I have always believed that, over the long term, real estate values closely correlate with replacement cost, the number at which new supply enters the market. That number in Washington is $700-800 in the District of Columbia and $450 per square foot in the suburbs. In Manhattan, replacement cost is, say, $900 per square foot for outlying sites and much more if one can find a Sixth Avenue to Lexington Avenue site. All this becomes even more interesting when one considers, as I do, that Vornado's current share price values our Manhattan towers at about $500 per square foot.

We take the bad with the good. Our core operating businesses had a truly great 2007, posting record results. Occupancies are high, rents are good and talented people are in place. But our share price disappointed, as did everyone's. We are always elephant hunting and this year we missed a few. So be it. For sure, the trouble in our economy will create opportunities for Vornado. Our business is secure and flourishing, and Mike and I are very confident about our future.

Steven Roth

Chairman and CEO

April 3, 2008

P.S. I am delighted to arrange tickets for shareholders and colleagues to any of the Broadway plays that my wife is producing this season – CURTAINS, AUGUST:OSAGE COUNTY, A CATERED AFFAIR, THE COUNTRY GIRL and THURGOOD.