Vornado Realty Trust · NYSE:VNO
Vornado Realty Trust — Wachovia Presentation 2004
50 slides from Vornado Realty Trust's conference presentation, Jun 23, 2004
Slide 1: Vornado Realty Trust
” Viaanernes REALTY TRUST
Slide 2: Wachovia Presentation June 23, 2004
Wachovia Presentation June 23, 2004
Slide 3: Forward-Looking Statements
Forward-Looking Statements These slides and the related discussion may 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 guarantee
Slide 4: Michael Fascitelli
Michael Fascitelli President
Slide 5: Joseph Macnow
Joseph Macnow Executive Vice President Finance and Administration Chief Financial Officer
Slide 6: Who Are We?
Who Are We? REALTY TRUST
Slide 7: Vornado Realty Trust – Who Are We?
Vornado Realty Trust – Who Are We? • 5th Largest REIT with over $14.5 billion enterprise value • Largest public REIT office owner in NYC with 13.3 million SF • Largest public REIT office owner in DC metro area with 13.9 million SF • Major owner of retail properties in high-density under- stored New
Slide 8: Portfolio EBITDA by Segment
Portfolio EBITDA by Segment EBITDA for three months ended 3/31/04 Other 9% Retail NY Office 14% 31% Merchandise Mart 10% AmeriCold 7% DC Office 29% Note: Does not include other expenses
Slide 9: EBITDA by Region
EBITDA by Region EBITDA for three months ended 3/31/04 Puerto Rico Other 1% 15% So PA Metro 2% Chicago NYC Metro 8% 43% DC Metro 31%
Slide 10: Key Operating and Investment Strategies
Key Operating and Investment Strategies • Operating platforms that have size and scale • Good buildings in great locations in markets with high barriers to entry • Buy below market rent • Buy below replacement cost • Redevelop properties to highest use • Focus on growth per share in FFO • Focus on t
Slide 11: Experienced and Deep Management Team
Experienced and Deep Management Team • Steven Roth Chief Executive Officer and Chairman of the Board • Michael D. Fascitelli President and Trustee • Melvyn H. Blum Executive Vice President – Development • Michelle Felman Executive Vice President – Acquisitions • David R. Greenbaum President of New Y
Slide 12: Business Review
Business Review REALTY TRUST
Slide 13: New York Office - 888 Seventh Avenue
New York Office - 888 Seventh Avenue
Slide 14: Vornado Midtown Portfolio
Vornado Midtown Portfolio 731Lexington Ave — Mill1129 Third Ave | | Seventh Ave 640 Fifth Ave 330 Fad 435 Ave 7 i ; Pe 90 Park Penn Ave | Peni Ave Wes East 330 West 34th St Penn 11 Penn Plaza Plaza = Commercial m Retail 4 Union Square South ‘ADDITIONAL VORNADO HOLDINGS NOT VISIBLE ON THIS MAP: 770 B
Slide 15: New York Office EBITDA and Occupancy Rate
New York Office EBITDA and Occupancy Rate ($ in thousands) 96.3% 97.4% 95.9% 95.0% 95.2% Occupancy 95.5% 91.0% 331,219 (1) (1) 321,384 312,602 (1) 273,810 EBITDA 211,660 154,686 81,530 1998 1999 2000 2001 2002 2003 3 Mo. Ended 3/31/2004 Percent Increase/(Decrease) in Same Store EBITDA 7.5% 11.4% 20.
Slide 16: Washington DC Office - Crystal Park Four
Washington DC Office - Crystal Park Four
Slide 17: 87% of Vornado Properties are Inside the Beltway
87% of Vornado Properties are Inside the Beltway 0.2 million SF 1.5 million SF 0.8 million SF 1.5 million SF 7.4 million SF 2.5 million SF Vornado Ownership by Submarket
Slide 18: DC Office EBITDA and Occupancy Rate
DC Office EBITDA and Occupancy Rate ($ in thousands) 97.8% 98.6% 97.9% Occupancy 94.8% 93.9% 93.6% 93.7% 288,808 292,270 249,380 219,022 EBITDA 174,118 151,071 76,668 1998 1999 2000 2001 2002 2003 3 Mo. Ended 3/31/04 Percent Increase/(Decrease) in Same Store EBITDA N/A N/A 4.2% 3.6% 4.1% (1.7%) 2.7%
Slide 19: Retail
New York CitygRetaiil rs ) Shopping Malls — Fa REALTY TRUST
Slide 20: Vornado Retail – Geographic Distribution
Vornado Retail – Geographic Distribution
Slide 21: Retail EBITDA and Occupancy Rate
Retail EBITDA and Occupancy Rate ($ in thousands) 93.5% Occupancy 92.9% 93.0% 92.0% 92.0% 91.0% 88.0% (2) 138,890 122,956 116,928 118,422 (1) EBITDA 115,218 113,900 37,813 1998 1999 2000 2001 2002 2003 3 Mo. Ended 3/31/04 Percent Increase/(Decrease) in Same Store EBITDA 5.1% 3.4% 4.9% 2.7% (2.6%) 4.
Slide 22: Merchandise Mart
Merchandise Mart REALTY TRUST
Slide 23: Merchandise Mart Today
Merchandise Mart Today (SF in thousands) # of Buildings Showroom Office Total Chicago 3 2,523 2,421 4,944 Washington 3 330 550 880 High Point 2 2,011 - 2,011 Los Angeles 1 776 - 776 Total 9 5,623 2,988 8,611
Slide 24: Merchandise Mart EBITDA and Occupancy Rate
Merchandise Mart EBITDA and Occupancy Rate ($ in thousands) Occupancy 94.1% 95.0% 95.0% 95.0% 94.0% 94.2% 93.6% 115,959 117,887 108,171 96,419 EBITDA 79,736 68,030 26,826 1998 1999 2000 2001 2002 2003 3 Mo. Ended 3/31/04 Percent Increase/(Decrease) in Same Store EBITDA N/A 17% 18% 8% (1.0%) 4.1% 4.1
Slide 25: Other Investments
Other Investments • Own 60% of largest temperature-controlled logistics company in US • 87 cold storage warehouses containing 440.7 million cubic feet • Own 33% of Alexander’s • 6 properties in New York City including 1.3 million SF development of 731 Lexington Ave • Hotel Pennsylvania • 1.0 million
Slide 26: Capital Structure
Capital Structure REALTY TRUST
Slide 27: Capital Structure Strategies
Capital Structure Strategies • Maintain conservative, flexible capital structure • Use floating-rate debt when appropriate • Ability to access multiples forms of capital • Unsecured debt, perpetual preferred, mortgage debt • $700 million senior unsecured debt • Unsecured debt ratings: – Moody’s - Ba
Slide 28: Enterprise Value
Enterprise Value ($ in billions) Debt (1) Preferred Equity Common Equity (2) 14.1 14.5 11.4 5.1 5.1 5.3 5.3 9.9 9.2 7.6 5.1 5.1 1.1 1.1 1.0 1.0 3.8 3.8 4.0 4.0 5.7 3.2 3.2 1.1 1.1 1.1 1.1 2.7 1.0 1.0 2.7 0.8 7.9 8.2 8.2 0.8 7.9 0.1 0.1 5.2 5.0 5.0 5.2 3.6 4.2 4.2 2.9 2.9 3.6 1998 1999 2000 2001 2002
Slide 29: Debt Composition
Debt Composition ($ in billions) Floating Fixed 1.4 1.4 1.5 1.8 1.3 1.3 1.5 3.7 3.9 3.6 2.5 1.9 2.2 1.2 1998 1999 2000 2001 2002 2003 3/31/04 % Floating 55.6% 40.6% 45.0% 34.2% 29.4% 27.8% 27.0% Weighted Average Interest Rates Floating 6.6% 7.6% 8.0% 3.5% 2.9% 2.4% 2.4% Fixed 7.0% 7.4% 8.1% 7.9% 7.5
Slide 30: Debt Maturity Schedule
Debt Maturity Schedule ($ in millions) Floating Fixed 200 1,984 532 295 68 377 256 281 377 27 2004 2005 2006 2007 2008 Thereafter Weighted Average Interest Rates 6.70% 3.03% 4.43% 3.80% 6.87% 6.86%
Slide 31: Perpetual Preferreds by Date First Callable
Perpetual Preferreds by Date First Callable ($ in millions) 627 210 120 45 35 2004 2005 2006 2008 2009 Weighted Average Dividend Rates 8.30% 8.25% 8.25% 7.00% 7.20% Note: 2004 subsequent to redemption of $27.5 million Series D-2 8.375% Cumulative Redeemable Preferred Units and Series B 8.5% Preferre
Slide 32: Dividend Policy, Growth and Relative Value
Dividend Policy, Growth and Relative Value
Slide 33: Dividend Policy
Dividend Policy • Payout approximately 100% of taxable income on a quarterly basis • Board re-evaluates dividend quarterly and typically adjusts the dividend with the fourth dividend of the year • Common stock dividend increased 4.4% in October 2003 to a running rate of $2.84 per share per annum
Slide 34: Dividend Policy
Dividend Policy • Opportunistic sales could lead to capital gain dividend announcements. • Sale of Two Park Ave. in 2003 created two capital gain dividends declared of $0.16 per share each – payable Dec. 29, 2003 and February 10, 2004
Slide 35: Recurring FFO per share
Recurring FFO per share $4.56 $4.56 $4.28 $4.28 18% CAGR $4.09 $4.09 $3.65 $3.65 $3.37 $3.37 7% $2.81 $2.81 4% 12% 8% $1.67 $1.67 20% $1.11 $1.11 68% 1997 1997 1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 3 Mo. Ended 3/31/04
Slide 36: Funds Available for Distribution (FAD)
(1) Funds Available for Distribution (FAD) Payout Ratio Based on Common Dividend (Dividend/FAD) 91.0% 91.0% 85.5% 85.5% 79.9% 79.9% 73.9% 73.9% 74.5% 74.5% 1Q 1Q 2004 2004 1Q 1Q 2003 2003 4Q 4Q 2003 2003 12 12 mo mo ended ended 12 12 mo mo ended ended 12/31/03 12/31/02 (1) FAD is defined as FFO less
Slide 37: Relative Growth
Relative Growth FFO Per Share Growth 1997 – 2003 (CAGR) 18.2% Growth vs. Retail Peers 11.0% 7.6% 7.1% 4.7% FRT REG WRI KIM VNO (1) 18.2% Growth vs. Office Peers 12.7% 12.9% 7.2% 7.8% 4.6% CRE CLI EOP SLG BXP VNO (1) Source: Bloomberg (1) Recurring FFO
Slide 38: Relative Growth
Relative Growth Dividend Per Share Growth 1997 – 2004E (CAGR) Growth vs. Retail Peers 11.1% 9.9% 4.6% 3.4% 2.1% FRT REG WRI KIM VNO Growth vs. Office Peers 11.1% (1) (1) (1) 8.0% 6.1% 6.4% 3.4% 1.9% CRE CLI SLG EOP BXP VNO Source: Bloomberg, as of 6/18/04 (1) CAGR for 1998-2004E Note: 2004 equals mo
Slide 39: Relative Value
Relative Value 2004E FFO Multiple FFO Multiple vs. Retail Peers 14.7x 12.4x 12.4x 12.8x 13.1x VNO WRI KIM REG FRT FFO Multiple vs. Office Peers 12.0x 12.2x 12.4x 11.2x 9.9x 10.3x CRE EOP CLI SLG BXP VNO Source: FirstCall, as of 6/18/04
Slide 40: Recent Capital Transactions and Future Opportunities
Recent Capital Transactions and Future Opportunities
Slide 41: Summary of 2003 and YTD 2004 Transactions
Summary of 2003 and YTD 2004 Transactions Acquisitions / ($756.4) million Investments Dispositions - $299.9 million pending (1) $225.5 million Capital Transactions $394.0 million TOTAL $163.0 million (1) There can be no assurance that these transactions will be ultimately completed, completed on a t
Slide 42: Opportunities
Opportunities • $1 Billion available from $600 million credit line and cash on balance sheet • Maintain acquisition discipline – best deals currently are where VNO can add value through redevelopment and/or retenanting • Potential to strategically pull capital out of the portfolio – temperature-cont
Slide 43: Appendix
Appendix This investor package, and the related discussion addresses certain non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Funds From Operations (“FFO”) and Funds Available for Distribution (“FAD”). FFO is presented before non-compa
Slide 44: Appendix (continued)
Appendix (continued) Reconciliation of Net Income Applicable to Common Shares to Funds from Operations ("FFO") (1) Years ended December 31, 1997 – 2000 ($ in thousands, except per share amounts) Vornado Realty Trust Reconciliation of Net Income Applicable to Common Shares to Funds from Operations ("
Slide 45: Appendix (continued)
Appendix (continued) Reconciliation of Net Income Applicable to Common Shares to Funds from Operations ("FFO") (1) Years ended December 31, 2001 – 2003 and for the 3 Mo. Ended March 31,2004 ($ in thousands, except per share amounts) Year Ended December 31, 3 Mo Ended 2001 2002 2003 3/31/2004 Net inc
Slide 46: Appendix (continued)
Appendix (continued) Footnote to pages in Appendix for Reconciliation of Net Income to Funds From Operations (‘FFO”) (1) FFO does not represent cash generated from operating activities in accordance with accounting principles generally accepted in the United States of America and is not necessarily
Slide 47: Appendix (Continued)
Appendix (Continued) Reconciliation of Funds Available for Distribution (“FAD”)(1) For Three Months Ended March 31, 2004 and 2003 and Three Months Ended December 31, 2003 ($ amounts in thousands, except per share amounts) 3 Mo Ended 3 Mo Ended 3 Mo Ended 3/31/2004 3/31/2003 12/31/2003 FFO - Operatin
Slide 48: Appendix (Continued)
Appendix (Continued) Reconciliation of Funds Available for Distribution (“FAD”) (1) For Year Ended December 31, 2003 and 2002 ($ amounts in thousands, except per share amounts) Year-Ended Year-Ended 12/31/2003 12/31/2002 FFO - Operating Partnership Basis $637,428 $553,226 Less: Recurring tenant impr
Slide 49: Appendix (continued)
Appendix (continued) (1) Reconciliation of Net Income to EBITDA Three Months Ended March 31, 2004 and Three Months Ended March 31, 2003 ($ in thousands) Three Months Ended March 31, 2004 Total Office Retail Mart TCL Other Net Income 82,439 84,191 15,319 16,129 2,541 (35,741) Adjustments: Interest an
Slide 50: Appendix (continued)
Appendix (continued) Changes By Segment in EBITDA Three Months Ended March 31, 2004 and March 31, 2003 ($ in thousands) Total Office Retail Mart TCL Other Three Months Ended March 31, 2003 EBITDA 232,042 154,199 33,653 25,855 20,747 (2,412) 2003 Operations (1) (3) Same store operations 3,405 1,404 1