Jeffrey S. Olson will be SpinCo’s Chairman and CEO
PARAMUS, N.J. -- (Business Wire)
VORNADO REALTY TRUST (NYSE:VNO) (“Vornado”) announced today its Board of
Trustees has approved a plan to spin off its shopping center business
consisting of 81 strip shopping centers and four malls into a new
publicly traded REIT (“SpinCo”). The strip shopping centers are
primarily located in the densely populated Northeast. The malls consist
of the powerful Bergen Town Center in Paramus, New Jersey, Monmouth Mall
in Eatontown, New Jersey and two malls in suburbs of San Juan, Puerto
Rico. The 85 retail properties total approximately 16.1 million square
feet and had average occupancy of 95.5% at December 31, 2013. SpinCo’s
2014 net operating income is estimated to be approximately $200 million.
Jeffrey S. Olson, currently Chief Executive Officer of Equity One Inc.,
will be SpinCo’s Chairman of the Board and Chief Executive Officer.
Robert Minutoli, Executive Vice President of Vornado’s existing Retail
Segment, will remain with SpinCo as its Chief Operating Officer.
Vornado’s retail management team and personnel will also remain with
SpinCo. Steven Roth, Chairman of the Board and Chief Executive Officer
of Vornado, will serve on the Board of Directors of SpinCo.
Vornado believes that SpinCo’s portfolio will be well positioned to
deliver both internal growth through active asset management and
redevelopments and external growth through acquisitions and selective
new developments. SpinCo’s demographics are among the highest of its
peers having average population within 3 miles of 149,000 and average
household income of $71,000. SpinCo’s average base rent is $18.75 per
square foot as compared to the peer median of $15.66 per square foot.
Vornado will retain, for disposition in the near term, 20 small retail
assets which do not fit SpinCo’s strategy, valued at approximately $100
million. Further, Vornado will retain Beverly Connection and Springfield
Town Center, both of which are under contract for disposition. Vornado’s
business after these dispositions and the spin-off will be highly
concentrated in New York City and Washington, DC, and be comprised of
its high quality office portfolios and the largest, most valuable
portfolio of Manhattan street retail assets.
The pro rata distribution of SpinCo’s shares to Vornado common
shareholders and Vornado Realty L.P. common unitholders is intended to
be treated as a tax-free spin-off for U.S. federal income tax purposes.
Vornado anticipates that its current annualized dividend of $2.92 per
share will be maintained through the combination of Vornado’s and
SpinCo’s dividends.
The initial Form 10 registration statement relating to the spin-off is
expected to be filed with the Securities and Exchange Commission (“SEC”)
in the second quarter of 2014, and the distribution is expected to be
completed in the fourth quarter of 2014. The transaction is subject to
certain conditions, including the SEC declaring that SpinCo’s
registration statement is effective, filing and approval of SpinCo’s
listing application, receipt of third party consents, and formal
approval and declaration of the distribution by Vornado’s Board of
Trustees. Vornado may, at any time and for any reason until the proposed
transaction is complete, abandon the separation or modify or change its
terms.
Goldman, Sachs & Co. and Morgan Stanley are Vornado’s exclusive
financial advisors and Sullivan & Cromwell LLP is legal advisor to
Vornado in connection with the proposed transaction.
Conference Call Details
Vornado will hold a conference call to discuss the transaction at 10:00
a.m. Eastern Time on Monday, April 14, 2014. The conference call can be
accessed by dialing 800-708-4539 (toll free) or 847-619-6396
(international) and entering the passcode 37093999.
A telephonic replay of the conference call and an online audio playback
will be available until May 5, 2014. The telephonic replay can be
accessed by dialing 888-843-7419 and entering the passcode 37093999 and
the online audio playback can be accessed at www.vno.com.
Supplemental Materials and Website
An investor presentation for this transaction is available on Vornado’s
website at www.vno.com.
The investor presentation and this press release have also been
furnished to the SEC in a current report on Form 8-K.
Vornado Realty Trust is a fully integrated equity real estate investment
trust.
Forward-Looking Statements
Certain statements contained herein 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
performance. They represent our intentions, plans, expectations and
beliefs and are subject to numerous assumptions, risks and
uncertainties. Consequently, the future results, financial condition and
business of Vornado Realty Trust (“Vornado”) and of the planned spin-off
entity (“SpinCo”) may differ materially from those expressed in these
forward-looking statements. You can find many of these statements by
looking for words such as “approximates”, “believes”, “expects”,
“anticipates”, “estimates”, “intends”, “plans”, “would”, “may” or
similar expressions in this press release. We also note the following
forward-looking statements: in the case of our development and
redevelopment projects, the estimated completion date, estimated project
cost and cost to complete; and estimates of future capital expenditures,
dividends to common and preferred shareholders and operating partnership
distributions. Many of the factors that will determine the outcome of
these and our other forward-looking statements are beyond our ability to
control or predict. These factors include, among others: uncertainties
as to the timing of the spin-off and whether it will be completed, the
possibility that various closing conditions to the spin-off may not be
satisfied or waived, the expected tax treatment of the spin-off, the
composition of the spin-off portfolio, the possibility that third-party
consents required to transfer certain properties in the spin-off will
not be received, the impact of the spin-off on the businesses of Vornado
and SpinCo, the timing of and costs associated with property
improvements, financing commitments, and general competitive factors.
For further discussion of factors that could materially affect the
outcome of our forward-looking statements and other risks and
uncertainties, see “Risk Factors” in Vornado’s annual and quarterly
periodic reports filed with the SEC. For these statements, we claim the
protection of the safe harbor for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995. You are
cautioned not to place undue reliance on our forward-looking statements.
All subsequent written and oral forward-looking statements attributable
to us or any person acting on our behalf are expressly qualified in
their entirety by the cautionary statements contained or referred to in
this section. We do not undertake any obligation to release publicly any
revisions to our forward-looking statements to reflect events or
circumstances occurring after the date of this press release.
Non-GAAP Measures
This press release includes forward-looking statements regarding the
estimated non-GAAP measure of 2014 net operating income (“NOI”) for
SpinCo, based upon the assets currently expected to be included in
SpinCo. NOI is a supplemental non-GAAP measures that aids in the
assessment of the unlevered performance of SpinCo’s properties and
portfolio as it relates to the total return on assets. The most directly
comparable GAAP financial measure is operating income. NOI is calculated
by adjusting GAAP operating income to add back depreciation and
amortization expense, general and administrative expenses, and non-cash
ground rent expense, and deduct non-cash rental income resulting from
the straight-lining of rents and amortization of acquired below market
leases net of above market leases. We believe NOI is a meaningful
non-GAAP financial measure because real estate acquisitions and
dispositions are evaluated based on, among other considerations,
property NOI applied to market capitalization rates. We believe that NOI
is helpful to SpinCo investors because it is a widely recognized measure
of the performance of real estate investment trusts in the shopping
center sector and provides a relevant basis for comparison among REITs
in such sector. NOI should not be considered a substitute for operating
income or net income and may not be comparable to similarly titled
measures employed by others.
Contacts:
VORNADO REALTY TRUST
STEPHEN THERIOT, 201-587-1000
Source: Vornado Realty Trust
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