Realty Trust as General Partner, the Banks signatory thereto, each as a
Bank, JPMorgan Chase Bank, N.A. as Administrative Agent, Bank of America, N.A. as
Syndication Agent, Citicorp North America, Inc., Deutsche Bank Trust Company
Americas, and UBS Loan Finance LLC as Documentation Agents, and J.P. Morgan
Securities Inc. and Bank of America Securities LLC as Lead Arrangers and Bookrunners.
- Incorporated by reference to Exhibit 10.1 to Vornado Realty Trust’s Current Report
on Form 8-K (File No. 001-11954), filed on October 4, 2007
10.30
Second Amendment to Revolving Credit Agreement, dated as of September 28, 2007, by and
among Vornado Realty L.P. as borrower, Vornado Realty Trust as General Partner, the
Banks listed on the signature pages thereof, and J.P. Morgan Chase Bank N.A., as
Administrative Agent for the Banks - Incorporated by reference to Exhibit 10.2 to
Vornado Realty Trust’s Current Report on Form 8-K (File No. 001-11954),
filed on October 4, 2007
10.31
Form of Vornado Realty Trust 2002 Omnibus Share Plan Non-Employee Trustee Restricted
LTIP Unit Agreement – Incorporated by reference to Exhibit 10.45 to Vornado Realty
Trust’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No.
001-11954) filed on February 26, 2008
10.32
Form of Vornado Realty Trust 2008 Out-Performance Plan Award Agreement – Incorporated
by reference to Exhibit 10.46 to Vornado Realty Trust’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2008 (File No. 001-11954) filed on May 6, 2008
10.33
Amendment to Employment Agreement between Vornado Realty Trust and Michael D.
Fascitelli, dated December 29, 2008. Incorporated by reference to Exhibit 10.47 to
Vornado Realty Trust’s Annual Report on Form 10-K for the year ended December 31,
2008 (File No. 001-11954) filed on February 24, 2009
84
10.34
Amendment to Employment Agreement between Vornado Realty Trust and Joseph Macnow,
dated December 29, 2008. Incorporated by reference to Exhibit 10.48 to Vornado Realty
Trust’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No.
001-11954) filed on February 24, 2009
10.35
Amendment to Employment Agreement between Vornado Realty Trust and David R.
Greenbaum, dated December 29, 2008. Incorporated by reference to Exhibit 10.49 to
10.36
Amendment to Indemnification Agreement between Vornado Realty Trust and David R.
Greenbaum, dated December 29, 2008. Incorporated by reference to Exhibit 10.50 to
10.37
Amendment to Employment Agreement between Vornado Realty Trust and Mitchell N.
Schear, dated December 29, 2008. Incorporated by reference to Exhibit 10.51 to Vornado
Realty Trust’s Annual Report on Form 10-K for the year ended December 31, 2008 (File
No. 001-11954) filed on February 24, 2009
10.38
Amendment to Employment Agreement between Vornado Realty Trust and Christopher G.
Kennedy, dated December 29, 2008. Incorporated by reference to Exhibit 10.53 to
10.39
Vornado Realty Trust's 2010 Omnibus Share Plan. Incorporated by reference to Exhibit 10.41 to
Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010
(File No. 001-11954) filed on August 3, 2010
10.40
Employment Agreement between Vornado Realty Trust and Michael J. Franco, dated
September 24, 2010. Incorporated by reference to Exhibit 10.42 to Vornado Realty Trust's
Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 (File No. 001-11954)
filed on November 2, 2010
10.41
Form of Vornado Realty Trust 2010 Omnibus Share Plan Stock Agreement. Incorporated by
reference to Exhibit 10.42 to Vornado Realty Trust's Annual Report on Form 10-K for the year
ended December 31, 2010 (File No. 001-11954) filed on February 23, 2011
10.42
Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted LTIP Unit Agreement
Incorporated by reference to Exhibit 10.43 to Vornado Realty Trust's Annual Report on Form
10-K for the year ended December 31, 2010 (File No. 001-11954) filed on February 23, 2011
10.43
Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted Stock Agreement
Incorporated by reference to Exhibit 10.44 to Vornado Realty Trust's Annual Report on Form
10.44
Letter Agreement between Vornado Realty Trust and Michelle Felman, dated December 21, 2010.
Incorporated by reference to Exhibit 10.45 to Vornado Realty Trust's Annual Report on Form
85
10.45
Waiver and Release between Vornado Realty Trust and Michelle Felman, dated December 21,
2010. Incorporated by reference to Exhibit 10.46 to Vornado Realty Trust's Annual Report
on Form 10-K for the year ended December 31, 2010 (File No. 001-11954) filed on
February 23, 2011
10.46
Revolving Credit Agreement dated as of June 8, 2011, by and among Vornado Realty L.P. as
borrower, Vornado Realty Trust as General Partner, the Banks listed on the signature pages
thereof, and J.P. Morgan Chase Bank N.A., as Administrative Agent for the Banks.
Incorporated by reference to Exhibit 10.46 to Vornado Realty Trust's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2011 (File No. 001-11954) filed on August 1, 2011
10.47
Letter Agreement between Vornado Realty Trust and Christopher G. Kennedy, dated
August 5, 2011
10.48
Waiver and Release between Vornado Realty Trust and Christopher G. Kennedy, dated
15.1
Letter regarding Unaudited Interim Financial Information
31.1
Rule 13a-14 (a) Certification of the Chief Executive Officer
31.2
Rule 13a-14 (a) Certification of the Chief Financial Officer
32.1
Section 1350 Certification of the Chief Executive Officer
32.2
Section 1350 Certification of the Chief Financial Officer
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
101.DEF
XBRL Taxonomy Extension Definition Linkbase
101.LAB
XBRL Taxonomy Extension Label Linkbase
101.PRE
XBRL Taxonomy Extension Presentation Linkbase