2 0 2 1 A N N U A L R E P O R T
THE PENN DISTRICT – Construction Progress Photo – 31st to 34th Street/Seventh Avenue
This Annual Report is printed on recycled paper and is recyclable.
T H I S P A G E I N T E N T I O N A L L Y L E F T B L A N K
V O R N A D O C O M P A N Y P R O F I L E
Vornado Realty Trust is a fully-integrated real estate operating company.
Our business is 88% New York-centric and 79% office-centric. We currently own all or portions of:
67 Manhattan properties consisting of:
20.6 million square feet of office space in 32 of the properties;
2.7 million square feet of street retail space in 60 of the properties;
1,674 residential units in eight Manhattan properties;
Multiple development sites, including the Hotel Pennsylvania which is on
Seventh Avenue at 33rd Street in the heart of THE PENN DISTRICT
THE PENN DISTRICT is our premier interconnected campus-like development
currently consisting of 9 million square feet in over a dozen buildings and land sites
surrounding New York’s Pennsylvania Station, the busiest transportation hub in
North America;
A 32.4% interest in Alexander’s, Inc. (NYSE:ALX) which owns six properties in the
New York metropolitan area, including 731 Lexington Avenue, the 1.1 million square foot
Bloomberg L.P. headquarters building;
Signage throughout THE PENN DISTRICT and Times Square;
BMS, our wholly owned subsidiary, which provides cleaning and security services for our
buildings and third parties, currently employing 2,710 associates;
The 3.7 million square foot MART in Chicago;
A 70% controlling interest in 555 California Street, a three-building office complex in San
Francisco’s financial district aggregating 1.8 million square feet;
A 25% interest in Vornado Capital Partners, our real estate fund. We are the general partner
and investment manager of the fund. The fund is in wind down; and
220 Central Park South, our 950-foot super-tall luxury residential condominium tower
containing 400,000 salable square feet, which is over 95% sold.
Vornado’s common shares are listed on the New York Stock Exchange and are traded
under the symbol: VNO.
1
T H I S P A G E I N T E N T I O N A L L Y L E F T B L A N K
2
Financial Highlights
As Reported
Revenues
Net income/(loss)
Net income/(loss) per share - basic
Net income/(loss) per share - diluted
Total assets
Total equity
Net operating income
Funds from operations
Funds from operations per share
% decrease in funds from operations per share
As Adjusted
Net income
Net income per share
Funds from operations
Funds from operations per share
% increase/(decrease) in funds from operations per share
$
$
$
$
$
$
$
$
$
$
$
$
$
Year Ended December 31,
2021
1,589,210,000
101,086,000
0.53
0.53
17,266,588,000
6,515,238,000
1,033,368,000
571,074,000
2.97
(24.4)%
$
$
$
$
$
$
$
$
$
2020
1,527,951,000
(348,744,000)
(1.83)
(1.83)
16,221,822,000
6,948,155,000
972,579,000
750,522,000
3.93
(25.1)%
Year Ended December 31,
2021
88,153,000
0.46
549,863,000
2.86
9.2 %
$
$
$
$
2020
23,893,000
0.12
501,015,000
2.62
(24.3)%
These financial highlights and the letter to shareholders present certain non-GAAP measures, including revenues, net income/(loss), total assets, Net Operating Income (“NOI”) and Funds from
Operations, all as adjusted, as well as Funds from Operations and NOI. We have provided reconciliations of these non-GAAP measures to the applicable GAAP measures in the appendix section
of this letter to shareholders and in the Company’s Annual Report on Form 10-K under “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which
accompanies this letter or can be viewed at www.vno.com.
3
To Our Shareholders
Together with the entire free world, we mourn the loss of life and destruction in the senseless war in Europe.
Net Income/(Loss) attributable to common shares for the year ended December 31, 2021 was $101.1 million, $0.53 per diluted share, compared
to ($348.7) million, ($1.83) per diluted share, for the previous year.
Funds from Operations, as Adjusted (an apples-to-apples comparison of our continuing business, eliminating certain one-timers) for the year
ended December 31, 2021 was $549.9 million, $2.86 per diluted share, compared to $501.0 million, $2.62 per diluted share, for the previous year,
an increase of $0.24 per share. This increase is detailed on page 5.
Funds from Operations, as Reported (apples-to-oranges including one-timers) for the year ended December 31, 2021 was $571.1 million,
$2.97 per diluted share, compared to $750.5 million, $3.93 per diluted share, for the previous year. See page 5 for a reconciliation of Funds from
Operations, as Reported, to Funds from Operations, as Adjusted.
Here are our financial results (presented in Net Operating Income format) by business unit:
($ IN MILLIONS)
New York:
Office
Retail
Residential
Alexander’s
Hotel Pennsylvania
Total New York
theMART
555 California Street
Other
Total Net Operating Income
2021
Same Store
% Increase/
(Decrease)
2.7 %
13.2 %
(14.1) %
0.7 %
N/A
4.0 %
(14.2) %
7.9 %
2.9 %
Net Operating Income
% of 2021
2021
66.6 %
17.0 %
1.7 %
3.7 %
(1.2) %
87.8 %
5.8 %
6.4 %
677.2
173.4
17.8
37.3
(12.7)
893.0
58.9
64.8
100.0 %
1,016.7
16.7
1,033.4
2020
672.5
147.3
20.7
35.9
(42.5)
833.9
69.2
60.3
963.4
9.2
972.6
2019
724.5
273.2
23.4
44.3
7.4
1,072.8
102.1
59.7
1,234.6
25.2
1,259.8
This letter and Annual Report contain 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. The
Company’s future results, financial condition and business may differ materially from those expressed in these forward-looking statements. These
forward-looking statements are subject to numerous assumptions, risks and uncertainties. Currently, one of the most significant factors is the
ongoing adverse effect of the COVID-19 pandemic on our business, financial condition, results of operations, cash flows, operating performance
and the effect it has had and may continue to have on our tenants, the global, national, regional and local economies and financial markets and the
real estate market in general. The extent of the impact of the COVID-19 pandemic will continue to depend on future developments, including
vaccination rates among the population, the efficacy and durability of vaccines against emerging variants, and the governmental and tenant
responses thereto, all of which are uncertain at this time but the impact could be material. Moreover, you are cautioned that the COVID-19 pandemic
will heighten many of the risks identified in "Item 1A. Risk Factors" in Part I of our Annual Report on Form 10-K for the year ended December
31, 2021, a copy of which accompanies this letter or can be viewed at www.vno.com.
4
The following chart reconciles Funds from Operations, as Reported, to Funds from Operations, as Adjusted:
($ IN MILLIONS, EXCEPT PER SHARE)
Funds from Operations, as Reported
Less adjustments for certain items that impact FFO:
After-tax gain on sale of 220 Central Park South units
Tax benefit from taxable REIT subsidiaries
Defeasance cost - 1290 Avenue of the Americas refinancing
Hotel Pennsylvania
Deferred tax liability - Farley
Series K preferred shares issuance costs
Real Estate Fund(1)
Lease liability extinguishment gain - 608 Fifth Avenue
Severance and other reduction in force-related expenses
Credit losses on loans receivable
Other, including noncontrolling interests’ share of above adjustments
Total adjustments
Funds from Operations, as Adjusted
Funds from Operations, as Adjusted per share
2021
571.1
44.6
27.9
(17.9)
(12.3)
(10.9)
(9.0)
3.8
—
—
—
(5.0)
21.2
549.9
2.86
2020
750.5
332.1
—
—
(26.9)
—
—
(63.1) (1)
70.3
(23.4)
(13.4)
(26.1)
249.5
501.0
2.62
Funds from Operations, as Adjusted increased in 2021 by $48.9 million, or $0.24 per share, a 9.2% increase. Here is the detail:
($ IN MILLIONS, EXCEPT PER SHARE)
Acquisitions
Variable Businesses
Tenant Related
Interest expense
Real estate tax expenses - theMART
Preferred dividends
General and Administrative expenses
THE PENN DISTRICT out of service
Other
Increase in FFO, as Adjusted
Per Share
Increase/(Decrease)
Amount
16.5
15.4
13.4
30.8
(18.5)
(14.0)
21.6
(6.8)
(9.5)
48.9
0.08
0.08
0.07
0.16
(0.10)
(0.07)
0.11
(0.04)
(0.05)
0.24
1 Our $800 million Real Estate Fund was formed in 2010. All invested capital has been returned. We account for the Fund on a fair value, mark-to-market basis and, as such, the
Fund’s performance has caused volatility in our numbers. The Fund is in final stages of wind down. The Fund’s 2020 number shown in the table above represents the final non-
cash markdowns to zero of the three remaining assets. This should be the end of it.
5
Report Card
Since I have run Vornado from 1980, total shareholder returns have been 13% per annum, but subpar lately. Dividends have represented
3.9 percentage points of Vornado’s annual return.
Here is a table that shows Vornado’s total return to shareholders compared to our New York-centric peers and two REIT indices for
various periods ending December 31, 2021:
One-year
Three-year
Five-year
Ten-year
Twenty-year(3)
Vornado
17.7 %
(19.4)%
(36.6)%
11.6 %
232.7 %
NY
REIT
Peers (2)
12.9 %
(8.3)%
(25.9)%
— %
— %
Office
REIT
Index
22.0 %
30.8 %
17.7 %
102.6 %
291.9 %
MSCI
Index
43.1 %
66.4 %
66.8 %
192.3 %
669.2 %
Our stock price for the last seven years has been disappointing and, in my mind, chronically disconnected from the value of our assets.
The graph below demonstrates that case. Over the last ten years, our NAV(4) (a surrogate for private market values) has compounded at
4.8%, but our stock price has compounded at negative 2.2%. Over the last years, I and others have made the point that public shareholders
price CBD office buildings at a significant discount to private value. Something is obviously wrong.
Vornado NAV(4)(5) Per Share vs. Stock Price
$110.00
$100.00
$90.00
$80.00
$70.00
$60.00
$50.00
$40.00
$30.00
$20.00
UE spin-off
JBGS spin-off
$85.31
$45.32
To complete the story here, both our spin-offs trade at a tighter NAV discount than the parent which was expected and, to my mind,
further validates the separations.
NAV
Stock Price
2 Comprised of New York City-centric peers: SL Green, Empire State Realty Trust and Paramount Group.
3 Long-term returns have been negatively affected by COVID. Had we done this table on December 31, 2019, pre-COVID, the numbers on the “twenty-year” line would have
been, reading across, 569.9%, 468.9%, and 732.4%.
4 Per Green Street Advisors.
5 NAV has been reduced by $10 for the Urban Edge spin-off and $23 for the JBG SMITH spin-off.
6
Ten-Year Earnings Record
As is our custom, we present the table below that traces our ten-year record, both in absolute dollars and per share amounts:
($ AND SHARES
IN MILLIONS,
EXCEPT PER
SHARE DATA)
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
NOI(6)
FFO, As Adjusted
Amount
% Change
Amount
% Change
Per Share
1,047.6
1,027.5
1,184.6
1,180.4
1,182.0
1,144.1
1,106.7
1,009.5
953.5
842.4
2.0 %
(13.3) %
0.4 %
(0.1) %
3.3 %
3.4 %
9.6 %
5.9 %
13.2 %
0.8 %
549.9
501.0
660.5
702.8
701.0
672.3
629.7
507.3
468.0
357.5
9.8 %
(24.1) %
(6.0) %
0.3 %
4.3 %
6.8 %
24.1 %
8.4 %
30.9 %
3.5 %
2.86
2.62
3.46
3.68
3.66
3.53
3.32
2.69
2.49
1.92
Shares
Outstanding
205.7
203.7
203.1
202.3
201.6
200.5
199.9
198.5
197.8
197.3
As shown on the following page, in the last ten years we have been a net seller to the tune of $13.7 billion, notably including $2.7 billion
in the Retail Joint Venture transaction and $9.7 billion of tax-free spin-offs. This activity has enriched shareholders but has punished
our earnings. The table below compares our published FFO per share period-by-period to what our FFO per share would have been had
we not sold or spun assets:
FFO, As Adjusted Per Share
2021
2020
2019
2018
2017
As Published
2.86
2.62
3.46
3.68
3.66
Pro Forma
To Include
Sold Properties
5.76
5.23
6.76
6.86
6.80
6 All years include only the properties owned at the end of 2021 excluding the Hotel Pennsylvania.
7
Acquisitions/Dispositions
Here is a ten-year schedule of acquisitions and dispositions.
($ IN MILLIONS)
2022 to date
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
Number of
Transactions
1
6
Net Acquisitions/
(Dispositions)
(84.5)
262.6
3
7
9
9
11
25
17
26
33
3.7
(2,818.6)
336.0
(5,901.9)
(875.1)
(3,717.1)
(412.3)
(616.5)
142.9
147
(13,680.8)
3.7
67.1
573.5
—
397.0
Acquisitions Dispositions
84.5
134.4
—
2,885.7
237.5
6,047.6
1,022.5
4,672.9
1,060.4
1,429.8
1,222.3
18,797.6
1,365.2
145.7
813.3
147.4
648.1
955.8
5,116.8
Gain
0.9
7.9
—
1,384.1
170.4
5.1
664.4
316.7
523.4
434.1
454.0
3,961.0
2019 Dispositions include $2.665 billion for the Retail Joint Venture at a 4.5% cap rate resulting in a gain of $1.205 billion.(7) 2017
Dispositions include $5.997 billion for the JBG SMITH spin-off and 2015 Dispositions include $3.700 billion for the Urban Edge
Properties spin-off. No gain was recognized on the spin-offs.
Over the ten-year period, our dispositions totaled $18.8 billion and we were a net seller of $13.7 billion. Other than the Retail Joint
Venture, since 2018 we have been uncharacteristically inactive. Our stock price being in the penalty box was the limiting factor. Green
Street would say we should have been selling and shrinking… maybe so.
The action here takes place on the 45th floor where our acquisitions/dispositions team resides. Thanks to Michael Franco and to EVP
Michael Schnitt, SVPs Cliff Broser, Brian Cantrell, Adam Green and Jared Toothman, and to VPs Brian Feldman and Tatiana Melamed.
7 The gain reported in our published financial statements was $2.571 billion, the difference being the gain recognized on the step up in basis to fair value of the retained portion of
the assets.
8
Lease…Lease…Lease
The mission of our business is to create value for shareholders by growing our asset base through the addition of carefully selected
properties and by adding value through intensive and efficient management. Our operating platform is where the rubber meets the road.
In our business, leasing is the main event. In New York, theMART and 555 California Street, we leased 2.9 million square feet in 2021.
As is our practice, we present below leasing and occupancy statistics for our businesses.
(SQUARE FEET IN
THOUSANDS)
2021
Square feet leased
Initial Rent
GAAP Mark-to-Market
Cash Mark-to-Market
Number of transactions
2020
Square feet leased
Initial Rent
GAAP Mark-to-Market
Cash Mark-to-Market
Number of transactions
Occupancy rate:
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
New York
Office
Street Retail
theMART
555
California
Street
2,252
83.26
15.9 %
10.8 %
98
2,231
89.33
11.0 %
4.6 %
54
92.2 %
93.4 %
96.9 %
97.2 %
97.1 %
96.3 %
96.3 %
96.9 %
96.6 %
95.8 %
229
145.44
37.1 %
13.2 %
36
238
136.29
1.3 %
(5.9)%
35
80.7 %
78.8 %
94.5 %
97.3 %
96.9 %
97.1 %
96.2 %
96.5 %
97.4 %
96.8 %
330
51.18
(0.5)%
0.0 %
60
379
49.74
1.5 %
(1.9)%
52
88.9 %
89.5 %
94.6 %
94.7 %
98.6 %
98.9 %
98.6 %
94.7 %
96.4 %
95.2 %
74
114.70
29.5 %
25.4 %
4
371
108.92(8)
54.7 %
39.7 %
6
93.8 %
98.4 %
99.8 %
99.4 %
94.2 %
92.4 %
93.3 %
97.6 %
94.5 %
93.1 %
It is worth underscoring our significant leasing accomplishments during the past 12 and 24 pandemic months – our square footage
leased, starting rents, and mark-to-markets were industry leading and are detailed in the table above, all of which speaks to both the
talent of our leasing teams and the quality of our assets. Notable leases of size and importance were:
NYU at One Park Avenue - 633,000 square feet;
Interpublic Group at 100 West 33rd Street - 513,000 square feet;
Meta at Farley - 730,000 square feet;
Madison Square Garden at PENN 2 - 428,000 square feet;
Wegmans at 770 Broadway - 82,000 square feet.
Bank of America at 555 California Street - 247,000 square feet
Clear Secure at 85 Tenth Avenue - 119,000 square feet
Kudos and special mention to our leasing team for signing 831,000 square feet of leases this year in New York, with $100 plus per
square foot starting rents, a 25% market share of all triple digit rents signed this year.
Thanks to our leasing captains: Glen Weiss and Haim Chera. Also thanks to the New York leasing machine: Ed Hogan, Josh Glick,
Jared Solomon, Jared Silverman, Edward Riguardi, Ryan Levy, Jason Morrison, Anthony Cugini, and to Paul Heinen who runs leasing
at theMART and 555 California Street. Our thanks also to our in-house legal teams and their leaders, EVPs Pam Caruso and Elana
Butler.
8 2020 initial rent and GAAP and cash mark-to-markets exclude a 247,000 square foot lease, as the starting rent for this space will be determined in 2024 based on fair market
value.
9
Capital Markets
At year-end, we had $4.1 billion of immediate liquidity consisting of $1.9 billion of cash and restricted cash and $2.2 billion available
on our $2.75 billion revolving credit facilities. Today, we have $3.9 billion of immediate liquidity. We also have over $10 billion of
unencumbered assets.
Since January 1, 2021, we have executed eight capital markets transactions totaling $5.8 billion. Our capital markets team had another
strong year. Thank you to EVP – Head of Capital Markets Jan LaChapelle and VP Tatiana Melamed.
In February, a joint venture in which we had a 55% interest, completed a $525 million refinancing of One Park Avenue, a 944,000
square foot Manhattan office building. The interest-only loan bears a rate of LIBOR plus 1.11% (1.50% as of March 31, 2022) and
matures in March 2023, with three one-year extension options (March 2026, as fully extended). The loan replaced the previous $300
million loan that bore interest at LIBOR plus 1.75% and was scheduled to mature in March 2021. We realized our $105 million share
of net proceeds.
In March, we entered into an interest rate swap for our $500 million PENN 11 mortgage loan from LIBOR plus 2.75% to a fixed rate of
3.03% through March 2024. In December, we completed a loan modification which reduced the interest rate to LIBOR plus 1.95%
(2.24% as of March 31, 2022), resulting in a fixed rate of 2.23% pursuant to the interest rate swap.
In March, we completed a $350 million refinancing of 909 Third Avenue, a 1.4 million square foot Manhattan office building. The
interest-only loan bears a fixed rate of 3.23% and matures in April 2031. The loan replaced the previous $350 million loan that bore
interest at a fixed rate of 3.91% and was scheduled to mature in May 2021.
In April, we extended our $1.25 billion unsecured revolving credit facility from January 2023 (as fully extended) to April 2026 (as fully
extended). The interest rate on the extended facility was lowered to LIBOR plus 0.90% from LIBOR plus 1.00%. The facility fee remains
at 20 basis points. Our separate $1.50 billion unsecured revolving credit facility matures in March 2024 (as fully extended) and has an
interest rate of LIBOR plus 0.90% and a facility fee of 20 basis points.
In May, we completed a $1.2 billion refinancing of 555 California Street, a three-building 1.8 million square foot office campus in
San Francisco, in which we own a 70% controlling interest. The interest-only loan bears a rate of LIBOR plus 1.93% (2.33% as of
March 31, 2022) in years one through five, LIBOR plus 2.18% in year six and LIBOR plus 2.43% in year seven. The loan matures in
May 2023, with five one-year extension options (May 2028 as fully extended). We swapped the interest rate on our $840 million share
of the loan to a fixed rate of 2.26% through May 2024. The loan replaced the previous $533 million loan that bore interest at a fixed rate
of 5.10% and was scheduled to mature in September 2021. We realized our $457 million share of net proceeds.
In May, we completed a green bond public offering of $400 million of 2.15% senior unsecured notes due June 1, 2026 ("2026 Notes")
and $350 million of 3.40% senior unsecured notes due June 1, 2031 ("2031 Notes"). Interest on the senior unsecured notes is payable
semi-annually on June 1 and December 1. The 2026 Notes were sold at 99.86% of their face amount to yield 2.18% and the 2031 Notes
were sold at 99.59% of their face amount to yield 3.45%.
In May, we repaid the $675 million mortgage loan on theMART (i.e. unencumbering the asset), a 3.7 million square foot commercial
building in Chicago. The loan bore interest at 2.70% and was scheduled to mature in September 2021.
In September, we issued $300 million of 4.45% Series O cumulative redeemable preferred shares at a price of $25.00 per share, pursuant
to an effective registration statement. We received aggregate net proceeds of $291.2 million after underwriters' discount and issuance
costs.
In October, we redeemed all of the outstanding 5.70% Series K preferred shares/units at their redemption price of $25.00 per share or
$300 million in the aggregate, plus accrued and unpaid dividends through the date of redemption.
In November, we completed a $950 million refinancing of 1290 Avenue of the Americas, a 2.1 million square foot Manhattan office
building, in which we own a 70% controlling interest. The interest-only loan bears a rate of LIBOR plus 1.51% (1.90% as of March 31,
2022) in years one to five, increasing 0.25% in each of years six and seven. The loan matures in November 2023 with five one-year
extension options (November 2028 as fully extended). We defeased the existing $950 million loan that bore interest at a fixed rate of
3.34% and was scheduled to mature in November 2022.
10
Below is the right-hand side of our balance sheet at December 31, 2021, 2020 and 2019.
($ IN MILLIONS)
Secured debt
Unsecured debt
Share of non-consolidated debt
Noncontrolling interests’ share of consolidated debt
Total debt
Cash and restricted cash
Projected cash proceeds from 220 Central Park South in excess of debt
Net debt
EBITDA as adjusted
Net debt/EBITDA as adjusted
2021
6,099
2,575
2,700
(682)
10,692
(2,035)
(148)
8,509
949
9.0 x
2020
5,608
1,825
2,873
(483)
9,823
(1,835)
(275)
7,713
2019
5,670
1,775
2,803
(483)
9,765
(1,347)
(1,200)
7,218
910
1,136
8.5 x
6.4 x
The decline in our credit statistics is largely the result of COVID-related reductions in our income of $187 million.(9) This resulted in
downgrades by S&P to BBB- and by Moody’s to Baa3.(10) We expect to earn our rating back and then some as our income reverts and
improves, as our variable businesses continue to recover, as our occupancy climbs back to our historical 97% and as our PENN
DISTRICT projects come online.
Fixed-rate debt accounted for 52% of debt with a weighted average interest rate of 3.2% and a weighted average term of 4.8 years;
floating-rate debt accounted for 48% of debt with a weighted average interest rate of 1.6% and a weighted average term of 3.0 years.(11)
76% of our debt is recourse solely to individual assets. The fair value of the assets pledged is $13.5 billion, resulting in a loan-to-value
of 60.1%. We have over $10 billion of unencumbered assets.
Vornado remains committed to maintaining our investment grade rating.
9 Please see page 25 for detail.
10 All of our New York peers and most of the CBD office REITs are in the same boat.
11 We have a higher percentage of floating-rate debt than most, which is intentional. We also have larger cash balances than most as a natural hedge.
11
T H I S P A G E I N T E N T I O N A L L Y L E F T B L A N K
12
THE PENN DISTRICT
13
We are the largest owner in THE PENN DISTRICT with 9 million square feet. THE PENN DISTRICT’s time has come, the district being
validated by the neighboring Hudson Yards and Manhattan West. Our assets sit literally on top of Penn Station, the region’s major
transportation hub, adjacent to Macy’s and Madison Square Garden. Day and night, THE PENN DISTRICT is teeming with activity. Here’s
where we stand:
THE PENN DISTRICT is different from our other office assets…it is a large multi-building complex, it is long-term and it is development
focused (development and long-term are two of the dirtiest words in REITland). THE PENN DISTRICT is the highest growth opportunity in
our portfolio.
My excitement and conviction about our PENN DISTRICT grows quarter by quarter. I still believe that a winning strategy is to allow investors
to choose between the high growth, development-oriented PENN DISTRICT or our other, pretty terrific in their own right, Class A traditional
core assets… or both and that the most efficient way to do so is initially by tracker.(12) Nonetheless, we have decided to pause. This is purely
an internal transaction with no counterparty or deadline and I believe it wise to delay until COVID is resolved, workers return en masse to the
office, construction is further along, etc. No rush, let’s get it right.
Our development plans for Farley, PENN 1 and PENN 2 were outlined in my letters to shareholders over the last years. Images, budgets,
returns and delivery dates are on our website. Each of these three large, exciting projects is now under construction and when completed will
constitute the debut of our vision for THE PENN DISTRICT.
I have read some commentary that this year we did not update the development statistics on page 19 of our supplemental. In fact, we did and
since both our capital budget and rent projections are on course, no change was required (the numbers actually have improved). Our budget
is to take $55/$60 rents to $90/$100 and that plan has now been validated by actual signed leases.
Over time, we hope to grow our interconnected campus by as much as 10 million square feet of new-builds. And over time, our PENN
DISTRICT campus will almost certainly command premium pricing.
We have begun with 5 million square feet in three existing buildings – Farley, PENN 1 and PENN 2 – all interconnected either above or
below ground. Here we are investing $2.4 billion(13) to create a unique environment for work, to bring to 22nd century standards, and to totally
transform. In the middle of everything are PENN 1 and PENN 2, where we are creating a two-building, 4.3 million square foot campus directly
on top of Penn Station. It will feature a three-block plaza along Seventh Avenue covered by a giant new bustle across the entire 430-foot
frontage of PENN 2. This bustle will extend out 70 feet from the face of the building and will be 45 feet above the street. It will be striking,
extraordinary and unique, creating a monumental covered plaza in front of our PENN 2 and the main entrance to Penn Station. At PENN 2,
we are also removing the skin of the entire building and replacing it with new, exciting, 22nd century curtainwall featuring triple-glazed floor-
to-ceiling windows. This architecture (designed by Dan Shannon, MdeAS Architects) will bring the neighborhood into the modern age. The
bustle and penthouse conversion will create 150,000 square feet of valuable new, high ceilinged, best-in-class creative space, growing the
new PENN 2 to 1.8 million square feet. Images of these designs are posted on our website at www.vno.com.
Essential to our strategy here is interconnectivity and scale which will allow us to provide our tenants with an unparalleled amenity package,
even a giant leap forward from what we created at theMART a few years ago. Our 4.3 million square foot PENN 1 and PENN 2 campus is
programmed to have over 180,000 square feet of amenity space, about 4%. Think about this – 4% of even a large million square footer would
be only a noncompetitive 40,000 square foot amenity package, so scale really matters. But, there’s more – the scale of this campus will allow
us to provide our tenants with flexibility for their growth and expansion. A 300,000 square foot tenant in a 500,000 square foot building is
boxed in. But we could almost certainly provide this same 300,000 square foot tenant in this 4.3 million square foot campus multiple expansion
availabilities and unrivaled flexibility. So, scale really matters.
12 By the way, I am perplexed that there is not universal agreement here. And a second “by the way”, the enormous advantage to the tracker structure is that it allows investors economic
choice but unlike a full spin-off allows both the tracker and parent to benefit from one management team and infrastructure.
13 $1.4 billion spent to date, with $1.0 billion left to go. Rate of spend will be about $650 million in 2022, $250 million in 2023, and $100 million in 2024.
14
Here’s an update on THE PENN DISTRICT:
The acclaimed Moynihan Train Hall is now open to the public, as is our Moynihan Food Hall. Our retail leasing in the Train Hall
is well along, with 26 leases executed at or above underwriting. In the western half of Farley, we are developing 90,000 square
feet of retail which will serve as the connecting link between Manhattan West and Hudson Yards, our neighbors to the west, and
the Moynihan/Penn Station complex to the east. This retail is organized around the 32nd Street corridor (read mall) that will act as
a funnel that we expect will collect thousands of office workers heading to and from Penn Station.
The doubling in width and doubling in height of the Long Island Rail Road concourse is scheduled to be completed by year end.
We own the retail on both sides of the LIRR concourse, all of which space was vacated to accommodate the construction. We are
now in discussions with over 30 retailers for that space, most of them prior tenants, many of them food-oriented, at rents that are
better than pre-COVID levels.
Vornado was honored to be a major principal in both the Moynihan Train Hall and LIRR concourse public/private partnerships.
At Farley, we have turned over to Meta (formerly Facebook) their 730,000 square feet for tenant fit out.
At PENN 11, our major tenant has expanded to 400,000 square feet.
At PENN 1, our grand new lobby and multi-floor amenity offerings are largely completed and open. Our amenities here are
extensive (we believe the largest amenity package in the City, by far) and unique, tailored to the demographic of our tenants’
workforce and is receiving rave reviews from tenants and brokers.
On the 7th floor of PENN 1, our experience and leasing center is open and busy. This 14,000 square foot facility, complete with
multiple scale models and floor-to-ceiling, wall-to-wall videos, vividly illustrates and brings to life our vision and plans for the
buildings, restaurants, retail, amenities, and lifestyle and workstyle that THE PENN DISTRICT will become.
THE PENN DISTRICT Experience Center
At PENN 2, we are, give or take, 25% into construction.
At Hotel Penn, interior demolition and abatement is advanced, and building demolition will begin shortly.
Our construction operations in THE PENN DISTRICT span three full blocks (31st to 34th Streets) along the west side of Seventh Avenue
(see cover photo). In a few short months, everything in THE PENN DISTRICT will begin to come to life as shiny, modern curtainwall
continues to be erected on the PENN 2 façades, and steel is erected giving shape to the massive two-block long bustle, an architectural
statement in scale and substance that will announce the entrance to Pennsylvania Station, Madison Square Garden, and our office building
lobby.
It has long been a goal of government to improve the capacity and user experience of Penn Station.(14) It has long been a precept of urban
planning that density belongs at transit hubs. Recognizing these two important objectives which complement each other, Empire State
Development Corporation is working to establish a General Project Plan (“GPP”), the purpose of which is to revitalize Penn Station and the
surrounding area, significantly enhance the public realm, make subway improvements, add new entrances to Penn, and generate funds from
the new density to help finance the station transformation. The GPP process was supported by the Governor in a November press release that
can be accessed here.
14 In normal, non-COVID times, Penn Station struggles mightily to handle three times the traffic it was originally designed for.
15
What I said in last year’s letter bears repeating. In our business, the deals are the drama… buying, selling, leasing. But in the end, we
are a customer-centric business… in a manner of speaking, we are in the hospitality business.
Talent is our New Client. We are in a service business. We put our best foot forward when we take a page out of the hospitality
industry. Our tenants appreciate and deserve to be treated like guests. Coffee and welcoming greetings go a long way. In keeping
with that spirit, our PENN DISTRICT marketing campaign features the slogan, “Talent is our New Client,” the point being that
everything we do, in every phase of our business, must be geared to pleasing, even delighting, our clients, defined as the talented
employees of our tenants. After all, we recognize that real estate is a recruiting tool for our tenants.
Further, we are pushing the envelope of design. There is a place for Park Avenue-style financial services buildings and a place for
West Side creative-type buildings. In THE PENN DISTRICT, we are creating a 22nd century work environment featuring lobbies
with areas to sit, congregate, surf or just hang and chill, a warm palette, welcoming libraries, conference centers, gyms, an
auditorium, food service, happy hour, outdoor space and gardens and more. In a word, we will create a hospitality-rich communal
workplace for our PENN DISTRICT tenants. The images below (actual pictures, not renderings) are a tiny sampling – additional
images are posted at www.vno.com.
At Vornado, our small dedicated staff of technologists is continuously working to improve our customers’ experience and make their
lives more efficient. For further information, please see www.vno.com/technology-innovation.
The Live.Work.Do. app is Vornado’s proprietary digital platform that provides tenants across our portfolio mobile access, visitor
management, back-of-house operations requests, local retailer deals, access to curated events, transit updates, security features, Dock
parking, Revel moped access and more. In THE PENN DISTRICT, we provide online and in-seat ordering from our in-building
restaurants, scheduling and booking resources at our co-working suites and conference facility, membership and class booking at our
fitness center, and doctor and physical therapy appointments at our health center by Columbia Doctors. In 2022, a robust offering of
events and educational programming will also commence.
Our PENN DISTRICT development team is led by Barry Langer with David Bellman, Judy Kessler, Alan Reagan, Sandy Reis, and
Brian Thompson. Special shout out and kudos to Glen Weiss, Barry Langer, Josh Glick and Brad Zizmor who have been the guiding
lights in the creation of PENN 1’s unique food, gathering and social spaces.
16
Retail
Retail has bottomed. Tenant activity is picking up from no interest and no tours in 2018/2019 to now a fairly active market, but still at
bottom-fishing pricing. We expect activity and pricing to accelerate from here.
We are making more than our fair share of deals – a sampling is Fendi, Berluti, Sephora, Whole Foods, Wegmans, Canada Goose,
Chase, Duane Reade, Bond Street Sushi, Stefano Ricci, Five Below…
Individually, and collectively, we own great assets… a portfolio of 60 properties, 2.7 million square feet of flagship street retail
concentrated on the best high streets – Fifth Avenue, Times Square, THE PENN DISTRICT and SoHo. Please see www.vno.com for
portfolio details and images. Here is the math for our retail business:
($ IN MILLIONS,
EXCEPT
PROPERTIES)
Number of
Properties
NOI
GAAP Basis
Cash Basis
2022
2021
2020
2019
2018
2017
2016
58
60
63
62
63
63
62
173.4
147.3
273.2
353.4
359.9
363.7
160.8
158.7
267.7
324.2
324.3
292.0
Cash Basis
Guidance
175.0
135.0
Here is the math that allows for comparable analysis of the above table. The top-tick 2018 income of $324.2 million should be adjusted
for the Retail Joint Venture, other sales and out-of-service assets totaling $146.3 million, bringing 2018, as adjusted, to $178 million.
Other reductions are tenant-related issues.
We were pleased to “beat” our 2021 Retail guidance by $25 million and to “raise” our 2022 Retail guidance by $15 million.
Here are our 2021 results by submarket:
($ IN MILLIONS, EXCEPT %)
Fifth Avenue
Times Square
THE PENN DISTRICT
SoHo
Other
Total
GAAP Basis
Amount
78.9
25.5
14.0
8.7
46.3
173.4
NOI
%
45.5
14.7
8.1
5.0
26.7
100.0
Cash Basis
Amount
68.0
27.2
12.8
8.3
44.5
160.8
%
42.3
16.9
8.0
5.2
27.6
100.0
We sold Madison Avenue. Why? Madison Avenue has changed. A generation ago, luxury shoppers, by and large, all lived on the Upper
East Side, and Madison Avenue was the unique and renowned Manhattan shopping mecca. Over the years, those shoppers have moved
to the four corners of Manhattan. And Madison Avenue’s retailers have followed their customers by opening three, four or five stores
in different submarkets. The uniqueness of Madison Avenue has been diluted… and so we sold. Here’s the math: we sold for $100
million and recognized a non-cash loss of $7.9 million. The properties were 70% vacant and generated $4.7 million of negative FFO in
2020. The buyer is a substantial offshore family office whom we know well, who got a good price and is prepared to invest more capital
and wait longer than we were.
17
Some Thoughts, 2021 Version
I begin with a shoutout and thank you to our amazing and talented Vornado people in New York, Paramus, Chicago and
San Francisco, in leasing, development, the 45th floor, Paramus and operations all of whom are A+, head of the class, and we
say thank you.
It sort of feels like there may be some trouble ahead – inflation, interest rates, overheating, what have you. This is a time for
caution. Our balance sheet and liquidity provide a sufficient level of safety. Importantly, our development spend in THE
PENN DISTRICT is fully funded from cash on our balance sheet – and remember, Farley, PENN 1 and PENN 2 are
unencumbered and debt-free.
Our portfolio is populated with the highest quality assets in all of REITland: 770 Broadway; Farley; 1290 Avenue of the
Americas; 555 California Street; theMART; our Fifth Avenue and Times Square retail assets to name a few; and, the most
exciting development opportunity in all of REITland, THE PENN DISTRICT; and the two best development sites in town,
350 Park Avenue and PENN 15.
In 2021, Vornado delivered outstanding, industry-leading performance: FFO, as adjusted per share increased by 9.2% and
we leased 2.9 million square feet overall including 230,000 square feet of New York retail and 2.3 million square feet of
New York office at starting rents of $83 and mark-to-markets of 10.8% (see page 9).
Michael has mentioned on recent earnings calls, and I agree, that we expect Vornado’s future growth to be outsized and
industry leading. We expect double digit FFO growth in 2022.
We believe in New York, our hometown. New York wins in infrastructure. It is the economic and cultural capital of the
United States (there is a reason the Statue of Liberty is in New York Harbor); it is the finance center of the world; it attracts
the best and the brightest; it has a large and growing highly educated and diverse workforce, eight professional sports teams,
Lincoln Center and Carnegie Hall, Broadway, great museums, great restaurants and nightlife, the best hospitals and
universities, and, of course, the largest concentration of Fortune 500 headquarters and is now a large and growing tech
center… you get the message. And think about this, just the space that tech companies have recently leased in New York
will require 20,000 new talented employees. There is maybe only one other city in the country with the scale to satisfy that
requirement.
We believe the future of work will continue to be in the form of people gathering in the office. Work from home alone at
the kitchen table enabled by Zoom (a.k.a. Hollywood Squares) will have a place in a hybrid work schedule but the creative,
teamwork, social and collegial interaction of talented people in the office and in the central business district will continue to
be essential.
Does anybody think a nine hour, four day workweek with three days off has legs? Does anybody think law school should
be two years and that business school should be one year and a summer?
With inflation the topic du jour, it should be noted that replacement cost for New York office buildings is rising aggressively.
I submit that replacement cost has always been a leading indicator, foretelling that our existing stock of office buildings will
be increasing in value. In the same vein, the Manhattan residential rental market is, I believe, also a leading indicator. It went
from 100% occupancy pre-COVID, down to 70% at the height of COVID, and is now back to 100% (at higher than pre-
COVID rents) as New Yorkers have returned. Restaurants are full and standing room only. So… the City is full… but office
buildings not so much. The last domino will be when employees and employers resolve hybrid work schedules and the office
districts are again teeming with activity… And that will come sooner than you think.
I have said it’s kind of silly to hang on every COVID return mandate and subsequent delay. Normalcy will return for sure –
neither I nor really anyone, can predict exactly when.
We listen to our tenants and, so, I am convinced that the way they want to work is rapidly changing from the rigid, closed
office door Uptown model to the less formal, creative West Side model. Of New York’s 400 million square feet, I’m guessing
only about half of that space really qualifies for the workplace of the future.
18
We have entered into a partnership to pursue soundstages with a West Coast specialist at one of our Manhattan assets.
After many years of proudly commanding a full page and hero picture in this letter, 220 Central Park South, basically
completed, now gets this short paragraph. Sales to date have totaled $3.133 billion. We are over 95% sold with, I guesstimate,
$150 million still to come from future sales.
As we look through our portfolio of assets, we have more than a half dozen outstanding residential development
opportunities in Manhattan, Queens, and one in Northern Virginia. The apartment business is on fire and a dollar of income
from a residential project has always been valued rich to a dollar from office. We have the expertise, as proven by our success
at 220 and The Alexander in Rego Park, and will pursue these opportunities, all of which involve development and patience.
We have brought on an experienced residential developer to focus here.
We are in conversation with multiple operators for multiple sites to bid for a gaming license in Manhattan when the time
comes. Last year, I wrote the following about Manhattan gaming which is doubly valid today:
Gaming is now all around us. There are as many as 30 gaming venues within an easy drive of Manhattan. Internet
gaming is the next big thing, predicted to have a much larger audience than even brick-and-mortar casinos (I
understand one can even bet on the coin toss or each down or each free throw). New York State has authorized
seven casino licenses, four of which have already been issued Upstate (I understand they are not doing well) with
a seven-year head start on three Downstate licenses. There is a rising level of chatter that the issuance of the
Downstate licenses will be accelerated and that Manhattan will be in play. There are two Downstate racetrack
licenses (slot machines only) at Yonkers Raceway and Aqueduct Raceway that are performing well. My guess is
that these two will win two of the three full Downstate casino licenses and then where will the third go? To my
mind, it makes little sense for the third license to go to another venue in either Long Island or Westchester which
would split revenue with the existing Yonkers or Aqueduct. It makes perfect sense for the third and final license
to go to Manhattan. Being the center of everything, Manhattan will generate by far the highest revenue for our
education system; after all, aren’t we in it to maximize the tax revenue? And Manhattan has, by far, the largest
number of hotel rooms, restaurants, museums, tourist attractions, and the region’s transportation network was
designed with Manhattan as its hub.
As a sign of market potential, it should be noted that New York generated 25% of this year’s Super Bowl online sports
betting.
The competition between high-tax, densely populated urban centers and low-tax/no-tax, generally warm weather, business
welcoming states is the topic du jour. In the “this will never happen… but it should department”, the first governor of a
northern, densely populated, urban state who recognizes all this and reduces taxes will be lionized.
I will resist questioning the wisdom of raising taxes in the face of a New York economy that is in the early innings of
reopening and recovering, especially when Washington has balanced the city and state budgets. But I will, for the fourth year
in a row, question the wisdom of the New York State estate tax. I repeat here what I have said before:
There is one vulnerability I would like to point out. In New York State, the top 2% pay a full 50% of personal
income taxes so it is critical that they remain tax-paying residents. The vulnerability comes with the 1%-ers, who
are at the end of their careers. Most of the folks I know are willing to pay higher income taxes for the privilege
of living in New York, but hate the prospect of a 16% toll for the privilege of dying in New York. New York
State’s estate tax brings in only about 1/150th of the state’s annual budget. The estate tax should be repealed.
Keeping our highest taxpayers through the end of their lives is both good economic policy and good politics. By
the way, high-tax California has no estate tax, New Jersey repealed its estate tax in 2018.
A year ago, I was on four public company boards – Vornado, Alexander’s, Urban Edge and JBG SMITH. Am I
overboarded? UE and JBGS were born out of Vornado; Vornado’s shareholders initially owned 100% of UE and 73% of
JBGS. I sat on both boards, with decades of experience and as a proud overseer, sort of representing Vornado’s shareholders.
Last year, ISS, the proxy god, recommended “withhold” and I was essentially fired from the JBGS board, a company that I
founded and where I was Chairman. It doesn’t seem right to me.
I find it interesting and predictive that during COVID, companies continued to rent space in New York and elsewhere,
especially the tech giants. This, while many of those same companies reevaluated their work policies, even permitting full-
time WFH.
Fasano, the famed operator of the best restaurants and hotels in Brazil, has opened their first restaurant in New York at 280
Park Avenue, 49th Street between Park and Madison. The food, service, ambiance and buzz are outstanding. I highly
recommend it. And, by the way, we own 280 Park and so are the proud landlord.
Theatre in New York is a huge part of our cultural landscape and economy. My wife and son, my theatre family, predict that
the coming season will see wonderful plays and musicals and fill Broadway theatres once again.
The Principles by Which We Run Our Business are reprinted as Appendix A.
19
Environmental, Social and Governance (“ESG”)
Our Board and senior management hold ESG among our top priorities… and we are a clear leader in the industry. In 2019, we published
our commitment to making our buildings carbon neutral by 2030. Our six-point plan, known as Vision 2030, is outlined in our ESG
Report, found at esg.vno.com.
Key sustainability achievements this past year include:
Advanced our commitment to locally-sourced renewable energy and the environment through the procurement of Renewable
Energy Credits, sourced from hydro energy facilities located in the State of New York, which assigns zero carbon to 100%
of our directly procured electricity. With an annualized balance of over 215,000 megawatt hours, we are one of the largest
customers of home-grown renewable energy. We support the transmission projects that will alleviate bottlenecks and bring
clean energy downstate into New York City.
Aligned our carbon reductions and targets with the Science-Based Target Initiative, and have committed to a 64% reduction
by 2030 using a 2019 base year to ensure our ongoing emissions reduction contributes to a 1.5-degree climate scenario.
Achieved a 2.6% reduction in our overall location-based emissions, and a 37.8% drop in our market-based scope 2 emissions.
Below is an inventory of carbon emissions from our buildings in 2021, according to the Financial Control method,(15)
measured in metric tons:
Scope 1
Scope 2
Scope 1+2 Total
Scope 3
Grand Total
Location-Based
Market-Based
2021
29,864
131,405
161,269
39,633
200,902
% Change
2020-2021
2.3 %
(1.9)%
(1.2)%
(7.8)%
(2.6)%
2021
29,864
83,295
113,159
39,633
152,792
% Change
2020-2021
2.3 %
(37.8)%
(30.7)%
(7.8)%
(25.9)%
Received multiple awards recognizing our continued industry leadership in sustainability including the NAREIT Leader in
the Light Leadership Personified Award; ENERGY STAR Partner of the Year with Sustained Excellence (7th time with this
distinction); and Global Real Estate Sustainability Benchmark “Green Star” Ranking (9th year in a row; ranking #2 out of
94 publicly traded companies in the Americas, with an “A” grade for our public disclosure).
Expanded our climate scenario analysis as recommended by the Taskforce on Climate-Related Financial Disclosures and
have updated our disclosures (which are paired with third party assurance) according to the Sustainability Accounting
Standards Board and the Global Reporting Initiative.
Altogether, we own and operate more than 27 million square feet of LEED certified buildings, representing 95% of our office portfolio,
with over 23 million square feet at LEED Gold or Platinum. Thanks to our sustainability and energy management captains Gaston Silva,
Karen Oh, Robert Phinney, and Michael Lipitz.
In addition, we have provided our employees with the resources, support, and flexibility needed through the pandemic. We enhance our
human capital by sponsoring continuing education and career development. We have actively engaged with our workforce and solicit
their feedback through our divisional leaders and employee surveys.
Our Board, and particularly our Corporate Governance and Nominating Committee, is assigned with oversight of ESG, which includes
climate change risk. Our 2022 Long Term Performance Plan incorporates ESG performance metrics as part of our Senior Management
compensation program. A discussion regarding our corporate governance is included in our proxy statement, which can be viewed at
www.vno.com/proxy and the governance section of our website at www.vno.com/governance.
15 We have chosen to report our emissions according to the financial control method, as discussed in the World Resource Institute’s Greenhouse Gas Protocol: A Corporate
Accounting and Reporting Standard: Revised Edition. Location-Based reflects emissions for our properties based on the grid average emission factor, while Market-Based reflects
emissions that we are responsible for due to our purchasing decisions. Our Scope 1 emissions include onsite combustion from oil and natural gas; Scope 2 emissions include our
district steam consumption and electricity consumption, including electricity consumed by our submetered tenants; Scope 3 emissions include other utility consumption within
the direct control of our tenants.
20
21
Thank You, Dick West… Welcome Ray McGuire
Richard R. West is a pro’s pro. He is the most practical academic I’ve ever met. He is a graduate business school
dean (Amos Tuck at Dartmouth and Leonard N. Stern at NYU). Dick has been on the Vornado board for 40 years,
since 1982, and has been a very active and engaged counselor and Audit Committee Chair. His judgment and
leadership, understanding of processes and people, balance sheet issues, and risk vs. reward are at the head of the
class. His good humor, always with perfect timing, was most welcome. Vornado owes Dick a huge debt of gratitude.
Dick, I and your colleagues on the Board wish you well. While Dick may be irreplaceable, he was succeeded as
Audit Chair last year (a transition year) by Mandy Puri, who is surely up to the task. Could it be we have two
irreplaceables?
Raymond J. McGuire was elected to the Board on March 31, 2022 and will stand for election with all Trustees at
our annual meeting in May. Ray’s bio is on our website at www.vno.com, please take a look. His education, work
experience, and life experiences are truly extraordinary. And it takes extraordinary to rise to the very top of Morgan
Stanley and then Citigroup. We are excited to have Ray as a friend and counselor; we will benefit enormously from
his judgment and experience. Last year, Ray decided it was time to give back and commit to public service in the
form of a courageous, albeit longshot, race to be elected mayor of the City of New York. We are delighted to
welcome Ray McGuire to the Vornado board.
22
We continually broaden our leadership team through promotions from within our Company. Please join me in congratulating this year’s
class; they deserve it.
Our new Executive Vice Presidents and Corporate Officers:
David Bellman
Executive Vice President
Design & Construction
Elana Butler
Executive Vice President
Leasing Counsel
Pamela Caruso
Executive Vice President
Leasing Counsel
Richard Famularo
Executive Vice President
Controller
Joshua Glick
Executive Vice President
Director of PENN
DISTRICT Leasing
Jan LaChapelle
Executive Vice President
Head of Capital Markets
Frank Maiorano
Executive Vice President
Head of Tax &
Compliance
Michael Schnitt
Executive Vice President
Acquisitions & Capital
Markets
Gary Hansen
Chief Financial Officer
Alexander’s, Inc.
Deirdre Maddock
Chief Accounting Officer
Vornado Realty Trust
In addition:
Samantha Benvenuto was promoted to Senior Vice President, Human Resources
Brian Cantrell was promoted to Senior Vice President, Acquisitions & Capital Markets
Robert Larson was promoted to Senior Vice President, Operations
Carlos Lopez was promoted to Senior Vice President, Field Operations
Blaise Lucas was promoted to Senior Vice President & Controller – Alexander’s & VCP Fund
Alan Reagan was promoted to Senior Vice President, Development
Michael Sadowski was promoted to Senior Vice President, Application Development
Fabiola Cabrera was promoted to Vice President, Controller – theMART
Dalia Elachi was promoted to Vice President, Tax and Compliance
Monique Kielar was promoted to Vice President, Apparel Marketing
Yan Yan Ma was promoted to Vice President, Tax and Compliance
Matthew McAvoy was promoted to Vice President, Operations
Jose Meneses was promoted to Vice President, Financial Reporting and Technical Accounting
Kyle Nyhuis was promoted to Vice President, Development Accounting
Karen Oh was promoted to Vice President, Utilities & Innovation
Daniel Ruanova was promoted to Vice President, Senior Property Manager
Penny Willimann was promoted to Vice President, Marketing and Sales
Welcome to Fred Harris, Executive Vice President, Development; David Barattin, Senior Vice President, Finance - New York Division;
Robert Phinney, Vice President, Sustainability; Henri Chalouh, Vice President, Leasing Counsel and Natasha Torres, Vice President,
FP&A.
Thank you and congratulations to Matt Iocco, who has retired after 22 years of service. We will miss him and wish him well.
Our operating platform heads are the best in the business. I pay my respects to my partners, Michael Franco, Glen Weiss, Barry Langer,
Haim Chera and Tom Sanelli; and to David Greenbaum and Joe Macnow, my long-time partners who are now part-timers. Our
exceptional 15 Division Executive Vice Presidents deserve special recognition and our thanks. Thank you as well to our very talented
and hardworking 24 Senior Vice Presidents and 58 Vice Presidents who make the trains run on time, every day.
Our Vornado Family has grown with 7 marriages and 17 births this year, 7 girls and 10 boys.
On behalf of Vornado’s Board, senior management and 3,224 associates, we thank our shareholders, analysts and other stakeholders for
their continued support.
Steven Roth
Chairman and CEO
April 4, 2022
23
Appendix A - Here Are The Principles By Which We Run Our Business:
We are a fully-integrated real estate operating company. We have the best leasing, operating and development teams in the
business. We are laser focused.
We invest in the best buildings in the best locations.
We seek to acquire value-add assets where our unique skills will create shareholder value. We believe vacancy at the right
price is an opportunity and that buildings, even in rundown condition (that we can reimagine) in great locations are also an
opportunity.
We invest in our buildings to maintain, modernize and transform. The front of the house and the back of the house of our
assets are as good as new (and are in locations where new could not be created). Our transformations have increased rents
over $20 per square foot, yielding attractive double-digit returns. We also measure our success here by the quality of tenants
we have been able to attract. We have transformed almost all of our fleet; THE PENN DISTRICT is in process.
We are disciplined and patient and prepared to let flat 4% cap rate deals pass by, while we wait for the fat pitch.
While we have many million plus square foot buildings, we shy away from 500,000 square foot tenants who seem to always
get the better of the deal, in strong markets or in weak. Our sweet spot is the 50,000 to 200,000 square foot tenant.
A few years ago, I coined the phrase, “The island of Manhattan is tilting to the West and to the South.” Today, the hottest
submarkets in town run from Hudson Yards to THE PENN DISTRICT and extend South through Chelsea and Meatpacking.
Anticipating these trends, we have structured our office portfolio so that half of our square footage is in this district.
We have a hospitality approach, treating our tenants as the valued customers that they are. This attitude begins at the leasing
table (although that process can at times be contentious), through tenant fit up, to greeting at the front door. We believe this
approach yields the highest renewal rate in the business; renewing tenants enhances our bottom line.
We treat the real estate brokerage community as if they are our customers, because they are. Brokers prefer dealing with us,
we know what it takes to make a deal, we treat their clients well and we deliver every time.
We are in the amenity business. Our amenity poster child is now the new PENN 1, where we have dominant, state of the art,
dining, workout, socializing and meeting spaces, etc.
Tenant mix is really important; companies and their employees care who they co-tenant with. The design and location of
each of our buildings has a target market in mind. For example our new-builds in Chelsea are targeting the creative class and
boutique financials (an interesting combination).
We maintain a fortress balance sheet with industry-leading liquidity.
All of this in the relentless pursuit of shareholder value.
24
Below is a reconciliation of net income (loss) to NOI, as adjusted (properties owned at the end of 2021):
($ IN MILLIONS)
Net income (loss)
Our share of (income) loss from partially owned entities
Our share of (income) loss from real estate fund
Interest and other investment (income) loss, net
Net gains on disposition of assets
Net gain on transfer to Fifth Ave. and Times Square JV
Purchase price fair value adjustment
(Income) loss from discontinued operations
NOI attributable to noncontrolling interests
Depreciation, amortization expense and income taxes
General and administrative expense
Acquisition and transaction related costs
Our share of NOI from partially owned entities
Interest and debt expense
NOI
Certain items that impact NOI
2020
2019
(461.8)
3,334.3
329.1
226.3
5.5
(78.9)
104.1
(21.8)
2018
422.6
(9.1)
89.2
(17.1)
(381.3)
(845.5)
(246.0)
2021
207.5
(130.5)
(11.1)
(4.6)
(50.8)
—
—
—
— (2,571.1)
—
—
—
—
(69.4)
(72.8)
(69.3)
401.9
134.6
13.8
310.9
231.1
1,033.4
14.2
436.3
181.5
174.0
306.5
229.3
972.6
54.9
522.6
169.9
106.5
322.4
286.6
1,259.8
1,382.6
1,401.3
(75.2)
(202.2)
(219.3)
NOI, as adjusted (properties owned at the end of 2021)
1,047.6
1,027.5
1,184.6
1,180.4
1,182.0
Below is a reconciliation of net income (loss) to FFO and FFO, as adjusted:
2020
2019
(297.0)
3,147.9
(51.7)
(50.1)
(348.7)
3,097.8
368.6
389.0
2018
449.9
(65.1)
384.8
413.1
—
(178.7)
(158.1)
($ IN MILLIONS)
Net income (loss) attributable to Vornado
Preferred share dividends and issuance costs
Net income (loss) applicable to common shares
Depreciation and amortization of real property
Net gains on sale of real estate
Real estate impairment losses
Decrease in fair value of marketable securities
Net gain on transfer to Fifth Avenue and Times Square JV, net
Net gain from sale of Urban Edge shares
After tax purchase price fair value adjustment
Partially-owned entities adjustments:
Depreciation of real property
Net gains on sale of real estate
Income tax effect of adjustments
Real estate impairment losses
(Increase) decrease in fair value of marketable securities
Noncontrolling interests’ share adjustments
Preferred share dividends
FFO
Certain items that impact FFO
FFO, as adjusted
Below is a reconciliation of net income (loss) to EBITDA, as adjusted
($ IN MILLIONS)
Net income (loss) (before noncontrolling interests)
Less: net (income) loss attributable to noncontrolling interests
in consolidated subsidiaries
Net income (loss) attributable to the Operating Partnership
Interest and debt expense
Depreciation and amortization
Net gain of sale of real estate
Impairment losses on real estate
Income tax expense/benefit
Net gain on transfer to Fifth Avenue and Times Square JV, net
EBITDA
Gain on sale of 220 Central Park South units
Hotel Pennsylvania (permanently closed April 5, 2021)
Real Estate Fund
608 Fifth Avenue lease liability (gain) loss
Severance and other reduction in force expenses
Credit losses on loans receivable
Other
EBITDA, as adjusted (2019 to 2021 variance - 187 million)
2021
176.0
(74.9)
101.1
373.8
—
7.9
—
—
—
—
139.2
(15.7)
—
—
(1.1)
(34.1)
—
571.1
(21.2)
549.9
2021
207.5
(24.0)
183.5
297.1
526.5
(15.6)
7.9
(9.8)
—
989.6
(50.3)
11.6
(3.8)
—
—
—
1.9
949.0
236.3
4.9
32.0
5.5
— (2,559.1)
—
—
(62.4)
—
156.6
134.7
—
—
409.1
2.8
(79.1)
—
—
—
—
2.9
141.7
—
750.5
1,003.4
(249.5)
(342.9)
501.0
660.5
2020
(461.8)
2019
3,334.3
139.9
(321.9)
309.0
532.3
—
645.3
36.2
24.5
3,358.8
390.1
530.5
(178.7)
32.0
103.9
— (2,559.2)
1,677.4
(604.4)
(8.3)
48.8
77.2
—
—
(55.1)
1,135.6
1,200.9
(381.3)
31.1
63.1
(70.3)
23.4
13.4
30.0
910.3
2017
264.1
(15.2)
(3.2)
(37.8)
(0.5)
—
—
13.2
(65.3)
470.4
159.0
1.8
269.2
345.6
2017
227.4
(65.4)
162.0
468.0
(3.5)
—
—
—
—
—
—
(44.1)
(0.6)
(71.2)
484.2
141.9
31.3
253.6
347.9
12.0
26.5
—
—
(27.3)
101.6
(4.0)
137.0
(17.8)
—
—
3.9
(22.8)
—
729.7
(26.9)
702.8
—
7.7
—
(36.7)
1.1
717.8
(16.8)
701.0
2016
982.0
(168.9)
23.6
(29.6)
(160.4)
—
—
(404.9)
(66.2)
428.2
149.6
9.4
271.1
330.2
1,364.1
(220.0)
1,144.1
2016
906.9
(83.3)
823.6
531.6
(177.0)
160.7
—
—
—
—
154.8
(2.9)
—
6.3
—
(41.1)
1.6
1,457.6
(785.3)
672.3
2015
859.4
9.9
(74.1)
(27.2)
(149.4)
—
—
(223.5)
(64.9)
294.8
149.3
12.5
245.8
309.3
1,341.9
(235.2)
1,106.7
2015
760.4
(80.6)
679.8
514.1
(289.1)
0.3
—
—
—
—
144.0
(4.5)
—
16.8
—
(22.4)
—
1,039.0
(409.3)
629.7
2014
1,009.0
58.5
2013
564.7
336.3
(163.0)
(102.9)
(38.6)
(13.6)
—
—
20.8
(2.0)
—
—
2012
694.5
(428.9)
(63.9)
252.7
(4.9)
—
—
(686.9)
(666.8)
(378.1)
(55.0)
(58.6)
(45.3)
360.7
141.9
18.4
207.7
337.4
342.5
150.3
24.9
175.1
323.5
1,176.5
1,107.8
304.5
140.5
17.4
152.1
315.7
956.3
(167.0)
(154.3)
(113.9)
1,009.5
953.5
842.4
2014
864.9
(81.5)
783.4
517.5
2013
476.0
(84.0)
392.0
501.8
2012
617.3
(67.9)
549.4
504.4
(507.2)
(411.6)
(245.8)
26.5
37.1
130.0
—
—
—
—
117.8
(11.6)
(7.3)
—
—
(8.0)
—
911.1
—
—
—
—
157.3
(0.5)
(26.7)
6.6
—
(15.1)
0.1
641.0
—
—
—
—
154.7
(241.6)
(27.5)
11.6
—
(16.6)
—
818.6
(403.8)
(173.0)
(461.1)
507.3
468.0
357.5
Below is a reconciliation of net income (loss) to net income, as adjusted:
2021
101.1
(44.6)
29.5
(17.0)
7.9
(3.8)
—
15.1
88.2
($ IN MILLIONS)
Net income (loss) applicable to common shares
220 Central Park South gains
Hotel Pennsylvania (permanently closed April 5, 2021)
Tax benefit net of tax liabilities
Non-cash impairment losses
Real Estate Fund
Severance
Certain other items that impact net income
Net income, as adjusted
2020
(348.7)
(332.1)
31.2
—
575.1
63.1
29.4
5.9
23.9
25
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended:
December 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
Commission File Number:
Commission File Number:
to
001-11954 (Vornado Realty Trust)
001-34482 (Vornado Realty L.P.)
Vornado Realty Trust
Vornado Realty L.P.
(Exact name of registrants as specified in its charter)
Vornado Realty Trust
Maryland
(State or other jurisdiction of incorporation or organization)
22-1657560
(I.R.S. Employer Identification Number)
Vornado Realty L.P.
Delaware
(State or other jurisdiction of incorporation or organization)
13-3925979
(I.R.S. Employer Identification Number)
888 Seventh Avenue, New York, New York 10019
(Address of principal executive offices) (Zip Code)
(212) 894-7000
(Registrants’ telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Registrant
Vornado Realty Trust
Vornado Realty Trust
Vornado Realty Trust
Vornado Realty Trust
Vornado Realty Trust
Common Shares of beneficial interest, $.04 par value per share
Title of Each Class
Trading Symbol(s)
VNO
Name of Exchange on Which
Registered
New York Stock Exchange
Cumulative Redeemable Preferred Shares of beneficial
interest, liquidation preference $25.00 per share:
5.40% Series L
5.25% Series M
5.25% Series N
4.45% Series O
VNO/PL
VNO/PM
VNO/PN
VNO/PO
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Registrant
Vornado Realty Trust
Vornado Realty L.P.
Title of Each Class
Series A Convertible Preferred Shares of beneficial interest,
liquidation preference $50.00 per share
Class A Units of Limited Partnership Interest
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Vornado Realty Trust: Yes ☑ No ☐ Vornado Realty L.P.: Yes ☐ No ☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Vornado Realty Trust: Yes ☐ No ☑ Vornado Realty L.P.: Yes ☐ No ☑
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.
Vornado Realty Trust: Yes ☑ No ☐ Vornado Realty L.P.: Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Vornado Realty Trust: Yes ☑ No ☐ Vornado Realty L.P.: Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” "non-accelerated filer,"
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Vornado Realty Trust:
☑ Large Accelerated Filer
☐ Non-Accelerated Filer
Vornado Realty L.P.:
☐ Large Accelerated Filer
☑ Non-Accelerated Filer
☐ Accelerated Filer
☐ Smaller Reporting Company
☐ Emerging Growth Company
☐ Accelerated Filer
☐ Smaller Reporting Company
☐ Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report.
Vornado Realty Trust: Yes ☑ No ☐ Vornado Realty L.P.: Yes ☑ No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Vornado Realty Trust: Yes ☐ No ☑ Vornado Realty L.P.: Yes ☐ No ☑
The aggregate market value of the voting and non-voting common shares held by non-affiliates of Vornado Realty Trust, i.e. by persons
other than officers and trustees of Vornado Realty Trust, was $8,259,860,000 at June 30, 2021.
As of December 31, 2021, there were 191,723,608 common shares of beneficial interest outstanding of Vornado Realty Trust.
There is no public market for the Class A units of limited partnership interest of Vornado Realty L.P. Based on the June 30, 2021 closing
share price of Vornado Realty Trust’s common shares, which are issuable upon redemption of the Class A units, the aggregate market
value of the Class A units held by non-affiliates of Vornado Realty L.P., i.e. by persons other than Vornado Realty Trust and its officers
and trustees, was $515,447,000 at June 30, 2021.
Part III: Portions of Proxy Statement for Annual Meeting of Vornado Realty Trust’s Shareholders to be held on May 19, 2022.
Documents Incorporated by Reference
EXPLANATORY NOTE
This report combines the Annual Reports on Form 10-K for the fiscal year ended December 31, 2021 of Vornado Realty Trust
and Vornado Realty L.P. Unless stated otherwise or the context otherwise requires, references to “Vornado” refer to Vornado Realty
Trust, a Maryland real estate investment trust (“REIT”), and references to the “Operating Partnership” refer to Vornado Realty L.P., a
Delaware limited partnership. References to the “Company,” “we,” “us” and “our” mean collectively Vornado, the Operating
Partnership and those subsidiaries consolidated by Vornado.
The Operating Partnership is the entity through which we conduct substantially all of our business and own, either directly or
through subsidiaries, substantially all of our assets. Vornado is the sole general partner and also a 92.6% limited partner of the
Operating Partnership. As the sole general partner of the Operating Partnership, Vornado has exclusive control of the Operating
Partnership’s day-to-day management.
Under the limited partnership agreement of the Operating Partnership, unitholders may present their Class A units for redemption
at any time (subject to restrictions agreed upon at the time of issuance of the units that may restrict such right for a period of time).
Class A units may be tendered for redemption to the Operating Partnership for cash; Vornado, at its option, may assume that
obligation and pay the holder either cash or Vornado common shares on a one-for-one basis. Because the number of Vornado common
shares outstanding at all times equals the number of Class A units owned by Vornado, the redemption value of each Class A unit is
equivalent to the market value of one Vornado common share, and the quarterly distribution to a Class A unitholder is equal to the
quarterly dividend paid to a Vornado common shareholder. This one-for-one exchange ratio is subject to specified adjustments to
prevent dilution. Vornado generally expects that it will elect to issue its common shares in connection with each such presentation for
redemption rather than having the Operating Partnership pay cash. With each such exchange or redemption, Vornado’s percentage
ownership in the Operating Partnership will increase. In addition, whenever Vornado issues common shares other than to acquire
Class A units of the Operating Partnership, Vornado must contribute any net proceeds it receives to the Operating Partnership and the
Operating Partnership must issue to Vornado an equivalent number of Class A units of the Operating Partnership. This structure is
commonly referred to as an umbrella partnership REIT, or UPREIT.
The Company believes that combining the Annual Reports on Form 10-K of Vornado and the Operating Partnership into this
single report provides the following benefits:
•
•
•
enhances investors’ understanding of Vornado and the Operating Partnership by enabling investors to view the business as a
whole in the same manner as management views and operates the business;
eliminates duplicative disclosure and provides a more streamlined and readable presentation because a substantial portion of the
disclosure applies to both Vornado and the Operating Partnership; and
creates time and cost efficiencies in the preparation of one combined report instead of two separate reports.
The Company believes it is important to understand the few differences between Vornado and the Operating Partnership in the
context of how Vornado and the Operating Partnership operate as a consolidated company. The financial results of the Operating
Partnership are consolidated into the financial statements of Vornado. Vornado does not have any significant assets, liabilities or
operations, other than its investment in the Operating Partnership. The Operating Partnership, not Vornado, generally executes all
significant business relationships other than transactions involving the securities of Vornado. The Operating Partnership holds
substantially all of the assets of Vornado. The Operating Partnership conducts the operations of the business and is structured as a
partnership with no publicly traded equity. Except for the net proceeds from equity offerings by Vornado, which are contributed to the
capital of the Operating Partnership in exchange for Class A units of partnership in the Operating Partnership, and the net proceeds of
debt offerings by Vornado, which are contributed to the Operating Partnership in exchange for debt securities of the Operating
Partnership, as applicable, the Operating Partnership generates all remaining capital required by the Company’s business. These
sources may include working capital, net cash provided by operating activities, borrowings under the revolving credit facility, the
issuance of secured and unsecured debt and equity securities and proceeds received from the disposition of certain properties.
To help investors better understand the key differences between Vornado and the Operating Partnership, certain information for
Vornado and the Operating Partnership in this report has been separated, as set forth below:
•
•
•
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities;
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations includes information
specific to each entity, where applicable; and
Item 8. Financial Statements and Supplementary Data which includes the following specific disclosures for Vornado
Realty Trust and Vornado Realty L.P.:
•
•
•
•
Note 10. Redeemable Noncontrolling Interests
Note 11. Shareholders' Equity/Partners' Capital
Note 14. Stock-based Compensation
Note 18. Income (Loss) Per Share/Income (Loss) Per Class A Unit
This report also includes separate Part II, Item 9A. Controls and Procedures sections and separate Exhibits 31 and 32 certifications
for each of Vornado and the Operating Partnership in order to establish that the requisite certifications have been made and that
Vornado and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18
U.S.C. §1350.
Item
Financial Information:
Page Number
INDEX
1.
1A.
1B.
2.
3.
4.
5.
6.
7.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Reserved
Management's Discussion and Analysis of Financial Condition and Results of
Operations
7A.
Quantitative and Qualitative Disclosures about Market Risk
8.
9.
9A.
9B.
9C.
10.
11.
12.
13.
14.
15.
16.
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
Directors, Executive Officers and Corporate Governance(1)
Executive Compensation(1)
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters(1)
Certain Relationships and Related Transactions, and Director Independence(1)
Principal Accounting Fees and Services(1)
Exhibits, Financial Statement Schedules
Form 10-K Summary
7
12
24
25
31
31
31
32
33
59
60
119
119
123
123
123
123
124
124
124
124
134
135
PART I.
PART II.
PART III.
PART IV.
Signatures
____________________
(1) These items are omitted in whole or in part because Vornado, the Operating Partnership’s sole general partner, will file a
definitive Proxy Statement pursuant to Regulation 14A under the Securities Exchange Act of 1934 with the Securities and
Exchange Commission no later than 120 days after December 31, 2021, portions of which are incorporated by reference herein.
5
FORWARD-LOOKING STATEMENTS
Certain statements contained herein constitute forward‑looking statements as such term is defined in Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 Annual Report on Form
10‑K. We also note the following forward-looking statements: in the case of our development and redevelopment projects, the
estimated completion date, estimated project cost and cost to complete; and estimates of future capital expenditures, dividends to
common and preferred shareholders and operating partnership distributions. 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 this Annual Report on Form 10-K.
Currently, one of the most significant factors is the ongoing adverse effect of the COVID-19 pandemic on our business, financial
condition, results of operations, cash flows, operating performance and the effect it has had and may continue to have on our tenants,
the global, national, regional and local economies and financial markets and the real estate market in general. The extent of the impact
of the COVID-19 pandemic will depend on future developments, including vaccination rates among the population, the efficacy and
durability of vaccines against emerging variants, and governmental and tenant responses thereto, all of which are uncertain at this time
but the impact could be material. Moreover, you are cautioned that the COVID-19 pandemic will heighten many of the risks identified
in “Item 1A. Risk Factors” in this Annual Report on Form 10-K.
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 Annual Report on Form 10-K 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 Annual Report on Form 10-K.
6
PART I
ITEM 1.
BUSINESS
Vornado is a fully‑integrated REIT and conducts its business through, and substantially all of its interests in properties are held
by, the Operating Partnership, a Delaware limited partnership. Accordingly, Vornado’s cash flow and ability to pay dividends to its
shareholders are 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 92.6% of the common limited
partnership interest in the Operating Partnership as of December 31, 2021.
We currently own all or portions of:
New York:
•
67 Manhattan operating properties consisting of:
•
•
•
20.6 million square feet of office space in 32 of the properties;
2.7 million square feet of street retail space in 60 of the properties;
1,674 units in eight residential properties;
• Multiple development sites, including Hotel Pennsylvania;
•
A 32.4% interest in Alexander’s, Inc. (“Alexander’s”) (NYSE: ALX), which owns six properties in the greater New York
metropolitan area, including 731 Lexington Avenue, the 1.1 million square foot Bloomberg, L.P. headquarters building, and
The Alexander, a 312-unit apartment tower in Queens;
Signage throughout the Penn District and Times Square; and
Building Maintenance Services LLC ("BMS"), a wholly owned subsidiary, which provides cleaning and security services for
our buildings and third parties.
•
•
Other Real Estate and Investments:
•
•
•
•
The 3.7 million square foot theMART in Chicago;
A 70% controlling interest in 555 California Street, a three-building office complex in San Francisco’s financial district
aggregating 1.8 million square feet;
A 25% interest in Vornado Capital Partners, our real estate fund (the "Fund"). We are the general partner and investment
manager of the fund. The fund is in wind-down; and
Other real estate and investments.
OBJECTIVES AND STRATEGY
Our business objective is to maximize Vornado shareholder value. We intend to achieve this objective by continuing to pursue our
investment philosophy and to execute 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, 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;
developing and redeveloping 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 and proceeds from 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 these securities in the future.
ACQUISITION
We completed the following acquisition during 2021:
•
$158 million purchase of our joint venture partner's 45% ownership interest in One Park Avenue (valuing the property at
$875 million, encumbered by $525 million of existing debt), increasing our ownership interest to 100%.
DISPOSITIONS
We completed the following sale transactions during 2021:
•
•
•
•
•
$137 million net proceeds from the sale of six condominium units at 220 Central Park South ("220 CPS");
$100 million aggregate sale of three Manhattan retail properties located at 677-679, 759-771 and 828-850 Madison Avenue;
$75 million sale by Alexander's (32.4% interest) of its Paramus, New Jersey property to IKEA Property, Inc. ("IKEA"), the
tenant at the property, pursuant to IKEA's purchase option contained in the lease;
$28 million sale of 501 Broadway by the Fund (25% interest); and
$10 million sale by Alexander's (32.4% interest) of a parcel of land in the Bronx, New York.
7
FINANCINGS
We completed the following financing transactions during 2021:
•
$1.25 billion unsecured revolving credit facility extended from January 2023 to April 2026, lowering the interest rate to
LIBOR plus 0.89% from LIBOR plus 1.00%;
$1.2 billion refinancing of 555 California Street (70% interest);
$950 million refinancing of 1290 Avenue of the Americas (70% interest);
$750 million green bond public offering of senior unsecured notes;
$675 million repayment of theMART mortgage loan;
$525 million refinancing of One Park Avenue;
$500 million modification of the PENN 11 mortgage loan lowering the interest rate to LIBOR plus 1.95% from LIBOR plus
2.75%, resulting in a fixed rate of 2.23% pursuant to the interest rate swap agreement;
$350 million refinancing of 909 Third Avenue;
$300 million issuance of 4.45% Series O cumulative redeemable preferred shares; and
$300 million redemption of 5.70% Series K cumulative redeemable preferred shares.
•
•
•
•
•
•
•
•
•
DEVELOPMENT AND REDEVELOPMENT EXPENDITURES
PENN District
Farley
Our 95% joint venture (5% is owned by the Related Companies ("Related")) is developing Farley Office and Retail, which will
include approximately 845,000 rentable square feet of commercial space, comprised of approximately 730,000 square feet of office
space and approximately 115,000 square feet of restaurant and retail space. The total development cost of this project is estimated to
be approximately $1,120,000,000 at our 95% share, of which $896,186,000 of cash has been expended as of December 31, 2021.
PENN 1
We are redeveloping PENN 1, a 2,547,000 square foot office building located on 34th Street between Seventh and Eighth
Avenue. In December 2020, we entered into an agreement with the Metropolitan Transportation Authority (the “MTA”) to oversee the
redevelopment of the Long Island Rail Road Concourse at Penn Station (the "Concourse"), within the footprint of PENN 1. Skanska
USA Civil Northeast, Inc. will perform the redevelopment under a fixed price contract for $380,000,000 which is being funded by the
MTA. In connection with the redevelopment, we entered into an agreement with the MTA which will result in the widening of the
Concourse to relieve overcrowding and our trading of 15,000 square feet of back of house space for 22,000 square feet of retail
frontage space. Vornado's total development cost for the PENN 1 project is estimated to be $450,000,000. As of December 31, 2021,
$309,437,000 of cash has been expended.
PENN 2
We are redeveloping PENN 2, a 1,795,000 square foot (as expanded) office building, located on the west side of Seventh Avenue
between 31st and 33rd Street. The development cost of this project is estimated to be $750,000,000, of which $161,066,000 of cash
has been expended as of December 31, 2021.
PENN 15 (Hotel Pennsylvania Site)
We have permanently closed the Hotel Pennsylvania and plan to develop an office tower on the site. Demolition of the existing
building structure commenced in the fourth quarter of 2021.
We are also making districtwide improvements within the PENN District. The development cost of these improvements is
estimated to be $100,000,000, of which $31,481,000 of cash has been expended as of December 31, 2021.
We are also evaluating other development and redevelopment opportunities at certain of our properties in Manhattan including, in
particular, the PENN District.
There can be no assurance that the above projects will be completed, completed on schedule or within budget.
8
ENVIRONMENTAL SUSTAINABILITY INITIATIVES
We have long believed a focus on environmental sustainability is responsible management of our business and important to our
tenants. It has been central to Vornado's business strategy for over 10 years. The Corporate Governance and Nominating Committee of
Vornado's Board of Trustees is assigned with oversight of Environmental, Social and Governance (“ESG”) matters, which includes
climate change risk. Environmental sustainability initiatives are carried out by a dedicated team of professionals that work directly
with our business units.
Vornado is an industry leader in sustainability, owning and operating more than 27 million square feet of LEED (Leadership in
Energy and Environmental Design) certified buildings, representing 95% of our office portfolio, with over 23 million square feet at
LEED Gold or Platinum. In 2021, we were selected as a global “Sector Leader” for all Office/Retail Diversified REITs in the Global
Real Estate Sustainability Benchmark ("GRESB"), ranked second among 94 responding listed companies in the United States and
received the “Green Star” distinction for the ninth consecutive year. In 2020, we received the Leader in the Light Award by the
National Association for Real Estate Investment Trusts (NAREIT) for the 11th consecutive year; were recognized as an EPA
ENERGY STAR Partner of the Year, with the Sustained Excellence distinction; and received the 2020 Leadership Award from the
United States Green Buildings Council (USGBC). We prioritize addressing climate change and in 2019 adopted a 10-year plan to
make our buildings carbon neutral by 2030 (“Vision 2030”). Vision 2030 is a multi-faceted approach that prioritizes energy efficiency,
demand management, and renewable power. We rely on both existing and future technology, as well as meaningful stakeholder
collaboration with our tenants, our employees, and our communities, to achieve this plan. Our commitment to carbon neutrality and
associated emissions reduction targets have been approved by the Science Based Targets Initiative as consistent with a 1.5°C climate
scenario, the most ambitious goal of the Paris Agreement.
We consider sustainability in all aspects of our business, including the design, construction, retrofit and ongoing maintenance and
operations of our portfolio of buildings. We operate our buildings sustainably and efficiently by establishing best practices in energy
and water consumption, carbon reduction, resource and waste management and ecologically sensitive procurement. Our policies, from
100% green cleaning to energy efficiency, are implemented across our entire portfolio. Mandatory sustainability training is required
for all of our building operators and managers, and we undertake significant outreach with our tenants, employees and investors
regarding Vornado’s sustainability programs and strategies.
In January 2022, the Compensation Committee of Vornado's Board of Trustees approved the 2022 performance based long-term
incentive plan which for the first time formally ties senior management compensation to achievement of certain ESG targets, including
reductions in greenhouse emissions, achieving a specified GRESB score and targeting a higher percentage of LEED Gold or Platinum
certified square footage.
We are committed to transparent reporting of sustainability performance indicators and publish an annual ESG Report in
accordance with the Global Reporting Initiative and aligned with the metrics codified by the Sustainability Accounting Standards
Board and recommendations set forth by the Task Force on Climate-related Financial Disclosures. Further details on our
environmental sustainability initiatives and strategy, including our Vision 2030 Roadmap, can be found in our 2020 ESG Report at
(esg.vno.com). There can be no assurance that our Vision 2030 commitment will be achieved in the planned time frame. The ESG
Report is not incorporated by reference and should not be considered part of this Annual Report on Form 10-K.
HUMAN CAPITAL MANAGEMENT
As of December 31, 2021, we have approximately 3,224 employees, consisting of (i) 2,710 employees of Building Maintenance
Services LLC, a wholly owned subsidiary, which provides cleaning, security, and engineering services primarily to our New York
properties, (ii) 235 employees in our corporate office, (iii) 161 employees in leasing and property management, and (iv) 118
employees of theMART. The foregoing does not include employees of partially owned entities.
Human capital management is critical to our success and our employees are the foundation of our human capital. To foster talent
and growth, we provide training and continuing education, promote career and personal development, and encourage innovation and
engagement.
Compensation, Benefits and Employees Wellbeing
To attract and retain the best-qualified talent and to help our employees stay healthy, balance their work and personal lives, and
meet their financial and retirement goals, we offer competitive benefits including, but not limited to, market-competitive
compensation, healthcare (medical, dental and vision coverage), a health savings account, 401(k) and employer match, dependent care
flexible spending account, parental leave, adoption/surrogacy benefits, short-term and long-term disability insurance, life insurance,
time off/paid holidays, tuition reimbursement, subsidized gym memberships, employee wellness programs and incentives, in-
workplace COVID-19 and flu vaccinations, onsite COVID-19 testing, commuter benefits, employee assistance program and
workplace flexibility.
Talent Development
We promote career and personal development, provide training and continuing education, and encourage innovation and
engagement. This includes tuition reimbursement for our employees’ continuing education and professional development, and the
opportunity to participate in a variety of training and networking engagements.
9
HUMAN CAPITAL MANAGEMENT - CONTINUED
Culture and Engagement
Our employees are critical to our success, and we believe creating a positive and inclusive culture is essential to attracting and
retaining engaged employees. We seek to retain our employees by actively engaging with our workforce and we solicit their feedback
through our divisional leaders and employee surveys. We use their feedback to create and continually enhance programs that support
their needs.
Through our volunteer program, Vornado Volunteers, employees are granted one day of paid time off per calendar year to
volunteer for a cause of their choice.
Diversity and Inclusion
Vornado is a diverse and inclusive environment that empowers the individual and enriches the employment experience. We have
published Equal Employment Opportunity “EEO” data since 2017 and have a broadly diverse workforce across both our corporate
base as well as our BMS division. Our employee demographics data can be found on our ESG micro-site (esg.vno.com), which is not
incorporated by reference and should not be considered part of this Annual Report on Form 10-K.
Our diversity metrics set a baseline from where we constantly strive to improve.
Health and Wellness / COVID-19 Response
As a building owner and landlord to thousands of business tenants, we focus on maintaining and improving the health of our
indoor environments, as well as communicating the value of our health and wellness programs with consistency and clarity to our
stakeholders. We believe that consistent health programming and communications protocols not only mitigate health risks within our
buildings, but they also create a responsible behavior framework for our employees, our tenants, and our visitors.
We responded to the COVID-19 pandemic with determination to ensure that our tenants, employees and visitors remain healthy
and safe. We fortified many of our buildings with protections that include daily health screenings and questionnaires, social distancing
and PPE requirements, enhanced HVAC and indoor air quality, and installed onsite COVID-19 testing and vaccination locations. This
infrastructure is further reinforced with our green cleaning program and our on-site operations team.
Labor Relations
BMS employs and manages janitorial and security staff who are members of 32BJ SEIU and engineering staff who are members
of Local 94 of the International Union of Operating Engineers AFL-CIO. Through our active participation in the Realty Advisory
Board on Labor Relations, we work collaboratively with both unions and consider our relations with our union employees to be very
positive.
For additional information on human capital matters, please see our most recent ESG report, available for download on our
website at www.vno.com and in digital format at esg.vno.com. This report and other information on our website are not incorporated
by reference into and do not form any part of this Annual Report on Form 10-K.
COMPETITION
We compete with a large number of real estate investors, property owners and developers, some of which may be willing to
accept lower returns on their investments. Principal factors of competition are rents charged, sales prices, 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 global, 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, population
and employment trends. See "Risk Factors" in Item 1A for additional information regarding these factors.
SEGMENT DATA
We operate in the following reportable segments: New York and Other. Financial information related to these reportable segments
for the years ended December 31, 2021, 2020 and 2019 is set forth in Note 23 – Segment Information to our consolidated financial
statements in this Annual Report on Form 10-K.
TENANTS ACCOUNTING FOR OVER 10% OF REVENUES
None of our tenants accounted for more than 10% of total revenues in any of the years ended December 31, 2021, 2020 and 2019.
CERTAIN ACTIVITIES
We do not base our acquisitions and investments on specific allocations by type of property. We have historically held our
properties for long‑term investment; however, it is possible that properties in our portfolio may be sold or otherwise disposed of when
circumstances warrant. Further, we have not adopted a policy that limits the amount or percentage of assets which could be invested in
a specific property or property type. Generally our activities are reviewed and may be modified from time to time by Vornado’s Board
of Trustees without the vote of our shareholders or Operating Partnership unitholders.
PRINCIPAL EXECUTIVE OFFICES
Our principal executive offices are located at 888 Seventh Avenue, New York, New York 10019; telephone (212) 894‑7000.
10
MATERIALS AVAILABLE ON OUR WEBSITE
Copies of our Annual Report on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K and amendments to
those reports, as well as Reports on Forms 3, 4 and 5 regarding officers, trustees or 10% beneficial owners, filed or furnished pursuant
to Section 13(a), 15(d) or 16(a) of the Securities Exchange Act of 1934 are available free of charge through our website
(www.vno.com) as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange
Commission. Also available on our website are copies of our Audit Committee Charter, Compensation Committee Charter, Corporate
Governance and Nominating Committee Charter, Code of Business Conduct and Ethics, and Corporate Governance Guidelines. In the
event of any changes to these charters or the code or guidelines, changed copies will also be made available on our website. Copies of
these documents are also available directly from us free of charge. Our website also includes other financial and non-financial
information, including certain non-GAAP financial measures, none of which is a part of this Annual Report on Form 10-K. Copies of
our filings under the Securities Exchange Act of 1934 are also available free of charge from us, upon request.
11
ITEM 1A.
RISK FACTORS
Material factors that may adversely affect our business, operations and financial condition are summarized below. We refer to the
equity and debt securities of both Vornado and the Operating Partnership as our “securities” and the investors who own shares of
Vornado or units of the Operating Partnership, or both, as our “equity holders.” The risks and uncertainties described herein may not
be the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial
may also adversely affect our business, operations and financial condition. See “Forward-Looking Statements” contained herein on
page 6.
RISKS RELATED TO OUR PROPERTIES AND INDUSTRY
Our business, financial condition, results of operations and cash flows have been and may continue to be adversely affected by
the COVID-19 pandemic and the impact could be material to us.
Our business has been adversely affected by the ongoing COVID-19 pandemic and preventive measures taken to curb the spread
of the virus. The pandemic has resulted in governments and other authorities implementing numerous measures to try to contain the
virus, such as travel bans and restrictions, quarantines, shelter in place orders, and business closures. Existing and potential new
variants make the on-going impact of the COVID-19 pandemic difficult to predict. If the virus continues to spread significantly in its
current form or as a more contagious variant, governmental agencies and other authorities may order additional closures or impose
further restrictions on businesses, which could negatively impact the financial condition of our tenants. The continuation of the
pandemic could also have fundamental adverse effects on our business. Further delays in tenant return-to-work plans as a result of the
continued risks of the pandemic and further dependence on work from home and flexible work arrangements may lead our office
tenants to reassess their long-term physical space needs. Further, while many of the limitations and restrictions imposed on retailers
during the onset of the pandemic have been lifted and/or eased, economic conditions, including a decline in Manhattan tourism since
the onset of the virus, continue to adversely affect the financial health of our retail tenants. The impact of such conditions could cause
retailers to reduce the number and size of their physical locations and further increase reliance on e-commerce. Over time, these
factors could decrease the demand for office and retail space and ultimately decrease occupancy and/or rent levels across our portfolio,
which may have a negative impact on our financial condition and/or access to capital. In addition, the value of our real estate assets
may decline, which may result in non-cash impairment charges in future periods and the impact could be material. The extent of the
COVID-19 pandemic’s effect on our operational and financial performance will depend on future developments, including vaccination
rates among the population, the efficacy and durability of vaccines against emerging variants, and governmental and tenant responses
thereto, all of which are uncertain at this time. Given the dynamic nature of the circumstances, it is difficult to predict the ongoing
impact of the COVID-19 pandemic on our business, financial condition, results of operations and cash flows but the impact could be
material.
A significant portion of our properties is located in the New York City Metropolitan area and is affected by the economic
cycles and risks inherent to this area.
In 2021, approximately 88% of our net operating income ("NOI", a non-GAAP measure) came from properties located in the New
York City metropolitan area. We may continue to concentrate a significant portion of our future acquisitions, development and
redevelopment in this area. Real estate markets are subject to economic downturns and we cannot predict how economic conditions
will impact this market in either the short or long term. Declines in the economy or declines in real estate markets in the New York
City metropolitan area, including the effects of the COVID-19 pandemic, have hurt and could continue to hurt our financial
performance and the value of our properties. In addition to the factors affecting the national economic condition generally, the factors
affecting economic conditions in this region include:
•
•
•
•
•
•
•
•
•
•
•
financial performance and productivity of the media, advertising, professional services, financial, technology, retail,
insurance and real estate industries;
business layoffs or downsizing;
any oversupply of, or reduced demand for, real estate;
industry slowdowns;
relocations of businesses;
changing demographics;
increased work from home and use of alternative work places;
changes in the number of domestic and international tourists to our markets (including as a result of changes in the
relative strengths of world currencies and as a result of the COVID-19 pandemic);
the fiscal health of New York State and New York City governments and local transit authorities, particularly as a result
of the COVID-19 pandemic;
infrastructure quality; and
changes in rates or the treatment of the deductibility of state and local taxes.
12
It is impossible for us to ensure the accuracy of predictions of the future or the effect of trends in the economic and investment
climates of the geographic areas in which we concentrate, and more generally of the United States, or the real estate markets in these
areas. Local, national or global economic downturns could negatively affect the value of our properties, our businesses and
profitability.
We are subject to risks that affect the general and New York City retail environments.
Certain of our properties are Manhattan retail properties. In 2021, approximately 17% of our NOI is from Manhattan retail
properties. As such, these properties are affected by the general and New York City retail environments, including office and
residential occupancy rates, the level of consumer spending and consumer confidence, Manhattan tourism, employer remote-working
policies, the threat of terrorism, increasing competition from on-line retailers, other retailers, and outlet malls, and the impact of
technological change upon the retail environment generally. Further, New York City tourism has not yet fully recovered from the
effects of the COVID-19 pandemic. The decline in international tourists, who comprise a major source of demand for our Manhattan
retail tenants, has adversely affected such tenants. These factors could adversely affect the financial condition of our retail tenants, or
result in the bankruptcy of such tenants, and the willingness of retailers to lease space in our retail locations, which could have an
adverse effect on the value of our properties, our business and profitability.
Our performance and the value of an investment in us are subject to risks associated with our real estate assets and with the
real estate industry.
The value of our real estate and the value of an investment in us fluctuates depending on conditions in the general economy and
the real estate business. These conditions may also adversely impact our revenues and cash flows.
The factors that affect the value of our real estate investments include, among other things:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
global, national, regional and local economic conditions;
competition from other available space, including co-working space and sub-leases;
local conditions such as an oversupply of space or a reduction in demand for real estate in the area;
how well we manage our properties;
the development and/or redevelopment of our properties;
changes in market rental rates;
the impact on our retail tenants and demand for retail space at our properties due to increased competition from online
shopping;
the timing and costs associated with property improvements and rentals;
whether we are able to pass all or portions of any increases in operating costs through to tenants;
changes in real estate taxes and other expenses;
the ability of state and local governments to operate within their budgets;
whether tenants and users such as customers and shoppers consider a property attractive;
changes in consumer preferences adversely affecting retailers and retail store values;
changes in space utilization by our tenants due to technology, economic conditions, and business environment;
the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;
consequences of any armed conflict involving, or terrorist attacks against, the United States or individual acts of violence
in public spaces;
trends in office real estate;
availability of financing on acceptable terms or at all;
inflation or deflation;
fluctuations in interest rates;
our ability to obtain adequate insurance;
changes in zoning laws and taxation;
government regulation;
potential liability under environmental or other laws or regulations;
natural disasters;
general competitive factors;
climate change; and
pandemics.
The rents or sales proceeds we receive and the occupancy levels at our properties may decline as a result of adverse changes in
any of these factors. If rental revenues, sales proceeds and/or occupancy levels decline, we generally would expect to have less cash
available for operating costs, to pay indebtedness and for distribution to equity holders. In addition, some of our major expenses,
including mortgage payments, real estate taxes and maintenance costs generally do not decline when the related rents decline and
maintenance costs can increase substantially in an inflationary environment.
13
Real estate is a competitive business and that competition may adversely impact us.
We compete with a large number of real estate investors, property owners and developers, some of which may be willing to
accept lower returns on their investments. Principal factors of competition are rents charged, sales prices, attractiveness of location, the
quality of the property and the breadth and the quality of services provided. Substantially all of our properties face competition from
similar properties in the same market, which may adversely impact the rents we can charge at those properties and our results of
operations.
Our commercial office properties are located primarily in highly developed areas of the New York metropolitan area. Manhattan
is the largest office market in the United States. The number of competitive office properties in the New York metropolitan area,
which may be newer or better located than our properties, could have a material adverse effect on our ability to lease office space at
our properties and on the effective rents we are able to charge.
We depend on leasing space to tenants on economically favorable terms and collecting rent from tenants who may not be able
to pay.
Our financial results depend significantly on leasing space in our properties to tenants on economically favorable terms. In
addition, because a majority of our income comes from renting of real property, our income, funds available to pay indebtedness and
funds available for distribution to equity holders will decrease if a significant number of our tenants cannot pay their rent or if we are
not able to maintain occupancy levels on favorable terms. If a tenant does not pay its rent, we may not be able to enforce our rights as
landlord without delays and may incur substantial legal and other costs. Even if we are able to enforce our rights, a tenant may not
have recoverable assets.
We may be adversely affected by trends in office real estate, including work from home trends.
In 2021, approximately 79% of our NOI is from our office properties. Work from home, flexible or hybrid work schedules, open
workplaces, videoconferencing, and teleconferencing are becoming more common, particularly as a result of the COVID-19
pandemic. These practices may enable businesses to reduce their office space requirements. There is also an increasing trend among
some businesses to utilize shared office spaces and co-working spaces. A continuation of the movement towards these practices could,
over time, erode the overall demand for office space and, in turn, place downward pressure on occupancy, rental rates, cash flows and
property valuations.
We may be unable to renew leases or relet space as leases expire.
When our tenants decide not to renew their leases upon their expiration, we may not be able to relet the space. Even if tenants do
renew or we can relet the space, the terms of renewal or reletting, considering among other things, rent and other concessions, the cost
of improvements to the property and leasing commissions, may be less favorable than the terms in the expired leases. In addition,
changes in space utilization by our tenants may impact our ability to renew or relet space without the need to incur substantial costs in
renovating or redesigning the internal configuration of the relevant property. If we are unable to promptly renew the leases or relet the
space at similar rates or if we incur substantial costs in renewing or reletting the space, our cash flow and ability to service debt
obligations and pay dividends and distributions to equity holders could be adversely affected.
Bankruptcy or insolvency of tenants may decrease our revenue, net income and available cash.
From time to time, some of our tenants have declared bankruptcy, and other tenants may declare bankruptcy or become insolvent
in the future. The bankruptcy or insolvency of a major tenant could cause us to suffer lower revenues and operational difficulties,
including leasing the remainder of the property. As a result, the bankruptcy or insolvency of a major tenant could result in decreased
net income and funds available to pay our indebtedness or make distributions to equity holders.
Terrorist attacks may adversely affect the value of our properties and our ability to generate cash flow.
We have significant investments in the New York City, Chicago and San Francisco metropolitan areas. In response to a terrorist
attack or the perceived threat of terrorism, tenants in these areas may choose to relocate their businesses to less populated, lower-
profile areas of the United States that may be perceived to be less likely targets of future terrorist activity and fewer customers may
choose to patronize businesses in these areas. This, in turn, would trigger a decrease in the demand for space in these areas, which
could increase vacancies in our properties and force us to lease space on less favorable terms. Furthermore, we may experience
increased costs in security, equipment and personnel. As a result, the value of our properties and the level of our revenues and cash
flows could decline materially.
Natural disasters and the effects of climate change could have a concentrated impact on the areas where we operate and could
adversely impact our results.
Our investments are concentrated in the New York, Chicago and San Francisco metropolitan areas. Natural disasters, including
earthquakes, storms, tornados, floods and hurricanes, could cause significant damage to our properties and the surrounding
environment or area. Potentially adverse consequences of “global warming,” including rising sea levels, could similarly have an
impact on our properties and the economies of the metropolitan areas in which we operate. Government efforts to combat climate
change may impact the cost of operating our properties. Over time, these conditions could result in declining demand for office space
in our buildings or the inability of us to operate the buildings at all. Climate change may also have indirect effects on our business by
14
increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of energy at our
properties and requiring us to expend funds as we seek to repair and protect our properties against such risks. The incurrence of these
losses, costs or business interruptions may adversely affect our operating and financial results.
Our properties are located in urban areas, which means the vitality of our properties is reliant on sound transportation and utility
infrastructure. If that infrastructure is compromised in any way by an extreme weather event, such a compromise could have an
adverse impact on our local economies and populations, as well as on our tenants’ ability to do business in our buildings.
Our properties are subject to transitional risks related to climate-related policy change.
De-carbonization of grid-supplied energy could lead to increased energy costs and operating expenses for our buildings.
Retrofitting our building systems to consume less energy could lead to increased capital costs. Buildings which consume fossil fuel
onsite may be subject to penalties. In addition, the full transition of grid-supplied energy to renewable sources (as has been mandated
by the Climate Leadership and Community Protection Act in New York State) could lead to increased energy costs and operating
expenses for our buildings.
We may become subject to costs, taxes or penalties, or increases therein, associated with natural resource or energy usage, such as
a “carbon tax” and by local legislation such as New York City’s Local Law 97, which sets limits on carbon emissions in our buildings
and imposes penalties if we exceed those limits, or laws passed to impose limits or eliminate any onsite fossil fuel combustion in new
construction and major renovations. These costs, taxes or penalties could increase our operating costs and decrease the cash available
to pay our obligations or distribute to our equity owners.
Changes to tax laws could affect REITs generally, the trading of our shares and our results of operations, both positively and
negatively, in ways that are difficult to anticipate.
The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the
legislative process and by the IRS and the Treasury Department. Changes to tax laws (which changes may have retroactive
application) could adversely affect the taxation of REITs and their shareholders. We cannot predict whether, when, in what form, or
with what effective dates, tax laws, regulations and rulings may be enacted, promulgated or decided, or technical corrections made,
which could result in an increase in our, or our shareholders’, tax liability or require changes in the manner in which we operate in
order to minimize increases in our tax liability. If such changes occur, we may be required to pay additional taxes on our assets or
income and/or be subject to additional restrictions. These increased tax costs could, among other things, adversely affect the trading
price for our common shares, our financial condition, our results of operations and the amount of cash available for the payment of
dividends.
RISKS RELATED TO OUR OPERATIONS AND STRATEGIES
We face risks associated with property acquisitions.
We have acquired in the past and intend to continue to pursue the acquisition of properties and portfolios of properties, including,
but not limited to, large portfolios that could increase our size and result in alterations to our capital structure. Our acquisition
activities and their success are subject to the following risks:
•
•
•
•
•
•
•
•
even if we enter into an acquisition agreement for a property, we may be unable to complete that acquisition after making
a non-refundable deposit and incurring certain other acquisition-related costs;
we may be unable to obtain or assume financing for acquisitions on favorable terms or at all;
acquired properties may fail to perform as expected;
the actual costs of repositioning, redeveloping or maintaining acquired properties may be greater than our estimates and
may require significantly greater time and attention of management than anticipated;
the acquisition agreement will likely contain conditions to closing, including completion of due diligence investigations
to our satisfaction or other conditions that are not within our control, which may not be satisfied;
acquired properties may be located in new markets where we may face risks associated with a lack of market knowledge
or understanding of the local economy, lack of business relationships in the area, costs associated with opening a new
regional office and unfamiliarity with local governmental and permitting procedures;
we may acquire real estate through the acquisition of the ownership entity subjecting us to the risks of that entity and we
may be exposed to the liabilities of properties or companies acquired, some of which we may not be aware of at the time
of acquisition; and
we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of
properties, into our existing operations, and this could have an adverse effect on our results of operations and financial
condition.
Any delay or failure on our part to identify, negotiate, finance and consummate such acquisitions in a timely manner and on
favorable terms, or operate acquired properties to meet our financial expectations, could impede our growth and have an adverse effect
on us, including our financial condition, results of operations, cash flow and the market value of our securities.
15
We are exposed to risks associated with property redevelopment and repositioning that could adversely affect us, including our
financial condition and results of operations.
We continue to engage in redevelopment and repositioning activities with respect to our properties, and, accordingly, we are
subject to certain risks, which could adversely affect us, including our financial condition and results of operations. These risks
include, without limitation, (i) the availability and pricing of financing on favorable terms or at all; (ii) the availability and timely
receipt of zoning and other regulatory approvals; (iii) the potential for the fluctuation of occupancy rates and rents at redeveloped
properties, which may result in our investment not being profitable; (iv) start up, repositioning and redevelopment costs may be higher
than anticipated; (v) cost overruns, especially in an inflationary environment, and untimely completion of construction (including risks
beyond our control, such as weather or labor conditions, material shortages or supply chain delays); (vi) the potential that we may fail
to recover expenses already incurred if we abandon development or redevelopment opportunities after we begin to explore them; (vii)
the potential that we may expend funds on and devote management time to projects which we do not complete; (viii) the inability to
complete leasing of a property on schedule or at all, resulting in an increase in carrying or redevelopment costs; (ix) the possibility that
properties will be leased at below expected rental rates and (x) to the extent the redevelopment activities are conducted in partnership
with third parties, the possibility of disputes with our joint venture development partners and the potential that we miss certain project
milestone deadlines. These risks could result in substantial unanticipated delays or expenses and could prevent the initiation or the
completion of redevelopment activities or the ultimate rents achieved on new developments, any of which could have an adverse effect
on our financial condition, results of operations, cash flow, the market value of our common shares and ability to satisfy our principal
and interest obligations and to make distributions to our shareholders.
From time to time we have made, and in the future we may seek to make one or more material acquisitions. The
announcement of such a material acquisition may result in a rapid and significant decline in the price of our securities.
From time to time we have made, and in the future we may seek to make one or more material acquisitions that we believe will
maximize shareholder value. However, an announcement by us of one or more significant acquisitions could result in a quick and
significant decline in the price of our securities.
It may be difficult to sell real estate timely, which may limit our flexibility.
Real estate investments are relatively illiquid. Consequently, we may have limited ability to dispose of assets in our portfolio
promptly in response to changes in economic or other conditions which could have an adverse effect on our sources of working capital
and our ability to satisfy our debt obligations.
We may not be able to effectively operate our business if we are unable to attract and retain qualified personnel due to a tight
labor market and COVID-19 vaccine mandate in areas in which we operate.
Our success depends on our ability to continue to attract, retain, and motivate qualified personnel. Currently, the U.S. job market
is experiencing labor shortages and employee resignations at record levels. Factors impacting the labor shortage include continued
fears of COVID-19, enhanced unemployment insurance benefits, people leaving the workforce entirely, higher pay from competitors,
demand for flexible working hours and remote work, and many other factors. The increased ability of employees in the workforce to
work from home or in other remote work arrangements has made it and may continue to make it more difficult for us to compete in the
job market. In addition, we may find it difficult to attract and retain employees in New York City, where our corporate office and a
significant portion of our properties are located, due to the implementation of a COVID-19 vaccine mandate beginning in December
2021. Our inability to attract, retain, and motivate qualified personnel, could have a material adverse effect on our ability to operate
our business.
Significant inflation could adversely affect our business and financial results.
Increased inflation could adversely affect us by increasing costs of land, construction and renovation. In a highly inflationary
environment, we may be unable to raise rental rates at or above the rate of inflation, which could reduce our profit margins. In
addition, our cost of labor and materials could increase, which could have an adverse impact on our business or financial results.
While increases in most operating expenses at our properties can be passed on to our office and retail tenants, some tenants have fixed
reimbursement charges and expenses at our residential properties may not be able to be passed on to residential tenants. Unreimbursed
increased operating expenses may reduce cash flow available for payment of mortgage debt and interest and for distributions to
shareholders.
We may not be permitted to dispose of certain properties or pay down the debt associated with those properties when we might
otherwise desire to do so without incurring additional costs. In addition, when we dispose of or sell assets, we may not be able to
reinvest the sales proceeds and earn similar returns.
As part of an acquisition of a property, or a portfolio of properties, we may agree, and in the past have agreed, not to dispose of
the acquired properties or reduce the mortgage indebtedness for a long-term period, unless we pay certain of the resulting tax costs of
the seller. These agreements could result in us holding on to properties that we would otherwise sell and not pay down or refinance. In
addition, when we dispose of or sell assets, we may not be able to reinvest the sales proceeds and earn returns similar to those
generated by the assets that were sold.
16
From time to time we have made, and in the future we may seek to make investments in companies over which we do not have
sole control. Some of these companies operate in industries with different risks than investing and operating real estate.
From time to time we have made, and in the future we may seek to make, investments in companies that we may not control,
including, but not limited to, Alexander’s, our Fifth Avenue and Times Square JV, and other equity and loan investments. Although
these businesses generally have a significant real estate component, some of them operate in businesses that are different from
investing and operating real estate. Consequently, we are subject to operating and financial risks of those industries and to the risks
associated with lack of control, such as having differing objectives than our partners or the entities in which we invest, or becoming
involved in disputes, or competing directly or indirectly with these partners or entities. In addition, we rely on the internal controls and
financial reporting controls of these entities and their failure to maintain effectiveness or comply with applicable standards may
adversely affect us.
We are subject to risks involved in real estate activity through joint ventures and private equity real estate funds.
We currently own properties through joint ventures and private equity real estate funds with other persons and entities and may in
the future acquire or own properties through joint ventures and funds when we believe circumstances warrant the use of such
structures. Joint venture and fund investments involve risk, including: the possibility that our partners might refuse to make capital
contributions when due and therefore we may be forced to make contributions to maintain the value of the property; that we may be
responsible to our partners for indemnifiable losses; that our partners might at any time have business or economic goals that are
inconsistent with ours; that third parties may be hesitant or refuse to transact with the joint venture or fund due to the identity of our
partners; and that our partners may be in a position to take action or withhold consent contrary to our recommendations, instructions or
requests. We and our respective joint venture partners may each have the right to trigger a buy-sell, put right or forced sale
arrangement, which could cause us to sell our interest, or acquire our partner’s interest, or to sell the underlying asset, at a time when
we otherwise would not have initiated such a transaction, without our consent or on unfavorable terms. In some instances, joint
venture and fund partners may have competing interests in our markets that could create conflicts of interest. These conflicts may
include compliance with the REIT requirements, and our REIT status could be jeopardized if any of our joint ventures or funds do not
operate in compliance with REIT requirements. To the extent our partners do not meet their obligations to us or our joint ventures or
funds, or they take action inconsistent with the interests of the joint venture or fund, we may be adversely affected.
RISKS RELATED TO OUR INDEBTEDNESS AND ACCESS TO CAPITAL
Capital markets and economic conditions can materially affect our liquidity, financial condition and results of operations as
well as the value of an investment in our debt and equity securities.
There are many factors that can affect the value of our debt and equity securities, including the state of the capital markets and the
economy. Demand for office and retail space typically declines nationwide due to an economic downturn, bankruptcies, downsizing,
layoffs and cost cutting. Government action or inaction may adversely affect the state of the capital markets. The cost and availability
of credit may be adversely affected by illiquid credit markets and wider credit spreads, which may adversely affect our liquidity and
financial condition, including our results of operations, and the liquidity and financial condition of our tenants. Our inability or the
inability of our tenants to timely refinance maturing liabilities and access the capital markets to meet liquidity needs may materially
affect our financial condition and results of operations and the value of our securities.
We may not be able to obtain capital to make investments.
We depend primarily on external financing to fund the growth of our business. This is because one of the requirements of the
Internal Revenue Code of 1986, as amended, for a REIT is that it distributes 90% of its taxable income, excluding net capital gains, to
its shareholders. This, in turn, requires the Operating Partnership to make distributions to its unitholders. There is a separate
requirement to distribute net capital gains or pay a corporate level tax in lieu thereof. Our access to debt or equity financing depends
on the willingness of third parties to lend or make equity investments and on conditions in the capital markets generally. Although we
believe that we will be able to finance any investments we may wish to make in the foreseeable future, there can be no assurance that
new financing will be available or available on acceptable terms. For information about our available sources of funds, see
“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and
the notes to the consolidated financial statements in this Annual Report on Form 10-K.
We depend on dividends and distributions from our direct and indirect subsidiaries. The creditors and preferred equity holders
of these subsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or
distributions to us.
Substantially all of Vornado’s assets are held through its Operating Partnership that holds substantially all of its properties and
assets through subsidiaries. The Operating Partnership’s cash flow is dependent on cash distributions to it by its subsidiaries, and in
turn, substantially all of Vornado’s cash flow is dependent on cash distributions to it by the Operating Partnership. The creditors of
each of Vornado’s direct and indirect subsidiaries are entitled to payment of that subsidiary’s obligations to them, when due and
payable, before distributions may be made by that subsidiary to its equity holders. Thus, the Operating Partnership’s ability to make
distributions to its equity holders depends on its subsidiaries’ ability first to satisfy their obligations to their creditors and then to make
distributions to the Operating Partnership. Likewise, Vornado’s ability to pay dividends to its holders of common and preferred shares
17
depends on the Operating Partnership’s ability first to satisfy its obligations to its creditors and make distributions to holders of its
preferred units and then to make distributions to Vornado.
Furthermore, the holders of preferred units of the Operating Partnership are entitled to receive preferred distributions before
payment of distributions to the Operating Partnership’s equity holders, including Vornado. Thus, Vornado’s ability to pay cash
dividends to its equity holders and satisfy its debt obligations depends on the Operating Partnership’s ability first to satisfy its
obligations to its creditors and make distributions to holders of its preferred units and then to its equity holders, including Vornado. As
of December 31, 2021, there were three series of preferred units of the Operating Partnership not held by Vornado with a total
liquidation value of $53,223,000.
In addition, Vornado’s participation in any distribution of the assets of any of its direct or indirect subsidiaries upon the
liquidation, reorganization or insolvency is only after the claims of the creditors, including trade creditors and preferred equity holders,
are satisfied.
We have a substantial amount of indebtedness that could affect our future operations.
As of December 31, 2021, our consolidated mortgages and unsecured indebtedness, excluding related premium, discount and
deferred financing costs, totaled $8.7 billion. We are subject to the risks normally associated with debt financing, including the risk
that our cash flow from operations will be insufficient to meet our required debt service. Our debt service costs generally will not be
reduced if developments in the market or at our properties, such as the entry of new competitors or the loss of major tenants, cause a
reduction in the income from our properties. Should such events occur, our operations may be adversely affected. If a property is
mortgaged to secure payment of indebtedness and income from such property is insufficient to pay that indebtedness, the property
could be foreclosed upon by the mortgagee resulting in a loss of income and a decline in our total asset value.
We have outstanding debt, and the amount of debt and its cost may increase and refinancing may not be available on
acceptable terms.
We rely on both secured and unsecured, variable rate and non-variable rate debt to finance acquisitions and development activities
and for working capital. If we are unable to obtain debt financing or refinance existing indebtedness upon maturity, our financial
condition and results of operations would likely be adversely affected. In addition, the cost of our existing debt may increase,
especially in the case of a rising interest rate environment, and we may not be able to refinance our existing debt in sufficient amounts
or on acceptable terms. If the cost or amount of our indebtedness increases or we cannot refinance our debt in sufficient amounts or on
acceptable terms, we are at risk of credit rating downgrades and default on our obligations that could adversely affect our financial
condition and results of operations.
Failure to hedge effectively against interest rate changes may adversely affect results of operations.
The interest rate hedge instruments we use to manage some of our exposure to interest rate volatility involve risk and
counterparties may fail to perform under these arrangements. In addition, these arrangements may not be effective in reducing our
exposure to interest rate changes and when existing interest rate hedges terminate, we may incur increased costs in implementing
further interest rate hedges. Failure to hedge effectively against interest rate changes may adversely affect our results of operations.
Covenants in our debt instruments could adversely affect our financial condition and our acquisitions and development
activities.
The mortgages on our properties contain customary covenants such as those that limit our ability, without the prior consent of the
applicable lender, to further mortgage the applicable property or to discontinue insurance coverage. Our unsecured indebtedness and
debt that we may obtain in the future may contain customary restrictions, requirements and other limitations on our ability to incur
indebtedness, including covenants that limit our ability to incur debt based upon the level of our ratio of total debt to total assets, our
ratio of secured debt to total assets, our ratio of EBITDA to interest expense, and fixed charges, and that require us to maintain a
certain ratio of unencumbered assets to unsecured debt. Our ability to borrow is subject to compliance with these and other covenants.
In addition, failure to comply with our covenants could cause a default under the applicable debt instrument, and we may then be
required to repay such debt with capital from such other sources or give possession of a secured property to the lender. Under those
circumstances, other sources of capital may not be available to us or may be available only on unattractive terms.
A downgrade in our credit ratings could materially and adversely affect our business and financial condition.
Our credit rating and the credit ratings assigned to our debt securities and our preferred shares could change based upon, among
other things, our results of operations and financial condition. These ratings are subject to ongoing evaluation by credit rating
agencies, and any rating could be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant
such action. Moreover, these credit ratings are not recommendations to buy, sell or hold our common shares or any other securities. If
any of the credit rating agencies that have rated our securities downgrades or lowers its credit rating, or if any credit rating agency
indicates that it has placed any such rating on a “watch list” for a possible downgrading or lowering, or otherwise indicates that its
outlook for that rating is negative, such action could have a material adverse effect on our costs and availability of funding, which
could in turn have a material adverse effect on our financial condition, results of operations, cash flows, the trading/redemption price
of our securities, and our ability to satisfy our debt service obligations and to pay dividends and distributions to our equity holders.
18
RISK RELATED TO OUR ORGANIZATION AND STRUCTURE
Vornado’s Amended and Restated Declaration of Trust (the “declaration of trust”) sets limits on the ownership of its shares.
Generally, for Vornado to maintain its qualification as a REIT under the Internal Revenue Code, not more than 50% in value of
the outstanding shares of beneficial interest of Vornado may be owned, directly or indirectly, by five or fewer individuals at any time
during the last half of Vornado’s taxable year. The Internal Revenue Code defines “individuals” for purposes of the requirement
described in the preceding sentence to include some types of entities. Under Vornado’s declaration of trust, as amended, no person
may own more than 6.7% of the outstanding common shares of any class, or 9.9% of the outstanding preferred shares of any class,
with some exceptions for persons who held common shares in excess of the 6.7% limit before Vornado adopted the limit and other
persons approved by Vornado’s Board of Trustees. In addition, our declaration of trust includes restrictions on ownership of our
common shares and preferred shares to preserve our status as a "domestically controlled qualified investment entity" within the
meaning of Section 897 (h)(4)(B) of the Internal Revenue Code of 1986, as amended. These restrictions on transferability and
ownership may delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or
otherwise be in the best interest of equity holders.
The Maryland General Corporation Law (the “MGCL”) contains provisions that may reduce the likelihood of certain takeover
transactions.
The MGCL imposes conditions and restrictions on certain “business combinations” (including, among other transactions, a
merger, consolidation, share exchange, or, in certain circumstances, an asset transfer or issuance of equity securities) between a
Maryland REIT and certain persons who beneficially own at least 10% of the corporation’s stock (an “interested shareholder”). Unless
approved in advance by the board of trustees of the trust, or otherwise exempted by the statute, such a business combination is
prohibited for a period of five years after the most recent date on which the interested shareholder became an interested
shareholder. After such five-year period, a business combination with an interested shareholder must be: (a) recommended by the
board of trustees of the trust, and (b) approved by the affirmative vote of at least (i) 80% of the trust’s outstanding shares entitled to
vote and (ii) two-thirds of the trust’s outstanding shares entitled to vote which are not held by the interested shareholder with whom
the business combination is to be effected, unless, among other things, the trust’s common shareholders receive a “fair price” (as
defined by the statute) for their shares and the consideration is received in cash or in the same form as previously paid by the interested
shareholder for his or her shares.
In approving a transaction, Vornado’s Board of Trustees may provide that its approval is subject to compliance, at or after the
time of approval, with any terms and conditions determined by the Board of Trustees. Vornado’s Board of Trustees has adopted a
resolution exempting any business combination between Vornado and any trustee or officer of Vornado or its affiliates. As a result,
any trustee or officer of Vornado or its affiliates may be able to enter into business combinations with Vornado that may not be in the
best interest of our equity holders. With respect to business combinations with other persons, the business combination provisions of
the MGCL may have the effect of delaying, deferring or preventing a change in control of Vornado or other transaction that might
involve a premium price or otherwise be in the best interest of our equity holders. The business combination statute may discourage
others from trying to acquire control of Vornado and increase the difficulty of consummating any offer.
Title 3, Subtitle 8 of the MGCL permits our Board of Trustees, without shareholder approval and regardless of what is currently
provided in our declaration of trust or bylaws, to implement certain takeover defenses, including adopting a classified board or
increasing the vote required to remove a trustee. Such takeover defenses may have the effect of inhibiting a third party from making an
acquisition proposal for us or of delaying, deferring or preventing a change in control of us under the circumstances that otherwise
could provide our common shareholders with the opportunity to realize a premium over the then current market price.
Vornado may issue additional shares in a manner that could adversely affect the likelihood of certain takeover transactions.
Vornado’s declaration of trust authorizes the Board of Trustees to:
•
•
•
•
cause Vornado to issue additional authorized but unissued common shares or preferred shares;
classify or reclassify, in one or more series, any unissued preferred shares;
set the preferences, rights and other terms of any classified or reclassified shares that Vornado issues; and
increase, without shareholder approval, the number of shares of beneficial interest that Vornado may issue.
Vornado’s Board of Trustees could establish a series of preferred shares whose terms could delay, deter or prevent a change in
control of Vornado, and therefore of the Operating Partnership, or other transaction that might involve a premium price or otherwise
be in the best interest of our equity holders, although Vornado’s Board of Trustees does not now intend to establish a series of
preferred shares of this kind. Vornado’s declaration of trust and bylaws contain other provisions that may delay, deter or prevent a
change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of our equity
holders.
We may change our policies without obtaining the approval of our equity holders.
Our operating and financial policies, including our policies with respect to acquisitions of real estate or other companies, growth,
operations, indebtedness, capitalization, dividends and distributions, are exclusively determined by Vornado’s Board of Trustees.
Accordingly, our equity holders do not control these policies.
19
Steven Roth and Interstate Properties may exercise substantial influence over us. They and some of Vornado’s other trustees
and officers have interests or positions in other entities that may compete with us.
As of December 31, 2021, Interstate Properties, a New Jersey general partnership, and its partners beneficially owned an
aggregate of approximately 6.9% of the common shares of beneficial interest of Vornado and 26.1% of the common stock of
Alexander’s, which is described below. Steven Roth, David Mandelbaum and Russell B. Wight, Jr. are the three partners of Interstate
Properties. Mr. Roth is the Chairman of the Board of Trustees and Chief Executive Officer of Vornado, the managing general partner
of Interstate Properties, and the Chairman of the Board of Directors and Chief Executive Officer of Alexander’s. Messrs. Mandelbaum
and Wight are Trustees of Vornado and Directors of Alexander’s.
Because of these overlapping interests, Mr. Roth and Interstate Properties and its partners may have substantial influence over
Vornado, and therefore over the Operating Partnership. In addition, certain decisions concerning our operations or financial structure
may present conflicts of interest among Messrs. Roth, Mandelbaum and Wight and Interstate Properties and our other equity holders.
In addition, Mr. Roth, Interstate Properties and its partners, and Alexander’s currently and may in the future engage in a wide variety
of activities in the real estate business which may result in conflicts of interest with respect to matters affecting us, such as which of
these entities or persons, if any, may take advantage of potential business opportunities, the business focus of these entities, the types
of properties and geographic locations in which these entities make investments, potential competition between business activities
conducted, or sought to be conducted, competition for properties and tenants, possible corporate transactions such as acquisitions and
other strategic decisions affecting the future of these entities.
We manage and lease the real estate assets of Interstate Properties pursuant to a management agreement for which we receive an
annual fee equal to 4% of annual base rent and percentage rent. See Note 22 – Related Party Transactions to our consolidated
financial statements in this Annual Report on Form 10-K for additional information.
There may be conflicts of interest between Alexander’s and us.
As of December 31, 2021, we owned 32.4% of the outstanding common stock of Alexander’s. Alexander’s is a REIT that has six
properties, which are located in the greater New York metropolitan area. In addition to the 2.2% that they indirectly own through
Vornado, Interstate Properties, which is described above, and its partners owned 26.1% of the outstanding common stock of
Alexander’s as of December 31, 2021. Mr. Roth is the Chairman of the Board of Trustees and Chief Executive Officer of Vornado, the
managing general partner of Interstate Properties, and the Chairman of the Board of Directors and Chief Executive Officer of
Alexander’s. Messrs. Mandelbaum and Wight are Trustees of Vornado and Directors of Alexander’s and general partners of Interstate
Properties. Ms. Mandakini Puri and Dr. Richard West are Trustees of Vornado and Directors of Alexander’s.
We manage, develop and lease Alexander’s properties under management, development and leasing agreements under which we
receive annual fees from Alexander’s. These agreements are described in Note 5 - Investments in Partially Owned Entities to our
consolidated financial statements in this Annual Report on Form 10-K.
RISKS RELATED TO OUR COMMON SHARES AND OPERATING PARTNERSHIP CLASS A UNITS
The trading price of Vornado’s common shares has been volatile and may continue to fluctuate.
The trading price of Vornado’s common shares has been volatile and may continue to fluctuate widely as a result of several
factors, many of which are outside our control. In addition, the stock market is subject to fluctuations in the share prices and trading
volumes that affect the market prices of the shares of many companies. These broad market fluctuations have in the past and may in
the future adversely affect the market price of Vornado’s common shares and the redemption price of the Operating Partnership’s
Class A units. In particular, the market price of our common shares has been further adversely impacted since March 2020 due to the
COVID-19 pandemic. These factors include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
our financial condition and performance;
the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;
actual or anticipated quarterly fluctuations in our operating results and financial condition;
our dividend policy;
the reputation of REITs and real estate investments generally and the attractiveness of REIT equity securities in
comparison to other equity securities, including securities issued by other real estate companies, and fixed income
securities;
uncertainty and volatility in the equity and credit markets;
fluctuations in interest rates;
changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts or
actions taken by rating agencies with respect to our securities or those of other REITs;
failure to meet analysts’ revenue or earnings estimates;
speculation in the press or investment community;
strategic actions by us or our competitors, such as acquisitions or restructurings;
the extent of institutional investor interest in us;
the extent of short-selling of Vornado common shares and the shares of our competitors;
fluctuations in the stock price and operating results of our competitors;
20
•
•
•
•
general financial and economic market conditions and, in particular, developments related to market conditions for office
REITs and other real estate related companies and the New York City real estate market;
domestic and international economic factors unrelated to our performance;
changes in tax laws and rules; and
all other risk factors addressed elsewhere in this Annual Report on Form 10-K.
A significant decline in Vornado’s stock price could result in substantial losses for our equity holders.
Vornado has many shares available for future sale, which could hurt the market price of its shares and the redemption price of
the Operating Partnership’s units.
The interests of equity holders could be diluted if we issue additional equity securities. As of December 31, 2021, Vornado had
authorized but unissued 58,276,392 common shares of beneficial interest, $.04 par value, and 58,387,098 preferred shares of
beneficial interest, no par value; of which 20,859,593 common shares are reserved for issuance upon redemption of Class A Operating
Partnership units, convertible securities and employee stock options and 11,200,000 preferred shares are reserved for issuance upon
redemption of preferred Operating Partnership units. Any shares not reserved may be issued from time to time in public or private
offerings or in connection with acquisitions. In addition, common and preferred shares reserved may be sold upon issuance in the
public market after registration under the Securities Act or under Rule 144 under the Securities Act or other available exemptions from
registration. We cannot predict the effect that future sales of Vornado’s common and preferred shares or Operating Partnership Class
A and preferred units will have on the market prices of our securities.
In addition, under Maryland law, Vornado’s Board of Trustees has the authority to increase the number of authorized shares
without shareholder approval.
Loss of our key personnel could harm our operations and adversely affect the value of our common shares and Operating
Partnership Class A units.
We are dependent on the efforts of Steven Roth, the Chairman of the Board of Trustees and Chief Executive Officer of
Vornado. While we believe that we could find a replacement for him and other key personnel, the loss of their services could harm our
operations and adversely affect the value of our securities.
RISKS RELATED TO REGULATORY COMPLIANCE
Vornado may fail to qualify or remain qualified as a REIT and may be required to pay federal income taxes at corporate rates,
which could adversely impact the value of our common shares.
Although we believe that Vornado will remain organized and will continue to operate so as to qualify as a REIT for federal
income tax purposes, Vornado may fail to remain so qualified. Qualifications are governed by highly technical and complex
provisions of the Internal Revenue Code for which there are only limited judicial or administrative interpretations and depend on
various facts and circumstances that are not entirely within our control. In addition, legislation, new regulations, administrative
interpretations or court decisions may significantly change the relevant tax laws and/or the federal income tax consequences of
qualifying as a REIT. If, with respect to any taxable year, Vornado fails to maintain its qualification as a REIT and does not qualify
under statutory relief provisions, Vornado could not deduct distributions to shareholders in computing our taxable income and would
have to pay federal income tax on its taxable income at regular corporate rates. The federal income tax payable would include any
applicable alternative minimum tax. If Vornado had to pay federal income tax, the amount of money available to distribute to equity
holders and pay its indebtedness would be reduced for the year or years involved, and Vornado would not be required to make
distributions to shareholders in that taxable year and in future years until it was able to qualify as a REIT and did so. In addition,
Vornado would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification
was lost, unless Vornado were entitled to relief under the relevant statutory provisions. Our failure to qualify as a REIT could impact
our ability to expand our business and raise capital and adversely affect the value of our common shares.
We may face possible adverse federal tax audits and changes in federal tax laws, which may result in an increase in our tax
liability.
In the normal course of business, certain entities through which we own real estate either have undergone or may undergo tax
audits. Although we believe that we have substantial arguments in favor of our positions, in some instances there is no controlling
precedent or interpretive guidance. There can be no assurance that audits will not occur with increased frequency or that the ultimate
result of such audits will not have a material adverse effect on our results of operations.
At any time, the U.S. federal income tax laws governing REITs or the administrative interpretations of those laws may be
amended. We cannot predict if or when any new U.S. federal income tax law, regulation, or administrative interpretation, or any
amendment to any existing U.S. federal income tax law, Treasury regulation or administrative interpretation, will be adopted,
promulgated or become effective and any such law, regulation, or interpretation may take effect retroactively. Vornado, its taxable
REIT subsidiaries, and our security holders could be adversely affected by any such change in, or any new, U.S. federal income tax
law, Treasury regulation or administrative interpretation.
21
We may face possible adverse state and local tax audits and changes in state and local tax law.
Because Vornado is organized and qualifies as a REIT, it is generally not subject to federal income taxes, but we are subject to
certain state and local taxes. In the normal course of business, certain entities through which we own real estate either have undergone,
or are currently undergoing, tax audits. Although we believe that we have substantial arguments in favor of our positions in the
ongoing audits, in some instances there is no controlling precedent or interpretive guidance on the specific point at issue. There can be
no assurance that audits will not occur with increased frequency or that the ultimate result of such audits will not have a material
adverse effect on our results of operations.
From time to time changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax
liability. A shortfall in tax revenues for states and municipalities in which we operate may lead to an increase in the frequency and size
of such changes including changes in laws, regulations and administration of property and transfer taxes. If such changes occur, we
may be required to pay additional taxes on our assets or income. These increased tax costs could adversely affect our financial
condition and results of operations and the amount of cash available for the payment of dividends and distributions to our security
holders.
Compliance or failure to comply with the Americans with Disabilities Act ("ADA") or other safety regulations and
requirements could result in substantial costs.
ADA generally requires that public buildings, including our properties, meet certain Federal requirements related to access and
use by disabled persons. Noncompliance could result in the imposition of fines by the Federal government or the award of damages to
private litigants and/or legal fees to their counsel. From time to time persons have asserted claims against us with respect to some of
our properties under the ADA, but to date such claims have not resulted in any material expense or liability. If, under the ADA, we are
required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access
barriers, it could adversely affect our financial condition and results of operations, as well as the amount of cash available for
distribution to equity holders.
Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety
requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know whether
existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures
that will affect our cash flow and results of operations.
We may incur significant costs to comply with environmental laws and environmental contamination may impair our ability to
lease and/or sell real estate.
Our operations and properties are subject to various federal, state and local laws and regulations concerning the protection of the
environment, including air and water quality, hazardous or toxic substances and health and safety. Under some environmental laws, a
current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released
at a property. The owner or operator may also be held liable to a governmental entity or to third parties for property damage or
personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination. These laws often
impose liability without regard to whether the owner or operator knew of the release of the substances or caused the release. The
presence of contamination or the failure to remediate contamination may also impair our ability to sell or lease real estate or to borrow
using the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including those that can require the
abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and govern
emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment
containing polychlorinated biphenyls (PCBs) are also regulated by federal and state laws. We are also subject to risks associated with
human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can
be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. Our predecessor companies may
be subject to similar liabilities for activities of those companies in the past. We could incur fines for environmental compliance and be
held liable for the costs of remedial action with respect to the foregoing regulated substances or related claims arising out of
environmental contamination or human exposure to contamination at or from our properties.
Each of our properties has been subject to varying degrees of environmental assessment. To date, these environmental
assessments have not revealed any environmental condition material to our business. However, identification of new compliance
concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination, human exposure to
contamination or changes in clean-up or compliance requirements could result in significant costs to us.
22
GENERAL RISKS
The occurrence of cyber incidents, or a deficiency in our cyber security, as well as other disruptions of our IT networks and
related systems, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our
confidential information, and/or damage to our business relationships or reputation, all of which could negatively impact our
financial results.
We face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware,
ransomware, computer viruses, attachments to e-mails, persons who access our systems from inside or outside our organization, and
other significant disruptions of our IT networks and related systems. The risk of a security breach or disruption, particularly through
cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as
the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Although we have
not experienced cyber incidents that are individually, or in the aggregate, material, we have experienced cyber attacks in the past,
which have thus far been mitigated by preventative, detective, and responsive measures that we have put in place. Our IT networks
and related systems are essential to the operation of our business and our ability to perform day-to-day operations (including managing
our building systems) and, in some cases, may be critical to the operations of certain of our tenants. Although we make efforts to
maintain the security and integrity of these types of IT networks and related systems, and we have implemented various measures to
manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or
that attempted security breaches or disruptions would not be successful or damaging. Unauthorized parties, whether within or outside
our company, may disrupt or gain access to our systems, or those of third parties with whom we do business, through human error,
misfeasance, fraud, trickery, or other forms of deceit, including break-ins, use of stolen credentials, social engineering, phishing,
computer viruses or other malicious codes, and similar means of unauthorized and destructive tampering. Even the most well protected
information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security
breaches evolve and generally are not recognized until launched against a target, and in some cases are designed to not be detected
and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate security
barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.
A security breach or other significant disruption involving our IT networks and related systems could disrupt the proper
functioning of our networks and systems and therefore our operations and/or those of certain of our tenants; result in the unauthorized
access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable
information of ours or others, which others could use to compete against us or which could expose us to damage claims by third-
parties for disruptive, destructive or otherwise harmful purposes and outcomes; result in our inability to maintain the building systems
relied upon by our tenants for the efficient use of their leased space; require significant management attention and resources to remedy
any damages that result; may require payments to the attackers; subject us to litigation claims for breach of contract, damages, credits,
fines, penalties, governmental investigations and enforcement actions or termination of leases or other agreements; or damage our
reputation among our tenants and investors generally. Any or all of the foregoing could have a material adverse effect on our results of
operations, financial condition and cash flows.
A cyber attack or systems failure could interfere with our ability to comply with financial reporting requirements, which could
adversely affect us. A cyber attack could also compromise the confidential information of our employees, tenants, customers and
vendors. A successful attack could disrupt and materially affect our business operations, including damaging relationships with
tenants, customers and vendors. Any compromise of our information security systems could also result in a violation of applicable
privacy and other laws, significant legal and financial exposure, damage to our reputation, loss or misuse of the information (which
may be confidential, proprietary and/or commercially sensitive in nature) and a loss of confidence in our security measures, which
could harm our business.
Competition for acquisitions may reduce the number of acquisition opportunities available to us and increase the costs of
those acquisitions.
We may acquire properties when we are presented with attractive opportunities. We may face competition for acquisition
opportunities from other well-capitalized investors, including publicly traded and privately held REITs, private real estate funds,
domestic and foreign financial institutions, life insurance companies, sovereign wealth funds, pension trusts, partnerships and
individual investors, which may adversely affect us because that competition may cause an increase in the purchase price for a desired
acquisition property or result in a competitor acquiring the desired property instead of us.
If we are unable to successfully acquire additional properties, our ability to grow our business could be adversely affected. In
addition, increases in the cost of acquisition opportunities could adversely affect our results of operations.
We may be adversely affected by the discontinuation of London Interbank Offered Rate ("LIBOR").
On March 5, 2021, the United Kingdom Financial Conduct Authority ("FCA") announced that USD LIBOR will no longer be
published after June 30, 2023. The Secured Overnight Financing Rate ("SOFR") has been identified by market participants as the
preferred alternative to USD LIBOR in derivatives and other financial contracts. Our new floating rate loans entered into after
December 31, 2021 no longer reference to LIBOR rates and instead reference to SOFR or another floating rate.
As of December 31, 2021, we had approximately $6.7 billion of consolidated outstanding debt indexed to LIBOR. $2.2 billion of
this debt is subject to interest rate swaps that convert the floating rates to a fixed interest rate. In the transition from the use of LIBOR
23
to SOFR or other alternatives, the level of interest payments we incur may change. In addition, although certain of our LIBOR based
obligations provide for alternative methods of calculating the interest rate payable (including transition to an alternative benchmark
rate) if LIBOR is not reported and we have been entering into amendments to certain of our financing agreements to provide for
alternative benchmark rates if LIBOR is discontinued, uncertainty as to the extent and manner of future changes may result in interest
rates and/or payments that are higher than or lower than or that do not otherwise correlate over time with the interest rates and/or
payments that would have been made on our obligations if LIBOR was available in its current form. Use of alternative interest rates or
other LIBOR reforms could result in increased volatility or a tightening of credit markets which could adversely affect our ability to
obtain cost-effective financing. In addition, the transition of our existing LIBOR financing agreements to alternative benchmarks may
result in unanticipated changes to the overall interest rate paid on our liabilities.
Some of our potential losses may not be covered by insurance.
For our properties, we maintain general liability insurance with limits of $300,000,000 per occurrence and per property, of which
$250,000,000 includes communicable disease coverage, and we maintain all risk property and rental value insurance with limits of
$2.0 billion per occurrence, with sub-limits for certain perils such as flood and earthquake, excluding communicable disease coverage.
Our California properties have earthquake insurance with coverage of $350,000,000 per occurrence and in the aggregate, subject to a
deductible in the amount of 5% of the value of the affected property. We maintain coverage for certified terrorism acts with limits of
$6.0 billion per occurrence and in the aggregate (as listed below), $1.2 billion for non-certified acts of terrorism, and $5.0 billion per
occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological (“NBCR”) terrorism events, as
defined by the Terrorism Risk Insurance Act of 2002, as amended to date and which has been extended through December 2027.
Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a
portion of 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 NBCR acts. 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. For NBCR acts, PPIC is responsible for a
deductible of $1,785,910 and 20% of the balance of a covered loss and the Federal government is responsible for the remaining
portion of a covered loss. We are ultimately responsible for any loss incurred by PPIC.
We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism and other
events. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are
responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material.
Our debt instruments, consisting of mortgage loans secured by our properties, senior unsecured notes 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 or
refinance our properties and expand our portfolio.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
There are no unresolved comments from the staff of the Securities and Exchange Commission as of the date of this Annual Report
on Form 10-K.
24
ITEM 2.
PROPERTIES
We operate in two reportable segments: New York and Other. The following pages provide details of our real estate properties as
of December 31, 2021.
NEW YORK SEGMENT
Property
PENN 1 (ground leased through 2098)(1)
1290 Avenue of the Americas
PENN 2
909 Third Avenue (ground leased through 2063)(1)
280 Park Avenue(2)
Independence Plaza, Tribeca (1,327 units)(2)
770 Broadway
PENN 11
90 Park Avenue
One Park Avenue
888 Seventh Avenue (ground leased through 2067)(1)
100 West 33rd Street
Farley Office and Retail
(ground and building leased through 2116)(1)
330 West 34th Street (65.2% ground leased through 2149)(1)
85 Tenth Avenue(2)
650 Madison Avenue(2)
350 Park Avenue
150 East 58th Street(4)
33-00 Northern Boulevard (Center Building)
7 West 34th Street(2)
595 Madison Avenue
640 Fifth Avenue(2)
50-70 West 93rd Street (324 units)(2)
Manhattan Mall
40 Fulton Street
260 Eleventh Avenue (ground leased through 2114)(1)
4 Union Square South
61 Ninth Avenue (2 buildings) (ground leased through 2115)(1)(2)
512 West 22nd Street(2)
825 Seventh Avenue
1540 Broadway(2)
Paramus
666 Fifth Avenue (2)(5)
1535 Broadway(2)
57th Street (2 buildings)(2)
689 Fifth Avenue(2)
478-486 Broadway (2 buildings) (10 units)(6)
150 West 34th Street
510 Fifth Avenue
655 Fifth Avenue(2)
155 Spring Street(6)
435 Seventh Avenue
________________________________________
See notes on page 27.
%
Ownership
100.0 %
70.0 %
100.0 %
100.0 %
50.0 %
Type
Office / Retail
Office / Retail
Office / Retail
Office
Office / Retail
%
Occupancy
82.4%
99.6%
100.0%
96.7%
98.1%
Square Feet
Under
Development
or Not
Available
for Lease
Total
Property
257,000
2,547,000
—
2,120,000
In Service
2,290,000
2,120,000
428,000
1,192,000
1,620,000
1,350,000
1,264,000
—
—
1,350,000
1,264,000
50.1 % Retail / Residential
100.0%
(3)
1,249,000
8,000
1,257,000
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
95.0 %
100.0 %
49.9 %
20.1 %
100.0 %
100.0 %
100.0 %
53.0 %
100.0 %
52.0 %
49.9 %
100.0 %
100.0 %
100.0 %
100.0 %
45.1 %
55.0 %
51.2 %
52.0 %
100.0 %
52.0 %
52.0 %
50.0 %
52.0 %
Office / Retail
Office / Retail
Office / Retail
Office / Retail
Office / Retail
Office
Office / Retail
Office / Retail
Office / Retail
Office / Retail
Office / Retail
Office / Retail
Office
Office / Retail
Office / Retail
Office / Retail
Residential
Retail
Office / Retail
Office
Retail
Office / Retail
Office / Retail
Office(2) / Retail
Retail
Office
Retail
Retail / Theatre
Office / Retail
Office / Retail
100.0 % Retail / Residential
100.0 %
100.0 %
50.0 %
100.0 %
100.0 %
Retail
Retail
Retail
Retail
Retail
99.3%
99.3%
98.9%
96.9%
94.6%
95.3%
100.0%
74.2%
89.6%
93.3%
72.8%
88.3%
92.4%
100.0%
81.4%
84.9%
96.3%
18.3%
84.7%
95.5%
99.3%
94.5%
72.6%
44.7%
79.9%
85.2%
100.0%
98.2%
83.9%
93.9%
100.0%
100.0%
51.5%
100.0%
88.6%
100.0%
(3)
1,182,000
1,153,000
956,000
944,000
887,000
859,000
756,000
725,000
638,000
601,000
581,000
545,000
498,000
477,000
332,000
315,000
283,000
257,000
251,000
209,000
204,000
192,000
172,000
172,000
161,000
129,000
114,000
107,000
103,000
98,000
33,000
78,000
66,000
57,000
50,000
43,000
—
—
—
—
—
—
89,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
56,000
—
—
—
—
—
1,182,000
1,153,000
956,000
944,000
887,000
859,000
845,000
725,000
638,000
601,000
581,000
545,000
498,000
477,000
332,000
315,000
283,000
257,000
251,000
209,000
204,000
192,000
172,000
172,000
161,000
129,000
114,000
107,000
103,000
98,000
89,000
78,000
66,000
57,000
50,000
43,000
25
ITEM 2.
PROPERTIES – CONTINUED
NEW YORK SEGMENT – CONTINUED
Property
692 Broadway
606 Broadway
697-703 Fifth Avenue(2)
1131 Third Avenue
131-135 West 33rd Street
715 Lexington Avenue
537 West 26th Street
443 Broadway
334 Canal Street (4 units)
304 Canal Street (4 units)
431 Seventh Avenue
759-771 Madison Avenue (40 East 66th Street) (4 units)
138-142 West 32nd Street
148 Spring Street
339 Greenwich Street
150 Spring Street (1 unit)
966 Third Avenue
968 Third Avenue(2)
137 West 33rd Street
57th Street(2)
Eighth Avenue and 34th Street
PENN 15 (Hotel Pennsylvania Site)(8)
Other (3 buildings)
Alexander's, Inc.:
731 Lexington Avenue(2)
Rego Park II, Queens (6.6 acres)(2)
Rego Park I, Queens (4.8 acres)(2)
The Alexander Apartment Tower, Queens (312 units)(2)
Flushing, Queens (1.0 acre ground leased through 2037)(1)(2)
Rego Park III, Queens (3.2 acres)(2)
Total New York Segment
Our Ownership Interest
________________________________________
See notes on page 27.
Type
%
Ownership
100.0 %
Retail
50.0 %
Office / Retail
44.8 %
Retail
100.0 %
Retail
100.0 %
Retail
100.0 %
Retail
100.0 %
Retail
Retail
100.0 %
100.0 % Retail / Residential
100.0 % Retail / Residential
Retail
100.0 %
Residential
100.0 %
Retail
100.0 %
Retail
100.0 %
100.0 %
Retail
100.0 % Retail / Residential
Retail
100.0 %
Retail
50.0 %
Retail
100.0 %
Land
50.0 %
Land
100.0 %
Land
100.0 %
Retail
100.0 %
%
Occupancy
64.4%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
—%
100.0%
100.0%
72.7%
100.0%
74.2%
100.0%
100.0%
100.0%
(7)
(7)
(7)
100.0%
(3)
(3)
(3)
In Service
36,000
36,000
26,000
23,000
23,000
10,000
17,000
16,000
14,000
13,000
10,000
10,000
8,000
8,000
8,000
7,000
7,000
7,000
3,000
—
—
—
16,000
Square Feet
Under
Development
or Not
Available
for Lease
Total
Property
—
—
—
—
—
12,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
36,000
36,000
26,000
23,000
23,000
22,000
17,000
16,000
14,000
13,000
10,000
10,000
8,000
8,000
8,000
7,000
7,000
7,000
3,000
—
—
—
16,000
32.4 %
32.4 %
32.4 %
32.4 %
32.4 %
32.4 %
Office / Retail
Retail
Retail
Residential
Retail
Land
98.9%
84.4%
100.0%
95.2%
100.0%
(7)
91.8%
1,056,000
480,000
260,000
255,000
167,000
23,000
135,000
78,000
1,079,000
615,000
338,000
—
—
255,000
167,000
—
25,445,000
—
1,850,000
—
27,295,000
91.3%
20,086,000
1,683,000
21,769,000
26
ITEM 2.
PROPERTIES – CONTINUED
OTHER SEGMENT
Property
theMART:
theMART, Chicago
Piers 92 and 94 (New York) (ground and building leased
through 2110)(1)
527 West Kinzie, Chicago
Other (2 properties)(2), Chicago
Total theMART
Our Ownership Interest
555 California Street:
555 California Street
315 Montgomery Street
345 Montgomery Street
Total 555 California Street
Our Ownership Interest
Other:
%
Ownership
Type
%
Occupancy
In Service
Square Feet
Under
Development
or Not
Available
for Lease
Total
Property
Office / Retail /
Trade show /
Showroom
100.0 %
100.0 % Trade show / Other
Land
100.0 %
Retail
50.0 %
70.0 %
70.0 %
70.0 %
Office / Retail
Office / Retail
Office / Retail
88.8%
3,673,000
—
3,673,000
—%
(7)
100.0%
88.9%
—
—
19,000
3,692,000
208,000
—
—
208,000
208,000
—
19,000
3,900,000
88.9%
3,683,000
208,000
3,891,000
97.8%
100.0%
—%
93.8%
1,505,000
235,000
78,000
1,818,000
—
—
—
—
1,505,000
235,000
78,000
1,818,000
93.8%
1,273,000
—
1,273,000
Rosslyn Plaza, VA (197 units)(2)
Fashion Centre Mall, VA(2)
Washington Tower, VA(2)
Wayne Towne Center, Wayne, NJ (ground leased through
2064)(1)
Annapolis, MD (ground leased through 2042)(1)
Atlantic City, NJ (11.3 acres ground leased through 2070 to
MGM Growth Properties for a portion of the Borgata Hotel
and Casino complex)
Total Other
46.2 %
7.5 %
7.5 %
100.0 %
100.0 %
Office /
Residential
Retail
Office
(3)
65.1%
95.7%
75.0%
Retail
Retail
100.0%
100.0%
685,000
868,000
170,000
638,000
128,000
304,000
—
—
52,000
—
989,000
868,000
170,000
690,000
128,000
100.0 %
Land
100.0%
89.7%
—
2,489,000
—
356,000
—
2,845,000
Our Ownership Interest
92.8%
1,154,000
192,000
1,346,000
Vornado Capital Partners Real Estate Fund ("Fund")(9) :
Crowne Plaza Times Square, NY (0.64 acres owned in
fee; 0.18 acres ground leased through 2187 and
0.05 acres ground leased through 2035) (1)(10)
Lucida, 86th Street and Lexington Avenue, NY
(ground leased through 2082)(1) (39 units)
1100 Lincoln Road, Miami, FL
Total Real Estate Fund
Our Ownership Interest
75.7 %
100.0 %
100.0 %
Office / Retail /
Hotel
Retail /
Residential
Retail / Theatre
86.7%
246,000
(3)
100.0%
78.0%
87.0%
157,000
130,000
533,000
87.0%
152,000
—
—
—
—
—
246,000
157,000
130,000
533,000
152,000
________________________________________
(1) Term assumes all renewal options exercised, if applicable.
(2) Denotes property not consolidated in the accompanying consolidated financial statements and related financial data included in the Annual Report on Form 10-K.
(3) Excludes residential occupancy statistics.
(4)
(5)
(6)
(7) Properties under development or to be developed.
(8) We permanently closed the Hotel Pennsylvania and plan to develop an office tower on the site. Demolition of the existing building structure commenced in the
Includes 962 Third Avenue (the Annex building to 150 East 58th Street) 50.0% ground leased through 2118(1).
75,000 square feet is leased from 666 Fifth Avenue Office Condominium.
478-482 Broadway and 155 Spring Street sold on January 13, 2022.
fourth quarter of 2021.
(9) We own a 25% interest in the Fund. The ownership percentage in this section represents the Fund's ownership in the underlying assets.
(10) We own a 32.8% economic interest through the Fund and the Crowne Plaza Joint Venture.
27
PROPERTIES – CONTINUED
ITEM 2.
Top 10 Tenants Based on Annualized Escalated Rents(1) (at share):
Tenant
Meta Platforms, Inc. (formerly Facebook, Inc.)
IPG and affiliates
Google/Motorola Mobility (guaranteed by Google)
New York University
Bloomberg L.P.
Equitable Financial Life Insurance Company
Swatch Group USA
Verizon Media Group
Amazon (including its Whole Foods subsidiary)
The City of New York
________________________________________
See note below.
Annualized Escalated Rents(1) (at share) by Tenants’ Industry:
Square
Footage
At Share
Annualized
Escalated Rents
At Share
1,451,153
$
156,036
967,552
759,446
632,628
304,385
336,644
14,949
313,726
312,694
636,573
66,748
42,785
40,948
38,237
35,196
32,349
31,475
29,353
25,887
Industry
Office:
Technology
Financial Services
Professional Services
Advertising/Marketing
Real Estate
Insurance
Entertainment and Electronics
Education
Banking
Communications
Apparel
Engineering, Architect & Surveying
Government
Health Services
Other
Retail:
Apparel
Luxury Retail
Banking
Restaurants
Grocery
Other
Showroom
Total
% of Total
Annualized
Escalated Rents
At Share
Percentage
8.6%
3.7%
2.4%
2.3%
2.1%
1.9%
1.8%
1.7%
1.6%
1.4%
17%
16%
8%
5%
4%
3%
3%
3%
3%
3%
2%
2%
2%
2%
4%
77%
6%
4%
2%
1%
1%
4%
18%
5%
100%
________________________________________
(1) Represents monthly contractual base rent before free rent plus tenant reimbursements multiplied by 12. Annualized escalated rents at share include leases signed
but not yet commenced in place of current tenants or vacancy in the same space.
28
NEW YORK
As of December 31, 2021, our New York segment consisted of 27.3 million square feet in 73 properties. The 27.3 million square
feet is comprised of 20.6 million square feet of Manhattan office in 32 of the properties, 2.7 million square feet of Manhattan street
retail in 60 of the properties, 1,674 units in eight residential properties, and our 32.4% interest in Alexander’s, which owns six
properties in the greater New York metropolitan area, including 731 Lexington Avenue, the 1.1 million square foot Bloomberg, L.P.
headquarters building, and The Alexander, a 312-unit apartment tower in Queens. The New York segment also includes 10 garages
totaling 1.7 million square feet (4,875 spaces).
As of December 31, 2021, the occupancy rate for our New York segment was 91.3%.
Occupancy and weighted average annual rent per square foot:
Office:
Retail:
Vornado's Ownership Interest
As of December 31,
Total Square Feet
In Service
Square Feet
In Service
Square Feet
At Share
Occupancy
Rate
Weighted
Average Annual
Escalated
Rent Per
Square Foot
2021
2020
2019 (1)
2018
2017
20,630,000
20,586,000
20,666,000
21,495,000
21,329,000
19,442,000
18,361,000
19,070,000
19,858,000
20,256,000
16,757,000
15,413,000
16,195,000
16,632,000
16,982,000
92.2% $
93.4%
96.9%
97.2%
97.1%
80.01
79.05
76.26
74.04
71.09
Vornado's Ownership Interest
As of December 31,
Total Square Feet
In Service
Square Feet
In Service
Square Feet
At Share
Occupancy
Rate
Weighted
Average Annual
Escalated
Rent Per
Square Foot
2021
2020
2019 (1)
2018
2017
2,693,000
2,690,000
2,712,000
2,802,000
2,931,000
2,267,000
2,275,000
2,300,000
2,648,000
2,720,000
1,825,000
1,805,000
1,842,000
2,419,000
2,471,000
80.7% $
78.8%
94.5%
97.3%
96.9%
214.22
226.38
209.86
228.43
217.17
Occupancy and average monthly rent per unit:
Residential:
Vornado's Ownership Interest
As of December 31,
Total
Number of Units
Total
Number of Units
Occupancy
Rate
Average Monthly
Rent Per Unit
2021
2020
2019
2018
2017
1,986
1,995
1,996
2,004
2,031
951
960
960
968
995
96.4% $
84.9%
97.5%
96.6%
96.7%
3,776
3,714
3,902
3,788
3,757
________________________________________
(1) Reflects the transfer of 45.4% of common equity in the properties contributed to the Fifth Avenue and Times Square JV on April 18, 2019.
29
NEW YORK – CONTINUED
Lease expirations as of December 31, 2021 (at share)(1):
Year
Office:
Month to month
2022
2023(4)
2024
2025
2026
2027
2028
2029
2030
2031
Retail:
Month to month
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Number of
Expiring Leases
Square Feet of
Expiring Leases(2)
Percentage of
New York Square
Feet
Annualized Escalated Rents
of Expiring Leases
Total
Per Square Foot
7
80
64
81
51
68
61
38
32
31
25
8
8
12
12
11
8
13
9
12
19
34
25,000
671,000
1,357,000
1,039,000
719,000
1,451,000
1,318,000
989,000
1,170,000
621,000
817,000
20,000
115,000
58,000
173,000
40,000
82,000
32,000
29,000
46,000
155,000
96,000
0.2%
4.4%
8.9%
6.8%
4.7%
9.7%
8.7%
6.5%
7.7%
4.1%
5.4%
1.6%
9.3%
4.7%
14.0%
3.2%
6.6%
2.6%
2.3%
3.7%
12.5%
7.8%
$
$
1,419,000 $
48,405,000
125,367,000
93,258,000
57,919,000
107,605,000
90,028,000
70,334,000
94,220,000
48,939,000
72,149,000
1,548,000 $
6,630,000
26,356,000
37,780,000
11,074,000
25,544,000
18,241,000
13,539,000
20,046,000
21,686,000
30,658,000
(3)
(5)
56.76
72.14
92.39
89.76
80.55
74.16
68.31
71.12
80.53
78.81
88.31
77.40
57.65
454.41
218.38
276.85
311.51
570.03
466.86
435.78
139.91
319.35
________________________________________
(1) Assumes tenants do not exercise renewal or cancellation options.
(2) Excludes storage, vacancy and other.
(3) Based on current market conditions, we expect to re-lease this space at rents between $70 to $80 per square foot.
(4) Excludes the expiration of 492,000 square feet at 909 Third Avenue for U.S. Post Office as we assume the exercise of all renewal options through 2038 given the
below-market rent on their options.
(5) Based on current market conditions, we expect to re-lease this space at rents between $50 to $75 per square foot.
Alexander’s
As of December 31, 2021, we own 32.4% of the outstanding common stock of Alexander’s, which owns six properties in the
greater New York metropolitan area aggregating 2.5 million square feet, including 731 Lexington Avenue, the 1.1 million square foot
Bloomberg L.P. headquarters building. Alexander’s had $1,096,544,000 of outstanding debt as of December 31, 2021, of which our
pro rata share was $355,280,000, none of which is recourse to us.
OTHER REAL ESTATE AND INVESTMENTS
theMART
As of December 31, 2021, we own the 3.7 million square foot theMART in Chicago, whose largest tenant is Motorola Mobility at
609,000 square feet, the lease of which is guaranteed by Google. As of December 31, 2021, theMART had an occupancy rate of
88.9% and a weighted average annual rent per square foot of $54.40.
30
OTHER REAL ESTATE AND INVESTMENTS - CONTINUED
555 California Street
As of December 31, 2021, we own a 70% controlling interest in a three-building office complex aggregating 1.8 million square
feet, located at California and Montgomery Streets in San Francisco’s financial district (“555 California Street”). 555 California Street
is encumbered by a $1.2 billion mortgage loan that bears a rate of LIBOR plus 1.93% in years one through five (2.04% as of
December 31, 2021), LIBOR plus 2.18% in year six and LIBOR plus 2.43% in year seven. The loan matures in May 2023, with five
one-year extension options (May 2028 as fully extended). We swapped the interest rate on our $840,000,000 share of the loan to a
fixed rate of 2.26% through May 2024. As of December 31, 2021, 555 California Street had an occupancy rate of 93.8% and a
weighted average annual rent per square foot of $89.53.
Vornado Capital Partners Real Estate Fund (the “Fund”) and Crowne Plaza Times Square Hotel Joint Venture (the “Crowne
Plaza Joint Venture”)
As of December 31, 2021, we own a 25% interest in the Fund, which is in wind-down, and currently has three investments, one of
which is the Crowne Plaza Times Square Hotel in which we also own an additional interest through the Crowne Plaza Joint
Venture. We are the general partner and investment manager of the Fund. As of December 31, 2021, these three investments including
the Crowne Plaza Joint Venture's share of the Crowne Plaza Times Square Hotel are carried on our consolidated balance sheet at an
aggregate fair value of $7,730,000.
ITEM 3.
LEGAL PROCEEDINGS
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 is not expected to have a material adverse effect on our financial position, results of
operations or cash flows.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
PART II
Vornado Realty Trust
Vornado’s common shares are traded on the New York Stock Exchange under the symbol “VNO.”
As of February 1, 2022, there were 830 holders of record of Vornado common shares.
Vornado Realty L.P.
There is no established trading market for the Operating Partnership's Class A units. Class A units that are not held by Vornado
may be tendered for redemption to the Operating Partnership for cash; Vornado, at its option, may assume that obligation and pay the
holder either cash or Vornado common shares on a one-for-one basis. Because the number of Vornado common shares outstanding at
all times equals the number of Class A units owned by Vornado, the redemption value of each Class A unit is equivalent to the market
value of one Vornado common share, and the quarterly distribution to a Class A unit holder is equal to the quarterly dividend paid to a
Vornado common shareholder.
As of February 1, 2022, there were 882 Class A unitholders of record.
Recent Sales of Unregistered Securities
During 2021, we issued 838,982 Class A units in connection with (i) the issuance of Vornado common shares and (ii) the exercise
of awards pursuant to Vornado's omnibus share plan, including grants of restricted Vornado common shares and restricted units of the
Operating Partnership and upon conversion, surrender or exchange of the Operating Partnership’s units or Vornado stock options. The
consideration received included $898,703 in cash proceeds. Such units were issued in reliance on an exemption from registration
under Section 4(a)(2) of the Securities Act of 1933, as amended.
From time to time, in connection with equity awards granted under our Omnibus Share Plan, we may withhold common shares for
tax purposes or acquire common shares as part of the payment of the exercise price. Although we treat these as repurchases for certain
financial statement purposes, these withheld or acquired shares are not considered by us as repurchases for this purpose.
Information relating to compensation plans under which Vornado’s equity securities are authorized for issuance is set forth under
Part III, Item 12 of this Annual Report on Form 10-K and such information is incorporated by reference herein.
Recent Purchases of Equity Securities
None.
31
Performance Graph
The following graph is a comparison of the five-year cumulative return of Vornado’s common shares, the Standard & Poor’s 500
Index (the “S&P 500 Index”) and the National Association of Real Estate Investment Trusts’ (“NAREIT”) All Equity Index, a peer
group index. The graph assumes that $100 was invested on December 31, 2016 in our common shares, the S&P 500 Index and the
NAREIT All Equity Index and that all dividends were reinvested without the payment of any commissions. There can be no assurance
that the performance of our shares will continue in line with the same or similar trends depicted in the graph below.
Vornado Realty Trust
S&P 500 Index
The NAREIT All Equity Index
ITEM 6.
RESERVED
2016
2017
2018
2019
2020
2021
$
100 $
96 $
79 $
90 $
54 $
100
100
122
109
116
104
153
134
181
127
63
233
180
32
Comparison of Five-Year Cumulative ReturnVornado Realty TrustS&P 500 IndexThe NAREIT All Equity Index201620172018201920202021$50$75$100$125$150$175$200$225$250
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
Critical Accounting Estimates
Net Operating Income At Share by Segment for the Years Ended December 31, 2021 and 2020
Results of Operations for the Year Ended December 31, 2021 Compared to December 31, 2020
Related Party Transactions
Liquidity and Capital Resources
Funds From Operations for the Years Ended December 31, 2021 and 2020
Page Number
34
41
42
46
51
52
58
33
Introduction
The following discussion should be read in conjunction with the financial statements and related notes included under Part II,
Item 8 of this Annual Report on Form 10-K.
Our Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") within this section is
focused on the years ended December 31, 2021 and 2020, including year-to-year comparisons between these years. Our MD&A for
the year ended December 31, 2019, including year-to-year comparisons between 2020 and 2019, can be found in Part II, Item 7,
Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form
10-K for the year ended December 31, 2020.
Overview
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 are 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 92.6% of the common limited partnership interest in the Operating Partnership as
of December 31, 2021. All references to the “Company,” “we,” “us” and “our” mean collectively Vornado, the Operating Partnership
and those subsidiaries consolidated by Vornado.
We own and operate office and retail properties with a concentration in the New York City metropolitan area. In addition, we
have a 32.4% interest in Alexander’s, Inc. (“Alexander’s”) (NYSE: ALX), which owns six properties in the greater New York
metropolitan area, as well as interests in other real estate and investments.
Our business objective is to maximize Vornado shareholder value, which we measure by the total return provided to our
shareholders. Below is a table comparing Vornado’s performance to the FTSE NAREIT Office Index (“Office REIT”) and the MSCI
US REIT Index (“MSCI”) for the following periods ended December 31, 2021:
Three-month
One-year
Three-year
Five-year
Ten-year
Vornado
Total Return(1)
Office REIT
MSCI
0.8%
17.7%
(19.4%)
(36.6%)
11.6%
7.9%
22.0%
30.8%
17.7%
102.6%
16.3%
43.1%
66.4%
66.8%
192.3%
____________________
(1)
Past performance is not necessarily indicative of future performance.
We intend to achieve this objective by continuing to pursue our investment philosophy and to execute 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, 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;
developing and redeveloping 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 and proceeds from 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 these securities in the future.
We compete with a large number of real estate investors, property owners and developers, some of which may be willing to
accept lower returns on their investments. Principal factors of competition are rents charged, sales prices, 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 global, 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, population
and employment trends. See “Risk Factors” in Item 1A for additional information regarding these factors.
34
Overview - continued
Our business has been adversely affected by the ongoing COVID-19 pandemic and the preventive measures taken to curb the
spread of the virus. The pandemic has resulted in governments and other authorities implementing numerous measures to try to
contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and business closures. Some of the effects
on us include the following:
• While many of the limitations and restrictions imposed on our retail tenants during the onset of the pandemic have been lifted
and/or eased, economic conditions and other factors, including a decline in Manhattan tourism since the onset of the virus,
continue to adversely affect the financial health of our retail tenants.
• While our buildings are open, many of our office tenants are working remotely.
• We temporarily closed the Hotel Pennsylvania on April 1, 2020 and on April 5, 2021, we permanently closed the hotel and
•
plan to develop an office tower on the site.
Trade shows at theMART were cancelled beginning March of 2020 and resumed in the third quarter of 2021 with generally
lower attendance than pre-pandemic levels.
The extent of the COVID-19 pandemic’s effect on our operational and financial performance will depend on future developments,
including vaccination rates among the population, the efficacy and durability of vaccines against emerging variants and governmental
and tenant responses thereto, all of which are uncertain at this time. Given the dynamic nature of the circumstances, it is difficult to
predict the ongoing impact of the COVID-19 pandemic on our business, financial condition, results of operations and cash flows but
the impact could be material.
35
Overview - continued
Year Ended December 31, 2021 Financial Results Summary
Net income attributable to common shareholders for the year ended December 31, 2021 was $101,086,000, or $0.53 per diluted
share, compared to net loss attributable to common shareholders of $348,744,000, or $1.83 per diluted share, for the year ended
December 31, 2020. The years ended December 31, 2021 and 2020 include certain items that impact net income (loss) attributable to
common shareholders, which are listed in the table below. The aggregate of these items, net of amounts attributable to noncontrolling
interests, increased net income attributable to common shareholders by $12,933,000, or $0.07 per diluted share, for the year ended
December 31, 2021 and increased net loss attributable to common shareholders by $372,637,000, or $1.95 per diluted share, for the
year ended December 31, 2020.
Funds from operations ("FFO") attributable to common shareholders plus assumed conversions for the year ended December 31,
2021 was $571,074,000, or $2.97 per diluted share, compared to $750,522,000, or $3.93 per diluted share, for the year ended
December 31, 2020. The years ended December 31, 2021 and 2020 include certain items that impact FFO, which are listed in the table
on the following page. The aggregate of these items, net of amounts attributable to noncontrolling interests, increased FFO by
$21,211,000, or $0.11 per diluted share, for the year ended December 31, 2021 and by $249,507,000, or $1.31 per diluted share, for
the year ended December 31, 2020.
The following table reconciles the difference between our net income (loss) attributable to common shareholders and our net
income attributable to common shareholders, as adjusted:
(Amounts in thousands)
For the Year Ended December 31,
2021
2020
Certain (income) expense items that impact net income (loss) attributable to common shareholders:
After-tax net gain on sale of 220 Central Park South ("220 CPS") condominium units
$
(44,607) $
Hotel Pennsylvania loss (permanently closed on April 5, 2021)
Tax benefit recognized by our taxable REIT subsidiaries
Defeasance costs and write-off of unamortized deferred financing costs related to 1290 Avenue of the Americas
refinancing, net of $7,664 attributable to noncontrolling interests
Our share of Alexander's gain on sale of Paramus, New Jersey property pursuant to IKEA Property, Inc.'s
purchase option
Deferred tax liability on our investment in Farley Office and Retail (held through a taxable REIT subsidiary)
Previously capitalized Series K preferred share issuance costs
Real estate impairment losses
Our share of (income) loss from real estate fund investments
Non-cash impairment loss on our investment in Fifth Avenue and Times Square JV, net of $4,289 attributable
to noncontrolling interests
608 Fifth Avenue non-cash lease liability extinguishment gain
Severance and other reduction-in-force related expenses
Credit losses on loans receivable resulting from a new GAAP accounting standard effective January 1, 2020
Severance accrual related to Hotel Pennsylvania closure, net of $3,145 of income tax benefit
Mark-to-market decrease in Pennsylvania Real Estate Investment Trust ("PREIT") common shares (sold on
January 23, 2020)
Other
Noncontrolling interests' share of above adjustments
29,472
(27,910)
17,882
(11,620)
10,868
9,033
7,880
(3,757)
—
—
—
—
—
—
(1,379)
(14,138)
1,205
Total of certain (income) expense items that impact net income (loss) attributable to common shareholders
$
(12,933) $
(332,099)
31,280
—
—
—
—
—
236,286
63,114
409,060
(70,260)
23,368
13,369
6,101
4,938
12,586
397,743
(25,106)
372,637
36
Overview - continued
Year Ended December 31, 2021 Financial Results Summary - continued
The following table reconciles the difference between our FFO attributable to common shareholders plus assumed conversions
and our FFO attributable to common shareholders plus assumed conversions, as adjusted:
(Amounts in thousands)
For the Year Ended December 31,
2021
2020
Certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions:
After-tax net gain on sale of 220 CPS condominium units
Tax benefit recognized by our taxable REIT subsidiaries
$
(44,607) $
(27,910)
Defeasance costs and write-off of unamortized deferred financing costs related to 1290 Avenue of the Americas
refinancing, net of $7,664 attributable to noncontrolling interests
Hotel Pennsylvania loss (permanently closed on April 5, 2021)
Deferred tax liability on our investment in Farley Office and Retail (held through a taxable REIT subsidiary)
Previously capitalized Series K preferred share issuance costs
Our share of (income) loss from real estate fund investments
608 Fifth Avenue non-cash lease liability extinguishment gain
Severance and other reduction-in-force related expenses
Credit losses on loans receivable resulting from a new GAAP accounting standard effective January 1, 2020
Severance accrual related to Hotel Pennsylvania closure, net of $3,145 of income tax benefit
Other
Noncontrolling interests' share of above adjustments
17,882
12,331
10,868
9,033
(3,757)
—
—
—
—
3,804
(22,356)
1,145
(332,099)
—
—
20,843
—
—
63,114
(70,260)
23,368
13,369
6,101
9,660
(265,904)
16,397
Total of certain (income) expense items that impact FFO attributable to common shareholders plus assumed
conversions, net
$
(21,211) $
(249,507)
Same Store Net Operating Income ("NOI") At Share
The percentage increase (decrease) in same store NOI at share and same store NOI at share - cash basis of our New York
segment, theMART and 555 California Street are summarized below.
Year Ended December 31, 2021 compared to December 31, 2020:
Total
New York
theMART(1)
555
California
Street
Same store NOI at share % increase (decrease)
Same store NOI at share - cash basis % increase (decrease)
2.9 %
1.6 %
4.0 %
3.2 %
(14.2) %
(14.9) %
7.9%
0.2%
___________________
(1)
2021 includes an increase in real estate tax expense of $18,285 primarily due to a recent increase in the triennial tax-assessed value of theMART.
Calculations of same store NOI at share, reconciliations of our net income to NOI at share, NOI at share - cash basis 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 Financial Condition and Results of Operations.
Acquisition
One Park Avenue
On August 5, 2021, pursuant to a right of first offer, we increased our ownership interest in One Park Avenue, a 944,000 square
foot Manhattan office building, to 100.0% by acquiring our joint venture partner's 45.0% ownership interest in the property. The
purchase price values the property at $875,000,000. We paid approximately $158,000,000 in cash and assumed our joint venture
partner's share of the $525,000,000 mortgage loan. We previously accounted for our investment under the equity method and have
consolidated the accounts of the property from the date of acquisition of the additional 45.0% ownership interest.
Dispositions
220 CPS
During the year ended December 31, 2021, we closed on the sale of six condominium units at 220 CPS for net proceeds of
$137,404,000 resulting in a financial statement net gain of $50,318,000 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, $5,711,000 of income tax
expense was recognized on our consolidated statements of income. From inception to December 31, 2021, we have closed on the sale
of 106 units for net proceeds of $3,006,896,000 resulting in financial statement net gains of $1,117,255,000.
37
Overview - continued
Dispositions - continued
Alexander's, Inc. ("Alexander's")
On June 4, 2021, Alexander's completed the sale of a parcel of land in the Bronx, New York for $10,000,000. As a result of the
sale, we recognized our $2,956,000 share of the net gain and also received a $300,000 sales commission paid by Alexander's.
On October 4, 2021, Alexander's sold its Paramus, New Jersey property to IKEA Property, Inc. ("IKEA"), the tenant at the
property, for $75,000,000 pursuant to IKEA's purchase option contained in the lease. The property was encumbered by a $68,000,000
mortgage loan which was repaid at closing of the sale. As a result of the sale, we recognized our $11,620,000 share of the net gain and
also received a $750,000 sales commission paid by Alexander's.
Madison Avenue
On September 24, 2021, we sold three Manhattan retail properties located at 677-679, 759-771 and 828-850 Madison Avenue in
two separate sale transactions for an aggregate sales price of $100,000,000. Net proceeds from the sales were $96,503,000. In
connection with the sales, we recorded $7,880,000 of non-cash impairment losses which are included in "impairment losses,
transaction related costs and other" on our consolidated statements of income.
Vornado Capital Partners Real Estate Fund (the "Fund")
On December 7, 2021, the Fund completed the sale of the retail condominium located at 501 Broadway for $27,500,000. From
the inception of this investment through its disposition, the Fund realized a $6,346,000 net loss.
SoHo Properties
On May 10, 2021, we entered into an agreement to sell two Manhattan retail properties located at 478-482 Broadway and 155
Spring Street for a sales price of $84,500,000. On January 13, 2022, we completed the sale transaction and realized net proceeds of
$81,399,000. In connection with the sale, we will recognize a net gain of approximately $850,000 in the first quarter of 2022.
Financings
Secured Debt
On February 26, 2021, the joint venture completed a $525,000,000 refinancing of One Park Avenue. The interest-only loan bears
a rate of LIBOR plus 1.11% (1.22% as of December 31, 2021) and matures in March 2023, with three one-year extension options
(March 2026, as fully extended). We realized our $105,000,000 share of net proceeds. The loan replaced the previous $300,000,000
loan that bore interest at LIBOR plus 1.75% and was scheduled to mature in March 2021.
On March 7, 2021, we entered into an interest rate swap agreement for our $500,000,000 PENN 11 mortgage loan to swap the
interest rate on the mortgage loan from LIBOR plus 2.75% to a fixed rate of 3.03% through March 2024. On December 1, 2021, we
completed a loan modification which reduced the interest rate on the mortgage loan to LIBOR plus 1.95% (2.05% as of December 31,
2021) from LIBOR plus 2.75%, resulting in a fixed rate of 2.23% pursuant to the interest rate swap agreement.
On March 26, 2021, we completed a $350,000,000 refinancing of 909 Third Avenue, a 1.4 million square foot Manhattan office
building. The interest-only loan bears a fixed rate of 3.23% and matures in April 2031. The loan replaced the previous $350,000,000
loan that bore interest at a fixed rate of 3.91% and was scheduled to mature in May 2021.
On May 10, 2021, we completed a $1.2 billion refinancing of 555 California Street, a three-building 1.8 million square foot office
campus in San Francisco, in which we own a 70.0% controlling interest. The interest-only loan bears a rate of LIBOR plus 1.93% in
years one through five (2.04% as of December 31, 2021), LIBOR plus 2.18% in year six and LIBOR plus 2.43% in year seven. The
loan matures in May 2023, with five one-year extension options (May 2028 as fully extended). We swapped the interest rate on our
$840,000,000 share of the loan to a fixed rate of 2.26% through May 2024. The loan replaced the previous $533,000,000 loan that
bore interest at a fixed rate of 5.10% and was scheduled to mature in September 2021.
On May 28, 2021, we repaid the $675,000,000 mortgage loan on theMART, a 3.7 million square foot commercial building in
Chicago, with proceeds from our senior unsecured notes offering. The loan bore interest at 2.70% and was scheduled to mature in
September 2021.
On November 16, 2021, we completed a $950,000,000 refinancing of 1290 Avenue of the Americas, a 2.1 million square foot
Class A Manhattan office building, in which we own a 70.0% controlling interest. The interest-only loan bears a rate of LIBOR plus
1.51% (1.62% as of December 31, 2021) in years one to five, increasing 0.25% in both years six and seven. The loan matures in
November 2023 with five one-year extension options (November 2028 as fully extended). We defeased the existing $950,000,000
loan that bore interest at a fixed rate of 3.34% and was scheduled to mature in November 2022. As a result, we incurred $23,729,000
of defeasance costs, which are included in "interest and debt expense" on our consolidated statements of income, of which $7,119,000
is attributable to noncontrolling interest.
38
Overview - continued
Financings - continued
Unsecured Revolving Credit Facility
On April 15, 2021, we extended our $1.25 billion unsecured revolving credit facility from January 2023 (as fully extended) to
April 2026 (as fully extended). The interest rate on the extended facility was lowered to LIBOR plus 0.90% from LIBOR plus 1.00%.
We subsequently qualified for a sustainability margin adjustment by achieving certain key performance indicator (KPI) metrics, which
reduced our interest rate by 0.01% to LIBOR plus 0.89%. The facility fee remains at 20 basis points. Our separate $1.50 billion
unsecured revolving credit facility matures in March 2024 (as fully extended) and has an interest rate of LIBOR plus 0.90% and a
facility fee of 20 basis points.
Senior Unsecured Notes
On May 24, 2021, we completed a green bond public offering of $400,000,000 2.15% senior unsecured notes due June 1, 2026
("2026 Notes") and $350,000,000 3.40% senior unsecured notes due June 1, 2031 ("2031 Notes"). Interest on the senior unsecured
notes is payable semi-annually on June 1 and December 1, commencing December 1, 2021. The 2026 Notes were sold at 99.86% of
their face amount to yield 2.18% and the 2031 Notes were sold at 99.59% of their face amount to yield 3.45%.
Preferred Shares/Units
On September 22, 2021, Vornado sold 12,000,000 4.45% Series O cumulative redeemable preferred shares at a price of $25.00
per share, pursuant to an effective registration statement. Vornado received aggregate net proceeds of $291,153,000, after
underwriters' discount and issuance costs, and contributed the net proceeds to the Operating Partnership in exchange for 12,000,000
4.45% Series O preferred units (with economic terms that mirror those of the Series O preferred shares). Dividends on the Series O
preferred shares/units are cumulative and payable quarterly in arrears. The Series O preferred shares/units 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), Vornado may redeem the Series O preferred shares/units at a redemption price of $25.00 per share/unit, plus accrued
and unpaid dividends/distributions through the date of redemption. The Series O preferred shares/units have no maturity date and will
remain outstanding indefinitely unless redeemed by Vornado. Vornado used the net proceeds for the redemption of its 5.70% Series K
cumulative redeemable preferred shares/units.
On October 13, 2021, we redeemed all of the outstanding 5.70% Series K preferred shares/units at their redemption price of
$25.00 per share/unit, or $300,000,000 in the aggregate, plus accrued and unpaid dividends/distributions through the date of
redemption. We recognized $9,033,000 of previously capitalized issuance costs in "Series K preferred share/unit issuance costs" on
our consolidated statements of income during the third quarter of 2021, when the preferred shares/units were called for redemption.
Leasing Activity for the Year Ended December 31, 2021
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
(“GAAP”). 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.
•
•
•
•
2,252,000 square feet of New York Office space (1,973,000 square feet at share) at an initial rent of $83.26 per square foot and a
weighted average lease term of 11.1 years. The changes in the GAAP and cash mark-to-market rent on the 1,591,000 square feet
of second generation space were positive 15.9% and positive 10.8%, respectively. Tenant improvements and leasing commissions
were $10.31 per square foot per annum, or 12.4% of initial rent.
229,000 square feet of New York Retail space (208,000 square feet at share) at an initial rent of $145.44 per square foot and a
weighted average lease term of 17.1 years. The changes in the GAAP and cash mark-to-market rent on the 109,000 square feet of
second generation space were positive 37.1% and positive 13.2%, respectively. Tenant improvements and leasing commissions
were $4.26 per square foot per annum, or 2.9% of initial rent.
330,000 square feet at theMART (all at share) at an initial rent of $51.18 per square foot and a weighted average lease term of 5.8
years. The changes in the GAAP and cash mark-to-market rent on the 273,000 square feet of second generation space were
negative 0.5% and 0.0%, respectively. Tenant improvements and leasing commissions were $7.63 per square foot per annum, or
14.9% of initial rent.
74,000 square feet at 555 California Street (52,000 square feet at share) at an initial rent of $114.70 per square foot and a
weighted average lease term of 4.0 years. The changes in the GAAP and cash mark-to-market rent on the 48,000 square feet of
second generation space were positive 29.5% and positive 25.4%, respectively. Tenant improvements and leasing commissions
were $3.94 per square foot per annum, or 3.4% of initial rent.
39
Overview - continued
Square footage (in service) and Occupancy as of December 31, 2021:
(Square feet in thousands)
New York:
Office
Retail (includes retail properties that are in the base of our office properties)
Residential - 1,986 units(2)
Alexander's
Other:
theMART
555 California Street
Other
Total square feet at December 31, 2021
____________________
See notes below.
Number of
properties
Square Feet (in service)
Total
Portfolio
Our
Share
Occupancy %
32 (1)
60 (1)
8 (1)
6
4
3
11
19,442
2,267
1,518
2,218
25,445
3,692
1,818
2,489
7,999
16,757
1,825
785
719
20,086
3,683
1,273
1,154
6,110
33,444
26,196
92.2%
80.7%
96.4%
95.6%
91.3%
(2)
(2)
88.9%
93.8%
92.8%
Square footage (in service) and Occupancy as of December 31, 2020:
(Square feet in thousands)
New York:
Office
Retail (includes retail properties that are in the base of our office properties)
Residential - 1,995 units(2)
Alexander's
Hotel Pennsylvania (temporarily closed on April 1, 2020 and permanently
closed on April 5, 2021)
Other:
theMART
555 California Street
Other
Number of
properties
Square Feet (in service)
Total
Portfolio
Our
Share
Occupancy %
32 (1)
63 (1)
9 (1)
7
1
4
3
11
18,361
2,275
1,526
2,366
—
24,528
3,692
1,741
2,489
7,922
15,413
1,805
793
766
—
93.4%
78.8%
84.9%
98.5%
(2)
(2)
18,777
92.2%
3,683
1,218
1,154
6,055
89.5%
98.4%
92.8%
Total square feet at December 31, 2020
32,450
24,832
____________________
(1) Reflects the Office, Retail and Residential space within our 77 and 79 total New York properties as of December 31, 2021 and 2020, respectively.
(2) The Alexander Apartment Tower (312 units) is reflected in Residential unit count and occupancy.
40
Critical Accounting Estimates
In preparing the consolidated financial statements we have made estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
periods. Accounting estimates are deemed critical if they involve a significant level of estimation uncertainty and have had or are
reasonably likely to have a material impact on our financial condition or results of operations. Below is a summary of the critical
accounting estimates used in the preparation of our consolidated financial statements. A discussion of our accounting policies is
included in Note 2 - Basis of Presentation and Significant Accounting Policies to our consolidated financial statements in this Annual
Report on Form 10-K.
Acquisitions of Real Estate
Upon the acquisition of real estate, we assess whether the transaction should be accounted for as an asset acquisition or as a
business combination. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted
for as asset acquisitions. Our acquisitions of real estate generally will not meet the definition of a business because substantially all of
the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e. land, buildings, and related
identified intangible assets).
We assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired
above and below-market leases, acquired in-place leases and tenant relationships) and acquired liabilities and we allocate the purchase
price on a relative fair value basis. We assess fair value based on estimated cash flow projections based on a number of factors such as
historical operating results, known trends, and market/economic conditions and make key assumptions regarding the discount and
capitalization rates used in our analyses. The use of different assumptions to value the acquired properties and allocate value between
land and building could affect the revenues recognized over the terms of the leases at our properties and the expenses recognized over
the property's estimated remaining useful life on our consolidated statements of income.
Impairment Analyses for Investments in Real Estate and Unconsolidated Partially Owned Entities
Our investments in consolidated properties, including any related right-of-use assets and intangible assets, and unconsolidated
partially owned entities are individually reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Impairment analyses are based on current plans, intended holding periods, ability to hold,
and available information at the time the analyses are prepared. Assessing impairment can be complex and involves a high degree of
subjectivity in determining if impairment indicators are present and in estimating the future undiscounted cash flows or the fair value
of an asset. In particular, these estimates are sensitive to significant assumptions, including the estimation of future rental revenues,
operating expenses, discount and capitalization rates and our intent and ability to hold the related asset, all of which could be affected
by our expectations about future market or economic conditions. These estimates can have a significant impact on the undiscounted
cash flows or estimated fair value of an asset and could thereby affect the value of our real estate investments on our consolidated
balance sheets as well as any potential impairment losses recognized on our consolidated statements of income.
Collectability Assessments for Revenue Recognition
We evaluate on an individual lease basis whether it is probable that we will collect substantially all amounts due from our tenants
and recognize changes in the collectability assessment of our operating leases as adjustments to rental revenue. Management exercises
judgment in assessing collectability of tenant receivables and considers payment history, current credit status, publicly available
information about the financial condition of the tenant, the impact of COVID-19 on tenants' businesses, and other factors. Our
assessment of the collectability of tenant receivables can have a significant impact on the rental revenue recognized in our
consolidated statements of income.
Recent Accounting Pronouncements
See Note 2 – Basis of Presentation and Significant Accounting Policies to our consolidated financial statements in this Annual
Report on Form 10-K for a discussion concerning recent accounting pronouncements.
41
NOI At Share by Segment for the Years Ended December 31, 2021 and 2020
NOI at share represents total revenues less operating expenses including our share of partially owned entities. NOI at share - cash
basis represents NOI at share adjusted to exclude straight-line rental income and expense, amortization of acquired below and above
market leases, net and other non-cash adjustments. We consider NOI at share - cash basis to be the primary non-GAAP financial
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 NOI at share - cash basis, we utilize this measure
to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI at share and NOI at share -
cash basis should not be considered alternatives to net income or cash flow from operations and may not be comparable to similarly
titled measures employed by other companies. NOI at share - cash basis includes rent that has been deferred as a result of the
COVID-19 pandemic.
Below is a summary of NOI at share and NOI at share - cash basis by segment for the years ended December 31, 2021 and 2020.
(Amounts in thousands)
Total revenues
Operating expenses
NOI - consolidated
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries
Add: NOI from partially owned entities
NOI at share
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net
and other
NOI at share - cash basis
(Amounts in thousands)
Total revenues
Operating expenses
NOI - consolidated
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries
Add: NOI from partially owned entities
NOI at share
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net
and other
NOI at share - cash basis
For the Year Ended December 31, 2021
Total
New York
Other
$
1,589,210
$
1,257,599
$
(797,315)
791,895
(69,385)
310,858
1,033,368
(626,386)
631,213
(38,980)
300,721
892,954
1,318
(1,188)
$
1,034,686
$
891,766
$
331,611
(170,929)
160,682
(30,405)
10,137
140,414
2,506
142,920
For the Year Ended December 31, 2020
Total
New York
Other
$
1,527,951
$
1,221,748
$
(789,066)
738,885
(72,801)
306,495
972,579
(640,531)
581,217
(43,773)
296,447
833,891
46,246
36,715
$
1,018,825
$
870,606
$
306,203
(148,535)
157,668
(29,028)
10,048
138,688
9,531
148,219
42
NOI At Share by Segment for the Years Ended December 31, 2021 and 2020 - continued
The elements of our New York and Other NOI at share for the years ended December 31, 2021 and 2020 are summarized below.
(Amounts in thousands)
New York:
Office(1)
Retail(2)
Residential
Alexander's(3)
Hotel Pennsylvania(4)
Total New York
Other:
theMART(5)
555 California Street
Other investments
Total Other
NOI at share
For the Year Ended December 31,
2021
2020
$
677,167
$
173,363
17,783
37,318
(12,677)
892,954
58,909
64,826
16,679
140,414
672,495
147,299
20,687
35,912
(42,502)
833,891
69,178
60,324
9,186
138,688
$
1,033,368
$
972,579
________________________________________
(1)
2020 includes $18,173 of non-cash write-offs of receivables arising from the straight-lining of rents and $6,702 of write-offs of tenant receivables deemed
uncollectible.
2020 includes $25,876 of non-cash write-offs of receivables arising from the straight-lining of rents and $12,017 of write-offs of tenant receivables deemed
uncollectible.
2020 includes $3,511 of non-cash write-offs of receivables arising from the straight-lining of rents and $1,335 of write-offs of tenant receivables deemed
uncollectible.
(2)
(3)
(4) On April 5, 2021, we permanently closed the Hotel Pennsylvania. Beginning in the third quarter of 2021, we commenced capitalization of carrying costs in
(5)
connection with our development of the future PENN 15 (formerly Hotel Pennsylvania) site.
2021 includes an increase in real estate tax expense of $18,285 primarily due to a recent increase in the triennial tax-assessed value of theMART. 2020 includes
$2,722 of non-cash write-offs of receivables arising from the straight-lining of rents and $1,742 of write-offs of tenant receivables deemed uncollectible.
43
NOI At Share by Segment for the Years Ended December 31, 2021 and 2020 - continued
The elements of our New York and Other NOI at share - cash basis for the years ended December 31, 2021 and 2020 are
summarized below.
(Amounts in thousands)
New York:
Office(1)
Retail(2)
Residential
Alexander's(3)
Hotel Pennsylvania(4)
Total New York
Other:
theMART(5)
555 California Street
Other investments
Total Other
NOI at share - cash basis
For the Year Ended December 31,
2021
2020
$
686,507
$
160,801
16,656
40,525
(12,723)
891,766
64,389
60,680
17,851
142,920
691,755
158,686
19,369
42,737
(41,941)
870,606
76,251
60,917
11,051
148,219
$
1,034,686
$
1,018,825
________________________________________
(1)
(2)
(3)
(4) On April 5, 2021, we permanently closed the Hotel Pennsylvania. Beginning in the third quarter of 2021, we commenced capitalization of carrying costs in
2020 includes $6,702 of write-offs of tenant receivables deemed uncollectible.
2020 includes $12,017 of write-offs of tenant receivables deemed uncollectible.
2020 includes $1,335 of write-offs of tenant receivables deemed uncollectible.
(5)
connection with our development of the future PENN 15 (formerly Hotel Pennsylvania) site.
2021 includes an increase in real estate tax expense of $18,285 primarily due to a recent increase in the triennial tax-assessed value of theMART. 2020 includes
$1,742 of write-offs of tenant receivables deemed uncollectible.
44
Reconciliation of Net Income (Loss) to NOI At Share and NOI At Share - Cash Basis for the Years Ended December 31, 2021
and 2020
Below is a reconciliation of net income (loss) to NOI at share and NOI at share - cash basis for the years ended December 31,
2021 and 2020.
(Amounts in thousands)
Net income (loss)
Depreciation and amortization expense
General and administrative expense
Impairment losses, transaction related costs and other
(Income) loss from partially owned entities
(Income) loss from real estate fund investments
Interest and other investment (income) loss, net
Interest and debt expense
Net gains on disposition of wholly owned and partially owned assets
Income tax (benefit) expense
NOI from partially owned entities
NOI attributable to noncontrolling interests in consolidated subsidiaries
NOI at share
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other
NOI at share - cash basis
NOI At Share by Region
Region:
New York City metropolitan area
Chicago, IL
San Francisco, CA
For the Year Ended December 31,
2021
2020
$
207,553
$
(461,845)
412,347
134,545
13,815
(130,517)
(11,066)
(4,612)
231,096
(50,770)
(10,496)
310,858
(69,385)
1,033,368
1,318
1,034,686
399,695
181,509
174,027
329,112
226,327
5,499
229,251
(381,320)
36,630
306,495
(72,801)
972,579
46,246
1,018,825
For the Year Ended December 31,
2021
2020
88%
6%
6%
100%
87%
7%
6%
100%
45
Results of Operations – Year Ended December 31, 2021 Compared to December 31, 2020
Revenues
Our revenues were $1,589,210,000 for the year ended December 31, 2021 compared to $1,527,951,000 in the prior year, an
increase of $61,259,000. Below are the details of the increase by segment:
(Amounts in thousands)
Increase (decrease) due to:
Rental revenues:
Acquisitions, dispositions and other
Development and redevelopment
Hotel Pennsylvania(1)
Trade shows(2)
Same store operations
Fee and other income:
BMS cleaning fees
Management and leasing fees
Other income
Total increase in revenues
________________________________________
See notes on the following page.
Total
New York
Other
$
11,815
$
9,696
$
(8,163)
(8,493)
8,179
43,558
(3)
46,896
14,244
(7,691)
7,810
14,363
(8,163)
(8,493)
—
32,694
25,734
14,779
(7,331)
2,669
10,117
2,119
—
—
8,179
10,864
21,162
(535)
(360)
5,141
4,246
$
61,259
$
35,851
$
25,408
46
Results of Operations – Year Ended December 31, 2021 Compared to December 31, 2020 - continued
Expenses
Our expenses were $1,367,869,000 for the year ended December 31, 2021 compared to $1,550,740,000 in the prior year, a
decrease of $182,871,000. Below are the details of the decrease by segment:
(Amounts in thousands)
Increase (decrease) due to:
Operating:
Acquisitions, dispositions and other
Development and redevelopment
Non-reimbursable expenses
Hotel Pennsylvania(1)
Trade shows(2)
BMS expenses
Same store operations
Depreciation and amortization:
Acquisitions, dispositions and other
Development and redevelopment
Same store operations
General and administrative
Expense from deferred compensation plan liability
Total
New York
Other
$
11,198
$
11,198
$
(10,249)
11,125
(37,763)
3,293
7,670
22,975
8,249
15,080
11,351
(13,779)
12,652
(46,964) (5)
3,404
(10,249)
11,349
(37,763)
—
8,205
3,115
(14,145)
15,080
11,351
(12,032)
14,399
(15,430)
—
Impairment losses, transaction related costs and other
(160,212)
(158,527) (6)
—
—
(224)
—
3,293
(535)
19,860
(4)
22,394
—
—
(1,747)
(1,747)
(31,534)
3,404
(1,685)
Total decrease in expenses
$
(182,871)
$
(173,703)
$
(9,168)
____________________
(1) On April 5, 2021, we permanently closed the Hotel Pennsylvania. Beginning in the third quarter of 2021, we commenced capitalization of carrying costs in
connection with our development of the future PENN 15 (formerly Hotel Pennsylvania) site. Operating expense for 2020 includes a $9,246 severance accrual for
furloughed union employees.
2020 includes $63,204 for the write-off of lease receivables deemed uncollectible (primarily write-offs of receivables arising from the straight-lining of rents).
2021 includes an increase in real estate tax expense of $18,285 primarily due to a recent increase in the triennial tax-assessed value of theMART.
(2) We cancelled trade shows at theMART beginning late March of 2020 due to the COVID-19 pandemic and resumed in the third quarter of 2021.
(3)
(4)
(5) Primarily due to the overhead reduction program, including $22,132 of severance and other reduction-in-force related expenses in 2020.
(6) Primarily due to $236,286 of non-cash impairment losses related to wholly owned street retail assets in 2020, partially offset by $70,260 of lease liability
extinguishment gain related to 608 Fifth Avenue recognized in 2020 and $7,880 of non-cash impairment losses for the three Manhattan retail properties sold in
2021.
47
Results of Operations – Year Ended December 31, 2021 Compared to December 31, 2020 - continued
Income (Loss) from Partially Owned Entities
Below are the components of income (loss) from partially owned entities.
(Amounts in thousands)
Our share of net income (loss):
Fifth Avenue and Times Square JV:
Equity in net income(1)
Return on preferred equity, net of our share of the expense
Non-cash impairment loss
Alexander's(2)
Partially owned office buildings(3)
Other investments(4)
Percentage Ownership
at December 31, 2021
For the Year Ended December 31,
2021
2020
51.5%
$
47,144 $
37,416
—
84,560
40,121
12,057
(6,221)
32.4%
Various
Various
21,063
37,357
(413,349)
(354,929)
18,635
12,742
(5,560)
$
130,517 $
(329,112)
____________________
(1)
2021 includes decreases in our share of depreciation and amortization expense compared to the prior year of $17,448, primarily resulting from non-cash
impairment losses recognized during 2020. 2020 includes $3,125 of write-offs of lease receivables deemed uncollectible.
2021 includes our $11,620 share of net gain on the sale of the Paramus, New Jersey property to IKEA Property, Inc., and our $2,956 share of net gain on the sale
of a parcel of land in the Bronx, New York. We also recognized $750 and $300, respectively, of sales commissions paid by Alexander's in connection with these
sales. 2020 includes our $4,846 share of write-offs of lease receivables deemed uncollectible.
Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue (consolidated from August 5, 2021), 7 West 34th Street, 512 West 22nd Street, 61
Ninth Avenue, 85 Tenth Avenue and others.
Includes interests in Independence Plaza, Rosslyn Plaza and others.
(2)
(3)
(4)
Income (Loss) from Real Estate Fund Investments
Below is a summary of income (loss) from the Fund and the Crowne Plaza joint venture.
(Amounts in thousands)
Net investment income (loss)
Net unrealized income (loss) on held investments
Net realized income on exited investments
Income (loss) from real estate fund investments
Less (income) loss attributable to noncontrolling interests in consolidated subsidiaries
For the Year Ended December 31,
2021
2020
$
6,445 $
3,257
1,364
11,066
(7,309)
(220)
(226,107)
—
(226,327)
163,213
(63,114)
Income (loss) from real estate fund investments net of noncontrolling interests in consolidated subsidiaries
$
3,757 $
Interest and Other Investment Income (Loss), net
The following table sets forth the details of interest and other investment income (loss), net.
(Amounts in thousands)
Interest on loans receivable
Interest on cash and cash equivalents and restricted cash
Credit losses on loans receivable
Market-to-market decrease in the fair value of marketable security (sold on January 23, 2020)
Other, net
For the Year Ended December 31,
2021
2020
$
$
2,517 $
284
—
—
1,811
4,612 $
3,384
5,793
(13,369)
(4,938)
3,631
(5,499)
48
Results of Operations – Year Ended December 31, 2021 Compared to December 31, 2020 - continued
Interest and Debt Expense
Interest and debt expense was $231,096,000 for the year ended December 31, 2021, compared to $229,251,000 in the prior year,
an increase of $1,845,000. This increase was primarily due to (i) $23,729,000 of defeasance costs, of which $7,119,000 is attributable
to noncontrolling interest, in connection with the refinancing of 1290 Avenue of the Americas partially offset by, (ii) $10,941,000 of
lower interest expense due to variable rates on certain mortgage loans that were previously swapped to higher fixed rates under interest
rate swap arrangements that expired in 2020, and (iii) $9,387,000 of lower interest expense resulting from lower average interest rates
on our variable rate loans.
Net Gains on Disposition of Wholly Owned and Partially Owned Assets
Net gains on disposition of wholly owned and partially owned assets for the year ended December 31, 2021 was $50,770,000
compared to $381,320,000 in the prior year, a decrease of $330,550,000. This resulted primarily from lower net gains on sale of 220
CPS condominium units.
Income Tax Benefit (Expense)
Income tax benefit was $10,496,000 for the year ended December 31, 2021, compared to an expense of $36,630,000 in the prior
year, a decrease in expense of $47,126,000. This was primarily due to a higher tax benefit recognized by our taxable REIT subsidiaries
in 2021 and lower income tax expense from the sale of 220 CPS condominium units partially offset by an increase in the deferred tax
liability on our investment in Farley Office and Retail.
Net (Income) Loss Attributable to Noncontrolling Interests in Consolidated Subsidiaries
Net income attributable to noncontrolling interests in consolidated subsidiaries was $24,014,000 for the year ended December 31,
2021, compared to net loss of $139,894,000 in the prior year, an increase in income of $163,908,000. This resulted primarily from a
decrease in net loss allocated to the noncontrolling interests of our real estate fund investments.
Net (Income) Loss Attributable to Noncontrolling Interests in the Operating Partnership (Vornado Realty Trust)
Net income attributable to noncontrolling interests in the Operating Partnership was $7,540,000 for the year ended December 31,
2021, compared to net loss of $24,946,000 in the prior year, an increase in income of $32,486,000. This resulted primarily from higher
net income subject to allocation to Class A unitholders.
Preferred Share Dividends of Vornado Realty Trust
Preferred share dividends were $65,880,000 for the year ended December 31, 2021, compared to $51,739,000 in the prior year, an
increase of $14,141,000. This was primarily due to the issuance of the 5.25% Series N cumulative redeemable preferred shares in
November 2020 and the 4.45% Series O cumulative redeemable preferred shares in September 2021, partially offset by the redemption
of the 5.70% Series K cumulative redeemable preferred shares in October 2021.
Preferred Unit Distributions of Vornado Realty L.P.
Preferred unit distributions were $66,035,000 for the year ended December 31, 2021, compared to $51,904,000 in the prior year,
an increase of $14,131,000. This was primarily due to the issuance of the 5.25% Series N cumulative redeemable preferred units in
November 2020 and the 4.45% Series O cumulative redeemable preferred units in September 2021, partially offset by the redemption
of the 5.70% Series K cumulative redeemable preferred units in October 2021.
Preferred Share/Unit Issuance Costs
Preferred share/unit issuance costs for the year ended December 31, 2021 were $9,033,000 representing the previously capitalized
issuance costs which were expensed upon calling for redemption of all the outstanding Series K cumulative redeemable preferred
shares/units in September 2021.
49
Results of Operations – Year Ended December 31, 2021 Compared to December 31, 2020 - continued
Same Store Net Operating Income At Share
Same store NOI at share represents NOI at share from operations which are in service in both the current and prior year reporting
periods. Same store NOI at share - cash basis is same store NOI at share adjusted to exclude straight-line rental income and expense,
amortization of acquired below and above market leases, net 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
NOI at share and same store NOI at share - cash basis should not be considered alternatives to net income or cash flow from
operations and may not be comparable to similarly titled measures employed by other companies.
Below are reconciliations of NOI at share to same store NOI at share for our New York segment, theMART, 555 California Street
and other investments for the year ended December 31, 2021 compared to December 31, 2020.
(Amounts in thousands)
NOI at share for the year ended December 31, 2021
$ 1,033,368
$
892,954
Total
New York
Less NOI at share from:
Change in ownership interest in One Park Avenue
Dispositions
Development properties
Hotel Pennsylvania (permanently closed on April 5, 2021)
Other non-same store income, net
Same store NOI at share for the year ended December 31, 2021
$
(9,651)
312
(28,793)
12,677
(23,464)
984,449
(9,651)
312
(28,793)
12,677
(6,785)
860,714
$
NOI at share for the year ended December 31, 2020
$
972,579
$
833,891
Less NOI at share from:
Dispositions
Development properties
Hotel Pennsylvania (permanently closed on April 5, 2021)
Other non-same store income, net
3,488
(31,707)
42,502
(30,321)
3,488
(31,707)
42,502
(20,382)
Same store NOI at share for the year ended December 31, 2020
$
956,541
$
827,792
Increase (decrease) in same store NOI at share
$
27,908
$
32,922
theMART(1)
58,909
$
555 California
Street
Other
$
64,826
$
16,679
—
—
—
—
—
58,909
69,178
—
—
—
—
—
—
—
—
64,826
60,324
—
—
—
—
—
—
—
(16,679)
—
9,186
—
—
—
$
$
$
$
(524)
(229)
(9,186)
68,654
$
60,095
(9,745)
$
4,731
$
$
—
—
$
$
$
$
% increase (decrease) in same store NOI at share
2.9 %
4.0 %
(14.2) %
7.9 %
— %
___________________
(1)
2021 includes an increase in real estate tax expense of $18,285 primarily due to a recent increase in the triennial tax-assessed value of theMART.
50
Results of Operations – Year Ended December 31, 2021 Compared to December 31, 2020 - continued
Same Store Net Operating Income At Share - continued
Below are reconciliations of NOI at share - cash basis to same store NOI at share - cash basis for our New York segment,
theMART, 555 California Street and other investments for the year ended December 31, 2021 compared to December 31, 2020.
(Amounts in thousands)
NOI at share - cash basis for the year ended December 31, 2021
$ 1,034,686
$
891,766
Total
New York
theMART(1)
64,389
$
555
California
Street
Other
$
60,680
$
17,851
Less NOI at share - cash basis from:
Change in ownership interest in One Park Avenue
Dispositions
Development properties
Hotel Pennsylvania (permanently closed on April 5, 2021)
Other non-same store income, net
(7,023)
611
(25,710)
12,723
(25,297)
(7,023)
611
(25,710)
12,723
(7,446)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(17,851)
Same store NOI at share - cash basis for the year ended December 31, 2021
$
989,990
$
864,921
$
64,389
$
60,680
$
—
NOI at share - cash basis for the year ended December 31, 2020
$ 1,018,825
$
870,606
$
76,251
$
60,917
$
11,051
Less NOI at share - cash basis from:
Dispositions
Development properties
Hotel Pennsylvania (permanently closed on April 5, 2021)
Other non-same store income, net
(1,835)
(42,998)
41,941
(41,652)
(1,835)
(42,998)
41,941
(29,663)
—
—
—
(553)
—
—
—
(385)
Same store NOI at share - cash basis for the year ended December 31, 2020
$
974,281
$
838,051
$
75,698
$
60,532
Increase (decrease) in same store NOI at share - cash basis
$
15,709
$
26,870
$
(11,309)
$
148
—
—
—
(11,051)
—
—
$
$
% increase (decrease) in same store NOI at share - cash basis
1.6 %
3.2 %
(14.9) %
0.2 %
— %
___________________
(1)
2021 includes an increase in real estate tax expense of $18,285 primarily due to a recent increase in the triennial tax-assessed value of theMART.
Related Party Transactions
See Note 22 - Related Party Transactions to our consolidated financial statements in this Annual Report on Form 10-K for a
discussion concerning related party transactions.
51
Liquidity and Capital Resources
Our cash requirements include property operating expenses, capital improvements, tenant improvements, debt service, leasing
commissions, dividends to our shareholders and distributions to unitholders of the Operating Partnership, as well as acquisition and
development and redevelopment costs. The sources of liquidity to fund these cash requirements include rental revenue, which is our
primary source of cash flow and is dependent upon the occupancy and rental rates of our properties; proceeds from debt financings,
including mortgage loans, senior unsecured borrowings, unsecured term loans and unsecured revolving credit facilities; proceeds from
the issuance of common and preferred equity; and asset sales.
As of December 31, 2021, we have $4.1 billion of liquidity comprised of $1.9 billion of cash and cash equivalents and restricted
cash and $2.2 billion available on our $2.75 billion revolving credit facilities. The on-going challenges posed by the COVID-19
pandemic could adversely impact our cash flow from continuing operations but we anticipate that cash flow from continuing
operations over the next twelve months together with cash balances on hand will be adequate to fund our business operations, cash
distributions to unitholders of the Operating Partnership, cash dividends to our shareholders, debt amortization and recurring capital
expenditures. Capital requirements for development and redevelopment expenditures and acquisitions may require funding from
borrowings, equity offerings and/or asset sales.
We may from time to time purchase or retire outstanding debt securities or redeem our equity 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.
Summary of Cash Flows
Cash and cash equivalents and restricted cash was $1,930,351,000 at December 31, 2021, a $199,982,000 increase from the
balance at December 31, 2020.
Our cash flow activities for the years ended December 31, 2021 and 2020 are summarized as follows:
(Amounts in thousands)
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Operating Activities
For the Year Ended December 31,
2021
2020
Increase (Decrease)
in Cash Flow
$
761,806 $
424,240 $
(532,347)
(29,477)
(87,800)
(213,202)
337,566
(444,547)
183,725
Net cash provided by operating activities primarily consists of cash inflows from rental revenues and operating distributions from
our non-consolidated partially owned entities less cash outflows for property expenses, general and administrative expenses and
interest expense. For the year ended December 31, 2021, net cash provided by operating activities of $761,806,000 was comprised of
$758,260,000 of cash from operations, including distributions of income from partially owned entities of $214,521,000 and return of
capital from real estate fund investments of $5,104,000, and a net increase of $3,546,000 in cash due to the timing of cash receipts and
payments related to changes in operating assets and liabilities.
52
Liquidity and Capital Resources - continued
Summary of Cash Flows - continued
Investing Activities
Net cash flow used in investing activities is impacted by the timing and extent of our development, capital improvement,
acquisition and disposition activities during the year.
The following table details the net cash used in investing activities for the years ended December 31, 2021 and 2020:
(Amounts in thousands)
For the Year Ended December 31,
2021
2020
Increase (Decrease)
in Cash Flow
Development costs and construction in progress
$
(585,940) $
(601,920) $
Additions to real estate
Proceeds from sale of condominium units at 220 Central Park South
Acquisition of additional 45.0% ownership interest in One Park Avenue (inclusive of $5,806
of prorations and net working capital and net of $39,370 of cash and restricted cash
balances consolidated upon acquisition)
Distributions of capital from partially owned entities
Proceeds from sales of real estate
Investments in partially owned entities
Acquisitions of real estate and other
Proceeds from repayments of loans receivable
Moynihan Train Hall expenditures
Proceeds from sales of marketable securities
Net cash used in investing activities
Financing Activities
(149,461)
137,404
(123,936)
106,005
100,024
(14,997)
(3,000)
1,554
—
—
(155,738)
1,044,260
—
2,389
—
(8,959)
(1,156)
—
(395,051)
28,375
$
(532,347) $
(87,800) $
15,980
6,277
(906,856)
(123,936)
103,616
100,024
(6,038)
(1,844)
1,554
395,051
(28,375)
(444,547)
Net cash flow used in financing activities is impacted by the timing and extent of issuances of debt and equity securities,
distributions paid to common shareholders and unitholders of the Operating Partnership as well as principal and other repayments
associated with our outstanding debt.
The following table details the net cash used in financing activities for the years ended December 31, 2021 and 2020:
(Amounts in thousands)
Proceeds from borrowings
Repayments of borrowings
Purchase of marketable securities in connection with defeasance of mortgage payable
Dividends paid on common shares/Distributions to Vornado
Redemption of preferred shares/units
Proceeds from the issuance of preferred shares/units
Distributions to redeemable security holders and noncontrolling interests in consolidated
subsidiaries
Dividends paid on preferred shares/Distributions to preferred unitholders
Debt issuance costs
Contributions from noncontrolling interests in consolidated subsidiaries
Repurchase of shares/Class A units related to stock compensation agreements and related tax
withholdings and other
Proceeds received from exercise of Vornado stock options and other
Moynihan Train Hall reimbursement from Empire State Development
For the Year Ended December 31,
2021
2020
Increase (Decrease)
in Cash Flow
$
3,248,007 $
1,056,315 $
2,191,692
(1,584,243)
(1,067,564)
(973,729)
(406,109)
(300,000)
291,153
(190,876)
(65,880)
(51,184)
4,052
(1,567)
899
—
—
(827,319)
—
291,182
(91,514)
(64,271)
(10,901)
100,094
(137)
5,862
395,051
(516,679)
(973,729)
421,210
(300,000)
(29)
(99,362)
(1,609)
(40,283)
(96,042)
(1,430)
(4,963)
(395,051)
183,725
Net cash used in financing activities
$
(29,477) $
(213,202) $
53
Liquidity and Capital Resources - continued
Dividends
On January 19, 2022, Vornado declared a quarterly common dividend of $0.53 per share (an indicated annual rate of $2.12 per
common share). This dividend, if declared by the Board of Trustees for all of 2022, would require Vornado to pay out approximately
$406,000,000 of cash for common share dividends. In addition, during 2022, Vornado expects to pay approximately $62,000,000 of
cash dividends on outstanding preferred shares and approximately $30,000,000 of cash distributions to unitholders of the Operating
Partnership.
Debt
We have an effective shelf registration for the offering of our equity and debt securities that is not limited in amount due to our
status as a “well-known seasoned issuer.” We have issued senior unsecured notes from a shelf registration statement that contain
financial covenants that restrict our ability to incur debt, and that require us to maintain a level of unencumbered assets based on the
level of our secured debt. Our unsecured revolving 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 unsecured revolving credit facilities also contain customary conditions precedent to borrowing,
including representations and warranties, and contain customary events of default that could give rise to accelerated repayment,
including such items as failure to pay interest or principal. As of December 31, 2021, we are in compliance with all of the financial
covenants required by our senior unsecured notes and our unsecured revolving credit facilities.
A summary of our consolidated debt as of December 31, 2021 and 2020 is presented below.
(Amounts in thousands)
As of December 31, 2021
As of December 31, 2020
Consolidated debt:
Variable rate
Fixed rate
Total
Deferred financing costs, net and other
Total, net
$
Balance
4,534,215
4,140,000
8,674,215
(58,268)
Weighted
Average
Interest Rate
1.59%
3.06%
2.29%
Weighted
Average
Interest Rate
1.83%
3.70%
2.89%
$
Balance
3,220,815
4,212,643
7,433,458
(34,462)
$
8,615,947
$
7,398,996
During 2022 and 2023, $700,000,000 and $0, respectively, of our outstanding consolidated debt matures (based on the extended
maturity for certain loans in which we have the unilateral right to extend); we may refinance this maturing debt as it comes due or
choose to repay it using cash and cash equivalents or our unsecured revolving credit facilities. We may also refinance or prepay other
outstanding debt depending 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.
Details of 2021 financing activities are provided in the “Overview” of Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
The contractual principal and interest repayments schedule of our consolidated debt as of December 31, 2021 is as follows:
(Amounts in thousands)
Total
Less than 1 Year
1 – 3 Years
3 – 5 Years
Thereafter
Notes and mortgages payable
Senior unsecured notes due 2025
Senior unsecured notes due 2026
Senior unsecured notes due 2031
Unsecured term loan
Revolving credit facilities
Total contractual principal(1) and interest(2)
repayments
$
6,484,855 $
497,906
438,031
462,124
859,732
585,328
1,178,788 $
15,750
8,600
11,900
29,799
8,181
4,112,696 $
31,500
17,200
23,800
829,933
577,147
394,291 $
450,656
412,231
23,800
—
—
799,080
—
—
402,624
—
—
$
9,327,976 $
1,253,018 $
5,592,276 $
1,280,978 $
1,201,704
____________________
(1) Based on the contractual maturity of our loans, including the extended maturity date of certain loans for which the unilateral right to extend has been exercised as
of December 31, 2021.
(2) Estimated interest for variable-rate debt based on the 1-month LIBOR curve available as of December 31, 2021.
54
Liquidity and Capital Resources - continued
Capital Expenditures
Capital expenditures consist of expenditures to maintain and improve assets, tenant improvement allowances and leasing
commissions. During 2022, we expect to incur $275,000,000 of capital expenditures for our consolidated properties. We plan to fund
these capital expenditures from operating cash flow, existing liquidity, and/or borrowings. Our partially owned non-consolidated
subsidiaries typically fund their capital expenditures without any additional equity contribution from us.
Development and Redevelopment Expenditures
Development and redevelopment expenditures consist of all hard and soft costs associated with the development and
redevelopment of a property. We plan to fund these development and redevelopment expenditures from operating cash flow, existing
liquidity, and/or borrowings. See detailed discussion below for our current development and redevelopment projects.
PENN District
Farley
Our 95% joint venture (5% is owned by the Related Companies ("Related")) is developing Farley Office and Retail, which will
include approximately 845,000 rentable square feet of commercial space, comprised of approximately 730,000 square feet of office
space and approximately 115,000 square feet of restaurant and retail space. The total development cost of this project is estimated to
be approximately $1,120,000,000 at our 95% share, of which $896,186,000 of cash has been expended as of December 31, 2021.
PENN 1
We are redeveloping PENN 1, a 2,547,000 square foot office building located on 34th Street between Seventh and Eighth
Avenue. In December 2020, we entered into an agreement with the Metropolitan Transportation Authority (the “MTA”) to oversee the
redevelopment of the Long Island Rail Road Concourse at Penn Station (the "Concourse"), within the footprint of PENN 1. Skanska
USA Civil Northeast, Inc. will perform the redevelopment under a fixed price contract for $380,000,000 which is being funded by the
MTA. In connection with the redevelopment, we entered into an agreement with the MTA which will result in the widening of the
Concourse to relieve overcrowding and our trading of 15,000 square feet of back of house space for 22,000 square feet of retail
frontage space. Vornado's total development cost for the PENN 1 project is estimated to be $450,000,000. As of December 31, 2021,
$309,437,000 of cash has been expended.
PENN 2
We are redeveloping PENN 2, a 1,795,000 square foot (as expanded) office building, located on the west side of Seventh Avenue
between 31st and 33rd Street. The development cost of this project is estimated to be $750,000,000, of which $161,066,000 of cash
has been expended as of December 31, 2021.
PENN 15 (Hotel Pennsylvania Site)
We have permanently closed the Hotel Pennsylvania and plan to develop an office tower on the site. Demolition of the existing
building structure commenced in the fourth quarter of 2021.
We are also making districtwide improvements within the PENN District. The development cost of these improvements is
estimated to be $100,000,000, of which $31,481,000 of cash has been expended as of December 31, 2021.
We are also evaluating other development and redevelopment opportunities at certain of our properties in Manhattan including, in
particular, the PENN District.
There can be no assurance that the above projects will be completed, completed on schedule or within budget.
Other Obligations
We have contractual cash obligations for certain properties that are subject to long-term ground and building leases. During 2022,
$36,044,000 of lease payments are due, including fair market rent resets accounted for as variable rent, under our operating leases. For
2023 and thereafter, we have $1,303,520,000 of future lease payments. We believe that our operating cash flow will be adequate to
fund these lease payments.
55
Liquidity and Capital Resources - continued
Insurance
For our properties, we maintain general liability insurance with limits of $300,000,000 per occurrence and per property, of which
$250,000,000 includes communicable disease coverage, and we maintain all risk property and rental value insurance with limits of
$2.0 billion per occurrence, with sub-limits for certain perils such as flood and earthquake, excluding communicable disease coverage.
Our California properties have earthquake insurance with coverage of $350,000,000 per occurrence and in the aggregate, subject to a
deductible in the amount of 5% of the value of the affected property. We maintain coverage for certified terrorism acts with limits of
$6.0 billion per occurrence and in the aggregate (as listed below), $1.2 billion for non-certified acts of terrorism, and $5.0 billion per
occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological (“NBCR”) terrorism events, as
defined by the Terrorism Risk Insurance Act of 2002, as amended to date and which has been extended through December 2027.
Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a
portion of 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 NBCR acts. 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. For NBCR acts, PPIC is responsible for a
deductible of $1,785,910 and 20% of the balance of a covered loss and the Federal government is responsible for the remaining
portion of a covered loss. We are ultimately responsible for any loss incurred by PPIC.
Certain condominiums in which we own an interest (including our leasehold interest in the Farley Condominiums) own insurance
policies with different per occurrence and aggregate limits than our policies described above.
We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism and other
events. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are
responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material.
Our debt instruments, consisting of mortgage loans secured by our properties, senior unsecured notes 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 or
refinance our properties and expand our portfolio.
Other Commitments and Contingencies
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 is not currently expected to have a material adverse effect on our financial position,
results of operations or cash flows.
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.
In July 2018, we leased 78,000 square feet at 345 Montgomery Street in San Francisco, CA, to a subsidiary of Regus PLC, for an
initial term of 15 years. The obligations under the lease were guaranteed by Regus PLC in an amount of up to $90,000,000. The tenant
purported to terminate the lease prior to space delivery. We commenced a suit on October 23, 2019 seeking to enforce the lease and
the guaranty. On May 11, 2021, the court issued a final statement of decision in our favor and on July 7, 2021, the Regus subsidiary
appealed the decision. On October 9, 2020, the successor to Regus PLC filed for bankruptcy in Luxembourg. We are actively pursuing
claims relating to the guaranty against the successor to Regus PLC and its parent in Luxembourg and other jurisdictions.
In November 2011, we entered into an agreement with the New York City Economic Development Corporation ("EDC") to lease
Piers 92 and 94 (the "Piers"). In February 2019, EDC issued an order for us to vacate Pier 92 due to structural problems. Beginning
March 2020 through August 2021, we did not pay EDC the monthly rent due under the non-recourse lease due to the loss of our right
to use or occupy Pier 92. On August 31, 2021, both parties entered into a mutual release with respect to claims by EDC for unpaid rent
owed and claims by the Company for costs and damages as a result of our inability to use or occupy Pier 92.
56
Liquidity and Capital Resources - continued
Other Commitments and Contingencies - continued
Our mortgage loans are non-recourse to us, except for the mortgage loans secured by 640 Fifth Avenue, 7 West 34th Street and
435 Seventh Avenue, which we guaranteed and therefore are part of our tax basis. 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. In addition, we have guaranteed the rent and payments in lieu of real estate taxes due to ESD, an
entity of New York State, for Farley Office and Retail. As of December 31, 2021, the aggregate dollar amount of these guarantees and
master leases is approximately $1,648,000,000.
As of December 31, 2021, $15,273,000 of letters of credit were outstanding under one of our unsecured revolving credit
facilities. Our unsecured revolving 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 unsecured revolving 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.
Our 95% consolidated joint venture (5% is owned by Related) is developing Farley Office and Retail. In connection with the
development of the property, the joint venture admitted a historic tax credit investor partner (the "Tax Credit Investor"). Under the
terms of the historic tax credit arrangement, the joint venture is required to comply with various laws, regulations, and contractual
provisions. Non-compliance with applicable requirements could result in projected tax benefits not being realized and, therefore, may
require a refund or reduction of the Tax Credit Investor’s capital contributions. As of December 31, 2021, the Tax Credit Investor has
made $92,400,000 in capital contributions. Vornado and Related have guaranteed certain of the joint venture’s obligations to the Tax
Credit Investor.
As investment manager of the Fund we are entitled to an incentive allocation after the limited partners have received a preferred
return on their invested capital. The incentive allocation is subject to catch-up and clawback provisions. Accordingly, based on the
December 31, 2021 fair value of the Fund assets, at liquidation we would be required to make a $27,100,000 payment to the limited
partners, net of amounts owed to us, representing a clawback of previously paid incentive allocations, which would have no income
statement impact as it was previously accrued.
As of December 31, 2021, we expect to fund additional capital to certain of our partially owned entities aggregating
approximately $10,300,000.
As of December 31, 2021, we have construction commitments aggregating approximately $494,000,000.
57
Funds From Operations
Vornado Realty Trust
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 certain
real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specified
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.
The calculations of both the numerator and denominator used in the computation of income per share are disclosed in Note 18 –
Income (Loss) Per Share/Income (Loss) Per Class A Unit, in our consolidated financial statements in Part II, Item 8 of this Annual
Report on Form 10-K.
FFO attributable to common shareholders plus assumed conversions was $571,074,000, or $2.97 per diluted share, for the year
ended December 31, 2021, compared to $750,522,000, or $3.93 per diluted share, for the prior year. Details of certain items that
impact FFO are discussed in the financial results summary of our “Overview.”
(Amounts in thousands, except per share amounts)
Reconciliation of net income (loss) attributable to common shareholders to FFO attributable to common
shareholders plus assumed conversions:
Net income (loss) attributable to common shareholders
Per diluted share
FFO adjustments:
Depreciation and amortization of real property
Real estate impairment losses
Decrease in fair value of marketable securities
Proportionate share of adjustments to equity in net income (loss) of partially owned entities to arrive at FFO:
Depreciation and amortization of real property
Net gains on sale of real estate
(Increase) decrease in fair value of marketable securities
Non-cash impairment loss on our investment in Fifth Avenue and Times Square JV, net of $4,289 of
noncontrolling interests
Noncontrolling interests' share of above adjustments
FFO adjustments, net
FFO attributable to common shareholders
Convertible preferred share dividends
FFO attributable to common shareholders plus assumed conversions
Per diluted share
Reconciliation of weighted average shares outstanding:
Weighted average common shares outstanding
Effect of dilutive securities:
Out-Performance Plan units
Convertible preferred shares
AO LTIP units
Employee stock options and restricted stock awards
Denominator for FFO per diluted share
$
$
$
$
$
$
$
For the Year Ended December 31,
2021
2020
101,086 $
0.53 $
(348,744)
(1.83)
373,792 $
7,880
—
139,247
(15,675)
(1,155)
—
504,089
(34,144)
469,945 $
571,031 $
43
571,074 $
2.97 $
368,556
236,286
4,938
156,646
—
2,801
409,060
1,178,287
(79,068)
1,099,219
750,475
47
750,522
3.93
191,551
191,146
557
26
10
4
—
28
—
19
192,148
191,193
58
ITEM 7A.
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:
(Amounts in thousands, except per share and unit amounts)
2021
2020
Consolidated debt:
Variable rate
Fixed rate
Pro rata share of debt of non-consolidated entities(1):
Variable rate
Fixed rate
Noncontrolling interests’ share of consolidated subsidiaries
Total change in annual net income attributable to the Operating
Partnership
Noncontrolling interests’ share of the Operating Partnership
Total change in annual net income attributable to Vornado
Total change in annual net income attributable to the Operating
Partnership per diluted Class A unit
Total change in annual net income attributable to Vornado per
diluted share
December 31,
Balance
Weighted
Average
Interest Rate
Effect of 1%
Change In
Base Rates
December 31,
Balance
Weighted
Average
Interest Rate
$
$
$
$
4,534,215
4,140,000
8,674,215
1,267,224
1,432,181
2,699,405
1.59%
3.06%
2.29%
1.78%
3.72%
2.81%
$
45,342 $
3,220,815
—
4,212,643
45,342 $
7,433,458
12,672 $
1,384,710
(1)
—
1,488,464
12,672 $
2,873,174
1.83%
3.70%
2.89%
1.80%
3.76%
2.81%
(6,821)
51,193
(3,496)
47,697
0.25
0.25
$
$
$
_______________________
(1) Net of our $16,200 share of Alexander's participation in its Rego Park II shopping center mortgage loan which is considered partially extinguished as the
participation interest is a reacquisition of debt. On April 7, 2021, Alexander's used its participation in the loan to reduce the loan balance.
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
current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt. As of
December 31, 2021, the estimated fair value of our consolidated debt was $8,657,000,000.
Derivatives and Hedging
We 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. The
following table summarizes our consolidated derivative instruments, all of which hedge variable rate debt, as of December 31, 2021.
(Amounts in thousands)
Included in other assets:
Hedged Item
As of December 31, 2021
Variable Rate
Fair Value
Notional
Amount
Spread over
LIBOR
Interest
Rate
Swapped
Rate
Expiration
Date
555 California Street mortgage loan interest rate swap
$
11,814 $
840,000
(1)
PENN 11 mortgage loan interest rate swap
Various interest rate caps
6,565
550
500,000
1,650,000
$
18,929 $ 2,990,000
L+193
L+195
2.04%
2.05%
2.26%
2.23%
5/24
3/24
Included in other liabilities:
Unsecured term loan interest rate swap
33-00 Northern Boulevard mortgage loan interest rate swap
$
$
28,976 $
750,000
(2)
3,861
100,000
32,837 $
850,000
L+100
L+180
1.10%
1.91%
3.87%
4.14%
10/23
1/25
________________________
(1) Represents our 70.0% share of the $1.2 billion mortgage loan.
(2) Remaining $50,000 balance of our unsecured term loan bears interest at a floating rate of LIBOR plus 1.00%.
59
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
Vornado Realty Trust
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
Consolidated Balance Sheets at December 31, 2021 and 2020
Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Changes in Equity for the years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019
Vornado Realty L.P.
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
Consolidated Balance Sheets at December 31, 2021 and 2020
Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Changes in Equity for the years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019
Vornado Realty Trust and Vornado Realty L.P.
Notes to Consolidated Financial Statements
Page
Number
61
63
64
65
66
69
72
74
75
76
77
80
83
60
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders and Board of Trustees
Vornado Realty Trust
New York, New York
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Vornado Realty Trust and subsidiaries (the "Company") as of
December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, changes in equity, and cash
flows for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at
Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2021, in conformity with the accounting principles generally accepted in
the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal
Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated February 14, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.
Real Estate Recoverability Assessment — Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Company’s wholly owned properties are individually reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the
aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. The recoverability assessment is
determined based on projected future cash flows that utilize capitalization rates and available market information. The Company’s
undiscounted cash flows requires management to make significant estimates and assumptions related to future market rental rates and
capitalization rates.
We identified the recoverability assessment of wholly owned properties as a critical audit matter because of the significant estimates
and assumptions related to future market rental rates and capitalization rates. Performing audit procedures to evaluate the
reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort,
including the need to involve our fair value specialists, where applicable.
61
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the recoverability assessment of wholly owned properties included the following, among other things:
• We tested the effectiveness of controls over management’s evaluation of recoverability of its wholly owned properties,
including those over future market rental rates and capitalization rates used in the assessment.
• We evaluated the reasonableness of future market rental rates and capitalization rates used by management with independent
market data, focusing on geographical location and property. In addition, we developed ranges of independent estimates of
future market rental rates and capitalization rates and compared those to the amounts used by management.
• We involved our fair value specialists in providing comparable market transaction details to further support the future market
rental rate and capitalization rate assumptions, as applicable.
• We evaluated the reasonableness of management’s projected future cash flows by comparing management’s projections to
the Company’s historical results.
• We evaluated whether the assumptions were consistent with evidence obtained in other areas of the audit.
/s/ DELOITTE & TOUCHE LLP
New York, New York
February 14, 2022
We have served as the Company’s auditor since 1976.
62
VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except unit, share and per share amounts)
ASSETS
Real estate, at cost:
Land
Buildings and improvements
Development costs and construction in progress
Leasehold improvements and equipment
Total
Less accumulated depreciation and amortization
Real estate, net
Right-of-use assets
Cash and cash equivalents
Restricted cash
Tenant and other receivables
Investments in partially owned entities
Real estate fund investments
220 Central Park South condominium units ready for sale
Receivable arising from the straight-lining of rents
Deferred leasing costs, net of accumulated amortization of $211,775 and $196,972
Identified intangible assets, net of accumulated amortization of $97,186 and $93,113
Other assets
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgages payable, net
Senior unsecured notes, net
Unsecured term loan, net
Unsecured revolving credit facilities
Lease liabilities
Accounts payable and accrued expenses
Deferred revenue
Deferred compensation plan
Other liabilities
Total liabilities
Commitments and contingencies
Redeemable noncontrolling interests:
Class A units - 14,033,438 and 13,583,607 units outstanding
Series D cumulative redeemable preferred units - 141,400 and 141,401 units outstanding
Total redeemable noncontrolling partnership units
Redeemable noncontrolling interest in a consolidated subsidiary
Total redeemable noncontrolling interests
Shareholders' equity:
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and
outstanding 48,792,902 and 48,793,402 shares
Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and
outstanding 191,723,608 and 191,354,679 shares
Additional capital
Earnings less than distributions
Accumulated other comprehensive loss
Total shareholders' equity
Noncontrolling interests in consolidated subsidiaries
Total equity
See notes to the consolidated financial statements.
As of December 31,
2021
2020
2,540,193 $
9,839,166
718,694
119,792
13,217,845
(3,376,347)
9,841,498
337,197
1,760,225
170,126
79,661
3,297,389
7,730
57,142
656,318
391,693
154,895
512,714
17,266,588 $
6,053,343 $
1,189,792
797,812
575,000
370,206
613,497
48,118
110,174
304,725
10,062,667
587,440
3,535
590,975
97,708
688,683
2,420,054
7,933,030
1,604,637
130,222
12,087,943
(3,169,446)
8,918,497
367,365
1,624,482
105,887
77,658
3,491,107
3,739
128,215
674,075
372,919
23,856
434,022
16,221,822
5,580,549
446,685
796,762
575,000
401,008
427,202
40,110
105,564
294,520
8,667,400
507,212
4,535
511,747
94,520
606,267
1,182,459
1,182,339
7,648
8,143,093
(3,079,320)
(17,534)
6,236,346
278,892
6,515,238
17,266,588 $
7,633
8,192,507
(2,774,182)
(75,099)
6,533,198
414,957
6,948,155
16,221,822
$
$
$
$
63
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share amounts)
REVENUES:
Rental revenues
Fee and other income
Total revenues
EXPENSES:
Operating
Depreciation and amortization
General and administrative
Expense from deferred compensation plan liability
Impairment losses, transaction related costs and other
For the Year Ended December 31,
2021
2020
2019
$
1,424,531 $
1,377,635 $
164,679
1,589,210
(797,315)
(412,347)
(134,545)
(9,847)
(13,815)
150,316
1,527,951
(789,066)
(399,695)
(181,509)
(6,443)
(174,027)
1,767,222
157,478
1,924,700
(917,981)
(419,107)
(169,920)
(11,609)
(106,538)
Total expenses
(1,367,869)
(1,550,740)
(1,625,155)
Income (loss) from partially owned entities
Income (loss) from real estate fund investments
Interest and other investment income (loss), net
Income from deferred compensation plan assets
Interest and debt expense
Net gain on transfer to Fifth Avenue and Times Square JV
Net gains on disposition of wholly owned and partially owned assets
Income (loss) before income taxes
Income tax benefit (expense)
Income (loss) from continuing operations
Loss from discontinued operations
Net income (loss)
Less net (income) loss attributable to noncontrolling interests in:
Consolidated subsidiaries
Operating Partnership
Net income (loss) attributable to Vornado
Preferred share dividends
Series K preferred share issuance costs
NET INCOME (LOSS) attributable to common shareholders
INCOME (LOSS) PER COMMON SHARE - BASIC:
Net income (loss) per common share
Weighted average shares outstanding
INCOME (LOSS) PER COMMON SHARE - DILUTED:
Net income (loss) per common share
Weighted average shares outstanding
130,517
11,066
4,612
9,847
(231,096)
—
50,770
197,057
10,496
207,553
—
207,553
(24,014)
(7,540)
175,999
(65,880)
(9,033)
(329,112)
(226,327)
(5,499)
6,443
(229,251)
—
381,320
(425,215)
(36,630)
(461,845)
—
78,865
(104,082)
21,819
11,609
(286,623)
2,571,099
845,499
3,437,731
(103,439)
3,334,292
(30)
(461,845)
3,334,262
139,894
24,946
(297,005)
(51,739)
—
24,547
(210,872)
3,147,937
(50,131)
—
$
$
$
101,086 $
(348,744) $
3,097,806
0.53 $
(1.83) $
191,551
191,146
16.23
190,801
0.53 $
(1.83) $
192,122
191,146
16.21
191,053
See notes to consolidated financial statements.
64
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
Net income (loss)
Other comprehensive income (loss):
For the Year Ended December 31,
2021
2020
2019
$
207,553 $
(461,845) $
3,334,262
Increase (reduction) in value of interest rate swaps and other
Other comprehensive income (loss) of nonconsolidated subsidiaries
Amounts reclassified from accumulated other comprehensive loss relating to
nonconsolidated subsidiary
Comprehensive income (loss)
Less comprehensive (income) loss attributable to noncontrolling interests
51,338
10,275
—
269,166
(35,602)
(29,971)
(14,342)
—
(506,158)
174,287
Comprehensive income (loss) attributable to Vornado
$
233,564 $
(331,871) $
(47,883)
(938)
(2,311)
3,283,130
(183,090)
3,100,040
See notes to consolidated financial statements.
65
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in thousands, except per share amount)
Preferred Shares
Common Shares
Shares
Amount
Shares
Amount
Additional
Capital
Earnings
Less Than
Distributions
Accumulated
Other
Comprehensive
(Loss) Income
Non-
controlling
Interests in
Consolidated
Subsidiaries
Total
Equity
48,793
$ 1,182,339
191,355
$
7,633
$ 8,192,507
$ (2,774,182) $
(75,099) $
414,957
$ 6,948,155
Balance as of December 31, 2020
Net income attributable to
Vornado
Net income attributable to
nonredeemable noncontrolling
interests in consolidated
subsidiaries
Dividends on common shares
($2.12 per share)
Dividends on preferred shares (see
Note 11 for dividends per share
amounts)
Series O cumulative redeemable
preferred shares issuance
Common shares issued:
Upon redemption of Class A
units, at redemption value
Under employees' share option
plan
Under dividend reinvestment
plan
Contributions
Distributions
Conversion of Series A preferred
shares to common shares
Deferred compensation shares and
options
Other comprehensive income of
nonconsolidated subsidiaries
Increase in value of interest rate
swaps
Unearned 2018 Out-Performance
Plan awards acceleration
Redeemable Class A unit
measurement adjustment
Series K cumulative redeemable
preferred shares called for
redemption
Redeemable noncontrolling
interests' share of above
adjustments
Other
—
—
—
—
—
—
—
—
—
—
—
—
—
350
1
21
—
—
1
(4)
—
—
—
—
—
—
—
12,000
291,153
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(13)
—
—
—
—
—
(12,000)
(290,967)
—
—
—
(53)
—
—
—
—
—
14
—
1
—
—
—
—
—
—
—
—
—
—
—
—
175,999
—
—
—
—
14,562
22
876
—
—
13
906
—
—
10,283
(76,073)
—
(406,109)
(65,880)
—
—
—
—
—
—
—
(114)
—
—
—
—
—
(9,033)
—
—
—
—
—
—
—
—
—
—
—
—
10,275
51,337
—
—
—
—
175,999
20,826
20,826
—
(406,109)
—
—
—
—
—
4,052
(65,880)
291,153
14,576
22
877
4,052
(160,975)
(160,975)
—
—
—
—
—
—
—
792
10,275
51,337
10,283
(76,073)
—
(300,000)
—
(3)
—
(1)
(4,048)
1
—
32
(4,048)
(24)
Balance as of December 31, 2021
48,793
$ 1,182,459
191,724
$
7,648
$ 8,143,093
$ (3,079,320) $
(17,534) $
278,892
$ 6,515,238
See notes to consolidated financial statements.
66
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED
(Amounts in thousands, except per share amounts)
Preferred Shares
Common Shares
Shares
Amount
Shares
Amount
Additional
Capital
Earnings
Less Than
Distributions
Accumulated
Other
Comprehensive
(Loss) Income
Non-
controlling
Interests in
Consolidated
Subsidiaries
Total
Equity
Balance as of December 31, 2019
36,796
$ 891,214
190,986
$
7,618
$ 7,827,697
$ (1,954,266) $
(40,233) $
578,948
$ 7,310,978
Cumulative effect of accounting
change
Net loss attributable to Vornado
Net loss attributable to
nonredeemable noncontrolling
interests in consolidated
subsidiaries
Dividends on common shares
($2.38 per share)
Dividends on preferred shares (see
Note 11 for dividends per share
amounts)
Series N cumulative
redeemable preferred shares
issuance
Common shares issued:
Upon redemption of Class A
units, at redemption value
Under employees' share option
plan
Under dividend reinvestment
plan
Contributions:
Real estate fund investments
Other
Distributions
Conversion of Series A preferred
shares to common shares
Deferred compensation shares and
options
Other comprehensive loss of
nonconsolidated subsidiaries
Reduction in value of interest rate
swaps
Unearned 2017 Out-Performance
Plan awards acceleration
Redeemable Class A unit
measurement adjustment
Redeemable noncontrolling
interests' share of above
adjustments
Other
—
—
—
—
—
—
—
—
—
—
12,000
291,182
—
—
—
—
—
—
—
—
—
—
—
—
(3)
(57)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
236
69
47
—
—
—
4
13
—
—
—
—
—
—
—
—
—
—
—
—
9
3
2
—
—
—
—
1
—
—
—
—
—
—
—
—
—
—
—
—
9,257
3,514
2,343
—
—
—
57
(16,064)
(297,005)
—
(454,939)
(51,739)
—
—
—
—
—
—
—
—
1,305
(137)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
10,824
344,043
—
(6,533)
—
—
—
—
—
(32)
(14,342)
(29,972)
—
—
2,914
6,534
—
—
(16,064)
(297,005)
(140,438)
(140,438)
—
(454,939)
—
—
—
—
—
3,389
4,305
(51,739)
291,182
9,266
3,517
2,345
3,389
4,305
(33,007)
(33,007)
—
—
—
—
—
—
—
1,169
(14,342)
(29,972)
10,824
344,043
—
1,760
2,914
1,729
Balance as of December 31, 2020
48,793
$ 1,182,339
191,355
$
7,633
$ 8,192,507
$ (2,774,182) $
(75,099) $
414,957
$ 6,948,155
See notes to consolidated financial statements.
67
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED
(Amounts in thousands, except per share amount)
Preferred Shares
Common Shares
Shares
Amount
Shares
Amount
Additional
Capital
Earnings
Less Than
Distributions
Accumulated
Other
Comprehensive
Income (Loss)
Non-
controlling
Interests in
Consolidated
Subsidiaries
Total
Equity
Balance as of December 31, 2018
36,800
$ 891,294
190,535
$
7,600
$ 7,725,857
$ (4,167,184) $
7,664
$
642,652
$ 5,107,883
Net income attributable to
Vornado
Net loss attributable to
noncontrolling interests in
consolidated subsidiaries
Dividends on common shares :
Special dividend ($1.95 per
share)
Aggregate quarterly dividends
($2.64 per common share)
Dividends on preferred shares
Common shares issued:
Upon redemption of Class
A units, at redemption value
Under employees' share option
plan
Under dividend reinvestment
plan
Contributions:
Real estate fund investments
Other
Distributions
Conversion of Series A preferred
shares to common shares
Deferred compensation shares and
options
Other comprehensive loss of
nonconsolidated subsidiaries
Reduction in value of interest rate
swaps
Amounts reclassified related to a
nonconsolidated subsidiary
Unearned 2016 Out-Performance
Plan awards acceleration
Redeemable Class A unit
measurement adjustment
Redeemable noncontrolling
interests' share of above
adjustments
Deconsolidation of partially owned
entity
Other
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(2)
(80)
—
—
—
—
—
—
—
—
(2)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
171
245
22
—
—
—
6
7
—
—
—
—
—
—
—
—
—
—
—
—
—
7
10
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3,147,937
—
—
—
—
—
(372,380)
(503,785)
(50,131)
11,243
—
5,479
(8,587)
1,413
—
—
—
80
—
—
—
—
—
1,095
(105)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
11,720
70,810
—
—
—
—
—
—
—
—
—
—
(31)
(938)
(47,885)
(2,311)
—
—
3,235
—
2
—
3,147,937
(24,547)
(24,547)
—
—
—
—
—
—
9,023
8,848
(372,380)
(503,785)
(50,131)
11,250
(3,098)
1,414
9,023
8,848
(45,587)
(45,587)
—
—
—
—
—
—
—
—
—
990
(938)
(47,885)
(2,311)
11,720
70,810
3,235
(11,441)
(11,441)
—
(29)
Balance as of December 31, 2019
36,796
$ 891,214
190,986
$
7,618
$ 7,827,697
$ (1,954,266) $
(40,233) $
578,948
$ 7,310,978
See notes to consolidated financial statements.
68
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year Ended December 31,
2021
2020
2019
$
207,553 $
(461,845) $
3,334,262
(Amounts in thousands)
Cash Flows from Operating Activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization (including amortization of deferred financing costs)
Distributions of income from partially owned entities
Equity in net (income) loss of partially owned entities
Net gains on disposition of wholly owned and partially owned assets
Stock-based compensation expense
Defeasance cost in connection with refinancing of mortgage payable
Amortization of below-market leases, net
Straight-lining of rents
Real estate impairment losses
Write-off of lease receivables deemed uncollectible
Return of capital from real estate fund investments
Net realized and unrealized (income) loss on real estate fund investments
Non-cash (gain on extinguishment of 608 Fifth Avenue lease liability) impairment loss on 608 Fifth
Avenue right-of-use asset
Credit losses on loans receivable
Decrease in fair value of marketable securities
Net gain on transfer to Fifth Avenue and Times Square JV
Prepayment penalty on redemption of senior unsecured notes due 2022
Other non-cash adjustments
Changes in operating assets and liabilities:
Real estate fund investments
Tenant and other receivables
Prepaid assets
Other assets
Accounts payable and accrued expenses
Other liabilities
Net cash provided by operating activities
Cash Flows from Investing Activities:
Development costs and construction in progress
Additions to real estate
Proceeds from sale of condominium units at 220 Central Park South
Acquisition of additional 45.0% ownership interest in One Park Avenue (inclusive of $5,806 of
prorations and net working capital and net of $39,370 of cash and restricted cash balances
consolidated upon acquisition)
Distributions of capital from partially owned entities
Proceeds from sales of real estate
Investments in partially owned entities
Acquisitions of real estate and other
Proceeds from repayments of loans receivable
Moynihan Train Hall expenditures
Proceeds from sales of marketable securities
Proceeds from transfer of interest in Fifth Avenue and Times Square JV (net of $35,562 of
transaction costs and $10,899 of deconsolidated cash and restricted cash)
Proceeds from redemption of 640 Fifth Avenue preferred equity
Net cash (used in) provided by investing activities
See notes to consolidated financial statements.
69
432,594
214,521
(130,517)
(50,770)
38,329
23,729
(9,249)
8,644
7,880
7,695
5,104
(4,621)
—
—
—
—
—
7,368
(4,474)
(187)
30,466
(54,716)
35,856
(3,399)
761,806
(585,940)
(149,461)
137,404
(123,936)
106,005
100,024
(14,997)
(3,000)
1,554
—
—
—
—
417,942
175,246
329,112
(381,320)
48,677
—
(16,878)
24,404
236,286
63,204
—
226,107
(70,260)
13,369
4,938
—
—
6,739
(7,197)
(5,330)
(137,452)
(52,832)
14,868
(3,538)
424,240
(601,920)
(155,738)
1,044,260
—
2,389
—
(8,959)
(1,156)
—
(395,051)
28,375
—
—
(532,347)
(87,800)
438,933
116,826
(78,865)
(845,499)
53,908
—
(19,830)
9,679
26,705
17,237
—
106,109
75,220
—
5,533
(2,571,099)
22,058
(3,472)
(10,000)
(25,988)
7,558
(4,302)
5,940
1,626
662,539
(649,056)
(233,666)
1,605,356
—
24,880
324,201
(18,257)
(69,699)
1,395
(438,935)
168,314
1,248,743
500,000
2,463,276
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS – CONTINUED
(Amounts in thousands)
Cash Flows from Financing Activities:
Proceeds from borrowings
Repayments of borrowings
Purchase of marketable securities in connection with defeasance of mortgage payable
Dividends paid on common shares
Redemption of preferred shares
Proceeds from the issuance of preferred shares
Distributions to noncontrolling interests
Dividends paid on preferred shares
Debt issuance costs
Contributions from noncontrolling interests
Repurchase of shares related to stock compensation agreements and related tax withholdings and
other
Proceeds received from exercise of employee share options and other
Moynihan Train Hall reimbursement from Empire State Development
Prepayment penalty on redemption of senior unsecured notes due 2022
Net cash used in financing activities
Net increase in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash at beginning of period
Cash and cash equivalents and restricted cash at end of period
Reconciliation of Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period
Restricted cash at beginning of period
Cash and cash equivalents and restricted cash at beginning of period
Cash and cash equivalents at end of period
Restricted cash at end of period
Cash and cash equivalents and restricted cash at end of period
For the Year Ended December 31,
2021
2020
2019
$
3,248,007 $
1,056,315 $
1,108,156
(1,584,243)
(1,067,564)
(2,718,987)
(973,729)
(406,109)
(300,000)
291,153
(190,876)
(65,880)
(51,184)
4,052
(1,567)
899
—
—
(29,477)
199,982
1,730,369
—
(827,319)
—
291,182
(91,514)
(64,271)
(10,901)
100,094
(137)
5,862
395,051
—
(213,202)
123,238
1,607,131
(407,126)
(503,785)
(893)
—
(80,194)
(50,131)
(15,588)
17,871
(8,692)
6,903
438,935
(22,058)
(2,235,589)
890,226
716,905
$
$
$
$
$
1,930,351 $
1,730,369 $
1,607,131
1,624,482 $
1,515,012 $
105,887
92,119
1,730,369 $
1,607,131 $
570,916
145,989
716,905
1,760,225 $
1,624,482 $
1,515,012
170,126
105,887
92,119
1,930,351 $
1,730,369 $
1,607,131
See notes to consolidated financial statements.
70
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS – CONTINUED
(Amounts in thousands)
Supplemental Disclosure of Cash Flow Information:
Cash payments for interest, excluding capitalized interest of $38,320, $40,855 and $67,980
Cash payments for income taxes
Non-Cash Investing and Financing Activities:
Marketable securities transferred in connection with the defeasance of mortgage payable
Defeasance of mortgage payable
Increase in assets and liabilities resulting from the consolidation of One Park Avenue:
$
$
$
Real estate
Identified intangible assets
Mortgages payable
Deferred revenue
Accrued capital expenditures included in accounts payable and accrued expenses
Write-off of fully depreciated assets
Reclassification of assets held for sale (included in "other assets")
Redeemable Class A unit measurement adjustment
Decrease (increase) in accumulated other comprehensive loss due to change in fair value of
consolidated interest rate swaps
Reclassification of condominium units from "development costs and construction in progress" to
"220 Central Park South condominium units ready for sale"
Decrease in assets and liabilities resulting from the deconsolidation of Moynihan Train Hall:
Real estate, net
Moynihan Train Hall Obligation
Investments received in exchange for transfer to Fifth Avenue and Times Square JV:
Preferred equity
Common equity
Lease liabilities arising from the recognition of right-of-use assets
Special dividend/distribution declared and payable on January 15, 2020
Recognition of negative basis related to the sale of our investment in 330 Madison Avenue
Amounts related to our investment in Pennsylvania Real Estate Investment Trust reclassified from
"investments in partially owned entities" and "accumulated other comprehensive loss" to
"marketable securities" upon conversion of operating partnership units to common shares
For the Year Ended December 31,
2021
2020
2019
188,587 $
9,155 $
210,052 $
15,105 $
283,613
59,834
(973,729) $
950,000
566,013
139,545
525,000
18,884
291,690
(123,537)
80,005
(76,073)
51,337
16,014
—
—
—
—
—
—
—
—
— $
—
—
—
—
—
117,641
(189,250)
—
344,043
(407,126)
390,000
—
—
—
—
109,975
(122,813)
—
70,810
(29,972)
(47,885)
388,280
1,311,468
(1,291,804)
(1,291,804)
—
—
—
—
—
—
—
—
2,327,750
1,449,495
526,866
398,292
60,052
54,962
See notes to consolidated financial statements.
71
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Partners
Vornado Realty L.P.
New York, New York
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Vornado Realty L.P. and subsidiaries (the "Partnership") as of
December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, changes in equity, and cash
flows for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at
Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 2021 and 2020, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2021, in conformity with the accounting principles generally
accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Partnership's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal
Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated February 14, 2022, expressed an unqualified opinion on the Partnership's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the
Partnership's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Partnership in accordance with the US federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.
Real Estate Recoverability Assessment — Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Partnership’s wholly owned properties are individually reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the
aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. The recoverability assessment is
determined based on projected future cash flows that utilize capitalization rates and available market information. The Partnership’s
undiscounted cash flows requires management to make significant estimates and assumptions related to future market rental rates and
capitalization rates.
We identified the recoverability assessment of wholly owned properties as a critical audit matter because of the significant estimates
and assumptions related to future market rental rates and capitalization rates. Performing audit procedures to evaluate the
reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort,
including the need to involve our fair value specialists, where applicable.
72
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the recoverability assessment of wholly owned properties included the following, among other things:
• We tested the effectiveness of controls over management’s evaluation of recoverability of its wholly owned properties,
including those over future market rental rates and capitalization rates used in the assessment.
• We evaluated the reasonableness of future market rental rates and capitalization rates used by management with independent
market data, focusing on geographical location and property. In addition, we developed ranges of independent estimates of
future market rental rates and capitalization rates and compared those to the amounts used by management.
• We involved our fair value specialists in providing comparable market transaction details to further support the future market
rental rate and capitalization rate assumptions, as applicable.
• We evaluated the reasonableness of management’s projected future cash flows by comparing management’s projections to
the Partnership’s historical results.
• We evaluated whether the assumptions were consistent with evidence obtained in other areas of the audit.
/s/ DELOITTE & TOUCHE LLP
New York, New York
February 14, 2022
We have served as the Partnership’s auditor since 1997.
73
VORNADO REALTY L.P.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except unit amounts)
ASSETS
Real estate, at cost:
Land
Buildings and improvements
Development costs and construction in progress
Leasehold improvements and equipment
Total
Less accumulated depreciation and amortization
Real estate, net
Right-of-use assets
Cash and cash equivalents
Restricted cash
Tenant and other receivables
Investments in partially owned entities
Real estate fund investments
220 Central Park South condominium units ready for sale
Receivable arising from the straight-lining of rents
Deferred leasing costs, net of accumulated amortization of $211,775 and $196,972
Identified intangible assets, net of accumulated amortization of $97,186 and $93,113
Other assets
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgages payable, net
Senior unsecured notes, net
Unsecured term loan, net
Unsecured revolving credit facilities
Lease liabilities
Accounts payable and accrued expenses
Deferred revenue
Deferred compensation plan
Other liabilities
Total liabilities
Commitments and contingencies
Redeemable noncontrolling interests:
Class A units - 14,033,438 and 13,583,607 units outstanding
Series D cumulative redeemable preferred units - 141,400 and 141,401 units outstanding
Total redeemable noncontrolling partnership units
Redeemable noncontrolling interest in a consolidated subsidiary
Total redeemable noncontrolling interests
Partners' equity:
Partners' capital
Earnings less than distributions
Accumulated other comprehensive loss
Total partners' equity
Noncontrolling interests in consolidated subsidiaries
Total equity
See notes to the consolidated financial statements.
As of December 31,
2021
2020
2,540,193 $
9,839,166
718,694
119,792
13,217,845
(3,376,347)
9,841,498
337,197
1,760,225
170,126
79,661
3,297,389
7,730
57,142
656,318
391,693
154,895
512,714
17,266,588 $
6,053,343 $
1,189,792
797,812
575,000
370,206
613,497
48,118
110,174
304,725
10,062,667
587,440
3,535
590,975
97,708
688,683
9,333,200
(3,079,320)
(17,534)
6,236,346
278,892
6,515,238
17,266,588 $
2,420,054
7,933,030
1,604,637
130,222
12,087,943
(3,169,446)
8,918,497
367,365
1,624,482
105,887
77,658
3,491,107
3,739
128,215
674,075
372,919
23,856
434,022
16,221,822
5,580,549
446,685
796,762
575,000
401,008
427,202
40,110
105,564
294,520
8,667,400
507,212
4,535
511,747
94,520
606,267
9,382,479
(2,774,182)
(75,099)
6,533,198
414,957
6,948,155
16,221,822
$
$
$
$
74
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per unit amounts)
REVENUES:
Rental revenues
Fee and other income
Total revenues
EXPENSES:
Operating
Depreciation and amortization
General and administrative
Expense from deferred compensation plan liability
Impairment losses, transaction related costs and other
For the Year Ended December 31,
2021
2020
2019
$
1,424,531 $
1,377,635 $
164,679
1,589,210
(797,315)
(412,347)
(134,545)
(9,847)
(13,815)
150,316
1,527,951
(789,066)
(399,695)
(181,509)
(6,443)
(174,027)
1,767,222
157,478
1,924,700
(917,981)
(419,107)
(169,920)
(11,609)
(106,538)
Total expenses
(1,367,869)
(1,550,740)
(1,625,155)
Income (loss) from partially owned entities
Income (loss) from real estate fund investments
Interest and other investment income (loss), net
Income from deferred compensation plan assets
Interest and debt expense
Net gain on transfer to Fifth Avenue and Times Square JV
Net gains on disposition of wholly owned and partially owned assets
Income (loss) before income taxes
Income tax benefit (expense)
Income (loss) from continuing operations
Loss from discontinued operations
Net income (loss)
Less net (income) loss attributable to noncontrolling interests in consolidated subsidiaries
Net income (loss) attributable to Vornado Realty L.P.
Preferred unit distributions
Series K preferred unit issuance costs
NET INCOME (LOSS) attributable to Class A unitholders
INCOME (LOSS) PER CLASS A UNIT - BASIC:
Net income (loss) per Class A unit
Weighted average units outstanding
INCOME (LOSS) PER CLASS A UNIT - DILUTED:
Net income (loss) per Class A unit
Weighted average units outstanding
130,517
11,066
4,612
9,847
(231,096)
—
50,770
197,057
10,496
207,553
—
207,553
(24,014)
183,539
(66,035)
(9,033)
(329,112)
(226,327)
(5,499)
6,443
(229,251)
—
381,320
(425,215)
(36,630)
(461,845)
—
(461,845)
139,894
(321,951)
(51,904)
—
78,865
(104,082)
21,819
11,609
(286,623)
2,571,099
845,499
3,437,731
(103,439)
3,334,292
(30)
3,334,262
24,547
3,358,809
(50,296)
—
$
$
$
108,471 $
(373,855) $
3,308,513
0.52 $
(1.86) $
204,728
203,503
16.22
202,947
0.51 $
(1.86) $
205,644
203,503
16.19
203,248
See notes to consolidated financial statements.
75
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
Net income (loss)
Other comprehensive income (loss):
For the Year Ended December 31,
2021
2020
2019
$
207,553 $
(461,845) $
3,334,262
Increase (reduction) in value of interest rate swaps and other
Other comprehensive income (loss) of nonconsolidated subsidiaries
Amounts reclassified from accumulated other comprehensive loss relating to
nonconsolidated subsidiary
Comprehensive income (loss)
51,338
10,275
—
269,166
(29,971)
(14,342)
—
(506,158)
Less comprehensive (income) loss attributable to noncontrolling interests in consolidated
subsidiaries
Comprehensive income (loss) attributable to Vornado Realty L.P.
$
(24,014)
245,152 $
139,894
(366,264) $
(47,883)
(938)
(2,311)
3,283,130
24,547
3,307,677
See notes to consolidated financial statements.
76
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in thousands, except per unit amount)
Preferred Units
Class A Units
Owned by Vornado
Units
Amount
Units
Amount
Earnings
Less Than
Distributions
Accumulated
Other
Comprehensive
(Loss) Income
Non-
controlling
Interests in
Consolidated
Subsidiaries
Total
Equity
Balance as of December 31, 2020
48,793
$ 1,182,339
191,355
$ 8,200,140
$
(2,774,182) $
(75,099) $
414,957
$ 6,948,155
Net income attributable to Vornado Realty L.P.
Net income attributable to redeemable
partnership units
Net income attributable to nonredeemable
noncontrolling interests in consolidated
subsidiaries
Distributions to Vornado ($2.12 per unit)
Distributions to preferred unitholders (see Note
11 for distributions per unit amounts)
Series O cumulative redeemable preferred units
issuance
Class A Units issued to Vornado:
Upon redemption of redeemable Class A units,
at redemption value
Under Vornado's employees' share option plan
Under Vornado's dividend reinvestment plan
Contributions
Distributions
Conversion of Series A preferred units to Class A
units
Deferred compensation units and options
Other comprehensive income of nonconsolidated
subsidiaries
Increase in value of interest rate swaps
Unearned 2018 Out-Performance Plan awards
acceleration
Redeemable Class A unit measurement
adjustment
Series K cumulative redeemable preferred units
called for redemption
Redeemable partnership units' share of above
adjustments
Other
—
—
—
—
—
—
—
—
—
—
12,000
291,153
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(13)
—
—
—
—
—
(12,000)
(290,967)
—
—
—
(53)
350
14,576
1
21
—
—
1
(4)
—
—
—
—
—
—
—
22
877
—
—
13
906
—
—
10,283
(76,073)
—
—
(3)
183,539
(7,540)
—
(406,109)
(65,880)
—
—
—
—
—
—
—
(114)
—
—
—
—
(9,033)
—
(1)
—
—
—
—
—
—
—
—
—
—
—
—
—
10,275
51,337
—
—
—
(4,048)
1
—
—
183,539
(7,540)
20,826
20,826
—
—
—
—
—
—
4,052
(406,109)
(65,880)
291,153
14,576
22
877
4,052
(160,975)
(160,975)
—
—
—
—
—
—
—
—
32
—
792
10,275
51,337
10,283
(76,073)
(300,000)
(4,048)
(24)
Balance as of December 31, 2021
48,793
$ 1,182,459
191,724
$ 8,150,741
$
(3,079,320) $
(17,534) $
278,892
$ 6,515,238
See notes to consolidated financial statements.
77
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY – CONTINUED
(Amounts in thousands, except per unit amounts)
Preferred Units
Class A Units
Owned by Vornado
Units
Amount
Units
Amount
Earnings
Less Than
Distributions
Accumulated
Other
Comprehensive
(Loss) Income
Non-
controlling
Interests in
Consolidated
Subsidiaries
Total
Equity
Balance as of December 31, 2019
36,796
$ 891,214
190,986
$ 7,835,315
$
(1,954,266) $
(40,233) $
578,948
$ 7,310,978
(16,064)
(321,951)
24,946
—
(454,939)
(51,739)
—
—
—
—
—
—
—
—
Cumulative effect of accounting change
Net loss attributable to Vornado Realty L.P.
Net loss attributable to redeemable partnership
units
Net loss attributable to nonredeemable
noncontrolling interests in consolidated
subsidiaries
Distributions to Vornado ($2.38 per unit)
Distributions to preferred unitholders (see Note
11 for distributions per unit amounts)
Series N cumulative redeemable preferred units
issuance
Class A Units issued to Vornado:
Upon redemption of redeemable Class A
units, at redemption value
Under Vornado's employees' share option
plan
Under Vornado's dividend reinvestment plan
Contributions:
Real estate fund investments
Other
Distributions
Conversion of Series A preferred units to Class
A units
Deferred compensation units and options
Other comprehensive loss of nonconsolidated
subsidiaries
Reduction in value of interest rate swaps
Unearned 2017 Out-Performance Plan awards
acceleration
Redeemable Class A unit measurement
adjustment
Redeemable partnership units' share of above
adjustments
Other
—
—
—
—
—
—
—
—
—
—
—
—
12,000
291,182
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(3)
—
—
—
—
—
—
—
—
—
—
—
—
—
(57)
—
—
—
—
—
—
—
236
9,266
3,517
2,345
—
—
—
57
69
47
—
—
—
4
13
—
—
—
—
—
—
1,306
(137)
—
—
10,824
344,043
—
(6,533)
—
—
—
—
—
(32)
(14,342)
(29,972)
—
—
2,914
6,534
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(140,438)
—
—
—
—
—
—
3,389
4,305
(16,064)
(321,951)
24,946
(140,438)
(454,939)
(51,739)
291,182
9,266
3,517
2,345
3,389
4,305
(33,007)
(33,007)
—
—
—
—
—
—
—
1,760
—
1,169
(14,342)
(29,972)
10,824
344,043
2,914
1,729
Balance as of December 31, 2020
48,793
$ 1,182,339
191,355
$ 8,200,140
$
(2,774,182) $
(75,099) $
414,957
$ 6,948,155
See notes to consolidated financial statements.
78
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY – CONTINUED
(Amounts in thousands, except per unit amount)
Preferred Units
Class A Units
Owned by Vornado
Units
Amount
Units
Amount
Earnings
Less Than
Distributions
Accumulated
Other
Comprehensive
Income (Loss)
Non-
controlling
Interests in
Consolidated
Subsidiaries
Total
Equity
Balance as of December 31, 2018
36,800
$ 891,294
190,535
$ 7,733,457
$
(4,167,184) $
7,664
$
642,652
$ 5,107,883
Net income attributable to Vornado Realty L.P.
—
Net income attributable to redeemable partnership
units
Net loss attributable to noncontrolling interests in
consolidated subsidiaries
Distributions to Vornado:
Special distribution ($1.95 per Class A unit)
Aggregate quarterly distributions to Vornado
($2.64 per Class A unit)
Distributions to preferred unitholders
Class A Units issued to Vornado:
—
—
—
—
—
Upon redemption of redeemable Class A units,
at redemption value
—
Under Vornado's employees' share option plan
—
Under Vornado's dividend reinvestment plan
—
Contributions:
Real estate fund investments
Other
Distributions
Conversion of Series A preferred units to Class A
units
Deferred compensation units and options
Other comprehensive loss of nonconsolidated
subsidiaries
Reduction in value of interest rate swaps
Amounts reclassified related to a nonconsolidated
subsidiary
Unearned 2016 Out-Performance Plan awards
acceleration
—
—
—
(2)
—
—
—
—
—
Redeemable Class A unit measurement adjustment
—
Redeemable partnership units' share of above
adjustments
Deconsolidation of partially owned entity
Other
—
—
(2)
—
—
—
—
—
—
—
—
—
—
—
—
(80)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
171
245
22
—
—
—
6
7
—
—
—
—
—
—
—
—
—
—
—
—
—
—
11,250
5,489
1,414
—
—
—
80
3,358,809
(210,872)
—
(372,380)
(503,785)
(50,131)
—
(8,587)
—
—
—
—
—
1,095
(105)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
11,720
70,810
—
—
—
—
—
—
—
—
—
—
(31)
(938)
(47,885)
(2,311)
—
—
3,235
—
2
—
3,358,809
—
(210,872)
(24,547)
(24,547)
—
—
—
—
—
—
9,023
8,848
(372,380)
(503,785)
(50,131)
11,250
(3,098)
1,414
9,023
8,848
(45,587)
(45,587)
—
—
—
—
—
—
—
—
—
990
(938)
(47,885)
(2,311)
11,720
70,810
3,235
(11,441)
(11,441)
—
(29)
Balance as of December 31, 2019
36,796
$ 891,214
190,986
$ 7,835,315
$
(1,954,266) $
(40,233) $
578,948
$ 7,310,978
See notes to consolidated financial statements.
79
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Cash Flows from Operating Activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization (including amortization of deferred financing costs)
Distributions of income from partially owned entities
Equity in net (income) loss of partially owned entities
Net gains on disposition of wholly owned and partially owned assets
Stock-based compensation expense
Defeasance cost in connection with refinancing of mortgage payable
Amortization of below-market leases, net
Straight-lining of rents
Real estate impairment losses
Write-off of lease receivables deemed uncollectible
Return of capital from real estate fund investments
Net realized and unrealized (income) loss on real estate fund investments
Non-cash (gain on extinguishment of 608 Fifth Avenue lease liability) impairment loss on 608 Fifth
Avenue right-of-use asset
Credit losses on loans receivable
Decrease in fair value of marketable securities
Net gain on transfer to Fifth Avenue and Times Square JV
Prepayment penalty on redemption of senior unsecured notes due 2022
Other non-cash adjustments
Changes in operating assets and liabilities:
Real estate fund investments
Tenant and other receivables
Prepaid assets
Other assets
Accounts payable and accrued expenses
Other liabilities
Net cash provided by operating activities
Cash Flows from Investing Activities:
Development costs and construction in progress
Additions to real estate
Proceeds from sale of condominium units at 220 Central Park South
Acquisition of additional 45.0% ownership interest in One Park Avenue (inclusive of $5,806 of
prorations and net working capital and net of $39,370 of cash and restricted cash balances
consolidated upon acquisition)
Distributions of capital from partially owned entities
Proceeds from sales of real estate
Investments in partially owned entities
Acquisitions of real estate and other
Proceeds from repayments of loans receivable
Moynihan Train Hall expenditures
Proceeds from sales of marketable securities
Proceeds from transfer of interest in Fifth Avenue and Times Square JV (net of $35,562 of
transaction costs and $10,899 of deconsolidated cash and restricted cash)
Proceeds from redemption of 640 Fifth Avenue preferred equity
Net cash (used in) provided by investing activities
For the Year Ended December 31,
2021
2020
2019
$
207,553 $
(461,845) $
3,334,262
432,594
214,521
(130,517)
(50,770)
38,329
23,729
(9,249)
8,644
7,880
7,695
5,104
(4,621)
—
—
—
—
—
7,368
(4,474)
(187)
30,466
(54,716)
35,856
(3,399)
761,806
(585,940)
(149,461)
137,404
(123,936)
106,005
100,024
(14,997)
(3,000)
1,554
—
—
—
—
417,942
175,246
329,112
(381,320)
48,677
—
(16,878)
24,404
236,286
63,204
—
226,107
(70,260)
13,369
4,938
—
—
6,739
(7,197)
(5,330)
(137,452)
(52,832)
14,868
(3,538)
424,240
(601,920)
(155,738)
1,044,260
—
2,389
—
(8,959)
(1,156)
—
(395,051)
28,375
—
—
(532,347)
(87,800)
438,933
116,826
(78,865)
(845,499)
53,908
—
(19,830)
9,679
26,705
17,237
—
106,109
75,220
—
5,533
(2,571,099)
22,058
(3,472)
(10,000)
(25,988)
7,558
(4,302)
5,940
1,626
662,539
(649,056)
(233,666)
1,605,356
—
24,880
324,201
(18,257)
(69,699)
1,395
(438,935)
168,314
1,248,743
500,000
2,463,276
See notes to consolidated financial statements.
80
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS – CONTINUED
(Amounts in thousands)
Cash Flows from Financing Activities:
Proceeds from borrowings
Repayments of borrowings
Purchase of marketable securities in connection with defeasance of mortgage payable
Distributions to Vornado
Redemption of preferred units
Proceeds from the issuance of preferred units
Distributions to redeemable security holders and noncontrolling interests in consolidated
subsidiaries
Distributions to preferred unitholders
Debt issuance costs
Contributions from noncontrolling interests in consolidated subsidiaries
Repurchase of Class A units related to stock compensation agreements and related tax withholdings
and other
Proceeds received from exercise of Vornado stock options and other
Moynihan Train Hall reimbursement from Empire State Development
Prepayment penalty on redemption of senior unsecured notes due 2022
Net cash used in financing activities
Net increase in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash at beginning of period
Cash and cash equivalents and restricted cash at end of period
Reconciliation of Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period
Restricted cash at beginning of period
Cash and cash equivalents and restricted cash at beginning of period
Cash and cash equivalents at end of period
Restricted cash at end of period
Cash and cash equivalents and restricted cash at end of period
For the Year Ended December 31,
2021
2020
2019
$
3,248,007 $
1,056,315 $
1,108,156
(1,584,243)
(1,067,564)
(2,718,987)
(973,729)
(406,109)
(300,000)
291,153
(190,876)
(65,880)
(51,184)
4,052
(1,567)
899
—
—
(29,477)
199,982
1,730,369
—
(827,319)
—
291,182
(91,514)
(64,271)
(10,901)
100,094
(137)
5,862
395,051
—
(213,202)
123,238
1,607,131
(407,126)
(503,785)
(893)
—
(80,194)
(50,131)
(15,588)
17,871
(8,692)
6,903
438,935
(22,058)
(2,235,589)
890,226
716,905
$
$
$
$
$
1,930,351 $
1,730,369 $
1,607,131
1,624,482 $
1,515,012 $
105,887
92,119
1,730,369 $
1,607,131 $
570,916
145,989
716,905
1,760,225 $
1,624,482 $
1,515,012
170,126
105,887
92,119
1,930,351 $
1,730,369 $
1,607,131
See notes to consolidated financial statements.
81
VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS – CONTINUED
For the Year Ended December 31,
2021
2020
2019
188,587 $
9,155 $
210,052 $
15,105 $
283,613
59,834
(973,729) $
950,000
566,013
139,545
525,000
18,884
291,690
(123,537)
80,005
(76,073)
51,337
16,014
—
—
—
—
—
—
—
—
— $
—
—
—
—
—
117,641
(189,250)
—
344,043
(407,126)
390,000
—
—
—
—
109,975
(122,813)
—
70,810
(29,972)
(47,885)
388,280
1,311,468
(1,291,804)
(1,291,804)
—
—
—
—
—
—
—
—
2,327,750
1,449,495
526,866
398,292
60,052
54,962
(Amounts in thousands)
Supplemental Disclosure of Cash Flow Information:
Cash payments for interest, excluding capitalized interest of $38,320, $40,855 and $67,980
Cash payments for income taxes
Non-Cash Investing and Financing Activities:
Marketable securities transferred in connection with the defeasance of mortgage payable
Defeasance of mortgage payable
Increase in assets and liabilities resulting from the consolidation of One Park Avenue:
$
$
$
Real estate
Identified intangible assets
Mortgages payable
Deferred revenue
Accrued capital expenditures included in accounts payable and accrued expenses
Write-off of fully depreciated assets
Reclassification of assets held for sale (included in "other assets")
Redeemable Class A unit measurement adjustment
Decrease (increase) in accumulated other comprehensive loss due to change in fair value of
consolidated interest rate swaps
Reclassification of condominium units from "development costs and construction in progress" to
"220 Central Park South condominium units ready for sale"
Decrease in assets and liabilities resulting from the deconsolidation of Moynihan Train Hall:
Real estate, net
Moynihan Train Hall Obligation
Investments received in exchange for transfer to Fifth Avenue and Times Square JV:
Preferred equity
Common equity
Lease liabilities arising from the recognition of right-of-use assets
Special dividend/distribution declared and payable on January 15, 2020
Recognition of negative basis related to the sale of our investment in 330 Madison Avenue
Amounts related to our investment in Pennsylvania Real Estate Investment Trust reclassified from
"investments in partially owned entities" and "accumulated other comprehensive loss" to
"marketable securities" upon conversion of operating partnership units to common shares
See notes to consolidated financial statements.
82
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Business
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 are 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 92.6% of the common limited partnership interest in the Operating Partnership as
of December 31, 2021. All references to the “Company,” “we,” “us” and “our” mean, collectively, Vornado, the Operating Partnership
and those subsidiaries consolidated by Vornado.
We currently own all or portions of:
New York:
•
67 Manhattan operating properties consisting of:
•
•
•
20.6 million square feet of office space in 32 of the properties;
2.7 million square feet of street retail space in 60 of the properties;
1,674 units in eight Manhattan residential properties;
• Multiple development sites, including Hotel Pennsylvania;
•
A 32.4% interest in Alexander’s, Inc. (“Alexander’s”) (NYSE: ALX), which owns six properties in the greater New York
metropolitan area, including 731 Lexington Avenue, the 1.1 million square foot Bloomberg, L.P. headquarters building, and
The Alexander, a 312-unit apartment tower in Queens;
Signage throughout the Penn District and Times Square; and
Building Maintenance Services LLC ("BMS"), a wholly owned subsidiary, which provides cleaning and security services for
our buildings and third parties.
•
•
Other Real Estate and Investments:
•
•
•
•
The 3.7 million square foot theMART in Chicago;
A 70% controlling interest in 555 California Street, a three-building office complex in San Francisco’s financial district
aggregating 1.8 million square feet;
A 25% interest in Vornado Capital Partners, our real estate fund (the "Fund"). We are the general partner and investment
manager of the fund. The fund is in wind-down; and
Other real estate and investments.
2. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Vornado and the Operating Partnership and their
consolidated subsidiaries. All inter-company amounts have been eliminated. Our consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United States of America (“GAAP”), which require us to make
estimates and assumptions that affect the reported amounts of assets and liabilities, 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.
Recently Issued Accounting Literature
In March 2020, the Financial Accounting Standards Board ("FASB") issued an update ("ASU 2020-04") establishing Accounting
Standards Codification ("ASC") Topic 848, Reference Rate Reform. ASU 2020-04 contains practical expedients for reference rate
reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be
elected over time as reference rate reform activities occur. We have elected to apply the hedge accounting expedients related to
probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future
hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the
presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance and may apply other
elections as applicable as additional changes in the market occur.
In August 2020, the FASB issued an update ("ASU 2020-06") Debt - Debt with Conversion and Other Options (Subtopic 470-20)
and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). ASU 2020-06 simplifies the accounting for
convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred
stock, removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and also
simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for reporting periods beginning after
December 15, 2021, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2020-06 on our
consolidated financial statements, but do not believe the adoption of this standard will have a material impact on our consolidated
financial statements.
83
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Basis of Presentation and Significant Accounting Policies - continued
Recently Issued Accounting Literature - continued
In July 2021, the FASB issued an update ("ASU 2021-05") Lessors - Certain Leases with Variable Lease Payments to ASC Topic
842, Leases ("ASC 842"). ASU 2021-05 provides additional ASC 842 classification guidance as it relates to a lessor's accounting for
certain leases with variable lease payments. ASU 2021-05 requires a lessor to classify a lease with variable payments that do not
depend on an index or rate as an operating lease if either a sales-type lease or direct financing lease classification would trigger a day-
one loss. ASU 2021-05 is effective for reporting periods beginning after December 15, 2021, with early adoption permitted. We are
currently evaluating the impact of the adoption of ASU 2021-05 on our consolidated financial statements, but do not believe the
adoption of this standard will have a material impact on our consolidated financial statements.
Significant Accounting Policies
Real Estate: Real estate is carried at cost, net of accumulated depreciation and amortization. Betterments, major renewals and
certain costs directly related to the improvement and leasing of real estate are capitalized. Maintenance and repairs are expensed as
incurred. For redevelopment of existing operating properties, the net book value of the existing property under redevelopment plus the
cost for the construction and improvements incurred in connection with the redevelopment, including interest and debt expense, are
capitalized to the extent the capitalized costs of the property do not exceed the estimated fair value of the redeveloped property when
complete. If the cost of the redeveloped property, including the net book value of the existing property, exceeds the estimated fair
value of the redeveloped property, the excess is charged to expense. Depreciation is recognized on a straight-line basis over the
estimated useful lives of these assets which range from 7 to 40 years. Tenant allowances are amortized on a straight-line basis over the
lives of the related leases, which approximate the useful lives of the assets.
Upon the acquisition of real estate, we assess whether the transaction should be accounted for as an asset acquisition or as a
business combination. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted
for as asset acquisitions. Our acquisitions of real estate generally will not meet the definition of a business because substantially all of
the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e. land, buildings, and related
identified intangible assets).
We assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired
above and below-market leases, acquired in-place leases and tenant relationships) and acquired liabilities and we allocate the purchase
price based on these assessments which are on a relative fair value basis. We assess fair value based on estimated cash flow
projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows
are based on a number of factors including historical operating results, known trends, and market/economic conditions. We amortize
identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows
of the property or business acquired.
Our properties, including any related right-of-use ("ROU") assets and intangible assets, are individually reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when
the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an
undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair
value. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the
analyses are prepared. If our estimates of the future cash flows, anticipated holding periods, or market conditions change, our
evaluation of impairment losses may be different and such differences could be material to our consolidated financial
statements. Estimates of future cash flows are subjective and are based, in part, on assumptions regarding future occupancy, rental
rates, capital requirements, capitalization rates and discount rates that could differ materially from actual results.
84
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Basis of Presentation and Significant Accounting Policies - continued
Significant Accounting Policies - continued
Partially Owned Entities: We consolidate entities in which we have a controlling financial interest. In determining whether we
have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we
consider (i) whether the entity is a variable interest entity (“VIE”) in which we are the primary beneficiary or (ii) whether the entity is
a voting interest entity in which we have a majority of the voting interests of the entity. We are deemed to be the primary beneficiary
of a VIE when we have (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance
and (ii) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. We generally do not control
a partially owned entity if the approval of all of the partners/members is contractually required with respect to decisions that most
significantly impact the performance of the partially owned entity. This includes decisions regarding operating/capital budgets, and the
placement of new or additional financing secured by the assets of the venture, among others. We account for investments under the
equity method when the requirements for consolidation are not met, and we have significant influence over the operations of the
investee. Equity method investments are initially recorded at cost and subsequently adjusted for our share of net income or loss and
cash contributions and distributions each period. Investments that do not qualify for consolidation or equity method accounting are
accounted for under the cost method.
Investments in unconsolidated partially owned entities are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recorded when there is a decline in the fair value
below the carrying value and we conclude such decline is other-than-temporary. An impairment loss is measured based on the excess
of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended
holding periods, ability to hold, and available information at the time the analyses are prepared.
220 Central Park South Condominium Units Ready For Sale: Our 220 Central Park South ("220 CPS") residential
condominium units are reclassified from "development costs and construction in progress" to "220 Central Park South condominium
units ready for sale" upon receipt of the unit's temporary certificate of occupancy. These units are substantially complete and ready for
sale. Each unit is carried at the lower of its carrying amount or fair value less costs to sell. We have used the relative sales value
method to allocate costs to individual condominium units. GAAP income is recognized when legal title transfers upon closing of the
condominium unit sales and is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated
statements of income. As of December 31, 2021 and 2020, none of the 220 CPS condominium units ready for sale had a carrying
value that exceeded fair value.
Cash and Cash Equivalents: Cash and cash equivalents consist of highly liquid investments with original maturities of three
months or less and are carried at cost, which approximates fair value due to their short-term maturities. The majority of our cash and
cash equivalents consists of (i) deposits at major commercial banks, which may at times exceed the Federal Deposit Insurance
Corporation limit, (ii) United States Treasury Bills, and (iii) Certificate of Deposits placed through an Account Registry Service.
Restricted Cash: Restricted cash consists of security deposits, cash restricted for the purposes of facilitating a Section 1031 Like-
Kind exchange, cash restricted in connection with our deferred compensation plan and cash escrowed under loan agreements,
including for debt service, real estate taxes, property insurance and capital improvements.
Deferred Charges: Direct financing costs are deferred and amortized over the terms of the related agreements as a component of
interest expense. Direct and incremental costs related to successful leasing activities are capitalized and amortized on a straight-line
basis over the lives of the related leases. All other deferred charges are amortized on a straight-line basis, which approximates the
effective interest rate method, in accordance with the terms of the agreements to which they relate.
85
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Basis of Presentation and Significant Accounting Policies - continued
Significant Accounting Policies - continued
Revenue Recognition:
•
Rental revenues include revenues from the leasing of space at our properties to tenants, revenues from the Hotel Pennsylvania
(permanently closed on April 5, 2021), trade shows, tenant services and parking garage revenues.
•
•
•
•
•
Revenues from the leasing of space at our properties to tenants includes (i) lease components, including fixed and
variable lease payments, and nonlease components which include reimbursement of common area maintenance
expenses, and (ii) reimbursement of real estate taxes and insurance expenses. As lessor, we have elected to combine
the lease and nonlease components of our operating lease agreements and account for the components as a single
lease component in accordance with ASC 842.
•
•
Revenues from fixed lease payments for operating leases in our portfolio are recognized on a straight-line
basis over the non-cancelable term of the lease, together with renewal options that are reasonably certain of
being exercised. We commence revenue recognition when the tenant takes possession of the leased space
and the leased space is substantially ready for its intended use.
Revenue derived from the reimbursement of real estate taxes, insurance expenses and common area
maintenance expenses are generally recognized in the same period as the related expenses are incurred.
• We recognize amortization of acquired below-market leases as an increase to rental revenues and
amortization of acquired above-market leases as a decrease to rental revenues over the term of the lease
(see Note 8 - Identified Intangible Assets and Liabilities).
Hotel revenues arising from the operation of Hotel Pennsylvania, which we permanently closed on April 5, 2021,
consists of room revenue, food and beverage revenue, and banquet revenue. Room revenues are recognized when
the rooms are made available for the guest, in accordance with ASC 842.
Trade shows revenues arising from the operation of trade shows is primarily booth rentals. These revenues are
recognized upon the occurrence of the trade shows when the trade show booths are made available for use by the
exhibitors, in accordance with ASC 842.
Tenant services revenues arises from sub-metered electric, elevator, trash removal and other services provided to
tenants at their request. These revenues are recognized as the services are transferred in accordance with ASC Topic
606, Revenue from Contracts with Customers ("ASC 606").
Parking garage revenues arise from the operations of our parking facilities which charge a hourly or monthly fee to
provide parking services. These revenues are recognized as the services are transferred in accordance with ASC 606.
•
Fee and other income includes management, leasing and other revenue arising from contractual agreements with third parties
or with partially owned entities and includes BMS cleaning, engineering and security services. This revenue is recognized as
the services are transferred in accordance with ASC 606.
We evaluate on an individual lease basis whether it is probable that we will collect substantially all amounts due from our tenants
and recognize changes in the collectability assessment of our operating leases as adjustments to rental revenue. Management exercises
judgment in assessing collectability of tenant receivables and considers payment history, current credit status and publicly available
information about the financial condition of the tenant, the impact of COVID-19 on tenants' businesses, and other factors. Tenant
receivables, including receivables arising from the straight-lining of rents, are written off when management deems that the
collectability of substantially all future lease payments from a specific lease is not probable of collection, at which point, the Company
will limit future rental revenues to cash received.
We have made a policy election in accordance with the FASB Staff Q&A which provides relief in accounting for leases during
the COVID-19 pandemic, allowing us to continue recognizing rental revenue on a straight-line basis for rent deferrals, with no impact
to revenue recognition, and to recognize rent abatements as a reduction to rental revenue in the period granted.
86
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Basis of Presentation and Significant Accounting Policies - continued
Significant Accounting Policies - continued
Income Taxes: Vornado operates in a manner intended to enable it to continue to qualify as a REIT under Sections 856‑860 of
the Internal Revenue Code of 1986, as amended. Under those sections, a REIT which distributes at least 90% of its REIT taxable
income as a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its
taxable income which is distributed to its shareholders. Vornado distributes to its shareholders 100% of its REIT taxable income and
therefore, no provision for Federal income taxes is required. Dividends distributed for the year ended December 31, 2021, were
characterized, for federal income tax purposes, as 84.2% ordinary income under Section 199A of the Internal Revenue Code and
15.8% qualified dividend income (taxed as long-term capital gain). Dividends distributed for the year ended December 31, 2020, were
characterized, for federal income tax purposes, as ordinary income. Dividends distributed for the year ended December 31, 2019, were
characterized, for federal income tax purposes, as 62.1% ordinary income and 37.9% long-term capital gain.
We have elected to treat certain consolidated subsidiaries, and may in the future elect to treat newly formed subsidiaries, as
taxable REIT subsidiaries pursuant to an amendment to the Internal Revenue Code that became effective January 1, 2001. Taxable
REIT subsidiaries may participate in non-real estate related activities and/or perform non-customary services for tenants and are
subject to Federal and State income tax at regular corporate tax rates. Farley Office and Retail, our 220 CPS condominium project and
the operations of Hotel Pennsylvania, prior to its closure, are held through taxable REIT subsidiaries.
As of December 31, 2021 and 2020, our taxable REIT subsidiaries had deferred tax assets, net of valuation allowances, of
$8,582,000 and $15,017,000, respectively, and are included in “other assets” on our consolidated balance sheets. As of December 31,
2021 and 2020, our taxable REIT subsidiaries had deferred tax liabilities of $40,591,000 and $29,348,000, respectively, which are
included in "other liabilities" on our consolidated balance sheets. The deferred tax assets and liabilities relate to net operating loss
carry forwards and temporary differences between the book and tax basis of assets and liabilities.
For the year ended December 31, 2021, we recognized $10,496,000 of income tax benefit based on an effective tax rate of
approximately (5.3)%. For the years ended December 31, 2020 and 2019, we recognized $36,630,000 and $103,439,000 of income tax
expense, respectively, based on effective tax rates of approximately (8.6)% and 3.0%, respectively. Income tax benefit (expense)
recorded in each of the years primarily relates to our consolidated taxable REIT subsidiaries, and certain state, local, and franchise
taxes. The year ended December 31, 2021 included $27,910,000 of income tax benefit recognized by our taxable REIT subsidiaries,
$10,868,000 of income tax expense resulting from book to tax differences (primarily straight-line rent adjustments and depreciation)
on our investment in Farley Office and Retail and $5,711,000 of income tax expense recognized on the sale of 220 CPS condominium
units. The years ended December 31, 2020 and 2019, included $49,221,000 and $101,828,000, respectively, of income tax expense
recognized on the sale of 220 CPS condominium units. The Company has no uncertain tax positions recognized as of December 31,
2021 and 2020.
The Operating Partnership’s partners are required to report their respective share of taxable income on their individual tax returns.
The estimated taxable income attributable to Vornado common shareholders (unaudited) for the years ended December 31, 2021,
2020 and 2019 was approximately $413,026,000, $419,812,000, and $917,162,000, respectively. The book to tax differences between
net income (loss) and estimated taxable income primarily result from differences in the income recognition or deductibility of
depreciation and amortization, gain or loss from the sale of real estate and other capital transactions, impairment losses, straight-line
rent adjustments, stock option expense and repairs expense related to the tangible property regulations.
The net basis of Vornado’s assets and liabilities for tax reporting purposes is approximately $2.6 billion lower than the amounts
reported in Vornado’s consolidated balance sheet as of December 31, 2021.
87
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. Revenue Recognition
Below is a summary of our revenues by segment. Additional financial information related to these reportable segments for the
years ended December 31, 2021, 2020 and 2019 is set forth in Note 23 - Segment Information.
(Amounts in thousands)
Property rentals
Trade shows(1)
Lease revenues(2)
Tenant services
Parking revenues
Rental revenues
BMS cleaning fees
Management and leasing fees
Other income
Fee and other income
Total revenues
____________________
See notes on following page.
(Amounts in thousands)
Property rentals(4)
Hotel Pennsylvania(5)
Trade shows(1)
Lease revenues(2)
Tenant services
Rental revenues
BMS cleaning fees
Management and leasing fees
Other income
Fee and other income
Total revenues
____________________
See notes on following page.
For the Year Ended December 31, 2021
Total
New York
Other
$
1,354,209 $
1,071,816 $
19,482
1,373,691
37,449
13,391
1,424,531
119,780
11,725
33,174
164,679
1,589,210
—
1,071,816
26,048
11,370
1,109,234
126,891
12,177
9,297
148,365
1,257,599
For the Year Ended December 31, 2020
Total
New York
Other
$
1,323,347 $
1,051,009 $
8,741
11,303
1,343,391
34,244
1,377,635
105,536
19,416
25,364
150,316
8,741
—
1,059,750
23,750
1,083,500
112,112
19,508
6,628
138,248
$
1,527,951 $
1,221,748 $
282,393
19,482
301,875
11,401
2,021
315,297
(7,111) (3)
(452)
23,877
16,314
331,611
272,338
—
11,303
283,641
10,494
294,135
(6,576) (3)
(92)
18,736
12,068
306,203
88
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. Revenue Recognition - continued
(Amounts in thousands)
Property rentals(4)
Hotel Pennsylvania
Trade shows
Lease revenues(2)
Tenant services
Rental revenues
BMS cleaning fees
Management and leasing fees
Other income
Fee and other income
Total revenues
For the Year Ended December 31, 2019
Total
New York
Other
$
1,589,539 $
1,300,385 $
89,594
40,577
1,719,710
47,512
1,767,222
124,674
13,542
19,262
157,478
89,594
—
1,389,979
35,011
1,424,990
133,358
13,694
5,818
152,870
$
1,924,700 $
1,577,860 $
289,154
—
40,577
329,731
12,501
342,232
(8,684) (3)
(152)
13,444
4,608
346,840
____________________
(1) We cancelled trade shows at theMART beginning late March of 2020 due to the COVID-19 pandemic and resumed in the third quarter of 2021.
(2) The components of lease revenues were as follows:
(Amounts in thousands)
Fixed billings
Variable billings
Total contractual operating lease billings
Adjustment for straight-line rents and amortization of acquired below-market leases and
other, net
Less: write-off of straight-line rent and tenant receivables deemed uncollectible
For the Year Ended December 31,
2021
2020
2019
$
1,277,645 $
1,292,174 $
108,850
1,386,495
(5,109)
(7,695)
126,907
1,419,081
(12,486)
(63,204)
1,531,917
199,291
1,731,208
5,739
(17,237)
Lease revenues
$
1,373,691 $
1,343,391 $
1,719,710
(3) Represents the elimination of theMART and 555 California Street BMS cleaning fees which are included as income in the New York segment.
(4) Reduced by $63,204 and $17,237 for the years ended December 31, 2020 and 2019, respectively, for the write-off of lease receivables deemed uncollectible
(primarily write-offs of receivables arising from the straight-lining of rents).
(5) We temporarily closed the Hotel Pennsylvania on April 1, 2020 and on April 5, 2021, we permanently closed the hotel and plan to develop an office tower on the
site.
89
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. Real Estate Fund Investments
We are the general partner and investment manager of Vornado Capital Partners Real Estate Fund (the “Fund”) and own a 25.0%
interest in the Fund, which had an initial eight-year term ending February 2019. On January 29, 2018, the Fund's term was extended to
February 2023. The Fund's three-year investment period ended in July 2013. The Fund is accounted for under ASC Topic 946,
Financial Services – Investment Companies (“ASC 946”) 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, retaining the fair value basis of accounting.
We are the general partner and investment manager of the Crowne Plaza Times Square Hotel Joint Venture (the “Crowne Plaza
Joint Venture”) and own a 57.1% interest in the joint venture which owns the 24.3% interest in the Crowne Plaza Times Square Hotel
not owned by the Fund. The Crowne Plaza Joint Venture is also accounted for under ASC 946 and we consolidate the accounts of the
joint venture into our consolidated financial statements, retaining the fair value basis of accounting. On June 9, 2020, the joint venture
between the Fund and the Crowne Plaza Joint Venture defaulted on the $274,355,000 non-recourse loan on the Crowne Plaza Times
Square Hotel. The interest-only loan, which bears interest at a floating rate of LIBOR plus 3.69% (3.79% as of December 31, 2021)
and provides for additional default interest of 3.00%, was scheduled to mature on July 9, 2020.
On April 12, 2021, the Fund defaulted on the $82,750,000 non-recourse loan on 1100 Lincoln Road. The interest-only loan
currently bears interest at a floating rate of prime plus 1.40% (4.65% as of December 31, 2021) and provides for additional default
interest of 3.00%. The loan was scheduled to mature on July 27, 2021.
On December 7, 2021, the Fund completed the sale of the retail condominium located at 501 Broadway for $27,500,000. From
the inception of this investment through its disposition, the Fund realized a $6,346,000 net loss.
As of December 31, 2021, we had three real estate fund investments through the Fund and the Crowne Plaza Joint Venture with
an aggregate fair value of $7,730,000, $328,055,000 below cost, and had remaining unfunded commitments of $28,465,000, of which
our share was $8,849,000. As of December 31, 2020, we had four real estate fund investments with an aggregate fair value of
$3,739,000.
Below is a summary of income (loss) from the Fund and the Crowne Plaza Joint Venture.
(Amounts in thousands)
Net investment income (loss)
Net unrealized income (loss) on held investments
Net realized income on exited investments
Income (loss) from real estate fund investments
Less (income) loss attributable to noncontrolling interests in consolidated subsidiaries
Income (loss) from real estate fund investments net of noncontrolling interests in consolidated
subsidiaries
For the Year Ended December 31,
2021
2020
2019
$
6,445 $
(220) $
3,257
1,364
11,066
(7,309)
(226,107)
—
(226,327)
163,213
2,027
(106,109)
—
(104,082)
55,274
$
3,757 $
(63,114) $
(48,808)
5.
Investments in Partially Owned Entities
Fifth Avenue and Times Square JV
As of December 31, 2021, we own a 51.5% common interest in a joint venture ("Fifth Avenue and Times Square JV") which
owns interests in properties located at 640 Fifth Avenue, 655 Fifth Avenue, 666 Fifth Avenue, 689 Fifth Avenue, 697-703 Fifth
Avenue, 1535 Broadway and 1540 Broadway (collectively, the "Properties"). The remaining 48.5% common interest in the joint
venture is owned by a group of institutional investors (the "Investors"). Our 51.5% common interest in the joint venture represents an
effective 51.0% interest in the Properties. The 48.5% common interest in the joint venture owned by the Investors represents an
effective 47.2% interest in the Properties.
We also own $1.828 billion of preferred equity security interests in certain of the properties. The preferred equity has an annual
coupon of 4.25% through April 2024, increasing to 4.75% for the subsequent five years and thereafter at a formulaic rate. It can be
redeemed under certain conditions on a tax deferred basis.
As of December 31, 2021, the carrying amount of our investment in the joint venture was less than our share of the equity in the
net assets of the joint venture by approximately $387,402,000, the basis difference primarily resulting from non-cash impairment
losses recognized during 2020. Substantially all of this basis difference was allocated, based on our estimates of the fair values of Fifth
Avenue and Times Square JV’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference related
to the buildings into earnings as a reduction to depreciation expense over their estimated useful lives.
Management, Development, Leasing and Other Agreements
We provide various services to Fifth Avenue and Times Square JV in accordance with management, development, leasing and
other agreements, as described on the following page.
90
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5.
Investments in Partially Owned Entities - continued
Fifth Avenue and Times Square JV - continued
We receive an annual fee for managing the Properties equal to 2% of the gross revenues from the Properties. In addition, we are
entitled to a development fee of 5% of development costs, plus reimbursement of certain costs, for development projects performed by
us. We are entitled to 1.5% of development costs, plus reimbursement of certain costs, as a supervisory fee for development projects
not performed by us. We provide leasing services for fees calculated based on a percentage of rents, less any commissions paid to
third-party real estate brokers, if applicable. We jointly provide leasing services for the retail space with Crown Retail Services LLC,
and exclusively provide leasing services for the office space. We recognized property management fee income, included in "fee and
other income" on our consolidated statements of income, of $4,297,000, $3,982,000 and $3,085,000 for the years ended December 31,
2021, 2020 and 2019, respectively.
BMS, our wholly-owned subsidiary, supervises cleaning, security and engineering services at certain of the Properties. We
recognized income for these services, included in "fee and other income" on our consolidated statements of income, of $3,993,000,
$3,595,000 and $3,087,000 for the years ended December 31, 2021, 2020 and 2019, respectively.
We believe, based on comparable fees charged by other real estate companies, that the fees described above are consistent with
the market.
Alexander’s, Inc
As of December 31, 2021, we own 1,654,068 Alexander’s common shares, or approximately 32.4% of Alexander’s common
equity. We manage, develop and lease Alexander’s properties pursuant to agreements which expire in March of each year and are
automatically renewable. As of December 31, 2021 and 2020, Alexander’s owed us an aggregate of $879,000 and $1,516,000,
respectively, pursuant to such agreements.
On June 4, 2021, Alexander's completed the sale of a parcel of land in the Bronx, New York for $10,000,000. As a result of the
sale, we recognized our $2,956,000 share of the net gain and also received a $300,000 sales commission paid by Alexander's.
On October 4, 2021, Alexander's sold its Paramus, New Jersey property to IKEA Property, Inc. ("IKEA"), the tenant at the
property, for $75,000,000 pursuant to IKEA's purchase option contained in the lease. The property was encumbered by a $68,000,000
mortgage loan which was repaid at closing of the sale. As a result of the sale, we recognized our $11,620,000 share of the net gain and
also received a $750,000 sales commission paid by Alexander's.
As of December 31, 2021, the market value (“fair value” pursuant to ASC Topic 820, Fair Value Measurements ("ASC 820")) of
our investment in Alexander’s, based on Alexander’s December 31, 2021 closing share price of $260.30, was $430,554,000, or
$339,149,000 in excess of the carrying amount on our consolidated balance sheet. As of December 31, 2021, 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 $30,081,000. 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.
Management, Development, Leasing and Other Agreements
We receive an annual fee for managing Alexander’s and all of its properties equal to the sum of (i) $2,800,000, (ii) 2% of the
gross revenue from the Rego Park II Shopping Center, (iii) $0.50 per square foot of the tenant-occupied office and retail space at 731
Lexington Avenue, and (iv) $344,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue. In
addition, we are entitled to a development fee of 6% of development costs, as defined.
We provide Alexander’s with leasing services for a fee of 3% of rent for the first ten years of a lease term, 2% of rent for the
eleventh through twentieth year of a lease term and 1% of rent for the twenty-first through thirtieth year of a lease term, subject to the
payment of rents by Alexander’s tenants. In the event third-party real estate brokers are used, our fee increases by 1% and we are
responsible for the fees to the third-parties. We are also entitled to a commission upon the sale of any of Alexander’s assets equal to
3% of gross proceeds, as defined, for asset sales less than $50,000,000, and 1% of gross proceeds, as defined, for asset sales of
$50,000,000 or more.
BMS, our wholly-owned subsidiary, supervises (i) cleaning, engineering and security services at Alexander’s 731 Lexington
Avenue property and (ii) security services at Alexander’s Rego Park I, Rego Park II properties and The Alexander apartment tower.
During the years ended December 31, 2021, 2020 and 2019, we recognized $4,234,000, $3,613,000 and $3,613,000 of income,
respectively, for these services.
91
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Investments in Partially Owned Entities - continued
Below is a schedule of our investments in partially owned entities.
(Amounts in thousands)
Investments:
Fifth Avenue and Times Square JV (see page 90 for details)
Partially owned office buildings/land(1)
Alexander’s (see page 91 for details)
Other investments(2)
Investments in partially owned entities included in other liabilities(3):
7 West 34th Street
85 Tenth Avenue
Percentage
Ownership at
December 31, 2021
Balance as of December 31,
2021
2020
51.5%
Various
32.4%
Various
53.0%
49.9%
$
2,770,633 $
2,798,413
306,989
91,405
128,362
473,285
82,902
136,507
3,297,389 $
3,491,107
(60,918) $
(18,067)
(78,985) $
(55,340)
(13,080)
(68,420)
$
$
$
____________________
(1)
Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue (consolidated from August 5, 2021, see Note 7 - Acquisitions and Dispositions for
details), 512 West 22nd Street, 61 Ninth Avenue and others.
(2)
Includes interests in Independence Plaza, Rosslyn Plaza and others.
(3) Our negative basis results from distributions in excess of our investment.
Below is a schedule of income (loss) from partially owned entities.
(Amounts in thousands)
Our share of net income (loss):
Fifth Avenue and Times Square JV (see page 90 for details):
Equity in net income(1)
Return on preferred equity, net of our share of the expense
Non-cash impairment loss
Alexander's (see page 91 for details):
Equity in net income
Net gain on sale of land
Management, leasing and development fees
Partially owned office buildings(3)
Other investments(4)
Percentage
Ownership at
December 31, 2021
For the Year Ended December 31,
2021
2020
2019
51.5%
$
47,144 $
37,416
—
84,560
20,116
14,576
5,429
40,121
12,057
$
21,063
37,357
(413,349)
(354,929)
13,326
(2)
—
5,309
18,635
12,742
(6,221)
(5,560)
31,130
27,586
—
58,716
19,204
—
4,575
23,779
(3,443)
(187)
32.4%
Various
Various
____________________
(1)
2021 includes decreases in our share of depreciation and amortization expense compared to the prior year of $17,448, primarily resulting from non-cash
impairment losses recognized during 2020 (see page 90 for details). 2021 and 2020 include a $13,971 reduction in income related to a Forever 21 lease
modification at 1540 Broadway. 2020 also includes $3,125 of write-offs of lease receivables deemed uncollectible.
Includes our $4,846 share of write-offs of lease receivables deemed uncollectible.
Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue (consolidated from August 5, 2021, see Note 7 - Acquisitions and Dispositions for
details), 7 West 34th Street, 512 West 22nd Street, 61 Ninth Avenue, 85 Tenth Avenue and others.
Includes interests in Independence Plaza, Rosslyn Plaza, Urban Edge Properties (sold on March 4, 2019), Pennsylvania Real Estate Investment Trust (accounted
for as a marketable security from March 12, 2019 and sold on January 23, 2020) and others.
(2)
(3)
(4)
$
130,517 $
(329,112)
$
78,865
92
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Investments in Partially Owned Entities – continued
Below is a summary of the debt of our partially owned entities.
(Amounts in thousands)
Mortgages Payable:
Partially owned office buildings(2)
Alexander's
Fifth Avenue and Times Square JV
Other(3)
Percentage
Ownership at
December 31, 2021
Various
32.4%
51.5%
Various
Maturity
2022-2029
2024-2027
2022-2024
2022-2026
Weighted Average
Interest Rate at
December 31, 2021
100% Partially Owned Entities’
Debt at December 31,(1)
2021
2020
2.95%
1.43%
2.61%
3.67%
$
3,348,149 $
1,096,544
950,000
1,292,012
3,622,572
1,164,544
950,000
1,288,265
________________________________________
(1) All amounts are non-recourse to us except (i) the $500,000 mortgage loan on 640 Fifth Avenue, included in the Fifth Avenue and Times Square JV, and (ii) the
$300,000 mortgage loan on 7 West 34th Street.
Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue (consolidated from August 5, 2021), 7 West 34th Street, 512 West 22nd Street, 61
Ninth Avenue, 85 Tenth Avenue and others.
Includes interests in Independence Plaza, Rosslyn Plaza and others.
(2)
(3)
Based on our ownership interest in the partially owned entities above, our pro rata share of the debt of these partially owned
entities was $2,699,405,000 and $2,873,174,000 as of December 31, 2021 and 2020, respectively
Summary of Condensed Combined Financial Information
The following is a summary of condensed combined financial information for all of our partially owned entities.
(Amounts in thousands)
Balance Sheet:
Assets
Liabilities
Noncontrolling interests
Equity
(Amounts in thousands)
Income Statement:
Total revenue
Net income
Net income (loss) attributable to the entities
6. 220 Central Park South
As of December 31,
2021
2020
$
12,689,000 $
13,344,000
7,553,000
2,069,000
3,067,000
7,747,000
2,075,000
3,522,000
For the Year Ended December 31,
2021
2020
2019
$
1,184,000 $
1,163,000 $
1,504,000
190,000
114,000
45,000
(33,000)
39,000
(32,000)
During the year ended December 31, 2021, we closed on the sale of six condominium units at 220 CPS for net proceeds of
$137,404,000 resulting in a financial statement net gain of $50,318,000 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, $5,711,000 of income tax
expense was recognized on our consolidated statements of income. In addition, during 2021 our taxable REIT subsidiaries recognized
a $27,910,000 income tax benefit on our consolidated statements of income. From inception to December 31, 2021, we have closed on
the sale of 106 units for net proceeds of $3,006,896,000 resulting in financial statement net gains of $1,117,255,000.
As of December 31, 2021, 95% of the condominium units have been sold.
93
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. Acquisitions and Dispositions
One Park Avenue
On August 5, 2021, pursuant to a right of first offer, we increased our ownership interest in One Park Avenue, a 944,000 square
foot Manhattan office building, to 100.0% by acquiring our joint venture partner's 45.0% ownership interest in the property. The
purchase price values the property at $875,000,000. We paid approximately $158,000,000 in cash and assumed our joint venture
partner's share of the $525,000,000 mortgage loan (discussed below). We previously accounted for our investment under the equity
method and have consolidated the accounts of the property from the date of acquisition of the additional 45.0% ownership interest.
The aggregate purchase price and our existing basis in the property have been allocated between the assets acquired and the liabilities
assumed (excluding working capital accounts) as follows:
(Amounts in thousands)
Assets:
Land
Building and improvements
Identified intangible assets
Assets consolidated
Liabilities:
Mortgages payable
Deferred revenue
Liabilities consolidated
$
Net assets consolidated (excluding working capital)
$
197,057
368,956
139,545
705,558
525,000
18,884
543,884
161,674
On February 26, 2021, the joint venture completed a $525,000,000 refinancing of One Park Avenue. The interest-only loan bears
a rate of LIBOR plus 1.11% (1.22% as of December 31, 2021) and matures in March 2023, with three one-year extension options
(March 2026, as fully extended). We realized our $105,000,000 share of net proceeds. The loan replaced the previous $300,000,000
loan that bore interest at LIBOR plus 1.75% and was scheduled to mature in March 2021.
Madison Avenue
On September 24, 2021, we sold three Manhattan retail properties located at 677-679, 759-771 and 828-850 Madison Avenue in
two separate sale transactions for an aggregate sales price of $100,000,000. Net proceeds from the sales were $96,503,000. In
connection with the sales, we recorded $7,880,000 of non-cash impairment losses which are included in "impairment losses,
transaction related costs and other" on our consolidated statements of income.
SoHo Properties
On May 10, 2021, we entered into an agreement to sell two Manhattan retail properties located at 478-482 Broadway and 155
Spring Street for a sales price of $84,500,000. On January 13, 2022, we completed the sale transaction and realized net proceeds of
$81,399,000. In connection with the sale, we will recognize a net gain of approximately $850,000 in the first quarter of 2022. As of
December 31, 2021, $80,005,000 of assets associated with these properties were classified as held-for-sale and are included in "other
assets" on our consolidated balance sheets.
94
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. Identified Intangible Assets and Liabilities
The following summarizes our identified intangible assets (primarily above-market leases) and liabilities (primarily below-
market leases).
(Amounts in thousands)
Identified intangible assets:
Gross amount
Accumulated amortization
Total, net
Identified intangible liabilities (included in deferred revenue):
Gross amount
Accumulated amortization
Total, net
Balance as of December 31,
2021
2020
$
$
$
$
252,081 $
(97,186)
154,895 $
256,065 $
(212,245)
43,820 $
116,969
(93,113)
23,856
273,902
(238,541)
35,361
Amortization of acquired below-market leases, net of acquired above-market leases, resulted in an increase to rental revenues of
$9,249,000, $16,878,000 and $19,830,000 for the years ended December 31, 2021, 2020 and 2019, 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, 2022 is as follows:
(Amounts in thousands)
2022
2023
2024
2025
2026
$
5,531
5,151
2,056
843
201
Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was $7,330,000,
$6,507,000 and $8,666,000 for the years ended December 31, 2021, 2020 and 2019, respectively. Estimated annual amortization of
all other identified intangible assets including acquired in-place leases for each of the five succeeding years commencing January 1,
2022 is as follows:
(Amounts in thousands)
2022
2023
2024
2025
2026
$
9,805
8,743
7,906
6,330
6,136
95
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. Debt
Secured Debt
On March 7, 2021, we entered into an interest rate swap agreement for our $500,000,000 PENN 11 mortgage loan to swap the
interest rate on the mortgage loan from LIBOR plus 2.75% to a fixed rate of 3.03% through March 2024. On December 1, 2021, we
completed a loan modification which reduced the interest rate on the mortgage loan to LIBOR plus 1.95% (2.05% as of December 31,
2021) from LIBOR plus 2.75%, resulting in a fixed rate of 2.23% pursuant to the interest rate swap agreement.
On March 26, 2021, we completed a $350,000,000 refinancing of 909 Third Avenue, a 1.4 million square foot Manhattan office
building. The interest-only loan bears a fixed rate of 3.23% and matures in April 2031. The loan replaced the previous $350,000,000
loan that bore interest at a fixed rate of 3.91% and was scheduled to mature in May 2021.
On May 10, 2021, we completed a $1.2 billion refinancing of 555 California Street, a three-building 1.8 million square foot office
campus in San Francisco, in which we own a 70.0% controlling interest. The interest-only loan bears a rate of LIBOR plus 1.93% in
years one through five (2.04% as of December 31, 2021), LIBOR plus 2.18% in year six and LIBOR plus 2.43% in year seven. The
loan matures in May 2023, with five one-year extension options (May 2028 as fully extended). We swapped the interest rate on our
$840,000,000 share of the loan to a fixed rate of 2.26% through May 2024. The loan replaced the previous $533,000,000 loan that
bore interest at a fixed rate of 5.10% and was scheduled to mature in September 2021.
On May 28, 2021, we repaid the $675,000,000 mortgage loan on theMART, a 3.7 million square foot commercial building in
Chicago, with proceeds from our senior unsecured notes offering discussed below. The loan bore interest at 2.70% and was scheduled
to mature in September 2021.
On November 16, 2021, we completed a $950,000,000 refinancing of 1290 Avenue of the Americas, a 2.1 million square foot
Class A Manhattan office building, in which we own a 70.0% controlling interest. The interest-only loan bears a rate of LIBOR plus
1.51% (1.62% as of December 31, 2021) in years one to five, increasing 0.25% in both years six and seven. The loan matures in
November 2023 with five one-year extension options (November 2028 as fully extended). We defeased the existing $950,000,000
loan that bore interest at a fixed rate of 3.34% and was scheduled to mature in November 2022. As a result, we incurred $23,729,000
of defeasance costs, which are included in "interest and debt expense" on our consolidated statements of income, of which $7,119,000
is attributable to noncontrolling interest.
Unsecured Revolving Credit Facility
On April 15, 2021, we extended our $1.25 billion unsecured revolving credit facility from January 2023 (as fully extended) to
April 2026 (as fully extended). The interest rate on the extended facility was lowered to LIBOR plus 0.90% from LIBOR plus 1.00%.
We subsequently qualified for a sustainability margin adjustment by achieving certain key performance indicator (KPI) metrics, which
reduced our interest rate by 0.01% to LIBOR plus 0.89%. The facility fee remains at 20 basis points. Our separate $1.50 billion
unsecured revolving credit facility matures in March 2024 (as fully extended) and has an interest rate of LIBOR plus 0.90% and a
facility fee of 20 basis points.
Senior Unsecured Notes
On May 24, 2021, we completed a green bond public offering of $400,000,000 2.15% senior unsecured notes due June 1, 2026
("2026 Notes") and $350,000,000 3.40% senior unsecured notes due June 1, 2031 ("2031 Notes"). Interest on the senior unsecured
notes is payable semi-annually on June 1 and December 1, commencing December 1, 2021. The 2026 Notes were sold at 99.86% of
their face amount to yield 2.18% and the 2031 Notes were sold at 99.59% of their face amount to yield 3.45%.
96
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. Debt - continued
The following is a summary of our debt:
(Amounts in thousands)
Mortgages Payable:
Fixed rate
Variable rate
Total
Deferred financing costs, net and other
Total, net
Unsecured Debt:
Senior unsecured notes
Deferred financing costs, net and other
Senior unsecured notes, net
Unsecured term loan
Deferred financing costs, net and other
Unsecured term loan, net
Weighted Average
Interest Rate at
December 31, 2021
Balance as of December 31,
2021
2020
2.80%
1.68%
2.08%
3.02%
3.70%
$
2,190,000 $
3,909,215
6,099,215
(45,872)
3,012,643
2,595,815
5,608,458
(27,909)
$
$
6,053,343 $
5,580,549
1,200,000 $
(10,208)
1,189,792
800,000
(2,188)
797,812
450,000
(3,315)
446,685
800,000
(3,238)
796,762
Unsecured revolving credit facilities
1.00%
575,000
575,000
Total, net
$
2,562,604 $
1,818,447
The net carrying amount of properties collateralizing the above indebtedness amounted to $5.6 billion as of December 31, 2021.
As of December 31, 2021, the principal repayments required for the next five years and thereafter are as follows:
(Amounts in thousands)
Year Ended December 31,
2022
2023
2024
2025
2026
Thereafter
Mortgages Payable
Unsecured Debt
$
1,046,600 $
3,198,400
773,215
331,000
—
750,000
—
575,000
800,000
450,000
400,000
350,000
10. Redeemable Noncontrolling Interests
Redeemable Noncontrolling Partnership Units
Redeemable noncontrolling partnership units are primarily comprised of Class A Operating Partnership units held by third parties
and 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 Vornado’s consolidated statements of changes in equity and to “partners’
capital” on the consolidated balance sheets of the Operating Partnership. Class A units may be tendered for redemption to the
Operating Partnership for cash; Vornado, at its option, may assume that obligation and pay the holder either cash or Vornado common
shares on a one-for-one basis. Because the number of Vornado common shares outstanding at all times equals the number of Class A
units owned by Vornado, the redemption value of each Class A unit is equivalent to the market value of one Vornado common share,
and the quarterly distribution to a Class A unitholder is equal to the quarterly dividend paid to a Vornado common shareholder.
97
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. Redeemable Noncontrolling Interests - continued
Redeemable Noncontrolling Partnership Units - continued
Below are the details of redeemable noncontrolling partnership units.
(Amounts in thousands, except units and per unit
amounts)
Balance as of December 31,
Units Outstanding as of
December 31,
Unit Series
2021
2020
2021
2020
Per Unit
Liquidation
Preference
Preferred or
Annual
Distribution
Rate
Common:
Class A units held by third parties
$
587,440
(1) $
507,212
(1)
14,033,438
13,583,607
n/a
$
2.12
Perpetual Preferred/Redeemable Preferred:
5.00% D-16 Cumulative Redeemable(2)
3.25% D-17 Cumulative Redeemable(3)
$
$
—
3,535
$
$
1,000
3,535
—
1
n/a
n/a
141,400
141,400 $
25.00 $
0.8125
________________________________________
(1) Aggregate redemption value was based on Vornado's year-end closing common share price.
(2) Redeemed on October 18, 2021.
(3) Holders may tender units for redemption to the Operating Partnership for cash at their stated redemption amount; Vornado, at its option, may assume that
obligation and pay the holders either cash or Vornado preferred shares on a one-for-one basis. These units are redeemable at Vornado's option at any time.
Below is a table summarizing the activity of redeemable noncontrolling partnership units.
(Amounts in thousands)
Beginning balance
Net income (loss)
Other comprehensive income (loss)
Distributions
Redemption of Class A units for Vornado common shares, at redemption value
Redeemable Class A unit measurement adjustment
Other, net
Ending balance
For the Year Ended December 31,
2021
2020
$
511,747
$
7,540
4,048
(29,901)
(14,576)
76,073
36,044
$
590,975
$
888,915
(24,946)
(2,914)
(32,595)
(9,266)
(344,043)
36,596
511,747
Redeemable noncontrolling partnership units 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 Topic 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
$49,659,000 and $50,002,000 as of December 31, 2021 and 2020, respectively. Changes in the value from period to period, if any, are
charged to “interest and debt expense” on our consolidated statements of income.
Redeemable Noncontrolling Interest in a Consolidated Subsidiary
A consolidated joint venture in which we own a 95% interest is developing Farley Office and Retail (the "Project"). During 2020,
a historic tax credit investor (the "Tax Credit Investor") funded $92,400,000 of capital contributions and is expected to make
additional capital contributions in future periods.
The arrangement includes a put option whereby the joint venture may be obligated to purchase the Tax Credit Investor’s
ownership interest in the Project at a future date. The put price is calculated based on a pre-determined formula. As exercise of the put
option is outside of the joint venture’s control, the Tax Credit Investor’s interest, together with the put option, have been recorded to
“redeemable noncontrolling interest in a consolidated subsidiary” on our consolidated balance sheets as of December 31, 2021 and
2020. The redeemable noncontrolling interest is recorded at the greater of the 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 Vornado’s consolidated statements
of changes in equity and to “partners’ capital” on the consolidated balance sheets of the Operating Partnership. There was no
adjustment required for the years ended December 31, 2021 and 2020.
98
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. Redeemable Noncontrolling Interests - continued
Redeemable Noncontrolling Interest in a Consolidated Subsidiary - continued
Below is a table summarizing the activity of the redeemable noncontrolling interest in a consolidated subsidiary.
(Amounts in thousands)
Beginning balance
Net income
Contributions
Other, net
Ending balance
For the Year Ended December 31,
2021
2020
$
$
94,520
$
3,188
—
—
97,708
$
—
544
92,400
1,576
94,520
11. Shareholders' Equity/Partners' Capital
Common Shares (Vornado Realty Trust)
As of December 31, 2021, there were 191,723,608 common shares outstanding. During 2021, we paid an aggregate of
$406,109,000 of common dividends comprised of quarterly common dividends of $0.53 per share.
Class A Units (Vornado Realty L.P.)
As of December 31, 2021, there were 191,723,608 Class A units outstanding that were held by Vornado. These units are
classified as “partners’ capital” on the consolidated balance sheets of the Operating Partnership. As of December 31, 2021, there were
14,033,438 Class A units outstanding, that were held by third parties. These units are classified outside of “partners’ capital” as
“redeemable partnership units” on the consolidated balance sheets of the Operating Partnership (See Note 10 – Redeemable
Noncontrolling Interests). During 2021, the Operating Partnership paid an aggregate of $406,109,000 of distributions to Vornado
comprised of quarterly common distributions of $0.53 per unit.
Preferred Shares/Units
On September 22, 2021, Vornado sold 12,000,000 4.45% Series O cumulative redeemable preferred shares at a price of $25.00
per share, pursuant to an effective registration statement. Vornado received aggregate net proceeds of $291,153,000, after
underwriters' discount and issuance costs, and contributed the net proceeds to the Operating Partnership in exchange for 12,000,000
4.45% Series O preferred units (with economic terms that mirror those of the Series O preferred shares). Dividends on the Series O
preferred shares/units are cumulative and payable quarterly in arrears. The Series O preferred shares/units 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), Vornado may redeem the Series O preferred shares/units at a redemption price of $25.00 per share/unit, plus accrued
and unpaid dividends/distributions through the date of redemption. The Series O preferred shares/units have no maturity date and will
remain outstanding indefinitely unless redeemed by Vornado. Vornado used the net proceeds for the redemption of its 5.70% Series K
cumulative redeemable preferred shares/units.
On October 13, 2021, we redeemed all of the outstanding 5.70% Series K preferred shares/units at their redemption price of
$25.00 per share/unit, or $300,000,000 in the aggregate, plus accrued and unpaid dividends/distributions through the date of
redemption. We recognized $9,033,000 of previously capitalized issuance costs in "Series K preferred share/unit issuance costs" on
our consolidated statements of income during the third quarter of 2021, when the preferred shares/units were called for redemption.
99
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. Shareholders' Equity/Partners' Capital - continued
Preferred Shares/Units - continued
The following table sets forth the details of our preferred shares of beneficial interest and the preferred units of the Operating
Partnership as of December 31, 2021 and 2020. During 2021, preferred dividends were $65,880,000.
(Amounts in thousands, except share/unit and per share/per unit amounts)
Preferred Shares/Units
Convertible Preferred:
Balance as of December 31,
2021
2020
Per Share/Unit
Shares/Units
Outstanding as of
December 31,
2021
2020
Liquidation
Preference
Annual
Dividend/
Distribution(1)
6.5% Series A: authorized 12,902 and 13,402 shares/units(2)
$
920 $
934
12,902
13,402 $
50.00 $
3.25
Cumulative Redeemable Preferred(3):
5.70% Series K: authorized 12,000,000 shares/units(4)
5.40% Series L: authorized 13,800,000 shares/units
5.25% Series M: authorized 13,800,000 shares/units
5.25% Series N: authorized 12,000,000 shares/units
4.45% Series O: authorized 12,000,000 shares/units(5)
—
290,971
—
12,000,000
290,306
308,946
291,134
291,153
290,306
12,000,000
12,000,000
308,946
12,780,000
12,780,000
291,182
12,000,000
12,000,000
—
12,000,000
—
n/a
25.00
25.00
25.00
25.00
n/a
1.35
1.3125
1.3125
1.1125
$ 1,182,459 $ 1,182,339
48,792,902
48,793,402
________________________________________
(1) Dividends on preferred shares and distributions on preferred units are cumulative and are payable quarterly in arrears.
(2) Redeemable at the option of Vornado under certain circumstances, at a redemption price of 1.9531 common shares/Class A units per Series A Preferred Share/
Unit plus accrued and unpaid dividends/distributions through the date of redemption, or convertible at any time at the option of the holder for 1.9531 common
shares/Class A units per Series A Preferred Share/Unit.
(3) Series L preferred shares/units are redeemable at Vornado's option at a redemption price of $25.00 per share/unit, plus accrued and unpaid dividends/distributions
through the date of redemption. Series M preferred shares/units are redeemable commencing December 2022, Series N preferred shares/units are redeemable
commencing November 2025 and Series O preferred shares/units are redeemable commencing September 2026. Series K preferred shares/units were redeemed on
October 13, 2021.
(4) Redeemed on October 13, 2021.
Issued in September 2021.
(5)
Accumulated Other Comprehensive Loss
The following table sets forth the changes in accumulated other comprehensive loss by component for the year ended December
31, 2021.
(Amounts in thousands)
Balance as of December 31, 2020
Other comprehensive income (loss)
Balance as of December 31, 2021
12. Variable Interest Entities
Accumulated other
comprehensive (loss)
income of
nonconsolidated
subsidiaries
Total
Interest rate
swaps
Other
$
$
(75,099) $
57,565
(17,534) $
(14,338) $
(66,098) $
10,275
51,337
(4,063) $
(14,761) $
5,337
(4,047)
1,290
Unconsolidated VIEs
As of December 31, 2021 and 2020, we have several unconsolidated VIEs. We do not consolidate these entities because we are
not the primary beneficiary and the nature of our involvement in the activities of these entities does not give us power over decisions
that significantly affect these entities’ economic performance. We account for our investment in these entities under the equity method
(see Note 5 – Investments in Partially Owned Entities). As of December 31, 2021 and 2020, the net carrying amount of our
investments in these entities was $69,435,000 and $224,754,000, respectively, and our maximum exposure to loss in these entities is
limited to the carrying amount of our investments.
Consolidated VIEs
Our most significant consolidated VIEs are the Operating Partnership (for Vornado), the Farley joint venture and certain
properties that have non-controlling interests. These entities are VIEs because the non-controlling interests do not have substantive
kick-out or participating rights. We consolidate these entities because we control all significant business activities.
As of December 31, 2021, the total assets and liabilities of our consolidated VIEs, excluding the Operating Partnership, were
$4,564,621,000 and $2,517,652,000 respectively. As of December 31, 2020, the total assets and liabilities of our consolidated VIEs,
excluding the Operating Partnership, were $4,053,841,000 and $1,722,719,000, respectively.
100
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. Fair Value Measurements
ASC 820 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 on a Recurring Basis
Financial assets and liabilities that are measured at fair value on our consolidated balance sheets consist of (i) real estate fund
investments, (ii) the assets in our deferred compensation plan (for which there is a corresponding liability on our consolidated balance
sheets), (iii) loans receivable for which we have elected the fair value option under ASC Subtopic 825-10, Financial Instruments
("ASC 825-10"), (iv) interest rate swaps 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 these financial assets and
liabilities by their levels in the fair value hierarchy.
(Amounts in thousands)
Real estate fund investments
Deferred compensation plan assets ($9,104 included in restricted cash and $101,070 in
other assets)
Loans receivable ($46,444 included in investments in partially owned entities and
$3,738 in other assets)
Interest rate swaps and caps (included in other assets)
Total assets
Mandatorily redeemable instruments (included in other liabilities)
Interest rate swaps (included in other liabilities)
Total liabilities
(Amounts in thousands)
Real estate fund investments
Deferred compensation plan assets ($10,813 included in restricted cash and $94,751 in
other assets)
Loans receivable ($43,008 included in investments in partially owned entities and
$4,735 in other assets)
Interest rate swaps (included in other assets)
Total assets
Mandatorily redeemable instruments (included in other liabilities)
Interest rate swaps (included in other liabilities)
Total liabilities
As of December 31, 2021
Total
Level 1
Level 2
Level 3
$
7,730 $
— $
— $
7,730
110,174
65,158
50,182
18,929
—
—
—
—
18,929
45,016
50,182
—
187,015 $
65,158 $
18,929 $
102,928
49,659 $
49,659 $
— $
32,837
—
32,837
82,496 $
49,659 $
32,837 $
—
—
—
As of December 31, 2020
Total
Level 1
Level 2
Level 3
3,739 $
— $
— $
3,739
105,564
65,636
47,743
17
—
—
—
—
17
157,063 $
65,636 $
17 $
50,002 $
50,002 $
— $
66,033
—
66,033
116,035 $
50,002 $
66,033 $
39,928
47,743
—
91,410
—
—
—
$
$
$
$
$
$
$
101
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. Fair Value Measurements - continued
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued
Real Estate Fund Investments
As of December 31, 2021, we had three real estate fund investments with an aggregate fair value of $7,730,000, or $328,055,000
below cost. These investments are classified as Level 3.
Significant unobservable quantitative inputs used in determining the fair value of each investment include capitalization rates and
discount rates. These rates are based on the location, type and nature of each property, current and anticipated market conditions,
industry publications and from the experience of our Acquisitions and Capital Markets departments. Significant unobservable
quantitative inputs in the table below were utilized in determining the fair value of these real estate fund investments.
Range
Weighted Average
(based on fair value of assets)
Unobservable Quantitative Input
December 31, 2021
December 31, 2020
December 31, 2021
December 31, 2020
Discount rates
Terminal capitalization rates
12.0% to 15.0%
5.5% to 8.8%
7.6% to 15.0%
5.5% to 10.3%
13.2%
7.4%
12.7%
7.9%
The inputs above are subject to change based on changes in economic and market conditions and/or changes in use or timing of
exit. Changes in discount rates and terminal capitalization rates result in increases or decreases in the fair values of these
investments. The discount rates encompass, among other things, uncertainties in the valuation models with respect to terminal
capitalization rates and the amount and timing of cash flows. Therefore, a change in the fair value of these investments resulting from
a change in the terminal capitalization rate may be partially offset by a change in the discount rate. It is not possible for us to predict
the effect of future economic or market conditions on our estimated fair values.
The table below summarizes the changes in the fair value of real estate fund investments that are classified as Level 3.
(Amounts in thousands)
Beginning balance
Dispositions
Purchases/additional fundings
Net unrealized income (loss) on held investments
Net realized income on exited investments
Ending balance
Deferred Compensation Plan Assets
For the Year Ended December 31,
2021
2020
3,739 $
(5,104)
4,474
3,257
1,364
7,730 $
222,649
—
7,197
(226,107)
—
3,739
$
$
Deferred compensation plan assets that are classified as Level 3 consist of investments in limited partnerships and investment
funds, which are managed by third parties. We receive quarterly financial reports that provide net asset values on a fair value basis
from a third-party administrator, which are compiled from the quarterly reports provided to them from each limited partnership and
investment fund. The period of time over which these underlying assets are expected to be liquidated is unknown. The third-party
administrator does not adjust these values in determining our share of the net assets and we do not adjust these values when reported in
our consolidated financial statements.
The table below summarizes the changes in the fair value of deferred compensation plan assets that are classified as Level 3.
(Amounts in thousands)
Beginning balance
Purchases
Sales
Realized and unrealized gains
Other, net
Ending balance
Loans Receivable
For the Year Ended December 31,
2021
2020
39,928 $
5,705
(4,766)
2,250
1,899
45,016 $
32,435
8,766
(5,467)
808
3,386
39,928
$
$
Loans receivable consist of loan investments in real estate related assets for which we have elected the fair value option under
ASC 825-10. These investments are classified as Level 3.
Significant unobservable quantitative inputs used in determining the fair value of each investment include capitalization rates and
discount rates. These rates are based on the location, type and nature of each property, current and anticipated market conditions,
industry publications and from the experience of our Acquisitions and Capital Markets departments. Significant unobservable
quantitative inputs in the table on the following page were utilized in determining the fair value of these loans receivable.
102
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. Fair Value Measurements - continued
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued
Loans Receivable - continued
Range
Weighted Average
(based on fair value of investments)
Unobservable Quantitative Input
Discount rates
Terminal capitalization rates
December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
6.5 %
5.0 %
6.5 %
5.0 %
6.5%
5.0%
6.5%
5.0%
The table below summarizes the changes in fair value of loans receivable that are classified as Level 3.
(Amounts in thousands)
Beginning balance
Credit losses
Interest accrual
Paydowns
Ending balance
Derivatives and Hedging
For the Year Ended December 31,
2021
2020
47,743 $
—
3,714
(1,275)
50,182 $
59,251
(13,369)
2,461
(600)
47,743
$
$
We 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. We
recognize the fair values of all derivatives in "other assets" or "other liabilities" on our consolidated balance sheets. Derivatives that
are not hedges are adjusted to fair value through earnings. If a derivative is a hedge, depending on the nature of the hedge, changes in
the fair value of the derivative will either be offset against the change in fair value of the hedge asset, liability, or firm commitment
through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. Reported net income
and equity may increase or decrease prospectively, depending on future levels of interest rates and other variables affecting the fair
values of derivative instruments and hedged items, but will have no effect on cash flows.
The following tables summarize our consolidated derivative instruments, all of which hedge variable rate debt, as of December
31, 2021 and 2020, respectively.
(Amounts in thousands)
Included in other assets:
Hedged Item
555 California Street mortgage loan interest rate swap(1)
PENN 11 mortgage loan interest rate swap(3)
Various interest rate caps
Included in other liabilities:
Unsecured term loan interest rate swap
33-00 Northern Boulevard mortgage loan interest rate swap
As of December 31, 2021
Variable Rate
Fair Value
Notional
Amount
Spread over
LIBOR
Interest
Rate
Swapped
Rate
Expiration
Date
$
11,814 $
840,000
(2)
6,565
550
500,000
1,650,000
18,929 $
2,990,000
28,976 $
750,000
(4)
3,861
32,837 $
100,000
850,000
$
$
$
L+193
L+195
2.04%
2.05%
2.26%
2.23%
5/24
3/24
L+100
L+180
1.10%
1.91%
3.87%
4.14%
10/23
1/25
______________________________________________
(1) Entered into on May 15, 2021.
(2) Represents our 70.0% share of the $1.2 billion mortgage loan.
(3) Entered into on March 7, 2021.
(4) Remaining $50,000 balance of our unsecured term loan bears interest at a floating rate of LIBOR plus 1.00%.
(Amounts in thousands)
Hedged Item
Included in other assets:
Various interest rate caps
Included in other liabilities:
Unsecured term loan interest rate swap
33-00 Northern Boulevard mortgage loan interest rate swap
As of December 31, 2020
Variable Rate
Fair Value
Notional
Amount
Spread over
LIBOR
Interest
Rate
Swapped
Rate
Expiration
Date
$
$
$
17 $
175,000
57,723 $
750,000
(1)
8,310
66,033 $
100,000
850,000
L+100
L+180
1.15%
1.95%
3.87%
4.14%
10/23
1/25
______________________________________
(1) Remaining $50,000 balance of our unsecured term loan bears interest at a floating rate of LIBOR plus 1.00%.
103
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. Fair Value Measurements - continued
Fair Value Measurements on a Nonrecurring Basis
There were no assets measured at fair value on a nonrecurring basis on our consolidated balance sheet as of December 31, 2021.
As of December 31, 2020, assets measured at fair value on a nonrecurring basis on our consolidated balance sheet consisted of real
estate assets that have been written down to estimated fair value for impairment purposes. The impairment losses primarily relate to
wholly owned street retail assets.
Our estimate of the fair value of these assets was measured using widely accepted valuation techniques including (i) discounted
cash flow analyses based upon market conditions and expectations of growth and utilized unobservable quantitative inputs, including a
capitalization rate of 5.0% and discount rate of 7.0%, and (ii) comparable sales activity.
(Amounts in thousands)
Real estate assets
As of December 31, 2020
Total
Level 1
Level 2
Level 3
$
191,116 $
— $
— $
191,116
Financial Assets and Liabilities not Measured at Fair Value
Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash equivalents
(primarily money market funds, which invest in obligations of the United States government), and our secured and unsecured
debt. Estimates of the fair value of these instruments are determined by the standard practice of modeling the contractual cash flows
required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate,
which is provided by a third-party specialist. For floating rate debt, we use forward rates derived from observable market yield curves
to project the expected cash flows we would be required to make under the instrument. The fair value of cash equivalents and
borrowings under our unsecured revolving credit facilities and unsecured term loan are classified as Level 1. The fair value of our
secured debt and unsecured debt are classified as Level 2. The table below summarizes the carrying amounts and fair value of these
financial instruments.
(Amounts in thousands)
Cash equivalents
Debt:
Mortgages payable
Senior unsecured notes
Unsecured term loan
Unsecured revolving credit facilities
Total
As of December 31, 2021
As of December 31, 2020
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
$
$
$
$
$
1,346,684
6,099,215
1,200,000
800,000
575,000
$
$
1,347,000
6,052,000
1,230,000
800,000
575,000
$
$
1,476,427
5,608,458
450,000
800,000
575,000
1,476,000
5,612,000
476,000
800,000
575,000
8,674,215
(1) $
8,657,000
$
7,433,458
(1) $
7,463,000
____________________
(1) Excludes $58,268 and $34,462 of deferred financing costs, net and other as of December 31, 2021 and 2020, respectively.
104
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. Stock-based Compensation
Vornado's 2019 Omnibus Share Plan (the “Plan") provides the Compensation Committee of Vornado's Board of Trustees (the
"Committee") the ability to grant incentive and nonqualified Vornado stock options, restricted stock, restricted Operating Partnership
units ("OP units"), out-performance plan awards ("OPPs"), appreciation-only long-term incentive plan units (“AO LTIP Units”) and
performance conditioned appreciation-only long-term incentive plan units ("Performance Conditioned AO LTIP Units") to certain of
our employees and officers. Awards may be granted up to a maximum 5,500,000 shares, if all awards granted are Full Value awards,
as defined in the Plan, and up to 11,000,000 shares, if all of the awards granted are Not Full Value Awards, as defined in the Plan. Full
Value Awards are awards of securities, such as restricted shares, that, if all vesting requirements are met, do not require the payment
of an exercise price or strike price to acquire the securities. Not Full Value Awards are awards of securities, such as options, that do
require the payment of an exercise price or strike price. As of December 31, 2021, Vornado has approximately 3,490,000 shares
available for future grants under the Plan, if all awards granted are Full Value Awards, as defined.
We account for all equity-based compensation in accordance with ASC Topic 718, Compensation - Stock Compensation. Below is
a summary of our stock-based compensation expense, a component of "general and administrative" expense on our consolidated
statements of income.
(Amounts in thousands)
OP Units
OPPs
AO LTIP Units
Vornado stock options
Vornado restricted stock
Performance Conditioned AO LTIP Units
For the Year Ended December 31,
2020
2019
2021
$
27,698 $
33,431 $
39,969
8,629
877
456
450
219
9,579
3,955
656
649
407
$
38,329 $
48,677 $
1,944
2,636
547
549
8,263
53,908
Below is a summary of unrecognized compensation expense for the year ended December 31, 2021.
(Amounts in thousands)
OP Units
OPPs
AO LTIP Units
Vornado stock options
Vornado restricted stock
Performance Conditioned AO LTIP Units
OPPs
As of
December 31, 2021
Weighted-Average
Remaining
Contractual Term
$
13,460
5,104
565
489
483
94
$
20,195
1.3
2.0
1.2
1.4
1.4
1.0
1.5
OPPs are multi-year, performance-based equity compensation plans under which participants have the opportunity to earn a class
of units (“OPP units”) of the Operating Partnership if, and only if, Vornado outperforms a predetermined total shareholder return
(“TSR”) and/or outperforms the market with respect to a relative TSR during the three-year or four-year performance period (the
“Performance Period”) as described on the following page. OPP units, if earned, become convertible into Class A units of the
Operating Partnership (and ultimately into Vornado common shares) following vesting.
2021 OPP
On January 12, 2021, the Committee approved the 2021 OPP, a multi-year, $30,000,000 performance-based equity compensation
plan. Awards under the 2021 OPP may potentially be earned if Vornado (i) achieves a TSR greater than 28% over a four-year
performance period (the “2021 OPP Absolute Component”), and /or (ii) achieves a TSR above a benchmark weighted index (the
"Index"), comprised of 80% of the constituents of the SNL US Office REIT Index at the time awards were granted, and 20% of the
constituents of the SNL US Retail Index at the time awards were granted, over the Performance Period (the “2021 OPP Relative
Component”).
105
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. Stock-based Compensation – continued
2021 OPP - continued
The value of awards under the 2021 OPP Absolute Component and 2021 OPP Relative Component will be calculated separately
and will each be subject to an aggregate $30,000,000 maximum award cap for all participants. The two components will be added
together to determine the aggregate award size, which shall also be subject to the aggregate $30,000,000 maximum award cap for all
participants. In the event awards are earned under the 2021 OPP Absolute Component, but Vornado underperforms the Index by more
than 200 basis points per annum over the Performance Period (800 basis points over the four years), the amount earned under the 2021
OPP Absolute Component will be reduced based on the degree by which the Index exceeds Vornado’s TSR with the maximum payout
being 50% under the 2021 OPP Absolute Component. In the event awards are earned under the 2021 OPP Relative Component, but
Vornado fails to achieve a TSR of at least 2% per annum, awards earned under the 2021 OPP Relative Component will be reduced on
a ratable sliding scale based on Vornado’s absolute TSR performance, with the maximum payout being 50% under the 2021 OPP
Relative Component in the event Vornado’s TSR during the four-year measurement period is 0% or negative. If the designated
performance objectives are achieved, awards earned under 2021 OPP will vest 50% in year four and 50% in year five. In addition, all
of Vornado’s senior executives are required to hold any earned and vested awards for one year following each such vesting date.
Dividends on awards granted under the 2021 OPP accrue during the four-year performance period and are paid to participants if
awards are ultimately earned based on the achievement of the designated performance objectives.
Below is the summary of the OPP units granted during the years December 31, 2021, 2020 and 2018.
Plan Year
2021
2020
2018
Total Plan
Notional Amount
Percentage of Notional
Amount Granted
Grant Date
Fair Value(1)
$
30,000,000
35,000,000
35,000,000
99.1 % $
94.0 %
78.2 %
9,950,000
11,700,000
10,300,000
OPP Units Earned
To be determined in 2025
To be determined in 2023
Not earned
________________________________________
(1) During the years ended December 31, 2021, 2020 and 2018, $6,140,000, $7,583,000 and $8,040,000, respectively, was immediately expensed on the respective
grant date due to acceleration of vesting for employees who are retirement eligible (have reached age 65 or age 60 with at least 20 years of service).
Vornado Stock Options
Vornado stock options are granted at an exercise price equal to the average of the high and low market price of Vornado’s
common shares on the NYSE on the date of grant, generally vest over four years and expire ten years from the date of grant.
Compensation expense related to Vornado stock option awards is recognized on a straight-line basis over the vesting period.
Below is a summary of Vornado’s stock option activity for the year ended December 31, 2021.
Outstanding as of December 31, 2020
Exercised
Forfeited
Expired
Outstanding as of December 31, 2021
Options exercisable as of December 31, 2021
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
64.79
36.72
56.92
64.70
65.27
70.13
5.75
4.71
$
$
152,920
37,820
Shares
765,637 $
(598)
(3,008)
(570,098)
191,933 $
124,805 $
There were no Vornado stock options granted during the year ended December 31, 2021. The fair value of each option grant is
estimated on the date of grant using an option-pricing model with the following weighted-average assumptions for grants in the years
ended December 31, 2020 and 2019.
Expected volatility
Expected life
Risk free interest rate
Expected dividend yield
As of December 31,
2020
35% - 36%
5.0 years
0.57% - 1.76%
3.2% - 3.4%
2019
35%
5.0 years
2.50%
2.9%
The weighted average grant date fair value per share for options granted during the years ended December 31, 2020 and 2019
was $12.28 and $16.64, respectively. Cash received from option exercises for the years ended December 31, 2021, 2020 and 2019 was
$22,000, $3,516,000 and $5,495,000, respectively. The total intrinsic value of options exercised during the years ended December 31,
2021, 2020 and 2019 was $5,500, $859,000 and $18,954,000, respectively.
106
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. Stock-based Compensation – continued
Performance Conditioned AO LTIP Units
Performance Conditioned AO LTIP Units are AO LTIP Units that require the achievement of certain performance conditions by a
specified date or they are forfeited. The performance-based condition is met if Vornado common shares trade at or above 110% of the
grant price per share for any 20 consecutive days on or before the fourth anniversary following the date of grant. If the performance
conditions are not met, the awards are forfeited. If the performance conditions are met, once vested, the awards may be converted into
Class A Operating Partnership units in the same manner as AO LTIP Units until ten years from the date of grant.
Below is a summary of Performance Conditioned AO LTIP Units activity for the year ended December 31, 2021.
Outstanding as of December 31, 2020
Outstanding as of December 31, 2021
Options exercisable at December 31, 2021
Weighted-
Average
Grant-Date
Fair Value
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
62.62
62.62
62.62
7.04
7.04
$
$
—
—
Units
496,792
496,792
322,313
(1) $
(1) $
$
________________________________________
(1) Granted in 2019 at a grant price of $64.48 and a fair value of $8,983,000 at the date of grant.
The fair value of each Performance Conditioned AO LTIP Units granted is estimated on the date of grant using an option-pricing
model with the following weighted average assumptions for grants in the year ended December 31, 2019.
Expected volatility
Expected life
Risk free interest rate
Expected dividend yield
AO LTIP Units
35%
8.0 years
2.76%
3.1%
AO LTIP Units are a class of partnership interests in the Operating Partnership that are intended to qualify as “profits interests”
for federal income tax purposes and generally only allow the recipient to realize value to the extent the fair market value of a Vornado
common share exceeds the threshold level set at the time the AO LTIP Units are granted, subject to any vesting conditions applicable
to the award. The threshold level is intended to be equal to 100% of the then fair market value of a Vornado common share on the date
of grant. The value of vested AO LTIP Units is realized through conversion of the AO LTIP Units into Class A Operating Partnership
units. The number of Class A Units into which vested AO LTIP Units may be converted is determined based on the quotient of (i) the
excess of the conversion value on the conversion date over the threshold value designated at the time the AO LTIP Unit was granted,
divided by (ii) the conversion value on the conversion date. The “conversion value” is the value of a Vornado common share on the
conversion date multiplied by the Conversion Factor as defined in the Partnership Agreement, which is currently one. AO LTIP Units
have a term of ten years from the grant date. Each holder will generally receive special income allocations in respect of an AO LTIP
Unit equal to 10% (or such other percentage specified in the applicable award agreement) of the income allocated in respect of a
Class A Unit. Upon conversion of AO LTIP Units to Class A Units, holders will be entitled to receive in respect of each such AO
LTIP Unit, on a per unit basis, a special distribution equal to 10% (or such other percentage specified in the applicable award
agreement) of the distributions received by a holder of an equivalent number of Class A Units during the period from the grant date of
the AO LTIP Units through the date of conversion.
Below is a summary of AO LTIP Units activity for the year ended December 31, 2021.
Outstanding as of December 31, 2020
Exercised
Forfeited
Expired
Outstanding as of December 31, 2021
Options exercisable as of December 31, 2021
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
59.71
36.72
56.30
66.32
59.91
61.83
7.29
7.06
$
$
640,711
279,164
Shares
717,581 $
(16,669)
(60,927)
(72,246)
567,739 $
327,535 $
107
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. Stock-based Compensation – continued
AO LTIP Units - continued
There were no AO LTIP Units granted during the year ended December 31, 2021. AO LTIP Units granted during the years ended
December 31, 2020 and 2019 had a fair value of $4,319,000 and $3,429,000, respectively. The fair value of each AO LTIP Unit
granted is estimated on the date of grant using an option-pricing model with the following weighted-average assumptions for grants in
the years ended December 31, 2020 and 2019.
Expected volatility
Expected life
Risk free interest rate
Expected dividend yield
OP Units
As of December 31,
2020
35% - 36%
5.0 years
0.57% - 1.76%
3.2% - 3.4%
2019
35%
5.0 years
2.50%
2.90%
OP Units are granted at the average of the high and low market price of Vornado’s common shares on the NYSE on the date of
grant, vest ratably over four years and are subject to a taxable book-up event, as defined. Compensation expense related to OP Units is
recognized ratably over the vesting period using a graded vesting attribution model. Distributions paid on unvested OP Units
amounted to $2,634,000, $5,316,000 and $4,070,000 in the years ended December 31, 2021, 2020 and 2019, respectively.
Below is a summary of restricted OP unit activity for the year ended December 31, 2021.
Unvested as of December 31, 2020
Unvested Units
Granted
Vested
Forfeited
Unvested as of December 31, 2021
Units
Weighted-Average
Grant-Date
Fair Value
1,152,418 $
816,019
(867,747)
(17,603)
1,083,087
53.17
32.10
42.11
52.73
53.99
OP Units granted in 2021, 2020 and 2019 had a fair value of $26,194,000, $18,013,000 and $58,732,000, respectively. The fair
value of OP Units that vested during the years ended December 31, 2021, 2020 and 2019 was $36,541,000, $24,373,000 and
$27,821,000, respectively.
Vornado Restricted Stock
Vornado restricted stock awards are granted at the average of the high and low market price of Vornado’s common shares on the
NYSE on the date of grant and generally vest over four years. Compensation expense related to Vornado’s restricted stock awards is
recognized on a straight-line basis over the vesting period. Dividends paid on unvested Vornado restricted stock are charged directly to
retained earnings and amounted to $35,000, $98,000 and $51,000 for the years ended December 31, 2021, 2020 and 2019,
respectively.
Below is a summary of Vornado’s restricted stock activity for the year ended December 31, 2021.
Unvested Shares
Unvested as of December 31, 2020
Vested
Forfeited
Unvested as of December 31, 2021
Shares
Weighted-Average
Grant-Date
Fair Value
25,315 $
(8,833)
(708)
15,774
60.06
64.17
58.56
57.82
There were no Vornado restricted stock awards granted during the year ended December 31, 2021. Vornado restricted stock
awards granted in 2020 and 2019 had a fair value of $853,000 and $568,000, respectively. The fair value of restricted stock that vested
during the years ended December 31, 2021, 2020, and 2019 was $567,000, $602,000 and $477,000, respectively.
108
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. Impairment Losses, Transaction Related Costs and Other
The following table sets forth the details of impairment losses, transaction related costs and other:
(Amounts in thousands)
Real estate impairment losses
Transaction related costs
608 Fifth Avenue lease liability extinguishment gain in 2020 and impairment loss and related write-
offs in 2019
For the Year Ended December 31,
2021
2020
2019
$
$
(7,880) (1) $
(5,935)
(236,286) $
(8,001)
—
70,260
(13,815)
$
(174,027) $
(8,065)
(4,613)
(93,860)
(106,538)
________________________________________
(1) See Note 7 - Acquisitions and Dispositions for additional information.
16. Interest and Other Investment Income (Loss), Net
The following table sets forth the details of interest and other investment income (loss), net:
(Amounts in thousands)
Interest on loans receivable
Interest on cash and cash equivalents and restricted cash
Credit losses on loans receivable
Market-to-market decrease in the fair value of marketable security (sold on January 23, 2020)
Dividends on marketable securities
Other, net
17. Interest and Debt Expense
The following table sets forth the details of interest and debt expense:
(Amounts in thousands)
Interest expense(1)
Capitalized interest and debt expense
Amortization of deferred financing costs
For the Year Ended December 31,
2021
2020
2019
$
2,517 $
3,384 $
284
—
—
—
$
1,811
4,612 $
5,793
(13,369)
(4,938)
—
3,631
(5,499) $
6,326
13,380
—
(5,533)
3,938
3,708
21,819
For the Year Ended December 31,
2020
2019
2021
$
$
249,169 $
251,847 $
(38,320)
20,247
(41,056)
18,460
231,096 $
229,251 $
335,016
(72,200)
23,807
286,623
________________________________________
(1)
2021 includes $23,729 of defeasance costs, of which $7,119 is attributable to noncontrolling interest, in connection with the refinancing of 1290 Avenue of the
Americas, a property in which we own a 70% controlling interest. See Note 9 - Debt for additional information. 2019 includes $22,540 of debt prepayment costs
in connection with the redemption of $400,000 5.00% senior unsecured notes which were scheduled to mature in January 2022.
109
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
18. Income (Loss) Per Share/Income (Loss) Per Class A Unit
Vornado Realty Trust
The following table presents the calculations of (i) basic income (loss) per common share which includes the weighted average
number of common shares outstanding without regard to dilutive potential common shares and (ii) diluted income (loss) per common
share which includes the weighted average common shares and dilutive share equivalents. Unvested share-based payment awards that
contain nonforfeitable rights to dividends, whether paid or unpaid, are accounted for as participating securities. Earnings are allocated
to participating securities, which include restricted stock awards, based on the two-class method. Other potential dilutive share
equivalents such as our employee stock options, OP Units, OPPs, AO LTIP Units and Performance Conditioned AO LTIP Units are
included in the computation of diluted earnings per share ("EPS") using the treasury stock method, while the dilutive effect of our
Series A convertible preferred shares is reflected in diluted EPS by application of the if-converted method.
(Amounts in thousands, except per share amounts)
Numerator:
For the Year Ended December 31,
2021
2020
2019
Income (loss) from continuing operations, net of (income) loss attributable to noncontrolling interests $
175,999 $
(297,005) $
3,147,965
Loss from discontinued operations
Net income (loss) attributable to Vornado
Preferred share dividends
Series K preferred share issuance costs
Net income (loss) attributable to common shareholders
Earnings allocated to unvested participating securities
Numerator for basic income (loss) per share
Impact of assumed conversions:
Convertible preferred share dividends
Earnings allocated to Out-Performance Plan units
Numerator for basic and diluted income (loss) per share
Denominator:
—
175,999
(65,880)
(9,033)
101,086
(34)
101,052
—
—
—
(297,005)
(51,739)
—
(28)
3,147,937
(50,131)
—
(348,744)
3,097,806
(99)
(309)
(348,843)
3,097,497
—
—
57
9
$
101,052 $
(348,843) $
3,097,563
Denominator for basic income (loss) per share – weighted average shares
191,551
191,146
190,801
Effect of dilutive securities(1):
Employee stock options, restricted stock awards, AO LTIP Units and OPPs
Convertible preferred shares
571
—
—
—
218
34
Denominator for diluted income (loss) per share – weighted average shares and assumed conversions
192,122
191,146
191,053
INCOME (LOSS) PER COMMON SHARE - BASIC:
Net income (loss) per common share
INCOME (LOSS) PER COMMON SHARE - DILUTED:
Net income (loss) per common share
$
$
0.53 $
(1.83) $
16.23
0.53 $
(1.83) $
16.21
________________________________________
(1) The effect of dilutive securities excluded an aggregate of 13,835, 14,007 and 13,020 weighted average common share equivalents in the years ended December 31,
2021, 2020 and 2019, respectively, as their effect was anti-dilutive.
110
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
18. Income (Loss) Per Share/Income (Loss) Per Class A Unit – continued
Vornado Realty L.P.
The following table presents the calculations of (i) basic income (loss) per Class A unit which includes the weighted average
number of Class A units outstanding without regard to dilutive potential Class A units and (ii) diluted income (loss) per Class A unit
which includes the weighted average Class A units and dilutive Class A unit equivalents. Unvested share-based payment awards that
contain non-forfeitable rights to dividends, whether paid or unpaid, are accounted for as participating securities. Earnings are allocated
to participating securities, which include Vornado restricted stock awards, OP Units and OPPs, based on the two-class method. Other
potential dilutive unit equivalents such as Vornado stock options, AO LTIP Units and Performance Conditioned AO LTIP Units are
included in the computation of diluted income per unit ("EPU") using the treasury stock method, while the dilutive effect of our Series
A convertible preferred units is reflected in diluted EPU by application of the if-converted method.
(Amounts in thousands, except per unit amounts)
Numerator:
Income (loss) from continuing operations, net of (income) loss attributable to noncontrolling interests
in consolidated subsidiaries
Loss from discontinued operations
Net income (loss) attributable to Vornado Realty L.P.
Preferred unit distributions
Series K preferred unit issuance costs
Net income (loss) attributable to Class A unitholders
Earnings allocated to unvested participating securities
Numerator for basic income (loss) per Class A unit
Impact of assumed conversions:
Convertible preferred unit distributions
For the Year Ended December 31,
2021
2020
2019
$
183,539 $
(321,951) $
3,358,839
—
183,539
(66,035)
(9,033)
108,471
(2,668)
105,803
—
(321,951)
(51,904)
—
(373,855)
(5,417)
(379,272)
(30)
3,358,809
(50,296)
—
3,308,513
(17,296)
3,291,217
—
—
57
Numerator for basic and diluted income (loss) per Class A unit
$
105,803 $
(379,272) $
3,291,274
Denominator:
Denominator for basic income (loss) per Class A unit – weighted average units
204,728
203,503
202,947
Effect of dilutive securities(1):
Vornado stock options, Vornado restricted stock awards, OP Units, AO LTIP Units and OPPs
Convertible preferred units
916
—
—
—
267
34
Denominator for diluted income (loss) per Class A unit – weighted average units and assumed
conversions
205,644
203,503
203,248
INCOME (LOSS) PER CLASS A UNIT - BASIC:
Net income (loss) per Class A unit
INCOME (LOSS) PER CLASS A UNIT - DILUTED:
Net income (loss) per Class A unit
$
$
0.52 $
(1.86) $
16.22
0.51 $
(1.86) $
16.19
________________________________________
(1) The effect of dilutive securities excluded an aggregate of 313, 1,650 and 825 weighted average Class A unit equivalents in the years ended December 31, 2021,
2020 and 2019 respectively, as their effect was anti-dilutive.
111
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. Leases
As lessor
We lease space to tenants under operating leases. Most of the leases provide for the payment of fixed base rent payable monthly in
advance. Leases typically provide for periodic step‑ups in rent over the term of the lease and pass through to tenants their share of
increases in real estate taxes and operating expenses over a base year. Certain leases also require additional variable rent payments
based on a percentage of the tenants’ sales. Electricity is provided to tenants on a sub-metered basis or included in rent based on
surveys and adjusted for subsequent utility rate increases. Leases also typically provide for free rent and tenant improvement
allowances for all or a portion of the tenant’s initial construction costs of its premises.
As of December 31, 2021, future undiscounted cash flows under non-cancelable operating leases were as follows:
(Amounts in thousands)
For the year ended December 31,
2022
2023
2024
2025
2026
Thereafter
As of December 31, 2021
$
1,313,854
1,266,425
1,132,125
1,021,434
977,834
7,068,874
As lessee
We have a number of ground leases which are classified as operating leases. As of December 31, 2021, our ROU assets and lease
liabilities were $337,197,000 and $370,206,000, respectively. As of December 31, 2020, our ROU assets and lease liabilities were
$367,365,000 and $401,008,000, respectively.
The discount rate applied to measure each ROU asset and lease liability is based on our incremental borrowing rate ("IBR"). We
consider the general economic environment and our credit rating and factor in various financing and asset specific adjustments to
ensure the IBR is appropriate to the intended use of the underlying lease. Certain of our ground leases offer renewal options which we
assess against relevant economic factors to determine whether we are reasonably certain of exercising or not exercising the option.
Lease payments associated with renewal periods that we are reasonably certain will be exercised are included in the measurement of
the lease liability and corresponding ROU asset.
Certain of our ground leases are subject to fair market rent resets based on a percentage of the appraised value of the underlying
assets at specified future dates. Fair market rent resets occurring during the lease term do not give rise to remeasurement of the related
ROU assets and lease liabilities. Fair market rent resets occurring during the lease term, which may be material, will be recognized in
the periods in which they are incurred as variable rent expense.
The following table sets forth information related to the measurement of our lease liabilities as of December 31, 2021, 2020 and
2019:
(Amounts in thousands)
Weighted average remaining lease term (in years)
Weighted average discount rate
Cash paid for operating leases
For the Year Ended December 31,
2020
2019
2021
44.4
4.85%
44.8
4.91%
40.2
4.84%
$
22,382
$
23,932
$
27,817
We recognize rent expense as a component of "operating" expenses on our consolidated statements of income. Rent expense is
comprised of fixed and variable lease payments. The following table sets forth the details of rent expense for the years ended
December 31, 2021, 2020 and 2019:
(Amounts in thousands)
Fixed rent expense
Variable rent expense
Rent expense
For the Year Ended December 31,
2020
2019
2021
$
$
24,901 $
13,078
37,979 $
28,503 $
1,178
29,681 $
33,738
1,978
35,716
112
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. Leases - continued
As lessee - continued
As of December 31, 2021, future lease payments under operating ground leases were as follows:
(Amounts in thousands)
For the year ended December 31,
As of December 31, 2021
2022
2023
2024
2025
2026
Thereafter
Total undiscounted cash flows
Present value discount
Lease liabilities
Farley Office and Retail
$
$
21,080
22,802
23,154
23,522
23,911
833,728
948,197
(577,991)
370,206
The future lease payments detailed above exclude the ground and building lease at Farley Office and Retail. Our 95%
consolidated joint venture has a 99-year triple-net lease with Empire State Development ("ESD") for 845,000 rentable square feet of
commercial space at the property, comprised of approximately 730,000 square feet of office space and approximately 115,000 square
feet of restaurant and retail space. Our lease of the commercial space at the property is accounted for as a “failed sale-leaseback” as a
result of us being deemed the "accounting owner" during development of the property in accordance with ASC 842-40-55 and the
lease subsequently meeting "finance lease" classification pursuant to ASC 842-40-25 upon substantial completion. The lease calls for
annual rent payments and fixed payments in lieu of real estate taxes ("PILOT") through June 2030. Following the fixed PILOT
payment period, the PILOT is calculated in a manner consistent with buildings subject to New York City real estate taxes and
assessments. As of December 31, 2021, future rent and fixed PILOT payments are $542,631,000.
20. Multiemployer Benefit Plans
Our subsidiaries make contributions to certain multiemployer defined benefit plans (“Multiemployer Pension Plans”) and health
plans (“Multiemployer Health Plans”) for our union represented employees, pursuant to the respective collective bargaining
agreements.
Multiemployer Pension Plans
Multiemployer Pension Plans differ from single-employer pension plans in that (i) contributions to multiemployer plans may be
used to provide benefits to employees of other participating employers and (ii) if other participating employers fail to make their
contributions, each of our participating subsidiaries may be required to bear its then pro rata share of unfunded obligations. If a
participating subsidiary withdraws from a plan in which it participates, it may be subject to a withdrawal liability. As of December 31,
2021, our subsidiaries’ participation in these plans was not significant to our consolidated financial statements.
In the years ended December 31, 2021, 2020 and 2019, we contributed $19,851,000, $7,049,000 and $10,793,000, respectively,
towards Multiemployer Pension Plans, which is included as a component of “operating” expenses on our consolidated statements of
income. During the year ended December 31, 2021, the Company funded its pension withdrawal liability in relation to the permanent
closure of Hotel Pennsylvania which resulted in the Company funding more than 5% of total employer contributions to the related
plan for the year. For our other Multiemployer Pension Plans, our subsidiaries’ contributions did not represent more than 5% of total
employer contributions for the years ended December 31, 2021, 2020 and 2019.
Multiemployer Health Plans
Multiemployer Health Plans in which our subsidiaries participate provide health benefits to eligible active and retired
employees. In the years ended December 31, 2021, 2020 and 2019, our subsidiaries contributed $23,431,000, $26,938,000 and
$32,407,000, respectively, towards these plans, which is included as a component of “operating” expenses on our consolidated
statements of income.
113
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21. Commitments and Contingencies
Insurance
For our properties, we maintain general liability insurance with limits of $300,000,000 per occurrence and per property, of which
$250,000,000 includes communicable disease coverage, and we maintain all risk property and rental value insurance with limits of
$2.0 billion per occurrence, with sub-limits for certain perils such as flood and earthquake, excluding communicable disease coverage.
Our California properties have earthquake insurance with coverage of $350,000,000 per occurrence and in the aggregate, subject to a
deductible in the amount of 5% of the value of the affected property. We maintain coverage for certified terrorism acts with limits of
$6.0 billion per occurrence and in the aggregate (as listed below), $1.2 billion for non-certified acts of terrorism, and $5.0 billion per
occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological (“NBCR”) terrorism events, as
defined by the Terrorism Risk Insurance Act of 2002, as amended to date and which has been extended through December 2027.
Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a
portion of 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 NBCR acts. 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. For NBCR acts, PPIC is responsible for a
deductible of $1,785,910 and 20% of the balance of a covered loss and the Federal government is responsible for the remaining
portion of a covered loss. We are ultimately responsible for any loss incurred by PPIC.
Certain condominiums in which we own an interest (including our leasehold interest in the Farley Condominiums) own insurance
policies with different per occurrence and aggregate limits than our policies described above.
We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism and other
events. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are
responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material.
Our debt instruments, consisting of mortgage loans secured by our properties, senior unsecured notes 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 or
refinance our properties and expand our portfolio.
Other Commitments and Contingencies
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 is not currently expected to have a material adverse effect on our financial position,
results of operations or cash flows.
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.
In July 2018, we leased 78,000 square feet at 345 Montgomery Street in San Francisco, CA, to a subsidiary of Regus PLC, for an
initial term of 15 years. The obligations under the lease were guaranteed by Regus PLC in an amount of up to $90,000,000. The tenant
purported to terminate the lease prior to space delivery. We commenced a suit on October 23, 2019 seeking to enforce the lease and
the guaranty. On May 11, 2021, the court issued a final statement of decision in our favor and on July 7, 2021, the Regus subsidiary
appealed the decision. On October 9, 2020, the successor to Regus PLC filed for bankruptcy in Luxembourg. We are actively pursuing
claims relating to the guaranty against the successor to Regus PLC and its parent in Luxembourg and other jurisdictions.
In November 2011, we entered into an agreement with the New York City Economic Development Corporation ("EDC") to lease
Piers 92 and 94 (the "Piers"). In February 2019, EDC issued an order for us to vacate Pier 92 due to structural problems. Beginning
March 2020 through August 2021, we did not pay EDC the monthly rent due under the non-recourse lease due to the loss of our right
to use or occupy Pier 92. On August 31, 2021, both parties entered into a mutual release with respect to claims by EDC for unpaid rent
owed and claims by the Company for costs and damages as a result of our inability to use or occupy Pier 92.
Our mortgage loans are non-recourse to us, except for the mortgage loans secured by 640 Fifth Avenue, 7 West 34th Street and
435 Seventh Avenue, which we guaranteed and therefore are part of our tax basis. 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. In addition, we have guaranteed the rent and payments in lieu of real estate taxes due to ESD, an
entity of New York State, for Farley Office and Retail. As of December 31, 2021, the aggregate dollar amount of these guarantees and
master leases is approximately $1,648,000,000.
114
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21. Commitments and Contingencies – continued
Other Commitments and Contingencies - continued
As of December 31, 2021, $15,273,000 of letters of credit were outstanding under one of our unsecured revolving credit
facilities. Our unsecured revolving 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 unsecured revolving 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.
Our 95% consolidated joint venture (5% is owned by Related Companies ("Related")) is developing Farley Office and Retail. In
connection with the development of the property, the joint venture admitted a historic tax credit investor partner. Under the terms of
the historic tax credit arrangement, the joint venture is required to comply with various laws, regulations, and contractual provisions.
Non-compliance with applicable requirements could result in projected tax benefits not being realized and, therefore, may require a
refund or reduction of the Tax Credit Investor’s capital contributions. As of December 31, 2021, the Tax Credit Investor has made
$92,400,000 in capital contributions. Vornado and Related have guaranteed certain of the joint venture’s obligations to the Tax Credit
Investor.
As investment manager of the Fund we are entitled to an incentive allocation after the limited partners have received a preferred
return on their invested capital. The incentive allocation is subject to catch-up and clawback provisions. Accordingly, based on the
December 31, 2021 fair value of the Fund assets, at liquidation we would be required to make a $27,100,000 payment to the limited
partners, net of amounts owed to us, representing a clawback of previously paid incentive allocations, which would have no income
statement impact as it was previously accrued.
As of December 31, 2021, we expect to fund additional capital to certain of our partially owned entities aggregating
approximately $10,300,000.
As of December 31, 2021, we have construction commitments aggregating approximately $494,000,000.
22. Related Party Transactions
Alexander’s, Inc.
We own 32.4% of Alexander’s. Steven Roth, the Chairman of Vornado’s Board of Trustee’s and its Chief Executive Officer, is
also the Chairman of the Board of Directors and Chief Executive Officer of Alexander’s. We provide various services to Alexander’s
in accordance with management, development and leasing agreements. These agreements are described in Note 5 - Investments in
Partially Owned Entities.
Interstate Properties (“Interstate”)
Interstate is a general partnership in which Mr. Roth is the managing general partner. David Mandelbaum and
Russell B. Wight, Jr., Trustees of Vornado and Directors of Alexander’s, respectively, are Interstate’s two other general partners. As
of December 31, 2021, Interstate and its partners beneficially owned an aggregate of approximately 6.9% of the common shares of
beneficial interest of Vornado and 26.1% of Alexander’s common stock.
We manage and lease the real estate assets of Interstate pursuant to a management agreement for which we receive an annual fee
equal to 4% of annual base rent and percentage rent. The management agreement has a term of one year and is automatically
renewable unless terminated by either of the parties on 60 days’ notice at the end of the term. We believe, based upon comparable fees
charged by other real estate companies, that the management agreement terms are consistent with the market. We earned $203,000,
$203,000, and $300,000 of management fees under the agreement for the years ended December 31, 2021, 2020 and 2019,
respectively.
Fifth Avenue and Times Square JV
We provide various services to Fifth Avenue and Times Square JV in accordance with management, development, leasing and
other agreements. These agreements are described in Note 5 - Investments in Partially Owned Entities. Haim Chera, Executive Vice
President - Head of Retail, has an investment in Crown Acquisitions Inc. and Crown Retail Services LLC (collectively, "Crown"),
companies controlled by Mr. Chera's family. Crown has a nominal minority interest in Fifth Avenue and Times Square JV.
Additionally, we have other investments with Crown.
115
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. Segment Information
We operate in two reportable segments, New York and Other, which is based on how we manage our business.
Net operating income ("NOI") at share represents total revenues less operating expenses including our share of partially owned
entities. NOI at share - cash basis represents NOI at share adjusted to exclude straight-line rental income and expense, amortization of
acquired below and above market leases, net and other non-cash adjustments. We consider NOI at share - cash basis to be the primary
non-GAAP financial 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 NOI at share - cash basis, we
utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI at
share and NOI at share - cash basis should not be considered alternatives to net income or cash flow from operations and may not be
comparable to similarly titled measures employed by other companies. NOI at share - cash basis includes rent that has been deferred as
a result of the COVID-19 pandemic.
Below is a summary of NOI at share, NOI at share - cash basis and selected balance sheet data by segment for the years ended
December 31, 2021, 2020 and 2019.
For the Year Ended December 31, 2021
Total
New York
Other
$
1,589,210
$
1,257,599
$
(797,315)
791,895
(69,385)
310,858
1,033,368
(626,386)
631,213
(38,980)
300,721
892,954
1,318
(1,188)
1,034,686
$
891,766
$
13,217,845
$
10,702,008
$
2,515,837
3,297,389
17,266,588
3,265,933
15,969,498
31,456
1,297,090
For the Year Ended December 31, 2020
Total
New York
Other
$
1,527,951
$
1,221,748
$
(789,066)
738,885
(72,801)
306,495
972,579
(640,531)
581,217
(43,773)
296,447
833,891
46,246
36,715
1,018,825
$
870,606
$
331,611
(170,929)
160,682
(30,405)
10,137
140,414
2,506
142,920
306,203
(148,535)
157,668
(29,028)
10,048
138,688
9,531
148,219
12,087,943
$
9,581,830
$
2,506,113
3,491,107
16,221,822
3,459,142
15,046,469
31,965
1,175,353
(Amounts in thousands)
Total revenues
Operating expenses
NOI - consolidated
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries
Add: NOI from partially owned entities
NOI at share
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net
and other
NOI at share - cash basis
Balance Sheet Data:
Real estate, at cost
Investments in partially owned entities
Total assets
(Amounts in thousands)
Total revenues
Operating expenses
NOI - consolidated
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries
Add: NOI from partially owned entities
NOI at share
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net
$
$
and other
NOI at share - cash basis
Balance Sheet Data:
Real estate, at cost
Investments in partially owned entities
Total assets
$
$
116
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. Segment Information - continued
(Amounts in thousands)
Total revenues
Operating expenses
NOI - consolidated
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries
Add: NOI from partially owned entities
NOI at share
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net
and other
NOI at share - cash basis
For the Year Ended December 31, 2019
Total
New York
Other
$
1,924,700
$
1,577,860
$
(917,981)
1,006,719
(69,332)
322,390
1,259,777
(758,304)
819,556
(40,896)
294,168
1,072,828
(6,060)
(12,318)
$
1,253,717
$
1,060,510
$
346,840
(159,677)
187,163
(28,436)
28,222
186,949
6,258
193,207
Below is a reconciliation of net income (loss) to NOI at share and NOI at share - cash basis for the years ended December 31,
2021, 2020 and 2019.
(Amounts in thousands)
Net income (loss)
Depreciation and amortization expense
General and administrative expense
Impairment losses, transaction related costs and other
(Income) loss from partially owned entities
(Income) loss from real estate fund investments
Interest and other investment (income) loss, net
Interest and debt expense
Net gain on transfer to Fifth Avenue and Times Square JV
Net gains on disposition of wholly owned and partially owned assets
Income tax (benefit) expense
Loss from discontinued operations
NOI from partially owned entities
NOI attributable to noncontrolling interests in consolidated subsidiaries
NOI at share
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net
and other
NOI at share - cash basis
For the Year Ended December 31,
2021
2020
2019
$
207,553
$
(461,845)
$
3,334,262
412,347
134,545
13,815
(130,517)
(11,066)
(4,612)
231,096
—
(50,770)
(10,496)
—
310,858
(69,385)
1,033,368
399,695
181,509
174,027
329,112
226,327
5,499
229,251
—
(381,320)
36,630
—
306,495
(72,801)
972,579
419,107
169,920
106,538
(78,865)
104,082
(21,819)
286,623
(2,571,099)
(845,499)
103,439
30
322,390
(69,332)
1,259,777
1,318
46,246
(6,060)
$
1,034,686
$
1,018,825
$
1,253,717
117
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24. Subsequent Event
2022 Long-Term Performance Award
On January 12, 2022, the Compensation Committee approved the 2022 Long-Term Performance Plan (“LTPP”), a multi-year,
LTIP units-based performance equity compensation plan. Awards under the 2022 LTPP are bifurcated between operational
performance (50%) and relative performance (50%) measurements and may be earned at specified threshold, target and maximum
levels.
The operational component awards may be earned based on Vornado’s 2022 operational performance in the following categories:
•
•
Comparable FFO per share (75% weighting); and
ESG performance metrics consisting of greenhouse emissions reductions, GRESB score and Green Building Certification
(LEED) achievements (aggregate 25% weighting).
Any LTPP award units tentatively earned based on Vornado’s 2022 operational performance are subject to an absolute return
modifier pursuant to which such award units are subject to a potential reduction (but not increase) of up to 30% if Vornado’s aggregate
total 3-year TSR for 2022-2025 is below specified levels.
Awards under relative components may be earned based on Vornado’s 3-year TSR, measured against the Dow Jones U.S. Real
Estate Office Index (50% weighting) and a Northeast peer group custom index (50% weighting). Awards earned under the relative
component of the LTPP are subject to reductions of up to 30% if Vornado’s 3-year TSR is below specified levels.
If the designated performance objectives are achieved, awards earned under 2022 LTPP will vest 50% in January 2025 and 50%
in January 2026. In addition, the Chief Executive Officer is required to hold any earned and vested awards for three years following
each such vesting date and all other award recipients are required to hold such awards for one year following each such vesting date.
Dividends on awards granted under the 2022 LTPP accrue during the applicable performance period and are paid to participants if
awards are ultimately earned based on the achievement of the designated performance objectives.
Sale of SoHo Properties
On January 13, 2022, we sold two Manhattan retail properties located at 478-482 Broadway and 155 Spring Street. See Note 7 -
Acquisitions and Dispositions for additional information.
118
ITEM 9.
None.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
ITEM 9A.
CONTROLS AND PROCEDURES
Vornado Realty Trust
Disclosure Controls and Procedures: Our management, with the participation of Vornado’s Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of our 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 Annual Report on Form 10-K.
Based on such evaluation, Vornado’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such
period, our disclosure controls and procedures are effective.
Internal Control Over Financial Reporting: There have not been any changes in our internal control over financial reporting (as
defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) during the fourth quarter of the fiscal year to which
this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
Management’s Report on Internal Control over Financial Reporting
Management of Vornado Realty Trust, together with its consolidated subsidiaries (the “Company”), is responsible for establishing
and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed
under the supervision of Vornado’s principal executive and principal financial officers to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with
accounting principles generally accepted in the United States of America.
As of December 31, 2021, management conducted an assessment of the effectiveness of our internal control over financial
reporting based on the framework established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that our internal
control over financial reporting as of December 31, 2021 was effective.
Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions
are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in
the United States, and that receipts and expenditures are being made only in accordance with authorizations of management and our
trustees; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of
our assets that could have a material effect on our financial statements.
The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by Deloitte & Touche
LLP, an independent registered public accounting firm, as stated in their report appearing on the following page, which expresses an
unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2021.
119
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders and Board of Trustees
Vornado Realty Trust
New York, New York
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Vornado Realty Trust and subsidiaries (the “Company”) as of
December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control —
Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated
February 14, 2022, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control
over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based
on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
New York, New York
February 14, 2022
120
ITEM 9A. - CONTINUED
Vornado Realty L.P.
Disclosure Controls and Procedures: Vornado Realty L.P.’s management, with the participation of Vornado’s Chief Executive
Officer and Chief Financial Officer, has evaluated the effectiveness of our 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 Annual Report
on Form 10-K. Based on such evaluation, Vornado’s Chief Executive Officer and Chief Financial Officer have concluded that, as of
the end of such period, our disclosure controls and procedures are effective.
Internal Control Over Financial Reporting: There have not been any changes in our internal control over financial reporting (as
defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) during the fourth quarter of the fiscal year to which
this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
Management’s Report on Internal Control over Financial Reporting
Management of Vornado Realty Trust, sole general partner of Vornado Realty L.P., together with Vornado Realty L.P.’s
consolidated subsidiaries (the “Company”), is responsible for establishing and maintaining adequate internal control over financial
reporting. Our internal control over financial reporting is a process designed under the supervision of Vornado’s principal executive
and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
our financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United
States of America.
As of December 31, 2021, management conducted an assessment of the effectiveness of our internal control over financial
reporting based on the framework established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that our internal
control over financial reporting as of December 31, 2021 was effective.
Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions
are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in
the United States, and that receipts and expenditures are being made only in accordance with authorizations of management and
Vornado’s trustees; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of our assets that could have a material effect on our financial statements.
The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by Deloitte & Touche
LLP, an independent registered public accounting firm, as stated in their report appearing on the following page, which expresses an
unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2021.
121
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Partners
Vornado Realty L.P.
New York, New York
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Vornado Realty L.P. and subsidiaries (the “Partnership”) as of
December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Partnership maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control —
Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Partnership and our report
dated February 14, 2022, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal
Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
New York, New York
February 14, 2022
122
ITEM 9B.
OTHER INFORMATION
None.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information relating to trustees of Vornado, the Operating Partnership’s sole general partner, including its audit committee and
audit committee financial expert, will be contained in Vornado’s definitive Proxy Statement involving the election of Vornado’s
trustees which Vornado will file with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities
Exchange Act of 1934 not later than 120 days after December 31, 2021, and such information is incorporated herein by reference.
Also incorporated herein by reference is the information under the caption “16(a) Beneficial Ownership Reporting Compliance” of the
Proxy Statement.
Executive Officers of the Registrant
The following is a list of the names, ages, principal occupations and positions with Vornado of the executive officers of Vornado
and the positions held by such officers during the past five years. All executive officers of Vornado have terms of office that run until
the next succeeding meeting of the Board of Trustees of Vornado following the Annual Meeting of Vornado’s Shareholders unless
they are removed sooner by Vornado’s Board.
Name
Steven Roth
Age
80
PRINCIPAL OCCUPATION, POSITION AND OFFICE
(Current and during past five years with Vornado unless otherwise stated)
Chairman of the Board; Chief Executive Officer since April 2013 and from May 1989 to May 2009;
Managing General Partner of Interstate Properties, an owner of shopping centers and an investor in
securities and partnerships; Chief Executive Officer of Alexander’s, Inc. since March 1995, a
Director since 1989, and Chairman of the Board since May 2004.
Michael J. Franco
53
President and Chief Financial Officer since December 2020; President since April 2019; Executive
Vice President - Chief Investment Officer from April 2015 to April 2019; Executive Vice President -
Head of Acquisitions and Capital Markets from November 2010 to April 2015.
Haim Chera
Barry S. Langer
Glen J. Weiss
52
43
52
Executive Vice President - Head of Retail since April 2019; Principal at Crown Acquisitions from
January 2000 - April 2019.
Executive Vice President - Development - Co-Head of Real Estate since April 2019; Executive Vice
President - Head of Development from May 2015 to April 2019.
Executive Vice President - Office Leasing - Co-Head of Real Estate since April 2019; Executive Vice
President - Office Leasing from May 2013 to April 2019.
Vornado, the Operating Partnership’s sole general partner, has adopted a Code of Business Conduct and Ethics that applies to all
officers and employees. This Code is available on Vornado’s website at www.vno.com.
ITEM 11.
EXECUTIVE COMPENSATION
Information relating to Vornado’s executive officer and trustee compensation will be contained in Vornado’s Proxy Statement
referred to above in Item 10, “Directors, Executive Officers and Corporate Governance,” and such information is incorporated herein
by reference.
123
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Information relating to security ownership of certain beneficial owners and management and related stockholder matters will be
contained in Vornado’s Proxy Statement referred to in Item 10, “Directors, Executive Officers and Corporate Governance,” and such
information is incorporated herein by reference.
Equity compensation plan information
The following table provides information as of December 31, 2021 regarding Vornado’s equity compensation plans.
Plan Category
Equity compensation plans approved by security
holders
Equity compensation awards not approved by
security holders
Total
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants and rights
Number of securities remaining
available for future issuance
under equity compensation plans
(excluding securities reflected in
the second column)
6,099,655
(1)
$
—
6,099,655
$
65.27
—
65.27
3,489,732
(2)
—
3,489,732
________________________________________
(1)
Includes shares/units of (i) 191,933 Vornado Stock Options (124,805 of which are vested and exercisable), (ii) 567,739 Appreciation-Only Long-Term Incentive
Plan ("AO LTIP") units (327,535 of which are vested and exercisable), (iii) 496,762 Performance Conditioned AO LTIP units (322,313 of which are vested and
exercisable), (iv) 2,911,216 restricted Operating Partnership units (1,828,129 of which are vested and exercisable) and (v) 1,932,005 unearned Out-Performance
Plan ("OPP") units, which do not have an exercise price. OPP units, if earned, become convertible into Class A units of the Operating Partnership (and ultimately
into Vornado common shares) following vesting.
Does not include 15,774 shares of Vornado Restricted Stock, as they have been reflected in Vornado's total shares outstanding.
(2) Based on awards being granted as "Full Value Awards," as defined. If we were to grant "Not Full Value Awards," as defined, the number of securities available
for future grants is approximately 6,980,000 shares.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information relating to certain relationships and related transactions, and director independence will be contained in Vornado’s
Proxy Statement referred to in Item 10, “Directors, Executive Officers and Corporate Governance,” and such information is
incorporated herein by reference.
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
Information relating to principal accounting fees and services will be contained in Vornado’s Proxy Statement referred to in Item
10, “Directors, Executive Officers and Corporate Governance,” under the caption “Ratification of The Appointment of Independent
Accounting Firm” and such information is incorporated herein by reference.
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this report:
PART IV
1. The consolidated financial statements are set forth in Item 8 of this Annual Report on Form 10-K.
The following financial statement schedules should be read in conjunction with the financial statements included in Item 8 of this
Annual Report on Form 10-K.
III--Real Estate and Accumulated Depreciation as of December 31, 2021, 2020 and 2019
Page in this
Annual Report
on Form 10-K
125
Schedules other than those listed above are omitted because they are not applicable or the information required is included in the
consolidated financial statements or the notes thereto.
124
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
(Amounts in thousands)
COLUMN A
COLUMN B
COLUMN C
COLUMN D
COLUMN E
COLUMN F
COLUMN G COLUMN H COLUMN I
Initial cost to company
Gross amount at which
carried at close of period
Encumbrances (1)
Land
Buildings
and
improvements
Costs
capitalized
subsequent
to acquisition
Buildings
and
improvements
Land
Total (2)
Accumulated
depreciation
and
amortization
Date of
construction (3)
Date
acquired
Life on
which
depreciation
in latest
income
statement
is computed
New York
Manhattan
1290 Avenue of the Americas
$
One Park Avenue
350 Park Avenue
PENN 1
100 West 33rd Street
150 West 34th Street
PENN 2
90 Park Avenue
Manhattan Mall
770 Broadway
888 Seventh Avenue
PENN 11
909 Third Avenue
150 East 58th Street
595 Madison Avenue
330 West 34th Street
715 Lexington Avenue
484-486 Broadway
4 Union Square South
Farley Office and Retail
260 Eleventh Avenue
510 Fifth Avenue
606 Broadway
40 Fulton Street
443 Broadway
435 Seventh Avenue
692 Broadway
131-135 West 33rd Street
950,000
525,000
400,000
—
398,402
205,000
575,000
—
181,598
700,000
299,400
500,000
350,000
—
—
—
—
—
120,000
—
—
—
74,119
—
—
95,696
—
—
$ 518,244 $
926,992 $
268,355 $ 518,244 $ 1,195,347 $ 1,713,591 $
440,097
197,057
(5)
265,889
—
242,776
119,657
53,615
8,000
88,595
52,898
—
40,333
—
39,303
62,731
—
—
10,000
24,079
—
—
34,602
45,406
15,732
11,187
19,893
6,053
8,315
369,016
363,381
412,169
247,970
268,509
164,903
175,890
113,473
95,686
117,269
85,259
120,723
80,216
62,888
8,599
26,903
6,688
55,220
476,235
80,482
18,728
8,993
26,388
41,186
19,091
22,908
21,312
1,525
49,025
675,839
44,038
—
261,859
198,970
31,237
188,436
164,940
118,666
121,136
57,661
68,956
154,213
20,217
7,358
11,398
911,408
5,530
36,745
51,709
41,597
(36,197)
2,166
3,901
477
197,057
265,889
—
242,776
119,657
52,689
8,000
88,595
52,898
—
40,333
—
39,303
62,731
—
30,085
10,000
24,079
—
—
48,403
45,298
15,732
3,457
19,893
6,053
8,315
370,541
567,598
412,406
1,088,008
292,008
268,509
427,688
374,860
144,710
284,122
282,209
203,925
241,859
137,877
131,844
162,812
17,035
14,046
66,618
1,387,643
86,012
41,672
60,810
67,985
12,719
21,257
26,809
21,789
678,295
1,088,008
534,784
388,166
480,377
382,860
233,305
337,020
282,209
244,258
241,859
177,180
194,575
162,812
47,120
24,046
90,697
1,387,643
86,012
90,075
106,108
83,717
16,176
41,150
32,862
30,104
4,538
157,691
364,744
115,295
44,192
106,149
177,978
52,851
127,420
153,517
93,045
122,466
71,938
53,220
49,803
965
4,235
25,826
4,189
14,146
12,270
4,213
25,521
391
10,732
11,503
3,161
1963
1926
1960
1972
1911
1900
1968
1964
2009
1907
1980
1923
1969
1969
1968
1925
1923
2009
1965/2004
1912
1911
1987
2002
2007
2021
2006
1998
2007
2015
1997
1997
2007
1998
1998
1997
1999
1998
1999
1998
2001
2007
1993
2018
2015
2010
2016
1998
2013
1997
2005
2016
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
125
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
(Amounts in thousands)
COLUMN A
COLUMN B
COLUMN C
COLUMN D
COLUMN E
COLUMN F
COLUMN G COLUMN H COLUMN I
Initial cost to company
Gross amount at which
carried at close of period
Encumbrances (1)
Land
Buildings
and
improvements
Costs
capitalized
subsequent
to acquisition
Buildings
and
improvements
Land
Total (2)
Accumulated
depreciation
and
amortization
Date of
construction (3)
Date
acquired
Life on which
depreciation
in latest
income
statement
is computed
$
New York - continued
Manhattan - continued
304 Canal Street
1131 Third Avenue
431 Seventh Avenue
138-142 West 32nd Street
334 Canal Street
966 Third Avenue
148 Spring Street
150 Spring Street
137 West 33rd Street
825 Seventh Avenue
537 West 26th Street
339 Greenwich Street
— $
—
—
—
—
—
—
—
—
—
—
—
3,511 $
7,844
16,700
9,252
1,693
8,869
3,200
3,200
6,398
1,483
10,370
2,622
12,905 $
7,844
2,751
9,936
6,507
3,631
8,112
5,822
1,550
697
17,632
12,333
(8,456) $
5,683
—
2,002
(1,170)
—
398
312
—
3,940
19,925
(10,019)
1,771 $
7,844
16,700
9,252
752
8,869
3,200
3,200
6,398
1,483
26,631
865
6,189 $
13,527
2,751
11,938
6,278
3,631
8,510
6,134
1,550
4,637
21,296
4,071
7,960 $
21,371
19,451
21,190
7,030
12,500
11,710
9,334
7,948
6,120
47,927
4,936
169
3,093
1,014
1,844
205
756
2,941
2,109
262
829
2,062
123
PENN 15 (Hotel Pennsylvania site)
Other (Including Signage)
Total Manhattan
—
—
5,374,215
29,903
140,477
2,109,887
121,712
31,892
4,660,401
266,365
3,477
3,743,622
29,903
94,788
2,111,143
388,077
81,058
8,402,767
417,980
175,846
10,513,910
145,938
23,571
2,437,012
1910
1920
1932
1919
2014
1997
2007
2015
2011
2013
2008
2008
2015
1997
2018
2017
1997
Other Properties
33-00 Northern Boulevard, Queens,
New York
Paramus, New Jersey
Total Other Properties
100,000
46,505
—
—
100,000
46,505
86,226
—
86,226
14,493
23,348
37,841
46,505
1,036
47,541
100,719
22,312
123,031
147,224
23,348
170,572
17,829
19,393
37,222
1915
1967
2015
1987
Total New York
5,474,215
2,156,392
4,746,627
3,781,463
2,158,684
8,525,798
10,684,482
2,474,234
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
126
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
(Amounts in thousands)
COLUMN A
COLUMN B
COLUMN C
COLUMN D
COLUMN E
COLUMN F COLUMN G COLUMN H COLUMN I
Initial cost to company
Gross amount at which
carried at close of period
Encumbrances (1)
Land
Buildings
and
improvements
Costs
capitalized
subsequent
to acquisition
Buildings
and
improvements
Land
Total (2)
Accumulated
depreciation
and
amortization
Date of
construction
(3)
Date
acquired
Life on
which
depreciation
in latest
income
statement
is computed
Other
theMART
theMART, Illinois
$
— $
64,528 $
319,146 $
413,854 $
64,535 $
732,993 $
797,528 $
369,439
1930
527 West Kinzie, Illinois
Piers 92 and 94, New York
Total theMART
—
—
—
5,166
—
69,694
555 California Street, California
1,200,000
220 Central Park South, New York
Borgata Land, Atlantic City, NJ
759-771 Madison Avenue (40 East
66th) Residential, New York
Annapolis, Maryland
Wayne Towne Center, New Jersey
Other
Total Other
Leasehold improvements equipment and
other
—
—
319,146
895,379
16,445
—
13,321
9,652
26,137
—
197
19,144
433,195
5,166
—
69,701
197
19,144
752,334
5,363
19,144
—
3,905
822,035
373,344
256,718
223,446
1,152,097
1,375,543
395,120
1922,1969
-1970
(106,014)
—
—
83,089
(8,193)
5,273
—
47,347
10,035
—
—
—
26,151
—
8,309
9,652
73,484
10,035
26,151
83,089
13,582
9,652
73,484
10,035
—
—
3,101
4,713
34,112
1,942
223,446
115,720
83,089
8,454
—
—
—
—
—
—
—
—
—
1,200,000
500,403
1,280,080
633,088
381,509
2,032,062
2,413,571
812,332
—
—
—
119,792
—
119,792
119,792
89,781
1998
1998
2008
2007
2005
2010
2005
2005
2010
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
Total December 31, 2021
$
6,674,215 $ 2,656,795 $ 6,026,707 $ 4,534,343 $ 2,540,193 $ 10,677,652 $ 13,217,845 $ 3,376,347
________________________________________
(1) Represents contractual debt obligations.
(2) The net basis of Vornado's assets and liabilities for tax reporting purposes is approximately $2.6 billion lower than the amounts reported for financial statement purposes.
(3) Date of original construction –– many properties have had substantial renovation or additional construction –– see Column D.
(4) Depreciation of the buildings and improvements are calculated over lives ranging from the life of the lease to forty years.
(5) Secured amount outstanding on revolving credit facilities.
127
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
(Amounts in thousands)
The following is a reconciliation of real estate assets and accumulated depreciation:
Real Estate
Balance at beginning of period
Additions during the period:
Land
Buildings & improvements and other
Less: Assets sold, written-off, reclassified to ready for sale and deconsolidated
Balance at end of period
Accumulated Depreciation
Balance at beginning of period
Additions charged to operating expenses
Less: Accumulated depreciation on assets sold, written-off and deconsolidated
Balance at end of period
Year Ended December 31,
2021
2020
2019
$
12,087,943 $
13,074,012 $
16,237,883
197,057
1,286,474
13,571,474
353,629
1,372
1,127,593
14,202,977
2,115,034
46,074
1,391,784
17,675,741
4,601,729
$
13,217,845 $
12,087,943 $
13,074,012
$
3,169,446 $
3,015,958 $
3,180,175
362,311
344,301
3,531,757
155,410
3,376,347 $
3,360,259
190,813
3,169,446 $
360,194
3,540,369
524,411
3,015,958
$
128
(b)
Exhibits:
Exhibit No.
2.1
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.13
3.14
3.15
3.16
3.17
3.18
3.19
3.20
3.21
— Master Transaction Agreement, dated as of October 31, 2016, by and among Vornado Realty Trust, Vornado Realty L.P., JBG
Properties, Inc., JBG/Operating Partners, L.P., certain affiliates of JBG Properties Inc. and JBG/Operating Partners set forth on
Schedule A thereto, JBG SMITH Properties and JBG SMITH Properties LP. Incorporated by reference to Exhibit 2.1 to Vornado
Realty Trust's Annual Report on Form 10-K for the year ended December 31, 2016 (File No.001-11954), filed February 13, 2017
— 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
— Amended and Restated Bylaws of Vornado Realty Trust, as amended on July 25, 2018 - Incorporated by reference to Exhibit 3.55 to
Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 (File No. 001-11954), filed on July 30,
2018
— Articles of Amendment to Declaration of Trust, dated September 30, 2016 – Incorporated by reference to Exhibit 3.3 to Vornado
Realty Trust’s Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 001-11954), filed on February 16, 2021
— Articles of Amendment of Vornado Realty Trust, as filed with the State Department of Assessments and Taxation of Maryland on
October 4, 2016—Incorporated by reference to Annex B to Vornado Realty Trust's Definitive Proxy Statement on Schedule 14A
(File No. 001-11954), filed on April 8, 2016.
— Articles of Amendment to Declaration of Trust, dated June 13, 2018 - Incorporated by reference to Exhibit 3.54 to Vornado Realty
Trust's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 (File No. 001-11954), filed on July 30, 2018
— Articles of Amendment to Declaration of Trust, dated August 7, 2019 - Incorporated by reference to Exhibit 3.1 to Vornado Realty
Trust's Current Report on Form 8-K (File No. 001-11954), filed on August 8, 2019
— Articles Supplementary, 5.40% Series L Cumulative Redeemable Preferred Shares of Beneficial Interest, liquidation preference $25.00
per share, no par value – Incorporated by reference to Exhibit 3.6 to Vornado Realty Trust’s Registration Statement on Form 8-A
(File No. 001-11954), filed on January 25, 2013
*
*
*
*
*
*
*
*
— Articles Supplementary Classifying Vornado Realty Trust's 5.25% Series M Cumulative Redeemable Preferred Shares of Beneficial
*
Interest, liquidation preference $25.00 per share, no par value - Incorporated by reference to Exhibit 3.7 to Vornado Realty Trust's
Registration Statement on Form 8-A (File No. 001-11954), filed on December 13, 2017
— Articles Supplementary Classifying Vornado Realty Trust's 5.25% Series N Cumulative Redeemable Preferred Shares of
Beneficial Interest, liquidation preference $25.00 per share, no par value - Incorporated by reference to Exhibit 3.1 to Vornado
Realty Trust's Current Report on Form 8-K (File No. 001-11954), filed on November 24, 2020
— Articles Supplementary Classifying Vornado Realty Trust's 4.45% Series O Cumulative Redeemable Preferred Shares of Beneficial
Interest, liquidation preference $25.00 per share, no par value - Incorporated by reference to Exhibit 3.1 to Vornado Realty Trust's
Current Report on Form 8-K (File No. 001-11954), filed on September 22, 2021
— 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
— 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
*
*
*
*
— 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
— 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
— 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
— 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
— 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
— 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 (File No. 001-11954), filed on July 7, 1999
— 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 (File No. 001-11954), filed on July 7, 1999
— 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
— 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 Form 8-K (File No. 001-11954), filed on October 25, 1999
*
*
*
*
*
*
*
________________________________
Incorporated by reference
129
3.22
3.23
3.24
3.25
3.26
3.27
3.28
3.29
3.30
3.31
3.32
3.33
3.34
3.35
3.36
3.37
3.38
3.39
3.40
3.41
3.42
3.43
3.44
3.45
3.46
— Eleventh Amendment to the Partnership Agreement, dated as of November 24, 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 December 23, 1999
— Twelfth Amendment to the Partnership Agreement, dated as of May 1, 2000 - Incorporated by reference to Exhibit 3.2 to Vornado
Realty Trust’s Current Report on Form 8-K (File No. 001-11954), filed on May 19, 2000
— Thirteenth Amendment to the Partnership Agreement, dated as of May 25, 2000 - Incorporated by reference to Exhibit 3.2 to Vornado
Realty Trust’s Current Report on Form 8-K (File No. 001-11954), filed on June 16, 2000
— Fourteenth Amendment to the Partnership Agreement, dated as of December 8, 2000 - Incorporated by reference to Exhibit 3.2 to
Vornado Realty Trust’s Current Report on Form 8-K (File No. 001-11954), filed on December 28, 2000
— 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
*
*
*
*
*
— Sixteenth Amendment to the Partnership Agreement, dated as of July 25, 2001 - 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 12, 2001
— 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
— Eighteenth Amendment to the Partnership Agreement, dated as of January 1, 2002 - Incorporated by reference to Exhibit 3.1 to
Vornado Realty Trust’s Current Report on Form 8-K/A (File No. 001-11954), filed on March 18, 2002
— 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
— 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 the quarter ended March 31, 2003 (File No. 001-11954), filed on May 8, 2003
— 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
*
*
*
*
*
— 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
— 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
— 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
— 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 L.P.’s Registration Statement on Form S-3 (File No. 333-122306), filed on January 26,
2005
— 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
— 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 Form 8-K (File No. 000-22685), filed on December 21, 2004
— Twenty-Eighth Amendment to the Partnership Agreement, dated December 30, 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 January 4, 2005
— 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
— 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
— Thirty-First Amendment to the Partnership Agreement, dated September 9, 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 14, 2005
— 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
— 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
— 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
— 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
*
*
*
*
*
*
*
*
*
*
*
*
*
*
__________________________________
Incorporated by reference
130
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
3.47
3.48
3.49
3.50
3.51
3.52
3.53
3.54
3.55
3.56
3.57
— 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
— 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 Vornado Realty L.P.'s Current Report on Form 8-K (File No. 000-22685), filed on June
27, 2007
— 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 Vornado Realty L.P.'s Current Report on Form 8-K (File No. 000-22685), filed on June
27, 2007
— 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 Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on June
27, 2007
— 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 Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on June 27, 2007
— 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
— 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
— 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
— Forty-Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P., dated as, of
March 30, 2012 - Incorporated by reference to Exhibit 99.1 to Vornado Realty L.P.'s Current Report on Form 8-K (File No.
001-34482), filed on April 5, 2012
— Forty-Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership dated as of July 18, 2012 – Incorporated
by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on Form 8-K (File No. 001-34482), filed on July 18, 2012
— Forty-Fifth Amendment to Second Amended and Restated Agreement of Limited Partnership, dated as of January 25, 2013 –
Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on Form 8-K (File No. 001-34482), filed on
January 25, 2013
3.58
— Forty-Sixth Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P., dated April 1,
2015 - Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.'s Current Report on Form 8-K (File No. 001-34482), filed on
April 2, 2015
3.59
3.60
3.61
3.62
3.63
4.1
4.2
** — Forty-Seventh Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P., dated
December 13, 2017 - Incorporated by reference to Exhibit 3.2 to Vornado Realty L.P.'s Current Report on Form 8-K (File No.
001-34482), filed on December 13, 2017
** — Forty-Eighth Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P., dated as of
January 12, 2018 - Incorporated by reference to Exhibit 3.53 to Vornado Realty Trust's Annual Report on 10-K for the year ended
December 31, 2017 (File No. 001-11954), filed on February 12, 2018
— Forty-Ninth Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P., dated as of
August 7, 2019 - Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust's Current Report on Form 8-K (File No.
001-11954), filed on August 8, 2019
— Fiftieth Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P., dated as of
November 24, 2020 - 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 24, 2020
— Fifty-First Amendment to Second Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P., dated as of
September 22, 2021 - Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust's Current Report on Form 8-K (File No.
001-11954), filed on September 22, 2021
— 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 March 31, 2005 (File No.
001-11954), filed on April 28, 2005
— 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 such instruments
4.3
— Description of the Vornado Realty Trust securities registered pursuant to Section 12 of the Securities Exchange Act
***
*
**
***
__________________________________________
Incorporated by reference
Management contract or compensatory agreement
Filed herewith
131
4.4
10.1
10.2
10.3
10.4
10.5
— Description of Class A units of Vornado Realty L.P. and certain provisions of its agreement of limited partnership
***
— 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
** — Management Agreement between Interstate Properties and Vornado, Inc. dated July 13, 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
— 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
** — 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
** — 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
10.6
— 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 on Form 10-Q for the quarter ended June 30, 2002 (File No. 001-06064), filed on August 7, 2020
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
** — Second 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
** — 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 December 31, 2006 (File No. 001-11954), filed on February
27, 2007
** — 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
** — Form of Vornado Realty Trust 2010 Omnibus Share Plan Incentive / Non-Qualified Stock Option Agreement - Incorporated by
reference to Exhibit 99.1 to Vornado Realty Trust's Current Report on Form 8-K (File No. 001-11954) filed on April 5, 2012
** — Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted Stock Agreement - Incorporated by reference to Exhibit 99.2 to
Vornado Realty Trust's Current Report on Form 8-K (File No. 001-11954) filed on April 5, 2012
** — Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted LTIP Unit Agreement - Incorporated by reference to Exhibit 99.3
to Vornado Realty Trust's Current Report on Form 8-K (File No. 001-11954) filed on April 5, 2012
** — Form of Vornado Realty Trust 2012 Outperformance Plan Award 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, 2012 (File No. 001-11954) filed on February 26, 2013
** — Form of Vornado Realty Trust 2013 Outperformance Plan Award Agreement - Incorporated by reference to Exhibit 10.50 to Vornado
Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (File No. 001-11954), filed on May 6, 2013
** — Employment agreement between Vornado Realty Trust and Michael J. Franco dated January 10, 2014 - Incorporated by reference to
Exhibit 10.52 to Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (File No. 001-11954),
filed on May 5, 2014
** — Form of Vornado Realty Trust 2010 Omnibus Share Plan AO LTIP Unit Award Agreement - Incorporated by reference to Exhibit 10.34
to Vornado Realty Trust's Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 001-11954), filed on
February 12, 2018
— Amended and Restated Term Loan Agreement dated as of October 26, 2018 among Vornado Realty L.P. as Borrower, Vornado Realty
Trust as General Partner, the Banks listed on the signature pages thereof, and JP Morgan Chase Bank N.A. as Administrative Agent
for the Banks - Incorporated by reference to Exhibit 10.36 to Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2018 (File No. 001-11954), filed on October 29, 2018
** — Form of Performance Conditioned AO LTIP Award Agreement - Incorporated by reference to Exhibit 10.36 to Vornado Realty Trust's
Annual Report on Form 10-K for the year ended December 31, 2018 (File No. 001-11954), filed on February 11, 2019
** — Form of 2019 Amendment to Restricted LTIP Unit and Restricted Stock Agreements - Incorporated by reference to Exhibit 10.37 to
Vornado Realty Trust's Annual Report on Form 10-K for the year ended December 31, 2018 (File No. 001-11954), filed on February
11, 2019
10.20
** — Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted LTIP Unit Agreement - Incorporated by reference to Exhibit 10.38
*
to Vornado Realty Trust's Annual Report on Form 10-K for the year ended December 31, 2018 (File No. 001-11954), filed on
February 11, 2019
10.21
** — Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted Stock Agreement - Incorporated by reference to Exhibit 10.39 to
*
Vornado Realty Trust's Annual Report on Form 10-K for the year ended December 31, 2018 (File No. 001-11954), filed on February
11, 2019
*
**
***
__________________________________________
Incorporated by reference
Management contract or compensatory agreement
Filed herewith
132
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
10.22
— Second Amended and Restated Revolving Credit Agreement dated as of March 26, 2019, among Vornado Realty L.P., as Borrower,
Vornado Realty Trust as General Partner, the Banks listed on the signature pages thereof, and JPMorgan Chase Bank N.A., as
Administrative Agent for the Banks - Incorporated by reference to Exhibit 10.40 to Vornado Realty Trust's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2019 (File No. 001-11954), filed on April 29, 2019
10.23
** — Vornado Realty Trust 2019 Omnibus Share Plan - Incorporated by reference to Annex B to Vornado Realty Trust's Proxy Statement
dated April 5, 2019 (File No. 001-11954), filed on April 5, 2019
10.24
— Transaction Agreement between Vornado Realty L.P. and Crown Jewel Partner LLC, dated April 18, 2019 - Incorporated by reference
to Exhibit 10.42 to Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 (File No.
001-11954), filed on July 29, 2019
10.25
10.26
10.27
10.28
10.29
** — Form of Vornado Realty Trust 2019 Omnibus Share Plan Restricted Stock Agreement - Incorporated by reference to Exhibit 10.32 to
Vornado Realty Trust's Quarterly Report on Form 10-K for the year ended December 31, 2019 (File No. 001-11954), filed on
February 18, 2020
** — Form of Vornado Realty Trust 2019 Omnibus Share Plan Restricted LTIP Unit Agreement - Incorporated by reference to Exhibit 10.33
to Vornado Realty Trust's Quarterly Report on Form 10-K for the year ended December 31, 2019 (File No. 001-11954), filed on
February 18, 2020
** — Form of Vornado Realty Trust 2019 Omnibus Share Plan Incentive/Non-Qualified Stock Option Agreement - Incorporated by reference
to Exhibit 10.34 to Vornado Realty Trust's Quarterly Report on Form 10-K for the year ended December 31, 2019 (File No.
001-11954), filed on February 18, 2020
** — Employment agreement between Vornado Realty Trust and Glen J. Weiss dated May 25, 2018 - Incorporated by reference to Exhibit
10.35 to Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (File No. 001-11954), filed on
May 4, 2020
** — Employment agreement between Vornado Realty Trust and Haim Chera dated April 19, 2019 - Incorporated by reference to Exhibit
10.36 to Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (File No. 001-11954), filed on
May 4, 2020
10.30
** — Form of Vornado Realty Trust 2020 Outperformance Plan Award Agreement - Incorporated by reference to Exhibit 10.37 to Vornado
Realty Trust's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (File No. 001-11954), filed on May 4, 2020
10.31
** — Form of Vornado Realty Trust 2021 Outperformance Plan Award Agreement for Executives – Incorporated by reference to Exhibit
10.42 to Vornado Realty Trust’s Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 001-11954), filed on
February 16, 2021
10.32
** — Form of Vornado Realty Trust 2021 Outperformance Plan Award Agreement for Non-Executives – Incorporated by reference to
Exhibit 10.43 to Vornado Realty Trust’s Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 001-11954),
filed on February 16, 2021
10.33
10.34
— Second Amended and Restated Revolving Credit Agreement dated as of April 15, 2021 among Vornado Realty L.P., as Borrower, the
Banks listed on the signature pages thereof, and JPMorgan Chase Bank N.A., as Administrative Agent for the Banks - Incorporated
by reference to Exhibit 10.44 to Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 (File
No. 001-11954), filed on August 2, 2021
— Amendment No. 1 to Second Amended and Restated Revolving Credit Agreement dated as of April 16, 2021 among Vornado Realty
L.P. as Borrower, the Banks listed on the signature pages thereof, and JP Morgan Chase Bank N.A. as Administrative Agent for the
Banks - Incorporated by reference to Exhibit 10.45 to Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2021 (File No. 001-11954), filed on August 2, 2021
10.35
— Amendment No. 2 to Amended and Restated Term Loan Agreement dated as of April 16, 2021 among Vornado Realty L.P. as
Borrower, the Banks listed on the signature pages thereof, and JP 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,
2021 (File No. 001-11954), filed on August 2, 2021
*
*
*
*
*
*
*
*
*
*
*
*
*
*
10.36
— Form of Vornado Realty Trust 2022 Long-term Performance Plan LTIP Unit Award Agreement
***
__________________________________________
Incorporated by reference
Management contract or compensatory agreement
Filed herewith
*
**
***
133
21
23.1
23.2
31.1
31.2
31.3
31.4
32.1
32.2
32.3
32.4
101
104
— Subsidiaries of Vornado Realty Trust and Vornado Realty L.P.
— Consent of Independent Registered Public Accounting Firm for Vornado Realty Trust
— Consent of Independent Registered Public Accounting Firm for Vornado Realty L.P.
— Rule 13a-14 (a) Certification of the Chief Executive Officer of Vornado Realty Trust
— Rule 13a-14 (a) Certification of the Chief Financial Officer of Vornado Realty Trust
— Rule 13a-14 (a) Certification of the Chief Executive Officer of Vornado Realty L.P.
— Rule 13a-14 (a) Certification of the Chief Financial Officer of Vornado Realty L.P.
— Section 1350 Certification of the Chief Executive Officer of Vornado Realty Trust
— Section 1350 Certification of the Chief Financial Officer of Vornado Realty Trust
— Section 1350 Certification of the Chief Executive Officer of Vornado Realty L.P.
— Section 1350 Certification of the Chief Financial Officer of Vornado Realty L.P.
— The following financial information from Vornado Realty Trust and Vornado Realty L.P. Annual Report on Form 10-K for the year
ended December 31, 2021, formatted in Inline Extensible Business Reporting Language (iXBRL) includes: (i) consolidated balance
sheets, (ii) consolidated statements of income, (iii) consolidated statements of comprehensive income, (iv) consolidated statements of
changes in equity, (v) consolidated statements of cash flows, and (vi) the notes to consolidated financial statements.
— The cover page from the Vornado Realty Trust and Vornado Realty L.P. Annual Report on Form 10-K for the year ended December 31,
2021, formatted as iXBRL and contained in Exhibit 101.
***
***
***
***
***
***
***
***
***
***
***
***
***
_____________________________
Filed herewith
***
ITEM 16.
FORM 10-K SUMMARY
None.
134
V O R N A D O C O R P O R A T E I N F O R M A T I O N
TRUSTEES
STEVEN ROTH
Chairman of the Board
CANDACE K. BEINECKE, Lead Trustee
Senior Partner of Hughes Hubbard & Reed LLP
MICHAEL D. FASCITELLI
Owner of MDF Capital LLC and former President
and Chief Executive Officer of Vornado
BEATRICE HAMZA BASSEY
Group General Counsel, Chief Compliance Officer
and Corporate Secretary, Atlas Mara Ltd.
WILLIAM W. HELMAN IV
General Partner, Greylock Partners
DAVID M. MANDELBAUM
Partner, Interstate Properties
RAYMOND J. MCGUIRE
Former Vice Chairman, Citigroup
MANDAKINI PURI*
Private Equity Consultant
DANIEL R. TISCH*
Managing Member,
TowerView LLC
RICHARD R. WEST*
Dean Emeritus, Leonard N. Stern School of Business,
New York University
RUSSELL B. WIGHT, JR
Partner, Interstate Properties
*Members of the Audit Committee
DIVISION EXECUTIVE VICE PRESIDENTS
DAVID BELLMAN
Design & Construction
ELANA BUTLER
Leasing Counsel
PAMELA CARUSO
Leasing Counsel
MICHAEL DOHERTY
President – BMS Division
ROBERT ENTIN
Chief Information Officer
RICHARD FAMULARO
Controller
JOSHUA GLICK
Director of PENN DISTRICT Leasing
FREDERICK HARRIS
Development
CORPORATE OFFICERS
STEVEN ROTH
Chairman of the Board
Chief Executive Officer
MICHAEL J. FRANCO
President and Chief Financial Officer
GLEN J. WEISS
Executive Vice President –
Office Leasing and Co-Head of Real Estate
BARRY S. LANGER
Executive Vice President –
Development and Co-Head of Real Estate
HAIM CHERA
Executive Vice President –
Head of Retail
THOMAS SANELLI
Executive Vice President –
Finance and Chief Administrative Officer
DEIRDRE MADDOCK
Senior Vice President –
Chief Accounting Officer
DAVID R. GREENBAUM
Vice Chairman
JOSEPH MACNOW
Senior Advisor
ED HOGAN
Retail Leasing – New York Division
JAN LACHAPELLE
Head of Capital Markets
FRANK MAIORANO
Head of Tax and Compliance
MYRON MAURER
Chief Operating Officer – theMART
MICHAEL SCHNITT
Acquisitions and Capital Markets
GASTON SILVA
Chief Operating Officer – New York Division
LISA VOGEL
Marketing
Company Data
COMPANY DATA
EXECUTIVE OFFICES
888 Seventh Avenue
New York, New York 10019
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
New York, New York
COUNSEL
Sullivan & Cromwell LLP
New York, New York
TRANSFER AGENT AND REGISTRAR
American Stock Transfer & Trust Co.
New York, New York
MANAGEMENT CERTIFICATIONS
The Company’s Chief Executive Officer and Chief Financial
Officer provided certifications to the Securities and Exchange
Commission as required by Section 302 of the Sarbanes-Oxley Act
of 2002 and these certifications are included in the Company’s
Annual Report on Form 10-K for the year ended December 31,
2021. In addition, as required by Section 303A.12(a) of the New
York Stock Exchange (NYSE) Listed Company Manual, on May
24, 2021, the Company’s Chief Executive Officer submitted to the
NYSE the annual CEO certification regarding the Company’s
compliance with the NYSE’s corporate governance listing
standards.
REPORT ON FORM 10-K
Shareholders may obtain a copy of the Company’s annual report on
Form 10-K as filed with the Securities and Exchange Commission
free of charge (except for exhibits), by writing to the Secretary,
Vornado Realty Trust, 888 Seventh Avenue, New York, New York
10019; or visit the Company’s website at www.vno.com and refer
to the Company’s SEC filings.
ANNUAL MEETING
The annual meeting of shareholders of Vornado Realty Trust, will
be held virtually, via the internet, at 11:30 AM. New York City
time on May 19, 2022.
To attend the virtual 2022 Annual Meeting you will need to access
www.virtualshareholdermeeting.com/VNO2022 and enter the 16-
digit control number found on your proxy card, voting instruction
form or Notice of Internet Availability of Proxy Materials. There is
no physical location for the annual meeting. We encourage you to
allow ample time for online check-in, which will begin at 11:15
AM. New York City time. Additional details regarding how to
participate in the Annual Meeting can be accessed at the
Company’s website, www.vno.com or at www.proxyvote.com.