Vornado Realty Trust · NYSE:VNO
Vornado Realty Trust — Merger or Acquisition (December 2014)
50 slides from Vornado Realty Trust's merger presentation, Dec 15, 2014
Slide 1: Analyst Presentation December 15, 2014
ANALYST PRESENTATION December 15, 2014
Slide 2: Forward-looking statements and non-GAAP measures
2 These slides and the related discussions may contain forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks a
Slide 3: Overview and Spin Transaction
3 OVERVIEW AND SPIN TRANSACTION Name Urban Edge Properties Exchange / Ticker NYSE / UE Portfolio 79 shopping centers, three malls and a warehouse park (14.9 million owned SF) Distribution Ratio One Urban Edge common share for every two Vornado common shares Expected Dividend for Q1 2015 $0.20 per sh
Slide 4: Origins of Urban Edge
4 ORIGINS OF URBAN EDGE Founded in 1946 Grew to over 100 locations Acquired Vornado (fan company) in 1959 Faced financial difficulties in Interstate Properties took control in 1979 Liquidated retailer in the early value from the real estate Converted to a REIT in 1993 with 55 shopping centers 44 sho
Slide 5: Origins of Urban Edge
5 ORIGINS OF URBAN EDGE Bethlehem, PA 1966
Slide 6: Investment Highlights
6 INVESTMENT HIGHLIGHTS 1. High quality portfolio concentrated in the Washington, DC to Boston corridor with the New York Metropolitan Region representing two-thirds of total NOI (1) Average Population / Income (3 Miles) 152,149 / $86,062 (2) Average Supermarket Sales PSF $724 (3) Weighted Average B
Slide 7: Portfolio Quick Facts
7 PORTFOLIO Number of Assets 83 Total Owned Square Footage (MM) 14.9 Average Shopping Center Size (SF) 177k Occupancy % (1) 95.4% Average Shopping Center Age (years) ~38 PORTFOLIO QUICK FACTS Note: (1) As of September 30, 2014 (2) Excludes third-party fee income Puerto Rico Power 51% Mall 25% Commun
Slide 8: DC to Boston Corridor
8 DC TO BOSTON CORRIDOR 71 of the 83 properties are situated in the DC to Boston corridor, representing ~85% of NOI (1) Most heavily urbanized region in the US Contains 50 million people 931 people per square mile, over 10x higher than the US average Note: (1) NOI is based on YTD NOI as of September
Slide 9: New York Metropolitan Region
9 NEW YORK METROPOLITAN REGION New York Metropolitan Region represents ~66% of NOI (1) 45 properties 9.3 million SF Note: (1) NOI is based on YTD NOI as of September 30, 2014. Excludes third-party fee income
Slide 10: Puerto Rico
10 PUERTO RICO Puerto Rico represents ~12% of NOI (1) 2 properties 1.0 million SF Note: (1) NOI is based on YTD NOI as of September 30, 2014. Excludes third-party fee income
Slide 11: California
11 CALIFORNIA California represents ~2% of NOI (1) 4 properties 126,000 SF Note: (1) NOI is based on YTD NOI as of September 30, 2014. Excludes third-party fee income
Slide 12: Population Within 3-Mile Ring
12 Source: International Strategy & Investment Group, LLC; 2012E 3-mile ring population 67,016 69,396 72,125 73,272 83,559 94,656 97,259 98,009 99,066 108,088 116,949 134,377 152,149 60,000 85,000 110,000 135,000 160,000 RPT DDR BRX CDR RPAI REG BFS KIM WRI ROIC EQY FRT UE POPULATION WITHIN 3-MILE R
Slide 13: Average Household Income Within 3-Mile Ring
13 Source: International Strategy & Investment Group, LLC; 3-mile ring 2012E average household income. Note: Urban Edge Form 10 uses median household income $67,670 $68,420 $70,025 $71,515 $73,054 $75,762 $77,473 $77,592 $82,040 $86,062 $89,811 $91,718 $95,170 $ 60,000 $ 70,000 $ 80,000 $ 90,000 $ 1
Slide 14: Supermarket Sales PSF
14 $505 $525 $537 $558 $575 $600 $625 $724 $500 $560 $620 $680 $740 RPT RPAI BRX WRI REG BFS EQY UE Source: Peer Company Investor Presentations Note: (1) Based on reporting supermarkets including: RPT (November 2014), RPAI (November 2014), BRX (November 2014), WRI (November 2014), REG (September 201
Slide 15: Average Base Rent 3Q2014
15 Strong demographic profile and high barrier-to-entry market presence drive rents $12.10 $12.73 $12.78 $13.48 $13.65 $15.34 $15.95 $16.93 $17.83 $18.06 $18.30 $19.37 $25.36 $10.00 $14.00 $18.00 $22.00 $26.00 BRX CDR RPT KIM DDR RPAI WRI EQY ROIC BFS REG UE FRT Source: Comparable data per Green Str
Slide 16: High and Stable Historical Occupancy
16 94.5% 94.9% 95.0% 95.0% 95.6% 95.4% 90.0% 92.0% 94.0% 96.0% 98.0% 100.0% 2009 2010 2011 2012 2013 3Q 2014 Note: (1) Data as of September 30, 2014. Figures represent owned square feet and exclude warehouses HIGH AND STABLE HISTORICAL OCCUPANCY (1) PORTFOLIO HIGHLIGHTS
Slide 17: Tenant Profile
17 6.3% 4.7% 3.9% 3.8% 3.0% 3.0% 2.9% 2.3% 2.3% 2.2% 0.0% 2.0% 4.0% 6.0% 8.0% TENANT PROFILE ABR PSF $16.23 $7.29 $15.57 $8.73 $11.94 $9.43 $20.58 $9.42 $21.56 $11.02 # of Stores 7 9 16 6 8 8 7 4 9 4 Credit Ratings A2 / A Aa2 / AA A3 / A+ A3 / A- Baa3 / BBB Baa1 / BBB Baa2 / BB Caa1 / CCC+ NR / BB+
Slide 18: Growth Strategy
19 Expand footprint by leveraging experience and relationships in core markets Retail division has acquired ~$1.7 billion in new properties over the past ten years GROWTH STRATEGY Increase occupancy Increase rents Improve tenant mix Recapture below market anchor leases Revitalization of existing ass
Slide 19: Strategy Execution Core Competencies
20 STRATEGY EXECUTION CORE COMPETENCIES Identification Acquisition Planning Budgeting Design Pre-leasing Adaptation Construction Commissioning & turnover Completing leasing Operating
Slide 20: Las Catalinas Mall, Puerto Rico - Leasing
21 Centrally located, easily accessible mall serving the densely populated Caguas region Merchandising dominated by island-based retailers, many of which are struggling in the current weak economy Las Catalinas Mall, Puerto Rico LEASING
Slide 21: Las Catalinas Mall remerchandising
22 1. P.F. 2. Forever 21 3. Outback Steakhouse 4. Adidas 5. Bath & Body Works 6. Aeropostale 7. Van Heusen Before Remerchandise with strong mainland retailers looking for 2nd or 3rd locations after Plaza Las Americas and/or Plaza Carolina Significant representation of island-based merchants LEASING
Slide 22: Walnut Creek, California - Leasing
23 29,000 SF Barnes & Noble lease significantly undermarket at $45 PSF rent expires January 31, 2016 Next to Apple Store and across Olympic Boulevard from Neiman Marcus and Broadway Plaza, which is undergoing a major expansion and renovation Enormous appeal to merchants looking for a prominent locat
Slide 23: Walnut Creek, California
24 Walnut Creek, California LEASING
Slide 24: Walnut Creek illustrative options
25 Illustrative Single Tenant Option Illustrative Multiple Tenant Option Walnut Creek, California LEASING
Slide 25: Bruckner Plaza, Bronx - Existing
26 1963 vintage center serving a densely populated and underserved trade area with easy access to major roads and mass transit; significant frontage on the Bruckner Expressway Existing Bruckner Plaza, Bronx, New York REDEVELOPMENT
Slide 26: Bruckner Plaza, Bronx - Proposed
27 Renovate and remerchandise southern portion (Key Food, retail/office building and small retail building) and refurbish all site improvements Significant longer term expansion potential on northern portion expiration/recapture and rezoning Proposed Bruckner Plaza, Bronx, New York REDEVELOPMENT
Slide 27: East Hanover, New Jersey - Existing
28 Older center on Rt. 10, a primary east-west arterial serving affluent areas, adjacent to the warehouse park; anchored by Home Depot, Dick's and Marshalls Retail: renovate buildings and site work to match physical appearance to customer shopper base Warehouses: update for users seeking space neare
Slide 28: East Hanover, New Jersey - Proposed
29 Proposed Existing REDEVELOPMENT East Hanover, New Jersey
Slide 29: Montehiedra Town Center, Puerto Rico
30 Superior freeway location 5 miles south of San Juan, but outflanked by Plaza Las Americas (5 miles north) and Las Catalinas (8 miles south) Convert to value/retail outlet format; no competition south of San Juan; only other outlets on the island are 30 miles west and 15 miles east of the city Nik
Slide 30: Montehiedra Town Center new additions
31 New Additions Montehiedra Town Center, Puerto Rico REDEVELOPMENT
Slide 31: Bergen Town Center - Before
32 Former Bergen Mall developed by Allied Stores and opened in 1957 anchored by Stern’s and Newberry’s; Ohrbach’s added in 1967 Partial demolition and major expansion Before Bergen Town Center, New Jersey DEVELOPMENT
Slide 32: Bergen Town Center - After
33 952,000 SF anchored by Target, Century 21 and Whole Foods; Lowe’s on adjacent owned property Junior anchors include Marshalls, Rack, Off Fifth, Bloomingdale’s Outlet, Last Call Studio by Neiman Marcus, Nike, H&M, Old Navy and Ulta; REI and 24 Hour Fitness on adjacent owned property Leasing exceed
Slide 33: Bergen Town Center - After
34 After DEVELOPMENT Bergen Town Center, New Jersey
Slide 34: Garfield, New Jersey - Before
35 Former Two Guys distribution facility Total demolition and reconstruction, including extensive environmental and geotechnical remediation Before Garfield, New Jersey DEVELOPMENT
Slide 35: Garfield, New Jersey - After
36 195,000 SF anchored by Wal-Mart and Marshalls Approvals in-hand and site work completed for 70,000 SF of additional development After DEVELOPMENT Garfield, New Jersey
Slide 36: North Bergen, New Jersey - Before
37 DEVELOPMENT North Bergen, New Jersey Before Former truck transfer terminal in densely populated, underserved NJ trade area just across the Hudson from NYC Total demolition and reconstruction, including extensive environmental and geotechnical remediation
Slide 37: North Bergen, New Jersey - After
38 410,000 SF anchored by Wal-Mart (203,000 SF), PetSmart and Harbor Freight Strong, productive small store line-up brings leasing to 100% After DEVELOPMENT North Bergen, New Jersey
Slide 38: North Plainfield, New Jersey - Before
39 Excellent location with more than 3,000 linear feet of frontage on Route 22, a major east-west arterial through affluent suburbs Older center with vacant Kmart, Pathmark and Circuit City on leased land Before North Plainfield, New Jersey DEVELOPMENT
Slide 39: North Plainfield, New Jersey - After
40 Anchors replaced with Costco and Tile Shop Texas Roadhouse signed and others in negotiation 20,000 SF additional capacity on underutilized land Fee interest acquired After North Plainfield, New Jersey DEVELOPMENT
Slide 40: Redevelopment Pipeline
41 REDEVELOPMENT PIPELINE Robust redevelopment pipeline generating strong return on capital PROPERTY DESCRIPTION SF COST NOI ROC Bruckner Plaza Renovate and remerchandise non-anchor buildings 112,000 24,000 Montehiedra Town Center Convert to value/retail outlet format 139,100 17,500 East Hanover War
Slide 41: Balance Sheet Liquidity and Leverage
42 $12 $120 $104 $611 $300 $130 $16 $0 $100 $200 $300 $400 $500 $600 $700 BALANCE SHEET LIQUIDITY AND LEVERAGE Capitalized for immediate growth Strong balance sheet with ~$1.3 billion of total debt outstanding and Net Debt / EBITDA (2) of 6.1x At separation, significant liquidity with approximately
Slide 42: Balance Sheet Benchmarking
43 BALANCE SHEET BENCHMARKING Source: Company investor presentations, SEC filings, and Green Street Advisors November 2014 Strip Center Sector Update Note: (1) Represents weighted average annual interest rate of fixed rate debt (2) Represents weighted average years to maturity (3) Represents debt ma
Slide 43: Same Property NOI
44 SAME PROPERTY NOI $181 $184 $188 $100 $125 $150 $175 $200 12/31/11 12/31/12 12/31/13 $144 $147 $100 $115 $130 $145 $160 9/30/13 9/30/14 FOR THE CALENDAR YEAR ENDED ($MM), FOR THE 9 MONTHS ENDED ($MM),
Slide 44: Select Financial Information
45 SELECT FINANCIAL INFORMATION Note: Data on this slide, including annualized data and third quarter 2014 data, are not intended to represent, and should not be taken as, guidance as to future results or predictions as to future results. Totals may not add due to rounding (1) Disclosed in p. 27 of
Slide 45: Urban Edge Properties Balance Sheet
46 URBAN EDGE PROPERTIES BALANCE SHEET Note: Totals may not add due to rounding (1) Consists of $10MM of Restricted Cash, $11MM of Tenant and Other Receivables, and $14MM of Prepaid Expenses and Other Assets (2) Consists of Identified Intangible Assets of $35MM, Deferred Leasing Costs of $19MM, Rece
Slide 46: Urban Edge Properties Outstanding Debt
47 URBAN EDGE PROPERTIES OUTSTANDING DEBT Note: Data on this slide, including annualized data and third quarter 2014 data, are not intended to represent, and should not be taken as, guidance as to future results or predictions as to future results. Urban Edge has entered into a four year unsecured r
Slide 47: Appendix
48 APPENDIX NOI and same property NOI are supplemental non-GAAP measures that aid in the assessment of the unlevered performance of our properties and portfolio as it relates to the total return on assets. The most directly comparable GAAP financial measure is operating income. We calculate NOI by a
Slide 48: Urban Edge Properties EBITDA
49 URBAN EDGE PROPERTIES EBITDA TTM 9/30/14 PRO FORMA ADJUSTMENTS PRO FORMA TTM 9/30/14 Net Income 46,757 (1,983) 44,774 Depreciation, Amortization and Income Taxes 57,400 - 57,400 Interest and Debt Expense 54,289 - 54,289 EBITDA 158,446 (1,983) 156,463 Non-comparable Items: Real Estate Impairment L
Slide 49: NOI reconciliation
50 TTM 9/30/14 YTD 9/30/14 YTD 9/30/13 2013 2012 2011 2010 Operating Income 102,229 91,819 156,803 167,213 124,965 144,038 121,427 Depreciation and Amortization 56,184 40,586 38,445 54,043 52,960 50,981 49,504 General and Administrative 25,808 19,250 19,323 25,881 27,209 27,698 28,058 Real Estate Im
Slide 50: Improving Shopping Centers in and on the Edge of Urban Communities
51 IMPROVING SHOPPING CENTERS IN AND ON THE EDGE OF URBAN COMMUNITIES
Vornado Realty Trust — Merger or Acquisition (December 2014) on 6ix