Vornado Announces Fourth Quarter 2017 Financial Results
February 12 2018 - 6:03PM
VORNADO REALTY TRUST (NYSE:VNO) filed its Form 10-K for the year
ended December 31, 2017 today and reported its financial results
below. The financial results treat as "discontinued
operations" the Company's former Washington, DC segment, which was
spun off to shareholders on July 17, 2017.
Quarter Ended December 31, 2017
Financial Results
- NET INCOME attributable to common shareholders for the quarter
ended December 31, 2017 was $27.3 million, or $0.14 per diluted
share, compared to $651.2 million, or $3.43 per diluted share, for
the prior year's quarter. Adjusting net income attributable
to common shareholders (non-GAAP) for the items listed in the table
on the following page, net income attributable to common
shareholders for the quarters ended December 31, 2017 and 2016 was
$65.5 million and $77.8 million, or $0.34 and $0.41 per diluted
share, respectively.
- FUNDS FROM OPERATIONS attributable to common shareholders plus
assumed conversions (non-GAAP) ("FFO") for the quarter ended
December 31, 2017 was $153.2 million, or $0.80 per diluted share,
compared to $797.7 million, or $4.20 per diluted share, for the
prior year's quarter. Adjusting FFO for the items listed in
the table on page 3, FFO for the quarters ended December 31, 2017
and 2016 was $187.6 million and $193.2 million, or $0.98 and $1.02
per diluted share, respectively.
Year Ended December 31, 2017 Financial
Results
- NET INCOME attributable to common shareholders for the year
ended December 31, 2017 was $162.0 million, or $0.85 per
diluted share, compared to $823.6 million, or $4.34 per diluted
share, for the prior year. Adjusting net income attributable
to common shareholders (non-GAAP) for the items listed in the table
on the following page, net income attributable to common
shareholders for the years ended December 31, 2017 and 2016 was
$251.0 million and $229.2 million, or $1.31 and $1.21 per diluted
share, respectively.
- FFO (non-GAAP) for the year ended December 31, 2017 was $717.8
million, or $3.75 per diluted share, compared to $1,457.6 million,
or $7.66 per diluted share, for the prior year. Adjusting FFO
for the items listed in the table on page 3, FFO for the years
ended December 31, 2017 and 2016 was $713.8 million and $683.4
million, or $3.73 and $3.59 per diluted share, respectively.
Supplemental Financial
Information
Further details regarding results of operations,
properties and tenants can be accessed at the Company's website
www.vno.com. Vornado Realty Trust is a fully – integrated
equity real estate investment trust.
Certain statements contained herein may
constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. For
a discussion of factors that could materially affect the outcome of
our forward-looking statements and our future results and financial
condition, see "Risk Factors" in Part I, Item 1A, of our Annual
Report on Form 10-K for the year ended December 31, 2017.
Such factors include, among others, risks associated with the
timing of and costs associated with property improvements,
financing commitments and general competitive factors.
(tables to follow)
The following table reconciles our net income
attributable to common shareholders to net income attributable to
common shareholders, as adjusted (non-GAAP):
| |
|
|
|
|
|
|
|
| (Amounts in thousands,
except per share amounts) |
For the Quarters Ended |
|
For the Years Ended |
| |
December 31, |
|
December 31, |
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| Net income attributable
to common shareholders |
$ |
27,319 |
|
|
$ |
651,181 |
|
|
$ |
162,017 |
|
$ |
823,606 |
| Per
diluted share |
$ |
0.14 |
|
|
$ |
3.43 |
|
|
$ |
0.85 |
|
$ |
4.34 |
| |
|
|
|
|
|
|
|
| Certain items that
impact net income attributable to common shareholders: |
|
|
|
|
|
|
|
| JBG SMITH
Properties which is treated as a discontinued operation: |
|
|
|
|
|
|
|
|
Transaction costs |
$ |
(1,617 |
) |
|
|
$ |
(11,989 |
|
) |
|
$ |
(68,662 |
) |
|
$ |
(16,586 |
) |
| Operating
results through July 17, 2017 spin-off |
— |
|
|
|
20,523 |
|
|
47,752 |
|
|
87,237 |
|
| |
(1,617 |
) |
|
|
8,534 |
|
|
(20,910 |
) |
|
70,651 |
|
| |
|
|
|
|
|
|
|
| Tax
expense related to the reduction of our taxable REIT subsidiaries
deferred tax assets |
(34,800 |
) |
|
|
— |
|
|
(34,800 |
) |
|
— |
|
| Expense
related to the prepayment of our 2.50% senior unsecured notes due
2019 |
(4,836 |
) |
|
|
— |
|
|
(4,836 |
) |
|
— |
|
| 666 Fifth
Avenue Office Condominium (49.5% interest) |
(3,042 |
) |
|
|
(7,869 |
) |
|
(25,414 |
) |
|
(41,532 |
) |
| Income
(loss) from real estate fund investments, net |
529 |
|
|
|
(34,704 |
) |
|
(10,804 |
) |
|
(21,042 |
) |
| Net gain
on extinguishment of Skyline properties debt |
— |
|
|
|
487,877 |
|
|
— |
|
|
487,877 |
|
| Income
from the repayment of our investments in 85 Tenth Avenue loans and
preferred equity |
— |
|
|
|
160,843 |
|
|
— |
|
|
160,843 |
|
| Net gain
on sale on our 20% interest in Fairfax Square |
— |
|
|
|
15,302 |
|
|
— |
|
|
15,302 |
|
| Our share
of impairment on India non-depreciable real estate |
— |
|
|
|
(13,962 |
) |
|
— |
|
|
(13,962 |
) |
| Default
interest on Skyline properties mortgage loan |
— |
|
|
|
(2,480 |
) |
|
— |
|
|
(7,823 |
) |
|
Impairment loss on our investment in Pennsylvania REIT |
— |
|
|
|
— |
|
|
(44,465 |
) |
|
— |
|
| Net gain
resulting from Urban Edge Properties operating partnership unit
issuances |
— |
|
|
|
— |
|
|
21,100 |
|
|
— |
|
| Our share
of net gain on sale of property of Suffolk Downs JV |
— |
|
|
|
— |
|
|
15,314 |
|
|
— |
|
| Net gain
on repayment of Suffolk Downs JV debt investments |
— |
|
|
|
— |
|
|
11,373 |
|
|
— |
|
| Our share
of write-off of deferred financing costs |
— |
|
|
|
— |
|
|
(3,819 |
) |
|
— |
|
| Skyline
properties impairment loss |
— |
|
|
|
— |
|
|
— |
|
|
(160,700 |
) |
| Net gain
on sale of 47% ownership interest in 7 West 34th Street |
— |
|
|
|
— |
|
|
— |
|
|
159,511 |
|
| Preferred
share issuance costs (Series J redemption) |
— |
|
|
|
— |
|
|
— |
|
|
(7,408 |
) |
|
Other |
3,084 |
|
|
|
(2,942 |
) |
|
2,060 |
|
|
(8,298 |
) |
| |
(40,682 |
) |
|
|
610,599 |
|
|
(95,201 |
) |
|
633,419 |
|
| Noncontrolling
interests' share of above adjustments |
2,522 |
|
|
|
(37,185 |
) |
|
6,267 |
|
|
(38,972 |
) |
| Total of certain items
that impact net income attributable to common shareholders,
net |
$ |
(38,160 |
) |
|
|
$ |
573,414 |
|
|
$ |
(88,934 |
) |
|
$ |
594,447 |
|
| |
|
|
|
|
|
|
|
| Net income attributable
to common shareholders, as adjusted (non-GAAP) |
$ |
65,479 |
|
|
|
$ |
77,767 |
|
|
$ |
250,951 |
|
|
$ |
229,159 |
|
| Per
diluted share (non-GAAP) |
$ |
0.34 |
|
|
|
$ |
0.41 |
|
|
$ |
1.31 |
|
|
$ |
1.21 |
|
| |
| |
| |
The following table reconciles our FFO (non-GAAP) to FFO, as
adjusted (non-GAAP):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Amounts in thousands,
except per share amounts) |
|
For the Quarters Ended |
|
For the Years Ended |
| |
|
December 31, |
|
December 31, |
| |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| FFO (non-GAAP)
(1) |
|
$ |
153,151 |
|
|
$ |
797,734 |
|
|
$ |
717,805 |
|
|
$ |
1,457,583 |
|
| Per
diluted share (non-GAAP) |
|
$ |
0.80 |
|
|
$ |
4.20 |
|
|
$ |
3.75 |
|
|
$ |
7.66 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Certain items that
impact FFO: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| JBG SMITH
Properties which is treated as a discontinued operation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction costs |
|
$ |
(1,617 |
) |
|
$ |
(11,989 |
) |
|
$ |
(68,662 |
) |
|
$ |
(16,586 |
) |
| Operating
results through July 17, 2017 spin-off |
|
— |
|
|
57,147 |
|
|
122,201 |
|
|
226,288 |
|
| |
|
(1,617 |
) |
|
45,158 |
|
|
53,539 |
|
|
209,702 |
|
| |
|
|
|
|
|
|
|
|
| Tax
expense related to the reduction of our taxable REIT subsidiaries
deferred tax assets |
|
(34,800 |
) |
|
— |
|
|
(34,800 |
) |
|
— |
|
| Expense
related to the prepayment of our 2.50% senior unsecured notes due
2019 |
|
(4,836 |
) |
|
— |
|
|
(4,836 |
) |
|
— |
|
| 666 Fifth
Avenue Office Condominium (49.5% interest) |
|
1,103 |
|
|
808 |
|
|
13,164 |
|
|
10,925 |
|
| Income
(loss) from real estate fund investments, net |
|
529 |
|
|
(34,704 |
) |
|
(10,804 |
) |
|
(21,042 |
) |
| Net gain
on extinguishment of Skyline properties debt |
|
— |
|
|
487,877 |
|
|
— |
|
|
487,877 |
|
| Income
from the repayment of our investments in 85 Tenth Avenue loans and
preferred equity |
|
— |
|
|
160,843 |
|
|
— |
|
|
160,843 |
|
| Our share
of impairment on India non-depreciable real estate |
|
— |
|
|
(13,962 |
) |
|
— |
|
|
(13,962 |
) |
|
Impairment loss on our investment in Pennsylvania REIT |
|
— |
|
|
— |
|
|
(44,465 |
) |
|
— |
|
| Net gain
resulting from Urban Edge Properties operating partnership unit
issuances |
|
— |
|
|
— |
|
|
21,100 |
|
|
— |
|
| Net gain
on repayment of our Suffolk Downs JV debt investments |
|
— |
|
|
— |
|
|
11,373 |
|
|
— |
|
| Our share
of write-off of deferred financing costs |
|
— |
|
|
— |
|
|
(3,819 |
) |
|
— |
|
| Preferred
share issuance costs (Series J redemption) |
|
— |
|
|
— |
|
|
— |
|
|
(7,408 |
) |
|
Other |
|
2,945 |
|
|
(2,324 |
) |
|
3,801 |
|
|
(2,454 |
) |
| |
|
(36,676 |
) |
|
643,696 |
|
|
4,253 |
|
|
824,481 |
|
| Noncontrolling
interests' share of above adjustments |
|
2,274 |
|
|
(39,201 |
) |
|
(264 |
) |
|
(50,293 |
) |
| Total of certain items
that impact FFO, net |
|
$ |
(34,402 |
) |
|
$ |
604,495 |
|
|
$ |
3,989 |
|
|
$ |
774,188 |
|
| |
|
|
|
|
|
|
|
|
| FFO, as adjusted
(non-GAAP) |
|
$ |
187,553 |
|
|
$ |
193,239 |
|
|
$ |
713,816 |
|
|
$ |
683,395 |
|
| Per
diluted share (non-GAAP) |
|
$ |
0.98 |
|
|
$ |
1.02 |
|
|
$ |
3.73 |
|
|
$ |
3.59 |
|
|
|
|
(1) See page 5 for a reconciliation of our net
income attributable to common shareholders to FFO (non-GAAP) for
the quarters and years ended December 31, 2017 and 2016.
VORNADO REALTY
TRUSTOPERATING RESULTS FOR THE QUARTERS AND YEARS
ENDEDDECEMBER 31, 2017 AND 2016
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Amounts in thousands,
except per share amounts) |
For the Quarters Ended |
|
For the Years Ended |
| |
December 31, |
|
December 31, |
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| Revenues |
$ |
536,226 |
|
|
$ |
513,974 |
|
|
$ |
2,084,126 |
|
|
$ |
2,003,742 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from continuing
operations |
$ |
52,278 |
|
|
$ |
195,428 |
|
|
$ |
277,356 |
|
|
$ |
577,010 |
|
| Income (loss) from
discontinued operations |
1,273 |
|
|
509,116 |
|
|
(13,228 |
) |
|
404,912 |
|
| Net income |
53,551 |
|
|
704,544 |
|
|
264,128 |
|
|
981,922 |
|
| Less net (income) loss
attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
Consolidated subsidiaries |
(7,366 |
) |
|
5,010 |
|
|
(25,802 |
) |
|
(21,351 |
) |
| Operating
Partnership |
(1,853 |
) |
|
(42,244 |
) |
|
(10,910 |
) |
|
(53,654 |
) |
| Net income attributable
to Vornado |
44,332 |
|
|
667,310 |
|
|
227,416 |
|
|
906,917 |
|
| Preferred share
dividends |
(17,013 |
) |
|
(16,129 |
) |
|
(65,399 |
) |
|
(75,903 |
) |
| Preferred share
issuance costs (Series J redemption) |
— |
|
|
— |
|
|
— |
|
|
(7,408 |
) |
| Net income attributable
to common shareholders |
$ |
27,319 |
|
|
$ |
651,181 |
|
|
$ |
162,017 |
|
|
$ |
823,606 |
|
| |
|
|
|
|
|
|
|
| Income per common share
- Basic: |
|
|
|
|
|
|
|
| Income
from continuing operations, net |
$ |
0.14 |
|
|
$ |
0.91 |
|
|
$ |
0.92 |
|
|
$ |
2.35 |
|
| Income
(loss) from discontinued operations, net |
— |
|
|
2.53 |
|
|
(0.07 |
) |
|
2.01 |
|
| Net
income per common share |
$ |
0.14 |
|
|
$ |
3.44 |
|
|
$ |
0.85 |
|
|
$ |
4.36 |
|
| Weighted
average shares outstanding |
189,898 |
|
|
189,013 |
|
|
189,526 |
|
|
188,837 |
|
| |
|
|
|
|
|
|
|
| Income per common share
- Diluted: |
|
|
|
|
|
|
|
| Income
from continuing operations, net |
$ |
0.14 |
|
|
$ |
0.91 |
|
|
$ |
0.91 |
|
|
$ |
2.34 |
|
| Income
(loss) from discontinued operations, net |
— |
|
|
2.52 |
|
|
(0.06 |
) |
|
2.00 |
|
| Net
income per common share |
$ |
0.14 |
|
|
$ |
3.43 |
|
|
$ |
0.85 |
|
|
$ |
4.34 |
|
| Weighted
average shares outstanding |
191,020 |
|
|
190,108 |
|
|
191,258 |
|
|
190,173 |
|
| |
|
|
|
|
|
|
|
| FFO (non-GAAP) |
$ |
153,151 |
|
|
$ |
797,734 |
|
|
$ |
717,805 |
|
|
$ |
1,457,583 |
|
| Per
diluted share (non-GAAP) |
$ |
0.80 |
|
|
$ |
4.20 |
|
|
$ |
3.75 |
|
|
$ |
7.66 |
|
| |
|
|
|
|
|
|
|
| FFO, as adjusted
(non-GAAP) |
$ |
187,553 |
|
|
$ |
193,239 |
|
|
$ |
713,816 |
|
|
$ |
683,395 |
|
| Per
diluted share (non-GAAP) |
$ |
0.98 |
|
|
$ |
1.02 |
|
|
$ |
3.73 |
|
|
$ |
3.59 |
|
| |
|
|
|
|
|
|
|
| Weighted average shares
used in determining FFO per diluted share |
191,063 |
|
|
190,108 |
|
|
191,304 |
|
|
190,173 |
|
|
|
|
|
|
|
The following table reconciles net income attributable to common
shareholders to FFO (non-GAAP):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Amounts in thousands,
except per share amounts) |
For the Quarters Ended |
|
For the Years Ended |
| |
December 31, |
|
December 31, |
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| Net income attributable
to common shareholders |
$ |
27,319 |
|
|
$ |
651,181 |
|
|
$ |
162,017 |
|
|
$ |
823,606 |
|
| Per
diluted share |
$ |
0.14 |
|
|
$ |
3.43 |
|
|
$ |
0.85 |
|
|
$ |
4.34 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| FFO adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and
amortization of real property |
$ |
106,017 |
|
|
$ |
133,389 |
|
|
$ |
467,966 |
|
|
$ |
531,620 |
|
| Net gains on sale of
real estate |
308 |
|
|
(15,302 |
) |
|
(3,489 |
) |
|
(177,023 |
) |
| Real estate impairment
losses |
— |
|
|
— |
|
|
— |
|
|
160,700 |
|
| Proportionate share of
adjustments to equity in net income of partially owned entities to
arrive at FFO: |
|
|
|
|
|
|
|
|
Depreciation and amortization of real property |
28,247 |
|
|
37,160 |
|
|
137,000 |
|
|
154,795 |
|
| Net gains
on sale of real estate |
(593 |
) |
|
(12 |
) |
|
(17,777 |
) |
|
(2,853 |
) |
| Real
estate impairment losses |
145 |
|
|
792 |
|
|
7,692 |
|
|
6,328 |
|
| |
134,124 |
|
|
156,027 |
|
|
591,392 |
|
|
673,567 |
|
| Noncontrolling
interests' share of above adjustments |
(8,310 |
) |
|
(9,495 |
) |
|
(36,728 |
) |
|
(41,267 |
) |
| FFO adjustments,
net |
$ |
125,814 |
|
|
$ |
146,532 |
|
|
$ |
554,664 |
|
|
$ |
632,300 |
|
| |
|
|
|
|
|
|
|
| FFO attributable to
common shareholders (non-GAAP) |
$ |
153,133 |
|
|
$ |
797,713 |
|
|
$ |
716,681 |
|
|
$ |
1,455,906 |
|
| Convertible preferred
share dividends |
18 |
|
|
21 |
|
|
77 |
|
|
86 |
|
| Earnings allocated to
Out-Performance Plan units |
— |
|
|
— |
|
|
1,047 |
|
|
1,591 |
|
| FFO attributable to
common shareholders plus assumed conversions (non-GAAP) |
$ |
153,151 |
|
|
$ |
797,734 |
|
|
$ |
717,805 |
|
|
$ |
1,457,583 |
|
| Per
diluted share (non-GAAP) |
$ |
0.80 |
|
|
$ |
4.20 |
|
|
$ |
3.75 |
|
|
$ |
7.66 |
|
| |
| |
| |
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
gains from sales of depreciated real estate assets, real estate
impairment losses, depreciation and amortization expense from real
estate assets and other specified non-cash items, including the pro
rata share of such adjustments of unconsolidated
subsidiaries. FFO and FFO per diluted share are non-GAAP
financial measures 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 flow as a liquidity measure. FFO
may not be comparable to similarly titled measures employed by
other companies. A reconciliation of our net income to FFO is
provided above. In addition to FFO, we also disclose FFO, as
adjusted. Although this non-GAAP measure clearly differs from
NAREIT's definition of FFO, we believe it provides a meaningful
presentation of operating performance. Reconciliations of FFO
to FFO, as adjusted are provided on page 3 of this press
release.
Conference Call and Audio
Webcast
As previously announced, the Company will host a
quarterly earnings conference call and an audio webcast on Tuesday,
February 13, 2018 at 10:00 a.m. Eastern Time (ET). The
conference call can be accessed by dialing 800-708-4540 (domestic)
or 847-619-6397 (international) and indicating to the operator the
passcode 46251598. A telephonic replay of the
conference call will be available from 1:00 p.m. ET on
February 13, 2018 through March 15, 2018. To access the
replay, please dial 888-843-7419 and enter the passcode
46251598#. A live webcast of the conference call will be
available on the Company's website at www.vno.com and an online
playback of the webcast will be available on the website for 90
days following the conference call.
CONTACT:
JOSEPH MACNOW(212) 894-7000
Vornado Realty (NYSE:VNO)
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