1 Exhibit Index on Page 28 As filed with the Securities and Exchange Commission on February 3, 1998 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) November 18, 1998 ------------------------------- Commission File Number: 1-11954 -------------------------------------------------------- VORNADO REALTY TRUST - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Maryland 22-1657560 - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) (I.R.S. Employer Identification Number) Park 80 West, Plaza II, Saddle Brook, New Jersey 07663 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (201)587-1000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) N/A - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Page 1
2 This Form 8-K/A amends Vornado Realty Trust's Form 8-K's previously filed to include certain required financial statements and pro forma financial information. Item 1. Not Applicable. Item 2. Acquisition or Disposition of Assets On December 17, 1997, Vornado Realty Trust ("Vornado") acquired 640 Fifth Avenue, an 18 story Manhattan office building located at the corner of 51st Street, for approximately $64 million from Met Life International Real Estate Partners Limited Partnership. The building contains approximately 250,000 square feet. Vornado financed the purchase from its existing cash. This transaction was arrived at through an arms-length negotiation and was consummated through a subsidiary of Vornado Realty L.P., a limited partnership of which Vornado owns 92.4% and is the sole general partner. Item 3-4. Not Applicable. Item 5. Other Events. On December 22, 1997, Vornado announced that the contract it previously had executed to acquire the long-term leasehold interest in One Penn Plaza for approximately $410 million has been executed by the seller, and that certain rights of first refusal to the contract have been waived. The acquisition, which was previously announced on November 18, 1997, is expected to close within the next 60 days subject to customary closing conditions. One Penn Plaza is a 57 story Manhattan office building containing approximately 2,350,000 square feet and encompasses substantially the entire square block bounded by 33rd Street, 34th Street, Seventh Avenue and Eighth Avenue. On November 21, 1997, Vornado Realty Trust entered into an agreement to acquire 150 East 58th Street, a 39 story Manhattan office building, for approximately $118 million. The building contains approximately 550,000 square feet. The acquisition, which is subject to customary closing conditions, is expected to be completed in the first quarter of 1998. Item 6. Not Applicable. Page 2
3 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a)-(b) There are filed herewith: (a) the historical Statements of Revenues and Certain Expenses of One Penn Plaza, 150 East 58th Street and 640 Fifth Avenue commencing on page 5, and (b) the Condensed Consolidated Pro Forma Balance Sheet of Vornado Realty Trust as of September 30, 1997 and the Condensed Consolidated Pro Forma Income Statement of Vornado Realty Trust for the nine months ended September 30, 1997 and the year ended December 31, 1996, commencing on page 18, prepared to give Pro Forma effect to the proposed acquisitions of One Penn Plaza and 150 East 58th Street, the completed acquisition of 640 Fifth Avenue and the previously reported acquisitions and investments (Mendik Company, 90 Park Avenue, Arbor Property Trust, Americold Corporation and URS Logistics, Inc. (collectively "Cold Storage"), The Montehiedra Town Center, Riese, Charles E. Smith Commercial Realty L.P. and The Hotel Pennsylvania). The Pro Forma data also includes information updated through September 30, 1997 for certain previously reported acquisitions which were disclosed in Form 8-K's previously filed with the Securities and Exchange Commission in 1997. Page Reference --------- One Penn Plaza Independent Auditors' Report....................................5 Statements of Revenues and Certain Expenses for the Year Ended December 31, 1996 (audited) and for the Nine Months Ended September 30, 1997 and 1996 (unaudited).......................6 Notes to Statements of Revenues and Certain Expenses for the Year Ended December 31, 1996 and for the Nine Months Ended September 30, 1997 and 1996.............................7 150 East 58th Street Independent Auditors' Report....................................9 Statements of Revenues and Certain Expenses for the Year Ended December 31, 1996 (audited) and for the Nine Months Ended September 30, 1997 and 1996 (unaudited).......................10 Notes to Statements of Revenues and Certain Expenses for the Year Ended December 31, 1996 and for the Nine Months Ended September 30, 1997 and 1996.............................11 640 Fifth Avenue Independent Auditors' Report....................................13 Statements of Revenues and Certain Expenses for the Year Ended December 31, 1996 (audited) and for the Nine Months Ended September 30, 1997 and 1996 (unaudited).......................14 Notes to Statements of Revenues and Certain Expenses for the Year Ended December 31, 1996 and for the Nine Months Ended September 30, 1997 and 1996.............................15 Page 3
4 Pro Forma financial information Condensed Consolidated Pro Forma Balance Sheet at September 30, 1997............................................18 Condensed Consolidated Pro Forma Income Statement for the Nine Months Ended September 30, 1997..................19 Condensed Consolidated Pro Forma Income Statement for the Year Ended December 31, 1996..........................22 Notes to Condensed Consolidated Pro Forma Financial Statements..25 (c) Exhibits. Exhibit No. Exhibit ----------- ------- 23.1 Consent of Deloitte & Touche LLP 23.2 Consent of Deloitte & Touche LLP 23.3 Consent of Deloitte & Touche LLP Item 8-9. Not Applicable. Page 4
5 INDEPENDENT AUDITORS' REPORT To the Shareholders of Vornado Realty Trust: We have audited the statement of revenues and certain expenses of One Penn Plaza, as described in Note 1 for the year ended December 31, 1996. This financial statement is the responsibility of One Penn Plaza's management. Our responsibility is to express an opinion on the financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. 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 audit provides a reasonable basis for our opinion. The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the filing of Form 8-K/A of Vornado Realty Trust) as described in Note 1 and is not intended to be a complete presentation of One Penn Plaza's revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the statement of revenues and certain expenses of One Penn Plaza as described in Note 1 for the year ended December 31, 1996 in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP New York, New York March 17, 1997 Page 5
6 ONE PENN PLAZA STATEMENTS OF REVENUES AND CERTAIN EXPENSES (000's Omitted) For the Nine Months Ended For the Year September 30 Ended 1997 1996 December 31, (unaudited) (unaudited) 1996 ----------- ----------- ---- REVENUES: Base Rent $36,309 $35,634 $46,618 Tenant Recoveries 3,866 2,044 3,679 Other Income 5,952 4,852 7,238 ------- ------- ------- Total revenues 46,127 42,530 57,535 ------- ------- ------- CERTAIN EXPENSES: Real Estate Taxes 8,966 8,842 11,761 Ground Rent 2,444 2,362 3,333 Repairs and Maintenance 3,790 1,695 2,410 Cleaning 3,322 2,987 4,079 Professional Fees 367 597 1,054 Utilities 5,782 5,173 6,808 Insurance 383 389 524 Management Fee 420 388 537 Payroll 2,302 2,248 2,939 General and Administrative 357 302 397 ------- ------- ------- Total certain expenses 28,133 24,983 33,842 ------- ------- ------- REVENUES IN EXCESS OF CERTAIN EXPENSES $17,994 $17,547 $23,693 ======= ======= ======= See notes to statements of revenues and certain expenses. Page 6
7 ONE PENN PLAZA NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES 1. ORGANIZATION AND BASIS OF PRESENTATION One Penn Plaza (the "Property") is a 57 story office building located on leaseholds situated on a major portion of the block bounded by Seventh and Eighth Avenues and 33rd and 34th Streets in New York City. The Property has aggregate net rentable area of approximately 2,350,000 square feet (approximately 91% leased as of September 30, 1997). The accounting records of the Property are maintained in accordance with generally accepted accounting principles. The statements of revenues and certain expenses includes information related to the operations of One Penn Plaza as recorded by the office building's previous owner. The accompanying historical financial statement information is presented in conformity with Rule 3-14 of the Securities and Exchange Commission. Accordingly, the financial statements are not representative of the actual operations for the periods presented as certain expenses, which may not be comparable to the expenses expected to be incurred in the future operations of the acquired property, have been excluded. Expenses excluded consist of interest, depreciation and amortization, and other costs not directly related to the future operations of the acquired property. The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The statements of revenues and certain expenses for the nine month periods ended September 30, 1997 and 1996 are unaudited, however, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for the fair presentation of these statements of revenues and certain expenses for the interim periods, on the basis described above, have been included. The results for such interim periods are not necessarily indicative of the results for an entire year. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition - Rental income is recognized from leases with scheduled rent increases on a straight-line basis over the lease term. Escalation rents based upon payments for real estate taxes, insurance, utilities and maintenance by tenants are estimated and accrued. Page 7
8 3. RELATED PARTY TRANSACTIONS Management fees were paid to Helmsley-Spear, Inc. ("Helmsley-Spear"). The principal stockholder of Helmsley-Spear has an ownership interest in the Property. During 1996 and 1995, Metropolitan, which has an ownership interest in the Property, executed operating leases to occupy office space in the building. The lease terms expire to October 31, 2005 and initially required annual rental payments of $2,283,129 through December 31, 1996. 4. LEASEHOLDS The building is on land subject to leases with outside third parties. The approximate fixed annual rental payments, as defined, are as follows (000's omitted): Year Ending December 31, Amount 1997 $2,580 1998 2,580 1999 2,580 2000 2,580 2001 2,690 Thereafter 62,410 One lease provides for certain additional percentage rent and another provides for reimbursement of real estate tax escalation on the land. For the year ended December 31, 1996, the Property recognized $48,000 and $46,000 in percentage rent and real estate tax escalation expenses, respectively. 5. OPERATING LEASES The Property leases office space to various tenants with lease terms expiring in various years. The following is a schedule, by years, of the approximate minimum future rentals required under these operating leases as of December 31, 1996 (000's omitted): Year Ending December 31, Amount 1997 $ 45,812 1998 42,023 1999 38,602 2000 36,546 2001 33,386 Thereafter 166,662 ****** Page 8
9 INDEPENDENT AUDITORS' REPORT To the Shareholders of Vornado Realty Trust: We have audited the statement of revenues and certain expenses of 150 East 58th Street, as described in Note 1 for the year ended December 31, 1996. This financial statement is the responsibility of Vornado Realty Trust's management. Our responsibility is to express an opinion on the financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. 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 audit provides a reasonable basis for our opinion. The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the filing of Form 8-K/A of Vornado Realty Trust) as described in Note 1 and is not intended to be a complete presentation of 150 East 58th Street's revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the statement of revenues and certain expenses of 150 East 58th Street as described in Note 1 for the year ended December 31, 1996 in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Parsippany, New Jersey January 16, 1998 Page 9
10 150 EAST 58TH STREET STATEMENTS OF REVENUES AND CERTAIN EXPENSES (000's Omitted) For the Nine Months Ended For the Year September 30, Ended 1997 1996 December 31, (unaudited) (unaudited) 1996 ----------- ----------- ---- REVENUES: Base Rent $10,426 $9,436 $11,982 Tenant Recoveries 1,537 1,600 2,135 Other Income 410 527 765 ------- ------ ------- Total revenues 12,373 11,563 14,882 ------- ------ ------- CERTAIN EXPENSES: Real Estate Taxes 2,446 2,531 3,368 Ground Rent 80 80 107 Repairs and Maintenance 448 296 401 Cleaning 917 893 1,130 Professional Fees 153 179 235 Utilities 1,079 1,210 1,546 Insurance 113 104 144 Management Fee 128 128 170 Payroll 472 436 577 Administrative 143 113 166 Miscellaneous 112 186 207 ------- ------ ------- Total certain expenses 6,091 6,156 8,051 ------- ------ ------- REVENUES IN EXCESS OF CERTAIN EXPENSES $ 6,282 $5,407 $ 6,831 ======= ====== ======= See notes to statements of revenues and certain expenses. Page 10
11 150 EAST 58TH STREET NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES 1. ORGANIZATION AND BASIS OF PRESENTATION 150 East 58th Street (the "Property") is a 39 story commercial office building located on East 58th Street and Third Avenue in New York City. The Property has aggregate net rentable area of approximately 550,000 square feet (approximately 95% leased as of September 30, 1997). The accounting records of the Property are maintained in accordance with generally accepted accounting principles. The statements of revenues and certain expenses includes information related to the operations of 150 East 58th Street as recorded by the office building's previous owner. The accompanying historical financial statement information is presented in conformity with Rule 3-14 of the Securities and Exchange Commission. Accordingly, the financial statements are not representative of the actual operations for the periods presented as certain expenses, which may not be comparable to the expenses expected to be incurred in the future operations of the acquired property, have been excluded. Expenses excluded consist of interest, depreciation and amortization, and other costs not directly related to the future operations of the acquired property. The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The statements of revenues and certain expenses for the nine month periods ended September 30, 1997 and 1996 are unaudited, however, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for the fair presentation of these statements of revenues and certain expenses for the interim periods, on the basis described above, have been included. The results for such interim periods are not necessarily indicative of the results for an entire year. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition - Rental income is recognized from leases with scheduled rent increases on a straight-line basis over the lease term. Escalation rents based upon payments for real estate taxes, insurance, utilities and maintenance by tenants are estimated and accrued. Page 11
12 3. LEASEHOLDS The building is on land subject to leases with outside third parties. The approximate fixed annual rental payments, as defined, are as follows (000's omitted): Year Ending December 31, Amount 1997 $159 1998 159 1999 159 2000 159 2001 159 Thereafter 2,696 4. OPERATING LEASES The Property leases office space to various tenants with lease terms expiring in various years. The following is a schedule, by years, of the approximate minimum future rentals required under these operating leases as of December 31, 1996 (000's omitted): Year Ending December 31, Amount 1997 $13,645 1998 14,407 1999 11,762 2000 9,816 2001 7,718 Thereafter 30,224 ****** Page 12
13 INDEPENDENT AUDITORS' REPORT To the Shareholders of Vornado Realty Trust: We have audited the statement of revenues and certain expenses of 640 Fifth Avenue, as described in Note 1 for the year ended December 31, 1996. This financial statement is the responsibility of 640 Fifth Avenue's management. Our responsibility is to express an opinion on the financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. 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 audit provides a reasonable basis for our opinion. The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for the inclusion in the filing of Form 8-K/A of Vornado Realty Trust) as described in Note 1 and is not intended to be a complete presentation of 640 Fifth Avenue's revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the statement of revenues and certain expenses of 640 Fifth Avenue as described in Note 1 for the year ended December 31, 1996 in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP New York, New York February 12, 1997 Page 13
14 640 FIFTH AVENUE STATEMENTS OF REVENUES AND CERTAIN EXPENSES (000's omitted) For the Nine Months Ended For the Year September 30, Ended 1997 1996 December 31, (Unaudited) (Unaudited) 1996 ----------- ----------- ---- REVENUES: Base rent $3,790 $3,118 $4,170 Tenant recoveries 1,378 1,346 1,446 Other income -- 272 336 ------ ------ ------ Total revenues 5,168 4,736 5,952 ------ ------ ------ CERTAIN EXPENSES Real estate taxes 1,526 1,688 2,221 Repairs and maintenance 352 60 163 Cleaning 562 689 855 Utilities 398 392 466 Insurance 37 36 48 Management fee 138 109 178 Payroll 139 105 156 Miscellaneous 114 86 115 ------ ------ ------ Total certain expenses 3,266 3,165 4,202 ------ ------ ------ REVENUES IN EXCESS OF CERTAIN EXPENSES $1,902 $1,571 $1,750 ====== ====== ====== See notes to statements of revenues and certain expenses. Page 14
15 640 FIFTH AVENUE NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES 1. ORGANIZATION AND BASIS OF PRESENTATION 640 Fifth Avenue is an office building located at the corner of 51st Street of, New York, N.Y. (the "Property"). The Property was formerly owned by Met Life International Real Estate Limited Partnership and operated by Shorenstein Company, L.P. ("Shorenstein"). The Property has aggregate net rentable area of approximately 248,000 square feet (approximately 92% leased as of September 30, 1997). The accounting records of the Property are maintained in accordance with generally accepted accounting principles. The statements of revenues and certain expenses includes information related to the operations of 640 Fifth Avenue as recorded by the office building's previous owner. The accompanying historical financial statement information is presented in conformity with Rule 3-14 of the Securities and Exchange Commission. Accordingly, the financial statements are not representative of the actual operations for the periods presented as certain expenses, which may not be comparable to the expenses expected to be incurred in the future operations of the acquired property, have been excluded. Expenses excluded consist of interest, depreciation and amortization, and other costs not directly related to the future operations of the acquired property. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. The ultimate results could differ from those estimates. The statements of revenues and certain expenses for the nine month periods ended September 30, 1997 and 1996 are unaudited, however, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for the fair presentation of these statements of revenues and certain expenses for the interim periods, on the basis described above, have been included. The results for such interim periods are not necessarily indicative of the results for an entire year. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition - Rental income is recognized from leases with scheduled rent increases on a straight-line basis over the lease term. Escalation rents based upon payments for real estate taxes, insurance, utilities and maintenance by tenants are estimated and accrued. Page 15
16 3. OPERATING LEASES The Property leases office space to various tenants with lease terms expiring in various years. Approximately 26% of total rental income was earned from one tenant in the building. The following is a schedule, by years, of the approximate minimum future rentals required under these operating leases as of December 31, 1996 (000's omitted): Year Ending December 31, Amount 1997 $4,102 1998 3,696 1999 3,521 2000 2,909 2001 2,975 Thereafter 4,980 ****** Page 16
17 Pro Forma Financial Information: The unaudited condensed consolidated pro forma financial information attached presents: (A) the condensed consolidated pro forma income statements of Vornado Realty Trust for the year ended December 31, 1996 and the nine months ended September 30, 1997, as if (i) the proposed acquisitions of One Penn Plaza and 150 East 58th Street and the completed acquisition of 640 Fifth Avenue (collectively "New Acquisitions"), (ii) the previously reported acquisitions and investments (Mendik Company, 90 Park Avenue, Arbor Property Trust, Americold and URS (collectively "Cold Storage"), Montehiedra, Riese, Charles E. Smith Commercial Realty L.P. and the Hotel Pennsylvania) and (iii) the sale of common shares and the use of proceeds therefrom, had occurred on January 1, 1996 and (B) the condensed consolidated pro forma balance sheet of Vornado Realty Trust as of September 30, 1997, as if the above acquisitions had occurred on September 30, 1997 or the date of acquisition, if earlier. The Pro Forma data also includes information updated through September 30, 1997 for certain previously reported acquisitions which were disclosed in Form 8-K's previously filed with the Securities and Exchange Commission in 1997. The unaudited condensed consolidated pro forma financial information is not necessarily indicative of what Vornado Realty Trust's actual results of operations or financial position would have been had these transactions been consummated on the dates indicated, nor does it purport to represent Vornado Realty Trust's results of operations or financial position for any future period. The results of operations for the period ended September 30, 1997 are not necessarily indicative of the operating results for the full year. The unaudited condensed consolidated pro forma financial information should be read in conjunction with the Consolidated Financial Statements and notes thereto included in Vornado's Annual Report on Form 10-K for the year ended December 31, 1996, as amended, and the Quarterly Report on Form 10-Q for the period ended September 30, 1997 and the Statements of Revenue and Certain Expenses of One Penn Plaza, 150 East 58th Street and 640 Fifth Avenue included herein. In management's opinion, all adjustments necessary to reflect these transactions have been made. All share and per share amounts have been restated to reflect the 100% stock dividend announced on October 7, 1997. Page 17
18 Condensed Consolidated Pro Forma Balance Sheet September 30, 1997 (unaudited) (Amounts in thousands) Historical ------------------------ Previously Pro Forma Previously Reported Adjustments Reported Pro Forma Company New Company Vornado Acquisitions Adjustments Pro Forma Acquisitions Pro Forma ---------- ------------ ----------- ----------- ------------- ----------- Assets: Real estate, net $ 1,065,314 $ 140,823 $ 127,334 (A) $ 1,319,170 $ 410,000 (SS) $ 1,911,170 (14,301)(A) 118,000 (TT) 64,000 (TT) Cash and cash equivalents 117,215 24,740 (B) 141,955 (92,000)(TT) 49,955 Investment in and advances to Cold Storage 204,000 (B) 204,000 204,000 Investment in and advances to Alexander's, Inc. 107,446 107,446 107,446 Investment in partnerships and joint ventures 58,177 60,000 (B) 118,177 118,177 Investment in and advances to management companies 13,250 13,250 13,250 Officer's deferred compensation expense 4,170 4,170 4,170 Mortgage loans receivable 84,663 84,663 84,663 Receivable arising from straight- lining of rents 21,999 21,999 21,999 Other assets 79,272 10,626 (2,554)(C) 87,344 87,344 ----------- --------- ----------- ----------- --------- ----------- $ 1,551,506 $ 151,449 $ 399,219 $ 2,102,174 $ 500,000 $ 2,602,174 =========== ========= =========== =========== ========= =========== Liabilities: Notes and mortgages payable $ 772,156 $ 124,879 $ (310,000)(B) $ 587,035 $ 410,000 (SS) $ 997,035 Deferred leasing fee income 10,461 10,461 10,461 Officer's deferred compensation payable 25,000 25,000 25,000 Other liabilities 30,576 12,269 42,845 42,845 ----------- --------- ----------- ----------- --------- ----------- 838,193 137,148 (310,000) 665,341 410,000 1,075,341 ----------- --------- ----------- ----------- --------- ----------- Minority interest of unitholders in the Operating Partnership 178,411 - 178,411 178,411 ----------- --------- ----------- ----------- --------- ----------- Equity 534,902 14,301 127,334 (A) 1,258,422 90,000 (TT) 1,348,422 (14,301)(A) (2,554)(C) 598,740 (B) ----------- --------- ----------- ----------- --------- ----------- $ 1,551,506 $ 151,449 $ 399,219 $ 2,102,174 $ 500,000 $ 2,602,174 =========== ========= =========== =========== ========= =========== Page 18
19 Condensed Consolidated Pro Forma Income Statement For the Nine Months Ended September 30, 1997 (Unaudited) (Amounts in thousands, except per share amounts) Historical -------------------------- Previously Previously Reported Historical Reported Pro Forma Company New Pro Forma Company Vornado Acquisitions (1) Adjustments Pro Forma Acquisitions Adjustments Pro Forma --------- ---------------- ------------- ---------- ------------ ------------ --------- Revenues: Property rentals $ 113,353 $ 68,596 $ 1,775 (D) $ 184,817 $ 50,525 $ 2,057 (VV) $237,399 1,093 (GG) Expense reimbursements 25,924 19,229 45,153 6,781 51,934 Other income 2,550 3,662 (2,622) (E) 3,590 6,362 9,952 --------- --------- ------- --------- --------- ---------- -------- 141,827 91,487 246 233,560 63,668 2,057 299,285 --------- --------- ------- --------- --------- ---------- -------- Expenses: Operating 48,557 34,791 83,348 37,490 - (XX) 128,838 Depreciation and amortization 15,040 7,908 368 (F) 25,860 11,241 (UU) 37,101 1,956 (G) 588 (HH) General and administrative 8,208 3,838 (1,607) (E) 9,285 9,285 (1,154) (H) Amortization of officer's deferred compensation expense 18,747 18,747 18,747 --------- --------- ------- --------- --------- ---------- -------- 90,552 46,537 151 137,240 37,490 11,241 185,971 --------- --------- ------- --------- --------- ---------- -------- Operating income (loss) 51,275 44,950 95 96,320 26,178 (9,184) 113,314 (Loss) income applicable to Preferred Stock Affiliates (6,270) (CC) 4,162 4,162 10,432 (DD) Income applicable to Alexander's 4,186 4,186 4,186 Equity in net income of management companies 918 964 (E) 1,882 1,882 Equity in net income of investees 553 362 276 (I) 3,575 3,575 2,384 (II) Interest income on mortgage notes receivable 7,708 (4,586) (J) 5,121 5,121 1,999 (JJ) Interest and dividend income 9,125 899 10,024 10,024 Interest and debt expense (30,972) (15,671) 4,537 (K) (34,516) (20,756)(WW) (55,272) (4,410) (L) 884 (M) (3,997) (KK) 15,113 (LL) Net gain on marketable securities 911 911 911 Minority interest of unitholders in the Operating Partnership (4,600) (3,084) (N) (7,684) (7,684) --------- --------- ------- --------- --------- ---------- -------- Net income (loss) 39,104 30,540 14,337 83,981 26,178 (29,940) 80,219 Preferred stock dividends (10,096) (5,137) (O) (15,233) (15,233) --------- --------- ------- --------- --------- ---------- -------- Net income (loss) applicable to common shares $ 29,008 $ 30,540 $ 9,200 $ 68,748 $ 26,178 $ (29,940) $ 64,986 ========= ========= ======= ========= ========= ========== ======== Net income per common share, based on 53,627,027 and 72,725,331 shares, respectively $ 0.54 $ 0.89 ========= ======== Page 19
20 Condensed Consolidated Pro Forma Income Statement For the Nine Months Ended September 30, 1997 (Unaudited) (Amounts in thousands, except per share amounts) Historical -------------------------- Previously Previously Reported Historical Reported Pro Forma Company New Pro Forma Company Vornado Acquisitions (1) Adjustments Pro Forma Acquisitions Adjustments Pro Forma --------- ---------------- ------------- ---------- ------------ ------------ ------------- Other Data: Funds from Operations (2): Net income (loss) applicable to common shares $ 29,008 $ 30,540 $ 9,200 $ 68,748 $ 26,178 $ (29,940) $ 64,986 Depreciation and amortization of real property 14,623 5,807 2,912 23,342 11,241 34,583 Straight-lining of property rent escalations (2,317) 881 (1,775) (3,211) (2,931) (2,057) (8,199) Leasing fees received in excess of income recognized 1,333 1,333 1,333 Proportionate share of adjustments to income from equity investments to arrive at FFO 1,142 832 28,089 30,063 30,063 Non-recurring lease cancellation income and write-off of related costs (11,581) (11,581) (11,581) --------- --------- ---------- --------- --------- ---------- ----------- $ 43,789 $ 26,479 $ 38,426 $ 108,694 $ 23,247 $ (20,756) $ 111,185 ========= ========= ========== ========= ========= ========== =========== Cash flow provided by (used) in: Operating activities $ 64,017 $ 19,522 $ 34,363 $ 117,902 $ 21,772 $ (20,756) $ 118,918 Investing activities $(670,755) $ (5,732) $ (279,630) $(956,117) $ - $ (592,000) $(1,548,117) Financing activities $ 575,409 $ (9,235) $ 294,113 $ 860,287 $ - $ 500,000 $ 1,360,287 - ---------- (1) Certain revenue and expense items have been reclassified to conform to Vornado's presentation. (2) Funds from operations does not represent cash generated from operating activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs which is disclosed in the Consolidated Statements of Cash Flows for the applicable periods. There are no material legal or functional restrictions on the use of funds from operations. Funds from operations should not be considered as an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flows as a measure of liquidity. Management considers funds from operations a supplemental measure of Operating performance and along with cash flow from operating activities, financing activities, and investing activities, it provides investors with an indication of the ability of the Company to incur and service debt, to make capital expenditures and to fund other cash needs. Funds from operations may not be comparable to similarly titled measures employed by other REITs since a number of REITs, including the Company's, method of calculating funds from operations is different from that used by NAREIT. Funds from operations, as defined by NAREIT, represents net income applicable to common shares before depreciation and amortization, extraordinary items and gains or losses on sales of real estate. Funds from operations as disclosed above has been modified to adjust for the effect of straight-lining of property rentals for rent escalations and leasing fee income. Page 20
21 Condensed Combining Income Statement For the Nine Months Ended September 30, 1997 (Unaudited) (Amounts in thousands, except per share amounts) Historical -------------------------------------------------- One Penn 150 East 640 Fifth Plaza 58th Street Avenue Combined --------- ----------- --------- -------- Revenues: Property rentals $ 36,309 $ 10,426 $ 3,790 $ 50,525 Expense reimbursements 3,866 1,537 1,378 6,781 Other income 5,952 410 -- 6,362 -------- -------- ------- -------- 46,127 12,373 5,168 63,668 -------- -------- ------- -------- Expenses: Operating 28,133 6,091 3,266 37,490 -------- -------- ------- -------- 28,133 6,091 3,266 37,490 -------- -------- ------- -------- Net income applicable to common shares $ 17,994 $ 6,282 $ 1,902 $ 26,178 ======== ======== ======= ======== Other Data: Funds from Operations (2): Net income (loss) applicable to common shares $ 17,994 $ 6,282 $ 1,902 $ 26,178 Depreciation and amortization of real property - - - - Straight-lining of property rent escalations (2,855) 82 (158) (2,931) -------- -------- ------- -------- $ 15,139 $ 6,364 $ 1,744 $ 23,247 ======== ======== ======= ======== Cash flow provided by: Operating activities $ 14,462 $ 6,089 $ 1,221 $ 21,772 Investing activities $ - $ - $ - $ - Financing activities $ - $ - $ - $ - - ---------- (2) Funds from operations does not represent cash generated from operating activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs which is disclosed in the Consolidated Statements of Cash Flows for the applicable periods. There are no material legal or functional restrictions on the use of funds from operations. Funds from operations should not be considered as an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flows as a measure of liquidity. Management considers funds from operations a supplemental measure of Operating performance and along with cash flow from operating activities, financing activities, and investing activities, it provides investors with an indication of the ability of the Company to incur and service debt, to make capital expenditures and to fund other cash needs. Funds from operations may not be comparable to similarly titled measures employed by other REITs since a number of REITs, including the Company's, method of calculating funds from operations is different from that used by NAREIT. Funds from operations, as defined by NAREIT, represents net income applicable to common shares before depreciation and amortization, extraordinary items and gains or losses on sales of real estate. Funds from operations as disclosed above has been modified to adjust for the effect of straight-lining of property rentals for rent escalations and leasing fee income. Page 21
22 Condensed Consolidated Pro Forma Income Statement For the Year Ended December 31, 1996 (Unaudited) (Amounts in thousands, except per share amounts) Historical -------------------------- Previously Previously Reported Historical Reported Pro Forma Company New Pro Forma Company Vornado Acquisitions (1) Adjustments Pro Forma Acquisitions Adjustments Pro Forma --------- ---------------- ------------- ---------- ------------ ------------ --------- Revenues: Property rentals $ 87,424 $ 145,335 $ 7,071 (P) $ 241,972 $ 62,770 $ 2,866 (ZZ) $307,608 (44) (Q) 2,186 (MM) Expense reimbursements 26,644 37,651 64,295 7,260 71,555 Other income 2,819 6,124 (5,378) (Q) 3,565 8,339 11,904 --------- ---------- -------- ---------- --------- ---------- -------- 116,887 189,110 3,835 309,832 78,369 2,866 391,067 --------- ---------- -------- ---------- --------- ---------- -------- Expenses: Operating 36,412 82,523 (39) (Q) 119,012 46,095 - (BBB) 165,107 116 (R) Depreciation and amortization 11,589 18,515 (144) (Q) 45,089 14,987 (YY) 60,076 9,981 (S) 3,276 (T) 1,872 (NN) General and administrative 5,167 8,956 (3,788) (Q) 8,162 8,162 (2,173) (U) Amortization of officer's deferred compensation expense 2,083 2,083 2,083 --------- ---------- -------- ---------- --------- ---------- -------- 55,251 109,994 9,101 174,346 46,095 14,987 235,428 --------- ---------- -------- ---------- --------- ---------- -------- Operating income (loss) 61,636 79,116 (5,266) 135,486 32,274 (12,121) 155,639 (Loss) income applicable to Preferred Stock Affiliates (8,357) (EE) 5,552 5,552 13,909 (FF) Income applicable to Alexander's 7,956 7,956 7,956 Equity in net income of management companies 1,855 1,471 (Q) 3,326 3,326 Equity in net income of investees 1,663 1,755 (V) 5,609 5,609 2,191 (OO) Interest income on mortgage notes receivable 2,579 3,998 (PP) 6,577 6,577 Interest and dividend income 3,151 2,536 (20) (Q) 5,667 5,667 Interest and debt expense (16,726) (34,692) 9,016 (W) (43,862) (71,537) (12,775) (X) (27,675)(AAA) 1,237 (Y) (10,072) (QQ) 20,150 (RR) Net gain on marketable securities 913 913 913 Minority interest of unitholders in the Operating Partnership (10,372) (Z) (10,372) (10,372) --------- ---------- -------- ---------- --------- ---------- -------- Net income (loss) 61,364 48,623 6,865 116,852 32,274 (39,796) 109,330 Preferred stock dividends (19,800) (AA) (19,800) (19,800) --------- ---------- -------- ---------- --------- ---------- -------- Net income (loss) applicable to common shares $ 61,364 $ 48,623 $(12,935) $ 97,052 $ 32,274 $ (39,796) $ 89,530 ========= ========== ======== ========== ========= ========== ======== Net income per common share, based on 49,206,884 and 68,305,188 shares, respectively $ 1.25 $ 1.31 ========= ======== Page 22
23 Condensed Consolidated Pro Forma Income Statement For the Year Ended December 31, 1996 (Unaudited) (Amounts in thousands, except per share amounts) Historical -------------------------- Previously Previously Reported Historical Reported Pro Forma Company New Pro Forma Company Vornado Acquisitions (1) Adjustments Pro Forma Acquisitions Adjustments Pro Forma --------- ---------------- ------------- ---------- ------------ ------------ -------------- Other Data: Funds from Operations (2): Net income (loss) applicable to common shares $ 61,364 $ 48,623 $ (12,935) $ 97,052 $ 32,274 $ (39,796) $ 89,530 Depreciation and amortization of real property 10,583 18,515 14,985 44,083 14,987 59,070 Straight-lining of property rent escalations (2,676) (2,676) (7,071) (12,423) (1,672) (2,866) (16,961) Leasing fees received in excess of income recognized 1,805 1,805 1,805 Proportionate share of adjustments to income from equity investments to arrive at FFO (1,760) 2,747 35,445 36,432 36,432 -------- ---------- ---------- ---------- --------- ---------- ------------ $ 69,316 $ 67,209 $ 30,424 $ 166,949 $ 30,602 $ (27,675) $ 169,876 ======== ========== ========== ========== ========= ========== ============ Cash flow provided by (used) in: Operating activities $ 70,703 $ 59,012 $ 61,185 $ 190,900 $ 28,723 $ (27,675) $ 191,948 Investing activities $ 14,912 $ (8,930) $ (951,148) $ (945,166) $ - $ (592,000) $ (1,537,166) Financing activities $(15,046) $ (20,031) $ 869,165 $ 834,088 $ - $ 500,000 $ 1,334,088 - ----------- (1) Certain revenue and expense items have been reclassified to conform to Vornado's presentation. (2) Funds from operations does not represent cash generated from operating activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs which is disclosed in the Consolidated Statements of Cash Flows for the applicable periods. There are no material legal or functional restrictions on the use of funds from operations. Funds from operations should not be considered as an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flows as a measure of liquidity. Management considers funds from operations a supplemental measure of Operating performance and along with cash flow from operating activities, financing activities, and investing activities, it provides investors with an indication of the ability of the Company to incur and service debt, to make capital expenditures and to fund other cash needs. Funds from operations may not be comparable to similarly titled measures employed by other REITs since a number of REITs, including the Company's, method of calculating funds from operations is different from that used by NAREIT. Funds from operations, as defined by NAREIT, represents net income applicable to common shares before depreciation and amortization, extraordinary items and gains or losses on sales of real estate. Funds from operations as disclosed above has been modified to adjust for the effect of straight-lining of property rentals for rent escalations and leasing fee income. Page 23
24 Condensed Combining Income Statement For the Year Ended December 31, 1996 (Unaudited) (Amounts in thousands, except per share amounts) Historical -------------------------------------------------- One Penn 150 East 640 Fifth Plaza 58th Street Avenue Combined --------- ----------- --------- -------- Revenues: Property rentals $ 46,618 $ 11,982 $ 4,170 $ 62,770 Expense reimbursements 3,679 2,135 1,446 7,260 Other income 7,238 765 336 8,339 --------- --------- -------- --------- 57,535 14,882 5,952 78,369 --------- --------- -------- --------- Expenses: Operating 33,842 8,051 4,202 46,095 --------- --------- -------- --------- 33,842 8,051 4,202 46,095 --------- --------- -------- --------- Net income applicable to common shares $ 23,693 $ 6,831 $ 1,750 $ 32,274 ========= ========= ======== ========= Other Data: Funds from Operations (2): Net income (loss) applicable to common shares $ 23,693 $ 6,831 $ 1,750 $ 32,274 Depreciation and amortization of real property - - - - Straight-lining of property rent escalations (1,417) (44) (211) (1,672) --------- --------- -------- --------- $ 22,276 $ 6,787 $ 1,539 $ 30,602 ========= ========= ======== ========= Cash flow provided by: Operating activities $ 20,905 $ 6,283 $ 1,535 $ 28,723 Investing activities $ - $ - $ - $ - Financing activities $ - $ - $ - $ - - ---------- (2) Funds from operations does not represent cash generated from operating activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs which is disclosed in the Consolidated Statements of Cash Flows for the applicable periods. There are no material legal or functional restrictions on the use of funds from operations. Funds from operations should not be considered as an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flows as a measure of liquidity. Management considers funds from operations a supplemental measure of Operating performance and along with cash flow from operating activities, financing activities, and investing activities, it provides investors with an indication of the ability of the Company to incur and service debt, to make capital expenditures and to fund other cash needs. Funds from operations may not be comparable to similarly titled measures employed by other REITs since a number of REITs, including the Company's, method of calculating funds from operations is different from that used by NAREIT. Funds from operations, as defined by NAREIT, represents net income applicable to common shares before depreciation and amortization, extraordinary items and gains or losses on sales of real estate. Funds from operations as disclosed above has been modified to adjust for the effect of straight-lining of property rentals for rent escalations and leasing fee income. Page 24
25 Notes to Condensed Consolidated Pro Forma Financial Statements (Amounts in thousands, except per share amounts) New Acquisitions (One Penn Plaza, 150 East 58th Street and 640 Fifth Avenue): On November 21, 1997, Vornado entered into an agreement to acquire 150 East 58th Street, a 39 story Manhattan office building, for approximately $118 million. The building contains approximately 550,000 square feet. The acquisition, which is subject to customary closing conditions, is expected to be completed in the first quarter of 1998. On December 17, 1997, Vornado acquired 640 Fifth Avenue, an 18 Story Manhattan office building located at the corner of 51st Street, for approximately $ 64 million from Met Life International Real Estate Partners Limited Partnership. The building contains approximately 250,000 square feet. Vornado financed the purchase from its existing cash. On December 22, 1997, Vornado announced that the contract it previously had executed to acquire the long-term leasehold interest in One Penn Plaza for approximately $410 million has been executed by the seller, and that certain rights of first refusal to the contract have been waived. The acquisition, which was previously announced on November 18, 1997, is expected to close within the next sixty days subject to customary closing conditions. One Penn Plaza is a 57 story Manhattan office building containing approximately 2,350,000 square feet and encompasses substantially the entire square block bounded by 33rd Street, 34th Street, Seventh Avenue and Eighth Avenue. Pro Forma September 30, 1997 Balance Sheet: (SS) To reflect the acquisition of One Penn Plaza with borrowings from the Company's revolving credit facility. (TT) To reflect the use of $90 million of proceeds from the issuance of 2.1 million common shares (exercise of over-allotment option by underwriters in November, 1997), net of expenses, and $92 million of existing cash for (i) the acquisition of 640 Fifth Avenue ($64 million) and (ii) 150 East 58th Street ($118 million). Pro Forma September 30, 1997 Income Statement: (UU) Adjustment to depreciation expense for the nine month period ended September 30, 1997 for the new acquisitions based upon their respective purchase price (VV) To adjust rentals for the nine month period ended September 30, 1997 arising from the straight-lining of tenant leases that contain escalations over the lease term. (WW) To accrue interest at 6.75%, the current rate in effect, on borrowings under the revolving credit facility to finance the One Penn Plaza acquisition. (XX) The above pro formas reflect fees for property management services paid to third parties. These properties will be managed internally subsequent to their acquisitions, by the Mendik division. Management assumes significant cost savings can be anticipated, however, amounts can not presently be determined. Pro Forma December 31, 1996 Income Statement: (YY) Adjustment to depreciation expense for the year ended December 31, 1996 for the new acquisitions based upon their respective purchase price. (ZZ) To adjust rentals for the year ended December 31, 1996 arising from the straight-lining of tenant leases that contain escalations over the lease term. (AAA) To accrue interest at 6.75%, the current rate in effect, on borrowings under the revolving credit facility to finance the One Penn Plaza acquisition. (BBB) The above pro formas reflect fees for property management services paid to third parties. These properties will be managed internally subsequent to their acquisitions, by the Mendik division. Management assumes significant cost savings can be anticipated, however, amounts can not presently be determined. Previously Reported Acquisitions (Mendik Companies, 90 Park Avenue, Arbor Property Trust, Americold, URS, Montehiedra, Riese, Charles E. Smith Commercial Realty, L.P. And The Hotel Pennsylvania) Pro forma effect has been given to the above listed acquisitions in previously filed Form 8-K's during 1997 and is included in this document in a combined manner as "Previously Reported Acquisitions" for the historical information. Pro Forma September 30, 1997 Balance Sheet: (A) Assumed issuance of 2,998,304 common shares, with a fair value of $127,334 (based on an average price of $42.469 per share), in exchange for all of the common shares of Arbor. (B) To reflect the use of $598,740 of proceeds, net of $35,754 of offering costs, from the issuance of 14,100 common shares for (i) $204,000 loan in connection with Cold Storage acquisition, (ii) $60,000 Charles E. Smith Realty Limited Partnership, and (iii) $310,000 reduction in debt. The remaining balance of $24,740 is reflected in cash and cash equivalents. (C) Write-off of deferred assets of Arbor as reflected in the values allocated to the real estate and the debt in accordance with APB No. 16. Page 25
26 Pro Forma September 30, 1997 Income Statement: (D) To adjust rentals for the period from January 1, 1997 to April 14, 1997 arising from the straight-lining of property rentals for rent escalations based on the remaining terms of the applicable Mendik leases. (E) To reflect adjustments required to record the Company's investment in the Mendik management company for the period from January 1, 1997 to April 14, 1997 under the equity method of accounting. (F) Increase in depreciation for the period from January 1, 1997 to April 14, 1997 due to allocation of the Mendik purchase price. (G) Adjustment to depreciation based on allocation of the Arbor purchase price and the reclassification of the 90 Park Avenue investment to real estate. (H) Reflects the elimination of Arbor management expenses in connection with the acquisition. (I) Increase in equity in investees for the period from January 1, 1997 to April 14, 1997 due to net decrease in interest expense on refinanced Mendik debt. (J) Elimination of interest income earned on mortgage loan receivable from 90 Park Avenue for the period prior to Vornado's acquisition of title to the land. (K) Reflects decrease in interest expense and loan cost amortization for the period from January 1, 1997 to April 14, 1997 resulting from the reduction and refinancing of Mendik debt. (L) Reflects interest expense of $4,410 for the period from January 1, 1997 to May 6, 1997 on the 90 Park Avenue investment of $185,000, based on an average interest rate of approximately 7.0%. (M) Reflects elimination of amortization of deferred financing costs of $884 for the nine months ended September 30, 1997 on existing Arbor debt. (N) To reflect preferential distributions for the period from January 1, 1997 to April 14, 1997 relating to the Mendik Transaction. (O) To reflect preferred stock dividends at a rate of 6.50% plus offering costs for the period from January 1, 1997 to April 14, 1997 on the proportionate number of Series A Preferred Shares used to fund the Mendik acquisition. (CC) To reflect Vornado's share of net loss per the Cold Storage Condensed Consolidated Pro Forma Income Statement for the Nine Months Ended September 30, 1997. (DD) To reflect Vornado's share of the management fee income received from Cold Storage. (GG) To reflect rent from new leases entered into with the Riese organization in connection with the acquisition. (HH) Adjustment to depreciation expense for the period from January 1, 1997 to date of Riese and Montehiedra acquisitions based on the allocation of the purchase price. (II) To reflect equity in income from investment in Charles E. Smith Commercial Realty Limited Partnership and the Hotel Pennsylvania. (JJ) Adjustment to interest income for the period from January 1, 1997 to the date of the Riese acquisition on mortgage note receivable $41,000 at a rate of 9.75%. (KK) Adjustment to interest expense for the period from January 1, 1997 to date of Riese and Montehiedra acquisitions based on the amount of the investments. (LL) To reflect reduction of interest expense based on reduction of debt from the use of proceeds from common stock offering. Pro Forma December 31, 1996 Income Statement: (P) To adjust rentals arising from the straight-lining of property rentals for rent escalations based on the remaining terms of the applicable Mendik leases. (Q) To reflect adjustments required to record the Company's investment in the Mendik management company under the equity method of accounting. (R) Increase in Mendik operating expenses due to contract changes. (S) Increase in depreciation due to preliminary allocation of the Mendik purchase price. (T) Adjustment to depreciation based on allocation of the Arbor purchase price and the reclassification of the 90 Park Avenue investment to real estate. (U) Reflects the elimination of Arbor management expenses in connection with the acquisition. (V) Increase in equity in investees, due to net decrease in interest expense on refinanced Mendik debt. (W) Reflects decrease in interest expense and loan cost amortization resulting from the reduction and refinancing of the Mendik debt. (X) Reflects interest expense on the 90 Park Avenue investment of $185,000, based on an average interest rate of approximately 7.0%. (Y) Reflects elimination of amortization of deferred financing costs on existing Arbor debt. (Z) To reflect preferential distributions relating to the Mendik Transaction. (AA) To reflect preferred stock dividends at a rate of 6.50% plus amortization of the underwriting discount on the proportionate number of Series A Preferred Shares used to fund the Mendik acquisition. (EE) To reflect Vornado's share of net loss per the Cold Storage Condensed Consolidated Pro Forma Income Statement for the Year Ended December 31, 1996. (FF) To reflect Vornado's share of the management fee income received from Cold Storage. (MM) To reflect rent from new leases entered into with the Riese organization in connection with the acquisition. (NN) Adjustment to depreciation expense for the Riese and Montehiedra acquisitions based on the allocation of purchase price. (OO) To reflect equity in income from investment in Charles E. Smith Commercial Realty Limited Partnership and the Hotel Pennsylvania. (PP) Adjustment to interest income on the mortgage note receivable with the Riese organization of $41,000 at a rate of 9.75%. (QQ) Adjustment to interest expense for the Riese and Montehiedra acquisitions based on the amount of the investments. (RR) To reflect reduction of interest expense based on reduction of debt from the use of proceeds from common stock offering. Page 26
27 VORNADO REALTY TRUST 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 hereunto duly authorized. VORNADO REALTY TRUST -------------------------- (Registrant) Date: February 3, 1998 /s/ Irwin Goldberg -------------------------- IRWIN GOLDBERG Vice President, Chief Financial Officer Page 27
28 INDEX TO EXHIBITS Page Exhibit No: Exhibit Reference - ----------- ------- --------- 23.1 Consent of Deloitte & Touche LLP................................29 23.2 Consent of Deloitte & Touche LLP................................30 23.3 Consent of Deloitte & Touche LLP................................31 Page 28
1 Exhibit 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Amendment No. 2 to Registration Statement No. 333-40787 and Amendment No. 4 to Registration Statement No. 333-29013 of Vornado Realty Trust and Vornado Realty L.P. both on Form S-3, of our report dated March 17, 1997 on the statement of revenues and certain expenses of One Penn Plaza for the year ended December 31, 1996, which report appears in the Form 8-K/A of Vornado Realty Trust and Vornado Realty L.P. dated November 18, 1997. DELOITTE & TOUCHE LLP New York, New York January 28, 1998 Page 29
1 Exhibit 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Amendment No. 2 to Registration Statement No. 333-40787 and Amendment No. 4 to Registration Statement No. 333-29013 of Vornado Realty Trust and Vornado Realty L.P. both on Form S-3, of our report dated January 16, 1998 on the statement of revenues and certain expenses of 150 East 58th Street for the year ended December 31, 1996, which report appears in the Form 8-K/A of Vornado Realty Trust and Vornado Realty L.P. dated November 18, 1997. DELOITTE & TOUCHE LLP Parsippany, New Jersey January 28, 1998 Page 30
1 Exhibit 23.3 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Amendment No. 2 to Registration Statement No. 333-40787 and Amendment No. 4 to Registration Statement No. 333-29013 of Vornado Realty Trust and Vornado Realty L.P. both on Form S-3, of our report dated February 12, 1997 on the statement of revenues and certain expenses of 640 Fifth Avenue for the year ended December 31, 1996, which report appears in the Form 8-K/A of Vornado Realty Trust and Vornado Realty L.P. dated November 18, 1997. DELOITTE & TOUCHE LLP New York, New York January 28, 1998 Page 31