Vornado(US:VNO)2025-08-04 20:18PART I. Financial Information This section presents the company's consolidated financial statements, management's analysis, market risk disclosures, and internal controls Item 1. Financial Statements This section presents the unaudited consolidated financial statements for Vornado Realty Trust and Vornado Realty L.P. for the three and six months ended June 30, 2025, and 2024, including balance sheets, income statements, and cash flow statements with comprehensive notes Financial Statements of Vornado Realty Trust For the six months ended June 30, 2025, Vornado Realty Trust reported a significant increase in net income to $913.1 million, largely driven by an $803.2 million gain on a sales-type lease, while total assets and liabilities decreased, and net cash from operating activities surged to $1.08 billion Vornado Realty Trust - Key Financial Highlights (Six Months Ended June 30) | Metric (Amounts in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $903,016 | $886,641 | | Net Income | $913,051 | $33,826 | | Net Income attributable to common shareholders | $830,661 | $26,226 | | Diluted EPS | $4.14 | $0.13 | | Net Cash from Operating Activities | $1,078,946 | $226,164 | | Net Cash from Investing Activities | $525,155 | ($307,100) | | Net Cash from Financing Activities | ($1,190,422) | ($63,794) | Vornado Realty Trust - Balance Sheet Summary (Amounts in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $15,608,496 | $15,998,608 | | Real estate, net | $9,902,532 | $10,066,283 | | Cash and cash equivalents | $1,204,863 | $733,947 | | Total Liabilities | $8,594,438 | $9,826,739 | | Mortgages payable, net | $4,977,526 | $5,676,014 | | Total Equity | $6,263,961 | $5,337,211 | Financial Statements of Vornado Realty L.P. Vornado Realty L.P.'s financial results mirror those of Vornado Realty Trust, with net income attributable to Class A unitholders reaching $903.4 million for the six months ended June 30, 2025, reflecting the consolidated nature of business operations Vornado Realty L.P. - Key Financial Highlights (Six Months Ended June 30) | Metric (Amounts in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $903,016 | $886,641 | | Net Income | $913,051 | $33,826 | | Net Income attributable to Class A unitholders | $903,356 | $28,583 | | Diluted EPS (per Class A unit) | $4.15 | $0.13 | | Net Cash from Operating Activities | $1,078,946 | $226,164 | Notes to Consolidated Financial Statements The notes provide detailed disclosures on accounting policies and significant transactions, including a $803.2 million gain from the 770 Broadway master lease, various property dispositions, debt composition, and segment performance - On May 5, 2025, the company completed a 70-year master lease with New York University (NYU) for 1,076,000 sq. ft. at 770 Broadway, with NYU making a prepaid lease payment of $935 million, resulting in a gain on a sales-type lease of $803.2 million8486 - The Fifth Avenue and Times Square JV, in which Vornado has a 51.5% interest, sold a portion of its 666 Fifth Avenue property to UNIQLO for $350 million, resulting in a financial statement gain of $76.2 million for Vornado, and the JV also completed a $450 million financing of 1535 Broadway676970 - During the first six months of 2025, the company sold two condominium units at 220 Central Park South for net proceeds of $24.8 million, realizing a net gain of $13.7 million, and also sold six residential condominium units on Canal Street for net proceeds of $21.6 million, resulting in a net gain of $10.3 million8889 Debt Summary as of June 30, 2025 (Amounts in thousands) | Debt Category | Balance | Weighted Avg. Interest Rate | | :--- | :--- | :--- | | Mortgages Payable | | | | Fixed rate | $4,395,000 | 4.51% | | Variable rate | $603,943 | 6.65% | | Unsecured Debt | | | | Senior unsecured notes | $750,000 | 2.73% | | Unsecured term loan | $800,000 | 4.40% | | Unsecured revolving credit facilities | $575,000 | 3.84% | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the financial results for Q2 and H1 2025, highlighting a significant increase in net income due to the 770 Broadway master lease, while FFO per diluted share decreased for the quarter, alongside key transactions, leasing activity, and a strong liquidity position of $2.9 billion Financial Results Summary For Q2 2025, net income attributable to common shareholders substantially increased to $743.8 million ($3.70/share) due to the 770 Broadway transaction, though FFO per diluted share decreased to $0.60 from $0.76, while six-month net income was $830.7 million ($4.14/share) with FFO per diluted share nearly flat at $1.27 Q2 Financial Results Comparison | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income (common shareholders) | $743.8M | $35.3M | | Diluted EPS | $3.70 | $0.18 | | FFO (common shareholders) | $120.9M | $148.9M | | FFO per Diluted Share | $0.60 | $0.76 | Six-Month Financial Results Comparison | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Income (common shareholders) | $830.7M | $26.2M | | Diluted EPS | $4.14 | $0.13 | | FFO (common shareholders) | $256.0M | $253.1M | | FFO per Diluted Share | $1.27 | $1.29 | Key Business Activities The company executed several significant transactions in H1 2025, including the 70-year master lease of 770 Broadway to NYU for a $935 million prepaid payment, resulting in an $803.2 million gain, alongside multiple property dispositions and debt repayments - Completed a 70-year master lease at 770 Broadway with NYU, receiving a $935 million prepaid lease payment and recording an $803.2 million gain210211 - The Fifth Avenue and Times Square JV sold a portion of 666 Fifth Avenue to UNIQLO for $350 million, with proceeds used to partially redeem Vornado's preferred equity215 - Repaid $450 million of 3.50% senior unsecured notes upon their maturity on January 15, 2025220 - A joint venture completed a $675 million refinancing of Independence Plaza, a 1,328-unit residential complex, with the new loan bearing a fixed rate of 5.84% and maturing in June 2030222 Leasing Activity and Occupancy In Q2 2025, the company leased 1.48 million square feet of New York office space and 57,000 square feet of retail space, with GAAP and cash basis rents for second-generation relet office space increasing by 11.8% and 8.7% respectively, resulting in overall portfolio occupancy of 85.2% Q2 2025 New York Leasing Activity (Second Generation Relet Space) | Metric | Office | Retail | | :--- | :--- | :--- | | Square Feet Leased | 240,000 | 44,000 | | GAAP Rent % Increase | 11.8% | 7.9% | | Cash Rent % Increase | 8.7% | 0.3% | Portfolio Occupancy as of June 30, 2025 | Segment | Occupancy % | | :--- | :--- | | New York - Office | 86.7% | | New York - Retail | 67.7% | | THE MART | 78.2% | | 555 California Street | 92.3% | | Total Portfolio (Our Share) | 85.2% | Liquidity and Capital Resources As of June 30, 2025, Vornado maintained $2.9 billion of liquidity, comprising $1.4 billion in cash and $1.5 billion available under revolving credit facilities, with significant cash flow from operations primarily driven by the NYU prepaid lease payment and ongoing development projects - The company has $2.9 billion of liquidity as of June 30, 2025, comprising $1.4 billion in cash and $1.5 billion available on its revolving credit facilities292 - Net cash from operating activities increased by $852.8 million for the six months ended June 30, 2025, primarily due to the $901.4 million net prepaid lease payment from NYU295296 - Net cash used in financing activities increased by $1.13 billion, driven by $1.28 billion in debt repayments, including the repayment of the $700 million mortgage on 770 Broadway and $450 million of senior unsecured notes295298 - Key development projects include the PENN 2 redevelopment (estimated cost $750 million, $718 million spent) and the Sunset Pier 94 Studios JV (estimated cost $350 million)300302 Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risk from interest rate fluctuations, with a hypothetical 1% increase in base interest rates estimated to decrease annual net income by approximately $4.7 million, a risk mitigated through derivative instruments like interest rate swaps and caps - A hypothetical 1% increase in base interest rates would decrease Vornado's annual net income by an estimated $4.7 million, or $0.02 per diluted share323 Consolidated Debt Exposure as of June 30, 2025 (Amounts in thousands) | Debt Type | Balance | Weighted Avg. Interest Rate | | :--- | :--- | :--- | | Fixed Rate | $6,520,000 | 4.23% | | Variable Rate | $603,943 | 6.28% | | Total | $7,123,943 | 4.40% | - The company uses interest rate swaps and caps to manage interest rate risk, with significant hedging instruments in place for debt on properties like 555 California Street, the unsecured term loan, and the unsecured revolving credit facility as of June 30, 2025330331 Item 4. Controls and Procedures Management concluded that as of June 30, 2025, the disclosure controls and procedures for both Vornado Realty Trust and Vornado Realty L.P. were effective, with no material changes to internal control over financial reporting occurring during the quarter - Management concluded that as of June 30, 2025, the disclosure controls and procedures for both Vornado Realty Trust and Vornado Realty L.P. were effective335337 - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls336338 PART II. Other Information This section details legal proceedings, risk factors, equity sales, and other relevant disclosures Item 1. Legal Proceedings The company is involved in various legal actions arising in the ordinary course of business, which management does not expect to have a material adverse effect on its financial position or results of operations - The company states that ongoing legal actions from the ordinary course of business are not expected to have a material adverse effect on its financial condition339 Item 1A. Risk Factors There have been no material changes to the Risk Factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the company's risk factors were reported for the period340 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the quarter, Vornado Realty Trust issued 91,369 common shares to redeem Class A units of Vornado Realty L.P. under an exemption from registration, with no share repurchases made and $170.9 million remaining available under its authorized repurchase plan - Vornado Realty Trust issued 91,369 common shares in exchange for the redemption of Class A units of the Operating Partnership341 - No shares were repurchased during the three months ended June 30, 2025, with $170,857,000 remaining authorized for future repurchases as of quarter-end342 Item 5. Other Information The company reported that none of its directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the second quarter of 2025346