{"id":12452,"date":"2024-09-05T13:01:55","date_gmt":"2024-09-05T18:01:55","guid":{"rendered":"https:\/\/1reason.com\/re\/vornado-announces-second-quarter-2024-financial-results\/12452\/"},"modified":"2024-09-06T08:01:56","modified_gmt":"2024-09-06T13:01:56","slug":"vornado-announces-second-quarter-2024-financial-results","status":"publish","type":"post","link":"https:\/\/1reason.com\/re\/vornado-announces-second-quarter-2024-financial-results\/12452\/","title":{"rendered":"Vornado Announces Second Quarter 2024 Financial Results"},"content":{"rendered":"
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FUNDS FROM OPERATIONS (“FFO”) attributable to common shareholders plus assumed conversions (non-GAAP) for the quarter ended June 30, 2024 was $148,944,000, or $0.76 per diluted share, compared to $144,059,000, or $0.74 per diluted share, for the prior year’s quarter.Adjusting for the items that impact period-to-period comparability listed in the table on the following page, FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the quarter ended June 30, 2024 was $112,766,000, or $0.57 per diluted share, and $140,737,000, or $0.72 per diluted share, for the prior year’s quarter.<\/p>\n

Six Months Ended June 30, 2024 Financial Results<\/u><\/em><\/strong><\/p>\n

NET INCOME attributable to common shareholders for the six months ended June 30, 2024 was $26,226,000, or $0.13 per diluted share, compared to $51,545,000, or $0.27 per diluted share, for the six months ended June 30, 2023.<\/p>\n

FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the six months ended June 30, 2024 was $253,068,000, or $1.29 per diluted share, compared to $263,149,000, or $1.35 per diluted share, for the six months ended June 30, 2023. Adjusting for the items that impact period-to-period comparability listed in the table on the following page, FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the six months ended June 30, 2024 was $221,608,000, or $1.13 per diluted share, and $257,032,000, or $1.32 per diluted share, for the six months ended June 30, 2023.<\/p>\n

The following table reconciles FFO attributable to common shareholders plus assumed conversions (non-GAAP) to FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP):<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
(Amounts in thousands, except per share amounts)<\/td>\nFor the Three Months Ended<\/strong>
June 30,<\/strong><\/td>\n		\nFor the Six Months Ended<\/strong>
June 30,<\/strong><\/td>\n<\/tr>\n
\n\n2024<\/strong><\/td>\n\n\n\n2023<\/strong><\/td>\n\n\n\n2024<\/strong><\/td>\n\n\n\n2023<\/strong><\/td>\n<\/tr>\n
FFO attributable to common shareholders plus assumed conversions (non-GAAP)(1)<\/sup><\/td>\n$<\/td>\n148,944<\/td>\n\n\n$<\/td>\n144,059<\/td>\n\n\n$<\/td>\n253,068<\/td>\n\n\n$<\/td>\n263,149<\/td>\n<\/tr>\n
Per diluted share (non-GAAP)<\/td>\n$<\/td>\n0.76<\/td>\n\n\n$<\/td>\n0.74<\/td>\n\n\n$<\/td>\n1.29<\/td>\n\n\n$<\/td>\n1.35<\/td>\n<\/tr>\n
\n\n\n\n\n\n\n<\/tr>\n
Certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions:<\/td>\n\n\n\n\n\n\n<\/tr>\n
Our share of the gain on the discounted extinguishment of the 280 Park Avenue mezzanine loan<\/td>\n$<\/td>\n(31,215<\/td>\n)<\/td>\n\n$<\/td>\n\u2014<\/td>\n\n\n$<\/td>\n(31,215<\/td>\n)<\/td>\n\n$<\/td>\n\u2014<\/td>\n<\/tr>\n
After-tax net gain on sale of 220 Central Park South (“220 CPS”) condominium units<\/td>\n\n(13,069<\/td>\n)<\/td>\n\n\n\u2014<\/td>\n\n\n\n(13,069<\/td>\n)<\/td>\n\n\n(6,173<\/td>\n)<\/td>\n<\/tr>\n
Deferred tax liability on our investment in the Farley Building (held through a taxable REIT subsidiary)<\/td>\n\n2,599<\/td>\n\n\n\n2,206<\/td>\n\n\n\n6,733<\/td>\n\n\n\n5,081<\/td>\n<\/tr>\n
Other<\/td>\n\n2,252<\/td>\n\n\n\n(5,785<\/td>\n)<\/td>\n\n\n3,261<\/td>\n\n\n\n(5,497<\/td>\n)<\/td>\n<\/tr>\n
\n\n(39,433<\/td>\n)<\/td>\n\n\n(3,579<\/td>\n)<\/td>\n\n\n(34,290<\/td>\n)<\/td>\n\n\n(6,589<\/td>\n)<\/td>\n<\/tr>\n
Noncontrolling interests’ share of above adjustments<\/td>\n\n3,255<\/td>\n\n\n\n257<\/td>\n\n\n\n2,830<\/td>\n\n\n\n472<\/td>\n<\/tr>\n
Total of certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions, net<\/td>\n$<\/td>\n(36,178<\/td>\n)<\/td>\n\n$<\/td>\n(3,322<\/td>\n)<\/td>\n\n$<\/td>\n(31,460<\/td>\n)<\/td>\n\n$<\/td>\n(6,117<\/td>\n)<\/td>\n<\/tr>\n
Per diluted share (non-GAAP)<\/td>\n$<\/td>\n(0.19<\/td>\n)<\/td>\n\n$<\/td>\n(0.02<\/td>\n)<\/td>\n\n$<\/td>\n(0.16<\/td>\n)<\/td>\n\n$<\/td>\n(0.03<\/td>\n)<\/td>\n<\/tr>\n
\n\n\n\n\n\n\n<\/tr>\n
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)<\/td>\n$<\/td>\n112,766<\/td>\n\n\n$<\/td>\n140,737<\/td>\n\n\n$<\/td>\n221,608<\/td>\n\n\n$<\/td>\n257,032<\/td>\n<\/tr>\n
Per diluted share (non-GAAP)<\/td>\n$<\/td>\n0.57<\/td>\n\n\n$<\/td>\n0.72<\/td>\n\n\n$<\/td>\n1.13<\/td>\n\n\n$<\/td>\n1.32<\/td>\n<\/tr>\n<\/table>\n

________________________________<\/p>\n

(1)<\/strong> See page 9 for a reconciliation of net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the three and six months ended June 30, 2024 and 2023.<\/p>\n<\/p>\n

FFO, as Adjusted Bridge – Q2 2024 vs. Q2 2023<\/u><\/em><\/strong><\/p>\n

The following table bridges our FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the three months ended June 30, 2023 to FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the three months ended June 30, 2024:<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
(Amounts in millions, except per share amounts)<\/td>\nFFO, as Adjusted<\/strong><\/td>\n<\/tr>\n
\nAmount<\/strong><\/td>\n\nPer Share<\/strong><\/td>\n<\/tr>\n
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the three months ended June 30, 2023<\/strong><\/td>\n$<\/strong><\/td>\n140.7<\/strong><\/td>\n\n\n$<\/strong><\/td>\n0.72<\/strong><\/td>\n<\/tr>\n
\n\n\n<\/tr>\n
(Decrease) increase in FFO, as adjusted due to:<\/td>\n\n\n<\/tr>\n
Lease expirations, net of rent commencements, and other tenant related items<\/td>\n\n(15.1<\/td>\n)<\/td>\n\n<\/tr>\n
345 Montgomery Street tenant settlement proceeds, net of legal expenses in 2023<\/td>\n\n(14.1<\/td>\n)<\/td>\n\n<\/tr>\n
Change in interest expense, net of interest income<\/td>\n\n(7.0<\/td>\n)<\/td>\n\n<\/tr>\n
Variable businesses (primarily signage)<\/td>\n\n3.9<\/td>\n\n\n<\/tr>\n
Other, net<\/td>\n\n3.7<\/td>\n\n\n<\/tr>\n
\n\n(28.6<\/td>\n)<\/td>\n\n<\/tr>\n
Noncontrolling interests’ share of above items and impact of assumed conversions of convertible securities<\/td>\n\n0.7<\/td>\n\n\n<\/tr>\n
Net decrease<\/td>\n\n(27.9<\/td>\n)<\/td>\n\n\n(0.15<\/td>\n)<\/td>\n<\/tr>\n
\n\n\n<\/tr>\n
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the three months ended June 30, 2024<\/strong><\/td>\n$<\/strong><\/td>\n112.8<\/strong><\/td>\n\n\n$<\/strong><\/td>\n0.57<\/strong><\/td>\n<\/tr>\n<\/table>\n

See page 9 for a reconciliation of net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the three and six months ended June 30, 2024 and 2023. Reconciliations of FFO attributable to common shareholders plus assumed conversions to FFO attributable to common shareholders plus assumed conversions, as adjusted are provided above.<\/p>\n

Financing Activity<\/strong><\/p>\n

280 Park Avenue<\/em><\/p>\n

On April4, 2024, a joint venture, in which we have a 50% interest, amended and extended the $1,075,000,000 mortgage loan on 280 Park Avenue. The maturity date on the amended loan was extended to September 2026, with options to fully extend to September 2028, subject to certain conditions. The interest rate on the amended loan remains at SOFR plus 1.78%. On July8, 2024, the joint venture swapped the interest rate to a fixed rate of 5.84% through September 2028. Additionally, on April4, 2024, the joint venture amended and extended the $125,000,000 mezzanine loan, and subsequently repaid the loan for $62,500,000. In connection with the repayment of the mezzanine loan, we recognized our $31,215,000 share of the debt extinguishment gain which is included in \u201cincome from partially owned entities\u201d on our consolidated statements of income.<\/p>\n

435 Seventh Avenue<\/em><\/p>\n

On April9, 2024, we completed a $75,000,000 refinancing of 435 Seventh Avenue, of which $37,500,000 is recourse to the Operating Partnership. The interest-only loan bears a rate of SOFR plus 2.10% and matures in April 2028. The interest rate on the loan was swapped to a fixed rate of 6.96% through April 2026. The loan replaces the previous $95,696,000 fully recourse loan, which bore interest at SOFR plus 1.41%.<\/p>\n

Unsecured Revolving Credit Facility<\/em><\/p>\n

On May 3, 2024, we extended one of our two unsecured revolving credit facilities to April 2029 (as fully extended). The new $915,000,000 facility replaced the $1.25billion facility that was due to mature in April 2026. The new facility currently bears interest at a rate of SOFR plus 1.20% with a facility fee of 25 basis points. Our $1.25billion revolving credit facility matures in December 2027 (as fully extended) and has an interest rate of SOFR plus 1.15% and a facility fee of 25 basis points.<\/p>\n

640 Fifth Avenue (Fifth Avenue and Times Square JV)<\/em><\/p>\n

On June10, 2024, the Fifth Avenue and Times Square JV completed a $400,000,000 refinancing of 640 Fifth Avenue. The non-recourse loan matures in July 2029, bears interest at a fixed rate of 7.47% and amortizes at $7,000,000 per annum. The loan replaces the previous $500,000,000 loan, which the joint venture paid down by $100,000,000. The previous loan was fully recourse to the Operating Partnership and bore interest at SOFR plus 1.11%.<\/p>\n

Interest Rate Swap and Cap Arrangements<\/em><\/p>\n

We entered into the following interest rate swap and cap arrangements during the six months ended June 30, 2024:<\/p>\n\n\n\n\n\n\n\n\n\n
(Amounts in thousands)<\/td>\n\nNotional Amount<\/strong>
(at share)<\/strong><\/td>\n		\nAll-In Swapped
Rate<\/strong><\/td>\n		\nExpiration Date<\/strong><\/td>\n\nVariable Rate Spread<\/strong><\/td>\n<\/tr>\n
Interest rate swaps:<\/strong><\/td>\n\n\n\n\n\n\n\n<\/tr>\n
PENN 11(1)<\/strong><\/sup><\/td>\n\n$<\/td>\n250,000<\/td>\n\n6.21<\/td>\n%<\/td>\n\n10\/25<\/td>\n\nS+206<\/td>\n<\/tr>\n
435 Seventh Avenue<\/td>\n\n\n75,000<\/td>\n\n6.96<\/td>\n%<\/td>\n\n04\/26<\/td>\n\nS+210<\/td>\n<\/tr>\n
\n\n\n\n\n\n\n\n<\/tr>\n
\n\n\n\nIndex Strike Rate<\/strong><\/td>\n\n\n\n<\/tr>\n
Interest rate caps:<\/strong><\/td>\n\n\n\n\n\n\n\n<\/tr>\n
61 Ninth Avenue (45.1% interest)<\/td>\n\n$<\/td>\n75,543<\/td>\n\n4.39<\/td>\n%<\/td>\n\n01\/26<\/td>\n\nS+146<\/td>\n<\/tr>\n<\/table>\n

________________________________<\/p>\n

(1)<\/strong>Together with the existing $250,000 swap arrangement on the $500,000 PENN 11 mortgage loan, the loan will bear interest at an all-in swapped rate of 6.28% through October 2025.<\/p>\n

Dispositions<\/strong><\/p>\n

220 Central Park South<\/em><\/p>\n

During the three and six months ended June 30, 2024, we closed on the sale of two condominium units at 220 CPS for net proceeds of $31,605,000, resulting in a financial statement net gain of $15,175,000 which is included in “net gains on disposition of wholly owned and partially owned assets” on our consolidated statements of income. In connection with these sales, $2,106,000 of income tax expense was recognized on our consolidated statements of income. Four units remain unsold.<\/p>\n

50-70 West 93rd Street<\/em><\/p>\n

On May 13, 2024, we sold our 49.9% interest in 50-70 West 93rd Street to our joint venture partner. We received net proceeds of $2,000,000 after deducting our share of the existing $83,500,000 mortgage loan, which was scheduled to mature in December 2024, resulting in a net gain of $873,000. The net gain is included in “net gains on disposition of wholly owned and partially owned assets” on our consolidated statements of income.<\/p>\n

Alexander\u2019s<\/strong><\/p>\n

On May 3, 2024, Alexander\u2019s Inc. (\u201cAlexander\u2019s\u201d), in which we own a 32.4% common equity interest, and Bloomberg L.P. reached an agreement to extend the leases covering approximately 947,000 square feet at 731 Lexington Avenue that were scheduled to expire in February 2029 for a term of eleven years to February 2040.<\/p>\n

Leasing Activity<\/strong><\/p>\n

The leasing activity and related statistics below are based on leases signed during the period and are not intended to coincide with the commencement of rental revenue in accordance with accounting principles generally accepted in the United States of America (\u201cGAAP\u201d). Second generation relet space represents square footage that has not been vacant for more than nine months and tenant improvements and leasing commissions are based on our share of square feet leased during the period.<\/p>\n

For the Three Months Ended <\/em>June 30, 2024<\/em>:<\/em><\/p>\n