UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
 
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934	
 
For the Fiscal Year Ended:	December 31, 2013	 	 	

OR
 
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934	

For the transition period from	 	to	 	
 	 	 	 	
Commission File Number:	001‑11954	

 	VORNADO REALTY TRUST	 	
 (Exact name of Registrant as specified in its charter)
 
Maryland	 	22‑1657560	
(State or other jurisdiction of incorporation or organization)	 	(I.R.S. Employer Identification Number)	
 	 	 	
888 Seventh Avenue, New York, New York	 	10019	
(Address of Principal Executive Offices)	 	(Zip Code)	
 
Registrant’s telephone number including area code:	(212) 894‑7000	

Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class	 	Name of Each Exchange on Which Registered	
Common Shares of beneficial interest,
$.04 par value per share	 	New York Stock Exchange	
 	 	 	
Cumulative Redeemable Preferred Shares of beneficial
interest, no par value:	 	 	
 	 	 	
6.625% Series G	 	New York Stock Exchange	
 	 	 	
6.625% Series I	 	New York Stock Exchange	
 	 	 	
6.875% Series J	 	New York Stock Exchange	
 	 	 	
5.70% Series K	 	New York Stock Exchange	
 	 	 	
5.40% Series L	 	New York Stock Exchange	
 	 	 	
Securities registered pursuant to Section 12(g) of the Act:      NONE

 

 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 
YES  x      NO  o
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
YES  o      NO  x
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES  x      NO  o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  
YES  x      NO  o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S‑K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10‑K or any amendment to this Form 10‑K. o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
	x Large Accelerated Filer	 	o Accelerated Filer	
	o Non-Accelerated Filer (Do not check if smaller reporting company)	 	o Smaller Reporting Company	
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES  o   NO  x
 
The aggregate market value of the voting and non-voting common shares held by non‑affiliates of the registrant, i.e. by persons other than officers and trustees of Vornado Realty Trust, was $14,071,641,000 at June 30, 2013.
 
As of December 31, 2013, there were 187,284,688 of the registrant’s common shares of beneficial interest outstanding.
 
Documents Incorporated by Reference
 
Part III :  Portions of Proxy Statement for Annual Meeting of Shareholders to be held on May 22, 2014.
 
This Annual Report on Form 10-K omits financial statements required under Rule 3-09 of Regulation S-X, for Toys “R” Us, Inc. An amendment to this Annual Report on Form 10-K will be filed as soon as practicable following the availability of such financial statements.

 

  
 
				INDEX			
							
		Item		Financial Information:		Page Number	
							
PART I.	1.		Business		4	
							
		1A.		Risk Factors		8	
							
		1B.		Unresolved Staff Comments		17	
							
		2.		Properties		18	
							
		3.		Legal Proceedings		31	
							
		4.		Mine Safety Disclosures		31	
							
PART II.	5.		Market for Registrant’s Common Equity, Related Stockholder Matters and			
				Issuer Purchases of Equity Securities		32	
							
		6.		Selected Financial Data		34	
							
		7.		Management's Discussion and Analysis of Financial Condition and			
				Results of Operations		36	
							
		7A.		Quantitative and Qualitative Disclosures about Market Risk		92	
							
		8.		Financial Statements and Supplementary Data		93	
							
		9.		Changes in and Disagreements with Accountants on			
				Accounting and Financial Disclosure		144	
							
		9A.		Controls and Procedures		144	
							
		9B.		Other Information		146	
							
PART III.	10.		Directors, Executive Officers and Corporate Governance (1)		146	
							
		11.		Executive Compensation (1)		147	
							
		12.		Security Ownership of Certain Beneficial Owners and Management			
				and Related Stockholder Matters (1)		147	
							
		13.		Certain Relationships and Related Transactions, and Director Independence (1)		147	
							
		14.		Principal Accounting Fees and Services (1)		147	
							
PART IV.	15.		Exhibits, Financial Statement Schedules		148	
							
Signatures					149	

(1)	These items are omitted in whole or in part because the registrant will file a definitive Proxy Statement pursuant to Regulation 14A under the Securities Exchange Act of 1934 with the Securities and Exchange Commission no later than 120 days after December 31, 2013, portions of which are incorporated by reference herein.	
2

 

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 future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business 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 other similar expressions in this Annual Report on Form 10‑K. 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. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Item 1A. Risk Factors” in this Annual Report on Form 10-K.
 
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, which speak only as of the date of this Annual Report on Form 10-K or the date of any document incorporated by reference. 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 Annual Report on Form 10-K.

3

 

PART I
 
ITEM 1.        BUSINESS
Vornado Realty Trust (“Vornado”) is a fully‑integrated real estate investment trust (“REIT”) and conducts its business through, and substantially all of its interests in properties are held by, Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”).  Accordingly, Vornado’s cash flow and ability to pay dividends to its shareholders is dependent upon the cash flow of the Operating Partnership and the ability of its direct and indirect subsidiaries to first satisfy their obligations to creditors.  Vornado is the sole general partner of, and owned approximately 94.0% of the common limited partnership interest in the Operating Partnership at December 31, 2013.  All references to “we,” “us,” “our,” the “Company” and “Vornado” refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership.
                 
As of December 31, 2013, we own all or portions of:
 
New York:
 
·          19.8 million square feet of Manhattan office space in 31 properties and four residential properties containing 1,653 units;
 
·          2.4 million square feet of Manhattan street retail space in 55 properties;
 
·          The 1,700 room Hotel Pennsylvania located on Seventh Avenue at 33 rd Street in the heart of the Penn Plaza district;
 
·          A 32.4% interest in Alexander’s, Inc. (NYSE: ALX), which owns six properties in the greater New York metropolitan area, including 731 Lexington Avenue, the 1.3 million square foot Bloomberg, L.P. headquarters building;
 
Washington, DC:
 
·          16.2 million square feet of office space in 59 properties and seven residential properties containing 2,405 units;
 
Retail Properties:
 
·          14.9 million square feet of retail space in 106 strip shopping centers and single tenant retail assets, primarily in the northeast states and California;
 
·          5.3 million square feet of retail space in six regional malls, located in the northeast / mid-Atlantic states and Puerto Rico;

Other Real Estate and Related Investments:
 
·          The 3.6 million square foot Merchandise Mart in Chicago, whose largest tenant is Motorola Mobility, owned by Google, which leases 608,000 square feet;
 
·          A 70% controlling interest in 555 California Street, a three-building office complex in San Francisco’s financial district aggregating 1.8 million square feet, known as the Bank of America Center;
 
·          A 25.0% interest in Vornado Capital Partners, our real estate fund.  We are the general partner and investment manager of the fund;
 
·          A 32.6% interest in Toys “R” Us, Inc.; and
 
·          Other real estate and related investments and mortgage and mezzanine loans on real estate.
4

 

OBJECTIVES AND STRATEGY
Our business objective is to maximize shareholder value. We intend to achieve this objective by continuing to pursue our investment philosophy and execute our operating strategies through:
 
·      Maintaining a superior team of operating and investment professionals and an entrepreneurial spirit;
·      Investing in properties in select markets, such as New York City and Washington, DC, where we believe there is a high likelihood of capital appreciation;
·      Acquiring quality properties at a discount to replacement cost and where there is a significant potential for higher rents;
·      Investing in retail properties in select under-stored locations such as the New York City metropolitan area;
·      Developing and redeveloping our existing properties to increase returns and maximize value; and
·          Investing in operating companies that have a significant real estate component.
 
We expect to finance our growth, acquisitions and investments using internally generated funds, proceeds from possible asset sales and by accessing the public and private capital markets.  We may also offer Vornado common or preferred shares or Operating Partnership units in exchange for property and may repurchase or otherwise reacquire these securities in the future.

ACQUISITIONS
 
Since January 1, 2013, we have completed the following acquisitions:
 
·          A 20.1% interest in 650 Madison Avenue, a 27-story, 594,000 square foot Class A office and retail tower located on Madison Avenue between 59th and 60th Street, for $260 million ($1.295 billion at 100%). 
·          A 92.5% interest in 655 Fifth Avenue, a 57,500 square foot retail and office property located at the northeast corner of Fifth Avenue and 52nd Street in Manhattan, for $277.5 million ($300 million at 100%). 
·          Land and air rights for 137,000 zoning square feet thereby completing the assemblage for our 220 Central Park South development site in Manhattan, for $194 million.
·           Three other Manhattan street retail properties, in separate transactions, for an aggregate of $65.3 million.
 
Additional details about our Acquisitions are provided in the “Overview” of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

DISPOSITIONS
 
Since January 1, 2013, we have sold 20 assets and marketable securities, including J.C. Penney, for an aggregate of $1.8 billion, with net proceeds of approximately $1.3 billion.  Below is a summary of these sales.
 
·          Green Acres Mall in Valley Stream, New York, for $500 million.
·          The Plant, a power strip shopping center in San Jose, California, for $203 million.
·          866 United Nations Plaza, a 360,000 square foot office building in Manhattan, for $200 million.
·          A retail property in Philadelphia, which is a part of the Gallery at Market Street, for $60 million.
·          A parcel of land known as Harlem Park located at 1800 Park Avenue (at 125 th Street) in New York City, for $66 million.
·          A retail property in Tampa, Florida for $45 million, of which our 75% share was $33.8 million.
·          12 other properties, in separate transactions, for an aggregate of $82.3 million.
·          Marketable securities, principally  J.C. Penney, for an aggregate of $378.7 million.
·          Our 26.2% interest in LNR for net proceeds of $240.5 million.
·          Our 50% interest in the Downtown Crossing site in Boston for net proceeds of $45 million.
 
Additional details about our Dispositions are provided in the “Overview” of Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
5

 

FINANCINGS
 
Since January 1, 2013, we have executed the following capital market transactions:
 
·          A $600 million loan secured by our 220 Central Park South development site.
·          The restructuring of the $678 million (face amount) Skyline properties mortgage loan.
·          Extended one of our two $1.25 billion revolving credit facilities from June 2015 to June 2017, with two six-month extension options.
·          Five additional financings secured by real estate aggregating $1.707 billion at a weighted average interest rate of 3.63% and a weighted average term of 7.5 years.  One of these financings was to support a recently acquired asset and the other four yielded approximately $351 million of net proceeds. 
·          Issued $300 million of 5.4% Series L Preferred Shares and redeemed all of the outstanding Series F and H Preferred Shares and the Series D-15 Preferred Units, which had a weighted average rate of 6.77%, for $299.4 million.
 
Additional details about our Financings are provided in the “Overview” of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

SEGMENT DATA
 
We operate in the following business segments: New York, Washington, DC, Retail Properties, and Toys “R” Us (“Toys”).  As a result of certain organizational changes and asset sales in 2012, the Merchandise Mart segment no longer meets the criteria to be a separate reportable segment; accordingly, effective January 1, 2013, the remaining assets have been reclassified to “Other.”  We have also reclassified the prior period segment financial results to conform to the current year presentation. Financial information related to these business segments for the years ended December 31, 2013, 2012 and 2011 is set forth in Note 26 – Segment Information to our consolidated financial statements in this Annual Report on Form 10-K.

SEASONALITY
 
Our revenues and expenses are subject to seasonality during the year which impacts quarterly net earnings, cash flows and funds from operations, and therefore impacts comparisons of the current quarter to the previous quarter. The business of Toys is highly seasonal and substantially all of Toys’ net income is generated in its fourth quarter, which we record on a one-quarter lag basis in our first quarter. The New York and Washington, DC segments have historically experienced higher utility costs in the first and third quarters of the year.  The Retail Properties segment revenue in the fourth quarter is typically higher due to the recognition of percentage and specialty rental income.

TENANTS ACCOUNTING FOR OVER 10% OF REVENUES
 
None of our tenants accounted for more than 10% of total revenues in any of the years ended December 31, 2013, 2012 and 2011 . 
6

 

CERTAIN ACTIVITIES
 
We do not base our acquisitions and investments on specific allocations by type of property. We have historically held our properties for long‑term investment; however, it is possible that properties in our portfolio may be sold when circumstances warrant. Further, we have not adopted a policy that limits the amount or percentage of assets which could be invested in a specific property or property type. While we may seek the vote of our shareholders in connection with any particular material transaction, generally our activities are reviewed and may be modified from time to time by our Board of Trustees without the vote of shareholders.

EMPLOYEES
 
As of December 31, 2013, we have approximately 4,369 employees, of which 339 are corporate staff. The New York segment has 3,244 employees, including 2,564 employees of Building Maintenance Services LLC, a wholly owned subsidiary, which provides cleaning, security and engineering services primarily to our New York and Washington, DC properties and 516 employees at the Hotel Pennsylvania. The Washington, DC and Retail Properties segments have 448 and 107 employees, respectively and the Merchandise Mart properties have 231 employees.  The foregoing does not include employees of partially owned entities, including Toys or Alexander’s, of which we own 32.6% and 32.4%, respectively.

PRINCIPAL EXECUTIVE OFFICES
 
Our principal executive offices are located at 888 Seventh Avenue, New York, New York 10019; telephone (212) 894‑7000. 

MATERIALS AVAILABLE ON OUR WEBSITE
 
Copies of our Annual Report on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, and amendments to those reports, as well as Reports on Forms 3, 4 and 5 regarding officers, trustees or 10% beneficial owners of us, filed or furnished pursuant to Section 13(a), 15(d) or 16(a) of the Securities Exchange Act of 1934 are available free of charge through our website (www.vno.com) as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission. Also available on our website are copies of our Audit Committee Charter, Compensation Committee Charter, Corporate Governance and Nominating Committee Charter, Code of Business Conduct and Ethics and Corporate Governance Guidelines. In the event of any changes to these charters or the code or guidelines, changed copies will also be made available on our website.  Copies of these documents are also available directly from us free of charge.  Our website also includes other financial information, including certain non-GAAP financial measures, none of which is a part of this Annual Report on Form 10-K.  Copies of our filings under the Securities Exchange Act of 1934 are also available free of charge from us, upon request.
7

 

ITEM 1A.     RISK FACTORS
Material factors that may adversely affect our business, operations and financial condition are summarized below.  The risks and uncertainties described herein may not be the only ones we face.  Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.  See “Forward-Looking Statements” contained herein on page 3.
 
REAL ESTATE INVESTMENTS’ VALUE AND INCOME FLUCTUATE DUE TO VARIOUS FACTORS.
The value of real estate fluctuates depending on conditions in the general economy and the real estate business. These conditions may also adversely impact our revenues and cash flows.
 
The factors that affect the value of our real estate investments include, among other things:
·      national, regional and local economic conditions;
·      competition from other available space;
·      local conditions such as an oversupply of space or a reduction in demand for real estate in the area;
·      how well we manage our properties;
·          the development and/or redevelopment of our properties;
·      changes in market rental rates;
·      the timing and costs associated with property improvements and rentals;
·      whether we are able to pass all or portions of any increases in operating costs through to tenants;
·      changes in real estate taxes and other expenses;  
·      whether tenants and users such as customers and shoppers consider a property attractive;
·      the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;
·      availability of financing on acceptable terms or at all;
·          inflation or deflation;
·      fluctuations in interest rates;
·      our ability to obtain adequate insurance;
·      changes in zoning laws and taxation;
·      government regulation;
·      consequences of any armed conflict involving, or terrorist attacks against, the United States;
·      potential liability under environmental or other laws or regulations;
·          natural disasters;
·      general competitive factors; and
·          climate changes.
 
The rents or sales proceeds we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of these factors. If rental revenues, sales proceeds and/or occupancy levels decline, we generally would expect to have less cash available to pay indebtedness and for distribution to shareholders. In addition, some of our major expenses, including mortgage payments, real estate taxes and maintenance costs generally do not decline when the related rents decline.
 
Capital markets and economic conditions can materially affect our liquidity, financial condition and results of operations as well as the value of our debt and equity securities.
There are many factors that can affect the value of our debt and equity securities, including the state of the capital markets and the economy.  Demand for office and retail space may decline nationwide, as it did in 2008 and 2009 due to the economic downturn, bankruptcies, downsizing, layoffs and cost cutting.  Government action or inaction may adversely affect the state of the capital markets.  The cost and availability of credit may be adversely affected by illiquid credit markets and wider credit spreads, which may adversely affect our liquidity and financial condition, including our results of operations, and the liquidity and financial condition of our tenants.  Our inability or the inability of our tenants to timely refinance maturing liabilities and access the capital markets to meet liquidity needs may materially affect our financial condition and results of operations and the value of our debt and equity securities.

8

 
 
Real estate is a competitive business.
We compete with a large number of property owners and developers, some of which may be willing to accept lower returns on their investments. Principal factors of competition include rents charged, sales prices, attractiveness of location, the quality of the property and the breadth and quality of services provided. Our success depends upon, among other factors, trends of the national, regional and local economies, financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulation, legislation and population trends.
 
We depend on leasing space to tenants on economically favorable terms and collecting rent from tenants who may not be able to pay.
Our financial results depend significantly on leasing space in our properties to tenants on economically favorable terms. In addition, because a majority of our income comes from renting of real property, our income, funds available to pay indebtedness and funds available for distribution to shareholders will decrease if a significant number of our tenants cannot pay their rent or if we are not able to maintain occupancy levels on favorable terms. If a tenant does not pay its rent, we may not be able to enforce our rights as landlord without delays and may incur substantial legal costs.  During periods of economic adversity, there may be an increase in the number of tenants that cannot pay their rent and an increase in vacancy rates.
 
Bankruptcy or insolvency of tenants may decrease our revenue, net income and available cash.
From time to time, some of our tenants have declared bankruptcy, and other tenants may declare bankruptcy or become insolvent in the future. In the case of our malls and strip shopping centers, the bankruptcy or insolvency of a major tenant could cause us to suffer lower revenues and operational difficulties, including leasing the remainder of the property. As a result, the bankruptcy or insolvency of a major tenant could result in decreased revenue, net income and funds available to pay our indebtedness or make distributions to shareholders. 
 
We may incur significant costs to comply with environmental laws and environmental contamination may impair our ability to lease and/or sell real estate.
Our operations and properties are subject to various federal, state and local laws and regulations concerning the protection of the environment, including air and water quality, hazardous or toxic substances and health and safety. Under some environmental laws, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property. The owner or operator may also be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused the release. The presence of contamination or the failure to remediate contamination may impair our ability to sell or lease real estate or to borrow using the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and also govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) are also regulated by federal and state laws. We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. Our predecessor companies may be subject to similar liabilities for activities of those companies in the past.  We could incur fines for environmental compliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or related claims arising out of environmental contamination or human exposure to contamination at or from our properties.
 
Each of our properties has been subject to varying degrees of environmental assessment. To date, these environmental assessments have not revealed any environmental condition material to our business. However, identification of new compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination,  human exposure to contamination or changes in clean-up or compliance requirements could result in significant costs to us.
 
We face risks associated with our tenants being designated “Prohibited Persons” by the Office of Foreign Assets Control.    
 
Pursuant to Executive Order 13224 and other laws, the Office of Foreign Assets Control of the United States Department of the Treasury (“OFAC”) maintains a list of persons designated as terrorists or who are otherwise blocked or banned (“Prohibited Persons”) from conducting business or engaging in transactions in the United States.  Our leases, loans and other agreements may require us to comply with OFAC requirements.  If a tenant or other party with whom we conduct business is placed on the OFAC list we may be required to terminate the lease or other agreement.  Any such termination could result in a loss of revenue or otherwise negatively affect our financial results and cash flows.
 
9

 
 
Our business and operations would suffer in the event of system failures.    
 
Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan for our internal information technology systems, our systems are vulnerable to damages from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures.  Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business.  We may also incur additional costs to remedy damages caused by such disruptions.
 
The occurrence of cyber incidents, or a deficiency in our cyber security, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.
 
A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our information resources. More specifically, a cyber incident is an intentional attack or an unintentional event that can include gaining unauthorized access to systems to disrupt operations, corrupt data, or steal confidential information. As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced. Our three primary risks that could directly result from the occurrence of a cyber incident include operational interruption, damage to our relationship with our tenants, and private data exposure.  We have implemented processes, procedures and controls to help mitigate these risks, but these measures, as well as our increased awareness of a risk of a cyber incident, do not guarantee that our financial results will not be negatively impacted by such an incident.
 
Some of our potential losses may not be covered by insurance.
We maintain general liability insurance with limits of $300,000,000 per occurrence and all risk property and rental value insurance with limits of $2.0 billion per occurrence, with sub-limits for certain perils such as floods.  Our California properties have earthquake insurance with coverage of $180,000,000 per occurrence, subject to a deductible in the amount of 5% of the value of the affected property, up to a $180,000,000 annual aggregate. We maintain coverage for terrorism acts with limits of $4.0 billion per occurrence and in the aggregate, and $2.0 billion per occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological (“NBCR”) terrorism events, as defined by Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2014.
 
Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a portion of all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for NBCR acts.  Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to PPIC.  For NBCR acts, PPIC is responsible for a deductible of $3,200,000 and 15% of the balance of a covered loss and the Federal government is responsible for the remaining 85% of a covered loss.  We are ultimately responsible for any loss incurred by PPIC.
 
We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism.  However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future.
 
Our debt instruments, consisting of mortgage loans secured by our properties which are non-recourse to us, senior unsecured notes and revolving credit agreements contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain it could adversely affect our ability to finance our properties and expand our portfolio.
 
Compliance or failure to comply with the Americans with Disabilities Act or other safety regulations and requirements could result in substantial costs. 
The Americans with Disabilities Act (“ADA”) generally requires that public buildings, including our properties, meet certain federal requirements related to access and use by disabled persons.  Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants and/or legal fees to their counsel.  From time to time persons have asserted claims against us with respect to some of our properties under the ADA, but to date such claims have not resulted in any material expense or liability.  If, under the ADA, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations, as well as the amount of cash available for distribution to shareholders.

 
 
10

 

Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements.  If we fail to comply with these requirements, we could incur fines or private damage awards.  We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations.

OUR INVESTMENTS ARE CONCENTRATED IN THE NEW YORK CITY METROPOLITAN AREA AND WASHINGTON, DC / NORTHERN VIRGINIA AREA. CIRCUMSTANCES AFFECTING THESE AREAS GENERALLY COULD ADVERSELY AFFECT OUR BUSINESS.
A significant portion of our properties are located in the New York City / New Jersey metropolitan area and Washington, DC / Northern Virginia area and are affected by the economic cycles and risks inherent to those areas.
In 2013, approximately 96% of our EBITDA, excluding items that affect comparability, came from properties located in the New York City metropolitan areas and the Washington, DC / Northern Virginia area.  We may continue to concentrate a significant portion of our future acquisitions in these areas or in other geographic real estate markets in the United States or abroad.  Real estate markets are subject to economic downturns and we cannot predict how economic conditions will impact these markets in either the short or long term. Declines in the economy or declines in real estate markets in these areas could hurt our financial performance and the value of our properties.  In addition to the factors affecting the national economic condition generally, the factors affecting economic conditions in these regions include:
·      financial performance and productivity of the media, advertising, financial, technology, retail, insurance and real estate industries;
·      space needs of, and budgetary constraints affecting, the United States Government, including the effect of a deficit reduction plan and/or base closures and repositioning under the Defense Base Closure and Realignment Act of 2005, as amended;
·      business layoffs or downsizing;
·      industry slowdowns;
·      relocations of businesses;
·      changing demographics;
·      increased telecommuting and use of alternative work places;
·      infrastructure quality; and
·      any oversupply of, or reduced demand for, real estate.
 
It is impossible for us to assess the future effects of trends in the economic and investment climates of the geographic areas in which we concentrate, and more generally of the United States, or the real estate markets in these areas.  Local, national or global economic downturns, would negatively affect our businesses and profitability.
 
Terrorist attacks, such as those of September 11, 2001 in New York City and the Washington, DC area, may adversely affect the value of our properties and our ability to generate cash flow.
We have significant investments in large metropolitan areas, including the New York, Washington, DC and San Francisco metropolitan areas. In the aftermath of a terrorist attack, tenants in these areas may choose to relocate their businesses to less populated, lower-profile areas of the United States that may be perceived to be less likely targets of future terrorist activity and fewer customers may choose to patronize businesses in these areas. This, in turn, would trigger a decrease in the demand for space in these areas, which could increase vacancies in our properties and force us to lease space on less favorable terms. As a result, the value of our properties and the level of our revenues and cash flows could decline materially.
 
Natural Disasters could have a concentrated impact on the areas where we operate and could adversely impact our results.
Our investments are concentrated in the New York, Washington, DC, Chicago and San Francisco metropolitan areas.  Natural disasters, including earthquakes, storms and hurricanes, could impact our properties in these and other areas in which we operate.  Potentially adverse consequences of “global warming” could similarly have an impact on our properties.  As a result, we could become subject to significant losses and/or repair costs that may or may not be fully covered by insurance and to the risk of business interruption.  The incurrence of these losses, costs or business interruptions may adversely affect our operating and financial results.

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WE MAY ACQUIRE OR SELL ASSETS OR ENTITIES OR DEVELOP PROPERTIES. OUR FAILURE OR INABILITY TO CONSUMMATE THESE TRANSACTIONS OR MANAGE THE RESULTS OF THESE TRANSACTIONS COULD ADVERSELY AFFECT OUR OPERATIONS AND FINANCIAL RESULTS.
We may acquire, develop or redevelop real estate and acquire related companies and this may create risks.
We may acquire, develop or redevelop properties or acquire real estate related companies when we believe doing so is consistent with our business strategy. We may not succeed in (i) developing, redeveloping or acquiring real estate and real estate related companies; (ii) completing these activities on time or within budget; and (iii) leasing or selling developed, redeveloped or acquired properties at amounts sufficient to cover our costs.  Competition in these activities could also significantly increase our costs. Difficulties in integrating acquisitions may prove costly or time-consuming and could divert management’s attention. Acquisitions or developments in new markets or industries where we do not have the same level of market knowledge may result in weaker than anticipated performance. We may also abandon acquisition or development opportunities that we have begun pursuing and consequently fail to recover expenses already incurred.  Furthermore, we may be exposed to the liabilities of properties or companies acquired, some of which we may not be aware of at the time of acquisition.  
 
From time to time we have made, and in the future we may seek to make, one or more material acquisitions.  The announcement of such a material acquisition may result in a rapid and significant decline in the price of our common shares.
 
We are continuously looking at material transactions that we believe will maximize shareholder value.  However, an announcement by us of one or more significant acquisitions could result in a quick and significant decline in the price of our common shares. 
 
It may be difficult to buy and sell real estate quickly, which may limit our flexibility.
Real estate investments are relatively difficult to buy and sell quickly. Consequently, we may have limited ability to vary our portfolio promptly in response to changes in economic or other conditions.
 
We may not be permitted to dispose of certain properties or pay down the debt associated with those properties when we might otherwise desire to do so without incurring additional costs.  In addition, when we dispose of or sell assets, we may not be able to reinvest the sales proceeds and earn similar returns.
As part of an acquisition of a property, or a portfolio of properties, we may agree, and in the past have agreed, not to dispose of the acquired properties or reduce the mortgage indebtedness for a long-term period, unless we pay certain of the resulting tax costs of the seller. These agreements could result in us holding on to properties that we would otherwise sell and not pay down or refinance.  In addition, when we dispose of or sell assets, we may not be able to reinvest the sales proceeds and earn returns similar to those generated by the assets that were sold.
 
From time to time we have made, and in the future we may seek to make, investments in companies over which we do not have sole control. Some of these companies operate in industries with different risks than investing and operating real estate.
From time to time we have made, and in the future we may seek to make, investments in companies that we may not control, including, but not limited to, Alexander’s, Inc. (“Alexander’s”), Toys “R” Us (“Toys”), Lexington Realty Trust (“Lexington”), and other equity and mezzanine investments. Although these businesses generally have a significant real estate component, some of them operate in businesses that are different from investing and operating real estate, including operating or managing toy stores. Consequently, we are subject to operating and financial risks of those industries and to the risks associated with lack of control, such as having differing objectives than our partners or the entities in which we invest, or becoming involved in disputes, or competing directly or indirectly with these partners or entities.  In addition, we rely on the internal controls and financial reporting controls of these entities and their failure to maintain effectiveness or comply with applicable standards may adversely affect us.
 
We are subject to risks that affect the general retail environment.
A substantial portion of our properties are in the retail shopping center real estate market and we have a significant investment in Toys.  This means that we are subject to factors that affect the retail environment generally, including the level of consumer spending and consumer confidence, the threat of terrorism and increasing competition from discount retailers, outlet malls, retail websites and catalog companies.  These factors could adversely affect the financial condition of our retail tenants and the retailer in which we hold an investment and the willingness of retailers to lease space in our shopping centers, and in turn, adversely affect us.

 

 
 
12

 
 
Our investment in Toys subjects us to risks that are different from our other lines of business and may result in increased seasonality and volatility in our reported earnings.
Because Toys is a retailer, its operations subject us to the risks of a retail company that are different than those presented by our other lines of business. The business of Toys is highly seasonal and substantially all of Toys net income is generated in its fourth quarter. In addition, our fiscal year ends on December 31 whereas, as is common for retailers, Toys’ fiscal year ends on the Saturday nearest to January 31. Therefore, we record our pro rata share of Toys’ net earnings on a one-quarter lag basis. For example, our financial results for the year ended December 31, 2013 include Toys’ financial results for its first, second and third quarters ended November 2, 2013, as well as Toys’ fourth quarter results of 2012. Because of the seasonality of Toys, our reported quarterly net income shows increased volatility. We may also, in the future and from time to time, invest in other businesses that may report financial results that are more volatile than our historical financial results. 
 
We depend upon our anchor tenants to attract shoppers.
We own several regional malls and other shopping centers that are typically anchored by well-known department stores and other tenants who generate shopping traffic at the mall or shopping center. The value of our properties would be adversely affected if tenants or anchors failed to meet their contractual obligations, sought concessions in order to continue operations or ceased their operations, including as a result of bankruptcy. If the sales of stores operating in our properties were to decline significantly due to economic conditions, closing of anchors or for other reasons, tenants may be unable to pay their minimum rents or expense recovery charges. In the event of a default by a tenant or anchor, we may experience delays and costs in enforcing our rights as landlord.
 
Our decision to dispose of real estate assets would change the holding period assumption in our valuation analyses, which could result in material impairment losses and adversely affect our financial results.
 
 We evaluate real estate assets for impairment based on the projected cash flow of the asset over our anticipated holding period.  If we change our intended holding period, due to our intention to sell or otherwise dispose of an asset, then under accounting principles generally accepted in the United States of America, we must reevaluate whether that asset is impaired.  Depending on the carrying value of the property at the time we change our intention and the amount that we estimate we would receive on disposal, we may record an impairment loss that would adversely affect our financial results. This loss could be material to our results of operations in the period that it is recognized.
 
We invest in marketable equity securities.  The value of these investments may decline as a result of operating performance or economic or market conditions. 
We invest in marketable equity securities of publicly-traded companies, such as Lexington Realty Trust.  As of December 31, 2013, our marketable securities have an aggregate carrying amount of $191,917,000, at market.  Significant declines in the value of these investments due to, among other reasons, operating performance or economic or market conditions, may result in the recognition of impairment losses which could be material. 

OUR ORGANIZATIONAL AND FINANCIAL STRUCTURE GIVES RISE TO OPERATIONAL AND FINANCIAL RISKS.
We may not be able to obtain capital to make investments.
We depend primarily on external financing to fund the growth of our business. This is because one of the requirements of the Internal Revenue Code of 1986, as amended, for a REIT is that it distributes 90% of its taxable income, excluding net capital gains, to its shareholders. There is a separate requirement to distribute net capital gains or pay a corporate level tax in lieu thereof. Our access to debt or equity financing depends on the willingness of third parties to lend or make equity investments and on conditions in the capital markets generally. Although we believe that we will be able to finance any investments we may wish to make in the foreseeable future, there can be no assurance that new financing will be available or available on acceptable terms.  For information about our available sources of funds, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and the notes to the consolidated financial statements in this Annual Report on Form 10-K.

 

 

 
 
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Vornado Realty Trust (“Vornado”) depends on dividends and distributions from its direct and indirect subsidiaries. The creditors and preferred security holders of these subsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or distributions to Vornado.
Substantially all of Vornado’s assets are held through its Operating Partnership that holds substantially all of its properties and assets through subsidiaries. The Operating Partnership’s cash flow is dependent on cash distributions to it by its subsidiaries, and in turn, substantially all of Vornado’s cash flow is dependent on cash distributions to it by the Operating Partnership. The creditors of each of Vornado’s direct and indirect subsidiaries are entitled to payment of that subsidiary’s obligations to them, when due and payable, before distributions may be made by that subsidiary to its equity holders. Thus, the Operating Partnership’s ability to make distributions to holders of its units depends on its subsidiaries’ ability first to satisfy their obligations to their creditors and then to make distributions to the Operating Partnership. Likewise, Vornado’s ability to pay dividends to holders of common and preferred shares depends on the Operating Partnership’s ability first to satisfy its obligations to its creditors and make distributions payable to holders of preferred units and then to make distributions to Vornado.
 
Furthermore, the holders of preferred units of the Operating Partnership are entitled to receive preferred distributions before payment of distributions to holders of Class A units of the Operating Partnership, including Vornado. Thus, Vornado’s ability to pay cash dividends to its shareholders and satisfy its debt obligations depends on the Operating Partnership’s ability first to satisfy its obligations to its creditors and make distributions to holders of its preferred units and then to holders of its Class A units, including Vornado.  As of December 31, 2013, there were three series of preferred units of the Operating Partnership not held by Vornado with a total liquidation value of $56,139,000.
 
In addition, Vornado’s participation in any distribution of the assets of any of its direct or indirect subsidiaries upon the liquidation, reorganization or insolvency, is only after the claims of the creditors, including trade creditors and preferred security holders, are satisfied.
 
We have outstanding debt, and the amount of debt and its cost may increase and refinancing may not be available on acceptable terms.
We rely on both secured and unsecured, variable rate and non-variable rate debt to finance acquisitions and development activities and for working capital. If we are unable to obtain debt financing or refinance existing indebtedness upon maturity, our financial condition and results of operations would likely be adversely affected.  In addition, the cost of our existing debt may increase, especially in the case of a rising interest rate environment, and we may not be able to refinance our existing debt in sufficient amounts or on acceptable terms.  If the cost or amount of our indebtedness increases or we cannot refinance our debt in sufficient amounts or on acceptable terms, we are at risk of credit ratings downgrades and default on our obligations that could adversely affect our financial condition and results of operations.
    
Covenants in our debt instruments could adversely affect our financial condition and our acquisitions and development activities.
The mortgages on our properties contain customary covenants such as those that limit our ability, without the prior consent of the lender, to further mortgage the applicable property or to discontinue insurance coverage. Our unsecured indebtedness and debt that we may obtain in the future may contain customary restrictions, requirements and other limitations on our ability to incur indebtedness, including covenants that limit our ability to incur debt based upon the level of our ratio of total debt to total assets, our ratio of secured debt to total assets, our ratio of EBITDA to interest expense, and fixed charges, and that require us to maintain a certain level of unencumbered assets to unsecured debt. Our ability to borrow is subject to compliance with these and other covenants. In addition, failure to comply with our covenants could cause a default under the applicable debt instrument, and we may then be required to repay such debt with capital from other sources or give possession of a secured property to the lender. Under those circumstances, other sources of capital may not be available to us, or may be available only on unattractive terms.
 
Vornado may fail to qualify or remain qualified as a REIT and may be required to pay income taxes at corporate rates.
Although we believe that we will remain organized and will continue to operate so as to qualify as a REIT for federal income tax purposes, we may fail to remain so qualified. Qualifications are governed by highly technical and complex provisions of the Internal Revenue Code for which there are only limited judicial or administrative interpretations and depend on various facts and circumstances that are not entirely within our control.  In addition, legislation, new regulations, administrative interpretations or court decisions may significantly change the relevant tax laws and/or the federal income tax consequences of qualifying as a REIT.  If, with respect to any taxable year, we fail to maintain our qualification as a REIT and do not qualify under statutory relief provisions, we could not deduct distributions to shareholders in computing our taxable income and would have to pay federal income tax on our taxable income at regular corporate rates. The federal income tax payable would include any applicable alternative minimum tax. If we had to pay federal income tax, the amount of money available to distribute to shareholders and pay our indebtedness would be reduced for the year or years involved, and we would no longer be required to make distributions to shareholders.  In addition, we would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost, unless we were entitled to relief under the relevant statutory provisions.  

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We face possible adverse changes in tax laws, which may result in an increase in our tax liability.
From time to time changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. The shortfall in tax revenues for states and municipalities in recent years may lead to an increase in the frequency and size of such changes. If such changes occur, we may be required to pay additional taxes on our assets or income. These increased tax costs could adversely affect our financial condition and results of operations and the amount of cash available for payment of dividends.
 
Loss of our key personnel could harm our operations and adversely affect the value of our common shares.
We are dependent on the efforts of Steven Roth, the Chairman of the Board of Trustees and Chief Executive Officer of Vornado.  While we believe that we could find a replacement for him and other key personnel, the loss of their services could harm our operations and adversely affect the value of our common shares.

VORNADO’S CHARTER DOCUMENTS AND APPLICABLE LAW MAY HINDER ANY ATTEMPT TO ACQUIRE US.
Our Amended and Restated Declaration of Trust (the “declaration of trust”) sets limits on the ownership of our shares.
Generally, for Vornado to maintain its qualification as a REIT under the Internal Revenue Code, not more than 50% in value of the outstanding shares of beneficial interest of Vornado may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of Vornado’s taxable year. The Internal Revenue Code defines “individuals” for purposes of the requirement described in the preceding sentence to include some types of entities. Under Vornado’s declaration of trust, as amended, no person may own more than 6.7% of the outstanding common shares of any class, or 9.9% of the outstanding preferred shares of any class, with some exceptions for persons who held common shares in excess of the 6.7% limit before Vornado adopted the limit and other persons approved by Vornado’s Board of Trustees. These restrictions on transferability and ownership may delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of the shareholders.
 
The Maryland General Corporation Law (the “MGCL”) contains provisions that may reduce the likelihood of certain takeover transactions.
 
The MGCL imposes conditions and restrictions on certain “business combinations” (including, among other transactions, a merger, consolidation, share exchange, or, in certain circumstances, an asset transfer or issuance of equity securities) between a Maryland REIT and certain persons who beneficially own at least 10% of the corporation’s stock (an “interested shareholder”). Unless approved in advance by the board of trustees of the trust, or otherwise exempted by the statute, such a business combination is prohibited for a period of five years after the most recent date on which the interested shareholder became an interested shareholder.  After such five-year period, a business combination with an interested shareholder must be: (a) recommended by the board of trustees of the trust, and (b) approved by the affirmative vote of at least (i) 80% of the trust’s outstanding shares entitled to vote and (ii) two-thirds of the trust’s outstanding shares entitled to vote which are not held by the interested shareholder with whom the business combination is to be effected, unless, among other things, the trust’s common shareholders receive a “fair price” (as defined by the statute) for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for his or her shares.
 
In approving a transaction, the Board may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the Board.  Vornado’s Board has adopted a resolution exempting any business combination between Vornado and any trustee or officer of Vornado or its affiliates.  As a result, any trustee or officer of Vornado or its affiliates may be able to enter into business combinations with Vornado that may not be in the best interest of Vornado’s shareholders. With respect to business combinations with other persons, the business combination provisions of the MGCL may have the effect of delaying, deferring or preventing a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of the shareholders. The business combination statute may discourage others from trying to acquire control of Vornado and increase the difficulty of consummating any offer.
 
Vornado has a classified Board of Trustees and that may reduce the likelihood of certain takeover transactions.
 
Vornado’s Board of Trustees is divided into three classes of trustees. Trustees of each class are chosen for three-year staggered terms. Staggered terms of trustees may reduce the possibility of a tender offer or an attempt to change control of Vornado, even though a tender offer or change in control might be in the best interest of Vornado’s shareholders.

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We may issue additional shares in a manner that could adversely affect the likelihood of certain takeover transactions.
 
Vornado’s declaration of trust authorizes the Board of Trustees to:
·      cause Vornado to issue additional authorized but unissued common shares or preferred shares;
·      classify or reclassify, in one or more series, any unissued preferred shares;
·      set the preferences, rights and other terms of any classified or reclassified shares that Vornado issues; and
·      increase, without shareholder approval, the number of shares of beneficial interest that Vornado may issue.
 
The Board of Trustees could establish a series of preferred shares whose terms could delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of Vornado’s shareholders, although the Board of Trustees does not now intend to establish a series of preferred shares of this kind. Vornado’s declaration of trust and bylaws contain other provisions that may delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of our shareholders.
 
We may change our policies without obtaining the approval of our shareholders.
Our operating and financial policies, including our policies with respect to acquisitions of real estate or other companies, growth, operations, indebtedness, capitalization and dividends, are exclusively determined by our Board of Trustees. Accordingly, our shareholders do not control these policies.

OUR OWNERSHIP STRUCTURE AND RELATED-PARTY TRANSACTIONS MAY GIVE RISE TO CONFLICTS OF INTEREST.
Steven Roth and Interstate Properties may exercise substantial influence over us. They and some of our other trustees and officers have interests or positions in other entities that may compete with us.
As of December 31, 2013, Interstate Properties, a New Jersey general partnership, and its partners owned an aggregate of approximately 6.6% of the common shares of Vornado and 26.3% of the common stock of Alexander’s Inc. (NYSE: ALX) (“Alexander’s”), which is described below.  Steven Roth, David Mandelbaum and Russell B. Wight, Jr. are the three partners of Interstate Properties. Mr. Roth is the Chairman of the Board and Chief Executive Officer of Vornado, the managing general partner of Interstate Properties and the Chairman of the Board and Chief Executive Officer of Alexander’s. Messrs. Wight and Mandelbaum are trustees of Vornado and also directors of Alexander’s.
 
Because of these overlapping interests, Mr. Roth and Interstate Properties and its partners may have substantial influence over Vornado and on the outcome of any matters submitted to Vornado’s shareholders for approval. In addition, certain decisions concerning our operations or financial structure may present conflicts of interest among Messrs. Roth, Mandelbaum and Wight and Interstate Properties and our other equity or debt holders. In addition, Mr. Roth, Interstate Properties and its partners, and Alexander’s currently and may in the future engage in a wide variety of activities in the real estate business which may result in conflicts of interest with respect to matters affecting us, such as which of these entities or persons, if any, may take advantage of potential business opportunities, the business focus of these entities, the types of properties and geographic locations in which these entities make investments, potential competition between business activities conducted, or sought to be conducted, competition for properties and tenants, possible corporate transactions such as acquisitions and other strategic decisions affecting the future of these entities.
 
We currently manage and lease the real estate assets of Interstate Properties under a management agreement for which we receive an annual fee equal to 4% of base rent and percentage rent.  See the related party disclosures in the notes to the consolidated financial statements in this Annual Report on Form 10-K for additional information.
 
There may be conflicts of interest between Alexander’s and us.
As of December 31, 2013, we owned 32.4% of the outstanding common stock of Alexander’s. Alexander’s is a REIT that has six properties, which are located in the greater New York metropolitan area.  In addition to the 2.1% that they indirectly own through Vornado, Interstate Properties, which is described above, and its partners owned 26.3% of the outstanding common stock of Alexander’s as of December 31, 2013. Mr. Roth is the Chairman of the Board and Chief Executive Office of Vornado, the managing general partner of Interstate Properties, and the Chairman of the Board and Chief Executive Officer of Alexander’s.  Messrs. Wight and Mandelbaum are trustees of Vornado and also directors of Alexander’s and general partners of Interstate Properties.  Dr. Richard West is a trustee of Vornado and a director of Alexander’s.  In addition, Joseph Macnow, our Executive Vice President – Finance and Chief Administrative Officer, is the Executive Vice President and Chief Financial Officer of Alexander’s. 

 
 
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We manage, develop and lease Alexander’s properties under management and development agreements and leasing agreements under which we receive annual fees from Alexander’s. See the related party disclosures in the notes to the consolidated financial statements in this Annual Report on Form 10-K for additional information. 

THE NUMBER OF SHARES OF VORNADO REALTY TRUST AND THE MARKET FOR THOSE SHARES GIVE RISE TO VARIOUS RISKS.
The trading price of our common shares has been volatile and may fluctuate. 
 
The trading price of our common shares has been volatile and may continue to fluctuate widely as a result of a number of factors, many of which are outside our control.  In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of the shares of many companies.  These broad market fluctuations have in the past and may in the future adversely affect the market price of our common shares.  Among the factors that could affect the price of our common shares are:
·          our financial condition and performance;
·          the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;
·          actual or anticipated quarterly fluctuations in our operating results and financial condition;
·          our dividend policy;
·          the reputation of REITs and real estate investments generally and the attractiveness of REIT equity securities in comparison to other equity securities, including securities issued by other real estate companies, and fixed income securities;
·          uncertainty and volatility in the equity and credit markets;
·          fluctuations in interest rates;
·          changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs;
·          failure to meet analysts’ revenue or earnings estimates;
·          speculation in the press or investment community;
·          strategic actions by us or our competitors, such as acquisitions or restructurings;
·          the extent of institutional investor interest in us;
·          the extent of short-selling of our common shares and the shares of our competitors;
·          fluctuations in the stock price and operating results of our competitors;
·          general financial and economic market conditions and, in particular, developments related to market conditions for REITs and other real estate related companies;
·          domestic and international economic factors unrelated to our performance; and
·          all other risk factors addressed elsewhere in this Annual Report on the Form 10-K. 
 
A significant decline in our stock price could result in substantial losses for shareholders.
 
Vornado has many shares available for future sale, which could hurt the market price of its shares.
The interests of our current shareholders could be diluted if we issue additional equity securities. As of December 31, 2013, we had authorized but unissued, 62,715,312 common shares of beneficial interest, $.04 par value and 57,266,023 preferred shares of beneficial interest, no par value; of which 20,356,425 common shares are reserved for issuance upon redemption of Class A Operating Partnership units, convertible securities and employee stock options and 11,200,000 preferred shares are reserved for issuance upon redemption of preferred Operating Partnership units.  Any shares not reserved may be issued from time to time in public or private offerings or in connection with acquisitions.  In addition, common and preferred shares reserved may be sold upon issuance in the public market after registration under the Securities Act or under Rule 144 under the Securities Act or other available exemptions from registration.  We cannot predict the effect that future sales of our common and preferred shares or Operating Partnership Class A and preferred units will have on the market prices of our outstanding shares.
 
In addition, under Maryland law, the Board has the authority to increase the number of authorized shares without shareholder approval.
 
ITEM 1B.     UNRESOLVED STAFF COMMENTS
There are no unresolved comments from the staff of the Securities Exchange Commission as of the date of this Annual Report on Form 10-K.
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ITEM 2.        PROPERTIES
We operate in four business segments:  New York, Washington, DC, Retail Properties and Toys “R” Us.  The following pages provide details of our real estate properties.
									Square Feet 		
											Under 				
											Development 				
											or Not				
			%				%				Available 		Total		
Property		Ownership		Type		Occupancy		In Service 		for Lease 		Property 		
NEW YORK:														
One Penn Plaza (ground leased through 2098)		100.0%		Office / Retail		97.0%		2,509,000 		- 		2,509,000 		
1290 Avenue of the Americas		70.0%		Office / Retail		94.4%		2,113,000 		- 		2,113,000 		
Two Penn Plaza		100.0%		Office / Retail		95.5%		1,619,000 		- 		1,619,000 		
666 Fifth Avenue Office Condominium		49.5%		Office		87.0%		1,418,000 		- 		1,418,000 		
909 Third Avenue (ground leased through 2063)		100.0%		Office		100.0%		1,343,000 		- 		1,343,000 		
Independence Plaza, Tribeca (1,328 units)		50.1%		Residential / Retail		95.4%		1,240,000 		- 		1,240,000 		
280 Park Avenue		49.5%		Office / Retail		100.0%		741,000 		488,000 		1,229,000 		
Eleven Penn Plaza		100.0%		Office / Retail		99.1%		1,148,000 		- 		1,148,000 		
770 Broadway		100.0%		Office / Retail		100.0%		1,126,000 		- 		1,126,000 		
One Park Avenue (2)		30.3%		Office / Retail		96.7%		944,000 		- 		944,000 		
90 Park Avenue		100.0%		Office / Retail		96.5%		918,000 		- 		918,000 		
888 Seventh Avenue (ground leased through 2067)		100.0%		Office / Retail		93.4%		877,000 		- 		877,000 		
100 West 33rd Street		100.0%		Office		99.2%		848,000 		- 		848,000 		
330 Madison Avenue		25.0%		Office / Retail		94.2%		832,000 		- 		832,000 		
330 West 34th Street (ground leased through 2148)		100.0%		Office / Retail		100.0%		95,000 		540,000 		635,000 		
1740 Broadway		100.0%		Office / Retail		100.0%		601,000 		- 		601,000 		
650 Madison Avenue		20.1%		Office / Retail		91.3%		595,000 		- 		595,000 		
350 Park Avenue		100.0%		Office / Retail		99.0%		569,000 		- 		569,000 		
150 East 58th Street		100.0%		Office / Retail		95.8%		538,000 		- 		538,000 		
20 Broad Street (ground leased through 2081)		100.0%		Office		99.3%		472,000 		- 		472,000 		
640 Fifth Avenue		100.0%		Office / Retail		96.0%		324,000 		- 		324,000 		
595 Madison Avenue		100.0%		Office / Retail		100.0%		322,000 		- 		322,000 		
50-70 W 93rd Street (325 units)		49.9%		Residential		93.2%		283,000 		- 		283,000 		
Manhattan Mall		100.0%		Retail		96.1%		256,000 		- 		256,000 		
40 Fulton Street		100.0%		Office / Retail		99.0%		249,000 		- 		249,000 		
4 Union Square South		100.0%		Retail		100.0%		206,000 		- 		206,000 		
57th Street (5 buildings)		50.0%		Office / Retail		82.6%		188,000 		- 		188,000 		
825 Seventh Avenue		51.2%		Office / Retail		100.0%		169,000 		- 		169,000 		
1540 Broadway		100.0%		Retail		100.0%		160,000 		- 		160,000 		
Paramus		100.0%		Office		97.6%		129,000 		- 		129,000 		
608 Fifth Avenue (ground leased through 2026)		100.0%		Office / Retail		91.4%		126,000 		- 		126,000 		
666 Fifth Avenue Retail Condominium		100.0%		Retail		100.0%		113,000 		- 		113,000 		
689 Fifth Avenue		100.0%		Office / Retail		68.2%		92,000 		- 		92,000 		
478-486 Broadway (2 buildings)		100.0%		Retail		100.0%		85,000 		- 		85,000 		
510 Fifth Avenue		100.0%		Retail		90.6%		64,000 		- 		64,000 		
1535 Broadway (Marriott Marquis)														
	(ground and building leased through 2032)		100.0%		Retail		n/a		- 		64,000 		64,000 		
655 Fifth Avenue		92.5%		Retail		100.0%		57,000 		- 		57,000 		
155 Spring Street		100.0%		Retail		100.0%		49,000 		- 		49,000 		
435 Seventh Avenue		100.0%		Retail		100.0%		43,000 		- 		43,000 		
3040 M Street		100.0%		Retail		100.0%		42,000 		- 		42,000 		
692 Broadway		100.0%		Retail		100.0%		35,000 		- 		35,000 		
715 Lexington (ground leased through 2041)		100.0%		Retail		100.0%		23,000 		- 		23,000 		
1131 Third Avenue		100.0%		Retail		100.0%		11,000 		11,000 		22,000 		
7 West 34th Street		100.0%		Retail		100.0%		21,000 		- 		21,000 		
828-850 Madison Avenue		100.0%		Retail		100.0%		18,000 		- 		18,000 		
484 Eighth Avenue		100.0%		Retail		80.6%		16,000 		- 		16,000 		
443 Broadway		100.0%		Retail		100.0%		16,000 		- 		16,000 		
334 Canal Street		100.0%		Retail		n/a		- 		15,000 		15,000 		
40 East 66th Street		100.0%		Retail		100.0%		11,000 		- 		11,000 		
431 Seventh Avenue		100.0%		Retail		100.0%		10,000 		- 		10,000 		
677-679 Madison Avenue		100.0%		Retail		100.0%		8,000 		- 		8,000 		
148 Spring Street		100.0%		Retail		100.0%		7,000 		- 		7,000 		
150 Spring Street		100.0%		Retail		100.0%		7,000 		- 		7,000 		
18

 

ITEM 2.        PROPERTIES - CONTINUED 

									Square Feet 		
											Under 				
											Development 				
											or Not				
			%				%				Available 		Total		
Property		Ownership		Type		Occupancy		In Service 		for Lease 		Property 		
NEW YORK - continued:														
966 Third Avenue		100.0%		Retail		100.0%		7,000 		- 		7,000 		
488 Eighth Avenue		100.0%		Retail		100.0%		6,000 		- 		6,000 		
968 Third Avenue		50.0%		Retail		100.0%		6,000 		- 		6,000 		
267 West 34th Street		100.0%		Retail		100.0%		6,000 		- 		6,000 		
															
Hotel Pennsylvania		100.0%		Hotel		n/a		1,400,000 		- 		1,400,000 		
															
Alexander's, Inc.:														
731 Lexington Avenue		32.4%		Office / Retail		100.0%		1,059,000 		- 		1,059,000 		
Rego Park II, Queens		32.4%		Retail		97.8%		609,000 		- 		609,000 		
Rego Park I, Queens		32.4%		Retail		100.0%		343,000 		- 		343,000 		
Flushing, Queens		32.4%		Retail		100.0%		167,000 		- 		167,000 		
Paramus, New Jersey (30.3 acres													
	ground leased through 2041)		32.4%		Retail		100.0%		- 		- 		- 		
Rego Park II Apartment Tower, Queens		32.4%		Retail		n/a		- 		250,000 		250,000 		
Rego Park III, Queens (3.2 acres)		32.4%		Retail		n/a		- 		- 		- 		
Total New York					96.4% 		27,289,000 		1,368,000 		28,657,000 		
															
Vornado's Ownership Interest						96.8% 		21,392,000 		952,000 		22,344,000 		
															
WASHINGTON, DC:														
Skyline Properties (8 buildings)		100.0%		Office		60.8%		2,652,000 		- 		2,652,000 		
2011-2451 Crystal Drive (5 buildings)		100.0%		Office		84.5%		2,316,000 		- 		2,316,000 		
S. Clark Street / 12th Street (5 buildings)		100.0%		Office		71.9%		1,528,000 		- 		1,528,000 		
1550-1750 Crystal Drive /														
	241-251 18th Street (4 buildings)		100.0%		Office		75.9%		1,486,000 		- 		1,486,000 		
Waterfront Station		2.5%		Office		n/a 		- 		1,058,000 		1,058,000 		
1800, 1851 and 1901 South Bell Street (3 buildings)	100.0%		Office		96.9%		506,000 		363,000 		869,000 		
Fashion Centre Mall		7.5%		Office		99.4%		822,000 		- 		822,000 		
Rosslyn Plaza (4 buildings)		46.2%		Office		72.3%		575,000 		159,000 		734,000 		
1825-1875 Connecticut Avenue, NW														
	(Universal Buildings ) (2 buildings)		100.0%		Office		95.5%		679,000 		- 		679,000 		
2200 / 2300 Clarendon Blvd (Courthouse Plaza)														
	(ground leased through 2062) (2 buildings)		100.0%		Office		94.0%		636,000 		- 		636,000 		
1299 Pennsylvania Avenue, NW														
	(Warner Building)		55.0%		Office		75.8%		614,000 		- 		614,000 		
Fairfax Square (3 buildings)		20.0%		Office		89.0%		558,000 		- 		558,000 		
2100 / 2200 Crystal Drive (2 buildings)		100.0%		Office		99.2%		529,000 		- 		529,000 		
Commerce Executive (3 buildings)		100.0%		Office		93.8%		400,000 		19,000 		419,000 		
1501 K Street, NW		5.0%		Office		98.0%		398,000 		- 		398,000 		
2101 L Street, NW		100.0%		Office		99.0%		380,000 		- 		380,000 		
223 23rd Street / 2221 South Clark Street (2 buildings)	100.0%		Office		100.0%		84,000 		225,000 		309,000 		
1750 Pennsylvania Avenue, NW		100.0%		Office		88.2%		279,000 		- 		279,000 		
1150 17th Street, NW		100.0%		Office		89.2%		241,000 		- 		241,000 		
875 15th Street, NW (Bowen Building)		100.0%		Office		96.7%		231,000 		- 		231,000 		
Democracy Plaza One														
	(ground leased through 2084)		100.0%		Office		89.4%		216,000 		- 		216,000 		
1101 17th Street, NW		55.0%		Office		89.1%		213,000 		- 		213,000 		
1730 M Street, NW		100.0%		Office		89.9%		202,000 		- 		202,000 		
Washington Tower		7.5%		Office		100.0%		170,000 		- 		170,000 		
2001 Jefferson Davis Highway		100.0%		Office		64.3%		162,000 		- 		162,000 		
1399 New York Avenue, NW		100.0%		Office		84.1%		128,000 		- 		128,000 		
1726 M Street, NW		100.0%		Office		100.0%		91,000 		- 		91,000 		
Crystal City Shops at 2100		100.0%		Office		99.0%		80,000 		- 		80,000 		
Crystal Drive Retail		100.0%		Office		100.0%		57,000 		- 		57,000 		
19

 
 
ITEM 2.        PROPERTIES - CONTINUED 

									Square Feet 		
											Under 				
											Development 				
											or Not				
			%				%				Available 		Total		
Property		Ownership		Type		Occupancy		In Service 		for Lease 		Property 		
WASHINGTON, DC - continued:														
Riverhouse (1,661 units) (3 buildings)		100.0%		Residential		96.6%		1,793,000 		- 		1,793,000 		
West End 25 (283 units)		100.0%		Residential		94.7%		273,000 		- 		273,000 		
220 20th Street (265 units)		100.0%		Residential		96.6%		269,000 		- 		269,000 		
Crystal City Hotel		100.0%		Hotel		n/a		266,000 		- 		266,000 		
Rosslyn Plaza (196 units) (2 buildings)		43.7%		Residential		95.4%		253,000 		- 		253,000 		
Met Park / Warehouses		100.0%		Warehouse		100.0%		104,000 		127,000 		231,000 		
Other (3 buildings)		100.0%		Other		100.0%		9,000 		2,000 		11,000 		
Total Washington, DC						83.5%		19,200,000 		1,953,000 		21,153,000 		
															
Vornado's Ownership Interest						83.4%		16,628,000 		842,000 		17,470,000 		

RETAIL PROPERTIES:														
Wayne Town Center, Wayne, NJ														
	(ground leased through 2064)		100.0%		Strip		100.0%		316,000 		347,000 		663,000 		
Allentown, PA		100.0%		Strip		90.3%		627,000 		- 		627,000 		
Poughkeepsie, NY		100.0%		Strip		85.9%		517,000 		- 		517,000 		
Bronx (Bruckner Boulevard), NY		100.0%		Strip		91.3%		501,000 		- 		501,000 		
North Bergen (Tonnelle Avenue), NJ		100.0%		Strip		100.0%		410,000 		- 		410,000 		
Beverly Connection, Los Angeles CA		100.0%		Strip		91.5%		335,000 		- 		335,000 		
Wilkes-Barre, PA		100.0%		Strip		83.2%		329,000 		- 		329,000 		
Buffalo (Amherst), NY		100.0%		Strip		100.0%		311,000 		- 		311,000 		
Bricktown, NJ		100.0%		Strip		94.7%		279,000 		- 		279,000 		
Union (Route 22 and Morris Avenue), NJ		100.0%		Strip		99.4%		276,000 		- 		276,000 		
Hackensack, NJ		100.0%		Strip		75.4%		275,000 		- 		275,000 		
Totowa, NJ		100.0%		Strip		100.0%		271,000 		- 		271,000 		
East Hanover (240 Route 10 West), NJ		100.0%		Strip		95.9%		267,000 		- 		267,000 		
Cherry Hill, NJ		100.0%		Strip		98.6%		263,000 		- 		263,000 		
Jersey City, NJ		100.0%		Strip		100.0%		236,000 		- 		236,000 		
East Brunswick (325 - 333 Route 18 South), NJ		100.0%		Strip		100.0%		232,000 		- 		232,000 		
Union (2445 Springfield Avenue), NJ		100.0%		Strip		100.0%		232,000 		- 		232,000 		
Middletown, NJ		100.0%		Strip		96.3%		231,000 		- 		231,000 		
Lancaster, PA		100.0%		Strip		82.1%		228,000 		- 		228,000 		
Woodbridge NJ		100.0%		Strip		84.1%		226,000 		- 		226,000 		
Chicopee, MA		100.0%		Strip		100.0%		224,000 		- 		224,000 		
Marlton, NJ		100.0%		Strip		100.0%		213,000 		- 		213,000 		
North Plainfield, NJ														
	(ground leased through 2060)		100.0%		Strip		85.0%		212,000 		- 		212,000 		
Bergen Town Center - East, Paramus, NJ		100.0%		Strip		93.6%		211,000 		- 		211,000 		
Huntington, NY		100.0%		Strip		97.9%		209,000 		- 		209,000 		
Manalapan, NJ		100.0%		Strip		99.3%		208,000 		- 		208,000 		
Rochester, NY		100.0%		Strip		100.0%		205,000 		- 		205,000 		
East Rutherford, NJ		100.0%		Strip		100.0%		197,000 		- 		197,000 		
East Brunswick (339-341 Route 18 South), NJ		100.0%		Strip		100.0%		196,000 		- 		196,000 		
Garfield, NJ		100.0%		Strip		100.0%		195,000 		- 		195,000 		
Mt. Kisco, NY		100.0%		Strip		100.0%		189,000 		- 		189,000 		
Newington, CT		100.0%		Strip		100.0%		188,000 		- 		188,000 		
Bensalem, PA		100.0%		Strip		98.9%		185,000 		- 		185,000 		
Springfield, MA		100.0%		Strip		97.8%		182,000 		- 		182,000 		
Bordentown, NJ		100.0%		Strip		80.4%		83,000 		96,000 		179,000 		
Morris Plains, NJ		100.0%		Strip		95.9%		177,000 		- 		177,000 		
20

 
 
ITEM 2.        PROPERTIES - CONTINUED 

									Square Feet 		
										Under 				
											Development 				
											or Not				
			%				%				Available 		Total 		
Property		Ownership		Type		Occupancy		In Service		for Lease 		Property 		
RETAIL PROPERTIES - continued:														
Dover, NJ		100.0%		Strip		96.3%		173,000 		- 		173,000 		
Freeport (437 East Sunrise Highway), NY		100.0%		Strip		100.0%		173,000 		- 		173,000 		
Delran, NJ		100.0%		Strip		7.2%		43,000 		128,000 		171,000 		
Lodi (Route 17 North), NJ		100.0%		Strip		100.0%		171,000 		- 		171,000 		
Watchung, NJ		100.0%		Strip		96.6%		170,000 		- 		170,000 		
Broomall, PA		100.0%		Strip		100.0%		169,000 		- 		169,000 		
Bethlehem, PA		100.0%		Strip		95.3%		167,000 		- 		167,000 		
Rochester (Henrietta), NY														
	(ground leased through 2056)		100.0%		Strip		96.2%		165,000 		- 		165,000 		
Staten Island, NY		100.0%		Strip		96.3%		165,000 		- 		165,000 		
Baltimore (Towson), MD		100.0%		Strip		100.0%		155,000 		- 		155,000 		
Waterbury, CT		100.0%		Strip		97.6%		148,000 		- 		148,000 		
Lawnside, NJ		100.0%		Strip		100.0%		145,000 		- 		145,000 		
Albany (Menands), NY		100.0%		Strip		74.0%		140,000 		- 		140,000 		
Annapolis, MD														
	(ground and building leased through 2042)		100.0%		Strip		100.0%		128,000 		- 		128,000 		
Hazlet, NJ		100.0%		Strip		100.0%		123,000 		- 		123,000 		
Glen Burnie, MD		100.0%		Strip		90.5%		121,000 		- 		121,000 		
Roseville, MI		100.0%		Strip		100.0%		119,000 		- 		119,000 		
Norfolk, VA														
	(ground and building leased through 2069)		100.0%		Strip		100.0%		114,000 		- 		114,000 		
York, PA		100.0%		Strip		100.0%		110,000 		- 		110,000 		
Kearny, NJ		100.0%		Strip		43.5%		104,000 		- 		104,000 		
Glenolden, PA		100.0%		Strip		100.0%		102,000 		- 		102,000 		
New Hyde Park, NY														
	(ground and building leased through 2029)		100.0%		Strip		100.0%		101,000 		- 		101,000 		
Inwood, NY		100.0%		Strip		88.8%		100,000 		- 		100,000 		
North Syracuse, NY														
	(ground and building leased through 2014)		100.0%		Strip		100.0%		98,000 		- 		98,000 		
Turnersville, NJ		100.0%		Strip		100.0%		96,000 		- 		96,000 		
Rockville, MD		100.0%		Strip		100.0%		94,000 		- 		94,000 		
Lodi (Washington Street), NJ		100.0%		Strip		92.1%		85,000 		- 		85,000 		
Milford, MA														
	(ground and building leased through 2019)		100.0%		Strip		100.0%		83,000 		- 		83,000 		
Wilkes-Barre, PA														
	(ground and building leased through 2014)		100.0%		Strip		100.0%		41,000 		40,000 		81,000 		
West Babylon, NY		100.0%		Strip		83.4%		79,000 		- 		79,000 		
Carlstadt, NJ (ground leased through 2050)		100.0%		Strip		95.2%		78,000 		- 		78,000 		
Bronx (1750-1780 Gun Hill Road), NY		100.0%		Strip		90.7%		77,000 		- 		77,000 		
East Hanover (200 Route 10 West), NJ		100.0%		Strip		89.5%		76,000 		- 		76,000 		
Wyomissing, PA														
	(ground and building leased through 2065)		100.0%		Strip		93.2%		76,000 		- 		76,000 		
Colton (1904 North Rancho Avenue), CA		100.0%		Strip		100.0%		73,000 		- 		73,000 		
Wheaton, MD														
	(ground leased through 2060)		100.0%		Strip		100.0%		66,000 		- 		66,000 		
Paramus, NJ (ground leased through 2033)		100.0%		Strip		100.0%		63,000 		- 		63,000 		
North Bergen (Kennedy Boulevard), NJ		100.0%		Strip		100.0%		62,000 		- 		62,000 		
Queens, NY		100.0%		Strip		100.0%		56,000 		- 		56,000 		
South Plainfield, NJ														
	(ground leased through 2039)		100.0%		Strip		85.9%		56,000 		- 		56,000 		
San Francisco (2675 Geary Street), CA														
	(ground and building leased through 2043)		100.0%		Strip		100.0%		55,000 		- 		55,000 		
21

 
 
ITEM 2.        PROPERTIES - CONTINUED 

									Square Feet 		
										Under 				
											Development 				
											or Not				
			%				%				Available 		Total 		
Property		Ownership		Type		Occupancy		In Service		for Lease 		Property 		
RETAIL PROPERTIES - continued:														
Cambridge, MA														
	(ground and building leased through 2033)		100.0%		Strip		100.0%		48,000 		- 		48,000 		
Battle Creek, MI		100.0%		Strip		- 		47,000 		- 		47,000 		
Commack, NY														
	(ground and building leased through 2021)		100.0%		Strip		100.0%		47,000 		- 		47,000 		
Lansing, IL		100.0%		Strip		100.0%		47,000 		- 		47,000 		
Springdale, OH														
	(ground and building leased through 2046)		100.0%		Strip		- 		47,000 		- 		47,000 		
Arlington Heights, IL														
	(ground and building leased through 2043)		100.0%		Strip		100.0%		46,000 		- 		46,000 		
Dewitt, NY														
	(ground leased through 2041)		100.0%		Strip		100.0%		46,000 		- 		46,000 		
Antioch, TN		100.0%		Strip		100.0%		45,000 		- 		45,000 		
Charleston, SC														
	(ground leased through 2063)		100.0%		Strip		100.0%		45,000 		- 		45,000 		
Signal Hill, CA		100.0%		Strip		100.0%		45,000 		- 		45,000 		
Vallejo, CA														
	(ground leased through 2043)		100.0%		Strip		100.0%		45,000 		- 		45,000 		
Freeport (240 West Sunrise Highway), NY														
	(ground and building leased through 2040)		100.0%		Strip		100.0%		44,000 		- 		44,000 		
Fond Du Lac, WI														
	(ground leased through 2073)		100.0%		Strip		100.0%		43,000 		- 		43,000 		
San Antonio, TX														
	(ground and building leased through 2041)		100.0%		Strip		100.0%		43,000 		- 		43,000 		
Chicago, IL														
	(ground and building leased through 2051)		100.0%		Strip		100.0%		41,000 		- 		41,000 		
Englewood, NJ		100.0%		Strip		79.7%		41,000 		- 		41,000 		
Springfield, PA														
	(ground and building leased through 2025)		100.0%		Strip		100.0%		41,000 		- 		41,000 		
Riverside (5571 Mission Boulevard), CA		100.0%		Strip		100.0%		39,000 		- 		39,000 		
Tyson's Corner, VA														
	(ground and building leased through 2035)		100.0%		Strip		100.0%		38,000 		- 		38,000 		
Salem, NH														
	(ground leased through 2102)		100.0%		Strip		100.0%		37,000 		- 		37,000 		
Owensboro, KY														
	(ground and building leased through 2046)		100.0%		Strip		100.0%		32,000 		- 		32,000 		
Dubuque, IA														
	(ground leased through 2043)		100.0%		Strip		100.0%		31,000 		- 		31,000 		
Midland, MI														
	(ground leased through 2043)		100.0%		Strip		83.6%		31,000 		- 		31,000 		
Eatontown, NJ		100.0%		Strip		100.0%		30,000 		- 		30,000 		
Walnut Creek (1149 South Main Street), CA		100.0%		Strip		100.0%		29,000 		- 		29,000 		
East Hanover (280 Route 10 West), NJ		100.0%		Strip		94.0%		26,000 		- 		26,000 		
Montclair, NJ		100.0%		Strip		100.0%		18,000 		- 		18,000 		
Oceanside, NY		100.0%		Strip		100.0%		16,000 		- 		16,000 		
Walnut Creek (Mt. Diablo), CA		95.0%		Strip		100.0%		7,000 		- 		7,000 		
22

 

ITEM 2.        PROPERTIES - CONTINUED 
 
									Square Feet 		
										Under 				
											Development 				
											or Not				
			%				%				Available 		Total 		
Property		Ownership		Type		Occupancy		In Service		for Lease 		Property 		
RETAIL PROPERTIES - continued:														
Monmouth Mall, Eatontown, NJ		50.0%		Mall		93.9%		1,464,000 		- 		1,464,000 		
Springfield Mall, Springfield, VA		100.0%		Mall		100.0%		684,000 		690,000 		1,374,000 		
Broadway Mall, Hicksville, NY		100.0%		Mall		90.1%		1,138,000 		- 		1,138,000 		
Bergen Town Center - West, Paramus, NJ		100.0%		Mall		99.5%		951,000 		- 		951,000 		
Montehiedra, Puerto Rico		100.0%		Mall		91.0%		542,000 		- 		542,000 		
Las Catalinas, Puerto Rico		100.0%		Mall		93.1%		494,000 		- 		494,000 		
Total Retail Properties						94.3%		20,224,000 		1,301,000 		21,525,000 		
															
Vornado's Ownership Interest						94.3%		18,215,000 		1,301,000 		19,516,000 		
 
OTHER (Merchandise Mart):														
Merchandise Mart, Chicago		100.0%		Office / Retail / Showroom		96.4%		3,559,000 		- 		3,559,000 		
Other		50.0%		Retail		100.0%		19,000 		- 		19,000 		
7 West 34th Street		100.0%		Office / Showroom		90.9%		125,000 		295,000 		420,000 		
Total Merchandise Mart						96.3%		3,703,000 		295,000 		3,998,000 		
															
Vornado's Ownership Interest						96.3%		3,694,000 		295,000 		3,989,000 		
															
OTHER (555 California Street):														
555 California Street		70.0%		Office		94.3%		1,503,000 		- 		1,503,000 		
315 Montgomery Street		70.0%		Office / Retail		94.1%		228,000 		- 		228,000 		
345 Montgomery Street		70.0%		Office / Retail		100.0%		64,000 		- 		64,000 		
Total 555 California Street						94.5%		1,795,000 		- 		1,795,000 		
															
Vornado's Ownership Interest						94.5%		1,257,000 		- 		1,257,000 		
															
OTHER (Warehouses):														
East Hanover (5 buildings)		100.0%		Warehouse		45.6%		942,000 		- 		942,000 		
Total Warehouses						45.6%		942,000 		- 		942,000 		
															
Vornado's Ownership Interest						45.6%		942,000 		- 		942,000 		
 
OTHER (Vornado Capital Partners Real Estate Fund) (1) :												
One Park Avenue, NY (2)		64.7%		Office / Retail		96.7%		944,000 		- 		944,000 		
Georgetown Park Retail Shopping Center, DC		50.0%		Office / Retail		100.0%		223,000 		90,000 		313,000 		
800 Corporate Pointe, Culver City, CA (2 buildings)		100.0%		Office		57.0%		243,000 		- 		243,000 		
Crowne Plaza Times Square, NY		38.2%		Office / Retail / Hotel		100.0%		226,000 		- 		226,000 		
Lucida, 86th Street and Lexington Avenue, NY		100.0%		Retail / Residential		100.0%		146,000 		- 		146,000 		
1100 Lincoln Road, Miami, FL		100.0%		Retail		99.6%		127,000 		- 		127,000 		
520 Broadway, Santa Monica, CA		100.0%		Office		81.6%		112,000 		- 		112,000 		
11 East 68th Street Retail, NY		100.0%		Retail		100.0%		9,000 		- 		9,000 		
501 Broadway, NY		100.0%		Retail		100.0%		9,000 		- 		9,000 		
Total Real Estate Fund Properties						89.3%		2,039,000 		90,000 		2,129,000 		
															
Vornado's Ownership Interest						89.3%		364,000 		11,000 		375,000 		

(1) We own a 25% interest in the Fund. The ownership percentage in this section represents the Fund's ownership in the underlying asset.			
															
(2) Our combined ownership interest in this asset, including our direct ownership and our indirect ownership through the Fund, is 46.5%.			
23

 

NEW YORK
 
As of December 31, 2013, our New York segment consisted of 27.3 million square feet in 71 properties.  The 27.3 million square feet is comprised of 19.8 million square feet of office space in 31 properties, 2.4 million square feet of retail space in 55 properties, four residential properties containing 1,653 units, the 1.4 million square foot Hotel Pennsylvania, and our 32.4% interest in Alexander’s, Inc. (“Alexander’s”), which owns six properties in the greater New York metropolitan area.  The New York segment also includes 10 garages totaling 1.7 million square feet (4,909 spaces) which are managed by, or leased to, third parties.
 
New York lease terms generally range from five to seven years for smaller tenants to as long as 20 years for major tenants, and may provide for extension options at market rates.  Leases typically provide for periodic step‑ups in rent over the term of the lease and pass through to tenants their share of increases in real estate taxes and operating expenses over a base year.  Electricity is provided to tenants on a sub-metered basis or included in rent based on surveys and adjusted for subsequent utility rate increases.  Leases also typically provide for free rent and tenant improvement allowances for all or a portion of the tenant’s initial construction costs of its premises.
 
As of December 31, 2013, the occupancy rate for our New York segment, in which we own 21.4 million square feet (of a total of 27.3 million square feet), was 96.8%.  The statistics provided in the following sections include information for our share of the office, retail and residential space.

Occupancy and weighted average annual rent per square foot:	

	Office:																
												Weighted			
										Average Annual			
					Rentable		Occupancy		Rent Per			
		As of December 31,		Square Feet		Rate		Square Foot			
		2013 			16,358,000 				96.6 	%		$	62.03 				
		2012 			16,397,000 				95.8 	%			60.33 				
		2011 			16,241,000 				96.2 	%			58.84 				
		2010 			14,991,000 				96.1 	%			56.29 				
		2009 			14,974,000 				97.1 	%			55.68 				

	Retail:																
												Weighted			
										Average Annual			
					Rentable		Occupancy		Rent Per			
		As of December 31,		Square Feet		Rate		Square Foot			
		2013 			2,166,000 				97.4 	%		$	162.39 				
		2012 			2,051,000 				96.8 	%			147.50 				
		2011 			1,994,000 				95.6 	%			110.17 				
		2010 			1,918,000 				96.4 	%			106.52 				
		2009 			1,814,000 				97.0 	%			101.53 				

																	
	Residential:														
					Number of		Occupancy		Average Monthly			
		As of December 31,		Units		Rate		Rent Per Unit			
		2013 			1,653 				94.8 	%		$	2,864 				
		2012 			1,651 				96.5 	%			2,672 				
 
24

 

NEW YORK – CONTINUED	

Tenants accounting for 2% or more of revenues:	
																
										Percentage of		Percentage		
				Square Feet		2013 		New York		of Total		
	Tenant		Leased		Revenues		Revenues		Revenues		
	AXA Equitable Life Insurance		423,000 			$	36,329,000 		2.7 	%		1.3 	%		
	Macy’s		646,000 				34,630,000 		2.6 	%		1.3 	%		
	Limited Brands		504,000 				29,704,000 		2.2 	%		1.1 	%		
	McGraw-Hill Companies, Inc.		480,000 				26,395,000 		2.0 	%		1.0 	%		
	Draftfcb		744,000 				26,276,000 		2.0 	%		1.0 	%		

	
2013 rental revenue by tenants’ industry:	

	Industry		Percentage			
	Office:						
		Financial Services		15 	%			
		Legal Services		7 	%			
		Communications		7 	%			
		Family Apparel		7 	%			
		Real Estate		6 	%			
		Insurance		4 	%			
		Publishing		4 	%			
		Technology		3 	%			
		Pharmaceutical		2 	%			
		Government		2 	%			
		Home Entertainment & Electronics		2 	%			
		Banking		2 	%			
		Advertising / Marketing		2 	%			
		Engineering, Architect & Surveying		2 	%			
		Health Services		1 	%			
		Other		9 	%			
				75 	%			
	Retail:						
		Family Apparel		8 	%			
		Department Stores		3 	%			
		Women's Apparel		3 	%			
		Restaurants		2 	%			
		Luxury Retail		2 	%			
		Banking		2 	%			
		Discount Stores		1 	%			
		Other		4 	%			
				25 	%			
								
	Total		100 	%			

25

 

NEW YORK – CONTINUED	

Lease expirations as of December 31, 2013, assuming none of the tenants exercise renewal options:	
																		
								Percentage of		Weighted Average Annual		
			Number of		Square Feet of			New York		Rent of Expiring Leases		
Year		Expiring Leases		Expiring Leases			Square Feet		Total		Per Square Foot		
Office:																	
Month to month		16 			36,000 			0.2 	%		$	1,620,000 		$	45.00 		
2014 			142 			798,000 	(1)		5.2 	%			52,488,000 			65.77 	(1)	
2015 			138 			1,579,000 			10.3 	%			87,965,000 			55.71 		
2016 			148 			1,204,000 			7.8 	%			72,933,000 			60.58 		
2017 			105 			1,184,000 			7.7 	%			70,550,000 			59.59 		
2018 			94 			1,006,000 	(2)		6.5 	%			72,236,000 			71.81 		
2019 			80 			953,000 			6.2 	%			59,502,000 			62.44 		
2020 			94 			1,270,000 			8.2 	%			74,114,000 			58.36 		
2021 			61 			1,118,000 			7.3 	%			69,518,000 			62.18 		
2022 			60 			1,197,000 			7.8 	%			74,878,000 			62.55 		
2023 			45 			1,582,000 			10.3 	%			107,319,000 			67.84 		
Retail:																	
Month to month		12 			41,000 			3.3 	%		$	7,191,000 		$	175.39 		
2014 			24 			67,000 	(3)		5.3 	%			9,591,000 			143.15 	(3)	
2015 			40 			142,000 			11.3 	%			30,637,000 			215.75 		
2016 			20 			222,000 			17.7 	%			21,173,000 			95.37 		
2017 			9 			166,000 			13.2 	%			9,094,000 			54.78 		
2018 			38 			220,000 			17.5 	%			41,672,000 			189.42 		
2019 			23 			106,000 			8.4 	%			23,907,000 			225.54 		
2020 			20 			93,000 			7.4 	%			10,683,000 			114.87 		
2021 			11 			38,000 			3.0 	%			7,184,000 			189.05 		
2022 			8 			23,000 			1.8 	%			3,569,000 			155.17 		
2023 			14 			137,000 			10.9 	%			31,395,000 			229.16 		
																		
(1)	Based on current market conditions, we expect to release this space at weighted average rents ranging from $65 to $75 per square foot.		
(2)	Excludes 492,000 square feet at 909 Third Avenue leased to the U.S. Post Office through 2038 (including four 5-year renewal options) for which the annual escalated rent is $9.81 per square foot.		
(3)	Based on current market conditions, we expect to release this space at weighted average rents ranging from $150 to $200 per square foot.		
 
Alexander’s
As of December 31, 2013, we own 32.4% of the outstanding common stock of Alexander’s, which owns six properties in the greater New York metropolitan area aggregating 2.2 million square feet, including 731 Lexington Avenue, the 1.3 million square foot Bloomberg L.P. headquarters building.  Alexander’s had $1.05 billion of outstanding debt at December 31, 2013, of which our pro rata share was $340 million, none of which is recourse to us.
 
Hotel Pennsylvania
We own the Hotel Pennsylvania which is located in New York City on Seventh Avenue opposite Madison Square Garden and consists of a hotel portion containing 1,000,000 square feet of hotel space with 1,700 rooms and a commercial portion containing 400,000 square feet of retail and office space.
					Year Ended December 31,				
					2013 			2012 			2011 			2010 			2009 				
		Hotel:																						
			Average occupancy rate		93.4 	%			89.1 	%			89.1 	%			83.2 	%			71.5 	%			
			Average daily rate	$	158.01 			$	152.79 			$	152.53 			$	144.21 			$	133.87 				
			Revenue per available room	$	147.63 			$	136.21 			$	135.87 			$	120.00 			$	95.67 				
		Commercial:																						
			Office space:																						
				Average occupancy rate		33.4 	%			33.4 	%			33.4 	%			33.4 	%			30.4 	%			
				Weighted average annual rent per square foot	$	17.81 			$	17.32 			$	13.49 			$	7.52 			$	20.54 				
			Retail space:																						
				Average occupancy rate		62.5 	%			64.3 	%			63.0 	%			62.3 	%			70.7 	%			
				Weighted average annual rent per square foot	$	30.59 			$	27.19 			$	29.01 			$	31.42 			$	35.05 				
26

 

WASHINGTON, DC
 
As of December 31, 2013, our Washington, DC segment consisted of 71 properties aggregating 19.2 million square feet.  The 19.2 million square feet is comprised of 16.2 million square feet of office space in 59 properties, seven residential properties containing 2,405 units, a hotel property, and 20.8 acres of undeveloped land.  The Washington, DC segment also includes 56 garages totaling approximately 8.9 million square feet (29,611 spaces) which are managed by, or leased to, third parties.
 
Washington, DC office lease terms generally range from five to seven years for smaller tenants to as long as 15 years for major tenants, and may provide for extension options at either pre-negotiated or market rates. Leases typically provide for periodic step-ups in rent over the term of the lease and pass through to tenants, the tenants’ share of increases in real estate taxes and certain property operating expenses over a base year. Periodic step-ups in rent are usually based upon either fixed percentage increases or the consumer price index. Leases also typically provide for free rent and tenant improvement allowances for all or a portion of the tenant’s initial construction costs of its premises.
 
As of December 31, 2013, the occupancy rate for our Washington DC segment, in which we own 16.6 million square feet (of a total of 19.2 million square feet), was 83.4%, and 29.0% of the occupied space was leased to various agencies of the U.S. Government.  The statistics provided in the following sections include information for our share of the office and residential space.
 
Occupancy and weighted average annual rent per square foot:	

	Office:											Weighted			
										Average Annual			
					Rentable		Occupancy		Rent Per			
		As of December 31,		Square Feet		Rate		Square Foot			
		2013 			13,803,000 				80.7 	%		$	42.44 				
		2012 			13,637,000 				81.2 	%			41.57 				
		2011 			14,162,000 				89.3 	%			40.80 				
		2010 			14,035,000 				94.8 	%			39.65 				
		2009 			14,035,000 				94.9 	%			38.46 				

	Residential:														
					Number of		Occupancy		Average Monthly			
		As of December 31,		Units		Rate		Rent Per Unit			
		2013 			2,405 				96.3 	%		$	2,083 				
		2012 			2,414 				97.9 	%			2,104 				
		2011 			2,414 				96.6 	%			2,056 				
		2010 			2,414 				95.5 	%			1,925 				
		2009 			2,414 				84.0 	%			1,622 				

															
Tenants accounting for 2% or more of revenues:	
															
									Percentage of		Percentage		
			Square Feet		2013 		Washington, DC		of Total		
	Tenant		Leased		Revenues		Revenues		Revenues		
	U.S. Government		3,667,000 			$	143,870,000 		26.6 	%		5.2 	%		
	Family Health International		618,000 				19,188,000 		3.6 	%		0.7 	%		
	Boeing		377,000 				16,317,000 		3.0 	%		0.6 	%		
	Lockheed Martin		325,000 				14,114,000 		2.6 	%		0.5 	%		

27

 

WASHINGTON, DC – CONTINUED	

2013 rental revenue by tenants’ industry:		
					
	Industry		Percentage		
					
	U.S. Government		29%		
	Government Contractors		17%		
	Membership Organizations		10%		
	Legal Services		5%		
	Manufacturing		3%		
	Business Services		3%		
	Management Consulting Services		3%		
	State and Local Government		2%		
	Real Estate		2%		
	Food		2%		
	Health Services		2%		
	Computer and Data Processing		2%		
	Communication		2%		
	Education		1%		
	Television Broadcasting		1%		
	Other		16%		
			100%		

Lease expirations as of December 31, 2013, assuming none of the tenants exercise renewal options:			
																		
								Percentage of		Weighted Average Annual			
			Number of		Square Feet of		Washington, DC		Rent of Expiring Leases			
	Year		Expiring Leases		Expiring Leases		Square Feet		Total		Per Square Foot			
	Month to month		33 			115,000 		1.1 	%		$	4,564,000 		$	39.82 			
	2014 		171 			1,340,000 	(1) 	12.9 	%			52,762,000 			39.38 	(1) 		
	2015 		173 			1,690,000 		16.2 	%			69,763,000 			41.29 			
	2016 		118 			1,160,000 		11.1 	%			50,018,000 			43.12 			
	2017 		75 			647,000 		6.2 	%			26,009,000 			40.19 			
	2018 		92 			1,040,000 		10.0 	%			44,659,000 			42.94 			
	2019 		60 			1,289,000 		12.4 	%			54,658,000 			42.39 			
	2020 		44 			636,000 		6.1 	%			32,330,000 			50.82 			
	2021 		14 			549,000 		5.3 	%			24,632,000 			44.84 			
	2022 		24 			866,000 		8.3 	%			38,161,000 			44.08 			
	2023 		12 			172,000 		1.6 	%			7,612,000 			44.32 			

(1) Based on current market conditions, we expect to release this space at weighted average rents ranging from $35 to $40 per square foot.	

Base Realignment and Closure (“BRAC”)
 
          Our Washington, DC segment was impacted by the BRAC statute, which required the Department of Defense (“DOD”) to relocate from 2,395,000 square feet in our buildings in the Northern Virginia area to government owned military bases.  See page 46 for the status of BRAC related move-outs and the sluggish leasing environment in the Washington, DC / Northern Virginia area, and its impact on 2013 EBITDA and the estimated impact on 2014 EBITDA.
28

 

RETAIL PROPERTIES
 
As of December 31, 2013, our Retail Properties segment consisted of 112 retail properties aggregating 20.2 million square feet.  Of the 112 retail properties, 106 are strip shopping centers and single tenant retail assets located primarily in the Northeast and California, and six are regional malls located in New York, New Jersey, Virginia and San Juan, Puerto Rico.  Our strip shopping centers and malls are generally located on major highways in mature, densely populated areas, and therefore attract consumers from a regional, rather than a neighborhood market place.  Our strip shopping centers are substantially (approximately 78%) leased to large stores (over 20,000 square feet).
 
Retail Properties’ lease terms generally range from five years or less in some instances for smaller tenants to as long as 25 years for major tenants.  Leases generally provide for reimbursements of real estate taxes, insurance and common area maintenance charges (including roof and structure in strip shopping centers, unless it is the tenant’s direct responsibility), and percentage rents based on tenant sales volume.  Percentage rents accounted for less than 1% of the Retail Properties total revenues during 2013.
 
As of December 31, 2013, the occupancy rate for the Retail Properties segment, in which we own 18.2 million square feet (of a total of 20.2 million square feet), was 94.3%.  The statistics provided in the following sections includes information for our share of the Strip Shopping Centers and Regional Malls.
 
Occupancy and weighted average annual rent per square foot:
 
	Strip Shopping Centers:	
																	
										Weighted Average			
					Rentable		Occupancy		Annual Net Rent			
		As of December 31,		Square Feet		Rate		Per Square Foot			
		2013 			14,572,000 				94.3 	%		$	16.97 				
		2012 			14,350,000 				94.0 	%			16.59 				
		2011 			14,370,000 				93.9 	%			16.28 				
		2010 			14,492,000 				93.0 	%			15.44 				
		2009 			14,019,000 				93.3 	%			15.16 				
 
	Regional Malls:	
											Weighted Average Annual			
											Net Rent Per Square Foot			
														Mall and			
					Rentable		Occupancy		Mall		Anchor			
		As of December 31,		Square Feet		Rate		Tenants		Tenants			
		2013 			3,643,000 			94.3 	%		$	40.21 			$	22.37 				
		2012 			3,608,000 			92.7 	%			41.86 				22.46 				
		2011 			3,800,000 			92.7 	%			37.68 				21.98 				
		2010 			3,653,000 			92.8 	%			38.08 				22.77 				
		2009 			3,607,000 			92.9 	%			38.11 				21.72 				

Tenants accounting for 2% or more of revenues:	 	
														 	
									Percentage of		Percentage of	 	
		Square Feet		2013 			Retail Properties		Total	 	
Tenant		Leased		Revenues			Revenues		Revenues	 	
The Home Depot		994,000 			$	19,146,000 			4.5 	%		0.7 	%	 	
Wal-Mart		1,439,000 				15,811,000 			3.7 	%		0.6 	%	 	
Best Buy		530,000 				12,739,000 			3.0 	%		0.5 	%	 	
Lowe's		976,000 				12,728,000 			3.0 	%		0.5 	%	 	
The TJX Companies, Inc.		552,000 				10,815,000 			2.5 	%		0.4 	%	 	
Stop & Shop / Koninklijke Ahold NV		633,000 				10,307,000 	(1)		2.4 	% (1)		0.4 	% (1)	 	
Kohl's		716,000 				9,186,000 			2.2 	%		0.3 	%	 	
Shop Rite		471,000 				9,098,000 			2.1 	%		0.3 	%	 	
														 	
(1) Excludes $59,599,000 of income pursuant to a settlement agreement with Stop & Shop.	 	

29

 

RETAIL PROPERTIES – CONTINUED	

2013 rental revenue by type of retailer:	

	Industry		Percentage			
	Discount Stores		20 	%			
	Home Improvement		10 	%			
	Supermarkets		10 	%			
	Family Apparel		9 	%			
	Home Entertainment and Electronics		7 	%			
	Restaurants		7 	%			
	Banking and Other Business Services		4 	%			
	Home Furnishings		4 	%			
	Personal Services		4 	%			
	Sporting Goods, Toys and Hobbies		3 	%			
	Women's Apparel		3 	%			
	Membership Warehouse Clubs		2 	%			
	Other		17 	%			
			100 	%			

Lease expirations as of December 31, 2013, assuming none of the tenants exercise renewal options:	
																
							Percentage of		Weighted Average Annual		
		Number of		Square Feet of		Retail Properties		Net Rent of Expiring Leases		
Year		Expiring Leases		Expiring Leases		Square Feet		Total		Per Square Foot		
Strip Shopping Centers:																
Month to month		8 			53,000 		0.3 	%		$	1,088,000 		$	20.55 		
2014 		56 			631,000 	(1)	3.8 	%			10,325,000 			16.37 	(1)	
2015 		61 			581,000 		3.5 	%			11,504,000 			19.81 		
2016 		65 			785,000 		4.8 	%			11,928,000 			15.19 		
2017 		60 			528,000 		3.2 	%			8,222,000 			15.58 		
2018 		68 			1,601,000 		9.7 	%			22,455,000 			14.02 		
2019 		67 			1,384,000 		8.4 	%			20,211,000 			14.60 		
2020 		29 			899,000 		5.4 	%			11,573,000 			12.87 		
2021 		36 			660,000 		4.0 	%			11,096,000 			16.80 		
2022 		46 			996,000 		6.0 	%			12,387,000 			12.43 		
2023 		46 			1,195,000 		7.2 	%			19,785,000 			16.56 		
																
Regional Malls:																
Month to month		9 			39,000 		0.2 	%		$	710,000 		$	18.00 		
2014 		48 			134,000 	(2)	0.8 	%			4,518,000 			33.82 	(2)	
2015 		42 			140,000 		0.8 	%			5,192,000 			37.17 		
2016 		45 			131,000 		0.8 	%			5,053,000 			38.65 		
2017 		27 			350,000 		2.1 	%			3,178,000 			9.07 		
2018 		33 			88,000 		0.5 	%			4,353,000 			49.74 		
2019 		27 			149,000 		0.9 	%			5,793,000 			38.84 		
2020 		22 			168,000 		1.0 	%			5,600,000 			33.27 		
2021 		18 			414,000 		2.5 	%			5,514,000 			13.32 		
2022 		9 			43,000 		0.3 	%			1,672,000 			38.91 		
2023 		14 			55,000 		0.3 	%			1,991,000 			36.04 		

(1) Based on current market conditions, we expect to release this space at weighted average rents ranging from $17 to $19 per square foot.	
(2) Based on current market conditions, we expect to release this space at weighted average rents ranging from $34 to $38 per square foot.	
30

 

TOYS “R” US, INC. (“TOYS”)
As of December 31, 2013 we own a 32.6% interest in Toys, a worldwide specialty retailer of toys and baby products, which has a significant real estate component. Toys had $5.7 billion of outstanding debt at November 2, 2013, of which our pro rata share was $1.9 billion, none of which is recourse to us.
 
The following table sets forth the total number of stores operated by Toys as of December 31, 2013:  
						Building					
						Owned on				
						Leased				
		Total		Owned		Ground		Leased			
	Domestic	879 		287 		222 		370 			
	International	700 		78 		26 		596 			
	Total Owned and Leased	1,579 		365 		248 		966 			
	Franchised Stores	177 									
	Total	1,756 									

OTHER INVESTMENTS
 
Merchandise Mart
As of December 31, 2013, we own the 3.6 million square foot Merchandise Mart in Chicago, whose largest tenant is Motorola Mobility, owned by Google, which leases 608,000 square feet.  The Merchandise Mart is encumbered by a $550,000,000 mortgage loan that bears interest at a fixed rate of 5.57% and matures in December 2016.  As of December 31, 2013 the Merchandise Mart had an occupancy rate of 96.4% and a weighted average annual rent per square foot of $33.18.

555 California Street
As of December 31, 2013, we own a 70% controlling interest in a three-building office complex containing 1.8 million square feet, known as the Bank of America Center, located at California and Montgomery Streets in San Francisco’s financial district (“555 California Street”).  555 California Street is encumbered by a $600,000,000 mortgage loan that bears interest at a fixed rate of 5.10% and matures in September 2021.  As of December 31, 2013 555 California Street had an occupancy rate of 94.5% and a weighted average annual rent per square foot of $58.22.

Vornado Capital Partners Real Estate Fund (the “Fund”)
 
As of December 31, 2013, we own a 25.0% interest in the Fund.  We are the general partner and investment manager of the Fund.  At December 31, 2013, the Fund had nine investments with an aggregate fair value of $667,710,000, or $153,413,000 in excess of cost, and had remaining unfunded commitments of $149,186,000, of which our share was $37,297,000. 

 
ITEM 3.    LEGAL PROCEEDINGS
We are from time to time involved in legal actions arising in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters is not expected to have a material adverse effect on our financial position, results of operations or cash flows.

 
ITEM 4.    MINE SAFETY DISCLOSURES
 
Not applicable.
31

 

PART II

ITEM 5.        MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
Vornado’s common shares are traded on the New York Stock Exchange under the symbol “VNO.” 
 
Quarterly high and low sales prices of the common shares and dividends paid per common share for the years ended December 31, 2013 and 2012 were as follows:
 
			Year Ended			Year Ended			
			December 31, 2013			December 31, 2012			
	Quarter		High		Low		Dividends			High		Low		Dividends			
																							
	1st		$	85.94 		$	79.43 		$	0.73 			$	86.21 		$	75.17 		$	0.69 			
	2nd			88.73 			76.19 			0.73 				88.50 			78.56 			0.69 			
	3rd			89.35 			79.56 			0.73 				86.56 			79.50 			0.69 			
	4th			91.91 			82.73 			0.73 				82.50 			72.64 			1.69 	(1)		

	(1) Comprised of a regular quarterly dividend of $0.69 per share and a special long-term capital gain dividend of $1.00 per share.	

As of February 1, 2014, there were 1,029 holders of record of our common shares.

Recent Sales of Unregistered Securities
 
During the fourth quarter of 2013, we issued 11,249 common shares upon the redemption of Class A units of the Operating Partnership held by persons who received units, in private placements in earlier periods, in exchange for their interests in limited partnerships that owned real estate. The common shares were issued without registration under the Securities Act of 1933 in reliance on Section 4 (2) of that Act.
 
Information relating to compensation plans under which our equity securities are authorized for issuance is set forth under Part III, Item 12 of this Annual Report on Form 10-K and such information is incorporated by reference herein.

Recent Purchases of Equity Securities
 
None
32

 

Performance Graph
 
The following graph is a comparison of the five-year cumulative return of our common shares, the Standard & Poor’s 500 Index (the “S&P 500 Index”) and the National Association of Real Estate Investment Trusts’ (“NAREIT”) All Equity Index, a peer group index.  The graph assumes that $100 was invested on December 31, 2008 in our common shares, the S&P 500 Index and the NAREIT All Equity Index and that all dividends were reinvested without the payment of any commissions.  There can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the graph below.

 
			2008 		2009 		2010 		2011 		2012 		2013 		
	Vornado Realty Trust		$	100 		$ 	123 		$ 	152 		$ 	145 		$	158 		$	182 		
	S&P 500 Index			100 			126 			146 			149 			172 			228 		
	The NAREIT All Equity Index			100 			128 			164 			177 			212 			218 		
																					
33

 

ITEM 6. SELECTED FINANCIAL DATA															
																	
			Year Ended December 31,	
(Amounts in thousands, except per share amounts)	2013 		2012 		2011 		2010 		2009 	
Operating Data:															
Revenues:															
	Property rentals	$	2,155,963 		$	2,062,061 		$	2,091,488 		$	2,081,028 		$	1,998,425 	
	Tenant expense reimbursements		317,345 			294,584 			307,609 			312,550 			309,509 	
	Cleveland Medical Mart development project		36,369 			235,234 			154,080 			- 			- 	
	Fee and other income		251,232 			144,353 			149,631 			146,812 			154,462 	
Total revenues		2,760,909 			2,736,232 			2,702,808 			2,540,390 			2,462,396 	
Expenses:															
	Operating		1,054,897 			1,017,331 			984,707 			980,974 			955,038 	
	Depreciation and amortization		531,212 			510,383 			516,222 			491,129 			489,259 	
	General and administrative		211,100 			202,444 			208,530 			212,233 			228,650 	
	Cleveland Medical Mart development project		32,210 			226,619 			145,824 			- 			- 	
	Impairment losses, acquisition related costs															
	and tenant buy-outs		57,300 			114,886 			35,299 			101,458 			71,863 	
Total expenses		1,886,719 			2,071,663 			1,890,582 			1,785,794 			1,744,810 	
Operating income		874,190 			664,569 			812,226 			754,596 			717,586 	
(Loss) income applicable to Toys "R" Us		(362,377)			14,859 			48,540 			71,624 			92,300 	
Income (loss) from partially owned entities		23,592 			408,267 			70,072 			20,869 			(21,471)	
Income (loss) from Real Estate Fund		102,898 			63,936 			22,886 			(303)			- 	
Interest and other investment (loss) income, net		(24,699)			(260,945)			148,783 			235,266 			(116,436)	
Interest and debt expense		(483,190)			(493,713)			(519,157)			(536,363)			(595,800)	
Net gain (loss) on extinguishment of debt		- 			- 			- 			94,789 			(25,915)	
Net gain on disposition of wholly owned and partially															
	owned assets		3,407 			13,347 			15,134 			81,432 			5,641 	
Income before income taxes		133,821 			410,320 			598,484 			721,910 			55,905 	
Income tax benefit (expense)		6,406 			(8,132)			(23,925)			(22,137)			(20,134)	
Income from continuing operations		140,227 			402,188 			574,559 			699,773 			35,771 	
Income from discontinued operations		424,513 			292,353 			165,441 			8,258 			92,679 	
Net income		564,740 			694,541 			740,000 			708,031 			128,450 	
Less net (income) loss attributable to noncontrolling interests in:															
	Consolidated subsidiaries		(63,952)			(32,018)			(21,786)			(4,920)			2,839 	
	Operating Partnership		(23,659)			(35,327)			(41,059)			(44,033)			(5,834)	
	Preferred unit distributions of the Operating Partnership		(1,158)			(9,936)			(14,853)			(11,195)			(19,286)	
Net income attributable to Vornado		475,971 			617,260 			662,302 			647,883 			106,169 	
Preferred share dividends		(82,807)			(76,937)			(65,531)			(55,534)			(57,076)	
Preferred unit and share redemptions		(1,130)			8,948 			5,000 			4,382 			- 	
Net income attributable to common shareholders	$	392,034 		$	549,271 		$	601,771 		$	596,731 		$	49,093 	
																	
Per Share Data:															
	(Loss) income from continuing operations, net - basic	$	(0.03)		$	1.46 		$	2.42 		$	3.23 		$	(0.20)	
	(Loss) income from continuing operations, net - diluted		(0.03)			1.46 			2.40 			3.20 			(0.20)	
	Net income per common share - basic		2.10 			2.95 			3.26 			3.27 			0.28 	
	Net income per common share - diluted		2.09 			2.94 			3.23 			3.24 			0.28 	
	Dividends per common share		2.92 			3.76 	(1)		2.76 			2.60 			3.20 	
																	
Balance Sheet Data:															
	Total assets	$	20,097,224 		$	22,065,049 		$	20,446,487 		$	20,517,471 		$	20,185,472 	
	Real estate, at cost		18,354,626 			18,238,218 			16,421,701 			16,139,344 			16,203,842 	
	Accumulated depreciation		(3,410,933)			(3,072,269)			(2,874,529)			(2,513,658)			(2,214,796)	
	Debt		9,978,718 			11,127,230 			9,899,277 			10,161,754 			10,035,691 	
	Total equity		7,594,744 			7,904,144 			7,508,447 			6,830,405 			6,649,406 	

																	
(1) Includes a special long-term capital gain dividend of $1.00 per share.	
 
34

 

				Year Ended December 31,	
(Amounts in thousands)	2013 		2012 		2011 		2010 		2009 	
Other Data:															
Funds From Operations ("FFO") (1) :															
	Net income attributable to Vornado	$	475,971 		$	617,260 		$	662,302 		$	647,883 		$	106,169 	
	Depreciation and amortization of real property		501,753 			504,407 			530,113 			505,806 			508,572 	
	Net gains on sale of real estate		(411,593)			(245,799)			(51,623)			(57,248)			(45,282)	
	Real estate impairment losses		37,170 			129,964 			28,799 			97,500 			23,203 	
	Proportionate share of adjustments to equity in net income															
		of Toys, to arrive at FFO:															
			Depreciation and amortization of real property		69,741 			68,483 			70,883 			70,174 			65,358 	
			Net gains on sale of real estate		- 			- 			(491)			- 			(164)	
			Real estate impairment losses		6,552 			9,824 			- 			- 			- 	
			Income tax effect of above adjustments		(26,703)			(27,493)			(24,634)			(24,561)			(22,819)	
	Proportionate share of adjustments to equity in net income of															
		partially owned entities, excluding Toys, to arrive at FFO:															
			Depreciation and amortization of real property		87,529 			86,197 			99,992 			78,151 			75,200 	
			Net gains on sale of real estate		(465)			(241,602)			(9,276)			(5,784)			(1,188)	
			Real estate impairment losses		- 			1,849 			- 			11,481 			- 	
	Noncontrolling interests' share of above adjustments		(15,089)			(16,649)			(40,957)			(46,794)			(47,022)	
	FFO		724,866 			886,441 			1,265,108 			1,276,608 			662,027 	
	Preferred share dividends		(82,807)			(76,937)			(65,531)			(55,534)			(57,076)	
	Preferred unit and share redemptions		(1,130)			8,948 			5,000 			4,382 			- 	
	FFO attributable to common shareholders		640,929 			818,452 			1,204,577 			1,225,456 			604,951 	
	Convertible preferred share dividends		108 			113 			124 			160 			170 	
	Interest on 3.88% exchangeable senior debentures		- 			- 			26,272 			25,917 			-  	
FFO attributable to common shareholders															
	plus assumed conversions (1)	$	641,037 		$	818,565 		$	1,230,973 		$	1,251,533 		$	605,121 	
 
________________________________
(1)   FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”).  NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gain from sales of depreciated real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets, extraordinary items and other specified non-cash items, including the pro rata share of such adjustments of unconsolidated subsidiaries.  FFO and FFO per diluted share are used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions.  FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flows as a liquidity measure.  FFO may not be comparable to similarly titled measures employed by other companies.
35

 

ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS	
	OF OPERATIONS	
								
					Page			
					Number			
		Overview	37			
		Overview - Leasing activity	42			
		Critical Accounting Policies	47			
		Net Income and EBITDA by Segment for the Years Ended				
			December 31, 2013, 2012 and 2011	50			
		Results of Operations:				
			Years Ended December 31, 2013 and 2012	55			
			Years Ended December 31, 2012 and 2011	62			
		Supplemental Information:				
			Net Income and EBITDA by Segment for the Three Months Ended				
				December 31, 2013 and 2012	69			
			Three Months Ended December 31, 2013 Compared to December 31, 2012	74			
			Three Months Ended December 31, 2013 Compared to September 30, 2013	76			
		Related Party Transactions	78			
		Liquidity and Capital Resources	79			
			Financing Activities and Contractual Obligations	79			
			Certain Future Cash Requirements	83			
			Cash Flows for the Year Ended December 31, 2013	85			
			Cash Flows for the Year Ended December 31, 2012	87			
			Cash Flows for the Year Ended December 31, 2011	89			
		Funds From Operations for the Three Months and Years Ended				
			December 31, 2013 and 2012	91			
36

 

Overview
Vornado Realty Trust (“Vornado”) is a fully‑integrated real estate investment trust (“REIT”) and conducts its business through, and substantially all of its interests in properties are held by, Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”).  Accordingly, Vornado’s cash flow and ability to pay dividends to its shareholders is dependent upon the cash flow of the Operating Partnership and the ability of its direct and indirect subsidiaries to first satisfy their obligations to creditors.  Vornado is the sole general partner of, and owned approximately 94.0% of the common limited partnership interest in the Operating Partnership at December 31, 2013.  All references to “we,” “us,” “our,” the “Company” and “Vornado” refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership.
 
We own and operate office and retail properties (our “core” operations) with large concentrations in the New York City metropolitan area and in the Washington, DC / Northern Virginia area. In addition, we have a 32.4% interest in Alexander’s, Inc. (NYSE: ALX) (“Alexander’s”), which owns six properties in the greater New York metropolitan area, a 32.6% interest in Toys “R” Us, Inc. (“Toys”) as well as interests in other real estate and related investments.
 
Our business objective is to maximize shareholder value, which we measure by the total return provided to our shareholders. Below is a table comparing our performance to the FTSE NAREIT Office Index (“Office REIT”) and the Morgan Stanley REIT Index (“RMS”) for the following periods ended December 31, 2013:
 
			Total Return (1)		
			Vornado		Office REIT		RMS		
		Three-months	6.5% 		0.6% 		(0.1%) 		
		One-year	14.7% 		5.6% 		2.5% 		
		Three-year	19.4% 		19.6% 		31.2% 		
		Five-year	82.4% 		92.0% 		116.7% 		
		Ten-year	148.3% 		85.7% 		124.1% 		

	(1) Past performance is not necessarily indicative of future performance.	
 
We intend to achieve our business objective by continuing to pursue our investment philosophy and execute our operating strategies through:
 
·      Maintaining a superior team of operating and investment professionals and an entrepreneurial spirit;
·      Investing in properties in select markets, such as New York City and Washington, DC, where we believe there is a high likelihood of capital appreciation;
·      Acquiring quality properties at a discount to replacement cost and where there is a significant potential for higher rents;
·      Investing in retail properties in select under-stored locations such as the New York City metropolitan area;
·      Developing and redeveloping existing properties to increase returns and maximize value; and
·      Investing in operating companies that have a significant real estate component.
 
We expect to finance our growth, acquisitions and investments using internally generated funds, proceeds from possible asset sales and by accessing the public and private capital markets.  We may also offer Vornado common or preferred shares or Operating Partnership units in exchange for property and may repurchase or otherwise reacquire these securities in the future.
 
We compete with a large number of property owners and developers, some of which may be willing to accept lower returns on their investments than we are. Principal factors of competition include rents charged, sales prices, attractiveness of location, the quality of the property and the breadth and the quality of services provided.  See “Risk Factors” in Item 1A for additional information regarding these factors.
37

 

Overview - continued
Year Ended December 31, 2013 Financial Results Summary
 
Net income attributable to common shareholders for the year ended December 31, 2013 was $392,034,000, or $2.09 per diluted share, compared to $549,271,000, or $2.94 per diluted share for the year ended December 31, 2012. Net income for the years ended December 31, 2013 and 2012 includes $412,058,000 and $487,401,000, respectively, of net gains on sale of real estate, and $43,722,000 and $141,637,000, respectively, of real estate impairment losses.  In addition, the years ended December 31, 2013 and 2012 include certain items that affect comparability which are listed in the table below.  The aggregate of net gains on sale of real estate, real estate impairment losses and the items in the table below, net of amounts attributable to noncontrolling interests, decreased net income attributable to common shareholders for the year ended December 31, 2013 by $3,302,000, or $0.02 per diluted share and increased net income attributable to common shareholders for the year ended December 31, 2012 by $287,099,000, or $1.54 per diluted share.
 
Funds from operations attributable to common shareholders plus assumed conversions (“FFO”) for the year ended December 31, 2013 was $641,037,000, or $3.41 per diluted share, compared to $818,565,000, or $4.39 per diluted share for the prior year.  FFO for the years ended December 31, 2013 and 2012 includes certain items that affect comparability which are listed in the table below. The aggregate of these items, net of amounts attributable to noncontrolling interests, decreased FFO by $300,434,000, or $1.60 per diluted share for the year ended December 31, 2013, and increased FFO by $40,090,000, or $0.21 per diluted share for the year ended December 31, 2012.
 
			For the Year Ended December 31,	
(Amounts in thousands)	2013 		2012 	
Items that affect comparability income (expense):						
	Toys "R" Us (Negative FFO) FFO (including impairment losses of $240,757 and $40,000,						
		respectively)	$	(312,788)		$	65,673 	
	Loss on sale of J.C. Penney common shares		(54,914)			- 	
	Non-cash impairment loss on J.C. Penney common shares		(39,487)			(224,937)	
	Loss from the mark-to-market of J.C. Penney derivative position		(33,487)			(75,815)	
	Acquisition related costs		(24,857)			(11,248)	
	Preferred unit and share redemptions		(1,130)			8,948 	
	Stop & Shop litigation settlement income		59,599 			- 	
	Net gain on sale of marketable securities, land parcels and residential condominiums		58,245 			13,347 	
	FFO attributable to discontinued operations, including LNR, and discontinued operations						
		of Alexander's in 2012		33,928 			153,179 	
	Accelerated amortization of discount on investment in subordinated debt of Independence Plaza		- 			60,396 	
	After-tax net gain on sale of Canadian Trade Shows		- 			19,657 	
	Net gain resulting from Lexington Realty Trust's stock issuance		- 			14,116 	
	1290 Avenue of the Americas and 555 California Street priority return		- 			13,222 	
	Other, net		(3,890)			6,196 	
		(318,781)			42,734 	
Noncontrolling interests' share of above adjustments		18,347 			(2,644)	
Items that affect comparability, net	$ 	(300,434)		$ 	40,090 	

The percentage increase (decrease) in GAAP basis and Cash basis same store Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) of our operating segments for the year ended December 31, 2013 over the year ended December 31, 2012 is summarized below.
												
	Same Store EBITDA:		New York		Washington, DC		Retail Properties		
		December 31, 2013 vs. December 31, 2012								
			GAAP basis		5.5% 		(2.8%) 		2.8% 		
			Cash basis		7.7% 		(3.8%) 		3.7% 		
38

 

Overview - continued
Quarter Ended December 31, 2013  Financial Results Summary
 
Net loss attributable to common shareholders for the quarter ended December 31, 2013 was $68,887,000, or $0.37 per diluted share, compared to net income of $62,633,000, or $0.33 per diluted share for the quarter ended December 31, 2012.  Net loss for the quarter ended December 31, 2013 and net income for the quarter ended December 31, 2012 include $127,512,000 and $281,549,000, respectively, of net gains on sale of real estate, and $32,899,000 and $117,883,000, respectively, of real estate impairment losses.  In addition, the quarters ended December 31, 2013 and 2012 include certain other items that affect comparability which are listed in the table below.  The aggregate of net gains on sale of real estate, real estate impairment losses and the items in the table below, net of amounts attributable to noncontrolling interests, increased net loss attributable to common shareholders for the quarter ended December 31, 2013 by $176,464,000, or $0.94 per diluted share and decreased net income attributable to common shareholders for the quarter ended December 31, 2012 by $14,761,000, or $0.08 per diluted share.
 
FFO for the quarter ended December 31, 2013 was a negative $6,784,000, or $0.04 per diluted share, compared to a positive $55,890,000, or $0.30 per diluted share for the prior year’s quarter.  FFO for the quarters ended December 31, 2013 and 2012 include certain items that affect comparability which are listed in the table below.  The aggregate of these items, net of amounts attributable to noncontrolling interests, decreased FFO for the quarter ended December 31, 2013 by $255,479,000, or $1.37 per diluted share and $151,361,000, or $0.81 per diluted share for the quarter ended December 31, 2012.
 
			For the Three Months Ended December 31,	
(Amounts in thousands)	2013 		2012 	
Items that affect comparability income (expense):						
	Toys "R" Us Negative FFO (including impairment losses of $162,215 and $40,000, respectively)	$	(282,041)		$	(61,358)	
	Acquisition related costs		(18,088)			(6,934)	
	Non-cash impairment loss on J.C. Penney common shares		- 			(224,937)	
	Loss from the mark-to-market of J.C. Penney derivative position		- 			(22,472)	
	Net gain on sale of land parcels and residential condominiums		23,988 			- 	
	FFO attributable to discontinued operations, including LNR and discontinued operations						
		of Alexander's in 2012		1,671 			46,365 	
	Accelerated amortization of discount on investment in subordinated debt of Independence Plaza		- 			60,396 	
	1290 Avenue of the Americas and 555 California Street priority return and income tax benefit		- 			25,260 	
	Net gain resulting from Lexington Realty Trust's stock issuance		- 			14,116 	
	Other, net		3,436 			8,425 	
				(271,034)			(161,139)	
Noncontrolling interests' share of above adjustments		15,555 			9,778 	
Items that affect comparability, net	$	(255,479)		$	(151,361)	

The percentage increase (decrease) in GAAP basis and cash basis same store EBITDA of our operating segments for the quarter ended December 31, 2013 over the quarter ended December 31, 2012 and the trailing quarter ended September 30, 2013 are summarized below.
	Same Store EBITDA:		New York		Washington, DC		Retail Properties		
		December 31, 2013 vs. December 31, 2012								
			GAAP basis		6.7% 		4.1% 		3.1% 		
			Cash basis		4.4% 		2.8% 		5.1% 		
		December 31, 2013 vs. September 30, 2013								
			GAAP basis		3.9% 		(3.1%) 		3.2% 		
			Cash basis		1.9% 		(3.6%) 		3.7% 		
 
Calculations of same store EBITDA, reconciliations of our net income to EBITDA and FFO and the reasons we consider these non-GAAP financial measures useful are provided in the following pages of Management’s Discussion and Analysis of the Financial Condition and Results of Operations.
39

 

O verview – continued
  
2013 Acquisitions
 
On September 30, 2013, a joint venture, in which we have a 20.1% interest, acquired 650 Madison Avenue, a 27-story, 594,000 square foot Class A office and retail tower located on Madison Avenue between 59th and 60th Street, for $1.295 billion.  The property contains 523,000 square feet of office space and 71,000 square feet of retail space.  The purchase price was funded with cash and a new $800,000,000 seven-year 4.39% interest-only loan.
 
On October 4, 2013, we acquired a 92.5% interest in 655 Fifth Avenue, a 57,500 square foot retail and office property located at the northeast corner of Fifth Avenue and 52nd Street in Manhattan, for $277,500,000 in cash. 
 
On October 15, 2013, we acquired, for $194,000,000 in cash, land and air rights for 137,000 zoning square feet thereby completing the assemblage for our 220 Central Park South development site in Manhattan.
 
In addition to the above, during 2013, we acquired three Manhattan street retail properties, in separate transactions, for an aggregate of $65,300,000.
 
2013 Dispositions
 
During 2013, we sold an aggregate of $1.430 billion in assets resulting in net proceeds of approximately $940,000,000 and net gains aggregating $435,000,000.  Below are the details of these sales.
 
Retail Properties
 
On January 24, 2013, we sold the Green Acres Mall located in Valley Stream, New York, for $500,000,000.  The sale resulted in net proceeds of $185,000,000, after repaying the existing loan and closing costs, and a net gain of $202,275,000. 
 
On April 15, 2013, we sold The Plant, a power strip shopping center in San Jose, California, for $203,000,000.  The sale resulted in net proceeds of $98,000,000, after repaying the existing loan and closing costs, and a net gain of $32,169,000.
 
On April 15, 2013, we sold a retail property in Philadelphia, which is a part of the Gallery at Market Street, for $60,000,000.  The sale resulted in net proceeds of $58,000,000, and a net gain of $33,058,000.
 
On September 23, 2013, we sold a retail property in Tampa, Florida for $45,000,000, of which our 75% share was $33,750,000.  Our share of the net proceeds after repaying the existing loan and closing costs were $20,810,000, and our share of the net gain was $8,728,000.
 
In addition to the above, during 2013, we sold 12 other properties, in separate transactions, for an aggregate of $82,300,000, in cash, which resulted in a net gain aggregating $7,851,000.
 
New York
 
On December 17, 2013, we sold 866 United Nations Plaza, a 360,000 square foot office building in Manhattan for $200,000,000.  The sale resulted in net proceeds of $146,439,000 after repaying the existing loan and closing costs, and a net gain of $127,512,000.
 
Other
 
On January 23, 2013, we and the other equity holders of LNR entered into a definitive agreement to sell LNR for $1.053 billion, of which our 26.2% share was $275,900,000.  The definitive agreement provided that LNR would not (i) make any cash distributions to the equity holders, including us, through the completion of the sale, which occurred on April 19, 2013, and (ii) take any of the following actions (among others) without the purchaser’s approval, the lending or advancing of any money, the acquisition of assets in excess of specified amounts, or the issuance of equity interests.  The sale was the result of a competitive bidding process that we believe resulted in a sale price that represented the fair value of our investment in LNR.  The sale was consummated on April 19, 2013, and we received net proceeds after transaction and closing costs of $240,474,000.  Notwithstanding the terms of the definitive agreement, in accordance with GAAP, we recorded our pro rata share of LNR’s earnings on a one-quarter lag basis through the date of sale, which increased our investment in LNR above our share of the net sales proceeds and resulted in us recognizing an other than temporary impairment loss on our investment of $27,231,000 in the three months ended March 31, 2013.  LNR’s net loss for the period from January 1, 2013 through April 19, 2013 was $80,654,000, including a $66,241,000 non-cash impairment loss. Our share of the net loss was $21,131,000, including $17,355,000 for our share of the non-cash impairment loss.  In the three months ended June 30, 2013, we recorded our share of the net loss but did not record our share of the non-cash impairment loss, as it was effectively considered in our assessment of “other-than-temporary” impairment loss when we recorded the $27,231,000 impairment loss in the three months ended March 31, 2013.  As a result of recording our share of the net loss of $3,776,000 for the three months ended June 30, 2013, the carrying amount of our investment decreased below our share of the net sales proceeds; accordingly, we recorded an offsetting gain on the sale of our investment.
40

 
 
Overview – continued
 
2013 Dispositions – continued
 
Other - continued
 
On April 24, 2013, a site located in the Downtown Crossing district of Boston was sold by a joint venture, of which we owned a 50% interest.  Our share of the net proceeds were approximately $45,000,000, which resulted in a $2,335,000 impairment loss that was recognized in the first quarter.
 
On October 1, 2013, we sold a parcel of land known as Harlem Park located at 1800 Park Avenue (at 125 th Street) in New York City, for $66,000,000. The sale resulted in net proceeds of $63,000,000 and a net gain of $23,507,000.

2013 Financings
 
Secured Debt
 
On February 20, 2013, we completed a $390,000,000 financing of the retail condominium located at 666 Fifth Avenue at 53 rd Street, which we had acquired December 2012.  The 10-year fixed-rate interest only loan bears interest at 3.61%.  This property was previously unencumbered.  The net proceeds from this financing were approximately $387,000,000. 
 
On March 25, 2013, we completed a $300,000,000 financing of the Outlets at Bergen Town Center, a 948,000 square foot shopping center located in Paramus, New Jersey.  The 10-year fixed-rate interest only loan bears interest at 3.56%.  The property was previously encumbered by a $282,312,000 floating-rate loan. 
 
On June 7, 2013, we completed a $550,000,000 refinancing of Independence Plaza, a three-building 1,328 unit residential complex in the Tribeca submarket of Manhattan.  The five-year fixed-rate interest only mortgage loan bears interest at 3.48%.  The property was previously encumbered by a $323,000,000 floating-rate loan.  The net proceeds of $219,000,000, after repaying the existing loan and closing costs, were distributed to the partners, of which our share was $137,000,000.   
 
On October 30, 2013, we completed the restructuring of the $678,000,000 (face amount) 5.74% Skyline properties mortgage loan. The loan was separated into two tranches; a senior $350,000,000 position and a junior $328,000,000 position. The maturity date has been extended from February 2017 to February 2022, with a one-year extension option. The effective interest rate is 2.965%. Amounts expended to re-lease the property are senior to the $328,000,000 junior position.
 
On November 27, 2013, we completed a $450,000,000 refinancing of Eleven Penn Plaza, a 1.1 million square foot Manhattan office building.  The seven-year fixed-rate interest only loan bears interest at 3.95%. The net proceeds from this refinancing were approximately $107,000,000 after repaying the existing loan and closing costs.
 
Unsecured Revolving Credit Facility
 
On March 28, 2013, we extended one of our two $1.25 billion revolving credit facilities from June 2015 to June 2017, with two six-month extension options. The interest on the extended facility was reduced from LIBOR plus 135 basis points to LIBOR plus 115 basis points. In addition, the facility fee was reduced from 30 basis points to 20 basis points.
 
Preferred Securities
 
On January 25, 2013, we sold 12,000,000 5.40% Series L Cumulative Redeemable Preferred Shares at a price of $25.00 per share in an underwritten public offering pursuant to an effective registration statement.  We retained aggregate net proceeds of $290,306,000, after underwriters’ discounts and issuance costs, and contributed the net proceeds to the Operating Partnership in exchange for 12,000,000 Series L Preferred Units (with economic terms that mirror those of the Series L Preferred Shares).
 
On February 19, 2013, we redeemed all of the outstanding 6.75% Series F Cumulative Redeemable Preferred Shares and 6.75% Series H Cumulative Redeemable Preferred Shares at par, for an aggregate of $262,500,000 in cash, plus accrued and unpaid dividends through the date of redemption.
 
On May 9, 2013, we redeemed all of the outstanding 6.875% Series D-15 Cumulative Redeemable Preferred Units with an aggregate face amount of $45,000,000 for $36,900,000 in cash, plus accrued and unpaid distributions through the date of redemption.
41

 

Overview - continued

Leasing Activity
 
The leasing activity presented below is based on leases signed during the period and is not intended to coincide with the commencement of rental revenue in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  Tenant improvements and leasing commissions presented below are based on square feet leased during the period.  Second generation relet space represents square footage that has not been vacant for more than nine months.  The leasing activity for the New York segment excludes Alexander’s, the Hotel Pennsylvania and residential.
 
							New York		Washington, DC		Retail Properties	
(Square feet in thousands)	Office		Retail		Office		Strips		Malls	
																					
Quarter Ended December 31, 2013:															
	Total square feet leased		559 			63 			312 			200 			137 	
	Our share of square feet leased		425 			52 			276 			200 			135 	
		Initial rent (1)	$	59.45 		$	276.62 		$	40.03 		$	23.27 		$	25.19 	
		Weighted average lease term (years)		9.4 			9.5 			5.3 			8.4 			4.6 	
		Second generation relet space:															
			Square feet		298 			50 			179 			129 			88 	
			Cash basis:															
				Initial rent (1)	$	59.92 		$	283.31 		$	38.95 		$	18.78 		$	21.30 	
				Prior escalated rent	$	54.39 		$	135.08 		$	39.96 		$	16.96 		$	20.94 	
				Percentage increase (decrease)		10.2% 			109.7% 			(2.5%) 			10.7% 			1.7% 	
			GAAP basis:															
				Straight-line rent (2)	$	58.79 		$	312.27 		$	38.53 		$	19.19 		$	21.57 	
				Prior straight-line rent	$	51.87 		$	217.85 		$	37.26 		$	16.34 		$	19.79 	
				Percentage increase		13.3% 			43.3% 			3.4% 			17.4% 			9.0% 	
		Tenant improvements and leasing															
			commissions:															
			Per square foot	$	67.95 		$	81.80 		$	26.84 		$	7.20 		$	4.77 	
			Per square foot per annum:	$	7.23 		$	8.61 		$	5.06 		$	0.86 		$	1.04 	
				Percentage of initial rent		12.2% 			3.1% 			12.6% 			3.7% 			4.1% 	
																					
Year Ended December 31, 2013:															
	Total square feet leased		2,410 			138 			1,836 			1,388 			674 	
	Our share of square feet leased		2,024 			121 			1,392 			1,388 			600 	
		Initial rent (1)	$	60.78 		$	268.52 		$	39.91 		$	17.27 		$	26.39 	
		Weighted average lease term (years)		11.0 			8.6 			7.0 			6.2 			8.1 	
		Second generation relet space:															
			Square feet		1,716 			103 			910 			959 			205 	
			Cash basis:															
				Initial rent (1)	$	60.04 		$	262.67 		$	40.91 		$	16.57 		$	23.59 	
				Prior escalated rent	$	56.84 		$	117.45 		$	41.16 		$	15.18 		$	22.76 	
				Percentage increase (decrease)		5.6% 			123.7% 			(0.6%) 			9.2% 			3.6% 	
			GAAP basis:															
				Straight-line rent (2)	$	59.98 		$	293.45 		$	40.87 		$	16.91 		$	24.04 	
				Prior straight-line rent	$	52.61 		$	152.34 		$	39.36 		$	14.76 		$	21.87 	
				Percentage increase		14.0% 			92.6% 			3.8% 			14.6% 			9.9% 	
		Tenant improvements and leasing															
			commissions:															
			Per square foot	$	61.78 		$	100.93 		$	33.24 		$	3.96 		$	20.69 	
			Per square foot per annum:	$	5.61 		$	11.64 		$	4.75 		$	0.64 		$	2.55 	
				Percentage of initial rent		9.2% 			4.3% 			11.9% 			3.7% 			9.7% 	

See notes on the following page.	
 
42

 

Overview - continued	

Leasing Activity - continued															
																					
							New York		Washington, DC		Retail Properties	
(Square feet in thousands)	Office		Retail		Office		Strips		Malls	
																					
Year Ended December 31, 2012:															
	Total square feet leased		1,950 			192 			2,111 			1,276 			146 	
	Our share of square feet leased:		1,754 			185 			1,901 			1,276 			101 	
		Initial rent (1)	$	57.15 		$	110.71 		$	40.55 		$	18.65 		$	38.45 	
		Weighted average lease term (years)		9.3 			11.9 			7.3 			8.2 			5.3 	
		Second generation relet space:															
			Square feet		1,405 			154 			1,613 			941 			17 	
			Cash basis:															
				Initial rent (1)	$	57.88 		$	110.21 		$	39.27 		$	15.98 		$	64.85 	
				Prior escalated rent	$	55.31 		$	88.47 		$	39.13 		$	14.58 		$	60.78 	
				Percentage increase		4.6% 			24.6% 			0.4% 			9.6% 			6.7% 	
			GAAP basis:															
				Straight-line rent (2)	$	57.34 		$	115.97 		$	38.96 		$	16.49 		$	66.24 	
				Prior straight-line rent	$	54.64 		$	89.52 		$	37.67 		$	13.69 		$	58.61 	
				Percentage increase		4.9% 			29.5% 			3.4% 			20.5% 			13.0% 	
		Tenant improvements and leasing															
			commissions:															
			Per square foot	$	54.45 		$	32.52 		$	35.49 		$	7.48 		$	18.66 	
			Per square foot per annum:	$	5.85 		$	2.73 		$	4.86 		$	0.91 		$	3.52 	
				Percentage of initial rent		10.2% 			2.5% 			12.0% 			4.9% 			9.2% 	

(1)	
Represents the cash basis weighted average starting rent per square foot, which is generally indicative of market rents. Most leases include free rent and periodic step-ups in rent which are not included in the initial cash basis rent per square foot but are included in the GAAP basis straight-line rent per square foot.	
																					
(2)	
Represents the GAAP basis weighted average rent per square foot that is recognized over the term of the respective leases, and includes the effect of free rent and periodic step-ups in rent.	

43

 

Overview - continued			
															
	Square footage (in service) and Occupancy as of December 31, 2013:			
															
								Square Feet (in service)					
						Number of		Total		Our					
	(Square feet in thousands)			properties		Portfolio		Share		Occupancy %		
	New York:												
		Office		31 		19,799 		16,358 		96.6%			
		Retail		55 		2,389 		2,166 		97.4%			
		Alexander's		6 		2,178 		706 		99.4%			
		Hotel Pennsylvania		1 		1,400 		1,400 					
		Residential - 1,653 units	4 		1,523 		762 		94.8%			
								27,289 		21,392 		96.8%			
															
	Washington, DC:												
		Office, excluding the Skyline Properties	51 		13,581 		11,151 		85.4%			
		Skyline Properties		8 		2,652 		2,652 		60.8%			
		Total Office		59 		16,233 		13,803 		80.7%			
		Residential - 2,405 units	7 		2,588 		2,446 		96.3%			
		Other		5 		379 		379 		100.0%			
								19,200 		16,628 		83.4%			
													
	Retail Properties:												
		Strip Shopping Centers		106 		14,951 		14,572 		94.3%			
		Regional Malls		6 		5,273 		3,643 		94.3%			
								20,224 		18,215 		94.3%			
															
	Other:												
		Merchandise Mart		2 		3,703 		3,694 		96.3%			
		555 California Street		3 		1,795 		1,257 		94.5%			
		Primarily Warehouses		5 		971 		971 		45.6%			
								6,469 		5,922 					
															
	Total square feet at December 31, 2013				73,182 		62,157 					
 
44

 

Overview - continued			
															
	Square footage (in service) and Occupancy as of December 31, 2012:			
															
								Square Feet (in service)					
						Number of		Total		Our					
	(Square feet in thousands)			properties		Portfolio		Share		Occupancy %		
	New York:												
		Office		30 		19,375 		16,397 		95.8%			
		Retail		49 		2,211 		2,051 		96.8%			
		Alexander's		6 		2,179 		706 		99.1%			
		Hotel Pennsylvania		1 		1,400 		1,400 					
		Residential - 1,651 units	4 		1,528 		873 		96.5%			
								26,693 		21,427 		96.1%			
															
	Washington, DC:												
		Office, excluding the Skyline Properties	51 		13,463 		10,994 		86.3%			
		Skyline Properties		8 		2,643 		2,643 		60.0%			
		Total Office		59 		16,106 		13,637 		81.2%			
		Residential - 2,414 units	7 		2,599 		2,457 		97.9%			
		Other		7 		435 		435 		100.0%			
								19,140 		16,529 		84.1%			
													
	Retail Properties:												
		Strip Shopping Centers		107 		14,729 		14,350 		94.0%			
		Regional Malls		6 		5,244 		3,608 		92.7%			
								19,973 		17,958 		93.7%			
															
	Other:												
		Merchandise Mart		2 		3,905 		3,896 		94.6%			
		555 California Street		3 		1,795 		1,257 		93.1%			
		Primarily Warehouses		5 		971 		971 		55.9%			
								6,671 		6,124 					
															
	Total square feet at December 31, 2012				72,477 		62,038 					
45

 

Overview - continued

Washington, DC Segment
 
Of the 2,395,000 square feet subject to the effects of the Base Realignment and Closure (“BRAC”) statute, 348,000 square feet has been taken out of service for redevelopment and 763,000 square feet has been leased or is pending.  The table below summarizes the status of the BRAC space as of December 31, 2013.
 
		Rent Per		Square Feet	
					Square Foot		Total		Crystal City		Skyline		Rosslyn	
															
Resolved:												
	Relet as of December 31, 2013		$	37.76 		724,000 		392,000 		268,000 		64,000 	
	Leases pending			45.16 		39,000 		39,000 		- 		- 	
	Taken out of service for redevelopment					348,000 		348,000 		- 		- 	
								1,111,000 		779,000 		268,000 		64,000 	
															
To Be Resolved:												
	Vacated as of December 31, 2013			37.58 		922,000 		504,000 		336,000 		82,000 	
	Expiring in:												
			2014 			32.29 		292,000 		91,000 		201,000 		- 	
			2015 			43.54 		70,000 		65,000 		5,000 		- 	
								1,284,000 		660,000 		542,000 		82,000 	
															
Total square feet subject to BRAC					2,395,000 		1,439,000 		810,000 		146,000 	

Due to the effects of BRAC related move-outs and the sluggish leasing environment in the Washington, DC / Northern Virginia area, EBITDA from continuing operations for the year ended December 31, 2012 was lower than 2011 by $54,857,000 and EBITDA from continuing operations for the year ended December 31, 2013 was lower than 2012 by $14,254,000.  We estimate that 2014 EBITDA will be between $10,000,000 and $15,000,000 lower than 2013 EBITDA.
46

 
 
Critical Accounting Policies

In preparing the consolidated financial statements we have made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Set forth below is a summary of the accounting policies that we believe are critical to the preparation of our consolidated financial statements.  The summary should be read in conjunction with the more complete discussion of our accounting policies included in Note 2 to the consolidated financial statements in this Annual Report on Form 10-K.
 
Real Estate
 
Real estate is carried at cost, net of accumulated depreciation and amortization. Maintenance and repairs are expensed as incurred. Depreciation requires an estimate by management of the useful life of each property and improvement as well as an allocation of the costs associated with a property to its various components. If we do not allocate these costs appropriately or incorrectly estimate the useful lives of our real estate, depreciation expense may be misstated.  As real estate is undergoing development activities, all property operating expenses directly associated with and attributable to, the development and construction of a project, including interest expense, are capitalized to the cost of real property to the extent we believe such costs are recoverable through the value of the property.  The capitalization period begins when development activities are underway and ends when the project is substantially complete.  General and administrative costs are expensed as incurred.
 
Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above and below-market leases and acquired in-place leases and tenant relationships) and acquired liabilities and we allocate purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information.  Estimates of future cash flows are based on a number of factors, including historical operating results, known trends and market/economic conditions. Identified intangibles are recorded at their estimated fair value, separate and apart from goodwill. Identified intangibles that are determined to have finite lives are amortized over the period in which they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired.   
 
As of December 31, 2013 and 2012, the carrying amounts of real estate, net of accumulated depreciation, were $14.9 billion and $15.2 billion, respectively.  As of December 31, 2013 and 2012, the carrying amounts of identified intangible assets (including acquired above-market leases, tenant relationships and acquired in-place leases) were $323,322,000 and $415,330,000, respectively, and the carrying amounts of identified intangible liabilities, a component of “deferred revenue” on our consolidated balance sheets, were $510,485,000 and $560,989,000, respectively.
 
Our properties, including any related intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis.  An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value.  Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared.  If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements.  The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results.  Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.
 
47

 
 
Critical Accounting Policies – continued
 
Partially Owned Entities
 
We consolidate entities in which we have a controlling financial interest.  In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity (“VIE”) and we are the primary beneficiary.  We are deemed to be the primary beneficiary of a VIE when we have (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. When the requirements for consolidation are not met, we account for investments under the equity method of accounting if we have the ability to exercise significant influence over the entity.  Equity method investments are initially recorded at cost and subsequently adjusted for our share of net income or loss and cash contributions and distributions each period. Investments that do not qualify for consolidation or the equity method are accounted for on the cost method. 
 
Investments in partially owned entities are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.  An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value.  Impairment analyses are based on current plans, intended holding periods and available information at the time the analyses are prepared.  The ultimate realization of our investments in partially owned entities is dependent on a number of factors, including the performance of each investment and market conditions.  If our estimates of the projected future cash flows, the nature of development activities for properties for which such activities are planned and the estimated fair value of the investment change based on market conditions or otherwise, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements.  The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. 
 
As of December 31, 2013 and 2012, the carrying amounts of investments in partially owned entities, including Toys “R” Us, was $1.2 billion and $1.7 billion, respectively.

Mortgage and Mezzanine Loans Receivable
 
We invest in mortgage and mezzanine loans of entities that have significant real estate assets.  These investments are either secured by the real property or by pledges of the equity interests of the entities owning the underlying real estate.  We record these investments at the stated principal amount net of any unamortized discount or premium.  We accrete or amortize any discount or premium over the life of the related receivable utilizing the effective interest method or straight-line method, if the result is not materially different. We evaluate the collectability of both interest and principal of each of our loans whenever events or changes in circumstances indicate such amounts may not be recoverable. A loan is impaired when it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient, to the value of the collateral if the loan is collateral dependent. If our estimates of the collectability of both interest and principal or the fair value of our loans change based on market conditions or otherwise, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements.
 
As of December 31, 2013 and 2012, the carrying amounts of mortgage and mezzanine loans receivable, net of a $5,845,000 allowance in 2013, were $170,972,000 and $225,359,000, respectively.  
48

 
 
Critical Accounting Policies – continued

Allowance For Doubtful Accounts
 
We periodically evaluate the collectability of amounts due from tenants and maintain an allowance for doubtful accounts ($21,869,000 and $37,674,000 as of December 31, 2013 and 2012) for estimated losses resulting from the inability of tenants to make required payments under the lease agreements. We also maintain an allowance for receivables arising from the straight-lining of rents ($4,355,000 and $3,165,000 as of December 31, 2013 and 2012, respectively). This receivable arises from earnings recognized in excess of amounts currently due under the lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates. These estimates may differ from actual results, which could be material to our consolidated financial statements.
 
Revenue Recognition
 
We have the following revenue sources and revenue recognition policies:
 
·        Base Rent — income arising from tenant leases. These rents are recognized over the non-cancelable term of the related leases on a straight-line basis which includes the effects of rent steps and rent abatements under the leases.  We commence rental revenue recognition when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use.  In addition, in circumstances where we provide a tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of rental revenue on a straight-line basis over the term of the lease.   
 
·        Percentage Rent — income arising from retail tenant leases that is contingent upon tenant sales exceeding defined thresholds. These rents are recognized only after the contingency has been removed (i.e., when tenant sales thresholds have been achieved).
 
·        Hotel Revenue — income arising from the operation of the Hotel Pennsylvania which consists of rooms revenue, food and beverage revenue, and banquet revenue. Income is recognized when rooms are occupied. Food and beverage and banquet revenue are recognized when the services have been rendered.
 
·        Trade Shows Revenue — income arising from the operation of trade shows, including rentals of booths. This revenue is recognized when the trade shows have occurred.
 
·        Expense Reimbursements — revenue arising from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred.
 
·        Management, Leasing and Other Fees — income arising from contractual agreements with third parties or with partially owned entities. This revenue is recognized as the related services are performed under the respective agreements.
 
·       Cleveland Medical Mart — revenue arising from the development of the Cleveland Medical Mart.  This revenue was recognized as the related services were performed under the respective agreements using the criteria set forth in ASC 605-25, Multiple Element Arrangements.
 
Before we recognize revenue, we assess, among other things, its collectibility. If our assessment of the collectibility of revenue changes, the impact on our consolidated financial statements could be material.
 
Income Taxes
 
We operate in a manner intended to enable us to continue to qualify as a Real Estate Investment Trust (“REIT”) under Sections 856-860 of the Internal Revenue Code of 1986, as amended. Under those sections, a REIT which distributes at least 90% of its REIT taxable income as a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We distribute to our shareholders 100% of our taxable income. Therefore, no provision for Federal income taxes is required. If we fail to distribute the required amount of income to our shareholders, or fail to meet other REIT requirements, we may fail to qualify as a REIT which may result in substantial adverse tax consequences.
49

 

Net Income and EBITDA by Segment for the Years Ended December 31, 2013, 2012 and 2011
 
As a result of certain organizational changes and asset sales in 2012, the Merchandise Mart segment no longer met the criteria to be a separate reportable segment; accordingly, effective January 1, 2013, the remaining assets were reclassified to “Other.”  We have also reclassified the prior period segment financial results to conform to the current year presentation.  Below is a summary of net income and a reconciliation of net income to EBITDA (1) by segment for the years ended December 31, 2013, 2012 and 2011.

																						
(Amounts in thousands)	For the Year Ended December 31, 2013	
										Retail						
				Total		New York		Washington, DC		Properties		Toys		Other		
Total revenues		$ 	2,760,909 		$ 	1,509,266 		$ 	541,161 		$ 	425,716 		$ 	- 		$ 	284,766 		
Total expenses			1,886,719 			926,963 			347,686 			251,516 			- 			360,554 		
Operating income (loss)			874,190 			582,303 			193,475 			174,200 			- 			(75,788)		
(Loss) income from partially owned																				
	entities, including Toys			(338,785)			15,527 			(6,968)			2,097 			(362,377)			12,936 		
Income from Real Estate Fund			102,898 			- 			- 			- 			- 			102,898 		
Interest and other investment																				
	(loss) income, net			(24,699)			5,532 			129 			13 			- 			(30,373)		
Interest and debt expense			(483,190)			(181,966)			(102,277)			(44,203)			- 			(154,744)		
Net gain on disposition of wholly																				
	owned and partially owned assets			3,407 			- 			- 			1,377 			- 			2,030 		
Income (loss) before income taxes			133,821 			421,396 			84,359 			133,484 			(362,377)			(143,041)		
Income tax benefit (expense)			6,406 			(2,794)			14,031 			(2,311)			- 			(2,520)		
Income (loss) from continuing																				
	operations			140,227 			418,602 			98,390 			131,173 			(362,377)			(145,561)		
Income (loss) from discontinued																				
	operations			424,513 			138,245 			- 			287,536 			- 			(1,268)		
Net income (loss)			564,740 			556,847 			98,390 			418,709 			(362,377)			(146,829)		
Less net (income) attributable to																				
	noncontrolling interests			(88,769)			(10,786)			- 			(3,065)			- 			(74,918)		
Net income (loss) attributable to																				
	Vornado			475,971 			546,061 			98,390 			415,644 			(362,377)			(221,747)		
Interest and debt expense (2)			758,781 			236,645 			116,131 			50,901 			181,586 			173,518 		
Depreciation and amortization (2)			732,757 			293,974 			142,409 			72,161 			135,178 			89,035 		
Income tax expense (benefit) (2)			26,371 			3,002 			(15,707)			2,311 			33,532 			3,233 		
EBITDA (1)		$ 	1,993,880 		$ 	1,079,682 	(3)	$ 	341,223 	(4)	$ 	541,017 	(5)	$ 	(12,081)		$ 	44,039 	(6)	
____________________________
See notes on page 52.
50

 

Net Income and EBITDA by Segment for the Years Ended December 31, 2013, 2012 and 2011 - continued

(Amounts in thousands)	For the Year Ended December 31, 2012	
										Retail						
				Total		New York		Washington, DC		Properties		Toys		Other		
Total revenues		$ 	2,736,232 		$ 	1,354,874 		$ 	554,028 		$ 	370,177 		$ 	- 		$ 	457,153 		
Total expenses			2,071,663 			851,512 			360,056 			324,096 			- 			535,999 		
Operating income (loss)			664,569 			503,362 			193,972 			46,081 			- 			(78,846)		
Income (loss) from partially owned																				
	entities, including Toys			423,126 			207,773 			(5,612)			1,458 			14,859 			204,648 		
Income from Real Estate Fund			63,936 			- 			- 			- 			- 			63,936 		
Interest and other investment																				
	(loss) income, net			(260,945)			4,230 			126 			27 			- 			(265,328)		
Interest and debt expense			(493,713)			(146,350)			(115,574)			(57,057)			- 			(174,732)		
Net gain on disposition of wholly																				
	owned and partially owned assets			13,347 			- 			- 			8,491 			- 			4,856 		
Income (loss) before income taxes			410,320 			569,015 			72,912 			(1,000)			14,859 			(245,466)		
Income tax expense			(8,132)			(3,491)			(1,650)			- 			- 			(2,991)		
Income (loss) from continuing																				
	operations			402,188 			565,524 			71,262 			(1,000)			14,859 			(248,457)		
Income from discontinued																				
	operations			292,353 			10,610 			167,766 			39,357 			- 			74,620 		
Net income (loss)			694,541 			576,134 			239,028 			38,357 			14,859 			(173,837)		
Less net (income) loss attributable to																				
	noncontrolling interests			(77,281)			(2,138)			- 			1,812 			- 			(76,955)		
Net income (loss) attributable to																				
	Vornado			617,260 			573,996 			239,028 			40,169 			14,859 			(250,792)		
Interest and debt expense (2)			760,523 			187,855 			133,625 			73,828 			147,880 			217,335 		
Depreciation and amortization (2)			735,293 			252,257 			157,816 			86,529 			135,179 			103,512 		
Income tax expense (benefit) (2)			7,026 			3,751 			1,943 			- 			(16,629)			17,961 		
EBITDA (1)		$ 	2,120,102 		$ 	1,017,859 	(3)	$ 	532,412 	(4)	$ 	200,526 	(5)	$ 	281,289 		$ 	88,016 	(6)	
____________________________
See notes on the following page.

(Amounts in thousands)	For the Year Ended December 31, 2011	
										Retail						
				Total		New York		Washington, DC		Properties		Toys		Other		
Total revenues		$ 	2,702,808 		$ 	1,333,280 		$ 	603,317 		$ 	374,482 		$ 	- 		$ 	391,729 		
Total expenses			1,890,582 			841,863 			369,255 			215,075 			- 			464,389 		
Operating income (loss)			812,226 			491,417 			234,062 			159,407 			- 			(72,660)		
Income (loss) from partially owned																				
	entities, including Toys			118,612 			12,062 			(6,381)			2,700 			48,540 			61,691 		
Income from Real Estate Fund			22,886 			- 			- 			- 			- 			22,886 		
Interest and other investment																				
	income (loss), net			148,783 			4,245 			199 			(33)			- 			144,372 		
Interest and debt expense			(519,157)			(151,728)			(115,456)			(64,592)			- 			(187,381)		
Net gain on disposition of wholly																				
	owned and partially owned assets			15,134 			- 			- 			4,278 			- 			10,856 		
Income (loss) before income taxes			598,484 			355,996 			112,424 			101,760 			48,540 			(20,236)		
Income tax expense			(23,925)			(2,084)			(2,690)			(34)			- 			(19,117)		
Income (loss) from continuing																				
	operations			574,559 			353,912 			109,734 			101,726 			48,540 			(39,353)		
Income from discontinued operations			165,441 			11,155 			52,390 			27,557 			- 			74,339 		
Net income			740,000 			365,067 			162,124 			129,283 			48,540 			34,986 		
Less net (income) loss attributable to																				
	noncontrolling interests			(77,698)			(10,042)			- 			237 			- 			(67,893)		
Net income (loss) attributable to																				
	Vornado			662,302 			355,025 			162,124 			129,520 			48,540 			(32,907)		
Interest and debt expense (2)			797,920 			181,740 			134,270 			82,608 			157,135 			242,167 		
Depreciation and amortization (2)			777,421 			247,630 			181,560 			91,040 			134,967 			122,224 		
Income tax expense (benefit) (2)			4,812 			2,170 			3,123 			34 			(1,132)			617 		
EBITDA (1)		$ 	2,242,455 		$ 	786,565 	(3)	$ 	481,077 	(4)	$ 	303,202 	(5)	$ 	339,510 		$ 	332,101 	(6)	
____________________________
See notes on the following page.
51

 

Net Income and EBITDA by Segment for the Years Ended December 31, 2013, 2012 and 2011 - continued

	Notes to preceding tabular information:	

(1)	EBITDA represents "Earnings Before Interest, Taxes, Depreciation and Amortization." We consider EBITDA a supplemental measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. As properties are bought and sold based on a multiple of EBITDA, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. EBITDA should not be considered a substitute for net income. EBITDA may not be comparable to similarly titled measures employed by other companies.	

(2)	Interest and debt expense, depreciation and amortization and income tax expense (benefit) in the reconciliation of net income (loss) to EBITDA includes our share of these items from partially owned entities.	

(3)	The elements of "New York" EBITDA are summarized below.	
		For the Year Ended December 31,				
	(Amounts in thousands)	2013 		2012 		2011 				
	Office (a)	$ 	759,941 		$ 	568,518 		$ 	539,734 				
	Retail		246,808 			189,484 			163,033 				
	Alexander's (b)		42,210 			231,402 			53,663 				
	Hotel Pennsylvania		30,723 			28,455 			30,135 				
		Total New York	$ 	1,079,682 		$ 	1,017,859 		$ 	786,565 				

	(a)		2013, 2012 and 2011 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $136,427, $16,245 and $9,635, respectively. Excluding these items, EBITDA was $623,514, $552,273 and $530,099, respectively.	
																		
	(b)		2012 and 2011 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $191,040 and $14,204, respectively. Excluding these items, EBITDA was $40,362 and $39,459, respectively.	

(4)	The elements of "Washington, DC" EBITDA are summarized below.	
		For the Year Ended December 31,				
	(Amounts in thousands)	2013 		2012 		2011 				
	Office, excluding the Skyline Properties (a)	$ 	268,373 		$ 	449,448 		$ 	385,285 				
	Skyline properties		29,499 			40,037 			56,148 				
		Total Office		297,872 			489,485 			441,433 				
	Residential		43,351 			42,927 			39,644 				
		Total Washington, DC	$ 	341,223 		$ 	532,412 		$ 	481,077 				

	(a)		2012 and 2011 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $176,935 and $70,743, respectively. Excluding these items, EBITDA was $272,513 and $314,542, respectively.	

(5)	The elements of "Retail Properties" EBITDA are summarized below.	
		For the Year Ended December 31,				
	(Amounts in thousands)	2013 		2012 		2011 				
	Strip shopping centers (a)	$ 	285,612 		$ 	172,708 		$ 	210,022 				
	Regional malls (b)		255,405 			27,818 			93,180 				
		Total Retail properties	$ 	541,017 		$ 	200,526 		$ 	303,202 				

	(a)		2013, 2012 and 2011 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $128,343, $20,480 and $59,922, respectively. Excluding these items, EBITDA was $157,269, $152,228 and $150,100, respectively.	
																		
	(b)		2013, 2012 and 2011 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $189,708, ($36,390) and $28,285, respectively. Excluding these items, EBITDA was $65,697, $64,208 and $64,895, respectively.	
																		
52

 

Net Income and EBITDA by Segment for the Years Ended December 31, 2013, 2012 and 2011 - continued

									
	Notes to preceding tabular information:										
																
(6)	The elements of "other" EBITDA are summarized below.		
																
	(Amounts in thousands)	For the Year Ended December 31,		
							2013 		2012 			2011 		
	Our share of Real Estate Fund:										
		Income before net realized/unrealized gains	$ 	1,676 		$ 	4,926 		$ 	4,205 		
		Net unrealized gains		21,443 			13,840 			2,999 		
		Net realized gains		2,046 			- 			1,348 		
		Carried interest		24,306 			5,838 			736 		
	Total		49,471 			24,604 			9,288 		
	Merchandise Mart Building, 7 West 34th Street and trade shows		74,270 			62,470 			50,406 		
	555 California Street		42,667 			46,167 			44,724 		
	India real estate ventures		5,841 			3,654 			7,037 		
	LNR (a) 		20,443 			75,202 			47,614 		
	Lexington (b) 		6,931 			32,595 			34,779 		
	Other investments		18,981 			25,612 			26,092 		
			218,604 			270,304 			219,940 		
	Corporate general and administrative expenses (c) 		(94,904)			(89,082)			(85,922)		
	Investment income and other, net (c) 		46,525 			45,563 			55,202 		
	Net gain on sale of marketable securities, land parcels and residential									
		condominiums	56,868 			4,856 			10,904 		
	Loss on sale of J.C. Penney common shares		(54,914)			- 			- 		
	Non-cash impairment loss on J.C. Penney common shares		(39,487)			(224,937)			- 		
	(Loss) income from the mark-to-market of J.C. Penney derivative position		(33,487)			(75,815)			12,984 		
	Acquisition related costs and impairment losses		(24,857)			(17,386)			(5,925)		
	Severance costs (primarily reduction in force at the Merchandise Mart)		(5,492)			(3,005)			(4,226)		
	Purchase price fair value adjustment and accelerated amortization of										
		discount on investment in subordinated debt of Independence Plaza		- 			105,366 			- 		
	Merchandise Mart discontinued operations (including net gains on sale of assets)	- 			93,588 			97,272 		
	Net gain resulting from Lexington's stock issuance and asset acquisition		- 			28,763 			9,760 		
	Verde Realty impairment loss		- 			(4,936)			- 		
	Mezzanine loans loss reversal and net gain on disposition		- 			- 			82,744 		
	Non-cash impairment loss on India land parcel		- 			- 			(13,794)		
	Net gain from Suffolk Downs' sale of a partial interest		- 			- 			12,525 		
	Real Estate Fund placement fees		- 			- 			(3,451)		
	Net income attributable to noncontrolling interests in the Operating Partnership		(23,659)			(35,327)			(41,059)		
	Preferred unit distributions of the Operating Partnership		(1,158)			(9,936)			(14,853)		
							$ 	44,039 		$ 	88,016 		$ 	332,101 		

	(a) 	On April 19, 2013, LNR was sold.		
																
	(b) 	In the first quarter of 2013, we began accounting for our investment in Lexington as a marketable equity security - available for sale. This investment was previously accounted for under the equity method.		
																
	(c) 	The amounts in these captions (for this table only) exclude income (expense) from the mark-to-market of our deferred compensation plan.		
53

 
 
Net Income and EBITDA by Segment for the Years Ended December 31, 2013, 2012 and 2011 - continued
        
EBITDA by Region
 
Below is a summary of the percentages of EBITDA by geographic region (excluding discontinued operations and other gains and losses that affect comparability), from our New York, Washington, DC and Retail Properties segments.

						
				For the Year Ended December 31,		
				2013 		2012 		2011 		
	Region:								
		New York City metropolitan area		73%		70%		66%		
		Washington, DC / Northern Virginia metropolitan area		23%		26%		29%		
		Puerto Rico		2%		2%		2%		
		California		1%		1%		1%		
		Other geographies		1%		1%		2%		
				100%		100%		100%		
54

 

Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012
 
Revenues
Our revenues, which consist of property rentals (including hotel and trade show revenues), tenant expense reimbursements, and fee and other income, were $2,760,909,000 in the year ended December 31, 2013, compared to $2,736,232,000 in the prior year, an increase of $24,677,000.  Below are the details of the increase (decrease) by segment:
 
(Amounts in thousands)																					
																						
														Retail						
Increase (decrease) due to:		Total			New York			Washington, DC			Properties			Other		
Property rentals:																					
	Acquisitions and other		$	63,291 			$	75,004 			$	462 			$	(11,602)			$	(573)		
	Properties placed into / taken out of																					
		service for redevelopment			(5,164)				(1,138)				(2,333)				(1,647)				(46)		
	Hotel Pennsylvania			8,201 				8,201 				- 				- 				- 		
	Trade Shows			(6,210)				- 				- 				- 				(6,210)		
	Same store operations			33,784 				27,115 				(15,267)				7,322 				14,614 		
			93,902 				109,182 				(17,138)				(5,927)				7,785 		
																							
Tenant expense reimbursements:																					
	Acquisitions and other			1,155 				2,715 				(604)				(1,860)				904 		
	Properties placed into / taken out of																					
		service for redevelopment			(1,334)				(402)				193 				(1,027)				(98)		
	Same store operations			22,940 				8,624 				2,443 				5,902 				5,971 		
				22,761 				10,937 				2,032 				3,015 				6,777 		
																							
Cleveland Medical Mart development project			(198,865)	(1)			- 				- 				- 				(198,865)	(1)	
																							
Fee and other income:																					
	BMS cleaning fees			(1,079)				(9,208)				- 				- 				8,129 	(2)	
	Signage revenue			11,974 				11,974 				- 				- 				- 		
	Management and leasing fees			2,788 				4,177 				1,691 				(1,567)				(1,513)		
	Lease termination fees			90,136 				25,333 	(3) 			983 				59,793 	(4) 			4,027 	(5) 	
	Other income			3,060 				1,997 				(435)				225 				1,273 		
			106,879 				34,273 				2,239 				58,451 				11,916 		
																							
Total increase (decrease) in revenues		$	24,677 			$	154,392 			$	(12,867)			$	55,539 			$	(172,387)		

																							
(1)		Primarily due to the completion of the project. This decrease in revenue is offset by a decrease in development costs expensed in the period. See note (3) on page 56.	
																							
(2)		Represents the elimination of intercompany fees from operating segments upon consolidation. See note (2) on page 56.	
																							
(3)		Primarily due to a $19,500 termination fee from a tenant at 1290 Avenue of the Americas. Our share of this income, net of the write off of the straight lining of rents and amounts attributable to the noncontrolling interest was $12,121.	
																							
(4)		Results primarily from income recognized in the first quarter of 2013 in connection with the settlement of the Stop & Shop litigation.	
																							
(5)		Primarily due to $3,000 from the termination of our subsidiaries' agreements with Cuyahoga County to operate the Cleveland Medical Mart Convention Center.	
55

 

Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012 - continued
 
Expenses
Our expenses, which consist primarily of operating (including hotel and trade show expenses), depreciation and amortization and general and administrative expenses, were $1,886,719,000 in the year ended December 31, 2013, compared to $2,071,663,000 in the prior year, a decrease of $184,944,000.  Below are the details of the increase (decrease) by segment:
 
(Amounts in thousands)																					
																						
																Retail						
Increase (decrease) due to:		Total			New York			Washington, DC			Properties			Other		
Operating:																					
	Acquisitions and other		$	23,591 			$	26,583 			$	- 			$	(1,409)			$	(1,583)		
	Properties placed into / taken out of																					
		service for redevelopment			(9,370)				(1,933)				(992)				(5,307)				(1,138)		
	Non-reimbursable expenses, including																					
		bad-debt reserves			928 				(3,366)				- 				1,470 				2,824 		
	Hotel Pennsylvania			6,012 				6,012 				- 				- 				- 		
	Trade Shows			(4,872)				- 				- 				- 				(4,872)		
	BMS expenses			( 5,056 )				( 8,500 )				- 				- 				3,444 	(2) 	
	Same store operations			26,333				15,132				2,037 				6,581 				2,583 		
				37,566 				33,928 				1,045 				1,335 				1,258 		
																							
Depreciation and amortization:																					
	Acquisitions and other			38,791 				41,047 				- 				(1,882)				(374)		
	Properties placed into / taken out of																					
		service for redevelopment			(20,644)				(552)				(16,177)				(3,915)				- 		
	Same store operations			2,682 				(3,020)				2,369 				1,601 				1,732 		
					20,829 				37,475 				(13,808)				(4,196)				1,358 		
																							
General and administrative:																					
	Mark-to-market of deferred compensation																					
		plan liability (1)			3,827 				- 				- 				- 				3,827 		
	Non-same store			7,287 				- 				- 				- 				7,287 		
	Same store operations			(2,458)				4,048 				393 				(4,662)				(2,237)		
				8,656 				4,048 				393 				(4,662)				8,877 		
																							
Cleveland Medical Mart development project			(194,409)	(3)			- 				- 				- 				(194,409)	(3)	
																							
Impairment losses, acquisition related costs																					
	and tenant buy-outs			(57,586)				- 				- 				(65,057)				7,471 		
																							
Total (decrease) increase in expenses		$	(184,944)			$	75,451 			$	(12,370)			$	(72,580)			$	(175,445)		

																							
(1)		This increase in expense is entirely offset by a corresponding increase in income from the mark-to-market of the deferred compensation plan assets, a component of “interest and other investment (loss) income, net” on our consolidated statements of income.	
																							
(2)		Represents the elimination of intercompany fees from operating segments upon consolidation. See note (2) on page 55.	
																							
(3)		Primarily due to the completion of the project. This decrease in expense is offset by the decrease in development revenue in the period. See note (1) on page 55.	

56

 

Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012 - continued
 
(Loss) Income Applicable to Toys
 
In the year ended December 31, 2013, we recognized a net loss of $362,377,000 from our investment in Toys, comprised of $128,919,000 for our 32.6% share of Toys’ net loss and $240,757,000 of non-cash impairment losses (see below), partially offset by $7,299,000 of management fee income.  In the year ended December 31, 2012, we recognized net income of $14,859,000 from our investment in Toys, comprised of $45,267,000 for our 32.6% share of Toys’ net income and $9,592,000 of management fee income, partially offset by a $40,000,000 non-cash impairment loss (see below). 
 
We account for Toys on the equity method, which means our investment is increased for our pro rata share of Toys undistributed net income.  At December 31, 2012, we estimated that the fair value of our investment was $40,000,000 less than the carrying amount of $518,041,000 and concluded that the decline in the value of our investment was “other-than-temporary” based on, among other factors, compression of earnings multiples of comparable retailers and our inability to forecast a recovery in the near term.  Accordingly, we recognized a non-cash impairment loss of $40,000,000 in the fourth quarter of 2012. 
 
In the first quarter of 2013, we recognized our share of Toys’ fourth quarter net income of $78,542,000 and a corresponding non-cash impairment loss of the same amount to continue to carry our investment at fair value. 
 
At December 31, 2013, we estimated that the fair value of our investment in Toys was approximately $80,062,000 ($83,224,000 including $3,162,000 for our share of Toys’ accumulated other comprehensive income), or $162,215,000 less than the carrying amount after recognizing our share of Toys third quarter net loss in our fourth quarter.  In determining the fair value of our investment, we considered, among other inputs, a December 31, 2013 third-party valuation of Toys.  We have concluded that the decline in the value of our investment is “other-than-temporary” based on, among other factors, Toys’ 2013 holiday sales results, compression of earnings multiples of comparable retailers and our inability to forecast a recovery in the near term.  Accordingly, we recognized an additional non-cash impairment loss of $162,215,000 in the fourth quarter of 2013. 
 
We will continue to assess the recoverability of our investment each quarter.  To the extent the fair value of our investment does not change, we will recognize a non-cash impairment loss equal to our share of Toys’ fourth quarter net income, if any, in our first quarter of 2014.

Income from Partially Owned Entities
 
Summarized below are the components of income (loss) from partially owned entities for the years ended December 31, 2013 and 2012.
 
							Percentage		For the Year Ended		
							Ownership at		December 31,		
	(Amounts in thousands)		December 31, 2013		2013 		2012 		
	Equity in Net Income (Loss):												
	Alexander's (1)		32.4%		$	24,402 			$	218,391 			
	Lexington (2)		n/a			(979)				28,740 			
	LNR (3)		n/a			18,731 				66,270 			
	India real estate ventures		4.1%-36.5%			(3,533)				(5,008)			
	Partially owned office buildings (4)		Various			(4,212)				(3,770)			
	Other investments (5) (6) 		Various			(10,817)				103,644 			
						$	23,592 			$	408,267 			

	(1)		2012 includes $186,357 of income comprised of (i) a $179,934 net gain and (ii) $6,423 of commissions in connection with the sale of real estate.	
																	
	(2)		2012 includes a $28,763 net gain resulting primarily from Lexington's stock issuances. In the first quarter of 2013, we began accounting for our investment in Lexington as a marketable equity security - available for sale.	
																	
	(3)		On April 19, 2013, LNR was sold for $1.053 billion. See page 40 for details.	
																	
	(4)		Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue and others.	
																	
	(5)		Includes interests in Independence Plaza, Monmouth Mall, 85 10th Avenue, Fashion Center Mall, 50-70 West 93rd Street and others.	
																	
	(6)		2012 includes $105,366 of income from Independence Plaza comprised of (i) $60,396 from the accelerated amortization of discount on investment in the subordinated debt of the property and (ii) a $44,970 purchase price fair value adjustment from the exercise of a warrant to acquire 25% of the equity interest in the property.	
57

 

Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012 - continued

Income from Real Estate Fund
 
Below are the components of the income from our Real Estate Fund for the year ended December 31, 2013 and 2012.

	(Amounts in thousands)		For the Year Ended December 31,		
			2013 		2012 		
	Net investment income		$	8,943 		$	8,575 		
	Net realized gains			8,184 			- 		
	Net unrealized gains			85,771 			55,361 		
	Income from Real Estate Fund			102,898 			63,936 		
	Less (income) attributable to noncontrolling interests			(53,427)			(39,332)		
	Income from Real Estate Fund attributable to Vornado (1)		$	49,471 		$	24,604 		
	___________________________________  		
			
	(1)	Excludes management, leasing and development fees of $2,992 and $3,278 for the years ended December 31, 2013 and 2012, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.		

 
Interest and Other Investment (Loss) Income, net
Interest and other investment (loss) income, net was a loss of $24,699,000 in the year ended December 31, 2013, compared to a loss of $260,945,000 in the prior year, a decrease in loss of $236,246,000.  This decrease resulted from:
 
	(Amounts in thousands)						
	Non-cash impairment on J.C. Penney common shares ($39,487 in 2013, compared to					
		$224,937 in 2012)			$	185,450 			
	J.C. Penney derivative position ($33,487 mark-to-market loss in 2013, compared to a $75,815						
		mark-to-market loss in 2012)			42,328 			
	Higher interest on mezzanine loans receivable			5,634 			
	Increase in the value of investments in our deferred compensation plan (offset by a corresponding						
		increase in the liability for plan assets in general and administrative expenses)			3,827 			
	Lower dividends and interest on marketable securities			(533)			
	Other, net			(460)			
					$	236,246 			
 
Interest and Debt Expense
Interest and debt expense was $483,190,000 in the year ended December 31, 2013, compared to $493,713,000 in the prior year, a decrease of $10,523,000.  This decrease was primarily due to (i) $25,502,000 of higher capitalized interest and (ii) $4,738,000 of interest savings from the restructuring of the Skyline properties mortgage loan in the fourth quarter of 2013, partially offset by (iii) interest expense of $12,319,000 from the financing of the retail condominium at 666 Fifth Avenue in the first quarter of 2013, and (iv) an $8,436,000 prepayment penalty in connection with the refinancing of Eleven Penn Plaza.
 
Net Gain on Disposition of Wholly Owned and Partially Owned Assets
Net gain on disposition of wholly owned and partially owned assets was $3,407,000 in the year ended December 31, 2013 (comprised primarily of net gains from the sale of marketable securities, land parcels (including Harlem Park), and residential condominiums aggregating $58,245,000, partially offset by a $54,914,000 net loss on sale of J.C. Penney common shares), compared to $13,347,000 in the year ended December 31, 2012 (comprised of net gains from the sale of marketable securities, land parcels and residential condominiums).
 
Income Tax Benefit (Expense)
In the year ended December 31, 2013, we had an income tax benefit of $6,406,000, compared to an expense of $8,132,000 in the prior year, a decrease in expense of $14,538,000.  This decrease resulted primarily from a reversal of previously accrued deferred tax liabilities in the current year due to a change in the effective tax rate resulting from an amendment of the Washington, DC Unincorporated Business Tax Statute. 
58

 
 
Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012 - continued
 
Income from Discontinued Operations
We have reclassified the revenues and expenses of the properties that were sold to “income from discontinued operations” and the related assets and liabilities to “assets related to discontinued operations” and “liabilities related to discontinued operations” for all the periods presented in the accompanying financial statements.  The table below sets forth the combined results of assets related to discontinued operations for the years ended December 31, 2013 and 2012.

					For the Year Ended December 31,		
	(Amounts in thousands)		2013 		2012 		
	Total revenues		$	38,043 		$	177,629 		
	Total expenses			23,305 			120,393 		
				14,738 			57,236 		
	Net gains on sale of real estate			414,502 			245,799 		
	Gain on sale of Canadian Trade Shows, net of $11,448 of income taxes			- 			19,657 		
	Impairment losses			(4,727)			(30,339)		
	Income from discontinued operations		$	424,513 		$	292,353 		
 
Net Income Attributable to Noncontrolling Interests in Consolidated Subsidiaries
 
Net income attributable to noncontrolling interests in consolidated subsidiaries was $63,952,000 in the year ended December 31, 2013, compared to $32,018,000 in the prior year, an increase of $31,934,000.  This increase resulted primarily from (i) $14,095,000 of higher net income allocated to the noncontrolling interests of our Real Estate Fund, (ii) $13,222,000 of lower income in the prior year resulting from a priority return on our investment in 1290 Avenue of the Americas and 555 California Street, and (iii) $2,909,000 of income allocated to the noncontrolling interest for its share of the net gain on sale of a retail property in Tampa, Florida.

Net Income Attributable to Noncontrolling Interests in the Operating Partnership
 
Net income attributable to noncontrolling interests in the Operating Partnership was $23,659,000 in the year ended December 31, 2013, compared to $35,327,000 in the prior year, a decrease of $11,668,000.  This decrease resulted primarily from lower net income subject to allocation to unitholders.

Preferred Unit Distributions of the Operating Partnership
 
Preferred unit distributions of the Operating Partnership were $1,158,000 in the year ended December 31, 2013 , compared to $9,936,000 in the prior year, a decrease of $8,778,000.  This decrease resulted primarily from the redemption of the 6.875% Series D-15 cumulative redeemable preferred units in May 2013, and the 7.0% Series D-10 and 6.75% Series D-14 cumulative redeemable preferred units in July 2012.
 
Preferred Share Dividends
 
Preferred share dividends were $82,807,000 in the year ended December 31, 2013, compared to $76,937,000 in the prior year, an increase of $5,870,000.  This increase resulted from the issuance of $300,000,000 of 5.70% Series K cumulative redeemable preferred shares in July 2012 and $300,000,000 of 5.40% Series L cumulative redeemable preferred shares in January 2013, partially offset by the redemption of $262,500,000 of 6.75% Series F and Series H cumulative redeemable preferred shares in February 2013 and $75,000,000 of 7.0% Series E cumulative redeemable preferred shares in August 2012.

Preferred Unit and Share Redemptions
 
In year ended December 31, 2013, we recognized $1,130,000 of expense in connection with preferred unit and share redemptions, comprised of $9,230,000 of expense from the redemption of the 6.75% Series F and Series H cumulative redeemable preferred shares in February 2013, partially offset by an $8,100,000 discount from the redemption of all of the 6.875% Series D-15 cumulative redeemable preferred units in May 2013.  In the year ended December 31, 2012, we recognized an $8,948,000 discount primarily from the redemption of all of the 7.0% Series D-10 and 6.75% Series D-14 cumulative redeemable preferred units.
59

 

Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012 - continued
 
Same Store EBITDA
Same store EBITDA represents EBITDA from property level operations which are owned by us in both the current and prior year reporting periods.  Same store EBITDA excludes segment-level overhead expenses, which are expenses that we do not consider to be property-level expenses, as well as other non-operating items.  We present same store EBITDA on both a GAAP basis and a cash basis (which excludes income from the straight-lining of rents, amortization of below-market leases, net of above-market leases and other non-cash adjustments).  We present these non-GAAP measures to (i) facilitate meaningful comparisons of the operational performance of our properties and segments, (ii) make decisions on whether to buy, sell or refinance properties, and (iii) compare the performance of our properties and segments to those of our peers.  Same store EBITDA should not be considered as an alternative to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies. 
 
Below is the reconciliation of EBITDA to same store EBITDA on a GAAP basis for each of our segments for the year ended December 31, 2013, compared to year ended December 31, 2012.

(Amounts in thousands)		New York		Washington, DC		Retail Properties		
														
EBITDA for the year ended December 31, 2013		$	1,079,682 		$	341,223 		$	541,017 		
	Add-back:											
		Non-property level overhead expenses included above			34,087 			27,630 			18,992 		
	Less EBITDA from:											
		Acquisitions			(67,613)			- 			- 		
		Dispositions, including net gains on sale			(136,854)			(150)			(290,727)		
		Properties taken out-of-service for redevelopment			(20,050)			(4,457)			(4,723)		
		Other non-operating (income) expense			(29,856)			(1,129)			(27,335)		
GAAP basis same store EBITDA for the year ended											
	December 31, 2013		$	859,396 		$	363,117 		$	237,224 		
														
EBITDA for the year ended December 31, 2012		$	1,017,859 		$	532,412 		$	200,526 		
	Add-back:											
		Non-property level overhead expenses included above			30,039 			27,237 			23,654 		
	Less EBITDA from:											
		Acquisitions			(4,131)			- 			- 		
		Dispositions, including net gains on sale			(200,050)			(176,052)			(77,048)		
		Properties taken out-of-service for redevelopment			(20,056)			(9,319)			(970)		
		Other non-operating (income) expense			(9,024)			(838)			84,581 		
GAAP basis same store EBITDA for the year ended											
	December 31, 2012		$	814,637 		$	373,440 		$	230,743 		
														
Increase (decrease) in GAAP basis same store EBITDA -											
	Year ended December 31, 2013 vs. December 31, 2012 (1)		$	44,759 		$	(10,323)		$	6,481 		
														
% increase (decrease) in GAAP basis same store EBITDA			5.5% 			(2.8%) 			2.8% 		
														
(1)	See notes on following page											
60

 

Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012 - continued

Notes to preceding tabular information:

New York:
 
The $44,759,000 increase in New York GAAP basis same store EBITDA resulted primarily from increases in Office and Retail of $32,415,000 and $9,595,000, respectively.  The Office increase resulted primarily from higher (i) rental revenue of $16,405,000 (primarily due to a $1.85 increase in average annual rents per square foot) and (ii) signage revenue and management and leasing fees of $16,151,000.  The Retail increase resulted primarily from higher rental revenue of $10,710,000, (primarily due to a $9.35 increase in average annual rents per square foot).

Washington, DC:
 
The $10,323,000 decrease in Washington, DC GAAP basis same store EBITDA resulted primarily from lower rental revenue of $15,267,000, primarily due to a 330 basis point decrease in office average same store occupancy to 82.8% from 86.1%, a significant portion of which resulted from the effects of BRAC related move-outs and the sluggish environment in the Washington, DC / Northern Virginia area (see page 46).

Retail Properties:
 
The $6,481,000 increase in Retail Properties GAAP basis same store EBITDA resulted primarily from higher rental revenue of $7,322,000, due to a 130 basis point increase in average same store occupancy to 93.5% from 92.2%, and a $0.19 increase in average annual rents per square foot. 

 
Below is the reconciliation of GAAP basis same store EBITDA to same store EBITDA on a Cash basis for each of our segments for the year ended December 31, 2013, compared to year ended December 31, 2012.
 
(Amounts in thousands)		New York		Washington, DC		Retail Properties		
														
GAAP basis same store EBITDA for the year ended											
	December 31, 2013		$	859,396 		$	363,117 		$	237,224 		
Less: Adjustments for straight line rents, amortization of acquired											
	below-market leases, net, and other non-cash adjustments			(107,060)			(10,181)			(11,762)		
Cash basis same store EBITDA for the year ended											
	December 31, 2013		$	752,336 		$	352,936 		$	225,462 		
														
GAAP basis same store EBITDA for the year ended											
	December 31, 2012		$	814,637 		$	373,440 		$	230,743 		
Less: Adjustments for straight line rents, amortization of acquired											
	below-market leases, net, and other non-cash adjustments			(115,828)			(6,484)			(13,279)		
Cash basis same store EBITDA for the year ended											
	December 31, 2012		$	698,809 		$	366,956 		$	217,464 		
														
Increase (decrease) in Cash basis same store EBITDA -											
	Year ended December 31, 2013 vs. December 31, 2012		$	53,527 		$	(14,020)		$	7,998 		
														
% increase (decrease) in Cash basis same store EBITDA			7.7% 			(3.8%) 			3.7% 		
61

 

Results of Operations – Year Ended December 31, 2012 Compared to December 31, 2011
 
Revenues
Our revenues, which consist primarily of property rentals (including hotel and trade show revenues), tenant expense reimbursements, and fee and other income, were $2,736,232,000 in the year ended December 31, 2012, compared to $2,702,808,000 in the year ended December 31, 2011, an increase of $33,424,000. Below are the details of the increase (decrease) by segment:
 
(Amounts in thousands)																					
																						
														Retail						
Increase (decrease) due to:		Total			New York			Washington, DC			Properties			Other		
Property rentals:																					
	Acquisitions and other		$	15,139 			$	9,528 			$	5,611 			$	- 			$	- 		
	Properties placed into / taken out of																					
		service for redevelopment			(29,707)				(5,339)				(22,312)				(2,056)				- 		
	Hotel Pennsylvania			1,113 				1,113 				- 				- 				- 		
	Trade Shows			(4,281)				- 				- 				- 				(4,281)		
	Same store operations			(11,691)				27,521 				(38,658)				7,004 				(7,558)		
			(29,427)				32,823 				(55,359)				4,948 				(11,839)		
																							
Tenant expense reimbursements:																					
	Acquisitions and other			(7,146)				(4,790)				2,724 				(2,393)				(2,687)		
	Properties placed into / taken out of																					
		service for redevelopment			(4,930)				(845)				(1,643)				(2,442)				- 		
	Same store operations			(949)				549 				3,362 				(3,004)				(1,856)		
				(13,025)				(5,086)				4,443 				(7,839)				(4,543)		
																					
Cleveland Medical Mart development project			81,154 	(1)			- 				- 				- 				81,154 	(1)	
																							
Fee and other income:																					
	BMS cleaning fees			5,830 				4,932 				- 				- 				898 		
	Signage revenue			1,069 				1,069 				- 				- 				- 		
	Management and leasing fees			66 				544 				414 				(859)				(33)		
	Lease termination fees			(13,973)				(10,703)				(3,151)				(393)				274 		
	Other income			1,730 				(1,985)				4,364 				(162)				(487)		
			(5,278)				(6,143)				1,627 				(1,414)				652 		
																							
Total increase (decrease) in revenues		$	33,424 			$	21,594 			$	(49,289)			$	(4,305)			$	65,424 		

																							
(1)		This increase in income is offset by an increase in development costs expensed in the period. See note (5) on page 63.	
62

 

Results of Operations – Year Ended December 31, 2012 Compared to December 31, 2011 - continued
 
Expenses
Our expenses, which consist primarily of operating (including hotel and trade show expenses), depreciation and amortization and general and administrative expenses, were $2,071,663,000 in the year ended December 31, 2012, compared to $1,890,582,000 in the year ended December 31, 2011, an increase of $181,081,000. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)																				
														Retail						
Increase (decrease) due to:		Total			New York			Washington, DC			Properties			Other		
Operating:																					
	Acquisitions and other		$	7,422 			$	6,617 			$	3,492 			$	- 			$	(2,687)		
	Properties placed into / taken out of																					
		service for redevelopment			(9,037)				(1,074)				(4,829)				(3,134)				- 		
	Non-reimbursable expenses, including																					
		bad-debt reserves			14,446 				(3,347)				2,662 				21,761 	(2)			(6,630)		
	Hotel Pennsylvania			2,594 				2,594 				- 				- 				- 		
	Trade Shows			(4,438)				- 				- 				- 				(4,438)		
	BMS expenses			5,139 				4,241 				- 				- 				898 		
	Same store operations			16,498 				15,820 				4,454 				(4,897)				1,121 		
				32,624 				24,851 				5,779 				13,730 				(11,736)		
																							
Depreciation and amortization:																					
	Acquisitions and other			7,960 				3,298 				4,662 				- 				- 		
	Properties placed into / taken out of																					
		service for redevelopment			(16,777)				(975)				(15,188)	(3)			(614)				- 		
	Same store operations			2,978 				2,959 				(5,320)				609 				4,730 		
					(5,839)				5,282 				(15,846)				(5)				4,730 		
																							
General and administrative:																					
	Mark-to-market of deferred compensation																					
		plan liability (1)			5,151 				- 				- 				- 				5,151 		
	Non-same store			(3,451)				- 				- 				- 				(3,451)		
	Same store operations			(7,786)				3,293 				868 				(1,835)				(10,112)	(4)	
				(6,086)				3,293 				868 				(1,835)				(8,412)		
																							
Cleveland Medical Mart development project			80,795 	(5)			- 				- 				- 				80,795 	(5)	
																							
Impairment losses, acquisition related costs																					
	and tenant buy-outs			79,587 				(23,777)	(6)			- 				97,131 	(7)			6,233 		
																							
Total increase (decrease) in expenses		$	181,081 			$	9,649 			$	(9,199)			$	109,021 			$	71,610 		

																							
(1)	This increase in expense is entirely offset by a corresponding increase in income from the mark-to-market of the deferred compensation plan assets, a component of “interest and other investment (loss) income, net” on our consolidated statements of income.	
			
(2)	Primarily from a $23,521 reversal of the Stop & Shop accounts receivable reserve in 2011.	
			
(3)	Primarily from depreciation expense on 1851 South Bell Street in 2011, which was taken out of service for redevelopment.	
			
(4)	Primarily from lower payroll costs due to a reduction in workforce at the Merchandise Mart.	
			
(5)	This increase in expense is offset by the increase in development revenue in the period. See note (1) on page 62.	
																							
(6)	Represents the buy-out of below-market leases in 2011.	
			
(7)	Primarily from a non-cash impairment loss of $70,100 on the Broadway Mall.	
																							
63

 

Results of Operations – Year Ended December 31, 2012 Compared to December 31, 2011 - continued
 
Income Applicable to Toys
 
In the year ended December 31, 2012, we recognized net income of $14,859,000 from our investment in Toys, comprised of $45,267,000 for our 32.6% share of Toys’ net income and $9,592,000 of management fee income, partially offset by a $40,000,000 non-cash impairment loss. 
 
In the year ended December 31, 2011, we recognized net income of $48,540,000 from our investment in Toys, comprised of $39,592,000 for our 32.7% share of Toys’ net income and $8,948,000 of management fee income. 

Income from Partially Owned Entities
Summarized below are the components of income (loss) from partially owned entities for the years ended December 31, 2012 and 2011.
 
							Percentage		For the Year Ended		
							Ownership at		December 31,		
	(Amounts in thousands)		December 31, 2012		2012 		2011 		
	Equity in Net Income (Loss):												
	Alexander's (1)		32.4%		$	218,391 			$	32,430 			
	Lexington (2)		10.5%			28,740 				8,351 			
	LNR		26.2%			66,270 				58,786 			
	India real estate ventures		4.0%-36.5%			(5,008)				(14,881)			
	Partially owned office buildings (3)		Various			(3,770)				(22,270)			
	Other investments (4) (5) 		Various			103,644 				7,656 			
									$	408,267 			$	70,072 			

	(1)		2012 includes $186,357 of income comprised of (i) a $179,934 net gain and (ii) $6,423 of commissions in connection with the sale of real estate.	
																	
	(2)		2012 includes a $28,763 net gain resulting primarily from Lexington's stock issuances.	
																	
	(3)		Includes interests in 280 Park Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue and others.	
																	
	(4)		Includes interests in Independence Plaza, Monmouth Mall, 85 10th Avenue, Fashion Center Mall, 50-70 West 93rd Street and others.	
																	
	(5)		2012 includes $105,366 of income from Independence Plaza comprised of (i) $60,396 from the accelerated amortization of discount on investment in the subordinated debt of the property and (ii) a $44,970 purchase price fair value adjustment from the exercise of a warrant to acquire 25% of the equity interest in the property.	

Income from Real Estate Fund
 
Below are the components of the income from our Real Estate Fund for the year ended December 31, 2012 and 2011.

	(Amounts in thousands)		For the Year Ended December 31,		
			2012 		2011 		
	Net investment income		$	8,575 		$	5,500 		
	Net realized gains			- 			5,391 		
	Net unrealized gains			55,361 			11,995 		
	Income from Real Estate Fund			63,936 			22,886 		
	Less (income) attributable to noncontrolling interests			(39,332)			(13,598)		
	Income from Real Estate Fund attributable to Vornado (1)		$	24,604 		$	9,288 		
	___________________________________  		
			
	(1)	Excludes management, leasing and development fees of $3,278 and $2,695 for the years ended December 31, 2012 and 2011, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.		
 	 	 	 	 	 	 	 	 	 	
64

 
 
Results of Operations – Year Ended December 31, 2012 Compared to December 31, 2011 - continued

Interest and Other Investment (Loss) Income, net
 
Interest and other investment (loss) income, net was a loss of $260,945,000 in the year ended December 31, 2012, compared to income of  $148,783,000 in the year ended December 31, 2011, a decrease in income of $409,728,000. This decrease resulted from:

									
	(Amounts in thousands)						
	Non-cash impairment loss on J.C. Penney common shares in 2012		$	(224,937)			
	J.C. Penney derivative position ($75,815 mark-to-market loss in 2012, compared to a $12,984						
		mark-to-market gain in 2011)				(88,799)			
	Mezzanine loan loss reversal and net gain on disposition in 2011			(82,744)			
	Lower dividends and interest on marketable securities			(17,608)			
	Increase in the value of investments in our deferred compensation plan (offset by a corresponding						
		increase in the liability for plan assets in general and administrative expenses)			5,151 			
	Other, net			(791)			
					$	(409,728)			
 
Interest and Debt Expense
Interest and debt expense was $493,713,000 in the year ended December 31, 2012, compared to $519,157,000 in the year ended December 31, 2011, a decrease of $25,444,000.  This decrease was primarily due to (i) $27,077,000 from the redemption of our exchangeable and convertible senior debentures in April 2012 and November 2011, respectively, (ii) $15,604,000 of higher capitalized interest and (iii) $12,082,000 from the refinancing of 350 Park Avenue in January 2012, partially offset by (iv) $18,833,000 from the issuance of $400,000,000 of senior unsecured notes in November 2011, (v) $6,093,000 from the refinancing of 100 West 33 rd Street in March 2012 and (vi) $4,715,000 from borrowings under our revolving credit facilities. 

Net Gain on Disposition of Wholly Owned and Partially Owned Assets
Net gain on disposition of wholly owned and partially owned assets was $13,347,000 in year ended December 31, 2012, compared to $15,134,000, in the year ended December 31, 2011 and resulted primarily from the sale of marketable securities, land parcels and residential condominiums.

Income Tax Benefit (Expense)
Income tax benefit (expense) was an expense of $8,132,000 in the year ended December 31, 2012, compared to an expense of $23,925,000 in the year ended December 31, 2011 a decrease of $15,793,000.  This decrease resulted primarily from the reversal of a $12,038,000 tax liability in the fourth quarter of 2012 upon liquidation of a taxable REIT subsidiary that was formed in connection with the acquisition of our 555 California Street property.
65

 
 
Results of Operations – Year Ended December 31, 2012 Compared to December 31, 2011 - continued

Income from Discontinued Operations
The table below sets forth the combined results of operations of assets related to discontinued operations for the years ended December 31, 2012 and 2011.

					For the Year Ended December 31,		
	(Amounts in thousands)		2012 		2011 		
											
	Total revenues		$	177,629 		$	260,343 		
	Total expenses			120,393 			201,633 		
				57,236 			58,710 		
	Net gains on sale of real estate			245,799 			51,623 		
	Impairment losses			(30,339)			(28,799)		
	Gain on sale of Canadian Trade Shows, net of $11,448 of income taxes				19,657 			- 		
	Net gain on extinguishment of High Point debt			- 			83,907 		
	Income from discontinued operations		$	292,353 		$	165,441 		
 
Net Income Attributable to Noncontrolling Interests in Consolidated Subsidiaries
 
Net income attributable to noncontrolling interests in consolidated subsidiaries was $32,018,000 in the year ended December 31, 2012, compared to $21,786,000 in the year ended December 31, 2011, an increase of $10,232,000.  This increase resulted primarily from a $25,734,000 increase in income allocated to the noncontrolling interests of our Real Estate Fund, partially offset by a $13,222,000 priority return on our investment in 1290 Avenue of the Americas and 555 California Street.

Net Income Attributable to Noncontrolling Interests in the Operating Partnership
 
Net income attributable to noncontrolling interests in the Operating Partnership was $35,327,000 in the year ended December 31, 2012, compared to $41,059,000 in the year ended December 31, 2011, a decrease of $5,732,000.  This decrease resulted primarily from lower net income subject to allocation to unitholders.

Preferred Unit Distributions of the Operating Partnership
 
Preferred unit distributions of the Operating Partnership were $9,936,000 in the year ended December 31, 2012, compared to $14,853,000 in the year ended December 31, 2011, a decrease of $4,917,000.  This decrease resulted primarily from the redemption of the 7.0% Series D-10 and 6.75% Series D-14 cumulative redeemable preferred units in July 2012.

Preferred Share Dividends
 
Preferred share dividends were $76,937,000 in the year ended December 31, 2012, compared to $65,531,000 in the year ended December 31, 2011, an increase of $11,406,000.  This increase resulted from the issuance of $246,000,000 of 6.875% Series J cumulative redeemable preferred shares in April 2011 and $300,000,000 of 5.70% Series K cumulative redeemable preferred shares in July 2012, partially offset by the redemption of $75,000,000 of 7.0% Series E cumulative redeemable preferred shares in August 2012.

Preferred Unit and Share Redemptions
 
In the year ended December 31, 2012, we recognized an $8,948,000 discount primarily from the redemption of all of the 7.0% Series D-10 and 6.75% Series D-14 cumulative redeemable preferred units, compared to a $5,000,000 discount in the year ended December 31, 2011, which resulted from the redemption of the Series D-11 cumulative redeemable preferred units. 
66

 

Results of Operations – Year Ended December 31, 2012 Compared to December 31, 2011 - continued
 
Same Store EBITDA
Below is the reconciliation of EBITDA to same store EBITDA on a GAAP basis for each of our segments for the year ended December 31, 2012, compared to the year ended December 31, 2011.

(Amounts in thousands)		New York		Washington, DC		Retail Properties		
														
EBITDA for the year ended December 31, 2012		$	1,017,859 		$	532,412 		$	200,526 		
	Add-back:											
		Non-property level overhead expenses included above			30,039 			27,237 			23,654 		
	Less EBITDA from:											
		Acquisitions			(42,129)			(5,005)			- 		
		Dispositions, including net gains on sale			(190,396)			(172,832)			(64,863)		
		Properties taken out-of-service for redevelopment			(961)			(5,329)			(1,134)		
		Other non-operating (income) expense			(9,981)			(723)			99,079 		
GAAP basis same store EBITDA for the year ended											
	December 31, 2012		$	804,431 		$	375,760 		$	257,262 		
														
EBITDA for the year ended December 31, 2011		$	786,565 		$	481,077 		$	303,202 		
	Add-back:											
		Non-property level overhead expenses included above			26,746 			26,369 			25,489 		
	Less EBITDA from:											
		Acquisitions			(14,956)			(150)			- 		
		Dispositions, including net gains on sale			(13,432)			(69,940)			(54,537)		
		Properties taken out-of-service for redevelopment			(6,009)			(25,644)			(2,925)		
		Other non-operating (income) expense			9,926 			(785)			(17,043)		
GAAP basis same store EBITDA for the year ended											
	December 31, 2011		$	788,840 		$	410,927 		$	254,186 		
														
Increase (decrease) in GAAP basis same store EBITDA -											
	Year ended December 31, 2012 vs. December 31,2011 (1)		$	15,591 		$	(35,167)		$	3,076 		
														
% increase (decrease) in GAAP basis same store EBITDA			2.0% 			(8.6%) 			1.2% 		
														
(1)	See notes on following page.											
67

 
 
Results of Operations – Year Ended December 31, 2012 Compared to December 31, 2011 - continued

Notes to preceding tabular information:

New York:
 
The $15,591,000 increase in New York GAAP basis same store EBITDA resulted primarily from an increase in Office of $13,029,000.  The Office increase resulted from higher rental revenue of $29,671,000 (primarily due to a $1.93 increase in average annual rents per square foot), partially offset by an increase in operating expenses.

Washington, DC:
 
The $35,167,000 decrease in Washington, DC GAAP basis same store EBITDA resulted primarily from lower rental revenue of $38,658,000, primarily due to a 740 basis point decrease in office average same store occupancy to 86.2% from 93.6%, a significant portion of which resulted from the effects of BRAC related move-outs and the sluggish leasing environment in the Washington, DC / Northern Virginia area (see page 46).

Retail Properties:
 
The $3,076,000 increase in Retail Properties GAAP basis same store EBITDA resulted primarily from higher rental revenue of $7,004,000, due to an increase in average same store occupancy and average annual rents per square foot. 

 
Below is the reconciliation of GAAP basis same store EBITDA to same store EBITDA on a Cash basis for each of our segments for the year ended December 31, 2012, compared to year ended December 31, 2011.

(Amounts in thousands)		New York		Washington, DC		Retail Properties		
														
GAAP basis same store EBITDA for the year ended											
	December 31, 2012		$	804,431 		$	375,760 		$	257,262 		
Less: Adjustments for straight line rents, amortization of acquired											
	below-market leases, net, and other non-cash adjustments			(94,560)			(5,573)			(15,676)		
Cash basis same store EBITDA for the year ended											
	December 31, 2012		$	709,871 		$	370,187 		$	241,586 		
														
GAAP basis same store EBITDA for the year ended											
	December 31, 2011		$	788,840 		$	410,927 		$	254,186 		
Less: Adjustments for straight line rents, amortization of acquired											
	below-market leases, net, and other non-cash adjustments			(93,053)			(357)			(15,685)		
Cash basis same store EBITDA for the year ended											
	December 31, 2011		$	695,787 		$	410,570 		$	238,501 		
														
Increase (decrease) in Cash basis same store EBITDA -											
	Year ended December 31, 2012 vs. December 31, 2011		$	14,084 		$	(40,383)		$	3,085 		
														
% increase (decrease) in Cash basis same store EBITDA			2.0% 			(9.8%) 			1.3% 		
68

 

Supplemental Information
Net Income and EBITDA by Segment for the Three Months Ended December 31, 2013 and 2012
 
Below is a summary of net income and a reconciliation of net income to EBITDA (1) by segment for the three months ended December 31, 2013 and 2012.

																						
(Amounts in thousands)	For the Three Months Ended December 31, 2013	
										Retail						
				Total		New York		Washington, DC		Properties		Toys		Other		
Total revenues		$ 	673,308 		$ 	380,018 		$ 	134,509 		$ 	92,936 		$ 	- 		$ 	65,845 		
Total expenses			501,743 			226,311 			89,095 			88,724 			- 			97,613 		
Operating income (loss)			171,565 			153,707 			45,414 			4,212 			- 			(31,768)		
(Loss) income from partially owned																				
	entities, including Toys			(293,165)			1,507 			(423)			585 			(293,066)			(1,768)		
Income from Real Estate Fund			28,951 			- 			- 			- 			- 			28,951 		
Interest and other investment																				
	income, net			8,234 			1,456 			30 			8 			- 			6,740 		
Interest and debt expense			(120,625)			(56,538)			(18,927)			(9,680)			- 			(35,480)		
Net gain on disposition of wholly																				
	owned and partially owned assets			23,988 			- 			- 			- 			- 			23,988 		
(Loss) income before income taxes			(181,052)			100,132 			26,094 			(4,875)			(293,066)			(9,337)		
Income tax benefit (expense)			12,578 			(1,496)			15,980 			(831)			- 			(1,075)		
(Loss) income from continuing																				
	operations			(168,474)			98,636 			42,074 			(5,706)			(293,066)			(10,412)		
Income from discontinued																				
	operations			129,715 			129,706 			- 			- 			- 			9 		
Net (loss) income			(38,759)			228,342 			42,074 			(5,706)			(293,066)			(10,403)		
Less net (income) loss attributable to																				
	noncontrolling interests			(9,760)			(1,268)			- 			14 			- 			(8,506)		
Net (loss) income attributable to																				
	Vornado			(48,519)			227,074 			42,074 			(5,692)			(293,066)			(18,909)		
Interest and debt expense (2)			207,424 			73,066 			22,416 			10,844 			62,239 			38,859 		
Depreciation and amortization (2)			183,685 			73,694 			36,610 			19,721 			31,446 			22,214 		
Income tax expense (benefit) (2)			8,270 			1,558 			(17,841)			831 			22,573 			1,149 		
EBITDA (1)		$ 	350,860 		$ 	375,392 	(3)	$ 	83,259 	(4)	$ 	25,704 	(5)	$ 	(176,808)		$ 	43,313 	(6)	
________________­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­__­­­­_______
See notes on page 71.
69

 

Supplemental Information – continued
Net Income and EBITDA by Segment for the Three Months Ended December 31, 2013 and 2012 - continued

(Amounts in thousands)	For the Three Months Ended December 31, 2012	
										Retail						
				Total		New York		Washington, DC		Properties		Toys		Other		
Total revenues		$ 	686,693 		$ 	356,786 		$ 	132,295 		$ 	94,947 		$ 	- 		$ 	102,665 		
Total expenses			600,728 			219,340 			88,889 			153,846 			- 			138,653 		
Operating income (loss)			85,965 			137,446 			43,406 			(58,899)			- 			(35,988)		
Income (loss) from partially owned																				
	entities, including Toys			280,939 			187,428 			(1,041)			418 			(73,837)			167,971 		
Income from Real Estate Fund			26,364 			- 			- 			- 			- 			26,364 		
Interest and other investment																				
	(loss) income, net			(237,961)			1,064 			29 			3 			- 			(239,057)		
Interest and debt expense			(121,049)			(37,578)			(30,166)			(11,695)			- 			(41,610)		
Net gain on disposition of wholly																				
	owned and partially owned assets			8,491 			- 			- 			8,491 			- 			- 		
Income (loss) before income taxes			42,749 			288,360 			12,228 			(61,682)			(73,837)			(122,320)		
Income tax benefit (expense)			9,187 			(1,011)			(373)			- 			- 			10,571 		
Income (loss) from continuing																				
	operations			51,936 			287,349 			11,855 			(61,682)			(73,837)			(111,749)		
Income (loss) from discontinued																				
	operations			39,957 			2,934 			36,787 			3,537 			- 			(3,301)		
Net income (loss)			91,893 			290,283 			48,642 			(58,145)			(73,837)			(115,050)		
Less net (income) loss attributable to																				
	noncontrolling interests			(5,758)			5,128 			- 			1,504 			- 			(12,390)		
Net income (loss) attributable to																				
	Vornado			86,135 			295,411 			48,642 			(56,641)			(73,837)			(127,440)		
Interest and debt expense (2)			193,258 			47,561 			34,139 			15,789 			44,492 			51,277 		
Depreciation and amortization (2)			182,499 			63,777 			34,829 			20,778 			34,808 			28,307 		
Income tax (benefit) expense (2)			(43,050)			1,074 			411 			- 			(34,611)			(9,924)		
EBITDA (1)		$ 	418,842 		$ 	407,823 	(3)	$ 	118,021 	(4)	$ 	(20,074)	(5)	$ 	(29,148)		$ 	(57,780)	(6)	
________________­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­__­­­­_______
See notes on the following page.
 
70

 

Supplemental Information – continued
Net Income and EBITDA by Segment for the Three Months Ended December 31, 2013 and 2012 - continued

	Notes to preceding tabular information:	

(1)	EBITDA represents "Earnings Before Interest, Taxes, Depreciation and Amortization." We consider EBITDA a supplemental measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. As properties are bought and sold based on a multiple of EBITDA, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. EBITDA should not be considered a substitute for net income. EBITDA may not be comparable to similarly titled measures employed by other companies.	

															
(2)	Interest and debt expense, depreciation and amortization and income tax (benefit) expense in the reconciliation of net income (loss) to EBITDA includes our share of these items from partially owned entities.	

															
(3)	The elements of "New York" EBITDA are summarized below.	
		For the Three Months Ended December 31,				
	(Amounts in thousands)	2013 		2012 				
	Office (a)	$ 	283,092 		$ 	151,613 				
	Retail		69,414 			52,576 				
	Alexander's (b)		11,069 			191,925 				
	Hotel Pennsylvania		11,817 			11,709 				
		Total New York	$ 	375,392 		$ 	407,823 				

	(a)		2013 and 2012 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $129,229 and $10,044, respectively. Excluding these items, EBITDA was $153,863 and $141,569, respectively.	
															
	(b)		2012 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $181,973. Excluding these items, EBITDA was $9,952.	

(4)	The elements of "Washington, DC" EBITDA are summarized below.	
		For the Three Months Ended December 31,				
	(Amounts in thousands)	2013 		2012 				
	Office, excluding the Skyline Properties (a)	$ 	65,910 		$ 	99,153 				
	Skyline properties		6,953 			7,910 				
		Total Office		72,863 			107,063 				
	Residential		10,396 			10,958 				
		Total Washington, DC	$ 	83,259 		$ 	118,021 				

	(a)		2012 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $37,348. Excluding these items, EBITDA was $61,805.	

(5)	The elements of "Retail Properties" EBITDA are summarized below.	
		For the Three Months Ended December 31,				
	(Amounts in thousands)	2013 		2012 				
	Strip shopping centers (a)	$ 	21,547 		$ 	24,154 				
	Regional malls (b)		4,157 			(44,228)				
		Total Retail properties	$ 	25,704 		$ 	(20,074)				

	(a)		2013 and 2012 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating net losses of $19,000 and $16,324, respectively. Excluding these items, EBITDA was $40,547 and $40,478, respectively.	
															
	(b)		2013 and 2012 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating net losses of $13,443 and $61,447, respectively. Excluding these items, EBITDA was $17,600 and $17,219, respectively.	
															
71

 

Supplemental Information – continued
Net Income and EBITDA by Segment for the Three Months Ended December 31, 2013 and 2012 - continued

	Notes to preceding tabular information:								
														
(6)	The elements of "other" EBITDA from continuing operations are summarized below.				
							For the Three Months			
	(Amounts in thousands)	Ended December 31,			
								2013 			2012 			
	Our share of Real Estate Fund:								
		(Loss) income before net realized/unrealized gains	$ 	(70)		$ 	764 			
		Net unrealized gain		6,574 			5,456 			
		Carried interest		8,341 			5,838 			
	Total		14,845 			12,058 			
	Merchandise Mart Building, 7 West 34th Street and trade shows		20,038 			13,620 			
	555 California Street		10,296 			14,761 			
	India real estate ventures		1,133 			1,936 			
	LNR (a) 		- 			29,196 			
	Lexington (b) 		- 			7,815 			
	Other investments		4,774 			(4,614)			
								51,086 			74,772 			
	Corporate general and administrative expenses (c) 		(23,850)			(22,142)			
	Investment income and other, net (c) 		7,372 			14,663 			
	Net gain on sale of land parcels and residential condominiums		23,988 			- 			
	Acquisition related costs and impairment losses		(18,088)			(13,072)			
	Severance costs (primarily reduction in force at the Merchandise Mart)		(1,338)			(1,485)			
	Non-cash impairment loss on J.C. Penney common shares		- 			(224,937)			
	Purchase price fair value adjustment and accelerated amortization of discount on								
		investment in subordinated debt of Independence Plaza		- 			105,366 			
	Net gain resulting from Lexington's stock issuance and asset acquisition		- 			28,763 			
	(Loss) from the mark-to-market of J.C. Penney derivative position		- 			(22,472)			
	Merchandise Mart discontinued operations		- 			7,432 			
	Net loss (income) attributable to noncontrolling interests in the Operating Partnership		4,155 			(3,882)			
	Preferred unit distributions of the Operating Partnership		(12)			(786)			
							$ 	43,313 		$ 	(57,780)			

	(a)		On April 19, 2013, LNR was sold.			
														
	(b)		In the first quarter of 2013, we began accounting for our investment in Lexington as a marketable equity security - available for sale. This investment was previously accounted for under the equity method.		
														
	(c)		The amounts in these captions (for this table only) exclude income (expense) from the mark-to-market of our deferred compensation plan.		
72

 

Supplemental Information – continued
 
Net Income and EBITDA by Segment for the Three Months Ended December 31, 2013 and 2012 - continued
 
EBITDA by Region
 
Below is a summary of the percentages of EBITDA by geographic region (excluding discontinued operations and other gains and losses that affect comparability), from our New York, Washington, DC and Retail Properties segments.
 
				For the Three Months			
				Ended December 31,			
				2013 		2012 			
	Region:							
		New York City metropolitan area		75%		73%			
		Washington, DC / Northern Virginia metropolitan area		22%		23%			
		Puerto Rico		1%		2%			
		California		1%		1%			
		Other geographies		1%		1%			
				100%		100%			
73

 

Supplemental Information – continued
Three Months Ended December 31, 2013 Compared to December 31, 2012
 
Same Store EBITDA
 
Same store EBITDA represents EBITDA from property level operations which are owned by us in both the current and prior year reporting periods.  Same store EBITDA excludes segment-level overhead expenses, which are expenses that we do not consider to be property-level expenses, as well as other non-operating items.  We present same store EBITDA on both a GAAP basis and a cash basis (which excludes income from the straight-lining of rents, amortization of below-market leases, net of above-market leases and other non-cash adjustments).  We present these non-GAAP measures to (i) facilitate meaningful comparisons of the operational performance of our properties and segments, (ii) make decisions on whether to buy, sell or refinance properties, and (iii) compare the performance of our properties and segments to those of our peers.  Same store EBITDA should not be considered as an alternative to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies. 
 
Below is the reconciliation of EBITDA to same store EBITDA on a GAAP basis for each of our segments for the three months ended December 31, 2013, compared to the three months ended December 31, 2012.
 
(Amounts in thousands)		New York		Washington, DC		Retail Properties		
														
EBITDA for the three months ended December 31, 2013		$	375,392 		$	83,259 		$	25,704 		
	Add-back:											
		Non-property level overhead expenses included above			8,550 			6,975 			4,168 		
	Less EBITDA from:											
		Acquisitions			(20,063)			- 			- 		
		Dispositions, including net gains on sale			(129,332)			(33)			(4)		
		Properties taken out-of-service for redevelopment			(5,279)			(1,035)			(1,144)		
		Other non-operating (income) expense			(2,986)			(316)			32,157 		
GAAP basis same store EBITDA for the three months ended											
	December 31, 2013		$	226,282 		$	88,850 		$	60,881 		
														
EBITDA for the three months ended December 31, 2012		$	407,823 		$	118,021 		$	(20,074)		
	Add-back:											
		Non-property level overhead expenses included above			8,070 			7,388 			4,851 		
	Less EBITDA from:											
		Acquisitions			(3,474)			- 			- 		
		Dispositions, including net gains on sale			(184,507)			(37,347)			(18,605)		
		Properties taken out-of-service for redevelopment			(5,141)			(2,070)			(364)		
		Other non-operating (income) expense			(10,665)			(615)			93,238 		
GAAP basis same store EBITDA for the three months ended											
	December 31, 2012		$	212,106 		$	85,377 		$	59,046 		
														
Increase in GAAP basis same store EBITDA -											
	Three months ended December 31, 2013 vs. December 31, 2012		$	14,176 		$	3,473 		$	1,835 		
														
% increase in GAAP basis same store EBITDA			6.7% 			4.1% 			3.1% 		
74

 

Supplemental Information – continued
Three Months Ended December 31, 2013 Compared to December 31, 2012
 
Below is the reconciliation of GAAP basis same store EBITDA to same store EBITDA on a Cash basis for each of our segments for the three months ended December 31, 2013, compared to the three months ended December 31, 2012.
 
(Amounts in thousands)		New York		Washington, DC		Retail Properties		
														
GAAP basis same store EBITDA for the three months ended											
	December 31, 2013		$	226,282 		$	88,850 		$	60,881 		
Less: Adjustments for straight line rents, amortization of acquired											
	below-market leases, net, and other non-cash adjustments			(29,712)			(1,899)			(2,655)		
Cash basis same store EBITDA for the three months ended											
	December 31, 2013		$	196,570 		$	86,951 		$	58,226 		
														
GAAP basis same store EBITDA for the three months ended											
	December 31, 2012		$	212,106 		$	85,377 		$	59,046 		
Less: Adjustments for straight line rents, amortization of acquired											
	below-market leases, net, and other non-cash adjustments			(23,843)			(775)			(3,645)		
Cash basis same store EBITDA for the three months ended											
	December 31, 2012		$	188,263 		$	84,602 		$	55,401 		
														
Increase in Cash basis same store EBITDA -											
	Three months ended December 31, 2013 vs. December 31, 2012		$	8,307 		$	2,349 		$	2,825 		
														
% increase in Cash basis same store EBITDA			4.4% 			2.8% 			5.1% 		
75

 

Supplemental Information – continued
 
Three Months Ended December 31, 2013 Compared to September 30, 2013
 
Below is the reconciliation of Net Income to EBITDA for the three months ended September 30, 2013.

(Amounts in thousands)		New York		Washington, DC		Retail Properties		
Net income attributable to Vornado for the three months ended											
	September 30, 2013		$	124,325 		$	19,994 		$	44,158 		
Interest and debt expense			59,344 			30,717 			12,119 		
Depreciation and amortization			67,294 			35,403 			17,573 		
Income tax expense			67 			828 			731 		
EBITDA for the three months ended September 30, 2013		$	251,030 		$	86,942 		$	74,581 		

Below is the reconciliation of GAAP basis same store EBITDA to same store EBITDA on a Cash basis for each of our segments for the three months ended December 31, 2013, compared to the three months ended September 30, 2013.
 
(Amounts in thousands)		New York		Washington, DC		Retail Properties		
														
EBITDA for the three months ended December 31, 2013		$	375,392 		$	83,259 		$	25,704 		
	Add-back:											
		Non-property level overhead expenses included above			8,550 			6,975 			4,168 		
	Less EBITDA from:											
		Acquisitions			(7,120)			- 			- 		
		Dispositions, including net gains on sale			(129,332)			(33)			(4)		
		Properties taken out-of-service for redevelopment			(5,279)			(1,035)			(1,144)		
		Other non-operating (income) expense			(2,860)			(316)			32,157 		
GAAP basis same store EBITDA for the three months ended											
	December 31, 2013		$	239,351 		$	88,850 		$	60,881 		
														
EBITDA for the three months ended September 30, 2013		$	251,030 		$	86,942 		$	74,581 		
	Add-back:											
		Non-property level overhead expenses included above			7,842 			6,857 			4,240 		
	Less EBITDA from:											
		Acquisitions			(575)			- 			- 		
		Dispositions, including net gains on sale			(2,481)			(46)			(17,097)		
		Properties taken out-of-service for redevelopment			(5,461)			(1,157)			(2,196)		
		Other non-operating (income) expense			(19,936)			(868)			(549)		
GAAP basis same store EBITDA for the three months ended											
	September 30, 2013		$	230,419 		$	91,728 		$	58,979 		
														
Increase (decrease) in GAAP basis same store EBITDA -											
	Three months ended December 31, 2013 vs. September 30, 2013		$	8,932 		$	(2,878)		$	1,902 		
														
% increase (decrease) in GAAP basis same store EBITDA			3.9% 			(3.1%) 			3.2% 		
76

 

Supplemental Information – continued
Three Months Ended December 31, 2013 Compared to September 30, 2013
 
Below is the reconciliation of GAAP basis same store EBITDA to same store EBITDA on a Cash basis for each of our segments for the three months ended December 31, 2013, compared to the three months ended September 30, 2013.
 
(Amounts in thousands)		New York		Washington, DC		Retail Properties		
														
GAAP basis same store EBITDA for the three months ended											
	December 31, 2013		$	239,351 		$	88,850 		$	60,881 		
Less: Adjustments for straight line rents, amortization of acquired											
	below-market leases, net, and other non-cash adjustments			(29,479)			(1,899)			(2,655)		
Cash basis same store EBITDA for the three months ended											
	December 31, 2013		$	209,872 		$	86,951 		$	58,226 		
														
GAAP basis same store EBITDA for the three months ended											
	September 30, 2013		$	230,419 		$	91,728 		$	58,979 		
Less: Adjustments for straight line rents, amortization of acquired											
	below-market leases, net, and other non-cash adjustments			(24,496)			(1,518)			(2,814)		
Cash basis same store EBITDA for the three months ended											
	September 30, 2013		$	205,923 		$	90,210 		$	56,165 		
														
Increase (decrease) in Cash basis same store EBITDA -											
	Three months ended December 31, 2013 vs. September 30, 2013		$	3,949 		$	(3,259)		$	2,061 		
														
% increase (decrease) in Cash basis same store EBITDA			1.9% 			(3.6%) 			3.7% 		
77

 
 
Related Party Transactions

Alexander’s
 
We own 32.4% of Alexander’s. Steven Roth, the Chairman of our Board and Chief Executive Officer is also the Chairman of the Board and Chief Executive Officer of Alexander’s.  We provide various services to Alexander’s in accordance with management, development and leasing agreements.  These agreements are described in Note 6 - Investments in Partially Owned Entities to our consolidated financial statements in this Annual Report on Form 10-K.

Interstate Properties (“Interstate”)
 
Interstate is a general partnership in which Mr. Roth is the managing general partner. David Mandelbaum and Russell B. Wight, Jr., Trustees of Vornado and Directors of Alexander’s, are Interstate’s two other partners. As of December 31, 2013, Interstate and its partners beneficially owned an aggregate of approximately 6.6% of the common shares of beneficial interest of Vornado and 26.3% of Alexander’s common stock.
 
We manage and lease the real estate assets of Interstate pursuant to a management agreement for which we receive an annual fee equal to 4% of annual base rent and percentage rent.  The management agreement has a term of one year and is automatically renewable unless terminated by either of the parties on 60 days’ notice at the end of the term.  We believe, based upon comparable fees charged by other real estate companies, that the management agreement terms are fair to us.  We earned $606,000, $794,000, and $787,000 of management fees under the agreement for the years ended December 31, 2013, 2012 and 2011.
78

 

Liquidity and Capital Resources

Property rental income is our primary source of cash flow and is dependent upon the occupancy and rental rates of our properties. Our cash requirements include property operating expenses, capital improvements, tenant improvements, debt service, leasing commissions, dividends to shareholders and distributions to unitholders of the Operating Partnership, as well as acquisition and development costs.    Other sources of liquidity to fund cash requirements include proceeds from debt financings, including mortgage loans, senior unsecured borrowings, and our revolving credit facilities; proceeds from the issuance of common and preferred equity; and asset sales. 
 
We anticipate that cash flow from continuing operations over the next twelve months will be adequate to fund our business operations, cash distributions to unitholders of the Operating Partnership, cash dividends to shareholders, debt amortization and recurring capital expenditures.  Capital requirements for development expenditures and acquisitions may require funding from borrowings and/or equity offerings.
 
We may from time to time purchase or retire outstanding debt securities.  Such purchases, if any will depend on prevailing market conditions, liquidity requirements and other factors.  The amounts involved in connection with these transactions could be material to our consolidated financial statements.

Dividends
 
On January 15, 2014, we declared a quarterly common dividend of $0.73 per share (an indicated annual rate of $2.92 per common share).  This dividend, if continued for all of 2014, would require us to pay out approximately $547,000,000 of cash for common share dividends.  In addition, during 2014, we expect to pay approximately $82,000,000 of cash dividends on outstanding preferred shares and approximately $33,000,000 of cash distributions to unitholders of the Operating Partnership.

Financing Activities and Contractual Obligations
 
We have an effective shelf registration for the offering of our equity and debt securities that is not limited in amount due to our status as a “well-known seasoned issuer.”  We have issued publicly senior unsecured notes from a shelf registration statement that contain financial covenants that restrict our ability to incur debt, and that require us to maintain a level of unencumbered assets based on the level of our secured debt.  Our revolving credit facilities contain financial covenants that require us to maintain minimum interest coverage and maximum debt to market capitalization ratios, and provide for higher interest rates in the event of a decline in our ratings below Baa3/BBB.  Our revolving credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.  As of December 31, 2013, we are in compliance with all of the financial covenants required by our senior unsecured notes and our revolving credit facilities.

As of December 31, 2013, we had $583,290,000 of cash and cash equivalents and $2,171,009,000 of borrowing capacity under our revolving credit facilities, net of outstanding borrowings and letters of credit of $295,870,000 and $33,121,000, respectively.  A summary of our consolidated debt as of December 31, 2013 and 2012 is presented below.  
 
		2013 			2012 		
	(Amounts in thousands)				Weighted						Weighted		
				December 31,		Average			December 31,		Average		
	Consolidated debt:	Balance		Interest Rate			Balance		Interest Rate		
		Variable rate	$	1,064,730 		2.01%			$	2,998,221 		1.84%		
		Fixed rate		8,913,988 		4.73%				8,129,009 		5.18%		
				$	9,978,718 		4.44%			$	11,127,230 		4.28%		

During 2014 and 2015, $142,753,000 and $943,731,000, respectively, of our outstanding debt matures; we may refinance this maturing debt as it comes due or choose to repay it using cash and cash equivalents or our revolving credit facilities.  We may also refinance or prepay other outstanding debt depending on prevailing market conditions, liquidity requirements and other factors.  The amounts involved in connection with these transactions could be material to our consolidated financial statements.
 
79

 

Liquidity and Capital Resources – continued

Financing Activities and Contractual Obligations – continued  

Below is a schedule of our contractual obligations and commitments at December 31, 2013.
 
(Amounts in thousands)				Less than											
Contractual cash obligations (principal and interest (1) ):	Total		1 Year		1 – 3 Years		3 – 5 Years		Thereafter		
	Notes and mortgages payable	$	10,290,431 		$	551,348 		$	2,760,195 		$	1,781,397 		$	5,197,491 		
	Operating leases		1,486,447 			42,845 			83,401 			82,831 			1,277,370 		
	Senior unsecured notes due 2039 (PINES)		1,370,076 			35,634 			71,268 			71,268 			1,191,906 		
	Revolving credit facilities		329,258 			4,201 			13,048 			312,009 			- 		
	Senior unsecured notes due 2022		560,833 			20,000 			40,000 			40,000 			460,833 		
	Senior unsecured notes due 2015		526,563 			21,250 			505,313 			- 			- 		
	Capital lease obligations		409,792 			12,500 			25,000 			25,000 			347,292 		
	Purchase obligations, primarily construction commitments		302,677 			302,677 			- 			- 			- 		
		Total contractual cash obligations	$	15,276,077 		$	990,455 		$	3,498,225 		$	2,312,505 		$	8,474,892 		
																		
Commitments:																
	Capital commitments to partially owned entities	$	144,931 		$	122,136 		$	22,795 		$	- 		$	- 		
	Standby letters of credit		33,121 			33,121 			- 			- 			- 		
		Total commitments	$	178,052 		$	155,257 		$	22,795 		$	- 		$	- 		
________________________																
(1)		Interest on variable rate debt is computed using rates in effect at December 31, 2013.		

Details of 2013 financing activities are provided in the “Overview” of Management’s Discussion and Analysis of Financial Conditions and Results of Operations.  Details of 2012 financing activities are discussed below.

Secured Debt
 
On January 9, 2012, we completed a $300,000,000 refinancing of 350 Park Avenue, a 559,000 square foot Manhattan office building. The five-year fixed rate loan bears interest at 3.75% and amortizes based on a 30-year schedule beginning in the third year. The proceeds of the new loan and $132,000,000 of existing cash were used to repay the existing loan and closing costs.
 
On March 5, 2012, we completed a $325,000,000 refinancing of 100 West 33 rd Street, a 1.1 million square foot property located between 32 nd and 33 rd Streets in Manhattan.  The building contains the 257,000 square foot Manhattan Mall and 848,000 square feet of office space.  The three-year loan bears interest at LIBOR plus 2.50% and has two one-year extension options.  We retained net proceeds of approximately $87,000,000, after repaying the existing loan and closing costs.             
 
On July 26, 2012, we completed a $150,000,000 refinancing of 2101 L Street, a 380,000 square foot office building located in Washington, DC. The 12-year fixed rate loan bears interest at 3.97% and amortizes based on a 30-year schedule beginning in the third year.
 
On August 17, 2012, we completed a $98,000,000 refinancing of 435 Seventh Avenue, a 43,000 square foot retail property in Manhattan. The seven-year loan bears interest at LIBOR plus 2.25%. We retained net proceeds of approximately $44,000,000, after repaying the existing loan and closing costs.
 
On November 8, 2012, we completed a $950,000,000 refinancing of 1290 Avenue of the Americas (70% owned), a 2.1 million square foot Manhattan office building. The 10-year fixed rate interest-only loan bears interest at 3.34%.  The partnership retained net proceeds of approximately $522,000,000, after repaying the existing loan and closing costs.
 
On November 16, 2012, we completed a $120,000,000 refinancing of 4 Union Square South, a 206,000 square foot Manhattan retail property. The seven-year loan bears interest at LIBOR plus 2.15% and amortizes based on a 30-year schedule beginning in the third year. We retained net proceeds of approximately $42,000,000, after repaying the existing loan and closing costs.
80

 
 
Liquidity and Capital Resources – continued

Financing Activities and Contractual Obligations – continued  
 
Senior Unsecured Debt
 
In April 2012, we redeemed all of the outstanding exchangeable and convertible senior debentures at par, for an aggregate of $510,215,000 in cash.

Preferred Securities
 
On July 11, 2012, we sold 12,000,000 5.70% Series K Cumulative Redeemable Preferred Shares at a price of $25.00 per share in an underwritten public offering pursuant to an effective registration statement.  We retained aggregate net proceeds of $290,971,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 12,000,000 Series K Preferred Units (with economic terms that mirror those of the Series K Preferred Shares).  Dividends on the Series K Preferred Shares are cumulative and payable quarterly in arrears.  The Series K Preferred Shares are not convertible into, or exchangeable for, any of our properties or securities.  On or after five years from the date of issuance (or sooner under limited circumstances), we may redeem the Series K Preferred Shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption. The Series K Preferred Shares have no maturity date and will remain outstanding indefinitely unless redeemed by us. 
 
On July 19, 2012, we redeemed all of the outstanding 7.0% Series D-10 and 6.75% Series D-14 cumulative redeemable preferred units with an aggregate face amount of $180,000,000 for $168,300,000 in cash, plus accrued and unpaid distributions through the date of redemption.
 
On August 16, 2012, we redeemed all of the outstanding 7.0% Series E Cumulative Redeemable Preferred Shares at par, for an aggregate of $75,000,000 in cash, plus accrued and unpaid dividends through the date of redemption.
81

 
 
Liquidity and Capital Resources – continued

Acquisitions and Investments

Details of 2013 acquisitions and investments are provided in the “Overview” of Management’s Discussion and Analysis of Financial Conditions and Results of Operations.  Details of 2012 acquisitions and investments are discussed below.
 
Marriott Marquis Times Square - Retail and Signage
 
On July 30, 2012, we entered into a lease with Host Hotels & Resorts, Inc. (NYSE: HST) (“Host”), under which we will redevelop the retail and signage components of the Marriott Marquis Times Square Hotel.  The Marriott Marquis with over 1,900 rooms is one of the largest hotels in Manhattan.  We plan to redevelop and substantially expand the existing retail space, including converting the below grade parking garage into retail, and creating six-story, 300 foot wide block front, dynamic LED signs.  During the term of the lease we will pay fixed rent equal to the sum of $12,500,000, plus a portion of the property’s net cash flow after we receive a 5.2% preferred return on our invested capital.  The lease contains put/call options which, if exercised, would lead to our ownership.  Host can exercise the put option during defined periods following the conversion of the project to a condominium.  We can exercise our call option under the same terms, at any time after the fifteenth year of the lease term. 
 
666 Fifth Avenue - Retail
 
On December 6, 2012, we acquired a retail condominium located at 666 Fifth Avenue at 53rd Street for $707,000,000 in cash. The property contains 114,000 square feet, 39,000 square feet in fee and 75,000 square feet by long-term lease from the 666 Fifth Avenue office condominium, which is 49.5% owned by us. 
 
Independence Plaza
 
In 2011, we acquired a 51% interest in the subordinated debt of Independence Plaza, a three-building 1,328 unit residential complex in the Tribeca submarket of Manhattan which has 54,500 square feet of retail space and 550 parking spaces, for $45,000,000 and a warrant to purchase 25% of the equity for $1,000,000.  On December 21, 2012, we acquired a 58.75% interest in the property as follows: (i) buying one of the equity partners’ 33.75% interest for $160,000,000, (ii) exercising our warrant for 25% of the equity and (iii) contributing the appreciated value of our interest in the subordinated debt as preferred equity.  In connection therewith, we recognized income of $105,366,000, comprised of $60,396,000 from the accelerated amortization of the discount on the subordinated debt immediately preceding the conversion to preferred equity, and a $44,970,000 purchase price fair value adjustment upon exercising the warrant.  The transaction valued the property at $844,800,000. We manage the retail space at the property and Stellar Management, our partner, manages the residential space.

Vornado Capital Partners Real Estate Fund (the “Fund”)
 
During 2012, the Fund made four investments aggregating $203,700,000.  At December 31, 2012, the Fund had nine investments with an aggregate fair value of $600,786,000, or $67,642,000 in excess of cost.
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Liquidity and Capital Resources – continued

Certain Future Cash Requirements
 
Capital Expenditures
 
The following table summarizes anticipated 2014 capital expenditures.
											Retail				
(Amounts in millions, except square foot data)	Total		New York		Washington, DC		Properties		Other (2)	
Expenditures to maintain assets	$	116.0 		$ 	61.0 (1)  		$ 	28.0 		$ 	4.0 		$ 	23.0 	
Tenant improvements		124.0 			43.0 			58.0 			6.0 			17.0 	
Leasing commissions		33.0 			17.0 			10.0 			2.0 			4.0 	
	Total capital expenditures and leasing															
		commissions	$	273.0 		$ 	121.0 		$ 	96.0 		$ 	12.0 		$ 	44.0 	
																		
Square feet budgeted to be leased															
	(in thousands)					1,000 			1,600 			600 				
Weighted average lease term (years)					10 			6 		 	7 				
Tenant improvements and leasing commissions:													
		Per square foot				$	60.00 		$	42.50 		$	13.50 				
		Per square foot per annum				$	6.00 		$	7.00 		$	2.00 				
________________________________________________															
																		
(1)	
Includes $17.0 related to 2013 that is expected to be expended in 2014.				
(2)	
Primarily Merchandise Mart and 555 California Street.				
 
The table above excludes anticipated capital expenditures of each of our partially owned non-consolidated subsidiaries, as these entities fund their capital expenditures without additional equity contributions from us.  

Development and Redevelopment Expenditures
 
We are in the process of renovating the Springfield Mall, which is expected to be completed in 2015.  The incremental development cost of this project is approximately $250,000,000, of which $97,600,000 has been expended as of December 31, 2013, approximately $130,000,000 is expected to be expended in 2014, and the balance of $22,400,000 is expected to be expended in 2015.
 
We are in the process of redeveloping and substantially expanding the existing retail space at the Marriott Marquis Times Square Hotel, including converting the below grade parking garage into retail and creating a six-story, 300 foot wide block front, dynamic LED sign, all of which is expected to be completed in 2015.  The incremental development cost of this project is approximately $215,000,000, of which $52,100,000 has been expended as of December 31, 2013, approximately $118,000,000 is expected to be expended in 2014, and the balance of $44,900,000 is expected to be expended in 2015. 
 
We plan to construct a residential condominium tower containing 472,000 zoning square feet on our 220 Central Park South development site.  The incremental development cost of this project is approximately $850,000,000.  In February 2014, we completed a $600,000,000 loan secured by this site.
 
We plan to develop a 699-unit residential project in Pentagon City (Metropolitan Park 4&5), which is expected to be completed in 2016.  The project will include a 37,000 square foot Whole Foods Market at the base of the building.  The incremental development cost of this project is approximately $250,000,000; a significant portion of which is expected to be financed.
 
We are in the process of repositioning and re-tenanting 280 Park Avenue (49.5% owned).  Our share of the incremental development cost of this project is approximately $62,000,000, of which $34,700,000 has been expended as of December 31, 2013, and the balance of $27,300,000 is expected to be expended in 2014.
 
We are also evaluating other development and redevelopment opportunities at certain of our properties in Manhattan, including the Hotel Pennsylvania and in Washington, including 1900 Crystal Drive, Rosslyn and Pentagon City.
 
There can be no assurance that any of our development or redevelopment projects will commence, or if commenced, be completed, or completed on schedule or within budget.
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Liquidity and Capital Resources – continued

Insurance
 
We maintain general liability insurance with limits of $300,000,000 per occurrence and all risk property and rental value insurance with limits of $2.0 billion per occurrence, with sub-limits for certain perils such as floods.  Our California properties have earthquake insurance with coverage of $180,000,000 per occurrence, subject to a deductible in the amount of 5% of the value of the affected property, up to a $180,000,000 annual aggregate. We maintain coverage for terrorism acts with limits of $4.0 billion per occurrence and in the aggregate, and $2.0 billion per occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological (“NBCR”) terrorism events, as defined by Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2014.
 
Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a portion of all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for NBCR acts.  Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to PPIC.  For NBCR acts, PPIC is responsible for a deductible of $3,200,000 and 15% of the balance of a covered loss and the Federal government is responsible for the remaining 85% of a covered loss.  We are ultimately responsible for any loss incurred by PPIC.
 
We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism.  However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future.
 
Our debt instruments, consisting of mortgage loans secured by our properties which are non-recourse to us, senior unsecured notes and revolving credit agreements contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain it could adversely affect our ability to finance our properties and expand our portfolio.

Other Commitments and Contingencies
 
We are from time to time involved in legal actions arising in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters is not expected to have a material adverse effect on our financial position, results of operations or cash flows.
 
Each of our properties has been subjected to varying degrees of environmental assessment at various times. The environmental assessments did not reveal any material environmental contamination. However, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites, or changes in cleanup requirements would not result in significant costs to us.
 
Our mortgage loans are non-recourse to us.  However, in certain cases we have provided guarantees or master leased tenant space.  These guarantees and master leases terminate either upon the satisfaction of specified circumstances or repayment of the underlying loans.  As of December 31, 2013, the aggregate dollar amount of these guarantees and master leases is approximately $342,000,000.
 
At December 31, 2013, $33,121,000 of letters of credit were outstanding under one of our revolving credit facilities.  Our revolving credit facilities contain financial covenants that require us to maintain minimum interest coverage and maximum debt to market capitalization ratios, and provide for higher interest rates in the event of a decline in our ratings below Baa3/BBB. Our revolving credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and also contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.
 
As of December 31, 2013, w e expect to fund additional capital to certain of our partially owned entities aggregating approximately $145,000,000.    
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Liquidity and Capital Resources – continued

Cash Flows for the Year Ended December 31, 2013
 
Our cash and cash equivalents were $583,290,000 at December 31, 2013, a $377,029,000 decrease over the balance at December 31, 2012.  Our consolidated outstanding debt was $9,978,718,000 at December 31, 2013, a $1,148,512,000 decrease over the balance at December 31, 2012.  As of December 31, 2013 and December 31, 2012, $295,870,000 and $1,170,000,000, respectively, was outstanding under our revolving credit facilities.  During 2014 and 2015, $142,753,000 and $943,731,000, respectively, of our outstanding debt matures; we may refinance this maturing debt as it comes due or choose to repay it.
 
Cash flows provided by operating activities of $1,040,789,000 was comprised of (i) net income of $564,740,000, (ii) $426,643,000 of non-cash adjustments, which include depreciation and amortization expense, the effect of straight-lining of rental income, equity in net income of partially owned entities and net gains on sale of real estate, (iii) return of capital from Real Estate Fund investments of $56,664,000, and (iv) distributions of income from partially owned entities of $54,030,000, partially offset by (v) the net change in operating assets and liabilities of $61,288,000, including $37,817,000 related to Real Estate Fund investments.
 
Net cash provided by investing activities of $722,076,000 was comprised of (i) $1,027,608,000 of proceeds from sales of real estate and related investments, (ii) $378,709,000 of proceeds from the sale of marketable securities, (iii) $290,404,000 of capital distributions from partially owned entities, (iv) $240,474,000 from the sale of LNR, (v) $101,150,000 from the return of the J.C. Penney derivative collateral, and (vi) $50,569,000 of proceeds from repayments of mortgages and mezzanine loans receivable and other, partially offset by (vii) $469,417,000 of development costs and construction in progress, (viii) $260,343,000 of additions to real estate, (ix) $230,300,000 of investments in partially owned entities, (x) $193,417,000 of acquisitions of real estate, (xi) $186,079,000 for the funding of the J.C. Penney derivative collateral and settlement of derivative position, (xii) $26,892,000 of changes in restricted cash, and (xiii) $390,000 of investments in mortgage and mezzanine loans receivable.
 
Net cash used in financing activities of $2,139,894,000 was comprised of (i) $3,580,100,000 for the repayments of borrowings, (ii) $545,913,000 of dividends paid on common shares, (iii) $299,400,000 for purchases of outstanding preferred units and shares, (iv) $215,247,000 of distributions to noncontrolling interests, (v) $83,188,000 of dividends paid on preferred shares, (vi) $19,883,000 of debt issuance and other costs, and (vii) $443,000 for the repurchase of shares related to stock compensation agreements and related tax holdings, partially offset by (viii) $2,262,245,000 of proceeds from borrowings, (ix) $290,306,000 of proceeds from the issuance of preferred shares, (x) $43,964,000 of contributions from noncontrolling interests in consolidated subsidiaries, and (xi) $7,765,000 of proceeds received from the exercise of employee share options.
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Liquidity and Capital Resources – continued

Capital Expenditures for the Year Ended December 31, 2013
 
Capital expenditures consist of expenditures to maintain assets, tenant improvement allowances and leasing commissions.  Recurring capital expenditures include expenditures to maintain a property’s competitive position within the market and tenant improvements and leasing commissions necessary to re-lease expiring leases or renew or extend existing leases.  Non-recurring capital improvements include expenditures to lease space that has been vacant for more than nine months and expenditures completed in the year of acquisition and the following two years that were planned at the time of acquisition, as well as tenant improvements and leasing commissions for space that was vacant at the time of acquisition of a property. 
 
Below is a summary of capital expenditures, leasing commissions and a reconciliation of total expenditures on an accrual basis to the cash expended in the year ended December 31, 2013.
 
											Retail					
(Amounts in thousands)	Total		New York		Washington, DC		Properties		Other		
Expenditures to maintain assets	$	73,130 		$	34,553 		$	22,165 		$	5,664 		$	10,748 		
Tenant improvements		152,319 			87,275 			39,156 			12,431 			13,457 		
Leasing commissions		56,638 			39,348 			9,551 			2,113 			5,626 		
Non-recurring capital expenditures		12,099 			11,579 			- 			- 			520 		
Total capital expenditures and leasing																
	commissions (accrual basis)		294,186 			172,755 			70,872 			20,208 			30,351 		
Adjustments to reconcile to cash basis:																
		Expenditures in the current year																
			applicable to prior periods		155,035 			56,345 			26,075 			5,562 			67,053 		
		Expenditures to be made in future																
			periods for the current period		(150,067)			(91,107)			(36,702)			(14,011)			(8,247)		
Total capital expenditures and leasing																
	commissions (cash basis)	$	299,154 		$	137,993 		$	60,245 		$	11,759 		$	89,157 	(1)	
																			
Tenant improvements and leasing commissions:															
	Per square foot per annum	$	4.33 		$	5.89 		$	4.75 		$	1.33 		$	- 		
	Percentage of initial rent		9.5%			8.1%			11.9%			6.6%			- 		

(1)		Includes tenant improvements and leasing commissions aggregating $61,895 in connection with the 608,000 square foot Motorola Mobility lease at the Merchandise Mart.		
 
Development and Redevelopment Expenditures
 
Development and redevelopment expenditures consist of all hard and soft costs associated with the development or redevelopment of a property, including tenant improvements, leasing commissions, capitalized interest and operating costs until the property is substantially completed and ready for its intended use.
 
Below is a summary of development and redevelopment expenditures incurred in the year ended December 31, 2013.
 
											Retail					
(Amounts in thousands)	Total		New York		Washington, DC		Properties		Other		
220 Central Park South	$	243,687 		$	- 		$	- 		$	- 		$	243,687 		
Springfield Mall		68,716 			- 			- 			68,716 			- 		
Marriott Marquis Times Square - retail																
	and signage		40,356 			40,356 			- 			- 			- 		
1290 Avenue of the Americas		13,865 			13,865 			- 			- 			- 		
330 West 34th Street		6,832 			6,832 			- 			- 			- 		
Metropolitan Park 4 & 5		6,289 			- 			6,289 			- 			- 		
1135 Third Avenue		5,247 			5,247 			- 			- 			- 		
LED Signage		5,042 			5,042 			- 			- 			- 		
Other		79,383 			14,643 			35,412 			25,210 			4,118 		
				$	469,417 		$	85,985 		$	41,701 		$	93,926 		$	247,805 		
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Liquidity and Capital Resources – continued
 
Cash Flows for the Year Ended December 31, 2012
 
Our cash and cash equivalents were $960,319,000 at December 31, 2012, a $353,766,000 increase over the balance at December 31, 2011.  Our consolidated outstanding debt was $11,127,230,000 at December 31, 2012, a $1,227,953,000 increase over the balance at December 31, 2011.
 
Cash flows provided by operating activities of $825,049,000 was comprised of (i) net income of $694,541,000, (ii) distributions of income from partially owned entities of $226,172,000, (iii) return of capital from Real Estate Fund investments of $63,762,000, and (iv) $151,954,000 of non-cash adjustments, which include depreciation and amortization expense, impairment loss on J.C. Penney common shares, the effect of straight-lining of rental income, equity in net income of partially owned entities and net gains on sale of real estate, partially offset by (v) the net change in operating assets and liabilities of $311,380,000, including $262,537,000 related to Real Estate Fund investments.
 
Net cash used in investing activities of $642,262,000 was comprised of (i) $673,684,000 of acquisitions of real estate and other, (ii) $205,652,000 of additions to real estate, (iii) $191,330,000 for the funding of the J.C. Penney derivative collateral, (iv) $156,873,000 of development costs and construction in progress, (v) $134,994,000 of investments in partially owned entities, (vi) $94,094,000 investments in mortgage and mezzanine loans receivable and other, and (vii) $75,138,000 of changes in restricted cash, partially offset by (viii) $445,683,000 of proceeds from sales of real estate and related investments, (ix) $144,502,000 of capital distributions from partially owned entities, (x) $134,950,000 from the return of the J.C. Penney derivative collateral, (xi) $60,258,000 of proceeds from the sale of marketable securities, (xii) $52,504,000 of proceeds from the sale of the Canadian Trade Shows, (xiii) $38,483,000 of proceeds from repayments of mezzanine loans receivable and other, and (xiv) $13,123,000 of proceeds from the repayment of loan to officer.
 
Net cash provided by financing activities of $170,979,000 was comprised of (i) $3,593,000,000 of proceeds from borrowings, (ii) $290,971,000 of proceeds from the issuance of preferred shares, (iii) $213,132,000 of contributions from noncontrolling interests in consolidated subsidiaries, and (iv) $11,853,000 of proceeds from exercise of employee share options, partially offset by (v) $2,747,694,000 for the repayments of borrowings, (vi) $699,318,000 of dividends paid on common shares, (vii) $243,300,000 for purchases of outstanding preferred units and shares, (viii) $104,448,000 of distributions to noncontrolling interests, (ix) $73,976,000 of dividends paid on preferred shares, (x) $39,073,000 of debt issuance and other costs, and (xi) $30,168,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings.
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Liquidity and Capital Resources – continued

Capital Expenditures in the year ended December 31, 2012
 
											Retail					
(Amounts in thousands)	Total		New York		Washington, DC		Properties		Other		
Expenditures to maintain assets	$	69,912 		$	27,434 		$	20,582 		$	4,676 		$	17,220 		
Tenant improvements		177,743 			71,572 			50,384 			9,052 			46,735 		
Leasing commissions		57,961 			27,573 			13,151 			2,368 			14,869 		
Non-recurring capital expenditures		6,902 			5,822 			- 			- 			1,080 		
Total capital expenditures and leasing																
	commissions (accrual basis)		312,518 			132,401 			84,117 			16,096 			79,904 		
Adjustments to reconcile to cash basis:																
		Expenditures in the current year																
			applicable to prior periods		105,350 			41,975 			24,370 			10,353 			28,652 		
		Expenditures to be made in future																
			periods for the current period		(170,744)			(76,283)			(43,600)			(7,754)			(43,107)		
Total capital expenditures and leasing																
	commissions (cash basis)	$	247,124 		$	98,093 		$	64,887 		$	18,695 		$	65,449 	(1) 	
																			
Tenant improvements and leasing commissions:															
	Per square foot per annum	$	4.16 		$	5.48 		$	4.86 		$	1.04 		$	- 		
	Percentage of initial rent		9.6%			8.8%			12.0%			5.2%			- 		

(1)	Includes tenant improvements and leasing commissions aggregating $24,354 in connection with the 608,000 square foot Motorola Mobility lease at the Merchandise Mart. 	
 
Development and Redevelopment Expenditures in the year ended December 31, 2012
 
											Retail					
(Amounts in thousands)	Total		New York		Washington, DC		Properties		Other		
Springfield Mall	$	18,278 		$	-  		$	-  		$	18,278 		$	- 		
1290 Avenue of the Americas		16,778 			16,778 			-  			-  			- 		
Crystal Square 5		15,039 			-  			15,039 			-  			- 		
220 Central Park South		12,191 			-  			-  			-  			12,191 		
Bergen Town Center		11,404 			-  			-  			11,404 			- 		
510 Fifth Avenue		10,206 			10,206 			-  			-  			- 		
Marriott Marquis Times Square - retail																
	and signage		9,092 			9,092 			-  			-  			- 		
1851 South Bell Street (1900 Crystal Drive)		6,243 			-  			6,243 			-  			- 		
Amherst, New York		5,585 			-  			-  			5,585 			- 		
Other		52,057 			15,484 			18,052 			18,279 			242 		
				$	156,873 		$	51,560 		$	39,334 		$	53,546 		$	12,433 		
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Liquidity and Capital Resources – continued

 
Cash Flows for the Year Ended December 31, 2011
 
Our cash and cash equivalents were $606,553,000 at December 31, 2011, a $84,236,000 decrease over the balance at December 31, 2010.  Our consolidated outstanding debt was $9,899,277,000 at December 31, 2011, a $262,477,000 decrease from the balance at December 31, 2010. 
 
Cash flows provided by operating activities of $702,499,000 was comprised of (i) net income of $740,000,000, (ii) distributions of income from partially owned entities of $93,635,000, and (iii) $151,745,000 of non-cash adjustments, including depreciation and amortization expense, the effect of straight-lining of rental income, equity in net income of partially owned entities, income from the mark-to-market of derivative positions in marketable equity securities, impairment losses and tenant buy-out costs, net realized and unrealized gains on Real Estate Fund assets and net gain on early extinguishment of debt, partially offset by (iv) the net change in operating assets and liabilities of $282,881,000, of which $184,841,000 relates to Real Estate Fund investments.
 
Net cash used in investing activities of $164,761,000 was comprised of (i) $571,922,000 of investments in partially owned entities, (ii) $165,680,000 of additions to real estate, (iii) $98,979,000 of investments in mortgage and mezzanine loans receivable and other, (iv) $93,066,000 of development costs and construction in progress, (v) $90,858,000 of acquisitions of real estate and other, and (vi) $43,850,000 for the funding of collateral for the J.C. Penney derivative, partially offset by (vii) $318,966,000 of capital distributions from partially owned entities, (viii) $187,294,000 of proceeds from sales and repayments of mortgage and mezzanine loans receivable and other, (ix) $140,186,000 of proceeds from sales of real estate and related investments, (x) changes in restricted cash of $126,380,000, (xi) $70,418,000 of proceeds from sales of marketable securities, and (xii) $56,350,000 from the return of derivative collateral.
 
Net cash used in financing activities of $621,974,000 was comprised of (i) $3,740,327,000 for the repayments of borrowings, (ii) $508,745,000 of dividends paid on common shares, (iii) $116,510,000 of distributions to noncontrolling interests, (iv) $61,464,000 of dividends paid on preferred shares, (v) $47,395,000 of debt issuance and other costs, (vi) $28,000,000 for the purchase of outstanding preferred units and shares, and (vii) $964,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings, partially offset by (viii) $3,412,897,000 of proceeds from borrowings, (ix) $238,842,000 of proceeds from the issuance of Series J preferred shares, (x) $204,185,000 of contributions from noncontrolling interests, and (xi) $25,507,000 of proceeds received from exercise of employee share options.
89

 

Liquidity and Capital Resources – continued

Capital Expenditures in the year ended December 31, 2011
 
											Retail				
(Amounts in thousands)	Total		New York		Washington, DC		Properties		Other	
Expenditures to maintain assets	$	58,463 		$	22,698 		$	18,939 		$	6,448 		$	10,378 	
Tenant improvements		138,076 			76,493 			33,803 			6,515 			21,265 	
Leasing commissions		43,613 			28,072 			9,114 			2,114 			4,313 	
Non-recurring capital expenditures		19,442 			17,157 			- 			- 			2,285 	
Total capital expenditures and leasing															
	commissions (accrual basis)		259,594 			144,420 			61,856 			15,077 			38,241 	
Adjustments to reconcile to cash basis:															
		Expenditures in the current year															
			applicable to prior periods		90,799 			43,392 			13,517 			9,705 			24,185 	
		Expenditures to be made in future															
			periods for the current period		(146,062)			(79,941)			(33,530)			(7,058)			(25,533)	
Total capital expenditures and leasing															
	commissions (cash basis)	$	204,331 		$	107,871 		$	41,843 		$	17,724 		$	36,893 	
																		
Tenant improvements and leasing commissions:														
	Per square foot per annum	$	3.88 		$	5.21 		$	4.47 		$	0.71 		$	- 	
	Percentage of initial rent		8.9%			9.1%			10.8%			3.3%			- 	

 
Development and Redevelopment Expenditures in the Year Ended December 31, 2011
 
											Retail				
(Amounts in thousands)	Total		New York		Washington, DC		Properties		Other	
Bergen Town Center	$	23,748 		$	- 		$	- 		$	23,748 		$	- 	
510 Fifth Avenue		8,833 			8,833 			- 			- 			- 	
Other		48,903 			6,627 			20,496 			18,580 			3,200 	
				$	81,484 		$	15,460 		$	20,496 		$	42,328 		$	3,200 	
90

 

Funds From Operations (“FFO”)
FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”).  NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gains from sales of depreciated real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets, extraordinary items and other specified non-cash items, including the pro rata share of such adjustments of unconsolidated subsidiaries.  FFO and FFO per diluted share are used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions.  FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flows as a liquidity measure.  FFO may not be comparable to similarly titled measures employed by other companies. 
 
FFO attributable to common shareholders plus assumed conversions was $641,037,000, or $3.41 per diluted share for the year ended December 31, 2013, compared to $818,565,000, or $4.39 per diluted share for the year ended December 31, 2012. FFO attributable to common shareholders plus assumed conversions was a negative $6,784,000, or $0.04 per diluted share for the three months ended December 31, 2013, compared to a positive $55,890,000, or $0.30 per diluted share for the three months ended December 31, 2012.  Details of certain items that affect comparability are discussed in the financial results summary of our “Overview.”
 
	For The Year		For The Three Months	
(Amounts in thousands, except per share amounts)	Ended December 31,		Ended December 31,	
Reconciliation of our net income (loss) to FFO:	2013 		2012 		2013 		2012 	
Net income (loss) attributable to Vornado	$	475,971 		$	617,260 		$	(48,519)		$	86,135 	
Depreciation and amortization of real property		501,753 			504,407 			124,611 			125,069 	
Net gains on sale of real estate		(411,593)			(245,799)			(127,512)			(41,998)	
Real estate impairment losses		37,170 			129,964 			32,443 			116,453 	
Proportionate share of adjustments to equity in net income of												
	Toys, to arrive at FFO:												
		Depreciation and amortization of real property		69,741 			68,483 			16,506 			17,777 	
		Real estate impairment losses		6,552 			9,824 			456 			1,430 	
		Income tax effect of above adjustments		(26,703)			(27,493)			(5,937)			(6,728)	
Proportionate share of adjustments to equity in net income of												
	partially owned entities, excluding Toys, to arrive at FFO:												
		Depreciation and amortization of real property		87,529 			86,197 			25,282 			20,387 	
		Net gains on sale of real estate		(465)			(241,602)			- 			(239,551)	
		Real estate impairment losses		- 			1,849 			- 			- 	
Noncontrolling interests' share of above adjustments		(15,089)			(16,649)			(3,746)			418 	
FFO		724,866 			886,441 			13,584 			79,392 	
Preferred share dividends		(82,807)			(76,937)			(20,368)			(20,750)	
Preferred unit and share redemptions		(1,130)			8,948 			- 			(2,752)	
FFO (Negative FFO) attributable to common shareholders		640,929 			818,452 			(6,784)			55,890 	
Convertible preferred share dividends		108 			113 			- 			- 	
FFO (Negative FFO) attributable to common shareholders												
	plus assumed conversions	$	641,037 		$	818,565 		$	(6,784)		$	55,890 	
												
Reconciliation of Weighted Average Shares												
	Weighted average common shares outstanding		186,941 			185,810 			187,109 			186,267 	
	Effect of dilutive securities:												
		Employee stock options and restricted share awards		768 			670 			- 			599 	
		Convertible preferred shares		48 			50 			- 			- 	
	Denominator for FFO (Negative FFO) per diluted share		187,757 			186,530 			187,109 			186,866 	
														
FFO (Negative FFO) attributable to common shareholders plus												
	assumed conversions per diluted share	$	3.41 		$	4.39 		$	(0.04) 		$	0.30 	
91

 

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have exposure to fluctuations in market interest rates. Market interest rates are sensitive to many factors that are beyond our control. Our exposure to a change in interest rates on our consolidated and non-consolidated debt (all of which arises out of non-trading activity) is as follows:
 
(Amounts in thousands, except per share amounts)	2013 		2012 	
							Weighted		Effect of 1%					Weighted	
			December 31,			Average		Change In		December 31,		Average	
Consolidated debt:	Balance			Interest Rate		Base Rates		Balance		Interest Rate	
	Variable rate	$	1,064,730 			2.01%		$	10,647 		$	2,998,221 		1.84%	
	Fixed rate		8,913,988 			4.73%			- 			8,129,009 		5.18%	
			$	9,978,718 			4.44%			10,647 		$	11,127,230 		4.28%	
Prorata share of debt of non-														
	consolidated entities (non-recourse):														
	Variable rate – excluding Toys	$	196,240 			2.09%			1,962 		$	264,531 		2.88%	
	Variable rate – Toys		1,179,001 			5.45%			11,790 			703,922 		5.69%	
	Fixed rate (including $682,484 and														
		$1,148,407 of Toys debt in 2013 and 2012)		2,814,162 			6.46%			- 			3,030,476 		7.04%	
			$	4,189,403 			5.97%			13,752 		$	3,998,929 		6.53%	
Redeemable noncontrolling interests’ share of above								(1,415)						
Total change in annual net income							$	22,984 						
Per share-diluted							$	0.12 						

We may utilize various financial instruments to mitigate the impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies, depending on our analysis of the interest rate environment and the costs and risks of such strategies. As of December 31, 2013, we have one interest rate cap with a principal amount of $60,000,000 and a weighted average interest rate of 2.36%.  This cap is based on a notional amount of $60,000,000 and caps LIBOR at a rate of 7.00%.  In addition, we have one interest rate swap on a $425,000,000 mortgage loan that swapped the rate from LIBOR plus 2.00% (2.17% at December 31, 2013) to a fixed rate of 5.13% for the remaining five-year term of the loan. 
 
As of December 31, 2013, we have investments in mezzanine loans with an aggregate carrying amount of $152,853,000 that are based on variable interest rates which partially mitigate our exposure to a change in interest rates.

Fair Value of Debt
 
The estimated fair value of our consolidated debt is calculated based on current market prices and discounted cash flows at the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt.  As of December 31, 2013, the estimated fair value of our consolidated debt was $9,802,000,000.
92

 
 
ITEM 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
INDEX TO FINANCIAL STATEMENTS

		Page	
		Number	
			
	Report of Independent Registered Public Accounting Firm	94	
			
	Consolidated Balance Sheets at December 31, 2013 and 2012	95	
			
	Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011	96	
			
	Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012 and 2011	97	
			
	Consolidated Statements of Changes in Equity for the years ended December 31, 2013, 2012 and 2011	98	
			
	Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011	101	
			
	Notes to Consolidated Financial Statements	103	
			
93

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Trustees
Vornado Realty Trust
New York, New York
 
We have audited the accompanying consolidated balance sheets of Vornado Realty Trust (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2013. Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Vornado Realty Trust at December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2014 expressed an unqualified opinion on the Company’s internal control over financial reporting.
 
/s/ DELOITTE & TOUCHE LLP
 
Parsippany, New Jersey
February 24, 2014
94

 

VORNADO REALTY TRUST	
CONSOLIDATED BALANCE SHEETS	

(Amounts in thousands, except share and per share amounts)		December 31,		December 31,	
ASSETS		2013 		2012 	
Real estate, at cost:							
	Land		$ 	4,205,815 		$ 	4,766,315 	
	Buildings and improvements			12,661,938 			12,421,086 	
	Development costs and construction in progress			1,354,350 			920,273 	
	Leasehold improvements and equipment			132,523 			130,544 	
		Total			18,354,626 			18,238,218 	
	Less accumulated depreciation and amortization			(3,410,933)			(3,072,269)	
Real estate, net			14,943,693 			15,165,949 	
Cash and cash equivalents			583,290 			960,319 	
Restricted cash			262,440 			183,256 	
Marketable securities			191,917 			398,188 	
Tenant and other receivables, net of allowance for doubtful accounts of $21,869 and $37,674			115,862 			195,718 	
Investments in partially owned entities			1,166,443 			1,226,256 	
Investment in Toys "R" Us			83,224 			478,041 	
Real Estate Fund investments			667,710 			600,786 	
Mortgage and mezzanine loans receivable, net of allowance of $5,845 in 2013			170,972 			225,359 	
Receivable arising from the straight-lining of rents, net of allowance of $4,355 and $3,165			823,137 			758,191 	
Deferred leasing and financing costs, net of accumulated amortization of $265,482 and $222,202			413,726 			405,004 	
Identified intangible assets, net of accumulated amortization of $282,593 and $352,035			323,322 			415,330 	
Assets related to discontinued operations			- 			671,573 	
Other assets			351,488 			381,079 	
				$ 	20,097,224 		$ 	22,065,049 	
									
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY							
Mortgages payable		$ 	8,331,993 		$ 	8,599,222 	
Senior unsecured notes			1,350,855 			1,358,008 	
Revolving credit facility debt			295,870 			1,170,000 	
Accounts payable and accrued expenses			422,276 			484,746 	
Deferred revenue			542,998 			596,067 	
Deferred compensation plan			116,515 			105,200 	
Deferred tax liabilities			1,280 			15,305 	
Liabilities related to discontinued operations			- 			487,271 	
Other liabilities			437,073 			400,934 	
	Total liabilities			11,498,860 			13,216,753 	
Commitments and contingencies							
Redeemable noncontrolling interests:							
	Class A units - 11,292,038 and 11,215,682 units outstanding			1,002,620 			898,152 	
	Series D cumulative redeemable preferred units - 1 and 1,800,001 units outstanding			1,000 			46,000 	
		Total redeemable noncontrolling interests			1,003,620 			944,152 	
Vornado shareholders' equity:							
	Preferred shares of beneficial interest: no par value per share; authorized 110,000,000							
		shares; issued and outstanding 52,682,807 and 51,184,609 shares			1,277,225 			1,240,278 	
	Common shares of beneficial interest: $.04 par value per share; authorized							
		250,000,000 shares; issued and outstanding 187,284,688 and 186,734,711 shares			7,469 			7,440 	
	Additional capital			7,143,840 			7,195,438 	
	Earnings less than distributions			(1,734,839)			(1,573,275)	
	Accumulated other comprehensive income (loss)			71,537 			(18,946)	
		Total Vornado shareholders' equity			6,765,232 			6,850,935 	
Noncontrolling interests in consolidated subsidiaries			829,512 			1,053,209 	
	Total equity			7,594,744 			7,904,144 	
				$ 	20,097,224 		$ 	22,065,049 	
									
See notes to the consolidated financial statements.	
95

 
  
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME	

				Year Ended December 31,	
				2013 		2012 		2011 	
(Amounts in thousands, except per share amounts)										
REVENUES:										
	Property rentals		$	2,155,963 		$	2,062,061 		$	2,091,488 	
	Tenant expense reimbursements			317,345 			294,584 			307,609 	
	Cleveland Medical Mart development project			36,369 			235,234 			154,080 	
	Fee and other income			251,232 			144,353 			149,631 	
Total revenues			2,760,909 			2,736,232 			2,702,808 	
EXPENSES:										
	Operating			1,054,897 			1,017,331 			984,707 	
	Depreciation and amortization			531,212 			510,383 			516,222 	
	General and administrative			211,100 			202,444 			208,530 	
	Cleveland Medical Mart development project			32,210 			226,619 			145,824 	
	Impairment losses, acquisition related costs and tenant buy-outs			57,300 			114,886 			35,299 	
Total expenses			1,886,719 			2,071,663 			1,890,582 	
Operating income			874,190 			664,569 			812,226 	
(Loss) income applicable to Toys "R" Us			(362,377)			14,859 			48,540 	
Income from partially owned entities			23,592 			408,267 			70,072 	
Income from Real Estate Fund			102,898 			63,936 			22,886 	
Interest and other investment (loss) income, net			(24,699)			(260,945)			148,783 	
Interest and debt expense			(483,190)			(493,713)			(519,157)	
Net gain on disposition of wholly owned and partially owned assets			3,407 			13,347 			15,134 	
Income before income taxes			133,821 			410,320 			598,484 	
Income tax benefit (expense)			6,406 			(8,132)			(23,925)	
Income from continuing operations			140,227 			402,188 			574,559 	
Income from discontinued operations			424,513 			292,353 			165,441 	
Net income			564,740 			694,541 			740,000 	
Less net income attributable to noncontrolling interests in:										
	Consolidated subsidiaries			(63,952)			(32,018)			(21,786)	
	Operating Partnership			(23,659)			(35,327)			(41,059)	
	Preferred unit distributions of the Operating Partnership			(1,158)			(9,936)			(14,853)	
Net income attributable to Vornado			475,971 			617,260 			662,302 	
Preferred share dividends			(82,807)			(76,937)			(65,531)	
Preferred unit and share redemptions			(1,130)			8,948 			5,000 	
NET INCOME attributable to common shareholders		$	392,034 		$	549,271 		$	601,771 	

(LOSS) INCOME PER COMMON SHARE - BASIC:										
		(Loss) income from continuing operations, net		$	(0.03)		$	1.46 		$	2.42 	
		Income from discontinued operations, net			2.13 			1.49 			0.84 	
		Net income per common share		$	2.10 		$	2.95 		$	3.26 	
		Weighted average shares outstanding			186,941 			185,810 			184,308 	
												
(LOSS) INCOME PER COMMON SHARE - DILUTED:										
		(Loss) income from continuing operations, net		$	(0.03)		$	1.46 		$	2.40 	
		Income from discontinued operations, net			2.12 			1.48 			0.83 	
		Net income per common share		$	2.09 		$	2.94 		$	3.23 	
		Weighted average shares outstanding			187,709 			186,530 			186,021 	
												
See notes to consolidated financial statements.	
96

 
  
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	

					Year Ended December 31,	
(Amounts in thousands)		2013 		2012 		2011 	
												
Net income		$	564,740 		$	694,541 		$	740,000 	
Other comprehensive income:										
	Change in unrealized net gain (loss) on securities available-for-sale			142,281 			(283,649)			41,657 	
	Amounts reclassified from accumulated other comprehensive income:										
		Non-cash impairment loss on J.C. Penney common shares			- 			224,937 			- 	
		Sale of available-for-sale securities			(42,404)			(3,582)			(5,020)	
	Pro rata share of other comprehensive (loss) income of										
			nonconsolidated subsidiaries			(22,814)			(31,758)			12,859 	
	Change in value of interest rate swap			18,183 			(5,659)			(43,704)	
	Other			533 			329 			(5,245)	
Comprehensive income			660,519 			595,159 			740,547 	
Less comprehensive income attributable to noncontrolling interests			(94,065)			(70,574)			(77,969)	
Comprehensive income attributable to Vornado		$	566,454 		$	524,585 		$	662,578 	

See notes to consolidated financial statements.	
													
97

 
  
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	
	
																						Accumulated							
(Amounts in thousands)																	Earnings		Other		Non-				
				Preferred Shares		Common Shares		Additional		Less Than		Comprehensive		controlling		Total	
				Shares		Amount		Shares		Amount		Capital		Distributions		Income (Loss)		Interests		Equity	
Balance, December 31, 2010			32,340 		$ 	783,088 			183,662 		$ 	7,317 		$ 	6,932,728 		$ 	(1,480,876)		$ 	73,453 		$ 	514,695 		$ 	6,830,405 	
Net income			- 			- 			- 			- 			- 			662,302 			- 			21,786 			684,088 	
Dividends on common shares			- 			- 			- 			- 			- 			(508,745)			- 			- 			(508,745)	
Dividends on preferred shares			- 			- 			- 			- 			- 			(65,694)			- 			- 			(65,694)	
Issuance of Series J preferred shares			9,850 			238,842 			- 			- 			- 			- 			- 			- 			238,842 	
Common shares issued:																												
	Upon redemption of Class A																												
		units, at redemption value			- 			- 			798 			32 			64,798 			- 			- 			- 			64,830 	
	Under Omnibus share plan			- 			- 			590 			23 			23,705 			(13,289)			- 			- 			10,439 	
	Under dividend reinvestment plan			- 			- 			21 			1 			1,771 			- 			- 			- 			1,772 	
Contributions:																												
	Real Estate Fund			- 			- 			- 			- 			- 			- 			- 			203,407 			203,407 	
	Other			- 			- 			- 			- 			- 			- 			- 			778 			778 	
Distributions:																												
	Real Estate Fund			- 			- 			- 			- 			- 			- 			- 			(49,422)			(49,422)	
	Other			- 			- 			- 			- 			- 			- 			- 			(15,604)			(15,604)	
Conversion of Series A preferred																												
	shares to common shares			(3)			(165)			5 			- 			165 			- 			- 			- 			- 	
Deferred compensation shares																												
	and options			- 			- 			4 			- 			10,608 			(523)			- 			- 			10,085 	
Change in unrealized net gain																												
	on securities available-for-sale			- 			- 			- 			- 			- 			- 			41,657 			- 			41,657 	
Amounts reclassified related to sale																												
	of available-for-sale securities			- 			- 			- 			- 			- 			- 			(5,020)			- 			(5,020)	
Pro rata share of other																												
	comprehensive income of																												
	nonconsolidated subsidiaries			- 			- 			- 			- 			- 			- 			12,859 			- 			12,859 	
Change in value of interest rate swap			- 			- 			- 			- 			- 			- 			(43,704)			- 			(43,704)	
Adjustments to carry redeemable																												
	Class A units at redemption value			- 			- 			- 			- 			98,092 			- 			- 			- 			98,092 	
Redeemable noncontrolling interests'																												
	share of above adjustments			- 			- 			- 			- 			- 			- 			(271)			- 			(271)	
Other			- 			(105)			- 			- 			(4,609)			5,121 			(5,245)			4,491 			(347)	
Balance, December 31, 2011			42,187 		$ 	1,021,660 			185,080 		$ 	7,373 		$ 	7,127,258 		$ 	(1,401,704)		$ 	73,729 		$ 	680,131 		$ 	7,508,447 	

See notes to consolidated financial statements.	
 
98

 
  
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED	
	
																						Accumulated							
(Amounts in thousands)																	Earnings		Other		Non-				
				Preferred Shares		Common Shares		Additional		Less Than		Comprehensive		controlling		Total	
				Shares		Amount		Shares		Amount		Capital		Distributions		Income (Loss)		Interests		Equity	
Balance, December 31, 2011			42,187 		$ 	1,021,660 			185,080 		$ 	7,373 		$ 	7,127,258 		$ 	(1,401,704)		$ 	73,729 		$ 	680,131 		$ 	7,508,447 	
Net income			- 			- 			- 			- 			- 			617,260 			- 			32,018 			649,278 	
Dividends on common shares			- 			- 			- 			- 			- 			(699,318)			- 			- 			(699,318)	
Dividends on preferred shares			- 			- 			- 			- 			- 			(76,937)			- 			- 			(76,937)	
Issuance of Series K preferred shares			12,000 			290,971 			- 			- 			- 			- 			- 			- 			290,971 	
Redemption of Series E preferred																												
	shares			(3,000)			(72,248)			- 			- 			- 			- 			- 			- 			(72,248)	
Common shares issued:																												
	Upon redemption of Class A																												
		units, at redemption value			- 			- 			1,121 			45 			89,717 			- 			- 			- 			89,762 	
	Under Omnibus share plan			- 			- 			434 			18 			9,521 			(16,389)			- 			- 			(6,850)	
	Under dividend reinvestment plan			- 			- 			29 			1 			2,306 			- 			- 			- 			2,307 	
	Upon acquisition of real estate			- 			- 			64 			3 			5,121 			- 			- 			- 			5,124 	
Contributions:																												
	Real Estate Fund			- 			- 			- 			- 			- 			- 			- 			195,029 			195,029 	
	Other			- 			- 			- 			- 			- 			- 			- 			18,103 			18,103 	
Distributions:																												
	Real Estate Fund			- 			- 			- 			- 			- 			- 			- 			(48,138)			(48,138)	
	Other			- 			- 			- 			- 			- 			- 			- 			(59)			(59)	
Conversion of Series A preferred																												
	shares to common shares			(2)			(105)			3 			- 			105 			- 			- 			- 			- 	
Deferred compensation shares																												
	and options			- 			- 			4 			- 			13,527 			(473)			- 			- 			13,054 	
Change in unrealized net loss																												
	on securities available-for-sale			- 			- 			- 			- 			- 			- 			(283,649)			- 			(283,649)	
Non-cash impairment loss on																												
	J.C. Penney common shares			- 			- 			- 			- 			- 			- 			224,937 			- 			224,937 	
Amounts reclassified related to sale																												
	of available-for-sale securities			- 			- 			- 			- 			- 			- 			(3,582)			- 			(3,582)	
Pro rata share of other																												
	comprehensive loss of																												
	nonconsolidated subsidiaries			- 			- 			- 			- 			- 			- 			(31,758)			- 			(31,758)	
Change in value of interest rate swap			- 			- 			- 			- 			- 			- 			(5,659)			- 			(5,659)	
Adjustments to carry redeemable																												
	Class A units at redemption value			- 			- 			- 			- 			(52,117)			- 			- 			- 			(52,117)	
Redeemable noncontrolling interests'																												
	share of above adjustments			- 			- 			- 			- 			- 			- 			6,707 			- 			6,707 	
Preferred unit and share																												
	redemptions			- 			- 			- 			- 			- 			8,948 			- 			- 			8,948 	
Consolidation of partially owned																												
	entity			- 			- 			- 			- 			- 			- 			- 			176,132 			176,132 	
Other			- 			- 			- 			- 			- 			(4,662)			329 			(7)			(4,340)	
Balance, December 31, 2012			51,185 		$ 	1,240,278 			186,735 		$ 	7,440 		$ 	7,195,438 		$ 	(1,573,275)		$ 	(18,946)		$ 	1,053,209 		$ 	7,904,144 	

See notes to consolidated financial statements.	
 
99

 
  
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED	
	
																						Accumulated							
(Amounts in thousands)																	Earnings		Other		Non-				
				Preferred Shares		Common Shares		Additional		Less Than		Comprehensive		controlling		Total	
				Shares		Amount		Shares		Amount		Capital		Distributions		Income (Loss)		Interests		Equity	
Balance, December 31, 2012			51,185 		$ 	1,240,278 			186,735 		$ 	7,440 		$ 	7,195,438 		$ 	(1,573,275)		$ 	(18,946)		$ 	1,053,209 		$ 	7,904,144 	
Net income			- 			- 			- 			- 			- 			475,971 			- 			63,952 			539,923 	
Dividends on common shares			- 			- 			- 			- 			- 			(545,913)			- 			- 			(545,913)	
Dividends on preferred shares			- 			- 			- 			- 			- 			(82,807)			- 			- 			(82,807)	
Issuance of Series L preferred shares			12,000 			290,306 			- 			- 			- 			- 			- 			- 			290,306 	
Redemption of Series F and Series H																												
	preferred shares			(10,500)			(253,269)			- 			- 			- 			- 			- 			- 			(253,269)	
Common shares issued:																												
	Upon redemption of Class A																												
		units, at redemption value			- 			- 			299 			12 			25,305 			- 			- 			- 			25,317 	
	Under Omnibus share plan			- 			- 			104 			23 			5,892 			(107)			- 			- 			5,808 	
	Under dividend reinvestment plan			- 			- 			22 			1 			1,850 			- 			- 			- 			1,851 	
	Upon acquisition of real estate			- 			- 			128 			5 			11,456 			- 			- 			- 			11,461 	
Contributions:																												
	Real Estate Fund			- 			- 			- 			- 			- 			- 			- 			28,078 			28,078 	
	Other			- 			- 			- 			- 			- 			- 			- 			15,886 			15,886 	
Distributions:																												
	Real Estate Fund			- 			- 			- 			- 			- 			- 			- 			(47,268)			(47,268)	
	Other			- 			- 			- 			- 			- 			- 			- 			(133,153)			(133,153)	
Conversion of Series A preferred																												
	shares to common shares			(2)			(90)			3 			- 			90 			- 			- 			- 			- 	
Deferred compensation shares																												
	and options			- 			- 			(6)			(12)			9,589 			(307)			- 			- 			9,270 	
Change in unrealized net gain																												
	on securities available-for-sale			- 			- 			- 			- 			- 			- 			142,281 			- 			142,281 	
Amounts reclassified related to sale																												
	of available-for-sale securities			- 			- 			- 			- 			- 			- 			(42,404)						(42,404)	
Pro rata share of other																												
	comprehensive loss of																												
	nonconsolidated subsidiaries			- 			- 			- 			- 			- 			- 			(22,814)			- 			(22,814)	
Change in value of interest rate swap			- 			- 			- 			- 			- 			- 			18,183 			- 			18,183 	
Adjustments to carry redeemable																												
	Class A units at redemption value			- 			- 			- 			- 			(108,252)			- 			- 			- 			(108,252)	
Redeemable noncontrolling interests'																												
	share of above adjustments			- 			- 			- 			- 			- 			- 			(5,296)			- 			(5,296)	
Preferred unit and share																												
	redemptions			- 			- 			- 			- 			- 			(1,130)			- 			- 			(1,130)	
Deconsolidation of partially																												
	owned entity			- 			- 			- 			- 			- 			- 			- 			(165,427)			(165,427)	
Consolidation of partially																												
	owned entity			- 			- 			- 			- 			- 			- 			- 			16,799 			16,799 	
Other			- 			- 			- 			- 			2,472 			(7,271)			533 			(2,564)			(6,830)	
Balance, December 31, 2013			52,683 		$ 	1,277,225 			187,285 		$ 	7,469 		$ 	7,143,840 		$ 	(1,734,839)		$ 	71,537 		$ 	829,512 		$ 	7,594,744 	

See notes to consolidated financial statements.	
100

 
  
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS	
												
				Year Ended December 31,	
				2013 		2012 		2011 	
(Amounts in thousands)										
Cash Flows from Operating Activities:										
Net income		$	564,740 		$	694,541 		$	740,000 	
Adjustments to reconcile net income to net cash provided by operating activities:										
	Depreciation and amortization (including amortization of deferred financing costs)			561,998 			557,888 			580,990 	
	Net gains on sale of real estate			(414,502)			(245,799)			(51,623)	
	Equity in net loss (income) of partially owned entities, including Toys “R” Us			338,785 			(423,126)			(118,612)	
	Net unrealized gains on Real Estate Fund investments			(85,771)			(55,361)			(17,386)	
	Straight-lining of rental income			(69,391)			(69,648)			(45,788)	
	Return of capital from Real Estate Fund investments			56,664 			63,762 			- 	
	Distributions of income from partially owned entities			54,030 			226,172 			93,635 	
	Amortization of below-market leases, net			(52,876)			(54,359)			(63,044)	
	Other non-cash adjustments			41,663 			52,082 			27,325 	
	Non-cash impairment loss on J.C. Penney common shares			39,487 			224,937 			- 	
	Impairment losses and tenant buy-outs			37,170 			133,977 			58,173 	
	Loss (income) from the mark-to-market of J.C. Penney derivative position			33,487 			75,815 			(12,984)	
	Net gain on disposition of wholly owned and partially owned assets			(3,407)			(13,347)			(15,134)	
	Gain on sale of Canadian Trade Shows			- 			(31,105)			- 	
	Net gain on extinguishment of debt			- 			- 			(83,907)	
	Mezzanine loans loss reversal and net gain on disposition			- 			- 			(82,744)	
	Recognition of disputed account receivable from Stop & Shop			- 			- 			(23,521)	
	Changes in operating assets and liabilities:										
		Real Estate Fund investments			(37,817)			(262,537)			(184,841)	
		Tenant and other receivables, net			83,897 			(23,271)			8,869 	
		Prepaid assets			(2,207)			(10,549)			(7,779)	
		Other assets			(50,856)			(46,573)			(89,186)	
		Accounts payable and accrued expenses			(41,729)			21,595 			(28,699)	
		Other liabilities			(12,576)			9,955 			18,755 	
Net cash provided by operating activities			1,040,789 			825,049 			702,499 	
Cash Flows from Investing Activities:										
	Proceeds from sales of real estate and related investments			1,027,608 			445,683 			140,186 	
	Development costs and construction in progress			(469,417)			(156,873)			(93,066)	
	Proceeds from sales of, and return of investment in, marketable securities			378,709 			60,258 			70,418 	
	Distributions of capital from partially owned entities			290,404 			144,502 			318,966 	
	Additions to real estate			(260,343)			(205,652)			(165,680)	
	Proceeds from the sale of LNR			240,474 			- 			- 	
	Investments in partially owned entities			(230,300)			(134,994)			(571,922)	
	Acquisitions of real estate and other			(193,417)			(673,684)			(90,858)	
	Funding of J.C. Penney derivative collateral; and settlement of derivative in 2013			(186,079)			(191,330)			(43,850)	
	Return of J.C. Penney derivative collateral			101,150 			134,950 			56,350 	
	Proceeds from sales and repayments of mortgage and mezzanine loans										
		receivable and other			50,569 			38,483 			187,294 	
	Restricted cash			(26,892)			(75,138)			126,380 	
	Investments in mortgage and mezzanine loans receivable and other			(390)			(94,094)			(98,979)	
	Proceeds from the sale of Canadian Trade Shows			- 			52,504 			- 	
	Proceeds from the repayment of loan to officer			- 			13,123 			13,123 	
	Loan to officer			- 			- 			(13,123)	
Net cash provided by (used in) investing activities			722,076 			(642,262)			(164,761)	
												
See notes to consolidated financial statements.	
 
101

 
  
VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED	
												
				Year Ended December 31,	
				2013 		2012 		2011 	
(Amounts in thousands)									
Cash Flows from Financing Activities:									
	Repayments of borrowings	$	(3,580,100)		$	(2,747,694)		$	(3,740,327)	
	Proceeds from borrowings		2,262,245 			3,593,000 			3,412,897 	
	Dividends paid on common shares		(545,913)			(699,318)			(508,745)	
	Purchases of outstanding preferred units and shares		(299,400)			(243,300)			(28,000)	
	Proceeds from the issuance of preferred shares		290,306 			290,971 			238,842 	
	Distributions to noncontrolling interests		(215,247)			(104,448)			(116,510)	
	Dividends paid on preferred shares		(83,188)			(73,976)			(61,464)	
	Contributions from noncontrolling interests		43,964 			213,132 			204,185 	
	Debt issuance and other costs		(19,883)			(39,073)			(47,395)	
	Proceeds received from exercise of employee share options		7,765 			11,853 			25,507 	
	Repurchase of shares related to stock compensation agreements and related									
		tax withholdings		(443)			(30,168)			(964)	
Net cash (used in) provided by financing activities		(2,139,894)			170,979 			(621,974)	
Net (decrease) increase in cash and cash equivalents		(377,029)			353,766 			(84,236)	
Cash and cash equivalents at beginning of period		960,319 			606,553 			690,789 	
Cash and cash equivalents at end of period	$	583,290 		$	960,319 		$	606,553 	
									
Supplemental Disclosure of Cash Flow Information:									
	Cash payments for interest (net of amounts capitalized of $42,303, $16,801 and $1,197)	$	465,260 		$	491,869 		$	531,174 	
	Cash payments for income taxes	$	9,023 		$	21,709 		$	26,187 	
										
Non-Cash Investing and Financing Activities:									
	Like-kind exchange of real estate:									
		Acquisitions	$	66,076 		$	230,913 		$	21,999 	
		Dispositions		(128,767)			(230,913)			(45,625)	
	Financing assumed in acquisitions		79,253 			- 			- 	
	Financing transferred in dispositions		- 			(163,144)			- 	
	L.A. Mart seller financing		- 			35,000 			- 	
	Marriott Marquis Times Square - retail and signage capital lease:									
		Asset (included in development costs and construction in progress)		- 			240,000 			- 	
		Liability (included in other liabilities)		- 			(240,000)			- 	
	Increase in assets and liabilities resulting from the consolidation of partially									
		owned entities:									
			Real estate, net		- 			342,919 			- 	
			Notes and mortgages payable		- 			334,225 			- 	
	Decrease in assets and liabilities resulting from the deconsolidation of discontinued									
		operations and/or investments that were previously consolidated:									
			Real estate, net		(852,166)			- 			(145,333)	
			Notes and mortgages payable		(322,903)			- 			(232,502)	
												
See notes to consolidated financial statements.	
												
102

 
  
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1.     Organization and Business
 
Vornado Realty Trust (“Vornado”) is a fully‑integrated real estate investment trust (“REIT”) and conducts its business through, and substantially all of its interests in properties are held by, Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”).  Accordingly, Vornado’s cash flow and ability to pay dividends to its shareholders is dependent upon the cash flow of the Operating Partnership and the ability of its direct and indirect subsidiaries to first satisfy their obligations to creditors.  Vornado is the sole general partner of, and owned approximately 94.0% of the common limited partnership interest in the Operating Partnership at December 31, 2013.  All references to “we,” “us,” “our,” the “Company” and “Vornado” refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership.
                 
As of December 31, 2013, we own all or portions of:
 
New York:
 
·          19.8 million square feet of Manhattan office space in 31 properties and four residential properties containing 1,653 units;
 
·          2.4 million square feet of Manhattan street retail space in 55 properties;
 
·          The 1,700 room Hotel Pennsylvania located on Seventh Avenue at 33 rd Street in the heart of the Penn Plaza district;
 
·          A 32.4% interest in Alexander’s, Inc. (NYSE: ALX), which owns six properties in the greater New York metropolitan area, including 731 Lexington Avenue, the 1.3 million square foot Bloomberg, L.P. headquarters building;
 
Washington, DC:
 
·          16.2 million square feet of office space in 59 properties and seven residential properties containing 2,405 units;
 
Retail Properties:
 
·          14.9 million square feet of retail space in 106 strip shopping centers and single tenant retail assets, primarily in the northeast states and California;
 
·          5.3 million square feet of retail space in six regional malls, located in the northeast / mid-Atlantic states and Puerto Rico;

Other Real Estate and Related Investments:
 
·          The 3.6 million square foot Merchandise Mart in Chicago, whose largest tenant is Motorola Mobility, owned by Google, which leases 608,000 square feet;
 
·          A 70% controlling interest in 555 California Street, a three-building office complex in San Francisco’s financial district aggregating 1.8 million square feet, known as the Bank of America Center;
 
·          A 25.0% interest in Vornado Capital Partners, our real estate fund.  We are the general partner and investment manager of the fund;
 
·          A 32.6% interest in Toys “R” Us, Inc.; and
 
·          Other real estate and related investments and mortgage and mezzanine loans on real estate.
103

 
  
VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
2.    Basis of Presentation and Significant Accounting Policies
 
Basis of Presentation
 
The accompanying consolidated financial statements include the accounts of Vornado and its consolidated subsidiaries, including the Operating Partnership. All inter-company amounts have been eliminated.  Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Recently Issued Accounting Literature
 
In February 2013, the Financial Accounting Standards Board (“FASB”) issued an update (“ASU 2013-02”) to Accounting Standards Codification (“ASC”) Topic 220, Comprehensive Income (“Topic 220”). ASU 2013-02 requires additional disclosures regarding significant reclassifications out of each component of accumulated other comprehensive income, including the effect on the respective line items of net income for amounts that are required to be reclassified into net income in their entirety and cross-references to other disclosures providing additional information for amounts that are not required to be reclassified into net income in their entirety. The adoption of this update as of January 1, 2013, did not have a material impact on our consolidated financial statements, but resulted in additional disclosures (see Note 12 – Shareholders’ Equity – Accumulated Other Comprehensive Income (Loss) ).  
 
In June 2013, the FASB issued an update (“ASU 2013-08”) to ASC Topic 946, Financial Services - Investment Companies (“Topic 946”). ASU 2013-08 amends the guidance in Topic 946 for determining whether an entity qualifies as an investment company and requires certain additional disclosures. ASU 2013-08 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2013. The adoption of this update as of January 1, 2014, did not have any impact on our real estate fund and our consolidated financial statements.

Significant Accounting Policies
 
Real Estate:  Real estate is carried at cost, net of accumulated depreciation and amortization. Betterments, major renewals and certain costs directly related to the improvement and leasing of real estate are capitalized. Maintenance and repairs are expensed as incurred. For redevelopment of existing operating properties, the net book value of the existing property under redevelopment plus the cost for the construction and improvements incurred in connection with the redevelopment are capitalized to the extent the capitalized costs of the property do not exceed the estimated fair value of the redeveloped property when complete. If the cost of the redeveloped property, including the net book value of the existing property, exceeds the estimated fair value of redeveloped property, the excess is charged to expense. Depreciation is recognized on a straight-line basis over estimated useful lives which range from 7 to 40 years. Tenant allowances are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets. Additions to real estate include interest expense capitalized during construction of $42,303,000 and $16,801,000 for the years ended December 31, 2013 and 2012, respectively.
 
Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above and below-market leases, acquired in-place leases and tenant relationships) and acquired liabilities and we allocate the purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information.  Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions.  We record acquired intangible assets (including acquired above-market leases, acquired in-place leases and tenant relationships) and acquired intangible liabilities (including below–market leases) at their estimated fair value separate and apart from goodwill. We amortize identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired.
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2.    Basis of Presentation and Significant Accounting Policies - continued
 
Our properties, including any related intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis.  An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value.  Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared.  If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements.  The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results.  Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. 
 
The table below summarizes impairment losses, acquisition related costs and tenant buy-outs in the years ended December 31, 2013, 2012 and 2011.
 
	(Amounts in thousands)			For the Year Ended December 31,			
					2013 				2012 			2011 			
	Impairment losses		$	32,443 			$	103,638 		$	5,228 			
	Acquisition related costs			24,857 	(1) 			11,248 			5,925 			
	Tenant buy-outs			- 				- 			24,146 			
				$	57,300 			$	114,886 		$	35,299 			

	(1)	Includes a $10,949 prepayment penalty in connection with the repayment of the mortgage loan upon the acquisition of 655 Fifth Avenue.		

Partially Owned Entities:   We consolidate entities in which we have a controlling financial interest.  In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity (“VIE”) and we are the primary beneficiary.  We are deemed to be the primary beneficiary of a VIE when we have (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. We generally do not control a partially owned entity if the entity is not considered a VIE and the approval of all of the partners/members is contractually required with respect to major decisions, such as operating and capital budgets, the sale, exchange or other disposition of real property, the hiring of a chief executive officer, the commencement, compromise or settlement of any lawsuit, legal proceeding or arbitration or the placement of new or additional financing secured by assets of the venture.  We account for investments under the equity method when the requirements for consolidation are not met, and we have significant influence over the operations of the investee. Equity method investments are initially recorded at cost and subsequently adjusted for our share of net income or loss and cash contributions and distributions each period. Investments that do not qualify for consolidation or equity method accounting are accounted for on the cost method. 
 
Investments in partially owned entities are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value.  Impairment analyses are based on current plans, intended holding periods and available information at the time the analyses are prepared.  In the years ended December 31, 2013, 2012 and 2011, we recognized non-cash impairment losses on investments in partially owned entities, aggregating $281,098,000, $44,936,000 and $13,794,000, respectively.  Included in these amounts are $240,757,000 and $40,000,000 of impairment losses related to our investment in Toys in 2013 and 2012, respectively.  
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
2.    Basis of Presentation and Significant Accounting Policies – continued
 
Mortgage and Mezzanine Loans Receivable: We invest in mortgage and mezzanine loans of entities that have significant real estate assets.  These investments are either secured by the real property or by pledges of the equity interests of the entities owning the underlying real estate.  We record these investments at the stated principal amount net of any unamortized discount or premium. We accrete or amortize any discount or premium over the life of the related receivable utilizing the effective interest method or straight-line method, if the result is not materially different.  We evaluate the collectibility of both interest and principal of each of our loans whenever events or changes in circumstances indicate such amounts may not be recoverable. A loan is impaired when it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient, to the value of the collateral if the loan is collateral dependent.  Interest on impaired loans is recognized when received in cash.

Cash and Cash Equivalents:   Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less and are carried at cost, which approximates fair value due to their short-term maturities.  The majority of our cash and cash equivalents consists of (i) deposits at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation limit, (ii) United States Treasury Bills, and (iii) Certificate of Deposits placed through an Account Registry Service (“CDARS”).  To date, we have not experienced any losses on our invested cash.

Restricted Cash:   Restricted cash consists of security deposits, cash restricted for the purposes of facilitating a Section 1031 Like-Kind exchange, cash restricted in connection with our deferred compensation plan and cash escrowed under loan agreements for debt service, real estate taxes, property insurance and capital improvements.   

Allowance for Doubtful Accounts:   We periodically evaluate the collectibility of amounts due from tenants and maintain an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under the lease agreements. We also maintain an allowance for receivables arising from the straight-lining of rents. This receivable arises from earnings recognized in excess of amounts currently due under the lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates.  As of December 31, 2013 and 2012, we had $21,869,000 and $37,674,000, respectively, in allowances for doubtful accounts.  In addition, as of December 31, 2013 and 2012, we had $4,355,000 and $3,165,000, respectively, in allowances for receivables arising from the straight-lining of rents.

Deferred Charges: Direct financing costs are deferred and amortized over the terms of the related agreements as a component of interest expense. Direct costs related to successful leasing activities are capitalized and amortized on a straight line basis over the lives of the related leases. All other deferred charges are amortized on a straight line basis, which approximates the effective interest rate method, in accordance with the terms of the agreements to which they relate.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
2.    Basis of Presentation and Significant Accounting Policies – continued
 
Revenue Recognition:   We have the following revenue sources and revenue recognition policies:
•      Base Rent — income arising from tenant leases. These rents are recognized over the non-cancelable term of the related leases on a straight-line basis which includes the effects of rent steps and rent abatements under the leases.  We commence rental revenue recognition when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use.  In addition, in circumstances where we provide a tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of rental revenue on a straight-line basis over the term of the lease.
  
•      Percentage Rent — income arising from retail tenant leases that is contingent upon tenant sales exceeding defined thresholds. These rents are recognized only after the contingency has been removed (i.e., when tenant sales thresholds have been achieved).
 
•      Hotel Revenue — income arising from the operation of the Hotel Pennsylvania which consists of rooms revenue, food and beverage revenue, and banquet revenue. Income is recognized when rooms are occupied. Food and beverage and banquet revenue is recognized when the services have been rendered.
 
•      Trade Shows Revenue — income arising from the operation of trade shows, including rentals of booths. This revenue is recognized when the trade shows have occurred.
 
•      Expense Reimbursements — revenue arising from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred.
 
•      Management, Leasing and Other Fees — income arising from contractual agreements with third parties or with partially owned entities. This revenue is recognized as the related services are performed under the respective agreements.
 
•      Cleveland Medical Mart — revenue arising from the development of the Cleveland Medical Mart.  This revenue was recognized as the related services were performed under the respective agreements using the criteria set forth in ASC 605-25, Multiple Element Arrangements . 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
2.    Basis of Presentation and Significant Accounting Policies – continued
 
Derivative Instruments and Hedging Activities:  ASC 815, Derivatives and Hedging , as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. As of December 31, 2013 and 2012, our derivative instruments consisted of an interest rate cap and an interest rate swap.  We record all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.
 
For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (loss) (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. We assess the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. For derivatives not designated as hedges, changes in fair value are recognized in earnings.
 
Income Taxes: We operate in a manner intended to enable us to continue to qualify as a REIT under Sections 856‑860 of the Internal Revenue Code of 1986, as amended. Under those sections, a REIT which distributes at least 90% of its REIT taxable income as a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We distribute to shareholders 100% of taxable income and therefore, no provision for Federal income taxes is required.  Dividends distributed for the year ended December 31, 2013, were characterized, for federal income tax income tax purposes, as ordinary income.  Dividend distributions for the year ended December 31, 2012, were characterized, for Federal income tax purposes, as 62.7% ordinary income and 37.3% long-term capital gain.  Dividend distributions for the year ended December 31, 2011 were characterized, for Federal income tax purposes, as 93.2% ordinary income and 6.8% long-term capital gain.
 
We have elected to treat certain consolidated subsidiaries, and may in the future elect to treat newly formed subsidiaries, as taxable REIT subsidiaries pursuant to an amendment to the Internal Revenue Code that became effective January 1, 2001.  Taxable REIT subsidiaries may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to Federal and State income tax at regular corporate tax rates. Our taxable REIT subsidiaries had a combined current income tax expense of approximately $9,608,000, $20,336,000 and $26,645,000 for the years ended December 31, 2013, 2012 and 2011, respectively, and have immaterial differences between the financial reporting and tax basis of assets and liabilities. 
 
The following table reconciles net income attributable to common shareholders to estimated taxable income for the years ended December 31, 2013, 2012 and 2011.
 
	(Amounts in thousands)			For the Year Ended December 31,		
					2013 			2012 			2011 		
	Net income attributable to common shareholders		$	392,034 		$	549,271 		$	601,771 		
	Book to tax differences (unaudited):											
		Depreciation and amortization			155,401 			205,155 			225,802 		
		Impairment losses on marketable equity securities			37,236 			211,328 			- 		
		Straight-line rent adjustments			(64,811)			(64,679)			(38,800)		
		Earnings of partially owned entities			339,376 			(60,049)			(96,178)		
		Stock options			4,884 			(28,701)			(27,697)		
		Sale of real estate			(324,936)			(123,905)			(18,766)		
		Derivatives			31,578 			71,228 			(12,160)		
		Mortgage and mezzanine loans receivable			- 			- 			(82,512)		
		Other, net			4,608 			17,080 			(6,223)		
	Estimated taxable income (unaudited)		$	575,370 		$	776,728 		$	545,237 		
 
The net basis of our assets and liabilities for tax reporting purposes is approximately $3.6 billion lower than the amounts reported in our consolidated balance sheet at December 31, 2013.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
3.     Vornado Capital Partners Real Estate Fund (the “Fund”)
 
We are the general partner and investment manager of the Fund, which has an eight-year term and a three-year investment period that ended in July 2013. During the investment period, the Fund was our exclusive investment vehicle for all investments that fit within its investment parameters, as defined. The Fund is accounted for under the AICPA Investment Company Guide and its investments are reported on its balance sheet at fair value, with changes in value each period recognized in earnings. We consolidate the accounts of the Fund into our consolidated financial statements, retaining the fair value basis of accounting.  
 
At December 31, 2013, the Fund had nine investments with an aggregate fair value of $667,710,000, or $153,413,000 in excess of cost, and had remaining unfunded commitments of $149,186,000, of which our share was $37,297,000.  At December 31, 2012, the Fund had nine investments with an aggregate fair value of $600,786,000.
 
Below is a summary of income (loss) from the Fund for the years ended December 31, 2013 , 2012  and 2011 .   
 
(Amounts in thousands)		For the Year Ended December 31,		
					2013 		2012 		2011 		
Net investment income		$	8,943 		$	8,575 		$	5,500 		
Net realized gains			8,184 			- 			5,391 		
Net unrealized gains			85,771 			55,361 			11,995 		
Income from Real Estate Fund			102,898 			63,936 			22,886 		
Less income attributable to noncontrolling interests			(53,427)			(39,332)			(13,598)		
Income from Real Estate Fund attributable to Vornado (1)		$	49,471 		$	24,604 		$	9,288 		
__________________________________________________________												
														
(1)		Excludes $2,992, $3,278 and $2,695 of management, leasing and development fees in the years ended December 31, 2013, 2012 and 2011, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.	

 
4.     Acquisitions
 
On October 4, 2013, we acquired a 92.5% interest in 655 Fifth Avenue, a 57,500 square foot retail and office property located at the northeast corner of Fifth Avenue and 52nd Street in Manhattan, for $277,500,000 in cash. We consolidate the accounts of the property into our consolidated financial statements from the date of acquisition.
 
On October 15, 2013, we acquired, for $194,000,000 in cash, land and air rights for 137,000 zoning square feet thereby completing the assemblage for our 220 Central Park South development site in Manhattan.   
 
In addition to the above, during 2013, we acquired three Manhattan street retail properties, in separate transactions, for an aggregate of $65,300,000.
 
5.    Marketable Securities and Derivative Instruments 

Our portfolio of marketable securities is comprised of equity securities that are classified as available-for-sale.  Available-for-sale securities are presented on our consolidated balance sheets at fair value.  Unrealized gains and losses resulting from the mark-to-market of these securities are included in “other comprehensive income (loss).”  Realized gains and losses are recognized in earnings only upon the sale of the securities and are recorded based on the weighted average cost of such securities.
 
We evaluate our portfolio of marketable securities for impairment each reporting period.  For each of the securities in our portfolio with unrealized losses, we review the underlying cause of the decline in value and the estimated recovery period, as well as the severity and duration of the decline.  In our evaluation, we consider our ability and intent to hold these investments for a reasonable period of time sufficient for us to recover our cost basis.  We also evaluate the near-term prospects for each of these investments in relation to the severity and duration of the decline.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
5.    Marketable Securities and Derivative Instruments – continued

	Below is a summary of our marketable securities portfolio as of December 31, 2013 and 2012.		
																					
			As of December 31, 2013		As of December 31, 2012		
						GAAP		Unrealized					GAAP		Unrealized		
			Fair Value		Cost		Gain		Fair Value		Cost		Gain		
Equity securities:																	 			
	Lexington		$	188,567 		$	72,549 		$	116,018 		$	- 		$	- 		$	- 		
	J.C. Penney			- 			- 			- 			366,291 			366,291 			- 		
	Other			3,350 			59 			3,291 			31,897 			12,465 			19,432 		
			$	191,917 		$	72,608 		$	119,309 		$	398,188 		$	378,756 		$	19,432 		

Investment in Lexington Realty Trust (“Lexington”) (NYSE: LXP)
 
From the inception of our investment in Lexington in 2008, until the first quarter of 2013, we accounted for our investment under the equity method because of our ability to exercise significant influence over Lexington’s operating and financial policies. As a result of Lexington’s common share issuances, our ownership interest was reduced over time from approximately 17.2% to 8.8% at March 31, 2013. In the first quarter of 2013, we concluded that we no longer have the ability to exercise significant influence over Lexington’s operating and financial policies, and began accounting for this investment as a marketable equity security – available for sale, in accordance with ASC Topic 320, Investments – Debt and Equity Securities .    

Investment in J.C. Penney Company, Inc. (“J.C. Penney”) (NYSE: JCP)
 
At December 31, 2012, we owned 23,400,000 J.C. Penney common shares comprised of (i) 18,584,010 common shares at a GAAP cost of $19.71 per share, or $366,291,000 in the aggregate, and (ii) 4,815,990 common shares through a forward contract at a weighted average strike price of $29.34 per share, or $141,309,000 in the aggregate.
 
On March 4, 2013, we sold 10,000,000 J.C. Penney common shares at a price of $16.03 per share, or $160,300,000 in the aggregate, resulting in a net loss of $36,800,000, which is included in “net gain on disposition of wholly owned and partially owned assets” on our consolidated statements of income. In addition, in the first quarter of 2013, we wrote down the remaining 8,584,010 J.C. Penney common shares we owned to fair value, based on J.C. Penney’s March 31, 2013 closing share price of $15.11 per share, and recorded a $39,487,000 impairment loss, which is included in “interest and other investment (loss) income, net” on our consolidated statements of income.
 
On September 19, 2013, we settled the forward contract and received 4,815,990 J.C. Penney common shares. In connection therewith, we recognized a $33,487,000 loss from the mark-to-market of the derivative position through its settlement date, which is included in “interest and other investment (loss) income, net” on our consolidated statements of income.
 
On September 19, 2013, we also sold the remaining 13,400,000 J.C. Penney common shares in a block trade at a price of $13.00 per share, or $174,200,000 in the aggregate and recognized an $18,114,000 net loss, which is included in “net gain on disposition of wholly owned and partially owned assets” on our consolidated statements of income.
 
The aggregate economic net loss on our investment in J.C. Penney, from inception through disposition, was $256,156,000. 

Other Investments
 
During 2013, 2012 and 2011, we sold other marketable securities for aggregate proceeds of $44,209,000, $58,718,000, and $69,559,000, respectively resulting in net gains of $31,741,000, $3,582,000, and $5,020,000, respectively, which are included as a component of “net gain on disposition of wholly owned and partially owned assets” on our consolidated statements of income. 
     
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
6.    Investments in Partially Owned Entities

Toys “R” Us (“Toys”)
As of December 31, 2013, we own 32.6% of Toys.  We account for our investment in Toys under the equity method and record our share of Toys’ net income or loss on a one-quarter lag basis because Toys’ fiscal year ends on the Saturday nearest January 31, and our fiscal year ends on December 31.  The business of Toys is highly seasonal and substantially all of Toys’ net income is generated in its fourth quarter. 
 
At December 31, 2012, we estimated that the fair value of our investment was $40,000,000 less than the carrying amount of $518,041,000 and concluded that the decline in the value of our investment was “other-than-temporary” based on, among other factors, compression of earnings multiples of comparable retailers and our inability to forecast a recovery in the near term.  Accordingly, we recognized a non-cash impairment loss of $40,000,000 in the fourth quarter of 2012.
 
In the first quarter of 2013, we recognized our share of Toys’ fourth quarter net income of $78,542,000 and a corresponding non-cash impairment loss of the same amount to continue to carry over our investment at fair value. 
 
At December 31, 2013, we estimated that the fair value of our investment in Toys was approximately $80,062,000 ($83,224,000 including $3,162,000 for our share of Toys’ accumulated other comprehensive income), or $162,215,000 less than the carrying amount after recognizing our share of Toys third quarter net loss in our fourth quarter.  In determining the fair value of our investment, we considered, among other inputs, a December 31, 2013 third-party valuation of Toys.  We have concluded that the decline in the value of our investment is “other-than-temporary” based on, among other factors, Toys’ 2013 holiday sales results, compression of earnings multiples of comparable retailers and our inability to forecast a recovery in the near term.  Accordingly, we recognized an additional non-cash impairment loss of $162,215,000 in the fourth quarter of 2013. 
 
We will continue to assess the recoverability of our investment each quarter.  To the extent the fair value of our investment does not change, we will recognize a non-cash impairment loss equal to our share of Toys’ fourth quarter net income, if any, in our first quarter of 2014.
 
Below is a summary of Toys’ latest available financial information on a purchase accounting basis:
 
	(Amounts in thousands)				Balance as of			
	Balance Sheet:				November 2, 2013		October 27, 2012			
		Assets				$	11,756,000 		$	12,953,000 			
		Liabilities					10,437,000 			11,190,000 			
		Noncontrolling interests					75,000 			44,000 			
		Toys “R” Us, Inc. equity (1)					1,244,000 			1,719,000 			
														
				For the Twelve Months Ended			
	Income Statement: 	November 2, 2013		October 27, 2012		October 29, 2011			
		Total revenues	$	13,046,000 		$	13,698,000 		$	13,956,000 			
		Net (loss) income attributable to Toys		(396,000)			138,000 			121,000 			

	(1)		As of December 31, 2013, the carrying amount of our investment in Toys is less than our share of Toys' equity by approximately $322,255,000. This basis difference results primarily from non-cash impairment losses aggregating $280,757,000 that we recognized in 2013 and 2012. We have allocated the basis difference to Toys' real estate (which will be amortized over its estimated useful life), and intangible assets, primarily trade names and trademarks (which is not being amortized and will be recognized upon disposition of our investment).		
					
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VORNADO REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
6.    Investments in Partially Owned Entities – continued

Alexander’s, Inc. (“Alexander’s”) (NYSE: ALX)
 
As of December 31, 2013, we own 1,654,068 Alexander’s commons shares, or approximately 32.4% of Alexander’s common equity.  We manage, lease and develop Alexander’s properties pursuant to the agreements described below which expire in March of each year and are automatically renewable.  As of December 31, 2013, we have a $43,307,000 receivable from Alexander’s for fees under these agreements. 
 
As of December 31, 2013 the market value (“fair value” pursuant to ASC 820) of our investment in Alexander’s, based on Alexander’s December 31, 2013 closing share price of $330.00, was $545,842,000, or $378,057,000 in excess of the carrying amount on our consolidated balance sheet.  As of December 31, 2013, the carrying amount of our investment in Alexander’s, excluding amounts owed to us, exceeds our share of the equity in the net assets of Alexander’s by approximately $42,048,000.  The majority of this basis difference resulted from the excess of our purchase price for the Alexander’s common stock acquired over the book value of Alexander’s net assets.  Substantially all of this basis difference was allocated, based on our estimates of the fair values of Alexander’s assets and liabilities, to real estate (land and buildings).  We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives.  This depreciation is not material to our share of equity in Alexander’s net income.  The basis difference related to the land will be recognized upon disposition of our investment.
 
Management and Development Agreements
 
We receive an annual fee for managing Alexander’s and all of its properties equal to the sum of (i) $2,800,000, (ii) 2% of the gross revenue from the Rego Park II Shopping Center, (iii) $0.50 per square foot of the tenant-occupied office and retail space at 731 Lexington Avenue, and (iv) $272,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue.  In addition, we are entitled to a development fee of 6% of development costs, as defined.
 
Leasing Agreements
 
We provide Alexander’s with leasing services for a fee of 3% of rent for the first ten years of a lease term, 2% of rent for the eleventh through twentieth year of a lease term and 1% of rent for the twenty-first through thirtieth year of a lease term, subject to the payment of rents by Alexander’s tenants.  In the event third-party real estate brokers are used, our fee increases by 1% and we are responsible for the fees to the third-parties.  We are also entitled to a commission upon the sale of any of Alexander’s assets equal to 3% of gross proceeds, as defined, for asset sales less than $50,000,000, or 1% of gross proceeds, as defined, for asset sales of $50,000,000 or more.  The total of these amounts is payable to us in annual installments in an amount not to exceed $4,000,000 with interest on the unpaid balance at one-year LIBOR plus 1.0% (1.84% at December 31, 2013).
 
Other Agreements
 
Building Maintenance Services (“BMS”), our wholly-owned subsidiary, supervises (i) cleaning, engineering and security services at Alexander’s 731 Lexington Avenue property and (ii) security services at Alexander’s Rego Park I and Rego Park II properties, for an annual fee of the costs for such services plus 6%.  During the years ended December 31, 2013, 2012 and 2011, we recognized $2,036,000, $2,362,000 and $2,442,000 of income, respectively, under these agreements.
 
Below is a summary of Alexander’s latest available financial information:
 
	(Amounts in thousands)						Balance as of December 31,			
	Balance Sheet:						2013		2012			
		Assets						$	1,458,000 		$	1,482,000 			
		Liabilities							1,124,000 			1,150,000 			
		Stockholders' equity							334,000 			332,000 			
																
				For the Year Ended December 31,			
	Income Statement:		2013		2012		2011			
		Total revenues			$	196,000 		$	191,000 		$	185,000 			
		Net income attributable to Alexander’s (1)				57,000 			674,000 			79,000 			

	(1)	2012 includes a $600,000 net gain on sale of real estate.						
112

 
  
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
6.    Investments in Partially Owned Entities – continued

LNR Property Corporation (“LNR”)
 
In January 2013, we and the other equity holders of LNR entered into a definitive agreement to sell LNR for $1.053 billion, of which our share of the net proceeds was $240,474,000.  The definitive agreement provided that LNR would not (i) make any cash distributions to the equity holders, including us, through the completion of the sale, which occurred on April 19, 2013, and (ii) take any of the following actions (among others) without the purchaser’s approval, the lending or advancing of any money, the acquisition of assets in excess of specified amounts, or the issuance of equity interests.  Notwithstanding the terms of the definitive agreement, in accordance with GAAP, we recorded our pro rata share of LNR’s earnings on a one-quarter lag basis through the date of sale, which increased the carrying amount of our investment in LNR above our share of the net sales proceeds and resulted in us recognizing an “other-than-temporary” impairment loss on our investment of $27,231,000 in the three months ended March 31, 2013.  LNR’s net loss for the period from January 1, 2013 through April 19, 2013 was $80,654,000, including a $66,241,000 non-cash impairment loss. Our share of the net loss was $21,131,000, including $17,355,000 for our share of the non-cash impairment loss.  In the three months ended June 30, 2013, we recorded our share of the net loss but did not record our share of the non-cash impairment loss, as it was effectively considered in our assessment of “other-than-temporary” impairment loss when we recorded the $27,231,000 impairment loss in the three months ended March 31, 2013.  As a result of recording our share of the net loss of $3,776,000 for the three months ended June 30, 2013, the carrying amount of our investment decreased below our share of the net sales proceeds; accordingly, we recorded an offsetting gain on the sale of our investment.
  
The following table summarizes the activity related to our investment in LNR by quarter for the year ended December 31, 2013.	
															
					For the Three Months Ended		For the Year Ended			
	(Amounts in thousands)		March 31, 2013		June 30, 2013		December 31, 2013			
		Balance at beginning of period		$	224,724 		$	241,377 		$	224,724 			
		Equity in earnings of LNR			45,962 			(3 , 776)	 		42, 186  			
		Other comprehensive loss			(2,078)			(903)			(2,981)			
		Balance before impairment loss			268,608 			236, 698  			263, 929  			
		Other-than-temporary impairment loss			(27,231)			- 			(27,231)			
		Net gain on sale			- 			3,776 			3, 776  			
		Net sales proceeds			- 			(240,474)			(240,474)			
		Balance at end of period		$	241,377 		$	- 		$	- 			

 
Below is a summary of LNR’s financial information as of December 31, 2012 and through the date of sale:		
															
	(Amounts in thousands)					Balance as of September 30,			
	Balance Sheet:					2013		2012			
		Assets (1)					$	- 		$	98,530,000 			
		Liabilities (1)						- 			97,643,000 			
		Noncontrolling interests						- 			8,000 			
		LNR Property Corporation equity						- 			879,000 			
														
				For the period ended										
				October 1, 2012			For the Twelve Months Ended September 30,			
	Income Statement:	to April 19, 2013			2012		2011			
		Total revenues	$	122,222 			$	238,000 		$	208,000 			
		Net income attributable to LNR		94,949 				266,000 			224,000 			
	
______________________________________________________________________												

 												
	(1)	Includes $97 billion of assets and liabilities of LNR related to consolidated CMBS and CDO trusts which were non-recourse to LNR and its equity holders, including us.			

															
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6.    Investments in Partially Owned Entities – continued

Independence Plaza
 
On December 21, 2012, we acquired a 58.75% economic interest in Independence Plaza, a three-building 1,328 unit residential complex in the Tribeca submarket of Manhattan (the “Property”).  We determined, at that time, that we were the primary beneficiary of the variable interest entity (“VIE”) that owned the Property.  Accordingly, we consolidated the operations of the Property from the date of acquisition.  Upon consolidation, our preliminary purchase price allocation was primarily to land ($309,848,000) and building ($527,578,000).  Based on a third party appraisal and additional information about facts and circumstances that existed at the acquisition date, which was obtained subsequent to the acquisition date, we finalized the purchase price allocation in the first quarter of 2013, and retroactively adjusted our December 31, 2012 consolidated balance sheet as follows:
  
	(Amounts in thousands)				
	Land	$	602,662 		
	Building and improvements		252,844 		
	Acquired above-market leases (included in identified intangible assets)		13,115 		
	Acquired in-place leases (included in identified intangible assets)		67,879 		
	Other assets		7,374 		
	Acquired below-market leases (included in deferred revenue)		(99,074)		
	Purchase price	$	844,800 		
 
On June 7, 2013, the existing $323,000,000 mortgage loan was refinanced with a $550,000,000 five-year fixed-rate interest only mortgage loan bearing interest at 3.48%.  The net proceeds of $219,000,000, after repaying the existing loan and closing costs, were distributed to the partners, of which our share was $137,000,000.  Simultaneously with the refinancing, we sold an 8.65% economic interest in the Property to our partner for $41,000,000 in cash, which reduced our economic interest to 50.1%.  As a result of this transaction, we determined that we were no longer the primary beneficiary of the VIE.  Accordingly, we deconsolidated the operations of the Property on June 7, 2013 and began accounting for our investment under the equity method. 
 
650 Madison Avenue
 
On September 30, 2013, a joint venture, in which we have a 20.1% interest, acquired 650 Madison Avenue, a 27-story, 594,000 square foot Class A office and retail tower located on Madison Avenue between 59 th and 60 th Street in Manhattan, for $1.295 billion.  The property contains 523,000 square feet of office space and 71,000 square feet of retail space.  The purchase price was funded with cash and a new $800,000,000 seven-year 4.39% interest-only loan.  We account for our investment in the joint venture under the equity method.

The following is a summary of condensed combined financial information for all of our partially owned entities, including Toys, Alexander’s and LNR (sold in April 2013), as of December 31, 2013 and 2012 and for the years ended December 31, 2013, 2012 and 2011.

	(Amounts in thousands)					Balance as of December 31,			
	Balance Sheet:					2013 		2012 			
		Assets (1)					$	21,773,000 		$	122,692,000 			
		Liabilities (1)						17,982,000 			117,064,000 			
		Noncontrolling interests						96,000 			88,000 			
		Equity						3,695,000 			5,540,000 			
														
				For the Year Ended December 31,			
	Income Statement:		2013 		2012 		2011 			
		Total revenue		$	14,092,000 		$	15,119,000 		$	15,321,000 			
		Net income (2)			(368,000)			1,091,000 			199,000 			

	(1)	2012 includes $97 billion of assets and liabilities of LNR related to consolidated CMBS and CDO trusts which were non-recourse to LNR and its equity holders, including us.		
														
	(2)	2012 includes a $600,000 net gain on sale of real estate.		
114

 
  
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
6.    Investments in Partially Owned Entities - continued

Below are schedules summarizing our investments in, and income from, partially owned entities.
 
									Percentage								
(Amounts in thousands)				Ownership at		As of December 31,		
Investments:				December 31, 2013		2013 		2012 		
	Toys				32.6%		$	83,224 		$	478,041 		
																	
	Alexander’s				32.4%		$	167,785 		$	171,013 		
	Lexington (see page 110 for details)				n/a			- 			75,542 		
	LNR (see page 113 for details)				n/a			- 			224,724 		
	India real estate ventures				4.1%-36.5%			88,467 			95,516 		
	Partially owned office buildings (1)				Various			621,294 			446,933 		
	Other investments (2)				Various			288,897 			212,528 		
											$	1,166,443 		$	1,226,256 		
______________________________________________________												
												
(1)		Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue and others.	
(2)		Includes interests in Independence Plaza, Monmouth Mall, 85 10th Avenue, Fashion Center Mall, 50-70 West 93rd Street and others.	
 
						Percentage							
(Amounts in thousands)	Ownership at		For the Year Ended December 31,		
Our Share of Net Income (Loss):	December 31, 2013		2013 		2012 		2011 		
	Toys:										 			
		Equity in net (loss) income		32.6%		$	(128,919)		$	45,267 		$	39,592 		
		Non-cash impairment losses (see page 111 for details)					(240,757)			(40,000)			- 		
		Management fees					7,299 			9,592 			8,948 		
									$	(362,377)		$	14,859 		$	48,540 		
																		
	Alexander's:													
		Equity in net income		32.4%		$	17,721 		$	24,709 		$	25,013 		
		Management, leasing and development fees					6,681 			13,748 			7,417 		
		Gain on sale of real estate					- 			179,934 			- 		
										24,402 			218,391 			32,430 		
																		
	Lexington (see page 110 for details):													
		Equity in net loss		n/a			(979)			(23)			(1,409)		
		Net gain resulting from Lexington's stock issuance and asset acquisition					- 			28,763 			9,760 		
										(979)			28,740 			8,351 		
																		
	LNR (see page 113 for details):													
		Equity in net income		n/a			42,186  			66,270 			31,409 		
		Impairment loss					( 27,231 )			- 			- 		
		Net gain on sale					3,776  			
- 			
- 		
		Income tax benefit, assets sales and tax settlement gains					- 			- 			27,377 		
										18,731 			66,270 			58,786 	 	
																		
	India real estate ventures:													
		Equity in net loss		4.1%-36.5%			(3,533)			(5,008)			(1,087)		
		Impairment loss					- 			- 			(13,794)		
										(3,533)			(5,008)			(14,881)		
																		
	Partially owned office buildings (1)		Various			(4,212)			(3,770)			(22,270)		
																		
	Other investments (2)		Various			(10,817)			103,644 			7,656 		
																		
									$	23,592 		$	408,267 		$	70,072 		
______________________________________________________													
																		
(1)			Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue and others.	
(2)			Includes interests in Independence Plaza, Monmouth Mall, 85 10th Avenue, Fashion Center Mall, 50-70 West 93rd Street and others.	
115

 
  
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6.    Investments in Partially Owned Entities - continued

		Below is a summary of the debt of our partially owned entities as of December 31, 2013 and 2012, none of which is recourse to us.	
														
			Percentage				Interest			
			Ownership at				Rate at		100% Partially Owned Entities’	
(Amounts in thousands)	December 31,				December 31,		Debt at December 31,	
	2013 		Maturity		2013 		2013 		2012 	
Toys:										 		
	Notes, loans and mortgages payable	32.6%		2014-2021		6.56%		$	5,702,247 		$	5,683,733 	
													
Alexander's:												
	Mortgages payable	32.4%		2014-2018		3.83%		$	1,049,959 		$	1,065,916 	
													
Lexington (see page 110 for details):												
	Mortgages payable	n/a		n/a		n/a		$	- 		$	1,994,179 	
													
LNR (see page 113 for details):												
	Mortgages payable	n/a		n/a		n/a		$	- 		$	309,787 	
	Liabilities of consolidated CMBS and CDO trusts			n/a		n/a			- 			97,211,734 	
									$	- 		$	97,521,521 	
														
Partially owned office buildings (1) :												
	Mortgages payable	Various		2014-2023		5.74%		$	3,622,759 		$	2,731,893 	
														
India Real Estate Ventures:												
	TCG Urban Infrastructure Holdings mortgages												
		payable	25.0%		2014-2022		13.50%		$	199,021 		$	236,579 	
														
Other (2) :												
	Mortgages payable	Various		2014-2023		4.56%		$	1,709,509 		$	1,150,543 	

(1) 	Includes 666 Fifth Avenue (Office), 650 Madison Avenue, 280 Park Avenue, One Park Avenue, 330 Madison Avenue and others.	
(2) 	Includes Independence Plaza, Monmouth Mall, Fashion Center Mall, 50-70 West 93rd Street and others.	
 
Based on our ownership interest in the partially owned entities above, our pro rata share of the debt of these partially owned entities, was $4,189,403,000 and $29,443,128,000 as of December 31, 2013 and 2012, respectively.  Excluding our pro rata share of LNR’s liabilities related to consolidated CMBS and CDO trusts, which are non-recourse to LNR and its equity holders, including us, our pro rata share of partially owned entities debt was $3,998,929,000 at December 31, 2012.
 
7.    Mortgage and Mezzanine Loans Receivable
 
In October 2012, we acquired a 25% participation in a $475,000,000 first mortgage and mezzanine loan for the acquisition and redevelopment of a 10-story retail building at 701 Seventh Avenue in Times Square.  The loan had an interest rate of LIBOR plus 10.2%, with a LIBOR floor of 1.0%.  Of the $475,000,000, we funded $93,750,000, representing our 25% share of the $375,000,000 that was funded at acquisition.  In March 2013, we transferred at par, the 25% participation in the mortgage loan.  The transfer did not qualify for sale accounting given our continuing interest in the mezzanine loan.  Accordingly, we continue to include the 25% participation in the mortgage loan in “Mortgage and Mezzanine Loans Receivable” and have recorded a $59,375,000 liability in “Other Liabilities” on our consolidated balance sheet.  On January 14, 2014, the mezzanine loan was repaid. 
 
On April 17, 2013, a $50,091,000 mezzanine loan that was scheduled to mature in August 2015, was repaid. In connection therewith, we received net proceeds of $55,358,000, including prepayment penalties, which resulted in income of $5,267,000, which is included in “interest and other investment (loss) income” on our consolidated statement of income.
 
As of December 31, 2013 and 2012, the carrying amount of mortgage and mezzanine loans receivable was $170,972,000 and $225,359,000, respectively.  These loans have a weighted average interest rate of 11.0% and 10.3% at December 31, 2013 and 2012, respectively and have maturities ranging from August 2014 to May 2016.
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8.    Discontinued Operations
 
        In accordance with the provisions of ASC 360, Property, Plant, and Equipment , we have reclassified the revenues and expenses of all the properties discussed below to “income from discontinued operations” and the related assets and liabilities to “assets related to discontinued operations” and “liabilities related to discontinued operations” for all of the periods presented in the accompanying financial statements.  The net gains resulting from the sale of these properties are included in “income from discontinued operations” on our consolidated statements of income.
 
2013 Activity : 
 
Retail Properties
 
On January 24, 2013, we sold the Green Acres Mall located in Valley Stream, New York, for $500,000,000. The sale resulted in net proceeds of $185,000,000 after repaying the existing loan and closing costs, and a net gain of $202,275,000.
 
On April 15, 2013, we sold The Plant, a power strip shopping center in San Jose, California, for $203,000,000. The sale resulted in net proceeds of $98,000,000 after repaying the existing loan and closing costs, and a net gain of $32,169,000.
 
On April 15, 2013, we sold a retail property in Philadelphia, which is a part of the Gallery at Market Street, for $60,000,000. The sale resulted in net proceeds of $58,000,000, and a net gain of $33,058,000.
 
On September 23, 2013, we sold a retail property in Tampa, Florida for $45,000,000, of which our 75% share was $33,750,000. Our share of the net proceeds after repaying the existing loan and closing costs were $20,810,000, and our share of the net gain was $8,728,000.
 
In addition to the above, during 2013, we sold 12 other properties, in separate transactions, for an aggregate of $82,300,000, in cash, which resulted in a net gain aggregating $7,851,000.
 
New York
 
On December 17, 2013, we sold 866 United Nations Plaza, a 360,000 square foot office building in Manhattan for $200,000,000.  The sale resulted in net proceeds of $146,439,000 after repaying the existing loan and closing costs, and a net gain of $127,512,000.

2012 Activity : 
 
Merchandise Mart
 
On January 6, 2012, we sold the 350 West Mart Center, a 1.2 million square foot office building in Chicago, Illinois, for $228,000,000, which resulted in a net gain of $54,911,000.
 
On June 22, 2012, we sold the L.A. Mart, a 784,000 square foot showroom building in Los Angeles, California, for $53,000,000, of which $18,000,000 was cash and $35,000,000 was nine-month seller financing at 6.0%, which was paid on December 28, 2012.
 
On July 26, 2012, we sold the Washington Design Center, a 393,000 square foot showroom building in Washington, DC and the Canadian Trade Shows, for an aggregate of $103,000,000.  The sale of the Canadian Trade Shows resulted in an after-tax net gain of $19,657,000.
 
On December 31, 2012, we sold the Boston Design Center, a 554,000 square foot showroom building in Boston, Massachusetts, for $72,400,000, which resulted in a net gain of $5,252,000.
 
Washington, DC
 
On July 26, 2012, we sold 409 Third Street S.W., a 409,000 square foot office building in Washington, DC, for $200,000,000, which resulted in a net gain of $126,621,000.  This building is contiguous to the Washington Design Center and was sold to the same purchaser.
 
On November 7, 2012, we sold three office buildings (“Reston Executive”) located in suburban Fairfax County, Virginia, containing 494,000 square feet for $126,250,000, which resulted in a net gain of $36,746,000.
117

 
  
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8.    Discontinued Operations - continued

Retail Properties
 
In 2012, we sold 12 other properties in separate transactions, for an aggregate of $157,000,000, which resulted in a net gain aggregating $22,266,000.

2011 Activity : 
 
During 2011, we completed the disposition of the High Point Complex in North Carolina, which resulted in an $83,907,000 net gain on extinguishment of debt and sold three other retail properties and two Washington, DC office buildings for an aggregate of $168,000,000 in cash, which resulted in a net gain aggregating $51,623,000.
 
The tables below set forth the assets and liabilities related to discontinued operations at December 31, 2013 and 2012, and their combined results of operations for the years ended December 31, 2013, 2012 and 2011.
    
				Assets Related to		Liabilities Related to		
	(Amounts in thousands)		Discontinued Operations as of		Discontinued Operations as of		
				December 31,		December 31,		
				2013 		2012 		2013 		2012 		
	Retail		$	- 		$	580,415 		$	- 		$	442,293 		
	New York			- 			65,418 			- 			44,978 		
	Other			- 			25,740 			- 			- 		
	Total		$	- 		$	671,573 		$	- 		$	487,271 		
																
	(Amounts in thousands)		For the Year Ended December 31,		
			2013 		2012 		2011 		
	Total revenues		$	38,043 		$	177,629 		$	260,343 		
	Total expenses			23,305 			120,393 			201,633 		
				14,738 			57,236 			58,710 		
	Net gains on sale of real estate			414,502 			245,799 			51,623 		
	Impairment losses			(4,727)			(30,339)			(28,799)		
	Gain on sale of Canadian Trade Shows, net of $11,448 of income taxes			- 			19,657 			- 		
	Net gain on extinguishment of High Point debt			- 			- 			83,907 		
	Income from discontinued operations		$	424,513 		$	292,353 		$	165,441 		
118

 
  
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9.    Identified Intangible Assets and Liabilities
The following summarizes our identified intangible assets (primarily acquired above-market leases) and liabilities (primarily acquired below-market leases) as of December 31, 2013 and 2012.
 
		Balance as of December 31,		
	(Amounts in thousands)	2013 		2012 		
	Identified intangible assets:							
	Gross amount	$	605,915 		$	767,365 		
	Accumulated amortization		(282,593)			(352,035)		
	Net	$	323,322 		$	415,330 		
	Identified intangible liabilities (included in deferred revenue):							
	Gross amount	$	892,487 		$	902,525 		
	Accumulated amortization		(382,002)			(341,536)		
	Net	$	510,485 		$	560,989 		
 
Amortization of acquired below-market leases, net of acquired above-market leases resulted in an increase to rental income of $52,861,000, $54,215,000 and $61,869,000 for the years ended December 31, 2013, 2012 and 2011, respectively.  Estimated annual amortization of acquired below-market leases, net of acquired above-market leases for each of the five succeeding years commencing January 1, 2014 is as follows:
 
	(Amounts in thousands)				
	2014 	$	45,588 		
	2015 		42,095 		
	2016 		40,489 		
	2017 		35,173 		
	2018 		33,408 		
 
Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was $64,330,000, $49,597,000 and $52,632,000 for the years ended December 31, 2013, 2012 and 2011, respectively.  Estimated annual amortization of all other identified intangible assets including acquired in-place leases, customer relationships, and third party contracts for each of the five succeeding years commencing January 1, 2014 is as follows:
 
	(Amounts in thousands)				
	2014 	$	29,238 		
	2015 		23,869 		
	2016 		20,689 		
	2017 		17,260 		
	2018 		12,860 		
 
We are a tenant under ground leases at certain properties.  Amortization of these acquired below-market leases, net of above-market leases resulted in an increase to rent expense of $4,357,000, $1,328,000 and $993,000 for the years ended December 31, 2013, 2012 and 2011, respectively.  Estimated annual amortization of these below-market leases, net of above-market leases for each of the five succeeding years commencing January 1, 2014 is as follows:
 
	(Amounts in thousands)				
	2014 	$	3,430 		
	2015 		3,430 		
	2016 		3,430 		
	2017 		3,430 		
	2018 		3,430 		
119

 
  
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10.    Debt

Mortgages Payable
 
On February 20, 2013, we completed a $390,000,000 financing of the retail condominium located at 666 Fifth Avenue at 53 rd Street, which we had acquired December 2012. The 10-year fixed-rate interest only loan bears interest at 3.61%. This property was previously unencumbered. The net proceeds from this financing were approximately $387,000,000.
 
On March 25, 2013, we completed a $300,000,000 financing of the Outlets at Bergen Town Center, a 948,000 square foot shopping center located in Paramus, New Jersey. The 10-year fixed-rate interest only loan bears interest at 3.56%. The property was previously encumbered by a $282,312,000 floating-rate loan.
 
On May 13, 2013, we notified the lender that due to tenants vacating the Montehiedra Town Center, its operating cash flow will be insufficient to pay the debt service; accordingly, at our request, the mortgage loan was transferred to the special servicer. We are in discussions with the special servicer to restructure the terms of the loan; there can be no assurance as to the timing and ultimate resolution of these discussions.
 
On October 30, 2013, we completed the restructuring of the $678,000,000 (face amount) 5.74% Skyline properties mortgage loan. The loan was separated into two tranches; a senior $350,000,000 position and a junior $328,000,000 position. The maturity date has been extended from February 2017 to February 2022, with a one-year extension option. The effective interest rate is 2.965%. Amounts expended to re-lease the property are senior to the $328,000,000 junior position.
 
On November 27, 2013, we completed a $450,000,000 refinancing of Eleven Penn Plaza, a 1.1 million square foot Manhattan office building.  The seven-year fixed-rate interest only loan bears interest at 3.95%. The net proceeds from this refinancing were approximately $107,000,000 after repaying the existing loan and closing costs.

Unsecured Revolving Credit Facility
 
On March 28, 2013, we extended one of our two $1.25 billion revolving credit facilities from June 2015 to June 2017, with two six-month extension options. The interest on the extended facility was reduced from LIBOR plus 135 basis points to LIBOR plus 115 basis points. In addition, the facility fee was reduced from 30 basis points to 20 basis points.
  
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
10.    Debt - continued

The following is a summary of our debt:
 
						Interest Rate at			Balance at December 31,		
	(Amounts in thousands)	December 31, 2013			2013 			2012 		
	Mortgages Payable:	 									
		Fixed rate		4.56%		$	7,563,133 		$ 	6,771,001 		
		Variable rate		2.28%			768,860 			1,828,221 		
							4.35%		$	8,331,993 		$ 	8,599,222 		
															
	Unsecured Debt:										
		Senior unsecured notes		5.69%		$	1,350,855 		$ 	1,358,008 		
		Unsecured revolving credit facilities		1.32%			295,870 			1,170,000 		
							4.90%		$	1,646,725 		$ 	2,528,008 		

        The net carrying amount of properties collateralizing the mortgages payable amounted to $9.3 billion at December 31, 2013.  As of December 31, 2013, the principal repayments required for the next five years and thereafter are as follows:
 
							Senior Unsecured			
							Debt and			
	(Amounts in thousands)						Revolving Credit			
	Year Ending December 31,			Mortgages Payable			Facilities			
	2014 		$	189,953 		$	- 			
	2015 			584,358 			500,000 			
	2016 			1,556,375 			- 			
	2017 			630,548 			- 			
	2018 			744,472 			295,870 			
	Thereafter			4,625,224 			852,500 			
 
We may refinance our maturing debt as it comes due or choose to repay it.
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11.    Redeemable Noncontrolling Interests
 
Redeemable noncontrolling interests on our consolidated balance sheets are primarily comprised of Class A Operating Partnership units held by third parties and  are recorded at the greater of their carrying amount or redemption value at the end of each reporting period.  Changes in the value from period to period are charged to “additional capital” in our consolidated statements of changes in equity.  Class A units may be tendered for redemption to the Operating Partnership for cash; we, at our option, may assume that obligation and pay the holder either cash or Vornado common shares on a one-for-one basis.  Because the number of Vornado common shares outstanding at all times equals the number of Class A units owned by Vornado, the redemption value of each Class A unit is equivalent to the market value of one Vornado common share, and the quarterly distribution to a Class A unitholder is equal to the quarterly dividend paid to a Vornado common shareholder. 
 
Below are the details of redeemable noncontrolling interests as of December 31, 2013 and 2012.
																		
(Amounts in thousands, except units and															Preferred or	
per unit amounts)		Balance as of		Units Outstanding at		Per Unit		Annual	
			December 31,		December 31,		Liquidation		Distribution	
Unit Series		2013 			2012 		2013 		2012 		Preference		Rate	
Common:																	
	Class A		$	1,002,620 		$	898,152 		11,292,038 		11,215,682 			n/a 		$	2.92 	
																		
Perpetual Preferred: (1)																	
	5.00% D-16 Cumulative Redeemable		$	1,000 		$	1,000 		1 		1 		$	1,000,000.00 		$	50,000.00 	
	6.875% D-15 Cumulative Redeemable (2)			- 			45,000 		- 		1,800,000 		$	n/a 		$	n/a 	
			$	1,000 		$	46,000 		1 		1,800,001 							
																		
(1)	Holders may tender units for redemption to the Operating Partnership for cash at their stated redemption amount; we, at our option, may assume that obligation and pay the holders either cash or Vornado preferred shares on a one-for-one basis. These units are redeemable at our option at any time.	
(2)	On May 9, 2013, we redeemed all of the outstanding 6.875% Series D-15 Cumulative Redeemable Preferred units with an aggregate face amount of $45,000 for $36,900 in cash, plus accrued and unpaid distributions through the date of redemption.	
 
Below is a table summarizing the activity of redeemable noncontrolling interests.	
					
	(Amounts in thousands)				
	Balance at December 31, 2011	$	1,160,677 		
	Net income		45,263 		
	Other comprehensive loss		(6,707)		
	Distributions		(54,315)		
	Redemption of Class A units for common shares, at redemption value		(89,762)		
	Adjustment to carry redeemable Class A units at redemption value		52,117 		
	Redemption of Series D-10 and Series D-14 redeemable units		(168,300)		
	Other, net		5,179 		
	Balance at December 31, 2012		944,152 		
	Net income		24,817 		
	Other comprehensive income		5,296 		
	Distributions		(34,053)		
	Redemption of Class A units for common shares, at redemption value		(25,317)		
	Adjustment to carry redeemable Class A units at redemption value		108,252 		
	Redemption of Series D-15 redeemable units		(36,900)		
	Other, net		17,373 		
	Balance at December 31, 2013	$	1,003,620 		
 
Redeemable noncontrolling interests exclude our Series G Convertible Preferred units and Series D-13 Cumulative Redeemable Preferred units, as they are accounted for as liabilities in accordance with ASC 480, Distinguishing Liabilities and Equity , because of their possible settlement by issuing a variable number of Vornado common shares.  Accordingly, the fair value of these units is included as a component of “other liabilities” on our consolidated balance sheets and aggregated $55,097,000 and $55,011,000 as of December 31, 2013 and 2012, respectively. 
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12.    Shareholders’ Equity
 
Common Shares
 
As of December 31, 2013, there were 187,284,688 common shares outstanding.  During 2013, we paid an aggregate of $545,913,000 of common dividends comprised of quarterly common dividends of $0.73 per share.
 
Preferred Shares
 
On January 25, 2013, we sold 12,000,000 5.40% Series L Cumulative Redeemable Preferred Shares at a price of $25.00 per share in an underwritten public offering pursuant to an effective registration statement.  We retained aggregate net proceeds of $290,306,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 12,000,000 Series L Preferred Units (with economic terms that mirror those of the Series L Preferred Shares).  Dividends on the Series L Preferred Shares are cumulative and payable quarterly in arrears.  The Series L Preferred Shares are not convertible into, or exchangeable for, any of our properties or securities.  On or after five years from the date of issuance (or sooner under limited circumstances), we may redeem the Series L Preferred Shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption. The Series L Preferred Shares have no maturity date and will remain outstanding indefinitely unless redeemed by us.
 
On February 19, 2013, we redeemed all of the outstanding 6.75% Series F Cumulative Redeemable Preferred Shares and 6.75% Series H Cumulative Redeemable Preferred Shares at par, for an aggregate of $262,500,000 in cash, plus accrued and unpaid dividends through the date of redemption.
 
The following table sets forth the details of our preferred shares of beneficial interest as of December 31, 2013 and 2012.
 
(Amounts in thousands, except share and		Balance as of		Shares Outstanding at		Per Share		Annual	
per share amounts)		December 31,		December 31,		Liquidation		Dividend	
Preferred Shares		2013 		2012 		2013 		2012 		Preference		Rate (1)	
Convertible Preferred:																	
	6.5% Series A: authorized 83,977 shares (2)		$	1,592 		$	1,682 		32,807 		34,609 		$	50.00 		$	3.25 	
Cumulative Redeemable:																	
	6.625% Series G: authorized 8,000,000 shares (3)			193,135 			193,135 		8,000,000 		8,000,000 		$	25.00 		$	1.65625 	
	6.625% Series I: authorized 10,800,000 shares (3)			262,379 			262,379 		10,800,000 		10,800,000 		$	25.00 		$	1.65625 	
	6.875% Series J: authorized 9,850,000 shares (3)			238,842 			238,842 		9,850,000 		9,850,000 		$	25.00 		$	1.71875 	
	5.70% Series K: authorized 12,000,000 shares (3)			290,971 			290,971 		12,000,000 		12,000,000 		$	25.00 		$	1.425 	
	5.40% Series L: authorized 12,000,000 shares (3)			290,306 			- 		12,000,000 		- 		$	25.00 		$	1.35 	
	6.75% Series F: authorized 6,000,000 shares			- 			144,720 		- 		6,000,000 		$	25.00 		$	1.6875 	
	6.75% Series H: authorized 4,500,000 shares			- 			108,549 		- 		4,500,000 		$	25.00 		$	1.6875 	
			$	1,277,225 		$	1,240,278 		52,682,807 		51,184,609 							

(1)	Dividends on preferred shares are cumulative and are payable quarterly in arrears.	
																		
(2)	Redeemable at our option under certain circumstances, at a redemption price of 1.4334 common shares per Series A Preferred Share plus accrued and unpaid dividends through the date of redemption, or convertible at anytime at the option of the holder for 1.4334 common shares per Series A Preferred Share.	
																		
(3)	Redeemable at our option at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption.	

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
12.    Shareholders’ Equity – continued
 
Accumulated Other Comprehensive Income (Loss)

The following tables set forth the changes in accumulated comprehensive income (loss) by component.
 
				For the Year Ended December 31, 2013	
						Securities		Pro rata share of		Interest			
						available-		nonconsolidated		rate			
(Amounts in thousands)		Total		for-sale		subsidiaries' OCI		swap		Other	
Balance as of December 31, 2012		$	(18,946)		$	19,432 		$	11,313 		$	(50,065)		$	374 	
	OCI before reclassifications			132,887 			142,281 			(22,814)			18,183 			(4,763)	
	Amounts reclassified from AOCI			(42,404)			(42,404)	(1)		- 			- 			- 	
Net current period OCI			90,483 			99,877 			(22,814)			18,183 			(4,763)	
Balance as of December 31, 2013		$	71,537 		$	119,309 		$	(11,501)		$	(31,882)		$	(4,389)	

(1)	Reclassified to "net gain on disposition of wholly owned and partially owned assets" on our consolidated statements of income.	

13.    Variable Interest Entities (“VIEs”)
 
Consolidated VIEs
 
The entity that owns Independence Plaza was a consolidated VIE at December 31, 2012.  On June 7, 2013, we sold a portion of our economic interest in this entity and determined that we are no longer its primary beneficiary.  Accordingly, we deconsolidated this VIE (see Note 6 – Investments in Partially Owned Entities ).  The table below summarizes the assets and liabilities of the VIE at December 31, 2012.  The liabilities were secured only by the assets of the VIE, and were non-recourse to us.
 
				As of December 31,			
	(Amounts in thousands)	2012 			
	Total assets	$	957,730 			
							
	Total liabilities	$	443,894 			
							
	Noncontrolling interest	$	193,933 			
 
Unconsolidated VIEs
 
At December 31, 2013, we have unconsolidated VIEs comprised of our investments in the entities that own the Warner Building and Independence Plaza.  We do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities does not give us power over decisions that significantly affect these entities’ economic performance.  We account for our investment in these entities under the equity method (see Note 6 – Investments in Partially Owned Entities ).  As of December 31, 2013, the net carrying amount of our investment in these entities was $152,929,000, and our maximum exposure to loss in these entities, is limited to our investment.  At December 31, 2012, we had one unconsolidated VIE, comprised of our investment in the Warner Building which had a carrying amount of $8,775,000. 
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14.  Fair Value Measurements

ASC 820, Fair Value Measurement and Disclosures defines fair value and establishes a framework for measuring fair value.  The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price).   ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value.  Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities.  Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets.   
 
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
 
Financial assets and liabilities that are measured at fair value on our consolidated balance sheets consist of (i) marketable securities, (ii) Real Estate Fund investments, (iii) the assets in our deferred compensation plan (for which there is a corresponding liability on our consolidated balance sheet), (iv) interest rate swaps and (v) mandatorily redeemable instruments (Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units).  The tables below aggregate the fair values of these financial assets and liabilities by their levels in the fair value hierarchy at December 31, 2013 and 2012, respectively. 
 
			As of December 31, 2013	
(Amounts in thousands)	Total		Level 1		Level 2 		Level 3	
	Marketable securities	$ 	191,917 		$ 	191,917 		$ 	- 		$ 	- 	
	Real Estate Fund investments (75% of which is attributable to												
		noncontrolling interests)		667,710 			- 			- 			667,710 	
	Deferred compensation plan assets (included in other assets)		116,515 			47,733 			- 			68,782 	
		Total assets	$ 	976,142 		$ 	239,650 		$ 	- 		$ 	736,492 	
														
	Mandatorily redeemable instruments (included in other liabilities)	$ 	55,097 		$ 	55,097 		$ 	- 		$ 	- 	
	Interest rate swap (included in other liabilities)		31,882 			- 			31,882 			- 	
		Total liabilities	$ 	86,979 		$ 	55,097 		$ 	31,882 		$ 	- 	

			As of December 31, 2012 	
(Amounts in thousands)	Total 		Level 1 		Level 2 		Level 3 	
	Marketable securities	$ 	398,188 		$ 	398,188 		$ 	- 		$ 	- 	
	Real Estate Fund investments (75% of which is attributable to												
		noncontrolling interests)		600,786 			- 			- 			600,786 	
	Deferred compensation plan assets (included in other assets)		105,200 			42,569 			- 			62,631 	
	J.C. Penney derivative position (included in other assets) (1)		11,165 			- 			11,165 			- 	
		Total assets	$ 	1,115,339 		$ 	440,757 		$ 	11,165 		$ 	663,417 	
														
	Mandatorily redeemable instruments (included in other liabilities)	$ 	55,011 		$ 	55,011 		$ 	- 		$ 	- 	
	Interest rate swap (included in other liabilities)		50,065 			- 			50,065 			- 	
		Total liabilities	$ 	105,076 		$ 	55,011 		$ 	50,065 		$ 	- 	

(1)	Represents the cash deposited with the counterparty in excess of the mark-to-market loss on the derivative position.	
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
14.  Fair Value Measurements - continued

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued
 
Real Estate Fund Investments
 
At December 31, 2013, our Real Estate Fund had nine investments with an aggregate fair value of $667,710,000, or $153,413,000 in excess of cost.  These investments are classified as Level 3.  We use a discounted cash flow valuation technique to estimate the fair value of each of these investments, which is updated quarterly by personnel responsible for the management of each investment and reviewed by senior management at each reporting period.  The discounted cash flow valuation technique requires us to estimate cash flows for each investment over the anticipated holding period, which currently ranges from 0.6 to 6.5 years.  Cash flows are derived from property rental revenue (base rents plus reimbursements) less operating expenses, real estate taxes and capital and other costs, plus projected sales proceeds in the year of exit.  Property rental revenue is based on leases currently in place and our estimates for future leasing activity, which are based on current market rents for similar space plus a projected growth factor.  Similarly, estimated operating expenses and real estate taxes are based on amounts incurred in the current period plus a projected growth factor for future periods.  Anticipated sales proceeds at the end of an investment’s expected holding period are determined based on the net cash flow of the investment in the year of exit, divided by a terminal capitalization rate, less estimated selling costs. 
 
The fair value of each property is calculated by discounting the future cash flows (including the projected sales proceeds), using an appropriate discount rate and then reduced by the property’s outstanding debt, if any, to determine the fair value of the equity in each investment. Significant unobservable quantitative inputs used in determining the fair value of each investment include capitalization rates and discount rates.  These rates are based on the location, type and nature of each property, and current and anticipated market conditions, which are derived from original underwriting assumptions, industry publications and from the experience of our Acquisitions and Capital Markets departments.  Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of these Fund investments at December 31, 2013.    

						 		Weighted Average		
								(based on fair		
	Unobservable Quantitative Input		Range		value of investments)		
		Discount rates		12.0% to 17.5%		13.9%		
		Terminal capitalization rates		5.0% to 6.0%		5.5%		
 
The above inputs are subject to change based on changes in economic and market conditions and/or changes in use or timing of exit.  Changes in discount rates and terminal capitalization rates result in increases or decreases in the fair values of these investments.  The discount rates encompass, among other things, uncertainties in the valuation models with respect to terminal capitalization rates and the amount and timing of cash flows.  Therefore, a change in the fair value of these investments resulting from a change in the terminal capitalization rate, may be partially offset by a change in the discount rate.  It is not possible for us to predict the effect of future economic or market conditions on our estimated fair values.
 
The table below summarizes the changes in the fair value of Fund investments that are classified as Level 3, for the years ended December 31, 2013 and 2012.
 
				Real Estate Fund Investments			
				For The Year Ended December 31,			
	(Amounts in thousands)		2013 		2012 			
	Beginning balance		$	600,786 		$	346,650 			
	Purchases			43,816 			262,251 			
	Sales/Returns			(70,848)			(63,762)			
	Net realized gains			8,184 			- 			
	Net unrealized gains			85,771 			55,361 			
	Other, net			1 			286 			
	Ending balance		$	667,710 		$	600,786 			
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
14.  Fair Value Measurements - continued

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued
 
Deferred Compensation Plan Assets
 
Deferred compensation plan assets that are classified as Level 3 consist of investments in limited partnerships and investment funds, which are managed by third parties.  We receive quarterly financial reports from a third-party administrator, which are compiled from the quarterly reports provided to them from each limited partnership and investment fund.  The quarterly reports provide net asset values on a fair value basis which are audited by independent public accounting firms on an annual basis.  The third-party administrator does not adjust these values in determining our share of the net assets and we do not adjust these values when reported in our consolidated financial statements.
 
The table below summarizes the changes in the fair value of Deferred Compensation Plan Assets that are classified as Level 3, for the years ended December 31, 2013 and 2012.
 
				Deferred Compensation Plan Assets			
				For The Year Ended December 31,			
	(Amounts in thousands)		2013 		2012 			
	Beginning balance		$	62,631 		$	56,221 			
	Purchases			5,018 			9,951 			
	Sales			(7,306)			(8,367)			
	Realized and unrealized gains			7,189 			4,703 			
	Other, net			1,250 			123 			
	Ending balance		$	68,782 		$	62,631 			

Fair Value Measurements on a Nonrecurring Basis
 
Assets measured at fair value on a nonrecurring basis on our consolidated balance sheets consist primarily of our investment in Toys and real estate assets that have been written-down to estimated fair value during 2013 and 2012.  See Note 2 – Basis of Presentation and Significant Accounting Policies for details of impairment losses recognized during 2013 and 2012.  See Note 6 – Investment in Partially Owned Entities for details of impairment losses related to Toys.  The fair values of these assets are determined using widely accepted valuation techniques, including (i) discounted cash flow analysis, which considers, among other things, leasing assumptions, growth rates, discount rates and terminal capitalization rates, (ii) income capitalization approach, which considers prevailing market capitalization rates, and (iii) comparable sales activity.  Generally, we consider multiple valuation techniques when measuring fair values but in certain circumstances, a single valuation technique may be appropriate.  The tables below aggregate the fair values of these assets by their levels in the fair value hierarchy.
 
				As of December 31, 2013		
	(Amounts in thousands)	Total		Level 1		Level 2 		Level 3		
		Real estate assets	$	354,341 		$	- 		$	- 		$	354,341 		
		Investment in Toys		83,224 			- 			- 			83,224 		
			Total assets	$	437,565 		$	- 		$	- 		$	437,565 		
																
				As of December 31, 2012		
	(Amounts in thousands)	Total		Level 1		Level 2 		Level 3		
		Investment in Toys	$	478,041 		$	- 		$	- 		$	478,041 		
		Real estate assets		189,529 			- 			- 			189,529 		
		Condominium units (included in other assets)		52,142 			- 			- 			52,142 		
			Total assets	$	719,712 		$	- 		$	- 		$	719,712 		
																
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
14.  Fair Value Measurements – continued

Financial Assets and Liabilities not Measured at Fair Value
 
 Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash equivalents (primarily U.S. Treasury Bills), mortgage and mezzanine loans receivable and our secured and unsecured debt.  Estimates of the fair value of these instruments are determined by the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate, which is provided by a third-party specialist.  For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash flows we would be required to make under the instrument.  The fair value of cash equivalents is classified as Level 1 and the fair value of our mortgage and mezzanine loans receivable is classified as Level 3.  The fair value of our secured and unsecured debt is classified as Level 2.  The table below summarizes the carrying amounts and fair value of these financial instruments as of December 31, 2013 and 2012.
 
				As of December 31, 2013		As of December 31, 2012		
				Carrying		Fair		Carrying		Fair		
	(Amounts in thousands)	Amount		Value		Amount		Value		
			Cash equivalents	$	295,000 		$	295,000 		$	543,000 		$	543,000 		
			Mortgage and mezzanine loans receivable		170,972 			170,959 			225,359 			221,446 		
				$	465,972 		$	465,959 		$	768,359 		$	764,446 		
		Debt:													
			Mortgages payable	$	8,331,993 		$	8,104,000 		$	8,599,222 		$	8,631,000 		
			Senior unsecured notes		1,350,855 			1,402,000 			1,358,008 			1,468,000 		
			Revolving credit facility debt		295,870 			296,000 			1,170,000 			1,170,000 		
				$	9,978,718 		$	9,802,000 		$	11,127,230 		$	11,269,000 		
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
15.    Stock-based Compensation

Our Omnibus Share Plan (the “Plan”), which was approved in May 2010, provides the Compensation Committee of the Board (the “Committee”) the ability to grant incentive and non-qualified stock options, restricted stock, restricted Operating Partnership units and out-performance plan awards to certain of our employees and officers.  Under the Plan, awards may be granted up to a maximum of 6,000,000 shares, if all awards granted are Full Value Awards, as defined, and up to 12,000,000 shares, if all of the awards granted are Not Full Value Awards, as defined, plus shares in respect of awards forfeited after May 2010 that were issued pursuant to our 2002 Omnibus Share Plan.  Full Value Awards are awards of securities, such as restricted shares, that, if all vesting requirements are met, do not require the payment of an exercise price or strike price to acquire the securities.  Not Full Value Awards are awards of securities, such as options, that do require the payment of an exercise price or strike price.  This means, for example, if the Committee were to award only restricted shares, it could award up to 6,000,000 restricted shares.  On the other hand, if the Committee were to award only stock options, it could award options to purchase up to 12,000,000 shares (at the applicable exercise price).  The Committee may also issue any combination of awards under the Plan, with reductions in availability of future awards made in accordance with the above limitations.  As of December 31, 2013, we have approximately 4,672,000 shares available for future grants under the Plan, if all awards granted are Full Value Awards, as defined.
 
In the years ended December 31, 2013, 2012 and 2011, we recognized an aggregate of $34,914,000, $30,588,000 and $28,853,000, respectively, of stock-based compensation expense, which is included as a component of “general and administrative” expenses on our consolidated statements of income.  The details of the various components of our stock-based compensation are discussed below.

Out-Performance Plans (“OPP Units”)
 
On March 30, 2012 and March 15, 2013, the Committee approved the 2012 and 2013 Out-Performance Plans (the “OPPs”), respectively.  The OPPs are multi-year, performance-based equity compensation plans under which participants, including our Chairman and Chief Executive Officer, have the opportunity to earn compensation payable in the form of equity awards if, and only if, we outperform a predetermined total shareholder return (“TSR”) and/or outperform the market with respect to a relative TSR in any year during the requisite performance periods as described below.   The aggregate notional amount of each of the OPPs is $40,000,000. 
 
Awards under the 2012 OPP may be earned if we (i) achieve a TSR level greater than 7% per annum, or 21% over the three-year performance period (the “Absolute Component”), and/or (ii) achieve a TSR above that of the SNL US REIT Index (the “Index”) over a one-year, two-year or three-year performance period (the “Relative Component”).  Awards under the 2013 OPP may be earned if we (i) achieve a TSR greater than 14% over the two-year performance measurement period, or 21% over the three-year performance measurement period (the “Absolute Component”), and/or (ii) achieve a TSR above that of the Index over a two-year or three-year performance measurement period (the “Relative Component”).  To the extent awards would be earned under the Absolute Component of each of the OPPs, but we underperform the Index, such awards would be reduced (and potentially fully negated) based on the degree to which we underperform the Index.  In certain circumstances, in the event we outperform the Index but awards would not otherwise be fully earned under the Absolute Component, awards may still be earned or increased under the Relative Component.  To the extent awards would otherwise be earned under the Relative Component but we fail to achieve at least a 6% per annum absolute TSR, such awards earned under the Relative Component would be reduced based on our absolute TSR, with no awards being earned in the event our TSR during the applicable measurement period is 0% or negative, irrespective of the degree to which we may outperform the Index.  Dividends on awards issued accrue during the performance period. 
 
If the designated performance objectives are achieved, OPP Units are subject to time-based vesting requirements. Awards earned under the OPPs vest 33% in year three, 33% in year four and 34% in year five.  Our executive officers (for the purposes of Section 16 of the Exchange Act) are required to hold earned 2013 OPP awards for one year following vesting. 
 
The fair value of the 2012 and 2013 OPPs on the date of grant was $12,250,000, and $6,814,000, respectively.  Such amounts are being amortized into expense over a five-year period from the date of grant, using a graded vesting attribution model.  In the years ended December 31, 2013, 2012 and 2011, we recognized $3,226,000, $2,826,000 and $740,000, respectively, of compensation expense related to OPP Units.  As of December 31, 2013, there was $10,065,000 of total unrecognized compensation cost related to the OPPs, which will be recognized over a weighted-average period of 1.9 years.
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15.    Stock-based Compensation - continued

Stock Options      
 
Stock options are granted at an exercise price equal to the average of the high and low market price of our common shares on the NYSE on the date of grant, generally vest over four years and expire 10 years from the date of grant.  Compensation expense related to stock option awards is recognized on a straight-line basis over the vesting period.  In the years ended December 31, 2013, 2012 and 2011, we recognized $8,234,000, $8,638,000 and $8,794,000, respectively, of compensation expense related to stock options that vested during each year.  As of December 31, 2013, there was $5,398,000 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 1.3 years.

Below is a summary of our stock option activity for the year ended December 31, 2013.
 
									Weighted-						
					Weighted-			Average						
					Average			Remaining		Aggregate			
					Exercise			Contractual		Intrinsic			
			Shares		Price			Term		Value			
	Outstanding at January 1, 2013	3,360,072 		$	67.16 									
	Granted	49,972 			83.11 									
	Exercised	(107,835)			55.85 									
	Cancelled or expired	(53,510)			83.80 									
	Outstanding at December 31, 2013	3,248,699 		$	67.51 			5.2 		$	76,089,000 			
	Options vested and expected to vest at													
		December 31, 2013	3,245,409 		$	67.50 			5.2 		$	76,022,000 			
	Options exercisable at December 31, 2013	2,478,838 		$	67.12 			4.8 		$	60,013,000 			
 
The fair value of each option grant is estimated on the date of grant using an option-pricing model with the following weighted-average assumptions for grants in the years ended December 31, 2013, 2012 and 2011.

		December 31,			
		2013 		2012 		2011 			
	Expected volatility	36.00%		36.00%		35.00%			
	Expected life	5.0 years		5.0 years		7.1 years			
	Risk free interest rate	0.91%		1.05%		2.90%			
	Expected dividend yield	4.30%		4.30%		4.40%			
 
The weighted average grant date fair value of options granted during the years ended December 31, 2013, 2012 and 2011 was $17.18, $17.50 and $21.42, respectively.  Cash received from option exercises for the years ended December 31, 2013, 2012 and 2011 was $5,915,000, $9,546,000 and $23,736,000, respectively.  The total intrinsic value of options exercised during the years ended December 31, 2013, 2012 and 2011 was $3,386,000, $40,887,000 and $39,348,000, respectively.
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15.    Stock-based Compensation - continued

Restricted Stock
 
Restricted stock awards are granted at the average of the high and low market price of our common shares on the NYSE on the date of grant and generally vest over four years.  Compensation expense related to restricted stock awards is recognized on a straight-line basis over the vesting period.  In the years ended December 31, 2013, 2012 and 2011, we recognized $1,344,000, $1,604,000 and $1,814,000, respectively, of compensation expense related to restricted stock awards that vested during each year.  As of December 31, 2013, there was $1,781,000 of total unrecognized compensation cost related to unvested restricted stock, which is expected to be recognized over a weighted-average period of 1.6 years.  Dividends paid on unvested restricted stock are charged directly to retained earnings and amounted to $110,000, $200,000 and $185,000 for the years ended December 31, 2013, 2012 and 2011, respectively.
Below is a summary of our restricted stock activity under the Plan for the year ended December 31, 2013.

						Weighted-Average			
						Grant-Date			
	Unvested Shares		Shares		Fair Value			
		Unvested at January 1, 2013		48,020 		$	78.61 			
		Granted		10,318 			83.11 			
		Vested		(16,018)			74.51 			
		Cancelled or expired		(12,656)			86.00 			
		Unvested at December 31, 2013		29,664 			79.23 			
 
Restricted stock awards granted in 2013, 2012 and 2011 had a fair value of $857,000, $929,000 and $1,042,000, respectively.  The fair value of restricted stock that vested during the years ended December 31, 2013, 2012 and 2011 was $1,194,000, $1,864,000 and $2,031,000, respectively.

Restricted Operating Partnership Units (“OP Units”)
 
OP Units are granted at the average of the high and low market price of our common shares on the NYSE on the date of grant, vest ratably over four years and are subject to a taxable book-up event, as defined.  Compensation expense related to OP Units is recognized ratably over the vesting period using a graded vesting attribution model.  In the years ended December 31, 2013, 2012 and 2011, we recognized $22,110,000, $17,520,000 and $17,505,000, respectively, of compensation expense related to OP Units that vested during each year.  As of December 31, 2013, there was $25,971,000 of total unrecognized compensation cost related to unvested OP Units, which is expected to be recognized over a weighted-average period of 1.8 years.  Distributions paid on unvested OP Units are charged to “net income attributable to noncontrolling interests in the Operating Partnership” on our consolidated statements of income and amounted to $2,598,000, $3,203,000 and $2,567,000 in the years ended December 31, 2013, 2012 and 2011, respectively.   
 
Below is a summary of restricted OP unit activity under the Plan for the year ended December 31, 2013.

						Weighted-Average			
						Grant-Date			
	Unvested Units		Units		Fair Value			
	 
 	Unvested at January 1, 2013		640,670 		$	69.61 			
		Granted		400,500 			79.77 			
		Vested		(252,052)			65.08 			
		Cancelled or expired		(23,147)			74.31 			
		Unvested at December 31, 2013		765,971 			76.27 			
 
OP Units granted in 2013, 2012 and 2011 had a fair value of $31,947,000, $16,464,000 and $18,727,000, respectively.  The fair value of OP Units that vested during the years ended December 31, 2013, 2012 and 2011 was $16,404,000, $15,014,000 and $10,260,000, respectively.
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16.    Fee and Other Income
         The following table sets forth the details of our fee and other income:

(Amounts in thousands)	For the Year Ended December 31,	
	2013 		2012 		2011 	
BMS cleaning fees	$	66,505 		$	67,584 		$	61,754 	
Signage revenue		32,866 			20,892 			19,823 	
Management and leasing fees		24,637 			21,849 			21,783 	
Lease termination fees (1)		92,497 			2,361 			16,334 	
Other income		34,727 			31,667 			29,937 	
	$	251,232 		$	144,353 		$	149,631 	
__________________________									
										
(1)	The year ended December 31, 2013 includes (i) $59,599 of income pursuant to a settlement agreement with Stop & Shop, which terminates our right to receive $6,000 of additional annual rent under a 1992 agreement, for a period potentially through 2031, (ii) $19,500 from a tenant at 1290 Avenue of the Americas, of which our 70% share, net of a $1,529 write-off of the straight lining of rents, was $12,121, and (iii) $3,000 from the termination of our subsidiaries' agreements with Cuyahoga County to operate the Cleveland Medical Mart Convention Center.	
 
The above table excludes fee income from partially owned entities, which is included in “income from partially owned entities” (see Note 6 – Investments in Partially Owned Entities ). 

17.     Interest and Other Investment (Loss) Income, Net
          The following table sets forth the details of our interest and other investment (loss) income:

(Amounts in thousands)		For the Year Ended December 31,	
				2013 		2012 		2011 	
Non-cash impairment loss on J.C. Penney common shares		$	(39,487)		$	(224,937)		$	- 	
(Loss) income from the mark-to-market of J.C. Penney derivative position			(33,487)			(75,815)			12,984 	
Interest on mezzanine loans receivable			19,495 			13,861 			14,023 	
Dividends and interest on marketable securities			11,446 			11,979 			29,587 	
Mark-to-market of investments in our deferred compensation plan (1)			10,636 			6,809 			1,658 	
Mezzanine loans loss reversal and net gain on disposition			- 			- 			82,744 	
Other, net			6,698 			7,158 			7,787 	
		$	(24,699)		$	(260,945)		$	148,783 	
												
__________________________										
												
(1)	This income is entirely offset by the expense resulting from the mark-to-market of the deferred compensation plan liability, which is included in "general and administrative" expense.	

18.     Interest and Debt Expense
          The following table sets forth the details of our interest and debt expense.

(Amounts in thousands)		For the Year Ended December 31,	
				2013 		2012 		2011 	
Interest expense		$	499,900 		$	486,875 		$	500,897 	
Amortization of deferred financing costs			25,593 			23,639 			19,457 	
Capitalized interest			(42,303)			(16,801)			(1,197)	
		$	483,190 		$	493,713 		$	519,157 	
												
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19.    Income Per Share
The following table provides a reconciliation of both net income and the number of common shares used in the computation of (i) basic income per common share - which includes the weighted average number of common shares outstanding without regard to dilutive potential common shares, and (ii) diluted income per common share - which includes the weighted average common shares and dilutive share equivalents. Dilutive share equivalents may include our Series A convertible preferred shares, employee stock options and restricted stock.

(Amounts in thousands, except per share amounts)		Year Ended December 31,		
					2013 		2012 		2011 		
Numerator:											
	Income from continuing operations, net of income attributable to noncontrolling interests		$	78,193 		$	340,877 		$	507,428 		
	Income from discontinued operations, net of income attributable to noncontrolling											
		interests			397,778 			276,383 			154,874 		
	Net income attributable to Vornado			475,971 			617,260 			662,302 		
	Preferred share dividends			(82,807)			(76,937)			(65,531)		
	Preferred unit and share redemptions			(1,130)			8,948 			5,000 		
	Net income attributable to common shareholders			392,034 			549,271 			601,771 		
	Earnings allocated to unvested participating securities			(110)			(202)			(221)		
	Numerator for basic income per share			391,924 			549,069 			601,550 		
	Impact of assumed conversions:											
		Convertible preferred share dividends			- 			113 			124 		
	Numerator for diluted income per share		$	391,924 		$	549,182 		$	601,674 		
														
Denominator:											
	Denominator for basic income per share – weighted average shares			186,941 			185,810 			184,308 		
	Effect of dilutive securities (1) :											
		Employee stock options and restricted share awards			768 			670 			1,658 		
		Convertible preferred shares			- 			50 			55 		
	Denominator for diluted income per share – weighted average shares and											
		assumed conversions			187,709 			186,530 			186,021 		
														
INCOME PER COMMON SHARE – BASIC:											
	(Loss) income from continuing operations, net		$	(0.03)		$	1.46 		$	2.42 		
	Income from discontinued operations, net			2.13 			1.49 			0.84 		
	Net income per common share		$	2.10 		$	2.95 		$	3.26 		
														
INCOME PER COMMON SHARE – DILUTED:											
	(Loss) income from continuing operations, net		$	(0.03)		$	1.46 		$	2.40 		
	Income from discontinued operations, net			2.12 			1.48 			0.83 		
	Net income per common share		$	2.09 		$	2.94 		$	3.23 		

(1)		The effect of dilutive securities in the years ended December 31, 2013, 2012 and 2011 excludes an aggregate of 11,752, 14,400 and 18,896 weighted average common share equivalents, respectively, as their effect was anti-dilutive.		
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20.  Leases
As lessor:
We lease space to tenants under operating leases. Most of the leases provide for the payment of fixed base rentals payable monthly in advance. Office building leases generally require the tenants to reimburse us for operating costs and real estate taxes above their base year costs. Shopping center leases provide for pass-through to tenants the tenant’s share of real estate taxes, insurance and maintenance. Shopping center leases also provide for the payment by the lessee of additional rent based on a percentage of the tenants’ sales. As of December 31, 2013, future base rental revenue under non-cancelable operating leases, excluding rents for leases with an original term of less than one year and rents resulting from the exercise of renewal options, are as follows:

	(Amounts in thousands)					
	Year Ending December 31:					
	2014 	$	1,811,280 			
	2015 		1,648,957 			
	2016 		1,535,967 			
	2017 		1,406,377 			
	2018 		1,272,529 			
	Thereafter		6,529,277 			
 
These amounts do not include percentage rentals based on tenants’ sales.  These percentage rents approximated $8,796,000, $8,466,000 and $7,995,000, for the years ended December 31, 2013, 2012 and 2011, respectively.
 
Excluding the $59,599,000 of income pursuant to a settlement agreement with Stop & Shop in the year ended December 31, 2013, none of our tenants accounted for more than 10% of total revenues in any of the years ended December 31, 2013, 2012 and 2011.

As lessee:           
We are a tenant under operating leases for certain properties.  These leases have terms that expire during the next thirty years.  Future minimum lease payments under operating leases at December 31, 2013 are as follows. 

	(Amounts in thousands)					
	Year Ending December 31:					
	2014 	$	42,845 			
	2015 		41,997 			
	2016 		41,404 			
	2017 		42,530 			
	2018 		40,301 			
	Thereafter		1,277,370 			
 
Rent expense was $51,186,000, $43,274,000 and $35,553,000 for the years ended December 31, 2013, 2012 and 2011, respectively.
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20.  Leases - continued
We are also a lessee under a capital lease under which we will redevelop the retail and signage components of the Marriot Marquis Times Square Hotel.  The lease has put/call options, which if exercised would lead to our ownership.  Capitalized leases are recorded at the present value of future minimum lease payments or the fair market value of the property.  Capitalized leases are depreciated on a straight-line basis over the estimated life of the asset or life of the related lease.  Depreciation expense on capital leases is included in “depreciation and amortization” on our consolidated statements of income.  As of December 31, 2013, future minimum lease payments under this capital lease are as follows:

	(Amounts in thousands)					
	Year Ending December 31:					
	2014 	$	12,500 			
	2015 		12,500 			
	2016 		12,500 			
	2017 		12,500 			
	2018 		12,500 			
	Thereafter		347,292 			
	Total minimum obligations		409,792 			
	Interest portion		(169,792)			
	Present value of net minimum payments	$	240,000 			
 
At December 31, 2013, the carrying amount of the property leased under the capital lease was $292,101,000, which is included as a component of “development costs and construction in progress” on our consolidated balance sheet and present value of net minimum payments of $240,000,000 is included in “other liabilities” on our consolidated balance sheet. 

21.  Multiemployer Benefit Plans
 
Our subsidiaries make contributions to certain multiemployer defined benefit plans (“Multiemployer Pension Plans”) and health plans (“Multiemployer Health Plans”) for our union represented employees, pursuant to the respective collective bargaining agreements.
 
Multiemployer Pension Plans
 
Multiemployer Pension Plans differ from single-employer pension plans in that (i) contributions to multiemployer plans may be used to provide benefits to employees of other participating employers and (ii) if other participating employers fail to make their contributions, each of our participating subsidiaries may be required to bear its then pro rata share of unfunded obligations.  If a participating subsidiary withdraws from a plan in which it participates, it may be subject to a withdrawal liability.  As of December 31, 2013, our subsidiaries’ participation in these plans were not significant to our consolidated financial statements.
 
In the years ended December 31, 2013, 2012 and 2011, our subsidiaries contributed $10,223,000, $10,683,000 and $10,168,000, respectively, towards Multiemployer Pension Plans, which is included as a component of “operating” expenses on our consolidated statements of income.  Our subsidiaries’ contributions did not represent more than 5% of total employer contributions in any of these plans for the years ended December 31, 2013, 2012 and 2011.
 
Multiemployer Health Plans
 
Multiemployer Health Plans in which our subsidiaries participate provide health benefits to eligible active and retired employees.  In the years ended December 31, 2013, 2012 and 2011, our subsidiaries contributed $26,262,000, $26,759,000 and $23,847,000, respectively, towards these plans, which is included as a component of “operating” expenses on our consolidated statements of income.
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22.  Commitments and Contingencies
 
Insurance
 
We maintain general liability insurance with limits of $300,000,000 per occurrence and all risk property and rental value insurance with limits of $2.0 billion per occurrence, with sub-limits for certain perils such as floods.  Our California properties have earthquake insurance with coverage of $180,000,000 per occurrence, subject to a deductible in the amount of 5% of the value of the affected property, up to a $180,000,000 annual aggregate. We maintain coverage for terrorism acts with limits of $4.0 billion per occurrence and in the aggregate, and $2.0 billion per occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological (“NBCR”) terrorism events, as defined by Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2014.
 
Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a portion of all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for NBCR acts.  Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to PPIC.  For NBCR acts, PPIC is responsible for a deductible of $3,200,000 and 15% of the balance of a covered loss and the Federal government is responsible for the remaining 85% of a covered loss.  We are ultimately responsible for any loss incurred by PPIC.
 
We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism.  However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future.
 
Our debt instruments, consisting of mortgage loans secured by our properties which are non-recourse to us, senior unsecured notes and revolving credit agreements contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain it could adversely affect our ability to finance our properties and expand our portfolio.

Other Commitments and Contingencies
 
We are from time to time involved in legal actions arising in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters is not expected to have a material adverse effect on our financial position, results of operations or cash flows.
 
Each of our properties has been subjected to varying degrees of environmental assessment at various times. The environmental assessments did not reveal any material environmental contamination. However, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites, or changes in cleanup requirements would not result in significant costs to us.
 
Our mortgage loans are non-recourse to us.  However, in certain cases we have provided guarantees or master leased tenant space.  These guarantees and master leases terminate either upon the satisfaction of specified circumstances or repayment of the underlying loans.  As of December 31, 2013, the aggregate dollar amount of these guarantees and master leases is approximately $342,000,000.
 
At December 31, 2013, $33,121,000 of letters of credit were outstanding under one of our revolving credit facilities.  Our revolving credit facilities contain financial covenants that require us to maintain minimum interest coverage and maximum debt to market capitalization ratios, and provide for higher interest rates in the event of a decline in our ratings below Baa3/BBB. Our revolving credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and also contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.
 
As of December 31, 2013, w e expect to fund additional capital to certain of our partially owned entities aggregating approximately $145,000,000.    
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23.  Related Party Transactions
 
Alexander’s
 
We own 32.4% of Alexander’s. Steven Roth, the Chairman of our Board and Chief Executive Officer is also the Chairman of the Board and Chief Executive Officer of Alexander’s.  We provide various services to Alexander’s in accordance with management, development and leasing agreements.  These agreements are described in Note 6 - Investments in Partially Owned Entities .  
  
Interstate Properties (“Interstate”)
 
Interstate is a general partnership in which Mr. Roth is the managing general partner. David Mandelbaum and Russell B. Wight, Jr., Trustees of Vornado and Directors of Alexander’s, are Interstate’s two other partners. As of December 31, 2013, Interstate and its partners beneficially owned an aggregate of approximately 6.6% of the common shares of beneficial interest of Vornado and 26.3% of Alexander’s common stock.
 
We manage and lease the real estate assets of Interstate pursuant to a management agreement for which we receive an annual fee equal to 4% of annual base rent and percentage rent.  The management agreement has a term of one year and is automatically renewable unless terminated by either of the parties on 60 days’ notice at the end of the term.  We believe, based upon comparable fees charged by other real estate companies, that the management agreement terms are fair to us.  We earned $606,000, $794,000, and $787,000 of management fees under the agreement for the years ended December 31, 2013, 2012 and 2011.

24.  Summary of Quarterly Results (Unaudited)
The following summary represents the results of operations for each quarter in 2013 and 2012:
 
							Net (Loss) Income									
							Attributable		Net (Loss) Income Per			
							to Common		Common Share (2)			
	(Amounts in thousands, except per share amounts)	Revenues		Shareholders (1)		Basic		Diluted			
		2013 														
			December 31	$	673,308 		$	(68,887)		$	(0.37)		$	(0.37)			
			September 30		679,435 			83,005 			0.44 			0.44 			
			June 30		681,699 			145,926 			0.78 			0.78 			
			March 31		726,467 			231,990 			1.24 			1.24 			
																	
		2012 														
			December 31	$	686,693 		$	62,633 		$	0.34 		$	0.33 			
			September 30		700,991 			232,393 			1.25 			1.24 			
			June 30		674,007 			20,510 			0.11 			0.11 			
			March 31		674,541 			233,735 			1.26 			1.25 			
_______________________________														
																	
	(1)	Fluctuations among quarters resulted primarily from non-cash impairment losses, mark-to-market of derivative instruments, net gains on sale of real estate and from seasonality of business operations.			
																	
	(2)	The total for the year may differ from the sum of the quarters as a result of weighting.	
137

 
  
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
25.  Subsequent Events

2014 Out-Performance Plan
 
 On January 10, 2014, the Compensation Committee approved the 2014 Outperformance Plan, a multi-year, performance-based equity compensation plan and related form of award agreement (the “2014 OPP”).  Under the 2014 OPP, participants have the opportunity to earn compensation payable in the form of operating partnership units during a three-year performance measurement period, if and only if we outperform a predetermined total shareholder return (“TSR”) and/or outperform the market with respect to relative TSR.  Awards under the 2014 OPP may be earned if we (i) achieve a TSR level greater than 7% per annum, or 21% over the three-year performance measurement period (the “Absolute Component”), and/or (ii) achieve a TSR above that of the SNL US REIT Index (the “Index”) over a three-year performance measurement period (the “Relative Component”).  To the extent awards would be earned under the Absolute Component but we underperform the Index, such awards earned under the Absolute Component would be reduced (and potentially fully negated) based on the degree to which we underperform the Index.  In certain circumstances, in the event we outperform the Index but awards would not otherwise be earned under the Absolute Component, awards may be increased under the Relative Component.  To the extent awards would otherwise be earned under the Relative Component but we fail to achieve at least a 6% per annum absolute TSR, such awards earned under the Relative Component would be reduced based on our absolute TSR, with no awards being earned in the event our TSR during the applicable measurement period is 0% or negative, irrespective of the degree to which we may outperform the Index.  If the designated performance objectives are achieved, OPP Units are also subject to time-based vesting requirements. Awards earned under the 2014 OPP vest 33% in year three, 33% in year four and 34% in year five.  Dividends on awards earned accrue during the performance measurement period.  In addition, our executive officers (for the purposes of Section 16 of the Exchange Act) are required to hold any earned OPP awards (or related equity) for at least one year following vesting.

220 Central Park South Development Site
 
On January 31, 2014, we completed a $600,000,000 loan secured by our 220 Central Park South development site.  The loan bears interest at LIBOR plus 2.75% and matures in January 2016, with three one-year extension options.

Broadway Mall
 
On February 14, 2014, we entered into an agreement to sell the Broadway Mall in Hicksville, Long Island, New York for $94,000,000.  The sale will result in net proceeds of approximately $92,000,000 after closing costs.  In the fourth quarter of 2013, we recognized a $13,443,000 non-cash impairment loss related to this property, which is included in “impairment losses, acquisition related costs and tenant buy-outs” on our consolidated statements of income.
138

 
  
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
26.    Segment Information
 
As a result of certain organizational changes and asset sales in 2012, the Merchandise Mart segment no longer met the criteria to be a separate reportable segment; accordingly, effective January 1, 2013, the remaining assets were reclassified to “Other.”  We have also reclassified the prior period segment financial results to conform to the current year presentation.  Below is a summary of net income and a reconciliation of net income to EBITDA (1) by segment for the years ended December 31, 2013, 2012 and 2011.

		
(Amounts in thousands)	For the Year Ended December 31, 2013	
			 							Retail						
				Total		New York		Washington, DC		Properties		Toys		Other		
Total revenues		$ 	2,760,909 		$ 	1,509,266 		$ 	541,161 		$ 	425,716 		$ 	- 		$ 	284,766 		
Total expenses			1,886,719 			926,963 			347,686 			251,516 			- 			360,554 		
Operating income (loss)			874,190 			582,303 			193,475 			174,200 			- 			(75,788)		
(Loss) income from partially owned																				
	entities, including Toys			(338,785)			15,527 			(6,968)			2,097 			(362,377)			12,936 		
Income from Real Estate Fund			102,898 			- 			- 			- 			- 			102,898 		
Interest and other investment																				
	(loss) income, net			(24,699)			5,532 			129 			13 			- 			(30,373)		
Interest and debt expense			(483,190)			(181,966)			(102,277)			(44,203)			- 			(154,744)		
Net gain on disposition of wholly																				
	owned and partially owned assets			3,407 			- 			- 			1,377 			- 			2,030 		
Income (loss) before income taxes			133,821 			421,396 			84,359 			133,484 			(362,377)			(143,041)		
Income tax benefit (expense)			6,406 			(2,794)			14,031 			(2,311)			- 			(2,520)		
Income (loss) from continuing																				
	operations			140,227 			418,602 			98,390 			131,173 			(362,377)			(145,561)		
Income (loss) from discontinued																				
	operations			424,513 			138,245 			- 			287,536 			- 			(1,268)		
Net income (loss)			564,740 			556,847 			98,390 			418,709 			(362,377)			(146,829)		
Less net (income) attributable to																				
	noncontrolling interests			(88,769)			(10,786)			- 			(3,065)			- 			(74,918)		
Net income (loss) attributable to																				
	Vornado			475,971 			546,061 			98,390 			415,644 			(362,377)			(221,747)		
Interest and debt expense (2)			758,781 			236,645 			116,131 			50,901 			181,586 			173,518 		
Depreciation and amortization (2)			732,757 			293,974 			142,409 			72,161 			135,178 			89,035 		
Income tax expense (benefit) (2)			26,371 			3,002 			(15,707)			2,311 			33,532 			3,233 		
EBITDA (1)		$ 	1,993,880 		$ 	1,079,682 	(3)	$ 	341,223 	(4)	$ 	541,017 	(5)	$ 	(12,081)		$ 	44,039 	(6)	
																						
Balance Sheet Data:																				
Real estate at cost		$ 	18,354,626 		$ 	8,591,026 		$ 	4,243,048 		$ 	2,827,044 		$ 	- 		$ 	2,693,508 		
Investments in partially owned entities			1,249,667 			904,278 			100,543 			6,640 			83,224 			154,982 		
Total assets			20,097,224 			9,255,964 			4,107,636 			3,387,798 			83,224 			3,262,602 		
																						
See notes on page 142.																				
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
26.    Segment Information – continued

																						
(Amounts in thousands)	For the Year Ended December 31, 2012	
										Retail						
				Total		New York		Washington, DC		Properties		Toys		Other		
Total revenues		$ 	2,736,232 		$ 	1,354,874 		$ 	554,028 		$ 	370,177 		$ 	- 		$ 	457,153 		
Total expenses			2,071,663 			851,512 			360,056 			324,096 			- 			535,999 		
Operating income (loss)			664,569 			503,362 			193,972 			46,081 			- 			(78,846)		
Income (loss) from partially owned																				
	entities, including Toys			423,126 			207,773 			(5,612)			1,458 			14,859 			204,648 		
Income from Real Estate Fund			63,936 			- 			- 			- 			- 			63,936 		
Interest and other investment																				
	(loss) income, net			(260,945)			4,230 			126 			27 			- 			(265,328)		
Interest and debt expense			(493,713)			(146,350)			(115,574)			(57,057)			- 			(174,732)		
Net gain on disposition of wholly																				
	owned and partially owned assets			13,347 			- 			- 			8,491 			- 			4,856 		
Income (loss) before income taxes			410,320 			569,015 			72,912 			(1,000)			14,859 			(245,466)		
Income tax expense			(8,132)			(3,491)			(1,650)			- 			- 			(2,991)		
Income (loss) from continuing																				
	operations			402,188 			565,524 			71,262 			(1,000)			14,859 			(248,457)		
Income from discontinued																				
	operations			292,353 			10,610 			167,766 			39,357 			- 			74,620 		
Net income (loss)			694,541 			576,134 			239,028 			38,357 			14,859 			(173,837)		
Less net (income) loss attributable to																				
	noncontrolling interests			(77,281)			(2,138)			- 			1,812 			- 			(76,955)		
Net income (loss) attributable to																				
	Vornado			617,260 			573,996 			239,028 			40,169 			14,859 			(250,792)		
Interest and debt expense (2)			760,523 			187,855 			133,625 			73,828 			147,880 			217,335 		
Depreciation and amortization (2)			735,293 			252,257 			157,816 			86,529 			135,179 			103,512 		
Income tax expense (benefit) (2)			7,026 			3,751 			1,943 			- 			(16,629)			17,961 		
EBITDA (1)		$ 	2,120,102 		$ 	1,017,859 	(3)	$ 	532,412 	(4)	$ 	200,526 	(5)	$ 	281,289 		$ 	88,016 	(6)	
																						
Balance Sheet Data:																				
Real estate at cost		$ 	18,238,218 		$ 	8,855,243 		$ 	4,171,879 		$ 	2,812,911 		$ 	- 		$ 	2,398,185 		
Investments in partially owned entities			1,704,297 			576,336 			95,670 			7,083 			478,041 			547,167 		
Total assets			22,065,049 			9,215,438 			4,196,694 			3,589,633 			478,041 			4,585,243 		
																						
See notes on page 142.																				
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
26.    Segment Information – continued

																						
(Amounts in thousands)	For the Year Ended December 31, 2011	
										Retail						
				Total		New York		Washington, DC		Properties		Toys		Other		
Total revenues		$ 	2,702,808 		$ 	1,333,280 		$ 	603,317 		$ 	374,482 		$ 	- 		$ 	391,729 		
Total expenses			1,890,582 			841,863 			369,255 			215,075 			- 			464,389 		
Operating income (loss)			812,226 			491,417 			234,062 			159,407 			- 			(72,660)		
Income (loss) from partially owned																				
	entities, including Toys			118,612 			12,062 			(6,381)			2,700 			48,540 			61,691 		
Income from Real Estate Fund			22,886 			- 			- 			- 			- 			22,886 		
Interest and other investment																				
	income (loss), net			148,783 			4,245 			199 			(33)			- 			144,372 		
Interest and debt expense			(519,157)			(151,728)			(115,456)			(64,592)			- 			(187,381)		
Net gain on disposition of wholly																				
	owned and partially owned assets			15,134 			- 			- 			4,278 			- 			10,856 		
Income (loss) before income taxes			598,484 			355,996 			112,424 			101,760 			48,540 			(20,236)		
Income tax expense			(23,925)			(2,084)			(2,690)			(34)			- 			(19,117)		
Income (loss) from continuing																				
	operations			574,559 			353,912 			109,734 			101,726 			48,540 			(39,353)		
Income from discontinued operations			165,441 			11,155 			52,390 			27,557 			- 			74,339 		
Net income			740,000 			365,067 			162,124 			129,283 			48,540 			34,986 		
Less net (income) loss attributable to																				
	noncontrolling interests			(77,698)			(10,042)			- 			237 			- 			(67,893)		
Net income (loss) attributable to																				
	Vornado			662,302 			355,025 			162,124 			129,520 			48,540 			(32,907)		
Interest and debt expense (2)			797,920 			181,740 			134,270 			82,608 			157,135 			242,167 		
Depreciation and amortization (2)			777,421 			247,630 			181,560 			91,040 			134,967 			122,224 		
Income tax expense (benefit) (2)			4,812 			2,170 			3,123 			34 			(1,132)			617 		
EBITDA (1)		$ 	2,242,455 		$ 	786,565 	(3)	$ 	481,077 	(4)	$ 	303,202 	(5)	$ 	339,510 		$ 	332,101 	(6)	
																						
Balance Sheet Data:																				
Real estate at cost		$ 	16,421,701 		$ 	6,991,960 		$ 	4,176,894 		$ 	2,898,501 		$ 	- 		$ 	2,354,346 		
Investments in partially owned entities			1,740,459 			536,393 			113,536 			7,747 			506,809 			575,974 		
Total assets			20,446,487 			7,130,240 			4,150,140 			3,748,303 			506,809 			4,910,995 		
																						
See notes on the following page.																				
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
26.    Segment Information – continued

	Notes to preceding tabular information:	

																		
(1)	EBITDA represents "Earnings Before Interest, Taxes, Depreciation and Amortization." We consider EBITDA a supplemental measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. As properties are bought and sold based on a multiple of EBITDA, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. EBITDA should not be considered a substitute for net income. EBITDA may not be comparable to similarly titled measures employed by other companies.	

																		
(2)	Interest and debt expense, depreciation and amortization and income tax expense (benefit) in the reconciliation of net income (loss) to EBITDA includes our share of these items from partially owned entities.	

																		
(3)	The elements of "New York" EBITDA are summarized below.	
																		
		For the Year Ended December 31,				
	(Amounts in thousands)	2013 		2012 		2011 				
	Office (a)	$ 	759,941 		$ 	568,518 		$ 	539,734 				
	Retail		246,808 			189,484 			163,033 				
	Alexander's (b)		42,210 			231,402 			53,663 				
	Hotel Pennsylvania		30,723 			28,455 			30,135 				
		Total New York	$ 	1,079,682 		$ 	1,017,859 		$ 	786,565 				

	(a)		2013 includes a $127,512 net gain on sale of real estate.	
																		
	(b)		2012 includes $179,934 for our share of net gain on sale of Kings Plaza.	

(4)	The elements of "Washington, DC" EBITDA are summarized below.	
																		
		For the Year Ended December 31,				
	(Amounts in thousands)	2013 		2012 		2011 				
	Office, excluding the Skyline Properties (a)	$ 	268,373 		$ 	449,448 		$ 	385,285 				
	Skyline properties		29,499 			40,037 			56,148 				
		Total Office		297,872 			489,485 			441,433 				
	Residential		43,351 			42,927 			39,644 				
		Total Washington, DC	$ 	341,223 		$ 	532,412 		$ 	481,077 				

	(a)		2012 includes a $ 163,367 net gain on sale of real estate.	

(5)	The elements of "Retail Properties" EBITDA are summarized below.	
																		
		For the Year Ended December 31,				
	(Amounts in thousands)	2013 		2012 		2011 				
	Strip shopping centers (a)	$ 	285,612 		$ 	172,708 		$ 	210,022 				
	Regional malls (b)		255,405 			27,818 			93,180 				
		Total Retail properties	$ 	541,017 		$ 	200,526 		$ 	303,202 				

	(a)		2013 includes $81,806 of net gains on sale of real estate, $59,599 of income pursuant to a settlement agreement with Stop & Shop and a $19,000 real estate impairment loss.  2012 includes $15,821 of net gains on sale of real estate and a $33,775 real estate impairment loss.			
																		
	(b)		2013 includes a $202,275 net gain on sale of the Green Acres Mall and a $13,443 real estate impairment loss.  2012 includes a $70,100 real estate impairment loss.	

142

 
  
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
26.    Segment Information – continued

	Notes to preceding tabular information:										
																
(6)	The elements of "other" EBITDA from continuing operations are summarized below.					
																
	(Amounts in thousands)	For the Year Ended December 31,		
							2013 		2012 			2011 		
	Our share of Real Estate Fund:										
		Income before net realized/unrealized gains	$ 	1,676 		$ 	4,926 		$ 	4,205 		
		Net unrealized gains		21,443 			13,840 			2,999 		
		Net realized gains		2,046 			- 			1,348 		
		Carried interest		24,306 			5,838 			736 		
	Total		49,471 			24,604 			9,288 		
	Merchandise Mart Building, 7 West 34th Street and trade shows		74,270 			62,470 			50,406 		
	555 California Street		42,667 			46,167 			44,724 		
	India real estate ventures		5,841 			3,654 			7,037 		
	LNR (a) 		20,443 			75,202 			47,614 		
	Lexington (b) 		6,931 			32,595 			34,779 		
	Other investments		18,981 			25,612 			26,092 		
			218,604 			270,304 			219,940 		
	Corporate general and administrative expenses (c) 		(94,904)			(89,082)			(85,922)		
	Investment income and other, net (c) 		46,525 			45,563 			55,202 		
	Net gain on sale of marketable securities, land parcels and residential										
		condominiums		56,868 			4,856 			10,904 		
	Loss on sale of J.C. Penney common shares		(54,914)			- 			- 		
	Non-cash impairment loss on J.C. Penney common shares		(39,487)			(224,937)			- 		
	(Loss) income from the mark-to-market of J.C. Penney derivative position		(33,487)			(75,815)			12,984 		
	Acquisition related costs and impairment losses		(24,857)			(17,386)			(5,925)		
	Severance costs (primarily reduction in force at the Merchandise Mart)		(5,492)			(3,005)			(4,226)		
	Purchase price fair value adjustment and accelerated amortization of										
		discount on investment in subordinated debt of Independence Plaza		- 			105,366 			- 		
	Merchandise Mart discontinued operations (including net gains on sale of assets)	- 			93,588 			97,272 		
	Net gain resulting from Lexington's stock issuance and asset acquisition		- 			28,763 			9,760 		
	Verde Realty impairment loss		- 			(4,936)			- 		
	Mezzanine loans loss reversal and net gain on disposition		- 			- 			82,744 		
	Non-cash impairment loss on India land parcel		- 			- 			(13,794)		
	Net gain from Suffolk Downs' sale of a partial interest		- 			- 			12,525 		
	Real Estate Fund placement fees		- 			- 			(3,451)		
	Net income attributable to noncontrolling interests in the Operating Partnership		(23,659)			(35,327)			(41,059)		
	Preferred unit distributions of the Operating Partnership		(1,158)			(9,936)			(14,853)		
							$ 	44,039 		$ 	88,016 		$ 	332,101 		

	(a)	On April 19, 2013, LNR was sold (see page 113 for details).	
																
	(b)	In the first quarter of 2013, we began accounting for our investment in Lexington as a marketable equity security - available for sale. This investment was previously accounted for under the equity method (see page 110 for details).		
																
	(c)	The amounts in these captions (for this table only) exclude income (expense) from the mark-to-market of our deferred compensation plan.		
																
143

 

ITEM 9.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

ITEM 9A.     CONTROLS AND PROCEDURES
Disclosure Controls and Procedures:  Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a‑15 (e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this annual report on Form 10-K. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.
 
Internal Control Over Financial Reporting:  There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934, as amended) during the fourth quarter of the fiscal year to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
Management of Vornado Realty Trust, together with its consolidated subsidiaries (the “Company”), is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed under the supervision of our principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.
 
As of December 31, 2013, management conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that our internal control over financial reporting as of December 31, 2013 was effective.
 
Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States, and that receipts and expenditures are being made only in accordance with authorizations of management and our trustees; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.
 
The effectiveness of our internal control over financial reporting as of December 31, 2013 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing on page 145, which expresses an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2013.
144

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Trustees
Vornado Realty Trust
New York, New York
 
We have audited the internal control over financial reporting of Vornado Realty Trust, together with its consolidated subsidiaries (the “Company”) as of December 31, 2013, based on criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of trustees, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and trustees of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2013 of the Company and our report dated February 24, 2014 expressed an unqualified opinion on those financial statements and financial statement schedules.
 
/s/ DELOITTE & TOUCHE LLP
 
Parsippany, New Jersey
February 24, 2014
145

 

ITEM 9B.     OTHER INFORMATION
 
None.
PART III
 
ITEM 10.      DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information relating to trustees of the Registrant, including its audit committee and audit committee financial expert, will be contained in a definitive Proxy Statement involving the election of trustees under the caption “Election of Trustees” which the Registrant will file with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934 not later than 120 days after December 31, 2013, and such information is incorporated herein by reference. Also incorporated herein by reference is the information under the caption “16(a) Beneficial Ownership Reporting Compliance” of the Proxy Statement.
 
The following is a list of the names, ages, principal occupations and positions with Vornado of the executive officers of Vornado and the positions held by such officers during the past five years. All executive officers of Vornado have terms of office that run until the next succeeding meeting of the Board of Trustees of Vornado following the Annual Meeting of Shareholders unless they are removed sooner by the Board.
 
				PRINCIPAL OCCUPATION, POSITION AND OFFICE	
Name		Age		(Current and during past five years with Vornado unless otherwise stated)	
					
Steven Roth		72 		Chairman of the Board; Chief Executive Officer since April 2013 and from May 1989 to May 2009; Managing General Partner of Interstate Properties, an owner of shopping centers and an investor in securities and partnerships; Chief Executive Officer of Alexander’s, Inc. since March 1995, a Director since 1989, and Chairman since May 2004.	
					
Michael J. Franco		45 		Executive Vice President - Co-Head of Acquisitions and Capital Markets since November 2010; Managing Director (2003-2010) and Executive Director (2001-2003) of the Real Estate Investing Group of Morgan Stanley.	
					
David R. Greenbaum		62 		President of the New York Division since April 1997 (date of our acquisition); President of Mendik Realty (the predecessor to the New York Office division) from 1990 until April 1997.	
					
Joseph Macnow		68 		Executive Vice President - Finance and Chief Administrative Officer since June 2013; Executive Vice President - Finance and Administration from January 1998 to June 2013, and Chief Financial Officer from March 2001 to June 2013; Vice President and Chief Financial Officer of the Company from 1985 to January 1998; Executive Vice President and Chief Financial Officer of Alexander's, Inc. since August 1995.	
					
Robert Minutoli		63 		Executive Vice President - Retail since April 2013; Senior Vice President - Retail from April 2009 to April 2013.	
					
Mitchell N. Schear		55 		President of Vornado/Charles E. Smith L.P. (our Washington, DC division) since April 2003; President of the Kaempfer Company from 1998 to April 2003 (date acquired by us).	
					
Wendy Silverstein		53 		Executive Vice President - Co-Head of Acquisitions and Capital Markets since November 2010; Executive Vice President of Capital Markets since 1998; Senior Credit Officer of Citicorp Real Estate and Citibank, N.A. from 1986 to 1998.	
					
Stephen W. Theriot		54 		Chief Financial Officer since June 2013; Partner at Deloitte & Touche LLP (1994 - 2013) and most recently, leader of its Northeast Real Estate practice (2011 - 2013).	

The Registrant has adopted a Code of Business Conduct and Ethics that applies to, among others, Steven Roth, its principal executive officer, and Stephen W. Theriot, its principal financial and accounting officer. This Code is available on our website at www.vno.com .   
146

 

ITEM 11.      EXECUTIVE COMPENSATION
Information relating to executive officer and director compensation will be contained in the Proxy Statement referred to above in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Executive Compensation” and such information is incorporated herein by reference.

 
ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information relating to security ownership of certain beneficial owners and management will be contained in the Proxy Statement referred to in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Principal Security Holders” and such information is incorporated herein by reference.
 
                      Equity compensation plan information
The following table provides information as of December 31, 2013 regarding our equity compensation plans.
 
									Number of securities remaining		
			Number of securities to be		Weighted-average		available for future issuance		
			issued upon exercise of		exercise price of		under equity compensation plans		
			outstanding options,		outstanding options,		(excluding securities reflected in		
Plan Category		warrants and rights		warrants and rights		the second column)		
Equity compensation plans approved										
	by security holders		4,732,733 	(1)		$	67.51 		4,672,329 	(2)	
Equity compensation awards not										
	approved by security holders		- 				- 		- 		
Total		4,732,733 			$	67.51 		4,672,329 		
___________________________										
(1)	Includes an aggregate of 1,484,034 shares/units, comprised of (i) 29,664 restricted common shares, (ii) 978,232 restricted Operating Partnership units and (iii) 476,138 Out-Performance Plan units, which do not have an exercise price.	
											
(2)	Based on awards being granted as "Full Value Awards," as defined. If we were to grant "Not Full Value Awards," as defined, the number of securities available for future grants would be 9,344,658.	

 
ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information relating to certain relationships and related transactions will be contained in the Proxy Statement referred to in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Certain Relationships and Related Transactions” and such information is incorporated herein by reference.

 
ITEM 14.      PRINCIPAL ACCOUNTING FEES AND SERVICES
Information relating to Principal Accounting fees and services will be contained in the Proxy Statement referred to in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Ratification of Selection of Independent Auditors” and such information is incorporated herein by reference.
147

 

PART IV
 
ITEM 15.              EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)     The following documents are filed as part of this report:
 
1.     The consolidated financial statements are set forth in Item 8 of this Annual Report on Form 10-K.
 
The following financial statement schedules should be read in conjunction with the financial statements included in Item 8 of this Annual Report on Form 10-K.
 
		Pages in this		
		Annual Report		
		on Form 10-K		
	II--Valuation and Qualifying Accounts--years ended December 31, 2013, 2012 and 2011	150 		
	III--Real Estate and Accumulated Depreciation as of December 31, 2013	151 		
 
Schedules other than those listed above are omitted because they are not applicable or the information required is included in the consolidated financial statements or the notes thereto.
 
The following exhibits listed on the Exhibit Index, which is incorporated herein by reference, are filed with this Annual Report on Form 10-K.
 
Exhibit No.	 	 	 	
12	 	 	Computation of Ratios	
21	 	 	Subsidiaries of Registrant	
23	 	 	Consent of Independent Registered Public Accounting Firm	
31.1	 	 	Rule 13a-14 (a) Certification of Chief Executive Officer	
31.2	 	 	Rule 13a-14 (a) Certification of Chief Financial Officer	
32.1	 	 	Section 1350 Certification of the Chief Executive Officer	
32.2	 	 	Section 1350 Certification of the Chief Financial Officer	
101.INS	 	 	XBRL Instance Document	
101.SCH	 	 	XBRL Taxonomy Extension Schema	
101.CAL	 	 	XBRL Taxonomy Extension Calculation Linkbase	
101.DEF	 	 	XBRL Taxonomy Extension Definition Linkbase	
101.LAB	 	 	XBRL Taxonomy Extension Label Linkbase	
101.PRE	 	 	XBRL Taxonomy Extension Presentation Linkbase	

148

 

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 	 	VORNADO REALTY TRUST	
 	 	(Registrant)	

Date: February 24, 2014	By:	/s/ Stephen W. Theriot	
 	 	Stephen W. Theriot, Chief Financial Officer
(duly authorized officer and principal financial and accounting officer)	
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
 
 	Signature	 	Title	 	Date	
 	 	 	 	 	 	
By:	/s/Steven Roth	 	Chairman of the Board of Trustees	 	February 24, 2014	
 	     (Steven Roth)	 	     and Chief Executive Officer	 	 	
 	 	 	 	 	 	
By:	/s/Michael D. Fascitelli	 	Trustee	 	February 24, 2014	
 	     (Michael D. Fascitelli)	 	 	 	 	
 	 	 	 	 	 	
By:	/s/Candace K. Beinecke	 	Trustee	 	February 24, 2014	
 	     (Candace K. Beinecke)	 	 	 	 	
 	 	 	 	 	 	
By:	/s/Robert P. Kogod	 	Trustee	 	February 24, 2014	
 	     (Robert P. Kogod)	 	 	 	 	
 	 	 	 	 	 	
By:	/s/Michael Lynne	 	Trustee	 	February 24, 2014	
 	     (Michael Lynne)	 	 	 	 	
 	 	 	 	 	 	
By:	/s/David Mandelbaum	 	Trustee	 	February 24, 2014	
 	     (David Mandelbaum)	 	 	 	 	
 	 	 	 	 	 	
By:	/s/Ronald G. Targan	 	Trustee	 	February 24, 2014	
 	     (Ronald G. Targan)	 	 	 	 	
 	 	 	 	 	 	
By:	/s/Daniel R. Tisch	 	Trustee	 	February 24, 2014	
 	     (Daniel R. Tisch)	 	 	 	 	
 	 	 	 	 	 	
By:	/s/Richard R. West	 	Trustee	 	February 24, 2014	
 	     (Richard R. West)	 	 	 	 	
 	 	 	 	 	 	
By:	/s/Russell B. Wight	 	Trustee	 	February 24, 2014	
 	     (Russell B. Wight, Jr.)	 	 	 	 	
 	 	 	 	 	 	
By:	/s/ Stephen W. Theriot	 	Chief Financial Officer	 	February 24, 2014	
 	     (Stephen W. Theriot)	 	     (Principal Financial and Accounting Officer)	 	 	
149

 

VORNADO REALTY TRUST	
SCHEDULE II	
VALUATION AND QUALIFYING ACCOUNTS	
December 31, 2013	
(Amounts in Thousands)	

	Column A		Column B		Column C		Column D		Column E			
								Additions								
					Balance at		Charged		Uncollectible		Balance			
					Beginning		Against		Accounts		at End			
		Description		of Year		Operations		Written-off		of Year			
																		
		Year Ended December 31, 2013:															
			Allowance for doubtful accounts		$	40,839 		$	11,417 		$	(20,187)		$	32,069 			
		Year Ended December 31, 2012:															
			Allowance for doubtful accounts		$	46,531 		$	9,697 		$	(15,389)		$	40,839 			
		Year Ended December 31, 2011:															
			Allowance for doubtful accounts		$	140,780 		$	(56,995)		$	(37,254)		$	46,531 			
 
150

 

VORNADO REALTY TRUST	
SCHEDULE III	
REAL ESTATE AND ACCUMULATED DEPRECIATION	
(Amounts in thousands)	
COLUMN A		COLUMN B			COLUMN C			COLUMN D			COLUMN E 			COLUMN F		COLUMN G		COLUMN H		COLUMN I 	
																		Gross amount at which 									Life on which	
								Initial cost to company (1)					carried at close of period 									depreciation	
															Costs											Accumulated						in latest	
											Building			capitalized					Buildings 					depreciation						income	
											and			subsequent					and  					and		Date of		Date		statement	
Description	Encumbrances	Land		improvements			to acquisition			Land 		improvements 		Total (2) 		amortization		construction (3)		acquired		is computed	
	New York																														
		New York																														
			Manhattan																														
			1290 Avenue of the Americas	$	950,000 		$ 	515,539 		$ 	923,653 		$ 	113,956 		$ 	515,539 		$ 	1,037,609 		$ 	1,553,148 		$ 	177,161 		1963 		2007 		(4)	
			350 Park Avenue		300,000 			265,889 			363,381 			34,075 			265,889 			397,456 			663,345 			70,876 		1960 		2006 		(4)	
			666 Fifth Avenue (Retail Condo)		390,000 			189,005 			471,072 			- 			189,005 			471,072 			660,077 			13,011 				2012		(4)	
			One Penn Plaza		- 			- 			412,169 			181,159 			- 			593,328 			593,328 			227,919 		1972		1998		(4)	
			100 West 33rd Street (Manhattan Mall)		223,242 			242,776 			247,970 			12,661 			242,776 			260,631 			503,407 			44,717 		1911 		2007		(4)	
			1540 Broadway		- 			105,914 			214,208 			25,955 			105,914 			240,163 			346,077 			28,847 				2006		(4)	
			655 Fifth Avenue		- 			102,594 			231,903 			- 			102,594 			231,903 			334,497 			1,461 				2013		(4)	
			Two Penn Plaza		425,000 			53,615 			164,903 			84,924 			52,689 			250,753 			303,442 			117,909 		1968		1997		(4)	
			1535 Broadway (Marriott Marquis)		- 			- 			249,285 			42,816 			- 			292,101 			292,101 			- 				2012		(4)	
			Manhattan Mall		101,758 			88,595 			113,473 			72,225 			88,595 			185,698 			274,293 			38,089 		2009		2007		(4)	
			770 Broadway		353,000 			52,898 			95,686 			90,361 			52,898 			186,047 			238,945 			73,059 		1907		1998		(4)	
			90 Park Avenue		- 			8,000 			175,890 			40,927 			8,000 			216,817 			224,817 			90,125 		1964		1997		(4)	
			888 Seventh Avenue		318,554 			- 			117,269 			105,383 			- 			222,652 			222,652 			90,120 		1980		1998		(4)	
			909 Third Avenue		194,910 			- 			120,723 			85,724 			- 			206,447 			206,447 			62,044 		1969		1999		(4)	
			Eleven Penn Plaza		450,000 			40,333 			85,259 			61,146 			40,333 			146,405 			186,738 			62,040 		1923		1997		(4)	
			640 Fifth Avenue		- 			38,224 			25,992 			113,404 			38,224 			139,396 			177,620 			62,664 		1950		1997		(4)	
			1740 Broadway		- 			26,971 			102,890 			38,868 			26,971 			141,758 			168,729 			56,364 		1950		1997		(4)	
			150 East 58th Street		- 			39,303 			80,216 			31,394 			39,303 			111,610 			150,913 			45,234 		1969		1998		(4)	
			595 Madison Avenue		- 			62,731 			62,888 			19,656 			62,731 			82,544 			145,275 			28,720 		1968		1999		(4)	
			828-850 Madison Avenue		80,000 			107,937 			28,261 			10 			107,937 			28,271 			136,208 			6,124 				2005 		(4)	
			4 Union Square South		120,000 			24,079 			55,220 			2,233 			24,079 			57,453 			81,532 			13,383 		1965/2004		1993 		(4)	
			510 Fifth Avenue		30,740 			34,602 			18,728 			18,737 			34,602 			37,465 			72,067 			3,269 				2010 		(4)	
			478-482 Broadway		- 			20,000 			13,375 			27,843 			20,000 			41,218 			61,218 			5,419 		2009 		2007 		(4)	
			20 Broad Street		- 			- 			28,760 			27,401 			- 			56,161 			56,161 			18,774 		1956		1998		(4)	
			40 Fulton Street		- 			15,732 			26,388 			12,411 			15,732 			38,799 			54,531 			14,314 		1987		1998		(4)	
			443 Broadway		- 			11,187 			41,186 			- 			11,187 			41,186 			52,373 			608 				2013		(4)	
			40 East 66th Street		- 			13,616 			34,635 			121 			13,616 			34,756 			48,372 			6,957 				2005 		(4)	
			155 Spring Street		- 			13,700 			30,544 			2,545 			13,700 			33,089 			46,789 			5,780 				2007 		(4)	
			689 Fifth Avenue		- 			19,721 			13,446 			10,237 			19,721 			23,683 			43,404 			8,387 		1925		1998		(4)	
			435 Seventh Avenue		98,000 			19,893 			19,091 			43 			19,893 			19,134 			39,027 			5,480 		2002		1997 		(4)	
			3040 M Street		- 			7,830 			27,490 			3,256 			7,830 			30,746 			38,576 			5,996 				2006		(4)	
			692 Broadway		- 			6,053 			22,908 			3,388 			6,053 			26,296 			32,349 			5,369 				2005 		(4)	
			715 Lexington Avenue		- 			- 			26,903 			- 			- 			26,903 			26,903 			5,864 		1923 		2001 		(4)	
			677-679 Madison Avenue		- 			13,070 			9,640 			388 			13,070 			10,028 			23,098 			1,890 				2006		(4)	
			330 West 34th Street		- 			- 			8,599 			13,610 			- 			22,209 			22,209 			2,764 		1925		1998		(4)	
			484-486 Broadway		- 			10,000 			6,688 			5,054 			10,000 			11,742 			21,742 			1,432 		2009		2007 		(4)	
			1135 Third Avenue		- 			7,844 			7,844 			4,173 			7,844 			12,017 			19,861 			33 				1997 		(4)	
			431 Seventh Avenue		- 			16,700 			2,751 			- 			16,700 			2,751 			19,451 			464 				2007 		(4)	
			267 West 34th Street		- 			5,099 			10,037 			- 			5,099 			10,037 			15,136 			42 				2013		(4)	
			334 Canal Street		- 			1,693 			6,507 			4,815 			- 			13,015 			13,015 			- 				2011		(4)	
 
151

 

VORNADO REALTY TRUST	
SCHEDULE III	
REAL ESTATE AND ACCUMULATED DEPRECIATION	
(Amounts in thousands)	
COLUMN A		COLUMN B			COLUMN C			COLUMN D			COLUMN E 			COLUMN F		COLUMN G		COLUMN H		COLUMN I 	
																		Gross amount at which 									Life on which	
								Initial cost to company (1)					carried at close of period 									depreciation	
															Costs											Accumulated						in latest	
											Building			capitalized					Buildings 					depreciation						income	
											and			subsequent					and  					and		Date of		Date		statement	
Description	Encumbrances	Land		improvements			to acquisition			Land 		improvements 		Total (2) 		amortization		construction (3)		acquired		is computed	
			1540 Broadway Garage	$	- 		$	4,086 		$	8,914 		$	- 		$	4,086 		$	8,914 		$	13,000 		$	1,687 		1990 		2006 		(4)	
			966 Third Avenue		- 			8,869 			3,631 			- 			8,869 			3,631 			12,500 			30 				2013		(4)	
			148 Spring Street		- 			3,200 			8,112 			374 			3,200 			8,486 			11,686 			1,159 				2008 		(4)	
			608 Fifth Avenue		- 			- 			- 			10,572 			- 			10,572 			10,572 			- 		1932		2012		(4)	
			150 Spring Street		- 			3,200 			5,822 			192 			3,200 			6,014 			9,214 			860 				2008 		(4)	
			488 Eighth Avenue		- 			10,650 			1,767 			(4,671)			6,862 			884 			7,746 			134 				2007 		(4)	
			484 Eighth Avenue		- 			3,856 			762 			299 			3,856 			1,061 			4,917 			324 				1997 		(4)	
			825 Seventh Avenue		- 			1,483 			697 			33 			1,483 			730 			2,213 			302 				1997 		(4)	
			Other (Primarily Signage)		- 			- 			5,548 			43,641 			- 			49,189 			49,189 			9,669 							
				Total New York		4,035,204 			2,216,487 			4,733,084 			1,341,339 			2,210,080 			6,080,830 			8,290,910 			1,416,874 							
																																		
		New Jersey																														
			Paramus		- 			- 			- 			27,673 			1,033 			26,640 			27,673 			15,897 		1967 		1987 		(4)	
																																		
		Other Properties																														
			Hotel Pennsylvania		- 			29,903 			121,712 			78,876 			29,903 			200,588 			230,491 			80,180 		1919		1997		(4)	
																																		
	Total New York		4,035,204 			2,246,390 			4,854,796 			1,447,888 			2,241,016 			6,308,058 			8,549,074 			1,512,951 							
																																		
	Washington, DC																														
		Washington, DC																														
			2011-2451 Crystal Drive		226,855 			100,935 			409,920 			132,550 			100,228 			543,177 			643,405 			181,658 		1984-1989		2002 		(4)	
			2001 Jefferson Davis Highway,																														
			2100/2200 Crystal Drive, 223 23rd																														
			Street, 2221 South Clark Street, Crystal																														
			City Shops at 2100, 220 20th Street		72,579 			57,213 			131,206 			183,233 			57,070 			314,582 			371,652 			73,439 		1964-1969		2002 		(4)	
			1550-1750 Crystal Drive/																														
			241-251 18th Street		112,987 			64,817 			218,330 			74,331 			64,652 			292,826 			357,478 			90,441 		1974-1980		2002 		(4)	
			Riverhouse Apartments		259,546 			118,421 			125,078 			64,211 			138,696 			169,014 			307,710 			29,476 				2007 		(4)	
			Skyline Place (6 buildings)		458,569 			41,986 			221,869 			29,071 			41,862 			251,064 			292,926 			78,373 		1973-1984		2002 		(4)	
			1215, 1225 S. Clark Street/ 200, 201																														
			12th Street S.		60,674 			47,594 			177,373 			32,917 			47,465 			210,419 			257,884 			66,549 		1983-1987		2002 		(4)	
			1229-1231 25th Street (West End 25)		101,671 			67,049 			5,039 			106,456 			68,198 			110,346 			178,544 			11,499 				2007 		(4)	
			2101 L Street		150,000 			32,815 			51,642 			83,379 			39,768 			128,068 			167,836 			26,103 		1975 		2003 		(4)	
			1800, 1851 and 1901 South Bell Street		- 			37,551 			118,806 			(9,349)			37,551 			109,457 			147,008 			30,997 		1968 		2002 		(4)	
			2200 / 2300 Clarendon Blvd		41,279 			- 			105,475 			40,977 			- 			146,452 			146,452 			47,179 		1988-1989		2002 		(4)	
			Met Park / Warehouses		- 			106,946 			1,326 			26,591 			82,897 			51,966 			134,863 			1,237 				2007 		(4)	
			Bowen Building - 875 15th Street, NW		115,022 			30,077 			98,962 			1,712 			30,176 			100,575 			130,751 			21,759 		2004 		2005 		(4)	
			One Skyline Tower		139,536 			12,266 			75,343 			35,222 			12,231 			110,600 			122,831 			34,684 		1988 		2002 		(4)	
			1875 Connecticut Ave, NW		- 			36,303 			82,004 			4,447 			35,886 			86,868 			122,754 			18,030 		1963 		2007 		(4)	
 
152

 

VORNADO REALTY TRUST	
SCHEDULE III	
REAL ESTATE AND ACCUMULATED DEPRECIATION	
(Amounts in thousands)	
COLUMN A		COLUMN B			COLUMN C			COLUMN D			COLUMN E 			COLUMN F		COLUMN G		COLUMN H		COLUMN I 	
																		Gross amount at which 									Life on which	
								Initial cost to company (1)					carried at close of period 									depreciation	
															Costs											Accumulated						in latest	
											Building			capitalized					Buildings 					depreciation						income	
											and			subsequent					and  					and		Date of		Date		statement	
Description	Encumbrances	Land		improvements			to acquisition			Land 		improvements 		Total (2) 		amortization		construction (3)		acquired		is computed	
			1399 New York Avenue, NW	$	- 		$	33,481 		$	67,363 		$	4,236 		$	34,178 		$	70,902 		$	105,080 		$	4,880 				2011 		(4)	
			1825 Connecticut Ave, NW		- 			33,090 			61,316 			(5,122)			32,726 			56,558 			89,284 			11,695 		1956 		2007 		(4)	
			1235 S. Clark Street		- 			15,826 			53,894 			17,221 			15,826 			71,115 			86,941 			20,001 		1981 		2002 		(4)	
			Commerce Executive		- 			13,401 			58,705 			14,473 			13,140 			73,439 			86,579 			24,578 		1985-1989		2002 		(4)	
			Seven Skyline Place		104,419 			10,292 			58,351 			2,210 			10,262 			60,591 			70,853 			16,367 		2001 		2002 		(4)	
			Crystal City Hotel		- 			8,000 			47,191 			8,993 			8,000 			56,184 			64,184 			12,890 		1968 		2004 		(4)	
			1150 17th Street		28,728 			23,359 			24,876 			15,276 			24,723 			38,788 			63,511 			13,523 		1970 		2002 		(4)	
			1750 Pennsylvania Avenue		- 			20,020 			30,032 			5,410 			21,170 			34,292 			55,462 			9,446 		1964 		2002 		(4)	
			H Street - North 10-1D Land Parcel		- 			104,473 			55 			(49,301)			46,866 			8,361 			55,227 			- 				2007 		(4)	
			1730 M Street		14,853 			10,095 			17,541 			9,867 			10,687 			26,816 			37,503 			10,017 		1963 		2002 		(4)	
			Democracy Plaza One		- 			- 			33,628 			2,772 			- 			36,400 			36,400 			15,039 		1987 		2002 		(4)	
			1726 M Street		- 			9,450 			22,062 			3,588 			9,455 			25,645 			35,100 			5,270 		1964 		2006 		(4)	
			Crystal Drive Retail		- 			- 			20,465 			5,753 			- 			26,218 			26,218 			9,985 		2004 		2004 		(4)	
			1109 South Capitol Street		- 			11,541 			178 			(205)			11,597 			(83)			11,514 			- 				2007 		(4)	
			South Capitol		- 			4,009 			6,273 			(2,078)			- 			8,204 			8,204 			- 				2005 		(4)	
			H Street		- 			1,763 			641 			41 			1,763 			682 			2,445 			143 				2005 		(4)	
			Other		- 			- 			51,767 			(42,411)			- 			9,356 			9,356 			45 							
	Total Washington, DC		1,886,718 			1,052,773 			2,376,711 			796,471 			997,073 			3,228,882 			4,225,955 			865,303 							
																																		
	Retail Properties																														
		California																														
			Los Angeles (Beverly Connection)		- 			72,996 			131,510 			25,162 			72,995 			156,673 			229,668 			26,727 		2008		2005		(4)	
			Walnut Creek (1149 S. Main St)		- 			2,699 			19,930 			- 			2,699 			19,930 			22,629 			4,088 				2006		(4)	
			Signal Hill		- 			9,652 			2,940 			1 			9,652 			2,941 			12,593 			533 				2006		(4)	
			Walnut Creek (1556 Mount Diablo Blvd)		- 			5,909 			- 			1,536 			5,908 			1,537 			7,445 			73 				2007		(4)	
			Vallejo		- 			- 			2,945 			221 			- 			3,166 			3,166 			549 				2006		(4)	
			Colton (1904 North Rancho Avenue)		- 			1,239 			954 			- 			1,239 			954 			2,193 			225 				2004		(4)	
			Riverside (5571 Mission Blvd)		- 			209 			704 			- 			209 			704 			913 			166 				2004		(4)	
				Total California		- 			92,704 			158,983 			26,920 			92,702 			185,905 			278,607 			32,361 							
																																		
		Connecticut																														
			Waterbury		13,941 			667 			4,504 			4,111 			667 			8,615 			9,282 			5,746 		1969		1969		(4)	
			Newington		11,206 			2,421 			1,200 			691 			2,421 			1,891 			4,312 			720 		1965		1965		(4)	
				Total Connecticut		25,147 			3,088 			5,704 			4,802 			3,088 			10,506 			13,594 			6,466 							
																																		
		Illinois																														
			Lansing		- 			2,135 			1,064 			71 			2,135 			1,135 			3,270 			205 				2006		(4)	
 
153

 

VORNADO REALTY TRUST	
SCHEDULE III	
REAL ESTATE AND ACCUMULATED DEPRECIATION	
(Amounts in thousands)	
COLUMN A		COLUMN B			COLUMN C			COLUMN D			COLUMN E 			COLUMN F		COLUMN G		COLUMN H		COLUMN I 	
																		Gross amount at which 									Life on which	
								Initial cost to company (1)					carried at close of period 									depreciation	
															Costs											Accumulated						in latest	
											Building			capitalized					Buildings 					depreciation						income	
											and			subsequent					and  					and		Date of		Date		statement	
Description	Encumbrances	Land		improvements			to acquisition			Land 		improvements 		Total (2) 		amortization		construction (3)		acquired		is computed	
		Iowa 																														
			Dubuque 	$	- 		$ 	- 		$ 	1,479 		$ 	- 		$ 	- 		$ 	1,479 		$ 	1,479 		$ 	266 				2006		(4)	
																																		
		Maryland																														
			Rockville		- 			3,470 			20,599 			93 			3,470 			20,692 			24,162 			4,559 				2005 		(4)	
			Baltimore (Towson)		15,581 			581 			3,227 			10,134 			581 			13,361 			13,942 			5,281 		1968 		1968 		(4)	
			Annapolis		- 			- 			9,652 			- 			- 			9,652 			9,652 			2,705 				2005 		(4)	
			Wheaton		- 			- 			5,367 			- 			- 			5,367 			5,367 			973 				2006		(4)	
			Glen Burnie		- 			462 			2,571 			1,262 			462 			3,833 			4,295 			2,959 		1958		1958 		(4)	
				Total Maryland		15,581 			4,513 			41,416 			11,489 			4,513 			52,905 			57,418 			16,477 							
																																		
		Massachusetts																														
			Springfield		5,713 			2,797 			2,471 			592 			2,797 			3,063 			5,860 			982 		1993		1966		(4)	
			Chicopee		8,282 			895 			- 			- 			895 			- 			895 			- 		1969		1969		(4)	
			Cambridge		- 			- 			- 			260 			- 			260 			260 			149 							
				Total Massachusetts		13,995 			3,692 			2,471 			852 			3,692 			3,323 			7,015 			1,131 							
																																		
		Michigan																														
			Roseville		- 			30 			6,128 			1,461 			30 			7,589 			7,619 			2,223 				2005		(4)	
			Battle Creek		- 			1,264 			2,144 			(2,443)			264 			701 			965 			127 				2006		(4)	
			Midland		- 			- 			133 			- 			- 			133 			133 			24 				2006		(4)	
				Total Michigan 		- 			1,294 			8,405 			(982)			294 			8,423 			8,717 			2,374 							
																																		
		New Hampshire 																														
			Salem 		- 			6,083 			- 			- 			6,083 			- 			6,083 			- 				2006		(4)	
																																		
		New Jersey																														
			Paramus (Bergen Town Center)		300,000 			19,884 			81,723 			372,514 			37,635 			436,486 			474,121 			69,290 		1957/2009		2003		(4)	
			North Bergen (Tonnelle Ave)		75,000 			24,493 			- 			63,816 			31,806 			56,503 			88,309 			7,814 		2009		2006		(4)	
			Union (Springfield Avenue)		28,428 			19,700 			45,090 			- 			19,700 			45,090 			64,790 			7,421 				2007		(4)	
			Wayne Towne Center		- 			- 			26,137 			11,926 			- 			38,063 			38,063 			3,651 				2010		(4)	
			East Rutherford		13,558 			- 			36,727 			60 			- 			36,787 			36,787 			4,582 		2007		2007		(4)	
			Garfield		- 			45 			8,068 			25,807 			45 			33,875 			33,920 			5,413 		2009		1998		(4)	
			East Hanover I and II		42,696 			2,232 			18,241 			11,224 			2,671 			29,026 			31,697 			14,988 		1962		1962/1998		(4)	
			Lodi (Washington Street)		8,433 			7,606 			13,125 			2,252 			7,606 			15,377 			22,983 			3,043 				2004		(4)	
			Bricktown		31,872 			1,391 			11,179 			6,224 			1,391 			17,403 			18,794 			11,699 		1968		1968		(4)	
			Hazlet		- 			7,400 			9,413 			- 			7,400 			9,413 			16,813 			1,549 				2007		(4)	
			Totowa		24,710 			120 			11,994 			4,561 			120 			16,555 			16,675 			12,369 		1957/1999		1957		(4)	
			Carlstadt		- 			- 			16,457 			1 			- 			16,458 			16,458 			2,546 				2007		(4)	
			East Brunswick II (339-341 Route 18 S.)		11,754 			2,098 			10,949 			2,938 			2,098 			13,887 			15,985 			8,842 		1972		1972		(4)	
			Marlton		17,221 			1,611 			3,464 			9,961 			1,454 			13,582 			15,036 			7,905 		1973		1973		(4)	
 
154

 

VORNADO REALTY TRUST	
SCHEDULE III	
REAL ESTATE AND ACCUMULATED DEPRECIATION	
(Amounts in thousands)	
COLUMN A		COLUMN B			COLUMN C			COLUMN D			COLUMN E 			COLUMN F		COLUMN G		COLUMN H		COLUMN I 	
																		Gross amount at which 									Life on which	
								Initial cost to company (1)					carried at close of period 									depreciation	
															Costs											Accumulated						in latest	
											Building			capitalized					Buildings 					depreciation						income	
											and			subsequent					and  					and		Date of		Date		statement	
Description	Encumbrances	Land		improvements			to acquisition			Land 		improvements 		Total (2) 		amortization		construction (3)		acquired		is computed	
			Hackensack	$	40,455 		$ 	692 		$ 	10,219 		$ 	2,911 		$ 	692 		$ 	13,130 		$ 	13,822 		$ 	9,301 		1963		1963		(4)	
			Union (Route 22 and Morris Ave)		32,255 			3,025 			7,470 			2,618 			3,025 			10,088 			13,113 			5,037 		1962		1962		(4)	
			Manalapan		20,993 			725 			7,189 			4,924 			1,046 			11,792 			12,838 			7,868 		1971		1971		(4)	
			Cherry Hill		13,831 			5,864 			2,694 			3,821 			4,864 			7,515 			12,379 			3,807 		1964		1964		(4)	
			South Plainfield		5,112 			- 			10,044 			1,562 			- 			11,606 			11,606 			1,825 				2007		(4)	
			Watchung		15,034 			4,178 			5,463 			1,526 			4,441 			6,726 			11,167 			3,980 		1994		1959		(4)	
			Englewood		11,760 			2,300 			17,245 			(8,390)			1,495 			9,660 			11,155 			285 				2007		(4)	
			Eatontown		- 			4,653 			4,999 			326 			4,653 			5,325 			9,978 			1,210 				2005		(4)	
			Dover		13,121 			559 			6,363 			2,962 			559 			9,325 			9,884 			6,380 		1964		1964		(4)	
			Lodi (Route 17 N.)		11,316 			238 			9,446 			- 			238 			9,446 			9,684 			3,363 		1999		1975		(4)	
			North Plainfield		- 			500 			13,983 			(5,785)			500 			8,198 			8,698 			2,709 		1955		1989		(4)	
			Jersey City		20,227 			652 			7,495 			468 			652 			7,963 			8,615 			2,621 		1965		1965		(4)	
			Morris Plains		21,321 			1,104 			6,411 			915 			1,104 			7,326 			8,430 			6,810 		1961		1985		(4)	
			Middletown		17,330 			283 			5,248 			1,947 			283 			7,195 			7,478 			5,542 		1963		1963		(4)	
			East Brunswick I (325-333 Route 18 S.)		24,820 			319 			6,220 			586 			319 			6,806 			7,125 			6,712 		1957		1957		(4)	
			Woodbridge		20,610 			1,509 			2,675 			1,867 			1,539 			4,512 			6,051 			2,600 		1959		1959		(4)	
			Delran		- 			756 			4,468 			724 			756 			5,192 			5,948 			5,192 		1972		1972		(4)	
			Lawnside		10,660 			851 			3,164 			1,351 			851 			4,515 			5,366 			4,198 		1969		1969		(4)	
			Kearny		- 			309 			3,376 			1,211 			309 			4,587 			4,896 			3,530 		1938		1959		(4)	
			Bordentown		- 			498 			3,176 			1,178 			713 			4,139 			4,852 			4,058 		1958		1958		(4)	
			Turnersville		- 			900 			1,342 			1,094 			900 			2,436 			3,336 			2,195 		1974		1974		(4)	
			North Bergen (Kennedy Blvd)		5,084 			2,308 			636 			48 			2,308 			684 			2,992 			458 		1993		1959		(4)	
			Montclair		2,624 			66 			419 			381 			66 			800 			866 			684 		1972		1972		(4)	
				Total New Jersey		840,225 			118,869 			432,312 			529,529 			143,239 			937,471 			1,080,710 			251,477 							
																																		
		New York																														
			Bronx (Bruckner Blvd)		- 			66,100 			259,503 			(18,471)			62,243 			244,889 			307,132 			45,494 				2007		(4)	
			Hicksville (Broadway Mall)		- 			126,324 			48,904 			(79,777)			64,513 			30,938 			95,451 			2,748 				2005 		(4)	
			Huntington		16,619 			21,200 			33,667 			1,377 			21,200 			35,044 			56,244 			5,292 				2007 		(4)	
			Mt. Kisco		28,206 			22,700 			26,700 			442 			23,297 			26,545 			49,842 			4,002 				2007		(4)	
			Poughkeepsie		- 			12,733 			12,026 			16,556 			8,469 			32,846 			41,315 			5,348 		2009		2005 		(4)	
			Bronx (1750-1780 Gun Hill Road)		- 			6,427 			11,885 			19,156 			6,428 			31,040 			37,468 			4,109 		2009		2005 		(4)	
			Staten Island		17,000 			11,446 			21,262 			959 			11,446 			22,221 			33,667 			5,454 				2004 		(4)	
			Inwood		- 			12,419 			19,097 			588 			12,419 			19,685 			32,104 			4,413 				2004		(4)	
			Queens (99-01 Queens Blvd)		- 			7,839 			20,392 			2,123 			7,839 			22,515 			30,354 			5,567 				2004 		(4)	
			West Babylon		- 			6,720 			13,786 			27 			6,720 			13,813 			20,533 			2,347 				2007		(4)	
			Buffalo (Amherst)		- 			5,743 			4,056 			9,966 			5,107 			14,658 			19,765 			5,409 		1968		1968		(4)	
			Freeport (437 E. Sunrise Highway)		21,321 			1,231 			4,747 			1,453 			1,231 			6,200 			7,431 			5,178 		1981		1981		(4)	
			Dewitt		- 			- 			7,116 			- 			- 			7,116 			7,116 			1,277 				2006		(4)	
			Oceanside		- 			2,710 			2,306 			- 			2,710 			2,306 			5,016 			379 				2007		(4)	
 
155

 

VORNADO REALTY TRUST	
SCHEDULE III	
REAL ESTATE AND ACCUMULATED DEPRECIATION	
(Amounts in thousands)	
COLUMN A		COLUMN B			COLUMN C			COLUMN D			COLUMN E 			COLUMN F		COLUMN G		COLUMN H		COLUMN I 	
																		Gross amount at which 									Life on which	
								Initial cost to company (1)					carried at close of period 									depreciation	
															Costs											Accumulated						in latest	
											Building			capitalized					Buildings 					depreciation						income	
											and			subsequent					and  					and		Date of		Date		statement	
Description	Encumbrances	Land		improvements			to acquisition			Land 		improvements 		Total (2) 		amortization		construction (3)		acquired		is computed	
			Albany (Menands)	$	- 		$ 	460 		$ 	2,091 		$ 	2,389 		$ 	460 		$ 	4,480 		$ 	4,940 		$ 	3,620 		1965		1965		(4)	
			Rochester (Henrietta)		- 			- 			2,647 			892 			- 			3,539 			3,539 			3,229 		1971		1971		(4)	
			Rochester		4,374 			2,172 			- 			- 			2,172 			- 			2,172 			- 		1966		1966		(4)	
			Freeport (240 West Sunrise Highway)		- 			- 			- 			260 			- 			260 			260 			128 				2005		(4)	
			Commack		- 			- 			43 			184 			- 			227 			227 			88 				2006		(4)	
			New Hyde Park		- 			- 			4 			- 			- 			4 			4 			126 		1970		1976		(4)	
				Total New York		87,520 			306,224 			490,232 			(41,876)			236,254 			518,326 			754,580 			104,208 							
																																		
		Pennsylvania																														
			Wilkes-Barre		19,898 			6,053 			26,646 			424 			6,053 			27,070 			33,123 			4,129 				2007 		(4)	
			Allentown		29,904 			187 			15,580 			1,584 			187 			17,164 			17,351 			13,169 		1957		1957		(4)	
			Bensalem		14,843 			2,727 			6,698 			1,895 			2,727 			8,593 			11,320 			3,443 		1972/1999		1972		(4)	
			Bethlehem		5,576 			827 			5,200 			960 			839 			6,148 			6,987 			5,530 		1966		1966		(4)	
			Wyomissing		- 			- 			2,646 			2,381 			- 			5,027 			5,027 			3,139 				2005		(4)	
			York		5,194 			409 			2,568 			1,566 			409 			4,134 			4,543 			3,609 		1970		1970		(4)	
			Broomall		10,660 			850 			2,171 			1,224 			850 			3,395 			4,245 			2,696 		1966		1966		(4)	
			Lancaster		5,385 			3,140 			63 			711 			3,140 			774 			3,914 			491 		1966		1966		(4)	
			Glenolden		6,834 			850 			1,820 			568 			850 			2,388 			3,238 			2,022 		1975		1975		(4)	
			Springfield		- 			- 			- 			80 			- 			80 			80 			44 				2005		(4)	
				Total Pennsylvania		98,294 			15,043 			63,392 			11,393 			15,055 			74,773 			89,828 			38,272 							
																																		
		South Carolina 																														
			Charleston 		- 			- 			3,634 			- 			- 			3,634 			3,634 			659 				2006		(4)	
																																		
		Tennessee 																														
			Antioch 		- 			1,521 			2,386 			- 			1,521 			2,386 			3,907 			432 				2006		(4)	
																																		
		Virginia																														
			Springfield (Springfield Mall)		- 			49,516 			265,964 			17,936 			849 			332,567 			333,416 			830 				2006		(4)	
			Norfolk		- 			- 			3,927 			15 			- 			3,942 			3,942 			2,684 				2005		(4)	
				Total Virginia 		- 			49,516 			269,891 			17,951 			849 			336,509 			337,358 			3,514 							
																																		
		Wisconsin 																														
			Fond Du Lac		- 			- 			174 			102 			- 			276 			276 			93 				2006		(4)	
																																		
		Puerto Rico																														
			Las Catalinas		- 			15,280 			64,370 			9,015 			15,280 			73,385 			88,665 			28,700 		1996		2002		(4)	
			Montehiedra		120,000 			9,182 			66,751 			7,874 			9,267 			74,540 			83,807 			29,843 		1996		1997		(4)	
				Total Puerto Rico		120,000 			24,462 			131,121 			16,889 			24,547 			147,925 			172,472 			58,543 							
																																		
		Other		- 			- 			- 			3,861 			- 			3,861 			3,861 			487 						(4)	
						 																												
	Total Retail Properties		1,200,762 			629,144 			1,612,664 			581,001 			533,972 			2,288,837 			2,822,809 			516,965 							
 
156

 

VORNADO REALTY TRUST	
SCHEDULE III	
REAL ESTATE AND ACCUMULATED DEPRECIATION	
(Amounts in thousands)	
COLUMN A		COLUMN B			COLUMN C			COLUMN D			COLUMN E 			COLUMN F		COLUMN G		COLUMN H		COLUMN I 	
																		Gross amount at which 									Life on which	
								Initial cost to company (1)					carried at close of period 									depreciation	
															Costs											Accumulated						in latest	
											Building			capitalized					Buildings 					depreciation						income	
											and			subsequent					and  					and		Date of		Date		statement	
Description	Encumbrances	Land		improvements			to acquisition			Land 		improvements 		Total (2) 		amortization		construction (3)		acquired		is computed	
	Merchandise Mart																														
		Illinois																														
			Merchandise Mart, Chicago	$	550,000 		$	64,528 		$	319,146 		$	247,014 		$	64,535 		$	566,153 		$	630,688 		$	186,040 		1930 		1998 		(4)	
			527 W. Kinzie, Chicago		- 			5,166 			- 			- 			5,166 			- 			5,166 			- 							
				Total Illinois		550,000 			69,694 			319,146 			247,014 			69,701 			566,153 			635,854 			186,040 							
																																		
		New York																														
			7 West 34th Street		- 			34,614 			94,167 			35,522 			34,614 			129,689 			164,303 			38,836 		1901 		2000 		(4)	
			MMPI Piers		- 			- 			- 			11,702 			- 			11,702 			11,702 			749 				2008 		(4)	
				Total New York		- 			34,614 			94,167 			47,224 			34,614 			141,391 			176,005 			39,585 							
																																		
	Total Merchandise Mart		550,000 			104,308 			413,313 			294,238 			104,315 			707,544 			811,859 			225,625 							
																																		
	Warehouse/Industrial																														
		New Jersey																														
			East Hanover		- 			576 			7,752 			9,039 			691 			16,676 			17,367 			13,996 		1972		1972		(4)	
	Total Warehouse/Industrial		- 			576 			7,752 			9,039 			691 			16,676 			17,367 			13,996 							
																																		
	Other																														
			555 California Street 		600,000 			221,903 			893,324 			49,758 			221,903 			943,082 			1,164,985 			169,495 		1922/1969/1970		2007 		(4)	
			220 Central Park South 		- 			115,720 			16,420 			367,471 			- 			499,611 			499,611 			- 				2005		(4)	
			Borgata Land, Atlantic City, NJ 		59,309 			83,089 			7 			(7)			83,089 			- 			83,089 			- 				2010		(4)	
			40 East 66th Residential 		- 			29,199 			85,798 			(82,151)			12,765 			20,081 			32,846 			3,777 				2005		(4)	
			677-679 Madison 		- 			1,462 			1,058 			285 			1,627 			1,178 			2,805 			283 				2006		(4)	
			Other  		- 			28,052 			- 			(16,349)			9,364 			2,339 			11,703 			- 				2005		(4)	
	Total Other		659,309 			479,425 			996,607 			319,007 			328,748 			1,466,291 			1,795,039 			173,555 							
																																		
	Leasehold Improvements																														
		Equipment and Other		- 			- 			- 			132,523 			- 			132,523 			132,523 			102,538 							
		Total December 31, 2013	$	8,331,993 		$ 	4,512,616 		$ 	10,261,843 		$ 	3,580,167 		$ 	4,205,815 		$ 	14,148,811 		$ 	18,354,626 		$ 	3,410,933 							
157

 

VORNADO REALTY TRUST	
SCHEDULE III	
REAL ESTATE AND ACCUMULATED DEPRECIATION	
			
Notes:			
			
(1)		Initial cost is cost as of January 30, 1982 (the date on which Vornado commenced real estate operations) unless acquired subsequent to that date see Column H.	
(2)		The net basis of the Company’s assets and liabilities for tax purposes is approximately $3.6 billion lower than the amount reported for financial statement purposes.	
(3)		Date of original construction –– many properties have had substantial renovation or additional construction –– see Column D.	
(4)		Depreciation of the buildings and improvements are calculated over lives ranging from the life of the lease to forty years.	
 
158

 

VORNADO REALTY TRUST	
SCHEDULE III	
REAL ESTATE AND ACCUMULATED DEPRECIATION	
(AMOUNTS IN THOUSANDS)	
														
The following is a reconciliation of real estate assets and accumulated depreciation:	
														
				Year Ended December 31,			
				2013 		2012 		2011 			
	Real Estate											
		Balance at beginning of period	$	18,238,218 		$	16,421,701 		$	16,193,864 			
		Additions during the period:											
			Land		131,646 			514,950 			33,481 			
			Buildings & improvements		1,014,876 			1,615,077 			315,762 			
					19,384,740 			18,551,728 			16,543,107 			
		Less: Assets sold, written-off and deconsolidated		1,030,114 			313,510 			121,406 			
		Balance at end of period	$	18,354,626 		$	18,238,218 		$	16,421,701 			
														
	Accumulated Depreciation											
		Balance at beginning of period	$	3,072,269 		$	2,874,529 		$	2,520,818 			
		Additions charged to operating expenses		423,844 			427,189 			452,793 			
					3,496,113 			3,301,718 			2,973,611 			
		Less: Accumulated depreciation on assets sold and written-off		85,180 			229,449 			99,082 			
		Balance at end of period	$	3,410,933 		$	3,072,269 		$	2,874,529 			
159

 

	EXHIBIT INDEX	
 						 	
Exhibit No.						
	3.1 		-	Articles of Restatement of Vornado Realty Trust, as filed with the State	*	
					Department of Assessments and Taxation of Maryland on July 30, 2007 - Incorporated		
					by reference to Exhibit 3.75 to Vornado Realty Trust’s Quarterly Report on Form 10-Q		
					for the quarter ended June 30, 2007 (File No. 001-11954), filed on July 31, 2007		
							
	3.2 		-	Amended and Restated Bylaws of Vornado Realty Trust, as amended on March 2, 2000 -	*	
					Incorporated by reference to Exhibit 3.12 to Vornado Realty Trust’s Annual Report on		
					Form 10-K for the year ended December 31, 1999 (File No. 001-11954), filed on		
					March 9, 2000		
							
	3.3 		-	Articles Supplementary, 5.40% Series L Cumulative Redeemable Preferred Shares of	*	
					Beneficial Interest, liquidation preference $25.00 per share, no par value – Incorporated by		
					reference to Exhibit 3.6 to Vornado Realty Trust’s Registration Statement on Form 8-A		
					(File No. 001-11954), filed on January 25, 2013		
							
	3.4 		-	Second Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P.,	*	
					dated as of October 20, 1997 (the “Partnership Agreement”) – Incorporated by reference		
					to Exhibit 3.26 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for the quarter		
					ended March 31, 2003 (File No. 001-11954), filed on May 8, 2003		
							
	3.5 		-	Amendment to the Partnership Agreement, dated as of December 16, 1997 – Incorporated by	*	
					reference to Exhibit 3.27 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for		
					the quarter ended March 31, 2003 (File No. 001-11954), filed on May 8, 2003		
							
	3.6 		-	Second Amendment to the Partnership Agreement, dated as of April 1, 1998 – Incorporated	*	
					by reference to Exhibit 3.5 to Vornado Realty Trust’s Registration Statement on Form S-3		
					(File No. 333-50095), filed on April 14, 1998		
							
	3.7 		-	Third Amendment to the Partnership Agreement, dated as of November 12, 1998 -	*	
					Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on		
					Form 8-K (File No. 001-11954), filed on November 30, 1998		
							
	3.8 		-	Fourth Amendment to the Partnership Agreement, dated as of November 30, 1998 -	*	
					Incorporated by reference to Exhibit 3.1 to Vornado Realty Trust’s Current Report on		
					Form 8-K (File No. 001-11954), filed on February 9, 1999		
							
	3.9 		-	Fifth Amendment to the Partnership Agreement, dated as of March 3, 1999 - Incorporated by	*	
					reference to Exhibit 3.1 to Vornado Realty Trust’s Current Report on Form 8-K		
					(File No. 001-11954), filed on March 17, 1999		
							
	3.10		-	Sixth Amendment to the Partnership Agreement, dated as of March 17, 1999 - Incorporated	*	
					by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on Form 8-K		
					(File No. 001-11954), filed on July 7, 1999		
							
	3.11 		-	Seventh Amendment to the Partnership Agreement, dated as of May 20, 1999 - Incorporated	*	
					by reference to Exhibit 3.3 to Vornado Realty Trust’s Current Report on Form 8-K		
					(File No. 001-11954), filed on July 7, 1999		
							
	3.12 		-	Eighth Amendment to the Partnership Agreement, dated as of May 27, 1999 - Incorporated	*	
					by reference to Exhibit 3.4 to Vornado Realty Trust’s Current Report on Form 8-K		
					(File No. 001-11954), filed on July 7, 1999		
							
	3.13 		-	Ninth Amendment to the Partnership Agreement, dated as of September 3, 1999 -	*	
					Incorporated by reference to Exhibit 3.3 to Vornado Realty Trust’s Current Report on		
					Form 8-K (File No. 001-11954), filed on October 25, 1999		
							
					_______________________		
		*			Incorporated by reference.		
 
160

 

  	3.14		-	Tenth Amendment to the Partnership Agreement, dated as of September 3, 1999 -	*	
					Incorporated by reference to exhibit 3,4 to Vornado Realty Trust's Current Report on		
					Form 8-K (File No. 001-11954), filed on October 25, 1999		
							
	3.15		-	Eleventh Amendment to the Partnership Agreement, dated as of November 24, 1999 -	*	
					Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on		
					Form 8-K (File No. 001-11954), filed on December 23, 1999		
							
	3.16		-	Twelfth Amendment to the Partnership Agreement, dated as of May 1, 2000 - Incorporated	*	
					by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on Form 8-K		
					(File No. 001-11954), filed on May 19, 2000		
							
	3.17		-	Thirteenth Amendment to the Partnership Agreement, dated as of May 25, 2000 -	*	
					Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on		
					Form 8-K (File No. 001-11954), filed on June 16, 2000		
							
	3.18		-	Fourteenth Amendment to the Partnership Agreement, dated as of December 8, 2000 -	*	
					Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on		
					Form 8-K (File No. 001-11954), filed on December 28, 2000		
							
	3.19		-	Fifteenth Amendment to the Partnership Agreement, dated as of December 15, 2000 -	*	
					Incorporated by reference to Exhibit 4.35 to Vornado Realty Trust’s Registration		
					Statement on Form S-8 (File No. 333-68462), filed on August 27, 2001		
							
	3.20		-	Sixteenth Amendment to the Partnership Agreement, dated as of July 25, 2001 - Incorporated	*	
					by reference to Exhibit 3.3 to Vornado Realty Trust’s Current Report on Form 8-K		
					(File No. 001 11954), filed on October 12, 2001		
							
	3.21		-	Seventeenth Amendment to the Partnership Agreement, dated as of September 21, 2001 -	*	
					Incorporated by reference to Exhibit 3.4 to Vornado Realty Trust’s Current Report on		
					Form 8 K (File No. 001-11954), filed on October 12, 2001		
							
	3.22		-	Eighteenth Amendment to the Partnership Agreement, dated as of January 1, 2002 -	*	
					Incorporated by reference to Exhibit 3.1 to Vornado Realty Trust’s Current Report on		
					Form 8-K/A (File No. 001-11954), filed on March 18, 2002		
							
	3.23		-	Nineteenth Amendment to the Partnership Agreement, dated as of July 1, 2002 - Incorporated	*	
					by reference to Exhibit 3.47 to Vornado Realty Trust’s Quarterly Report on Form 10-Q		
					for the quarter ended June 30, 2002 (File No. 001-11954), filed on August 7, 2002		
							
	3.24		-	Twentieth Amendment to the Partnership Agreement, dated April 9, 2003 - Incorporated by	*	
					reference to Exhibit 3.46 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for		
					the quarter ended March 31, 2003 (File No. 001-11954), filed on May 8, 2003		
							
	3.25		-	Twenty-First Amendment to the Partnership Agreement, dated as of July 31, 2003 -	*	
					Incorporated by reference to Exhibit 3.47 to Vornado Realty Trust’s Quarterly Report		
					on Form 10-Q for the quarter ended September 30, 2003 (File No. 001-11954), filed on		
					November 7, 2003		
							
	3.26		-	Twenty-Second Amendment to the Partnership Agreement, dated as of November 17, 2003 –	*	
					Incorporated by reference to Exhibit 3.49 to Vornado Realty Trust’s Annual Report on		
					Form 10-K for the year ended December 31, 2003 (File No. 001-11954), filed on		
					March 3, 2004		
							
	3.27		-	Twenty-Third Amendment to the Partnership Agreement, dated May 27, 2004 – Incorporated	*	
					by reference to Exhibit 99.2 to Vornado Realty Trust’s Current Report on Form 8-K		
					(File No. 001-11954), filed on June 14, 2004		
							
					_______________________		
		*			Incorporated by reference.		
 
161

 

  	3.28		-	Twenty-Fourth Amendment to the Partnership Agreement, dated August 17, 2004 –	*	
			 		Incorporated by reference to Exhibit 3.57 to Vornado Realty Trust and Vornado Realty		
			 		L.P.’s Registration Statement on Form S-3 (File No. 333-122306), filed on		
			 		January 26, 2005		
			 				
	3.29		-	Twenty-Fifth Amendment to the Partnership Agreement, dated November 17, 2004 –	*	
			 		Incorporated by reference to Exhibit 3.58 to Vornado Realty Trust and Vornado Realty		
			 		L.P.’s Registration Statement on Form S-3 (File No. 333-122306), filed on		
			 		January 26, 2005		
			 				
	3.30		-	Twenty-Sixth Amendment to the Partnership Agreement, dated December 17, 2004 –	*	
			 		Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on		
			 		Form 8-K (File No. 000-22685), filed on December 21, 2004		
			 				
	3.31		-	Twenty-Seventh Amendment to the Partnership Agreement, dated December 20, 2004 –	*	
			 		Incorporated by reference to Exhibit 3.2 to Vornado Realty L.P.’s Current Report on		
			 		Form 8-K (File No. 000-22685), filed on December 21, 2004		
			 				
	3.32		-	Twenty-Eighth Amendment to the Partnership Agreement, dated December 30, 2004 -	*	
			 		Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on		
			 		Form 8-K (File No. 000-22685), filed on January 4, 2005		
			 				
	3.33		-	Twenty-Ninth Amendment to the Partnership Agreement, dated June 17, 2005 - Incorporated	*	
			 		by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on Form 8-K		
			 		(File No. 000-22685), filed on June 21, 2005		
			 				
	3.34		-	Thirtieth Amendment to the Partnership Agreement, dated August 31, 2005 - Incorporated by	*	
			 		reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on Form 8-K		
			 		(File No. 000-22685), filed on September 1, 2005		
			 				
	3.35		-	Thirty-First Amendment to the Partnership Agreement, dated September 9, 2005 -	*	
			 		Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on		
			 		Form 8-K (File No. 000-22685), filed on September 14, 2005		
			 				
	3.36		-	Thirty-Second Amendment and Restated Agreement of Limited Partnership, dated as of	*	
			 		December 19, 2005 – Incorporated by reference to Exhibit 3.59 to Vornado Realty L.P.’s		
			 		Quarterly Report on Form 10-Q for the quarter ended March 31, 2006		
			 		(File No. 000-22685), filed on May 8, 2006		
			 				
	3.37		-	Thirty-Third Amendment to Second Amended and Restated Agreement of Limited	*	
			 		Partnership, dated as of April 25, 2006 – Incorporated by reference to Exhibit 10.2 to		
			 		Vornado Realty Trust’s Form 8-K (File No. 001-11954), filed on May 1, 2006		
			 				
	3.38		-	Thirty-Fourth Amendment to Second Amended and Restated Agreement of Limited	*	
			 		Partnership, dated as of May 2, 2006 – Incorporated by reference to Exhibit 3.1 to		
			 		Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on		
			 		May 3, 2006		
			 				
	3.39		-	Thirty-Fifth Amendment to Second Amended and Restated Agreement of Limited	*	
			 		Partnership, dated as of August 17, 2006 – Incorporated by reference to Exhibit 3.1 to		
			 		Vornado Realty L.P.’s Form 8-K (File No. 000-22685), filed on August 23, 2006		
			 				
	3.40		-	Thirty-Sixth Amendment to Second Amended and Restated Agreement of Limited	*	
			 		Partnership, dated as of October 2, 2006 – Incorporated by reference to Exhibit 3.1 to		
			 		Vornado Realty L.P.’s Form 8-K (File No. 000-22685), filed on January 22, 2007		
			 				
			 		_______________________		
		*	 		Incorporated by reference.		
 
162

 

  	3.41		-	Thirty-Seventh Amendment to Second Amended and Restated Agreement of Limited	*	
			 		Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.1 to		
			 		Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on		
			 		June 27, 2007		
			 				
	3.42		-	Thirty-Eighth Amendment to Second Amended and Restated Agreement of Limited	*	
			 		Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.2 to		
			 		Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on		
			 		June 27, 2007		
			 				
	3.43		-	Thirty-Ninth Amendment to Second Amended and Restated Agreement of Limited	*	
			 		Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.3 to		
			 		Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on		
			 		June 27, 2007		
			 				
	3.44		-	Fortieth Amendment to Second Amended and Restated Agreement of Limited	*	
			 		Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.4 to		
			 		Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on		
			 		June 27, 2007		
			 				
	3.45		-	Forty-First Amendment to Second Amended and Restated Agreement of Limited	*	
			 		Partnership, dated as of March 31, 2008 – Incorporated by reference to Exhibit 3.44 to		
			 		Vornado Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31,		
			 		2008 (file No. 001-11954), filed on May 6, 2008		
			 				
	3.46		-	Forty-Second Amendment to Second Amended and Restated Agreement of Limited Partnership,	*	
			 		dated as of December 17, 2010 – Incorporated by reference to Exhibit 99.1 to Vornado		
			 		Realty L.P.'s Current Report on Form 8-K (File No. 000-22685), filed on December 21, 2010		
			 				
	3.47		-	Forty-Third Amendment to Second Amended and Restated Agreement of Limited Partnership,	*	
			 		dated as of April 20, 2011 – Incorporated by reference to Exhibit 3.1 to Vornado		
			 		Realty L.P.'s Current Report on Form 8-K (File No. 000-22685), filed on April 21, 2011		
 	 	 	 	 	 	
	3.48		-	Forty-Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership	*	
			 		dated as of July 18, 2012 – Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s		
			 		Current Report on Form 8-K (File No. 001-34482), filed on July 18, 2012		
 	 	 	 	 	 	 	
 	3.49	 	-	Forty-Fifth Amendment to Second Amended and Restated Agreement of Limited Partnership,	*	
 	 	 	 	 	dated as of January 25, 2013 – Incorporated by reference to Exhibit 3.1 to Vornado Realty	 	
 	 	 	 	 	L.P.’s Current Report on Form 8-K (File No. 001-34482), filed on January 25, 2013	 	
 	 	 	 	 	 	 	
	4.1		-	Indenture, dated as of November 25, 2003, between Vornado Realty L.P. and The Bank of	*	
			 		New York, as Trustee - Incorporated by reference to Exhibit 4.10 to Vornado Realty		
			 		Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005		
			 		(File No. 001-11954), filed on April 28, 2005		
			 				
	4.2		-	Indenture, dated as of November 20, 2006, among Vornado Realty Trust, as Issuer, Vornado	*	
			 		Realty L.P., as Guarantor and The Bank of New York, as Trustee – Incorporated by		
			 		reference to Exhibit 4.1 to Vornado Realty Trust’s Current Report on Form 8-K		
			 		(File No. 001-11954), filed on November 27, 2006		
			 				
			 	Certain instruments defining the rights of holders of long-term debt securities of Vornado		
			 		Realty Trust and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation		
			 		S-K. Vornado Realty Trust hereby undertakes to furnish to the Securities and Exchange		
			 		_______________________		
		*			Incorporated by reference.		
 
163

 

 	10.1		-	Master Agreement and Guaranty, between Vornado, Inc. and Bradlees New Jersey, Inc. dated	*	
					as of May 1, 1992 - Incorporated by reference to Vornado, Inc.’s Quarterly Report on	
	
					Form 10-Q for the quarter ended March 31, 1992 (File No. 001-11954), filed May 8, 1992	

	
	10.2		-	Registration Rights Agreement between Vornado, Inc. and Steven Roth, dated December 29,	*	
					1992 - Incorporated by reference to Vornado Realty Trust’s Annual Report on Form 10-K	
	
					for the year ended December 31, 1992 (File No. 001-11954), filed February 16, 1993	

	
 	10.3 	**	-	Stock Pledge Agreement between Vornado, Inc. and Steven Roth dated December 29, 1992	*	
					- Incorporated by reference to Vornado, Inc.’s Annual Report on Form 10-K for the year		
					ended December 31, 1992 (File No. 001-11954), filed February 16, 1993		
							
 	10.4 	**	-	Management Agreement between Interstate Properties and Vornado, Inc. dated July 13, 1992	*	
					- Incorporated by reference to Vornado, Inc.’s Annual Report on Form 10-K for the year		
					ended December 31, 1992 (File No. 001-11954), filed February 16, 1993		
							
	10.5 	**	-	Employment Agreement, dated as of April 15, 1997, by and among Vornado Realty Trust,	*	
					The Mendik Company, L.P. and David R. Greenbaum - Incorporated by reference to		
					Exhibit 10.4 to Vornado Realty Trust’s Current Report on Form 8-K		
					(File No. 001-11954), filed on April 30, 1997		
							
	10.6 	**	-	Letter agreement, dated November 16, 1999, between Steven Roth and Vornado Realty Trust	*	
					- Incorporated by reference to Exhibit 10.51 to Vornado Realty Trust’s Annual Report on		
					Form 10-K for the year ended December 31, 1999 (File No. 001-11954), filed on		
					March 9, 2000		
							
	10.7 	 	-	Agreement and Plan of Merger, dated as of October 18, 2001, by and among Vornado Realty	*	
					Trust, Vornado Merger Sub L.P., Charles E. Smith Commercial Realty L.P., Charles E.		
					Smith Commercial Realty L.L.C., Robert H. Smith, individually, Robert P. Kogod,		
					dinividually, and Charles E. Smith Management, Inc. - Incorporated by reference to		
 	 	 	 		Exhibit 2.1 to Vornado Realty Trust’s Current Report on Form 8-K (File No. 001-11954),	 	
 	 	 	 		filed on January 16, 2002	 	
							
	10.8 		-	Tax Reporting and Protection Agreement, dated December 31, 2001, by and among Vornado,	*	
					Vornado Realty L.P., Charles E. Smith Commercial Realty L.P. and Charles E. Smith		
					Commercial Realty L.L.C. - Incorporated by reference to Exhibit 10.3 to Vornado Realty		
					Trust’s Current Report on Form 8-K/A (File No. 1-11954), filed on March 18, 2002		
							
	10.9 		-	Employment Agreement between Vornado Realty Trust and Michael D. Fascitelli, dated	*	
					March 8, 2002 - Incorporated by reference to Exhibit 10.7 to Vornado Realty Trust’s		
					Quarterly Report on Form 10-Q for the quarter ended March 31, 2002		
					(File No. 001-11954), filed on May 1, 2002		
							
	10.10		-	First Amendment, dated October 31, 2002, to the Employment Agreement between Vornado	*	
					Realty Trust and Michael D. Fascitelli, dated March 8, 2002 - Incorporated by reference		
					to Exhibit 99.6 to the Schedule 13D filed by Michael D. Fascitelli on November 8, 2002		
							
	10.11 	**	-	Amendment to Real Estate Retention Agreement, dated as of July 3, 2002, by and between	*	
					Alexander’s, Inc. and Vornado Realty L.P. - Incorporated by reference to Exhibit		
					10(i)(E)(3) to Alexander’s Inc.’s Quarterly Report for the quarter ended June 30, 2002		
 	 	 	 		(File No. 001-06064), filed on August 7, 2002	 	
							
	10.12 	**	-	59th Street Real Estate Retention Agreement, dated as of July 3, 2002, by and between	*	
					Vornado Realty L.P., 731 Residential LLC and 731 Commercial LLC - Incorporated by		
					reference to Exhibit 10(i)(E)(4) to Alexander’s Inc.’s Quarterly Report for the quarter		
					ended June 30, 2002 (File No. 001-06064), filed on August 7, 2002		
 	 	 	 	 	_______________________	 	
		*			Incorporated by reference.		
		**			Management contract or compensatory agreement.		

164

 

 	10.13	 	-	Amended and Restated Management and Development Agreement, dated as of July 3, 2002,	*	
 	 	 	 	 	  by and between Alexander's, Inc., the subsidiaries party thereto and Vornado	 	
 	 	 	 	 	  Management Corp. - Incorporated by reference to Exhibit 10(i)(F)(1) to Alexander's	 	
 	 	 	 	 	  Inc.'s Quarterly Report for the quarter ended June 30, 2002 (File No. 001-06064),	 	
 	 	 	 	 	  filed on August 7, 2002	 	
 	 	 	 	 	 	
 	10.14		-	Amendment dated May 29, 2002, to the Stock Pledge Agreement between Vornado Realty	*	
			 	 	Trust and Steven Roth dated December 29, 1992 - Incorporated by reference to Exhibit 5		
			 		of Interstate Properties’ Schedule 13D/A dated May 29, 2002 (File No. 005-44144), filed		
			 		on May 30, 2002		
			 				
	10.15	**	-	Vornado Realty Trust’s 2002 Omnibus Share Plan - Incorporated by reference to Exhibit 4.2	*	
			 		to Vornado Realty Trust’s Registration Statement on Form S-8 (File No. 333-102216)		
			 		filed December 26, 2002		
			 				
	10.16	**	-	Form of Stock Option Agreement between the Company and certain employees –	*	
			 		Incorporated by reference to Exhibit 10.77 to Vornado Realty Trust’s		
			 		Annual Report on Form 10-K for the year ended December 31, 2004		
 	 	 	 		(File No. 001-11954), filed on February 25, 2005	 	
			 				
	10.17	**	-	Form of Restricted Stock Agreement between the Company and certain employees –	*	
			 		Incorporated by reference to Exhibit 10.78 to Vornado Realty Trust’s Annual Report on		
			 		Form 10-K for the year ended December 31, 2004 (File No. 001-11954), filed on		
			 		February 25, 2005		
			 				
	10.18	**	-	Amendment, dated March 17, 2006, to the Vornado Realty Trust Omnibus Share Plan –	*	
			 		Incorporated by reference to Exhibit 10.50 to Vornado Realty Trust’s Quarterly Report on		
			 		Form 10-Q for the quarter ended March 31, 2006 (File No. 001-11954), filed on		
			 		May 2, 2006		
			 				
	10.19	**	-	Form of Vornado Realty Trust 2006 Out-Performance Plan Award Agreement, dated as of	*	
			 		April 25, 2006 – Incorporated by reference to Exhibit 10.1 to Vornado Realty Trust’s		
			 		Form 8-K (File No. 001-11954), filed on May 1, 2006		
			 				
	10.20	**	-	Form of Vornado Realty Trust 2002 Restricted LTIP Unit Agreement – Incorporated by	*	
			 		reference to Vornado Realty Trust’s Form 8-K (Filed No. 001-11954), filed on		
			 		May 1, 2006		
			 				
	10.21	**	-	Amendment No.2, dated May 18, 2006, to the Vornado Realty Trust Omnibus Share Plan	*	
			 		– Incorporated by reference to Exhibit 10.53 to Vornado Realty Trust’s Quarterly		
			 		Report on Form 10-Q for the quarter ended June 30, 2006 (File No. 001-11954), filed		
 	 	 	 		on August 1, 2006	 	
			 				
	10.22	**	-	Amended and Restated Employment Agreement between Vornado Realty Trust and Joseph	*	
			 		Macnow dated July 27, 2006 – Incorporated by reference to Exhibit 10.54 to Vornado		
			 		Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006		
			 		(File No. 001-11954), filed on August 1, 2006		
			 				
	10.23	**	-	Amendment, dated October 26, 2006, to the Vornado Realty Trust Omnibus Share Plan –	*	
			 		Incorporated by reference to Exhibit 10.54 to Vornado Realty Trust’s Quarterly Report		
			 		on Form 10-Q for the quarter ended September 30, 2006 (File No. 001-11954), filed on		
			 		October 31, 2006		
			 				
	10.24	** 	-	Amendment to Real Estate Retention Agreement, dated January 1, 2007, by and between	*	
			 		Vornado Realty L.P. and Alexander’s Inc. – Incorporated by reference to Exhibit 10.55		
			 		to Vornado Realty Trust’s Annual Report on Form 10-K for the year ended		
			 		December 31, 2006 (File No. 001-11954), filed on February 27, 2007		
			 		_______________________		
		*	 		Incorporated by reference.		
		**	 		Management contract or compensatory agreement.		
 
165

 

	10.25	**	-	Amendment to 59th Street Real Estate Retention Agreement, dated January 1, 2007, by and	*	 	
					among Vornado Realty L.P., 731 Retail One LLC, 731 Restaurant LLC, 731 Office One		 	
					LLC and 731 Office Two LLC. – Incorporated by reference to Exhibit 10.56 to		 	
 	 	 	 		Vornado Realty Trust’s Annual Report on Form 10-K for the year ended	 	 	
					December 31, 2006 (File No. 001-11954), filed on February 27, 2007		 	
							 	
	10.26	**	-	Employment Agreement between Vornado Realty Trust and Mitchell Schear, as of April 19,	*	 	
					2007 – Incorporated by reference to Exhibit 10.46 to Vornado Realty Trust’s Quarterly		 	
					Report on Form 10-Q for the quarter ended March 31, 2007 (File No. 001-11954),		 	
					filed on May 1, 2007		 	
							 	
	10.27	**	-	Form of Vornado Realty Trust 2002 Omnibus Share Plan Non-Employee Trustee Restricted	*	 	
					LTIP Unit Agreement – Incorporated by reference to Exhibit 10.45 to Vornado Realty		 	
					Trust’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No.		 	
					001-11954) filed on February 26, 2008		 	
							 	
	10.28	**	-	Form of Vornado Realty Trust 2008 Out-Performance Plan Award Agreement – Incorporated	*	 	
					by reference to Exhibit 10.46 to Vornado Realty Trust’s Quarterly Report on Form 10-Q		 	
					for the quarter ended March 31, 2008 (File No. 001-11954) filed on May 6, 2008		 	
							 	
	10.29	**	-	Amendment to Employment Agreement between Vornado Realty Trust and Michael D.	*	 	
					Fascitelli, dated December 29, 2008. Incorporated by reference to Exhibit 10.47 to		 	
					Vornado Realty Trust’s Annual Report on Form 10-K for the year ended December 31,		 	
 	 	 	 		2008 (File No. 001-11954) filed on February 24, 2009	 	 	
				 	 		 	
	10.30	**	-	Amendment to Employment Agreement between Vornado Realty Trust and Joseph Macnow,	*	 	
					dated December 29, 2008. Incorporated by reference to Exhibit 10.48 to Vornado Realty		 	
					Trust’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No.		 	
					001-11954) filed on February 24, 2009		 	
 	 	 	 	 	 	 	 	
 	10.31	**	-	Amendment to Employment Agreement between Vornado Realty Trust and David R.	*	 	
 	 				Greenbaum, dated December 29, 2008. Incorporated by reference to Exhibit 10.49 to		 	
 	 				Vornado Realty Trust’s Annual Report on Form 10-K for the year ended December 31,		 	
 	 				2008 (File No. 001-11954) filed on February 24, 2009		 	
 	 	 	 	 	 	 	 	
 	10.32	**	-	Amendment to Indemnification Agreement between Vornado Realty Trust and David R.	*	 	
 	 				Greenbaum, dated December 29, 2008. Incorporated by reference to Exhibit 10.50 to		 	
 	 				Vornado Realty Trust’s Annual Report on Form 10-K for the year ended December 31,		 	
 	 				2008 (File No. 001-11954) filed on February 24, 2009		 	
 	 	 	 	 	 	 	 	
 	10.33	**	-	Amendment to Employment Agreement between Vornado Realty Trust and Mitchell N.	*	 	
 	 				Schear, dated December 29, 2008. Incorporated by reference to Exhibit 10.51 to Vornado		 	
 	 				Realty Trust’s Annual Report on Form 10-K for the year ended December 31, 2008 (File		 	
 	 				No. 001-11954) filed on February 24, 2009		 	
 	 	 	 	 	 	 	 	
 	10.34	**	-	Vornado Realty Trust's 2010 Omnibus Share Plan. Incorporated by reference to Exhibit 10.41 to	*	 	
 	 				Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010		 	
 	 				(File No. 001-11954) filed on August 3, 2010		 	
 	 	 	 	 	 	 	
 	10.35	**	-	Employment Agreement between Vornado Realty Trust and Michael J. Franco, dated	 *	 	
					September 24, 2010. Incorporated by reference to Exhibit 10.42 to Vornado Realty Trust's	 	 	
 	 	 	 		Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 (File No. 001-11954)	 	 	
					filed on November 2, 2010	 	 	
					_______________________		 	
		*			Incorporated by reference.		 	
		**			Management contract or compensatory agreement.		 	

166

 

	10.36	**	-	Form of Vornado Realty Trust 2010 Omnibus Share Plan Incentive / Non-Qualified Stock Option	*	
					Agreement. Incorporated by reference to Exhibit 99.1 to Vornado Realty Trust's Current		
					Report on Form 8-K (File No. 001-11954) filed on April 5, 2012		
 	 	 	 	 	 	 	
 	10.37	**	-	Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted Stock Agreement.	*	
 	 	 	 	 	Incorporated by reference to Exhibit 99.2 to Vornado Realty Trust's Current Report on Form	 	
 	 	 	 	 	8-K (File No. 001-11954) filed on April 5, 2012	 	
 	 	 	 	 	 	
	10.38	**	-	Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted LTIP Unit Agreement.	*	
				 	Incorporated by reference to Exhibit 99.3 to Vornado Realty Trust's Current Report on Form		
				 	8-K (File No. 001-11954) filed on April 5, 2012		
							
	10.39	**	-	Letter Agreement between Vornado Realty Trust and Michelle Felman, dated December 21, 2010.	*	
					Incorporated by reference to Exhibit 10.45 to Vornado Realty Trust's Annual Report on Form		
					10-K for the year ended December 31, 2010 (File No. 001-11954) filed on February 23, 2011		
							
	10.40	**	-	Waiver and Release between Vornado Realty Trust and Michelle Felman, dated December 21,	*	
					2010. Incorporated by reference to Exhibit 10.46 to Vornado Realty Trust's Annual Report		
 	 	 	 		on Form 10-K for the year ended December 31, 2010 (File No. 001-11954) filed on	 	
					February 23, 2011		
							
	10.41	**	-	Revolving Credit Agreement dated as of June 8, 2011, by and among Vornado Realty L.P. as	*	
					borrower, Vornado Realty Trust as General Partner, the Banks listed on the signature pages		
					thereof, and J.P. Morgan Chase Bank N.A., as Administrative Agent for the Banks.		
 	 	 	 		Incorporated by reference to Exhibit 10.46 to Vornado Realty Trust's Quarterly Report on	 	
					Form 10-Q for the quarter ended June 30, 2011 (File No. 001-11954) filed on August 1, 2011		
 	 	 	 	 	 	
	10.42	**	-	Letter Agreement between Vornado Realty Trust and Christopher G. Kennedy, dated August 5,	*	
					2011. Incorporated by reference to Exhibit 10.47 to Vornado Realty Trust’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2011 (File No. 001-11954) filed on
November 3, 2011		
							
	10.43	**	-	Waiver and Release between Vornado Realty Trust and Christopher G. Kennedy, dated August 5,	*	
					2011. Incorporated by reference to Exhibit 10.48 to Vornado Realty Trust’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2011 (File No. 001-11954) filed on
November 3, 2011		
					 		
	10.44		-	Revolving Credit Agreement dated on November 7, 2011, by and among Vornado Realty L.P. as	*	
				 	borrower, Vornado Realty Trust as General Partner, the Banks listed on the signature pages		
 	 	 	 	 	thereof, and JP Morgan Chase Bank N.A., as administrative agent for the Banks.	 	
 	 	 	 	 	Incorporated by reference to Exhibit 10.1 to Vornado Realty Trust’s Current Report on	 	
				 	Form 8-K (File No. 001-11954) filed on November 11, 2011		
 	 	 	 	 	 	 	
	10.45	**	-	Form of Vornado Realty Trust 2012 Outperformance Plan Award Agreement.	*	
					Incorporated by reference to Exhibit 10.45 to Vornado Realty Trust's Annual Report on Form		
					10-K for the year ended December 31, 2012 (File No. 001-11954) filed on February 26, 2013		
 	 	 	 	 	 	 	
 	10.46	**	-	Letter Agreement between Vornado Realty Trust and Michael D. Fascitelli, dated	*	
 	 	 	 	 	February 27, 2013. Incorporated by reference to Exhibit 99.1 to Vornado Realty Trust’s	 	
 	 	 	 	 	Current Report on Form 8-K (File No. 001-11954), filed on February 27, 2013	 	
 	 	 	 	 	 	 	
 	 	 	 	 	_______________________	 	
		*			Incorporated by reference.		
		**			Management contract or compensatory agreement.		

167

 

 	10.47	**	-	Waiver and Release between Vornado Realty Trust and Michael D. Fascitelli, dated	*	
 	 	 	 	February 27, 2013. Incorporated by reference to Exhibit 99.2 to Vornado Realty Trust’s	 	
 	 	 	 	Current Report on Form 8-K (File No. 001-11954), filed on February 27, 2013	 	
 	 	 	 	 	 	
 	10.48	 	-	Amendment to June 2011 Revolving Credit Agreement dated as of March 28, 2013, by and	*	
 	 	 	 	among Vornado Realty L.P., as Borrower, the banks listed on the signature pages, and	 	
 	 	 	 	J.P. Morgan Chase Bank N.A., as Administrative Agent. Incorporated by reference to	 	
 	 	 	 	Exhibit 10.48 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for the quarter	 	
 	 	 	 	ended March 31, 2013 (File No. 001-11954), filed on May 6, 2013	 	
 	 	 	 	 	 	
 	10.49	 	-	Amendment to November 2011 Revolving Credit Agreement dated as of March 28, 2013, by	*	
 	 	 	 	and among Vornado Realty L.P., as Borrower, the banks listed on the signature pages, and	 	
 	 	 	 	J.P. Morgan Chase Bank N.A., as Administrative Agent. Incorporated by reference to	 	
 	 	 	 	Exhibit 10.49 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for the quarter	 	
 	 	 	 	ended March 31, 2013 (File No. 001-11954), filed on May 6, 2013	 	
 	 	 	 	 	 	
 	10.50	**	-	Form of Vornado Realty Trust 2013 Outperformance Plan Award Agreement. Incorporated	*	
 	 	 	 	by reference to Exhibit 10.50 to Vornado Realty Trust’s Quarterly Report on Form 10-Q	 	
 	 	 	 	for the quarter ended March 31, 2013 (File No. 001-11954), filed on May 6, 2013	 	
 	 	 	 	 	 	
 	10.51	**	-	Employment agreement between Vornado Realty Trust and Stephen W. Theriot dated	*	
 	 	 	 	June 1, 2013. Incorporated by reference to Exhibit 10.51 to Vornado Realty Trust’s	 	
 	 	 	 	Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (File No. 001-11954),	 	
 	 	 	 	filed on August 5, 2013

 	 	 	 	 	 	

 	 	 	 	 	 	 	 	

 	 	 	 	 	 	 	 	

 	 	 	 	 	 	 	 	

 	 	 	 	 	 	 	 	

 	 	 	 	 	 	 	 	

 	 	 	 	 	 	 	 	

 	 	 	 	 	_______________________	 	 	
		    *			Incorporated by reference.		 	
		    **			Management contract or compensatory agreement.		 	

 
168

 

 	 	 	 	 	 	
							
 	12	 	-	Computation of Ratios	 	
 	 	 	 	 	 	
 	21	 	-	Subsidiaries of the Registrant	 	
 	 	 	 	 	 	
 	23	 	-	Consent of Independent Registered Public Accounting Firm	 	
 	 	 	 	 	 	
	31.1		-	Rule 13a-14 (a) Certification of the Chief Executive Officer		
							
	31.2		-	Rule 13a-14 (a) Certification of the Chief Financial Officer		
							
	32.1		-	Section 1350 Certification of the Chief Executive Officer		
							
	32.2		-	Section 1350 Certification of the Chief Financial Officer		
							
	101.INS		-	XBRL Instance Document		
							
	101.SCH		-	XBRL Taxonomy Extension Schema		
							
	101.CAL		-	XBRL Taxonomy Extension Calculation Linkbase		
							
	101.DEF		-	XBRL Taxonomy Extension Definition Linkbase		
							
	101.LAB		-	XBRL Taxonomy Extension Label Linkbase		
							
	101.PRE		-	XBRL Taxonomy Extension Presentation Linkbase		

 
169

 
 
EXHIBIT 12	
																					
COMPUTATION OF RATIOS	
(UNAUDITED)	

             Our consolidated ratios of earnings to fixed charges and earnings to combined fixed charges and preference dividends for each of the fiscal years ended December 31, 2013, 2012, 2011, 2010 and 2009 are as follows:	

																					
		For the Year Ended December 31,	
(Amounts in thousands)	2013 		2012 		2011 		2010 		2009 	
																					
Income (loss) from continuing operations before income taxes and															
	income from partially owned entities	$	472,606 		$	(12,806)		$	479,872 		$	629,417 		$	(14,924)	
Fixed charges		543,713 			534,875 			549,058 			566,956 			643,793 	
Income distributions from partially owned entities		54,030 			226,172 			93,635 			61,037 			30,473 	
Capitalized interest		(42,303)			(16,801)			(1,197)			(864)			(17,256)	
Preferred unit distributions		(1,158)			(9,936)			(16,853)			(18,192)			(19,658)	
																					
Earnings - Numerator	$	1,026,888 		$	721,504 		$	1,104,515 		$	1,238,354 		$	622,428 	
																					
Interest and debt expense	$	483,190 		$	493,713 		$	519,157 		$	536,363 		$	595,800 	
Capitalized interest		42,303 			16,801 			1,197 			864 			17,256 	
1/3 of rental expense – interest factor		17,062 			14,425 			11,851 			11,537 			11,079 	
Preferred unit distributions		1,158 			9,936 			16,853 			18,192 			19,658 	
Fixed charges - Denominator		543,713 			534,875 			549,058 			566,956 			643,793 	
Preferred share dividends		82,807 			76,937 			65,531 			55,534 			57,076 	
Combined fixed charges and preference dividends - Denominator	$	626,520 		$	611,812 		$	614,589 		$	622,490 		$	700,869 	
																					
Ratio of earnings to fixed charges		1.89 			1.35 			2.01 			2.18 			0.97 	
																					
Ratio of earnings to combined fixed charges and preference dividends		1.64 			1.18 			1.80 			1.99 			0.89 	
																					
             Earnings equals (i) income from continuing operations before income taxes and income from partially owned entities, plus, (ii) fixed charges, (iii) income distributions from partially owned entities, minus (iv) capitalized interest and (v) preferred unit distributions of the Operating Partnership. Fixed charges equals (i) interest and debt expense, plus (ii) capitalized interest, (iii) the portion of operating lease rental expense that is representative of the interest factor, which is one-third of operating lease rentals and (iv) preferred unit distributions of the Operating Partnership. Combined fixed charges and preference dividends equals fixed charges plus preferred share dividends.	

   
 
EXHIBIT 21

VORNADO REALTY TRUST	
SUBSIDIARIES OF THE REGISTRANT	
As of December 31, 2013	
 	 	 	
 	 	State of	
Name of Subsidiary	 	Organization	
 	 	 	
11 East 68th Parallel REIT LLC	 	Delaware	
11 East 68th REIT Holding LLC	 	Delaware	
11 East 68th REIT LLC	 	Delaware	
11 East 68th Street I Corp.	 	British Virgin Islands	
11 East 68th Street II Corp.	 	British Virgin Islands	
11 East 68th Street LLC	 	Delaware	
11 East 68th TRS LLC	 	Delaware	
1227/1229 Management LLC	 	Delaware	
1290 Management II, LLC	 	Delaware	
148 Spring Street, LLC	 	Delaware	
14th Street Acquisition LLC	 	Delaware	
150 East 58th Street, L.L.C.	 	New York	
150 Spring Street LLC	 	Delaware	
1535 Broadway LLC	 	Delaware	
1740 Broadway Associates L.P.	 	Delaware	
201 East 66th Street LLC	 	New York	
220 S 20th Street Developer LLC	 	Delaware	
280 Park Administration LLC	 	Delaware	
280 Park Cleaning LLC	 	Delaware	
29 West 57th Street Owner LLC	 	Delaware	
31 West 57th Street Owner LLC	 	Delaware	
330 Madison Company LLC	 	Delaware	
334 Canal Street LLC	 	Delaware	
350 Park EAT LLC	 	Delaware	
4 USS Member LLC	 	Delaware	
40 East 14 Realty Associates General Partnership	 	New York	
40 East 14 Realty Associates, L.L.C.	 	New York	
40 Fulton Street LLC	 	New York	
401 Commercial Son II LLC	 	Delaware	
401 Commercial Son, LLC	 	Delaware	
401 Commercial, L.P.	 	Delaware	
401 General Partner, L.L.C.	 	Delaware	
401 Hotel General Partner, L.L.C.	 	Delaware	
401 Hotel REIT, LLC	 	Delaware	
401 Hotel TRS, Inc.	 	Delaware	
401 Hotel, L.P.	 	Delaware	
480-486 Broadway, LLC	 	Delaware	
488 Eighth Avenue Owner LLC	 	Delaware	
49 West 57th Street Owner LLC	 	Delaware	
501 Broadway Parallel REIT LLC	 	Delaware	
501 Broadway REIT LLC	 	Delaware	
520 Broadway Parallel REIT LLC	 	Delaware	
520 Broadway REIT LLC	 	Delaware	

 

527 West Kinzie LLC	 	Delaware	
58 Central Park III LLC	 	Delaware	
58 Central Park LLC	 	Delaware	
650 Madison GP LLC	 	Delaware	
650 Madison GP LP	 	Delaware	
650 Madison Junior Mezz LLC	 	Delaware	
650 Madison Office Manager LLC	 	Delaware	
650 Madison Owner LLC	 	Delaware	
650 Madison Parallel Investor LP	 	Delaware	
650 Madison Parallel REIT LLC	 	Delaware	
650 Madison Retail Manager LLC	 	Delaware	
650 Madison Senior Mezz LLC	 	Delaware	
655 EAT TIC Parent LLC	 	Delaware	
655 Fifth Avenue LLC	 	Delaware	
655 Fifth Avenue Owner LLC	 	Delaware	
655 Fifth Holdings LLC	 	Delaware	
655 Fifth II LLC	 	Delaware	
655 Fifth III LLC	 	Delaware	
655 Fifth IV LLC	 	Delaware	
666 Fifth Administration LLC	 	Delaware	
666 Fifth Cleaning LLC	 	Delaware	
666 Fifth Management LLC	 	Delaware	
689 Fifth Avenue L.L.C.	 	New York	
6M Investor LP	 	Delaware	
6M REIT LLC	 	Delaware	
7 West 34th Street LLC	 	New York	
713-715 Sunrise LLC	 	Delaware	
715 Lexington Avenue LLC	 	New York	
770 Broadway Company LLC	 	New York	
770 Broadway Mezzanine Lender LLC	 	Delaware	
770 Broadway Mezzanine LLC	 	Delaware	
770 Broadway Owner LLC	 	Delaware	
825 Seventh Avenue Holding Corporation	 	New York	
825 Seventh Avenue Holding L.L.C.	 	New York	
85 Tenth Junior Mezz LLC	 	Delaware	
85 Tenth JV Member LC	 	Delaware	
85 Tenth Senior Mezz II LLC	 	Delaware	
85 Tenth Senior Mezz LLC	 	Delaware	
866 U.N. Plaza Associates LLC	 	New York	
888 Seventh Avenue LLC	 	Delaware	
909 Third Avenue Assignee LLC	 	New York	
909 Third Company, L.P.	 	New York	
909 Third GP, LLC	 	Delaware	
968 Third, L.L.C.	 	New York	
AG Georgetown Park Holdings I LLC	 	Delaware	
AG Georgetown Park Holdings II LLC	 	Delaware	
AG Georgetown Park Owner I LLC	 	Delaware	
AG Georgetown Park Owner II LLC	 	Delaware	

 

Alexander's, Inc.	 	Delaware	
Allentown VF L.L.C.	 	Pennsylvania	
Altius Management Advisors Pvt. Ltd.	 	Foreign	
Amherst II VF L.L.C.	 	New York	
Arbor Property, L.P.	 	Delaware	
Arna-Eads, Inc.	 	Delaware	
Arna-Fern, Inc.	 	Delaware	
Atlantic City Holding L.L.C.	 	New Jersey	
Balena Real Estate Development LLC	 	Delaware	
Bengal Intelligent Parks Pvt. Ltd.	 	Foreign	
Bensalem Holding Company, L.L.C.	 	Delaware	
Bensalem Holding Company, L.P.	 	Pennsylvania	
Bensalem VF, L.L.C.	 	Pennsylvania	
Bethlehem Holding Company, L.L.C.	 	Delaware	
Bethlehem Holding Company, L.P.	 	Pennsylvania	
Bethlehem Properties Holding Company, L.L.C.	 	Pennsylvania	
Bethlehem Properties Holding Company, L.P.	 	Pennsylvania	
Bethlehem VF, L.L.C.	 	Pennsylvania	
Bethlehem VF, L.P.	 	Pennsylvania	
Bevcon Holdings LLC	 	Delaware	
Bevcon I Investors LLC	 	Delaware	
Bevcon I L.L.C.	 	Delaware	
Bevcon I Managers Inc.	 	Delaware	
Bevcon II LLC	 	Delaware	
BIP Developers Pvt. Ltd.	 	Foreign	
Bordentown II VF, L.L.C.	 	New Jersey	
Bordentown VF, L.L.C.	 	New Jersey	
Boulevard Services Pvt. Ltd.	 	Foreign	
Bowen Building, L.P.	 	Delaware	
Bricktown VF L.L.C.	 	New Jersey	
Bricktown VF Member LLC	 	Delaware	
Bridgeland Warehouses L.L.C.	 	Delaware	
Building Maintenance Service LLC	 	Delaware	
Canadian Craft Show LTD.	 	Foreign	
CESC 1101 17th Street L.L.C.	 	Delaware	
CESC 1101 17th Street Limited Partnership	 	Maryland	
CESC 1101 17th Street Manager L.L.C.	 	Delaware	
CESC 1140 Connecticut Avenue Holding LLC	 	Delaware	
CESC 1140 Connecticut Avenue L.L.C.	 	Delaware	
CESC 1140 Connecticut Avenue Limited Partnership	 	District of Columbia	
CESC 1140 Connecticut Avenue Manager L.L.C.	 	Delaware	
CESC 1150 17th Street L.L.C.	 	Delaware	
CESC 1150 17th Street Limited Partnership	 	District of Columbia	
CESC 1150 17th Street Manager L.L.C.	 	Delaware	
CESC 1730 M Street L.L.C.	 	Delaware	
CESC 1750 Pennsylvania Avenue L.L.C.	 	Delaware	
CESC 2101 L Street L.L.C.	 	Delaware	
CESC Commerce Executive Park L.L.C.	 	Delaware	

 

 

CESC Crystal Square Four L.L.C.	 	Delaware	
CESC Crystal/Rosslyn L.L.C.	 	Delaware	
CESC District Holdings L.L.C.	 	Delaware	
CESC Downtown Member L.L.C.	 	Delaware	
CESC Engineering TRS Inc.	 	Delaware	
CESC Fairfax Square Manager L.L.C.	 	Delaware	
CESC Gateway One L.L.C.	 	Delaware	
CESC Gateway Two Limited Partnership	 	Virginia	
CESC Gateway Two Manager L.L.C.	 	Delaware	
CESC Gateway/Square L.L.C.	 	Delaware	
CESC Gateway/Square Member L.L.C.	 	District of Columbia	
CESC H Street L.L.C.	 	Delaware	
CESC Mall L.L.C.	 	Delaware	
CESC Mall Land, L.L.C.	 	Delaware	
CESC One Courthouse Plaza Holdings, LLC	 	Delaware	
CESC One Courthouse Plaza L.L.C.	 	Delaware	
CESC One Democracy Plaza L.P.	 	Delaware	
CESC One Democracy Plaza Manager LLC	 	Delaware	
CESC Park Five Land L.L.C.	 	Delaware	
CESC Park Five Manager L.L.C.	 	Virginia	
CESC Park Four Land L.L.C.	 	Delaware	
CESC Park Four Manager L.L.C.	 	Virginia	
CESC Park One Land L.L.C.	 	Delaware	
CESC Park One Manager L.L.C.	 	Virginia	
CESC Park Three Land L.L.C.	 	Delaware	
CESC Park Three Manager L.L.C.	 	Virginia	
CESC Park Two L.L.C.	 	Delaware	
CESC Park Two Land L.L.C.	 	Delaware	
CESC Park Two Manager L.L.C.	 	Virginia	
CESC Plaza Five Limited Partnership	 	Delaware	
CESC Plaza Limited Partnership	 	Virginia	
CESC Plaza Manager, L.L.C.	 	Virginia	
CESC Plaza Parking L.L.C.	 	Delaware	
CESC Skyline LLC	 	Delaware	
CESC Square L.L.C.	 	Delaware	
CESC Square Land L.L.C.	 	Delaware	
CESC TRS, Inc.	 	Delaware	
CESC Two Courthouse Plaza Limited Partnership	 	Virginia	
CESC Two Courthouse Plaza Manager, L.L.C.	 	Delaware	
CESC Water Park L.L.C.	 	Delaware	
Charles E. Smith Commercial Realty, L.P.	 	Delaware	
Cherry Hill VF L.L.C.	 	New Jersey	
Cherry Hill VF Member LLC	 	Delaware	
Chicopee Holding L.L.C.	 	Massachusetts	
Cinderella Homes Pvt. Ltd.	 	Foreign	
Cleveland Developer LLC	 	Delaware	
Cleveland MMCC L.L.C	 	Delaware	
Cleveland Operator LLC	 	Delaware	

 

 

Commerce Executive Park Association of Co-Owners	 	Virginia	
Conrans VF L.L.C.	 	New Jersey	
Conrans VF Member LLC	 	Delaware	
CP Culver City Parallel REIT LLC	 	Delaware	
CP Culver City REIT LLC	 	Delaware	
CP Parallel TRS LLC	 	Delaware	
CP TRS LLC	 	Delaware	
CPTS Domestic Owner LLC	 	Delaware	
CPTS Hotel Lessee LLC	 	Delaware	
CPTS Hotel Lessee Mezz 1 LLC	 	Delaware	
CPTS Hotel Lessee Mezz 2 LLC	 	Delaware	
CPTS Hotel Lessee Mezz 3 LLC	 	Delaware	
CPTS Mezz Holding LLC	 	Delaware	
CPTS Parallel Owner LLC	 	Delaware	
CPTS TRS LLC	 	Delaware	
Cumberland Holding L.L.C.	 	New Jersey	
Delran VF L.L.C.	 	New Jersey	
Design Center Owner (D.C.), L.L.C.	 	Delaware	
Dover VF L.L.C.	 	New Jersey	
Dover VF Member LLC	 	Delaware	
Durham Leasing II L.L.C.	 	New Jersey	
Durham Leasing L.L.C.	 	New Jersey	
East Brunswick VF L.L.C.	 	New Jersey	
East Brunswick VF Member LLC	 	Delaware	
Eatontown Monmouth Mall (Junior Mezz) LLC	 	Delaware	
Eatontown Monmouth Mall (Senior Mezz) LLC	 	Delaware	
Eatontown Monmouth Mall LLC	 	Delaware	
Eleven Penn Plaza LLC	 	New York	
Everest Infrastructure Development Mauritius Limited	 	Foreign	
Fairfax Square L.L.C	 	Delaware	
Fairfax Square Partners	 	Delaware	
Fifth Crystal Park Associates Limited Partnership	 	Virginia	
First Crystal Park Associates Limited Partnership	 	Virginia	
Fourth Crystal Park Associates Limited Partnership	 	Virginia	
Franconia GP, L.L.C.	 	Delaware	
Freeport VF L.L.C.	 	New York	
Freeport VF Member LLC	 	Delaware	
Fuller Madison LLC	 	New York	
Gallery Market Holding Company, L.L.C.	 	Pennsylvania	
Gallery Market Holding Company, L.P.	 	Pennsylvania	
Gallery Market Properties Holding Company, L.L.C.	 	Pennsylvania	
Gallery Market Properties Holding Company, L.P.	 	Pennsylvania	
Garfield Parcel L.L.C.	 	New Jersey	
Geneva Associates Owner LLC	 	Delaware	
Georgetown Park Parallel REIT LLC	 	Delaware	
Georgetown Park REIT LLC	 	Delaware	
Glen Bernie VF LLC	 	Maryland	
Green Acres 666 Fifth Retail EAT TIC Owner LLC	 	Delaware	

 

 

Green Acres 666 Fifth Retail TIC Owner LLC	 	Delaware	
Green Acres Mall, L.L.C.	 	Delaware	
Guard Management Service Corp.	 	Delaware	
H Street Building Corporation	 	Delaware	
H Street JP Fashion LLC	 	Delaware	
H Street Management, L.L.C.	 	Delaware	
Hackensack VF L.L.C.	 	New Jersey	
Hackensack VF Member LLC	 	Delaware	
Hanover Holding L.L.C.	 	New Jersey	
Hanover Industries L.L.C.	 	New Jersey	
Hanover Leasing L.L.C.	 	New Jersey	
Hanover Public Warehousing L.L.C.	 	New Jersey	
Hanover VF L.L.C.	 	New Jersey	
Hanover VF Member LLC	 	Delaware	
HBR Annapolis Properties, L.L.C.	 	Delaware	
HBR Norfolk Properties, L.L.C.	 	Delaware	
HBR Properties Pennsylvania LLC	 	Delaware	
HBR Properties Roseville LLC	 	Delaware	
HBR Properties, L.L.C.	 	Delaware	
Henrietta Holding L.L.C.	 	New York	
HWA Holdings (DE) LLC	 	Delaware	
International Biotech Park Ltd.	 	Foreign	
IP Mezz Borrower I LLC	 	Delaware	
IP Mezz Borrower II LLC	 	Delaware	
IP Mortgage Borrower LLC	 	Delaware	
Jersey City VF L.L.C.	 	New Jersey	
Jersey City VF Member LLC	 	Delaware	
Juggernaut Homes Pvt. Ltd.	 	Foreign	
Kearny Holding VF L.L.C.	 	New Jersey	
Kearny Leasing VF L.L.C.	 	New Jersey	
Lancaster Leasing Company, L.L.C.	 	Delaware	
Lancaster Leasing Company, L.P.	 	Pennsylvania	
LaSalle Hubbard L.L.C.	 	Delaware	
Lawnside VF L.L.C.	 	New Jersey	
Lawnside VF Member LLC	 	Delaware	
Lewisville TC L.L.C.	 	Texas	
Lincoln Road II LLC	 	Delaware	
Lincoln Road Management LLC	 	Delaware	
Lincoln Road Parallel REIT LLC	 	Delaware	
Lincoln Road REIT LLC	 	Delaware	
Littleton Holding L.L.C.	 	New Jersey	
Lodi II VF L.L.C.	 	New Jersey	
Lodi II VF Member LLC	 	Delaware	
Lodi VF L.L.C.	 	New Jersey	
Lodi VF Member LLC	 	Delaware	
M 330 Associates L.P.	 	New York	
M 393 Associates LLC	 	New York	
Manalapan VF L.L.C.	 	New Jersey	

 

 

Manalapan VF Member LLC	 	Delaware	
Marlton VF L.L.C.	 	New Jersey	
Marlton VF Member LLC	 	Delaware	
Marple Holding Company, L.L.C.	 	Delaware	
Marple Holding Company, L.P.	 	Pennsylvania	
Mart Franchise Center, Inc.	 	Illinois	
Mart Parking II, LLC	 	Delaware	
Mart Parking LLC	 	Delaware	
Mart REIT, L.L.C.	 	Delaware	
Mart Trade Show L.L.C.	 	Delaware	
Menands VF L.L.C.	 	New York	
Merchandise Mart Enterprises, Inc. (Canada)	 	Foreign	
Merchandise Mart First Mezzanine Borrower L.L.C.	 	Delaware	
Merchandise Mart Holdco L.L.C.	 	Delaware	
Merchandise Mart L.L.C.	 	Delaware	
Merchandise Mart Properties, Inc.	 	Delaware	
Merchandise Mart Second Mezzanine Borrower L.L.C.	 	Delaware	
Mesquite TC L.L.C.	 	Texas	
Middletown VF L.L.C.	 	New Jersey	
Middletown VF Member LLC	 	Delaware	
MMCC Services LLC	 	Delaware	
MMPI Cleveland Development L.L.C.	 	Delaware	
MMPI Piers MTS L.L.C.	 	Delaware	
MMPI Volta LLC	 	Delaware	
Monmouth Mall License LLC	 	Delaware	
Monmouth Mall LLC	 	Delaware	
Montclair VF L.L.C.	 	New Jersey	
Montclair VF Member LLC	 	Delaware	
Morris Plains Holding VF L.L.C.	 	New Jersey	
Morris Plains Holding VF Member LLC	 	Delaware	
Morris Plains Leasing VF L.L.C.	 	New Jersey	
Morris Plains Leasing VF Member LLC	 	Delaware	
Mortgage Owner LLC	 	Delaware	
MTS-MM L.L.C.	 	Delaware	
MW Hyde Park LLC	 	Delaware	
New Bridgeland Warehouse LLC	 	Delaware	
New Hanover Holding LLC	 	Delaware	
New Hanover Industries LLC	 	Delaware	
New Hanover Leasing LLC	 	Delaware	
New Hanover LLC	 	Delaware	
New Hanover Member LLC	 	Delaware	
New Hanover Public Warehousing LLC	 	Delaware	
New Hyde Park VF L.L.C.	 	New York	
New Jersey GL LLC	 	Delaware	
New Kaempfer 1501 LLC	 	Delaware	
New Kaempfer IB LLC	 	Delaware	
New Kaempfer Waterfront LLC	 	Delaware	
New TG Hanover LLC	 	Delaware	

 

 

New Vornado/Saddle Brook LLC	 	Delaware	
New Woodbridge II Member LLC	 	Delaware	
New Woodbridge II, LLC	 	New Jersey	
Newington VF L.L.C.	 	Connecticut	
Newington VF Member LLC	 	Delaware	
NFM Corp.	 	Delaware	
NFM Partners L.P.	 	Delaware	
Ninety Park Lender LLC	 	New York	
Ninety Park Lender QRS, Inc.	 	Delaware	
Ninety Park Manager LLC	 	New York	
Ninety Park Property LLC	 	New York	
North Bergen VF L.L.C.	 	New Jersey	
North Bergen VF Member LLC	 	Delaware	
North Plainfield VF L.L.C.	 	New Jersey	
Office Acquisition Finance L.L.C.	 	Delaware	
Office Center Owner (D.C.) L.L.C.	 	Delaware	
One Penn Plaza LLC	 	New York	
One Penn Plaza TRS, Inc.	 	Delaware	
Orleans Hubbard LLC	 	Delaware	
Palisades 1399 New York Avenue TIC Owner LLC	 	Delaware	
Palisades 14th Street L.L.C.	 	Delaware	
Paris Associates Owner LLC	 	Delaware	
Park One Member L.L.C.	 	Delaware	
Patson Vornado GP LLC	 	Delaware	
Patson Vornado LLC	 	Delaware	
PCJ I Inc.	 	New York	
Peak Power One LLC	 	Delaware	
Penn Plaza Insurance Company, L.L.C.	 	Vermont	
Philadelphia Holding Company, L.L.C.	 	Delaware	
Philadelphia Holding Company, L.P.	 	Pennsylvania	
Philadelphia VF L.L.C.	 	Pennsylvania	
Philadelphia VF L.P.	 	Pennsylvania	
Piers 92/94 LLC	 	Delaware	
Pike Holding Company, L.L.C.	 	Pennsylvania	
Pike Holding Company, L.P.	 	Pennsylvania	
Pike VF L.L.C.	 	Pennsylvania	
Pike VF L.P.	 	Pennsylvania	
Powerspace & Services, Inc.	 	Delaware	
Rahway Leasing L.L.C.	 	New Jersey	
Realty Services Trustee Company Pvt. Ltd.	 	Foreign	
Restaurant Corp Lessor LLC	 	Delaware	
River House Corporation	 	Virginia	
Rochester Holding L.L.C.	 	New York	
Rochester Holding Member LLC	 	Delaware	
Rockville Acquisition, LLC	 	Delaware	
RTR JP Fashion LLC	 	Delaware	
RTR VW LLC	 	Delaware	
Shenandoah DC Holding, LLC	 	Delaware	

 

 

SMB Administration LLC	 	Delaware	
SMB Tenant Services LLC	 	Delaware	
SO Hudson 555 Management, Inc.	 	Delaware	
SO Hudson Westside I Corp.	 	Delaware	
South Capitol, L.L.C.	 	Delaware	
Springfield Member VF L.L.C.	 	Delaware	
Springfield Town Center Lessee LLC	 	Delaware	
Springfield VF L.L.C.	 	Massachusetts	
T.G. Hanover L.L.C.	 	New Jersey	
T53 Condominium, L.L.C.	 	New York	
TCG Developments India Pvt. Ltd.	 	Foreign	
TCG Real Estate Investment Management Company Pvt. Ltd.	 	Foreign	
TCG Software Parks Pvt. Ltd.	 	Foreign	
TCG Urban Infrastructure Holdings Ltd.	 	Foreign	
Techna Infrastructure Pvt. Ltd.	 	Foreign	
The Armory Show Inc.	 	New York	
The Palisades A/V Company, L.L.C.	 	Delaware	
The Park Laurel Condominium	 	Delaware	
The Second Rochester Holding L.L.C.	 	New York	
The Second Rochester Holding Member LLC	 	Delaware	
Thebes I LLC	 	Delaware	
Third Crystal Park Associates Limited Partnership	 	Virginia	
TMO 1 LLC	 	Delaware	
Totowa VF L.L.C.	 	New Jersey	
Totowa VF Member LLC	 	Delaware	
Towson II VF LLC	 	Delaware	
Towson VF L.L.C.	 	Maryland	
Towson VF Member LLC	 	Delaware	
Trees Acquisition Subsidiary, Inc.	 	Delaware	
Turnersville VF L.L.C.	 	New Jersey	
Two Guys From Harrison Holding Company L.L.C.	 	Delaware	
Two Guys From Harrison Holding Company L.P.	 	Pennsylvania	
Two Guys from Harrison N.Y. (DE), L.L.C.	 	Delaware	
Two Guys From Harrison N.Y. L.L.C.	 	New York	
Two Guys From Harrison NY Member LLC	 	Delaware	
Two Guys Mass. LLC	 	Massachusetts	
Two Guys-Connecticut Holding L.L.C.	 	Connecticut	
Two Penn Plaza REIT JP Fashion LLC	 	Delaware	
Two Penn Plaza REIT, Inc.	 	New York	
UBI Management, L.L.C.	 	Delaware	
Union VF L.L.C.	 	New Jersey	
Union VF Member LLC	 	Delaware	
Universal Building North, Inc.	 	District of Columbia	
Universal Building, Inc.	 	District of Columbia	
Upper Moreland Holding Company, L.L.C.	 	Pennsylvania	
Upper Moreland Holding Company, L.P.	 	Pennsylvania	
Upper Moreland VF, L.L.C.	 	Pennsylvania	
VBL Company, L.L.C.	 	New York	

 

 

VCP COI One Park LP	 	Delaware	
VCP CP Culver City LLC	 	Delaware	
VCP CP Culver City Parking LLC	 	Delaware	
VCP IM L.L.C.	 	Delaware	
VCP Lincoln Road LLC	 	Delaware	
VCP LP L.L.C.	 	Delaware	
VCP Mezz Loan LLC	 	Delaware	
VCP One Park Parallel REIT LLC	 	Delaware	
VCP One Park REIT LLC	 	Delaware	
VCP Parallel COI One Park LP	 	Delaware	
VFC Connecticut Holding, L.L.C.	 	Delaware	
VFC Massachusetts Holding, L.L.C.	 	Delaware	
VFC New Jersey Holding, L.L.C.	 	Delaware	
VFC Pennsylvania Holding, L.L.C.	 	Pennsylvania	
VFC Pennsylvania Holding, L.P.	 	Pennsylvania	
Virgin Sign L.L.C.	 	Delaware	
VM Kushner JV Member LLC	 	Delaware	
VM Kushner LLC	 	Delaware	
VMS Lender LLC	 	Delaware	
VNK L.L.C.	 	Delaware	
VNO 100 West 33rd Street LLC	 	Delaware	
VNO 11 East 68th Street Holding Company LLC	 	Delaware	
VNO 11 East 68th Street Mezz LLC	 	Delaware	
VNO 11 East 68th Street Property Owner LLC	 	Delaware	
VNO 1105 State Highway 36 LLC	 	Delaware	
VNO 1229-1231 25th Street LLC	 	Delaware	
VNO 1290 REIT LLC	 	Delaware	
VNO 1399 GP LLC	 	Delaware	
VNO 1399 Holding LLC	 	Delaware	
VNO 154 Spring Street LLC	 	Delaware	
VNO 155 Spring Street LLC	 	Delaware	
VNO 1657 Broadway LLC	 	Delaware	
VNO 1920 L Street LLC	 	Delaware	
VNO 195 North Bedford Road LLC	 	Delaware	
VNO 220 S. 20th Street LLC	 	Delaware	
VNO 220 S. 20th Street Member LLC	 	Delaware	
VNO 225 West 58th Street LLC	 	Delaware	
VNO 2445 Springfield Avenue LLC	 	Delaware	
VNO 267 West 34th LLC	 	Delaware	
VNO 280 Park JV Member LLC	 	Delaware	
VNO 3098 Long Beach Road LLC	 	Delaware	
VNO 33 West 57th Street LLC	 	Delaware	
VNO 3500 US Highway 9 LLC	 	Delaware	
VNO 375 Mezz LLC	 	Delaware	
VNO 375 Park LLC	 	Delaware	
VNO 401 Commercial Leasee LLC	 	Delaware	
VNO 426 Washington Street Developer LLC	 	Delaware	
VNO 426 West Broadway Member, LLC	 	Delaware	

 

 

VNO 426 West Broadway, LLC	 	Delaware	
VNO 431 Seventh Avenue LLC	 	Delaware	
VNO 435 Seventh Avenue LLC	 	Delaware	
VNO 443 Broadway Holdings II LLC	 	Delaware	
VNO 443 Broadway Holdings III LLC	 	Delaware	
VNO 443 Broadway LLC	 	Delaware	
VNO 501 Broadway LLC	 	Delaware	
VNO 510 Fifth LLC	 	Delaware	
VNO 520 Broadway LLC	 	Delaware	
VNO 520 Management LLC	 	Delaware	
VNO 530 Broadway Mezz II LLC	 	Delaware	
VNO 530 Broadway Mezz LLC	 	Delaware	
VNO 530 Broadway Mezzanine I LLC	 	Delaware	
VNO 535-545 5th Loan LLC	 	Delaware	
VNO 555 Fifth LLC	 	Delaware	
VNO 5760 Broadway LLC	 	Delaware	
VNO 63rd Street LLC	 	Delaware	
VNO 6417 Loisdale Road LLC	 	Delaware	
VNO 650 Madison Investor LLC	 	Delaware	
VNO 650 Madison LLC	 	Delaware	
VNO 655 Partners LLC	 	Delaware	
VNO 666 Fifth Lender LLC	 	Delaware	
VNO 666 Fifth Member LLC	 	Delaware	
VNO 666 Fifth Retail TIC Lessee LLC	 	Delaware	
VNO 675 Paterson Avenue LLC	 	Delaware	
VNO 7000 Hadley Road LLC	 	Delaware	
VNO 701 Seventh Avenue Mezz LLC	 	Delaware	
VNO 701 Seventh Avenue TRS LLC	 	Delaware	
VNO 757 Third Avenue LLC	 	Delaware	
VNO 839 New York Avenue LLC	 	Delaware	
VNO 86 Lex LLC	 	Delaware	
VNO 86 Lex Parallel REIT LLC	 	Delaware	
VNO 86 Lex REIT LLC	 	Delaware	
VNO 866 UN Plaza TRS L.L.C.	 	Delaware	
VNO 93rd Street LLC	 	Delaware	
VNO 966 Third Avenue LLC	 	Delaware	
VNO 99-01 Queens Boulevard LLC	 	Delaware	
VNO AC LLC	 	Delaware	
VNO AP 195 N. Bedford Road LLC	 	Delaware	
VNO Ashley House LLC	 	Delaware	
VNO Ashley House Member LLC	 	Delaware	
VNO Bergen Mall Owner LLC	 	Delaware	
VNO Brick LLC	 	New Jersey	
VNO Broad Street LLC	 	Delaware	
VNO Bruckner Plaza Lender LLC	 	Delaware	
VNO Bruckner Plaza LLC	 	Delaware	
VNO Building Acquisition LLC	 	Delaware	
VNO Capital Partners REIT LLC	 	Delaware	

 

 

VNO Capital Partners TRS LLC	 	Delaware	
VNO Courthouse I LLC	 	Delaware	
VNO Courthouse II LLC	 	Delaware	
VNO Courthouse Place Mezz LLC	 	Delaware	
VNO CPPIB Member LLC	 	Delaware	
VNO Crystal City Marriott, Inc.	 	Delaware	
VNO Crystal City TRS, Inc.	 	Delaware	
VNO EAT 666 Fifth Retail LLC	 	Delaware	
VNO Eatontown Seamans Plaza LLC	 	Delaware	
VNO Fashion LLC	 	Delaware	
VNO Fulton Street Brooklyn LLC	 	Delaware	
VNO GT Manager LLC	 	Delaware	
VNO GT Owner LLC	 	Delaware	
VNO GT Property Manager LLC	 	Delaware	
VNO HM Pool 1 LLC	 	Delaware	
VNO HM Pool 2 LLC	 	Delaware	
VNO Hotel L.L.C.	 	Delaware	
VNO IF Delaware PI LLC	 	Delaware	
VNO IF GP LLC	 	Delaware	
VNO IF II, L.L.C.	 	Delaware	
VNO IF LLC	 	Delaware	
VNO IF PI LLC	 	Delaware	
VNO IP Loan LLC	 	Delaware	
VNO IP Warrant LLC	 	Delaware	
VNO Island Global LLC	 	Delaware	
VNO James House Member LLC	 	Delaware	
VNO James House, LLC	 	Delaware	
VNO JCP LLC	 	Delaware	
VNO LF 50 West 57th Street Holding LLC	 	Delaware	
VNO LF 50 West 57th Street JV LLC	 	Delaware	
VNO LF 50 West 57th Street LLC	 	Delaware	
VNO LF 50 West 57th Street Management LLC	 	Delaware	
VNO LNR Holdco, L.L.C.	 	Delaware	
VNO MM License LLC	 	Delaware	
VNO Morris Avenue GL LLC	 	Delaware	
VNO Mundy Street LLC	 	Delaware	
VNO One Park LLC	 	Delaware	
VNO One Park Management LLC	 	Delaware	
VNO Paterson Plank Road LLC	 	Delaware	
VNO Patson Geary, L.P.	 	Delaware	
VNO Patson Investor LLC	 	Delaware	
VNO Patson LLC	 	Delaware	
VNO Patson Mt. Diablo A L.P.	 	Delaware	
VNO Patson Walnut Creek L.P.	 	Delaware	
VNO Pentagon City LLC	 	Delaware	
VNO Pentagon Plaza LLC	 	Delaware	
VNO Potomac House LLC	 	Delaware	
VNO Potomac House Member LLC	 	Delaware	

 

 

VNO Pune Township LLC	 	Delaware	
VNO Rockville, LLC	 	Delaware	
VNO Roosevelt Hotel Mezz II LLC	 	Delaware	
VNO Roosevelt Hotel Mezz LLC	 	Delaware	
VNO RTR AP, LLC	 	Delaware	
VNO SC Note LLC	 	Delaware	
VNO Shoppes on Dean LLC	 	Delaware	
VNO Shops on Lake LLC	 	Delaware	
VNO Skyline Lender LLC	 	Delaware	
VNO SM GP LLC	 	Delaware	
VNO SM LLC	 	Delaware	
VNO SMOH LLC	 	Delaware	
VNO SMOH TRS LLC	 	Delaware	
VNO South Capitol LLC	 	Delaware	
VNO Surplus 2006 LLC	 	Delaware	
VNO T-Hotel Loan LLC	 	Delaware	
VNO TRU 25 1/2 Road LLC	 	Delaware	
VNO TRU Alewife Brook Pkwy. LLC	 	Delaware	
VNO TRU Baltimore Park L.P.	 	Delaware	
VNO TRU Beckley Road LLC	 	Delaware	
VNO TRU CA LLC	 	Delaware	
VNO TRU Callahan Drive L.P.	 	Delaware	
VNO TRU Cherry Avenue L.P.	 	Delaware	
VNO TRU Coral Way LLC	 	Delaware	
VNO TRU Eastman Avenue LLC	 	Delaware	
VNO TRU Erie Blvd. LLC	 	Delaware	
VNO TRU Frederica Street LLC	 	Delaware	
VNO TRU Geary Street L.P.	 	Delaware	
VNO TRU Georgia Avenue LLC	 	Delaware	
VNO TRU Hickory Hollow L.P.	 	Delaware	
VNO TRU Jericho Turnpike LLC	 	Delaware	
VNO TRU Kennedy Road LLC	 	Delaware	
VNO TRU Lafayette Street LLC	 	Delaware	
VNO TRU Leesburg Pike LLC	 	Delaware	
VNO TRU Mall Drive L.P.	 	Delaware	
VNO TRU MICH L.P.	 	Delaware	
VNO TRU Military Road L.P.	 	Delaware	
VNO TRU PA LLC	 	Delaware	
VNO TRU Princeton Road LLC	 	Delaware	
VNO TRU Rand Road LLC	 	Delaware	
VNO TRU Rolling Meadows Drive LLC	 	Delaware	
VNO TRU Route 50 LLC	 	Delaware	
VNO TRU Sam Rittenburg Blvd. LLC	 	Delaware	
VNO TRU South Wadsworth Avenue LLC	 	Delaware	
VNO TRU Torrence Avenue LLC	 	Delaware	
VNO TRU TX LLC	 	Delaware	
VNO TRU University Drive LLC	 	Delaware	
VNO TRU West Sunrise Hwy. LLC	 	Delaware	

 

 

VNO VE LLC	 	Delaware	
VNO Wayne License LLC	 	Delaware	
VNO Wayne Towne Center Holding LLC	 	Delaware	
VNO Wayne Towne Center LLC	 	Delaware	
VNO-MM Mezzanine Lender LLC	 	Delaware	
Vornado - KC License L.L.C.	 	Delaware	
Vornado / Charles E. Smith L.P.	 	Delaware	
Vornado / Charles E. Smith Management L.L.C.	 	Delaware	
Vornado 1399 LLC	 	Delaware	
Vornado 1540 Broadway LLC	 	Delaware	
Vornado 1726 M Street LLC	 	Delaware	
Vornado 1740 Broadway LLC	 	Delaware	
Vornado 17th Street Holdings LP	 	Delaware	
Vornado 17th Street LLC	 	Delaware	
Vornado 220 Central Park South II LLC	 	Delaware	
Vornado 220 Central Park South LLC	 	Delaware	
Vornado 25W14 LLC	 	Delaware	
Vornado 3040 M Street LLC	 	Delaware	
Vornado 330 W 34 Mezz LLC	 	Delaware	
Vornado 330 West 34th Street L.L.C.	 	Delaware	
Vornado 40 East 66th Street LLC	 	Delaware	
Vornado 40 East 66th Street Member LLC	 	Delaware	
Vornado 40 East 66th Street TRS LLC	 	Delaware	
Vornado 401 Commercial LLC	 	Delaware	
Vornado 447 South Broadway LLC	 	Delaware	
Vornado 601 Madison Avenue, L.L.C.	 	Delaware	
Vornado 620 Sixth Avenue L.L.C.	 	Delaware	
Vornado 640 Fifth Avenue L.L.C.	 	Delaware	
Vornado 677 Madison LLC	 	Delaware	
Vornado 692 Broadway, L.L.C.	 	Delaware	
Vornado 800 17th Street, LLC	 	Delaware	
Vornado 90 Park Avenue L.L.C.	 	Delaware	
Vornado 90 Park Member L.L.C.	 	Delaware	
Vornado 90 Park QRS, Inc.	 	Delaware	
Vornado Acquisition Co. LLC	 	Delaware	
Vornado Auto L.L.C.	 	Delaware	
Vornado BAP LLC	 	Delaware	
Vornado Bergen East LLC	 	Delaware	
Vornado Bergen Mall License II LLC	 	Delaware	
Vornado Bergen Mall License LLC	 	Delaware	
Vornado Bergen Mall LLC	 	Delaware	
Vornado Bevcon I LLC	 	Delaware	
Vornado Beverly Connection LLC	 	Delaware	
Vornado Beverly Lessee LLC	 	Delaware	
Vornado Beverly LLC	 	Delaware	
Vornado Bowen GP LLC	 	Delaware	
Vornado Bowen II LLC	 	Delaware	
Vornado Bowen, LLC	 	Delaware	

 

 

Vornado Broadway Mall LLC	 	Delaware	
Vornado Burnside Plaza LLC	 	Delaware	
Vornado Caguas GP, Inc.	 	Delaware	
Vornado Caguas L.L.C.	 	Delaware	
Vornado Caguas L.P.	 	Delaware	
Vornado Capital Partners GP LLC	 	Delaware	
Vornado Capital Partners Parallel GP LLC	 	Delaware	
Vornado Capital Partners Parallel LP	 	Delaware	
Vornado Capital Partners Parallel REIT LLC	 	Delaware	
Vornado Capital Partners, L.P.	 	Delaware	
Vornado Catalinas GP, Inc.	 	Delaware	
Vornado Catalinas L.L.C.	 	Delaware	
Vornado Catalinas L.P.	 	Delaware	
Vornado CESCR Gen-Par, LLC	 	Delaware	
Vornado Cogen Holdings LLC	 	Delaware	
Vornado Communications, LLC	 	Delaware	
Vornado Condominium Management LLC	 	Delaware	
Vornado Crystal City L.L.C.	 	Delaware	
Vornado Crystal Park Loan, L.L.C.	 	Delaware	
Vornado DC Holding LLC	 	Delaware	
Vornado DP LLC	 	Delaware	
Vornado Dune LLC	 	Delaware	
Vornado EF Borrower LLC	 	Delaware	
Vornado Eleven Penn Plaza LLC	 	Delaware	
Vornado Eleven Penn Plaza Owner LLC	 	Delaware	
Vornado Everest Lender, L.L.C.	 	Delaware	
Vornado Everest, L.L.C.	 	Delaware	
Vornado Farley LLC	 	Delaware	
Vornado Finance GP II L.L.C.	 	Delaware	
Vornado Finance GP L.L.C.	 	Delaware	
Vornado Finance II L.P.	 	Delaware	
Vornado Finance L.P.	 	Delaware	
Vornado Finance SPE, Inc.	 	Delaware	
Vornado Forest Plaza L.L.C.	 	Delaware	
Vornado Forest Plaza Member L.L.C.	 	Delaware	
Vornado Fort Lee L.L.C.	 	Delaware	
Vornado Fortress LLC	 	Delaware	
Vornado Georgetown Park LLC	 	Delaware	
Vornado Green Acres Acquisition L.L.C.	 	Delaware	
Vornado Green Acres Delaware L.L.C.	 	Delaware	
Vornado Green Acres Funding L.L.C.	 	Delaware	
Vornado Green Acres Holdings L.L.C.	 	Delaware	
Vornado Green Acres SPE Managing Member, Inc.	 	Delaware	
Vornado Gun Hill Road LLC	 	Delaware	
Vornado Hinjewadi Township Private Limited	 	Foreign	
Vornado IB Holdings LLC	 	Delaware	
Vornado India Retail LLC	 	Delaware	
Vornado India Retail Management LLC	 	Delaware	

 

 

Vornado Investment Corporation	 	Delaware	
Vornado Investments L.L.C.	 	Delaware	
Vornado KMS Holdings LLC	 	Delaware	
Vornado Lending L.L.C.	 	New Jersey	
Vornado Lodi Delaware Member, LLC	 	Delaware	
Vornado Lodi Delaware, LLC	 	Delaware	
Vornado Lodi L.L.C.	 	Delaware	
Vornado LXP, L.L.C.	 	Delaware	
Vornado M 330 L.L.C.	 	Delaware	
Vornado M 393 L.L.C.	 	Delaware	
Vornado Management Corp.	 	Delaware	
Vornado Manhattan House Mortgage LLC	 	Delaware	
Vornado Mauritius Advisors LLC	 	Delaware	
Vornado Mauritius II LLC	 	Delaware	
Vornado Maywood License LLC	 	Delaware	
Vornado Monmouth Mall, L.L.C.	 	Delaware	
Vornado Montehiedra Acquisition L.P.	 	Delaware	
Vornado Montehiedra Acquisition LLC	 	Delaware	
Vornado Montehiedra Holding II L.P.	 	Delaware	
Vornado Montehiedra Holding L.P.	 	Delaware	
Vornado Montehiedra Holding LLC	 	Delaware	
Vornado Montehiedra Inc.	 	Delaware	
Vornado Montehiedra Lender LLC	 	Delaware	
Vornado Montehiedra OP L.P.	 	Delaware	
Vornado Montehiedra OP LLC	 	Delaware	
Vornado Montehiedra Out Parcel LLC	 	Delaware	
Vornado New York RR One L.L.C.	 	Delaware	
Vornado Newkirk Advisory LLC	 	Delaware	
Vornado Newkirk L.L.C.	 	Delaware	
Vornado NK Loan L.L.C.	 	Delaware	
Vornado North Bergen Tonnelle Plaza LLC	 	Delaware	
Vornado Office Inc.	 	Delaware	
Vornado Office Management LLC	 	Delaware	
Vornado Paramus License LLC	 	Delaware	
Vornado PC LLC	 	Delaware	
Vornado Property Advisor LLC	 	Delaware	
Vornado Realty L.L.C.	 	Delaware	
Vornado Realty, L.P.	 	Delaware	
Vornado Records 2006, L.L.C.	 	Delaware	
Vornado Retail Finance Manager LLC	 	Delaware	
Vornado Retail Management LLC	 	Delaware	
Vornado Retail Manager LLC	 	Delaware	
Vornado Rockaway L.L.C.	 	Delaware	
Vornado Rockville, LLC	 	Delaware	
Vornado Rosslyn LLC	 	Delaware	
Vornado RTR DC LLC	 	Delaware	
Vornado RTR Urban Development LLC	 	Delaware	
Vornado RTR Urban Development TMP LLC	 	Delaware	

 

 

Vornado RTR, Inc.	 	Delaware	
Vornado Savanna LLC	 	Delaware	
Vornado Savanna SM LLC	 	Delaware	
Vornado SB 1 L.P.	 	Delaware	
Vornado SB 10 L.P.	 	Delaware	
Vornado SB 11 L.P.	 	Delaware	
Vornado SB 14 L.P.	 	Delaware	
Vornado SB 17 L.P.	 	Delaware	
Vornado SB 2 L.P.	 	Delaware	
Vornado SB 24 L.P.	 	Delaware	
Vornado SB 25 L.P.	 	Delaware	
Vornado SB 3 L.P.	 	Delaware	
Vornado SB 8 L.P.	 	Delaware	
Vornado SB 9 L.P.	 	Delaware	
Vornado SB LLC	 	Delaware	
Vornado SC Properties II LLC	 	Delaware	
Vornado SC Properties LLC	 	Delaware	
Vornado Shenandoah Holdings II LLC	 	Delaware	
Vornado Shenandoah Holdings LLC	 	Delaware	
Vornado Sign LLC	 	Delaware	
Vornado South Hills, LLC	 	Delaware	
Vornado Springfield Mall LLC	 	Delaware	
Vornado Springfield Mall Manager LLC	 	Delaware	
Vornado Square Mile LLC	 	Delaware	
Vornado Suffolk LLC	 	Delaware	
Vornado Sun LLC	 	Delaware	
Vornado Title L.L.C.	 	Delaware	
Vornado Toys Bridge LLC	 	Delaware	
Vornado Truck LLC	 	Delaware	
Vornado TSQ LLC	 	Delaware	
Vornado Two Penn Plaza L.L.C.	 	Delaware	
Vornado Two Penn Property L.L.C.	 	Delaware	
Vornado Warner Acquisition LLC	 	Delaware	
Vornado Warner GP LLC	 	Delaware	
Vornado Warner Holdings LP	 	Delaware	
Vornado Warner LLC	 	Delaware	
Vornado Waterfront Holdings LLC	 	Delaware	
Vornado West Babylon LLC	 	Delaware	
Vornado Westbury Retail II LLC	 	Delaware	
Vornado Westbury Retail LLC	 	Delaware	
VRT Development Rights LLC	 	New York	
VRT Massachusetts Holding L.L.C.	 	Delaware	
VRT New Jersey Holding L.L.C.	 	Delaware	
VSPS I LLC	 	Delaware	
VSPS LLC	 	Delaware	
Warner Investments, L.P.	 	Delaware	
Washington CESC TRS, Inc.	 	Delaware	
Washington Design Center L.L.C.	 	Delaware	

 

   

Washington Design Center Subsidiary L.L.C.	 	Delaware	
Washington Mart SPE LLC	 	Delaware	
Washington Mart TRS, Inc.	 	Delaware	
Washington Office Center L.L.C.	 	Delaware	
Wasserman Vornado Strategic Real Estate Fund LLC	 	Delaware	
Watchung VF L.L.C.	 	New Jersey	
Watchung VF Member LLC	 	Delaware	
Waterbury VF L.L.C.	 	Connecticut	
Waterbury VF Member LLC	 	Delaware	
Wayne VF L.L.C.	 	New Jersey	
WDC 666 Fifth Retail TIC Owner LLC	 	Delaware	
Wells Kinzie L.L.C.	 	Delaware	
West 57th Street Holding LLC	 	Delaware	
West 57th Street JV LLC	 	Delaware	
West 57th Street Management LLC	 	Delaware	
West End 25 Developer LLC	 	Delaware	
WOC 666 Fifth Retail TIC Owner LLC	 	Delaware	
Woodbridge VF Member LLC	 	Delaware	
Woodbridge VF, L.L.C.	 	New Jersey	
WREC Columbus Ave LLC	 	Delaware	
WREC Hyde Park LLC	 	Delaware	
WREC Lido LLC	 	Delaware	
WREC Lido Venture LLC	 	Delaware	
WREC Quadrille LLC	 	Delaware	
WREC San Pasqual LLC	 	Delaware	
York Holding Company, L.L.C.	 	Delaware	
York Holding Company, L.P.	 	Pennsylvania	
York VF L.L.C.	 	Pennsylvania	

  

EXHIBIT 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following Registration Statements of our reports dated February 24, 2014, relating to the consolidated financial statements and financial statement schedules of Vornado Realty Trust, and the effectiveness of Vornado Realty Trust’s internal control over financial reporting, appearing in the Annual Report on Form 10-K of Vornado Realty Trust for the year ended December 31, 2013:
 
Registration Statement No. 333-68462 on Form S-8
Amendment No. 1 to Registration Statement No. 333-36080 on Form S-3
Registration Statement No. 333-64015 on Form S-3
Amendment No.1 to Registration Statement No. 333-50095 on Form S-3
Registration Statement No. 333-52573 on Form S-8
Registration Statement No. 333-29011 on Form S-8
Registration Statement No. 333-09159 on Form S-8
Registration Statement No. 333-76327 on Form S-3
Amendment No.1 to Registration Statement No. 333-89667 on Form S-3
Registration Statement No. 333-81497 on Form S-8
Registration Statement No. 333-102216 on Form S-8
Amendment No.1 to Registration Statement No. 333-102215 on Form S-3
Amendment No.1 to Registration Statement No. 333-102217 on Form S-3
Registration Statement No. 333-105838 on Form S-3
Registration Statement No. 333-107024 on Form S-3
Registration Statement No. 333-109661 on Form S-3
Registration Statement No. 333-114146 on Form S-3
Registration Statement No. 333-114807 on Form S-3
Registration Statement No. 333-121929 on Form S-3
Amendment No. 1 to Registration Statement No. 333-120384 on Form S-3
Registration Statement No. 333-126963 on Form S-3
Registration Statement No. 333-139646 on Form S-3
Registration Statement No. 333-141162 on Form S-3
Registration Statement No. 333-150592 on Form S-3
Registration Statement No. 333-150593 on Form S-8
Registration Statement No. 333-166856 on Form S-3
Registration Statement No. 333-172880 on Form S-8
Registration Statement No. 333-191865 on Form S-4
and in the following joint registration statements of Vornado Realty Trust and Vornado Realty L.P.:
Amendment No. 4 to Registration Statement No. 333-40787 on Form S-3
Amendment No. 4 to Registration Statement No. 333-29013 on Form S-3
Registration Statement No. 333-108138 on Form S-3
Registration Statement No. 333-122306 on Form S-3
Registration Statement No. 333-138367 on Form S-3
Registration Statement No. 333-162775 on Form S-3
Registration Statement No. 333-180640 on Form S-3

 
/s/ DELOITTE & TOUCHE LLP
 
Parsippany, New Jersey
February 24, 2014

  

EXHIBIT 31.1
CERTIFICATION
I, Steven Roth, certify that:
1.     I have reviewed this Annual Report on Form 10-K of Vornado Realty Trust;
2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure control and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 	February 24, 2014	 	
 	 	 	
 	/s/ Steven Roth	 	
 	Steven Roth	 	
 	Chairman of the Board and Chief Executive Officer	 	

  

EXHIBIT 31.2
CERTIFICATION
I, Stephen W. Theriot, certify that:
1.     I have reviewed this Annual Report on Form 10-K of Vornado Realty Trust;
2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure control and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 	February 24, 2014	 	
 	 	 	
 	/s/ Stephen W. Theriot	 	
 	Stephen W. Theriot	 	
 	Chief Financial Officer	 	

  

EXHIBIT 32.1
CERTIFICATION
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsection (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code)
 
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of Vornado Realty Trust (the “Company”), hereby certifies, to such officer’s knowledge, that:
 
The Annual Report on Form 10-K for year ended December 31, 2013 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

February 24, 2014	 	 	/s/ Steven Roth		
 	 	Name:	Steven Roth		
 	 	Title:	Chairman of the Board and Chief Executive Officer		

  

EXHIBIT 32.2
CERTIFICATION
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsection (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code)
 
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of Vornado Realty Trust (the “Company”), hereby certifies, to such officer’s knowledge, that:
 
The Annual Report on Form 10-K for year ended December 31, 2013 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

February 24, 2014	 	 	/s/ Stephen W. Theriot		
 	 	Name:	Stephen W. Theriot		
 	 	Title:	Chief Financial Officer