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vrt3q2011.htm - Generated by SEC Publisher for SEC Filing

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended:

September 30, 2011

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

For the transition period from:

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)

(212) 894-7000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 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

As of September 30, 2011, 184,496,038 of the registrant’s common shares of beneficial interest are outstanding.


PART I.		Financial Information:	Page Number

	Item 1.	Financial Statements:

		Consolidated Balance Sheets (Unaudited) as of
		September 30, 2011 and December 31, 2010	3

		Consolidated Statements of Income (Unaudited) for the
		Three and Nine Months Ended September 30, 2011 and 2010	4

		Consolidated Statements of Comprehensive Income (Unaudited) for the
		Three and Nine Months Ended September 30, 2011 and 2010	5

		Consolidated Statements of Changes in Equity (Unaudited) for the
		Nine Months Ended September 30, 2011 and 2010	6

		Consolidated Statements of Cash Flows (Unaudited) for the
		Nine Months Ended September 30, 2011 and 2010	7

		Notes to the Consolidated Financial Statements (Unaudited)	9

		Report of Independent Registered Public Accounting Firm	36

	Item 2.	Management's Discussion and Analysis of Financial
		Condition and Results of Operations	37

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	73

	Item 4.	Controls and Procedures	74


PART II.		Other Information:

	Item 1.	Legal Proceedings	75

	Item 1A.	Risk Factors	76

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	76

	Item 3.	Defaults Upon Senior Securities	76

	Item 5.	Other Information	76

	Item 6.	Exhibits	76

Signatures			77

Exhibit Index			78

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(Amounts in thousands, except share and per share amounts)			September 30,		December 31,
ASSETS			2011		2010
Real estate, at cost:
	Land		$	4,524,930	$	4,535,042
	Buildings and improvements			12,573,880		12,510,244
	Development costs and construction in progress			225,098		217,505
	Leasehold improvements and equipment			127,294		124,910
		Total		17,451,202		17,387,701
	Less accumulated depreciation and amortization			(2,975,075)		(2,715,046)
Real estate, net				14,476,127		14,672,655
Cash and cash equivalents				585,183		690,789
Restricted cash				124,984		200,822
Marketable securities				631,361		766,116
Accounts receivable, net of allowance for doubtful accounts of $76,935 and $62,979				145,854		157,146
Investments in partially owned entities				1,157,326		927,672
Investment in Toys "R" Us				546,258		447,334
Real Estate Fund investments				261,417		144,423
Mezzanine loans receivable, net				156,365		202,412
Receivable arising from the straight-lining of rents, net of allowance of $8,973 and $7,316				724,483		695,486
Deferred leasing and financing costs, net of accumulated amortization of $236,859 and $219,965				360,056		354,864
Identified intangible assets, net of accumulated amortization of $356,118 and $335,113				334,878		346,157
Assets related to discontinued operations				253,352		519,285
Due from officers				13,185		13,187
Other assets				417,399		379,123
			$	20,188,228	$	20,517,471

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Notes and mortgages payable			$	8,462,191	$	8,255,101
Senior unsecured notes				959,421		1,082,928
Exchangeable senior debentures				496,139		491,000
Convertible senior debentures				188,799		186,413
Revolving credit facility debt				300,000		874,000
Accounts payable and accrued expenses				469,024		438,479
Deferred credit				532,221		575,836
Deferred compensation plan				94,623		91,549
Deferred tax liabilities				13,814		13,278
Liabilities related to discontinued operations				8,954		267,652
Other liabilities				139,353		82,856
	Total liabilities			11,664,539		12,359,092
Commitments and contingencies
Redeemable noncontrolling interests:
	Class A units - 12,526,395 and 12,804,202 units outstanding			934,720		1,066,974
	Series D cumulative redeemable preferred units - 9,000,001 and 10,400,001 units outstanding			226,000		261,000
		Total redeemable noncontrolling interests		1,160,720		1,327,974
Vornado shareholders' equity:
	Preferred shares of beneficial interest: no par value per share; authorized 110,000,000
		shares; issued and outstanding 42,186,709 and 32,340,009 shares		1,021,855		783,088
	Common shares of beneficial interest: $.04 par value per share; authorized
		250,000,000 shares; issued and outstanding 184,496,038 and 183,661,875 shares		7,350		7,317
	Additional capital			7,112,004		6,932,728
	Earnings less than distributions			(1,330,405)		(1,480,876)
	Accumulated other comprehensive (loss) income			(59,019)		73,453
		Total Vornado shareholders' equity		6,751,785		6,315,710
Noncontrolling interests in consolidated subsidiaries				611,184		514,695
	Total equity			7,362,969		6,830,405
			$	20,188,228	$	20,517,471

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

			For the Three				For the Nine
			Months Ended September 30,				Months Ended September 30,
(Amounts in thousands, except per share amounts)			2011		2010		2011		2010

REVENUES:
	Property rentals		$	561,149	$	559,518	$	1,688,551	$	1,661,967
	Tenant expense reimbursements			94,053		95,341		264,857		271,040
	Cleveland Medical Mart development project			35,135		-		108,203		-
	Fee and other income			37,006		32,266		112,239		104,838
Total revenues				727,343		687,125		2,173,850		2,037,845
EXPENSES:
	Operating			285,659		275,077		841,266		802,927
	Depreciation and amortization			134,074		130,599		393,846		393,259
	General and administrative			46,452		55,200		155,566		153,231
	Cleveland Medical Mart development project			33,419		-		101,637		-
	Tenant buy-outs and other acquisition related costs			2,288		921		22,455		2,851
Total expenses				501,892		461,797		1,514,770		1,352,268
Operating income				225,451		225,328		659,080		685,577
(Loss) income applicable to Toys "R" Us				(9,304)		(2,557)		80,794		102,309
Income (loss) from partially owned entities				13,552		(1,996)		56,239		13,800
Income (loss) from Real Estate Fund (of which $3,675 and ($1,091) is
	attributable to noncontrolling interests, in each three-month
	period, respectively, and $15,703 and ($1,091) in each
	nine-month period, respectively)			5,353		(1,410)		25,491		(1,410)
Interest and other investment (loss) income, net				(29,994)		47,096		95,121		65,676
Interest and debt expense (including amortization of deferred
	financing costs of $4,828 and $5,170 in each three-month
	period, respectively, and $14,696 and $14,085 in each
	nine-month period, respectively)			(136,672)		(145,561)		(408,532)		(423,354)
Net (loss) on extinguishment of debt				-		(724)		-		(1,796)
Net gain on disposition of wholly owned and partially owned assets				1,298		5,072		7,975		12,759
Income before income taxes				69,684		125,248		516,168		453,561
Income tax expense				(7,144)		(5,449)		(19,448)		(15,993)
Income from continuing operations				62,540		119,799		496,720		437,568
Income (loss) from discontinued operations				3,683		(3,667)		146,293		(11,681)
Net income				66,223		116,132		643,013		425,887
Less:
	Net income attributable to noncontrolling interests in
		consolidated subsidiaries		(5,636)		(296)		(20,643)		(1,490)
	Net income attributable to noncontrolling interests in the
		Operating Partnership, including unit distributions		(6,825)		(11,584)		(47,364)		(33,487)
Net income attributable to Vornado				53,762		104,252		575,006		390,910
Preferred share dividends				(17,627)		(13,442)		(47,743)		(41,975)
Discount on preferred share and unit redemptions				5,000		4,382		5,000		4,382
NET INCOME attributable to common shareholders			$	41,135	$	95,192	$	532,263	$	353,317

INCOME PER COMMON SHARE - BASIC:
	Income from continuing operations, net		$	0.20	$	0.54	$	2.14	$	2.00
	Income (loss) from discontinued operations, net			0.02		(0.02)		0.75		(0.06)
	Net income per common share		$	0.22	$	0.52	$	2.89	$	1.94
	Weighted average shares			184,398		182,462		184,220		182,014

INCOME PER COMMON SHARE - DILUTED:
	Income from continuing operations, net		$	0.20	$	0.54	$	2.12	$	1.98
	Income (loss) from discontinued operations, net			0.02		(0.02)		0.74		(0.06)
	Net income per common share		$	0.22	$	0.52	$	2.86	$	1.92
	Weighted average shares			186,065		184,168		186,039		183,826

DIVIDENDS PER COMMON SHARE			$	0.69	$	0.65	$	2.07	$	1.95

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)


		For the Three				For the Nine
		Months Ended September 30,				Months Ended September 30,
(Amounts in thousands)		2011		2010		2011		2010

Net income		$	66,223	$	116,132	$	643,013	$	425,887
Other comprehensive (loss) income:
	Change in unrealized net (loss) gain on securities available-for-sale		(161,178)		8,966		(120,334)		34,497
	Pro rata share of other comprehensive income (loss) of
	nonconsolidated subsidiaries		112		3,885		26,477		(12,080)
	Change in value of interest rate swap		(24,424)		-		(42,458)		-
	Other		(69)		(5,176)		(5,114)		(5,594)
Comprehensive (loss) income			(119,336)		123,807		501,584		442,710
Less:
	Comprehensive income attributable to noncontrolling interests		(400)		(12,414)		(59,050)		(36,148)
Comprehensive (loss) income attributable to Vornado		$	(119,736)	$	111,393	$	442,534	$	406,562


See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
															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, 2009				33,952	$	823,686		181,214	$	7,218	$	6,961,007	$	(1,577,591)	$	28,449	$	406,637	$	6,649,406
Net income				-		-		-		-		-		390,910		-		1,490		392,400
Dividends on common shares				-		-		-		-		-		(354,937)		-		-		(354,937)
Dividends on preferred shares				-		-		-		-		-		(42,100)		-		-		(42,100)
Redemption of preferred shares				(1,600)		(39,982)		-		-		-		4,382		-		-		(35,600)
Common shares issued:
	Upon redemption of Class A
		units, at redemption value		-		-		822		33		62,573		-		-		-		62,606
	Under employees' share
		option plan		-		-		596		24		10,922		(25,583)		-		-		(14,637)
	Under dividend reinvestment plan			-		-		17		1		1,231		-		-		-		1,232
Contributions:
	Real Estate Fund			-		-		-		-		-		-		-		37,698		37,698
	Other			-		-		-		-		-		-		-		188		188
Conversion of Series A preferred
	shares to common shares			(3)		(177)		5		-		177		-		-		-		-
Deferred compensation shares
	and options			-		-		17		1		6,155		-		-		-		6,156
Change in unrealized net gain
	on securities available-for-sale			-		-		-		-		-		-		34,497		-		34,497
Pro rata share of other
	comprehensive (loss) of
	nonconsolidated subsidiaries			-		-		-		-		-		-		(12,080)		-		(12,080)
Adjustments to carry redeemable
	Class A units at redemption value			-		-		-		-		(232,099)		-		-		-		(232,099)
Other				-		-		-		-		(61)		30		(5,594)		670		(4,955)
Balance, September 30, 2010				32,349	$	783,527		182,671	$	7,277	$	6,809,905	$	(1,604,889)	$	45,272	$	446,683	$	6,487,775

															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				-		-		-		-		-		575,006		-		20,643		595,649
Dividends on common shares				-		-		-		-		-		(381,382)		-		-		(381,382)
Dividends on preferred shares				-		-		-		-		-		(47,905)		-		-		(47,905)
Issuance of Series J preferred shares				9,850		239,037		-		-		-		-		-		-		239,037
Common shares issued:
	Upon redemption of Class A
		units, at redemption value		-		-		435		17		38,203		-		-		-		38,220
	Under employees' share
		option plan		-		-		369		15		21,603		(397)		-		-		21,221
	Under dividend reinvestment plan			-		-		15		1		1,329		-		-		-		1,330
Contributions:
	Real Estate Fund			-		-		-		-		-		-		-		109,241		109,241
	Other			-		-		-		-		-		-		-		364		364
Distributions:
	Real Estate Fund			-		-		-		-		-		-		-		(22,713)		(22,713)
	Other			-		-		-		-		-		-		-		(15,604)		(15,604)
Conversion of Series A preferred
	shares to common shares			(3)		(165)		5		-		165		-		-		-		-
Deferred compensation shares
	and options			-		-		10		-		7,866		-		-		-		7,866
Change in unrealized net loss
	on securities available-for-sale			-		-		-		-		-		-		(120,334)		-		(120,334)
Pro rata share of other
	comprehensive income of
	nonconsolidated subsidiaries			-		-		-		-		-		-		26,477		-		26,477
Change in value of interest rate swap				-		-		-		-		-		-		(42,458)		-		(42,458)
Adjustments to carry redeemable
	Class A units at redemption value			-		-		-		-		114,628		-		-		-		114,628
Redeemable noncontrolling interests'
	share of above adjustments			-		-		-		-		-		-		8,957		-		8,957
Other				-		(105)		-		-		(4,518)		5,149		(5,114)		4,558		(30)
Balance, September 30, 2011				42,187	$	1,021,855		184,496	$	7,350	$	7,112,004	$	(1,330,405)	$	(59,019)	$	611,184	$	7,362,969

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

			For the Nine Months Ended
			September 30,
			2011		2010
(Amounts in thousands)
Cash Flows from Operating Activities:
Net income			$	643,013	$	425,887
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization (including amortization of deferred financing costs)			414,992		419,638
	Equity in net income of partially owned entities, including Toys “R” Us			(137,033)		(116,109)
	Net (gain) loss on extinguishment of debt			(83,907)		1,796
	Mezzanine loans loss (reversal) accrual and net gain on disposition			(82,744)		6,900
	Distributions of income from partially owned entities			75,612		36,829
	Net gain on sales of real estate			(51,623)		-
	Amortization of below-market leases, net			(49,988)		(49,144)
	Straight-lining of rental income			(38,262)		(55,581)
	Loss (income) from the mark-to-market of J.C. Penney derivative position			27,136		(32,249)
	Other non-cash adjustments			20,261		36,058
	Unrealized gain on Real Estate Fund assets			(19,209)		-
	Net gain on disposition of wholly owned and partially owned assets			(7,975)		(12,759)
	Litigation loss accrual and impairment losses			-		15,197
	Changes in operating assets and liabilities:
		Real Estate Fund investments		(97,785)		(62,500)
		Accounts receivable, net		11,292		(6,468)
		Prepaid assets		(68,558)		(45,104)
		Other assets		(43,413)		(59,614)
		Accounts payable and accrued expenses		32,227		78,153
		Other liabilities		22,635		13,791
Net cash provided by operating activities				566,671		594,721
Cash Flows from Investing Activities:
	Investments in partially owned entities			(440,865)		(159,053)
	Distributions of capital from partially owned entities			274,283		45,613
	Proceeds from sales of real estate and related investments			135,762		48,998
	Restricted cash			121,463		125,204
	Additions to real estate			(109,963)		(98,789)
	Proceeds from sales and repayments of mezzanine loans			100,525		109,594
	Development costs and construction in progress			(52,816)		(86,871)
	Investments in mezzanine loans receivable and other			(44,215)		(75,697)
	Funding of collateral for J.C. Penney derivative			(33,850)		-
	Return of derivative collateral			28,700		-
	Proceeds from sales of marketable securities			19,301		126,015
	Proceeds from maturing short-term investments			-		40,000
	Purchases of marketable securities			-		(13,917)
	Acquisitions of real estate and other			-		(10,000)
Net cash (used in) provided by investing activities				(1,675)		51,097

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)

				For the Nine Months Ended
				September 30,
				2011		2010
(Amounts in thousands)
Cash Flows from Financing Activities:
	Repayments of borrowings			$	(2,666,610)	$	(1,462,652)
	Proceeds from borrowings				2,184,167		1,603,359
	Dividends paid on common shares				(381,382)		(354,937)
	Proceeds from the issuance of Series J preferred shares				239,037		-
	Contributions from noncontrolling interests				109,605		39,351
	Distributions to noncontrolling interests				(77,330)		(41,055)
	Dividends paid on preferred shares				(43,675)		(42,100)
	Debt issuance and other costs				(28,614)		(14,942)
	Purchases of outstanding preferred units and shares				(28,000)		(48,600)
	Proceeds received from exercise of employee share options				22,947		12,192
	Repurchase of shares related to stock compensation agreements and related
		tax withholdings			(747)		(25,659)
Net cash used in financing activities					(670,602)		(335,043)
Net (decrease) increase in cash and cash equivalents					(105,606)		310,775
Cash and cash equivalents at beginning of period					690,789		535,479
Cash and cash equivalents at end of period				$	585,183	$	846,254


Supplemental Disclosure of Cash Flow Information:
	Cash payments for interest (including capitalized interest of $0 and $875)			$	388,938	$	409,953
	Cash payments for income taxes			$	10,299	$	5,348


Non-Cash Investing and Financing Activities:
	Change in unrealized net (loss) gain on securities available-for-sale			$	(120,334)	$	34,497
	Adjustments to carry redeemable Class A units at redemption value				114,628		(232,099)
	Common shares issued upon redemption of Class A units, at redemption value				38,220		62,606
	Contribution of mezzanine loan receivable to a joint venture				73,750		-
	Like-kind exchange of real estate				(45,625)		-
	Extinguishment of a liability in connection with the acquisition of real estate				-		20,500
	Investment in J.C. Penney, Inc.				-		271,372
	Decrease in assets and liabilities resulting from deconsolidation
		of discontinued operations:
			Assets related to discontinued operations		(145,333)		-
			Liabilities related to discontinued operations		(232,502)		-
	Write-off of fully depreciated assets				(58,279)		(50,785)


See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization

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 93.3% of the common limited partnership interest in the Operating Partnership at September 30, 2011. All references to “we,” “us,” “our,” the “Company” and “Vornado” refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership.

2. Basis of Presentation

The accompanying consolidated financial statements are unaudited and include the accounts of Vornado, and the Operating Partnership and its consolidated partially owned entities. All intercompany amounts have been eliminated. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (the “SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2010, as filed with the SEC.

We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three and nine months ended September 30, 2011 are not necessarily indicative of the operating results for the full year.

3. Recently Issued Accounting Literature

In June 2011, the Financial Accounting Standards Board (“FASB”) issued an update to Accounting Standards Codification (“ASC”) 220, Comprehensive Income, which requires, among other things, presentation of the components of net income and other comprehensive income in one continuous statement or in two separate but consecutive statements. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. We believe that the adoption of this guidance on January 1, 2012 will not have a material effect on our consolidated financial statements.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

4. Vornado Capital Partners, L.P. and Vornado Capital Partners Parallel, L.P. (the “Fund”)

We are the general partner and investment manager of an $800,000,000 real estate investment Fund, to which we have committed $200,000,000. The Fund has a term of eight years and is our exclusive investment vehicle during its three-year investment period, which concludes in July 2013, for all investments that fit within the Fund’s investment parameters, as defined. The Fund is accounted for under the AICPA Audit and Accounting Guide for Investment Companies 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.

From inception through September 30, 2011, the Fund received aggregate capital contributions from partners of $256,100,000, including $64,031,000 from us, and as of September 30, 2011, has five investments with an aggregate fair value of approximately $261,417,000. Below is a summary of income (loss) from the Fund for the three and nine months ended September 30, 2011 and 2010.

		For the Three Months				For the Nine Months
(Amounts in thousands)		Ended September 30,				Ended September 30,
		2011		2010		2011		2010
Operating (loss) income		$	(286)	$	(1,410)	$	3,197	$	(1,410)
Net realized gains			-		-		3,085		-
Net unrealized gains			5,639		-		19,209		-
Income (loss) from Real Estate Fund			5,353		(1,410)		25,491		(1,410)
Less:
	(Income) loss attributable to noncontrolling interests		(3,675)		1,091		(15,703)		1,091
Income (loss) from Real Estate Fund attributable to Vornado ⁽¹⁾		$	1,678	$	(319)	$	9,788	$	(319)

___________________________________

(1)	Excludes $378 and $1,803 of management, leasing and development fees in the three and nine months ended September 30, 2011, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.

One Park Avenue

On March 1, 2011, we as a co-investor, together with the Fund, acquired a 95% interest in One Park Avenue, a 932,000 square foot office building located between 32^nd and 33^rd Streets in New York, for $374,000,000. The purchase price consisted of $137,000,000 in cash and 95% of a new $250,000,000 five-year mortgage that bears interest at 5.0%. The Fund accounts for its 64.7% interest in the property at fair value in accordance with the AICPA Audit and Accounting Guide for Investment Companies. We account for our directly owned 30.3% equity interest under the equity method of accounting.

5. Marketable Securities and Derivative Instruments

Marketable Securities

Our portfolio of marketable securities is comprised of debt and equity securities that are classified as available for sale. Available for sale securities are presented on our consolidated balance sheets at fair value. Gains and losses resulting from the mark-to-market of these securities are included in “other comprehensive (loss) income.” 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.

In the nine months ended September 30, 2011 and 2010, we sold certain marketable securities for aggregate proceeds of $19,301,000 and $155,118,000, resulting in net gains of $2,139,000 and $8,960,000, respectively, of which $0 and $5,052,000 was recognized in the three months ended September 30, 2011 and 2010, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

5. Marketable Securities and Derivative Instruments- continued

Marketable Securities-continued

Below is a summary of our marketable securities portfolio as of September 30, 2011 and December 31, 2010.

		As of September 30, 2011							As of December 31, 2010
					GAAP		Unrealized					GAAP		Unrealized
		Maturity	Fair Value		Cost		(Loss) Gain		Maturity	Fair Value		Cost		Gain
Equity securities:
	J.C. Penney	n/a	$	497,680	$	590,366	$	(92,686)	n/a	$	600,600	$	590,366	$	10,234
	Other	n/a		26,769		13,561		13,208	n/a		47,248		26,481		20,767
Debt securities		04/13 - 10/18		106,912		102,679		4,233	08/11 - 10/18		118,268		104,180		14,088
			$	631,361	$	706,606	$	(75,245)		$	766,116	$	721,027	$	45,089

Investment in J.C. Penney Company, Inc. (“J.C. Penney”) (NYSE: JCP)

We own an economic interest in 23,400,000 J.C. Penney common shares, or 10.9% of J.C. Penney’s outstanding common shares. Below are the details of our investment.

We own 18,584,010 common shares at an average economic cost of $25.71 per share or $477,829,000 in the aggregate. As of September 30, 2011, these shares have an aggregate fair value of $497,680,000, based on J.C. Penney’s closing share price of $26.78 per share at September 30, 2011. Of these shares, 15,500,000 were acquired through the exercise of a call option that was acquired on September 28, 2010 and settled on November 9, 2010. During the period in which the call option was outstanding and classified as a derivative instrument, we recognized $112,537,000 of income. Upon exercise of the call option, the GAAP basis of the 18,584,010 common shares we own increased to $31.77 per share, or $590,366,000 in the aggregate. These shares are included in marketable equity securities on our consolidated balance sheet and are classified as “available for sale.” During the nine months ended September 30, 2011, we recognized a $102,920,000 loss from the mark-to-market of these shares, which is included in “other comprehensive (loss) income,” based on the difference between the carrying amount of these shares of $600,600,000 at December 31, 2010 and the fair value of $497,680,000 at September 30, 2011.

We also own an economic interest in 4,815,990 common shares through a forward contract executed on October 7, 2010, at a weighted average strike price of $28.76 per share, or $138,492,000 in the aggregate. The contract may be settled, at our election, in cash or common shares, in whole or in part, at any time prior to October 9, 2012. The counterparty may accelerate settlement, in whole or in part, upon one year’s notice to us. The strike price per share increases at an annual rate of LIBOR plus 80 basis points. The contract is a derivative instrument that does not qualify for hedge accounting treatment. Mark-to-market adjustments on the underlying common shares are recognized in “interest and other investment (loss) income, net” on our consolidated statements of income. During the three and nine months ended September 30, 2011, we recognized losses of $37,537,000 and $27,136,000, respectively, from the mark-to-market of the underlying common shares, based on J.C. Penney’s closing share price of $26.78 per share at September 30, 2011.

On September 16, 2011, we entered into an agreement with J.C. Penney which enables us to increase our beneficial and/or economic ownership to up to 15.4% of J.C. Penney’s outstanding common shares. We have agreed to vote any common shares we hold in excess of 9.9% of J.C. Penney’s outstanding common shares in accordance with either the recommendation of the board of directors of J.C. Penney or in direct proportion to the vote of all other public shareholders of J.C. Penney (excluding shares affiliated with Pershing Square Capital Management L.P.).

We review our investment in J.C. Penney on a continuing basis. Depending on various factors, including, without limitation, J.C. Penney’s financial position and strategic direction, actions taken by its board, price levels of its common stock, other investment opportunities available to us, market conditions and general economic and industry conditions, we may take such actions with respect to J.C. Penney as we deem appropriate, including (i) purchasing additional common stock or other financial instruments related to J.C. Penney, subject to our agreement with J.C. Penney as described in the preceding paragraph, or (ii) selling some or all of our beneficial or economic holdings, or (iii) engaging in hedging or similar transactions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

6. Investments in Partially Owned Entities

Toys “R” Us (“Toys”)

As of September 30, 2011, we own 32.7% of Toys. The business of Toys is highly seasonal. Historically, Toys’ fourth quarter net income accounts for more than 80% of its fiscal year net income. We account for our investment in Toys under the equity method and record our 32.7% 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. As of September 30, 2011, the carrying amount of our investment in Toys does not differ materially from our share of the equity in the net assets of Toys on a purchase accounting basis.

On May 28, 2010, Toys filed a registration statement, as amended, with the SEC for the offering and sale of its common stock. The offering, if completed, would result in a reduction of our percentage ownership of Toys’ equity. The size of the offering and its completion are subject to market and other conditions.

Below is a summary of Toys’ latest available financial information on a purchase accounting basis:

(Amounts in thousands)						Balance as of
Balance Sheet:						July 30, 2011		October 30, 2010
	Assets					$	11,778,000	$	12,810,000
	Liabilities						9,969,000		11,317,000
	Toys “R” Us, Inc. equity						1,809,000		1,493,000

		For the Three Months Ended				For the Nine Months Ended
Income Statement:		July 30, 2011		July 31, 2010		July 30, 2011		July 31, 2010
	Total revenues	$	2,648,000	$	2,565,000	$	11,256,000	$	11,030,000
	Net (loss) income attributable to Toys		(36,000)		(16,000)		227,000		292,000

Alexander’s, Inc. (“Alexander’s”) (NYSE: ALX)

As of September 30, 2011, we own 1,654,068 Alexander’s common 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 September 30, 2011, Alexander’s owed us $43,308,000 in fees under these agreements.

As of September 30, 2011, the fair value of our investment in Alexander’s, based on Alexander’s September 30, 2011 closing share price of $361.02, was $597,152,000, or $406,875,000 in excess of the carrying amount on our consolidated balance sheet. As of September 30, 2011, 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 $59,188,000. 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.

Below is a summary of Alexander’s latest available financial information:

(Amounts in thousands)						Balance as of
Balance Sheet:						September 30, 2011		December 31, 2010
	Assets					$	1,785,000	$	1,679,000
	Liabilities						1,427,000		1,335,000
	Noncontrolling interests						4,000		3,000
	Stockholders' equity						354,000		341,000

		For the Three Months Ended				For the Nine Months Ended
Income Statement:		September 30, 2011		September 30, 2010		September 30, 2011		September 30, 2010
	Total revenues	$	65,000	$	61,000	$	190,000	$	179,000
	Net income attributable to Alexander’s		20,000		18,000		59,000		49,000

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

6. Investments in Partially Owned Entities – continued

Lexington Realty Trust (“Lexington”) (NYSE: LXP)

As of September 30, 2011, we own 18,468,969 Lexington common shares, or approximately 11.7% of Lexington’s common equity. We account for our investment in Lexington under the equity method because we believe we have the ability to exercise significant influence over Lexington’s operating and financial policies, based on, among other factors, our representation on Lexington’s Board of Trustees and the level of our ownership in Lexington as compared to other shareholders. We record our pro rata share of Lexington’s net income or loss on a one-quarter lag basis because we file our consolidated financial statements on Form 10-K and 10-Q prior to the time that Lexington files its consolidated financial statements.

Based on Lexington’s September 30, 2011 closing share price of $6.54, the fair value of our investment in Lexington was $120,787,000, or $59,472,000 in excess of the September 30, 2011 carrying amount on our consolidated balance sheet. As of September 30, 2011, the carrying amount of our investment in Lexington was less than our share of the equity in the net assets of Lexington by approximately $48,861,000. This basis difference resulted primarily from $107,882,000 of non-cash impairment charges recognized during 2008, partially offset by purchase accounting for our acquisition of an additional 8,000,000 common shares of Lexington in October 2008, of which the majority relates to our estimate of the fair values of Lexington’s real estate (land and buildings) as compared to the carrying amounts in Lexington’s consolidated financial statements. The basis difference related to the buildings is being amortized over their estimated useful lives as an adjustment to our equity in net income or loss of Lexington. This amortization is not material to our share of equity in Lexington’s net income or loss. The basis difference attributable to the land will be recognized upon disposition of our investment.

Below is a summary of Lexington’s latest available financial information:

(Amounts in thousands)						Balance as of
Balance Sheet:						June 30, 2011		September 30, 2010
	Assets					$	3,240,000	$	3,385,000
	Liabilities						1,910,000		2,115,000
	Noncontrolling interests						60,000		71,000
	Shareholders’ equity						1,270,000		1,199,000

		For the Three Months Ended				For the Nine Months Ended
Income Statement:		June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010
	Total revenues	$	83,000	$	81,000	$	252,000	$	249,000
	Net (loss) attributable to Lexington		(44,000)		(24,000)		(49,000)		(97,000)

LNR Property LLC (“LNR”)

As of September 30, 2011, we own a 26.2% equity interest in LNR, which we acquired in July 2010. We account for our investment in LNR under the equity method and record our 26.2% share of LNR’s net income or loss on a one-quarter lag basis because we file our consolidated financial statements on Form 10-K and 10-Q prior to receiving LNR’s consolidated financial statements.

LNR consolidates certain commercial mortgage-backed securities (“CMBS”) and Collateralized Debt Obligation (“CDO”) trusts for which it is the primary beneficiary. The assets of these trusts (primarily commercial mortgage loans), which aggregate approximately $138.5 billion as of June 30, 2011, are the sole source of repayment of the related liabilities, which are non-recourse to LNR and its equity holders, including us. Changes in the fair value of these assets each period are offset by changes in the fair value of the related liabilities through LNR’s consolidated income statement. As of September 30, 2011, the carrying amount of our investment in LNR does not materially differ from our share of LNR’s equity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

6. Investments in Partially Owned Entities – continued

LNR Property LLC (“LNR”) – continued

Below is a summary of LNR’s latest available financial information:

(Amounts in thousands)		Balance as of
Balance Sheet:		June 30, 2011		September 30, 2010
	Assets	$	139,731,000	$	143,266,000
	Liabilities		139,025,000		142,720,000
	Noncontrolling interests		43,000		37,000
	LNR equity		663,000		509,000

		For the Three Months Ended		For the Nine Months Ended
Income Statement:		June 30, 2011		June 30, 2011
	Total revenues	$	73,000	$	156,000
	Net income attributable to LNR		52,000		152,000

280 Park Avenue Joint Venture

On March 16, 2011, we formed a 50/50 joint venture with SL Green Realty Corp (“SL Green”) to own the mezzanine debt of 280 Park Avenue, a 1.2 million square foot office building located between 48th and 49th Streets in Manhattan (the “Property”). We contributed our mezzanine loan with a face amount of $73,750,000, and they contributed their mezzanine loans with a face amount of $326,250,000 to the joint venture. We equalized our interest in the joint venture with SL Green by paying them $111,250,000 in cash and assuming $15,000,000 of their debt. On May 17, 2011, as part of the recapitalization of the Property, the joint venture contributed its debt position for 99% of the common equity of a new joint venture which owns the Property. The new joint venture expects to spend $150,000,000 for re-tenanting and repositioning the Property. We account for our 49.5% equity interest in the Property under the equity method of accounting from the date of recapitalization.

Independence Plaza

On June 17, 2011, a joint venture in which we are a 51% partner invested $55,000,000 in cash (of which we contributed $35,000,000) to acquire a face amount of $150,000,000 of mezzanine loans and a $35,000,000 participation in a senior loan on Independence Plaza, a residential complex comprised of three 39-story buildings in the Tribeca submarket of Manhattan. We share control over major decisions with our joint venture partner. Accordingly, we account for our 51% interest in the joint venture under the equity method of accounting from the date of acquisition.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

6. Investments in Partially Owned Entities - continued

Investments in partially owned entities as of September 30, 2011 and December 31, 2010 and income (loss) recognized from these investments for the three and nine months ended September 30, 2011 and 2010 are as follows:

					Percentage			Balance as of
(Amounts in thousands)					Ownership as of			September 30,		December 31,
Investments:					September 30, 2011			2011		2010
Toys							32.7 %	$	546,258	$	447,334

Alexander’s							32.4 %	$	190,277	$	186,811
Lexington							11.7 %		61,315		57,270
LNR							26.2 %		156,090		132,973
India real estate ventures							4%-36.5%		101,155		127,193
Partially owned office buildings ⁽¹⁾							Various		452,284		181,838
Other equity method investments ⁽²⁾							Various		196,205		241,587
								$	1,157,326	$	927,672

			For the Three Months Ended					For the Nine Months Ended
			September 30,					September 30,
Our Share of Net Income (Loss):			2011			2010		2011		2010
Toys – 32.7% share of:
	Equity in net (loss) income before income taxes		$	(26,773)		$	(32,574)	$	104,049	$	93,662
	Income tax benefit (expense)			15,135			27,501		(29,914)		1,914
	Equity in net (loss) income			(11,638)			(5,073)		74,135		95,576
	Interest and other income			2,334			2,516		6,659		6,733
			$	(9,304)		$	(2,557)	$	80,794	$	102,309

Alexander’s – 32.4% share of:
	Equity in net income		$	6,437		$	5,612	$	18,507	$	14,309
	Management, leasing and development fees			2,170			1,945		6,749		6,774
				8,607			7,557		25,256		21,083

Lexington – 11.7% share in 2011 and 13.8% share
	in 2010 of equity in net (loss) income ⁽³⁾			(617)			(2,301)		10,209		3,316

LNR – 26.2% share of equity in net income (acquired in
	July 2010) ⁽⁴⁾			13,656			-		39,913		-

India real estate ventures – 4% to 36.5% range in our
	share of equity in net (loss) income			(690)			(195)		(692)		2,062

Partially owned office buildings ⁽⁵⁾				(6,839)			86		(13,829)		1,864

Other equity method investments				(565)			(7,143)		(4,618)		(14,525)
			$	13,552		$	(1,996)	$	56,239	$	13,800
___________________________________
(1)		Includes interests in 330 Madison Avenue (25%), One Park Avenue (30.3%), 280 Park Avenue (49.5%), 825 Seventh Avenue (50%), Warner Building and 1101 17th Street (55%), Fairfax Square (20%), Rosslyn Plaza (46%) and West 57th Street properties (50%).

(2)		Includes interests in Monmouth Mall, Verde Realty Operating Partnership, 85 10th Avenue Associates and others.

(3)		Includes net gains of $9,760 and $5,998 in the nine months ended September 30, 2011 and 2010, respectively, resulting from Lexington's stock issuances.

(4)		The nine months ended September 30, 2011 includes $6,020 for our share of net gains from asset sales and $8,977 for our share of a tax settlement gain.

(5)		The nine months ended September 30, 2011 includes $9,022 for our share of expense, primarily for straight-line rent reserves and the write-off of tenant improvements in connection with a tenant's bankruptcy at the Warner Building.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

6. Investments in Partially Owned Entities – continued

Below is a summary of the debt of our partially owned entities as of September 30, 2011 and December 31, 2010, none of which is recourse to us.

				Interest	100% of
				Rate at	Partially Owned Entities’ Debt at
(Amounts in thousands)				September 30,	September 30,		December 31,
			Maturity	2011	2011		2010
Toys (32.7% interest) (as of July 30, 2011 and October 30, 2010,
respectively):
	Senior unsecured notes (Face value – $950,000)		07/17	10.75 %	$	929,773	$	928,045
	Senior unsecured notes (Face value – $725,000)		12/17	8.50 %		716,325		715,577
	$700 million secured term loan facility		09/16	6.00 %		685,595		689,757
	Senior U.K. real estate facility		04/13	5.02 %		573,207		561,559
	$400 million secured term loan facility		05/18	5.25 %		396,082		-
	7.875% senior notes (Face value – $400,000)		04/13	9.50 %		390,135		386,167
	7.375% senior secured notes (Face value – $350,000)		09/16	7.38 %		358,147		350,000
	7.375% senior notes (Face value – $400,000)		10/18	9.99 %		347,238		343,528
	Japan bank loans		03/12-02/16	1.85%-2.85%		194,376		180,500
	Spanish real estate facility		02/13	4.51 %		183,857		179,511
	$1.85 billion credit facility		08/15	2.91 %		173,000		519,810
	Japan borrowings		06/12-06/13	0.98 %		108,149		141,360
	Junior U.K. real estate facility		04/13	6.81%-7.84%		99,850		98,266
	French real estate facility		02/13	4.51 %		88,696		86,599
	European and Australian asset-based revolving credit facility		03/16	2.89 %		32,852		25,767
	8.750% debentures (Face value – $21,600)		09/21	9.17 %		21,080		21,054
	7.625% bonds (Face value – $500,000)		n/a	n/a		-		495,943
	Other		Various	Various		170,806		156,853
					$	5,469,168	$	5,880,296

Alexander’s (32.4% interest):
	731 Lexington Avenue mortgage note payable, collateralized by
		the office space	02/14	5.33 %	$	342,928	$	351,751
	731 Lexington Avenue mortgage note payable, collateralized by
		the retail space	07/15	4.93 %		320,000		320,000
	Rego Park construction loan payable		12/11	1.42 %		277,200		277,200
	Kings Plaza Regional Shopping Center mortgage note payable ⁽¹⁾		06/16	2.04 %		250,000		151,214
	Rego Park mortgage note payable		03/12	0.75 %		78,246		78,246
	Paramus mortgage note payable⁽²⁾		10/11	5.92 %		68,000		68,000
					$	1,336,374	$	1,246,411

Lexington (11.7% interest) (as of June 30, 2011 and
September 30, 2010, respectively):
	Mortgage loans collateralized by Lexington’s real estate		2011-2037	5.80 %	$	1,728,515	$	1,927,729

LNR (26.2% interest) (as of June 30, 2011 and
September 30, 2010):
	Mortgage notes payable		2011-2043	4.75 %	$	331,411	$	508,547
	Liabilities of consolidated CMBS and CDO trusts		n/a	5.30 %		138,541,030		142,001,333
					$	138,872,441	$	142,509,880


(1)		On June 10, 2011, Alexander's completed a $250,000 refinancing of this loan. The five-year interest only loan is at LIBOR plus 1.70%.
(2)		On October 5, 2011, this loan, which was scheduled to mature in October 2011, was refinanced for the same amount. The new seven-year interest only loan has a fixed rate of 2.90%.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

6. Investments in Partially Owned Entities - continued

				Interest	100% of
				Rate at	Partially Owned Entities’ Debt at
(Amounts in thousands)				September 30,	September 30,		December 31,
			Maturity	2011	2011		2010
Partially owned office buildings:
	280 Park Avenue (49.5% interest) mortgage notes payable
		(Face value - $740,000 at 6.37%)	06/16	3.93 %	$	818,564	$	n/a
	One Park Avenue (30.3% interest) mortgage note payable		03/16	5.00 %		250,000		n/a
	Warner Building (55% interest) mortgage note payable		05/16	6.26 %		292,700		292,700
	330 Madison Avenue (25% interest) mortgage note payable		06/15	1.77 %		150,000		150,000
	Kaempfer Properties (2.5% and 5.0% interests in two partnerships)
		mortgage notes payable, collateralized by the partnerships’ real estate	11/11-12/11	5.86 %		137,460		139,337
	Fairfax Square (20% interest) mortgage note payable		12/14	7.00 %		71,176		71,764
	Rosslyn Plaza (46% interest) mortgage note payable		12/11	1.22 %		56,680		56,680
	330 West 34th Street (34.8% interest) mortgage note payable,
		collateralized by land	07/22	5.71 %		50,150		50,150
	West 57th Street (50% interest) mortgage note payable		02/14	4.94 %		22,060		22,922
	825 Seventh Avenue (50% interest) mortgage note payable		10/14	8.07 %		20,205		20,565

India Real Estate Ventures:
	TCG Urban Infrastructure Holdings (25% interest) mortgage notes
		payable, collateralized by the entity’s real estate	2011-2022	11.81 %		238,957		196,319

Other:
	Verde Realty Operating Partnership (8.3% interest) mortgage notes
		payable, collateralized by the partnerships’ real estate	2013-2025	6.18 %		353,346		581,086
	Green Courte Real Estate Partners, LLC (8.3% interest) (as of
		June 30, 2011 and September 30, 2010), mortgage notes
		payable, collateralized by the partnerships’ real estate	2011-2018	5.57 %		294,292		296,991
	Monmouth Mall (50% interest) mortgage note payable		02/14-09/15	5.35 %		171,755		164,474
	Wells/Kinzie Garage (50% interest) mortgage note payable		12/17	5.00 %		14,856		15,022
	Orleans Hubbard Garage (50% interest) mortgage note payable		12/17	5.00 %		9,403		9,508
	Waterfront Station (2.5% interest)		n/a	n/a		-		217,106
	Other		Various	4.61 %		663,162		418,339

Based on our ownership interest in the partially owned entities above, our pro rata share of the debt of these partially owned entities was $39,802,179,000 and $40,443,346,000 as of September 30, 2011 and December 31, 2010, 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 is $3,540,451,000 and $3,275,917,000 at September 30, 2011 and December 31, 2010, respectively.

7. Mezzanine Loans Receivable

On March 2, 2011, we sold our mezzanine loan in the Tharaldson Lodging Companies for $70,848,000 in cash, which had a carrying amount of $60,416,000 and recognized a net gain of $10,474,000. The gain is included as a component of “interest and other investment income, net” on our consolidated statement of income.

In the first quarter of 2011, we recognized $72,270,000 of income, representing the difference between the fair value of our 280 Park Avenue Mezzanine Loan of $73,750,000, and its carrying amount of $1,480,000. The $72,270,000 of income, which is included in “interest and other investment income, net” on our consolidated statement of income, is comprised of $63,145,000 from the reversal of the loan loss reserve and $9,125,000 of previously unrecognized interest income. Our decision to reverse the loan loss reserve was based on the increase in value of the underlying collateral. On March 16, 2011, we contributed this mezzanine loan to a 50/50 joint venture with SL Green (see Note 6 – Investments in Partially Owned Entities).

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

7. Mezzanine Loans Receivable - continued

As of September 30, 2011 and December 31, 2010, the carrying amount of mezzanine loans receivable was $156,365,000 and $202,412,000, respectively, net of allowances of $0 and $73,216,000, respectively. These loans have a weighted average interest rate of 5.57% and maturities ranging from November 2011 to August 2015.

8. Discontinued Operations

On March 31, 2011, the receiver completed the disposition of the High Point Complex in North Carolina. In connection therewith, the property and related debt were removed from our consolidated balance sheet and we recognized a net gain of $83,907,000 on the extinguishment of debt.

During 2011, we sold 1140 Connecticut Avenue and 1227 25^th Street for $127,000,000 in cash, which resulted in a $45,862,000 net gain, and three retail properties in separate transactions for an aggregate of $40,990,000 in cash, which resulted in net gains aggregating $5,761,000.

In the third quarter of 2011, we reclassified the assets and liabilities and the combined results of operations of 350 West Mart Center, a 1.2 million square feet office building in Chicago, Illinois which is a part of our Merchandise Mart Properties segment and four retail properties, as “discontinued operations.”

The tables below set forth the assets and liabilities related to discontinued operations at September 30, 2011 and December 31, 2010, and their combined results of operations for the three and nine months ended September 30, 2011 and 2010.

		Assets Related to				Liabilities Related to
(Amounts in thousands)		Discontinued Operations as of				Discontinued Operations as of
		September 30,		December 31,		September 30,		December 31,
		2011		2010		2011		2010
350 West Mart Center		$	170,333	$	162,984	$	1,128	$	-
Retail properties			83,019		121,837		7,826		11,730
High Point			-		154,563		-		236,974
1227 25th Street			-		43,630		-		-
1140 Connecticut Avenue			-		36,271		-		18,948
Total		$	253,352	$	519,285	$	8,954	$	267,652


		For the Three Months				For the Nine Months
(Amounts in thousands)		Ended September 30,				Ended September 30,
		2011		2010		2011		2010
Total revenues		$	9,744	$	20,163	$	36,486	$	61,883
Total expenses			6,061		18,830		25,723		58,508
			3,683		1,333		10,763		3,375
Net gain on extinguishment of High Point debt			-		-		83,907		-
Net gain on sale of 1140 Connecticut Avenue
	and 1227 25th Street		-		-		45,862		-
Net gain on sales of other real estate			-		-		5,761		-
Litigation loss accrual and impairment loss			-		(5,000)		-		(15,056)
Income (loss) from discontinued operations		$	3,683	$	(3,667)	$	146,293	$	(11,681)

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

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 September 30, 2011 and December 31, 2010.

	Balance as of
	September 30,		December 31,
(Amounts in thousands)	2011		2010
Identified intangible assets:
Gross amount	$	690,996	$	681,270
Accumulated amortization		(356,118)		(335,113)
Net	$	334,878	$	346,157
Identified intangible liabilities (included in deferred credit):
Gross amount	$	861,696	$	856,689
Accumulated amortization		(380,198)		(335,317)
Net	$	481,498	$	521,372

Amortization of acquired below-market leases, net of acquired above-market leases, resulted in an increase to rental income of $16,100,000 and $16,756,000 for the three months ended September 30, 2011 and 2010, respectively, and $49,387,000 and $48,476,000 for the nine months ended September 30, 2011 and 2010, 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, 2012 is as follows:

(Amounts in thousands)
2012	$	51,092
2013		43,174
2014		37,419
2015		34,673
2016		31,281

Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was $16,059,000 and $15,032,000 for the three months ended September 30, 2011 and 2010, respectively, and $43,782,000 and $45,317,000 for the nine months ended September 30, 2011 and 2010, 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, 2012 is as follows:

(Amounts in thousands)
2012	$	47,168
2013		39,703
2014		21,398
2015		16,471
2016		13,924

We are a tenant under ground leases for certain properties. Amortization of these acquired below-market leases, net of above-market leases resulted in an increase to rent expense of $344,000 and $539,000 for the three months ended September 30, 2011 and 2010, respectively, and $1,033,000 and $1,618,000 for the nine months ended September 30, 2011 and 2010, respectively. Estimated annual amortization of these below-market leases, net of above-market leases, for each of the five succeeding years commencing January 1, 2012 is as follows:

(Amounts in thousands)
2012	$	1,377
2013		1,377
2014		1,377
2015		1,377
2016		1,377

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

10. Debt

The following is a summary of our debt:

				Interest
(Amounts in thousands)				Rate at	Balance at
				September 30,	September 30,		December 31,
Notes and mortgages payable:			Maturity (1)	2011	2011		2010
Fixed rate:
	New York Office:
		350 Park Avenue	01/12	5.48 %	$	430,000	$	430,000
		Two Penn Plaza ⁽²⁾	03/18	5.13 %		425,000		277,347
		1290 Avenue of the Americas	01/13	5.97 %		415,934		424,136
		770 Broadway	03/16	5.65 %		353,000		353,000
		888 Seventh Avenue	01/16	5.71 %		318,554		318,554
		909 Third Avenue	04/15	5.64 %		204,203		207,045
		Eleven Penn Plaza	12/11	5.20 %		196,253		199,320

	Washington, DC Office:
		Skyline Place	02/17	5.74 %		678,000		678,000
		River House Apartments	04/15	5.43 %		195,546		195,546
		2121 Crystal Drive ⁽³⁾	03/23	5.51 %		150,000		-
		Bowen Building	06/16	6.14 %		115,022		115,022
		1215 Clark Street, 200 12th Street and 251 18th Street	01/25	7.09 %		109,067		110,931
		West End 25 ⁽⁴⁾	06/21	4.88 %		101,671		-
		Universal Buildings	04/14	6.42 %		99,456		103,049
		Reston Executive I, II, and III	01/13	5.57 %		93,000		93,000
		2011 Crystal Drive	08/17	7.30 %		80,711		81,362
		1550 and 1750 Crystal Drive	11/14	7.08 %		77,292		79,411
		220 20th Street ⁽⁵⁾	02/18	4.61 %		75,323		-
		1235 Clark Street	07/12	6.75 %		51,569		52,314
		2231 Crystal Drive	08/13	7.08 %		44,422		46,358
		1750 Pennsylvania Avenue	06/12	7.26 %		44,538		45,132
		1225 Clark Street	08/13	7.08 %		26,571		27,616
		1800, 1851 and 1901 South Bell Street	12/11	6.91 %		2,610		10,099

	Retail:
		Cross-collateralized mortgages on 40 strip shopping centers	09/20	4.20 %		588,377		597,138
		Montehiedra Town Center	07/16	6.04 %		120,000		120,000
		Broadway Mall	07/13	5.30 %		88,383		90,227
		828-850 Madison Avenue Condominium	06/18	5.29 %		80,000		80,000
		North Bergen (Tonnelle Avenue) ⁽⁶⁾	01/18	4.59 %		75,000		-
		Las Catalinas Mall	11/13	6.97 %		56,488		57,737
		510 5th Avenue	01/16	5.60 %		31,850		32,189
		Other	03/12-05/36	5.12%-7.30%		95,962		97,054

	Merchandise Mart:
		Merchandise Mart	12/16	5.57 %		550,000		550,000
		Boston Design Center	09/15	5.02 %		67,655		68,538
		Washington Design Center	n/a	n/a		-		43,447

	Other:
		555 California Street ⁽⁷⁾	09/21	5.10 %		600,000		640,911
		Borgata Land ⁽⁸⁾	02/21	5.14 %		60,000		-
		Industrial Warehouses	n/a	n/a		-		24,358
Total fixed rate notes and mortgages payable				5.52 %	$	6,701,457	$	6,248,841
___________________
		See notes on page 22.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

10. Debt - continued

					Interest
(Amounts in thousands)					Rate at	Balance at
				Spread over	September 30,	September 30,		December 31,
Notes and mortgages payable:			Maturity (1)	LIBOR	2011	2011		2010
Variable rate:
	New York Office:
		Manhattan Mall	02/12	L+55	0.78 %	$	232,000	$	232,000
		866 UN Plaza ⁽⁹⁾	05/16	L+125 ⁽⁹⁾	1.52 %		44,978		44,978
	Washington, DC Office:
		2101 L Street	02/13	L+120	1.45 %		150,000		150,000
		River House Apartments	04/18	n/a⁽¹⁰⁾	1.53 %		64,000		64,000
		2200/2300 Clarendon Boulevard	01/15	L+75	0.98 %		54,833		59,278
		1730 M and 1150 17th Street	06/14	L+140	1.72 %		43,581		43,581
		West End 25 ⁽⁴⁾	n/a	n/a	n/a		-		95,220
		220 20th Street ⁽⁵⁾	n/a	n/a	n/a		-		83,573
	Retail:
		Green Acres Mall	02/13	L+140	1.73 %		325,045		335,000
		Bergen Town Center	03/13	L+150	1.76 %		279,044		279,044
		San Jose Strip Center	03/13	L+400	4.25 %		113,641		120,863
		Beverly Connection ⁽¹¹⁾	10/11	L+350 ⁽¹¹⁾	5.00 %		100,000		100,000
		4 Union Square South	04/14	L+325	3.52 %		75,000		75,000
		Cross-collateralized mortgages on 40 strip
		shopping centers ⁽¹²⁾	09/20	L+136 ⁽¹²⁾	2.36 %		60,000		60,000
		435 Seventh Avenue ⁽¹³⁾	08/14	L+300 ⁽¹³⁾	5.00 %		51,479		51,844
		Other	11/12	L+375	3.97 %		20,983		21,862
	Other:
		220 Central Park South⁽¹⁴⁾	10/11	L+235–L+245 ⁽¹⁴⁾	2.61 %		123,750		123,750
		Other	11/11	L+250	2.75 %		22,400		66,267
	Total variable rate notes and mortgages payable				2.19 %		1,760,734		2,006,260
	Total notes and mortgages payable				4.83 %	$	8,462,191	$	8,255,101

Senior unsecured notes:
	Senior unsecured notes due 2015		04/15		4.25 %	$	499,421	$	499,296
	Senior unsecured notes due 2039 ⁽¹⁵⁾		10/39		7.88 %		460,000		460,000
	Floating rate senior unsecured notes due 2011		n/a		n/a		-		23,250
	Senior unsecured notes due 2011		n/a		n/a		-		100,382
	Total senior unsecured notes				5.99 %	$	959,421	$	1,082,928

3.88% exchangeable senior debentures due 2025
	(see page 23)		04/12		5.32 %	$	496,139	$	491,000

Convertible senior debentures: (see page 23)
	3.63% due 2026		11/11		5.32 %	$	178,696	$	176,499
	2.85% due 2027		04/12		5.45 %		10,103		9,914
	Total convertible senior debentures ⁽¹⁶⁾				5.33 %	$	188,799	$	186,413

Unsecured revolving credit facilities:
	$1.595 billion unsecured revolving credit facility ⁽¹⁷⁾		09/12	L+55	0.75 %	$	300,000	$	669,000
	$1.25 billion unsecured revolving credit facility
		($22,085 reserved for outstanding letters of credit) ⁽¹⁸⁾	06/16	L+135	-		-		205,000
	Total unsecured revolving credit facilities				0.75 %	$	300,000	$	874,000
___________________________
	See notes on the following page.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

10. Debt - continued

	Notes to preceding tabular information (Amounts in thousands):

	(1)	Represents the extended maturity for certain loans in which we have the unilateral right, ability and intent to extend. In the case of our convertible and exchangeable debt, represents the earliest date holders may require us to repurchase the debentures.

	(2)	On February 11, 2011, we completed a $425,000 refinancing of this property. The seven-year loan bears interest at LIBOR plus 2.00%, which was swapped for the term of the loan to a fixed rate of 5.13%. The loan amortizes based on a 30-year schedule beginning in the fourth year. We retained net proceeds of approximately $139,000, after repaying the existing loan and closing costs.

	(3)	On February 10, 2011, we completed a $150,000 financing of this property. The 12-year fixed rate loan bears interest at 5.51% and amortizes based on a 30-year schedule beginning in the third year. This property was previously unencumbered.

	(4)	In May 2011, we repaid the outstanding balance of the variable-rate construction loan on this property and closed on a $101,671 mortgage at a fixed rate of 4.88%. The loan has a 10-year term and amortizes based on a 30-year schedule beginning in the sixth year.

	(5)	On January 18, 2011, we repaid the outstanding balance of the variable-rate construction loan on this property and closed on a $76,100 mortgage at a fixed rate of 4.61%. The loan has a seven-year term and amortizes based on a 30-year schedule.

	(6)	On January 10, 2011, we completed a $75,000 financing of this property. The seven-year fixed rate loan bears interest at 4.59% and amortizes based on a 25-year schedule beginning in the sixth year. This property was previously unencumbered.

	(7)	On September 1, 2011, we completed a $600,000 refinancing of this property. The 10-year fixed rate loan bears interest at 5.10% and amortizes based on a 30-year schedule beginning in the fourth year.

	(8)	In January 2011, we completed a $60,000 financing of this property. The 10-year fixed rate loan bears interest at 5.14% and amortizes based on a 30-year schedule beginning in the third year.

	(9)	On May 10, 2011, we refinanced this loan for the same amount. The five-year interest only loan is at LIBOR plus 1.25%.

	(10)	This loan bears interest at the Freddie Mac Reference Note Rate plus 1.53%.

	(11)	In October 2011, this loan was refinanced in the same amount for one year, with two one-year extension options. The interest rate on the new loan is at LIBOR plus 4.25% with a LIBOR floor of 0.50%.

	(12)	This loan has a LIBOR floor of 1.00%.

	(13)	This loan has a LIBOR floor of 2.00%.

	(14)	In October 2011, we extended the maturity date of this loan to October 2012, with a provision for a one-year extension option.

	(15)	These notes may be redeemed at our option in whole or in part beginning on October 1, 2014, at a price equal to the principal amount plus accrued interest.
	(16)	The net proceeds from the offering of these debentures were contributed to the Operating Partnership in the form of an inter-company loan and the Operating Partnership fully and unconditionally guaranteed payment of these debentures. There are no restrictions which limit the Operating Partnership from making distributions to Vornado and Vornado has virtually no independent assets or operations outside of the Operating Partnership.
	(17)	We are in the process of renewing this facility and expect to enter into a new $1,250,000 facility that has a four-year term, with a one-year extension option and bears interest on drawn amounts at LIBOR plus 1.25% and has a .25% facility fee (drawn or undrawn), based on our credit ratings.

	(18)	On June 8, 2011, we renewed this facility and increased it to $1,250,000 from $1,000,000. The renewed facility matures in four years, has a one-year extension option and bears interest on drawn amounts at LIBOR plus 1.35% and has a .30% facility fee (drawn or undrawn), based on our credit ratings.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

10. Debt – continued

Pursuant to the provisions of Accounting Standards Codification (“ASC”) 470-20, Debt with Conversion and Other Options, below is a summary of required disclosures related to our convertible and exchangeable senior debentures.

			2.85% Convertible				3.63% Convertible				3.88% Exchangeable
(Amounts in thousands, except per share amounts)			Senior Debentures due 2027				Senior Debentures due 2026				Senior Debentures due 2025
			September 30,		December 31,		September 30,		December 31,		September 30,		December 31,
Balance Sheet:			2011		2010		2011		2010		2011		2010
	Principal amount of debt component		$	10,233	$	10,233	$	179,052	$	179,052	$	499,982	$	499,982
	Unamortized discount			(130)		(319)		(356)		(2,553)		(3,843)		(8,982)
	Carrying amount of debt component		$	10,103	$	9,914	$	178,696	$	176,499	$	496,139	$	491,000
	Carrying amount of equity component		$	956	$	956	$	9,604	$	9,604	$	32,301	$	32,301
	Effective interest rate			5.45 %		5.45 %		5.32 %		5.32 %		5.32 %		5.32 %
	Maturity date (period through which
		discount is being amortized)		4/1/12				11/15/11				4/15/12
	Conversion price per share, as adjusted		$	157.18			$	148.46			$	87.17
	Number of shares on which the
		aggregate consideration to be
		delivered upon conversion is
		determined		- ⁽¹⁾				- ⁽¹⁾				5,736
__________________

(1)		Our convertible senior debentures require that upon conversion, the entire principal amount is to be settled in cash, and at our option, any excess value above the principal amount may be settled in cash or common shares. Based on the September 30, 2011 closing share price of our common shares and the conversion prices in the table above, there was no excess value; accordingly, no common shares would be issued if these securities were settled on this date. The number of common shares on which the aggregate consideration that would be delivered upon conversion is 65 and 1,206 common shares, respectively.

		Three Months Ended				Nine Months Ended
(Amounts in thousands)		September 30,				September 30,
Income Statement:		2011		2010		2011		2010
2.85% Convertible Senior Debentures due 2027:
	Coupon interest	$	74	$	160	$	219	$	480
	Discount amortization – original issue		11		23		33		69
	Discount amortization – ASC 470-20 implementation		52		110		156		325
		$	137	$	293	$	408	$	874

3.63% Convertible Senior Debentures due 2026:
	Coupon interest	$	1,623	$	3,523	$	4,868	$	11,328
	Discount amortization – original issue		202		417		598		1,320
	Discount amortization – ASC 470-20 implementation		540		1,117		1,599		3,533
		$	2,365	$	5,057	$	7,065	$	16,181

3.88% Exchangeable Senior Debentures due 2025:
	Coupon interest	$	4,843	$	4,844	$	14,531	$	14,532
	Discount amortization – original issue		410		389		1,213		1,151
	Discount amortization – ASC 470-20 implementation		1,326		1,258		3,926		3,724
		$	6,579	$	6,491	$	19,670	$	19,407

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

11. Redeemable Noncontrolling Interests

Redeemable noncontrolling interests on our consolidated balance sheets represent Operating Partnership units held by third parties and are comprised of Class A units and Series D-10, D-14, D-15 and D-16 (collectively, “Series D”) cumulative redeemable preferred units. Redeemable noncontrolling interests on our consolidated balance sheets 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. Below is a table summarizing the activity of redeemable noncontrolling interests.

(Amounts in thousands)
Balance at December 31, 2009	$	1,251,628
Net income		33,487
Distributions		(40,702)
Conversion of Class A units into common shares, at redemption value		(62,606)
Adjustments to carry redeemable Class A units at redemption value		232,099
Redemption of Series D-12 redeemable units		(13,000)
Other, net		16,316
Balance at September 30, 2010	$	1,417,222


Balance at December 31, 2010	$	1,327,974
Net income		47,364
Distributions		(38,393)
Conversion of Class A units into common shares, at redemption value		(38,220)
Adjustments to carry redeemable Class A units at redemption value		(114,628)
Redemption of Series D-11 redeemable units		(28,000)
Other, net		4,623
Balance at September 30, 2011	$	1,160,720

As of September 30, 2011 and December 31, 2010, the aggregate redemption value of redeemable Class A units was $934,720,000 and $1,066,974,000, respectively.

Redeemable noncontrolling interests exclude our Series G-1 through G-4 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 $55,052,000 and $55,097,000 as of September 30, 2011 and December 31, 2010, respectively.

In 2011, we redeemed 1,400,000 Series D-11 cumulative redeemable preferred units with a par value of $25.00 per unit, for an aggregate of $28,000,000 in cash. In 2010, we redeemed 800,000 Series D-12 cumulative redeemable preferred units with a par value of $25.00 per unit, for an aggregate of $13,000,000 in cash.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

12. Shareholders’ Equity

On April 20, 2011, we sold 7,000,000 6.875% Series J Cumulative Redeemable Preferred Shares at a price of $25.00 per share, in an underwritten public offering pursuant to an effective registration statement. On April 21, 2011, the underwriters exercised their option to purchase an additional 1,050,000 shares to cover over-allotments. On May 5, 2011 and August 5, 2011, we sold an additional 800,000 and 1,000,000 shares, respectively, at a price of $25.00 per share. We retained aggregate net proceeds of $239,037,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 9,850,000 Series J Preferred Units (with economic terms that mirror those of the Series J Preferred Shares). Dividends on the Series J Preferred Shares are cumulative and payable quarterly in arrears. The Series J 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, at our option, may redeem the Series J Preferred Shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption. The Series J Preferred Shares have no maturity date and will remain outstanding indefinitely unless redeemed by us.

13. 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

Financial assets and liabilities that are measured at fair value in our consolidated financial statements consist of (i) marketable securities, (ii) derivative positions in marketable equity securities, (iii) the assets of our deferred compensation plan, which are primarily marketable equity securities and equity investments in limited partnerships, (iv) Real Estate Fund investments, 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 financial assets and liabilities by the levels in the fair value hierarchy at September 30, 2011 and December 31, 2010, respectively.

			As of September 30, 2011
(Amounts in thousands)			Total		Level 1		Level 2		Level 3
	Marketable securities		$	631,361	$	631,361	$	-	$	-
	Real Estate Fund investments (75% of which is attributable to
		noncontrolling interests)		261,417		-		-		261,417
	Deferred compensation plan assets (included in other assets)			94,623		40,736		-		53,887
		Total assets	$	987,401	$	672,097	$	-	$	315,304

	Mandatorily redeemable instruments (included in other liabilities)		$	55,052	$	55,052	$	-	$	-

			As of December 31, 2010
(Amounts in thousands)			Total		Level 1		Level 2		Level 3
	Marketable securities		$	766,116	$	766,116	$	-	$	-
	Real Estate Fund investments (75% of which is attributable to
		noncontrolling interests)		144,423		-		-		144,423
	Deferred compensation plan assets (included in other assets)			91,549		43,699		-		47,850
	Derivative positions in marketable equity securities
		(included in other assets)		17,616		-		17,616		-
		Total assets	$	1,019,704	$	809,815	$	17,616	$	192,273

	Mandatorily redeemable instruments (included in other liabilities)		$	55,097	$	55,097	$	-	$	-

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

13. Fair Value Measurements - continued

Financial Assets and Liabilities Measured at Fair Value - continued

The tables below summarize the changes in the fair value of the Level 3 assets above, by category, for the three and nine months ended September 30, 2011 and 2010.

Real Estate Fund Investments:	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
(Amounts in thousands)	2011		2010		2011		2010
Beginning balance	$	255,795	$	-	$	144,423	$	-
Purchases		-		42,500		123,047		42,500
Sales		-		-		(12,831)		-
Realized and unrealized gains		5,639		-		22,294		-
Other, net		(17)		-		(15,516)		-
Ending balance	$	261,417	$	42,500	$	261,417	$	42,500


Deferred Compensation Plan Assets:	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
(Amounts in thousands)	2011		2010		2011		2010
Beginning balance	$	53,724	$	43,598	$	47,850	$	39,589
Purchases		3,155		9,802		22,259		16,144
Sales		(1,044)		(7,850)		(18,538)		(11,430)
Realized and unrealized (losses) gains		(2,051)		487		2,166		1,637
Other, net		103		-		150		97
Ending balance	$	53,887	$	46,037	$	53,887	$	46,037

Financial Assets and Liabilities not Measured at Fair Value

Financial assets and liabilities that are not measured at fair value in our consolidated financial statements include mezzanine loans receivable and debt. Estimates of the fair values of these instruments are based on our assessments of available market information and valuation methodologies, including discounted cash flow analyses. The table below summarizes the carrying amounts and fair values of these financial instruments as of September 30, 2011 and December 31, 2010.

			As of September 30, 2011				As of December 31, 2010
			Carrying		Fair		Carrying		Fair
(Amounts in thousands)			Amount		Value		Amount		Value
	Mezzanine loans receivable		$	156,365	$	150,226	$	202,412	$	197,581
	Debt:
		Notes and mortgages payable	$	8,462,191	$	8,576,512	$	8,255,101	$	8,446,791
		Senior unsecured notes		959,421		1,011,602		1,082,928		1,119,512
		Exchangeable senior debentures		496,139		514,981		491,000		554,355
		Convertible senior debentures		188,799		189,816		186,413		191,510
		Revolving credit facility debt		300,000		300,000		874,000		874,000
			$	10,406,550	$	10,592,911	$	10,889,442	$	11,186,168

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

14. Stock-based Compensation

Our Share Option Plan (the “Plan”) provides for grants of incentive and non-qualified stock options, restricted stock, restricted Operating Partnership units and out-performance plan rewards to certain of our employees and officers. We account for all stock-based compensation in accordance ASC 718, Compensation – Stock Compensation. Stock-based compensation expense for the three months ended September 30, 2011 and 2010 consists of stock option awards, restricted stock awards, Operating Partnership unit awards and out-performance plan awards. Stock-based compensation expense was $7,320,000 and $11,210,000 in the three months ended September 30, 2011 and 2010, respectively, and $21,384,000 and $26,167,000 in the nine months ended September 30, 2011 and 2010, respectively.

15. Fee and Other Income

The following table sets forth the details of our fee and other income:

	For the Three Months				For the Nine Months
(Amounts in thousands)	Ended September 30,				Ended September 30,
	2011		2010		2011		2010
Tenant cleaning fees	$	15,647	$	13,613	$	46,479	$	40,733
Management and leasing fees		4,361		3,555		15,456		16,075
Lease termination fees		4,803		2,301		12,478		10,112
Other income		12,195		12,797		37,826		37,918
	$	37,006	$	32,266	$	112,239	$	104,838

Fee and other income above includes management fee income from Interstate Properties, a related party, of $195,000 and $192,000 for the three months ended September 30, 2011 and 2010, respectively, and $586,000 and $584,000 for the nine months ended September 30, 2011 and 2010, respectively. The above table excludes management fee income from partially owned entities which is included in income from partially owned entities (see Note 6 – Investments in Partially Owned Entities).

16. Interest and Other Investment (Loss) Income, Net

The following table sets forth the details of our interest and other investment income:

		For the Three Months				For the Nine Months
(Amounts in thousands)		Ended September 30,				Ended September 30,
		2011		2010		2011		2010
Mezzanine loans loss reversal (accrual) and net gain on disposition		$	-	$	-	$	82,744	$	(6,900)
Dividends and interest on marketable securities			7,605		6,445		22,941		21,068
Interest on mezzanine loans			3,442		2,620		9,169		7,660
Mark-to-market of investments in our deferred compensation plan⁽¹⁾			(5,243)		3,907		1,502		5,684
(Loss) income from the mark-to-market of J.C. Penney derivative position			(37,537)		32,249		(27,136)		32,249
Other, net			1,739		1,875		5,901		5,915
		$	(29,994)	$	47,096	$	95,121	$	65,676
__________________________

(1)	This (loss) income is entirely offset by the revenue/expense resulting from the mark-to-market of the deferred compensation plan liability, which is included in "general and administrative" expense.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

17. 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 utilizes 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, restricted stock and exchangeable senior debentures.

			For the Three Months				For the Nine Months
(Amounts in thousands, except per share amounts)			Ended September 30,				Ended September 30,
			2011		2010		2011		2010
Numerator:
	Income from continuing operations, net of income
		attributable to noncontrolling interests	$	50,314	$	107,919	$	437,576	$	402,591
	Income (loss) from discontinued operations, net of income
		attributable to noncontrolling interests		3,448		(3,667)		137,430		(11,681)
	Net income attributable to Vornado			53,762		104,252		575,006		390,910
	Preferred share dividends			(17,627)		(13,442)		(47,743)		(41,975)
	Discount on preferred share and unit redemptions			5,000		4,382		5,000		4,382
	Net income attributable to common shareholders			41,135		95,192		532,263		353,317
	Earnings allocated to unvested participating securities			(48)		(29)		(199)		(79)
	Numerator for basic income per share			41,087		95,163		532,064		353,238
	Impact of assumed conversions:
		Convertible preferred share dividends		-		-		94		121
	Numerator for diluted income per share		$	41,087	$	95,163	$	532,158	$	353,359

Denominator:
	Denominator for basic income per share –
		weighted average shares		184,398		182,462		184,220		182,014
	Effect of dilutive securities ⁽¹⁾:
		Employee stock options and restricted share awards		1,667		1,706		1,764		1,741
		Convertible preferred shares		-		-		55		71
	Denominator for diluted income per share –
		weighted average shares and assumed conversions		186,065		184,168		186,039		183,826

INCOME PER COMMON SHARE – BASIC:
	Income from continuing operations, net		$	0.20	$	0.54	$	2.14	$	2.00
	Income (loss) from discontinued operations, net			0.02		(0.02)		0.75		(0.06)
	Net income per common share		$	0.22	$	0.52	$	2.89	$	1.94

INCOME PER COMMON SHARE – DILUTED:
	Income from continuing operations, net		$	0.20	$	0.54	$	2.12	$	1.98
	Income (loss) from discontinued operations, net			0.02		(0.02)		0.74		(0.06)
	Net income per common share		$	0.22	$	0.52	$	2.86	$	1.92


(1)		The effect of dilutive securities above excludes anti-dilutive weighted average common share equivalents of 18,857 and 19,837 in the three months ended September 30, 2011 and 2010, respectively, and 18,687 and 19,843 in the nine months ended September 30, 2011 and 2010, respectively.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

18. Cleveland Medical Mart Development Project

During 2010, two of our wholly owned subsidiaries entered into agreements with Cuyahoga County, Ohio (the “County”) to develop and operate the Cleveland Medical Mart and Convention Center (the “Facility”), a 1,000,000 square foot showroom, trade show and conference center in Cleveland’s central business district. The County will fund the development of the Facility, using the proceeds it received from the issuance of general obligation bonds and other sources, up to the development budget of $465,000,000 and maintain effective control of the property. During the 17-year development and operating period, our subsidiaries will receive net settled payments of approximately $10,000,000 per year, which are net of its $36,000,000 annual obligation to the County. Our subsidiaries’ obligation has been pledged by the County to the bondholders, but is payable by our subsidiaries only to the extent that they first receive at least an equal payment from the County. Our subsidiaries engaged a contractor to construct the Facility pursuant to a guaranteed maximum price contract; although our subsidiaries are ultimately responsible for cost overruns, the contractor is responsible for all costs incurred in excess of its contract and has provided a completion guaranty. Construction of the Facility is expected to be completed in 2013. Upon completion, our subsidiaries are required to fund $11,500,000, primarily for tenant improvements, and they are responsible for operating expenses and are entitled to the net operating income, if any, of the Facility. The County may terminate the operating agreement five years from the completion of development and periodically thereafter, if our subsidiaries fail to achieve certain performance thresholds.

We account for these agreements using criteria set forth in ASC 605-25, Multiple-Element Arrangements, as our subsidiaries are providing development, marketing, leasing, and other property management related services over the 17-year term. We recognize development fees using the percentage of completion method of accounting. In the three and nine months ended September 30, 2011, we recognized $35,135,000 and $108,203,000 of revenue, respectively, which is offset by development costs expensed of $33,419,000 and $101,637,000, respectively.

19. 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, including coverage for terrorist acts, 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.

Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for acts of terrorism, including nuclear, biological, chemical and radiological (“NBCR”) acts, as defined by the Terrorism Risk Insurance Program Reauthorization Act. 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. Coverage for NBCR losses is up to $2 billion per occurrence, for which 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 borne 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 future policy years.

Our debt instruments, consisting of mortgage loans secured by our properties which are non-recourse to us, senior unsecured notes, exchangeable senior debentures, convertible senior debentures 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.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

19. Commitments and Contingencies – continued

Other Commitments and Contingencies

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 September 30, 2011, the aggregate dollar amount of these guarantees and master leases is approximately $151,959,000.

At September 30, 2011, $22,085,000 of letters of credit were outstanding under one of our revolving credit facilities. Our 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 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.

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.

As part of the process of obtaining the required approvals to demolish and develop our 220 Central Park South property into a new residential tower, we have committed to fund the estimated project cost of approximately $400,000,000 to $425,000,000. In addition, we expect to fund additional capital to certain of our partially owned entities aggregating approximately $264,000,000.

Litigation

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, including the matter referred to below, is not expected to have a material adverse effect on our financial position, results of operations or cash flows.

On January 8, 2003, Stop & Shop filed a complaint with the United States District Court for the District of New Jersey (“USDC-NJ”) claiming that we had no right to reallocate and therefore continue to collect the $5,000,000 of annual rent from Stop & Shop pursuant to the Master Agreement and Guaranty, because of the expiration of the East Brunswick, Jersey City, Middletown, Union and Woodbridge leases to which the $5,000,000 of additional rent was previously allocated. Stop & Shop asserted that a prior order of the Bankruptcy Court for the Southern District of New York dated February 6, 2001, as modified on appeal to the District Court for the Southern District of New York on February 13, 2001, froze our right to reallocate which effectively terminated our right to collect the additional rent from Stop & Shop. On March 3, 2003, after we moved to dismiss for lack of jurisdiction, Stop & Shop voluntarily withdrew its complaint. On March 26, 2003, Stop & Shop filed a new complaint in New York State Supreme Court, asserting substantially the same claims as in its USDC-NJ complaint. We removed the action to the United States District Court for the Southern District of New York. In January 2005, that court remanded the action to the New York State Supreme Court. On February 14, 2005, we served an answer in which we asserted a counterclaim seeking a judgment for all the unpaid additional rent accruing through the date of the judgment and a declaration that Stop & Shop will continue to be liable for the additional rent as long as any of the leases subject to the Master Agreement and Guaranty remain in effect. On May 17, 2005, we filed a motion for summary judgment. On July 15, 2005, Stop & Shop opposed our motion and filed a cross-motion for summary judgment. On December 13, 2005, the Court issued its decision denying the motions for summary judgment. Both parties appealed the Court’s decision and on December 14, 2006, the Appellate Court division issued a decision affirming the Court’s decision. On January 16, 2007, we filed a motion for the reconsideration of one aspect of the Appellate Court’s decision which was denied on March 13, 2007. A trial was held in November 2010 and closing arguments were held in March 2011. As of September 30, 2011, we have a $40,733,000 receivable from Stop & Shop, of which $23,105,000 has been reserved. We believe, after consultation with counsel, that the maximum reasonably possible loss is up to the total amount of the receivable of $40,733,000.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

20. Segment Information

Below is a summary of net income and a reconciliation of net income to EBITDA⁽¹⁾ by segment for the three and nine months ended September 30, 2011 and 2010.


(Amounts in thousands)			For the Three Months Ended September 30, 2011
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	530,086	$	196,123	$	133,156	$	105,788	$	46,278	$	-	$	48,741
Straight-line rent adjustments					14,963		3,998		6,673		4,696		(1,006)		-		602
Amortization of acquired below-
	market leases, net				16,100		8,153		547		6,268		21		-		1,111
Total rentals					561,149		208,274		140,376		116,752		45,293		-		50,454
Tenant expense reimbursements					94,053		43,025		9,328		36,297		2,972		-		2,431
Cleveland Medical Mart development
	project				35,135		-		-		-		35,135		-		-
Fee and other income:
	Tenant cleaning fees				15,647		24,047		-		-		-		-		(8,400)
	Management and leasing fees				4,361		1,653		2,670		541		45		-		(548)
	Lease termination fees				4,803		3,540		1,002		261		-		-		-
	Other				12,195		5,212		5,232		1,155		988		-		(392)
Total revenues					727,343		285,751		158,608		155,006		84,433		-		43,545
Operating expenses					285,659		129,472		51,791		57,412		30,803		-		16,181
Depreciation and amortization					134,074		47,038		33,885		30,080		10,372		-		12,699
General and administrative					46,452		4,461		6,505		6,721		9,534		-		19,231
Cleveland Medical Mart development
	project				33,419		-		-		-		33,419		-		-
Tenant buy-outs and other acquisition
	related costs				2,288		-		-		1,593		-		-		695
Total expenses					501,892		180,971		92,181		95,806		84,128		-		48,806
Operating income (loss)					225,451		104,780		66,427		59,200		305		-		(5,261)
(Loss) applicable to Toys					(9,304)		-		-		-		-		(9,304)		-
Income (loss) from partially owned
	entities				13,552		(5,136)		(1,356)		889		38		-		19,117
Income from Real Estate Fund					5,353		-		-		-		-		-		5,353
Interest and other investment
	(loss) income, net				(29,994)		146		39		3		17		-		(30,199)
Interest and debt expense					(136,672)		(35,395)		(30,256)		(23,176)		(9,365)		-		(38,480)
Net gain on disposition of wholly
	owned and partially owned assets				1,298		-		-		-		-		-		1,298
Income (loss) before income taxes					69,684		64,395		34,854		36,916		(9,005)		(9,304)		(48,172)
Income tax expense					(7,144)		(678)		(960)		-		(890)		-		(4,616)
Income (loss) from continuing
	operations				62,540		63,717		33,894		36,916		(9,895)		(9,304)		(52,788)
Income from discontinued
	operations				3,683		165		-		818		2,700		-		-
Net income (loss)					66,223		63,882		33,894		37,734		(7,195)		(9,304)		(52,788)
Less:
	Net (income) loss attributable to
		noncontrolling interests in
		consolidated subsidiaries			(5,636)		(2,219)		-		110		-		-		(3,527)
	Net (income) attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(6,825)		-		-		-		-		-		(6,825)
Net income (loss) attributable to
	Vornado				53,762		61,663		33,894		37,844		(7,195)		(9,304)		(63,140)
Interest and debt expense⁽²⁾					197,864		39,526		33,703		24,368		9,523		38,018		52,726
Depreciation and amortization⁽²⁾					193,394		53,936		38,085		30,946		12,230		34,293		23,904
Income tax (benefit) expense⁽²⁾					(7,350)		736		925		-		890		(15,135)		5,234
EBITDA⁽¹⁾				$	437,670	$	155,861	$	106,607	$	93,158	$	15,448	$	47,872	$	18,724


See notes on page 35.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

20. Segment Information – continued


(Amounts in thousands)			For the Three Months Ended September 30, 2010
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	526,776	$	194,815	$	146,439	$	97,625	$	42,774	$	-	$	45,123
Straight-line rent adjustments					15,986		7,573		347		7,441		(457)		-		1,082
Amortization of acquired below-
	market leases, net				16,756		8,936		594		5,820		15		-		1,391
Total rentals					559,518		211,324		147,380		110,886		42,332		-		47,596
Tenant expense reimbursements					95,341		40,387		15,129		35,688		2,784		-		1,353
Fee and other income:
	Tenant cleaning fees				13,613		21,721		-		-		-		-		(8,108)
	Management and leasing fees				3,555		1,428		2,772		214		(2)		-		(857)
	Lease termination fees				2,301		1,220		728		346		7		-		-
	Other				12,797		5,505		5,554		1,016		800		-		(78)
Total revenues					687,125		281,585		171,563		148,150		45,921		-		39,906
Operating expenses					275,077		124,152		58,327		52,309		26,391		-		13,898
Depreciation and amortization					130,599		44,131		36,764		26,329		9,853		-		13,522
General and administrative					55,200		4,504		5,984		8,843		6,010		-		29,859
Tenant buy-outs and other acquisition
	related costs				921		-		-		-		-		-		921
Total expenses					461,797		172,787		101,075		87,481		42,254		-		58,200
Operating income (loss)					225,328		108,798		70,488		60,669		3,667		-		(18,294)
(Loss) applicable to Toys					(2,557)		-		-		-		-		(2,557)		-
(Loss) income from partially owned
	entities				(1,996)		1,705		(1,095)		833		8		-		(3,447)
(Loss) from Real Estate Fund					(1,410)		-		-		-		-		-		(1,410)
Interest and other investment
	income (loss), net				47,096		139		81		(46)		11		-		46,911
Interest and debt expense					(145,561)		(33,293)		(33,367)		(24,199)		(9,556)		-		(45,146)
Net (loss) on extinguishment
	of debt				(724)		-		-		-		-		-		(724)
Net gain on disposition of wholly
	owned and partially owned assets				5,072		-		-		-		-		-		5,072
Income (loss) before income taxes					125,248		77,349		36,107		37,257		(5,870)		(2,557)		(17,038)
Income tax (expense) benefit					(5,449)		(861)		(1,001)		(2)		714		-		(4,299)
Income (loss) from continuing
	operations				119,799		76,488		35,106		37,255		(5,156)		(2,557)		(21,337)
(Loss) income from discontinued
	operations				(3,667)		30		1,410		(3,642)		(1,465)		-		-
Net income (loss)					116,132		76,518		36,516		33,613		(6,621)		(2,557)		(21,337)
Less:
	Net (income) loss attributable to
		noncontrolling interests in
		consolidated subsidiaries			(296)		(2,442)		-		397		-		-		1,749
	Net (income) attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(11,584)		-		-		-		-		-		(11,584)
Net income (loss) attributable to
	Vornado				104,252		74,076		36,516		34,010		(6,621)		(2,557)		(31,172)
Interest and debt expense⁽²⁾					208,294		31,817		34,241		26,395		15,883		40,558		59,400
Depreciation and amortization⁽²⁾					179,148		42,531		41,394		28,024		12,782		30,079		24,338
Income tax (benefit) expense⁽²⁾					(23,013)		861		1,054		2		(714)		(27,501)		3,285
EBITDA⁽¹⁾				$	468,681	$	149,285	$	113,205	$	88,431	$	21,330	$	40,579	$	55,851


See notes on page 35.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

20. Segment Information – continued


(Amounts in thousands)			For the Nine Months Ended September 30, 2011
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	1,604,451	$	586,797	$	413,810	$	316,729	$	154,485	$	-	$	132,630
Straight-line rent adjustments					34,713		15,777		5,962		12,556		(2,059)		-		2,477
Amortization of acquired below-
	market leases, net				49,387		24,549		1,525		19,899		55		-		3,359
Total rentals					1,688,551		627,123		421,297		349,184		152,481		-		138,466
Tenant expense reimbursements					264,857		108,267		27,561		111,519		9,121		-		8,389
Cleveland Medical Mart development
	project				108,203		-		-		-		108,203		-		-
Fee and other income:
	Tenant cleaning fees				46,479		71,156		-		-		-		-		(24,677)
	Management and leasing fees				15,456		5,260		9,629		2,439		348		-		(2,220)
	Lease termination fees				12,478		9,176		3,013		289		-		-		-
	Other				37,826		15,078		15,894		4,241		2,832		-		(219)
Total revenues					2,173,850		836,060		477,394		467,672		272,985		-		119,739
Operating expenses					841,266		367,291		150,375		173,623		99,266		-		50,711
Depreciation and amortization					393,846		138,837		101,634		85,653		29,113		-		38,609
General and administrative					155,566		14,389		19,504		22,034		23,855		-		75,784
Cleveland Medical Mart development
	project				101,637		-		-		-		101,637		-		-
Tenant buy-outs and other acquisition
	related costs				22,455		-		-		16,593		3,040		-		2,822
Total expenses					1,514,770		520,517		271,513		297,903		256,911		-		167,926
Operating income (loss)					659,080		315,543		205,881		169,769		16,074		-		(48,187)
Income applicable to Toys					80,794		-		-		-		-		80,794		-
Income (loss) from partially owned
	entities				56,239		(4,893)		(6,038)		2,131		292		-		64,747
Income from Real Estate Fund					25,491		-		-		-		-		-		25,491
Interest and other investment
	income, net				95,121		466		119		5		35		-		94,496
Interest and debt expense					(408,532)		(103,514)		(89,911)		(69,482)		(28,140)		-		(117,485)
Net gain on disposition of wholly
	owned and partially owned assets				7,975		-		-		-		-		-		7,975
Income (loss) before income taxes					516,168		207,602		110,051		102,423		(11,739)		80,794		27,037
Income tax expense					(19,448)		(1,637)		(2,267)		(5)		(2,211)		-		(13,328)
Income (loss) from continuing
	operations				496,720		205,965		107,784		102,418		(13,950)		80,794		13,709
Income from discontinued operations					146,293		398		46,466		9,217		90,212		-		-
Net income					643,013		206,363		154,250		111,635		76,262		80,794		13,709
Less:
	Net (income) loss attributable to
		noncontrolling interests in
		consolidated subsidiaries			(20,643)		(6,815)		-		196		-		-		(14,024)
	Net (income) attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(47,364)		-		-		-		-		-		(47,364)
Net income (loss) attributable to
	Vornado				575,006		199,548		154,250		111,831		76,262		80,794		(47,679)
Interest and debt expense⁽²⁾					599,668		108,473		100,017		73,000		32,025		121,546		164,607
Depreciation and amortization⁽²⁾					561,738		146,650		118,290		88,322		34,632		101,862		71,982
Income tax expense⁽²⁾					42,135		1,695		2,380		5		2,211		29,914		5,930
EBITDA⁽¹⁾				$	1,778,547	$	456,366	$	374,937	$	273,158	$	145,130	$	334,116	$	194,840


See notes on page 35.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

20. Segment Information – continued


(Amounts in thousands)			For the Nine Months Ended September 30, 2010
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	1,560,473	$	582,090	$	426,217	$	284,808	$	145,206	$	-	$	122,152
Straight-line rent adjustments					53,018		22,642		5,519		21,699		628		-		2,530
Amortization of acquired below-
	market leases, net				48,476		27,312		1,836		14,897		(91)		-		4,522
Total rentals					1,661,967		632,044		433,572		321,404		145,743		-		129,204
Tenant expense reimbursements					271,040		105,968		42,592		107,799		8,876		-		5,805
Fee and other income:
	Tenant cleaning fees				40,733		62,778		-		-		-		-		(22,045)
	Management and leasing fees				16,075		4,278		13,252		759		31		-		(2,245)
	Lease termination fees				10,112		4,245		1,256		4,182		429		-		-
	Other				37,918		14,428		16,452		2,284		3,471		-		1,283
Total revenues					2,037,845		823,741		507,124		436,428		158,550		-		112,002
Operating expenses					802,927		349,934		163,097		159,131		85,915		-		44,850
Depreciation and amortization					393,259		131,911		108,994		80,550		30,111		-		41,693
General and administrative					153,231		13,824		18,079		22,591		20,252		-		78,485
Tenant buy-outs and other acquisition
	related costs				2,851		-		-		-		-		-		2,851
Total expenses					1,352,268		495,669		290,170		262,272		136,278		-		167,879
Operating income (loss)					685,577		328,072		216,954		174,156		22,272		-		(55,877)
Income applicable to Toys					102,309		-		-		-		-		102,309		-
Income (loss) from partially owned
	entities				13,800		4,345		(1,099)		3,353		239		-		6,962
(Loss) from Real Estate Fund					(1,410)		-		-		-		-		-		(1,410)
Interest and other investment
	income, net				65,676		466		130		143		35		-		64,902
Interest and debt expense					(423,354)		(99,026)		(101,592)		(62,047)		(28,383)		-		(132,306)
Net (loss) on extinguishment
	of debt				(1,796)		-		-		-		-		-		(1,796)
Net gain on disposition of wholly
	owned and partially owned assets				12,759		-		-		-		765		-		11,994
Income (loss) before income taxes					453,561		233,857		114,393		115,605		(5,072)		102,309		(107,531)
Income tax (expense) benefit					(15,993)		(1,670)		(1,092)		(37)		118		-		(13,312)
Income (loss) from continuing
	operations				437,568		232,187		113,301		115,568		(4,954)		102,309		(120,843)
(Loss) income from discontinued operations					(11,681)		106		(5,776)		(1,539)		(4,472)		-		-
Net income (loss)					425,887		232,293		107,525		114,029		(9,426)		102,309		(120,843)
Less:
	Net (income) loss attributable to
		noncontrolling interests in
		consolidated subsidiaries			(1,490)		(7,290)		-		895		-		-		4,905
	Net (income) attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(33,487)		-		-		-		-		-		(33,487)
Net income (loss) attributable to
	Vornado				390,910		225,003		107,525		114,924		(9,426)		102,309		(149,425)
Interest and debt expense⁽²⁾					611,993		94,404		104,355		68,275		45,370		123,791		175,798
Depreciation and amortization⁽²⁾					549,400		127,341		120,929		85,335		39,049		99,850		76,896
Income tax expense (benefit)⁽²⁾					13,553		1,670		1,161		37		(59)		(1,914)		12,658
EBITDA⁽¹⁾				$	1,565,856	$	448,418	$	333,970	$	268,571	$	74,934	$	324,036	$	115,927


See notes on the following page.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

20. 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 (benefit) expense in the reconciliation of net income (loss) to EBITDA includes our share of these items from partially owned entities.

(3)	The components of other EBITDA are summarized below. The totals for each of the columns below agree to the total EBITDA for the "other" column in the preceding EBITDA by segment reconciliations.

			For the Three Months				For the Nine Months
(Amounts in thousands)			Ended September 30,				Ended September 30,
			2011		2010		2011		2010
Our share of Real Estate Fund:
	Operations		$	743	$	(319)	$	2,550	$	(319)
	Net unrealized gains			1,410		-		4,802		-
	Net realized gains			-		-		771		-
	Carried interest (reversal) accrual			(475)		-		1,665		-
Total				1,678		(319)		9,788		(319)
Alexander's				14,588		13,288		45,577		41,947
LNR (acquired in July 2010)⁽¹⁾				15,769		-		38,569		-
Lexington⁽²⁾				8,424		8,092		37,730		37,375
555 California Street				11,220		11,797		32,608		34,421
Hotel Pennsylvania				9,773		8,080		18,382		14,249
Other investments				10,075		4,004		30,011		22,619
				71,527		44,942		212,665		150,292
Corporate general and administrative expenses⁽³⁾				(21,585)		(20,712)		(62,964)		(60,668)
Investment income and other, net⁽³⁾				12,530		15,808		38,860		41,876
Mezzanine loans loss reversal (accrual) and net gain on disposition				-		-		82,744		(6,900)
(Loss) income from the mark-to-market of J.C. Penney derivative
	position			(37,537)		32,249		(27,136)		32,249
Net gain on sale of condominiums				1,298		-		5,884		3,149
Acquisition related costs				(684)		(921)		(4,398)		(2,851)
Real Estate Fund placement fees				-		(3,207)		(3,451)		(5,937)
Net loss on extinguishment of debt				-		(724)		-		(1,796)
Net income attributable to noncontrolling interests in the Operating
	Partnership, including unit distributions			(6,825)		(11,584)		(47,364)		(33,487)
			$	18,724	$	55,851	$	194,840	$	115,927


(1)		The nine months ended September 30, 2011 includes $6,020 for our share of net gains from asset sales and $8,977 for our share of a tax settlement gain.

(2)		Includes net gains of $9,760 and $5,998 in the nine months ended September 30, 2011 and 2010, respectively, resulting from Lexington's stock issuances.

(3)		The amounts in these captions (for this table only) exclude the mark-to-market of our deferred compensation plan assets and offsetting liability.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Trustees

Vornado Realty Trust

New York, New York

We have reviewed the accompanying consolidated balance sheet of Vornado Realty Trust (the “Company”) as of September 30, 2011, and the related consolidated statements of income and comprehensive income for the three-month and nine-month periods ended September 30, 2011 and 2010, and of changes in equity and cash flows for the nine-month periods ended September 30, 2011 and 2010. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Vornado Realty Trust as of December 31, 2010, and the related consolidated statements of income, changes in equity, and cash flows for the year then ended (not presented herein); and in our report dated February 23, 2011, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2010 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey

November 3, 2011

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements contained in this Quarterly Report constitute forward‑looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. 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 Quarterly Report on Form 10‑Q. 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 our Annual Report on Form 10-K for the year ended December 31, 2010. 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 Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q.

Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a discussion of our consolidated financial statements for the three and nine months ended September 30, 2011. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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.

Critical Accounting Policies

A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2010 in Management’s Discussion and Analysis of Financial Condition. There have been no significant changes to our policies during 2011.

Overview

Business Objective and Operating Strategy

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 Morgan Stanley REIT Index (“RMS”) and the SNL REIT Index (“SNL”) for the following periods ended September 30, 2011:

		Total Return⁽¹⁾
		Vornado	RMS	SNL
	One-year	(9.9%)	1.3%	1.2%
	Three-year	(9.2%)	(5.0%)	(4.0%)
	Five-year	(18.7%)	(12.2%)	(8.9%)
	Ten-year	196.5%	139.6%	149.5%


(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 executing 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 our shares or any other securities in the future.

We compete with a large number of real estate property owners and developers, some of which may be willing to accept lower returns on their investments. Principal factors of competition are rents charged, attractiveness of location, the quality of the property and the breadth and the quality of services provided. Our success depends upon, among other factors, trends of the national, regional and local economies, the financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation and population trends. See “Item 1A. Risk Factors” in our Annual Report on Form 10-K, as amended, for additional information regarding these factors.

Overview - continued

Recently Issued Accounting Literature

2011 Acquisitions and Investments

One Park Avenue

280 Park Avenue Joint Venture

On March 16, 2011, we formed a 50/50 joint venture with SL Green Realty Corp (“SL Green”) to own the mezzanine debt of 280 Park Avenue, a 1.2 million square foot office building located between 48th and 49th Streets in Manhattan (the “Property”). We contributed our mezzanine loan with a face amount of $73,750,000 and they contributed their mezzanine loans with a face amount of $326,250,000 to the joint venture. We equalized our interest in the joint venture with SL Green by paying them $111,250,000 in cash and assuming $15,000,000 of their debt. On May 17, 2011, as part of the recapitalization of the Property, the joint venture contributed its debt position for 99% of the common equity of a new joint venture which owns the Property. The new joint venture expects to spend $150,000,000 for re-tenanting and repositioning the Property.

Independence Plaza

2011 Dispositions

Overview - continued

2011 Financing Activities

In January 2011, we completed a $60,000,000 financing of land under a portion of the Borgata Hotel and Casino complex. The 10-year fixed rate loan bears interest at 5.14% and amortizes based on a 30-year schedule beginning in the third year.

On January 10, 2011, we completed a $75,000,000 financing of North Bergen (Tonnelle Avenue), a 410,000 square foot strip shopping center. The seven-year fixed rate loan bears interest rate at 4.59% and amortizes based on a 25-year schedule beginning in the sixth year. This property was previously unencumbered.

On January 18, 2011, we repaid the outstanding balance of the construction loan on 220 20^th Street and closed on a $76,100,000 mortgage at a fixed rate of 4.61%. The loan has a seven-year term and amortizes based on a 30-year schedule.

On February 10, 2011, we completed a $150,000,000 financing of 2121 Crystal Drive, a 506,000 square foot office building located in Crystal City, Arlington, Virginia. The 12-year fixed rate loan bears interest at 5.51% and amortizes based on a 30-year schedule beginning in the third year. This property was previously unencumbered.

On February 11, 2011, we completed a $425,000,000 refinancing of Two Penn Plaza, a 1.6 million square foot Manhattan office building. The seven-year loan bears interest at LIBOR plus 2.00%, which was swapped for the term of the loan to a fixed rate of 5.13%. The loan amortizes based on a 30-year schedule beginning in the fourth year. We retained net proceeds of approximately $139,000,000 after repaying the existing loan and closing costs.

On April 20, 2011, we sold 7,000,000 6.875% Series J Cumulative Redeemable Preferred Shares at a price of $25.00 per share, in an underwritten public offering pursuant to an effective registration statement. On April 21, 2011, the underwriters exercised their option to purchase an additional 1,050,000 shares to cover over-allotments. On May 5, 2011 and August 5, 2011 we sold an additional 800,000 and 1,000,000 shares, respectively, at a price of $25.00 per share. We retained aggregate net proceeds of $239,037,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 9,850,000 Series J Preferred Units (with economic terms that mirror those of the Series J Preferred Shares). Dividends on the Series J Preferred Shares are cumulative and payable quarterly in arrears. The Series J 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, at our option, may redeem the Series J Preferred Shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption. The Series J Preferred Shares have no maturity date and will remain outstanding indefinitely unless redeemed by us.

In May 2011, we repaid the outstanding balance of the construction loan on West End 25, and closed on a $101,671,000 mortgage at a fixed rate of 4.88%. The loan has a 10-year term and amortizes based on a 30-year schedule beginning in the sixth year.

On June 8, 2011, we renewed one of our two unsecured revolving credit facilities, and increased it to $1,250,000,000 from $1,000,000,000. The renewed facility matures in four years, has a one-year extension option and bears interest on drawn amounts at LIBOR plus 1.35% and has a .30% facility fee (drawn or undrawn), based on our credit ratings. We plan to renew our second revolving credit facility of $1,595,000,000, which matures in September 2012, with a new $1,250,000,000 facility that has a four-year term, with a one-year extension option and bears interest on drawn amounts at LIBOR plus 1.25% and has a .25% facility fee (drawn or undrawn), based on our credit ratings.

On September 1, 2011, we completed a $600,000,000 refinancing of 555 California Street, a three-building office complex aggregating 1.8 million square feet in San Francisco’s financial district, known as the Bank of America center, in which we own a 70% controlling interest. The 10-year loan bears interest at 5.10% and amortizes based on a 30-year schedule beginning in the fourth year. The proceeds of the new loan and $45,000,000 of existing cash were used to repay the existing loan and closing costs.

Overview - continued

Quarter Ended September 30, 2011 Financial Results Summary

Net income attributable to common shareholders for the quarter ended September 30, 2011 was $41,135,000, or $0.22 per diluted share, compared to $95,192,000, or $0.52 per diluted share, for the quarter ended September 30, 2010. Net income for the quarter ended September 30, 2011 includes $3,591,000 of net gains on sale of real estate. In addition, the quarters ended September 30, 2011 and 2010 include certain other items that affect comparability, which are listed in the table below. The aggregate of net gains on sale of real estate and the items in the table below, net of amounts attributable to noncontrolling interests, decreased net income attributable to common shareholders by $26,352,000, or $0.14 per diluted share for the quarter ended September 30, 2011 and increased net income attributable to common shareholders for the quarter ended September 30, 2010 by 22,274,000, or $0.12 per diluted share.

Funds From Operations attributable to common shareholders plus assumed conversions (“FFO”) for the quarter ended September 30, 2011 was $195,125,000, or $1.05 per diluted share, compared to $248,964,000, or $1.31 per diluted share, for the prior year’s quarter. FFO for the quarters ended September 30, 2011 and 2010 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 by $27,759,000, or $0.15 per diluted share for the quarter ended September 30, 2011 and increased FFO for the quarter ended September 30, 2010 by $27,464,000, or $0.14 per diluted share.

		For the Three Months Ended
		September 30,
(Amounts in thousands)		2011		2010
Items that affect comparability income (expense):
	(Loss) income from the mark-to-market of J.C. Penney derivative position	$	(37,537)	$	32,249
	Merchandise Mart restructuring costs		(3,722)		-
	Buy-out of a below market lease		(1,593)		-
	Acquisitions costs and impairment losses		(684)		(5,921)
	Discount on preferred share and unit redemptions		5,000		4,382
	Net gain on sale of condominiums		1,298		-
	Real Estate Fund placement fees		-		(3,752)
	Default interest and fees accrued on loans in special servicing		-		(5,887)
	FFO attributable to discontinued operations		5,777		10,117
	Other, net		1,780		(1,647)
			(29,681)		29,541
Noncontrolling interests' share of above adjustments			1,922		(2,077)
Items that affect comparability, net		$	(27,759)	$	27,464

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 quarter ended September 30, 2011 over the quarter ended September 30, 2010 and the trailing quarter ended June 30, 2011 are summarized below.

			New York	Washington, DC		Merchandise
Same Store EBITDA:			Office	Office	Retail	Mart
	September 30, 2011 vs. September 30, 2010
		GAAP basis	(1.1%)	0.4%	0.9%	(2.2%)
		Cash Basis	1.6%	1.3%	1.1%	0.5%
	September 30, 2011 vs. June 30, 2011
		GAAP basis	(0.3%)	(0.9%)	0.9%	(21.8%)	⁽¹⁾
		Cash Basis	0.7%	(0.6%)	(1.9%)	(20.2%)	⁽¹⁾


(1)	Primarily due to the timing of Trade Shows.

Overview - continued

Nine Months Ended September 30, 2011 Financial Results Summary

Net income attributable to common shareholders for the nine months ended September 30, 2011 was $532,263,000, or $2.86 per diluted share, compared to $353,317,000, or $1.92 per diluted share, for the nine months ended September 30, 2010. Net income for the nine months ended September 30, 2011 and 2010 include $59,474,000 and $307,000, respectively, of net gains on sale of real estate. In addition, nine months ended September 30, 2011 and 2010 include certain items that affect comparability which are listed in the table below. The aggregate of net gains on sale of real estate and the items in the table below, net of amounts attributable to noncontrolling interests, increased net income attributable to common shareholders by $208,608,000 or $1.12 per diluted share for the nine months ended September 30, 2011 and $16,206,000, or $0.09 per diluted share for the nine months ended September 30, 2010.

FFO for the nine months ended September 30, 2011 was $951,054,000, or $4.96 per diluted share, compared to $814,030,000, or $4.29 per diluted share, for the nine months ended September 30, 2010. FFO for nine months ended September 30, 2011 and 2010 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, increased FFO by $159,303,000 or $0.83 per diluted share for the nine months ended September 30, 2011 and $31,685,000, or $0.17 per diluted share for the nine months ended September 30, 2010.

		For the Nine Months Ended
		September 30,
(Amounts in thousands)		2011		2010
Items that affect comparability income (expense):
	Net gain (loss) on extinguishment of debt	$	83,907	$	(1,796)
	Mezzanine loans loss reversal (accrual) and net gain on disposition		82,744		(6,900)
	Our share of LNR's asset sales and tax settlement gains		14,997		-
	Net gain resulting from Lexington's stock issuances		9,760		5,998
	Discount on preferred share and unit redemptions		7,000		11,354
	Net gain on sale of condominiums		5,884		3,149
	(Loss) income from the mark-to-market of J.C. Penney derivative position		(27,136)		32,249
	Buy-out of below-market leases		(16,593)		-
	Acquisition costs, litigation loss accrual and impairment losses		(4,398)		(17,907)
	Merchandise Mart restructuring costs		(3,722)		-
	Real Estate Fund placement fees		(3,451)		(6,482)
	Default interest and fees accrued on loans in special servicing		-		(12,445)
	FFO attributable to discontinued operations		17,188		26,308
	Other, net		3,828		524
			170,008		34,052
Noncontrolling interests' share of above adjustments			(10,705)		(2,367)
Items that affect comparability, net		$	159,303	$	31,685

The percentage increase (decrease) in GAAP basis and cash basis same store EBITDA of our operating segments for the nine months ended September 30, 2011 over the nine months ended September 30, 2010 is summarized below.

			New York	Washington, DC		Merchandise
Same Store EBITDA:			Office	Office	Retail	Mart
	September 30, 2011 vs. September 30, 2010
		GAAP basis	(1.3%)	2.1%	3.3%	(1.5%)
		Cash Basis	0.5%	2.5%	6.5%	2.0%

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.

Overview - continued

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 our share of square feet leased during the period.

(Square feet in thousands)					New York		Washington, DC				Merchandise Mart
As of September 30, 2011:					Office		Office		Retail ⁽⁴⁾		Office		Showroom
	Total square feet (in service)					19,206		20,596		25,379		1,524		4,046
	Our share of square feet (in service)					16,795		17,860		23,154		1,524		4,046
	Number of properties					29		82		155		5		5
	Occupancy rate					95.4%		90.4%⁽³⁾		92.3%		91.3%		91.9%

Leasing Activity:
Quarter Ended September 30, 2011:
	Total square feet leased					839		392		427		149		144
	Our share of square feet leased:					723		359		425		149		144
		Initial rent⁽¹⁾			$	55.05	$	42.51	$	26.65	$	27.34	$	38.28
		Weighted average lease term (years)				9.7		4.5		10.1		7.2		6.5
		Relet space (included above):
			Square feet			708		331		167		149		144
			Cash basis:
				Initial rent⁽¹⁾	$	54.98	$	42.91	$	31.66	$	27.34	$	38.28
				Prior escalated rent	$	41.58	$	39.82	$	28.73	$	28.63	$	39.31
				Percentage increase (decrease)		32.2%		7.8%		10.2%		(4.5%)		(2.6%)
			GAAP basis:
				Straight-line rent⁽²⁾	$	55.38	$	42.18	$	32.82	$	27.69	$	38.13
				Prior straight-line rent	$	42.78	$	38.14	$	28.36	$	25.53	$	34.99
				Percentage increase		29.4%		10.6%		15.7%		8.5%		9.0%
		Tenant improvements and leasing
			commissions:
			Per square foot		$	51.45	$	23.29	$	7.54	$	56.01	$	12.68
			Per square foot per annum:		$	5.30	$	5.18	$	0.75	$	7.79	$	1.96
				Percentage of initial rent		9.6%		12.2%		2.8%		28.5%		5.1%

Nine Months Ended September 30, 2011:
	Total square feet leased					2,073		1,179		1,172		189		358
	Our share of square feet leased:					1,507		1,031		1,140		189		358
		Initial rent⁽¹⁾			$	58.06	$	40.27	$	25.48	$	27.96	$	36.06
		Weighted average lease term (years)				9.7		4.5		8.7		7.0		6.1
		Relet space (included above):
			Square feet			1,257		929		439		189		358
			Cash basis:
				Initial rent⁽¹⁾	$	60.30	$	40.14	$	21.73	$	27.96	$	36.06
				Prior escalated rent	$	48.94	$	38.47	$	19.70	$	28.55	$	37.35
				Percentage increase (decrease)		23.2%		4.3%		10.3%		(2.1%)		(3.5%)
			GAAP basis:
				Straight-line rent⁽²⁾	$	60.26	$	39.74	$	22.49	$	28.26	$	35.09
				Prior straight-line rent	$	49.24	$	36.77	$	19.22	$	25.19	$	33.92
				Percentage increase		22.4%		8.1%		17.0%		12.2%		3.4%
		Tenant improvements and leasing
			commissions:
			Per square foot		$	50.76	$	19.72	$	7.03	$	52.09	$	7.10
			Per square foot per annum:		$	5.23	$	4.38	$	0.81	$	7.41	$	1.16
				Percentage of initial rent		9.0%		10.9%		3.2%		26.5%		3.2%


See notes on the following table.

Overview - continued

(Square feet in thousands)						New York		Washington, DC				Merchandise Mart
As of June 30, 2011:						Office		Office		Retail ⁽⁴⁾		Office		Showroom
	Total square feet (in service)						19,386		20,550		25,443		1,462		4,107
	Our share of square feet (in service)						16,966		17,821		23,472		1,462		4,107
	Number of properties						30		82		158		5		5
	Occupancy rate						95.6%		93.1%⁽³⁾		92.3%		91.3%		93.5%

As of December 31, 2010:
	Total square feet (in service)						17,454		21,149		25,557		1,448		4,122
	Our share of square feet (in service)						16,194		17,823		23,453		1,448		4,122
	Number of properties						28		82		161		5		5
	Occupancy rate						95.6%		94.3%⁽³⁾		92.3%		91.8%		93.8%

As of September 30, 2010:
	Total square feet (in service)						17,432		21,205		25,298		1,446		4,123
	Our share of square feet (in service)						16,180		18,247		22,907		1,446		4,123
	Number of properties						28		82		163		5		5
	Occupancy rate						96.0%		94.7%⁽³⁾		92.5%		91.5%		93.2%


(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.

(3)		Excluding residential and other properties, occupancy rates for the office properties were as follows.
			September 30, 2011	89.0%	(See Base Realignment and Closure ("BRAC") discussion below)
			June 30, 2011	92.2%
			December 31, 2010	94.0%
			September 30, 2010	94.3%

(4)		Mall sales per square foot, including partially owned malls, for the trailing twelve months ended September 30, 2011 and 2010 were $464 and
		$470, respectively.

BRAC

The tables below summarize the effect of BRAC on our Washington, DC Office Properties segment for square feet leased by the Department of Defense (“DOD”).

						Square Feet
DOD leases subject to BRAC							2,395,000
Less square feet already vacated							(396,000)
Less square feet to be taken out of service for redevelopment							(348,000)
Less square feet to be relet by the General Services Administration (leases pending)							(313,000)
DOD leases subject to BRAC expiring in the future per table below (see details below for expiration)							1,338,000

	Annual Escalated
	Rent of
	Expiring Leases		Square Feet of Expiring Leases
Year	Per Square Foot		Total	Crystal City	Skyline		Rosslyn
Fourth Quarter 2011	$	30.43	7,000	-	7,000		-
First Quarter 2012		38.13	241,000	203,000	38,000		-
Second Quarter 2012		39.60	171,000	171,000	-		-
Third Quarter 2012		41.47	380,000	251,000	119,000		10,000
Fourth Quarter 2012		n/a	-	-	-		-
Total 2012		40.05	792,000	625,000	157,000		10,000
2013		36.85	183,000	-	43,000		140,000
2014		32.76	330,000	128,000	202,000		-
2015		40.09	26,000	20,000	6,000		-
			1,338,000	773,000	415,000		150,000

Net Income and EBITDA by Segment for the Three Months Ended September 30, 2011 and 2010

Below is a summary of net income and a reconciliation of net income to EBITDA⁽¹⁾ by segment for the three months ended September 30, 2011 and 2010.


(Amounts in thousands)			For the Three Months Ended September 30, 2011
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	530,086	$	196,123	$	133,156	$	105,788	$	46,278	$	-	$	48,741
Straight-line rent adjustments					14,963		3,998		6,673		4,696		(1,006)		-		602
Amortization of acquired below-
	market leases, net				16,100		8,153		547		6,268		21		-		1,111
Total rentals					561,149		208,274		140,376		116,752		45,293		-		50,454
Tenant expense reimbursements					94,053		43,025		9,328		36,297		2,972		-		2,431
Cleveland Medical Mart development
	project				35,135		-		-		-		35,135		-		-
Fee and other income:
	Tenant cleaning fees				15,647		24,047		-		-		-		-		(8,400)
	Management and leasing fees				4,361		1,653		2,670		541		45		-		(548)
	Lease termination fees				4,803		3,540		1,002		261		-		-		-
	Other				12,195		5,212		5,232		1,155		988		-		(392)
Total revenues					727,343		285,751		158,608		155,006		84,433		-		43,545
Operating expenses					285,659		129,472		51,791		57,412		30,803		-		16,181
Depreciation and amortization					134,074		47,038		33,885		30,080		10,372		-		12,699
General and administrative					46,452		4,461		6,505		6,721		9,534		-		19,231
Cleveland Medical Mart development
	project				33,419		-		-		-		33,419		-		-
Tenant buy-outs and other acquisition
	related costs				2,288		-		-		1,593		-		-		695
Total expenses					501,892		180,971		92,181		95,806		84,128		-		48,806
Operating income (loss)					225,451		104,780		66,427		59,200		305		-		(5,261)
(Loss) applicable to Toys					(9,304)		-		-		-		-		(9,304)		-
Income (loss) from partially owned
	entities				13,552		(5,136)		(1,356)		889		38		-		19,117
Income from Real Estate Fund					5,353		-		-		-		-		-		5,353
Interest and other investment
	(loss) income, net				(29,994)		146		39		3		17		-		(30,199)
Interest and debt expense					(136,672)		(35,395)		(30,256)		(23,176)		(9,365)		-		(38,480)
Net gain on disposition of wholly
	owned and partially owned assets				1,298		-		-		-		-		-		1,298
Income (loss) before income taxes					69,684		64,395		34,854		36,916		(9,005)		(9,304)		(48,172)
Income tax expense					(7,144)		(678)		(960)		-		(890)		-		(4,616)
Income (loss) from continuing
	operations				62,540		63,717		33,894		36,916		(9,895)		(9,304)		(52,788)
Income from discontinued
	operations				3,683		165		-		818		2,700		-		-
Net income (loss)					66,223		63,882		33,894		37,734		(7,195)		(9,304)		(52,788)
Less:
	Net (income) loss attributable to
		noncontrolling interests in
		consolidated subsidiaries			(5,636)		(2,219)		-		110		-		-		(3,527)
	Net (income) attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(6,825)		-		-		-		-		-		(6,825)
Net income (loss) attributable to
	Vornado				53,762		61,663		33,894		37,844		(7,195)		(9,304)		(63,140)
Interest and debt expense⁽²⁾					197,864		39,526		33,703		24,368		9,523		38,018		52,726
Depreciation and amortization⁽²⁾					193,394		53,936		38,085		30,946		12,230		34,293		23,904
Income tax (benefit) expense⁽²⁾					(7,350)		736		925		-		890		(15,135)		5,234
EBITDA⁽¹⁾				$	437,670	$	155,861	$	106,607	$	93,158	$	15,448	$	47,872	$	18,724

____________________

See notes on page 47.

Net Income and EBITDA by Segment for the Three Months Ended September 30, 2011 and 2010 - continued


(Amounts in thousands)			For the Three Months Ended September 30, 2010
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	526,776	$	194,815	$	146,439	$	97,625	$	42,774	$	-	$	45,123
Straight-line rent adjustments					15,986		7,573		347		7,441		(457)		-		1,082
Amortization of acquired below-
	market leases, net				16,756		8,936		594		5,820		15		-		1,391
Total rentals					559,518		211,324		147,380		110,886		42,332		-		47,596
Tenant expense reimbursements					95,341		40,387		15,129		35,688		2,784		-		1,353
Fee and other income:
	Tenant cleaning fees				13,613		21,721		-		-		-		-		(8,108)
	Management and leasing fees				3,555		1,428		2,772		214		(2)		-		(857)
	Lease termination fees				2,301		1,220		728		346		7		-		-
	Other				12,797		5,505		5,554		1,016		800		-		(78)
Total revenues					687,125		281,585		171,563		148,150		45,921		-		39,906
Operating expenses					275,077		124,152		58,327		52,309		26,391		-		13,898
Depreciation and amortization					130,599		44,131		36,764		26,329		9,853		-		13,522
General and administrative					55,200		4,504		5,984		8,843		6,010		-		29,859
Tenant buy-outs and other acquisition
	related costs				921		-		-		-		-		-		921
Total expenses					461,797		172,787		101,075		87,481		42,254		-		58,200
Operating income (loss)					225,328		108,798		70,488		60,669		3,667		-		(18,294)
(Loss) applicable to Toys					(2,557)		-		-		-		-		(2,557)		-
(Loss) income from partially owned
	entities				(1,996)		1,705		(1,095)		833		8		-		(3,447)
(Loss) from Real Estate Fund					(1,410)		-		-		-		-		-		(1,410)
Interest and other investment
	income (loss), net				47,096		139		81		(46)		11		-		46,911
Interest and debt expense					(145,561)		(33,293)		(33,367)		(24,199)		(9,556)		-		(45,146)
Net (loss) on extinguishment
	of debt				(724)		-		-		-		-		-		(724)
Net gain on disposition of wholly
	owned and partially owned assets				5,072		-		-		-		-		-		5,072
Income (loss) before income taxes					125,248		77,349		36,107		37,257		(5,870)		(2,557)		(17,038)
Income tax (expense) benefit					(5,449)		(861)		(1,001)		(2)		714		-		(4,299)
Income (loss) from continuing
	operations				119,799		76,488		35,106		37,255		(5,156)		(2,557)		(21,337)
(Loss) income from discontinued
	operations				(3,667)		30		1,410		(3,642)		(1,465)		-		-
Net income (loss)					116,132		76,518		36,516		33,613		(6,621)		(2,557)		(21,337)
Less:
	Net (income) loss attributable to
		noncontrolling interests in
		consolidated subsidiaries			(296)		(2,442)		-		397		-		-		1,749
	Net (income) attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(11,584)		-		-		-		-		-		(11,584)
Net income (loss) attributable to
	Vornado				104,252		74,076		36,516		34,010		(6,621)		(2,557)		(31,172)
Interest and debt expense⁽²⁾					208,294		31,817		34,241		26,395		15,883		40,558		59,400
Depreciation and amortization⁽²⁾					179,148		42,531		41,394		28,024		12,782		30,079		24,338
Income tax (benefit) expense⁽²⁾					(23,013)		861		1,054		2		(714)		(27,501)		3,285
EBITDA⁽¹⁾				$	468,681	$	149,285	$	113,205	$	88,431	$	21,330	$	40,579	$	55,851

__________________________

See notes on the following page.

Net Income and EBITDA by Segment for the Three Months Ended September 30, 2011 and 2010 - 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 these measures 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 our net income (loss) to EBITDA includes our share of these items from partially owned entities.

(3) The components of other EBITDA are summarized below. The totals for each of the columns below agree to the total EBITDA for the “other” column in the preceding EBITDA by segment reconciliations.


			For the Three Months
(Amounts in thousands)			Ended September 30,
				2011		2010
Our share of Real Estate Fund:
	Operations		$	743	$	(319)
	Net unrealized gains			1,410		-
	Net realized gains			-		-
	Carried interest reversal			(475)		-
Total				1,678		(319)
LNR (acquired in July 2010)				15,769		-
Alexander's				14,588		13,288
555 California Street				11,220		11,797
Hotel Pennsylvania				9,773		8,080
Lexington				8,424		8,092
Other investments				10,075		4,004
				71,527		44,942
Corporate general and administrative expenses⁽¹⁾				(21,585)		(20,712)
Investment income and other, net⁽¹⁾				12,530		15,808
(Loss) income from the mark-to-market of J.C. Penney derivative position				(37,537)		32,249
Net gain on sale of condominiums				1,298		-
Acquisition related costs				(684)		(921)
Real Estate Fund placement fees				-		(3,207)
Net loss on extinguishment of debt				-		(724)
Net income attributable to noncontrolling interests in the Operating Partnership,
	including unit distributions			(6,825)		(11,584)
			$	18,724	$	55,851


(1)		The amounts in these captions (for this table only) exclude the mark-to-market of our deferred compensation plan assets
		and offsetting liability.

Net Income and EBITDA by Segment for the Three Months Ended September 30, 2011 and 2010 - continued

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 Office, Washington DC Office, Retail and Merchandise Mart segments.

		For the Three Months
		Ended September 30,
		2011	2010
Region:
	New York City metropolitan area	62%	62%
	Washington, DC / Northern Virginia metropolitan area	30%	31%
	California	2%	1%
	Chicago	3%	3%
	Puerto Rico	2%	2%
	Other geographies	1%	1%
		100%	100%

Results of Operations – Three Months Ended September 30, 2011 Compared to September 30, 2010

Revenues

Our revenues, which consist of property rentals, tenant expense reimbursements, hotel revenues, trade shows revenues, amortization of acquired below-market leases, net of above-market leases and fee income, were $727,343,000 for the three months ended September 30, 2011, compared to $687,125,000 in the prior year’s quarter, an increase of $40,218,000, of which $35,135,000 relates to the Cleveland Medical Mart development project. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)

						New York		Washington, DC				Merchandise
Increase (decrease) due to:			Total			Office		Office		Retail		Mart			Other
Property rentals:
	Acquisitions, sale of partial interests
		and other	$	(3,076)		$	(800)	$	(8,406)	$	4,787	$	-		$	1,343
	Development			411			-		1,055		(644)		-			-
	Hotel Pennsylvania			2,637			-		-		-		-			2,637
	Trade Shows			2,566			-		-		-		2,566			-
	Amortization of acquired below-market
		leases, net		(656)			(783)		(47)		448		6			(280)
	Leasing activity (see page 43)			(251)			(1,467)		394		1,275		389			(842)
				1,631			(3,050)		(7,004)		5,866		2,961			2,858

Tenant expense reimbursements:
	Acquisitions/development, sale of partial
		interests and other		867			3,831		(3,690)		726		-			-
	Operations			(2,155)			(1,193)		(2,111)		(117)		188			1,078
				(1,288)			2,638		(5,801)		609		188			1,078

Cleveland Medical Mart development
	project			35,135	⁽¹⁾		-		-		-		35,135	⁽¹⁾		-

Fee and other income:
	BMS cleaning fees			2,034			2,326		-		-		-			(292)
	Management and leasing fees			806			225		(102)		327		47			309
	Lease cancellation fee income			2,502			2,320		274		(85)		(7)			-
	Other			(602)			(293)		(322)		139		188			(314)
				4,740			4,578		(150)		381		228			(297)

Total increase (decrease) in revenues			$	40,218		$	4,166	$	(12,955)	$	6,856	$	38,512		$	3,639



(1)		This income is offset by $33,419 of development costs expensed in the quarter. See note (4) on page 50.

Results of Operations – Three Months Ended September 30, 2011 Compared to September 30, 2010 - continued

Expenses

Our expenses, which consist primarily of operating, depreciation and amortization and general and administrative expenses, were $501,892,000 for the three months ended September 30, 2011, compared to $461,797,000 in the prior year’s quarter, an increase of $40,095,000, of which $33,419,000 relates to the Cleveland Medical Mart development project. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)

						New York		Washington, DC					Merchandise
Increase (decrease) due to:			Total			Office		Office		Retail			Mart			Other
Operating:
	Acquisitions, sale of partial interests
		and other	$	2,784		$	-	$	(3,432)	$	6,216		$	-		$	-
	Development/redevelopment			131			-		(142)		273			-			-
	Non-reimbursable expenses, including
		bad debt reserves		5,993			3,351		(1,597)		355			3,884			-
	Hotel Pennsylvania			853			-		-		-			-			853
	Trade Shows			1,218			-		-		-			1,218			-
	BMS expenses			2,302			2,302		-		-			-			-
	Operations			(2,699)			(333)		(1,365)		(1,741)			(690)			1,430
				10,582			5,320		(6,536)		5,103			4,412			2,283

Depreciation and amortization:
	Acquisitions/development, sale of partial
		interests and other		469			-		(2,684)		3,153			-			-
	Operations			3,006			2,907		(195)		598			519			(823)
				3,475			2,907		(2,879)		3,751			519			(823)

General and administrative:
	Mark-to-market of deferred compensation
		plan liability ⁽¹⁾		(9,150)			-		-		-			-			(9,150)
	Real Estate Fund placement fees			(3,752)			-		-		-			-			(3,752)
	Operations			4,154			(43)		521		(2,122)			3,524	⁽²⁾		2,274	⁽³⁾
				(8,748)			(43)		521		(2,122)			3,524			(10,628)

Cleveland Medical Mart development
	project			33,419	⁽⁴⁾		-		-		-			33,419	⁽⁴⁾		-

Tenant buy-outs and other acquisition
	related costs			1,367			-		-		1,593	⁽⁵⁾		-			(226)

Total increase (decrease) in expenses			$	40,095		$	8,184	$	(8,894)	$	8,325		$	41,874		$	(9,394)



(1)		This decrease in expense is entirely offset by a corresponding decrease 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)		Includes $3,722 of restructuring costs.

(3)		Primarily from higher payroll costs and stock-based compensation.

(4)		This expense is entirely offset by development revenue in the quarter. See note (1) on page 49.

(5)		Represents the buy-out of a below-market lease.

Results of Operations – Three Months Ended September 30, 2011 Compared to September 30, 2010 - continued

Loss Applicable to Toys

In the three months ended September 30, 2011, we recognized net loss of $9,304,000 from our investment in Toys, comprised of $11,638,000 for our 32.7% share of Toys’ net loss ($26,773,000 before our share of Toys’ income tax benefit) and $2,334,000 of interest and other income.

In the three months ended September 30, 2010, we recognized net loss of $2,557,000 from our investment in Toys, comprised of $5,073,000 for our 32.7% share of Toys’ net loss ($32,574,000 before our share of Toys’ income tax benefit) and $2,516,000 of interest and other income.

Income (loss) from Partially Owned Entities

Summarized below are the components of income (loss) from partially owned entities for the three months ended September 30, 2011 and 2010.

		For the Three Months Ended
		September 30,
(Amounts in thousands)		2011		2010
Equity in Net Income (Loss):
Alexander's - 32.4% share of equity in net income		$	8,607	$	7,557

Lexington - 11.7% share in 2011 and 13.8% share in 2010 of equity in net loss			(617)		(2,301)

LNR - 26.2% share of equity in net income (acquired in July 2010)			13,656		-

India real estate ventures - 4% to 36.5% range in our share of equity in net loss			(690)		(195)

Partially owned office buildings			(6,839)		86

Other equity method investments⁽¹⁾			(565)		(7,143)
		$	13,552	$	(1,996)


(1)	Represents our equity in net income or loss in Verde Realty Operating Partnership, 85 10th Avenue Associates and others.

Income from Real Estate Fund

In the three months ended September 30, 2011, we recognized $5,353,000 of income from the Fund, including $5,639,000 of net unrealized gains from the mark-to-market of investments in the Fund. Of the $5,353,000, $3,675,000 was attributable to noncontrolling interests. Accordingly, our share of the Fund’s income was $1,678,000. In addition, we recognized $378,000 of management, leasing and development fees which are included as a component of “fee and other income.”

In the three months ended September 30, 2010, we recognized a $1,410,000 loss from the Fund, primarily due to $1,500,000 of organization costs. Of this loss, $1,091,000 was attributable to noncontrolling interests.

Results of Operations – Three Months Ended September 30, 2011 Compared to September 30, 2010 - continued

Interest and Other Investment (Loss) Income, net

Interest and other investment (loss) income, net (comprised of the mark-to-market of derivative positions in marketable equity securities, interest income on mezzanine loans receivable, other interest income and dividend income) was a loss of $29,994,000 in the three months ended September 30, 2011, compared to income of $47,096,000 in the prior year’s quarter, a decrease of $77,090,000. This decrease resulted from:


(Amounts in thousands)
J.C. Penney derivative position ($37,537 mark-to-market loss in 2011, compared to a $32,249
	mark-to-market gain in 2010)	$	(69,786)
Decrease in the value of investments in our deferred compensation plan (offset by a corresponding
	decrease in the liability for plan assets in general and administrative expenses)		(9,150)
Other, net (primarily dividends and interest on marketable securities and mezzanine loans)			1,846
		$	(77,090)

Interest and Debt Expense

Interest and debt expense was $136,672,000 in the three months ended September 30, 2011, compared to $145,561,000 in the prior year’s quarter, a decrease of $8,889,000. This decrease was primarily due to savings of (i) $7,206,000 from the repayment of the Springfield Mall mortgage at a discount in December 2010, (ii) $6,079,000 applicable to the repurchase and retirement of convertible senior debentures and repayment of senior unsecured notes, and (iii), 4,680,000 from the deconsolidation of the Warner Building resulting from the sale of a 45% interest in October 2010, partially offset by (iv) $4,745,000 from the financing of 2121 Crystal Drive and Two Penn Plaza in the first quarter of 2011, (v) $3,374,000 from the issuance of $660,000,000 of cross-collateralized debt secured by 40 of our strip shopping centers in August 2010 and (vi) $1,251,000 from the consolidation of the San Jose Shopping Center resulting from the October 2010 acquisition of the 55% interest we did not previously own.

Net Loss on Extinguishment of Debt

In the three months ended September 30, 2010, we recognized a $724,000 net loss on early extinguishment of debt resulting from the acquisition and retirement of convertible senior debentures and senior unsecured notes.

Net Gain on Disposition of Wholly Owned and Partially Owned Assets

Net gain on disposition of wholly owned and partially owned assets was $1,298,000 in the three months ended September 30, 2011, compared to $5,072,000 in the prior year’s quarter and resulted primarily from the sale of residential condominiums and marketable securities.

Income Tax Expense

Income tax expense was $7,144,000 in the three months ended September 30, 2011, compared to $5,449,000 in the prior year’s quarter, an increase of $1,695,000. This increase resulted primarily from higher taxable income of our taxable REIT subsidiaries.

Results of Operations – Three Months Ended September 30, 2011 Compared to September 30, 2010 - continued

Income (Loss) from Discontinued Operations

The table below sets forth the combined results of assets related to discontinued operations for the three months ended September 30, 2011 and 2010.


	For the Three Months Ended
	September 30,
(Amounts in thousands)	2011		2010
Total revenues	$	9,744	$	20,163
Total expenses		6,061		18,830
		3,683		1,333
Impairment loss		-		(5,000)
Income (loss) from discontinued operations	$	3,683	$	(3,667)

Net Income Attributable to Noncontrolling Interests in Consolidated Subsidiaries

Net income attributable to noncontrolling interests in consolidated subsidiaries was $5,636,000 in the three months ended September 30, 2011, compared to $296,000 in the prior year’s quarter, an increase of $5,340,000. This resulted primarily from a $4,766,000 increase in income allocated to the noncontrolling interests of our Real Estate Fund.

Net Income Attributable to Noncontrolling Interests in the Operating Partnership, including Unit Distributions

Net income attributable to noncontrolling interests in the Operating Partnership, including unit distributions for the three months ended September 30, 2011 and 2010 is primarily comprised of allocations of income to redeemable noncontrolling interests of $2,797,000 and $7,119,000, respectively, and preferred unit distributions of the Operating Partnership of $4,028,000 and $4,465,000, respectively. The decrease of $4,322,000 in allocations of income to redeemable noncontrolling interests resulted primarily from lower net income subject to allocation to unitholders.

Preferred Share Dividends

Preferred share dividends were $17,627,000 for the three months ended September 30, 2011, compared to $13,442,000 for the prior year’s quarter, an increase of $4,185,000. This increase resulted from the issuance of Series J preferred shares during 2011, partially offset by the redemption of the Series D-10 preferred shares in 2010.

Discount of Preferred Share and Unit Redemptions

In the three months ended September 30, 2011, we recognized a $5,000,000 discount from the redemption of 1,000,000 Series D-11 preferred units, compared to a $4,382,000 discount in the prior year’s quarter from the redemption of 1,600,000 Series D-10 preferred shares.

Results of Operations – Three Months Ended September 30, 2011 Compared to September 30, 2010 - 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 are the same store EBITDA results on a GAAP and cash basis for each of our segments for the three months ended September 30, 2011, compared to the three months ended September 30, 2010.

			New York		Washington, DC				Merchandise
(Amounts in thousands)			Office		Office		Retail		Mart
EBITDA for the three months ended September 30, 2011			$	155,861	$	106,607	$	93,158	$	15,448
	Add-back: non-property level overhead
		expenses included above		4,461		6,505		6,721		9,534
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(7,408)		1,500		(3,961)		(5,530)
GAAP basis same store EBITDA for the three months
		ended September 30, 2011		152,914		114,612		95,918		19,452
	Less: Adjustments for straight-line rents,
		amortization of below-market leases, net, and other
		non-cash adjustments		(10,863)		998		(9,485)		985
Cash basis same store EBITDA for the three months
		ended September 30, 2011	$	142,051	$	115,610	$	86,433	$	20,437


EBITDA for the three months ended September 30, 2010			$	149,285	$	113,205	$	88,431	$	21,330
	Add-back: non-property level overhead
		expenses included above		4,504		5,984		8,843		6,010
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		819		(5,067)		(2,200)		(7,453)
GAAP basis same store EBITDA for the three months
		ended September 30, 2010		154,608		114,122		95,074		19,887
	Less: Adjustments for straight-line rents,
		amortization of below-market leases, net, and other
		non-cash adjustments		(14,845)		42		(9,611)		440
Cash basis same store EBITDA for the three months
		ended September 30, 2010	$	139,763	$	114,164	$	85,463	$	20,327


(Decrease) increase in GAAP basis same store EBITDA for
		the three months ended September 30, 2011 over the
		three months ended September 30, 2010	$	(1,694)	$	490	$	844	$	(435)

Increase in Cash basis same store EBITDA for
		the three months ended September 30, 2011 over the
		three months ended September 30, 2010	$	2,288	$	1,446	$	970	$	110


% (decrease) increase in GAAP basis same store EBITDA				(1.1%)		0.4%		0.9%		(2.2%)

% increase in Cash basis same store EBITDA				1.6%		1.3%		1.1%		0.5%

Net Income and EBITDA by Segment for the Nine Months Ended September 30, 2011 and 2010

Below is a summary of net income and a reconciliation of net income to EBITDA⁽¹⁾ by segment for the nine months ended September 30, 2011 and 2010.


(Amounts in thousands)			For the Nine Months Ended September 30, 2011
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	1,604,451	$	586,797	$	413,810	$	316,729	$	154,485	$	-	$	132,630
Straight-line rent adjustments					34,713		15,777		5,962		12,556		(2,059)		-		2,477
Amortization of acquired below-
	market leases, net				49,387		24,549		1,525		19,899		55		-		3,359
Total rentals					1,688,551		627,123		421,297		349,184		152,481		-		138,466
Tenant expense reimbursements					264,857		108,267		27,561		111,519		9,121		-		8,389
Cleveland Medical Mart development
	project				108,203		-		-		-		108,203		-		-
Fee and other income:
	Tenant cleaning fees				46,479		71,156		-		-		-		-		(24,677)
	Management and leasing fees				15,456		5,260		9,629		2,439		348		-		(2,220)
	Lease termination fees				12,478		9,176		3,013		289		-		-		-
	Other				37,826		15,078		15,894		4,241		2,832		-		(219)
Total revenues					2,173,850		836,060		477,394		467,672		272,985		-		119,739
Operating expenses					841,266		367,291		150,375		173,623		99,266		-		50,711
Depreciation and amortization					393,846		138,837		101,634		85,653		29,113		-		38,609
General and administrative					155,566		14,389		19,504		22,034		23,855		-		75,784
Cleveland Medical Mart development
	project				101,637		-		-		-		101,637		-		-
Tenant buy-outs and other acquisition
	related costs				22,455		-		-		16,593		3,040		-		2,822
Total expenses					1,514,770		520,517		271,513		297,903		256,911		-		167,926
Operating income (loss)					659,080		315,543		205,881		169,769		16,074		-		(48,187)
Income applicable to Toys					80,794		-		-		-		-		80,794		-
Income (loss) from partially owned
	entities				56,239		(4,893)		(6,038)		2,131		292		-		64,747
Income from Real Estate Fund					25,491		-		-		-		-		-		25,491
Interest and other investment
	income, net				95,121		466		119		5		35		-		94,496
Interest and debt expense					(408,532)		(103,514)		(89,911)		(69,482)		(28,140)		-		(117,485)
Net gain on disposition of wholly
	owned and partially owned assets				7,975		-		-		-		-		-		7,975
Income (loss) before income taxes					516,168		207,602		110,051		102,423		(11,739)		80,794		27,037
Income tax expense					(19,448)		(1,637)		(2,267)		(5)		(2,211)		-		(13,328)
Income (loss) from continuing
	operations				496,720		205,965		107,784		102,418		(13,950)		80,794		13,709
Income from discontinued operations					146,293		398		46,466		9,217		90,212		-		-
Net income					643,013		206,363		154,250		111,635		76,262		80,794		13,709
Less:
	Net (income) loss attributable to
		noncontrolling interests in
		consolidated subsidiaries			(20,643)		(6,815)		-		196		-		-		(14,024)
	Net (income) attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(47,364)		-		-		-		-		-		(47,364)
Net income (loss) attributable to
	Vornado				575,006		199,548		154,250		111,831		76,262		80,794		(47,679)
Interest and debt expense⁽²⁾					599,668		108,473		100,017		73,000		32,025		121,546		164,607
Depreciation and amortization⁽²⁾					561,738		146,650		118,290		88,322		34,632		101,862		71,982
Income tax expense⁽²⁾					42,135		1,695		2,380		5		2,211		29,914		5,930
EBITDA⁽¹⁾				$	1,778,547	$	456,366	$	374,937	$	273,158	$	145,130	$	334,116	$	194,840

____________________

See notes on page 57.

Net Income and EBITDA by Segment for the Nine Months Ended September 30, 2011 and 2010 - continued


(Amounts in thousands)			For the Nine Months Ended September 30, 2010
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	1,560,473	$	582,090	$	426,217	$	284,808	$	145,206	$	-	$	122,152
Straight-line rent adjustments					53,018		22,642		5,519		21,699		628		-		2,530
Amortization of acquired below-
	market leases, net				48,476		27,312		1,836		14,897		(91)		-		4,522
Total rentals					1,661,967		632,044		433,572		321,404		145,743		-		129,204
Tenant expense reimbursements					271,040		105,968		42,592		107,799		8,876		-		5,805
Fee and other income:
	Tenant cleaning fees				40,733		62,778		-		-		-		-		(22,045)
	Management and leasing fees				16,075		4,278		13,252		759		31		-		(2,245)
	Lease termination fees				10,112		4,245		1,256		4,182		429		-		-
	Other				37,918		14,428		16,452		2,284		3,471		-		1,283
Total revenues					2,037,845		823,741		507,124		436,428		158,550		-		112,002
Operating expenses					802,927		349,934		163,097		159,131		85,915		-		44,850
Depreciation and amortization					393,259		131,911		108,994		80,550		30,111		-		41,693
General and administrative					153,231		13,824		18,079		22,591		20,252		-		78,485
Tenant buy-outs and other acquisition
	related costs				2,851		-		-		-		-		-		2,851
Total expenses					1,352,268		495,669		290,170		262,272		136,278		-		167,879
Operating income (loss)					685,577		328,072		216,954		174,156		22,272		-		(55,877)
Income applicable to Toys					102,309		-		-		-		-		102,309		-
Income (loss) from partially owned
	entities				13,800		4,345		(1,099)		3,353		239		-		6,962
(Loss) from Real Estate Fund					(1,410)		-		-		-		-		-		(1,410)
Interest and other investment
	income, net				65,676		466		130		143		35		-		64,902
Interest and debt expense					(423,354)		(99,026)		(101,592)		(62,047)		(28,383)		-		(132,306)
Net (loss) on extinguishment
	of debt				(1,796)		-		-		-		-		-		(1,796)
Net gain on disposition of wholly
	owned and partially owned assets				12,759		-		-		-		765		-		11,994
Income (loss) before income taxes					453,561		233,857		114,393		115,605		(5,072)		102,309		(107,531)
Income tax (expense) benefit					(15,993)		(1,670)		(1,092)		(37)		118		-		(13,312)
Income (loss) from continuing
	operations				437,568		232,187		113,301		115,568		(4,954)		102,309		(120,843)
(Loss) income from discontinued operations					(11,681)		106		(5,776)		(1,539)		(4,472)		-		-
Net income (loss)					425,887		232,293		107,525		114,029		(9,426)		102,309		(120,843)
Less:
	Net (income) loss attributable to
		noncontrolling interests in
		consolidated subsidiaries			(1,490)		(7,290)		-		895		-		-		4,905
	Net (income) attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(33,487)		-		-		-		-		-		(33,487)
Net income (loss) attributable to
	Vornado				390,910		225,003		107,525		114,924		(9,426)		102,309		(149,425)
Interest and debt expense⁽²⁾					611,993		94,404		104,355		68,275		45,370		123,791		175,798
Depreciation and amortization⁽²⁾					549,400		127,341		120,929		85,335		39,049		99,850		76,896
Income tax expense (benefit)⁽²⁾					13,553		1,670		1,161		37		(59)		(1,914)		12,658
EBITDA⁽¹⁾				$	1,565,856	$	448,418	$	333,970	$	268,571	$	74,934	$	324,036	$	115,927

___________________________

See notes on the following page.

Net Income and EBITDA by Segment for the Nine Months Ended September 30, 2011 and 2010 - continued

Notes to preceding tabular information:

			For the Nine Months
(Amounts in thousands)			Ended September 30,
			2011		2010
Our share of Real Estate Fund:
	Operations		$	2,550	$	(319)
	Net unrealized gains			4,802		-
	Net realized gains			771		-
	Carried interest accrual			1,665		-
Total				9,788		(319)
Alexander's				45,577		41,947
LNR (acquired in July 2010)⁽¹⁾				38,569		-
Lexington⁽²⁾				37,730		37,375
555 California Street				32,608		34,421
Hotel Pennsylvania				18,382		14,249
Other investments				30,011		22,619
				212,665		150,292
Corporate general and administrative expenses⁽³⁾				(62,964)		(60,668)
Investment income and other, net⁽³⁾				38,860		41,876
Mezzanine loans loss reversal (accrual) and net gain on disposition				82,744		(6,900)
(Loss) income from the mark-to-market of J.C. Penney derivative position				(27,136)		32,249
Net gain on sale of condominiums				5,884		3,149
Acquisition related costs				(4,398)		(2,851)
Real Estate Fund placement fees				(3,451)		(5,937)
Net loss on extinguishment of debt				-		(1,796)
Net income attributable to noncontrolling interests in the Operating Partnership,
	including unit distributions			(47,364)		(33,487)
			$	194,840	$	115,927


(1)		Includes $6,020 for our share of net gains from asset sales and $8,977 for our share of a tax settlement gain.

(2)		Includes net gains of $9,760 and $5,998 in the nine months ended September 30, 2011 and 2010, respectively, resulting from
		Lexington's stock issuances.

(3)		The amounts in these captions (for this table only) exclude the mark-to-market of our deferred compensation plan assets
		and offsetting liability.

Net Income and EBITDA by Segment for the Nine Months Ended September 30, 2011 and 2010 - continued

		For the Nine Months
		Ended September 30,
		2011	2010
Region:
	New York City metropolitan area	61%	61%
	Washington, DC / Northern Virginia metropolitan area	30%	31%
	California	2%	1%
	Chicago	3%	4%
	Puerto Rico	2%	2%
	Other geographies	2%	1%
		100%	100%

Results of Operations – Nine Months Ended September 30, 2011 Compared to September 30, 2010

Revenues

Our revenues, which consist of property rentals, tenant expense reimbursements, hotel revenues, trade shows revenues, amortization of acquired below-market leases, net of above-market leases and fee income, were $2,173,850,000 for the nine months ended September 30, 2011, compared to $2,037,845,000 in the prior year’s nine months, an increase of $136,005,000, of which $108,203,000 relates to the Cleveland Medical Mart development project. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)

						New York		Washington, DC					Merchandise
Increase (decrease) due to:			Total			Office		Office			Retail		Mart			Other
Property rentals:
	Acquisitions, sale of partial interests
		and other	$	(8,822)		$	(2,719)	$	(25,200)		$	14,768	$	-		$	4,329
	Development			5,191			-		5,556			(365)		-			-
	Hotel Pennsylvania			7,709			-		-			-		-			7,709
	Trade Shows			5,541			-		-			-		5,541			-
	Amortization of acquired below-market
		leases, net		911			(2,763)		(311)			5,002		146			(1,163)
	Leasing activity (see page 43)			16,054			561		7,680			8,375		1,051			(1,613)
				26,584			(4,921)		(12,275)			27,780		6,738			9,262

Tenant expense reimbursements:
	Acquisitions/development, sale of partial
		interests and other		(2,446)			3,831		(11,099)			2,135		-			2,687
	Operations			(3,737)			(1,532)		(3,932)			1,585		245			(103)
				(6,183)			2,299		(15,031)			3,720		245			2,584

Cleveland Medical Mart development
	project			108,203	⁽¹⁾		-		-			-		108,203	⁽¹⁾		-

Fee and other income:
	BMS cleaning fees			5,746			8,378		-			-		-			(2,632)	⁽²⁾
	Management and leasing fees			(619)			982		(3,623)	⁽³⁾		1,680		317			25
	Lease cancellation fee income			2,366			4,931		1,757			(3,893)		(429)			-
	Other			(92)			650		(558)			1,957		(639)			(1,502)
				7,401			14,941		(2,424)			(256)		(751)			(4,109)

Total increase (decrease) in revenues			$	136,005		$	12,319	$	(29,730)		$	31,244	$	114,435		$	7,737



(1)		This income is offset by $101,637 of development costs expensed in the period. See note (4) on page 60.

(2)		Primarily from the elimination of intercompany fees from operating segments upon consolidation.

(3)		Primarily from leasing fees in the prior year in connection with our management of a development project.

Results of Operations – Nine Months Ended September 30, 2011 Compared to September 30, 2010 - continued

Expenses

Our expenses, which consist primarily of operating, depreciation and amortization and general and administrative expenses, were $1,514,770,000 for the nine months ended September 30, 2011, compared to $1,352,268,000 in the prior year’s nine months, an increase of $162,502,000, of which $101,637,000 relates to the Cleveland Medical Mart development project. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)

						New York		Washington, DC					Merchandise
Increase (decrease) due to:			Total			Office		Office		Retail			Mart			Other
Operating:
	Acquisitions, sale of partial interests
		and other	$	3,347		$	-	$	(12,997)	$	13,657		$	-		$	2,687
	Development/redevelopment			674			-		(317)		991			-			-
	Non-reimbursable expenses, including
		bad debt reserves		10,301			4,205		(321)		(2,374)			8,791			-
	Hotel Pennsylvania			3,332			-		-		-			-			3,332
	Trade Shows			3,220			-		-		-			3,220			-
	BMS expenses			7,739			7,739		-		-			-			-
	Operations			9,726			5,413		913		2,218			1,340			(158)
				38,339			17,357		(12,722)		14,492			13,351			5,861

Depreciation and amortization:
	Acquisitions/development, sale of partial
		interests and other		(4,083)			-		(9,732)		5,649			-			-
	Operations			4,670			6,926		2,372		(546)			(998)			(3,084)
				587			6,926		(7,360)		5,103			(998)			(3,084)

General and administrative:
	Mark-to-market of deferred compensation
		plan liability ⁽¹⁾		(4,182)			-		-		-			-			(4,182)
	Real Estate Fund placement fees			(3,031)			-		-		-			-			(3,031)
	Operations			9,548			565		1,425		(557)			3,603	⁽²⁾		4,512	⁽³⁾
				2,335			565		1,425		(557)			3,603			(2,701)

Cleveland Medical Mart development
	project			101,637	⁽⁴⁾		-		-		-			101,637	⁽⁴⁾		-

Tenant buy-outs and other acquisition
	related costs			19,604			-		-		16,593	⁽⁵⁾		3,040			(29)

Total increase (decrease) in expenses			$	162,502		$	24,848	$	(18,657)	$	35,631		$	120,633		$	47



(1)		This decrease in expense is entirely offset by a corresponding decrease in income from the mark-to-market of the deferred compensation plan assets, a component of “interest and other investment income (loss), net” on our consolidated statements of income.

(2)		Includes $3,722 of restructuring costs.

(3)		Primarily from higher payroll costs and stock-based compensation expense.

(4)		This expense is entirely offset by development revenue in the period. See note (1) on page 59.

(5)		Represents the buy-out of below-market leases.

Results of Operations – Nine Months Ended September 30, 2011 Compared to September 30, 2010 - continued

Income Applicable to Toys

In the nine months ended September 30, 2011, we recognized net income of $80,794,000 from our investment in Toys, comprised of $74,135,000 for our 32.7% share of Toys’ net income ($104,049,000 before our share of Toys’ income tax expense) and $6,659,000 of interest and other income.

In the nine months ended September 30, 2010, we recognized net income of $102,309,000 from our investment in Toys, comprised of $95,576,000 for our 32.7% share of Toys’ net income ($93,662,000 before our share of Toys’ income tax benefit) and $6,733,000 of interest and other income.

Income from Partially Owned Entities

Summarized below are the components of income (loss) from partially owned entities for the nine months ended September 30, 2011 and 2010.

		For the Nine Months Ended
		September 30,
(Amounts in thousands)		2011		2010
Equity in Net Income (Loss):
Alexander's - 32.4% share of equity in net income		$	25,256	$	21,083

Lexington - 11.7% share in 2011 and 13.8% share in 2010 of equity in net income⁽¹⁾			10,209		3,316

LNR - 26.2% share of equity in net income (acquired in July 2010)⁽²⁾			39,913		-

India real estate ventures - 4% to 36.5% range in our share of equity in net (loss) income			(692)		2,062

Partially owned office buildings⁽³⁾			(13,829)		1,864

Other equity method investments⁽⁴⁾			(4,618)		(14,525)
		$	56,239	$	13,800


(1)	Includes net gains of $9,760 and $5,998 in the nine months ended September 30, 2011 and 2010, respectively, resulting from Lexington's stock issuances.
(2)	Includes $6,020 for our share of net gains from asset sales and $8,977 for our share of a tax settlement gain.

(3)	The nine months ended September 30, 2011 includes $9,022 for our share of expense, primarily for straight-line rent reserves and the write-off of tenant improvements in connection with a tenant's bankruptcy at the Warner Building.

(4)	Represents our equity in net income or loss in Verde Realty Operating Partnership, 85 10th Avenue Associates and others.

Income from Real Estate Fund

In the nine months ended September 30, 2011, we recognized $25,491,000 of income from the Fund, including $19,209,000 of net unrealized gains from the mark-to-market of investments in the Fund, and $3,085,000 of net realized gains from the disposition of an investment. Of the $25,491,000, $15,703,000 was attributable to noncontrolling interests. Accordingly, our share of the Fund’s income was $9,788,000 and includes $1,665,000 of accrued carried interest. In addition, we recognized $1,803,000 of management, leasing and development fees which are included as a component of “fee and other income,” and incurred $3,451,000 of placement fees in connection with the February 2011 closing of the Fund, which is included in “general and administrative” expenses.

In the nine months ended September 30, 2010, we recognized a $1,410,000 loss from the Fund, primarily due to $1,500,000 of organization costs. Of this loss, $1,091,000 was attributable to noncontrolling interests.

Results of Operations – Nine Months Ended September 30, 2011 Compared to September 30, 2010 - continued

Interest and Other Investment (Loss) Income, net

Interest and other investment income, net (comprised of the mark-to-market of derivative positions in marketable equity securities, interest income on mezzanine loans receivable, other interest income and dividend income) was $95,121,000 in the nine months ended September 30, 2011, compared to $65,676,000 in the prior year’s nine months, an increase of $29,445,000. This increase resulted from:


(Amounts in thousands)
Mezzanine loans ($82,744 loss reversal and net gain on disposition in 2011, compared to a $6,900
	loss accrual in 2010)	$	89,644
J.C. Penney derivative position ($27,136 mark-to-market loss in 2011, compared to a $32,249
	mark-to-market gain in 2010)		(59,385)
Decrease in the value of investments in our deferred compensation plan (offset by a corresponding
	decrease in the liability for plan assets in general and administrative expenses)		(4,182)
Other, net (primarily dividends and interest on marketable securities and mezzanine loans)			3,368
		$	29,445

Interest and Debt Expense

Interest and debt expense was $408,532,000 in the nine months ended September 30, 2011, compared to $423,354,000 in the prior year’s nine months, a decrease of $14,822,000. This decrease was primarily due to savings of (i) $18,157,000 from the repayment of the Springfield Mall mortgage at a discount in December 2010, (ii) $13,946,000 applicable to the repurchase and retirement of convertible senior debentures and repayment of senior unsecured notes, and (iii) $13,899,000 from the deconsolidation of the Warner Building resulting from the sale of a 45% interest in October 2010, partially offset by (iv) $16,568,000 from the issuance of $660,000,000 of cross-collateralized debt secured by 40 of our strip shopping centers in August 2010, (v) $10,375,000 from the financing of 2121 Crystal Drive and Two Penn Plaza in the first quarter of 2011, and (vi) $3,783,000 from the consolidation of the San Jose Shopping Center resulting from the October 2010 acquisition of the 55% interest we did not previously own.

Net Loss on Extinguishment of Debt

In the nine months ended September 30, 2010, we recognized a $1,796,000 net loss on extinguishment of debt resulting from the acquisition and retirement of convertible senior debentures and senior unsecured notes.

Net Gain on Disposition of Wholly Owned and Partially Owned Assets

Net gain on disposition of wholly owned and partially owned assets was $7,975,000 in the nine months ended September 30, 2011, compared to $12,759,000 in the prior year’s nine months and resulted primarily from the sale of residential condominiums and marketable securities.

Income Tax Expense

Income tax expense was $19,448,000 in the nine months ended September 30, 2011, compared to $15,993,000 in the prior year’s nine months, an increase of $3,455,000. This increase resulted primarily from higher taxable income of our taxable REIT subsidiaries.

Results of Operations – Nine Months Ended September 30, 2011 Compared to September 30, 2010 - continued

Income (Loss) from Discontinued Operations

The table below sets forth the combined results of assets related to discontinued operations for the nine months ended September 30, 2011 and 2010.


	For the Nine Months Ended
	September 30,
(Amounts in thousands)	2011		2010
Total revenues	$	36,486	$	61,883
Total expenses		25,723		58,508
		10,763		3,375
Net gain on extinguishment of High Point debt		83,907		-
Net gain on sale of 1140 Connecticut Avenue and 1227 25th Street		45,862		-
Net gain on sales of other real estate		5,761		-
Litigation loss accrual and impairment loss		-		(15,056)
Income (loss) from discontinued operations	$	146,293	$	(11,681)

Net Income Attributable to Noncontrolling Interests in Consolidated Subsidiaries

Net income attributable to noncontrolling interests in consolidated subsidiaries was $20,643,000 in the nine months ended September 30, 2011, compared to $1,490,000 in the prior year’s nine months, an increase of $19,153,000. This resulted primarily from a $16,794,000 increase in income allocated to the noncontrolling interests of our Real Estate Fund.

Net Income Attributable to Noncontrolling Interests in the Operating Partnership, including Unit Distributions

Net income attributable to noncontrolling interests in the Operating Partnership, including unit distributions for the nine months ended September 30, 2011 and 2010 is primarily comprised of allocations of income to redeemable noncontrolling interests of $36,385,000 and $26,785,000, respectively, and preferred unit distributions of the Operating Partnership of $10,979,000 and $6,702,000, respectively. The increase of $9,600,000 in allocations of income to redeemable noncontrolling interests resulted primarily from higher net income subject to allocation to unitholders.

Preferred Share Dividends

Preferred share dividends were $47,743,000 for the nine months ended September 30, 2011, compared to $41,975,000 for the prior year’s nine months, an increase of $5,768,000. This increase resulted from the issuance of Series J preferred shares during 2011, partially offset by the redemption of Series D-10 preferred shares in 2010.

Discount of Preferred Share and Unit Redemptions

In the nine months ended September 30, 2011, we recognized a $5,000,000 discount from the redemption of 1,000,000 Series D-11 preferred units with a par value of $25.00 per unit, for an aggregate of $20,000,000 in cash, compared to a $4,382,000 discount in the prior year from the redemption of 1,600,000 Series D-10 preferred shares with a par value of $25.00 per unit for an aggregate of $35,618,000.

Results of Operations – Nine Months Ended September 30, 2011 Compared to September 30, 2010 - continued

Same Store EBITDA

Below are the same store EBITDA results on a GAAP and cash basis for each of our segments for the nine months ended September 30, 2011, compared to the nine months ended September 30, 2010.

			New York		Washington, DC				Merchandise
(Amounts in thousands)			Office		Office		Retail		Mart
EBITDA for the nine months ended September 30, 2011			$	456,366	$	374,937	$	273,158	$	145,130
	Add-back: non-property level overhead
		expenses included above		14,389		19,504		22,034		23,855
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(16,953)		(48,045)		(8,702)		(96,528)
GAAP basis same store EBITDA for the nine months
		ended September 30, 2011		453,802		346,396		286,490		72,457
	Less: Adjustments for straight-line rents,
		amortization of below-market leases, net, and other
		non-cash adjustments		(37,187)		(3,358)		(21,507)		2,004
Cash basis same store EBITDA for the nine months
		ended September 30, 2011	$	416,615	$	343,038	$	264,983	$	74,461


EBITDA for the nine months ended September 30, 2010			$	448,418	$	333,970	$	268,571	$	74,934
	Add-back: non-property level overhead
		expenses included above		13,824		18,079		22,591		20,252
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(2,544)		(12,870)		(13,908)		(21,627)
GAAP basis same store EBITDA for the nine months
		ended September 30, 2010		459,698		339,179		277,254		73,559
	Less: Adjustments for straight-line rents,
		amortization of below-market leases, net, and other
		non-cash adjustments		(45,031)		(4,624)		(28,434)		(537)
Cash basis same store EBITDA for the nine months
		ended September 30, 2010	$	414,667	$	334,555	$	248,820	$	73,022


(Decrease) increase in GAAP basis same store EBITDA for
		the nine months ended September 30, 2011 over the
		nine months ended September 30, 2010	$	(5,896)	$	7,217	$	9,236	$	(1,102)

Increase in Cash basis same store EBITDA for
		the nine months ended September 30, 2011 over the
		nine months ended September 30, 2010	$	1,948	$	8,483	$	16,163	$	1,439


% (decrease) increase in GAAP basis same store EBITDA				(1.3%)		2.1%		3.3%		(1.5%)

% increase in Cash basis same store EBITDA				0.5%		2.5%		6.5%		2.0%

SUPPLEMENTAL INFORMATION

Three Months Ended September 30, 2011 vs. Three Months Ended June 30, 2011

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. Historically, Toys’ fourth quarter net income, which we record on a one-quarter lag basis in our first quarter, accounts for more than 80% of Toys’ fiscal year net income. The Office and Merchandise Mart segments have historically experienced higher utility costs in the first and third quarters of the year. The Merchandise Mart segment also has experienced higher earnings in the second and fourth quarters of the year due to major trade shows occurring in those quarters. The Retail segment revenue in the fourth quarter is typically higher due to the recognition of percentage rental income.

Below are the same store EBITDA results on a GAAP and cash basis for each of our segments for the three months ended September 30, 2011, compared to the three months ended June 30, 2011.

			New York		Washington, DC				Merchandise
(Amounts in thousands)			Office		Office		Retail		Mart
EBITDA for the three months ended September 30, 2011			$	155,861	$	106,607	$	93,158	$	15,448
	Add-back: non-property level overhead expenses
		included above		4,461		6,505		6,721		9,534
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(5,447)		1,500		(2,378)		(4,445)
GAAP basis same store EBITDA for the three months
	ended September 30, 2011			154,875		114,612		97,501		20,537
	Less: Adjustments for straight-line rents, amortization of
		below-market leases, net, and other non-cash adjustments		(10,862)		1,468		(8,898)		985
Cash basis same store EBITDA for the three months
	ended September 30, 2011		$	144,013	$	116,080	$	88,603	$	21,522


EBITDA for the three months ended June 30, 2011⁽¹⁾			$	157,016	$	111,517	$	96,507	$	23,998
	Add-back: non-property level overhead expenses
		included above		4,568		6,462		7,291		6,776
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(6,302)		(2,348)		(7,149)		(4,515)
GAAP basis same store EBITDA for the three months
	ended June 30, 2011			155,282		115,631		96,649		26,259
	Less: Adjustments for straight-line rents, amortization of
		below-market leases, net, and other non-cash adjustments		(12,286)		1,095		(6,355)		722
Cash basis same store EBITDA for the three months
	ended June 30, 2011		$	142,996	$	116,726	$	90,294	$	26,981


(Decrease) increase in GAAP basis same store EBITDA for
	the three months ended September 30, 2011 over the
	three months ended June 30, 2011		$	(407)	$	(1,019)	$	852	$	(5,722)

Increase (decrease) in Cash basis same store EBITDA for
	the three months ended September 30, 2011 over the
	three months ended June 30, 2011		$	1,017	$	(646)	$	(1,691)	$	(5,459)


% (decrease) increase in GAAP basis same store EBITDA				(0.3%)		(0.9%)		0.9%		(21.8%)

% increase (decrease) in Cash basis same store EBITDA				0.7%		(0.6%)		(1.9%)		(20.2%)


(1)		Below is the reconciliation of net income to EBITDA for the three months ended June 30, 2011.

			New York		Washington, DC				Merchandise
(Amounts in thousands)			Office		Office		Retail		Mart
Net income attributable to Vornado for the three months
	ended June 30, 2011		$	72,002	$	38,511	$	43,639	$	2,265
Interest and debt expense				36,953		34,093		24,468		9,595
Depreciation and amortization				47,621		38,306		28,400		11,227
Income tax expense				440		607		-		911
EBITDA for the three months ended June 30, 2011			$	157,016	$	111,517	$	96,507	$	23,998

LIQUIDITY AND CAPITAL RESOURCES

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 (excluding Fund acquisitions) may require funding from borrowings and/or equity offerings. In addition, the Fund has aggregate unfunded equity commitments of $543,900,000 for acquisitions, including $135,969,000 from us. 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.

Property rental income is our primary source of cash flow and is dependent upon the occupancy and rental rates of our properties. 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. Our cash requirements include property operating expenses, capital improvements, tenant improvements, leasing commissions, dividends to shareholders, distributions to unitholders of the Operating Partnership, as well as acquisition and development costs.

Cash Flows for the Nine Months Ended September 30, 2011

Our cash and cash equivalents were $585,183,000 at September 30, 2011, a $105,606,000 decrease over the balance at December 31, 2010. This decrease was primarily due to cash flows from financing activities, partially offset by cash flows from operating activities, as discussed below.

Our consolidated outstanding debt was $10,406,550,000 at September 30, 2011, a $482,892,000 decrease over the balance at December 31, 2010. As of September 30, 2011 and December 31, 2010, $300,000,000 and $874,000,000, respectively, was outstanding under our revolving credit facilities. During the remainder of 2011 and 2012 $624,000,000 and $1,593,000,000, respectively, of our outstanding debt matures; we may refinance this maturing debt as it comes due or choose to repay it using a portion of our $3,130,183,000 of available capacity (comprised of $585,183,000 of cash and cash equivalents and $2,545,000,000 of availability under our revolving credit facilities).

Cash flows provided by operating activities of $566,671,000 was comprised of (i) net income of $643,013,000 and (ii) distributions of income from partially owned entities of $75,612,000, partially offset by (iii) $8,352,000 of non-cash adjustments, which include depreciation and amortization expense, the effect of straight-lining of rental income and equity in net income of partially owned entities, and (iv) the net change in operating assets and liabilities of $143,602,000, including $97,785,000 related to Real Estate Fund investments.

Net cash used in investing activities of $1,675,000 was comprised of (i) $440,865,000 of investments in partially owned entities, (ii) $109,963,000 of additions to real estate, (iii) $52,816,000 of development costs and construction in progress, (iv) $44,215,000 of investments in mezzanine loans receivable and other, and (v) $33,850,000 for the funding of collateral for the J.C. Penney derivative, partially offset by (vi) $274,283,000 of capital distributions from partially owned entities, (vii) $135,762,000 of proceeds from sales of real estate and related investments, (viii) changes in restricted cash of $121,463,000, (ix) $100,525,000 of proceeds from sales and repayments of mezzanine loans, (x) $28,700,000 from the return of derivative collateral, and (xi) $19,301,000 of proceeds from sales of marketable securities

Net cash used in financing activities of $670,602,000 was comprised of (i) $2,666,610,000 for the repayments of borrowings, (ii) $381,382,000 of dividends paid on common shares, (iii) $77,330,000 of distributions to noncontrolling interests, (iv) $43,675,000 of dividends paid on preferred shares, (v) $28,614,000 of debt issuance and other costs, (vi) $28,000,000 for the purchase of outstanding preferred units and shares, and (vii) $747,000 for the repurchase of shares related to stock compensation agreements and related tax holdings, partially offset by (viii) $2,184,167,000 of proceeds from borrowings, (ix) $239,037,000 of proceeds from the issuance of Series J preferred shares, (x) $109,605,000 of contributions from noncontrolling interests, and (xi) $22,947,000 of proceeds received from exercise of employee share options.

LIQUIDITY AND CAPITAL RESOURCES – continued

Cash Flows for the Nine Months Ended September 30, 2010

Our cash and cash equivalents were $846,254,000 at September 30, 2010, a $310,775,000 increase over the balance at December 31, 2009. This increase resulted from $594,721,000 of net cash provided by operating activities and $51,097,000 of net cash provided by investing activities, partially offset by $335,043,000 of net cash used in financing activities.

Cash flows provided by operating activities of $594,721,000 was comprised of (i) net income of $425,887,000, (ii) $213,747,000 of non-cash adjustments, including depreciation and amortization expense, the effect of straight-lining of rental income and equity in net income of partially owned entities and (iii) distributions of income from partially owned entities of $36,829,000, partially offset by (iv) the net change in operating assets and liabilities of $81,742,000, of which $62,500,000 related to Real Estate Fund investments.

Net cash provided by investing activities of $51,097,000 was comprised of (i) proceeds from sales of marketable securities of $126,015,000, (ii) restricted cash of $125,204,000, (iii) proceeds from sales and repayments of mezzanine loans receivable of $109,594,000, (iv) proceeds from the sale of real estate and related investments of $48,998,000, (v) distributions of capital from partially owned entities of $45,613,000 and (vi) proceeds from maturing short-term investments of $40,000,000, partially offset by (vii) investments in partially owned entities of $159,053,000, (viii) additions to real estate of $98,789,000, (ix) development and redevelopment expenditures of $86,871,000, (x) investments in mezzanine loans receivable and other of $75,697,000, (xi) purchases of marketable securities of $13,917,000 and (xii) acquisitions of real estate and other of $10,000,000.

Net cash used in financing activities of $335,043,000 was comprised of (i) repayments of borrowings, including the purchase of our senior unsecured notes, of $1,462,652,000, (ii) dividends paid on common shares of $354,937,000, (iii) purchases of outstanding preferred units and shares of $48,600,000, (iv) dividends paid on preferred shares of $42,100,000, (v) distributions to noncontrolling interests of $41,055,000, (vi) repurchase of shares related to stock compensation arrangements and related tax withholdings of $25,659,000 and (vii) debt issuance costs of $14,942,000, partially offset by (viii) proceeds from borrowings of $1,603,359,000, (ix) contributions from noncontrolling interests of $39,351,000 and (x) $12,192,000 of proceeds received from the exercise of employee share options.

LIQUIDITY AND CAPITAL RESOURCES - continued

Capital Expenditures

Capital expenditures consist of expenditures to maintain assets, tenant improvement allowances and leasing commissions. Recurring capital improvements 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 nine months ended September 30, 2011.

						New York		Washington, DC				Merchandise
(Amounts in thousands)				Total		Office		Office		Retail		Mart		Other
Expenditures to maintain assets				$	31,347	$	11,361	$	8,760	$	5,162	$	3,495	$	2,569
Tenant improvements					82,537		48,105		18,671		4,734		10,705		322
Leasing commissions					23,762		16,567		4,182		1,315		1,575		123
Non-recurring capital expenditures					17,044		12,220		-		1,967		-		2,857
Total capital expenditures and leasing
	commissions (accrual basis)				154,690		88,253		31,613		13,178		15,775		5,871
Adjustments to reconcile to cash basis:
		Expenditures in the current year
			applicable to prior periods		69,717		26,814		11,363		14,018		11,993		5,529
		Expenditures to be made in future
			periods for the current period		(97,374)		(57,532)		(17,794)		(7,693)		(9,711)		(4,644)
Total capital expenditures and leasing
	commissions (cash basis)			$	127,033	$	57,535	$	25,182	$	19,503	$	18,057	$	6,756

Tenant improvements and leasing commissions:
	Per square foot per annum			$	3.59	$	5.23	$	4.38	$	0.81	$	3.53	$	-
	Percentage of initial rent				8.6%		9.0%		10.9%		3.2%		10.6%		-

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 nine months ended September 30, 2011.

			New York		Washington, DC				Merchandise
(Amounts in thousands)	Total		Office		Office		Retail		Mart		Other
Bergen Town Center	$	17,145	$	-	$	-	$	17,145	$	-	$	-
Green Acres Mall		3,443		-		-		3,443		-		-
510 Fifth Avenue		2,367		-		-		2,367		-		-
West End 25		1,897		-		1,897		-		-		-
North Bergen, New Jersey		1,746		-		-		1,746		-		-
Crystal City Hotel		1,556		-		1,556		-		-		-
Crystal Square		1,502		-		1,502		-		-		-
Crystal Plaza 5		1,346		-		1,346		-		-		-
Poughkeepsie, New York		936		-		-		936		-		-
Other		20,878		3,011		7,249		5,102		412		5,104
	$	52,816	$	3,011	$	13,550	$	30,739	$	412	$	5,104

As of September 30, 2011, the estimated costs to complete the above projects are approximately $23,927,000. We have also committed to fund the estimated project cost of approximately $400,000,000 to $425,000,000 to develop our 220 Central Park South property into a new residential tower. In addition, during 2012, we plan to redevelop 1851 South Bell Street, a 348,000 square foot office building in Crystal City, into a new 700,000 square foot office building (readdressed as 1900 Crystal Drive). The estimated cost of this project is approximately $300,000,000, or $425 per square foot. There can be no assurance that these projects will commence, or, if commenced, be completed on schedule or within budget.

LIQUIDITY AND CAPITAL RESOURCES - continued

Below is a summary of capital expenditures and leasing commissions and a reconciliation of total expenditures on an accrual basis to the cash expended in the nine months ended September 30, 2010.

						New York		Washington, DC				Merchandise
(Amounts in thousands)				Total		Office		Office		Retail		Mart		Other
Expenditures to maintain assets				$	32,861	$	14,233	$	7,263	$	3,032	$	4,360	$	3,973
Tenant improvements					98,465		41,678		11,146		11,701		28,905		5,035
Leasing commissions					23,884		12,560		4,352		1,702		3,982		1,288
Non-recurring capital expenditures					5,514		-		-		915		-		4,599
Total capital expenditures and leasing
	commissions (accrual basis)				160,724		68,471		22,761		17,350		37,247		14,895
Adjustments to reconcile to cash basis:
		Expenditures in the current year
			applicable to prior periods		55,822		29,758		12,781		5,793		4,085		3,405
		Expenditures to be made in future
			periods for the current period		(97,385)		(38,665)		(13,045)		(13,027)		(27,159)		(5,489)
Total capital expenditures and leasing
	commissions (cash basis)			$	119,161	$	59,564	$	22,497	$	10,116	$	14,173	$	12,811

Tenant improvements and leasing commissions:
	Per square foot per annum			$	3.69	$	6.78	$	2.58	$	1.40	$	4.43	$	-
	Percentage of initial rent				10.9%		14.0%		6.7%		5.8%		12.9%		-

Development and Redevelopment Expenditures

Below is a summary of development and redevelopment expenditures incurred in the nine months ended September 30, 2010.

			New York		Washington, DC				Merchandise
(Amounts in thousands)	Total		Office		Office		Retail		Mart		Other
Bergen Town Center	$	12,588	$	-	$	-	$	12,588	$	-	$	-
Residential condominiums		11,806		-		-		-		-		11,806
West End 25		9,011		-		9,011		-		-		-
1540 Broadway		7,493		-		-		7,493		-		-
Green Acres Mall		6,991		-		-		6,991		-		-
220 20th Street		3,946		-		3,946		-		-		-
Beverly Connection		3,452		-		-		3,452		-		-
Poughkeepsie, New York		2,396		-		-		2,396		-		-
Other		29,188		4,702		8,115		10,515		1,180		4,676
	$	86,871	$	4,702	$	21,072	$	43,435	$	1,180	$	16,482

LIQUIDITY AND CAPITAL RESOURCES – continued

Insurance

Other Commitments and Contingencies

LIQUIDITY AND CAPITAL RESOURCES - continued

Other Commitments and Contingencies - continued

Litigation

On January 8, 2003, Stop & Shop filed a complaint with the United States District Court for the District of New Jersey (“USDC-NJ”) claiming that we had no right to reallocate and therefore continue to collect the $5,000,000 of annual rent from Stop & Shop pursuant to the Master Agreement and Guaranty, because of the expiration of the East Brunswick, Jersey City, Middletown, Union and Woodbridge leases to which the $5,000,000 of additional rent was previously allocated. Stop & Shop asserted that a prior order of the Bankruptcy Court for the Southern District of New York dated February 6, 2001, as modified on appeal to the District Court for the Southern District of New York on February 13, 2001, froze our right to reallocate which effectively terminated our right to collect the additional rent from Stop & Shop. On March 3, 2003, after we moved to dismiss for lack of jurisdiction, Stop & Shop voluntarily withdrew its complaint. On March 26, 2003, Stop & Shop filed a new complaint in New York State Supreme Court, asserting substantially the same claims as in its USDC-NJ complaint. We removed the action to the United States District Court for the Southern District of New York. In January 2005, that court remanded the action to the New York State Supreme Court. On February 14, 2005, we served an answer in which we asserted a counterclaim seeking a judgment for all the unpaid additional rent accruing through the date of the judgment and a declaration that Stop & Shop will continue to be liable for the additional rent as long as any of the leases subject to the Master Agreement and Guaranty remain in effect. On May 17, 2005, we filed a motion for summary judgment. On July 15, 2005, Stop & Shop opposed our motion and filed a cross-motion for summary judgment. On December 13, 2005, the Court issued its decision denying the motions for summary judgment. Both parties appealed the Court’s decision and on December 14, 2006, the Appellate Court division issued a decision affirming the Court’s decision. On January 16, 2007, we filed a motion for the reconsideration of one aspect of the Appellate Court’s decision which was denied on March 13, 2007. A trial was held in November 2010 and closing arguments were held in March 2011. As of September 30, 2011, we have a $40,733,000 receivable from Stop and Shop, of which $23,105,000 has been reserved. We believe, after consultation with counsel, that the maximum reasonably possible loss is up to the total amount of the receivable of $40,733,000.

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 gain from sales of depreciated real estate assets, 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. The calculations of both the numerator and denominator used in the computation of income per share are disclosed in footnote 17 – Income per Share, in the notes to our consolidated financial statements on page 28 of this Quarterly Report on Form 10-Q.

FFO for the Three and Nine Months Ended September 30, 2011 and 2010

FFO attributable to common shareholders plus assumed conversions was $195,125,000, or $1.05 per diluted share for the three months ended September 30, 2011, compared to $248,964,000, or $1.31 per diluted share, for the prior year’s quarter. FFO attributable to common shareholders plus assumed conversions was $951,054,000, or $4.96 per diluted share, for the nine months ended September 30, 2011, compared to $814,030,000, or $4.29 per diluted share for the prior year’s nine months. Details of certain items that affect comparability are discussed in the financial results summary of our “Overview.”

			For The Three Months				For The Nine Months
(Amounts in thousands, except per share amounts)			Ended September 30,				Ended September 30,
Reconciliation of our net income to FFO:			2011		2010		2011		2010
Net income attributable to Vornado			$	53,762	$	104,252	$	575,006	$	390,910
Depreciation and amortization of real property				128,811		126,987		377,458		381,782
Net gain on sales of real estate				-		-		(51,623)		-
Proportionate share of adjustments to equity in net income of Toys,
	to arrive at FFO:
		Depreciation and amortization of real property		17,947		18,132		52,844		53,296
		Net gain on sales of real estate		-		-		(491)		-
		Income tax effect of above adjustments		(6,280)		(6,347)		(18,320)		(18,654)
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		27,541		19,481		73,743		58,555
		Net gain on sales of real estate		(3,591)		-		(7,360)		(307)
Noncontrolling interests' share of above adjustments				(10,468)		(11,011)		(27,224)		(33,485)
FFO				207,722		251,494		974,033		832,097
Preferred share dividends				(17,627)		(13,442)		(47,743)		(41,975)
Discount on preferred share and unit redemptions				5,000		4,382		5,000		4,382
FFO attributable to common shareholders				195,095		242,434		931,290		794,504
Interest on 3.88% exchangeable senior debentures				-		6,490		19,670		19,405
Convertible preferred share dividends				30		40		94		121
FFO attributable to common shareholders plus assumed conversions			$	195,125	$	248,964	$	951,054	$	814,030

Reconciliation of Weighted Average Shares
	Weighted average common shares outstanding			184,398		182,462		184,220		182,014
	Effect of dilutive securities:
		3.88% exchangeable senior debentures		-		5,736		5,736		5,736
		Employee stock options and restricted share awards		1,667		1,706		1,764		1,741
		Convertible preferred shares		54		70		55		71
	Denominator for FFO per diluted share			186,119		189,974		191,775		189,562

FFO attributable to common shareholders plus assumed conversions
	per diluted share		$	1.05	$	1.31	$	4.96	$	4.29

Item 3. 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)			2011						2010
						Weighted	Effect of 1%				Weighted
			September 30,			Average	Change In		December 31,		Average
Consolidated debt:			Balance			Interest Rate	Base Rates		Balance		Interest Rate
	Variable rate		$	2,060,734		1.98%	$	20,607	$	2,903,510	1.76%
	Fixed rate			8,345,816		5.56%		-		7,985,932	5.66%
			$	10,406,550		4.85%		20,607	$	10,889,442	4.62%
Pro-rata share of debt of non-consolidated
	entities (non-recourse):
	Variable rate – excluding Toys		$	284,305		2.68%		2,843	$	345,308	1.39%
	Variable rate – Toys			512,084		5.48%		5,121		501,623	4.95%
	Fixed rate (including $1,275,787,000 and
		$1,421,820 of Toys debt in 2011 and 2010)		2,744,062	⁽¹⁾	6.50%		-		2,428,986	6.86%
			$	3,540,451		6.04%		7,964	$	3,275,917	5.99%
Noncontrolling interests’ share of above								(1,857)
Total change in annual net income							$	26,714
Per share-diluted							$	0.14



(1)	Excludes $36.3 billion for our 26.2% pro rata shares of liabilities related to consolidated CMBS and CDO trusts which are non-recourse to LNR and its equity holders, including us.

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 September 30, 2011, variable rate debt with an aggregate principal amount of $557,120,000 and a weighted average interest rate of 2.81% was subject to LIBOR caps. These caps are based on a notional amount of $558,479,000 and cap LIBOR at a weighted average rate of 5.68%. In addition, we have one interest rate swap on a $425,000,000 loan that swapped the rate from LIBOR plus 2.00% (2.24% at September 30, 2011) to a fixed rate of 5.13% for the remaining seven-year term of the loan.

As of September 30, 2011, we have investments in mezzanine loans with an aggregate carrying amount of $76,362,000 that are based on variable interest rates which partially mitigate our exposure to a change in interest rates on our variable rate debt.

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 rate at which similar loans could be made currently to borrowers with similar credit ratings, for the remaining term of such debt. As of September 30, 2011, the estimated fair value of our consolidated debt was $10,592,911,000.

Derivative Instruments

We have, and may in the future enter into, derivative positions that do not qualify for hedge accounting treatment, including our economic interest in J.C. Penney common shares. Because these derivatives do not qualify for hedge accounting treatment, the gains or losses resulting from their mark-to-market at the end of each reporting period are recognized as an increase or decrease in “interest and other investment income, net” on our consolidated statements of income. In addition, we are, and may in the future be, subject to additional expense based on the notional amount of the derivative positions and a specified spread over LIBOR. Because the market value of these instruments can vary significantly between periods, we may experience significant fluctuations in the amount of our investment income or expense in any given period. During the nine months ended September 30, 2011 we recognized a $27,136,000 loss from derivative instruments.

Item 4. Controls and Procedures

Disclosure Controls and Procedures: The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s 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 report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2011, such disclosure controls and procedures were effective.

Internal Control Over Financial Reporting: There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934, as amended) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On January 8, 2003, Stop & Shop filed a complaint with the United States District Court for the District of New Jersey (“USDC-NJ”) claiming that we had no right to reallocate and therefore continue to collect the $5,000,000 of annual rent from Stop & Shop pursuant to the Master Agreement and Guaranty, because of the expiration of the East Brunswick, Jersey City, Middletown, Union and Woodbridge leases to which the $5,000,000 of additional rent was previously allocated. Stop & Shop asserted that a prior order of the Bankruptcy Court for the Southern District of New York dated February 6, 2001, as modified on appeal to the District Court for the Southern District of New York on February 13, 2001, froze our right to reallocate which effectively terminated our right to collect the additional rent from Stop & Shop. On March 3, 2003, after we moved to dismiss for lack of jurisdiction, Stop & Shop voluntarily withdrew its complaint. On March 26, 2003, Stop & Shop filed a new complaint in New York State Supreme Court, asserting substantially the same claims as in its USDC-NJ complaint. We removed the action to the United States District Court for the Southern District of New York. In January 2005, that court remanded the action to the New York State Supreme Court. On February 14, 2005, we served an answer in which we asserted a counterclaim seeking a judgment for all the unpaid additional rent accruing through the date of the judgment and a declaration that Stop & Shop will continue to be liable for the additional rent as long as any of the leases subject to the Master Agreement and Guaranty remain in effect. On May 17, 2005, we filed a motion for summary judgment. On July 15, 2005, Stop & Shop opposed our motion and filed a cross-motion for summary judgment. On December 13, 2005, the Court issued its decision denying the motions for summary judgment. Both parties appealed the Court’s decision and on December 14, 2006, the Appellate Court division issued a decision affirming the Court’s decision. On January 16, 2007, we filed a motion for the reconsideration of one aspect of the Appellate Court’s decision which was denied on March 13, 2007. A trial was held in November 2010 and closing arguments were held in March 2011. As of September 30, 2011, we have a $40,733,000 receivable from Stop and Shop, of which $23,105,000 has been reserved. We believe, after consultation with counsel, that the maximum reasonably possible loss is up to the total amount of the receivable of $40,733,000.

Item 1A. Risk Factors

There were no material changes to the Risk Factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2010.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In the third quarter of 2011, we issued 12,085 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 the Annual Report on Form 10-K for the year ended December 31, 2010, and such information is incorporated by reference herein.

Item 3. Defaults Upon Senior Securities

None.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibits required by Item 601 of Regulation S-K are filed herewith or incorporated herein by reference and are listed in the attached Exhibit Index.

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: November 3, 2011	By:	/s/ Joseph Macnow
		Joseph Macnow, Executive Vice President - Finance and Administration and Chief Financial Officer (duly authorized officer and principal financial and accounting officer)

	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, 6.875% Series J Cumulative Redeemable Preferred Shares of		*
					Beneficial Interest, liquidation preference $25.00 per share, no par value - Incorporated by
					reference to Exhibit 3.2 of Vornado Realty Trust's Registration Statement on Form 8-A
					(File No. 001-11954), filed on April 20, 2011

	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.

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.

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.

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

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 June 30, 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
				Commission, upon request, copies of any such instruments.

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
				______________________
	*			Incorporated by reference.

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	**	-	Promissory Note from Steven Roth to Vornado Realty Trust, dated December 23, 2005 –		*
				Incorporated by reference to Exhibit 10.15 to Vornado Realty Trust Annual Report on
				Form 10-K for the year ended December 31, 2005 (File No. 001-11954), filed on
				February 28, 2006

10.7	**	-	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

10.8		-	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,
				individually, 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

10.9		-	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

10.10		-	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

10.11	**	-	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

10.12	**	-	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

10.13		-	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.

10.14		-	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

10.15		-	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

10.16	**	-	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

10.17	**	-	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

10.18	**	-	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

10.19	**	-	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

10.20	**	-	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

10.21	**	-	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

10.22	**	-	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

10.23	**	-	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

10.24		-	Guaranty, made as of June 28, 2006, by Vornado Realty Trust, for the benefit of JP Morgan		*
				Chase Bank - Incorporated by reference to Exhibit 10.53 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
				_______________________
	*			Incorporated by reference.
	**			Management contract or compensatory agreement.


10.25	**	-	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

10.26	**	-	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

10.27	**	-	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

10.28	**	-	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

10.29		-	Revolving Credit Agreement, dated as of September 28, 2007, among Vornado Realty L.P. as		*
				borrower, Vornado Realty Trust as General Partner, the Banks signatory thereto, each as a
				Bank, JPMorgan Chase Bank, N.A. as Administrative Agent, Bank of America, N.A. as
				Syndication Agent, Citicorp North America, Inc., Deutsche Bank Trust Company
				Americas, and UBS Loan Finance LLC as Documentation Agents, and J.P. Morgan
				Securities Inc. and Bank of America Securities LLC as Lead Arrangers and Bookrunners.
				- Incorporated by reference to Exhibit 10.1 to Vornado Realty Trust’s Current Report
				on Form 8-K (File No. 001-11954), filed on October 4, 2007

10.30		-	Second Amendment to Revolving Credit Agreement, dated as of September 28, 2007, 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 10.2 to
				Vornado Realty Trust’s Current Report on Form 8-K (File No. 001-11954),
				filed on October 4, 2007

10.31	**	-	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

10.32	**	-	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

10.33	**	-	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


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

10.34	**	-	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

10.35	**	-	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

10.36	**	-	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

10.37	**	-	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

10.38	**	-	Amendment to Employment Agreement between Vornado Realty Trust and Christopher G.		*
				Kennedy, dated December 29, 2008. Incorporated by reference to Exhibit 10.53 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

10.39	**	-	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

10.40	**	-	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

10.41	**	-	Form of Vornado Realty Trust 2010 Omnibus Share Plan Stock Agreement. Incorporated by		*
				reference to Exhibit 10.42 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

10.42	**	-	Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted LTIP Unit Agreement		*
				Incorporated by reference to Exhibit 10.43 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

10.43	**	-	Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted Stock Agreement		*
				Incorporated by reference to Exhibit 10.44 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

10.44	**	-	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


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

10.45	**	-	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

10.46		-	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

10.47	**	-	Letter Agreement between Vornado Realty Trust and Christopher G. Kennedy, dated
				August 5, 2011

10.48	**	-	Waiver and Release between Vornado Realty Trust and Christopher G. Kennedy, dated
				August 5, 2011

15.1		-	Letter regarding Unaudited Interim Financial Information

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

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

ex1047.htm - Generated by SEC Publisher for SEC Filing

Exhibit 10.47

EXHIBIT A

Christopher G. Kennedy

Dear Mr. Kennedy:

This letter agreement shall set forth the terms and conditions pursuant to which Vornado Realty Trust (“Vornado”) will engage you to provide consulting services to Vornado on an independent contractor basis. This is the “Consulting Letter” referred to in the Separation and General Release Agreement (“Separation Agreement”) between you and Vornado dated August 5, 2011.

1. Services. During the Consulting Period (as defined in Section 2 below), Vornado hereby engages you as an independent contractor to provide to Vornado (a) assistance with the transition of your services in connection with your separation from service as an officer of Vornado (“Transition Services”), and (b) such additional services, as reasonably requested by Vornado (the “Advisory Services”, and together with the Transition Services, the “Services”). Vornado will make an office and secretary available for your use during the Consulting Period.

2. Consulting Period. The Consulting Period shall commence on the later to occur of (a) July 23, 2011, and (b) the date this letter agreement is countersigned by you; and shall expire on March 31, 2012. Notwithstanding the foregoing, the Consulting Period shall terminate immediately and without prior written notice if you (a) are reasonably determined by Vornado to be in material breach of this letter agreement or the Separation Agreement, or (b) commit any act or omission that involves dishonesty or disloyalty to Vornado or its affiliates (collectively, a “Termination Event”).

3. Fees. As fees for all Services rendered by you under this letter agreement, you shall receive consulting fees (“Consulting Fees”) payable monthly at the annual rate of $500,000.00 (prorated for partial months); provided, however, that the final monthly payment payable to you under this Agreement upon termination or expiration of the Consulting Period shall be subject to (i) your execution and delivery of the “Confirming Waiver and Release” referenced in the Separation Agreement in the time and manner provided thereby, and (ii) effectiveness of such Confirming Waiver and Release following the applicable revocation period. All Consulting Fees under this letter agreement shall be payable without deduction for federal income, social security, or state or local income taxes.

4. Duties. During the Consulting Period, you shall devote your best efforts and abilities and business time to the Consulting Services, to the extent required and in the manner requested by Vornado.

5. Independent Contractor. It is expressly agreed that you are acting solely as an independent contractor in performing the Services. Neither party to this letter agreement has any authority to bind or commit the other nor will either party’s acts or omissions be deemed the acts of the other. Except to the extent provided by Vornado’s health policies, Vornado shall carry no worker's compensation insurance or any health or accident insurance to cover you. Vornado shall not pay any contributions to Social Security, unemployment insurance, federal or state withholding taxes and you expressly waive any right to such participation or coverage. By executing this letter agreement, you agree that you shall make such contributions and pay applicable taxes and hereby indemnify and hold harmless Vornado in the event of your failure to do so.

6. Confidential Information. By executing this letter agreement below, you agree that during the course of your providing services to Vornado as an independent contractor and at all times thereafter, you shall not, directly or indirectly, use or disclose, in whole or in part, any of Vornado’s trade secrets, confidential or proprietary information, including tenant and customer lists and information, to any person, firm, corporation, or other entity for any reason or purpose whatsoever other than as expressly permitted by Vornado in the course of your providing independent contractor services to Vornado. By signing this letter agreement below, you further acknowledge and agree that Sections 9, 10 and 11 of the Employment Agreement between you and Vornado dated August 1, 2003, as amended (the “Employment Agreement”) survived the separation of your employment with Vornado, and shall continue to survive the termination of the Consulting Period, and nothing in this letter agreement shall be deemed to alter your obligations with respect thereto. You hereby agree that for purposes of Section 10 of the Employment Agreement, the term “Restriction Period” as used therein shall be extended until the later of the Restriction Period as defined in such Section of the Employment Agreement or the one-year anniversary of the expiration of the Consulting Period.

7. Entire Agreement. This letter agreement, the preserved sections of the Employment Agreement and the Separation Agreement contain the entire agreement of the parties with respect to the subject matter hereof and supersede all agreements and understandings (whether oral or written) between the parties hereto concerning the subject matter hereof. This letter agreement may be modified by the parties hereto only by a written supplemental agreement executed by both parties.

[signature page follows]

-2-

Kindly sign your name at the end of this letter agreement to signify your understanding and acceptance of these terms and that no one at Vornado has made any other representation to you. The letter agreement, countersigned by you, must be returned to Vornado. Vornado looks forward to your providing the Services.

Very truly yours,

Vornado Realty Trust

BY: /s/ Michael D. Fascitelli_____

Agreed and accepted this 5th day

of August, 2011

/s/ Christopher G. Kennedy_____

Christopher G. Kennedy

-3-

ex1048.htm - Generated by SEC Publisher for SEC Filing

Exhibit 10.48

SEPARATION AND GENERAL RELEASE AGREEMENT

This Separation and General Release Agreement must be executed and returned to

Employer (Attn: Alan J. Rice, Senior Vice President, Corporation Counsel) on or before August 12, 2011.

THIS SEPARATION AND GENERAL RELEASE AGREEMENT (this “Separation Agreement”) is entered into between CHRISTOPHER G. KENNEDY, an individual residing at 158 Melrose Ave, Kenilworth, IL 60043 (the “Employee”) and VORNADO REALTY TRUST, with an address at 210 Route 4 East, Paramus, New Jersey 07652 (the “Employer”). Employer, together with its past, present and future direct and indirect subsidiaries, affiliated entities, related companies and divisions and each of their respective past, present and future officers, directors, employees, shareholders, trustees, members, partners, attorneys and agents (in each case, individually and in their official capacities), and each of their respective employee benefit plans (and such plans' fiduciaries, agents, administrators and insurers, individually and in their official capacities), as well as any predecessors, future successors or assigns or estates of any of the foregoing, is collectively referred to in this Separation Agreement as the “Released Parties.”

1. Separation of Employment. Employee acknowledges and understands that Employee’s employment under the employment agreement dated as of August 1, 2003 between Employee and Employer, as amended (the “Employment Agreement”) is terminated July 22, 2011 (the “Separation Date”). Employee further acknowledges and understands that Employee’s last day of employment with Employer is the Separation Date and that Employee has received all compensation and benefits to which Employee is entitled as a result of Employee’s employment, except as otherwise provided in this Separation Agreement. Employee understands that, except as otherwise provided in this Separation Agreement, Employee is entitled to nothing further from the Released Parties, including reinstatement by Employer or any of its affiliates.

2. Employee General Release of the Released Parties. In consideration of the payments and benefits set forth in Section 4 below and Employer’s agreement to engage Employee as an independent contractor under the Consulting Letter (as defined below in Section 5), Employee hereby unconditionally and irrevocably releases, waives, discharges and gives up, to the full extent permitted by law, any and all Claims (as defined below) that Employee may have against any of the Released Parties, arising on or prior to the date of Employee’s execution and delivery of this Separation Agreement to Employer. “Claims” means any and all actions, charges, controversies, demands, causes of action, suits, rights, and/or claims whatsoever for debts, sums of money, wages, salary, severance pay, commissions, fees, bonuses, unvested stock options, vacation pay, sick pay, fees and costs, attorneys fees, losses, penalties, damages, including damages for pain and suffering and emotional harm, arising, directly or indirectly, out of any promise, agreement (including, without limitation, the Employment Agreement), offer letter, contract, understanding, common law, tort, the laws, statutes, and/or regulations of the States of Illinois, New Jersey, New York or any other state and the United States, including, but not limited to, federal and state wage and hour laws (to the extent waiveable), federal and state whistleblower laws, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal Pay Act, the Lilly Ledbetter Fair Pay Act of 2009, the Americans with Disabilities Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act (excluding COBRA), the Vietnam Era Veterans Readjustment Assistance Act, the Fair Credit Reporting Act, the Occupational Safety and Health Act, the Age Discrimination in Employment Act (“ADEA”), the Older Workers’ Benefit Protection Act, the Sarbanes-Oxley Act of 2002, the federal False Claims Act, the Illinois Human Rights Act, the Cook County Human Rights Ordinance, the Chicago Human Rights Ordinance, the New Jersey Law Against Discrimination, the New Jersey Family Leave Act, the New Jersey Civil Rights Act, the New Jersey Conscientious Employee Protection Act, the New Jersey False Claims Act, the New York State Human Rights Laws, and the New York City Human Rights Laws, as each may be amended from time to time, whether arising directly or indirectly from any act or omission, whether intentional or unintentional. This Section 2 releases all Claims including those of which Employee is not aware and those not mentioned in this Separation Agreement. Employee specifically releases any and all Claims arising out of Employee’s employment with Employer or termination therefrom. Employee expressly acknowledges and agrees that, by entering into this Separation Agreement, Employee is releasing and waiving any and all Claims, including, without limitation, Claims that Employee may have arising under ADEA, which have arisen on or before the date of Employee’s execution and delivery of this Separation Agreement to Employer.

3. Representations; Covenant Not to Sue. Employee hereby represents and warrants that (A) Employee has not filed, caused or permitted to be filed any pending proceeding (nor has Employee lodged a complaint with any governmental or quasi-governmental authority) against any of the Released Parties, nor has Employee agreed to do any of the foregoing, (B) Employee has not assigned, transferred, sold, encumbered, pledged, hypothecated, mortgaged, distributed, or otherwise disposed of or conveyed to any third party any right or Claim against any of the Released Parties which has been released in this Separation Agreement, and (C) Employee has not directly or indirectly assisted any third party in filing, causing or assisting to be filed, any Claim against any of the Released Parties. Except as set forth in Section 12 below, Employee covenants and agrees that Employee shall not encourage or solicit or voluntarily assist or participate in any way in the filing, reporting or prosecution by herself or any third party of a proceeding or Claim against any of the Released Parties based upon or relating to any Claim released by Employee in this Separation Agreement.

4. Payment. As good consideration for Employee’s execution, delivery and non-revocation of this Separation Agreement:

(i) Employer shall pay Employee severance in an aggregate amount equal to $1,350,000 (less applicable withholdings and other customary payroll deductions) (collectively, the “Periodic Severance Payments”), payable as follows: (a) $675,000 (the “First Payment Amount”) plus interest calculated in the manner set forth below, payable on the first business day following the six month anniversary of the Separation Date, and (b) $675,000 payable ratably over the six month period commencing on the six month anniversary of the Separation Date, in accordance with the Employer’s customary payroll practices. Interest will accrue on the First Payment Amount at a rate, per annum, equal to the applicable federal short-term rate (compounded monthly) in effect under Section 1274(d) of the Internal Revenue Code of 1986, as amended, on the Separation Date. Interest payable on the First Payment Amount will be calculated as if the First Payment Amount would have been payable ratably over the first six months after the Separation Date and accrue on each such deemed ratable payment from the date such payment would have been paid (if it had been paid ratably). Notwithstanding the foregoing, if Employee is re-employed within 12 months following the Separation Date, Employee shall provide notice to the Employer and the Periodic Severance Payments shall cease; provided, however, that if the Employee obtains employment within six months following the Separation Date, Employee will be paid a pro rata portion of the First Payment Amount on the first business day following the six month anniversary of the Separation Date based on the number of days during such six month period that he did not have other employment;

-2-

(ii) Employer shall pay Employee an amount equal to $193,699 (the “Bonus Severance Payment” and together with the Periodic Severance Payments, the “Separation Payments”) (less applicable withholdings and other customary payroll deductions) within ten (10) business days following the effectiveness of this Separation Agreement; and

(iii) Employee’s 3,739 unvested Restricted LTIP Units (all of the unvested Restricted LTIP Units as of the Separation Date that had been awarded to Employee in lieu of cash bonuses) shall fully vest on, and not before, March 31, 2012, provided that Employee (i) has not breached this Separation Agreement or the Consulting Agreement, and (ii) executes a Waiver and Release (the “Confirming Waiver and Release”) substantially identical to this Separation Agreement and which has an effective date no earlier than March 31, 2012. The Confirming Waiver and Release will be provided by Employer to Employee for review on or before March 1, 2012. Employee’s consulting services under the Consulting Letter will be recognized for purposes of determining Employee’s vested interest in all other equity awards made by Employer to Employee that are unvested as of the Separation Date provided that Employee has not breached this Separation Agreement or the Consulting Agreement. To the extent not vested at termination of the Consulting Period, such awards shall be immediately forfeited and canceled. All of Employee’s vested stock options shall terminate on the 60^th day following the last day of the Consulting Period to the extent not exercised on or before such 60^th day, and provided that Employee has not breached this Separation Agreement or the Consulting Agreement.

Employee acknowledges that the payments and benefits set forth in this Section 4 constitute full satisfaction of Employer’s obligations under the Employment Agreement (including, without limitation, Section 8(c) thereof) or otherwise arising out of Employee’s employment or termination thereof. Employee further acknowledges that Employee is not otherwise entitled to the payments and benefits described in this Section 4 or to Employer’s agreement to engage Employee as an independent contractor pursuant to the Consulting Letter and acknowledges that nothing in this Agreement shall be deemed to be an admission of liability on the part of any of the Released Parties. Employee agrees that Employee will not seek anything further from any of the Released Parties.

-3-

5. Consulting Letter. In further consideration of, and subject to, Employee’s execution, delivery, and non-revocation of this Agreement, Employer will agree to engage Employee, on an independent contractor basis, to perform consulting services to the Employer upon the terms and conditions set forth in a letter to Employee in the form attached to this Agreement as Exhibit A (the “Consulting Letter”).

6. Who is Bound. Employer and Employee are bound by this Separation Agreement. Anyone who succeeds to Employee’s rights and responsibilities, such as the executors of Employee’s estate, is bound and anyone who succeeds to Employer’s rights and responsibilities, such as its successors and assigns, is also bound.

7. Cooperation With Investigations/Litigation. Employee agrees, upon Employer’s request, to reasonably cooperate in any Employer investigation, litigation, arbitration, or regulatory proceeding regarding events that occurred during Employee’s tenure with Employer. Employee will make himself reasonably available to consult with Employer’s counsel, to provide information, and to appear to give testimony. Employer will reimburse Employee for reasonable out-of-pocket expenses Employee incurs in extending such cooperation, so long as Employee provides advance written notice of Employee’s request for reimbursement and provides satisfactory documentation of the expenses.

8. Confidentiality and Non Disparagement. Employee agrees not to make any defamatory or derogatory statements concerning any of the Released Parties. Provided inquiries are directed to Employer’s Human Resources Department, Employer shall disclose to prospective employers information limited to Employee’s dates of employment and last position held by Employee. Employee confirms and agrees that Employee shall not, directly or indirectly, disclose to any person or entity or use for Employee’s own benefit, any confidential information concerning the business, projects, finances or operations of Employer, its affiliates or any of its or their respective clients, customers and tenants; provided, however, that Employee’s obligations under this Section 8 shall not apply to information generally known in Employer’s industry through no fault of Employee or the disclosure of which is required by law after reasonable notice has been provided to Employer sufficient to enable Employer to contest the disclosure. Confidential information shall include, without limitation, trade secrets, customer, client, prospect and tenant lists, details of contracts, pricing policies, operational materials, marketing plans or strategies, security and safety plans and strategies, project development, and any other non-public or confidential information of, or relating to, Employer or its affiliates. Employee shall not reveal the amounts paid to Employee or the other terms of this Separation Agreement to anyone, except to Employee’s immediate family, legal and financial advisors and then only after securing the agreement of such individual to maintain the confidentiality of this Separation Agreement, or in response to a subpoena or other legal process, after reasonable notice has been provided to Employer sufficient to enable Employer to contest the disclosure. Without limitation of the foregoing, Employee acknowledges that the terms of Sections 9, 10, and 11 of the Employment Agreement shall survive the Separation Date and remain in full force and effect. Employee hereby agrees that for purposes of Section 10 of the Employment Agreement, the term “Restriction Period” as used therein shall be extended until the later of the Restriction Period as defined in such Section of the Employment Agreement or the one-year anniversary of the expiration of the Consulting Period. Employee hereby represents and warrants to Employer that Employee has at all times been in full compliance with the terms of Sections 9 and 10 of the Employment Agreement.

-4-

9. Remedies. If Employee breaches any term or condition of this Separation Agreement or any representation made by Employee in this Separation Agreement was false when made, it shall constitute a material breach of this Separation Agreement and, in addition to and not instead of the Released Parties’ other remedies hereunder or otherwise at law or in equity, Employee shall be required to immediately, upon written notice from Employer, return the Separation Payments paid by Employer under Section 4 of this Separation Agreement, less the greater of: (A) $500; or (B) 10% of the Separation Payments paid by Employer hereunder. Employee agrees that if Employee is required to return any of the Separation Payments, this Separation Agreement shall continue to be binding on Employee and the Released Parties shall be entitled to enforce the provisions of this Separation Agreement as if none of the Separation Payments had been repaid to Employer and Employer shall have no further obligations to Employee under Section 4 of this Separation Agreement and may terminate the Consulting Period (as defined under the Consulting Letter) and the Employer’s obligations under the Consulting Letter. Further, in the event of a breach by Employee of his obligations under this Separation Agreement, Employee agrees to pay all of the Released Parties’ attorneys’ fees and other costs associated with enforcing the terms this Separation Agreement. Notwithstanding the foregoing, it is understood and agreed that Employee shall have no automatic repayment obligations or obligation to pay the Released Parties’ attorneys’ fees and other costs associated with enforcing the terms of this Separation Agreement if Employee were to challenge the validity of the ADEA waiver only.

10. Employer Property. Employee agrees to return to Employer all of Employer’s and its affiliates’ property in Employee’s possession, custody and/or control, including, but not limited to, all equipment, vehicles, computers, personal digital assistants, pass codes, keys, swipe cards, credit cards, documents or other materials, in whatever form or format, that Employee received, prepared, or helped prepare, except to the extent permitted to be retained by Employee during the Consulting Period set forth in the Consulting Letter. Employee agrees that Employee will not retain any copies, duplicates, reproductions, computer disks, or excerpts thereof of Employer’s or its affiliates’ documents except to the extent permitted to be retained by Employee during the Consulting Period set forth in the Consulting Letter.

11. Construction of Agreement. In the event that one or more of the provisions contained in this Separation Agreement, the Consulting Letter or the preserved sections of the Employment Agreement shall for any reason be held unenforceable in any respect under the law of any state of the United States or the United States, such unenforceability shall not affect any other provision of this Separation Agreement, but this Separation Agreement, the Consulting Letter, and the preserved sections of the Employment Agreement shall then be construed as if such unenforceable provision or provisions had never been contained herein; provided, however, that if any court were to find that the waiver and release of Claims set forth in Section 2 of this Separation Agreement is unlawful or unenforceable, or was not entered into knowingly or voluntarily, Employee agrees, at Employer’s option, either to return the Separation Payments set forth in Section 4 of this Separation Agreement or to execute a waiver and release of Claims in a form satisfactory to Employer that is lawful and enforceable. If it is ever held that any restriction hereunder, the Consulting Letter, or under the preserved sections of the Employment Agreement is too broad to permit enforcement of such restriction to its fullest extent, such restriction shall be enforced to the maximum extent permitted by applicable law. This Separation Agreement, the Consulting Letter, the preserved sections of the Employment Agreement, and any and all matters arising directly or indirectly herefrom shall be governed under the laws of the State of New York without reference to choice of law rules. Employer and Employee consent to the sole jurisdiction of the federal and state courts of New York. EMPLOYER AND EMPLOYEE HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS SEPARATION AGREEMENT OR ANY AND ALL MATTERS ARISING DIRECTLY OR INDIRECTLY HEREFROM, AND REPRESENT THAT THEY HAVE CONSULTED WITH COUNSEL OF THEIR CHOICE OR HAVE CHOSEN VOLUNTARILY NOT TO DO SO SPECIFICALLY WITH RESPECT TO THIS WAIVER.

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12. Acknowledgments. Employer and Employee acknowledge and agree that:

(A) By entering in this Separation Agreement, Employee does not waive any rights or Claims that may arise after the date that Employee executes and deliver this Separation Agreement to Employer;

(B) This Separation Agreement shall not affect the rights and responsibilities of the Equal Employment Opportunity Commission (the “EEOC”) or similar federal or state agency to enforce ADEA or other laws, and further acknowledge and agree that this Separation Agreement shall not be used to justify interfering with Employee’s protected right to file a charge or participate in an investigation or proceeding conducted by the EEOC or similar federal or state agency. Accordingly, nothing in this Separation Agreement shall preclude Employee from filing a charge with, or participating in any manner in an investigation, hearing or proceeding conducted by, the EEOC or similar federal or state agency, but Employee hereby waives any and all rights to recover under, or by virtue of, any such investigation, hearing or proceeding;

(C) Notwithstanding anything set forth in this Separation Agreement to the contrary, nothing in this Separation Agreement shall affect or be used to interfere with Employee’s protected right to test in any court, under the Older Workers’ Benefit Protection Act, or like statute or regulation, the validity of the waiver of rights under ADEA set forth in this Separation Agreement; and

(D) Nothing in this Separation Agreement shall preclude Employee from exercising Employee’s rights, if any (i) under Section 601-608 of the Employee Retirement Income Security Act of 1974, as amended, popularly known as COBRA, or (ii) Employer’s 401(k) plan.

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13 Opportunity For Review.

(A) Employee is hereby advised and encouraged by Employer to consult with his own independent counsel before signing this Separation Agreement. Employee represents and warrants that Employee (i) has had sufficient opportunity to consider this Separation Agreement, (ii) has read this Separation Agreement, (iii) understands all the terms and conditions hereof, (iv) is not incompetent or had a guardian, conservator or trustee appointed for Employee, (v) has entered into this Separation Agreement of Employee’s own free will and volition, (vi) has duly executed and delivered this Separation Agreement, (vii) understands that Employee is responsible for Employee’s own attorneys’ fees and costs, (viii) has had the opportunity to review this Separation Agreement with counsel of his choice or has chosen voluntarily not to do so, (ix) understands that Employee has been given twenty-one days to review this Separation Agreement before signing this Separation Agreement and understands that he is free to use as much or as little of the 21-day period as he wishes or considers necessary before deciding to sign this Separation Agreement, (x) understands that if Employee does not sign and return this Separation Agreement to Employer (Attn: Alan J. Rice, Senior Vice President, Corporate Counsel) on or before August 12, 2011, Employer shall have no obligation to enter into this Separation Agreement, Employee shall not be entitled to receive the Separation Payments and other benefits provided for under Section 4 of this Separation Agreement nor shall the Consulting Letter be effective, and the Separation Date shall be unaltered; and (xi) understands that this Separation Agreement is valid, binding, and enforceable against the parties hereto in accordance with its terms.

(B) This Separation Agreement shall be effective and enforceable on the eighth (8th) day after execution and delivery to Employer (Attn: Alan J. Rice, Senior Vice President, Corporate Counsel) by Employee. The parties hereto understand and agree that Employee may revoke this Separation Agreement after having executed and delivered it to Employer (Attn: Alan J. Rice, Senior Vice President, Corporate Counsel), in writing, provided such writing is received by Employer at the address listed in this Separation Agreement above no later than 11:59 p.m. on the seventh (7th) day after Employee’s execution and delivery of this Separation Agreement to Employer. If Employee revokes this Separation Agreement, it shall not be effective or enforceable, Employer shall not be obligated to engage Employee as an independent contractor pursuant to the Consulting Letter and Employee shall not be entitled to receive the Separation Payments and other benefits provided for under Section 4 of this Separation Agreement, and the Separation Date shall be unaltered.

[Signatures Appear On the following page]

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Agreed to and accepted on this 5th day of August, 2011.

WITNESS: EMPLOYEE:

/s/ Anne Phelan /s/ Christopher G. Kennedy

Christopher G. Kennedy

Agreed to and accepted on this 5th day of August, 2011.

EMPLOYER:

VORNADO REALTY TRUST

BY: /s/ Michael D. Fascitelli

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ex151.htm - Generated by SEC Publisher for SEC Filing

EXHIBIT 15.1

November 3, 2011

Vornado Realty Trust

New York, New York

We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of Vornado Realty Trust for the periods ended September 30, 2011, and 2010, as indicated in our report dated November 3, 2011; because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, is incorporated by reference in the following registration statements of Vornado Realty Trust:

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

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

We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey

ex311.htm - Generated by SEC Publisher for SEC Filing

EXHIBIT 31.1

CERTIFICATION

I, Michael D. Fascitelli, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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.

	November 3, 2011
	/s/ Michael D. Fascitelli
	Michael D. Fascitelli
	President and Chief Executive Officer

ex312.htm - Generated by SEC Publisher for SEC Filing

EXHIBIT 31.2

CERTIFICATION

I, Joseph Macnow, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Vornado Realty Trust;

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.

	November 3, 2011
	/s/ Joseph Macnow
	Joseph Macnow
	Executive Vice President and Chief Financial Officer

ex321.htm - Generated by SEC Publisher for SEC Filing

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 Quarterly Report on Form 10-Q for quarter ended September 30, 2011 (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.


November 3, 2011		/s/ Michael D. Fascitelli
	Name:	Michael D. Fascitelli
	Title:	President and Chief Executive Officer

ex322.htm - Generated by SEC Publisher for SEC Filing

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)


November 3, 2011		/s/ Joseph Macnow
	Name:	Joseph Macnow
	Title:	Executive Vice President and Chief Financial Officer