Vornado Realty Trust · NYSE:VNO
Vornado Realty Trust — Investor Presentation (June 2017)
35 slides from Vornado Realty Trust's investor presentation, Jun 5, 2017
Slide 1: Forward Looking Statements
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
Slide 2: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES This investor presentation contains certain non-GAAP financial measures, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), net operating income (“NOI”), Funds from operations ("FFO") and others. EBITDA is earnings before interest, taxes,
Slide 3: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Amounts in millions) Reconciliation of Vornado Net Income to EBITDA, EBITDA, as adjusted and Vornado RemainCo Cash Net Operating Income for the twelve months ended December 31, for the fiscal years 2007 through 2016 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Net incom
Slide 4: Non-GAAP Reconciliation (Cont'd)
NON-GAAP RECONCILIATION (CONT’D) (Amounts in millions) Reconciliation of Vornado Net Income to EBITDA, EBITDA, as adjusted and Vornado RemainCo EBITDA, adjusted for the twelve months ended March 31, 2017 TTM March 31, 2017 Net income attributable to the Operating Partnership Interest and debt expens
Slide 5: Non-GAAP Reconciliation (Cont'd)
NON-GAAP RECONCILIATION (CONT’D) (Amounts in millions) Reconciliation of Trailing Twelve Months Net Income to EBITDA, EBITDA, as adjusted, Cash NOI, as adjusted, and Pro Forma Cash NOI for the twelve months ended March 31, 2017 Trailing TwelveTrMailoingthTswEenldvedMMonartchhs E3n1d, 2e0d1M7 arch 31
Slide 6: Non-GAAP Reconciliation (Cont'd)
NON-GAAP RECONCILIATION (CONT’D) (Amounts in millions) Reconciliation of Vornado Net Income to EBITDA, FFO, FFO as adjusted and Cash FFO, as adjusted for the three months ended March 31, 2017 1Q 2017 Net Income to FFO Reconciliation Washington DC(1) Total Company RemainCo Net Income $ 67.1 $ 20.4 $
Slide 7: Non-GAAP Reconciliation (Cont'd)
NON-GAAP RECONCILIATION (CONT’D) (Amounts in millions) Reconciliation of 555 California Net Income to EBITDA, EBITDA, as adjusted and Cash NOI for the year ended December 31, 2012 and for the trailing twelve months ended March 31, 2017 Reconciliation of New York Retail Net Income to EBITDA, EBIDTA,
Slide 8: 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 - $15.7 billion of total transactions • Disposed of $6.1 billion of non-core assets including regional malls, the Mart business (retaining theMART building in Chicago) a
Slide 9: Peerless NYC Focused Real Estate Company
VORNADO REMAINCO Peerless NYC focused real estate company with premier office assets and the only publicly investable high street retail portfolio of scale • Following the Washington, D.C. spin-off, Vornado RemainCo will be a pure-play New York City real estate company, with an irreplaceable NYC por
Slide 10: Why New York?
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 in 2
Slide 11: Why New York? Strong and Diversified Employment Growth
WHY NEW YORK? STRONG AND DIVERSIFIED EMPLOYMENT GROWTH Annual change in NYC employment by office-using sector 30 25 20 15 10 5 0 Financial Professional Business Services TAMI 4 Source: U.S. Bureau of Labor Statistics Thousands of Persons 34.1K30.3K32.9K30.6K44.6K42.1K30.4K
Slide 12: Why New York? Consistent Tourism Growth
WHY NEW YORK? CONSISTENT TOURISM GROWTH 70 International International 60.7 Domestic 58.5 60 50 40 30 20 10 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 5 Source: Cushman & Wakefield, NYC +Co Millions of Tourists Domestic56.5 54.3 52.7 48.812.0 46.
Slide 13: Near-Term Catalysts for Shareholder Value Creation
VORNADO REMAINCO NEAR-TERM CATALYSTS FOR SHAREHOLDER VALUE CREATION • Spin-merger of the DC Business with JBG SMITH (end of 2nd quarter) creates the market-leading DC focused REIT and the premier NYC pure-play REIT • Spotlights Vornado’s unique NYC franchise and irreplaceable portfolio • Significant
Slide 14: Trading at a Significant Discount to Net Asset Value
VORNADO REMAINCO TRADING AT A SIGNIFICANT DISCOUNT TO NET ASSET VALUE (Amounts in millions) All numbers as of 3/31/2017 except as noted VNO Share Price (06/01/17) Shares Outstanding $ 92.80 203.2 Equity Market Capitalization Plus: Debt and Preferred1 $ 18,857 11,845 624 2 Other Liabilities Vornado S
Slide 15: Fortress Balance Sheet
VORNADO REMAINCO FORTRESS BALANCE SHEET (Amounts in millions) As of 3/31/17 Unsecured debt 1,341 • Over ~$4.1 billion of liquidity Less: noncontrolling interests' share of consolidated debt (599) • ~$11 billion of unencumbered assets Less: transferred to JBG SMITH (1,354) • Investment grade credit r
Slide 16: Deep and Experienced Management Team
VORNADO REMAINCO DEEP AND EXPERIENCED MANAGEMENT TEAM E X E C U T I V E M A N A G E M E N T • 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 S TE V E
Slide 17: Leader Among Best-in-Class REITs
VORNADO REMAINCO LEADER AMONG BEST-IN-CLASS REITS Since 2006, Vornado RemainCo has delivered superior same-store NOI growth relative to blue-chip peers Vornado SLG BXP DEI KRC EQR PSA AVB SPG TCO VTR FRT PLD 2006-2016 Same-Store NOI CAGR 1. Same-store NOI growth data for all companies taken from pub
Slide 18: Consistent Track Record of Strong Growth
VORNADO REMAINCO CONSISTENT TRACK RECORD OF STRONG GROWTH Vornado RemainCo 10-year NOI1 (NON-GAAP) $44 $121 $994 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1. NOI from continuing operations (excludes sold properties and includes acquisitions from year of purchase); includes corporat
Slide 19: Select New York City Office Properties
VORNADO REMAINCO SELECT NEW YORK CITY OFFICE PROPERTIES PLAZA DISTRICT GRAND CENTRAL 888 SEVENTH AVENUE 650 MADISON AVENUE 666 FIFTH AVENUE 640 FIFTH AVENUE 689 FIFTH AVENUE 330 MADISON AVENUE 90 PARK AVENUE PENN PLAZA DISTRICT MIDTOWN 7 WEST 34TH STREET 330 W 34TH STREET ONE PENN / TWO PENN PLAZA 7
Slide 20: Blue-Chip Office Tenant Roster
VORNADO REMAINCO BLUE-CHIP OFFICE TENANT ROSTER 13
Slide 21: New York Office - Well Positioned by Submarket with Staggered Lease Expirations
VORNADO REMAINCO NEW YORK OFFICE1 - WELL POSITIONED BY SUBMARKET WITH STAGGERED LEASE EXPIRATIONS NEW YORK OFFICE EXPIRATIONS BY SQUARE FOOT AS OF 3/31/2017 NEW YORK OFFICE SUBMARKET BY SQUARE FOOT AS OF 3/31/2017 5,000 $140 Chelsea/ Meatpacking 3% Midtown South 8% Other 4% 4,500 $120 4,000 Penn Pla
Slide 22: Select New York City Street Retail Properties
VORNADO REMAINCO SELECT NEW YORK CITY STREET RETAIL PROPERTIES 828-850 MADISON AVENUE 650 MADISON AVENUE 759-771 MADISON AVENUE 677 MADISON AVENUE 595 MADISON AVENUE 666 FIFTH AVENUE 689 FIFTH AVENUE 1535 & 1540 BROADWAY 640 FIFTH AVENUE 510 FIFTH AVENUE 655 FIFTH AVENUE 697 FIFTH AVENUE 478-486 BRO
Slide 23: Blue-Chip Retail Tenant Roster
VORNADO REMAINCO BLUE-CHIP RETAIL TENANT ROSTER 16
Slide 24: Dominance of the Key High Street Retail Submarkets in Manhattan
VORNADO REMAINCO DOMINANCE OF THE KEY HIGH STREET RETAIL SUBMARKETS IN MANHATTAN Under Armour UPPER FIFTH AVENUE TIME S SQU ARE C ONTR OL BO TH SIDE S OF THE B O WTIE O WN 23% OF FR ONTA GE 1 Hublot Piaget h Harry Winston Armani Presbyterian l Wemp University Club Tissot Armani Exchange 1540 BROADWA
Slide 25: Retail Cash NOI, As Adjusted (Non-GAAP) by Submarket
VORNADO REMAINCO RETAIL CASH NOI, AS ADJUSTED (NON-GAAP) BY SUBMARKET 32.8 368.6 (Amounts in millions) FULLY LEASED CASH NOI % OF TOTAL 127.5 72.3 34.6% 19.6% 199.8 54.2% Fifth Avenue 71.1 37.4 13.3 13.0 34.0 19.3% 10.2% 3.6% 3.5% 9.2% Avenue Times Square 368.6 100.0% Penn Plaz Madison Avenue SoHo U
Slide 26: Leader in Repositioning and Modernizing Properties
VORV NO AR DN OA DROEMRAEIMNCAOIN C O LEADER IN REPOSITIONING AND MODERNIZING PROPERTIES 11 ASSETS TOTALING 10.3 MM SF • Dyson • Dune Capital • Hitchwood Capital Management 842,000 SF • Guggenheim Partners • Point72 Asset Management • American Century Investments 571,000 SF • Ziff Brothers • Marshal
Slide 27: theMART
VORNADO REMAINCO theMART theMART building (Chicago) – best example of contemporary office space outside of Silicon Valley. 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 upside | 3
Slide 28: 555 California Street
VORNADO REMAINCO 555 CALIFORNIA STREET 555 California Street – the franchise office building in San Francisco and arguably the most iconic building on the west coast – further NOI growth expected from redeveloped concourse and 315/345 Montgomery | 1,801,000 SF – 93.1% Occupancy1 • 1.2 million SF of
Slide 29: Penn Plaza - An Unprecedented Opportunity
VORNADO REMAINCO PENN PLAZA - AN UNPRECEDENTED OPPORTUNITY W 35TH STREET 7 WEST 34TH ST MACY’S W 34TH STREET EMPIRE STATE BUILDING 330 WEST 34TH ST W 33RD STREET Tremendous Value Creation Opportunity MANHATTAN MALL with average in-place rents of ~$60 PSF THE FARLEY BUILDING MADISON SQUARE GARDEN W 3
Slide 30: Farley Post Office Development Further Transforming the Penn Plaza Neighborhood
VORNADO REMAINCO - FARLEY POST OFFICE DEVELOPMENT FURTHER TRANSFORMING THE PENN PLAZA NEIGHBORHOOD • 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 31: Growth from New Projects in Chelsea / Meatpacking
VORNADO REMAINCO GROWTH FROM NEW PROJECTS IN CHELSEA / MEATPACKING 260 ELEVENTH AVENUE Size: 312,000 RSF Est. Completion: 2021 Size: 173,000 RSF Completion: 4Q 2017 85 TENTH AVENUE Size: 170,000 RSF Completion: 4Q 2017 Size:626,000 RSF Acquired: 4Q2016 25
Slide 32: 220 Central Park South - The Premier Residential Building in NYC
VORNADO REMAINCO 220 CENTRAL PARK SOUTH - THE PREMIER RESIDENTIAL BUILDING IN NYC • Topped out 4Q16, estimated completion in 3Q18 • Incremental net proceeds after repayment of debt and taxes is expected to be $900MM1 26 1. Inclusive of $100MM in dividends already paid to shareholders
Slide 33: A Leader in Sustainability
A LEADER IN SUSTAINABILITY NATIONALLY RECOGNIZED, INDUSTRY-LEADING SUSTAINABILITY PROGRAM • Energy Star Partner of the Year in 2017, Sustained Excellence recipient • 30 million square feet of owned and managed LEED certified buildings nationwide • Largest landlord of LEED certified buildings in New
Slide 34: A Leader in Sustainability
A LEADER IN SUSTAINABILITY NATIONALLY RECOGNIZED, INDUSTRY-LEADING SUSTAINABILITY PROGRAM + Energy Star Partner of the Year in 2017, Sustained Excellence recipient +30 million square feet of owned and managed LEED certified buildings nationwide VORNADO + Largest landlord of LEED certified buildings
Slide 35: Realty Trust - June 2017
VORNADO REALTY TRUST JUNE 2017
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