Vornado Realty Trust · NYSE:VNO
Vornado Realty Trust — Merger or Acquisition (November 2016)
43 slides from Vornado Realty Trust's merger presentation, Nov 14, 2016
Slide 1: Forward-looking statements
Certain statements contained in this investor presentation 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 perf
Slide 2: GAAP Reconciliation
GAAP RECONCILIATION Includes income from sold properties, gains on sale of real estate, impairment losses, and other adjustments. Includes interest on mezzanine debt, dividends on marketable securities, income on corporate investments and other adjustments. Reconciliation of Vornado Net Income to EB
Slide 3: GAAP Reconciliation (Cont'd)
GAAP Reconciliation (Cont’d) Reconciliation of Vornado RemainCo’s Total Incremental Revenue to Cash Incremental Revenue attributable to leases signed, but not yet commenced, for the three months ended December 31, 2016, and the twelve months ended December 31, 2017 and 2018 Reconciliation of Vornado
Slide 4: Relentless Focus on Shareholder Value Creation
RELENTLESS FOCUS ON SHAREHOLDER VALUE CREATION In the past few years, we have exited multiple business lines and non-core holdings - $14.6 Billion of total transactions Sold $5 Billion of non-core assets including regional malls, the Mart business (retaining the Chicago Mart building) and other non-
Slide 5: JBG SMITH Summary
Will create the market-leading, pure-play Washington D.C. real estate platform JBG SMITH Summary Management and Board Expected Pro Forma Ownership1 Expected Closing Vornado to combine its Washington, DC business with The JBG Companies and a select pool of their assets via a tax-free spin-merger to f
Slide 6: Washington, DC Spin-Merger Transaction Rationale & Investor Benefits
Washington, DC spin-merger Transaction Rationale & investor benefits Benefits to Vornado Shareholders Rationale for DC Separation Rationale for Combination with JBG The industry-leading Washington, DC operator with superior capital allocation skills Greater geographic diversification within Washingt
Slide 7: JBG's Track Record of Performance (Since 1999)
JBG’s Track Record of Performance (Since 1999) Best-in-class real estate operator with long history of value creation through opportunistic acquisition and development in the DC metro area Experience Expertise Leadership Scale Commitment Results 55+ year history focused exclusively on the DC metro a
Slide 8: Largest Pure-Play DC Metro Area Focused Real Estate Company
Largest Pure-Play DC Metro Area Focused Real Estate Company (MM SF) The clear public vehicle for real estate investment in the DC metro area Notes All figures include operating, construction in progress and near-term development pipeline commercial SF and units. DC metro area statistics based on the
Slide 9: Portfolio Summary
Portfolio Summary2 Premier Assets Located in Metro-served, Urban Infill Submarkets Notes Metro-served is defined as within 0.5 miles of an existing or planned Metro station. Operating portfolio is currently 96% Metro served. Metrics shown at pro rata share as of 9/30/2016. Commercial SF at pro rata
Slide 10: Premier Assets Located in Metro-Served, Urban Infill Submarkets
PREMIER ASSETS LOCATED IN METRO-SERVED, SL Se Hull URBAN INFILL SUBMARKETS VORNADO Over 98% of the portfolio is Metro-served" Portfolio Summary? Based on GAV
Slide 11: Vornado RemainCo: Pure-Play New York City Real Estate Company
Following the Washington, D.C. spin-off, Vornado RemainCo will be a pure-play New York City real estate company, with an irreplaceable NYC portfolio generating 88% of the Company’s pro forma EBITDA1 Own 81 properties totaling 24.0MM SF2 in New York City with blue chip tenant roster NYC office busine
Slide 12: Vornado RemainCo Near-Term Catalysts for Shareholder Value Creation
Vornado remainco – Near-Term Catalysts for shareholder value creation 9 Spin-merger of the DC Business with JBG creates the market-leading DC focused REIT and, by subtraction, the premier NYC pure-play REIT Sharpens focus on Vornado’s unique NYC franchise and irreplaceable portfolio Significant near
Slide 13: Trading at a Significant Discount to Net Asset Value
Vornado Remainco – Trading at a significant discount to net asset value 10 In millions except per share / psf (at 9/30/16) RemainCo debt balance does not include 220 CPS, Toys R Us and Skyline. See p. 30 for details. VNO Share Price (11/11/16) $95 Shares Outstanding 202 Equity Market Capitalization
Slide 14: Fortress Balance Sheet
11 Vornado Remainco - Fortress Balance Sheet Conservative, Low Cost of Capital Financing Strategy In millions (at 9/30/16) Over $4 Billion of liquidity ~$8 Billion of unencumbered assets Investment grade credit rating of Baa2/BBB/BBB (1) Includes $116MM for the Bowen Building currently held on VNO’s
Slide 15: Deep and Experienced Management Team
Vornado remainco – Deep and experienced management team 12 Vertically-integrated platform that includes best-in-class in-house development, leasing, operations and investment teams With over 680 associates, no other company offers more in-house expertise
Slide 16: Premier New York City Platform
Vornado remainco – Premier New York city platform NYC Gross Office Rents (PSF)2 NYC Trophy Office Buildings Square Feet (in MM’s) of Buildings With Signed Office Leases >$100 PSF Since 20133 NYC Gross Asset Value (GAV) (in BN’s)1 (Per Green Street Advisors) Notes All company information per 1Q16 pub
Slide 17: Premier New York City Platform (continued)
Vornado remainco – Premier New York city platform (continued) 1. For all companies except Vornado, represents information based upon analysis by Green Street Advisors prepared for VNO (dated August 2016); residential NOI included in Office NOI; BXP and PGRE do not break out office/retail NOI; repres
Slide 18: Consistent Track Record of Strong Growth
Vornado Remainco – consistent track record of strong growth 2006 – 2016 NOI CAGR (3) : 9.5% NOI from continuing operations (excludes sold properties and includes acquisitions from year of purchase); includes corporate G&A and excludes investment income, Vornado Capital Partners, and Hotel Pennsylvan
Slide 19: Leader Among Best-in-Class REITs
Vornado remainco – LEADER AMONG BEST-in-CLASS REITs Per reports published by Green Street Advisors for all companies other than Vornado RemainCo . Vornado RemainCo NOI (after corporate G&A) includes New York office, New York retail, ALX, 555 California Street, and theMART. VTR CAGR is from 2008-2015
Slide 20: New York Portfolio by Submarket
17 Vornado Remainco – New York Portfolio by Submarket at 9/30/16 New York Office By SF New York Retail By Gross revenue Penn Plaza 38% Midtown 32% Plaza District 15% Midtown South 8% Chelsea/ Meatpacking 3% Other 4% Penn Plaza 25% Soho/Tribeca 3% Madison Avenue 11% Fifth Avenue 31% Times Square 14%
Slide 21: Select New York City Office Properties
Vornado remainco – Select new York CITY office properties 18
Slide 22: Blue-Chip Office Tenant Roster
19 Vornado Remainco – Blue-chip Office tenant roster1 Includes office tenants from 555 California Street and theMART.
Slide 23: Select New York City Street Retail Properties
Vornado remainco – Select new York City street retail properties 20
Slide 24: Blue-Chip Retail Tenant Roster
21 Vornado remainco – Blue-chip retail tenant roster
Slide 25: Control of the Key High Street Retail Submarkets in Manhattan
22 Vornado remainco – Control of the key high Street RETAIL submarkets In Manhattan 1540 Broadway 1535 Broadway Control both sides of the bowtie UPPER FIFTH AVENUE - OWN 23% OF FRONTAGE1 TIMES SQUARE Note Excludes churches, clubs and retail owned by users.
Slide 26: Staggered Lease Expirations
23 Vornado remainco – Staggered Lease expirations at 9/30/16 Office Weighted Average Lease Term: 8.2 years Retail Weighted Average Lease Term: 8.6 years 3% 4% 10% 8% 3% 3% 1% 5% 14% 4% 10% 37% 0 30 60 90 120 150 180 Millions of Dollars Retail Expirations by Revenue 1% 4% 7% 5% 9% 8% 4% 11% 8% 5% 8%
Slide 27: Office Properties and Major Tenants
888 seventh avenue – 2008 885,000 SF TPG Capital United Talent Agency Corcoran Sunshine Lone Star Principal Global Investors 350 park avenue – 2008 571,000 SF M&T Trust Ziff Brothers Citco Marshall Wace North America, L.P. 330 Madison avenue – 2012 841,000 SF Guggenheim Partners JLL Point72 Asset Ma
Slide 28: theMART and 555 California Street
VORNADO REMAINCO – theMART and 555 CALIFORNIA Street As of 9/30/2016; square footage (“SF”) shown at 100% share. theMART (Chicago) – transformed from a showroom building to the premier creative and tech hub in the Midwest, resulting in significant earnings growth and value creation with significant
Slide 29: Market Leader in Sustainability
Vornado Remainco – Market leader in sustainability & Early Endorser of this philosophy 26 Nationally recognized, industry-leading sustainability program: Energy Star Partner of the Year, Sustained Excellence Recipient 2015 Over 30 million square feet LEED certified buildings nationwide, including 15
Slide 30: Penn Plaza: An Unprecedented Opportunity
Vornado remainco – PENN PLAZA – an unprecedented opportunity As of 9/30/16 W 35TH STREET MACY’S W 34TH STREET W 33RD STREET W 32ND STREET W 31ST STREET SIXTH AVENUE FIFTH AVENUE SEVENTH AVENUE EIGHTH AVENUE NINTH AVENUE 330 WEST 34TH ST 1 PENN PLAZA 2 PENN PLAZA FARLEY POST OFFICE 11 PENN PLAZA 15 P
Slide 31: Farley Post Office Development
Vornado remainco - Farley post office development Further Transforming the penn plaza neighborhood 28 A 50/50 joint venture between Vornado and the Related Companies has been conditionally designated as the developer to convert the Farley Post Office in Penn Plaza into the new Moynihan Train Station
Slide 32: Growth from New Developments in Chelsea / Meatpacking
Vornado remainco – Growth from new developments in Chelsea / meatpacking 85 TENTH AVENUE 29 Size: 173,000 RSF Completion: 4Q 2017 Size: 170,000 RSF Completion: 4Q 2017 Size:618,000 RSF Stabilized 260 ELEVENTH AVENUE Size: 325,000 RSF Est. Completion: 2021
Slide 33: Central Park South: Premier Residential Building in NYC
220 Central Park south – the premier residential building in NYC 30 Scheduled completion for 3Q18 Incremental net proceeds after repayment of debt and taxes is expected to be $900MM 1 (1) A portion of which will be part of a dividend to shareholders prior to completion of the development.
Slide 34: Appendix: Why New York?
31 Appendix: Why New York? Global city favored by businesses, residents, tourists and investors US gateway city with the strongest long-term population growth1 – vibrant 24/7 environment benefits from trend towards urbanization Diversified employment base continues path of outsized growth In 1990, 1
Slide 35: Population Growth by MSA since 1995
32 Population Growth by msa since 1995 Source: Cushman & Wakefield, U.S. Census Bureau Continued Urbanization People want to live, work and shop in NY 2,048 1,647 1,621 858 772 544 0 500 1,000 1,500 2,000 2,500 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 36: New York City Office-Using Employment
New York city Office-using employment 33 Source: Moody’s Economy and Cushman & Wakefield 1,043 1,275 1,128 1,237 1,154 1,368 1,000 1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400 OFFICE - USING EMPLOYMENT 1,043 1,275 1,128 1,237 1,154 1,368 1,000 1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400 Offic
Slide 37: Manhattan Inventory Over Time
34 Manhattan inventory over time Net office supply is flat since 1990 2016: 430 West 15th Street (85,202 SF) 855 Avenue of the Americas (171,000 SF) 10 Hudson Yards (1,750,000 SF) 432 Park Avenue (71,000 SF) 860 Washington Street (116,000 SF) 2017: 390 Madison Avenue (843,675 SF renovation) 787 Elev
Slide 38: Consistent Tourism Growth
35 Consistent tourism growth International Tourism CAGR: 4.3% Domestic Tourism CAGR: 3.1% Overall CAGR: 3.3% Source: Cushman & Wakefield, NYC + Co estimated 27.1 29.8 29.4 29.5 30.2 33 33.8 35.8 36.5 37.1 37.6 37 39.1 40.3 41.1 42.9 44.2 46.0 47.0 6 6.6 6.8 5.7 5.1 4.8 6.1 6.8 7.3 8.9 9.5 8.6 9.7 10
Slide 39: Manhattan Retail Sales Growth
36 Source: Cushman & Wakefield and REBNY Manhattan Retail Sales Growth Some of the Highest grossing stores in the world drives rents Manhattan High Street Retail Rent $PSF CAGR’s High Street 2004 2016 CAGR Upper Fifth Avenue 742 3,398 13.5% Times Square 331 2,363 17.8% Madison Avenue 667 1,644 7.8%
Slide 40: Major Cities: Total Investment Sales Volume since 2010
37 Major Cities: Total Investment sales volume since 2010 Source: Real Capital Analytics. 2016H1 annualized shown for 2016 Most in-demand and liquid investment market globally $14,782 $27,388 $33,687 $39,508 $45,583 $62,161 $48,879 $30,273 $17,109 $4,896 $17,716 $28,523 $10,852 $0 $10,000 $20,000 $3
Slide 41: Long Term Capital Appreciation: Manhattan Office Pricing PSF
38 Long Term Capital Appreciation – Manhattan Office Pricing PSF Source: Cushman & Wakefield, Manhattan office statistics reflect the entire market and all office classes On average, Manhattan office buildings double in value every 10 years Manhattan 7.7% Boston CBD 5.3% San Francisco CBD 5.2% Los A
Slide 42: Vornado Realty Trust November 2016
VORNADO REALTY TRUST November 2016
Slide 43: Vornado Realty Trust
VORNADO REALTY TRUST November 2016
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