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Vornado Announces Second Quarter 2018 Financial Results

July 30, 2018 4:24 PM

NEW YORK, July 30, 2018 (GLOBE NEWSWIRE) -- VORNADO REALTY TRUST (NYSE: VNO) reported today:

Quarter Ended June 30, 2018 Financial Results

NET INCOME attributable to common shareholders for the quarter ended June 30, 2018 was $111.5 million, or $0.58 per diluted share, compared to $116.0 million, or $0.61 per diluted share, for the prior year's quarter. Adjusting net income attributable to common shareholders for the items that impact the comparability of period to period net income listed in the table on the following page, net income attributable to common shareholders, as adjusted (non-GAAP) for the quarters ended June 30, 2018 and 2017 was $69.7 million and $67.4 million, or $0.36 and $0.35 per diluted share, respectively.

FUNDS FROM OPERATIONS ("FFO") attributable to common shareholders plus assumed conversions (non-GAAP) for the quarter ended June 30, 2018 was $209.7 million, or $1.10 per diluted share, compared to $257.7 million, or $1.35 per diluted share, for the prior year's quarter. Adjusting FFO attributable to common shareholders plus assumed conversions for the items that impact the comparability of period to period FFO listed in the table on page 3, FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the quarters ended June 30, 2018 and 2017 was $187.4 million and $180.5 million, or $0.98 and $0.95 per diluted share, respectively.

Six Months Ended June 30, 2018 Financial Results

NET INCOME attributable to common shareholders for the six months ended June 30, 2018 was $93.7 million, or $0.49 per diluted share, compared to $163.7 million, or $0.86 per diluted share, for the six months ended June 30, 2017. Adjusting net income attributable to common shareholders for the items that impact the comparability of period to period net income listed in the table on the following page, net income attributable to common shareholders, as adjusted (non-GAAP) for the six months ended June 30, 2018 and 2017 was $126.1 million and $113.5 million, or $0.66 and $0.60 per diluted share, respectively.

FUNDS FROM OPERATIONS ("FFO") attributable to common shareholders plus assumed conversions (non-GAAP) for the six months ended June 30, 2018 was $312.3 million, or $1.63 per diluted share, compared to $463.4 million, or $2.43 per diluted share, for the six months ended June 30, 2017. Adjusting FFO attributable to common shareholders plus assumed conversions for the items that impact the comparability of period to period FFO listed in the table on page 3, FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP) for the six months ended June 30, 2018 and 2017 was $361.4 million and $339.4 million, or $1.89 and $1.78 per diluted share, respectively.

The following table reconciles our net income attributable to common shareholders to net income attributable to common shareholders, as adjusted (non-GAAP):

(Amounts in thousands, except per share amounts)For the Three Months Ended June 30, For the Six Months Ended June 30,
2018 2017 2018 2017
Net income attributable to common shareholders$111,534 $115,972 $93,693 $163,724
Per diluted share$0.58 $0.61 $0.49 $0.86
Certain (income) expense items that impact net income attributable to common shareholders:
Net gains on sale of real estate$(24,449) $(15,339) $(24,767) $(19,459)
(Increase) decrease in fair value of marketable securities (including our share of partially owned entities)(16,024) — 18,636 —
Profit participation on the April 2018 sale of 701 Seventh Avenue(5,457) — (5,457) —
Our share of loss from 666 Fifth Avenue Office Condominium (49.5% interest)1,269 7,852 4,761 18,049
Our share of (income) loss from real estate fund investments (excluding our $4,252 share of One Park Avenue potential additional transfer taxes and reduction in carried interest for the six months ended June 30, 2018)(551) 304 (1,365) 3,539
(Income) loss from discontinued operations and sold properties (primarily related to JBG SMITH Properties operating results and transaction costs through July 17, 2017 spin-off)(286) (18,251) 83 (31,246)
Net gain resulting from Urban Edge Properties operating partnership unit issuances— (15,900) — (15,900)
Net gain on repayment of our Suffolk Downs JV debt investments— (11,373) — (11,373)
Our share of potential additional New York City transfer taxes based on a Tax Tribunal interpretation which Vornado is appealing— — 23,503 —
Preferred unit issuance costs— — 14,486 —
Other839 900 4,609 2,864
(44,659) (51,807) 34,489 (53,526)
Noncontrolling interests' share of above adjustments2,778 3,207 (2,105) 3,314
Total of certain (income) expense items that impact net income attributable to common shareholders$(41,881) $(48,600) $32,384 $(50,212)
Net income attributable to common shareholders, as adjusted (non-GAAP)$69,653 $67,372 $126,077 $113,512
Per diluted share (non-GAAP)$0.36 $0.35 $0.66 $0.60

The following table reconciles our FFO attributable to common shareholders plus assumed conversions (non-GAAP) to FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP):

(Amounts in thousands, except per share amounts)For the Three Months Ended June 30, For the Six Months Ended June 30,
2018 2017 2018 2017
FFO attributable to common shareholders plus assumed conversions (non-GAAP)(1)$209,680 $257,673 $312,339 $463,422
Per diluted share (non-GAAP)$1.10 $1.35 $1.63 $2.43
Certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions:
(Increase) decrease in fair value of marketable securities (including our share of partially owned entities)$(16,024) $— $18,636 $—
Profit participation on the April 2018 sale of 701 Seventh Avenue(5,457) — (5,457) —
Our share of FFO from 666 Fifth Avenue Office Condominium (49.5% interest)(2,178) (4,160) (2,041) (7,713)
Our share of FFO from real estate fund investments (excluding our $4,252 share of One Park Avenue potential additional transfer taxes and reduction in carried interest for the six months ended June 30, 2018)(551) 304 (1,365) 3,539
FFO from discontinued operations and sold properties (primarily related to JBG SMITH Properties operating results and transaction costs through July 17, 2017 spin-off)(374) (51,561) (104) (99,901)
Net gain resulting from Urban Edge Properties operating partnership unit issuances— (15,900) — (15,900)
Net gain on repayment of our Suffolk Downs JV debt investments— (11,373) — (11,373)
Our share of potential additional New York City transfer taxes based on a Tax Tribunal interpretation which Vornado is appealing— — 23,503 —
Preferred unit issuance costs— — 14,486 —
Other839 379 4,592 (962)
(23,745) (82,311) 52,250 (132,310)
Noncontrolling interests' share of above adjustments1,477 5,182 (3,212) 8,302
Total of certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions, net$(22,268) $(77,129) $49,038 $(124,008)
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)$187,412 $180,544 $361,377 $339,414
Per diluted share (non-GAAP)$0.98 $0.95 $1.89 $1.78

____________________________________________________________

(1) See page 10 for a reconciliation of our net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions (non-GAAP) for the three and six months ended June 30, 2018 and 2017.

Disposition Activity

On June 21, 2018, we completed the $45,000,000 sale of 27 Washington Square North, which resulted in a net gain of $23,559,000 which is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income. We acquired the property in December 2015 for $20,000,000.

Financing Activities

On April 19, 2018, the joint venture between our Fund (25% owned) and our Crowne Plaza Joint Venture (57.1% owned) completed a $255,000,000 refinancing of the Crowne Plaza Times Square Hotel. The interest-only loan is at LIBOR plus 3.51% (5.56% at June 30, 2018) and matures in May 2020 with three one-year extension options. In connection therewith, the joint venture purchased an interest rate cap that caps LIBOR at a rate of 4.00%. The Crowne Plaza Times Square Hotel was previously encumbered by a $310,000,000 interest-only mortgage at LIBOR plus 2.80% which was scheduled to mature in December 2018.

On June 11, 2018, the joint venture (50.1% owned) that owns Independence Plaza, a three-building 1,327 unit residential complex in the Tribeca submarket of Manhattan completed a $675,000,000 refinancing of Independence Plaza. The seven-year interest-only loan matures in July 2025 and has a fixed rate of 4.25%. Our share of net proceeds, after repayment of the existing 3.48% $550,000,000 mortgage and closing costs, was $55,618,000.

Second Quarter Leasing Activity:

Same Store Net Operating Income ("NOI"):

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.

Total New York(2) theMART 555CaliforniaStreet
Same store NOI at share % increase(1):
Three months ended June 30, 2018 compared to June 30, 20174.7% 4.2% 5.2% 13.5%
Six months ended June 30, 2018 compared to June 30, 20174.5% 4.1% 4.3% 12.9%
Three months ended June 30, 2018 compared to March 31, 20183.2% 3.3% 3.4% 1.1%
Same store NOI at share - cash basis % increase(1):
Three months ended June 30, 2018 compared to June 30, 20177.0% 5.9% 10.8% 23.8%
Six months ended June 30, 2018 compared to June 30, 20176.7% 5.8% 10.4% 18.5%
Three months ended June 30, 2018 compared to March 31, 20184.6% 4.6% 2.9% 7.7%

____________________

(1) See pages 12 through 17 for same store NOI at share and same store NOI at share - cash basis reconciliations.
Increase (Decrease)
(2) Excluding Hotel Pennsylvania - New York same store NOI at share % increase (decrease):
Three months ended June 30, 2018 compared to June 30, 20174.6%
Six months ended June 30, 2018 compared to June 30, 20174.2%
Three months ended June 30, 2018 compared to March 31, 2018(0.3)%
Excluding Hotel Pennsylvania - New York same store NOI at share - cash basis % increase:
Three months ended June 30, 2018 compared to June 30, 20176.3%
Six months ended June 30, 2018 compared to June 30, 20175.8%
Three months ended June 30, 2018 compared to March 31, 20180.7%

NOI:

The elements of our New York and Other NOI at share for the three and six months ended June 30, 2018 and 2017 and the three months ended March 31, 2018 are summarized below.

For the Three Months Ended For the Six Months Ended June 30,
(Amounts in thousands)June 30, March 31, 2018
2018 2017 2018 2017
New York:
Office$184,867 $171,809 $187,156 $372,023 $346,533
Retail87,109 89,955 87,909 175,018 179,003
Residential6,338 6,191 6,141 12,479 12,469
Alexander's11,909 11,966 11,575 23,484 23,709
Hotel Pennsylvania5,644 6,267 (4,185) 1,459 1,629
Total New York295,867 286,188 288,596 584,463 563,343
Other:
theMART27,816 26,182 26,875 54,691 52,071
555 California Street13,660 12,032 13,511 27,171 24,066
Other investments17,086 21,732 20,054 37,140 43,812
Total Other58,562 59,946 60,440 119,002 119,949
NOI at share$354,429 $346,134 $349,036 $703,465 $683,292

NOI - Cash Basis:

The elements of our New York and Other NOI at share - cash basis for the three and six months ended June 30, 2018 and 2017 and the three months ended March 31, 2018 are summarized below.

For the Three Months Ended For the Six Months Ended June 30,
(Amounts in thousands)June 30, March 31, 2018
2018 2017 2018 2017
New York:
Office$180,710 $163,972 $178,199 $358,909 $330,311
Retail79,139 79,967 79,589 158,728 159,386
Residential5,463 5,342 5,599 11,062 10,884
Alexander's12,098 12,311 12,039 24,137 24,399
Hotel Pennsylvania5,744 6,299 (4,153) 1,591 1,694
Total New York283,154 267,891 271,273 554,427 526,674
Other:
theMART27,999 24,897 27,079 55,078 49,429
555 California Street13,808 11,151 12,826 26,634 22,476
Other investments16,987 19,720 19,910 36,897 41,757
Total Other58,794 55,768 59,815 118,609 113,662
NOI at share - cash basis$341,948 $323,659 $331,088 $673,036 $640,336

Development/Redevelopment as of June 30, 2018

(Amounts in thousands, except square feet)
(At Share) Full Quarter Stabilized Operations
Property Rentable Sq. Ft. Excluding Land Costs Available for Occupancy
Current Projects: Segment Incremental Budget Amount Expended % Complete Start
220 Central Park South - residential condominiums Other 397,000 $1,400,000 $1,054,000 (1) 75.3% Q3 2012 N/A N/A
Moynihan Office Building - (50.1% interest)(2) New York 850,000 400,000 42,503 10.6% Q2 2017 Q3 2020 Q2 2022
One Penn Plaza - renovation(3) New York 2,535,000 200,000 3,939 2.0% Q4 2018 N/A N/A
61 Ninth Avenue - office/retail (45.1% interest)(4) New York 170,000 69,000 55,134 79.9% Q1 2016 Q2 2018 Q2 2019
512 West 22nd Street - office/retail (55.0% interest) New York 173,000 72,000 47,719 (5) 66.3% Q4 2015 Q3 2018 Q1 2020
345 Montgomery Street (555 California Street (70.0% interest) Other 64,000 32,000 6,399 (6) 20.0% Q1 2018 Q3 2019 Q3 2020
606 Broadway - office/retail (50.0% interest) New York 34,000 30,000 20,866 (7) 69.6% Q2 2016 Q4 2018 Q2 2020
825 Seventh Avenue - office (50.0% interest) New York 165,000 15,000 2,449 16.3% Q2 2018 Q1 2020 Q1 2021
Total current projects $1,233,009
Future Opportunities: Segment Property Zoning Sq. Ft.
Penn Plaza - multiple opportunities office/residential/retail New York TBD
Hotel Pennsylvania New York 2,052,000
260 Eleventh Avenue - office(8) New York 280,000
Undeveloped Land:
29, 31, 33 West 57th Street (50.0% interest) New York 150,000
527 West Kinzie, Chicago Other 330,000
Total undeveloped land 480,000

_______________________

(1) Excludes land and acquisition costs of $515,426.(2) Excludes $115,230 for our share of the upfront contribution of $230,000. The building and land are subject to a lease which expires in 2116.(3) The building is subject to a ground lease which expires in 2098.(4) The building is subject to a ground lease which expires in 2115.(5) Excludes land and acquisition costs of $57,000.(6) Excludes land and building costs of $31,000.(7) Excludes land and acquisition costs of $22,703.(8) The building is subject to a ground lease which expires in 2114.

Conference Call and Audio Webcast

As previously announced, the Company will host a quarterly earnings conference call and an audio webcast on Tuesday, July 31, 2018 at 10:00 a.m. Eastern Time (ET). The conference call can be accessed by dialing 888-771-4371 (domestic) or 847-585-4405 (international) and indicating to the operator the passcode 47136894. A telephonic replay of the conference call will be available from 1:30 p.m. ET on July 31, 2018 through August 30, 2018. To access the replay, please dial 888-843-7419 and enter the passcode 47136894#. A live webcast of the conference call will be available on the Company’s website at www.vno.com and an online playback of the webcast will be available on the website for 90 days following the conference call.

Supplemental Financial Information

Further details regarding results of operations, properties and tenants can be accessed at the Company’s website www.vno.com. Vornado Realty Trust is a fully - integrated equity real estate investment trust.

Certain statements contained herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. For a discussion of factors that could materially affect the outcome of our forward-looking statements and our future results and financial condition, see “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2017. Such factors include, among others, risks associated with the timing of and costs associated with property improvements, financing commitments and general competitive factors.

VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEETS
As of
(Amounts in thousands, except unit, share, and per share amounts)June 30, 2018 December 31, 2017
ASSETS
Real estate, at cost:
Land$3,175,830 $3,143,648
Buildings and improvements9,969,190 9,898,605
Development costs and construction in progress1,797,301 1,615,101
Leasehold improvements and equipment105,625 98,941
Total15,047,946 14,756,295
Less accumulated depreciation and amortization(3,035,523) (2,885,283)
Real estate, net12,012,423 11,871,012
Cash and cash equivalents1,090,791 1,817,655
Restricted cash121,168 97,157
Marketable securities165,650 182,752
Tenant and other receivables, net of allowance for doubtful accounts of $3,891 and $5,52665,773 58,700
Investments in partially owned entities959,801 1,056,829
Real estate fund investments373,039 354,804
Receivable arising from the straight-lining of rents, net of allowance of $1,798 and $954936,614 926,711
Deferred leasing costs, net of accumulated amortization of $198,100 and $191,827443,859 403,492
Identified intangible assets, net of accumulated amortization of $163,406 and $150,837146,370 159,260
Assets related to discontinued operations52 1,357
Other assets550,543 468,205
$16,866,083 $17,397,934
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgages payable, net$8,108,618 $8,137,139
Senior unsecured notes, net843,417 843,614
Unsecured term loan, net749,494 748,734
Unsecured revolving credit facilities80,000 —
Accounts payable and accrued expenses394,079 415,794
Deferred revenue187,934 227,069
Deferred compensation plan100,368 109,177
Liabilities related to discontinued operations214 3,620
Preferred shares redeemed on January 4 and 11, 2018— 455,514
Other liabilities520,331 464,635
Total liabilities10,984,455 11,405,296
Commitments and contingencies
Redeemable noncontrolling interests:
Class A units - 12,616,515 and 12,528,899 units outstanding932,613 979,509
Series D cumulative redeemable preferred units - 177,101 units outstanding5,428 5,428
Total redeemable noncontrolling interests938,041 984,937
Vornado's shareholders' equity:
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 36,799,573 shares891,325 891,988
Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 190,237,957 and 189,983,858 shares7,587 7,577
Additional capital7,555,993 7,492,658
Earnings less than distributions(4,206,381) (4,183,253)
Accumulated other comprehensive income33,351 128,682
Total Vornado shareholders' equity4,281,875 4,337,652
Noncontrolling interests in consolidated subsidiaries661,712 670,049
Total equity4,943,587 5,007,701
$16,866,083 $17,397,934

VORNADO REALTY TRUST
OPERATING RESULTS
(Amounts in thousands, except per share amounts)For the Three Months Ended June 30, For the Six Months Ended June 30,
2018 2017 2018 2017
Revenues$541,818 $511,087 $1,078,255 $1,019,145
Income from continuing operations$104,655 $129,373 $105,300 $187,902
Income from discontinued operations683 18,111 320 33,429
Net income105,338 147,484 105,620 221,331
Less net loss (income) attributable to noncontrolling interests in:
Consolidated subsidiaries26,175 (7,677) 34,449 (14,414)
Operating Partnership(7,445) (7,706) (6,321) (10,935)
Net income attributable to Vornado124,068 132,101 133,748 195,982
Preferred share dividends(12,534) (16,129) (25,569) (32,258)
Preferred share issuance costs— — (14,486) —
NET INCOME attributable to common shareholders$111,534 $115,972 $93,693 $163,724
INCOME PER COMMON SHARE – BASIC:
Income from continuing operations, net$0.59 $0.52 $0.49 $0.70
Income from discontinued operations, net— 0.09 — 0.16
Net income per common share$0.59 $0.61 $0.49 $0.86
Weighted average shares outstanding190,200 189,395 190,141 189,304
INCOME PER COMMON SHARE – DILUTED:
Income from continuing operations, net$0.58 $0.52 $0.49 $0.70
Income from discontinued operations, net— 0.09 — 0.16
Net income per common share$0.58 $0.61 $0.49 $0.86
Weighted average shares outstanding191,168 190,444 191,190 190,674
FFO attributable to common shareholders plus assumed conversions (non-GAAP)$209,680 $257,673 $312,339 $463,422
Per diluted share (non-GAAP)$1.10 $1.35 $1.63 $2.43
FFO attributable to common shareholders plus assumed conversions, as adjusted (non-GAAP)$187,412 $180,544 $361,377 $339,414
Per diluted share (non-GAAP)$0.98 $0.95 $1.89 $1.78
Weighted average shares used in determining FFO per diluted share191,168 190,444 191,228 190,450

VORNADO REALTY TRUSTNON-GAAP RECONCILIATIONS

The following table reconciles net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions:

(Amounts in thousands, except per share amounts)For the Three Months Ended June 30, For the Six Months Ended June 30,
2018 2017 2018 2017
Net income attributable to common shareholders$111,534 $115,972 $93,693 $163,724
Per diluted share$0.58 $0.61 $0.49 $0.86
FFO adjustments:
Depreciation and amortization of real property$103,599 $128,527 $204,009 $258,996
Net gains on sale of real estate(24,177) — (24,177) (2,267)
Proportionate share of adjustments to equity in net income (loss) of partially owned entities to arrive at FFO:
Depreciation and amortization of real property25,488 37,682 53,594 76,756
Net gains on sale of real estate(272) (15,339) (577) (17,192)
Real estate impairment losses— 167 4 3,218
104,638 151,037 232,853 319,511
Noncontrolling interests' share of above adjustments(6,508) (9,356) (14,419) (19,873)
FFO adjustments, net$98,130 $141,681 $218,434 $299,638
FFO attributable to common shareholders (non-GAAP)$209,664 $257,653 $312,127 $463,362
Convertible preferred share dividends16 20 32 60
Earnings allocated to Out-Performance Plan units— — 180 —
FFO attributable to common shareholders plus assumed conversions (non-GAAP)$209,680 $257,673 $312,339 $463,422
Per diluted share (non-GAAP)$1.10 $1.35 $1.63 $2.43

FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gains from sales of depreciated real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specified non-cash items, including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are non-GAAP financial measures used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flow as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies. A reconciliation of our net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions is provided above. In addition to FFO attributable to common shareholders plus assumed conversions, we also disclose FFO attributable to common shareholders plus assumed conversions, as adjusted. Although this non-GAAP measure clearly differs from NAREIT’s definition of FFO, we believe it provides a meaningful presentation of operating performance. Reconciliations of FFO attributable to common shareholders plus assumed conversions to FFO attributable to common shareholders plus assumed conversions, as adjusted are provided on page 3 of this press release.

VORNADO REALTY TRUSTNON-GAAP RECONCILIATIONS - CONTINUED

Below is a reconciliation of net income to NOI at share and NOI at share - cash basis for the three and six months ended June 30, 2018 and 2017 and the three months ended March 31, 2018.

For the Three Months Ended For the Six Months Ended June 30,
(Amounts in thousands)June 30, March 31, 2018
2018 2017 2018 2017
Net income$105,338 $147,484 $282 $105,620 $221,331
Deduct:
(Income) loss from partially owned entities(8,757) (46,021) 9,904 1,147 (47,379)
Loss (income) from real estate fund investments28,976 (4,391) 8,807 37,783 (4,659)
Interest and other investment (income) loss, net(30,892) (8,541) 24,384 (6,508) (15,236)
Net gains on disposition of wholly owned and partially owned assets(23,559) — — (23,559) (501)
(Income) loss from discontinued operations(683) (18,111) 363 (320) (33,429)
NOI attributable to noncontrolling interests in consolidated subsidiaries(17,160) (16,269) (17,312) (34,472) (32,607)
Add:
Depreciation and amortization expense111,846 105,123 108,686 220,532 210,251
General and administrative expense34,427 35,405 42,533 76,960 81,580
Transaction related costs and other1,017 260 13,156 14,173 1,012
NOI from partially owned entities65,752 67,016 67,513 133,265 133,113
Interest and debt expense87,657 84,789 88,166 175,823 167,513
Income tax expense (benefit)467 (610) 2,554 3,021 2,303
NOI at share354,429 346,134 349,036 703,465 683,292
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other(12,481) (22,475) (17,948) (30,429) (42,956)
NOI at share - cash basis$341,948 $323,659 $331,088 $673,036 $640,336

NOI represents total revenues less operating expenses. We consider NOI 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, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI should not be considered a substitute for net income. NOI may not be comparable to similarly titled measures employed by other companies.

VORNADO REALTY TRUSTNON-GAAP RECONCILIATIONS - CONTINUED

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 three months ended June 30, 2018 compared to June 30, 2017.

(Amounts in thousands)Total New York theMART 555CaliforniaStreet Other
NOI at share for the three months ended June 30, 2018$354,429 $295,867 $27,816 $13,660 $17,086
Less NOI at share from:
Acquisitions(503) (439) (64) — —
Dispositions(310) (310) — — —
Development properties placed into and out of service(12,794) (12,794) — — —
Lease termination income, net of straight-line and FAS 141 write-offs1,941 1,984 (43) — —
Other non-operating income, net(17,583) (497) — — (17,086)
Same store NOI at share for the three months ended June 30, 2018$325,180 $283,811 $27,709 $13,660 $—
NOI at share for the three months ended June 30, 2017$346,134 $286,188 $26,182 $12,032 $21,732
Less NOI at share from:
Acquisitions5 (164) 169 — —
Dispositions(406) (406) — — —
Development properties placed into and out of service(12,329) (12,329) — — —
Lease termination income, net of straight-line and FAS 141 write-offs(166) (166) — — —
Other non-operating income, net(22,573) (841) — — (21,732)
Same store NOI at share for the three months ended June 30, 2017$310,665 $272,282 $26,351 $12,032 $—
Increase in same store NOI at share for the three months ended June 30, 2018 compared to June 30, 2017$14,515 $11,529 $1,358 $1,628 $—
% increase in same store NOI at share4.7% 4.2%(1)5.2% 13.5% —%

____________________(1) Excluding Hotel Pennsylvania, same store NOI at share increased by 4.6%.

Same store NOI represents NOI from operations which are owned by us and in service in both the current and prior year reporting periods. Same store NOI - cash basis is NOI from operations before straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments which are owned by us and in service in both the current and prior year reporting periods. 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 and same store NOI - cash basis should not be considered as an alternative to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.

VORNADO REALTY TRUSTNON-GAAP RECONCILIATIONS - 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 three months ended June 30, 2018 compared to June 30, 2017.

(Amounts in thousands)Total New York theMART 555CaliforniaStreet Other
NOI at share - cash basis for the three months ended June 30, 2018$341,948 $283,154 $27,999 $13,808 $16,987
Less NOI at share - cash basis from:
Acquisitions(355) (291) (64) — —
Dispositions(242) (242) — — —
Development properties placed into and out of service(13,686) (13,686) — — —
Lease termination income(162) — (162) — —
Other non-operating income, net(17,483) (496) — — (16,987)
Same store NOI at share - cash basis for the three months ended June 30, 2018$310,020 $268,439 $27,773 $13,808 $—
NOI at share - cash basis for the three months ended June 30, 2017$323,659 $267,891 $24,897 $11,151 $19,720
Less NOI at share - cash basis from:
Acquisitions106 (63) 169 — —
Dispositions(297) (297) — — —
Development properties placed into and out of service(12,340) (12,340) — — —
Lease termination income(218) (218) — — —
Other non-operating income, net(21,287) (1,567) — — (19,720)
Same store NOI at share - cash basis for the three months ended June 30, 2017$289,623 $253,406 $25,066 $11,151 $—
Increase in same store NOI at share - cash basis for the three months ended June 30, 2018 compared to June 30, 2017$20,397 $15,033 $2,707 $2,657 $—
% increase in same store NOI at share - cash basis7.0% 5.9%(1)10.8% 23.8% —%

____________________(1) Excluding Hotel Pennsylvania, same store NOI at share - cash basis increased by 6.3%.

VORNADO REALTY TRUSTNON-GAAP RECONCILIATIONS - CONTINUED

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 three months ended June 30, 2018 compared to March 31, 2018.

(Amounts in thousands)Total New York theMART 555CaliforniaStreet Other
NOI at share for the three months ended June 30, 2018$354,429 $295,867 $27,816 $13,660 $17,086
Less NOI at share from:
Acquisitions(288) (224) (64) — —
Dispositions(310) (310) — — —
Development properties placed into and out of service(12,794) (12,794) — — —
Lease termination income, net of straight-line and FAS 141 write-offs1,941 1,984 (43) — —
Other non-operating income, net(17,583) (497) — — (17,086)
Same store NOI at share for the three months ended June 30, 2018$325,395 $284,026 $27,709 $13,660 $—
NOI at share for the three months ended March 31, 2018$349,036 $288,596 $26,875 $13,511 $20,054
Less NOI at share from:
Acquisitions(206) (121) (85) — —
Dispositions(54) (54) — — —
Development properties placed into and out of service(11,654) (11,654) — — —
Lease termination income, net of straight-line and FAS 141 write-offs(1,127) (1,127) — — —
Other non-operating income, net(20,633) (579) — — (20,054)
Same store NOI at share for the three months ended March 31, 2018$315,362 $275,061 $26,790 $13,511 $—
Increase in same store NOI at share for the three months ended June 30, 2018 compared to March 31, 2018$10,033 $8,965 $919 $149 $—
% increase in same store NOI at share3.2% 3.3%(1)3.4% 1.1% —%

____________________(1) Excluding Hotel Pennsylvania, same store NOI at share decreased by 0.3%.

VORNADO REALTY TRUSTNON-GAAP RECONCILIATIONS - 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 three months ended June 30, 2018 compared to March 31, 2018.

(Amounts in thousands)Total New York theMART 555CaliforniaStreet Other
NOI at share - cash basis for the three months ended June 30, 2018$341,948 $283,154 $27,999 $13,808 $16,987
Less NOI at share - cash basis from:
Acquisitions(288) (224) (64) — —
Dispositions(242) (242) — — —
Development properties placed into and out of service(13,686) (13,686) — — —
Lease termination income(162) — (162) — —
Other non-operating income, net(17,484) (497) — — (16,987)
Same store NOI at share - cash basis for the three months ended June 30, 2018$310,086 $268,505 $27,773 $13,808 $—
NOI at share - cash basis for the three months ended March 31, 2018$331,088 $271,273 $27,079 $12,826 $19,910
Less NOI at share - cash basis from:
Acquisitions(206) (121) (85) — —
Dispositions22 22 — — —
Development properties placed into and out of service(12,808) (12,808) — — —
Lease termination income(1,061) (1,061) — — —
Other non-operating income, net(20,488) (578) — — (19,910)
Same store NOI at share - cash basis for the three months ended March 31, 2018$296,547 $256,727 $26,994 $12,826 $—
Increase in same store NOI at share - cash basis for the three months ended June 30, 2018 compared to March 31, 2018$13,539 $11,778 $779 $982 $—
% increase in same store NOI at share - cash basis4.6% 4.6%(1)2.9% 7.7% —%

____________________(1) Excluding Hotel Pennsylvania, same store NOI at share - cash basis increased by 0.7%.

VORNADO REALTY TRUSTNON-GAAP RECONCILIATIONS - CONTINUED

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 six months ended June 30, 2018 compared to June 30, 2017.

(Amounts in thousands)Total New York theMART 555CaliforniaStreet Other
NOI at share for the six months ended June 30, 2018$703,465 $584,463 $54,691 $27,171 $37,140
Less NOI at share from:
Acquisitions(938) (789) (149) — —
Dispositions(364) (364) — — —
Development properties placed into and out of service(13,205) (13,205) — — —
Lease termination income, net of straight-line and FAS 141 write-offs814 857 (43) — —
Other non-operating income, net(38,217) (1,077) — — (37,140)
Same store NOI at share for the six months ended June 30, 2018$651,555 $569,885 $54,499 $27,171 $—
NOI at share for the six months ended June 30, 2017$683,292 $563,343 $52,071 $24,066 $43,812
Less NOI at share from:
Acquisitions36 (164) 200 — —
Dispositions(883) (883) — — —
Development properties placed into and out of service(12,313) (12,313) — — —
Lease termination income, net of straight-line and FAS 141 write-offs(825) (804) (21) — —
Other non-operating income, net(45,738) (1,926) — — (43,812)
Same store NOI at share for the six months ended June 30, 2017$623,569 $547,253 $52,250 $24,066 $—
Increase in same store NOI at share for the six months ended June 30, 2018 compared to June 30, 2017$27,986 $22,632 $2,249 $3,105 $—
% increase in same store NOI at share4.5% 4.1%(1)4.3% 12.9% —%

____________________(1) Excluding Hotel Pennsylvania, same store NOI at share increased by 4.2%.

VORNADO REALTY TRUSTNON-GAAP RECONCILIATIONS - 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 six months ended June 30, 2018 compared to June 30, 2017.

(Amounts in thousands)Total New York theMART 555CaliforniaStreet Other
NOI at share - cash basis for the six months ended June 30, 2018$673,036 $554,427 $55,078 $26,634 $36,897
Less NOI at share - cash basis from:
Acquisitions(639) (490) (149) — —
Dispositions(220) (220) — — —
Development properties placed into and out of service(14,290) (14,290) — — —
Lease termination income(1,223) (1,061) (162) — —
Other non-operating income, net(37,972) (1,075) — — (36,897)
Same store NOI at share - cash basis for the six months ended June 30, 2018$618,692 $537,291 $54,767 $26,634 $—
NOI at share - cash basis for the six months ended June 30, 2017$640,336 $526,674 $49,429 $22,476 $41,757
Less NOI at share - cash basis from:
Acquisitions137 (63) 200 — —
Dispositions(665) (665) — — —
Development properties placed into and out of service(12,234) (12,234) — — —
Lease termination income(3,279) (3,248) (31) — —
Other non-operating income, net(44,356) (2,599) — — (41,757)
Same store NOI at share - cash basis for the six months ended June 30, 2017$579,939 $507,865 $49,598 $22,476 $—
Increase in same store NOI at share - cash basis for the six months ended June 30, 2018 compared to June 30, 2017$38,753 $29,426 $5,169 $4,158 $—
% increase in same store NOI at share - cash basis6.7% 5.8%(1)10.4% 18.5% —%

____________________(1) Excluding Hotel Pennsylvania, same store NOI at share increased by 5.8%.

CONTACT: JOSEPH MACNOW
(212) 894-7000

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Source: Vornado Realty Trust

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