1

                                                       EXHIBIT INDEX ON PAGE 44

                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D. C. 20549

                                   FORM 10-K

/XX/   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934

For the Fiscal Year Ended:    DECEMBER 31, 1994

                                       or

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

For the transition period from                   to

Commission File Number:        1-5098

                              VORNADO REALTY TRUST
             (Exact name of Registrant as specified in its charter)

                     MARYLAND                                 22-1657560

         (State or other jurisdiction of                  (I.R.S. Employer
         incorporation or organization)                 Identification Number)

PARK 80 WEST, PLAZA II, SADDLE BROOK, NEW JERSEY               07663
(Address of Principal Executive Offices)                     (Zip Code)

Registrant's telephone number including area code:      (201) 587-1000

Securities registered pursuant to Section 12(b) of the Act:

   Title of Each Class                Name of Each Exchange on Which Registered

Common Shares of beneficial
interest $.04 par value per share               New York Stock Exchange

       Securities registered pursuant to Section 12(g) of the Act:  NONE

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
                                           ---       ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  / X /

The aggregate market value of the voting shares held by non-affiliates of the
registrant, i.e. by persons other than officers and trustees of Vornado Realty
Trust as reflected in the table in Item 12 of this Annual Report, at March 9,
1995 was $466,429,315.

As of March 9, 1995, there were 21,697,608 shares of the registrant's shares of
beneficial interest outstanding.

                      Documents Incorporated by Reference

Part III:  Proxy Statement for Annual Meeting of Shareholders to be held May 3,
1995.

                                   Page 1 of 209
   2

                               Table of Contents

NOTE:       Vornado Realty Trust and its consolidated subsidiaries are sometimes
            referred to in this Annual Report on Form 10-K as "Vornado",
            "Registrant" or the "Company".

            Item                                                             Page
            ----                                                             ----
                                                                          
PART I.     1.   Business                                                        3

            2.   Properties                                                      6

            3.   Legal Proceedings                                               9

            4.   Submission of Matters to a Vote of Security Holders             9

                 Executive Officers of the Registrant                           10

PART II.    5.   Market for the Registrant's Common Equity and Related
                 Stockholder Matters                                            11

            6.   Selected Consolidated Financial Data                           12

            7.   Management's Discussion and Analysis of Financial
                 Condition and Results of Operations                            13

            8.   Financial Statements and Supplementary Data                    17

            9.   Changes in and Disagreements with Independent Auditors'
                 on Accounting and Financial Disclosure                         17

PART III.  10.   Directors and Executive Officers of the Registrant               (1)

           11.   Executive Compensation                                           (1)

           12.   Security Ownership of Certain Beneficial Owners
                 and Management                                                   (1)

           13.   Certain Relationships and Related Transactions                   (1)

PART IV.   14.   Exhibits, Financial Statement Schedules, and
                 Reports on Form 8-K                                            37

SIGNATURES                                                                      38
- ----------------------------

(1)       These items are omitted because the Registrant will file a
          definitive Proxy Statement pursuant to Regulation 14A involving the
          election of directors with the Securities and Exchange Commission
          not later than 120 days after December 31, 1994.  Information
          relating to Executive Officers of the Registrant appears on page 10
          of this Annual Report on Form 10-K.

                                      -2-
   3

                                     PART I

ITEM 1.          BUSINESS

                 GENERAL

                The Company is a fully-integrated real estate investment trust
("REIT") which owns, leases, develops, redevelops and manages retail and
industrial properties primarily located in the Midatlantic and Northeast regions
of the United States.  The Company's primary focus is on shopping centers.  As
of December 31, 1994, the Company owned 56 shopping centers in seven states
containing 9.5 million square feet, including .9 million square feet built by
tenants on land leased from the Company.  The Company's shopping centers
accounted for 91% and 93%, respectively, of the Company's rental revenue for the
years ended December 31, 1994 and 1993.  The occupancy rate of the Company's
shopping center properties as of December 31, 1994 was 94% and has been over 90%
for the past five years.  In addition, the Company owns eight
warehouse/industrial properties in New Jersey containing 2.0 million square feet
and one office building in New Jersey containing 0.1 million square feet.

                The Company's shopping centers generally are located on major
regional highways in mature, densely populated areas. The Company believes there
is strong demand from large tenants relative to the level of supply for retail
space in well located shopping centers in densely populated areas in the
Midatlantic and Northeast regions of the United States.  This is principally a
result of the shortage of land in such areas, as well as restrictive zoning
which limits the development of retail properties.  The Company believes its 
properties attract consumers from a regional, rather than a neighborhood, 
marketplace because of (i) their location on regional highways and (ii) the 
high percentage of square feet dedicated to large, national stores.

                As of December 31, 1994, approximately 80% of the square
footage of the Company's shopping centers was leased to large stores (over
20,000 square feet) and over 93% was leased to tenants whose businesses are
national or regional in scope.   The Company's large tenants include discount
department stores, supermarkets, home improvements stores, discount apparel
stores, membership warehouse clubs, other "destination retailers" and "category
killers."  Category killers are large stores which offer a complete selection
of a category items (e.g., toys, office supplies, etc.) at low prices, often in
a warehouse format. The Company's large store tenants typically offer basic
consumer necessities such as food, health and beauty aids, moderately priced
clothing, building materials and home improvement supplies, and compete
primarily on the basis of price.  The Company believes that this tenant mix
mitigates the effects on its properties of adverse changes in general economic
conditions. Substantially all of the Company's large store leases are long-term
leases having fixed base rents with step-ups in rent typically occurring every
five years.

                In addition, the Company's leases generally provide for
additional rents based on a percentage of tenants' sales.  Of the Company's
$70,755,000 of rental revenue in 1994, base rents accounted for approximately
98.7% and percentage rents accounted for approximately 1.3%.  The Company's
leases generally pass through to tenants the tenant's share of all common area
charges (including roof and structure, unless it is the tenant's direct
responsibility), real estate taxes and insurance costs and certain capital
expenditures.  As of December 31, 1994, the average base rent per square foot
for the Company's shopping centers was $8.05.

                From 1990 through 1994, the Company's property rental revenue
for shopping centers (including the effects of straight-lining of rents) was
$52,000,000, $54,700,000, $56,900,000, $61,900,000 and $64,700,000,
respectively.  Straight-lining of rents averages the rent increases provided for
in leases such that rental revenue for financial statement purposes is constant
throughout the term of the lease.  This convention applies to leases entered
into after November 14, 1985.

                As of December 31, 1994, no single shopping center property
accounted for more than 3.1% of the Company's total leasable area for its
shopping center properties or more than 5.7% of annualized rental revenue for
its shopping center properties. Bradlees, Inc. accounted for 19% of property
rentals for the year ended December 31, 1994 and 18% for the years ended
December 31, 1993 and 1992.

                                      -3-
   4

ITEM 1.          BUSINESS - continued

                Vornado, Inc., the immediate predecessor to the Company, was
merged with the Company on May 6, 1993 in connection with the Company's
conversion to a REIT.

                The Company administers all operating functions, including
leasing, management, construction, finance, legal, accounting and data
processing, from its executive offices (other than the leasing of the Company's
three Texas properties, which is done by an employee locally).

                The Company's principal executive offices are located at Park 80
West, Plaza II, Saddle Brook, New Jersey 07663; telephone (201) 587-1000.

                RELATIONSHIP WITH ALEXANDER'S

                On March 2, 1995, following bankruptcy court approval of the
loan and management arrangements described below, the Company purchased all of
the 1,353,468 shares of common stock of Alexander's, Inc. ("Alexander's") owned
by Citibank, N.A. ("Citibank") for $40.50 per share in cash (the "Acquisition"),
representing 27.1% of the outstanding common stock of Alexander's. After the
Acquisition, the Company owns 29.3% of the outstanding shares of common stock of
Alexander's.  Interstate Properties, which owns 31% of the common shares of
beneficial interest of the Company, currently owns 27.1% of the outstanding
shares of Alexander's common stock.  Alexander's common stock is listed on the 
New York Stock Exchange under the symbol "ALX".  Alexander's will elect to 
qualify as a REIT in 1995.

                Alexander's owns eight properties (where its former department
stores were located) consisting of (i) 39.3 acres at the intersection of Routes
4 and 17 in Paramus, New Jersey to be redeveloped into a shopping center, (ii) a
359,000 square foot building (currently being rehabed) leased to Sears, Caldor
and Marshalls on Queens Boulevard and 63rd Road in Rego Park, Queens, New York
together with one and one-half square blocks of vacant adjacent land, (iii) a
general partnership interest and a 92% limited partnership interest in the
square block, including a 418,000 square foot building, between Lexington Avenue
and Third Avenue and 58th and 59th Street in Manhattan, New York, to be
developed, (iv) 50% of the 427,000 square feet of mall stores at the
Kings Plaza regional shopping center on Flatbush Avenue in Brooklyn, New York,
(v) a 320,000 square foot anchor store which is one of the two anchor stores at
the Kings Plaza regional shopping center, which is to be redeveloped, (vi) a
303,000 square foot building leased to Caldor on Fordham Road in the Bronx, New
York, (vii) 177,000 square foot building subleased to Caldor at Roosevelt Avenue
and Main Street in Flushing, New York and (viii) 173,000 square foot building
leased to Conways located at Third Avenue and 157th Street in the Bronx, New
York.  

                The Company and Alexander's have entered into a three year
management and development agreement (the "Management Agreement") under which
the Company has agreed to manage all Alexander's business affairs and manage and
develop Alexander's properties for an annual fee of $3,000,000; plus 6% of
development costs with a minimum guaranteed fee for the development portion of 
$1,650,000 in the first year and $750,000 in each of the second and third 
years.  Pursuant to the Management Agreement, Mr.  Roth, the Company's 
Chairman and Chief Executive Officer, also became Chief Executive Officer of 
Alexander's.

                The fees pursuant to the Management Agreement discussed above,
are in addition to leasing fees the Company receives from Alexander's under a
leasing agreement in effect since 1992.  The term of the leasing agreement has
been extended to be co-terminus with the term of the Management Agreement.

                On March 15, 1995, the Company and a bank lent Alexander's
$75,000,000 in a secured financing, of which $45,000,000 was funded by the
Company and the balance was funded by the bank.  The Company's loan, which is
subordinate to that of the bank, has a three year term and bears interest at
16.43% per annum for the first two years and at a fixed rate for the third year
of 992 basis points over one year treasury bills.  In addition, Alexander's paid
a loan origination fee of $1,500,000 to the Company.

                In connection with the Acquisition, the Company and Interstate
are restricted for three years from owning in excess of two-thirds of
Alexander's common stock or entering into certain other transactions with
Alexander's, without the consent of the independent directors of Alexander's.

                                      -4-
   5

ITEM 1.          BUSINESS - continued

                 COMPETITION

                The leasing of real estate is highly competitive.  The principal
means of competition are price, location and the nature and condition of the
facility to be leased.  The Company directly competes with all lessors and
developers of similar space in the areas in which its properties are located.

                 ENVIRONMENTAL REGULATIONS

                See "Note 10 - Contingencies" to the Consolidated Financial
                Statements at page 30.

                 EMPLOYEES

                The Company employs 64 people.

                 SEGMENT AND OTHER FINANCIAL DATA

                "Note 11 - Business Segments" to the Consolidated Financial
Statements at page 30, and the information concerning financial condition
contained in the statement "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Financial Condition" at page 13, are
incorporated herein by reference.  Vornado engages in no foreign operations.

                                      -5-
   6
ITEM 2.   PROPERTIES

          The Company leases 27,000 square feet in Saddle Brook, New Jersey for
          use as its executive offices.

          The following table sets forth certain information as of December 31,
          1994 relating to the properties owned by the Company.

                                                 YEAR                                   LEASABLE    GROUND     NUMBER
                                              ORIGINALLY       TYPE OF        LAND      BUILDING    LEASED      OF
                                               DEVELOPED      OWNERSHIP       AREA        AREA       AREA     TENANTS
                       LOCATION               OR ACQUIRED     INTEREST       (ACRES)    (SQ. FT)   (SQ. FT)   12/31/94
- -------------------------------------------------------------------------------------------------------------------------
                                                                                            
SHOPPING
CENTERS

NEW              Atlantic City                   1965           Fee            17.7      135,774         -         2
 JERSEY
                 Bordentown                      1958           Fee            31.2      178,678         -         3

                 Bricktown                       1968           Fee            23.9      259,888     2,764        20

                 Cherry Hill                     1964           Fee            37.6      231,142    63,511        13

                 Delran                          1972           Fee            17.5      167,340     1,200         4

                 Dover                           1964           Fee            19.6      172,673         -        11

                 East Brunswick                  1957           Fee            19.2      219,056    10,400         7

                 East Hanover                    1962           Fee            24.6      271,066         -        15

                 Hackensack                      1963           Fee            21.3      189,699    59,249        17

                 Jersey City                     1965           Fee            16.7      222,478     3,222        11

                 Kearny                          1959           Fee            35.3       41,518    62,471         6

                 Lawnside                        1969           Fee            16.4      142,136         -         2

                 Lodi                            1975           Fee             8.7      130,000         -         1

                 Manalapan                       1971           Fee            26.3      194,265     2,000         7

                 Marlton                         1973           Fee            27.8      173,238     6,836         9

                 Middletown                      1963           Fee            22.7      179,584    52,000        20

                 Morris Plains                   1985           Fee            34.8      171,493     1,000        17

                 North Bergen                    1959           Fee             4.6        6,515    55,597         3

                 North Plainfield                1989      Ground Lease        28.7      217,360         -        12

                 Totowa                          1957           Fee            40.5      201,471    93,613         6

                                                 AVERAGE                                              LEASE
                                                ANNUALIZED                        PRINCIPAL         EXPIRATION/
                                                BASE RENT       PERCENT            TENANTS            OPTION
                       LOCATION               PER SQ.FT. (1)   LEASED (1)   (OVER 40,000 SQ. FT.)   EXPIRATION
- ---------------------------------------------------------------------------------------------------------------
                                                                                      
SHOPPING
CENTERS

NEW              Atlantic City                    $4.81           90%       Sam's Wholesale          1999
 JERSEY
                 Bordentown                        5.19          100%       Bradlees  (2) (3)        2001/2021
                                                                            Shop-Rite                2011/2016

                 Bricktown                        10.12          100%       Caldor                   2008/2028
                                                                            Shop-Rite                2002/2017

                 Cherry Hill                       7.45           93%       Bradlees (2) (3)         2006/2026
                                                                            Shop & Bag               2007/2017
                                                                            Toys "R" Us (4)          2012/2042

                 Delran                            5.11           92%       Sam's Wholesale          2011/2021

                 Dover                             5.38           98%       Jamesway                 2003/2013
                                                                            Shop-Rite                2012/2022

                 East Brunswick                    8.98          100%       Bradlees (3)             2003/2023
                                                                            Shoppers World           2007/2012

                 East Hanover                      9.65           98%       Home Depot               2009/2019
                                                                            Pathmark                 2001/2024
                                                                            Todays Man               2009/2014

                 Hackensack                       14.03          100%       Bradlees (3)             2012/2017
                                                                            Channel                  2003/2013
                                                                            Pathmark                 2014/2024

                 Jersey City                      10.76           99%       Bradlees (3)             2002/2022
                                                                            Shop-Rite                2008/2028

                 Kearny                            7.69          100%       Pathmark                 2013/2033
                                                                            Channel (4)              2008

                 Lawnside                          8.74          100%       Home Depot               2012/2027

                 Lodi                              8.37          100%       National                 2013/2023
                                                                            Wholesale Liq.

                 Manalapan                         8.77          100%       Bradlees (3)             2002/2022
                                                                            Grand Union              2012/2022

                 Marlton                           7.46           98%       Bradlees  (2) (3)        2011/2031
                                                                            Shop-Rite                1999/2009

                 Middletown                       10.27           97%       Bradlees (3)             2002/2022
                                                                            Grand Union              2009/2029

                 Morris Plains                    10.63           97%       Caldor                   2002/2023

                 North Bergen                     25.78          100%       Waldbaum's               2012/2032

                 North Plainfield                  7.96           92%       K Mart                   2006/2016
                                                                            Pathmark                 2001/2011

                 Totowa                           13.70           95%       Bradlees (3)             2013/2028
                                                                            Home Depot (5)             -

                                     -6-
   7

                                                 YEAR                                   LEASABLE    GROUND     NUMBER
                                              ORIGINALLY       TYPE OF        LAND      BUILDING    LEASED      OF
                                               DEVELOPED      OWNERSHIP       AREA        AREA       AREA     TENANTS
                       LOCATION               OR ACQUIRED     INTEREST       (ACRES)    (SQ. FT)   (SQ. FT)   12/31/94
- -----------------------------------------------------------------------------------------------------------------------
                                                                                           
SHOPPING         Turnersville                    1974           Fee            23.3       89,453     6,513         3
CENTERS
                 Union                           1962           Fee            24.1      257,045         -        12

                 Vineland                        1966           Fee            28.0      143,257         -         6

                 Watchung                        1959           Fee            53.8       23,500   115,660         2

                 Woodbridge                      1959           Fee            19.7      232,755     3,614        11

NEW YORK         14th Street and Union
                       Square, Manhattan         1993           Fee             0.8      231,770         -         1

                 Albany (Menands)                1965           Fee            18.6      140,529         -         2

                 Buffalo (Amherst)               1968      Ground Lease        22.7      184,832   100,034         7
                                                               (90%)

                 Freeport                        1981           Fee            12.5      166,587         -         3

                 New Hyde Park                   1976        Leasehold         12.5      101,454         -         1

                 North Syracuse                  1976        Leasehold         29.4       98,434         -         1

                 Rochester (Henrietta)           1971      Ground Lease        15.0      147,812         -         2

                 Rochester                       1966           Fee            18.4      176,261         -         3

PENNSYLVANIA     Allentown                       1957           Fee            86.8      197,534    74,125        15

                 Bensalem                        1972           Fee            23.2      208,174     6,714        14

                 Bethlehem                       1966           Fee            23.0      157,212     2,654         8

                 Broomall                        1966           Fee            21.0      145,776    22,355         4

                 Glenolden                       1975           Fee            10.0      101,235         -         3

                 Lancaster                       1966           Fee            28.0      179,982         -         9

                 Levittown                       1964           Fee            12.8      104,448         -         1

                 10th and Market
                      Streets, Philadelphia      1994           Fee             1.8      271,300         -         1

                 Upper Moreland                  1974           Fee            18.6      122,432         -         1

                 York                            1970           Fee            12.0      113,294         -         3

MARYLAND         Baltimore (Belair Rd.)          1962           Fee            16.0      205,723         -         2

                 Baltimore (Towson)              1968           Fee            14.6      146,393     6,800         7

                 Baltimore (Dundalk)             1966           Fee            16.1      183,361         -        17

                                                   AVERAGE                                              LEASE
                                                  ANNUALIZED                        PRINCIPAL         EXPIRATION/
                                                  BASE RENT       PERCENT            TENANTS            OPTION
                       LOCATION                 PER SQ.FT. (1)   LEASED (1)   (OVER 40,000 SQ. FT.)   EXPIRATION
- -----------------------------------------------------------------------------------------------------------------
                                                                                        
SHOPPING         Turnersville                        4.67          100%       Bradlees (2) (3)         2011/2031
CENTERS
                 Union                              14.87          100%       Bradlees (3)             2002/2022
                                                                              Toys "R" Us              2015

                 Vineland                            4.74          100%       Jamesway                 1998/2018
                                                                              Channel                  2005/2010

                 Watchung                           17.20          100%       B.J. Wholesale           2024

                 Woodbridge                          9.16           99%       Bradlees  (3)            2002/2022
                                                                              Foodtown (4)             2007/2014

NEW YORK         14th Street and Union
                       Square, Manhattan             9.92          100%       Bradlees                 2019/2029

                 Albany (Menands)                    5.79          100%       Norstar Bank             2004/2014
                                                                              Grand Union (6) (4)      2000

                 Buffalo (Amherst)                   5.67           92%       Media Play               2002/2017
                                                                              MJ Design (5)              -
                                                                              Toys "R" Us              2013
                                                                              T.J. Maxx                1999

                 Freeport                           10.81          100%       Home Depot               2011/2021

                 New Hyde Park                       7.51          100%       Bradlees                 2019/2029

                 North Syracuse                         -          100%       Reisman Properties       2014
                                                                                (owner of shopping 
                                                                                center)

                 Rochester (Henrietta)               5.22           68%       Hechinger                2005/2025
                                                                              Marshalls (4)            1998/2003

                 Rochester                           6.01           55%       Hechinger                2005/2025

PENNSYLVANIA     Allentown                           8.18          100%       Hechinger                2011/2031
                                                                              Shop-Rite                2011/2021
                                                                              Burlington Coat
                                                                              Factory                  2017

                 Bensalem                            6.21           89%       Bradlees  (2) (3) (6)    2011/2031

                 Bethlehem                           5.12           45%       Pathmark                 2000/2023

                 Broomall                            6.33           89%       Bradlees  (2) (3)        2006/2026

                 Glenolden                           9.72          100%       Bradlees  (2) (3)        2012/2022

                 Lancaster                           4.28           99%       Jamesway                 2013
                                                                              Weis Markets             1998/2018

                 Levittown                           4.67          100%       Bradlees   (2) (3)       2006/2026

                 10th and Market
                      Streets, Philadelphia           -             62%       Clover  (5)                -

                 Upper Moreland                      7.50          100%       Sam's Wholesale (2)      2010/2015

                 York                                4.46          100%       Builders Square          2009/2018

MARYLAND         Baltimore (Belair Rd.)              5.95           65%       Big B Food               1999/2004
                                                                              Warehouse

                 Baltimore (Towson)                  9.25          100%       Staples                  2004

                 Baltimore (Dundalk)                 6.35          100%       Various Tenants            -

                                     -7-
   8

                                                 YEAR                                   LEASABLE    GROUND     NUMBER
                                              ORIGINALLY       TYPE OF        LAND      BUILDING    LEASED      OF
                                               DEVELOPED      OWNERSHIP       AREA        AREA       AREA     TENANTS
                       LOCATION               OR ACQUIRED     INTEREST       (ACRES)    (SQ. FT)   (SQ. FT)   12/31/94
- -----------------------------------------------------------------------------------------------------------------------
                                                                                            
SHOPPING         Glen Burnie                     1958           Fee            21.2      117,369     3,100         5
CENTERS

                 Hagerstown                      1966           Fee            13.9      133,343    14,965         4

CONNECTICUT      Newington                       1965           Fee            19.2      134,229    45,000         5

                 Waterbury                       1969           Fee            19.2      139,717     2,645        10

MASSACHUSETTS    Chicopee                        1969           Fee            15.4      112,062     2,851         3

                 Milford                         1976        Leasehold         14.7       83,000         -         1

                 Springfield                     1966           Fee            17.4            -   117,044         1

TEXAS            Lewisville                      1990           Fee            13.3       34,893     1,204        15

                 Mesquite                        1990           Fee             5.5       71,246         -        13

                 Dallas                          1990           Fee             9.9       99,733         -         9

                                                                            -------   ----------   -------       ---
                 Total Shopping Centers                                     1,187.5    8,561,519   939,141       391
                                                                            -------   ----------   -------       ---

WAREHOUSE/       E. Brunswick                    1972           Fee            16.1      325,800         -         1
INDUSTRIAL

                 E. Hanover                    1963-1967        Fee            45.5      941,429         -         8

                 Edison                          1982           Fee            18.7      272,071         -         1

                 Garfield                        1959           Fee            31.6      486,620         -         3

                 Total Warehouse/                                           -------   ----------   -------       ---
                      Industrial                                              111.9    2,025,920         -        13
                                                                            -------   ----------   -------       ---

OTHER            Paramus                         1987       Ground Lease        3.4      118,225         -        22
PROPERTIES
                 Montclair                       1972           Fee             1.6       16,928         -         -

                 Rahway                          1972        Leasehold            -       32,000         -         1
                                                                            -------   ----------   -------       ---
                 Total Other Properties                                         5.0      167,153         -        23
                                                                            -------   ----------   -------       ---
                 Grand Total                                                1,304.4   10,754,592   939,141       427
                                                                            =======   ==========   =======       ===

                                                   AVERAGE                                              LEASE
                                                  ANNUALIZED                        PRINCIPAL         EXPIRATION/
                                                  BASE RENT       PERCENT            TENANTS            OPTION
                       LOCATION                 PER SQ.FT. (1)   LEASED (1)   (OVER 40,000 SQ. FT.)   EXPIRATION
- -----------------------------------------------------------------------------------------------------------------
                                                                                        
SHOPPING         Glen Burnie                         5.77          100%       Rickel Home              2005
CENTERS                                                                       Center (6)

                 Hagerstown                          2.81           85%       Pharmhouse               2008/2012
                                                                              Weis Markets             1999/2009

CONNECTICUT      Newington                           5.87          100%       Bradlees (3)             2002/2022
                                                                              Rickel Home              2007/2027
                                                                               Center

                 Waterbury                           7.58          100%       Toys "R" Us              2010
                                                                              Finast                   2003/2018
                                                                              Supermarkets

MASSACHUSETTS    Chicopee                            4.85          100%       Bradlees (3)             2002/2022

                 Milford                             5.01          100%       Bradlees (3)             2004/2009

                 Springfield                            -          100%       Wal*Mart                 2018/2092

TEXAS            Lewisville                         12.64          100%       Albertson's  (7)         2055

                 Mesquite                           13.25           93%                                  

                 Dallas                              9.23           85%       Albertson's  (7)         2055

                                                    -----          ----
                 Total Shopping Centers              8.05           94%
                                                    -----          ----

WAREHOUSE/       E. Brunswick                        1.77           97%       Popsicle Playwear        2000/2005
INDUSTRIAL                                                                    IFB Apparel, Inc. (5)      -

                 E. Hanover                          4.06           61%       Various Tenants            -

                 Edison                              2.49          100%       White Cons. Ind.,Inc.    1995/1998

                 Garfield                            3.34           38%       Popular Services         1997
                                                                              & Various Tenants
                 Total Warehouse/                   -----          ----
                      Industrial                     3.20           67%
                                                    -----          ----

OTHER            Paramus                            16.57           64%
PROPERTIES
                 Montclair                              -          100%       (5)                        -

                 Rahway                              4.88          100%              
                                                    -----          ----
                 Total Other Properties             13.01           75%
                                                    -----          ----
                 Grand Total                        $7.42           89%
                                                    =====          ====

(1) Average annualized base rent per square foot does not include rent for
leases which have not commenced as of December 31, 1994 or rent for ground
leases (which leases are included in percent leased).

(2)  The tenant at these locations has subleased or assigned its space from
Montgomery Ward & Co., Inc. which remains liable under the lease for that
portion of the rent not exceeding the rent previously payable by Montgomery
Ward.

(3)  These leases are guaranteed by the Stop & Shop Companies, Inc.

(4)  Tenant occupies between 30,000 and 39,000 square feet.

(5)  These leases had not commenced as of December 31, 1994 and are not included
in the "number of tenants" column.

(6)  The tenant has ceased operations at these locations but continues to 
pay rent.

(7)  Square footage excludes Albertson's which owns its land and building.

                                     -8-
   9

          INSURANCE

          The Company carries comprehensive liability, fire, flood, extended
coverage and rental loss insurance with respect to its properties with policy
specifications and insured limits customarily carried for similar properties.
Management of the Company believes that the Company's insurance coverage
conforms to industry norms.

ITEM 3.   LEGAL PROCEEDINGS

          The Company is from time to time involved in legal actions arising in
the ordinary course of its business.  In the opinion of management, after
consultation with legal counsel, the outcome of such matters will not have a
material effect on the Company's financial condition or results of operations.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          No matters were submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 1994.

                                      -9-
   10

EXECUTIVE OFFICERS OF THE REGISTRANT

       The following is a list of the names, ages, principal occupations and
positions with Vornado of the executive officers of Vornado and the positions
held by such officers during the past five years.  All executive officers of
Vornado have terms of office which run until the next succeeding meeting of the
Board of Trustees of Vornado following the Annual Meeting of Shareholders unless
they are removed sooner by the Board.

                                       Principal Occupation, Position and Office
                                       (current and during past five years with
  Name                 Age             Vornado unless otherwise stated)
  ----                 ---             -----------------------------------------

Steven Roth             53             Chairman of the Board and Chief Executive
                                       Officer; Chairman of the Executive
                                       Committee of the Board; a General Partner
                                       of Interstate Properties, a developer and
                                       operator of shopping centers and an
                                       investor in securities and partnerships.

Richard T. Rowan        48             Vice President - Real Estate

Joseph Macnow           49             Vice President - Chief Financial Officer

                                      -10-
   11

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Vornado's common shares are traded on the New York Stock Exchange.
                                                                  
Quarterly price ranges of the common shares and dividends per share paid 
for the years ended December 31, 1994 and 1993 were as follows:     

- -------------------------------------------------------------------------------------------
                       YEAR ENDED                                     YEAR ENDED
                    DECEMBER 31, 1994                             DECEMBER 31, 1993
- -------------------------------------------------------------------------------------------
Quarter       High        Low       Dividends              High      Low        Dividends *
- -------------------------------------------------------------------------------------------
                                                                  
1st          $36.50      $31.50        $.50               $34.82     $24.83         $.31

2nd           37.50       32.25         .50                41.50      33.00          .31

3rd           37.50       34.00         .50                42.00      35.00          .44

4th           35.88       30.50         .50                41.25      32.25          .44
- -------------------------------------------------------------------------------------------

* Does not include a special dividend of $3.36 per share of accumulated earnings
  and profits paid in June 1993.

  The approximate number of record holders of common shares of Vornado at
  December 31, 1994, was 2,000.

                                      -11-
   12

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

                                                                         Year Ended
                                           ------------------------------------------------------------------------
                                           December 31,   December 31,   December 31,   December 31,   December 31,
                                                   1994           1993           1992           1991        1990(1)
- -------------------------------------------------------------------------------------------------------------------
OPERATING DATA                                       (in thousands, except share and per share amounts)
                                                                                         
  Revenues:
    Property rentals                        $    70,755    $    67,213    $    63,186    $    61,371    $    58,524
    Expense reimbursements                       21,784         19,839         17,898         16,865         16,938
    Other income                                  1,459          1,738            913            262            111
- -------------------------------------------------------------------------------------------------------------------
    Total Revenues                               93,998         88,790         81,997         78,498         75,573
- -------------------------------------------------------------------------------------------------------------------
  Expenses:
   Operating                                     30,223         27,994         27,587         25,848         25,393
   Depreciation and amortization                  9,963          9,392          9,309          9,115          8,491
   General and administrative                     6,495          5,890          4,612          4,770          6,121
   Costs incurred in connection with
    the merger Vornado, Inc. into
    Vornado Realty Trust                             --            856             --             --             --
   Cost incurred upon exercise of a
    stock option by an officer and
    subsequent repurchase of a portion
    of the shares                                    --             --         15,650             --             --
- -------------------------------------------------------------------------------------------------------------------
  Total Expenses                                 46,681         44,132         57,158         39,733         40,005
- -------------------------------------------------------------------------------------------------------------------
  Operating income                               47,317         44,658         24,839         38,765         35,568
  Interest and dividend income                    7,489         11,620          8,555          9,303         12,125
  Interest and debt expense                     (14,209)       (31,155)       (33,910)       (34,930)       (35,120)
  Net gain (loss) on marketable securities          643            263          2,779          4,862         (1,836)
- -------------------------------------------------------------------------------------------------------------------
  Income from continuing operations before
   income taxes and extraordinary item           41,240         25,386          2,263         18,000         10,737
  Provision (benefit) for income taxes               --         (6,369)         1,080          7,527          4,414
- -------------------------------------------------------------------------------------------------------------------
  Income from continuing operations
   before extraordinary item                $    41,240    $    31,755    $     1,183    $    10,473    $     6,323
- -------------------------------------------------------------------------------------------------------------------
  Weighted average number
   of shares outstanding                     21,853,720     19,790,448     16,559,330     16,324,895     16,357,643
  Income per share from
   continuing operations                    $      1.89    $      1.60    $       .07    $       .64    $       .39
  Cash dividends declared                          2.00           1.50*          1.15           1.08            .27
* Does not include special dividend of 
  $3.36 per share of accumulated earnings 
  and profits paid in June 1993.

BALANCE SHEET DATA
  As at:
  Total assets                              $   393,538    $   385,830    $   420,616    $   393,447    $   387,866
  Real estate, at cost                          365,832        340,415        314,651        305,123        303,511
  Accumulated depreciation                      128,705        118,742        111,142        103,520        100,501
  Long-term debt                                234,160        235,037        341,701        345,608        357,459
  Shareholders' equity (deficit)                116,688        115,737         (3,242)         8,125         15,421
- -------------------------------------------------------------------------------------------------------------------
OTHER DATA
  Funds from operations (2):
    Income from continuing operations
     before income taxes and
     extraordinary item                     $    41,240    $    25,386    $     2,263    $    18,000    $    10,737
     Depreciation and amortization
      (including debt issuance costs)            10,839         11,435         11,470         11,279         10,691
     Straight-lining of rental income            (2,181)        (2,200)        (2,200)        (2,200)        (2,109)
      (Gains)/losses on sale of
       securities available for sale                (51)          (263)          (846)        (1,932)         3,295
      Costs incurred in connection with
       the merger/upon exercise of a
       stock option                                  --            856         15,650            --              --
- -------------------------------------------------------------------------------------------------------------------
  Funds from operations                     $    49,847    $    35,214    $    26,337    $    25,147    $    22,614
- -------------------------------------------------------------------------------------------------------------------

                                                            Eleven Months
                                                                 Ended
                                                             December 31,
                                                                1990(1)
- -------------------------------------------------------------------------
OPERATING DATA         (in thousands, except share and per share amounts)
                                                        
  Revenues:
    Property rentals                                       $    53,768
    Expense reimbursements                                      15,468
    Other income                                                   111
- ----------------------------------------------------------------------
    Total Revenues                                              69,347
- ----------------------------------------------------------------------
  Expenses:
   Operating                                                    23,101
   Depreciation and amortization                                 7,824
   General and administrative                                    5,527
   Costs incurred in connection with
    the merger Vornado, Inc. into
    Vornado Realty Trust                                            --
   Cost incurred upon exercise of a
    stock option by an officer and
    subsequent repurchase of a portion
    of the shares                                                   --
- ----------------------------------------------------------------------
  Total Expenses                                                36,452
- ----------------------------------------------------------------------
  Operating income                                              32,895
  Interest and dividend income                                  11,051
  Interest and debt expense                                    (32,189)
  Net gain (loss) on marketable securities                          (3)
- ----------------------------------------------------------------------
  Income from continuing operations before
   income taxes and extraordinary item                          11,754
  Provision (benefit) for income taxes                           4,827
- ----------------------------------------------------------------------
  Income from continuing operations
   before extraordinary item                               $     6,927
- ----------------------------------------------------------------------
  Weighted average number
   of shares outstanding                                    16,357,643
  Income per share from
   continuing operations                                   $       .42
  Cash dividends declared                                          .27
* Does not include special dividend of $3.36 per 
  share of acumulated earnings
  and profits paid in June 1993.
BALANCE SHEET DATA
  As at:
  Total assets                                             $   387,866
  Real estate, at cost                                         303,511
  Accumulated depreciation                                     100,501
  Long-term debt                                               357,459
  Shareholders' equity (deficit)                                15,421
- ----------------------------------------------------------------------
OTHER DATA
  Funds from operations (2):
    Income from continuing operations
     before income taxes and
     extraordinary item                                    $    11,754
     Depreciation and amortization
      (including debt issuance costs)                            9,746
     Straight-lining of rental income                           (1,933)
      (Gains)/losses on sale of
       securities available for sale                             1,443
      Costs incurred in connection with
       the merger/upon exercise of a
       stock option
- ----------------------------------------------------------------------
 Funds from operations                                     $    21,010
- ----------------------------------------------------------------------

(1) In 1990, the Company changed to a calendar year end from a fiscal year
ending on the last Saturday in January.  The amounts for the year ended December
31, 1990 are included for comparative purposes only.

(2) Funds from operations does not represent cash generated from operating
activities in accordance with generally accepted accounting principles and is
not necessarily indicative of cash available to fund cash needs.  Funds from
operations should not be considered as an alternative to net income as an
indicator of the Company's operating performance or as an alternative to cash
flows as a measure of liquidity.

Amounts included in revenues and expenses have been reclassified to conform with
the current year's presentation.

                                      -12-
   13

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND
         RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
  YEARS ENDED DECEMBER 31, 1994
  AND DECEMBER 31, 1993

Funds from operations improved to $49,847,000 in 1994 from $35,214,000 in 1993,
an increase of $14,633,000 or 41.5%.

Funds from operations is defined as income from continuing operations before
income taxes plus depreciation and amortization (including debt issuance costs)
less straight-lining of rents and realized gains on securities available for
sale and excluding costs incurred in connection with the merger of Vornado, Inc.
into Vornado Realty Trust in 1993.  Funds from operations does not represent
cash generated from operating activities in accordance with generally accepted
accounting principles and is not necessarily indicative of cash available to
fund cash needs. Funds from operations should not be considered as an
alternative to net income as an indicator of the Company's operating performance
or as an alternative to cash flows as a measure of liquidity.  Nonetheless,
management considers funds from operations an appropriate supplemental measure
of the Company's operating performance.

The Company's revenues, which consist of property rentals, tenant expense
reimbursements and other income were $93,998,000 in 1994, compared to
$88,790,000 in 1993, an increase of $5,208,000 or 5.9%.

Property rentals from shopping centers were $63,778,000 in 1994, compared to
$60,919,000 in 1993, an increase of $2,859,000 or 4.7%.  This increase resulted
from rental step-ups in leases which are not subject to the straight-line method
of revenue recognition of $1,700,000 and $1,300,000 of rents from tenants at
expansions of shopping centers.  Property rentals from new tenants were
approximately the same as property rentals lost from vacating tenants.  Property
rentals from the remainder of the portfolio were $6,090,000 in 1994 as compared
to $5,340,000 in 1993, an increase of $750,000 or 14.0%.  This increase resulted
primarily from  property rentals received from new tenants exceeding property
rentals lost from vacating tenants.  Percentage rent was $887,000 in 1994 as
compared to $954,000 in 1993.

Tenant expense reimbursements were $21,784,000 in 1994, compared to $19,839,000
in 1993, an increase of $1,945,000.  This increase reflects a corresponding
increase in operating expenses passed through to tenants.

Other income was greater in 1993 than in 1994 primarily as a result of
reimbursements recognized under the Company's leasing agreement with Alexander's
in 1993.

Operating expenses were $30,223,000 in 1994 as compared to $27,994,000 in 1993,
an increase of $2,229,000.  This increase resulted primarily from an increase in
real estate taxes, snow removal costs and other common area maintenance charges.

Depreciation and amortization expense increased in 1994 primarily as a result of
the completion of property expansions.

General and administrative expenses were $6,495,000 in 1994 as compared to
$5,890,000 in 1993, an increase of $605,000.  This increase resulted from higher
professional fees and payroll.

Investment income from cash and cash equivalents, and marketable securities, net
of amounts due for U.S. Treasury obligations (collectively, "Liquid
Investments"), was $8,132,000 in 1994 compared to $11,883,000 in 1993, a
decrease of $3,751,000 or 31.6%.  The change in investment income resulted
primarily from a decrease in interest and dividend income of $4,131,000 as a
result of lower average investments due to the use of approximately $100,000,000
to reduce debt in November 1993, partially offset by an increase in net gains on
marketable securities.

Interest and debt expense was $14,209,000 in 1994 as compared to $31,155,000 in
1993, a decrease of $16,946,000 or 54.3%.  Of this decrease, (i) $14,586,000
resulted from the refinancing of a blanket mortgage loan (see Note 6), and (ii)
$1,300,000 resulted from an increase in capitalized interest during
construction.

The Company operates in a manner intended to enable it to continue to qualify as
a real estate investment trust ("REIT") under Sections 856-860 of the Internal
Revenue Code of 1986 as amended (the "Code").  Under those sections, a REIT
which distributes at least 95% of its REIT taxable income to its shareholders
each year and which meets certain other conditions will not be taxed on that
portion of its taxable income which is distributed to its shareholders.  The
Company has distributed to its shareholders an amount greater than its taxable
income.  Therefore, no provision for Federal income taxes is required.  In 1993,
as

                                      -13-

   14

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS - (continued)

a result of the Company's conversion to a REIT, the deferred tax balance of
$6,369,000 at December 31, 1992 was reversed.

RESULTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1993 AND DECEMBER 31, 1992

Funds from operations improved to $35,214,000 in 1993 from $26,337,000 in 1992,
an increase of $8,877,000 or 33.7%.

The Company's revenues, which consist of property rentals, tenant expense
reimbursements and other income were $88,790,000 in 1993, compared to 
$81,997,000 in 1992, an increase of $6,793,000 or 8.3%.

Property rentals from shopping centers were $60,919,000 in 1993, compared to
$56,185,000 in 1992, an increase of $4,734,000 or 8.4%. This increase resulted
from rental step-ups in existing tenant leases which are not subject to the
straight-line method of revenue recognition of $2,061,000 and property rentals
received from new tenants exceeding property rentals lost from vacating tenants.
Property rentals from the remainder of the portfolio were $5,340,000 in 1993 as
compared to $6,316,000 in 1992, a decrease of $976,000 or 15.4%.  Of this
decrease (i) $477,000 resulted from the closing of the outlet department store
at the Company's Watchung, New Jersey location on June 1, 1993 as part of a
redevelopment plan (see Liquidity and Capital Resources) and (ii) $499,000
resulted from the excess of property rentals lost from vacating tenants over
property rentals received from new tenants. Percentage rent was $954,000 in 1993
as compared to $685,000 in 1992.

Tenant expense reimbursements were $19,839,000 in 1993, compared to $17,898,000
in 1992, an increase of $1,941,000.  This increase relates to a corresponding
increase in operating expenses passed through to tenants and reimbursements from
tenants under leases which commenced subsequent to January 1, 1992.

Other income increased as a result of reimbursements of $750,000 recognized in
1993 under the Company's leasing agreement with Alexander's and a full year of
management fees received from Interstate Properties in 1993 as compared to a
partial year in 1992. 

Operating expenses were $27,994,000 in 1993 as compared to $27,587,000
in 1992, an increase of $407,000.  This increase resulted primarily from a 
rise in real estate taxes offset by savings of $500,000 in connection with 
the closing of the abovementioned outlet department store.

Depreciation and amortization expense for 1993 did not change significantly from
1992.

General and administrative expenses were $5,890,000 in 1993 as compared to
$4,612,000 in 1992, an increase of $1,278,000.  This increase resulted from
increases in (i) payroll of $500,000, of which $300,000 was applicable to
employees added in connection with the management of Interstate Properties (see
other income above), (ii) professional fees of $408,000 and (iii) general 
corporate office expenses of $370,000.

In connection with the merger of Vornado, Inc. into Vornado Realty Trust, the
Company incurred costs of $856,000.

Investment income from Liquid Investments was $11,883,000 in 1993 compared to
$11,334,000 in 1992, an increase of $549,000 or 4.8%. The change in investment
income resulted primarily from an increase in interest and dividend income of
$3,065,000 offset by a decrease in net gains on the sale of marketable
securities of $2,516,000 (including $1,932,000 from the Company's former
investment in a limited partnership, which was liquidated at December 31, 1992
at book value for cash).  Of the increase in interest and dividend income,
$1,912,000 was attributable to interest income earned on the net proceeds from
the issuance of 5,211,700 common shares of beneficial interest in May 1993, net
of a distribution of accumulated earnings and profits and working capital used
to prepay a blanket mortgage loan.  The balance of the increase resulted from
the mix of other investments.

Interest and debt expense was $31,155,000 in 1993 as compared to $33,910,000 in
1992, a decrease of $2,755,000 or 8.1%.  Of this decrease, (i) $1,600,000
resulted from the refinancing of a blanket mortgage loan (see Note 6), and (ii)
$282,000 was due to an increase in capitalized interest during construction.

                                      -14-
   15

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS - (continued)

LIQUIDITY AND CAPITAL RESOURCES

On December 31, 1994, the Company had Liquid Investments of $77,600,000
(excluding unrealized gains on securities available for sale) compared to
$100,400,000 at December 31, 1993, a decrease of $22,800,000.  The decrease in
Liquid Investments resulted primarily from (i) dividends paid to shareholders of
$43,200,000 and (ii) capital expenditures of $25,400,000 exceeding net cash
provided from operating activities of $46,900,000.

The major items of capital expenditures for 1994 were (i) $11,400,000 for
expansions in three  shopping centers, (ii) $3,900,000 for the acquisition of a
building in Philadelphia, Pennsylvania and (iii) $2,100,000 for the tenant
improvements at the Company's retail property at 14th Street in Manhattan, New
York.  The Company has budgeted approximately $13,500,000 for investment over
the next two years of which $10,000,000 is for future expansions and $2,000,000
is for tenant improvements at the Company's retail property in Philadelphia,
noted above.  In addition, the Company will continue its program of upgrading
its shopping centers by  refurbishing its parking lots (including resurfacing,
new lighting, updated landscaping, islands and curbing) and re-roofing of
buildings, the cost of which will be substantially reimbursed by tenants in
accordance with existing lease terms.

In July 1992, the Company was retained by Alexander's Inc. to act as a special
real estate consultant.  The Company is due approximately $12,400,000 for
transactions completed to date.  Of this amount, the Company was due to receive
$500,000 on July 1, 1994 but has not received such payment.  The balance of
$11.9 million will be payable over a seven year period in an amount not to
exceed $2,500,000 in any calendar year until the present value of such
installments (calculated at a discount rate of 9% per annum) equals the amount
that would have been paid had it been paid on September 21, 1993 or at the time
the  transactions which gave rise to the commissions occurred, if later.  Such
receipts are subject to payment of rents by the underlying tenants pursuant to
the leases and to the prior satisfaction of all payments to which certain
creditors of Alexander's are entitled under the plan of reorganization confirmed
by such creditors (see Notes 13-D and 17).

On March 2, 1995, following bankruptcy court approval of the loan and management
arrangements described below, the Company purchased all of the 1,353,468 shares
of common stock of Alexander's, Inc. ("Alexander's") owned by Citibank, N.A.
("Citibank") for $40.50 per share in cash (the "Acquisition"), representing
27.1% of the outstanding common stock of Alexander's.  After the Acquisition,
the Company owns 29.3% of the outstanding shares of common stock of Alexander's.
Interstate Properties, which owns 31% of the common shares of beneficial
interest of the Company, currently owns 27.1% of the outstanding shares of
Alexander's common stock.

The Company and Alexander's have entered into a three year management and
development agreement (the "Management Agreement") under which the Company has
agreed to manage all Alexander's business affairs and manage and develop
Alexander's properties for an annual fee of $3,000,000; plus 6% of development
costs with a minimum guaranteed fee for the development portion of $1,650,000 
in the first year and $750,000 in each of the second and third years.

The fees pursuant to the Management Agreement discussed above, are in addition
to leasing fees the Company receives from Alexander's under a leasing agreement
in effect since 1992.  The term of the leasing agreement has been extended to be
co-terminus with the term of the Management Agreement.

On March 15, 1995, the Company and a bank lent Alexander's $75,000,000 in a
secured financing, of which $45,000,000 was funded by the Company and the
balance was funded by the  bank.  The Company's loan, which is subordinate to
that of the bank, has a three year term and bears interest at 16.43% per annum
for the first two years and at a fixed rate for the third year of 992 basis
points over one year treasury bills.  In addition, Alexander's paid a loan 
origination fee of $1,500,000 to the Company.

                                      -15-
   16

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS - (continued)

On February 27, 1995, the Company entered into a three year unsecured revolving
credit facility with a bank providing for borrowings of up to $75,000,000.
Borrowings bear annual interest, at the Company's election, at Libor plus 1.50%
or the higher of the federal funds rate plus 1% or prime rate plus .50%.  At
March 15, 1995, the Company had borrowed $60,000,000 under the agreement.

In May 1994, the Company's shelf registration statement relating to $350,000,000
of securities became effective.

The Company anticipates that cash from continuing operations, working capital,
borrowings under its revolving credit facility and/or proceeds from the issuance
of securities under the Company's shelf registration statement will be adequate
to fund its business operations, capital expenditures, continuing debt service
obligations, the payment of dividends and the Alexander's transactions noted
above.

ECONOMIC CONDITIONS

Substantially all of the Company's leases contain step-ups in rent.  Such rental
increases are not designed to, and in many instances do not, approximate the
cost of inflation, but do have the effect of mitigating the adverse impact of
inflation.  In addition, substantially all of the Company's leases contain
provisions that require the tenant to reimburse the Company for the tenant's
share of common area charges (including roof and structure, unless it is the
tenant's direct responsibility) and real estate taxes thus passing through to
the tenants the effects of inflation on such expenses.

Inflation did not have a material effect on the Company's results for the
periods presented.

                                      -16-

   17

ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         Index to Financial Statements

                                                                                     Page
                                                                                     ----
                                                                                    
             Independent Auditors' Report                                              18

             Consolidated Balance Sheets as at December 31, 1994 and 1993              19

             Consolidated Statements of Income for the years ended 
             December 31, 1994, 1993 and 1992                                          21

             Consolidated Statements of Shareholders' Equity (Deficit)
             for the years ended December 31, 1994, 1993 and 1992                      22

             Consolidated Statements of Cash Flows for the years ended
             December 31, 1994, 1993 and 1992                                          23

             Notes to Consolidated Financial Statements                                24

ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT AUDITORS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE

             Not applicable.

                                      -17-
   18

INDEPENDENT AUDITORS' REPORT

Shareholders and Board of Trustees
Vornado Realty Trust
Saddle Brook, New Jersey

We have audited the accompanying consolidated balance sheets of Vornado Realty
Trust and subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of income, shareholders' equity (deficit) and cash flows
for each of the three years in the period ended December 31, 1994.  Our audits
also included the financial statement schedules listed in Item 14.  These
financial statements and financial statement schedules are the responsibility of
the Company's management.  Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Vornado Realty Trust and
subsidiaries at December 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1994 in conformity with generally accepted accounting principles.  Also, in
our opinion, such financial statement schedules, when considered in relation to
the basic consolidated financial statements taken as a whole, present fairly in
all material respects the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, the Company
changed its method of accounting for marketable securities effective January 1,
1994 to conform to Statement of Financial Accounting Standards No. 115.

Deloitte & Touche LLP
Parsippany, New Jersey
March 9, 1995
(March 15, 1995 as to Note 17)

                                      -18-
   19

CONSOLIDATED BALANCE SHEETS

- -----------------------------------------------------------------------------------------
(amounts in thousands except share amounts)     DECEMBER 31, 1994       December 31, 1993
- -----------------------------------------------------------------------------------------
                                                                       
ASSETS:
Real estate, at cost:
      Land                                               $ 61,269            $ 60,280
      Buildings and improvements                          298,277             274,696
      Leasehold improvements and equipment                  6,286               5,439
- -----------------------------------------------------------------------------------------
            Total                                         365,832             340,415
- -----------------------------------------------------------------------------------------
      Less accumulated depreciation and
         amortization                                     128,705             118,742
- -----------------------------------------------------------------------------------------
            Real estate, net                              237,127             221,673
- -----------------------------------------------------------------------------------------
Cash and cash equivalents, including U.S.
  government obligations under 
  repurchase agreements of $15,275 and $3,332              23,559              24,119
Marketable securities                                      87,206              99,130
Investment in and advances to Alexander's, Inc.             7,350               3,152
Due from officer                                            8,418               8,418
Accounts receivable, net of allowance for
  doubtful accounts of $457 and $402                        4,898               4,199
Receivable arising from the straight-lining of rents       11,807               9,626
Other assets                                               13,173              15,513
- -------------------------------------------------------------------------------------
                                                         $393,538            $385,830
- -------------------------------------------------------------------------------------

                                      -19-
   20

CONSOLIDATED BALANCE SHEETS (CONTINUED)

- --------------------------------------------------------------------------------------------------
(amounts in thousands except share amounts)               DECEMBER 31, 1994      December 31, 1993
- --------------------------------------------------------------------------------------------------
                                                                                  
LIABILITIES AND SHAREHOLDERS' EQUITY:
Notes and mortgages payable                                        $234,160             $235,037
Due for U.S. Treasury Obligations                                    34,275               22,847
Accounts payable and accrued expenses                                 4,275                8,195
Other liabilities                                                     4,140                4,014
- --------------------------------------------------------------------------------------------------
             Total liabilities                                      276,850              270,093
- --------------------------------------------------------------------------------------------------
Commitments and contingencies
Shareholders' equity:
          Preferred shares of beneficial interest:
             no par value per share; authorized,
             1,000,000 shares; issued, none
          Common shares of beneficial interest:
             $.04 par value per share; authorized,
             50,000,000 shares; issued, 21,654,285
             and 21,603,266 shares                                      866                  864
          Additional capital                                        198,184              197,575
          Accumulated deficit                                       (79,513)             (77,517)
- --------------------------------------------------------------------------------------------------
                                                                    119,537              120,922

          Unrealized gains on securities available
            for sale                                                  2,336                   --
          Due from officers for purchase of common
           shares of beneficial interest                             (5,185)              (5,185)
- --------------------------------------------------------------------------------------------------
             Total shareholders' equity                             116,688              115,737
- --------------------------------------------------------------------------------------------------
                                                                   $393,538             $385,830
- --------------------------------------------------------------------------------------------------

See notes to consolidated financial statements.

                                      -20-
   21

CONSOLIDATED STATEMENTS OF INCOME

- ------------------------------------------------------------------------------------------------------
                                                          YEAR ENDED       Year  Ended      Year Ended
(amounts in thousands                                   DECEMBER 31,      December 31,    December 31,
except share amounts)                                          1994              1993            1992 
- ------------------------------------------------------------------------------------------------------
                                                                                      
Revenues:
      Property rentals                                       $70,755           $67,213         $63,186
      Expense reimbursements                                  21,784            19,839          17,898
      Other income (including fee income
       from related parties of $1,144,
       $1,663 and $367)                                        1,459             1,738             913
- ------------------------------------------------------------------------------------------------------
Total revenues                                                93,998            88,790          81,997
- ------------------------------------------------------------------------------------------------------
Expenses:
      Operating                                               30,223            27,994          27,587
      Depreciation and amortization                            9,963             9,392           9,309
      General and administrative                               6,495             5,890           4,612
      Costs incurred in connection with the merger
        of Vornado, Inc. into Vornado Realty Trust                --               856              --
      Cost incurred upon exercise of a stock option
        by an officer and subsequent repurchase
        of a portion of the shares                                --                --          15,650
- ------------------------------------------------------------------------------------------------------
Total expenses                                                46,681            44,132          57,158
- ------------------------------------------------------------------------------------------------------
Operating income                                              47,317            44,658          24,839
- ------------------------------------------------------------------------------------------------------
Interest and dividend income                                   7,489            11,620           8,555
Interest and debt expense                                    (14,209)          (31,155)        (33,910)
Net gain on marketable securities                                643               263           2,779
- ------------------------------------------------------------------------------------------------------
Income from continuing operations before
  income taxes and extraordinary item                         41,240            25,386           2,263
Provision (benefit) for income taxes                              --            (6,369)          1,080
- ------------------------------------------------------------------------------------------------------
Income from continuing operations
  before extraordinary item                                   41,240            31,755           1,183
- ------------------------------------------------------------------------------------------------------
Loss from discontinued operation                                  --              (600)             --
- ------------------------------------------------------------------------------------------------------
Income before extraordinary item                              41,240            31,155           1,183
Extraordinary item - loss on
  early extinguishment of debt                                    --            (3,202)             --
- ------------------------------------------------------------------------------------------------------
      NET INCOME                                             $41,240           $27,953         $ 1,183
- ------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) PER SHARE based on 21,853,720,
 19,790,448, and 16,559,329 shares outstanding:
      Continuing operations                                    $1.89             $1.60            $.07
      Discontinued operation                                      --              (.03)             --
      Extraordinary item                                          --              (.16)             --
- ------------------------------------------------------------------------------------------------------
      NET INCOME                                               $1.89             $1.41            $.07
- ------------------------------------------------------------------------------------------------------

See notes to consolidated financial statements.

                                      -21-
   22

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

- ---------------------------------------------------------------------------------------------------------------------------
                                                                             Unrealized
                                                                               Gains on                               Total
(amounts in thousands                                            Retained    Securities         Due    Treasury      Share-
except share amounts)                    Common    Additional    Earnings     Available        from       Stock    holders'
                                         Shares       Capital    (Deficit)     for Sale    Officers    (Deficit)     Equity
- ---------------------------------------------------------------------------------------------------------------------------
                                                                                             
BALANCE, December 31, 1991                $ 608      $ 66,175   $ 124,303     $      --     $    --   $(182,961)   $  8,125
Net income                                   --            --       1,183            --          --          --       1,183
Dividends paid                               --            --     (17,541)           --          --          --     (17,541)
Acquisition of 3,300 shares of
   common stock *                            --            --          --            --          --         (89)        (89)
Common stock issued under
   employees' stock plans                    20         4,805          --            --          --          --       4,825
Due from officer for purchase
   of common shares                          --            --          --            --      (4,705)         --      (4,705)
Stock option tax benefit                     --         4,960          --            --          --          --       4,960
Three-for-two stock split                   214          (214)         --            --          --          --          --
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1992                  842        75,726     107,945            --      (4,705)   (183,050)     (3,242)
Net income                                   --            --      27,953            --          --          --      27,953
Net proceeds from issuance
   of common shares                         208       171,843          --            --          --          --     172,051
Distribution of accumulated                                                                                    
   earnings and profits                      --            --     (54,022)           --          --          --     (54,022)
Dividends paid                               --            --     (30,460)           --          --          --     (30,460)
Retirement of common stock
   held in treasury                        (200)      (53,917)   (128,933)           --          --     183,050          --
Common shares issued under
   employees' share plans                    14         3,923          --            --          --          --       3,937
Due from officers for purchase
   of common shares                          --            --          --            --        (480)         --        (480)
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1993                  864       197,575     (77,517)           --      (5,185)         --     115,737
Unrealized gains on securities
   available for sale at
   January 1, 1994                           --            --          --         8,565          --          --       8,565
Net income                                   --            --      41,240            --          --          --      41,240
Dividends paid                               --            --     (43,236)           --          --          --     (43,236)
Common shares issued under
   employees' share plans                     2           609          --            --          --          --         611
Change in unrealized gains (losses)
   on securities available for sale          --            --          --        (6,229)         --          --      (6,229)
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1994                $ 866      $198,184    $(79,513)      $ 2,336**   $(5,185)  $      --    $116,688
- ---------------------------------------------------------------------------------------------------------------------------

*  Not adjusted for applicable stock splits.

** Includes $3,435 in unrealized gains attributable to the Company's investment
   in the common stock of Alexander's, Inc. (see Note 13-C).

See notes to consolidated financial statements.

                                      -22-
   23

CONSOLIDATED STATEMENTS OF CASH FLOWS

- ---------------------------------------------------------------------------------------------------------------------

                                                                      YEAR ENDED        Year Ended         Year Ended
                                                                     DECEMBER 31,     December 31,       December 31,
(amounts in thousands)                                                      1994             1993               1992 
- ---------------------------------------------------------------------------------------------------------------------
                                                                                                      
CASH FLOWS FROM OPERATING ACTIVITIES:
   Income from continuing operations before
      extraordinary item                                                $  41,240        $  31,755           $  1,183

   Adjustments to reconcile income to net cash
      provided by continuing operations:
      Depreciation and amortization (including
        debt issuance costs)                                               10,839           11,435             11,470
      Straight-lining of rental income                                     (2,181)          (2,200)            (2,200)
      Deferred income taxes                                                    --           (6,369)               800
      Net gain on marketable securities                                      (643)            (263)            (2,779)
      Extraordinary item - loss on early
        extinguishment of debt                                                 --           (3,202)                --
   Changes in assets and liabilities:
      Trading securities                                                    1,485              279              1,732
      Accounts receivable                                                    (699)            (156)            (1,856)
      Due to officer                                                           --          (12,753)            12,753
      Accounts payable and accrued expenses                                (3,920)           2,611                314
      Other                                                                   827            7,188             (6,086)
- ---------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities of
   continuing operations                                                   46,948           28,325             15,331
- ---------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by operating
   activities of discontinued operation                                        --             (600)             2,276
- ---------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                  46,948           27,725             17,607
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to real estate                                               (25,417)         (26,986)           (11,215)
   Purchases of securities available for sale                                  --          (22,918)            (8,025)
   Proceeds from sale of securities
      available for sale                                                    9,983           51,254             34,040
- ---------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities                       (15,434)           1,350             14,800
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from issuance of common shares                                 --          172,051                 --
   Distribution of accumulated earnings and profits                            --          (54,022)                --
   Due for U.S. Treasury Obligations                                       11,428          (30,048)            28,719
   Proceeds from borrowings                                                    --          227,000              4,000
   Payments on borrowings                                                    (877)        (333,664)            (7,907)
   Costs of refinancing debt                                                   --           (5,247)                --
   Dividends paid                                                         (43,236)         (30,460)           (17,541)
   Exercise of share options                                                  611            3,937              4,825
   Net loans to officers                                                       --           (5,980)            (7,623)
   Acquisition of common stock held in treasury                                --               --                (89)
- ---------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities                       (32,074)         (56,433)             4,384
- ---------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents                         (560)         (27,358)            36,791
Cash and cash equivalents at beginning of year                             24,119           51,477             14,686
- ---------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                                $  23,559         $ 24,119           $ 51,477
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash payments for income taxes                                       $      --         $     --           $  4,993
- ---------------------------------------------------------------------------------------------------------------------
   Cash payments for interest                                           $  14,915         $ 29,382           $ 31,749
- ---------------------------------------------------------------------------------------------------------------------
Non-cash transactions:
   During 1994, a credit to shareholders' equity of $2,336 was recorded to reflect an unrealized gain on securities
available for sale.
   In May 1993, 5,007,024 shares of common stock held in treasury were retired.  The retirement of the shares was
recorded by reducing the common stock account ($200), additional capital ($53,917) and retained earnings ($128,933).
   In December 1992, a tax benefit of $4,960 resulting from the exercise of a stock option was reflected as an
increase to additional capital.
- ---------------------------------------------------------------------------------------------------------------------

See notes to consolidated financial statements.

                                      -23-

   24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1.  ORGANIZATION

ORGANIZATION:  On May 6, 1993, Vornado, Inc. merged into Vornado Realty Trust, a
Maryland real estate investment trust.  Vornado Realty Trust was formed on March
29, 1993, as a wholly-owned subsidiary of Vornado, Inc., specifically for the
purpose of the merger.

On May 21, 1993, the Company completed the sale of 5,211,700 common shares of
beneficial interest (including 211,700 shares which closed on June 4, 1993
pursuant to an election of the underwriters to exercise, in part, their
over-allotment option) in a public offering at $35 1/2, which net of expenses
yielded $172,051,000 to the Company.

On June 3, 1993, in connection with its conversion to a real estate investment
trust, the Company distributed to its shareholders a special dividend of
$54,022,000 of accumulated earnings and profits as determined for Federal income
tax purposes.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION:  The accompanying consolidated financial statements
include the accounts of Vornado Realty Trust and its subsidiaries, all of which
are wholly-owned. All significant intercompany balances and transactions have
been eliminated.

Effective December 31, 1994, to be consistent with the prevalent real estate
industry practice, the Company changed the presentation of its consolidated
statements of income to show tenant reimbursements of expenses, previously
offset against operating expenses, as part of revenues and to reflect other
income (including fee income from related parties) previously offset against
operating and general and administrative expenses, as part of revenues.  Prior
period's amounts have been reclassified to conform with the current year's
presentation.

The financial statements for the applicable periods present the Steinwurtzel
fleece apparel wholesaling business as a discontinued operation. 

REAL ESTATE:  Real estate is carried at the lower of cost or net realizable 
value.  Betterments, major renewals and certain costs directly related to the
acquisition, improvement and leasing of real estate are capitalized. Maintenance
and repairs are charged to operations as incurred.  Depreciation is provided on
a straight-line basis over the assets  estimated useful lives. Additions to real
estate include interest expense capitalized during construction of $1,582,000
and $282,000 for the years ended December 31, 1994 and 1993.

CASH AND CASH EQUIVALENTS: Cash and cash equivalents consist of highly liquid
investments purchased with original maturities of three months or less.

MARKETABLE SECURITIES:  On January 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115 - Accounting for Certain Investments in
Debt and Equity Securities (SFAS No. 115) under which securities are carried at
market.  The Company has classified debt and equity securities which it intends
to hold for an indefinite period of time as securities available for sale and
equity securities it intends to buy and sell on a short term basis as trading
securities.  Unrealized gains and losses are included in earnings for trading
securities and as a component of shareholder's equity for securities available
for sale.  Realized gains or losses on the sale of securities are recorded based
on average cost.

REVENUE RECOGNITION:  Base rents, additional rents based on tenants' sales
volume and  reimbursement of the tenants' share of certain operating expenses
are generally recognized when due from tenants.  The straight-line basis is used
to recognize base rents under leases entered into after November 14, 1985 which
provide for varying rents over the lease terms.

INCOME TAXES:  The Company operates in a manner intended to enable it to
continue to qualify as a real estate investment trust ("REIT") under Sections
856-860 of the Internal Revenue Code of 1986 as amended (the "Code").  Under
those sections, a REIT which distributes at least 95% of its REIT taxable income
to its

                                      -24-

   25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
shareholders each year and which meets certain other conditions will not be
taxed  on that portion of its taxable income which is distributed to its
shareholders.  The Company  has distributed to shareholders an amount greater
than its taxable income. Therefore, no provision for Federal income taxes is
required.  As a result of the Company's conversion to a REIT in 1993,  the
deferred tax balance at December 31, 1992 was reversed in 1993.

AMOUNTS PER SHARE:  Amounts per share are computed based upon the weighted
average number of shares outstanding during the year and the dilutive effect of
stock options.

3. MARKETABLE SECURITIES

   The aggregate cost and market value of securities held at December 31, 1994
and 1993 were as follows:
- --------------------------------------------------------------------------------

                                                   
                                             December 31, 1994                 December 31, 1993
                                             -----------------                 -----------------
                                           Cost            Market            Cost           Market
                                                                              
- ------------------------------------------------------------------------------------------------------
Securities available for sale:
   U.S.treasury obligations             $66,327,000      $66,285,000      $66,401,000     $ 70,284,000
   Other equity and debt securities      19,215,000       18,158,000       29,072,000       29,428,000
- ------------------------------------------------------------------------------------------------------
                                         85,542,000       84,443,000       95,473,000       99,712,000

Trading securities - equity               2,755,000        2,763,000        3,657,000        3,784,000
- ------------------------------------------------------------------------------------------------------
Total                                   $88,297,000      $87,206,000      $99,130,000     $103,496,000
- ------------------------------------------------------------------------------------------------------
Gross unrealized gains and losses at 
December 31, 1994 and 1993 were as follows:
- ------------------------------------------------------------------------------------------------------
                                                   
                                             December 31, 1994                  December 31, 1993
                                             -----------------                  -----------------
                                           Gains           (Losses)        Gains             (Losses)

- ------------------------------------------------------------------------------------------------------
                                                                              
Securities available for sale:
   U.S.treasury obligations                $149,000      $  (191,000)      $3,883,000     $         --
   Other equity and debt securities              --       (1,057,000)         482,000         (126,000)
- ------------------------------------------------------------------------------------------------------
                                            149,000       (1,248,000)       4,365,000         (126,000)

Trading securities - equity                   8,000               --          127,000               --
- ------------------------------------------------------------------------------------------------------
Total                                      $157,000      $(1,248,000)      $4,492,000        $(126,000)
- ------------------------------------------------------------------------------------------------------

Of the U.S. treasury obligations at December 31, 1994, $10,020,000 (market value
$10,106,000) matures within one year and $56,307,000 (market value $56,179,000)
matures within three years.

U.S. treasury obligations with a fair market value of $35,205,000 and
$26,656,000 were held as collateral for amounts due for U.S. treasury
obligations at December 31, 1994 and 1993.  Amounts due for U.S. treasury
obligations bear variable interest rates which averaged 4.36% and 3.19% for the
years ended December 31, 1994 and 1993.

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value of cash and cash equivalents, due from officer,
accounts receivable, accounts payable, and accrued expenses are reflected in the
balance sheet.  The fair value of marketable securities and the investment in
Alexander's, Inc. are based on quoted market prices.  At December 31, 1994 and
1993, the fair value of marketable securities was $87,206,000 and $103,496,000
compared to carrying value of $87,206,000 and $99,130,000 at their respective
dates.  The fair value of the investment in Alexander's was $5,980,000 and
$6,871,000 compared to carrying values of $5,980,000 and $2,545,000 at December
31, 1994 and 1993, respectively.  The fair value of notes and

                                      -25-
   26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
4.  FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

mortgages payable has been estimated by comparing the current rate at which
similar loans would be made to borrowers with similar credit ratings for the
remaining term, versus the stated interest rates in the loans.  At December 31,
1994 and 1993, the fair value of notes and mortgages payable were estimated to
be $205,496,000 and $233,462,000, respectively.  The  fair value estimates
presented herein are based on pertinent information available to management as 
of December 31, 1994 and 1993.  Although management is not aware of any factors 
that would significantly affect the estimated fair value amounts, such amounts 
have not been comprehensively revalued for purposes of these  financial 
statements since that date, and current estimates of fair value may differ 
significantly from the amounts presented herein.

5. INCOME TAXES

The provision for income taxes for the year ended December 31, 1992 was
$1,080,000 of which $239,000 was the current federal provision and $841,000 was
the deferred provision.  The effective tax rate for the year ended December 31,
1992 was 47.7% of which 34.0% represents the statutory tax rate and 13.7%
resulted from costs incurred upon exercise of a stock option by an officer not
deductible for income tax purposes.

6. NOTES AND MORTGAGES PAYABLE

In November 1993, a private placement of $227,000,000 aggregate principal
amount of secured notes due December 1, 2000 was completed by Vornado Finance
Corp., a wholly-owned, special-purpose subsidiary of the  Company.  The 7-year
notes bear a fixed rate of interest of 6.36% per annum.  The net proceeds from
the offering, together with working capital of Vornado Realty Trust, were used
to prepay  $327,132,000 of debt including $313,539,000 under a blanket mortgage
loan which bore interest at a rate of 9.36% per annum and was scheduled to
mature in January 1994.  As a result of the early extinguishment of debt, a
fourth quarter extraordinary charge of $3,202,000, which primarily represented
prepayment penalties, was recorded in 1993.

Notes and mortgages are summarized by range of interest rates as follows:
- -------------------------------------------------------------------------------

Interest rate                                             Principal amount
- --------------------------------------------------------------------------------
                                                           
           5.35%                                              $  4,115,000
           6.36%                                               227,000,000
           8.00%                                                 1,544,000
           8.25%                                                 1,501,000
- --------------------------------------------------------------------------------

The net book value of property securing the notes and mortgages amounted to
$172,622,000 at December 31, 1994.  In addition, $7,000,000 (face amount) of
U.S. Treasury Obligations have been escrowed as additional collateral for the
$227,000,000 of notes and will be released upon completion of a shopping center
expansion.  As at December 31, 1994, the maturities for the next five years are
as follows:

- -------------------------------------------------------------------------------
Year ending December 31:                                          Amount
- -------------------------------------------------------------------------------
                                                           
1995                                                          $  908,000
1996                                                             975,000
1997                                                           1,046,000
1998                                                             870,000
1999                                                             535,000
- --------------------------------------------------------------------------------

                                      -26-
   27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
7. EMPLOYEES' SHARE OPTION PLAN

Various officers and key employees have been granted incentive share options
and/or nonqualified options to purchase common shares. Options granted are at
prices equal to 100% of the market price of the Company's shares at date of
grant, become exercisable up to 27 months after grant, and expire ten years
after the date of grant.
 
The changes in number of shares under option for the three years ended December
31, 1994 were as follows:
- -------------------------------------------------------------------------------

                                                 Number of
                                                   shares       Option price
- --------------------------------------------------------------------------------
                                                          
Outstanding, December 31, 1991                   2,013,675      $6.30-$16.60
  Granted                                           93,750            $19.83
  Exercised                                     (1,510,132)     $6.30-$ 9.87
- --------------------------------------------------------------------------------
Outstanding, December 31, 1992                     597,293      $9.87-$19.83
- --------------------------------------------------------------------------------
Outstanding, December 31, 1992, adjusted *         672,812      $8.72-$19.83
  Granted *                                        281,379     $22.84-$37.94
  Exercised *                                     (334,923)     $8.72-$22.84
- --------------------------------------------------------------------------------
Outstanding, December 31, 1993                     619,268      $8.72-$37.94
  Granted                                               --                --
  Exercised                                        (51,019)     $8.72-$22.84
  Cancelled                                        (10,681)    $22.84-$34.25
- --------------------------------------------------------------------------------
OUTSTANDING, DECEMBER 31, 1994                     557,568      $8.72-$37.94
- --------------------------------------------------------------------------------

*  Option prices and number of shares have been adjusted, as applicable, to
   reflect the impact of a $3.36 special dividend paid in June 1993, in
   accordance with the terms of the Plan.
- --------------------------------------------------------------------------------
Shares available for future grant at December 31, 1994 were 1,327,816.
- --------------------------------------------------------------------------------

                                               DECEMBER 31,      December 31,
                                                      1994              1993
- --------------------------------------------------------------------------------
                                                          
Options exercisable                                420,200           346,167
Price range                                   $8.72-$34.25      $8.72-$22.84

- --------------------------------------------------------------------------------

                                      -27-
   28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

8.  RETIREMENT PLAN
 
The Company's qualified retirement plan covers all full-time employees. The Plan
provides annual pension benefits that are equal to 1% of the employee's annual
compensation for each year of participation.

The funding policy is in accordance with the minimum funding requirements of
ERISA.

Pension expense includes the following components:

- --------------------------------------------------------------------------------------------------------------
                                                                         YEAR            Year             Year
                                                                        ENDED           Ended            Ended
                                                                 DECEMBER 31,    December 31,     December 31,
                                                                         1994            1993             1992
- --------------------------------------------------------------------------------------------------------------
                                                                                           
Service cost -- benefits earned during the period                  $   81,000       $  89,000        $  88,000
Interest cost on projected benefit obligation                         558,000         577,000          566,000
Actual return on assets                                               130,000        (656,000)        (122,000)
Net amortization and deferral                                        (359,000)        436,000         (109,000)
- --------------------------------------------------------------------------------------------------------------
  Net pension expense                                               $410,000         $446,000       $  423,000
- --------------------------------------------------------------------------------------------------------------
Assumptions used in determining the net pension expense were:
- --------------------------------------------------------------------------------------------------------------
Discount rate                                                         8-1/2%           7-1/2%               8%
Rate of increase in compensation levels                               6-1/2%           6-1/2%           6-1/2%
Expected rate of return on assets                                          8%              8%               8%
- --------------------------------------------------------------------------------------------------------------

The following table sets forth the Plan's funded status and the amount
recognized in the Company's balance sheet:

- --------------------------------------------------------------------------------------------------------------
                                                                                 DECEMBER 31,    December 31,
                                                                                         1994            1993
- --------------------------------------------------------------------------------------------------------------
                                                                                             
Actuarial present value of benefit obligations:
  Vested benefit obligation                                                        $6,665,000      $7,575,000
- --------------------------------------------------------------------------------------------------------------
  Accumulated benefit obligation                                                   $6,742,000      $7,604,000
- --------------------------------------------------------------------------------------------------------------
  Projected benefit obligation                                                     $6,992,000      $7,959,000
  Plan assets at fair value                                                         3,219,000       3,742,000
- --------------------------------------------------------------------------------------------------------------
Projected benefit obligation in excess of plan assets                               3,773,000       4,217,000
Unrecognized net obligations                                                       (1,173,000)     (1,285,000)
Adjustment required to recognize minimum liability                                    923,000         930,000
- --------------------------------------------------------------------------------------------------------------
Accrued pension costs                                                              $3,523,000      $3,862,000
- --------------------------------------------------------------------------------------------------------------

Plan assets are invested in U.S. government obligations and securities backed by
U.S. government guaranteed mortgages.
- --------------------------------------------------------------------------------

                                      -28-

   29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

9.  LEASES

As lessor:

The Company leases properties to tenants. The lease terms range from less than
five years for smaller tenant spaces to as much as thirty years for major
tenants. Most of the leases provide for the payment of fixed base rentals
payable monthly in advance, and for the payment by the lessee of additional
rents based on a percentage of the tenants' sales as well as reimbursements of
real estate taxes, insurance and maintenance. As of December 31, 1994,  future
base rental revenue under noncancellable operating leases, excluding rents for
leases with an original term of less than one year and rents resulting from the
exercise of renewal options, is as follows:

- --------------------------------------------------------------------------------
Year ending December 31:                                      Amount
- --------------------------------------------------------------------------------
                                                     
1995                                                    $ 71,669,000
1996                                                      72,959,000
1997                                                      71,966,000
1998                                                      69,865,000
1999                                                      65,523,000
Thereafter                                               542,589,000
- --------------------------------------------------------------------------------

These amounts do not include rentals based on tenants' sales. These percentage
rents approximated $887,000, $954,000 and $685,000 for the years ended December
31, 1994, 1993 and 1992.

As lessee:

The Company is a tenant under leases for certain properties. These leases will
expire principally during the next twenty years. Future minimum lease payments
under operating leases at December 31, 1994, are as follows:

Year ending December 31:                                     Amount
- --------------------------------------------------------------------------------
                                                      
1995                                                     $ 1,473,000
1996                                                       1,475,000
1997                                                       1,119,000
1998                                                         941,000
1999                                                         864,000
Thereafter                                                27,427,000
- --------------------------------------------------------------------------------

Rent expense was $1,313,000, $1,366,000 and $1,446,000 for the years ended
December 31, 1994, 1993 and 1992.

                                      -29-
   30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------

10. CONTINGENCIES

In order to comply with environmental laws and with relevant health-based
standards, the Company has an active monitoring and maintenance program for
asbestos-containing materials ("ACMs") on its properties.  While the Company
believes that its program to remove friable ACMs has been substantially
completed, one location still requires further work.  The Company has received
an estimate of $500,000 to remove ACMs, which, pursuant to the lease is the
lessee's responsibility.  The Company does not believe that this expenditure
will have a material adverse effect on the Company's financial condition or
results of operations.

The Company also has certain other existing and potential environmental
liabilities with respect to compliance costs relating to underground storage
tanks and cleanup costs relating to tanks and to three Company sites at which
preexisting contamination was found.

The Company believes that known and potential environmental liabilities will not
have a material adverse effect on the Company's business, assets or results of
operation.  However, there can be no assurance that the identification of new
areas of contamination, change in the known scope of contamination, the
discovery of additional sites, or changes in cleanup requirements would not
result in significant costs to the Company.

At December 31, 1994, the Company had outstanding $1,400,000 of real estate
related standby letters of credit which were drawn under a $5,000,000 unsecured
line of credit with a bank bearing interest at prime.

From time-to-time, the Company has disposed of substantial amounts of real
estate to third parties for which, as to certain properties, it remains
contingently liable for rent payments or mortgage indebtedness.

There are various legal actions against the Company in the ordinary course of
business.  In the opinion of management, after consultation with legal counsel,
the outcome of such matters will not have a material effect on the Company's
financial condition or results of operations.

11. BUSINESS SEGMENTS

The Company operates in one business segment -- real estate. Bradlees, Inc.
accounted for 19% of property rentals for the year ended December 31, 1994 and
18% for the years ended December 31, 1993 and 1992.  The Company does not engage
in any foreign operations.

12. REPURCHASE AGREEMENTS

The Company enters into agreements for the purchase and resale of U.S.
government obligations for periods of up to one week. The obligations purchased
under these agreements are held in safekeeping in the name of the Company by
various money center banks. The Company has the right to demand additional
collateral or return of these invested funds at any time the collateral value is
less than 102% of the invested funds plus any accrued earnings thereon.

                                      -30-
   31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------

13.  RELATED PARTY TRANSACTIONS

Steven Roth, Chairman of the Board and Chief Executive Officer of the Company,
is a general partner of Interstate Properties, a 31.0% shareholder of the
Company at December 31, 1994.

A) On December 29, 1992, Mr. Roth exercised a stock option granted to him on
October 4, 1985, for 1,500,000 shares of the Company's stock, in order to
entitle the Company to a $10.8 million cash reduction in income taxes, the value
of which would have been substantially, if not totally, eliminated if the option
were exercised once the Company became a REIT.  In connection with the exercise,
the Company lent Mr. Roth $15,245,000 in 1992 ($9,410,000 of the exercise price
of $9,450,000 and $5,835,000 for withholding taxes which were immediately
payable by him and $7,000,000 in 1993 for additional taxes payable.  In
addition, the Company granted him registration rights with respect to such
shares.  The loan bears interest, payable quarterly, at a rate equal to the
broker call rate (7.25% at December 31, 1994) but not less than the minimum
applicable federal rate provided under the Internal Revenue Code and is due on
December 29, 1997.

On February 4, 1993, the Company repurchased 750,000 shares of this stock from
Mr. Roth at $27.17 per share, the closing price on February 3, 1993.  As of
December 31, 1992, the Company recorded an expense of $15,650,000, representing
the difference between the repurchase price and the option price.  In connection
with the repurchase, Mr. Roth repaid $9,122,500 of the loan including $1,500,000
of the amount he borrowed in 1993.

At December 31, 1994, the loan due from Mr. Roth was $13,122,500 ($4,705,000 of
which is shown as a reduction in shareholders' equity).

B) In 1993, the Company lent Messrs. Rowan and Macnow, Vice Presidents, $253,000
and $227,000, respectively, representing amounts owed by such persons in
connection with their option exercises.  The loans (which are reflected as a
reduction in shareholders' equity) accrue interest at a rate equal to the broker
call rate (7.25% at December 31, 1994) but not less than the minimum applicable
federal rate provided under the Internal Revenue Code and are due December 31,
1995.

C) At December 31, 1994 and 1993, the Company owned 113,100 shares of
Alexander's, Inc. common stock.  The investment is recorded at market value of
$5,980,000 at December 31, 1994 and at cost of $2,545,000 at December 31, 1993.
The market value was $6,871,000 at December 31, 1993.  Additionally, advances
and deferred charges in connection with the property development of Alexander's
were $1,370,000 and $607,000 at December 31, 1994 and 1993.  These amounts above
are shown on the accompanying balance sheet as Investment in and advances to
Alexander's, Inc.  On March 2, 1995, the Company acquired an additional
1,353,468 shares, or 27.1% of the common stock of Alexander's from Citibank,
N.A.  As a result of the increase in its investment, the Company will change its
accounting for its investment in Alexander's to the equity method which will
result in a reduction of its investment to cost by reducing the unrealized gain
recorded in shareholders' equity at December 31, 1994 by $3,435,000.  Interstate
owns 1,354,568 shares, or 27.1%, of the common stock of Alexander's and Mr. Roth
is a Director and Chief Executive Officer of Alexander's. Interstate, Mr. Roth
and the Company have filed as a "group" with the Securities and Exchange
Commission in connection with their respective holdings in Alexander's (see Note
17).

                                      -31-
   32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- ------------------------------------------------------------------------------

13.  RELATED PARTY TRANSACTIONS - (continued)

D) In July 1992, the Company was retained by Alexander's, Inc. to act as a
special real estate consultant with respect to the leasing or sale of certain
assets in connection with Alexander's reorganization proceedings under Chapter
11 of the Bankruptcy Code.

The terms of the leasing agreement provided the Company with exclusive rights
to sell and/or lease the assets of Alexander's through September 21, 1994 and
thereafter, shall automatically renew on a year-to-year basis, and is terminable
by either party at the end of each year on not less than 60 days prior notice
(agreement extended through 1997 - see Note 17).  The agreement provides for the
Company to generally receive a fee of (i) 3% of sales proceeds and (ii) 3% of
lease rent for the first ten years of a lease term, 2% of lease rent for the
eleventh through the twentieth years of a lease term and 1% of lease rent for
the twenty-first through thirtieth year of the lease term.

Subject to the payment of rents by underlying tenants pursuant to leases and to
the prior satisfaction of all payments to which certain creditors of Alexander's
are entitled under a plan of reorganization (approved by the Bankruptcy Court in
September 1993), the Company is due approximately $12.4 million for transactions
completed to date.  Of this amount, the Company was due to receive $500,000 on
July 1, 1994 but has not received such payment.  The balance of $11.9 million
will be payable over a seven year period in an amount not to exceed $2,500,000
in any calendar year until the present value of such installments (calculated at
a discount rate of 9% per annum) equals the amount that would have been paid had
it been paid on September 21, 1993 or at the time the transactions which gave
rise to the commissions occurred, if later.

The Company will recognize net fee income on leasing ($11.0 million) over the
life of the leases as rentals are paid and interest income ($.6  million) when
installments are received.

E) See Note 17 for a discussion of the terms of the Management and Development
Agreement entered into with Alexander's in March 1995.

F) The Company currently manages and leases the six shopping centers of
Interstate Properties pursuant to a Management Agreement for which the Company
receives a quarterly fee equal to 4% of base rent and percentage rent and
certain other commissions.  The Management Agreement has a term of one year and
is automatically renewable unless terminated by either of the parties on sixty
days' notice at the end of the term.   Although the Management Agreement was not
negotiated at arms length, the Company believes based upon comparable fees
charged by other real estate companies, that its terms are fair to the Company.
For the years ended December 31, 1994 and 1993 and the period from July 13, 1992
through December 31, 1992, $894,000, $913,000 and $367,000 of management fees
were earned by the Company pursuant to the Management Agreement.

                                      -32-
   33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

14. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)

                                        Year Ended December 31, 1994                        Year Ended December 31, 1993
                                 -----------------------------------------        --------------------------------------------
                                                Quarter ended                                      Quarter ended
                                 -----------------------------------------        --------------------------------------------

(amounts in 
thousands except                 Dec. 31, Sept. 30,    Jun. 30,   Mar. 31,        Dec. 31,    Sept. 30,    Jun. 30,   Mar. 31,
per share amounts)
- ------------------------------   -----------------------------------------        --------------------------------------------
                                                                                               
Revenues                          $24,155   $22,856     $23,960    $23,027         $22,657      $22,028     $22,149    $21,956
- ------------------------------   -----------------------------------------        --------------------------------------------
Income from
continuing operations
before income taxes and
extraordinary item                 10,492    10,530      10,114     10,104           8,134        7,128       4,730(1)   5,394
Provision (benefit) for
income taxes                           --        --          --         --              --           --      (8,523)     2,154
- ------------------------------   -----------------------------------------        --------------------------------------------
INCOME FROM
CONTINUING OPERATIONS
BEFORE EXTRAORDINARY ITEM          10,492    10,530      10,114     10,104           8,134        7,128      13,253      3,240
- ------------------------------   -----------------------------------------        --------------------------------------------
(Loss) from
discontinued operation
before income taxes                    --        --          --         --              --           --          --       (600)

Income tax (benefit)                   --        --          --         --              --           --         240       (240)
- ------------------------------   -----------------------------------------        --------------------------------------------
Income (loss) from
discontinued operation                 --        --          --         --              --           --         240       (360)
- ------------------------------   -----------------------------------------        --------------------------------------------
Income
before extraordinary item          10,492    10,530      10,114     10,104           8,134        7,128      13,013      2,880
Extraordinary item -- (loss)
on early extinguishment
of debt                                --        --          --         --          (3,202)          --          --         --
- ------------------------------   -----------------------------------------        --------------------------------------------
Net income                        $10,492   $10,530     $10,114    $10,104          $4,932       $7,128     $13,013     $2,880
- ------------------------------   -----------------------------------------        --------------------------------------------
Net income (loss) per share(2):
Continuing
operations                           $.48      $.48        $.46       $.46            $.37         $.33       $ .69      $ .20
Discontinued
operation                              --        --          --         --              --           --        (.01)      (.02)
Extraordinary item                     --        --          --         --            (.16)          --          --         --
- ------------------------------   -----------------------------------------        --------------------------------------------
                                     $.48      $.48        $.46       $.46            $.21         $.33       $ .68      $ .18
                                 -----------------------------------------        --------------------------------------------

1)  The decrease in income in the quarter ended June 30, 1993 is due primarily
    to the Company recording an expense of $856,000 in connection with the
    merger of Vornado, Inc. into Vornado Realty Trust.

2)  The totals for the years ended December 31, 1994 and 1993 differ from the
    sum of the quarters as a result of the weighting of the average number of
    shares outstanding and the dilutive effect of stock options.

Amounts included in revenues and expenses have been reclassified to conform with
the current year's presentation.

                                      -33-
   34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

15.  STOCK SPLIT

On March 8, 1993, the Board of Trustees approved a three-for-two stock split by
declaring a dividend of one share of common stock for each two shares issued and
outstanding as of the close of business on March 18, 1993. This distribution
resulted in a transfer of $214,000 to the common stock account from additional
capital.  The additional shares and cash payments in lieu of fractional shares
were issued March 25, 1993.

16.  DIVIDEND DISTRIBUTIONS

Dividends are characterized for Federal income tax purposes as follows:

- --------------------------------------------------------------------------------
                                                 1994       1993*       1992
- --------------------------------------------------------------------------------
                                                             
Ordinary income                                 96.0%       83.7%     100.0%
- --------------------------------------------------------------------------------
Return of capital (generally non-taxable)        4.0        16.3        --
- --------------------------------------------------------------------------------
Total                                          100.0%      100.0%     100.0%
- --------------------------------------------------------------------------------

*  For shareholders who received all dividends distributed during 1993.

17. SUBSEQUENT EVENTS

On March 2, 1995, following bankruptcy court approval of the loan and management
arrangements described below, the Company purchased all of the 1,353,468 shares
of common stock of Alexander's, Inc. ("Alexander's") owned by Citibank, N.A.
("Citibank") for $40.50 per share in cash (the "Acquisition"), representing
27.1% of the outstanding common stock of Alexander's.  After the Acquisition,
the Company owns 29.3% of the outstanding shares of common stock of Alexander's.
Interstate Properties, which owns 31% of the common shares of beneficial
interest of the Company, currently owns 27.1% of the outstanding shares of
Alexander's common stock.

The Company and Alexander's have entered into a three year management and
development agreement (the "Management Agreement") under which the Company has
agreed to manage all Alexander's business affairs and manage and develop
Alexander's properties for an annual fee of $3,000,000; plus 6% of development
costs with a minimum guaranteed fee for the development portion of $1,650,000 
in the first year and $750,000 in each of the second and third years.  
Pursuant to the Management Agreement, Mr. Roth, the Company's Chairman and
Chief Executive Officer, also became Chief Executive Officer of Alexander's.
                      
The fees pursuant to the Management Agreement discussed above, are in addition
to leasing fees the Company receives from Alexander's under a leasing agreement
in effect since 1992. The term of the leasing agreement has been extended to be
co-terminus with the term of the Management Agreement.

On March 15, 1995, the Company and a bank lent Alexander's $75,000,000 in a
secured financing, of which $45,000,000 was funded by the Company and the
balance was funded by the bank.  The Company's loan, which is subordinate to
that of the bank has a three year term and bears  interest at 16.43% per annum
for the first two years and at a fixed rate for the third year of 992 basis
points over one year treasury bills.  In addition, Alexander's paid a
loan origination fee of $1,500,000 to the Company.

                                      -34-
   35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
17.  SUBSEQUENT EVENTS (continued)

In connection with the Acquisition, the Company and Interstate are restricted
for three years from owning in excess of two-thirds of Alexander's common stock
or entering into certain other transactions with Alexander's, without the
consent of the independent directors of Alexander's.

On February 27, 1995, the Company entered into a three year unsecured revolving
credit facility with a bank providing for borrowings of up to $75,000,000.
Borrowings bear annual interest, at the Company's election, at Libor plus 1.50%
or the higher of the federal funds rate plus 1% or prime rate plus .50%.

The facility contains customary loan covenants including, among others, limits
on total outstanding indebtedness; maximum loan to value ratios; minimum debt
service coverage, funds from operations, and equity requirements and a negative
pledge with respect to certain unencumbered assets.  At March 15, 1995, the
Company had borrowed $60,000,000 under the agreement.

                                      -35-

   36

                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

           Information relating to trustees of the Registrant will be contained
in a definitive Proxy Statement involving the election of trustees which the
Registrant will file with the Securities and Exchange Commission pursuant to
Regulation 14A under the Securities Exchange Act of 1934 not later than 120 days
after December 31, 1994, and such information is incorporated herein by
reference.  Information relating to Executive Officers of the Registrant appears
at page 10 of this Annual Report on Form 10-K.

ITEM 11.   EXECUTIVE COMPENSATION

           Information relating to executive compensation will be contained in
the Proxy Statement referred to above in Item 10, "Directors and Executive
Officers of the Registrant", and such information is incorporated herein by
reference.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

           Information relating to security ownership of certain beneficial
owners and management will be contained in the Proxy Statement referred to in
Item 10, "Directors and Executive Officers of the Registrant", and such
information is incorporated herein by reference.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

           Information relating to certain relationships and related
transactions will be contained in the Proxy Statement referred to in Item 10,
"Directors and Executive Officers of the Registrant", and such information is
incorporated herein by reference.

                                      -36-

   37

                                    PART IV

ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

              (a)       The following documents are filed as part of this
                        report:

                      1.       The consolidated financial statements are set
                               forth in Item 8 of this Annual Report on Form
                               10-K.

                      2.       Financial Statement Schedules.

                        The following financial statement schedules should be
read in conjunction with the financial statements included in Item 8 of this
Annual Report on Form 10-K.

                                                                                        Pages in this
                                                                                        Annual Report
                                                                                        on Form 10-K
              Independent Auditors' Report                                              ------------
                                                                                  
                    II -       Valuation and Qualifying Accounts - years ended
                               December 31, 1994, 1993 and 1992                               39

                   III -       Real Estate and Accumulated Depreciation
                               as of December 31, 1994                                        40

              Schedules other than those listed above are omitted because they
are not applicable or the information required is included in the consolidated
financial statements or the notes thereto.

                      3.       Exhibits.  See the Exhibit Index at page 44 of
                               this Annual Report on Form 10-K.  The following
                               exhibits listed on the Exhibit Index are filed
                               with this Annual Report on Form 10-K. 

 
Exhibit No.
- ----------- 
                   
 10 (f)  2            Amendment to Real Estate Retention Agreement dated
                      February 6, 1995.

 10 (f)  7            Credit Agreement, dated as of March 15, 1995, among
                      Alexander's, Inc., as borrower, and Vornado Lending Corp.,
                      as lender.

 10 (f)  8            Subordination and Intercreditor Agreement, dated as of
                      March 15, 1995 among Vornado Lending Corp., Vornado Realty
                      Trust and First Fidelity Bank, National Association.

 10 (f)  9            Revolving Credit Agreement dated as of February 27, 1995
                      among Vornado Realty Trust, as borrower, and Union Bank of
                      Switzerland, as Bank and Administrative Agent.

 11                   Statement Re Computation of Per Share Earnings.

 21                   Subsidiaries of the Registrant.

 23                   Consent of Independent Auditors to Incorporation by
                      Reference.

 27                   Financial Data Schedule.

              (b)     Reports on Form 8-K

                      None

                                      -37-
   38

                                   SIGNATURES

             Pursuant to the requirements of Section 13 or 15 (d) 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

                                         By: /s/JOSEPH MACNOW
                                             ---------------------------------
                                                Joseph Macnow, Vice President-
                                                  Chief Financial Officer

                                         Date:  March 15, 1995

             Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:

             Signature                                    Title                                    Date
             ---------                                    -----                                    ----

By:    /s/STEVEN ROTH                        Chairman of the Board of Trustees              March 15, 1995
       ------------------------              (Principal Executive Officer)
       (Steven Roth)

By:    /s/JOSEPH MACNOW                      Vice President-Chief Financial                 March 15, 1995
       ------------------------              Officer and Controller (Principal
       (Joseph Macnow)                       Financial and Accounting Officer)
       
By:    /s/DAVID MANDELBAUM                   Trustee                                        March 15, 1995
       ------------------------
       (David Mandelbaum)

By:    /s/STANLEY SIMON                      Trustee                                        March 15, 1995
       ------------------------
       (Stanley Simon)

By:    /s/RONALD G. TARGAN                   Trustee                                        March 15, 1995
       ------------------------
       (Ronald G. Targan)

By:    /s/RUSSELL B. WIGHT, JR.              Trustee                                        March 15, 1995
       ------------------------
       (Russell B. Wight, Jr.)

By:    /s/RICHARD R. WEST                    Trustee                                        March 15, 1995
       ------------------------
       (Richard R. West)

                                      -38-
   39

                              VORNADO REALTY TRUST

                                AND SUBSIDIARIES

                                  SCHEDULE II

                       VALUATION AND QUALIFYING ACCOUNTS

- --------------------------------------------------------------------------------

Column A                                Column B            Column C                      Column D                       Column E
- ---------------------------------------------------------------------------------------------------------------------------------
(amounts in thousands)
                                          Balance             Additions                   Deductions                     Balance
                                       at beginning        charged against   -----------------------------------          at end
      Description                        of year             operations      Description                  Amount         of year
      -----------                      ------------        ---------------   -----------------------------------         -------

YEAR ENDED DECEMBER 31, 1994:
 Deducted from accounts receivable,                                          Uncollectible accounts
  allowance for doubtful accounts        $    402             $   385         written-off                $   330        $    457
                                         --------             -------                                    -------        --------
YEAR ENDED DECEMBER 31, 1993:
 Deducted from accounts receivable                                           Uncollectible accounts
   allowance for doubtful accounts       $    337             $   432         written-off                $   367        $    402
                                         --------             -------                                    -------        --------
YEAR ENDED DECEMBER 31, 1992:
 Deducted from accounts receivable,                                          Uncollectible accounts
  allowance for doubtful accounts        $    517             $   627         written-off                $   807        $    337
                                         --------             -------                                    -------        --------

   40

                              VORNADO REALTY TRUST
                                AND SUBSIDIARIES
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                               DECEMBER 31, 1994
                             (amounts in thousands)

- -------------------------------------------------------------------------------------------------------
            COLUMN A              COLUMN B                COLUMN C                    COLUMN D
- -------------------------------------------------------------------------------------------------------

                                                Initial cost to company (1)
                                                ---------------------------
                                                              Buildings and       Costs capitalized
          Description             Encumbrances    Land        improvements    subsequent to acquisition
- ------------------------------    ------------  -------       -------------   -------------------------
                                                                           
Shopping Centers
    New Jersey
       Atlantic City              $  2,135 *    $   358          $  2,143              $   574
       Bordentown                    3,276 *        498             3,176                1,029
       Bricktown                     9,919 *        929             2,175                9,182
       Cherry Hill                   9,706 *        915             3,926                3,269
       Delran                        2,848 *        756             3,184                1,915
       Dover                         3,635 *        224             2,330                2,091
       East Brunswick                8,205 *        172             3,236                3,176
       East Hanover                 11,066 *        376             3,063                3,264
       Hackensack                     -             536             3,293                6,071
       Jersey City                  10,381 *        652             2,962                1,774
       Kearny (4)                     -             279             4,429               (1,388)
       Lawnside                      5,708 *        851             2,222                1,219
       Lodi                          2,420 *        245             2,315                  928
       Manalapan                     6,397 *        725             2,447                4,983
       Marlton                       5,398 *      1,514             4,671                  896
       Middletown                    7,761 *        283             1,508                4,071
       Morris Plains                 6,600 *      1,254             3,140                3,431
       North Bergen (4)               -             510             3,390                 (956)
       North Plainfield              4,115          500            13,340                  344
       Totowa                       15,646 *      1,097             5,359                7,190
       Turnersville                  2,116 *        900             2,132                   75
       Union                        15,975 *      1,014             4,527                1,902
       Vineland                      2,358 *        290             1,594                1,121
       Watchung (4)                   -             451             2,347                5,502
       Woodbridge                    8,792 *        190             3,047                  560
                                   -------       ------            ------               ------
          Total New Jersey         144,457       15,519            85,956               62,223
                                   -------       ------            ------               ------

    New York
       14th Street and Union
            Square, Manhattan         -          12,566             4,044                3,457
       Albany (Menands)               -             460             1,677                1,572
       Buffalo (Amherst)             4,863 *        402             2,019                1,745
       Freeport                      8,021 *      1,231             3,273                3,168
       New Hyde Park                 2,043 *       -                 -                     122
       North Syracuse                 -            -                 -                      23
       Rochester (Henrietta)         2,203 *       -                2,124                1,193
       Rochester                     2,832 *        443             2,870                  689
                                    ------       ------            ------               ------
          Total New York            19,962       15,102            16,007               11,969
                                    ------       ------            ------               ------

- -------------------------------------------------------------------------------------------------------------------------
            COLUMN A                                  COLUMN E                           COLUMN F            COLUMN G
- -------------------------------------------------------------------------------------------------------------------------

                                  Gross amount at which carried at close of period
                                  ------------------------------------------------     Accumulated
                                                   Buildings and                       depreciation           Date of
          Description                Land          improvements          Total (2)   and amortization    construction (3)
- ------------------------------    ---------        -------------         ---------   ----------------    ----------------
                                                                                               
Shopping Centers
    New Jersey
       Atlantic City                $   358         $   2,717            $  3,075        $  1,668             1965
       Bordentown                       713             3,990               4,703           3,175             1958
       Bricktown                        929            11,357              12,286           3,235             1968
       Cherry Hill                      915             7,195               8,110           3,984             1964
       Delran                           756             5,099               5,855           2,261             1972
       Dover                            205             4,440               4,645           2,267             1964
       East Brunswick                   172             6,412               6,584           3,994             1957
       East Hanover                     477             6,226               6,703           3,374             1962
       Hackensack                       536             9,364               9,900           3,106             1963
       Jersey City                      652             4,736               5,388           2,964             1965
       Kearny (4)                       290             3,030               3,320             736             1938
       Lawnside                         851             3,441               4,292           1,675             1969
       Lodi                             245             3,243               3,488           1,874             1955
       Manalapan                        725             7,430               8,155           2,634             1971
       Marlton                        1,611             5,470               7,081           3,348             1973
       Middletown                       283             5,579               5,862           2,038             1963
       Morris Plains                  1,254             6,571               7,825           3,005             1961
       North Bergen (4)               2,309               635               2,944              15             1993
       North Plainfield                 500            13,684              14,184           2,543             1955
       Totowa                         1,097            12,549              13,646           4,190             1957
       Turnersville                     900             2,207               3,107           1,526             1974
       Union                          1,014             6,429               7,443           4,170             1962
       Vineland                         290             2,715               3,005           1,427             1966
       Watchung (4)                   4,200             4,100               8,300              65             1994
       Woodbridge                       220             3,577               3,797           2,503             1959
                                     ------           -------             -------          ------
          Total New Jersey           21,502           142,196             163,698          61,777
                                     ------           -------             -------          ------

    New York
       14th Street and Union
            Square, Manhattan        12,581             7,486              20,067              30             1965
       Albany (Menands)                 460             3,249               3,709           1,510             1965
       Buffalo (Amherst)                640             3,526               4,166           2,016             1968
       Freeport                       1,231             6,441               7,672           2,053             1981
       New Hyde Park                   -                  122                 122             122             1970
       North Syracuse                  -                   23                  23              20             1967
       Rochester (Henrietta)           -                3,317               3,317           1,726             1971
       Rochester                        443             3,559               4,002           2,044             1966
                                     ------            ------              ------           ----- 
          Total New York             15,355            27,723              43,078           9,521
                                     ------            ------              ------           -----

- --------------------------------------------------------------------------
            COLUMN A                 COLUMN H            COLUMN I
- --------------------------------------------------------------------------

                                                Life on which depreciation
                                       Date         in latest income
          Description                acquired     statement is computed
- ------------------------------       --------   --------------------------
                                                 
Shopping Centers
    New Jersey
       Atlantic City                   1965            14 -40 Years
       Bordentown                      1958            10 - 40 Years
       Bricktown                       1968            27 -40 Years
       Cherry Hill                     1964            15 - 40 Years
       Delran                          1972            20 - 40 Years
       Dover                           1964            16 - 40 Years
       East Brunswick                  1957            13 - 33 Years
       East Hanover                    1962            16 -40 Years
       Hackensack                      1963            17 - 40 Years
       Jersey City                     1965            19 - 40 Years
       Kearny (4)                      1959            28 - 40 Years
       Lawnside                        1969            19 - 40 Years
       Lodi                            1975            11 - 27 Years
       Manalapan                       1971            18 - 40 Years
       Marlton                         1973            21 - 40 Years
       Middletown                      1963            27 - 40 Years
       Morris Plains                   1985            14 - 19 Years
       North Bergen (4)                1959              30 Years
       North Plainfield                1989            26 - 30 Years
       Totowa                          1957            22 - 40 Years
       Turnersville                    1974            23 - 40 Years
       Union                           1962            10 - 40 Years
       Vineland                        1966            22 -40 Years
       Watchung (4)                    1959              30 Years
       Woodbridge                      1959            11 - 40 Years
          Total New Jersey

    New York
       14th Street and Union
            Square, Manhattan          1993              40 Years
       Albany (Menands)                1965            27 - 40 Years
       Buffalo (Amherst)               1968            14 - 40 Years
       Freeport                        1981            19 - 40 Years
       New Hyde Park                   1976             6 - 7 Years
       North Syracuse                  1976            11 - 12 Years
       Rochester (Henrietta)           1971            22 - 40 Years
       Rochester                       1966            15 - 40 Years
          Total New York

                             ----- CONTINUED -----
   41

                              VORNADO REALTY TRUST
                                AND SUBSIDIARIES
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                               DECEMBER 31, 1994
                             (amounts in thousands)

- ------------------------------------------------------------------------------------------------------------
            COLUMN A                 COLUMN B                COLUMN C                    COLUMN D
- ------------------------------------------------------------------------------------------------------------

                                                     Initial cost to company (1)
                                                     ---------------------------
                                                                   Buildings and       Costs capitalized
          Description                Encumbrances      Land        improvements    subsequent to acquisition
- ---------------------------------    ------------    -------       -------------   -------------------------
                                                                                
    Pennsylvania
       Allentown                          7,696 *         70            3,446                 7,026
       Bensalem                           3,967 *      1,198            3,717                 1,588
       Bethlehem                           -             278            1,806                 3,317
       Broomall                           3,260 *        734            1,675                   828
       Glenolden                          4,245 *        850            1,295                   668
       Lancaster                          2,312 *        606            2,312                 2,348
       Levittown                          2,283 *        193            1,231                   216
       10th and Market
            Streets, Philadelphia          -             933            3,230                     0
       Upper Moreland                     3,517 *        683            2,497                   112
       York                               1,463 *        421            1,700                 1,260
                                         ------        -----           ------                ------
          Total Pennsylvania             28,743        5,966           22,909                17,363
                                         ------        -----           ------                ------

    Maryland
       Baltimore (Belair Rd.)              -             785            1,333                 2,985
       Baltimore (Towson)                 5,779 *        581            2,756                   560
       Baltimore (Dundalk)                4,084 *        667            1,710                 2,936
       Glen Burnie                        2,299 *        462            1,741                   532
       Hagerstown                          -             168            1,453                   460
                                         ------        -----            -----                 -----         
          Total Maryland                 12,162        2,663            8,993                 7,473
                                         ------        -----            -----                 -----                          

    Connecticut
       Newington                          3,042 *        502            1,581                   537
       Waterbury                          3,889 *       -               2,103                 1,275
                                          -----        -----            -----                 -----
          Total Connecticut               6,931          502            3,684                 1,812
                                          -----        -----            -----                 -----

    Massachusetts
       Chicopee                           1,999 *        510            2,031                   358
       Springfield (4)                     -             505            1,657                   743
                                          -----        -----            -----                 -----
          Total Massachusetts             1,999        1,015            3,688                 1,101
                                          -----        -----            -----                 -----

    Texas
       Dallas
       Lewisville                           764 *      2,433            2,271                   676
       Mesquite                           3,445 *      3,414            4,704                 1,141
       Skillman                           1,987 *      3,714            6,891                   686
                                        -------       ------          -------               ------- 
          Total Texas                     6,196        9,561           13,866                 2,503
                                        -------       ------          -------               -------
Total Shopping Centers                  220,450       50,328          155,103               104,444
                                        -------       ------          -------               -------

- --------------------------------------------------------------------------------------------------------------------------------
            COLUMN A                                         COLUMN E                           COLUMN F            COLUMN G
- --------------------------------------------------------------------------------------------------------------------------------

                                         Gross amount at which carried at close of period
                                         ------------------------------------------------     Accumulated
                                                          Buildings and                       depreciation           Date of
          Description                       Land          improvements          Total (2)   and amortization    construction (3)
- ---------------------------------        ---------        -------------         ---------   ----------------    ----------------
                                                                                                       
    Pennsylvania
       Allentown                              170            10,372               10,542           3,257              1957
       Bensalem                             1,198             5,305                6,503           3,001              1972
       Bethlehem                              278             5,123                5,401           2,221              1966
       Broomall                               851             2,386                3,237           1,640              1966
       Glenolden                              850             1,963                2,813             843              1975
       Lancaster                              606             4,660                5,266           2,273              1966
       Levittown                              193             1,447                1,640           1,014              1964
       10th and Market
            Streets, Philadelphia             933             3,230                4,163               -              1977
       Upper Moreland                         683             2,609                3,292           1,737              1974
       York                                   421             2,960                3,381           1,412              1970
                                            -----            ------               ------          ------       
          Total Pennsylvania                6,183            40,055               46,238          17,398
                                            -----            ------               ------          ------

    Maryland
       Baltimore (Belair Rd.)                 785             4,318                5,103           2,468              1962
       Baltimore (Towson)                     581             3,316                3,897           1,758              1968
       Baltimore (Dundalk)                    667             4,646                5,313           1,913              1966
       Glen Burnie                            462             2,273                2,735           1,656              1958
       Hagerstown                             168             1,913                2,081           1,111              1966
                                            -----            ------               ------           ----- 
          Total Maryland                    2,663            16,466               19,129           8,906
                                            -----            ------               ------           -----

    Connecticut
       Newington                              502             2,118                2,620           1,320              1965
       Waterbury                              667             2,711                3,378           1,543              1969
                                            -----            ------               ------           -----  
          Total Connecticut                 1,169             4,829                5,998           2,863
                                            -----            ------               ------           ----- 

    Massachusetts
       Chicopee                               510             2,389                2,899           1,600              1969
       Springfield (4)                      2,586               319                2,905              24              1993
                                            -----            ------               ------           ----- 
          Total Massachusetts               3,096             2,708                5,804           1,624
                                            -----            ------               ------           ----- 

    Texas
       Dallas
       Lewisville                           2,469             2,911                5,380             419              1989
       Mesquite                             3,414             5,845                9,259             844              1988
       Skillman                             3,714             7,577               11,291           1,101              1988
                                           ------           -------              -------         ------- 
          Total Texas                       9,597            16,333               25,930           2,364
                                           ------           -------              -------         ------- 
Total Shopping Centers                     59,565           250,310              309,875         104,453
                                           ------           -------              -------         -------

- ------------------------------------------------------------------------------
            COLUMN A                     COLUMN H            COLUMN I
- ------------------------------------------------------------------------------

                                                    Life on which depreciation
                                           Date         in latest income
          Description                    acquired     statement is computed
- ---------------------------------        --------   --------------------------
                                                     
    Pennsylvania
       Allentown                           1957            24 - 42 Years
       Bensalem                            1972            20 - 40 Years
       Bethlehem                           1966            13 - 40 Years
       Broomall                            1966            13 - 40 Years
       Glenolden                           1975            23 - 40 Years
       Lancaster                           1966            14 - 40 Years
       Levittown                           1964            14 - 40 Years
       10th and Market
            Streets, Philadelphia          1994
       Upper Moreland                      1974            22 - 40 Years
       York                                1970            19 - 40 Years
          Total Pennsylvania

    Maryland
       Baltimore (Belair Rd.)              1962            26 - 33 Years
       Baltimore (Towson)                  1968            19 - 40 Years
       Baltimore (Dundalk)                 1966            16 - 40 Years
       Glen Burnie                         1958            22 - 33 Years
       Hagerstown                          1966            13 - 40 Years
          Total Maryland

    Connecticut
       Newington                           1965            15 - 40 Years
       Waterbury                           1969            23 - 40 Years
          Total Connecticut

    Massachusetts
       Chicopee                            1969            20 - 40 Years
       Springfield (4)                     1966              30 Years
          Total Massachusetts

    Texas
       Dallas
       Lewisville                          1990            28 - 30 Years
       Mesquite                            1990            28 - 30 Years
       Skillman                            1990            27 - 30 Years
          Total Texas

Total Shopping Centers

                               --- CONTINUED ---
   42

                              VORNADO REALTY TRUST
                                AND SUBSIDIARIES
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                               DECEMBER 31, 1994
                             (amounts in thousands)

- ------------------------------------------------------------------------------------------------------------
            COLUMN A                 COLUMN B                COLUMN C                    COLUMN D
- ------------------------------------------------------------------------------------------------------------

                                                     Initial cost to company (1)
                                                     ---------------------------
                                                                   Buildings and       Costs capitalized
          Description                Encumbrances      Land        improvements    subsequent to acquisition
- ---------------------------------    ------------    -------       -------------   -------------------------
                                                                               
Warehouse/Industrial
    New Jersey
       East Brunswick                                    147             4,772                2,734
       East Hanover                      8,210 *         576             7,752                5,921
       Edison                            2,455 *         705             2,839                1,240
       Garfield                          1,545            96             8,068                3,533
                                        ------         -----            ------               ------ 
          Total Warehouse/
             Industrial                 12,210         1,524            23,431               13,428
                                        ------         -----            ------               ------ 

Other Properties
    New Jersey
       Paramus                           1,500                           8,345                1,908
       Montclair                          -               66               470                    0
       Rahway                             -                                                      25
                                        ------         -----            ------               ------ 
          Total Other
             Properties                  1,500            66             8,815                1,933
                                        ------         -----            ------               ------ 

Leasehold Improvements
    and Equipment

TOTAL - DECEMBER 31, 1994             $234,160       $51,918          $187,349             $119,805
                                      ========       =======          ========             ========

- ----------------------------------------------------------------------------------------------------------------------------
            COLUMN A                                     COLUMN E                           COLUMN F            COLUMN G
- ----------------------------------------------------------------------------------------------------------------------------

                                     Gross amount at which carried at close of period
                                     ------------------------------------------------     Accumulated
                                                      Buildings and                       depreciation           Date of
          Description                   Land          improvements          Total (2)   and amortization    construction (3)
- ---------------------------------    ---------        -------------         ---------   ----------------    ----------------
                                                                                               
Warehouse/Industrial
    New Jersey
       East Brunswick                     147               7,506               7,653           3,160              1972
       East Hanover                       691              13,558              14,249           6,853          1963 - 1967
       Edison                             704               4,080               4,784           1,488              1954
       Garfield                            96              11,601              11,697           7,149              1942
                                        -----              ------              ------          ------
          Total Warehouse/
             Industrial                 1,638              36,745              38,383          18,650
                                        -----              ------              ------          ------

Other Properties
    New Jersey
       Paramus                           -                 10,253              10,253           1,835              1967
       Montclair                           66                 470                 536             450              1972
       Rahway                            -                     25                  25              19              1972
                                        -----              ------              ------          ------
          Total Other
             Properties                    66              10,748              10,814           2,304
                                        -----              ------              ------          ------

Leasehold Improvements
    and Equipment                                           6,760               6,760           3,298
                                                           ------              ------          ------

TOTAL - DECEMBER 31, 1994             $61,269            $304,563            $365,832        $128,705
                                      =======            ========            ========        ========

- --------------------------------------------------------------------------
            COLUMN A                 COLUMN H            COLUMN I
- --------------------------------------------------------------------------

                                                Life on which depreciation
                                       Date         in latest income
          Description                acquired     statement is computed
- ---------------------------------    --------   --------------------------
                                                 
Warehouse/Industrial
    New Jersey
       East Brunswick                  1972            19 - 40 Years
       East Hanover                    1963             5 - 40 Years
       Edison                          1982            17 - 25 Years
       Garfield                        1959            17 - 33 Years
          Total Warehouse/
             Industrial

Other Properties
    New Jersey
       Paramus                         1987            33 - 40 Years
       Montclair                       1972              15 Years
       Rahway                          1972              14 Years
          Total Other
             Properties

Leasehold Improvements
    and Equipment                                      3 - 20 Years

TOTAL - DECEMBER 31, 1994

  * These encumbrances are cross collateralized under a blanket mortgage in the
  amount of $227,000,000 at December 31, 1994.

Notes:
    1) Initial cost is cost as of January 30, 1982 (the date on which Vornado
       commenced real estate operations) unless acquired subseqent to that date
       - see Column H.

    2) Aggregate cost is approximately the same for federal income tax purposes.

    3) Date of original construction - many properties have had substantial
       renovation or additional construction - see Column D.

    4) Buildings on these properties were demolished in 1993.  As a result, the
       cost of the buildings and improvements, net of accumulated depreciation,
       were transferred to land. In addition, the cost of the land in Kearny is
       net of a $1,615,000 insurance recovery.
   43

                              VORNADO REALTY TRUST
                                AND SUBSIDIARIES
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                             (amounts in thousands)

The following is a reconciliation of real estate assets and accumulated
depreciation:

                                                       Year Ended            Year Ended              Year Ended
                                                   December 31, 1994      December 31, 1993      December 31, 1992
                                                   -----------------      -----------------      ----------------- 
                                                                                            
Real Estate
   Balance at beginning of period                       $340,415               $314,651              $305,123
   Additions during the period:
      Land                                                   989                 15,191                 2,817
      Buildings & improvements                            24,428                 14,332                 8,398
                                                        --------               --------              --------
                                                         365,832                344,174               316,338
   Less:  Cost of assets written-off                        -                     3,759                 1,687
                                                        --------               --------              --------
   Balance at end of period                             $365,832               $340,415              $314,651
                                                        ========               ========              ========
Accumulated Depreciation
   Balance at beginning of period                       $118,742               $111,142              $103,520
   Additions charged to operating expenses                 9,963                  9,392                 9,309
                                                        --------               --------              --------
                                                         128,705                120,534               112,829
   Less:  Accumulated depreciation on assets
             written-off                                    -                     1,792                 1,687
                                                        --------               --------              --------
   Balance at end of period                             $128,705               $118,742              $111,142
                                                        ========               ========              ========

                                      -43-
   44

                                 EXHIBIT INDEX

   
                                                                                              Page Number in
                                                                                              Sequential
    Exhibit No.                                                                               Numbering
    -----------                                                                               --------------

     3(a)         Amended and Restated Declaration of Trust of the Registrant,                    *
                  dated March 29, 1993 - Incorporated by reference from
                  Form S-4, filed April 15, 1993.

      (b)         By-laws of Vornado dated March 10, 1994 - Incorporated by reference             *
                  from Annual Report on Form 10-K for the year ended December 31, 1993,
                  filed March 24, 1994.

    4             Indenture dated as of November 24, 1993 between Vornado Finance                 *
                  Corp. and Bankers Trust Company, as Trustee - Incorporated by 
                  reference from Current Report on Form 8-K dated November 24, 1993,
                  filed December 1, 1993.

    10(a) 1       Master Agreement and Guaranty, between Vornado, Inc. and Bradlees               *
                  New Jersey, Inc. dated as of May 1, 1992 - Incorporated by
                  reference from Quarterly Report on Form 10-Q for quarter ended
                  March 31, 1992, filed May 8, 1992.

      (a) 2       Mortgage, Security Agreement, Assignment of Leases and Rents and                *
                  Fixture Filing dated as of November 24, 1993 made by each of the
                  entities listed therein, as mortgagors to Vornado Finance Corp., as
                  mortgagee - Incorporated by reference from Current Report on Form
                  8-K dated November 24, 1993, filed December 1, 1993.

      (b) 1 **    1985 Stock Option Plan as amended - Incorporated by reference                   *
                  from Quarterly Report on Form 10-Q for quarter ended May 2, 1987,
                  filed June 9, 1987.

      (b) 2 **    Form of Stock Option Agreement for use in connection with                       *
                  incentive stock options issued pursuant to Vornado, Inc. 
                  1985 Stock Option Plan - Incorporated by reference from Quarterly
                  Report on Form 10-Q for quarter ended October 26, 1985,
                  filed December 9, 1985.

      (b) 3 **    Form of Stock Option Agreement for use in connection with incentive             *
                  stock options issued pursuant to Vornado, Inc. 1985 Stock Option
                  Plan - Incorporated by reference from Quarterly Report on Form 10-Q
                  for quarter ended May 2, 1987, filed June 9, 1987.

      (b) 4 **    Form of Stock Option Agreement for use in connection with non-                  *
                  qualified options issued pursuant to Vornado, Inc. 1985 Stock Option
                  Plan - Incorporated by reference from Quarterly Report on Form 10-Q
                  for quarter ended October 26, 1985, filed December 9, 1985.

- ------------
*  Incorporated by reference
** Management contract or compensatory plan

                                      -44-
   45

                                                                                                
    10(c) 1 **    Employment Agreement between Vornado, Inc. and Joseph Macnow                        *
                  dated January 1, 1992 - Incorporated by reference from Annual Report on 
                  Form 10-K for the year ended December 31, 1991, filed March 30, 1992.

      (c) 2 **    Employment Agreement between Vornado, Inc. and Richard Rowan                        *
                  dated January 1, 1992 - Incorporated by reference from Annual Report on
                  Form 10-K for the year ended December 31, 1991, filed March 30, 1992.

      (d) 1       Promissory Notes from Steven Roth to Vornado, Inc. dated                            *
                  December 29, 1992 and January 15, 1993 - Incorporated by reference
                  from Annual Report on Form 10-K for the year ended December 31, 1992,
                  filed February 16, 1993.                                                            *

      (d) 2       Registration Rights Agreement between Vornado, Inc. and Steven                      *
                  Roth dated December 29, 1992 - Incorporated by reference
                  from Annual Report on Form 10-K for the year ended December 31, 1992,
                  filed February 16, 1993.

      (d) 3       Stock Pledge Agreement between Vornado, Inc. and Steven Roth                        *
                  dated December 29, 1992 - Incorporated by reference from Annual
                  Report on Form 10-K for the year ended December 31, 1992, filed
                  February 16, 1993.

      (d) 4       Promissory Notes from Steven Roth to Vornado Realty Trust                           *
                  dated April 15, 1993 and June 16, 1993 - Incorporated by reference
                  from Annual Report on Form 10-K for the year ended December 31, 1993,
                  filed March 24, 1994.

      (d) 5       Promissory Note from Richard Rowan to Vornado Realty Trust -                        *
                  Incorporated by reference from Annual Report on Form 10-K for the
                  year ended December 31, 1993, filed March 24, 1994.

      (d) 6       Promissory Note from Joseph Macnow to Vornado Realty Trust -                        *
                  Incorporated by reference from Annual Report on Form 10-K for the
                  year ended Decmeber 31, 1993, filed March 24, 1994.

      (e) 1       Management Agreement between Interstate Properties and Vornado,                     *
                  Inc. dated July 13, 1992 - Incorporated by reference from Annual
                  Report on Form 10-K for the year ended December 31, 1992,
                  filed February 16, 1993.

      (f) 1       Real Estate Retention Agreement between Vornado, Inc., Keen Realty                  *
                  Consultants, Inc. and Alexander's, Inc., dated as of July 20, 1992
                  - Incorporated by reference from Annual Report on Form 10-K for
                  the year ended December 31, 1992, filed February 16, 1993.

      (f) 2       Amendment to Real Estate Retention Agreement dated                                 47    
                  February 6, 1995.

      (f) 3       Stipulation between Keen Realty Consultants Inc. and Vornado Realty                 *
                  Trust re:  Alexander's Retention Agreement - Incorporated by
                  reference from Annual Report on Form 10-K for the year ended
                  December 31, 1993, filed March 24, 1994.

- ------------
*  Incorporated by reference
** Management contract or compensatory plan

                                      -45-
   46

                                                                                             
      (f) 4       Stock Purchase Agreement, dated February 6, 1995, among Vornado                     *
                  Realty Trust and Citibank, N.A. - Incorporated by reference from
                  Current Report on Form 8-K dated February 6, 1995, filed
                  February 21, 1995.

      (f) 5       Management and Development Agreement, dated as of February 6, 1995 -                *
                  Incorporated by reference from Current Report on Form 8-K dated
                  February 6, 1995, filed February 21, 1995.

      (f) 6       Standstill and Corporate Governance Agreement, dated as of                          *
                  February 6, 1995 - Incorporated by reference from Current Report on
                  Form 8-K dated February 6, 1995, filed February 21, 1995.

      (f) 7       Credit Agreement, dated as of March 15, 1995, among Alexander's, Inc.,             49
                  as borrower, and Vornado Lending Corp., as lender.

      (f) 8       Subordination and Intercreditor Agreement, dated as of March 15, 1995             108
                  among Vornado Lending Corp., Vornado Realty Trust and First Fidelity
                  Bank, National Association.                                                            

      (f) 9       Revolving Credit Agreement dated as of February 27, 1995 among                    142    
                  Vornado Realty Trust, as borrower, and Union Bank of Switzerland,
                  as Bank and Administrative Agent.

11                Statement Re Computation of Per Share Earnings.                                   205

12                Not applicable.                                                                   

13                Not applicable.

16                Not applicable.

18                Not applicable.

19                Not applicable.

21                Subsidiaries of the Registrant.                                                   206

22                Not applicable.

23                Consent of independent auditors to incorporation by reference.                    208

25                Not applicable.                                                                       

27                Financial Data Schedule.                                                          209

29                Not applicable.

- ------------
* Incorporated by reference

                                      -46-

   1

                               Alexander's, Inc.
                               31 W. 34th Street
                           New York, New York  10001

                                        February 6, 1995

Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663

                              Extension Agreement

Gentlemen:

          Reference is made to (1) that certain Real Estate Retention
Agreement, dated July 20, 1992 (the "Retention Agreement"), among Vornado,
Inc., predecessor in interest to Vornado Realty Trust, Keen Realty Consultants
Inc. and Alexander's, Inc. ("Alexander's") and (2) that certain Management and
Development Agreement, dated as of February 6, 1995 (the "Management
Agreement"), between Alexander's, certain affiliates of Alexander's and other
parties that are signatories thereto (collectively, "Owners") and Vornado
Realty Trust ("Manager").  All capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the Management Agreement.

          The parties hereto hereby acknowledge and agree that the term of the
Retention Agreement shall be extended so that the term of the Retention
Agreement shall become coterminus with the term of the Management Agreement,
as the same may be renewed in accordance with Article II, Section A of the
Management Agreement; provided, however, that in no event will the term of the
Retention Agreement expire prior to the present one-year term of the Retention
Agreement.

          This letter agreement shall become effective on the Effective Date
(as defined in the Management Agreement).

          This letter agreement (i) constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof and may not be
modified or amended except pursuant to the terms of an instrument signed by
the parties
   2
Vornado Realty Trust                                                    -2-

hereto; (ii) shall be binding upon and inure to the benefit of the parties
hereto and their successors and assigns; and (iii) shall be governed by, and
construed in accordance with, the laws of the State of New York.

                                   Very truly yours,

                                   Alexander's, Inc.

                                  By: /s/ Stephen Mann
                                      -------------------------
                                      Name: Stephen Mann 
                                      Title: Chairman

Accepted and Agreed as of this
6th day of February, 1995.

Vornado Realty Trust

By:  /s/ Joseph Macnow
     ------------------------------
     Name: Joseph Macnow 
     Title: Vice President,
            Chief Financial Officer
            
   1

                                CREDIT AGREEMENT

                           dated as of March 15, 1995

                                     among

                               ALEXANDER'S, INC.,
                                  as Borrower

                                      and

                             VORNADO LENDING CORP.,
                                   as Lender
   2
                       T A B L E   O F   C O N T E N T S

         SECTION                                                   PAGE

                                   ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

         1.01.  Certain Defined Terms............................    1
         1.02.  Computation of Time Periods......................   13
         1.03.  Accounting Terms.................................   13

                                   ARTICLE II

                       AMOUNTS AND TERMS OF THE ADVANCES

         2.01.  The Loan.........................................   13
         2.02.  Repayment........................................   13
         2.03.  Prepayments......................................   13
         2.04.  Interest.........................................   13
         2.05.  Loan Fee.........................................   15
         2.06.  Increased Costs..................................   15
         2.07.  Payments and Computations........................   15
         2.08.  Taxes............................................   17
         2.09.  Payment of Certain Costs and Expenses............   18
         2.10.  Use of Proceeds..................................   18

                                  ARTICLE III

                             CONDITIONS OF LENDING

         3.01.  Conditions Precedent to Funding Loan.............   18

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         4.01.  Representations and Warranties of the Borrower...   19

   3

         SECTION                       ii                          PAGE

                                   ARTICLE V

                                   COVENANTS

         5.01.  Affirmative Covenants of the Borrower............   24
         5.02.  Negative Covenants of the Borrower...............   27
         5.03.  Reporting Requirements...........................   32
         5.04.  Covenants of the Lender..........................   34

                                   ARTICLE VI

                               SPECIAL PROVISIONS

         6.01.  Condemnation and Casualty........................   36
         6.02.  Payment of REIT Dividends........................   37
         6.03.  Gruss Arrangements...............................   37
         6.04.  Release of Lexington Avenue Property.............   38
         6.05.  Exception to Cash Collateral Arrangements for
                      Certain Financings.........................   38
         6.06.  Construction and Development Financing...........   39
         6.07.  Release of Cash Collateral Account...............   40
         6.08.  Optional Release or Assignment...................   40

                                  ARTICLE VII

                               EVENTS OF DEFAULT

         7.01.  Events of Default................................   42

                                  ARTICLE VIII

                                 MISCELLANEOUS

         8.01.  Amendments, Etc..................................   44
         8.02.  Notices, Etc.....................................   45
         8.03.  No Waiver; Remedies..............................   45
         8.04.  Costs, Expenses..................................   45
         8.05.  Merger...........................................   47
         8.06.  Binding Effect...................................   47
         8.07.  Lender's Discretion..............................   47
         8.08   Participations...................................   47
         8.09.  Governing Law....................................   48

   4

SECTION                               iii                          PAGE

         8.10.  Execution in Counterparts........................   48
         8.11.  Waiver of Jury Trial.............................   48
         8.12.  Jurisdiction.....................................   49
         8.13.  Continuing Enforcement...........................   49

                  
Schedule I         -    Disclosed Litigation
Schedule II        -    Properties
Schedule III       -    Surviving Debt
Schedule IV        -    Use of Proceeds
Schedule V         -    Subsidiaries of each Loan Party
Schedule VI        -    Defaults Created by Loan Documents
Schedule VII       -    Required Authorizations
Schedule VIII (a)  -    Environmental Non-Compliance
Schedule XIII (b)  -    Environmental Reports
Schedule IX        -    Real Property
Schedule X         -    Leases
Schedule XI        -    Defaults under Material Agreements
Schedule XII       -    Non-compliance with Laws
Schedule XIII      -    Existing Agreements with Vornado Realty Trust
Schedule XIV       -    Subordination Conditions

Exhibit A          -    Form of Bankruptcy Court Order
Exhibit B          -    Form of Guaranty
Exhibit C          -    Form of Mortgage
Exhibit D          -    Form of Note
Exhibit E          -    Form of Pledge Agreement
Exhibit F          -    Form of Subordination, Nondisturbance and Attornment
                        Agreement
Exhibit G          -    Form of Opinion of Shearman & Sterling
Exhibit H          -    Form of Opinion of Wells, Garafalo, Jaworski & Liebman

   5

                 CREDIT AGREEMENT dated as of March 15, 1995 by and between
Alexander's, Inc., a Delaware corporation (the "Borrower"), as borrower, and
Vornado Lending Corp., a New Jersey corporation (the "Lender"), as lender.

         (1)     WHEREAS, the Borrower has requested that the Lender make a
loan in the aggregate principal amount and for purposes herein specified; and

         (2)     WHEREAS, the Lender is willing to make such a loan on the
terms and conditions set forth herein;

                 NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto hereby
agree as follows:

                                   ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

                 SECTION 1.01.  Certain Defined Terms.  As used in this Credit
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):

                 "Affiliate" means, as to any Person, any other Person that,
         directly or indirectly, controls, is controlled by or is under common
         control with such Person or is a director or officer of such Person.
         For purposes of this definition, the term "control" (including the
         terms "controlling," "controlled by" and "under common control with")
         of a Person means the possession, direct or indirect, of the power to
         vote 20% or more of the Voting Stock of such Person or to direct or
         cause the direction of the management and policies of such Person,
         whether through the ownership of Voting Stock, by contract or
         otherwise.

                 "Bankruptcy Court" means the Bankruptcy Court for the Southern
         District of New York.

                 "Bankruptcy Court Order" means a certified copy of an order of
         the Bankruptcy Court substantially in the form attached as Exhibit A
         hereto.

                 "Bankruptcy Plan" means that certain Debtors' First Amended
         and Restated Joint Plan of Reorganization by the United States
         Bankruptcy Court, Southern District of New York in a Proceeding for a
         Reorganization Under Chapter 11, dated July 21, 1993.
   6

                                       2

                 "Bankruptcy Proceeding" means the proceedings for
         reorganization under Chapter 11 of the United States Bankruptcy Code
         pending in the Bankruptcy Court entitled In re Alexander's, Inc., et
         al. (Case Nos. 92B 42704 (CB) through 92B 42720 (CB) inclusive).

                 "Borrower" has the meaning specified in the recital of parties
         to this Credit Agreement.

                 "Business Day" means each Monday, Tuesday, Wednesday, Thursday
         and Friday on which banks are not required or authorized to close in
         New York City.

                 "Capitalized Leases" has the meaning specified in clause (e)
         of the definition of Debt.

                 "Cash Collateral Account" means an account of the Borrower
         maintained with the Senior Lender in accordance with the Cash
         Collateral Agreement.

                 "Cash Collateral Agreement" means the Cash Collateral
         Agreement, dated of even date herewith, among the Borrower, the Lender
         and Senior Lender.

                 "CERCLA" means the Comprehensive Environmental Response,
         Compensation and Liability Act of 1980, as the same may be amended
         from time to time.

                 "Closing Date" means the date on which the Loan is advanced.

                 "Code" means the Internal Revenue Code of 1986, as amended.

                 "Collateral" means all "Collateral" referred to in the
         Collateral Documents and all other property that is subject to any
         Lien in favor of the Lender.

                 "Collateral Documents" means collectively each Guaranty,
         Pledge Agreement and Mortgage.

                 "Confidential Information" means information that the Borrower
         furnishes to the Lender on a confidential basis, but does not include
         any such information that is or becomes generally available to the
         public other than as a result of a breach by the Lender of its
         obligations hereunder or that is or becomes available to the Lender
         from a source other than the Borrower that is not, to the best of the
         Lender's knowledge, acting in violation of a confidentiality agreement
         with the Borrower.
   7

                                       3

                 "Consolidated" refers to the consolidation of accounts in
         accordance with GAAP.

                 "Debt" of any Person means, without duplication, (a) all
         indebtedness of such Person for borrowed money, (b) all Obligations of
         such Person for the deferred purchase price of property or services
         (other than trade payables not overdue by more than 60 days incurred
         in the ordinary course of such Person's business), (c) all Obligations
         of such Person evidenced by notes, bonds, debentures or other similar
         instruments, (d) all Obligations of such Person created or arising
         under any conditional sale or other title retention agreement with
         respect to property acquired by such Person (even though the rights
         and remedies of the seller or lender under such agreement in the event
         of default are limited to repossession or sale of such property), (e)
         all Obligations of such Person as lessee under leases that have been
         or should be, in accordance with GAAP, recorded as capital leases
         ("Capitalized Leases"), (f) all Obligations, contingent or otherwise,
         of such Person under acceptance, letter of credit or similar
         facilities, (g) all Debt of others referred to in clauses (a) through
         (f) above guaranteed directly or indirectly in any manner by such
         Person, or in effect guaranteed directly or indirectly by such Person
         through an agreement (i) to pay or purchase such Debt or to advance or
         supply funds for the payment or purchase of such Debt, (ii) to
         purchase, sell or lease (as lessee or lessor) property, or to purchase
         or sell services, primarily for the purpose of enabling the debtor to
         make payment of such Debt or to assure the holder of such Debt against
         loss, (iii) to supply funds to or in any other manner invest in the
         debtor (including any agreement to pay for property or services
         irrespective of whether such property is received or such services are
         rendered) or (iv) otherwise to assure a creditor against loss, and (h)
         all Debt referred to in clauses (a) through (f) above secured by (or
         for which the holder of such Debt has an existing right, contingent or
         otherwise, to be secured by) any Lien on property (including, without
         limitation, accounts and contract rights) owned by such Person, even
         though such Person has not assumed or become liable for the payment of
         such Debt.

                 "Deeply Subordinate" means subordination by Lender of its
         rights under the Loan Documents in accordance with a subordination
         agreement entered into with a third party lender substantially in the
         form of that certain Subordination and Standstill Agreement attached
         as Exhibit A to that certain Mortgage and Security Agreement, dated as
         of February 24, 1995 from the Borrower in favor of Greyrock Capital
         Group Inc.

                 "Default" means any Event of Default or any event that would
         constitute an Event of Default but for the requirement that notice be
         given or time elapse or both.
   8

                                       4

                 "Default Rate" means (a) prior to the Maturity Date, 4% per
         annum above the rate per annum required to be paid on the Loan
         pursuant to Sections 2.04(a) and (b) from and after the Maturity Date,
         4% per annum above the rate per annum from time to time in effect
         determined by adding (i) 7.25% or, provided that the Lender shall have
         entered into the Intercreditor Agreement, 9.92% and (ii) the One-Year
         Treasury Rate in effect as of the Maturity Date; provided, however,
         that for purposes of determining the Default Rate, the One-Year
         Treasury Rate shall be re-determined as of each anniversary of the
         Maturity Date.

                 "Development Financing" means (i) those financings described
         in Section 6.06 and (ii) any construction or development financing
         with respect to a Future Development Property.

                 "Development Properties" means any of the Kings Plaza Store
         Property and the Paramus Property.

                 "Disclosed Litigation" means the matters described on Schedule
         I to this Credit Agreement.

                 "Environmental Action" means any administrative, regulatory or
         judicial action, suit, demand, demand letter, claim, notice of
         non-compliance or violation, investigation, proceeding, consent order
         or consent agreement relating in any way to any Environmental Law or
         any Environmental Permit including, without limitation, (a) any
         written claim by any governmental or regulatory authority for
         enforcement, cleanup, removal, response, remedial or other actions or
         damages pursuant to any Environmental Law and (b) any written claim by
         any third party seeking damages, contribution, indemnification, cost
         recovery, compensation or injunctive relief resulting from Hazardous
         Materials or arising from alleged injury or threat of injury to
         health, safety or the environment.

                 "Environmental Law" means any applicable federal, state or
         local law, rule, regulation, order, writ, judgment, injunction,
         decree, determination or award relating to the environment, health,
         safety or Hazardous Materials.

                 "Environmental Permit" means any permit, approval,
         identification number, license or other authorization required under
         any Environmental Law.

                 "Events of Default" has the meaning specified in Section 7.01.

                 "Existing Debt" means Debt of the Borrower outstanding
         immediately before the time of execution of this Credit Agreement.
   9

                                       5

                 "Fidelity Credit Agreement" means the Credit Agreement, dated
         of even date herewith, between the Borrower and First Fidelity.

                 "Financing Properties" means any of the Flushing Property, the
         Rego Park I Property, the Third Avenue Property and the Fordham
         Property.

                 "First Fidelity" means First Fidelity Bank, National
         Association.

                 "Flushing Property" means the ground leasehold estate on the
         Property designated on Schedule II to this Credit Agreement as the
         "Flushing Property".

                 "Fordham Property" means the Property designated on Schedule
         II to this Credit Agreement as the "Fordham Road Property".

                 "Future Development Property" means any or all of the Rego
         Park II Property, the Rego Park III Property and the Lexington Avenue
         Property, in each case after the Mortgage on such Property has been
         released by the Lender.

                 "GAAP" has the meaning specified in Section 1.03.

                 "Gruss Agreement" means that certain letter agreement, dated
         March __, 1995, among the Gruss Partners, the Lender, the Senior
         Lender, the Borrower and the Lex Store General Partner.

                 "Gruss Partners" shall have the meaning assigned to such term
         in the Gruss Partnership Agreement.

                 "Gruss Partnership Agreement" means that certain Amended and
         Restated Agreement of Limited Partnership, dated as of August 21,
         1986, as last amended by that certain Third Amendment to Amended and
         Restated Agreement of Limited Partnership for Seven Thirty One Limited
         Partnership, dated as of October 4, 1993, as modified, for purposes of
         the provisions of this Credit Agreement, by the Gruss Agreement.

                 "Guarantor" means each of Alexander's of Flushing, Inc.,
         Alexander's of Third Avenue, Inc., Alexander's of Fordham Road, Inc.,
         Alexander's of Rego Park, Inc., Alexander's Department Stores of New
         Jersey, Inc., Alexander's Department Stores of Brooklyn, Inc.,
         Alexander's of Brooklyn, Inc., Alexander's of Rego Park II, Inc.,
         Alexander's of Rego Park III, Inc.  and Admo Realty Corp. and
         subsequent assignees thereof and any other Person who shall execute a
         Guaranty after the date hereof.
   10

                                       6

                 "Guaranty" means the Guaranty, substantially in the form of
         Exhibit B to this Credit Agreement, as amended from time to time, duly
         executed as of the Closing Date by each Guarantor.

                 "Hazardous Materials" means (a) petroleum or petroleum
         products, natural or synthetic gas, asbestos in any form that is
         friable, urea formaldehyde foam insulation and radon gas, (b) any
         substances defined as or included in the definition of "hazardous
         substances," "hazardous wastes," "hazardous materials," "extremely
         hazardous wastes," "restricted hazardous wastes," "toxic substances,"
         "toxic pollutants," "contaminants" or "pollutants," or words of
         similar import, under any Environmental Law and (c) any other
         substance exposure to which is regulated under any Environmental Law.

                 "Indemnified Party" has the meaning specified in Section
         8.04(b).

                 "Intercreditor Agreement" means the Subordination and
         Intercreditor Agreement, dated of even date herewith, among the
         Vornado Realty Trust and the Lender and the Senior Lender, as modified
         by the Intercreditor Letter Agreement.

                 "Intercreditor Letter Agreement" means that certain letter
         agreement, dated of even date herewith, among the Lender and the
         Senior Lender.

                 "Interes Payment Date" has the meaning specified in Section
         2.04(a).

                 "Interest Rate" means a rate per annum equal to (i) prior to
         the second anniversary of the Closing Date, 13.8% or, provided that
         the Lender shall have executed the Intercreditor Agreement pursuant to
         which the Loan Obligations shall be subordinated to the obligations of
         the Borrower owing to the Senior Lender under the Fidelity Credit
         Agreement, 16.43% and (ii) on and after the second anniversary of the
         Closing Date until all amounts owing under this Credit Agreement are
         paid in full, (A) 7.25% or, provided the Lender shall have executed
         the Intercreditor Agreement pursuant to which the Loan Obligations
         shall be subordinated to the obligations of the Borrower owing to the
         Senior Lender under the Fidelity Credit Agreement, 9.92% plus (B) the
         One-Year Treasury Rate.

                 "Kings Plaza Mall" means the Kings Plaza Mall property
         identified as such on the attached Schedule II to this Credit
         Agreement.

                 "Kings Plaza Store Property" means the Property designated on
         Schedule II to this Credit Agreement as the "Kings Plaza Store
         Property".
   11

                                       7

                 "Leasing Agreement" means that certain Real Estate
         Retention Agreement, dated July 20, 1992, among Vornado, Inc. (as
         predecessor to Vornado Realty Trust), Keen Realty Consultants and the
         Borrower as amended from time to time.

                 "Lender's Account" means an account of or specified by the
         Lender and, until the Lender shall notify the Borrower of a change in
         such account, shall mean the account of Vornado Realty Trust
         maintained at National Westminster Bank (Account No. 231313517).

                 "Lex Store General Partner" shall mean Alexander's Department
         Stores of Lexington Avenue, Inc., as general partner of Seven Thirty
         One Limited Partnership, a New York limited partnership.

                 "Lexington Avenue Partnership" means the partnership created
         pursuant to the Gruss Partnership Agreement.

                 "Lexington Avenue Property" means the Property designated on
         Schedule II to this Credit Agreement as the "59th Street Property".

                 "Lien" means any lien, security interest or other charge or
         encumbrance of any kind, or any other type of preferential
         arrangement, including, without limitation, the lien or retained
         security title of a conditional vendor and any easement, right of way
         or other encumbrance on title to real property.

                 "Loan" has the meaning specified in Section 2.01.

                 "Loan Documents" means this Credit Agreement, the Note, the
         Collateral Documents and the Guaranty and any other documents executed
         by any Loan Party in connection with the Loan.

                 "Loan Obligations" means all amounts due and payable to the
         Lender under the Loan Documents.

                 "Loan Parties" means the Borrower, each Guarantor, and each
         Mortgagor.

                 "Major Lease" means any lease at Property other than the Kings
         Plaza Mall (i) for an entire free-standing building, including without
         limitation a building to be constructed, (ii) for over 10,000 rentable
         square feet, or (iii) with an anchor tenant.

                 "Make Whole Premium" means (i) with respect to a prepayment of
         the Loan made pursuant to Section 2.03 on the second anniversary of
         the Closing Date, zero; and (ii) with respect to a prepayment of the
         Loan made pursuant to Section 2.03 on
   12

                                       8

         any date other than the second anniversary of the Closing Date, the
         present value of the stream of monthly interest payments that would be
         payable on the entire outstanding principal balance of the Loan
         commencing on the first day of the calendar month following the first
         day of the Measuring Period and on the first day of each month
         thereafter and ending with a final payment of all accrued and unpaid
         interest on the last day of the Measuring Period, determined as if
         interest were accruing on said outstanding principal balance at the
         Make Whole Rate.  For purposes of determining such present value, the
         discount rate used in such computation (the "Discount Rate"), shall be
         the yield on U.S. Treasury securities, adjusted to a constant maturity
         of a term equal to the Measuring Period, as made available by the
         Board of Governors of the Federal Reserve System.

                 "Make Whole Rate" means, with respect to any prepayment, a per
         annum rate, based on a 360 day year for the actual number of days
         elapsed, determined by subtracting the Discount Rate from the
         applicable per annum rate of interest on the Loan in effect on the
         date of prepayment.

                 "Management Agreement" means that certain Management
         Agreement, dated as of February 6, 1995, between the Borrower and
         Vornado Realty Trust, as amended from time to time.

                 "Material Adverse Change" means any material adverse change in
         the business, financial condition, operations, performance or
         properties of the Borrower and the Loan Parties taken as a whole.

                 "Material Adverse Effect" means a material adverse effect on
         (a) the business, financial condition, operations, performance or
         properties of the Borrower and the Loan Parties taken as a whole, (b)
         the rights and remedies of the Lender under any Loan Document or
         Related Document or (c) the ability of any Loan Party to perform its
         Obligations under any Loan Document or Related Document to which it is
         or is to be a party.

                 "Maturity Date" means the third anniversary of the Closing
         Date.

                 "Measuring Period" means the period commencing on the date of
         a prepayment and ending on (i) the second anniversary of the Closing
         Date (if such prepayment is made prior to such second anniversary) or
         (ii) the Maturity Date (if such prepayment is made subsequent to the
         second anniversary of the Closing Date).

                 "Mortgage" or "Mortgages" means one or more mortgages, in
         substantially the form of Exhibit C to this Credit Agreement and
         covering all or any of the Properties,
   13

                                       9

         as the same may be amended from time to time, duly executed by the
         applicable Mortgagor in favor of Lender.

                 "Mortgagor" means the Borrower, the Lexington Avenue
         Partnership, Alexander's of Fordham Road, Inc., and Alexander's
         Department Stores of New Jersey, Inc., or other mortgagor under a
         Mortgage, provided that any Mortgagor shall cease to be a Mortgagor
         upon the release or satisfaction of that Mortgagor's mortgage.

                 "Note" or "Notes" means, collectively, the promissory notes of
         the Borrower payable to the order of the Lender, in substantially the
         form of Exhibit D hereto, as amended from time to time, evidencing the
         indebtedness of the Borrower to the Lender resulting from the Loan
         made by the Lender.

                 "Obligation" means, with respect to any Person, any obligation
         of such Person of any kind, including, without limitation, any
         liability of such Person on any claim, whether or not the right of any
         creditor to payment in respect of such claim is reduced to judgment,
         liquidated, unliquidated, fixed, contingent, matured, disputed,
         undisputed, legal, equitable, secured or unsecured, and whether or not
         such claim is discharged, stayed or otherwise affected by any
         proceeding referred to in Section 7.01(f).  Without limiting the
         generality of the foregoing, the Obligations of the Loan Parties under
         the Loan Documents include (a) the obligation to pay principal,
         interest, charges, expenses, fees, reasonable attorneys' fees and
         disbursements, indemnities and other amounts payable by any Loan Party
         under any Loan Document and (b) the obligation to reimburse any amount
         in respect of any of the foregoing that the Lender, in accordance with
         the terms of the applicable Loan Document, may elect to pay or advance
         on behalf of such Loan Party.

                 "One-Year Treasury Rate" means the weekly average yield of
         United States Treasury securities adjusted to a constant maturity of
         one year, as made available by the Board of Governors of the Federal
         Reserve System as of the first Business Day following the date which
         is ten (10) days prior to the second anniversary of the Closing Date.

                 "Other Taxes" has the meaning specified in Section 2.08(b).

                 "Participant" has the meaning set forth in Section 8.08.

                 "Permitted Encumbrances" has the meaning specified in the
         Mortgages.

                 "Permitted Liens" means such of the following as to which no
         enforcement, collection, execution, levy or foreclosure proceeding
         shall have been commenced:
   14

                                       10

         (a) Liens for taxes, assessments and governmental charges or levies
         not yet due and payable; (b) Liens created under the Senior Loan
         Documents; (c) Permitted Encumbrances; (d) Liens on any of the
         Properties now existing or hereafter granted in favor of one or more
         of the Gruss Partners that are required by the terms of the Gruss
         Partnership Agreement and that are now subordinated to the liens of
         the Mortgage and the Collateral Documents or hereafter Deeply
         Subordinated to the liens of the Mortgage and the Collateral
         Documents; (e) Liens in favor of one or more Gruss Partners on
         partnership interests of the Lex Store General Partner or the Borrower
         required to be granted in connection with the exercise of the 4/7
         Redemption or the 3/7 Redemption (each as defined in the Gruss
         Partnership Agreement) provided that one Unit (as defined in the Gruss
         Partnership Agreement) held by the Lex Stores General Partner as a
         general partner shall at all times remain free and clear of any liens
         except those in favor of the Lender or the Senior Lender; (f) with
         respect to any real property acquired by Borrower or any Subsidiary or
         Affiliate of Borrower after the date hereof, liens to which such
         property is subject as of the date of such acquisition, purchase money
         mortgages or other similar purchase liens and liens in favor of
         lenders providing construction or development financing in connection
         with such property provided, that all proceeds of such financings are
         used for construction or development of such property or the
         retirement of Existing Debt secured by one or more liens on such
         Property; (g) Liens permitted to be incurred by Borrower pursuant to
         the terms of this Agreement; (h) Liens in connection with taxes being
         contested in good faith in compliance with this Credit Agreement; and
         (i) any renewal or replacement of any Lien securing Surviving Debt or
         Lien permitted pursuant to the foregoing clauses (a) through (h),
         inclusive, provided that any such renewal or replacement Lien secures
         Debt in an amount not in excess of the Debt secured by the Lien so
         renewed or replaced, provided, however, that notwithstanding the
         foregoing, the Lender shall not be required to subordinate to any Lien
         pursuant to this clause (i) except as otherwise provided in this
         Credit Agreement.

                 "Permitted Related Owner" means any of (a) any Subsidiary now
         existing or hereafter created all shares of issued and outstanding
         capital stock of which are owned by the Borrower or (b) a corporation
         (x) 90% or more of the economic interests of which shall be held by
         the Borrower through the ownership of shares of preferred and/or
         common stock of such corporation and (y) 10% or less of the economic
         interests of which shall be held by an entity reasonably satisfactory
         to the Lender through the ownership of shares of common and/or
         preferred stock of such corporation; provided that (i) all of such
         stock owned by the Borrower has been or is pledged to the Lender under
         a pledge agreement substantially in the form of the Pledge Agreement
         and that creates a first priority lien in favor of the Lender and (ii)
         such Subsidiary or corporation enters into a guaranty substantially in
         the form of the Guaranty pursuant to which it guarantees the
         obligations of the Borrower under the Notes.  The conditions regarding
         share ownership set forth in clauses (x) and (y)
   15

                                       11

         above may be varied to the extent necessary for any income received by
         the Borrower to be described in Section 856(c)(2) of the Code or for
         the Borrower to continue to qualify as a REIT.

                 "Person" means an individual, partnership, corporation
         (including a business trust), joint stock company, trust,
         unincorporated association, joint venture or other entity, or a
         government or any political subdivision or agency thereof.

                 "Pledge Agreement" means a pledge agreement, in substantially
         the form of Exhibit D to this Credit Agreement, as amended from time
         to time, among the Borrower, Alexander's Department Stores of
         Lexington Avenue, Inc., as pledgors, and the Lender, as pledgee.

                 "Prepayment Date" has the meaning specified in Section 2.03.

                 "Properties" means the properties listed on Schedule II to
         this Credit Agreement (other than the Kings Plaza Mall) and any real
         property acquired by the Borrower or any Mortgagor after the Closing
         Date.

                 "Reciprocal Easement Agreement" means that certain
         Construction, Operation and Reciprocal Easement Agreement, dated
         February 2, 1970, among Flatbrook Properties Corp., Kings Plaza
         Shopping Center of Avenue U, Inc. and Kings Plaza Shopping Center of
         Flatbush Avenue, Inc. as amended from time to time, and relating to
         the Kings Plaza Property.

                 "Rego Park I Property" means the Property designated on
         Schedule II to this Credit Agreement as the "Rego Park Property".

                 "Rego Park II Property" means the Property designated on
         Schedule II to this Credit Agreement as the "Rego Park II Property".

                 "Rego Park III Property" means the Property designated on
         Schedule II to this Credit Agreement as the "Rego Park III Property".

                 "REIT" means an entity described in Section 856(a) of the Code
         and entitled to the benefits of Section 857(a) of the Code.

                 "Release Date" has the meaning set forth in the Mortgage
         encumbering the Lexington Avenue Property.

                 "Release Price" has the meaning assigned to the term
         "Assignment Price" in the Gruss Agreement.

   16

                                       12

                 "Secured Debt" means any Debt of the Borrower incurred after
         the Closing Date that is secured by any of the Properties and/or the
         Collateral and that otherwise contains terms and conditions
         satisfactory to the Lender.

                 "Senior Debt" means any Secured Debt that is secured by any of
         the Properties and/or the Collateral with respect to which the liens
         have priority over the lien of the Mortgage.

                 "Senior Lender" means First Fidelity or its assignee under the
         Fidelity Credit Agreement.

                 "Senior Loan" means the loan made by the Senior Lender to the
         Borrower under the Senior Loan Documents.

                 "Senior Loan Documents" means the Credit Agreement, dated of
         even date herewith, between the Borrower and the Senior Lender or its
         assignee (the "Fidelity Credit Agreement") and the other documents
         defined as "Loan Documents" therein.

                 "Special Financings" means the financing of any Financing
         Property or Special Financing Property described in Section 6.05 (a)
         or (b).

                 "Subordinate Debt" means any Debt of the Borrower that is
         subordinated to the Loan Obligations under the Loan Documents on, and
         that otherwise contains, terms and conditions satisfactory to the
         Lender.

                 "Subordination Conditions" means the conditions set forth on
         Schedule XIV to this Credit Agreement.

                 "Subsidiary" means, with respect to the Borrower, any
         corporation of which more than 50% of the issued and outstanding
         capital stock having ordinary voting power to elect a majority of the
         Board of Directors of such corporation (irrespective of whether at the
         time capital stock of any other class or classes of such corporation
         shall or might have voting power upon the occurrence of any
         contingency) is at the time directly or indirectly owned or controlled
         by the Borrower, by the Borrower and one or more of its other
         Subsidiaries or by one or more of the Borrower's other Subsidiaries.

                 "Surviving Debt" means the Debt of the Borrower identified on
         Schedule III to the Credit Agreement.
   17

                                       13

                 "Surviving Debt Agreement" means any agreement or instrument
         setting forth the terms and conditions of any Surviving Debt, as the
         same may be amended from time to time.

                 "Taxes" has the meaning specified in Section 2.08(a).

                 "Tenancy In Common Agreement" means that certain Agreement,
         dated February 1, 1970, between Kings Plaza Shopping Center of Avenue
         U, Inc. and Kings Plaza Shopping Center of Flatbush Avenue, Inc. and
         pertaining to the Kings Plaza Mall property.

                 "Third Avenue Property" means the Property designated on
         Schedule II to the Credit Agreement as the "Third Avenue Property".

                 "Voting Stock" means capital stock issued by a corporation, or
         equivalent interests in any other Person, the holders of which are
         ordinarily, in the absence of contingencies, entitled to vote for the
         election of directors (or persons performing similar functions) of
         such Person, even though the right so to vote has been suspended by
         the happening of such a contingency.

                 SECTION 1.02.  Computation of Time Periods.  In this Credit
Agreement in the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding".

                 SECTION 1.03.  Accounting Terms.  All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(g) ("GAAP").

                                   ARTICLE II

                       AMOUNTS AND TERMS OF THE ADVANCES

                 SECTION 2.01.  The Loan.  The Lender agrees, on the terms and
conditions hereinafter set forth, to make a single advance to the Borrower on
the Closing Date in an amount equal to Forty-Five Million and 00/100 Dollars
($45,000,000.00) (such sum being hereinafter referred to as the "Loan").
Amounts borrowed under this Section 2.01 and repaid or prepaid may not be
reborrowed.
   18

                                       14

                 SECTION 2.02.  Repayment.  The Borrower shall repay to the
Lender the aggregate principal amount of the Loan and all other Loan
Obligations on the third anniversary of the Closing Date or on such earlier
date as the Loan Obligations become due as provided in the Loan Documents.

                 SECTION 2.03.  Prepayments.  The Borrower may, provided that
the Borrower shall simultaneously prepay all of its "Loan Obligations" as
defined in and in accordance with the Fidelity Credit Agreement, upon at least
fifteen (15) days' notice to the Lender stating the date (the "Prepayment
Date"), and if such notice is given the Borrower shall, prepay the outstanding
aggregate principal amount of the Loan, together with (i) accrued interest to
the date of such prepayment on the aggregate principal amount prepaid, (ii) all
other accrued and unpaid amounts due hereunder or under any other Loan
Document, and (iii) the Make Whole Premium.  The Borrower agrees that the Make
Whole Premium has been freely bargained for to provide the Lender with
compensation for the cost of reinvesting the Loan proceeds and for the loss of
the contracted return on the Loan, and that such prepayment premium is
reasonable and constitutes a means of providing the Lender with a substitute or
alternative source of cash flow if the Loan or any part thereof is prepaid
prior to the second anniversary of the Closing Date or after the second
anniversary of the Closing Date but prior to the Maturity Date.  Except as
otherwise provided herein, the Make Whole Premium shall apply to a voluntary or
involuntary prepayment of the Loan, whether by acceleration of the principal
balance due upon an Event of Default or otherwise. Anything herein contained or
contained in the Cash Collateral Agreement to the contrary notwithstanding, the
monies on deposit in the Cash Collateral Account may be used by the Borrower to
effect a prepayment of the Loan Obligations, provided that all of the
Obligations of the Borrower under the Fidelity Credit Agreement shall have been
paid.

                 SECTION 2.04.  Interest.  (a)  Ordinary Interest.  The
Borrower shall pay interest on the unpaid principal amount of the Loan owing to
the Lender from the Closing Date, until such principal amount shall be paid in
full, payable in arrears on the fifteenth day of each month (each an "Interest
Payment Date") at a rate per annum equal to the Interest Rate.

                 (b)      Additional Interest.  The Borrower shall pay
additional interest on the Loan, if applicable, pursuant to Section 6.03 of
this Credit Agreement.

                 (c)      Default Interest.  From and after the Maturity Date
and upon the occurrence and during the continuance of an Event of Default
specified in Section 7.01 of this Credit Agreement, the Borrower shall pay
interest on (i) the unpaid principal amount of the Loan and (ii) the amount of
any interest, fee or other amount due and payable hereunder which is not paid
when due, from the date such amount shall be due until such amount shall be
paid in full, in either clause (i) or (ii) payable immediately on the Maturity
Date or on demand after such occurrence and during such continuance, at a rate
per annum equal at all times to the Default Rate.
   19

                                       15

                 (d)      Late Charges.  In the event any payment of principal
or any interest is not made within five (5) days after the date on which such
amount first becomes due and payable, the Lender may, at its option, require
the Borrower to make an additional payment to the Lender as a late charge in an
amount equal to 5% of such overdue amount.

                 SECTION 2.05.  Loan Fee.  The Borrower will pay to the Lender,
as consideration for the Lender having agreed to advance funds pursuant to this
Credit Agreement, on the Closing Date a fee equal to 2.5% or, provided that the
Lender shall have executed the Intercreditor Agreement pursuant to which the
Loan Obligations shall be subordinated to the obligations of the Borrower under
the Fidelity Credit Agreement, 3.334% of the Loan.

                 SECTION 2.06.  Increased Costs.  If, with respect to any
assignee of the Lender or a Participant that is a bank (a "Bank Lender"), due
to either (i) the introduction of or any change in or in the interpretation of
any law or regulation (other than a law or regulation relating to taxes) or
(ii) the compliance with any guideline or request from any central bank or
other governmental authority (whether or not having the force of law), there
shall be any increase in the amount of capital required by such Bank Lender or
authority to be maintained by such Bank Lender or any corporation controlling
Bank Lender as a result of or based upon the existence of Bank Lender's
commitment to lend hereunder then, upon demand by Bank Lender, the Borrower
shall pay to Bank Lender, from time to time as reasonably specified by Bank
Lender, additional amounts sufficient to compensate Bank Lender in the light of
such circumstances, to the extent that Bank Lender reasonably determines such
increase in capital to be allocable to the existence of the Loan.

                 SECTION 2.07.  Payments and Computations.  (a)  The Borrower
shall make each payment required to be made hereunder and under the Notes not
later than 11:00 A.M., New York City time, on the day when due in U.S. dollars
to the Lender at the Lender's Account in immediately available (same day)
funds.

                 (b)      All computations of interest and fees shall be made
by the Lender on the basis of a year of 360 days, in each case for the actual
number of days (including the first day but excluding the last day) occurring
in the period for which such interest or fees are payable.  Each determination
by the Lender of an interest rate or fee hereunder shall be conclusive and
binding for all purposes, absent manifest error.

                 (c)      Whenever any payment hereunder or under the Notes
shall be stated to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of interest.
   20

                                       16

                 (d)      The Borrower covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any usury or
similar law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Credit Agreement, the Notes or
the other Loan Documents; and the Borrower (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Lender, but will suffer and permit the execution of every
such power as though no such law had been enacted.  It is the intent of the
Lender and the Borrower in the execution of the Notes, this Credit Agreement
and all other instruments now or hereafter securing the Notes or executed in
connection therewith or under any other written or oral agreement by the
Borrower in favor of the Lender to contract in strict compliance with
applicable usury law.  In furtherance thereof, the Lender and the Borrower
stipulate and agree that none of the terms and provisions contained in the
Notes, this Credit Agreement or any other instrument securing the Notes or
executed in connection herewith, or in any other written or oral agreement by
the Borrower in favor of the Lender, shall ever be construed to create a
contract to pay for the use, forbearance or detention of money, interest at a
rate in excess of the maximum interest rate permitted to be charged by
applicable law.  Neither the Borrower nor any guarantors, endorsers or other
parties now or hereafter becoming liable for payment of the Notes shall ever be
required to pay interest on the Notes or on indebtedness arising under any
instrument securing the Notes or executed in connection therewith, or in any
other written or oral agreement by the Borrower in favor of the Lender, at a
rate in excess of the maximum interest that may be lawfully charged under
applicable law, and the provisions of this Section 2.07(d) shall control over
all other provisions of the Notes, this Credit Agreement and any other
instruments now or hereafter securing the Notes or executed in connection
herewith or any other oral or written agreements that may be in apparent
conflict herewith.  The Lender expressly disavows any intention to charge or
collect excessive unearned interest or finance charges in the event the
maturity of the Notes is accelerated.  If the maturity of the Notes shall be
accelerated for any reason or if the principal of the Notes is paid prior to
the end of the term of the Notes, and as a result thereof the interest received
for the actual period of existence of the Loan exceeds the applicable maximum
lawful rate, the Lender shall, at its option, either refund to the Borrower the
amount of such excess or credit the amount of such excess against the principal
balance of the Notes then outstanding and thereby shall render inapplicable any
and all penalties of any kind provided by applicable law as a result of such
excess interest.  In the event that the Lender shall collect monies and/or any
other thing of value that are then or at any time deemed to constitute interest
that would increase the effective interest rate on the Notes to a rate in
excess of that permitted to be charged by applicable law, an amount equal to
interest in excess of the lawful rate shall, upon such determination, at the
option of the Lender, be either immediately returned to the Borrower or
credited against the principal balance of the Notes then outstanding, in which
event any and all penalties of any kind under applicable law as a result of
such excess interest shall be inapplicable.  By execution of this Credit
Agreement, the Borrower
   21

                                       17

acknowledges that it believes the Loan to be non-usurious and agrees that if,
at any time, the Borrower should have reason to believe, that the Loan is in
fact usurious, it will give the Lender notice of such condition and the
Borrower agrees that the Lender shall have ninety (90) days after receipt of
such notice in which to make appropriate refund or other adjustment in order to
correct such condition if in fact such exists.

                 SECTION 2.08.  Taxes.  (a)  Any and all payments by the
Borrower hereunder or under the Notes shall be made, in accordance with this
Section 2.08, free and clear of and without deduction for any and all present
or future taxes, levies, imposts, deductions, charges or withholdings other
than (i) net income taxes, franchise taxes and similar taxes imposed on the
Lender or a Participant, (ii) any tax, assessment or other governmental charge
that would not have been imposed but for the failure of the Lender or a
purchaser of all or a portion of the Lender's or a Participant's rights and
obligations under this Credit Agreement to comply with any certification,
identification or other reporting requirements concerning the nationality,
residence, identity or connection with the United States of the Lender or a
Participant, if compliance is required by statute or by regulation of the
United States Treasury Department as a precondition to exemption from such tax,
assessment or other governmental charge, (iii) any tax, assessment or other
governmental charge that would not have been imposed but for either (a) a sale
or other transfer of all or a portion of the Lender's or a Participant's rights
and obligations under this Credit Agreement to a Person that is not an entity
that is treated as a corporation organized or created under the laws of the
United States or of any State for U.S. federal tax purposes or (b) Lender's
merger or consolidation with, or transfer of substantially all of its assets
to, another entity, and (iv) any tax, assessment or other governmental charge
that would not have been imposed but for any present or former connection
between the Lender or a Participant (or a shareholder of the Lender or a
Participant) and the jurisdiction imposing such tax, assessment or other
governmental charge, including, without limitation, the Lender or a
Participant's being or having been a citizen or resident of, present or engaged
in a trade or business in, such jurisdiction, but excluding a connection
arising solely as a result of the Lender's having entered into, received
payments under and enforced this Credit Agreement (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes").  If the Borrower shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder or under
the Notes to the Lender, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions for Taxes (including
deductions ("Additional Taxes") applicable to additional sums payable pursuant
to this sentence), the Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.

                 (b)      In addition, the Borrower shall pay any present or
future stamp, documentary, excise, property or similar taxes, charges or levies
that arise from any payment
   22

                                       18

made hereunder or under the Notes or from the execution, delivery or
registration of, or otherwise with respect to, this Credit Agreement or the
Notes (hereinafter referred to as "Other Taxes").

                 (c)      The Borrower shall indemnify the Lender for the full
amount of Taxes, and Other Taxes, paid by the Lender and any liability
(including penalties, additions to tax, Additional Taxes, interest and
expenses) arising therefrom or with respect thereto except as may arise as a
result of the Lender's gross negligence or willful misconduct.

                 (d)      Within 30 days after the date of any payment of
Taxes, the Borrower shall furnish to the Lender, at its address referred to in
Section 8.02, the original receipt of payment thereof or a certified copy of
such receipt.

                 (e)      Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.08 shall survive the payment in full of
principal and interest hereunder and under the Note.

                 SECTION 2.09.  Payment of Certain Costs and Expenses.  The
Borrower shall pay to the Lender within five (5) days after demand therefor all
reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) incurred by the Lender in connection with (i) the approval of
any lease, (ii) the preparation, negotiation and execution of any
non-disturbance agreement requested for any lease, (iii) review and approval of
any plans, construction contracts or any other documents relating to
construction or development of a Property; and (iv) the assignment of any liens
of the Mortgages pursuant Section 6.08.

                 SECTION 2.10.  Use of Proceeds.  The proceeds of the Loan and
of the loan under the Fidelity Credit Agreement shall be available (and the
Borrower agrees that it shall use such proceeds) to refinance certain Existing
Debt and to provide working capital for the Borrower and its Subsidiaries, and
for other uses, in each case as set forth on Schedule IV.

                                  ARTICLE III

                             CONDITIONS OF LENDING

                 SECTION 3.01.  Conditions Precedent to Funding Loan.  The Loan
shall be advanced by the Lender at a closing to be held on March 15, 1995, or
such later date as the Borrower and the Lender may otherwise agree, provided
that the following conditions shall be conditions precedent to the obligations
of the Lender hereunder to make the Loan:
   23

                                       19

                 (1)      the representations and warranties of the Borrower
         contained in Section 4.01 shall be true and correct as of the Closing
         Date as if made on such date;

                 (2)      the Bankruptcy Court Order shall have been entered by
         the Bankruptcy Court and shall have become final and nonappealable;

                 (3)      paid-up mortgage title commitments in the form of the
         marked-up commitments which have been heretofor initialled by the
         respective attorneys for the Borrower and the Lender for
         identification purposes (the "Form Commitments "), dated the date of
         the Closing Date, and containing no title exceptions except those
         shown on the Form Commitments;

                 (4)      Amroc Investments, Inc. shall have executed and
         delivered to the Borrower a release of certain claims substantially in
         a form previously provided by the Lender;

                 (5)      the Lender shall have received opinion of Shearman
         and Sterling and Wells, Garofalo, Jaworski & Liebman, counsel and
         local counsel, respectively, to the Company in substantially the forms
         attached as Exhibits G and H, respectively dated the Closing Date;

                 (6)      the closing of the Senior Loan shall occur
         simultaneously with the closing of the Loan and the proceeds thereof
         shall be applied in accordance with Section 2.10 of this Credit
         Agreement; and

                 (7)      all costs and fees of the Lender (including
         attorneys' fees and expenses) in connection with the Loan shall have
         been paid.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                 SECTION 4.01.  Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:

                 (a)      Each Loan Party that is a corporation (i) is a
         corporation duly organized, validly existing and in good standing
         under the laws of the State of its incorporation, (ii) is duly
         qualified and in good standing as a foreign corporation in each other
         jurisdiction in which it owns or leases property or in which the
         conduct of its business requires it to so qualify or be licensed
         except where the failure to so qualify or be licensed is not
         reasonably likely to have a Material Adverse Effect and
   24

                                       20

         (iii) has all requisite corporate power and authority to own or lease
         and operate its properties and to carry on its business as now
         conducted and as proposed to be conducted.

                 (b)      Each Loan Party that is a partnership (i) is a
         partnership duly formed and validly existing under the laws of the
         State of its formation, (ii) is duly qualified in each other
         jurisdiction in which it owns or leases property or in which the
         conduct of its business requires it to so qualify or be licensed
         except where the failure to so qualify or be licensed is not
         reasonably likely to have a Material Adverse Effect and (iii) has all
         requisite partnership power and authority to own or lease and operate
         its properties and to carry on its business as now conducted and as
         proposed to be conducted.

                 (c)      Set forth on Schedule V hereto is a complete and
         accurate list of all Subsidiaries of each Loan Party and certain other
         affiliates, showing as of the date hereof (as to each such Subsidiary)
         the jurisdiction of its incorporation or formation and, in the case of
         corporations, the number of shares of each class of capital stock
         authorized, and the number outstanding, on the date hereof and the
         percentage of the outstanding shares of each such class owned
         (directly or indirectly) by such Loan Party and the number of shares
         covered by all outstanding options, warrants, rights of conversion or
         purchase and similar rights at the date hereof.  All of the
         outstanding capital stock of all of such corporate Subsidiaries has
         been validly issued, is fully paid and non-assessable and is owned by
         such Loan Party or one or more of its Subsidiaries free and clear of
         all Liens, except those created by the Collateral Documents and the
         Senior Loan Documents.

                 (d)      The execution, delivery and performance by each Loan
         Party of this Credit Agreement, the Notes, each other Loan Document
         and each Related Document to which it is or is to be a party, and the
         consummation of the transactions contemplated herein and therein, are
         within such Loan Party's corporate or partnership powers, have been
         duly authorized by all necessary corporate or partnership action, and,
         to each such Loan Party's knowledge, do not (i) contravene such Loan
         Party's organizational documents, (ii) violate any law, rule,
         regulation, order, writ, judgment, injunction, decree, determination
         or award, except where such violation is not reasonably likely to have
         a Material Adverse Effect and except as set forth on Schedule VI to
         this Credit Agreement, (iii) except as set forth on Schedule VI to
         this Credit Agreement, conflict with or result in the breach of, or
         constitute a default under, any contract, loan agreement, indenture,
         mortgage, deed of trust, lease or other instrument binding on or
         affecting any Loan Party, any of its Subsidiaries or any of their
         properties, except where such conflict, breach or default is not
         reasonably likely to have a Material Adverse Effect or (iv) except for
         the Liens created by the Collateral Documents and Senior Loan
         Documents, result in or require the creation or
   25

                                       21

         imposition of any Lien upon or with respect to any of the properties
         of any Loan Party or any of its Subsidiaries.

                 (e)      Other than as set forth on Schedule VII to this
         Credit Agreement, no authorization or approval or other action by, and
         no notice to or filing with, any governmental authority or regulatory
         body or any other third party is required for (i) the due execution,
         delivery, recordation, filing or performance by any Loan Party of this
         Credit Agreement, the Notes, any other Loan Document or any Related
         Document to which it is or is to be a party, or for the consummation
         of the transactions contemplated hereby, (ii) the grant by any Loan
         Party of the Liens granted by it pursuant to the Collateral Documents,
         (iii) the perfection or maintenance of the Liens created by the
         Collateral Documents or (iv) the exercise by the Lender of its rights
         under the Loan Documents or the remedies in respect of the Collateral
         pursuant to the Collateral Documents.

                 (f)      This Credit Agreement has been, and the Notes, each
         other Loan Document and each Related Document when delivered hereunder
         will have been, duly executed and delivered by each Loan Party
         thereto.  This Credit Agreement is, and the Notes, each other Loan
         Document and each Related Document when delivered hereunder will be,
         the legal, valid and binding obligation of each Loan Party thereto,
         enforceable against such Loan Party in accordance with its terms.

                 (g)      The Consolidated balance sheet of the Borrower and
         its Subsidiaries as at December 31, 1993, and the related Consolidated
         statement of income and cash flows of the Borrower and its
         Subsidiaries for the fiscal year then ended, accompanied by an opinion
         of Deloitte & Touche, independent public accountants, and the
         Consolidated balance sheet of the Borrower and its Subsidiaries as at
         September 30, 1994, and the related Consolidated statement of income
         and cash flows of the Borrower and its Subsidiaries for the nine
         months then ended, duly certified by the Chairman of the Board of
         Borrower or any other officer of Borrower, copies of which have been
         furnished to the Lender, fairly present, subject, in the case of said
         balance sheet as at September 30, 1994, and said statement of income
         and cash flows for the nine months then ended, to year-end audit
         adjustments, the Consolidated financial condition of the Borrower and
         its Subsidiaries as at such dates and the Consolidated results of the
         operations of the Borrower and its Subsidiaries for the periods ended
         on such dates, all in accordance with generally accepted accounting
         principles applied on a consistent basis.  Since September 30, 1994,
         there has been no Material Adverse Change.

                 (h)      The rent roll for the Properties delivered to the
         Lender on the Closing Date is true, accurate and complete in all
         material respects.
   26

                                       22

                 (i)      All financial statements delivered by any Loan Party
         to the Lender, are true, correct and complete in all material
         respects, fairly represent such Loan Party's financial condition as of
         the date hereof and thereof, and no information has been omitted that
         would make the information previously furnished misleading or
         incorrect in any material respect.

                 (j)      To such Loan Party's knowledge, there is no action,
         suit, investigation, litigation or proceeding affecting any Loan Party
         not covered by insurance (subject to reasonable deductibles),
         including any Environmental Action, pending before any court,
         governmental agency or arbitrator that (i) would be reasonably likely
         to have a Material Adverse Effect (other than the Disclosed
         Litigation) or (ii) other than the Bankruptcy Proceeding, purports to
         affect the legality, validity or enforceability of this Credit
         Agreement, the Notes, any other Loan Document or any Related Document
         or the consummation of the transactions contemplated hereby, and there
         has been no adverse change in the status or financial effect on any
         Loan Party of the Disclosed Litigation from that described on Schedule
         I.

                 (k)      Except as set forth on Schedule VIII(a) to this
         Credit Agreement to such Loan Party's knowledge, the operations and
         properties of each Loan Party and each of its Subsidiaries comply in
         all material respects with all Environmental Laws, all necessary
         Environmental Permits have been obtained and are in effect for the
         operations and properties of each Loan Party and its Subsidiaries,
         each Loan Party and its Subsidiaries are in compliance in all material
         respects with all such Environmental Permits, and, no circumstances
         exist that would be reasonably likely to (i) form the basis of an
         Environmental Action against any Loan Party or any of its Subsidiaries
         or any properties described in the Mortgages that could have a
         Material Adverse Effect or (ii) cause any such property to be subject
         to any restrictions on ownership, occupancy, use or transferability
         under any Environmental Law.

                 (l)      Except as set forth in the environmental reports
         heretofore delivered to the Lender as set forth on Schedule VIII(b) to
         this Credit Agreement, none of the Properties is listed or, to the
         knowledge of any Loan Party, proposed for listing on the National
         Priorities List under CERCLA or on the Comprehensive Environmental
         Response, Compensation and Liability Information System maintained by
         the Environmental Protection Agency or any analogous state list of
         sites requiring investigation or cleanup or is adjacent to any such
         property. Except as would not have a Material Adverse Effect, no
         underground storage tanks, as such term is defined in 42 U.S.C.Section
         6991, are located on any Property in violation of applicable
         Environmental Laws.  Except as set forth on the environmental reports
         heretofore provided to the Lender, the Borrower has no knowledge of
         any underground storage tank located on any property adjoining any
         Property.
   27

                                       23

                 (m)      Each Loan Party and each of its Subsidiaries has
         filed or has caused to be filed all income tax returns (Federal, state
         and local) required to be filed and has paid all taxes shown thereon
         to be due, together with applicable interest and penalties. The
         Borrower is not aware of any material unasserted claims for prior
         taxes against it for which adequate reserves satisfactory to the
         Lender have not been established.

                 (n)      Set forth on Schedule IX to this Credit Agreement is
         a complete and accurate list of all real property owned by any
         Mortgagor or any of their Subsidiaries, showing as of the date hereof
         the street address, county or other relevant jurisdiction, state and
         record owner thereof.  Each Mortgagor, or such Subsidiary, has good,
         marketable and insurable fee simple title to such real property, free
         and clear of all Liens, other than those disclosed on such Schedule
         and Liens created or permitted by the Loan Documents and the Senior
         Loan Documents.

                 (o)      Set forth on Schedule X to this Credit Agreement is a
         complete and accurate list of all leases of real property under which
         any Mortgagor or any of their Subsidiaries is the lessee, showing as
         of the date hereof the street address, county or other relevant
         jurisdiction, state, lessor, lessee, expiration date and annual base
         rental cost thereof.  To such Mortgagor's knowledge, each such lease
         is the legal, valid and binding obligation of the lessor thereof,
         enforceable in accordance with its terms.

                 (p)      Except as set forth on Schedule XI to this Credit
         Agreement, no Loan Party is in default in the performance, observance
         or fulfillment of any of the obligations, covenants or conditions
         contained herein or in any material agreement or instrument to which
         it is a party or by which it or any of its properties is bound
         including, without limitation, the Bankruptcy Plan, except for any
         such default which shall be cured on the Closing Date with the
         proceeds of the borrowings made pursuant to this Credit Agreement.

                 (q)      As of the date hereof, there has been no Material
         Adverse Change since the date of the most recent financial statements
         provided by the Borrower or such Loan Party to the Lender.

                 (r)      No Loan Document or other document, certificate or
         statement furnished to the Lender by or on behalf of the Borrower or
         any other Loan Party contains any untrue statement of a material fact
         or omits to state a material fact necessary in order to make the
         statements contained herein and therein not misleading.  It is
         specifically understood by the Borrower that all such statements,
         representations and warranties shall be deemed to have been relied
         upon by the Lender as an inducement to make the Loan to the Borrower.
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                                       24

                 (s)      That all of the Allowed Class 6 Claims (as defined in
         the Bankruptcy Plan) held by Amroc Investments, Inc.  shall have been
         paid in full simultaneously with the funding of the Loan under this
         Credit Agreement.

                                   ARTICLE V

                                   COVENANTS

                 SECTION 5.01.  Affirmative Covenants of the Borrower.  So long
as any portion of the Loan shall remain unpaid, the Borrower will, unless the
Lender shall otherwise consent in writing:

                 (a)      Compliance with Laws, Etc.  Comply, and cause each
         Mortgagor to comply, in all respects, with all applicable laws, rules,
         regulations and orders, except as set forth on Schedule XII to this
         Credit Agreement or except where such non-compliance is not likely to
         have a Material Adverse Effect; and keep, and cause each Mortgagor to
         keep, at all times in full force and effect all authorizations
         required for the continued use and operation of the properties of the
         Borrower and of each Mortgagor except as set forth on such Schedule.

                 (b)      Payment of Taxes, Etc.  Prepare and timely file all
         federal, state and local tax returns required to be filed by the
         Borrower and promptly pay and discharge all taxes, assessments and
         other governmental charges, imposed upon the Borrower or its income or
         any of its property, and cause each Subsidiary to do so, with respect
         to real estate taxes, before interest and penalties commence to accrue
         thereon and, with respect to all other taxes, before they become a
         Lien upon such property, except for those taxes, assessments and other
         governmental charges then being contested in good faith by appropriate
         proceedings and for which the Borrower or such Subsidiary has
         maintained adequate reserves and with respect to which (i) there is
         not a reasonable likelihood, in the judgment of the Lender, that the
         Borrower or the Lender shall be subject to any risk of criminal or
         material civil liability and (ii) there is not a reasonable
         likelihood, in the judgment of the Lender, that the Borrower's or any
         of its Subsidiaries' properties or the lien of the Mortgages shall be
         subject to the risk, respectively, of forfeiture or impairment,
         provided, however, that all real estate taxes must be paid when due.
         The Borrower shall submit to the Lender, upon request, an affidavit
         signed by the Borrower certifying that all federal, state and local
         income tax returns have been filed to date and all real property
         taxes, assessments and other governmental charges with respect to the
         Borrower's or any Subsidiary's properties have been paid to date.
   29

                                       25

                 (c)      Compliance with Environmental Laws.  Except as set
         forth on Schedule VIII(a) to this Credit Agreement, comply, and cause
         each of its Subsidiaries and all lessees and other Persons occupying
         its properties to comply, in all material respects, with all
         Environmental Laws and Environmental Permits applicable to its
         operations and properties, except where the non-compliance with such
         laws or the absence or non-renewal of such permits is not likely to
         have a Material Adverse Effect; obtain and renew all Environmental
         Permits necessary for its operations and properties, except where such
         non-compliance is not likely to have a Material Adverse Effect; and to
         the extent and in the timeframe required by applicable Environmental
         Law conduct, and cause each of its Subsidiaries to conduct, any
         investigation, study, sampling and testing, and undertake any cleanup,
         removal, remedial or other action necessary to remove and clean up all
         Hazardous Materials from any of its properties, in accordance with the
         requirements of all Environmental Laws; provided, however, that
         neither the Borrower nor any of its Subsidiaries shall be required to
         undertake any such cleanup, removal, remedial or other action to the
         extent that its obligation to do so is being contested in good faith
         and by proper proceedings and with respect to which (i) there is no
         reasonable likelihood of any risk of criminal or material civil
         liability to the Lender, (ii) there is no reasonable likelihood that
         the Borrower's or any of its Subsidiaries' properties or the lien of
         the Mortgages shall be subject to the risk, respectively, of
         forfeiture or impairment and (iii) appropriate reserves are being
         maintained with respect to such circumstances.

                 (d)      Maintenance of Insurance.  Maintain, and cause each
         Mortgagor to maintain, insurance with responsible and reputable
         insurance companies or associations in such amounts (subject to
         reasonable deductibles) and covering such risks as is usually carried
         by companies engaged in similar businesses and owning similar
         properties in the same general areas in which the Borrower or such
         Subsidiary operates and as otherwise required by the Mortgages,
         provided, however, that Borrower shall cause the Mortgagors to
         maintain the insurance required by the Mortgages.

                 (e)      Preservation of Corporate or Partnership Existence,
         Etc.  Preserve and maintain, in full force and effect, and cause each
         Mortgagor and the Lex Store General Partner, where applicable, to
         preserve and maintain, its corporate or partnership existence, rights
         (charter and statutory) and franchises and all authorizations and
         rights material to its business; provided, however, that neither the
         Borrower nor any Mortgagor shall be required to preserve any right or
         franchise if the Board of Directors or general partners of the
         Borrower or such Mortgagor shall determine that the preservation
         thereof is no longer desirable in the conduct of the business of the
         Borrower or such Mortgagor, as the case may be, and that the loss
         thereof is not disadvantageous in any material respect to the
         Borrower, such Mortgagor or the Lender.
   30

                                       26

                 (f)      Inspection Rights.  At any reasonable time and from
         time to time, in each case upon reasonable prior notice and at such
         times as shall not unreasonably disrupt tenants, permit the Lender or
         any agents or representatives thereof, to examine, audit and make
         copies of and abstracts from the records and books of account of, and
         visit the properties of, the Borrower and any Mortgagor, and to
         discuss the affairs, finances and accounts of the Borrower and any
         Mortgagor with any of their officers or directors and with their
         independent certified public accountants.

                 (g)      Keeping of Books.  Keep, and cause each Mortgagor and
         the Lex Store General Partner to keep, proper books of record and
         account, in which full and correct entries shall be made of all
         financial transactions and the assets and business of the Borrower and
         each such Subsidiary in accordance with generally accepted accounting
         principles in effect from time to time consistently applied.

                 (h)      Compliance with Terms of Lease Agreements.  Perform
         timely all of the obligations, covenants and agreements of the
         landlord contained in any lease now or hereafter affecting any of the
         Properties and require the timely performance by the tenant of all of
         the obligations, covenants and agreements to be performed by such
         tenant.

                 (i)      Approval of Leases.  The Borrower shall not, and
         shall cause each Mortgagor not to, lease space at any of the
         Properties (other than the Kings Plaza Mall) without the Lender's
         consent, which consent shall not unreasonably be withheld, provided,
         however, that no such consent of Lender shall be required for any
         lease of 10,000 square feet or less unless (i) such lease requires the
         Lender to provide a non-disturbance agreement to the lessee or (ii)
         such lease is not on commercially reasonable terms.  It is hereby
         expressly acknowledged and agreed by the Lender that all leases at any
         Property identified on the certified rent roll delivered to the Lender
         pursuant to Section 4.01(h) of this Credit Agreement are and shall be
         deemed to be approved.

                 (j)      Transactions with Affiliates.  Conduct, and cause
         each of its Subsidiaries to conduct, all transactions otherwise
         permitted under the Loan Documents with any of their Affiliates or any
         Permitted Related Owners on terms that are fair and reasonable and no
         less favorable to the Borrower or such Subsidiary than it would obtain
         in a comparable arm's-length transaction with a Person not an
         Affiliate.  Transactions with the Lender, Vornado Realty Trust and any
         of its Affiliates pursuant to agreements existing as of the date
         hereof among Borrower or its Subsidiaries and Vornado Realty Trust and
         its Affiliates as set forth on Schedule XIII to this Credit Agreement
         are approved.
   31

                                       27

                 (k)      Maintenance of Properties.  Maintain or cause to be
         maintained the Properties and all other items constituting Collateral.

                 (l)      Compliance with Loan Documents.  Comply and cause
         each Loan Party to comply with all of its covenants set forth in each
         of the Loan Documents.

                 (m)      After Acquired Properties.  Subject to the
         requirements of (i) liens existing at the time of acquisition, (ii)
         purchase money mortgage liens and (iii) liens in connection with
         construction or development financing which construction or
         development financing is reasonably acceptable to the Lender, grant to
         the Lender a valid mortgage lien, or spread the lien of a Mortgage to
         encumber, any real property acquired by Borrower or any Subsidiary
         after the date hereof.

                 (n)      Trust Fund.  In compliance with Section 13 and
         Article 3-A of the Lien Law of the State of New York, receive all
         proceeds of the Loan and hold the right to receive all such proceeds
         as a trust fund to be used first for the purpose of paying the cost of
         improvement, and apply all such proceeds first to the payment of the
         cost of improvement before using any part of such proceeds for any
         other purpose.

                 (o)      Flushing Property.  To keep at all times the ground
         lease covering the Flushing Property in full force and effect.

                 (p)      Mandatory Transfer.  Cause title to the King's Plaza
         Store Property, the Rego Park I Property, the Rego Park II Property
         and the Third Avenue Property to be transferred to a Permitted Related
         Owner not later than April 15, 1995, provided that such date may be
         extended to be co-terminus with the expiration of the period during
         which the Borrower may obtain the benefits of mortgage recording tax
         exemptions pursuant to an order of the Bankruptcy Court.

                 (q)      Reserve for Certain Disclosed Litigation.  The
         Borrower shall, on the date hereof, establish, and until the Loan
         shall be paid in full, maintain a segregated account with First
         Fidelity in an amount sufficient, at all times, to pay in full any
         outstanding claim constituting a part of item number 3 in Schedule I
         to this Credit Agreement; provided, however, the segregated account
         need never exceed $7,500,000.00.

                 SECTION 5.02.  Negative Covenants.  So long as any portion of
the Loan Obligations shall remain unpaid, the Borrower will not, or permit any
other Loan Party to, at any time, without the written consent of the Lender:

                 (a)      Liens, Etc.  Create, incur, assume or suffer to
         exist, or permit any Loan Party or Subsidiary to create, incur, assume
         or suffer to exist, any Lien on or
   32

                                       28

         with respect to any of its properties of any character (including,
         without limitation, accounts) whether now owned or hereafter acquired,
         or sign or file, or permit any Loan Party or Subsidiary to sign or
         file, under the Uniform Commercial Code of any jurisdiction, a
         financing statement that names the Borrower or any Mortgagor or
         Subsidiary as debtor, or sign, or permit any Loan Party or Subsidiary
         to sign, any security agreement authorizing any secured party
         thereunder to file such financing statement, or assign, or permit any
         Mortgagor to assign, any accounts or other right to receive income,
         excluding, however, from the operation of the foregoing restrictions
         the following:

                 (i)      Liens created by the Loan Documents or the Senior
                          Loan Documents;

                 (ii)     Permitted Liens;

                 (iii)    Special Liens (as defined in Section 5.02(b));

                 (iv)     Liens permitted pursuant to Development Financings;

                 (v)      Liens in connection with any Special Financings; and

                 (vi)     Liens otherwise consented to by the Lender in writing.

                 (b)      Debt.  Create, incur, assume or suffer to exist, or
         permit any Mortgagor or Subsidiary to create, incur, assume or suffer
         to exist, any Debt other than:

                 (i)      Debt under the Loan Documents or the Senior Loan
                          Documents;

                 (ii)     Debt permitted pursuant to Development Financings;

                 (iii)    Surviving Debt;

                 (iv)     Subordinate Debt or subordinated indebtedness
                          permitted pursuant to Section 5.02(f) or approved by
                          the Lender;

                 (v)      Debt secured by Permitted Liens; and

                 (vi)     Debt incurred in connection with Special Financings;

         provided, however, that the Borrower shall be permitted to enter into
         any agreement or agreements contemplating the incurrence by the
         Borrower of Debt in an aggregate amount not to exceed $150,000,000 in
         connection with the construction or
   33

                                       29

         development of all or any Financing Property or Development Property,
         provided that (i) the lien of the lender under any such agreement
         (each a "Special Lien") shall be Deeply Subordinated to the liens of
         the Mortgages and (ii) no funds shall be advanced in respect of any
         such Debt until the requirements set forth in this Credit Agreement
         with respect to such Financing Property or Development Financing shall
         have been satisfied by the Borrower or waived by the Lender and the
         Senior Lender, at which time the Liens of the Lender shall be
         subordinated or released in accordance with the terms of this Credit
         Agreement.

                 (c)      Mergers, Etc.  Merge into or consolidate with any
         Person or permit any Person to merge into it, or permit any Loan Party
         or Subsidiary to do so, except that (i) any Loan Party may merge into
         or consolidate with any other Loan Party; provided that, in the case
         of any such consolidation, the Person formed by such consolidation
         shall be a wholly owned Subsidiary of the Borrower; provided further,
         that the Borrower shall pledge and grant to Lender a first priority
         perfected lien in and security interest on the capital stock of such
         Subsidiary owned by the Borrower to the Lender as further collateral
         for the Loan Obligations, and (ii) any Subsidiary or Permitted Related
         Owner that is not a Loan Party may merge into or consolidate with any
         Subsidiary or Permitted Related Owner which is not a Loan Party.

                 (d)      Investments in Other Persons.  Purchase or acquire
         the obligations or stock of, or any other interest in, any Person
         (other than a Permitted Related Owner), except such investments as are
         made with surplus cash and do not expose the Borrower to any risk of
         loss in excess of the amount of cash invested.

                 (e)      Loans, etc.  Make, or permit any Mortgagor to make,
         loans to any Person, other than to the Borrower, a wholly owned
         Subsidiary or a Permitted Related Owner, provided that loans may be
         made to the Lexington Avenue Partnership or the Lex Store General
         Partner as may be necessary to satisfy the obligations under
         agreements in effect as of the date hereof of the Borrower,  the
         Lexington Avenue Partnership or the Lex Store General Partner or to
         provide funds necessary to operate the business of the Lexington
         Avenue Partnership and the Lex Store General Partner.

                 (f)      Dividends, Etc.  Declare or pay any dividends,
         purchase, redeem, retire, defease or otherwise acquire for value any
         of its capital stock or any warrants, rights or options to acquire
         such capital stock, now or hereafter outstanding (except that
         Permitted Related Owners may pay dividends to the Borrower) return any
         capital to its stockholders as such, make any distribution of assets,
         capital stock, warrants, rights, options, obligations or securities to
         its stockholders as such or issue or sell any capital stock or any
         warrants, rights or options to acquire such capital stock (except for
         capital stock issued by Permitted Related Owners), or permit any of
         its
   34

                                       30

         Subsidiaries to purchase, redeem, retire, defease or otherwise acquire
         for value any capital stock of the Borrower or any warrants, rights or
         options to acquire such capital stock or to issue or sell any capital
         stock or any warrants, rights or options to acquire such capital
         stock; provided, however, that nothing contained in this paragraph
         shall prohibit Borrower from (i) paying a dividend or making a
         distribution in the form of, or from the proceeds of an issuance of,
         subordinated indebtedness or otherwise (including, without limitation,
         payment in cash) as may reasonably be required, based upon the advice
         of counsel, to enable the Borrower to qualify as a REIT under the Code
         or (ii) paying a dividend or making a distribution from the proceeds
         of the issuance by the Borrower of equity securities.

                 (g)      Change in Nature of Business.  Make, or permit any
         Mortgagor to make, any material change in the nature of its business
         as carried on at the date hereof and will not, nor permit any
         Mortgagor to, remove, demolish, materially alter, discontinue the use
         of, sell, transfer, assign, hypothecate, pledge or otherwise dispose
         of, except as permitted hereunder and for sales, transfers,
         assignments and pledges to Subsidiaries or Permitted Related Owners,
         any part of its assets necessary for the continuance of its business,
         as presently conducted and as presently contemplated, except (i) in
         the normal course of business,  (ii) as required under the Gruss
         Partnership Agreement but only to the extent expressly permitted
         herein, and (iii) in connection with Development Financings or Special
         Financings; notwithstanding the foregoing, no Mortgagor shall transfer
         any Property except to a Permitted Related Owner.

                 (h)      Charter Amendments.  Amend, or permit any Mortgagor
         or Subsidiary to amend, its certificate of incorporation or bylaws.

                 (i)      Accounting Changes.  Make or permit, or permit any
         Mortgagor to make or permit, any change in accounting policies or
         reporting practices, except as required by generally accepted
         accounting principles.

                 (j)      Amendment, Etc. of Related Documents.   Except as may
         be required in order for the Borrower to qualify as a REIT under the
         Code, with respect to (i) the Management Agreement, (ii) the Leasing
         Agreement, (iii) the Tenancy in Common Agreement, (iv) the Reciprocal
         Easement Agreement, (v) the Senior Loan Documents, (vi) Major Leases
         and (vii) the Gruss Partnership Agreement, cancel or terminate or
         consent to or accept any cancellation or termination thereof, amend,
         modify or change in any material manner any term or condition thereof,
         waive any material default under or any material breach of any
         material term or condition thereof, agree in any manner to any other
         amendment, modification or change of any material term or condition
         thereof or take any other action in connection therewith that would
         impair
   35

                                       31

         the value of the interest or rights of the Borrower thereunder or that
         would impair the rights or interests of the Lender, or permit any
         Mortgagor to do any of the foregoing.

                 (k)      Future Speculative Development.  Develop, or permit
         any Mortgagor or Subsidiary to develop, any undeveloped real property
         owned by the Borrower or such Mortgagor in the absence of executed
         leases approved by Lender for more than 50% of the projected leasable
         space on such property.

                 (l)      Negative Pledge.  Except in connection with (i)
         Existing Debt, (ii) Secured Debt permitted hereby, (iii) Subordinated
         Debt permitted hereby, (iv) Permitted Liens, (v) Development Financing
         permitted hereby, (vi) any Special Financing permitted hereby, and
         (vii) as required under the Gruss Partnership Agreement but only to
         the extent expressly permitted herein, the Borrower shall not enter
         into any covenant or other agreement that prevents it or could prevent
         it in the future from pledging, granting a security interest in,
         mortgaging, assigning, encumbering or otherwise creating a lien on any
         of its property (whether real or personal, tangible or intangible, and
         now owned or hereafter acquired) in favor of the Lender, or that would
         be breached if the Borrower were to pledge, grant a security interest
         in, mortgage, assign, encumber or otherwise create a lien on any of
         its property (whether real or personal, tangible or intangible, and
         now owned or hereafter acquired) in favor of the Lender.

                 (m)      Future Property Acquisition.  Except as permitted in
         Section 6.01, acquire, or permit any Mortgagor or Subsidiary to
         acquire, any real property without the consent of the Lender and
         without executing and delivering or causing such Mortgagor or
         Subsidiary to execute and deliver any instrument the Lender may deem
         necessary or desirable to effectuate such real property becoming
         additional security for the Loan in accordance with Section 5.01(m).

                 (n)      Payments Under Subordinate Loan Documents.  Make any
         payment in respect of any Subordinate Debt (i) at any time while any
         amount shall be due and owing under any of the Loan Documents or (ii)
         after the Loan shall have matured or the Lender shall have accelerated
         payment of the Loan pursuant to Section 7.01 or prepay any Subordinate
         Debt while at any time that any Loan Obligation remains unpaid other
         than as provided in Section 5.02(r).

                 (o)      Lex Store General Partner.  Cause or permit the Lex
         Store General Partner to withdraw as sole general partner of the Gruss
         Partnership, to be other than the sole general partner or to designate
         a general partner under the Gruss Partnership Agreement other than the
         Lex Store General Partner.
   36

                                       32

                 (p)      Transfer of Properties.  Transfer title to any of the
         Properties except to (i) any Mortgagor, (ii) any Person described in
         clause (a) of the definition of Permitted Related Owner or (iii) any
         Person described in clause (b) of the definition of Permitted Related
         Owner, provided that, in the case of clause (iii), a receiver of a
         Property sought to be transferred to such Permitted Related Owner has
         proposed to enter into a lease at such Property or take any other
         action which would materially adversely affect the Borrower's
         qualification as a REIT and the Borrower has given ten (10) days'
         notice to the Lender of its intention to transfer such Property to
         such Permitted Related Owner.

                 (q)      Issuance of Shares.  Issue, or permit any Subsidiary
         (other than a Permitted Related Owner) to issue any shares of stock
         that are not issued as of the date hereof, except that notwithstanding
         this paragraph the Borrower shall be permitted to issue shares of
         stock at any time so long as, taking into account such issuance,
         Vornado Realty Trust and its Affiliates (including for this purpose
         Interstate Properties) shall continue to own in the aggregate not less
         than 20% of the outstanding shares of common stock of the Borrower,
         and provided further, with respect to the Borrower only, that an
         automatic exchange involving Excess Stock as defined in and pursuant
         to the Borrower's Amended and Restated Certificate of Incorporation
         shall not be treated as an issuance of shares for purposes of this
         paragraph.

                 (r)      Prepayment of Gruss Mortgage.  Prepay the 4/7
         Redemption Note or the 3/7 Redemption Note (each as defined in the
         Gruss Partnership Agreement) prior to the release of the Mortgage
         relating to the Lexington Avenue Property.

                 (s)      Lexington Avenue Partnership.  Permit the Lex Store
         General Partner to pledge its entire general partnership interest in
         the Lexington Avenue Partnership.

                 SECTION 5.03.  Reporting Requirements.  So long as any portion
of the Loan shall remain unpaid, the Borrower will, unless the Lender shall
otherwise consent in writing, furnish to the Lender:

                 (a)      Quarterly Financials.  (i) As soon as available and
         in any event within 45 days after the end of each of the first three
         quarters of each fiscal year of the Borrower, Borrower's Quarterly
         Report on Form 10-Q for the preceding quarter as filed with the
         Securities and Exchange Commission (the "Commission"), containing
         unaudited financial statements as required by law; and (ii) as soon as
         available and in any event within 60 days after the end of each of the
         first three quarters of each fiscal year, an unaudited consolidating
         balance sheet of the Borrower and its Subsidiaries as of the end of
         such quarter and consolidating statement of operations and cash flows
         of the Borrower and its Subsidiaries for the period commencing at the
         end of the
   37

                                       33

         previous fiscal year and ending with the end of such quarter, setting
         forth in each case in comparative form the corresponding figures for
         the corresponding period of the preceding fiscal year, all in
         reasonable detail and represented to be true and correct (subject to
         year-end audit adjustments) by the Chairman of the Board of the
         Borrower or other officer of the Borrower.

                 (b)      Annual Financials.  (i) As soon as available and in
         any event within 90 days after the end of each fiscal year of the
         Borrower, a copy of the Borrower's Annual Report on Form 10-K for such
         fiscal year as filed with the Commission; and (ii) as soon as
         available and in any event within 120 days after the end of each
         fiscal year, an unaudited consolidating balance sheet of the Borrower
         and its Subsidiaries as of the end of such fiscal year and an
         unaudited consolidating statement of operations and cash flows of the
         Borrower and its Subsidiaries for such fiscal year, represented to be
         true and correct by the Chairman of the Board of the Borrower or other
         officer of the Borrower.

                 (c)      Litigation.  Promptly after the commencement thereof,
         notice of all actions, suits, investigations, litigation and
         proceedings before any court or governmental department, commission,
         board, bureau, agency or instrumentality, domestic or foreign,
         affecting any Loan Party of the type described in Section 4.01(j), and
         promptly after the occurrence thereof, notice of any material adverse
         change in the status of the Disclosed Litigation from that described
         on Schedule I to this Credit Agreement.

                 (d)      Environmental Conditions.  Promptly after the
         occurrence thereof, notice of any condition or occurrence on any
         Property that results in a material noncompliance by any Loan Party or
         any of its Subsidiaries with any Environmental Law or Environmental
         Permit or would be reasonably likely to (i) form the basis of an
         Environmental Action against any Loan Party or any of its Subsidiaries
         or any Property that could have a Material Adverse Effect or (ii)
         cause any Property to be subject to any restrictions on ownership,
         occupancy, use or transferability under any Environmental Law.

                 (e)      Financial Data for Each Property Other Than the Kings
         Plaza Mall Property.  Not later than 120 days after the end of each
         fiscal year, and not later than sixty (60) days after the end of each
         fiscal quarter, financial data in form reasonably satisfactory to the
         Lender relating to the operation of each of the Properties, including,
         without limitation, certified rent roll and summary of leases
         represented as true and correct by the Chairman of the Board of the
         Borrower or other officer of the Borrower.
   38

                                       34

                 (f)      Financial Data for Kings Plaza Mall.  Notwithstanding
         anything to the contrary contained herein, the following shall be the
         financial reporting requirements for the Kings Plaza Mall:  (A) within
         120 days after the end of each fiscal year of the Kings Plaza Mall,
         annual financial statements of the Kings Plaza Mall, including a
         balance sheet and a statement of operations and cash flows then
         audited by Deloitte & Touche or another independent certified public
         accountant acceptable to the Lender, and a rent roll and summary of
         leases prepared by the manager of the Kings Plaza Mall and represented
         as true and correct by such manager, and (B) no later than 45 days
         after the end of each fiscal quarter, a quarterly operating statement
         with respect to the Kings Plaza Mall prepared by the manager of the
         Kings Plaza Mall and represented as true and correct by such manager.

                 (g)      Budget.  To the extent required and received under
         the Management Agreement, not less than 30 days prior to the
         commencement of each fiscal year, an annual operating budget relating
         to the Properties for the upcoming fiscal year including, without
         limitation, the projected gross rental income and projected operating
         expenses on a line item basis, provided, however, nothing herein
         contained shall be deemed to require the Borrower to comply with such
         budgets.

                 (h)      Other Information.  Such other information respecting
         the business, financial condition, operations, performance or
         properties of any Loan Party as the Lender may from time to time
         reasonably request.

                 SECTION 5.04.  Covenants of the Lender.  (a) The Lender hereby
covenants to Borrower that it will not exercise any rights, including rights
exercisable upon the occurrence of an Event of Default, that it has arising
from or as a result of this Credit Agreement or any related agreement,
including, without limitation, the Pledge Agreement between the Borrower and
the Lender, to cause Borrower or any Subsidiary of Borrower or any Permitted
Related Owner to (i) enter into a lease or lease amendment that either (A)
provides for payments that are based, directly or indirectly (including through
sub-leasing), upon the net "income or profits" of any person (as defined in
Section 856(d) (2) of the Code) or (B) requires Borrower or any Subsidiary of
Borrower or any Permitted Related Owner to provide a service to a tenant, other
than through an independent contractor (as defined in Section 856(d)(2) of the
Code), where the provision of such service by Borrower or any of its
Subsidiaries or any Permitted Related Owner would cause rents received by the
Borrower or any of its Subsidiaries to fail to be "rents from real property"
under Section 856(d)(2) of the Code, (ii) engage in a new line of business
which (A) is unrelated to the development or leasing of real property and (B)
would create a substantial risk, as a result of its generation of income not
described in Section 856(c)(2) or (c)(3) of the Code, that Borrower would fail
to qualify as a REIT under the Code or (iii) acquire an asset that would cause
Borrower to fail to satisfy the asset test of Section 856(c)(5) of the Code;
provided, however, that the foregoing covenants of this Section 5.04(a) shall
not preclude the Lender
   39

                                       35

from collecting amounts due to the Lender under this Credit Agreement or from
foreclosing on any property securing such indebtedness or (y) be deemed to have
been breached or violated by the Lender as a result of any act or action
(including, without limitation, the execution of a lease) made, done or taken
by any receiver for any property of any Loan Party (including a receiver
appointed at the request of the Lender) unless a motion to compel such act or
action was made by the Lender to the court which appointed such receiver.

                 (b)      The Lender agrees to use reasonable efforts to
preserve the confidentiality of any Confidential Information received by it
from the Borrower except as required by law or court order.

                 (c)      In the event that Borrower proposes to incur Secured
Debt in an amount equal to at least $52,500,000 in connection with the
construction, development or redevelopment of the Rego Park I Property, then
within 15 days after the Lender shall have received written request from the
Borrower of such proposed Secured Debt, the Lender will deliver an agreement (a
"Deep Subordination Agreement") executed by Lender to the prospective holder of
such proposed Secured Debt (herein called the "Prospective New Lender"),
provided that if such Deep Subordination Agreement is unacceptable to the
Prospective New Lender, and the Lender and the Prospective New Lender do not
execute a Deep Subordination Agreement with such modifications thereto
acceptable to the Prospective New Lender and deliver same to Borrower within
ten (10) days after the expiration of such 15-day period, then upon at least
five (5) Business Days, prior notice and request given by Borrower to Lender,
the Lender will execute and deliver to Borrower an instrument releasing the
lien of the Mortgages relating to the Rego Park I Property, provided that no
Default or Event of Default is then continuing; and provided further that the
Lender's obligation to deliver a Deep Subordination Agreement in accordance
with this paragraph shall be subject to the satisfaction by the Borrower or the
waiver in writing by the Lender of the Subordination Conditions simultaneously
with the incurrence of such Secured Debt.

                 (d)      The Lender shall execute and deliver a
non-disturbance agreement substantially in the form of Exhibit F (with such
changes as the Lender may reasonably request) in connection with any lease
approved by the Lender pursuant to Section 5.01(i) where the tenant is a
nationally recognized credit-worthy retail tenant, provided that the tenant
under such Lease shall require such non-disturbance agreement.

                 (e)      At the direction of the Borrower, the Lender hereby
agrees to invest the monies on deposit in the Cash Collateral Account only in
U.S. Treasury securities, commercial paper rated A1/P1 by any nationally
recognized rating agency, money market instruments and corporate debt
instruments rated AAA or the equivalent by any nationally recognized rating
agency, provided that the maturity of any such securities shall not be a date
after the Maturity Date.
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                                       36

                                   ARTICLE VI

                               SPECIAL PROVISIONS

                 SECTION 6.01.  Condemnation and Casualty.  (a)  In the event
of any condemnation or casualty of any Property in part or in the entirety, the
proceeds of such condemnation or casualty, to the extent not retained or
otherwise applied by the holder of any mortgage securing Senior Debt on such
Property, applied as required pursuant to any Major Lease approved by the
Lender at the Property or applied by such mortgagee or in accordance with such
Major Lease either to restore the improvements on such Property or to reduce
such Senior Debt, shall be immediately deposited by Borrower in the Cash
Collateral Account (such proceeds of condemnation so deposited being herein
called "Condemnation Proceeds"; such proceeds of casualty so deposited being
herein called "Casualty Proceeds"; and Condemnation Proceeds and/or Casualty
Proceeds being herein called "Proceeds") and shall constitute additional
collateral for the Loan Obligations in accordance with the Cash Collateral
Agreement.

                 (b)      Provided that no Default or Event of Default shall
have occurred and be continuing, the Borrower shall be entitled to withdraw any
Condemnation Proceeds from the Cash Collateral Account for the purpose of
acquiring additional real estate assets with the consent of the Lender, which
consent shall not be unreasonably withheld, provided that, subject to the
Senior Loan Documents, (i) Borrower shall have delivered to Lender an appraisal
for such real estate (x) for an amount at least equal to the amount of the
Condemnation Proceeds sought to be withdrawn by the Borrower to purchase such
real estate and (y) issued by an appraisal company and in form and substance
reasonably satisfactory to the Lender; (ii) the Borrower shall have delivered
to Lender environmental, engineering and such other studies, reports,
documents, title reports, violation searches and other information relating to
such real estate as would be generally required by the Lender in accordance
with good institutional lending practices, all of which studies, reports,
documents and other information shall be in form and substance reasonably
satisfactory to the Lender; (iii) the Lender shall be granted a priority lien
mortgage on said real estate to further secure the Guaranties (the "Additional
Mortgage"); (iv) the Borrower shall have delivered to Lender a paid-up mortgage
title insurance policy in favor of Lender, insuring the Additional Mortgage as
a second priority mortgage, subject only to the lien of the Senior Loans, on
such real estate, subject to no encumbrances or other title exceptions except
those title exceptions which Lender reasonably determines are acceptable based
on good institutional lending practices; and (v) the Borrower shall have paid
all reasonable costs and expenses of the Lender (including reasonable
attorneys' fees and expenses) incurred by the Lender in connection with the
review of any of the foregoing conditions.

                 (c)      The Borrower shall also have the right to withdraw
the Condemnation
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                                       37

Proceeds remaining in the Cash Collateral Account to pay for the cost of
constructing improvements on any Property covered by any Mortgage, and the
Borrower shall have the right to withdraw any Casualty Proceeds in the Cash
Collateral Account to pay for the repair and restoration of improvements whose
damage or destruction generated such Casualty Proceeds, provided that, in all
cases, subject to the Senior Loan Documents, (i) no Default or Event of Default
shall be continuing; (ii) the Lender shall have approved the plans and
specifications for the construction of such improvements as well as the general
contract and other major contracts to be entered into by the Borrower in
connection with such construction, which approval will not unreasonably be
withheld; (iii) the Lender shall have received such certification and
assurances as Lender shall reasonably request to assure it that the cost of
constructing the improvements as shown on the plans approved by Lender does not
exceed the amount of the Proceeds sought to be withdrawn by the Borrower to pay
for such improvements; and (iv) the Lender may impose such further conditions
and restrictions upon the disbursement of such Proceeds as the Lender deems
necessary or desirable, consistent with prudent institutional construction
lending practices, to assure the completion of the proposed improvements
subject to no liens or encumbrances (except Permitted Liens) and in accordance
with the aforesaid approved plans and all applicable laws.

                 SECTION 6.02.  Payment of REIT Dividends.  In the event that
the Borrower shall determine, upon the advice of counsel then generally used by
Borrower for tax advice, that it shall be required to pay a dividend or make a
distribution to stockholders in order to preserve its qualification as a REIT,
whether or not the Proceeds shall have been applied as contemplated pursuant to
Section 6.01(b) or (c), then, anything herein to the contrary notwithstanding,
the Borrower may, with the consent of the Lender (i) incur unsecured
subordinated indebtedness for the purpose of paying such dividend or making
such distribution or to pay such dividend or make such distribution in the form
of subordinated indebtedness and/or (ii) withdraw Proceeds from the Cash
Collateral Account to pay such dividend or make such distribution.

                 SECTION 6.03.  Gruss Arrangements.  (a)    In the event that
the Release Price is paid to the Lender on a date on which the Loan, if prepaid
in its entirety on such date pursuant to Section 2.03, would require the
payment of a Make Whole Premium, then a one-time payment of additional interest
shall accrue on the Loan in an amount equal to the Make Whole Premium, if any,
that would be due and payable pursuant to Section 2.03 if the Loan were prepaid
on such date (assuming for purposes of this Section 6.03 that Section 2.03
permitted partial prepayments), and if the Make Whole Premium were calculated
on the maximum principal amount of the Loan that could be paid out of the
Release Price after deducting therefrom all interest, default interest and
other sums (including the additional interest payable pursuant to this Section
6.03), other than principal, then due and payable on the Loan.
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                                       38

                  (b)     Notwithstanding any provision of this Credit
Agreement to the contrary, nothing contained herein shall prohibit the Borrower
from (i) making or permitting to be made distributions (including Guaranteed
Distributions, as defined in the Gruss Partnership Agreement) required to be
made under the Gruss Partnership Agreement, (ii) making or permitting to be
made any payments which are required to be made under the Note Guaranty or the
Distributions Guaranty (each as defined in the Gruss Partnership Agreement),
(iii) providing any Collateral to the Gruss Partners which is required to be
provided to the Gruss Partners to meet a Debt Coverage Requirement (as defined
in the Gruss Partnership Agreement) pursuant to the Gruss Partnership Agreement
(provided that (A) the Borrower shall not grant or permit to be granted to the
Gruss Partners any Lien on the last Unit (as defined in the Gruss Partnership
Agreement) held by the Lex Store General Partner as general partner and (B)
Liens on any of the Properties granted to the Gruss Partners shall be Deeply
Subordinated to the liens of the Mortgage and the Collateral Documents, as
applicable), (iv) making or permitting to be made any payments as they become
due under the 4/7 Redemption Note or the 3/7 Redemption Note (each as defined
in the Gruss Partnership Agreement) or (v) otherwise make any payments required
to be made by the ALX Partners (as defined in the Gruss Partnership Agreement)
or the Lexington Avenue Partnership under the Gruss Partnership Agreement.

                 SECTION 6.04.  Release of Lexington Avenue Property.  The
Borrower shall have the right, in connection with the development of the
Lexington Avenue Property, at its election upon fifteen (15) days' notice to
the Lender and provided that there shall not have been an entry of a
foreclosure order or judgment with respect to the Mortgage relating to the
Lexington Avenue Property, to deposit an amount in cash equal to the Release
Price into the Cash Collateral Account, whereupon the Lender shall agree to a
full release of the lien of the Mortgage relating to the Lexington Avenue
Property.

                 SECTION 6.05.  Exception to Cash Collateral Arrangements for
Certain Financings.  (a)  In the event that the Borrower shall notify the
Lender of a proposed financing of one or more of the Financing Properties (but
in any event including the Fordham Property) which is proposed to generate
gross proceeds (the "Financing Properties Gross Proceeds") equal to or greater
than $110,000,000 (the calculation of which shall be represented by the
Chairman of the Board or other officer of the Borrower), then provided that no
Default or Event of Default shall have occurred and be continuing, the Lender
shall permit the Borrower to effect such financing and, upon at least ten (10)
days' prior notice by the Borrower to the Lender of the Borrower's request that
the Lender release the lien of the Mortgages on all of the Financing
Properties, the Lender, subject to the last clause of Section 6.06(b), upon
receipt by the Lender of such documents and other information reasonably
requested by the Lender evidencing the proposed financing and the receipt by
the Borrower of the Financing Gross Proceeds and upon the deposit of the
amount, if any, of such Financing Properties Gross Proceeds (net of all
expenses) in excess of $150,000,000 into the Cash Collateral Account as
additional collateral for the Loan Obligations in accordance with
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                                       39

the Cash Collateral Agreement, shall release the lien of the Mortgages on all
of the Financing Properties.

                 (b)      In the event that the Borrower shall notify the
Lender of a proposed financing of all or any of the Financing Properties
excluding the Fordham Property (the "Special Financing Properties") which is
proposed to generate gross proceeds (the "Special Financing Gross Proceeds")
equal to or greater than $80,000,000 (the calculation of which shall be
certified by the Chairman of the Board or other officer of the Borrower), then
provided that no Default or Event of Default shall have occurred and be
continuing, the Lender shall permit the Borrower to effect such financing and,
upon at least ten (10) days' prior notice by the Borrower to the Lender of the
Borrower's request that Lender release the lien of the Mortgages on all of the
Special Financing Properties, the Lender, subject to the last clause of Section
6.06(b), upon receipt by the Lender of such documents and other information
reasonably requested by the Lender evidencing the proposed financing and
receipt by the Borrower of the Special Financing Gross Proceeds and upon the
deposit of the amount, if any, of such Special Financing Properties Gross
Proceeds (net of all expenses) in excess of $120,000,000 to the Cash Collateral
Account as additional collateral for the Loan Obligations in accordance with
the Cash Collateral Agreement, shall release the lien of the Mortgages on all
of the Special Financing Properties.

                 (c)      Provided that the Borrower shall deposit into the
Cash Collateral Account as additional collateral for the Loan Obligations in
accordance with the Cash Collateral Agreement an amount equal to the Rego
Release Amount, then, provided that no Default or Event of Default shall have
occurred and be continuing, the Lender shall release the lien of the Mortgages
on the Rego Park II Property and the Rego Park III Property.  The "Rego Release
Amount" shall mean $5,000,000 or, in the event the lien of the Mortgages on any
of the Financing Properties shall have been released pursuant to Section
6.05(a) or 6.05(b), $7,500,000, provided, however, that if, subsequent to the
deposit into the Cash Collateral Account of a Rego Release Amount equal to
$5,000,000 in accordance with this Section 6.05(c), the lien of the Mortgages
on any of the Financing Properties shall be released pursuant to Section
6.05(a) or 6.05(b), the Borrower shall, simultaneous with any such release of
the Financing Properties, deposit an additional $2,500,000 into the Cash
Collateral Account; provided, however, that the Lender shall not be obligated
to release  the Rego Park II Property and the Rego Park III Property pursuant
to this paragraph if the separation of the ownership of the Rego Park I
Property from the Rego Park II Property and the Rego Park III Property cause
the Rego Park I Property to be in violation of any zoning, parking or other
land use law or regulation.

                 SECTION 6.06.  Construction and Development Financing.  (a)
Provided that no Default or Event of Default shall have occurred and be
continuing, and provided that the Subordination Conditions shall have been
satisfied, the Lender shall subordinate the lien of the Mortgages relating to
each Development Property to any construction or development
   44

                                       40

loan or loans made to Borrower with respect to such Development Property by an
institutional lender, in the principal amount equal to C/D Subordination Amount
or any greater amount to the extent that cash equal to the excess of such
greater amount over the C/D Subordination Amount is deposited into the Cash
Collateral Account.  "C/D Subordination Amount" means, with respect to the
Kings Plaza Store Property, $10,000,000, and with respect to the Paramus
Property, $30,000,000 (which sum shall be reduced to $22,500,000 when the
tenant at such Property reimburses the Borrower or the C/D Lender for
$7,500,000 of tenant improvements), provided that (i) the C/D Subordination
Amount shall be reduced by any condemnation or casualty proceeds that have been
applied to repay Senior Debt as permitted pursuant to Section 6.01 and (ii) the
Borrower agrees that the amount of any tenant reimbursement not applied to
reduce the construction loan superior to the Loan shall be deposited into the
Cash Collateral Account.

                 (b)      In addition to the subordination by the Lender of the
lien of the Mortgages with respect to each Development Property pursuant to
Section 6.06(a), the Lender shall further agree to Deeply Subordinate its
rights under the Loan Documents to the loan of the C/D Lender with respect to
each Development Property in an amount equal to the C/D Subordination Amount,
provided (i) the Subordination Conditions are satisfied and (ii) the Borrower
shall deposit into the Cash Collateral Account an additional sum for such
Development Property equal to $5,000,000 or, in the event the lien of the
Mortgages on any of the Financing Properties shall have been released pursuant
to Section 6.05(a) or 6.05(b), $7,500,000, provided, however, that, subsequent
to the deposit into the Cash Collateral Account of the Additional Amount equal
to $5,000,000 in accordance with this Section 6.06(b), the Borrower shall,
simultaneous with any such release of the Financing Properties, deposit an
additional $2,500,000 into the Cash Collateral Account, payment of which shall
be a condition to the release of the Financing Properties in accordance with
Section 6.05(a) or 6.05(b).

                 SECTION 6.07.  Release of Cash Collateral Account.  Anything
contained in this Article VI to the contrary notwithstanding, the Borrower
shall have the right, provided that the Lender shall consent in writing, to
withdraw monies on deposit in the Cash Collateral Account (excluding monies
deposited pursuant to Section 6.01) in excess of $75,000,000 for any purpose.

                 SECTION 6.08.  Optional Release or Assignment.  (a)
Notwithstanding the express provisions thereof, wherever it is provided in any
of the provisions of this Credit Agreement that the Lender shall release all or
any portion of the lien of any of the Mortgages in consideration for the
Borrower's deposit of cash into the Cash Collateral Account, the Borrower may,
with the prior written consent of the Lender, elect that such release by the
Lender be effectuated not as a release but as an assignment of such Mortgage or
portion thereof, provided that the Borrower shall prepay the outstanding Loan
Obligations in an amount equal to the sum of (i) the amount that would
otherwise effectuate such release,
   45

                                       41

plus (ii) the Make Whole Premium, if any, that would be due and payable
pursuant to Section 2.03 (assuming for purposes of this Section 6.08 that
Section 2.03 permitted partial prepayments) calculated on the amount specified
in the foregoing clause (i), plus (iii) the amount of interest accrued and
unpaid on the amount specified in the foregoing clause (i) to the date of such
prepayment.  The Lender hereby agrees that, in connection with any such
election, the Lender shall permit the application of the monies in the Cash
Collateral Account toward such prepayment.

                 (b)      The Borrower's right to receive an assignment of
Mortgage or portion thereof pursuant to Section 6.08(a) hereof, shall be
conditioned upon the satisfaction of the following conditions:

                 (i)      No Default or Event of Default shall be continuing;

                 (ii)     The Borrower and Lender shall execute and deliver
         such mortgage and/or note splitter or severance agreements, and
         substitute note(s) and other documents as Lender or Borrower may
         reasonably request to effectuate the assignment to Borrower of the
         portion of the Loan Obligations covered by such release; any such
         assignment by Lender shall be expressly stated to be without
         representation or warranty by, or recourse, to, Lender;

                 (iii)    The Borrower and the assignee shall agree in writing
         and the mortgage(s) and note or substitute note so assigned shall
         state, that such note or substitute note so assigned to the assignee
         (the "Assigned Note") is secured solely by the mortgage(s)
         simultaneously being assigned to the assignee, and that no mortgage,
         guaranty or other security interest or collateral held by Lender
         (other than such mortgage being assigned to the assignee) shall
         secure, in any manner, such Assigned Note.

                 (iv)     The Lender, Borrower and the assignee shall execute
         other instruments or documents as Lender or Borrower may reasonably
         request to further confirm or assure the intent of the provisions of
         this Section 6.08(b);

                 (v)      The Borrower shall pay to Lender all reasonably
         attorneys' fees and expenses incurred by Lender in connection with
         such assignment of the Assigned Note and the mortgage(s) secured
         thereby; and

                 (vi)     If the Borrower is entitled under Section 6.04 to
         obtain a release of the Mortgage on the Lexington Avenue Property, and
         Borrower seeks to obtain an assignment of that Mortgage pursuant to
         this Section 6.08, then in addition to satisfying all of the foregoing
         conditions set forth in this Section 6.08(b), Borrower shall cause the
         assignee of the Assigned Note to execute and deliver to Lender an
   46

                                       42

         instrument, in form and substance satisfactory to Lender, pursuant to
         which said assignee assumes all of the obligations of Lender under the
         Gruss Agreement and agrees to indemnify, defend and hold harmless
         Lender, its successors and assigns, from and against all claims,
         liabilities, damages, losses, costs and expenses (including reasonable
         attorneys' fees and disbursements) asserted against, suffered or
         incurred by Lender as a result of any claim that such assignee, or any
         of its successors or assigns, breached or defaulted under any of the
         obligations of Lender under the Gruss Agreement.

                                  ARTICLE VII

                               EVENTS OF DEFAULT

                  SECTION 7.01.  Events of Default.  If any of the following
events ("Events of Default") shall occur and be continuing:

                 (a)      the Borrower shall fail to pay (i) any principal of
         the Loan, when the same becomes due and payable or (ii) any other
         payment under any Loan Document, in each case under this clause (ii)
         within five days after notice of the same becoming due and payable; or

                 (b)      any representation or warranty made by any Loan Party
         (or any of its officers) under or in connection with any Loan Document
         shall prove to have been incorrect in any material respect when made;
         or

                 (c)      the Borrower shall fail to perform or observe, in any
         material respect, any term, covenant or agreement contained in Section
         5.02; or

                 (d)      except as otherwise specified in such Loan Document,
         any Loan Party shall fail to perform any other term, covenant or
         agreement contained in any Loan Document on its part to be performed
         or observed if such failure shall remain unremedied for 30 days after
         written notice (or such longer period, if any, as may be set forth in
         the applicable covenant or agreement) thereof shall have been given to
         the Borrower by the Lender; or

                 (e)      any Loan Party or any of its Subsidiaries shall fail
         to pay any principal of, premium or interest on or any other amount
         payable in respect of any Senior Debt or any Subordinated Debt (other
         than the Debt under the Senior Loan Documents) of such Loan Party or
         such Subsidiary (as the case may be), when the same becomes due and
         payable (whether by scheduled maturity, required prepayment,
         acceleration,
   47

                                       43

         demand or otherwise), and such failure shall continue after the
         applicable notice and grace period, if any, specified in the agreement
         or instrument relating to such Senior Debt or Subordinated Debt; or
         any other event shall occur or condition shall exist under any
         agreement or instrument relating to any such Senior Debt or any
         Subordinated Debt (other than the Debt under the Senior Loan
         Documents) and shall continue after the applicable notice and grace
         period, if any, specified in such agreement or instrument, if the
         effect of such event or condition is to accelerate the maturity of
         such Senior Debt or Subordinated Debt or otherwise to cause such
         Senior Debt or Subordinated Debt to mature; or any such Senior Debt or
         Subordinated Debt shall be declared to be due and payable or required
         to be prepaid or redeemed (other than by a regularly scheduled
         required prepayment or redemption), purchased or defeased, or an offer
         to prepay, redeem, purchase or defease such Senior Debt or
         Subordinated Debt shall be required to be made, in each case prior to
         the stated maturity thereof; or

                 (f)      any Loan Party shall generally not pay its debts as
         such debts become due, or shall admit in writing its inability to pay
         its debts generally, or shall make a general assignment for the
         benefit of creditors; or any proceeding shall be instituted by or
         against any Loan Party seeking to adjudicate it a bankrupt or
         insolvent, or seeking liquidation, winding up, reorganization,
         arrangement, adjustment, protection, relief, or composition of it or
         its debts under any law relating to bankruptcy, insolvency or
         reorganization or relief of debtors, or seeking the entry of an order
         for relief or the appointment of a receiver, trustee, or other similar
         official for it or for any substantial part of its property and, in
         the case of any such proceeding instituted against it (but not
         instituted by it) that is being diligently contested by it in good
         faith, either such proceeding shall remain undismissed or unstayed for
         a period of 60 days or any of the actions sought in such proceeding
         (including, without limitation, the entry of an order for relief
         against, or the appointment of a receiver, trustee, custodian or other
         similar official for, it or any substantial part of its property)
         shall occur; or any Loan Party shall take any corporate action to
         authorize any of the actions set forth above in this subsection (f);
         provided, however, that no Event of Default shall, in any way, be
         triggered by application of this clause (f) due to the existence or
         any continuation of the Bankruptcy Proceeding; or

                 (g)      any judgment or order for the payment of money in
         excess of $500,000 shall be rendered against any Loan Party, and
         either (i) enforcement proceedings shall have been commenced and be
         continuing by any creditor upon such judgment or order or (ii) there
         shall be any period of 20 consecutive days during which a stay of
         enforcement of such judgment or order, by reason of a pending appeal
         or otherwise, shall not be in effect; or
   48

                                       44

                 (h)      any non-monetary judgment or order shall be rendered
         against any Loan Party that is reasonably likely to have a Material
         Adverse Effect, and there shall be any period of 20 consecutive days
         during which a stay of enforcement of such judgment or order, by
         reason of a pending appeal or otherwise, shall not be in effect; or

                 (i)      any material provision of any Loan Document after
         delivery thereof shall for any reason cease to be valid and binding on
         or enforceable against any Loan Party to it, or any such Loan Party
         shall so state in writing; or

                 (j)      except as otherwise permitted under Section 5.02(a),
         any Collateral Document after delivery thereof shall for any reason
         (other than pursuant to the terms thereof) cease to create a valid and
         perfected Lien on the Collateral purported to be covered thereby with
         the priority of liens set forth therein; or

                 (k)      the Lex Store General Partner shall cease to be the
         general partner of Lexington Avenue Partnership; or

                 (l)      any Event of Default (as such term is defined in any
         Mortgage or other Loan Document) shall occur and be continuing;

then, and in any such event, the Lender may, by notice to the Borrower, declare
the Loan Obligations, together with all interest thereon and all other amounts
payable under this Credit Agreement and the other Loan Documents, to be
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by the Borrower; provided, however, that in the event of an
actual or deemed entry of an order for relief with respect to any Loan Party
under the United States Bankruptcy Code other than in connection with the
Bankruptcy Proceeding, the Notes, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.

                                  ARTICLE VIII

                                 MISCELLANEOUS

                 SECTION 8.01.  Amendments, Etc.  No amendment or waiver of any
provision of this Credit Agreement or the Notes, nor consent to any departure
by the Borrower therefrom, shall in any event be effective unless the same
shall be in writing and
   49

                                       45

signed by the Borrower and the Lender, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

                 SECTION 8.02.  Notices, Etc.  All notices and communications
under this Credit Agreement shall be in writing and shall be given by either
(a) hand-delivery, (b) facsimile transmission, (c) first class mail (postage
prepaid), or (d) reliable overnight commercial courier (charges prepaid)

                 (i)    if to the Borrower, to:

                           Alexander's, Inc.
                           31 West 34th Street
                           New York, New York 10001
                           Attention:  Steven Santora
                           Facsimile No. (212) 695-4221

                 (ii)   if to the Lender, to:

                           Vornado Lending Corp.
                           c/o Vornado Realty Trust
                           Park 80 West, Plaza II
                           Saddle Brook, New Jersey  07663
                           Attention:  Chief Financial Officer
                           Facsimile No.: (201) 587-0600

Notice shall be deemed to have been given and received:  (i) if by hand
delivery, upon delivery; (ii) if by facsimile, upon transmission; (iii) if by
mail, three (3) calendar days after the date first deposited in the United
States mail; and (iv) if by overnight courier, on the date scheduled for
delivery.  A party may change its address by giving written notice to the other
party as specified herein.

                 SECTION 8.03.  No Waiver; Remedies.  No failure on the part of
the Lender to exercise, and no delay in exercising, any right hereunder or
under the Notes shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right.  The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

                 SECTION 8.04.  Costs, Expenses.  (a)  The Borrower agrees to
pay on demand (i) all reasonable costs and expenses of the Lender in connection
with the preparation, execution, delivery, administration, modification and
amendment of the Loan Documents (including, without limitation, the reasonable
fees and expenses of counsel for the Lender with respect thereto) and (ii) all
reasonable costs and expenses of the Lender in
   50

                                       46

connection with the enforcement of the Loan Documents, whether in any action,
suit or litigation, any bankruptcy, insolvency or other similar proceeding
affecting creditors' rights generally or otherwise (including, without
limitation, the reasonable fees and expenses of counsel for the Lender with
respect thereto).

                 (b)      The Borrower agrees to indemnify and hold harmless
the Lender and each of their Affiliates and their officers, directors,
employees, agents and advisors (each, an "Indemnified Party") from and against
any and all claims, damages, losses, liabilities and expenses (including,
without limitation, reasonable fees and expenses of counsel) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of, or in connection with the
preparation for a defense of, any investigation, litigation or proceeding
arising out of, related to or in connection with (i) the transactions
contemplated hereby, (ii) the actual or alleged presence of Hazardous Materials
on any property described in the Mortgages or any Environmental Action relating
in any way to any Loan Party or any of its Subsidiaries, (iii) disputes with
any architect, general contractor, subcontractor, materialman or supplier, or
on account of any act or omission to act by the Lender in connection with any
Property, (iv) any untrue statement of a material fact contained in information
submitted to the Lender by the Borrower or the omission of any material fact
necessary to be stated therein in order to make such statement not misleading
or incomplete, (v) the failure of the Borrower or any Loan Party to perform any
obligations required to be performed by the Borrower or any Loan Party under
any Loan Document and (vi) the ownership, construction, occupancy, operation,
use or maintenance of any of the Properties, in each case whether or not the
transactions contemplated hereby are consummated, except (I) to the extent such
claim, damage, loss, liability or expense is found to have resulted from any
Indemnified Party's gross negligence or willful misconduct. Notwithstanding the
foregoing provisions of this Section 8.04(b), the Borrower shall have no
obligation to indemnify any Indemnified Party against, or hold it harmless
from, (i) any judgment rendered by a court of competent jurisdiction against
any Indemnified Party and in favor of the Borrower, or (ii) any legal fees and
expenses incurred by the Indemnified Party in defending the action brought by
the Borrower which resulted in such judgment in favor of the Borrower, but the
foregoing provisions of this sentence shall not diminish or otherwise affect
the Borrower's liability for payment of all legal fees and expenses incurred by
the Lender in enforcing the Lender's rights and remedies under any of the Loan
Documents.

                 (c)      In case any action shall be brought against the
Lender or any other Indemnified Party in respect of which indemnity may be
sought against the Borrower, the Lender or such other Indemnified Party shall
promptly notify the Borrower and the Borrower shall assume the defense thereof,
including the employment of counsel selected by the Borrower and reasonably
satisfactory to the Lender, the payment of all costs and expenses and the right
to negotiate and consent to settlement.  The failure of the Lender to so notify
the Borrower shall not relieve the Borrower of any liability it may have under
the foregoing indemnification provisions or from any liability which it may
otherwise have to the Lender or
   51

                                       47

any of the other Indemnified Parties except to the extent that the Borrower
incurs actual expenses or suffers actual monetary loss as a result of such
failure to give notice.  The Lender shall have the right, at its sole option,
to employ separate counsel and as long as Borrower is complying with its
indemnification obligations hereunder, the fees and disbursements of such
separate counsel shall be paid by Lender.  The Borrower shall not be liable for
any settlement of any such action effected without its consent, but if settled
with the Borrower's consent, or if there be a final judgment for the claimant
in any such action, the Borrower agrees to indemnify and save harmless the
Lender from and against any loss or liability by reason of such settlement or
judgment.

                 (d)      If any Loan Party fails to pay when due any costs,
expenses or other amounts payable by it under any Loan Document, including,
without limitation, fees and expenses of counsel and indemnities, such amount
may be paid on behalf of such Loan Party by the Lender, in its sole discretion.

                 (e)      The provisions of this Section 8.04 shall survive the
repayment or other satisfaction of the Borrower's Obligations hereunder.

                 SECTION 8.05.  Merger.  This Credit Agreement and the other
Loan Documents constitute the sole agreement of the parties with respect to the
transactions contemplated herein and therein and supersede all oral
negotiations and prior writings with respect thereto.

                 SECTION 8.06.  Binding Effect.  This Credit Agreement shall
become effective when it shall have been executed by the Borrower and the
Lender and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Lender and their respective successors and assigns, except that
the Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lender.

                 SECTION 8.07   Lender's Discretion.  Except as otherwise
specified in this Credit Agreement, whenever this Credit Agreement provides
that the Lender's consent or approval is required, or that any action may be
taken or not taken at the Lender's option, such consent or approval may be
given or not, and such action may be taken or not, in the Lender's sole
discretion.  Any reference in this Credit Agreement to Lender's consent or
approval being required shall be deemed to refer to Lender's prior consent or
approval given in writing.

                 SECTION 8.08   Participations.  (a)  The Lender may sell
participations in [up to one-third of] its rights and obligations under this
Credit Agreement (including, without limitation, of its Loan and the Notes held
by it) (the purchaser of any rights and obligations being referred to herein
as a "Participant"); provided, however, that (i) the obligations of the
Borrower and the Lender under this Credit Agreement and the other Loan
Documents shall
   52

                                       48

remain unchanged, (ii) the Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower
shall continue to deliver all notices, communications and payments solely to
the Lender and any such notice, communication or payment shall be valid and
effective for all purposes hereunder notwithstanding any such sale of
participations.  Upon the sale of any participation permitted hereunder, the
Borrower shall cooperate with such reasonable requests of the Lender, at the
sole expense of the Lender, to sever and split the note issued hereunder among
the Lender and any Participants.

                 (b)      The Lender may, in connection with any participation
or proposed participation pursuant to this Section 8.08, disclose to the
Participant or proposed Participant, any information relating to the Borrower
furnished to the Lender by or on behalf of the Borrower; provided, however,
that, prior to any such disclosure, the Participant or proposed Participant
shall agree to preserve the confidentiality of any Confidential Information
received by it from the Lender.

                 (c)      Notwithstanding any other provision set forth in this
Credit Agreement, the Lender may at any time create a security interest in all
or any portion of its rights under this Credit Agreement (including, without
limitation, the Loan and the Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.

                 SECTION 8.09.  Governing Law.  This Credit Agreement and the
Note shall be governed by, and construed in accordance with, the laws of the
State of New York.

                 SECTION 8.10.  Execution in Counterparts.  This Credit
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute
one and the same agreement.  Delivery of an executed counterpart of a signature
page to this Credit Agreement by telecopier shall be effective as delivery of a
manually executed counterpart of this Credit Agreement.

                 SECTION 8.11.  Waiver of Jury Trial.  Each of the Borrower and
the Lender hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to any of the Loan Documents, the Loan or the
actions of the Lender in the negotiation, administration, performance or
enforcement thereof.  The Borrower acknowledges and agrees that this section is
a specific and material aspect of this Credit Agreement and that the Lender
would not extend credit to the Borrower if the waiver set forth in this section
were not a part of this Credit Agreement.
   53

                                       49

                 SECTION 8.12.  Jurisdiction.  The Borrower irrevocably
appoints each and every owner, partner and/or officer of the Borrower as its
attorneys upon whom may be served, by regular or certified mail at the address
set forth herein, any notice, process or pleading in any action or proceeding
against it arising out of or in connection with this Credit Agreement or any
other Loan Document; and the Borrower hereby consents that any action or
proceeding against it may be commenced and maintained in any court within the
State of New Jersey or the State of New York or in the United States District
Court for the District of New Jersey or the United States District Court for
the Southern District of New York by service of process on any such owner,
partner and/or officer; and the Borrower agrees that the courts of the State of
New Jersey and the courts for the State of New York and the courts for the
United States District Court for the District of New Jersey and the courts for
the United States District Court for the Southern District of New York shall
have jurisdiction with respect to the subject matter hereof and the person of
the Borrower and all collateral securing the obligations of the Borrower.  The
Borrower agrees not to assert any defense to any proceeding initiated by the
Lender in such court based upon improper venue or inconvenient forum.  The
foregoing shall not limit, restrict or otherwise affect the right of the
Borrower or the Lender to commence any action on this Credit Agreement or any
other Loan Document in any other courts having jurisdiction.

                 SECTION 8.13.  Continuing Enforcement.  If, after receipt of
any payment of all or any part of the Borrower's Obligations hereunder, the
Lender is required by law in connection with insolvency, fraudulent conveyance,
bankruptcy or similar proceedings to surrender such payment then this Credit
Agreement and the other Loan Documents shall continue in full force and effect,
and the Borrower shall be liable for, and shall indemnify, defend and hold
harmless the Lender with respect to the full amount so surrendered.  The
provisions of this Section 8.13 shall survive the termination of this Credit
Agreement and the other Loan Documents and shall remain effective
notwithstanding the payment of the Borrower's Obligations hereunder, the
cancellation of the Notes or any other Loan Document, the release of any
security interest, lien or encumbrance securing the Borrower's Obligations
hereunder or any other action which the Lender may have taken in reliance upon
its receipt of such payment.  Any cancellation, release or other such action by
the Lender shall be deemed to have been conditioned upon any payment of the
Borrower's Obligations hereunder having become final and irrevocable.

   54

                 IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.

                                       ALEXANDER'S, INC.

                                       
                                       By   /s/ Stephen Mann
                                          -------------------------------------
                                          Name: Stephen Mann
                                          Title: Chairman

                                       VORNADO LENDING CORP.

                                       By   /s/ Joseph Macnow
                                          -------------------------------------
                                          Name:  Joseph Macnow
                                          Title: Vice President
   55

                                PROMISSORY NOTE

$45,000,000.00                                                New York, New York

                                                                  March 15, 1995

         FOR VALUE RECEIVED, the undersigned, ALEXANDER'S, INC., a Delaware
corporation (herein sometimes referred to as "Maker" or the "undersigned"),
hereby promises to pay to the order of VORNADO LENDING CORP. ("LENDER"), the
principal sum of Forty-Five Million and 0/100 Dollars ($45,000,000.00), or such
lesser amount as shall have been advanced by Lender under the Credit Agreement
(as hereinafter defined) (the "LOAN"), in United States Dollars, together with
interest including without limitation additional interest payable pursuant to
Section 2.04(b) and 6.03 of the Credit Agreement thereon as provided in that
certain Credit Agreement, dated as of March 15, 1995, by and between Maker and
Lender (the "CREDIT AGREEMENT").

1.       CERTAIN DEFINED TERMS.  Terms used herein and not otherwise defined
have the meanings ascribed to such terms in the Credit Agreement.

2.       PAYMENT OF PRINCIPAL.

         The entire unpaid principal amount hereof, together with accrued and
unpaid interest thereon at the Interest Rate to but excluding March 15, 1998
(the "Maturity Date") and all other amounts payable hereunder shall be due and
payable on the Maturity Date.

3.       APPLICATION OF PAYMENTS.  Except as otherwise specified herein, each
payment or prepayment, if any, made under this Note shall be applied to pay
late charges, accrued and unpaid interest, principal, escrows (if any), and any
other fees, costs and expenses which the undersigned is obligated to pay under
this Note, in such order as Lender may elect from time to time in its sole
discretion.

4.       TENDER OF PAYMENT.

         All payments on this Note are payable on or before 11:00 a.m. on the
due date thereof, to the account of Vornado Realty Trust at National
Westminster Bank (Account No. 231313517), or such other account or place as
Lender shall designate in writing from time to time and shall be credited on
the date the funds become available lawful money of the United States.

         All sums payable to Lender which are due on a day that is not a
Business Day shall be made on the next succeeding Business Day and such
extended time shall be included in the computation of interest.  For purposes
of this paragraph, "Business Day" shall mean any Monday, Tuesday, Wednesday,
Thursday or Friday on which banks in New York are not authorized or required by
law to be closed.
   56
                                       2

5.       PREPAYMENT.

         The principal amount of this Note may not be prepaid except in
accordance with and subject to the terms and conditions of the Credit
Agreement.

6.       SECURITY FOR THE NOTE.

         6.1.    This Note is executed and delivered in accordance with a
commercial transaction described in the Credit Agreement.  As security for the
payment of the monies owing under this Note, the undersigned has delivered or
has caused to be delivered to Lender, inter alia, the Collateral Documents
referred to in the Credit Agreement.

         6.2.    The undersigned hereby grants to Lender a continuing security
interest in all property of the undersigned, now or hereafter in the possession
of Lender or any Affiliate (as defined below) in any capacity whatsoever,
including, but not limited to, any balance or share of any deposit, trust or
agency account, as security for the payment of this Note and any other
liabilities of the undersigned to Lender, which security interest shall be
enforceable and subject to all the provisions of this Note, as if such property
were specifically pledged hereunder and the proceeds of such property may be
applied at any time and without notice to any of the undersigned's liabilities.

7.       ADDITIONAL PAYMENTS; INTEREST; LATE CHARGE; DEFAULT RATE.

         In addition to the other payments provided for above, the undersigned
promises to pay on demand any interest and any other monies required to be paid
or advanced by the undersigned or by any other party obligated under any of the
Loan Documents (other than the Lender) or paid or advanced on behalf of the
undersigned or such party by Lender pursuant to the terms of the Credit
Agreement, the Mortgage or any other Loan Document, which obligation shall be
continuing and shall survive any judgment entered with respect to this Note or
any foreclosure of the Mortgage.  This Note shall evidence, and the Mortgage
and other Collateral Documents shall secure the payment of, all such sums so
advanced or paid.

8.       REMEDIES.  Upon the occurrence and during the continuance of an Event
of Default, Lender may exercise any right, power or remedy permitted by law or
as set forth herein or in the Credit Agreement, the Collateral Documents or any
other Loan Document including, without limitation, the right to declare the
entire unpaid principal amount hereof and all interest accrued hereon, and all
other sums secured by the Collateral Documents or any other Loan Document to
be, and such principal, interest and other sums shall thereupon become,
forthwith due and payable.

9.       MISCELLANEOUS.

         9.1.  REMEDIES CUMULATIVE.  The rights and remedies of Lender as
              provided herein and in any other Loan Document shall be
              cumulative and concurrent, may be pursued separately,
              successively or together against the undersigned or the Mortgaged
              Premises (as
   57
                                       3

defined in the Mortgage) or any other collateral security for payment of
amounts due hereunder, or any guarantor thereof, at the sole discretion of
Lender, may be exercised as often as occasion therefor shall arise, and shall
be in addition to any other rights or remedies conferred upon Lender at law or
in equity.  The failure, at any one or more times, of Lender to exercise any
such right or remedy shall in no event be construed as a waiver or release
thereof.  Lender shall have the right to take any action it deems appropriate
without the necessity of resorting to any collateral securing this Note.

         9.2.  INTEGRATION.  This Note and the other Loan Documents constitute
the sole agreement of the parties with respect to the transaction contemplated
hereby and supersede all oral negotiations and prior writings with respect
thereto.

         9.3.  ATTORNEYS' FEES AND EXPENSES.  If Lender retains the services of
counsel by reason of a default or an Event of Default hereunder or under any of
the other Loan Documents, or on account of any matter involving this Note, or
for examination of matters subject to Lender's approval under the Loan
Documents, all costs of suit and all reasonable attorneys' fees and such other
reasonable expenses so incurred by Lender shall forthwith, on demand, become due
and payable and shall be evidenced hereby.

         9.4.  NO IMPLIED WAIVER.  Lender shall not be deemed to have modified
or waived any of its rights or remedies hereunder unless such modification or
waiver is in writing and signed by Lender, and then only to the extent
specifically set forth therein.  A waiver in one event shall not be construed as
continuing or as a waiver of or bar to such right or remedy on a subsequent
event.

         9.5.  WAIVER.  The undersigned waives demand, notice, presentment,
protest, demand for payment, notice of dishonor, notice of protest and diligence
of collection of this Note. The undersigned consents to any and all extensions
of time, renewals, waivers, or modifications that may be granted by Lender with
respect to the payment or other provisions of this Note, and to the release of
any collateral, with or without substitution.  The undersigned agrees that
makers, endorsers, guarantors and sureties may be added or released without
notice and without affecting the undersigned's liability hereunder.  The
liability of the undersigned shall not be affected by the failure of Lender to
perfect or otherwise obtain or maintain the priority or validity of any security
interest in any collateral.  The liability of the undersigned shall be absolute
and unconditional and without regard to the liability of any other party hereto.

         9.6.  NO USURIOUS AMOUNTS.  Anything herein contained to the contrary
notwithstanding, the undersigned does not agree and shall not be obligated to
pay interest hereunder at a rate which is in excess of the maximum rate
permitted by law.  If by the terms of this Note, the undersigned is at any time
required to pay interest at a rate in excess of such maximum rate, the rate of
interest under this Note shall be deemed to be immediately reduced to such
maximum legal rate and the portion of all prior interest payments in excess of
such maximum legal rate shall be applied to and shall be deemed to have been
payments in reduction of the outstanding principal balance.  The undersigned
agrees that in determining

   58
                                       4

whether or not any interest payable under this Note exceeds the highest rate
permitted by law, any non-principal payment, including without limitation, late
charges, shall be deemed to the extent permitted by law to be an expense, fee,
premium or penalty rather than interest.

         9.7.  PARTIAL INVALIDITY.  The invalidity or unenforceability of any
one or more provisions of this Note shall not render any other provision invalid
or unenforceable.

         9.8.  BINDING EFFECT.  The covenants, conditions, waivers, releases
and agreements contained in this Note shall bind, and the benefits thereof shall
inure to, the parties hereto and their respective heirs, executors,
administrators, successors and assigns; provided, however, that this Note cannot
be assigned by the undersigned without the prior written consent of Lender, and
any such assignment or attempted assignment by the undersigned shall be void and
of no effect with respect to Lender.

         9.9.  MODIFICATIONS.  This Note may not be supplemented, extended,
modified or terminated except by an agreement in writing signed by the party
against whom enforcement of any such waiver, change, modification or discharge
is sought.

         9.10.  AFFILIATE.  As used herein, "AFFILIATE" shall mean First
Fidelity Bancorporation and any of its direct and indirect affiliates and
subsidiaries.

         9.11.  JURISDICTION.  The undersigned irrevocably appoints each and
every owner, partner and/or officer of the undersigned as its attorneys upon
whom may be served, by regular or certified mail at the address set forth below,
any notice, process or pleading in any action or proceeding against it arising
out of or in connection with this Note or any other Loan Document; and the
undersigned hereby consents that any action or proceeding against it be
commenced and maintained in any court within the State of New York or the State
of New Jersey or in the United States District Court for the Southern District
of New York or the United States District Court for the Southern District of New
Jersey by service of process on any such owner, partner and/or officer; and the
undersigned agrees that the courts of the State of New York and the State of New
Jersey and the United States District Court for the Southern District of New
York and the United States District Court for the District of New Jersey shall
have jurisdiction with respect to the subject matter hereof and the person of
the undersigned.  The undersigned agrees not to assert any defense to any action
or proceeding initiated by Lender in such courts based upon improper venue or
inconvenient forum.  The foregoing shall not restrict or otherwise affect the
right of the Lender to commence any action or proceeding on this Note or any
other Loan Document in any other court or courts having jurisdiction.

         9.12.  NOTICES.  All notices and communications relating to this Note
shall be in writing and shall be given in the manner provided in the Credit
Agreement.

         9.13.  GOVERNING LAW.  This Note shall be governed by and construed in
accordance with the substantive laws of the State of New York.

   59

                                       5

         9.14.  WAIVER OF JURY TRIAL.  THE UNDERSIGNED AND LENDER AGREE THAT
ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY LENDER
OR THE UNDERSIGNED, ON OR WITH RESPECT TO THIS NOTE OR ANY OTHER LOAN DOCUMENT
OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED
ONLY BY A COURT AND NOT BY A JURY.  LENDER AND THE UNDERSIGNED EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY SUCH SUIT, ACTION OR PROCEEDING.  FURTHER, EACH OF THE UNDERSIGNED AND
LENDER WAIVE ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION
OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES, BUT THE FOREGOING SHALL NOT BE
CONSTRUED TO PROHIBIT, RESTRICT OR OTHERWISE IMPAIR THE EXERCISE OF ANY RIGHTS
OR REMEDIES EXPRESSLY PROVIDED TO ANY PARTY IN ANY OF THE LOAN DOCUMENTS.  THE
UNDERSIGNED ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL
ASPECT OF THIS NOTE AND THAT LENDER WOULD NOT EXTEND CREDIT TO THE UNDERSIGNED
IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS NOTE.

         9.15.  REGISTERED FORM.  This Note may be transferred only through its
surrender to Maker for the issuance of a new note or notes to a new holder or
holders.

         IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
has duly executed and delivered this Note as of the day and year first above
written.

ATTEST:                               ALEXANDER'S, INC. (a Delaware corporation)

                                      By:   /s/ Stephen Mann
                                         -----------------------------------
                                         Name:  Stephen Mann
                                         Title:  Chairman
   1

                   SUBORDINATION AND INTERCREDITOR AGREEMENT

     SUBORDINATION AND INTERCREDITOR AGREEMENT, dated as of March 15, 1995,
made by and among VORNADO LENDING CORP., a New Jersey corporation,, having an
office at Park 80 West, Plaza II, Saddle Brook, New Jersey 07663 ("Subordinate
Mortgagee"); and VORNADO REALTY TRUST, a Maryland real estate investment
trust, having an office at Park 80 West, Plaza II, Saddle Brook, New Jersey
("Vornado"); in favor of FIRST FIDELITY BANK, NATIONAL ASSOCIATION, a national
banking association having an office at 570 Broad Street, B55003, Newark, New
Jersey 07102 ("Senior Mortgagee").

                               R E C I T A L S :

     A.   Borrower has executed a note dated as of the date hereof, in the
original principal amount of Thirty Million Dollars ($30,000,000.00), payable
to the order of Senior Mortgagee (the "First Senior Note") and a note dated as
of the date hereof, in the original principal amount of One Hundred Dollars
($100.00), payable to the order of Senior Mortgagee (the "Second Senior
Note").  The First Senior Note and the Second Senior Note (collectively, the
"Senior Notes") together evidence Senior Mortgagee's loan to Borrower (the
"Senior Loan") in the aggregate principal amount of $30,000,100.00, made
pursuant to the terms of the Credit Agreement dated as of the date hereof,
between Borrower and Senior Mortgagee (the "FF Credit Agreement").  All
capitalized terms used herein and not specifically defined herein shall have
the respective meanings assigned to those terms in the FF Credit Agreement or
the Senior
   2
Notes.  The term "Senior Loan Documents," as used herein, shall have the same
meaning assigned to the term "Loan Documents" in the FF Credit Agreement.  All
principal, interest, default interest, late charges, Senior Mortgagee's
attorneys' fees and disbursements and other amounts payable or which will or
may become payable by Borrower under the Senior Notes and/or the other Senior
Loan Documents (including, without limitation, interest accruing on the
outstanding principal amount of the Senior Notes after the date of any filing
by or against Borrower or any Guarantor (as hereinafter defined) of any
petition in bankruptcy or the commencement by or against Borrower or any
Guarantor of any bankruptcy, insolvency or similar proceeding) are herein
collectively referred to as the "Senior Debt."

     B.   In order to induce Senior Mortgagee to make the Senior Loan to
Borrower, (i) Borrower and Alexander's Department Store of Lexington Avenue,
Inc. ("Alex-Lex") (collectively, the "Pledgors") have executed and delivered
to Senior Mortgagee a certain Pledge Agreement of even date herewith (the
"Senior Pledge Agreement"), pursuant to which, inter alia, (x) Borrower, as
additional security for the Senior Debt, has pledged to Senior Mortgagee and
granted to it a first priority lien and security interest in certain shares of
capital stock owned by Borrower, as more particularly described in the Senior
Pledge Agreement (the "Stock"), and (y) Alex-Lex, as additional security for
the Senior Debt, has pledged to Senior Mortgagee and granted to it a first
priority lien and security interest in certain general and limited partnership
interests owned by Alex-Lex, as more particularly described in the Senior
Pledge

                                     - 2 -
   3
Agreement (the "Partnership Interests"); and the Stock, Partnership Interests
and other property, collateral and proceeds thereof pledged pursuant to the
Senior Pledge Agreement are herein collectively called the "Pledged
Collateral"; (ii) Borrower, Alexander's of Fordham Road, Inc. and Alexander's
Department Stores of New Jersey, Inc., respectively, as mortgagors, have
executed and delivered to Senior Mortgagee, as mortgagee, the mortgages
described in Schedule 1 attached hereto and made a part hereof, each in the
original principal amount of $30,000,100.00, securing, inter alia, the Senior
Notes and covering, inter alia, the lands and premises described in Schedule
1A attached hereto; and (iii) Seven Thirty One Limited Partnership (the "731
Mortgagor"), as mortgagor, has executed and delivered to Senior Mortgagee, as
mortgagee, a mortgage described in Schedule 2 attached hereto and made a part
hereof, in the original principal amount of $30,000,000.00, securing, inter
alia, the First Senior Note and covering, inter alia, the lands described in
Schedule 2A attached hereto (the mortgages described in said Schedule 1 and
Schedule 2 are herein collectively referred to as the "Senior Mortgages"). The
Senior Mortgages, the Senior Pledge Agreement and certain of the other Senior
Loan Documents secure the Senior Debt.  Borrower and Guarantors are sometimes
herein collectively referred to as the "Obligors" and individually as an
"Obligor".  All of the real and personal property and other property, rights
and/or interests covered by the Senior Mortgages are herein sometimes
collectively called the "Properties", and with respect to any one Senior
Mortgage, are referred to as a "Property".

                                     - 3 -
   4
     C.   Borrower has executed one or more notes of even date herewith
(collectively the "Subordinate Note"), in the principal amount of Forty-Five
Million Dollars ($45,000,000.00), payable to the order of Subordinate
Mortgagee, evidencing Subordinate Mortgagee's loan to Borrower (the
"Subordinate Loan") in the same principal amount, made pursuant to the terms
of the Credit Agreement dated as of the date hereof, between Borrower and
Subordinate Mortgagee (the "Vornado Credit Agreement").  In order to induce
Subordinate Mortgagee to make the Subordinate Loan to Borrower, (i) Pledgors
have executed and delivered to Subordinate Mortgagee a Pledge Agreement of
even date herewith (the "Subordinate Pledge Agreement"), pursuant to which,
inter alia, Pledgors, as additional security for the Subordinate Debt, have
pledged to Subordinate Mortgagee and granted to it a second priority lien and
security interest in the Pledged Collateral, subject and subordinate to the
lien, rights and interests granted to Senior Mortgage under the Senior Pledge
Agreement; (ii) Borrower, as mortgagor, has executed and delivered to
Subordinate Mortgagee, as mortgagee, the mortgages described in Schedule 3
attached hereto and made a part hereof, each in the principal amount of
$45,000,000.00, covering the same Properties that are covered by the Senior
Mortgages listed on Schedule 1; (iv) the 731 Mortgagor, as mortgagor, has
executed and delivered to Subordinate Mortgagee, as mortgagee, the mortgage
described in Schedule 4 attached hereto and made a part hereof, in the
original principal amount of $45,000,000.00 (provided that such mortgage is
stated to secure a total aggregate indebtedness of principal, interest and

                                     - 4 -
   5
all other sums not exceeding the amount, if any, by which $75,000,000.00
exceeds the amount of the Senior Debt from time to time outstanding), covering
the same Property that is covered by the Senior Mortgage under which the 731
Mortgagor is the mortgagor (the mortgages described in said  Schedule 3 and
Schedule  4 are herein collectively referred to as the "Subordinate
Mortgages").

     D.   All principal, interest, default interest, late charges and other
amounts payable or which will or may become payable by Borrower under, or
which is secured by the Subordinate Note, the Subordinate Mortgages, the
Subordinate Assignments (as hereinafter defined), the Subordinate Pledge
Agreement, the Vornado Credit Agreement and/or any other documents now or
hereafter evidencing or securing, in whole or in part, the Subordinate Loan
(collectively, the "Subordinate Loan Documents"), including, without
limitation, interest accruing on the outstanding principal amount of the
Subordinate Note after the date of any filing by or against any Obligor of any
petition in bankruptcy or the commencement by or against any Obligor of any
bankruptcy, insolvency or similar proceeding, are herein collectively referred
to as the "Subordinate Debt".

     E.   All sums and indebtedness of any kind or nature whatsoever,
(excluding Permitted Fees (as hereinafter defined), which is now owing or may
hereafter become owing by any Obligor or any Affiliate of any Obligor to
Subordinate Mortgagee or any Affiliate of Subordinate Mortgagee are herein
collectively referred to as the "Subordinate Other Debt".  Without limiting
the

                                     - 5 -
   6
generality of the foregoing definition of "Subordinate Other Debt", the same
shall be deemed to include any debt or indebtedness now or at any time
hereafter owing by any Obligor or any Affiliate of any Obligor, which debt or
indebtedness or the right to payment of all or any part thereof is acquired by
Subordinate Mortgagee or any Affiliate thereof from any third party by
assignment or otherwise. The Subordinate Debt and the Subordinate Other Debt
are herein collectively called the "Subordinate Indebtedness".  The
Subordinate Loan Documents and all other documents at any time and from time
to time evidencing or securing, in whole or in part, any of the Subordinate
Indebtedness are herein sometimes collectively called the "Subordinate
Documents".

     F.   To further secure the Senior Debt, (i) Borrower, as assignor, has
executed and delivered to Senior Mortgagee, as assignee, Assignments of Leases
and Rents, each of even date herewith, covering each of the Properties
described on Schedule 1A attached hereto; and (ii) the 731 Guarantor, as
assignor, has executed and delivered to Senior Mortgagee, as assignee, an
Assignment of Leases and Rents of even date herewith, covering the Property
described in Schedule 2A attached hereto (collectively, the "Senior
Assignments").  To further secure the Subordinate Debt, (i) Borrower, as
assignor, has executed and delivered to Subordinate Mortgagee, as assignee,
Assignments of Leases and Rents, each of even date herewith, covering each of
the Properties described on Schedule 1A attached hereto, and (ii) the 731
Guarantor, as assignor, has executed and delivered to Subordinate Mortgagee,
as assignee, an Assignment of Leases and Rents of even

                                     - 6 -
   7
date herewith, covering the Property described in Schedule 2A attached hereto
(collectively, the "Subordinate Assignments").

     G.   Borrower, Senior Mortgagee and Subordinate Mortgagee have entered
into a Cash Collateral Account Pledge and Assignment Agreement of even date
herewith (the "Cash Collateral Agreement") pursuant to which inter alia,
Borrower and Guarantors have established a cash collateral account with Senior
Mortgagee (the "Cash Collateral Account") and granted (i) to Senior Mortgagee
a first priority security interest in said account to further secure the
Senior Debt, and (ii) to Subordinate Mortgagee a second priority security
interest in said account to further secure the Subordinate Debt.  The Cash
Collateral Agreement constitutes a Senior Loan Document as well as a
Subordinate Loan Document.

     H.   With respect to each Property covered by a Senior Mortgage and a
Subordinate Mortgage, the Subordinate Mortgage on such Property will be
recorded immediately after the recording of, and will be and remain
subordinate to the Senior Mortgage on such Property, all in accordance with
the terms and conditions of this Agreement.  With respect to each Property
covered by a Senior Assignment and a Subordinate Assignment, the Subordinate
Assignment on such Property will be recorded immediately after the recording
of, and will be and remain subordinate to the Senior Assignment on such
Property, all in accordance with the terms and conditions of this Agreement.
Each reference in this Agreement to any one or more Senior Mortgage(s) shall
be deemed to include the Senior Assignment(s) covering the Property or
Properties covered by such

                                     - 7 -
   8
Senior Mortgage(s).  Similarly, each reference in this Agreement to any one or
more Subordinate Mortgage(s) shall be deemed to include the Subordinate
Assignment(s) covering the Property or Properties covered by such Subordinate
Mortgage(s).

     I.   Subordinate Mortgagee has agreed to subordinate (i) the liens of
each of the Subordinate Mortgages, the Subordinate Assignments, the
Subordinate Pledge Agreement and all other Subordinate Documents, and (ii)
Subordinate Mortgagee's right to payment of the Subordinate Indebtedness to
(x)  the liens created by the Senior Loan Documents, including, without
limitation, the liens of each of the Senior Mortgages, the Senior Assignments
and the Senior Pledge Agreement and (y) Senior Mortgagee's right to payment of
the Senior Debt, all upon the terms, provisions and conditions hereinafter set
forth.  Subordinate Mortgagee has also agreed to subordinate its lien on and
security interest in the Cash Collateral Account to Senior Mortgagee's lien on
and security interest in the Cash Collateral Account upon the terms and
conditions set forth herein and in the Cash Collateral Agreement.

     NOW, THEREFORE, in consideration of the premises, and to fulfill
Subordinate Mortgagee's covenants given to induce Senior Mortgagee to make the
Senior Loan, the parties hereto agree as follows:

     1.   Subordination of the Subordinate Mortgages and the other Subordinate
Documents.
          (a)  The parties hereto agree that (i) the Subordinate Indebtedness
is and shall be and remain subordinated in right of

                                     - 8 -
   9
payment, to the extent and in the manner provided in this Agreement, to the
prior payment in full of the Senior Debt; and (ii) each Subordinate Mortgage
and the lien created thereby (including, without limitation, any separate lien
created thereby on personal property and, with respect to any Subordinate
Mortgage which covers any leasehold interest of the mortgagor thereunder, any
lien created thereby on any fee title in and to any land or premises which the
mortgagor under such Subordinate Mortgage may hereafter acquire), each of the
Subordinate Assignments and the lien created thereby, the Subordinate Pledge
Agreement and the lien created thereby, the Subordinate Mortgagee's lien on
and security interest in the Cash Collateral Account and all other liens,
rights and interests now or at any time hereafter created by any of the
Subordinate Documents are and at all times shall be junior, subject and
subordinate in all respects to each of the Senior Mortgages and the lien
created thereunder which covers all or any part of any property covered by any
such Subordinate Mortgage (including, without limitation, any separate lien
created by such Senior Mortgage on personal property and, with respect to any
Senior Mortgage which covers any leasehold interest of the mortgagor
thereunder, any lien created thereby on any fee title in and to any land or
premises which the mortgagor under such Senior Mortgage may hereafter
acquire), each of the Senior Assignments and the liens created thereby, the
Senior Pledge Agreement and the lien created thereby and the Senior
Mortgagee's lien on and security interest in the Cash Collateral Account, as
well as to all of the terms, covenants and conditions contained in the Senior
Loan Documents, as

                                     - 9 -
   10
any of the same may be extended, amended or modified from time to time,
subject to the provisions of subparagraph 1(b) below.  For all purposes of
this Agreement, the term "Senior Debt" shall be deemed to also include any and
all amounts that may be advanced from time to time by Senior Mortgagee to cure
any default or defaults by any Obligor under any of the Senior Mortgages, the
Senior Pledge Agreement, the Senior Assignments or any of the other Senior
Loan Documents (such advances herein called "Protective Advances") including,
without limitation, any and all amounts which may hereafter be advanced from
time to time by Senior Mortgagee (x) to pay real estate taxes, assessments,
water and sewer rents, other governmental charges and/or insurance premiums
after default by such mortgagor in paying any of the same as and when required
pursuant to the terms of the applicable Senior Mortgage, or (y) otherwise to
protect or further secure the lien created by any of the Senior Loan
Documents.

          (b)  Notwithstanding anything herein contained to the contrary, the
term "Senior Debt" shall not include, and the liens created by the Subordinate
Mortgages and the other Subordinate Loan Documents shall not be subordinate as
to lien or payment rights to, any increase in the Senior Debt as a result of
any amendment to any of the Senior Loan Documents which (i) increases the
applicable interest rate or default interest rate payable on the principal
amount of the Senior Notes above the applicable interest rate that would have
been in effect under the Senior Loan Documents but for such modification, or
(ii) increases the principal amount of the

                                     - 10 -
   11
Senior Debt except by reason of any Protective Advances made by Senior
Mortgagee.

     2.   Restriction on the Exercise of Subordinate Mortgagee's Remedies.
Unless and until the Senior Debt shall have been paid in full, Subordinate
Mortgagee shall not commence any action to foreclose the Subordinate Pledge
Agreement or any Subordinate Mortgage or otherwise exercise any of its
remedies pursuant to or in connection with any of the Subordinate Documents,
regardless of whether any default by any party thereunder has occurred.
Without limiting the generality of the foregoing restrictions on the exercise
of the remedies of Subordinate Mortgagee, until the Senior Debt shall have
been paid in full, Subordinate Mortgagee shall not request, seek or obtain the
appointment of a receiver for any Property, it being understood and agreed
that only Senior Mortgagee may request or obtain the appointment of a receiver
for any Property.  Subordinate Mortgagee will not oppose or do anything to
hinder, delay or interfere with any application or request made by Senior
Mortgagee to obtain a receiver for any Property or any other action or act
made or taken by Senior Mortgagee to enforce any of its rights and remedies
under or pursuant to any of the Senior Mortgages or any of the other Senior
Loan Documents.

     3.   Permitted Payments.

          (a)  Until the Senior Debt has been paid in full, and regardless of
whether any default shall have occurred under any of the Subordinate
Documents, Subordinate Mortgagee shall not take, accept, receive, accelerate,
demand or institute any proceeding to

                                     - 11 -
   12
enforce (including, without limitation, the making of an application to any
court for the appointment of a receiver), directly or indirectly, in any
manner, any payment, prepayment or additional security of, for or on account
of all or any part of the Subordinate Indebtedness, except as expressly
provided in subparagraph 3(c) below.  The foregoing shall not prohibit or
restrict the making of any payments of Permitted Fees due and becoming due and
payable to Subordinate Mortgagee or any Affiliate thereof.  Permitted Fees
shall not be deemed to be a part of the Subordinate Indebtedness.

          (b)  Subordinate Mortgagee will not cause or permit any Affiliate of
Subordinate Mortgagee to do anything to violate the provision of subparagraph
3(a) above or any of the other terms, covenants or conditions of this
Agreement applicable to Subordinate Mortgagee.

          (c)  Notwithstanding the provisions of subparagraph 3(a) above, as
long as (i) no Event of Default under the FF Credit Agreement or any Senior
Loan Document shall have occurred and be continuing, and (ii) all accrued
interest and other amounts due and payable pursuant to the Senior Note and/or
the other Senior Loan Documents shall have been duly paid in accordance with
the terms of the Senior Note and the other Senior Loan Documents to and
including the date of the permitted payment to Subordinate Mortgagee as
described below in this sentence, then Subordinate Mortgagee may accept and
retain payment of the accrued and unpaid interest that is then due and payable
under the Subordinate Note.

                                     - 12 -
   13
If Subordinate Mortgagee receives any payment from any Obligor or other Loan
Party in violation of any of the provisions of this paragraph 3, then
Subordinate Mortgagee shall deliver such payment to Senior Mortgagee not later
than the second Business Day following Subordinate Mortgagee's receipt
thereof, in accordance with the provisions of Paragraph 12 hereof.  Nothing
contained in this Paragraph 3 shall be deemed to modify or release the
restrictions contained in Paragraph 2 hereof.

     4.   Default under Senior Loan.  The occurrence of a Default or Event of
Default by any Obligor under any of the Senior Loan Documents shall, without
limiting the provisions of Paragraph 2 hereof, impose upon Obligors and
Subordinate Mortgagee the obligations and restrictions, and shall result in
the occurrence of the events, specified in this Agreement but shall impose no
duty on Senior Mortgagee to take any action against any Obligor or to pursue
any remedies against any Obligor under any of the Senior Loan Documents or
otherwise.  Subordinate Mortgagee agrees that it will not object to or
otherwise hinder, delay, obstruct or interfere with the exercise by Senior
Mortgagee of any of its remedies under any of the Senior Loan Documents
following a Default or Event of Default by any Obligor thereunder.

     5.   No Prior Liens.  As long as the Senior Debt or any part thereof
shall remain unpaid, Subordinate Mortgagee shall not acquire by subrogation,
contract, purchase, assignment, transfer or otherwise any lien upon or other
estate, right or interest (including, without limitation, an interest as a
participant with

                                     - 13 -
   14
another party or parties in any such lien, estate, right or interest) in any
Property (including, without limitation, any such lien, estate, right or
interest which may arise with respect to real estate taxes, assessments or
other governmental charges) or any rents or revenues therefrom or any other
property encumbered by any of the Senior Loan Documents, which lien, estate,
right or interest is or may be prior in right to or on parity with any of the
Senior Mortgages or any of the other Senior Loan Documents or any extension,
consolidation, modification or supplement thereto (subject to the provisions
of paragraph 1(b) hereof). Notwithstanding the foregoing, Subordinate
Mortgagee may hereafter acquire by assignment the mortgagee's interest in any
mortgage on any property (an "Acquired Mortgage"), the lien of which mortgage,
immediately prior to such assignment, is senior or junior to the lien of any
Senior Mortgage; provided, however, that upon the assignment of such
mortgagee's interest to Subordinate Mortgagee, (i) said Acquired Mortgage and
the lien created thereby, (ii) any assignment of rents and/or leases and all
other documents further evidencing or securing the indebtedness secured by
such Acquired Mortgage, and (iii) all of the indebtedness secured by said
Acquired Mortgage, assignment of rents and/or leases and/or such other
documents and the note(s) or obligations secured thereby (collectively, the
"Acquired Mortgage Documents") shall all be and become subject and
subordinate, in all respects, to the Senior Debt, the Senior Mortgage and
Senior Assignment on said Property and all of the other Senior Loan Documents,
and to all amendments, modifications and extensions thereof; and upon
Subordinate

                                     - 14 -
   15
Mortgagee's or its Affiliate's acquiring or otherwise succeeding to the
interest of the mortgagee under any Acquired Mortgage Documents, the same
shall be deemed to be and become additional Subordinate Documents and the
indebtedness secured by the Acquired Mortgage Documents shall be deemed to be
and become Subordinate Indebtedness for all purposes of this Agreement, and,
accordingly, the Acquired Mortgage Documents and the enforcement of the rights
and remedies of the holder thereof shall be subject to the same restrictions,
limitations and prohibitions imposed in this Agreement on the enforcement of
the rights and remedies of Subordinate Mortgagee under the Subordinate
Documents.  The subordination of the Acquired Mortgage Documents referred to
in the foregoing provisions of this paragraph shall occur automatically upon
Subordinate Mortgagee's (or its Affiliate's) acquiring or otherwise succeeding
to the interest of the mortgagee under any of the Acquired Mortgage Documents,
without the necessity for the execution of any further instrument or
agreement; nevertheless, within ten (10) days after written notice and demand
given by Senior Mortgagee, Subordinate Mortgagee will execute such documents
in recordable form as Senior Mortgagee may reasonably request to confirm such
subordination of the Acquired Mortgage Documents and the indebtedness secured
thereby.  Subordinate Mortgagee will give prompt notice to Senior Mortgagee of
any acquisition by Subordinate Mortgagee of any Acquired Mortgage.

     6.   Intentionally Omitted.

                                     - 15 -
   16

     7.   Casualty; Condemnation.

     7.1  Subordinate Mortgagee hereby assigns and transfers unto Senior
Mortgagee, such assignment and transfer to be effective until payment in full
of the Senior Debt:

          (a)  all of Subordinate Mortgagee's right, title, interest or claim,
if any, in and to the proceeds of all policies of insurance covering any one
or more of the Properties for application upon the indebtedness secured by or
other disposition thereof in accordance with the terms, conditions and
provisions of the Senior Mortgages; and

          (b)  all of Subordinate Mortgagee's right, title, interest or claim,
if any, in and to all awards or other compensation made for any taking or
condemnation or all or any part of any Property or Properties, to be applied
upon the indebtedness secured by or disposed of in accordance with the terms,
conditions and provisions of the Senior Loan Documents;

provided, however, that Subordinate Mortgagee does not, by reason of the
foregoing provisions of this Paragraph 7.1, waive any rights or claims against
Senior Mortgagee arising out of the misuse or mishandling, if any, of such
funds which shall have been actually received by Senior Mortgagee.

     7.2  In the event that, following any such application or disposition of
such insurance proceeds, condemnation awards and/or other compensation, the
Senior Debt is thereby paid in full, any balance of such proceeds, award or
other compensation remains, then

                                     - 16 -
   17
Subordinate Mortgagee shall have such right to payment thereto, as it would
have in the absence of Paragraph 7.1 above.

     7.3  If Senior Mortgagee, in accordance with the terms, conditions, and
provisions of any Senior Mortgage, shall at any time release to any Obligor
any of the insurance proceeds, condemnation awards or other compensation
described in clauses (a) and (b) of Paragraph 7.1 above for the purpose of
repair or restoration of the Property covered by such Senior Mortgage, such
release shall not be deemed to be an additional advance under such Senior
Mortgage or any other Senior Loan Document.

     8.   Approvals and Consents.  Without limiting any other term provision
or condition of this Subordination Agreement, all rights, elections, approvals
and consents exercised, given or made by Senior Mortgagee under any of the
Senior Loan Documents which may also be exercised, given or made by
Subordinate Mortgagee under any of the Subordinate Documents, including,
without limitation, the failure of Senior Mortgagee to take any action which
might otherwise be taken by it, shall be deemed automatically and irrevocably
agreed to by Subordinate Mortgagee on the terms and conditions specified by
Senior Mortgagee, as if Subordinate Mortgagee had in fact exercised such
right, made such election, given such approval or consent or omitted to take
such action under the specific terms of the Subordinate Documents.  In all
events, Subordinate Mortgagee will execute such written confirmations,
including, without limitation, non-disturbance and attornment agreements with
tenant(s) of any Property, as Senior Mortgagee may

                                     - 17 -
   18
from time to time elect to execute pursuant to requests of any Obligor and in
substantially the same form as executed by Senior Mortgagee, but nothing
herein shall impose any duty or obligation on Senior Mortgagee to comply with
any such request made by any Obligor.

     9.   Bankruptcy of any Obligor.

     9.1  Upon any liquidation or reorganization of any Obligor or, if any
Obligor is a partnership, any general partner of such Obligor or any general
partner of such general partner (any such Obligor or general partner is
referred to herein as a "Borrower Party") in a bankruptcy, insolvency or
receivership proceeding or upon any involuntary liquidation or dissolution of
any Borrower Party, every payment or distribution, whether in cash, property
or securities, to which Subordinate Mortgagee would be entitled but for this
Agreement, shall instead be paid over to Senior Mortgagee for application on
account of the Senior Debt.  In the event of any Bankruptcy Proceeding, or
upon an assignment for the benefit of creditors, or any other marshalling of
the assets and liabilities of the Borrower or otherwise, any payment or
distribution of any kind (whether in cash, securities or other property) which
would be payable or deliverable upon or with respect to the indebtedness
evidenced and secured by the Subordinate Loan Documents shall be paid or
delivered directly to Senior Mortgagee for application (in the case of cash)
to, or as collateral (in the case of securities or other non-cash property)
for, the payment or prepayment of the Senior Loan until the Senior Loan shall
have been paid in full; and

                                     - 18 -
   19
if any such payment or distribution is received by Subordinate Mortgagee prior
to such payment in full of the Senior Loan, Subordinate Mortgagee shall be
deemed to have received the same in trust for the benefit of Senior Mortgagee,
and shall immediately remit such payment or distribution to Senior Mortgagee
immediately upon demand therefor.  Subordinate Mortgagee shall, upon payment
of any sums to Senior Mortgagee pursuant to this Section 9.1, become
subrogated to Senior Mortgagee's rights against Borrower in respect of such
sums; provided, however, that Subordinate Mortgagee shall not exercise any
such right of subrogation unless and until such time as the Senior
Indebtedness is paid or repaid, as the case may be, in full.

     9.2  Subordinate Mortgagee irrevocably authorizes Senior Mortgagee (but
Senior Mortgagee has no obligation to take any such action), under the
circumstances described in Paragraph 9.1 above, to demand, sue for, collect
and receive every such payment or distribution described in Paragraph 9.1, to
file claims and proofs of claims in any statutory or nonstatutory proceeding,
to vote the full amount of the Subordinate Debt in its sole discretion in
connection with any resolution, arrangement, plan of reorganization,
compromise, settlement or extension and to take all such other action
(including, without limitation, the right to participate in any composition of
creditors and the right to vote the amount of the Subordinate Indebtedness at
creditors' meetings for the election of trustees, acceptances of plans and
otherwise), in the name of Senior Mortgagee or in the name of Subordinate
Mortgagee or otherwise, as Senior Mortgagee may deem necessary or

                                     - 19 -
   20
advisable for the enforcement of the provisions of this Agreement. Subordinate
Mortgagee agrees, under the circumstances set forth in Paragraph 9.1 above,
promptly to take such action as may be reasonably requested at any time by
Senior Mortgagee, to deliver any instruments required to collect the amount of
the Subordinate Indebtedness and to file appropriate proofs of claim in
respect thereof, to deliver any instruments evidencing the Subordinate
Indebtedness to Senior Mortgagee, on demand therefor, and to execute and
deliver such powers of attorney, assignments or other instruments as may be
requested by Senior Mortgagee in order to enable Senior Mortgagee to collect
and receive any and all payments or distributions which may be payable or
deliverable at any time upon or in respect of the Subordinate Indebtedness.
Nothing herein contained shall be deemed to preclude Subordinate Mortgagee
from appearing or being heard in any bankruptcy, insolvency, or other similar
proceedings affecting any Borrower Party or from accelerating the Subordinate
Loan following the occurrence of any of the circumstances described in
Paragraph 9.1 above or the issuance or an order for relief under any
bankruptcy or insolvency law or code; provided, however, that Subordinate
Mortgagee shall not violate the provisions of the last sentence of Paragraph 4
above or collect from any Borrower Party or any Property or any trustee,
custodian or other representative of the estate of any Borrower Party any
amount due to Subordinate Mortgagee (through subrogation to the rights of
Senior Mortgagee, enforcement of the Subordinate Documents or otherwise) or
exercise any other remedy

                                     - 20 -
   21
against any Borrower Party or any Property until and unless all the Senior
Debt shall have been paid in full.

     10.  Priority of Payment Following Default.  Without limiting the
provisions of Paragraph 3 hereof, upon the occurrence and during the
continuation of any Event of Default under any of the Senior Mortgages or any
other Senior Loan Document, (a) all amounts payable in respect of the Senior
Debt shall be paid in full before any payment or distribution, whether in cash
or in other property, shall be made to Subordinate Mortgagee on account of any
amounts payable under any of the Subordinate Documents, and (b) during the
continuation of any such Event of Default, any payment or distribution,
whether in cash or other property, which would otherwise (but for the
subordination provisions contained in this Agreement) be payable or
deliverable in respect of any amounts payable in respect of the Subordinate
Indebtedness and/or any of the Subordinate Documents shall be paid or
delivered directly to Senior Mortgagee in respect of any amounts payable in
respect of the Senior Debt and/or any of the Senior Loan Documents (including
any interest thereon accruing after the occurrence of any such Event of
Default) until all such amounts shall have been paid in full or such Event of
Default shall have been expressly waived in writing by Senior Mortgagee.

     11.  Rents.

          Without in any way limiting any of the other terms, provisions or
conditions of this Agreement, none of the rents, revenues, issues or profits
(collectively, "Rents") from any

                                     - 21 -
   22
Property shall be paid to or may be collected on behalf of Subordinate
Mortgagee, and all Rents collected by or on behalf of Subordinate Mortgagee
shall be paid promptly to Senior Mortgagee (or its receiver) for disposition
in accordance with law and the terms, provisions and conditions of the Senior
Loan Documents.  As long as no Event of Default under any of the Senior Loan
Documents is continuing, Vornado or its affiliate, in its capacity as manager
under that certain Management Agreement, dated as of February 6, 1995, between
Borrower and Vornado (together with such immaterial modifications that have
occurred prior to, or as of, the date hereof, the "Management Agreement"),
shall have the right to collect the Rents as agent for Borrower; provided,
however, that upon demand made by Senior Mortgagee or its receiver during the
continuance of any Event of Default under any of the Senior Loan Documents,
Vornado shall pay the Rents collected by it promptly (but not later than two
(2) Business Dates after receipt) to Senior Mortgagee (or its receiver).  Upon
the appointment of a receiver for any Property in connection with a
foreclosure action commenced by Senior Mortgagee, Vornado shall exercise
reasonable efforts to cause all tenants of said Property to pay rents directly
to such receiver.  Borrower and each Obligor hereby authorize, direct and
consent to Subordinate Mortgagee's and Vornado's paying Rents in accordance
with the foregoing requirements of this paragraph 11, and no such payment of
Rents by Subordinate Mortgagee or Vornado shall constitute a default or
violation of any of the provisions of the Management Agreement.

                                     - 22 -
   23
     12.  Delivery of Payments.  If any payment or distribution of security or
the proceeds of any thereof is collected or received by Subordinate Mortgagee
in respect of any of the Subordinate Indebtedness in contravention of any
term, condition or provision of this Agreement, Subordinate Mortgagee
immediately will deliver the same to Senior Mortgagee, in the form received
(except for the endorsement or the assignment by Subordinate Mortgagee where
necessary), and, until so delivered, the same shall be held in trust by
Subordinate Mortgagee as the property of Senior Mortgagee.

     13.  Modification of Senior Loan Documents.  Subordinate Mortgagee agrees
that, without any notice to or consent by Subordinate Mortgagee, without
limiting or diminishing any rights or remedies of Senior Mortgagee hereunder,
and without any other action on the part of Senior Mortgagee in respect of
Subordinate Mortgagee:

          (a)  any demand for payment of the Senior Debt or any part thereof
made by Senior Mortgagee may be rescinded, and the Senior Debt, any of the
Senior Mortgages, any of the other Senior Loan Documents, the liability of
Obligors (or any of them) with respect thereto and any collateral security
therefor and any guaranty thereof may from time to time be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released
subject to the provisions of paragraph 1(b) hereof;

          (b)  the terms and conditions upon which the Senior Loan was or may
hereafter be incurred, any of the Senior Loan Documents and any other
documents related thereto or executed in connection

                                     - 23 -
   24
therewith, including collateral security documents and guaranties, may be
amended or modified from time to time, subject to the provisions of paragraph
1(b) hereof;

          (c)  any collateral security held by Senior Mortgagee at any time
for the payment of the Senior Loan may be sold, exchanged, waived, surrendered
or released, subject, however, to the rights of Subordinate Mortgagee under
the Cash Collateral Agreement and the Pledge Agreement;

          (d)  any Obligor or other person may be released from liability for
the payment or collection of the Senior Debt or any part thereof; and

          (e)  Senior Mortgagee may exercise or refrain from exercising any
right against any Obligor or other person, including, without limitation, any
Guarantor, and waive any Default or Event of Default under any of the Senior
Loan Documents.

     14.  Modification of Certain Agreements.  Subordinate Mortgagee and
Obligors hereby agree that they will not enter into or permit any Affiliate to
enter into any amendment of the Management Agreement or the Leasing Agreement
(as hereinafter defined), which amendment provides for the payment of any
fees, charges, commissions or other sums payable to Subordinate Mortgagee (or
any Affiliate that is a successor to the rights and obligations of Subordinate
Mortgagee thereunder) in excess of the Permitted Fees.  As used in this
Agreement, "Permitted Fees" means, with respect to the Management Agreement or
the Leasing Agreement, the

                                     - 24 -
   25
fees, charges, commissions or other sums payable to Subordinate Mortgagee (or
such Affiliate) pursuant to such agreement, including, without limitation, as
the same may be adjusted from time to time in accordance with or as
contemplated by the terms of the Management Agreement as in effect as of the
date hereof or the terms of the Leasing Agreement as in effect on the date
hereof; and "Leasing Agreement" means that certain Real Estate Retention
Agreement, dated as of July 20, 1992, among Vornado, Inc. (as predecessor to
Subordinate Mortgagee), Keen Realty Consultants and Borrower.

     15.  Collection of Funds.  Without limiting the other provisions hereof
or of any of the Senior Mortgages, all funds which any Obligor may be required
to deposit under the terms of both the Senior Mortgage and Subordinate
Mortgage on any Property shall be deposited with Senior Mortgagee under the
terms of the Senior Mortgage.

     16.  Further Assurances.  Subordinate Mortgagee will and at any time and
from time to time, promptly execute and deliver all further instruments and
documents, and take all further action, that may be reasonably necessary or
desirable, or that Senior Mortgagee may reasonably request, in order to
protect any right or interest granted hereby or to enable Senior Mortgagee to
exercise and enforce its rights and remedies hereunder.

     17.  Waiver of Notice, Etc.  For purposes of this Agreement, Subordinate
Mortgagee hereby waives promptness, diligence, notice of acceptance and any
other notice (other than notices required of

                                     - 25 -
   26
Senior Mortgagee pursuant to this Agreement or any other written agreement
between the parties hereto) with respect to the Senior Loan, the Senior Loan
Documents and this Agreement, and Subordinate Mortgagee hereby waives any
requirement that Senior Mortgagee protect, secure, perfect or take any other
measures with respect to any security interest or lien or any property subject
thereto or exhaust any right or take any action against Borrower or any other
Obligor or entity or any of the Properties or any collateral.

     18.  Notices.  (a)  Senior Mortgagor and Subordinate Mortgagee shall
notify the other, in writing, of any Default under the Senior Loan Documents
or the Subordinate Loan Documents, respectively, promptly after the occurrence
of such Default.  Any notice, consent, request or other communication required
or permitted to be given hereunder shall be in writing and shall be (a)
personally delivered, (b) delivered by an overnight delivery service of
outstanding national reputation, (c) transmitted by postage prepaid, U.S.
registered or certified mail, or (d) except with respect to notices of default
or acceleration, transmitted by telex, telecopier or facsimile machine to the
parties as follows:

          If to Senior Mortgagee:

          First Fidelity Bank, N.A.
          550 Broad Street
          B55015
          Newark, New Jersey  17102
          Attn:  Robert T. Matthews, Vice President

                                     - 26 -
   27
          With a copy sent simultaneously to:

          Herrick, Feinstein
          2 Park Avenue
          New York, New York  10016
          Attn:  Jeffrey H. Kaufman, Esq.

          If to Subordinate Mortgagee or Vornado:

          Vornado Realty Trust
          Park 80 West, Plaza II
          Saddle Brook, New Jersey  07663
          Attn:  Chief Financial Officer

          With a copy sent simultaneously to:

          Sullivan & Cromwell
          250 Park Avenue
          New York, New York 10177
          Attn:     Patricia A. Ceruzzi, Esq.
                    and Janet Geldzahler, Esq.

               -and-          

          Steven Roth, Chairman of the Board
          Vornado Realty Trust
          Park 80 West, Plaza II
          Saddle Brook, New Jersey 07663

     All notices and other communications shall be deemed to have been duly
given on (i) the date of delivery, if personally delivered, (ii) the first
business day following the date of delivery to overnight delivery service, if
by overnight delivery service, (iii) three (3) days following posting, if
transmitted by U.S. certified or registered mail, (iv) the date of
transmission with confirmed answerback if transmitted by telex, or (v) on the
date a legible copy is received by the addressee, if transmitted by telecopier
or facsimile machine, whichever shall first occur.  Any party may change its
address for purposes hereof by notice to the other parties given in accordance
with the provision hereof.

                                     - 27 -
   28
     19.  No Waiver.  No failure to exercise and no delay in exercising on the
part of Senior Mortgagee of any right, power or privilege under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies provided in this Agreement and in any of
the Senior Loan Documents shall be cumulative and shall not be exclusive of
any rights or remedies provided by law.  No right of Senior Mortgagee to
enforce the provisions contained in this Agreement shall be impaired by any
act or failure to act by Subordinate Mortgagee or any Obligor.

     20.  Governing Law.  This Agreement and the rights and obligations of the
parties hereunder shall be governed by and construed and interpreted in
accordance with the laws of the State of New York without regard to conflicts
of law of principles.

     21.  Termination.  This Agreement shall terminate and cease to be any
further force or effect upon payment in full of the Senior Debt; provided,
however, that this Agreement shall be reinstated if at any time payment of all
or any part of the Senior Debt is rescinded or otherwise must be restored or
returned by Senior Mortgagee upon the insolvency, bankruptcy or reorganization
of Borrower or any Obligor or otherwise as though such payment had not been
made.

                                     - 28 -
   29
     22.  Assignment.

     22.1 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assignees; provided,
however, that the foregoing shall not be construed to release any Obligor
from, or modify or otherwise affect any provision(s) contained in any of the
Senior Mortgages or any of the other Senior Loan Documents, prohibiting the
direct or indirect sale or other transfer of any Property or any interest
therein or in any Obligor, or making any such sale or transfer a Default or
Event of Default under any of the Senior Loan Documents.

     22.2 If Senior Mortgagee shall sell, assign or transfer its right, title
and interest under any Senior Mortgage, then any assignee of such Senior
Mortgage shall be entitled to all the benefits of this Agreement.

     23.  Waiver of Trial by Jury.  The parties hereto agree that any suit,
action or proceeding, whether claim or counterclaim, brought by any party on
or with respect to this Agreement or any document relating hereto or the
dealings of the parties with respect hereto or thereto, shall be tried only by
a court and not by a jury.  Each party hereby knowingly, voluntarily and
intentionally waive any right to a trial by jury in any such suit, action or
proceeding.  Obligors and Subordinate Mortgagee acknowledge and agree that
this Paragraph is a specific and material aspect of this Agreement and that
Senior Mortgagee would

                                     - 29 -
   30
not extend credit to Borrower if the waivers set forth in this section were
not a part of this Agreement.

     24.  Deed-in-Lieu.  If, after the occurrence of an Event of Default under
any of the Senior Loan Documents, Senior Mortgagee and any one or more
Obligors shall enter into an agreement whereby Senior Mortgagee agrees to
accept the transfer of title to it or its designee of all or any part of any
Property or interests covered by any one or more of the Senior Mortgages in
satisfaction for all or any part of the then outstanding Senior Debt, then
simultaneously with such transfer of title to Senior Mortgagee or its
designee, Subordinate Mortgagee will execute and deliver to Senior Mortgagee,
instrument(s) in recordable form and otherwise in form and substance
reasonably satisfactory to Senior Mortgagee, releasing, satisfying and
discharging of record all Subordinate Mortgages and all other mortgages and
liens, if any, held by Subordinate Mortgagee, its successors or assigns, and
covering all or any part of the same property or property interests which are
being transferred as aforesaid to Senior Mortgagee; and Subordinate Mortgagee
hereby grants to Senior Mortgagee an irrevocable power of attorney, coupled
with an interest, to execute and deliver in the name of Subordinate Mortgagee
the aforementioned instrument(s) which Subordinate Mortgagee fails to execute
and deliver to Senior Mortgagee within ten (10) days after Senior Mortgagee
shall have given written notice to Subordinate Mortgagee, requesting its

                                     - 30 -
   31
execution and delivery of such instrument(s) pursuant to this paragraph.

     25.  Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

     26.  Miscellaneous.

     26.1 The purpose of this Agreement is to define the relative rights of
Senior Mortgagee and Subordinate Mortgagee, and this Agreement shall not
impair or otherwise affect in any way the obligations of any Obligor under any
of the Senior Loan Documents and/or Subordinate Loan Documents, which
obligations are absolute and unconditional.

     26.2 If any provision of this Agreement shall conflict with any provision
of the Senior Loan Documents or the Subordinate Loan Documents, then the
provisions of this Agreement shall control.

     26.3 Subordinate Mortgagee agrees that it will not modify, amend or
supplement any of the Subordinate Loan Documents in any manner that would
adversely affect any of the rights and remedies of Senior Mortgagee hereunder
or under any of the Senior Loan Documents.

     26.4 No provision of this Agreement shall be waived, amended or
supplemented except by a written instrument signed by the party

                                     - 31 -
   32
or parties against whom enforcement of such waiver, amendment or supplement is
sought.

     26.5 Vornado agrees to cause Subordinate Mortgagee to duly and timely
observe and perform all of the terms, covenants and conditions required under
this Agreement to be observed or performed on the part of Subordinate
Mortgagee.  If Subordinate Mortgagee defaults in performing or observing any
of the terms, covenants or conditions to be performed or observed on its part
under this Agreement, Senior Mortgagee shall have the right to all available
legal and equitable remedies and other relief.  In addition, Subordinate
Mortgagee and Vornado, jointly and severally, agree to indemnify and hold
harmless Senior Mortgagee from and against (a) all damages, losses and
liabilities suffered or incurred by Senior Mortgagee as the result of any such
default, and (b) all costs and expenses (including reasonable attorneys' fees
and disbursements) incident to the matters referred to in the preceding clause
(a), whether or not litigation is commenced.

     26.6 This Agreement is not intended to or shall be construed to make
Senior Mortgagee a joint venturer or partner of Subordinate Mortgagee.
Neither party hereto shall hold itself out as a partner, agent or affiliate of
the other party hereto.

     26.7 If any provision of this Agreement shall be invalid or unenforceable
to any extent, then the other provisions of this

                                     - 32 -
   33
Agreement shall not be affected thereby and shall be enforced to the fullest
extent permitted by law.

     26.8 For purposes of this Agreement, Vornado Realty Trust and any
Affiliate of it shall be deemed to be an Affiliate of Subordinate Mortgagee.

     26.9 Borrower hereby acknowledges that (i) the aggregate rate of interest
(including the loan fees) on the Senior Loan and the Subordinate Loan reflects
good faith, arm's length negotiations involving the Borrower; and (ii) the
rate of interest on (and the loan fee associated with) the Senior Loan was
arrived at by good faith, arm's length negotiations between Senior Mortgagee
and Borrower.  Borrower acknowledges that the interest rate accruing on (and
the loan fee associates with) the Subordinate Loan is intended to compensate
Subordinate Mortgagee for making the Subordinate Loan and incurring the
increased risk of making a subordinate loan to Borrower.

                                     - 33 -
   34

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.

                                   VORNADO LENDING CORP.

                         By:  /s/ Joseph Macnow                  
                              ---------------------
                              Name:
                              Title: Vice President

                              VORNADO REALTY TRUST

                         By:  /s/ Joseph Macnow                  
                              ---------------------
                              Name:
                              Title: Vice President

                              FIRST FIDELITY BANK, NATIONAL ASSOCIATION

                         By:  /s/ Joseph Tkac                    
                              ---------------------
                              Name:
                              Title: Vice President

Borrower is signing below to
acknowledge its consent to
Section 26.9 only.

ALEXANDERS, INC.

By:  /s/ Stephen Mann                    
     ----------------
     Name:
     Title: Chairman

                                     - 34 -
   1

                            REVOLVING LOAN AGREEMENT

                         dated as of February 27, 1995

                                     among

                             VORNADO REALTY TRUST,
                                  as Borrower,

                           UNION BANK OF SWITZERLAND
                               (New York Branch),
                                    as Bank,

                                      and

                           UNION BANK OF SWITZERLAND
                               (New York Branch),
                            as Administrative Agent

   2

                               TABLE OF CONTENTS

                                                                           Page
                                                                      
ARTICLE I.           DEFINITIONS; ETC.  . . . . . . . . . . . . . . . . .    1
     Section  1.01  Definitions . . . . . . . . . . . . . . . . . . . . .    1
                    -----------                                               
     Section  1.02  Accounting Terms  . . . . . . . . . . . . . . . . . .   13
                    ----------------                                          
     Section  1.03  Computation of Time Periods . . . . . . . . . . . . .   13
                    ---------------------------                               
     Section  1.04  Rules of Construction . . . . . . . . . . . . . . . .   13
                    ---------------------                                     

ARTICLE II.          THE LOANS  . . . . . . . . . . . . . . . . . . . . .   13
     Section  2.01  The Loans . . . . . . . . . . . . . . . . . . . . . .   13
                    ---------                                                 
     Section  2.02  Purpose . . . . . . . . . . . . . . . . . . . . . . .   14
                    -------                                                   
     Section  2.03  Advances, Generally . . . . . . . . . . . . . . . . .   15
                    -------------------                                       
     Section  2.04  Procedures for Advances . . . . . . . . . . . . . . .   15
                    -----------------------                                   
     Section  2.05  Interest Periods; Renewals  . . . . . . . . . . . . .   15
                    --------------------------                                
     Section  2.06  Interest  . . . . . . . . . . . . . . . . . . . . . .   16
                    --------                                                  
     Section  2.07  Fees  . . . . . . . . . . . . . . . . . . . . . . . .   16
                    ----                                                      
     Section  2.08  Notes . . . . . . . . . . . . . . . . . . . . . . . .   17
                    -----                                                     
     Section  2.09  Prepayments . . . . . . . . . . . . . . . . . . . . .   17
                    -----------                                               
     Section  2.10  Changes of Commitments  . . . . . . . . . . . . . . .   17
                    ----------------------                                    
     Section  2.11  Method of Payment . . . . . . . . . . . . . . . . . .   18
                    -----------------                                         
     Section  2.12  Elections, Conversions or Continuation of Loans . . .   18
                    -----------------------------------------------           
     Section  2.13  Minimum Amounts . . . . . . . . . . . . . . . . . . .   18
                    ---------------                                           
     Section  2.14  Certain Notices Regarding Elections, Conversions and
                    ----------------------------------------------------
                    Continuations of Loans  . . . . . . . . . . . . . . .   19
                    ----------------------                                      

ARTICLE III.         YIELD PROTECTION; ILLEGALITY; ETC. . . . . . . . . .   20
     Section  3.01  Additional Costs  . . . . . . . . . . . . . . . . . .   20
                    ----------------                                          
     Section  3.02  Limitation on Types of Loans  . . . . . . . . . . . .   21
                    ----------------------------                              
     Section  3.03  Illegality  . . . . . . . . . . . . . . . . . . . . .   21
                    ----------                                                
     Section  3.04  Treatment of Affected Loans . . . . . . . . . . . . .   22
                    ---------------------------                               
     Section  3.05  Certain Compensation  . . . . . . . . . . . . . . . .   22
                    --------------------                                      
     Section  3.06  Capital Adequacy  . . . . . . . . . . . . . . . . . .   23
                    ----------------                                          
     Section  3.07  Substitution of Banks . . . . . . . . . . . . . . . .   23
                    ---------------------                                     

ARTICLE IV.          CONDITIONS PRECEDENT . . . . . . . . . . . . . . . .   25
     Section  4.01  Conditions Precedent to the Initial Advance . . . . .   25
                    -------------------------------------------               
     Section  4.02  Conditions Precedent to Advances After the Initial
                    --------------------------------------------------
                    Advance . . . . . . . . . . . . . . . . . . . . . . .   26
                    -------                                                     
     Section  4.03  Deemed Representations  . . . . . . . . . . . . . . .   27
                    ----------------------                                    

                                       i
   3

                                                                          Page
                                                                      
ARTICLE V.           REPRESENTATIONS AND WARRANTIES . . . . . . . . . . .   27
     Section  5.01  Due Organization  . . . . . . . . . . . . . . . . . .   27
                    ----------------                                          
     Section  5.02  Power and Authority; No Conflicts; Compliance With
                    --------------------------------------------------
                    Laws  . . . . . . . . . . . . . . . . . . . . . . . .   27
                    ----                                                        
     Section  5.03  Legally Enforceable Agreements  . . . . . . . . . . .   28
                    ------------------------------                            
     Section  5.04  Litigation  . . . . . . . . . . . . . . . . . . . . .   28
                    ----------                                                
     Section  5.05  Good Title to Properties  . . . . . . . . . . . . . .   28
                    ------------------------                                  
     Section  5.06  Taxes . . . . . . . . . . . . . . . . . . . . . . . .   28
                    -----                                                     
     Section  5.07  ERISA . . . . . . . . . . . . . . . . . . . . . . . .   29
                    -----                                                     
     Section  5.08  No Default on Outstanding Judgments or Orders . . . .   29
                    ---------------------------------------------             
     Section  5.09  No Defaults on Other Agreements . . . . . . . . . . .   29
                    -------------------------------                           
     Section  5.10  Government Regulation . . . . . . . . . . . . . . . .   29
                    ---------------------                                     
     Section  5.11  Environmental Protection  . . . . . . . . . . . . . .   30
                    ------------------------                                  
     Section  5.12  Solvency  . . . . . . . . . . . . . . . . . . . . . .   30
                    --------                                                  
     Section  5.13  Financial Statements  . . . . . . . . . . . . . . . .   30
                    --------------------                                      
     Section  5.14  Valid Existence of Affiliates . . . . . . . . . . . .   30
                    -----------------------------                             
     Section  5.15  Insurance . . . . . . . . . . . . . . . . . . . . . .   30
                    ---------                                                 
     Section  5.16  Accuracy of Information; Full Disclosure  . . . . . .   31
                    ----------------------------------------                  

ARTICLE VI.          AFFIRMATIVE COVENANTS  . . . . . . . . . . . . . . .   31
     Section  6.01  Maintenance of Existence  . . . . . . . . . . . . . .   31
                    ------------------------                                  
     Section  6.02  Maintenance of Records  . . . . . . . . . . . . . . .   31
                    ----------------------                                    
     Section  6.03  Maintenance of Insurance  . . . . . . . . . . . . . .   31
                    ------------------------                                  
     Section  6.04  Compliance with Laws; Payment of Taxes  . . . . . . .   31
                    --------------------------------------                    
     Section  6.05  Right of Inspection . . . . . . . . . . . . . . . . .   32
                    -------------------                                       
     Section  6.06  Compliance With Environmental Laws  . . . . . . . . .   32
                    ----------------------------------                        
     Section  6.07  Payment of Costs  . . . . . . . . . . . . . . . . . .   32
                    ----------------                                          
     Section  6.08  Maintenance of Properties . . . . . . . . . . . . . .   32
                    -------------------------                                 
     Section  6.09  Reporting and Miscellaneous Document Requirements . .   32
                    -------------------------------------------------         
     Section  6.10  Shopping Center EBITDA  . . . . . . . . . . . . . . .   35
                    ----------------------                                    
     Section  6.11  Management  . . . . . . . . . . . . . . . . . . . . .   35
                    ----------                                                

ARTICLE VII.         NEGATIVE COVENANTS . . . . . . . . . . . . . . . . .   35
     Section  7.01  Mergers Etc.  . . . . . . . . . . . . . . . . . . . .   35
                    -----------                                               
     Section  7.02  Investments . . . . . . . . . . . . . . . . . . . . .   35
                    -----------                                               
     Section  7.03  Sale of Assets  . . . . . . . . . . . . . . . . . . .   36
                    --------------                                            
     Section  7.04  Encumbrance of Certain Assets . . . . . . . . . . . .   36
                    -----------------------------                             

                                       ii
   4

                                                                              Page
                                                                         
ARTICLE VIII.        FINANCIAL COVENANTS  . . . . . . . . . . . . . . . . .     36
     Section  8.01   Equity Value  . . . . . . . . . . . . . . . . . . .  .     36
                     ------------                                              
     Section  8.02   Relationship of Total Outstanding Indebtedness to
                     -------------------------------------------------
                     Equity Value  . . . . . . . . . . . . . . . . . . . . .    36
                     ------------                                                
     Section  8.03   Relationship of Secured Indebtedness to Equity Value . .   36
                     ----------------------------------------------------      
     Section  8.04   Relationship of Combined EBITDA to Interest Expense . .    36
                     ---------------------------------------------------       
     Section  8.05   Relationship of Combined EBITDA to Total Outstanding
                     ----------------------------------------------------
                     Indebtedness  . . . . . . . . . . . . . . . . . . . . .    36
                     ------------                                                
     Section  8.06   Funds From Operations . . . . . . . . . . . . . . . . .    37
                     ---------------------                                     
     Section  8.07   Unsecured Debt Yield  . . . . . . . . . . . . . . . . .    37
                     --------------------                                      
     Section  8.08   Relationship of Unencumbered Combined EBITDA to
                     -----------------------------------------------
                     Interest Expense on Unsecured Indebtedness  . . . . . .    37
                     ------------------------------------------                  

ARTICLE IX.          EVENTS OF DEFAULT  . . . . . . . . . . . . . . . . . .     37
     Section  9.01   Events of Default  . . . . . . . . . . . . . . . . . .     37
                     -----------------                                        
     Section  9.02   Remedies   . . . . . . . . . . . . . . . . . . . . . .     39
                     --------                                                  

ARTICLE X.           ADMINISTRATIVE AGENT; RELATIONS
                     AMONG BANKS  . . . . . . . . . . . . . . . . . . . . .     39
     Section 10.01   Appointment, Powers and Immunities of Administrative
                     ----------------------------------------------------
                     Agent  . . . . . . . . . . . . . . . . . . . . . . . .     39
                     -----                                                       
     Section 10.02   Reliance by Administrative Agent  . .  . . . . . . .  .    40
                     --------------------------------                          
     Section 10.03   Defaults . . . . . . . . . . . . . . . . . . . . . . .     41
                     --------                                                  
     Section 10.04   Rights of Administrative Agent as a Bank . . . . . . .     41
                     ----------------------------------------                  
     Section 10.05   Indemnification of Administrative Agent  . . . . . . .     41
                     ---------------------------------------                   
     Section 10.06   Non-Reliance on Administrative Agent and Other Banks . .   42
                     ----------------------------------------------------      
     Section 10.07   Failure of Administrative Agent to Act  . . . . . . . .    42
                     --------------------------------------                    
     Section 10.08   Resignation or Removal of Administrative Agent  . . . .    42
                     ----------------------------------------------            
     Section 10.09   Amendments Concerning Agency Function . . . . . . . . .    43
                     -------------------------------------                     
     Section 10.10   Liability of Administrative Agent . . . . . . . . . . .    43
                     ---------------------------------                         
     Section 10.11   Transfer of Agency Function . . . . . . . . . . . . . .    43
                     ---------------------------                               
     Section 10.12   Non-Receipt of Funds by Administrative Agent  . . . . .    43
                     --------------------------------------------              
     Section 10.13   Withholding Taxes . . . . . . . . . . . . . . . . . . .    44
                     -----------------                                         
     Section 10.14   Minimum Commitment by UBS . . . . . . . . . . . . . . .    44
                     -------------------------                                 
     Section 10.15   Pro Rata Treatment  . . . . . . . . . . . . . . . . . .    45
                     ------------------                                        
     Section 10.16   Sharing of Payments Among Banks . . . . . . . . . . . .    45
                     -------------------------------                           
     Section 10.17   Possession of Documents.  . . . . . . . . . . . . . . .    45
                     -----------------------                                   

ARTICLE XI.          NATURE OF OBLIGATIONS  . . . . . . . . . . . . . . . .     45
     Section 11.01   Absolute and Unconditional Obligations  . . . . . . . .    45
                     --------------------------------------                    
     Section 11.02   Non-Recourse to VRT Principals  . . . . . . . . . . . .    46
                     ------------------------------                            

                                      iii
   5

                                                                           Page
                                                                      
ARTICLE XII.        MISCELLANEOUS . . . . . . . . . . . . . . . . . . . .   47
     Section 12.01  Binding Effect of Request for Advance . . . . . . . .   47
                    -------------------------------------                     
     Section 12.02  Amendments and Waivers  . . . . . . . . . . . . . . .   47
                    ----------------------                                    
     Section 12.03  Usury . . . . . . . . . . . . . . . . . . . . . . . .   48
                    -----                                                     
     Section 12.04  Expenses; Indemnification . . . . . . . . . . . . . .   48
                    -------------------------                                 
     Section 12.05  Assignment; Participation . . . . . . . . . . . . . .   48
                    -------------------------                                 
     Section 12.06  Documentation Satisfactory  . . . . . . . . . . . . .   50
                    --------------------------                                
     Section 12.07  Notices . . . . . . . . . . . . . . . . . . . . . . .   50
                    -------                                                   
     Section 12.08  Setoff  . . . . . . . . . . . . . . . . . . . . . . .   50
                    ------                                                    
     Section 12.09  Table of Contents; Headings . . . . . . . . . . . . .   51
                    ---------------------------                               
     Section 12.10  Severability  . . . . . . . . . . . . . . . . . . . .   51
                    ------------                                              
     Section 12.11  Counterparts  . . . . . . . . . . . . . . . . . . . .   51
                    ------------                                              
     Section 12.12  Integration . . . . . . . . . . . . . . . . . . . . .   51
                    -----------                                               
     Section 12.13  Governing Law . . . . . . . . . . . . . . . . . . . .   51
                    -------------                                             
     Section 12.14  Waivers . . . . . . . . . . . . . . . . . . . . . . .   51
                    -------                                                   
     Section 12.15  Jurisdiction; Immunities  . . . . . . . . . . . . . .   52
                    ------------------------                                  

EXHIBIT A -   Authorization Letter

EXHIBIT B -   Note

EXHIBIT C -   List of Affiliates

EXHIBIT D -   Solvency Certificate

EXHIBIT E -   Assignment and Assumption Agreement

EXHIBIT F -   Negative Pledge Properties

                                       iv
   6
          REVOLVING LOAN AGREEMENT dated as of February 27, 1995 among VORNADO
REALTY TRUST, a real estate investment trust organized and existing under the
laws of the State of Maryland ("Borrower"), UNION BANK OF SWITZERLAND (New
York Branch), as agent for the Banks (in such capacity, together with its
successors in such capacity, "Administrative Agent"), and UNION BANK OF
SWITZERLAND (New York Branch) (in its individual capacity and not as
Administrative Agent, "UBS"; UBS and the lenders who from time to time become
Banks pursuant to Section 3.07 or 12.05, each a "Bank" and collectively, the
"Banks").

           Borrower desires that the Banks extend credit as provided herein,
and the Banks are prepared to extend such credit.  Accordingly, Borrower, each
Bank and Administrative Agent agree as follows:

                         ARTICLE I.  DEFINITIONS; ETC.

          Section  1.01  Definitions.  As used in this Agreement the following
terms have the following meanings (except as otherwise provided, terms defined
in the singular to have a correlative meaning when used in the plural and vice
versa):

          "Administrative Agent" has the meaning specified in the preamble.

          "Administrative Agent's Office" means Administrative Agent's address
located at 299 Park Avenue, New York, NY 10171, or such other address in the
United States as Administrative Agent may designate by written notice to
Borrower and the Banks.

          "Affiliate" means, with respect to any Person (the "first Person"),
any other Person:  (1) which directly or indirectly controls, or is controlled
by, or is under common control with the first Person; or (2) ten percent (10%)
or more of the beneficial interest in which is directly or indirectly owned or
held by the first Person.  The term "control" means the possession, directly
or indirectly, of the power, alone, to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.

                "Agreement" means this Revolving Loan Agreement.

          "Applicable Lending Office" means, for each Bank and for its LIBOR
Loan or Base Rate Loan, as applicable, the lending office of such Bank (or of
an Affiliate of such Bank) designated as such on its signature page hereof or
in the applicable Assignment and Assumption Agreement, or such other office of
such Bank (or of an Affiliate of such Bank) as such Bank may from time to time
specify to Administrative Agent and Borrower as the
   7
office by which its LIBOR Loan or Base Rate Loan, as applicable, is to be made
and maintained.

          "Applicable Margin" means: (1) with respect to the Base Rate and
Base Rate Loans, one-half percent (.50%), and (2) with respect to the LIBOR
Interest Rate and LIBOR Loans, one and one-half percent (1.50%).

          "Assignee" has the meaning specified in Section 12.05.

          "Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement, substantially in the form of EXHIBIT E hereto, pursuant
to which a Bank assigns and an Assignee assumes rights and obligations in
accordance with Section 12.05.

          "Authorization Letter" means a letter agreement executed by Borrower
in the form of EXHIBIT A hereto.

          "Bank" and "Banks" have the respective meanings specified in the
preamble.

          "Bank Parties" means Administrative Agent and the Banks.

          "Banking Day" means (1) any day on which commercial banks are not
authorized or required to close in New York City and (2) whenever such day
relates to a LIBOR Loan, an Interest Period with respect to a LIBOR Loan, or
notice with respect to any LIBOR Loan, a day on which dealings in Dollar
deposits are also carried out in the London interbank market and banks are
open for business in London.

          "Base Rate" means, for any day, the higher of (1) the Federal Funds
Rate for such day plus one-half percent (.50%), or (2) the Prime Rate for such
day.

          "Base Rate Loan" means all or any portion (as the context requires)
of a Bank's Loan which shall accrue interest at a rate determined in relation
to the Base Rate.

          "Borrower's Accountants" means Deloitte & Touche, or such other
accounting firm(s) selected by Borrower and reasonably acceptable to the
Required Banks.

          "Borrower" has the meaning specified in the preamble.

          "Capitalization Value" means, at any time, the sum of (a) Cash Flow
less all leasing commissions and management and development fees earned by
Borrower (net of any expenses applicable thereto), for the three (3) month
period then ended annualized, capitalized at a rate of 10% per annum and (b)
such

                                       2
   8
leasing commissions and management and development fees, capitalized at a rate
of 25% per annum.

          "Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.

          "Cash Flow" means, for any period of time, Combined EBITDA less
income taxes.

          "Closing Date" means the date this Agreement has been executed by
all parties.

          "Code" means the Internal Revenue Code of 1986, as amended from time
to time.

          "Combined EBITDA" means, for any period of time, (1) revenues less
operating costs before Interest Expense, income taxes, gains or losses on the
sale of real estate and/or marketable securities, depreciation and
amortization and extraordinary items for Borrower and its Consolidated
Businesses, plus (2) Borrower's beneficial interest in revenues less operating
costs before Interest Expense, income taxes, gains or losses on the sale of
real estate and/or marketable securities, depreciation and amortization and
extraordinary items (after eliminating appropriate intercompany amounts)
applicable to each of the UJVs, in all cases as reflected in the VRT
Consolidated Financial Statements.

          "Consolidated Businesses" means, collectively each Affiliate of
Borrower who is included in the VRT Consolidated Statements in accordance with
GAAP.

          "Consolidated Outstanding Indebtedness" means, as of any time, all
indebtedness and liability for borrowed money, secured or unsecured, of
Borrower and its Consolidated Businesses, including mortgage and other notes
payable but excluding any indebtedness which is margin indebtedness on cash
and cash equivalent securities, all as reflected in the VRT Consolidated
Financial Statements.

          "Contingent Liabilities" means the sum of (1) those liabilities, as
determined in accordance with GAAP, set forth and quantified as contingent
liabilities in the notes to the VRT Consolidated Financial Statements and (2)
contingent liabilities, other than those described in the foregoing clause
(1), which represent direct payment guaranties of Borrower; provided, however,
that Contingent Liabilities shall exclude contingent liabilities which
represent the "Other Party's Share" of "Duplicated Obligations" (as such
quoted terms are hereinafter defined).  "Duplicated Obligations" means,
collectively, all those payment guaranties in respect of Debt of UJVs for
which Borrower and another party are jointly and severally liable,

                                       3
   9
where the other party is, in the sole judgment of the Required Banks, capable
of satisfying the Other Party's Share of such obligation.  "Other Party's
Share" means such other party's fractional beneficial interest in the UJV in
question.

          "Continue", "Continuation" and "Continued" refer to the continuation
pursuant to Section 2.12 of a LIBOR Loan as a LIBOR Loan from one Interest
Period to the next Interest Period.

          "Convert", "Conversion" and "Converted" refer to a conversion
pursuant to Section 2.12 of a Base Rate Loan into a LIBOR Loan or a LIBOR Loan
into a Base Rate Loan, each of which may be accompanied by the transfer by a
Bank (at its sole discretion) of all or a portion of its Loan from one
Applicable Lending Office to another.

          "Debt" means: (1) indebtedness or liability for borrowed money, or
for the deferred purchase price of property or services (including trade
obligations); (2) obligations as lessee under Capital Leases; (3) current
liabilities in respect of unfunded vested benefits under any Plan; (4)
obligations under letters of credit issued for the account of any Person; (5)
all obligations arising under bankers' or trade acceptance facilities; (6) all
guarantees, endorsements (other than for collection or deposit in the ordinary
course of business), and other contingent obligations to purchase any of the
items included in this definition, to provide funds for payment, to supply
funds to invest in any Person, or otherwise to assure a creditor against loss;
(7) all obligations secured by any Lien on property owned by the Person whose
Debt is being measured, whether or not the obligations have been assumed; and
(8) all obligations under any agreement providing for contingent participation
or other hedging mechanisms with respect to interest payable on any of the
items described above in this definition.

          "Default" means any event which with the giving of notice or lapse
of time, or both, would become an Event of Default.

          "Default Rate" means a rate per annum equal to:  (1) with respect to
Base Rate Loans, a variable rate three percent (3%) above the rate of interest
then in effect thereon (including the Applicable Margin); and (2) with respect
to LIBOR Loans, a fixed rate three percent (3%) above the rate(s) of interest
in effect thereon (including the Applicable Margin) at the time of Default
until the end of the then current Interest Period therefor and, thereafter, a
variable rate three percent (3%) above the rate of interest for a Base Rate
Loan (including the Applicable Margin).

          "Disposition" means a sale (whether by assignment, transfer or
Capital Lease) of an asset.

                                       4
   10

          "Dollars" and the sign "$" mean lawful money of the United States of
America.

          "Elect", "Election" and "Elected" refer to election, if any, by
Borrower pursuant to Section 2.12 to have all or a portion of an advance of
the Loans be outstanding as LIBOR Loans.

          "Environmental Discharge" means any discharge or release of any
Hazardous Materials in violation of any applicable Environmental Law.

          "Environmental Law" means any applicable Law relating to pollution
or the environment, including Laws relating to noise or to emissions,
discharges, releases or threatened releases of Hazardous Materials into the
work place, the community or the environment, or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.

          "Environmental Notice" means any written complaint, order, citation,
letter, inquiry, notice or other written communication from any Person
(1) affecting or relating to Borrower's compliance with any Environmental Law
in connection with any activity or operations at any time conducted by
Borrower, (2) relating to the occurrence or presence of or exposure to or
possible or threatened or alleged occurrence or presence of or exposure to
Environmental Discharges or Hazardous Materials at any of Borrower's locations
or facilities, including, without limitation:  (a) the existence of any
contamination or possible or threatened contamination at any such location or
facility and (b) remediation of any Environmental Discharge or Hazardous
Materials at any such location or facility or any part thereof; and (3) any
violation or alleged violation of any relevant Environmental Law.

          "Equity Value" means, at any time, the sum of (1) Capitalization
Value and (2) without duplication, the cost basis of properties of Borrower
under construction as certified by Borrower, such certificate to be
accompanied by all appropriate documentation supporting such figure.

          "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, including the rules and regulations promulgated
thereunder.

          "ERISA Affiliate" means any corporation or trade or business which
is a member of the same controlled group of organizations (within the meaning
of Section 414(b) of the Code) as Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with Borrower or is required to be
treated as a single employer with Borrower under Section 414(m) or 414(o) of
the Code.

                                       5
   11
          "Event of Default" has the meaning specified in Section 9.01.

          "Federal Funds Rate" means, for any day, the rate per annum
(expressed on a 360-day basis of calculation) equal to the weighted average of
the rates on overnight federal funds transactions as published by the Federal
Reserve Bank of New York for such day provided that (1) if such day is not a
Banking Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the immediately preceding Banking Day as so published on the
next succeeding Banking Day, and (2) if no such rate is so published on such
next succeeding Banking Day, the Federal Funds Rate for such day shall be the
average of the rates quoted by three Federal Funds brokers to Administrative
Agent on such day on such transactions.

          "Fiscal Year" means each period from January 1 to December 31.

          "Funds From Operations" means Combined EBITDA less the sum of
Interest Expense and income taxes.

          "GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis
consistent with those used in the preparation of the financial statements
referred to in Section 5.13 (except for changes concurred in by Borrower's
Accountants).

          "Good Faith Contest" means the contest of an item if: (1) the item
is diligently contested in good faith, and, if appropriate, by proceedings
timely instituted; (2) adequate reserves are established with respect to the
contested item; (3) during the period of such contest, the enforcement of any
contested item is effectively stayed; and (4) the failure to pay or comply
with the contested item during the period of the contest is not likely to
result in a Material Adverse Change.

          "Governmental Approvals" means any authorization, consent, approval,
license, permit, certification, or exemption of, registration or filing with
or report or notice to, any Governmental Authority.

          "Governmental Authority" means any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

          "Hazardous Materials" means any pollutant, effluents, emissions,
contaminants, toxic or hazardous wastes or substances, as any of those terms
are defined from time to time in or for the purposes of any relevant
Environmental Law, including asbestos fibers and friable asbestos,
polychlorinated biphenyls, and any petroleum or hydrocarbon-based products or
derivatives.

                                       6
   12

          "Initial Advance" means the first advance of proceeds of the Loans.

          "Interest Expense" means, for any period of time, the consolidated
interest expense (without deduction of consolidated interest income) of
Borrower and its Consolidated Businesses, including, without limitation or
duplication (or, to the extent not so included, with the addition of), (1) the
portion of any rental obligation in respect of any Capital Lease obligation
allocable to interest expense in accordance with GAAP; (2) the amortization of
Debt discounts; (3) any payments or fees (other than up-front fees) with
respect to interest rate swap or similar agreements; and (4) the interest
expense and items listed in clauses (1) through (3) above applicable to each
of the UJVs multiplied by Borrower's respective beneficial interests in the
UJVs, in all cases as reflected in the applicable VRT Consolidated Financial
Statements.

          "Interest Period" means, with respect to any LIBOR Loan, the period
commencing on the date the same is advanced, converted from a Base Rate Loan
or Continued, as the case may be, and ending, as Borrower may select pursuant
to Section 2.05, on the numerically corresponding day in the first, second,
third or sixth calendar month thereafter, provided that each such Interest
Period which commences on the last Banking Day of a calendar month (or on any
day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Banking Day of the
appropriate calendar month.

          "Law" means any federal, state or local statute, law, rule,
regulation, ordinance, order, code, or rule of common law, now or hereafter in
effect, and in each case as amended, and any judicial or administrative
interpretation thereof by a Governmental Authority or otherwise, including any
judicial or administrative order, consent decree or judgment.

          "LIBOR Base Rate" means, with respect to any Interest Period
therefor, the rate per annum (rounded upwards if necessary to the nearest 1/16
of 1%) quoted at approximately 11:00 a.m., New York time, by the principal New
York branch of UBS two (2) Banking Days prior to the first day of such
Interest Period for the offering to leading banks in the London interbank
market of Dollar deposits in immediately available funds, for a period, and in
an amount, comparable to such Interest Period and principal amount of the
LIBOR Loan in question outstanding during such Interest Period.

                                       7
   13
    "LIBOR Interest Rate" means, for any LIBOR Loan, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
Administrative Agent to be equal to the quotient of (1) the LIBOR Base Rate
for such LIBOR Loan for the Interest Period therefor divided by (2) one minus
the LIBOR Reserve Requirement for such LIBOR Loan for such Interest Period.

    "LIBOR Loan" means all or any portion (as the context requires) of
any Bank's Loan which shall accrue interest at rate(s) determined in relation
to LIBOR Interest Rate(s).

    "LIBOR Reserve Requirement" means, for any LIBOR Loan, the average
maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during the Interest Period
for such LIBOR Loan under Regulation D by member banks of the Federal Reserve
System in New York City with deposits exceeding One Billion Dollars
($1,000,000,000) against "Eurocurrency liabilities" (as such term is used in
Regulation D).  Without limiting the effect of the foregoing, the LIBOR
Reserve Requirement shall also reflect any other reserves required to be
maintained by such member banks by reason of any Regulatory Change against (1)
any category of liabilities which includes deposits by reference to which the
LIBOR Base Rate is to be determined as provided in the definition of "LIBOR
Base Rate" in this Section 1.01 or (2) any category of extensions of credit or
other assets which include loans the interest rate on which is determined on
the basis of rates referred to in said definition of "LIBOR Base Rate".

    "Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment for collateral purposes, deposit arrangement, lien
(statutory or other), or other security agreement or charge of any kind or
nature whatsoever of any third party (excluding any right of setoff but
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect 
as any of the foregoing, and the filing of any financing statement under the 
Uniform Commercial Code or comparable law of any jurisdiction to evidence any 
of the foregoing).

    "Loan" and "Loans" have the respective meanings specified in Section 2.01.

    "Loan Commitment" means, with respect to each Bank, the obligation
to make a Loan in the principal amount set forth below, as such amount may be
reduced from time to time in accordance with the provisions of Section 2.10
and Section 6.10:

                                       8
   14

                                       Loan
               Bank                  Commitment
               ----                  ----------
                                  
               UBS                   $75,000,000
                                     -----------

               Total                 $75,000,000
                                     ===========

          "Loan Documents" means this Agreement, the Notes and the Solvency
Certificates.

          "Material Adverse Change" means either (1) a material adverse change
in the status of the business, results of operations, financial condition or
property of  Borrower or (2) any event or occurrence of whatever nature which
is likely to have a material adverse effect on the ability of Borrower to
perform its obligations under the Loan Documents.

          "Material Affiliates" means the Affiliates listed on 
Exhibit C hereto.

          "Maturity Date" means March 1, 1998.

          "Multiemployer Plan" means a Plan defined as such in Section 3(37)
of ERISA to which contributions have been made by Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.

          "Note" and "Notes" have the respective meanings specified in 
Section 2.08.

          "Obligations" means each and every obligation, covenant and
agreement of Borrower, now or hereafter existing, contained in this Agreement,
and any of the other Loan Documents, whether for principal, reimbursement
obligations, interest, fees, expenses, indemnities or otherwise, and any
amendments or supplements thereto, extensions or renewals thereof or
replacements therefor, including but not limited to all indebtedness,
obligations and liabilities of Borrower to Administrative Agent and any Bank
now existing or hereafter incurred under or arising out of or in connection
with the Notes, this Agreement, the other Loan Documents, and any documents or
instruments executed in connection therewith; in each case whether direct or
indirect, joint or several, absolute or contingent, liquidated or
unliquidated, now or hereafter existing, renewed or restructured, whether or
not from time to time decreased or extinguished and later increased, created
or incurred, and including all indebtedness of Borrower, under any instrument
now or hereafter evidencing or securing any of the foregoing.

          "Parent" means, with respect to any Bank, any Person controlling
such Bank.

                                       9
   15

          "PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

          "Person" means an individual, partnership,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.

          "Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by Borrower or any ERISA
Affiliate of Borrower and which is covered by Title IV of ERISA or to which
Section 412 of the Code applies.

          "presence", when used in connection with any Environmental Discharge
or Hazardous Materials, means and includes presence, generation, manufacture,
installation, treatment, use, storage, handling, repair, encapsulation,
disposal, transportation, spill, discharge and release.

          "Prime Rate" means that rate of interest from time to time announced
by UBS at its Principal Office as its prime commercial lending rate.

          "Principal Office" means the principal office of UBS in the United
States, presently located at 299 Park Avenue, New York, New York 10171.

          "Pro Rata Share" means, for purposes of this Agreement and with
respect to each Bank, a fraction, the numerator of which is the amount of such
Bank's Loan Commitment and the denominator of which is the Total Loan
Commitment.

          "Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code.

          "Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time
to time, or any similar Law from time to time in effect.

          "Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time
to time.

          "Regulatory Change" means, with respect to any Bank, any change
after the date of this Agreement in United States federal, state, municipal or
foreign laws or regulations (including Regulation D) or the adoption or making
after such date of any interpretations, directives or requests applying to a
class of banks including such Bank of or under any United States, federal,
state, municipal or foreign laws or regulations (whether

                                       10
   16
or not having the force of law) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.

          "Reportable Event" means any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty (30) day
notice period is waived under subsections .13, .14, .16, .18, .19 or .20 of
PBGC Reg. Section 2615.

          "Required Banks" means at any time the Banks holding at least
sixty-six and sixty six hundredths percent (66.66%) of the then aggregate
unpaid principal amount of the Loans.

          "SEC Reports" means the reports required to be delivered to the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.

          "Secured Indebtedness" means that portion of Total Outstanding
Indebtedness that is secured.

          "Shopping Center EBITDA" means, for any period of time, revenues
less operating costs (including assumed management fees of 2% of net rents)
before Interest Expense, income taxes, gains or losses on the sale of real
estate and/or marketable securities, depreciation and amortization and
extraordinary items, in each case for the twelve shopping centers identified
on EXHIBIT F.

          "Solvency Certificate" means a certificate in substantially the form
of EXHIBIT D hereto, to be delivered by Borrower pursuant to the terms of this
Agreement.

          "Solvent" means, when used with respect to any Person, that (1) the
fair value of the property of such Person, on a going concern basis, is
greater than the total amount of liabilities (including, without limitation,
contingent liabilities) of such Person; (2) the present fair saleable value of
the assets of such Person, on a going concern basis, is not less than the
amount that will be required to pay the probable liabilities of such Person on
its debts as they become absolute and matured; (3) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; (4) such Person
is not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such Person is engaged; and (5) such Person
has sufficient resources, provided that such resources are prudently utilized,
to satisfy all of such Person's obligations.  Contingent liabilities will be
computed at the amount that, in light of all the facts and circumstances
existing at such time,

                                       11
   17
represents the amount that can reasonably be expected to become an actual or
matured liability.

          "Supplemental Fee Letter" means that certain letter, dated the date
hereof, between UBS and Borrower.

          "Total Loan Commitment" means an amount equal to the aggregate
amount of all Loan Commitments.

          "Total Market Capitalization" means, at any time, the sum of (1)
Equity Value and (2) Total Outstanding Indebtedness.

          "Total Outstanding Indebtedness" means the sum, without duplication,
of (1) Consolidated Outstanding Indebtedness, (2) VRT's Share of UJV Combined
Outstanding Indebtedness and (3) Contingent Liabilities.

          "UJV Combined Outstanding Indebtedness" means, as of any time, all
indebtedness and liability for borrowed money, secured or unsecured, of the
UJV's, on a combined basis, including mortgage and other notes payable but
excluding any indebtedness which is margin indebtedness on cash and cash
equivalent securities, all as reflected in the balance sheets of each of the
UJVs, prepared in accordance with GAAP.

          "UJVs" means the unconsolidated joint ventures in which Borrower
owns a beneficial interest and which are accounted for under the equity method
in the VRT Consolidated Financial Statements other than Alexander's, Inc.

          "Unencumbered Combined EBITDA" means that portion of Combined EBITDA
attributable to Unencumbered Wholly-Owned Assets.

          "Unencumbered Current Liability" of any Plan means the amount, if
any, by which the actuarial present value of accumulated plan benefits as of
the close of its most recent plan year, based upon the actuarial assumptions
used by the Plan's actuary in the most recent annual valuation of the Plan,
exceeds the fair market value of the assets allocable thereto, determined in
accordance with Section 412 of the Code.

          "Unencumbered Wholly-Owned Assets" means assets, reflected on the
VRT Consolidated Financial Statements, wholly owned, directly or indirectly,
by Borrower and not subject to any Lien to secure all or any portion of
Secured Indebtedness.

          "Unsecured Debt Yield" means, for any calendar quarter, the ratio,
expressed as a percentage, of (1) Unencumbered Combined EBITDA for the three
(3)-month period ending with such calendar quarter annualized to (2) Unsecured
Indebtedness as of the end of such calendar quarter.

                                       12
   18
          "Unsecured Indebtedness" means that portion of Total Outstanding
Indebtedness that is unsecured.

          "VRT Consolidated Financial Statements" means the consolidated
balance sheet and related consolidated statement of operations, accumulated
deficiency in assets and cash flows, and footnotes thereto, of Borrower,
prepared in accordance with GAAP.

          "VRT Principals" means the trustees, officers and directors of
Borrower at any applicable time.

          "VRT's Share of UJV Combined Outstanding Indebtedness" means the sum
of the indebtedness of each of the UJVs contributing to UJV Combined
Outstanding Indebtedness multiplied by Borrower's respective beneficial
fractional interests in each such UJV.

          Section  1.02  Accounting Terms.  All accounting terms not
specifically defined herein shall be construed in accordance with GAAP, and
all financial data required to be delivered hereunder shall be prepared in
accordance with GAAP.

          Section  1.03  Computation of Time Periods.  Except as otherwise
provided herein, in this Agreement, in the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including" and words "to" and "until" each means "to but excluding".

          Section  1.04  Rules of Construction.  When used in this Agreement:
(1) "or" is not exclusive; (2) a reference to a law includes any amendment or
modification to such law; (3) a reference to a Person includes its permitted
successors and permitted assigns; (4) except as provided otherwise, all
references to the singular shall include the plural and vice versa; (5) except
as provided in this Agreement, a reference to an agreement, instrument or
document shall include such agreement, instrument or document as the same may
be amended, modified or supplemented from time to time in accordance with its
terms and as permitted by the Loan Documents; (6) all references to Articles
or Sections shall be to Articles and Sections of this Agreement unless
otherwise indicated; and (7) all Exhibits to this Agreement shall be
incorporated into this Agreement.

                             ARTICLE II.  THE LOANS

          Section  2.01  The Loans.  Subject to the terms and conditions of
this Agreement, each of the Banks severally agrees to make a loan to Borrower
(each such loan by a Bank, a "Loan"; such loans, collectively, the "Loans")
pursuant to which the Bank shall from time to time advance and re-advance to
Borrower an amount equal to the excess of such Bank's Loan Commitment over all
previous advances made by such Bank which remain unpaid.

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   19
Within the limits set forth herein, Borrower may borrow from time to time
under this Section 2.01 and prepay from time to time pursuant to Section 2.09
(subject, however, to the restrictions on prepayment set forth in said
Section), and thereafter re-borrow pursuant to this Section 2.01.  The Loans
may be outstanding as: (1) Base Rate Loans; (2) LIBOR Loans; or (3) a
combination of the foregoing, as Borrower shall elect and notify
Administrative Agent in accordance with Section 2.14.  The LIBOR Loan and Base
Rate Loan of each Bank shall be maintained at such Bank's Applicable Lending
Office for its LIBOR Loan and Base Rate Loan, respectively.

          The obligations of the Banks under this Agreement are several, and
no Bank shall be responsible for the failure of any other Bank to make any
advance of a Loan to be made by such other Bank.  However, the failure of any
Bank to make any advance of the Loan to be made by it hereunder on the date
specified therefor shall not relieve any other Bank of its obligation to make
any advance of its Loan specified hereby to be made on such date.

          Section  2.02  Purpose.  Borrower shall use the proceeds of the
Loans for general capital and working capital requirements of Borrower and its
Consolidated Businesses and UJVs.

          In no event shall proceeds of the Loans be used in a manner that
would violate Regulation U.

          Each advance shall be subject, in addition to the limitations and
conditions applicable to advances of the Loans generally, to Administrative
Agent's receipt, on or immediately prior to the date the request for such
advance is made, of (1) a certificate, of the sort required by paragraph
(3)(b) of Section 6.09, containing covenant compliance calculations that
include the pro-forma adjustments described below, which calculations shall
demonstrate Borrower's compliance, on a pro-forma basis, as of the end of the
most recently ended calendar quarter for which financial results are required
hereunder to have been reported by Borrower, with all covenants enumerated in
said paragraph (3)(b) and (2) a certificate by the same officer setting forth
the use of the advance, the income projected to be generated from such advance
for purposes of determining Combined EBITDA and the type of income so
generated.

          In connection with each advance of Loan proceeds, the following pro-
forma adjustments shall be made to the covenant compliance calculations
required as of the end of the most recently ended calendar quarter for which
financial results are required hereunder to have been reported by Borrower:

            (i)  Total Outstanding Indebtedness and Unsecured Indebtedness
     shall be adjusted by adding thereto,

                                       14
   20
     respectively, all indebtedness and unsecured indebtedness that is
     incurred by Borrower in connection with the advance;

           (ii)  Combined EBITDA, for any period, shall be adjusted by adding
     the income to be included as provided in Borrower's certificate; and

          (iii)  Interest Expense for any period, shall be adjusted by adding
     thereto interest expense to be incurred by Borrower in connection with
     the advance.

          Section  2.03  Advances, Generally.  The Initial Advance shall be in
the minimum amount of Three Million Dollars ($3,000,000) and in integral
multiples of One Hundred Thousand Dollars ($100,000) above such amount and
shall be made upon satisfaction of the conditions set forth in Section 4.01.
Subsequent advances shall be made no more frequently than weekly thereafter,
upon satisfaction of the conditions set forth in Section 4.02.  The amount of
each advance subsequent to the Initial Advance shall be in the minimum amount
of Three Million Dollars ($3,000,000) (unless less than Three Million Dollars
($3,000,000) is available for disbursement pursuant to the terms hereof at the
time of any subsequent advance, in which case the amount of such subsequent
advance shall be equal to such remaining availability) and in integral
multiples of One Hundred Thousand Dollars ($100,000) above such amount.

          Section  2.04  Procedures for Advances.  Borrower shall submit to
Administrative Agent a request for each advance hereunder, stating the amount
requested and the expected purpose for which such advance is to be used, no
later than 10:00 a.m. (New York time) on the date, in the case of advances of
Base Rate Loans, which is one (1) Banking Day, and, in the case of advances of
LIBOR Loans, which is three (3) Banking Days, prior to the date the advance is
to be made.  Administrative Agent, upon its receipt and approval of the
request for advance, will so notify the Banks.  Not later than 10:00 a.m. (New
York time) on the date of each advance, each Bank shall, through its
Applicable Lending Office and subject to the conditions of this Agreement,
make the amount to be advanced by it on such day available to Administrative
Agent, at Administrative Agent's Office and in immediately available funds for
the account of Borrower.  The amount so received by Administrative Agent
shall, subject to the conditions of this Agreement, be made available to
Borrower, in immediately available funds, by Administrative Agent's crediting
account number 292079 of Borrower maintained with Administrative Agent at
Administrative Agent's Office.

          Section  2.05  Interest Periods; Renewals.  In the case of the LIBOR
Loans, Borrower shall select an Interest Period of any duration in accordance
with the definition of Interest Period in Section 1.01, subject to the
following limitations:  (1) no Interest Period may extend beyond the Maturity
Date; (2) if an

                                       15
   21
Interest Period would end on a day which is not a Banking Day, such Interest
Period shall be extended to the next Banking Day, unless such Banking Day
would fall in the next calendar month, in which event such Interest Period
shall end on the immediately preceding Banking Day; and (3) only eight (8)
discrete segments of a Bank's Loan bearing interest at a LIBOR Interest Rate,
for a designated Interest Period, pursuant to a particular Election,
Conversion or Continuation, may be outstanding at any one time (each such
segment of each Bank's Loan corresponding to a proportionate segment of each
of the other Banks' Loans).

          Upon notice to Administrative Agent as provided in Section 2.14,
Borrower may Continue any LIBOR Loan on the last day of the Interest Period of
the same or different duration in accordance with the limitations provided
above.

          Section  2.06  Interest.  Borrower shall pay interest to
Administrative Agent for the account of the applicable Bank on the outstanding
and unpaid principal amount of the Loans, at a rate per annum as follows:  (1)
for Base Rate Loans at a rate equal to the Base Rate plus the Applicable
Margin; and (2) for LIBOR Loans at a rate equal to the applicable LIBOR
Interest Rate plus the Applicable Margin.  Any principal amount not paid when
due (when scheduled, at acceleration or otherwise) shall bear interest
thereafter, payable on demand, at the Default Rate.

          The interest rate on Base Rate Loans shall change when the Base Rate
changes.  Interest on Base Rate Loans and LIBOR Loans shall not exceed the
maximum amount permitted under applicable law.  Interest shall be calculated
for the actual number of days elapsed on the basis of, in the case of both
Base Rate Loans and LIBOR Loans, three hundred sixty (360) days.

          Accrued interest shall be due and payable in arrears upon and with
respect to any payment or prepayment of principal and on the first Banking Day
of each calendar month; provided, however, that interest accruing at the
Default Rate shall be due and payable on demand.

          Section  2.07  Fees.  (a)  Borrower agrees to pay to Administrative
Agent, for its account, the fees provided for in the Supplemental Fee Letter.

          (b)  Borrower shall, during the term of the Loans, pay to
Administrative Agent for the account of each Bank a commitment fee computed on
the daily unused Loan Commitment of such Bank, at a rate per annum equal to
one-quarter percent (.25%), calculated on the basis of a year of three hundred
sixty (360) days for the actual number of days elapsed.  The accrued
commitment fee shall be due and payable in arrears on the tenth (10th) day of
June, September, December and March of each year, commencing on the first such
date after the Closing Date, and upon the Maturity Date or earlier termination
of the Loan Commitments.

                                       16
   22

          (c)  Borrower shall pay to Administrative Agent, for the account of
Administrative Agent, on the Closing Date and on each anniversary of the
Closing Date thereafter until (but excluding) the Maturity Date or earlier
termination of the Loan Commitments, an annual administration fee in the
amount of $50,000.

          Section  2.08  Notes.  The Loan made by each Bank under this
Agreement shall be evidenced by, and repaid with interest in accordance with,
a single promissory note of Borrower in the form of EXHIBIT B hereto duly
completed and executed by Borrower, representing the amount of such Bank's
Loan Commitment, or if less, the aggregate unpaid principal amount of all
Loans by such Bank to Borrower, payable to such Bank for the account of its
Applicable Lending Office (each, a "Note" and collectively, the "Notes").
Each Note shall mature, and all outstanding principal and other sums
thereunder shall be paid in full, on the Maturity Date.

          Each Bank is hereby authorized by Borrower to endorse on the
schedule attached to the Note held by it, the amount of each advance and each
payment of principal received by such Bank for the account of its Applicable
Lending Office(s) on account of its Loan, which endorsement shall, in the
absence of manifest error, be conclusive as to the outstanding balance of the
Loan made by such Bank; provided, however, that the failure to make such
notation with respect to the Loan or each advance or payment shall not limit
or otherwise affect the obligations of Borrower under this Agreement or the
Note held by such Bank.  Each Bank agrees that prior to any assignment of the
Note it will endorse the schedule attached to its Note.

          Section  2.09  Prepayments.  Without prepayment premium or penalty
but subject to Section 3.05, Borrower may, upon at least one (1) Banking Day's
notice to Administrative Agent in the case of the Base Rate Loans, and at
least three (3) Banking Days' notice to Administrative Agent in the case of
LIBOR Loans, prepay the Loans in whole or, with respect to Base Rate Loans
only, in part, provided that (1) any partial prepayment under this Section
shall be in integral multiples of One Million Dollars ($1,000,000); and (2)
each prepayment under this Section shall include all interest accrued on the
amount of principal prepaid to (but excluding) the date of prepayment.

          Section  2.10  Changes of Commitments.  (a)  At any time, Borrower
shall have the right, without premium or penalty, to terminate any unused Loan
Commitments existing as of the date of such termination, in whole or in part,
from time to time, provided that: (1) Borrower shall give notice of each such
termination to Administrative Agent no later then 10:00 a.m. (New York time)
on the date which is three (3) Banking Days prior to the effectiveness of such
termination; (2) the Loan Commitments of each of the Banks must be terminated
ratably and

                                       17
   23
simultaneously with those of the other Banks; and (3) each partial termination
of the Loan Commitments as a whole (and corresponding reduction of the Total
Loan Commitment) shall be in an integral multiple of One Million Dollars
($1,000,000).

          (b)  The Loan Commitments, to the extent terminated, may not be
reinstated.

          Section  2.11  Method of Payment.  Borrower shall make each payment
under this Agreement and under the Notes not later than 11:00 A.M. (New York
time) on the date when due in Dollars to Administrative Agent at
Administrative Agent's Office in immediately available funds.  Administrative
Agent will thereafter, on the day of its receipt of each such payment, cause
to be distributed to each Bank (1) such Bank's ratable share (based upon the
respective outstanding principal amounts and interest due under the Notes of
the Banks) of the payments of principal and interest in like funds for the
account of such Bank's Applicable Lending Office; and (2) fees payable to such
Bank in accordance with the terms of this Agreement.  Borrower hereby
authorizes Administrative Agent and the Banks, if and to the extent payment by
Borrower is not made when due under this Agreement or under the Notes, to
charge from time to time against any account Borrower maintains with
Administrative Agent or any Bank any amount so due to Administrative Agent
and/or the Banks.

          Except to the extent provided in this Agreement, whenever any
payment to be made under this Agreement or under the Notes is due on any day
other than a Banking Day, such payment shall be made on the next succeeding
Banking Day, and such extension of time shall in such case be included in the
computation of the payment of interest and other fees, as the case may be.

          Section  2.12  Elections, Conversions or Continuation of Loans.
Subject to the provisions of Article III and Sections 2.05 and 2.13, Borrower
shall have the right to Elect to have all or a portion of any advance of the
Loans be LIBOR Loans, to Convert Base Rate Loans into LIBOR Loans, to Convert
LIBOR Loans into Base Rate Loans, or to Continue LIBOR Loans as LIBOR Loans,
at any time or from time to time, provided that: (1) Borrower shall give
Administrative Agent notice of each such Election, Conversion or Continuation
as provided in Section 2.14; and (2) a LIBOR Loan may be Continued only on the
last day of the applicable Interest Period for such LIBOR Loan.  Except as
otherwise provided in this Agreement, each Election, Continuation and
Conversion shall be applicable to each Bank's Loan in accordance with its Pro
Rata Share.

          Section  2.13  Minimum Amounts.  With respect to the Loans as a
whole, each Election and each Conversion shall be in an amount at least equal
to Three Million Dollars ($3,000,000)

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   24
and in integral multiples of One Hundred Thousand Dollars ($100,000).

          Section  2.14  Certain Notices Regarding Elections, Conversions and
Continuations of Loans.  Notices by Borrower to Administrative Agent of
Elections, Conversions and Continuations of LIBOR Loans shall be irrevocable
and shall be effective only if received by Administrative Agent not later than
10:00 a.m. (New York time) on the number of Banking Days prior to the date of
the relevant Election, Conversion or Continuation specified below:

                                   Number of
     Notice                        Banking Days Prior
     ------                        ------------------
                                     
Conversions into Base Rate
Loans                                   one (1)

Elections of, Conversions into
or Continuations as, LIBOR Loans        three (3)

Promptly following its receipt of any such notice, Administrative Agent shall
so advise the Banks.  Each such notice of Election shall specify the portion
of the amount of the advance that is to be LIBOR Loans (subject to Section
2.13) and the duration of the Interest Period applicable thereto (subject to
Section 2.05); each such notice of Conversion shall specify the LIBOR Loans or
Base Rate Loans to be Converted; and each such notice of Conversion or
Continuation shall specify the date of Conversion or Continuation (which shall
be a Banking Day), the amount thereof (subject to Section 2.13) and the
duration of the Interest Period applicable thereto (subject to Section 2.05).
In the event that Borrower fails to Elect to have any portion of an advance be
LIBOR Loans, the entire amount of such advance shall constitute Base Rate
Loans.  In the event that Borrower fails to Continue LIBOR Loans within the
time period and as otherwise provided in this Section, such LIBOR Loans will
be automatically Converted into Base Rate Loans on the last day of the then
current applicable Interest Period for such LIBOR Loans.

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   25
                        ARTICLE III.  YIELD PROTECTION;
                                ILLEGALITY; ETC.

          Section  3.01  Additional Costs.  Borrower shall pay directly to
each Bank from time to time on demand such amounts as such Bank may reasonably
determine to be necessary to compensate it for any increased costs which such
Bank determines are attributable to its making or maintaining a LIBOR Loan, or
its obligation to make or maintain a LIBOR Loan, or its obligation to Convert
a Base Rate Loan to a LIBOR Loan hereunder, or any reduction in any amount
receivable by such Bank hereunder in respect of its LIBOR Loan or such
obligations (such increases in costs and reductions in amounts receivable
being herein called "Additional Costs"), in each case resulting from any
Regulatory Change which:

          (1)  changes the basis of taxation of any amounts payable to such
     Bank under this Agreement or the Notes in respect of any such LIBOR Loan
     (other than (i) changes in the rate of general corporate, franchise,
     branch profit, net income or other income tax imposed on such Bank or its
     Applicable Lending Office or (ii) a tax described in Section 10.13); or

          (2)  (other than to the extent the LIBOR Reserve Requirement is
     taken into account in determining the LIBOR Rate at the commencement of
     the applicable Interest Period) imposes or modifies any reserve, special
     deposit, deposit insurance or assessment, minimum capital, capital ratio
     or similar requirements relating to any extensions of credit or other
     assets of, or any deposits with or other liabilities of, such Bank
     (including any LIBOR Loan or any deposits referred to in the definition
     of "LIBOR Interest Rate" in Section 1.01), or any commitment of such Bank
     (including such Bank's Loan Commitment hereunder); or

          (3)  imposes any other condition (unrelated to the basis of taxation
     referred to in paragraph (1) above) affecting this Agreement or the Notes
     (or any of such extensions of credit or liabilities).

          Without limiting the effect of the provisions of the first paragraph
of this Section, in the event that, by reason of any Regulatory Change, any
Bank either (1) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category of deposits of other
liabilities of such Bank which includes deposits by reference to which the
LIBOR Interest Rate is determined as provided in this Agreement or a category
of extensions of credit or other assets of such Bank which includes loans
based on the LIBOR Interest Rate or (2) becomes subject to restrictions on the
amount of such a category of liabilities or assets which it may hold, then, if
such Bank so elects by notice to Borrower (with a copy to Administrative

                                       20
   26
Agent), the obligation of such Bank to permit Elections of, to Continue, or to
Convert Base Rate Loans into, LIBOR Loans shall be suspended (in which case
the provisions of Section 3.04 shall be applicable) until such Regulatory
Change ceases to be in effect.

          Determinations and allocations by a Bank for purposes of this
Section of the effect of any Regulatory Change pursuant to the first or second
paragraph of this Section, on its costs or rate of return of making or
maintaining its Loan or portions thereof or on amounts receivable by it in
respect of its Loan or portions thereof, and the amounts required to
compensate such Bank under this Section, shall be included in a calculation of
such amounts given to Borrower and shall be conclusive absent manifest error.

          Section  3.02  Limitation on Types of Loans.  Anything herein to the
contrary notwithstanding, if, on or prior to the determination of the LIBOR
Interest Rate for any Interest Period:

          (1)  Administrative Agent reasonably determines (which determination
     shall be conclusive) that quotations of interest rates for the relevant
     deposits referred to in the definition of "LIBOR Interest Rate" in
     Section 1.01 are not being provided in the relevant amounts or for the
     relevant maturities for purposes of determining rates of interest for the
     LIBOR Loans as provided in this Agreement; or

          (2)  a Bank reasonably determines (which determination shall be
     conclusive) and promptly notifies Administrative Agent that the relevant
     rates of interest referred to in the definition of "LIBOR Interest Rate"
     in Section 1.01 upon the basis of which the rate of interest for LIBOR
     Loans for such Interest Period is to be determined do not adequately
     cover the cost to such Bank of making or maintaining such LIBOR Loan for
     such Interest Period;

then Administrative Agent shall give Borrower prompt notice thereof, and so
long as such condition remains in effect, the Banks (or, in the case of the
circumstances described in clause (2) above, the affected Bank) shall be under
no obligation to permit Elections of LIBOR Loans, to Convert Base Rate Loans
into LIBOR Loans or to Continue LIBOR Loans and Borrower shall, on the last
day(s) of the then current Interest Period(s) for the affected outstanding
LIBOR Loans, either prepay the affected LIBOR Loans or Convert the affected
LIBOR Loans into Base Rate Loans in accordance with Section 2.12.

          Section  3.03  Illegality.  Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for any Bank or its
Applicable Lending Office to honor its obligation to make or maintain a LIBOR
Loan hereunder, to allow Elections of a LIBOR Loan or to Convert a Base Rate
Loan

                                       21
   27
into a LIBOR Loan, then such Bank shall promptly notify Administrative Agent
and Borrower thereof and such Bank's obligation to make or maintain, to permit
Elections of, to Continue, or to Convert its Base Rate Loan into, a LIBOR Loan
shall be suspended (in which case the provisions of Section 3.04 shall be
applicable) until such time as such Bank may again make and maintain a LIBOR
Loan.

          Section  3.04  Treatment of Affected Loans.  If the obligations of
any Bank to permit an Election of a LIBOR Loan, to Continue its LIBOR Loan, or
to Convert its Base Rate Loan into a LIBOR Loan, are suspended pursuant to
Sections 3.01 or 3.03 (each LIBOR Loan so affected being herein called an
"Affected Loan"), such Bank's Affected Loan shall be automatically Converted
into a Base Rate Loan on the last day of the then current Interest Period for
the Affected Loan (or, in the case of a Conversion required by Sections 3.01
or 3.03, on such earlier date as such Bank may specify to Borrower).

          To the extent that such Bank's Affected Loan has been so Converted,
all payments and prepayments of principal which would otherwise be applied to
such Bank's Affected Loan shall be applied instead to its Base Rate Loan and
such Bank shall have no obligation to Convert its Base Rate Loan into a LIBOR
Loan.

          Section  3.05  Certain Compensation.  Other than in connection with
a Conversion of an Affected Loan, Borrower shall pay to Administrative Agent
for the account of the applicable Bank, upon the request of such Bank through
Administrative Agent which request includes a calculation of the amount(s)
due, such amount or amounts as shall be sufficient (in the reasonable opinion
of such Bank) to compensate it for any loss, cost or expense which such Bank
reasonably determines is attributable to:

          (1)  any payment, prepayment, Conversion or Continuation of a LIBOR
     Loan made by such Bank on a date other than the last day of an applicable
     Interest Period for such LIBOR Loan whether by reason of acceleration or
     otherwise; or

          (2)  any failure by Borrower for any reason to Convert or Continue a
     LIBOR Loan to be Converted or Continued by such Bank on the date
     specified therefor in the relevant notice under Section 2.14; or

          (3)  any failure by Borrower to borrow (or to qualify for a
     borrowing of) a LIBOR Loan which would otherwise be made hereunder on the
     date specified in the relevant Election notice under Section 2.14 given
     or submitted by Borrower.

          Without limiting the foregoing, such compensation shall include an
amount equal to the present value (using as the

                                       22
   28
discount rate an interest rate equal to the rate determined under (2) below)
of the excess, if any, of (1) the amount of interest (less the Applicable
Margin) which otherwise would have accrued on the principal amount so paid,
prepaid, Converted or Continued (or not Converted, Continued or borrowed) for
the period from the date of such payment, prepayment, Conversion or
Continuation (or failure to Convert, Continue or borrow) to the last day of
the then current applicable Interest Period for the LIBOR Loan (or, in the
case of a failure to Convert, Continue or borrow, to the last day of the
applicable Interest Period for the LIBOR Loan which would have commenced on
the date specified therefor in the relevant notice) at the applicable rate of
interest for the LIBOR Loan provided for herein, over (2) the amount of
interest (as reasonably determined by such Bank) based upon the interest rate
which such Bank would have bid in the London interbank market for Dollar
deposits, for amounts comparable to such principal amount and maturities
comparable to such period.  A determination of any Bank as to the amounts
payable pursuant to this Section shall be conclusive absent manifest error.

          Section  3.06  Capital Adequacy.  If any Bank shall have determined
that, after the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such Governmental Authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on capital of such Bank (or its Parent) as a consequence of
such Bank's obligations hereunder to a level below that which such Bank (or
its Parent) could have achieved but for such adoption, change, request or
directive (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, then from time to
time, within fifteen (15) days after demand by such Bank (with a copy to
Administrative Agent), Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank (or its Parent) for such reduction.  A
certificate of any Bank claiming compensation under this Section, setting
forth in reasonable detail the basis therefor, shall be conclusive absent
manifest error.

          Section  3.07  Substitution of Banks.  If any Bank (an "Affected
Bank") (i) makes demand upon Borrower for (or if Borrower is otherwise
required to pay) Additional Costs pursuant to Section 3.01 or (ii) is unable
to make or maintain its Pro Rata Share of the Loan at the LIBOR Based Rate as
a result of a condition described in Section 3.03 or clause (2) of Section
3.02, Borrower may, within ninety (90) days of receipt of such demand or
notice (or the occurrence of such other event causing Borrower to be required
to pay Additional Costs or causing said

                                       23
   29
Section 3.03 or clause (2) of Section 3.02 to be applicable), as the case may
be, give written notice (a "Replacement Notice") to Administrative Agent and
to each Bank of Borrower's intention either (x) to prepay in full the Affected
Bank's Note and to terminate the Affected Bank's entire Loan Commitment or (y)
to replace the Affected Bank with another financial institution (the
"Replacement Bank") designated in such Replacement Notice.

          In the event Borrower opts to give the notice provided for in clause
(x) above, and if the Affected Bank shall not agree within thirty (30) days of
its receipt thereof to waive the payment of the Additional Costs in question
or the effect of the circumstances described in Section 3.03 or clause (2) of
Section 3.02, then, so long as no Default or Event of Default shall exist,
Borrower may (notwithstanding the provisions of clause (2) of Section 2.10(a))
terminate the Affected Bank's entire Loan Commitment, provided that in
connection therewith it pays to the Affected Bank all outstanding principal
and accrued and unpaid interest under the Affected Bank's Note, together with
all other amounts, if any, due from Borrower to the Affected Bank, including
all amounts properly demanded and unreimbursed under Section 3.01.

          In the event Borrower opts to give the notice provided for in clause
(y) above, and if (i) Administrative Agent shall, within thirty (30) days of
its receipt of the Replacement Notice, notify Borrower and each Bank in
writing that the Replacement Bank is reasonably satisfactory to Administrative
Agent and (ii) the Affected Bank shall not, prior to the end of such thirty
(30)-day period, agree to waive the payment of the Additional Costs in
question or the effect of the circumstances described in Section 3.03 or
clause (2) of Section 3.02, then the Affected Bank shall, so long as no
Default or Event of Default shall exist, assign its Note and all of its rights
and obligations under this Agreement to the Replacement Bank, and the
Replacement Bank shall assume all of the Affected Bank's rights and
obligations, pursuant to an agreement, substantially in the form of an
Assignment and Assumption Agreement, executed by the Affected Bank and the
Replacement Bank.  In connection with such assignment and assumption, the
Replacement Bank shall pay to the Affected Bank an amount equal to the
outstanding principal amount under the Affected Bank's Note plus all interest
accrued thereon, plus all other amounts, if any (other than the Additional
Costs in question), then due and payable to the Affected Bank; provided,
however, that prior to or simultaneously with any such assignment and
assumption, Borrower shall have paid to such Affected Bank all amounts
properly demanded and unreimbursed under Section 3.01.  Upon the effective
date of such assignment and assumption, the Replacement Bank shall become a
Bank Party to this Agreement and shall have all the rights and obligations of
a Bank as set forth in such Assignment and Assumption Agreement, and the
Affected Bank shall be released from its obligations hereunder, and no further
consent or action by any party shall be

                                       24
   30
required.  Upon the consummation of any assignment pursuant to this Section, a
substitute note shall be issued to the Replacement Bank by Borrower, in
exchange for the return of the Affected Bank's Note.  Such substitute note
shall constitute a "Note" and the obligations evidenced by such substitute
note shall constitute "Obligations" for all purposes of this Agreement and the
other Loan Documents.  If the Replacement Bank is not incorporated under the
laws of the United States of America or a state thereof, it shall, prior to
the first date on which interest or fees are payable hereunder for its
account, deliver to Borrower and Administrative Agent certification as to
exemption from deduction or withholding of any United States federal income
taxes in accordance with Section 10.13.  Each Replacement Bank shall be deemed
to have made the representations contained in, and shall be bound by the
provisions of, Section 10.13.

          Borrower, Administrative Agent and the Banks shall execute such
modifications to the Loan Documents as shall be reasonably required in
connection with and to effectuate the foregoing.

                       ARTICLE IV.  CONDITIONS PRECEDENT

          Section  4.01  Conditions Precedent to the Initial Advance.  The
obligations of the Banks hereunder and the obligation of each Bank to make the
Initial Advance are subject to the condition precedent that Administrative
Agent shall have received on or before the Closing Date (other than with
respect to paragraph (10) below which shall be required prior to the Initial
Advance) each of the following documents, and each of the following
requirements shall have been fulfilled:

          (1)  Fees and Expenses.  The payment of (A) the first instalment of
     the annual administration fee required by Section 2.07(c); (B) all fees
     and expenses incurred by Administrative Agent (including, without
     limitation, the reasonable fees and expenses of legal counsel) and (C)
     those fees specified in the Supplemental Fee Letter to be paid to
     Administrative Agent on or before the Closing Date;

          (2)  Note.  The Note for UBS, duly executed by Borrower;

          (3)  Financials of Borrower.  Audited VRT Consolidated Financial
     Statements as of and for the year ended December 31, 1993, acceptable to
     the Banks;

          (4)  Evidence of Formation of Borrower.  Certified (as of the
     Closing Date) copies of Borrower's declaration of trust and by-laws, with
     all amendments thereto, and a

                                       25
   31
     certificate of the Secretary of State of the jurisdiction of formation as
     to its good standing therein;

          (5)  Evidence of All Trust Action.  Certified (as of the Closing
     Date) copies of all documents evidencing the trust action taken by
     Borrower authorizing the execution, delivery and performance of the Loan
     Documents and each other document to be delivered by or on behalf of
     Borrower pursuant to this Agreement;

          (6)  Incumbency and Signature Certificate of Borrower.  A
     certificate (dated as of the Closing Date) of the secretary of Borrower
     certifying the names and true signatures of each person authorized to
     sign on behalf of Borrower;

          (7)  Solvency Certificate.  A Solvency Certificate, duly executed,
     from Borrower;

          (8)  Opinion of Counsel for Borrower.  A favorable opinion, dated
     the Closing Date, of Sullivan & Cromwell and Ballard Spahr Andrews &
     Ingersoll, counsel for Borrower, as to such matters as Administrative
     Agent may reasonably request;

          (9)  Authorization Letter.  The Authorization Letter, duly executed
     by Borrower;

          (10)  Request for Advance.  A request for an advance in accordance
     with Section 2.04;

          (11)  Certificate.  The following statements shall be true and
     Administrative Agent shall have received a certificate dated the Closing
     Date signed by a duly authorized signatory of Borrower stating, to the
     best of the certifying party's knowledge, the following:

               (a)  All representations and warranties contained in this
          Agreement and in each of the other Loan Documents are true and
          correct on and as of the Closing Date as though made on and as of
          such date, and

               (b)  No Default or Event of Default has occurred and is
          continuing, or could result from the transactions contemplated by
          this Agreement and the other Loan Documents; and

          (12)  Supplemental Fee Letter.  The Supplemental Fee Letter, duly
     executed by Borrower.

          Section  4.02  Conditions Precedent to Advances After the Initial
Advance.  The obligation of each Bank to make

                                       26
   32
advances of the Loans subsequent to the Initial Advance shall be subject to
satisfaction of the following conditions precedent:

          (1)  No Default or Event of Default shall have occurred and be
     continuing as of the date of the advance;

          (2)  Each of the representations and warranties contained in this
     Agreement and in each of the other Loan Documents (other than that in the
     last sentence of Section 5.13) shall be true and correct as of the date
     of the advance; and

          (3)  Administrative Agent shall have received a request for an
     advance in accordance with Section 2.04.

          Section  4.03  Deemed Representations.  Each request by Borrower
for, and acceptance by Borrower of, an advance of proceeds of the Loans shall
constitute a representation and warranty by Borrower that, as of both the date
of such request and the date of the advance (1) no Default or Event of Default
has occurred and is continuing, and (2) each representation or warranty
contained in this Agreement or the other Loan Documents (other than that in
the last sentence of Section 5.13) is true and correct.

                   ARTICLE V.  REPRESENTATIONS AND WARRANTIES

          Borrower represents and warrants to Administrative Agent and each
Bank as follows:

          Section  5.01  Due Organization.  Borrower is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its organization, has the power and authority to own its assets and to
transact the business in which it is now engaged, and, if applicable, is duly
qualified for the conduct of business and in good standing under the laws of
each other jurisdiction in which such qualification is required and where the
failure to be so qualified would have a material adverse affect on Borrower
and its Consolidated Businesses taken as a whole.

          Section  5.02  Power and Authority; No Conflicts; Compliance With
Laws.  The execution, delivery and performance of the obligations required to
be performed by Borrower of the Loan Documents does not and will not (a)
require the consent or approval of its shareholders or such consent or
approval has been obtained, (b) contravene either its declaration of trust or
by-laws, (c) violate any provision of, or require any filing, registration,
consent or approval under, any Law (including, without limitation, Regulation
U), order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to it, (d) result in a breach of or

                                       27
   33
constitute a default under or require any consent under any indenture or loan
or credit agreement or any other agreement, lease or instrument to which it
may be a party or by which it or its properties may be bound or affected
except for consents which have been obtained, (e) result in, or require, the
creation or imposition of any Lien, upon or with respect to any of its
properties now owned or hereafter acquired, or (f) cause it to be in default
under any such Law, order, writ, judgment, injunction, decree, determination
or award or any such indenture, agreement, lease or instrument; to the best of
its knowledge, Borrower is in compliance with all Laws applicable to it and
its properties where the failure to be in compliance would cause a Material
Adverse Change to occur.

          Section  5.03  Legally Enforceable Agreements.  Each Loan Document
is a legal, valid and binding obligation of Borrower, enforceable against
Borrower in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally.

          Section  5.04  Litigation.  Except as disclosed in Borrower's SEC
Reports existing as of the date hereof, there are no actions, suits or
proceedings pending or, to its knowledge, threatened against Borrower or any
of its Affiliates before any court or arbitrator or any Governmental Authority
reasonably likely to have a material effect on Borrower's ability to repay the
Loans.

          Section  5.05  Good Title to Properties.  Borrower and each of its
Affiliates have good, marketable and legal title to all of the properties and
assets each of them purports to own (including, without limitation, those
reflected in the December 31, 1993 financial statements referred to in Section
5.13) and, in the case of all of Borrower's shopping center properties, only
with exceptions which do not materially detract from the value of such
property or assets or the use thereof in Borrower's and such Affiliate's
business, and except to the extent that any such properties and assets have
been encumbered or disposed of since the date of such financial statements
without violating any of the covenants contained in Article VII or elsewhere
in this Agreement.  Borrower and its Material Affiliates enjoy peaceful and
undisturbed possession of all leased property necessary in any material
respect in the conduct of their respective businesses.  All such leases are
valid and subsisting and are in full force and effect.

          Section  5.06  Taxes.  Borrower has filed all tax returns (federal,
state and local) required to be filed and has paid all taxes, assessments and
governmental charges and levies due and payable without the imposition of a
penalty, including interest and penalties, except to the extent they are the
subject of a Good Faith Contest.

                                       28
   34

          Section  5.07  ERISA.  Borrower is in compliance in all material
respects with all applicable provisions of ERISA.  Neither a Reportable Event
nor a Prohibited Transaction has occurred with respect to any Plan; no notice
of intent to terminate a Plan has been filed nor has any Plan been terminated
within the past five (5) years; no circumstance exists which constitutes
grounds under Section 4042 of ERISA entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings; Borrower and the ERISA Affiliates
thereof have not completely or partially withdrawn under Sections 4201 or 4204
of ERISA from a Multiemployer Plan; Borrower and the ERISA Affiliates thereof
have met the minimum funding requirements of Section 412 of the Code and
Section 302 of ERISA of each with respect to the Plans of each and there is no
Unfunded Current Liability with respect to any Plan established or maintained
by each; and Borrower and the ERISA Affiliates thereof have not incurred any
liability to the PBGC under ERISA (other than for the payment of premiums
under Section 4007 of ERISA).  No part of the funds to be used by Borrower in
satisfaction of its obligations under this Agreement constitute "plan assets"
of any "employee benefit plan" within the meaning of ERISA or of any "plan"
within the meaning of Section 4975(e)(1) of the Code, as interpreted by the
Internal Revenue Service and the U.S. Department of Labor in rules,
regulations, releases, bulletins or as interpreted under applicable case law.

          Section  5.08  No Default on Outstanding Judgments or Orders.
Borrower has satisfied all judgments which are not being appealed and is not
in default with respect to any judgment, order, writ, injunction, decree, rule
or regulation of any court, arbitrator or federal, state, municipal or other
Governmental Authority, commission, board, bureau, agency or instrumentality,
domestic or foreign.

          Section  5.09  No Defaults on Other Agreements.  Except as disclosed
to the Bank Parties in writing or as disclosed in Borrower's SEC Reports,
Borrower, to the best of its knowledge, is not a party to any indenture, loan
or credit agreement or any lease or other agreement or instrument or subject
to any partnership, trust or other restriction which is likely to result in a
Material Adverse Change.  To the best of its knowledge, Borrower is not in
default in any respect in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument which is likely to result in a Material Adverse Change.

          Section  5.10  Government Regulation.  Borrower is not subject to
regulation under the Investment Company Act of 1940 or any statute or
regulation limiting any such Person's ability to incur indebtedness for money
borrowed as contemplated hereby.

                                       29
   35
          Section  5.11  Environmental Protection.  To Borrower's knowledge,
except as disclosed in Borrower's SEC Reports existing as of the date hereof,
none of Borrower's or its Affiliates' properties contains any Hazardous
Materials that, under any Environmental Law currently in effect, (1) would
impose liability on Borrower that is likely to result in a Material Adverse
Change, or (2) is likely to result in the imposition of a Lien on any assets
of Borrower or its Material Affiliates that is likely to result in a Material
Adverse Change.  To Borrower's knowledge, neither it nor any of its Material
Affiliates is in violation of, or subject to any existing, pending or
threatened investigation or proceeding by any Governmental Authority under any
Environmental Law that is likely to result in a Material Adverse Change.

          Section  5.12  Solvency.  Borrower is, and upon consummation of the
transactions contemplated by this Agreement, the other Loan Documents and any
other documents, instruments or agreements relating thereto, will be, Solvent.

          Section  5.13  Financial Statements.  The VRT Consolidated Financial
Statements most recently delivered to the Banks pursuant to the terms of this
Agreement are in all material respects complete and correct and fairly present
the financial condition of the subjects thereof as of the dates of and for the
periods covered by such statements, all in accordance with GAAP.  There has
been no Material Adverse Change since the date of such most recently delivered
VRT Consolidated Financial Statements.

          Section  5.14  Valid Existence of Affiliates.  Each Material
Affiliate is a corporation duly organized and existing in good standing under
the laws of the jurisdiction of its formation.  As to each Material Affiliate,
its correct name, the jurisdiction of its formation, Borrower's percentage of
beneficial interest therein, and the type of business in which it is primarily
engaged, are set forth on said EXHIBIT C.  Borrower and each of its Material
Affiliates have the power to own their respective properties and to carry on
their respective businesses now being conducted.  Each Material Affiliate is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the respective businesses
conducted by it or its respective properties, owned or held under lease, make
such qualification necessary and where the failure to be so qualified would
have the effect of a Material Adverse Change on Borrower and its Consolidated
Businesses taken as a whole.

          Section  5.15  Insurance.  Borrower and each of its Affiliates has
in force paid insurance with financially sound and reputable insurance
companies or associations in such amounts and covering such risks as are
usually carried by companies engaged in the same or a similar business and
similarly situated.

                                       30
   36
          Section  5.16  Accuracy of Information; Full Disclosure.  Neither
this Agreement nor any documents, financial statements, reports, notices,
schedules, certificates, statements or other writings furnished by or on
behalf of Borrower to Administrative Agent or any Bank in connection with the
negotiation of this Agreement or the consummation of the transactions
contemplated hereby, or required herein to be furnished by or on behalf of
Borrower (other than projections which are made by Borrower in good faith),
contains any untrue or misleading statement of a material fact or omits a
material fact necessary to make the statements herein or therein not
misleading.  There is no fact which Borrower has not disclosed to
Administrative Agent and the Banks in writing or which is not included in
Borrower's SEC Reports which materially affects adversely nor, so far as
Borrower can now foresee, will materially affect adversely the business or
financial condition of Borrower or the ability of Borrower to perform this
Agreement and the other Loan Documents.

                       ARTICLE VI.  AFFIRMATIVE COVENANTS

          So long as any of the Notes shall remain unpaid or the Loan
Commitments remain in effect, or any other amount is owing by Borrower to any
Bank hereunder or under any other Loan Document, Borrower shall:

          Section  6.01  Maintenance of Existence.  Preserve and maintain its
legal existence and, if applicable, good standing in the jurisdiction of
organization and, if applicable, qualify and remain qualified as a foreign
corporation in each jurisdiction in which such qualification is required,
except to the extent that failure to so qualify is not likely to result in a
Material Adverse Change.

          Section  6.02  Maintenance of Records.  Keep adequate records and
books of account, in which complete entries will be made in accordance with
GAAP, reflecting all of its financial transactions.

          Section  6.03  Maintenance of Insurance.  At all times, maintain and
keep in force, and cause each of its Material Affiliates to maintain and keep
in force, insurance with financially sound and reputable insurance companies
or associations in such amounts and covering such risks as are usually carried
by companies engaged in the same or a similar business and similarly situated,
which insurance may provide for reasonable deductibility from coverage
thereof.

          Section  6.04  Compliance with Laws; Payment of Taxes.  Comply in
all material respects with all Laws applicable to it or to any of its
properties or any part thereof, such compliance to include, without
limitation, paying before the same become

                                       31
   37
delinquent all taxes, assessments and governmental charges imposed upon it or
upon its property, except to the extent they are the subject of a Good Faith
Contest.

          Section  6.05  Right of Inspection.  At any reasonable time and from
time to time upon reasonable notice, permit Administrative Agent or any Bank
or any agent or representative thereof (provided that, at Borrower's request,
such Administrative Agent, Bank, agent or representative must be accompanied
by a representative of Borrower), to examine and make copies and abstracts
from the records and books of account of, and visit the properties of,
Borrower and to discuss the affairs, finances and accounts of Borrower with
the independent accountants of Borrower.

          Section  6.06  Compliance With Environmental Laws.  Comply in all
material respects with all applicable Environmental Laws and immediately pay
or cause to be paid all costs and expenses incurred in connection with such
compliance, except to the extent there is a Good Faith Contest.

          Section  6.07  Payment of Costs.  Pay all costs and expenses
required for the satisfaction of the conditions of this Agreement.

          Section  6.08  Maintenance of Properties.  Do all things reasonably
necessary to maintain, preserve, protect and keep its and its Affiliates'
properties in good repair, working order and condition.

          Section  6.09  Reporting and Miscellaneous Document Requirements.
Furnish directly to each of the Banks:

          (1)  Annual Financial Statements.  As soon as available and in any
event within ninety (90) days after the end of each Fiscal Year, the VRT
Consolidated Financial Statements as of the end of and for such Fiscal Year,
in reasonable detail and stating in comparative form the respective figures
for the corresponding date and period in the prior Fiscal Year and audited by
Borrower's Accountants;

          (2)  Quarterly Financial Statements.  As soon as available and in
any event within forty-five (45) days after the end of each calendar quarter
(other than the last quarter of the Fiscal Year), the unaudited VRT
Consolidated Financial Statements as of the end of and for such calendar
quarter, in reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the prior Fiscal Year;

          (3)  Certificate of No Default and Financial Compliance.  Within
fifty (50) days after the end of each of the first three quarters of each
Fiscal Year and within ninety-five (95) days after the end of each Fiscal
Year, a certificate of

                                       32
   38
Borrower's chief financial officer or treasurer (a) stating that, to the best
of his or her knowledge, no Default or Event of Default has occurred and is
continuing, or if a Default or Event of Default has occurred and is
continuing, specifying the nature thereof and the action which is proposed to
be taken with respect thereto; (b) stating that the covenants contained in
Section 6.10, Sections 7.02, 7.03 and 7.04 and in Article VIII have been
complied with (or specifying those that have not been complied with) and
including computations demonstrating such compliance (or non-compliance); (c)
setting forth the details of all items comprising Total Outstanding
Indebtedness (including amount, maturity, interest rate and amortization
requirements), Secured Indebtedness, Unencumbered Combined EBITDA, Interest
Expense and Unsecured Indebtedness; (d) containing a schedule of the
calculation, prepared by property, of Shopping Center EBITDA; and (e) only at
the end of each Fiscal Year stating Borrower's taxable income;

          (4)  Certificate of Borrower's Accountants.  Simultaneously with the
delivery of the annual financial statements required by paragraph (1) of this
Section, (a) a statement of Borrower's Accountants who audited such financial
statements comparing the computations set forth in the financial compliance
certificate required by paragraphs (3)(b) and (d) of this Section to the
audited financial statements required by paragraph (1) of this Section and (b)
when the audited financial statements required by paragraph (1) of this
Section have a qualified auditor's opinion, a statement of Borrower's
Accountants who audited such financial statements of whether any Default or
Event of Default has occurred and is continuing;

          (5)  Notice of Litigation.  Promptly after the commencement and
knowledge thereof, notice of all actions, suits, and proceedings before any
court or arbitrator, affecting Borrower which, if determined adversely to
Borrower is likely to result in a Material Adverse Change and which would be
required to be reported in Borrower's SEC Reports;

          (6)  Notices of Defaults and Events of Default.  As soon as possible
and in any event within ten (10) days after Borrower becomes aware of the
occurrence of a material Default or any Event of Default a written notice
setting forth the details of such Default or Event of Default and the action
which is proposed to be taken with respect thereto;

          (7)  Sales or Acquisitions of Assets.  Promptly after the occurrence
thereof, written notice of any Disposition or acquisition of assets (other
than acquisitions or Dispositions of investments such as certificates of
deposit, Treasury securities and money market deposits in the ordinary course
of Borrower's cash management) in excess of Twenty Five Million Dollars
($25,000,000) together with, in the case of any acquisition of such an asset,
copies of the agreements governing the acquisition

                                       33
   39
and historical financial information and Borrower's projections with respect
to the property acquired;

          (8)  Material Adverse Change.  As soon as is practicable and in any
event within five (5) days after knowledge of the occurrence of any event or
circumstance which is likely to result in or has resulted in a Material
Adverse Change and which would be required to be reported in Borrower's SEC
Reports, written notice thereof;

          (9)  Bankruptcy of Tenants.  Promptly after becoming aware of the
same, written notice of the bankruptcy, insolvency or cessation of operations
of any tenant in any property of Borrower or in which Borrower has an interest
to which four percent (4%) or more of aggregate minimum rent payable to
Borrower directly or through its Consolidated Businesses or UJVs is
attributable;

          (10)  Offices.  Thirty (30) days' prior written notice of any change
in the chief executive office or principal place of business of Borrower;

          (11)  Environmental and Other Notices.  As soon as possible and in
any event within thirty (30) days after receipt, copies of all Environmental
Notices received by Borrower which are not received in the ordinary course of
business and which relate to a previously undisclosed situation which is
likely to result in a Material Adverse Change;

          (12)  Insurance Coverage.  Promptly, such information concerning
Borrower's insurance coverage as Administrative Agent may reasonably request;

          (13)  Proxy Statements, Etc.  Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and reports
which Borrower or its Material Affiliates sends to its shareholders, and
copies of all regular, periodic and special reports, and all registration
statements which Borrower or its Material Affiliates files with the Securities
and Exchange Commission or any Governmental Authority which may be substituted
therefor, or with any national securities exchange;

          (14)  Rent Rolls.  As soon as available and in any event within
ninety (90) days after the end of each Fiscal Year, a rent roll, tenant sales
report and operating statement for each property directly or indirectly owned
in whole or in part by Borrower;

          (15)  Capital Expenditures.  As soon as available and in any event
within ninety (90) days after the end of each Fiscal Year, a schedule of such
Fiscal Year's capital expenditures and a budget for the next Fiscal Year's
planned capital expenditures

                                       34
   40
for each property directly or indirectly owned in whole or in part by
Borrower; and

          (16)  General Information.  Promptly, such other information
respecting the condition or operations, financial or otherwise, of Borrower or
any properties of Borrower as Administrative Agent may from time to time
reasonably request.

          Section  6.10  Shopping Center EBITDA.  If for any calendar quarter,
Shopping Center EBITDA is less than $2,812,500 for such quarter, then (a)
thereafter, until Shopping Center EBITDA is again greater than $2,812,500 for
a calendar quarter, the Loan Commitment shall be reduced to be an amount equal
to the quotient determined by dividing Shopping Center EBITDA from time to
time by three and three quarters percent (3-3/4%) and (b) if the outstanding
principal amount of the Loans exceeds the reduced amount of the Loan
Commitment calculated pursuant to (a) above, Borrower shall reduce the
outstanding principal amount of the Loans to such reduced Loan Commitment
amount within ten days after Administrative Agent's notice to Borrower to make
such principal reduction.

          Section  6.11  Management.  At all times, Borrower or its Affiliates
shall provide property management and leasing services for at least eighty
percent (80%) of the community shopping center properties then owned, directly
or indirectly, in whole or in part by Borrower.

                        ARTICLE VII.  NEGATIVE COVENANTS

          So long as any of the Notes shall remain unpaid, or the Loan
Commitments remain in effect, or any other amount is owing by Borrower to
Administrative Agent or any Bank hereunder or under any other Loan Document,
Borrower shall not do any or all of the following:

          Section  7.01  Mergers Etc.  Merge or consolidate with (except where
Borrower is the surviving entity), or sell, assign, lease or otherwise dispose
of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) (or
enter into any agreement to do any of the foregoing).

          Section  7.02  Investments.  Make any loan or advance to any Person
or purchase or otherwise acquire any capital stock, assets, obligations or
other securities of, make any capital contribution to, or otherwise invest in,
or acquire any interest in, any Person (any such transaction, an "Investment")
if such Investment constitutes the acquisition of a minority interest in a
Person (a "Minority Interest") and the amount of such Investment, together
with the value of all other Minority Interests acquired after the Closing Date
contributing to Equity

                                       35
   41
Value, would exceed fifteen percent (15%) of Total Market Capitalization.  A
fifty percent (50%) beneficial interest in a Person, in connection with which
the holder thereof exercises joint control over such Person with the holder(s)
of the other fifty percent (50%) beneficial interest, shall not constitute a
"Minority Interest" for purposes of this Section.

          Section  7.03  Sale of Assets.  Effect a Disposition of any of its
now owned or hereafter acquired assets (other than "margin stock" as defined
in Regulation U), including assets in which Borrower owns a beneficial
interest through its ownership of interests in joint ventures, aggregating
more than twenty five percent (25%) of Total Market Capitalization.

          Section  7.04  Encumbrance of Certain Assets.  At any time, effect a
Disposition of, mortgage, hypothecate or otherwise encumber to secure a Debt
(it being understood that, for purposes of this Section, an asset shall be
deemed "encumbered" if it is the subject of a pledge not to encumber) any of
the properties listed on EXHIBIT F hereof.

                       ARTICLE VIII.  FINANCIAL COVENANTS

          So long as any of the Notes shall remain unpaid, or the Loan
Commitments remain in effect, or any other amount is owing by Borrower to
Administrative Agent or any Bank under this Agreement or under any other Loan
Document, Borrower shall not permit or suffer:

          Section  8.01  Equity Value.  At any time, Equity Value to be less
than Five Hundred Million Dollars ($500,000,000); or

          Section  8.02  Relationship of Total Outstanding Indebtedness to
Equity Value.  At any time, Total Outstanding Indebtedness to exceed fifty
percent (50%) of Equity Value; or

          Section  8.03  Relationship of Secured Indebtedness to Equity Value.
At any time, Secured Indebtedness to exceed thirty five percent (35%) of
Equity Value; or

          Section  8.04  Relationship of Combined EBITDA to Interest Expense.
For any calendar quarter, the ratio of (1) Combined EBITDA to (2) Interest
Expense, each for such calendar quarter, to be less than 2.25 to 1.00; or

          Section  8.05  Relationship of Combined EBITDA to Total Outstanding
Indebtedness.  For any calendar quarter, the ratio (expressed as a percentage)
of (1) Combined EBITDA for such calendar quarter annualized, to (2) Total
Outstanding Indebtedness as of the end of such calendar quarter to be less
than fifteen percent (15%); or

                                       36
   42
          Section  8.06  Funds From Operations.  For any calendar quarter,
Funds From Operations for such calendar quarter to be less than Ten Million
Dollars ($10,000,000); or

          Section  8.07  Unsecured Debt Yield.  For any calendar quarter,
Unsecured Debt Yield for such calendar quarter to be less than ten percent
(10%); or

          Section  8.08  Relationship of Unencumbered Combined EBITDA to
Interest Expense on Unsecured Indebtedness.  For any calendar quarter, the
ratio of (1) Unencumbered Combined EBITDA to (2) that portion of Interest
Expense attributable to Unsecured Indebtedness, each for such calendar
quarter, to be less than 1.40 to 1.00.

                         ARTICLE IX.  EVENTS OF DEFAULT

          Section  9.01  Events of Default.  Any of the following events shall
be an "Event of Default":

          (1)  If Borrower shall:  fail to pay the principal of any Notes or
any payment required under Section 6.10 as and when due; or fail to pay
interest accruing on any Notes as and when due and such failure to pay shall
continue unremedied for five (5) days after the due date of such amount; or
fail to pay any fee or any other amount due under this Agreement or any other
Loan Document as and when due and such failure to pay shall continue
unremedied for two (2) days after notice by Administrative Agent of such
failure to pay; or

          (2)  If any representation or warranty made by Borrower in this
Agreement or in any other Loan Document or which is contained in any
certificate, document, opinion, financial or other statement furnished at any
time under or in connection with a Loan Document shall prove to have been
incorrect in any material respect on or as of the date made; or

          (3)  If Borrower shall fail (a) to perform or observe any term,
covenant or agreement contained in Section 6.11, Article VII or Article VIII;
or (b) to perform or observe any term, covenant or agreement contained in this
Agreement (other than obligations specifically referred to elsewhere in this
Section 9.01) and such failure shall remain unremedied for thirty (30)
consecutive calendar days after notice thereof; provided, however, that if any
such default under clause (b) above cannot by its nature be cured within such
thirty (30) day grace period and so long as Borrower shall have commenced cure
within such thirty (30) day grace period and shall, at all times thereafter,
diligently prosecute the same to completion, Borrower shall have an additional
period to cure such default; in no event, however, is the foregoing intended
to effect an extension of the Maturity Date; or

                                       37
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          (4)  If Borrower shall fail (a) to pay any Debt (other than the
payment obligations described in paragraph (1) of this Section) in an amount
equal to or greater than Ten Million Dollars ($10,000,000) when due (whether
by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) after the expiration of any applicable grace period, or (b) to
perform or observe any material term, covenant, or condition under any
agreement or instrument relating to any such Debt, when required to be
performed or observed, if the effect of such failure to perform or observe is
to accelerate, or to permit the acceleration of, after the giving of notice or
the lapse of time, or both (other than in cases where, in the judgment of the
Required Banks, meaningful discussions likely to result in (i) a waiver or
cure of the failure to perform or observe, or (ii) otherwise averting such
acceleration are in progress between Borrower and the obligee of such Debt),
the maturity of such Debt, or any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled or
otherwise required prepayment), prior to the stated maturity thereof; or

          (5)  If Borrower, or any Affiliate of Borrower (other than
Alexander's, Inc. and its subsidiaries) to which Fifty Million Dollars
($50,000,000) or more of Total Market Capitalization is attributable, shall:
(a) generally not, or be unable to, or shall admit in writing its inability
to, pay its debts as such debts become due; or (b) make an assignment for the
benefit of creditors, petition or apply to any tribunal for the appointment of
a custodian, receiver or trustee for it or a substantial part of its assets;
or (c) commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction, whether now or hereafter in effect; or (d) have had any
such petition or application filed or any such proceeding shall have been
commenced, against it, in which an adjudication or appointment is made or
order for relief is entered, or which petition, application or proceeding
remains undismissed or unstayed for a period of sixty (60) days or more; or
(e) be the subject of any proceeding under which all or a substantial part of
its assets may be subject to seizure, forfeiture or divestiture; or (f) by any
act or omission indicate its consent to, approval of or acquiescence in any
such petition, application or proceeding or order for relief or the
appointment of a custodian, receiver or trustee for all or any substantial
part of its property; or (g) suffer any such custodianship, receivership or
trusteeship for all or any substantial part of its property, to continue
undischarged for a period of sixty (60) days or more; or

          (6)  If one or more judgments, decrees or orders for the payment of
money in excess of Ten Million Dollars ($10,000,000) in the aggregate shall be
rendered against Borrower, and any such judgments, decrees or orders shall

                                       38
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continue unsatisfied and in effect for a period of thirty (30) consecutive
days without being vacated, discharged, satisfied or stayed or bonded pending
appeal; or

          (7)  If any of the following events shall occur or exist with
respect to Borrower, or any ERISA Affiliate of Borrower:  (a) any Prohibited
Transaction involving any Plan; (b) any Reportable Event with respect to any
Plan: (c) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan; (d) any event or
circumstance which might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any Plan, or the institution by the
PBGC of any such proceedings; or (e) complete or partial withdrawal under
Section 4201 or 4204 of ERISA from a Multiemployer Plan or the reorganization,
insolvency, or termination of any Multiemployer Plan; and in each case above,
if such event or conditions, if any, could in the opinion of any Bank subject
Borrower or any ERISA Affiliate of Borrower to any tax, penalty, or other
liability to a Plan, Multiemployer Plan, the PBGC or otherwise (or any
combination thereof) which in the aggregate exceeds or may exceed Fifty
Thousand Dollars ($50,000); or

          (8)  If at any time Borrower is not a qualified real estate
investment trust under Sections 856 through 860 of the Code or is not listed
on the New York Stock Exchange; or

          (9)  If at any time Borrower constitutes plan assets for ERISA
purposes (within the meaning of C.F.R. Section 2510.3-101).

          Section  9.02  Remedies.  If any Event of Default shall occur and be
continuing, Administrative Agent shall, upon request of the Required Banks, by
notice to Borrower, (1) declare the unpaid balance of the Notes, all interest
thereon, and all other amounts payable under this Agreement to be forthwith
due and payable, whereupon such balance, all such interest, and all such
amounts due under this Agreement shall become and be forthwith due and
payable, without presentment, demand, protest, or further notice of any kind,
all of which are hereby expressly waived by Borrower; and/or (2) exercise any
remedies provided in any of the Loan Documents or by law.

            ARTICLE X.  ADMINISTRATIVE AGENT; RELATIONS AMONG BANKS

          Section 10.01  Appointment, Powers and Immunities of Administrative
Agent.  Each Bank hereby irrevocably appoints and authorizes Administrative
Agent to act as its agent hereunder and under any other Loan Document with
such powers as are specifically delegated to Administrative Agent by the terms
of this Agreement and any other Loan Document, together with such other powers
as are reasonably incidental thereto.

                                       39
   45
Administrative Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and any other Loan Document or required
by law, and shall not by reason of this Agreement be a fiduciary or trustee
for any Bank except to the extent that Administrative Agent acts as an agent
with respect to the receipt or payment of funds.  Administrative Agent shall
not be responsible to the Banks for any recitals, statements, representations
or warranties made by Borrower or any officer, partner or official of Borrower
or any other Person contained in this Agreement or any other Loan Document, or
in any certificate or other document or instrument referred to or provided for
in, or received by any of them under, this Agreement or any other Loan
Document, or for the value, legality, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
any other document or instrument referred to or provided for herein or
therein, for the perfection or priority of any Lien securing the Obligations
or for any failure by Borrower to perform any of its obligations hereunder or
thereunder.  Administrative Agent may employ agents and attorneys-in-fact and
shall not be responsible, except as to money or securities received by it or
its authorized agents, for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.  Neither Administrative
Agent nor any of its directors, officers, employees or agents shall be liable
or responsible for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection herewith or
therewith, except for its or their own gross negligence or willful misconduct.
Borrower shall pay any fee agreed to by Borrower and Administrative Agent with
respect to Administrative Agent's services hereunder.

          Section 10.02  Reliance by Administrative Agent.  Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by
Administrative Agent.  Administrative Agent may deem and treat each Bank as
the holder of the Loan made by it for all purposes hereof and shall not be
required to deal with any Person who has acquired a participation in any Loan
or participation from a Bank.  As to any matters not expressly provided for by
this Agreement or any other Loan Document, Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder in
accordance with instructions signed by the Required Banks, and such
instructions of the Required Banks and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks and any other holder of
all or any portion of any Loan or participation.

                                       40
   46
          Section 10.03  Defaults.  Administrative Agent shall not be deemed
to have knowledge of the occurrence of a Default or Event of Default unless
Administrative Agent has received notice from a Bank or Borrower specifying
such Default or Event of Default and stating that such notice is a "Notice of
Default."  In the event that Administrative Agent receives such a notice of
the occurrence of a Default or Event of Default, Administrative Agent shall
give prompt notice thereof to the Banks.  Administrative Agent, following
consultation with the Banks, shall (subject to Section 10.07) take such action
with respect to such Default or Event of Default which is continuing as shall
be directed by the Required Banks; provided that, unless and until
Administrative Agent shall have received such directions, Administrative Agent
may take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Banks; and provided further that Administrative Agent shall not send a
notice of Default or acceleration to Borrower without the approval of the
Required Banks.  In no event shall Administrative Agent be required to take
any such action which it determines to be contrary to law.

          Section 10.04  Rights of Administrative Agent as a Bank.  With
respect to its Loan Commitment and the Loan provided by it, Administrative
Agent in its capacity as a Bank hereunder shall have the same rights and
powers hereunder as any other Bank and may exercise the same as though it were
not acting as Administrative Agent, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include Administrative Agent in its
capacity as a Bank.  Administrative Agent and its Affiliates may (without
having to account therefor to any Bank) accept deposits from, lend money to
(on a secured or unsecured basis), and generally engage in any kind of
banking, trust or other business with Borrower (and any Affiliates of
Borrower) as if it were not acting as Administrative Agent.

          Section 10.05  Indemnification of Administrative Agent.  Each Bank
agrees to indemnify Administrative Agent (to the extent not reimbursed under
Section 12.04 or under the applicable provisions of any other Loan Document,
but without limiting the obligations of Borrower under Section 12.04 or such
provisions), for its Pro Rata Share of any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against Administrative Agent in any way relating to or
arising out of this Agreement, any other Loan Document or any other documents
contemplated by or referred to herein or the transactions contemplated hereby
or thereby (including, without limitation, the costs and expenses which
Borrower is obligated to pay under Section 12.04) or under the applicable
provisions of any other Loan Document or the enforcement of any of the terms
hereof or thereof or of any such other documents or instruments; provided that
no Bank shall be

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liable for (1) any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified, (2) any loss
of principal or interest with respect to Administrative Agent's Loan or (3)
any loss suffered by Administrative Agent in connection with a swap or other
interest rate hedging arrangement entered into with Borrower.

          Section 10.06  Non-Reliance on Administrative Agent and Other Banks.
Each Bank agrees that it has, independently and without reliance on
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of
Borrower and the decision to enter into this Agreement and that it will,
independently and without reliance upon Administrative Agent or any other
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or any other Loan Document.  Administrative
Agent shall not be required to keep itself informed as to the performance or
observance by Borrower of this Agreement or any other Loan Document or any
other document referred to or provided for herein or therein or to inspect the
properties or books of Borrower.  Except for notices, reports and other
documents and information expressly required to be furnished to the Banks by
Administrative Agent hereunder, Administrative Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of Borrower (or any
Affiliate of Borrower) which may come into the possession of Administrative
Agent or any of its Affiliates.  Administrative Agent shall not be required to
file this Agreement, any other Loan Document or any document or instrument
referred to herein or therein, for record or give notice of this Agreement,
any other Loan Document or any document or instrument referred to herein or
therein, to anyone.

          Section 10.07  Failure of Administrative Agent to Act.  Except for
action expressly required of Administrative Agent hereunder, Administrative
Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have received further assurances (which may include
cash collateral) of the indemnification obligations of the Banks under Section
10.05 in respect of any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.

          Section 10.08  Resignation or Removal of Administrative Agent.
Administrative Agent hereby agrees not to unilaterally resign except in the
event it becomes an Affected Bank and is removed or replaced as a Bank
pursuant to Section 3.07, in which event it shall have the right to resign.
Administrative Agent may be removed at any time with or without cause by the
Required Banks, provided that Borrower and the other Banks shall be promptly
notified thereof.  Upon any such removal, the Required

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Banks shall have the right to appoint a successor Administrative Agent which
successor Administrative Agent, so long as it is reasonably acceptable to the
Required Banks, shall be that Bank then having the greatest Loan Commitment.
If no successor Administrative Agent shall have been so appointed by the
Required Banks and shall have accepted such appointment within thirty (30)
days after the Required Banks' removal of the retiring Administrative Agent,
then the retiring Administrative Agent may, on behalf of the Banks, appoint a
successor Administrative Agent, which shall be one of the Banks.  The Required
Banks or the retiring Administrative Agent, as the case may be, shall upon the
appointment of a successor Administrative Agent promptly so notify Borrower
and the other Banks.  Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent,
and the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder.  After any retiring Administrative Agent's removal
hereunder as Administrative Agent, the provisions of this Article X shall
continue in effect for its benefit in respect of any actions taken or omitted
to be taken by it while it was acting as Administrative Agent.

          Section 10.09  Amendments Concerning Agency Function.
Notwithstanding anything to the contrary contained in this Agreement,
Administrative Agent shall not be bound by any waiver, amendment, supplement
or modification of this Agreement or any other Loan Document which affects its
duties, rights, and/or function hereunder or thereunder unless it shall have
given its prior written consent thereto.

          Section 10.10  Liability of Administrative Agent.  Administrative
Agent shall not have any liabilities or responsibilities to Borrower on
account of the failure of any Bank to perform its obligations hereunder or to
any Bank on account of the failure of Borrower to perform its obligations
hereunder or under any other Loan Document.

          Section 10.11  Transfer of Agency Function.  Without the consent of
Borrower or any Bank, Administrative Agent may at any time or from time to
time transfer its functions as Administrative Agent hereunder to any of its
offices wherever located in the United States, provided that Administrative
Agent shall promptly notify Borrower and the Banks thereof.

          Section 10.12  Non-Receipt of Funds by Administrative Agent.  Unless
Administrative Agent shall have received notice from a Bank or Borrower
(either one as appropriate being the "Payor") prior to the date on which such
Bank is to make payment hereunder to Administrative Agent of the proceeds of a
Loan or Borrower is to make payment to Administrative Agent, as the case may
be (either such payment being a "Required Payment"), which

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notice shall be effective upon receipt, that the Payor will not make the
Required Payment in full to Administrative Agent, Administrative Agent may
assume that the Required Payment has been made in full to Administrative Agent
on such date, and Administrative Agent in its sole discretion may, but shall
not be obligated to, in reliance upon such assumption, make the amount thereof
available to the intended recipient on such date.  If and to the extent the
Payor shall not have in fact so made the Required Payment in full to
Administrative Agent, the recipient of such payment shall repay to
Administrative Agent forthwith on demand such amount made available to it
together with interest thereon, for each day from the date such amount was so
made available by Administrative Agent until the date Administrative Agent
recovers such amount, at the customary rate set by Administrative Agent for
the correction of errors among Banks for three (3) Banking Days and thereafter
at the Base Rate.

          Section 10.13  Withholding Taxes.  Each Bank represents at all times
during the term of this Agreement that it is entitled to receive any payments
to be made to it hereunder without the withholding of any tax and will furnish
to Administrative Agent and Borrower such forms, certifications, statements
and other documents as Administrative Agent or Borrower may request from time
to time to evidence such Bank's exemption from the withholding of any tax
imposed by any jurisdiction or to enable Administrative Agent or Borrower to
comply with any applicable Laws or regulations relating thereto.  Without
limiting the effect of the foregoing, if any Bank is not created or organized
under the laws of the United States of America or any state thereof, such Bank
will furnish to Administrative Agent and Borrower a United States Internal
Revenue Service Form 4224 in respect of all payments to be made to such Bank
by Borrower or Administrative Agent under this Agreement or any other Loan
Document or a United States Internal Revenue Service Form 1001 establishing
such Bank's complete exemption from United States withholding tax in respect
of payments to be made to such Bank by Borrower or Administrative Agent under
this Agreement or any other Loan Document, or such other forms,
certifications, statements or documents, duly executed and completed by such
Bank as evidence of such Bank's exemption from the withholding of U.S. tax
with respect thereto.  Administrative Agent shall not be obligated to make any
payments hereunder to such Bank in respect of any Loan or participation or
such Bank's Loan Commitment or obligation to purchase participations until
such Bank shall have furnished to Administrative Agent and Borrower the
requested form, certification, statement or document.

          Section 10.14  Minimum Commitment by UBS.  Subsequent to the Closing
Date, UBS hereby agrees to maintain a Loan Commitment in an amount no less
than 40% of the Total Loan Commitment, as the same may be decreased from time
to time in accordance with the provisions of this Agreement, and further

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agrees to hold and not to participate or assign any of such amount other than
an assignment to a Federal Reserve Bank or to the Parent or a majority-owned
subsidiary of UBS.

          Section 10.15  Pro Rata Treatment.  Except to the extent otherwise
provided, (1) each advance of proceeds of the Loans shall be made by the
Banks, (2) each reduction of the amount of the Total Loan Commitment under
Section 2.10 shall be applied to the Loan Commitments of the Banks, and (3)
each payment of the commitment fee accruing under Section 2.07(b) shall be
made for the account of the Banks, ratably according to the amounts of their
respective Loan Commitments.

          Section 10.16  Sharing of Payments Among Banks.  If a Bank shall
obtain payment of any principal of or interest on any Loan made by it through
the exercise of any right of setoff, banker's lien, counterclaim, or by any
other means (including direct payment), and such payment results in such Bank
receiving a greater payment than it would have been entitled to had such
payment been paid directly to Administrative Agent for disbursement to the
Banks, then such Bank shall promptly purchase for cash from the other Banks
participations in the Loans made by the other Banks in such amounts, and make
such other adjustments from time to time as shall be equitable to the end that
all the Banks shall share ratably the benefit of such payment.  To such end
the Banks shall make appropriate adjustments among themselves (by the resale
of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored.  Borrower agrees that any Bank so purchasing a
participation in the Loans made by other Banks may exercise all rights of
setoff, banker's lien, counterclaim or similar rights with respect to such
participation.  Nothing contained herein shall require any Bank to exercise
any such right or shall affect the right of any Bank to exercise, and retain
the benefits of exercising, any such right with respect to any other
indebtedness of Borrower.

          Section 10.17  Possession of Documents.  Each Bank shall keep
possession of its own Note.  Administrative Agent shall hold all the other
Loan Documents and related documents in its possession and maintain separate
records and accounts with respect thereto, and shall permit the Banks and
their representatives access at all reasonable times to inspect such Loan
Documents, related documents, records and accounts.

                       ARTICLE XI.  NATURE OF OBLIGATIONS

          Section 11.01  Absolute and Unconditional Obligations.  Borrower
acknowledges and agrees that its obligations and liabilities under this
Agreement and under the other Loan Documents shall be absolute and
unconditional irrespective of: (1) any lack of validity or enforceability of
any of the Obligations, any Loan Documents, or any agreement or instrument

                                       45
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relating thereto; (2) any change in the time, manner or place of payment of,
or in any other term in respect of, all or any of the Obligations, or any
other amendment or waiver of or consent to any departure from any Loan
Documents or any other documents or instruments executed in connection with or
related to the Obligations; (3) any exchange or release of any collateral, if
any, or of any other Person from all or any of the Obligations; or (4) any
other circumstances which might otherwise constitute a defense available to,
or a discharge of, Borrower or any other Person in respect of the Obligations.

          The obligations and liabilities of Borrower under this Agreement and
other Loan Documents shall not be conditioned or contingent upon the pursuit
by any Bank or any other Person at any time of any right or remedy against
Borrower or any other Person which may be or become liable in respect of all
or any part of the Obligations or against any collateral or security or
guarantee therefor or right of setoff with respect thereto.

          Section 11.02  Non-Recourse to VRT Principals.  Notwithstanding
anything to the contrary contained in this Agreement, in any of the other Loan
Documents, or in any other instruments, certificates, documents or agreements
executed in connection with the Loans (all of the foregoing, for purposes of
this Section, hereinafter referred to, individually and collectively, as the
"Relevant Documents"), no recourse under or upon any Obligation,
representation, warranty, promise or other matter whatsoever shall be had
against any of the VRT Principals and each Bank expressly waives and releases,
on behalf of itself and its successors and assigns, all right to assert any
liability whatsoever under or with respect to the Relevant Documents against,
or to satisfy any claim or obligation arising thereunder against, any of the
VRT Principals or out of any assets of the VRT Principals, provided, however,
that nothing in this Section shall be deemed to: (1) release Borrower from any
personal liability pursuant to, or from any of its respective obligations
under, the Relevant Documents, or from personal liability for its fraudulent
actions or fraudulent omissions; (2) release any VRT Principals from personal
liability for its or his own fraudulent actions or fraudulent omissions; (3)
constitute a waiver of any obligation evidenced or secured by, or contained
in, the Relevant Documents or affect in any way the validity or enforceability
of the Relevant Documents; or (4) limit the right of Administrative Agent
and/or the Banks to proceed against or realize upon any collateral hereafter
given for the Loans or any and all of the assets of Borrower (notwithstanding
the fact that the VRT Principals have an ownership interest in Borrower and,
thereby, an interest in the assets of Borrower) or to name Borrower (or, to
the extent that the same are required by applicable law or are determined by a
court to be necessary parties in connection with an action or suit against
Borrower or any collateral hereafter given for the Loans, any of the VRT
Principals) as a party defendant in, and to enforce against any collateral
hereafter

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given for the Loans and/or assets of Borrower any judgment obtained by
Administrative Agent and/or the Banks with respect to, any action or suit
under the Relevant Documents so long as no judgment shall be taken (except to
the extent taking a judgment is required by applicable law or determined by a
court to be necessary to preserve Administrative Agent's and/or Banks' rights
against any collateral hereafter given for the Loans or Borrower, but not
otherwise) or shall be enforced against the VRT Principals or their assets.

                          ARTICLE XII.  MISCELLANEOUS

          Section 12.01  Binding Effect of Request for Advance.  Borrower
agrees that, by its acceptance of any advance of proceeds of the Loans under
this Agreement, it shall be bound in all respects by the request for advance
submitted on its behalf in connection therewith with the same force and effect
as if Borrower had itself executed and submitted the request for advance and
whether or not the request for advance is executed and/or submitted by an
authorized person.

          Section 12.02  Amendments and Waivers.  No amendment or material
waiver of any provision of this Agreement or any other Loan Document nor
consent to any material departure by Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Required Banks
and, solely for purposes of its acknowledgment thereof, Administrative Agent,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given, provided, however, that
no amendment, waiver or consent shall, unless in writing and signed by all the
Banks do any of the following:  (1)  reduce the principal of, or interest on,
the Notes or any fees due hereunder or any other amount due hereunder or under
any Loan Document; (2) postpone any date fixed for any payment of principal
of, or interest on, the Notes or any fees due hereunder or under any Loan
Document, or waive any default in the payment of principal, interest or any
other amount due hereunder or under any Loan Documents; (3) change the
definition of Required Banks; (4) amend this Section or any other provision
requiring the consent of all the Banks; or (5) waive any default under
paragraph (5) of Section 9.01.  Any advance of proceeds of the Loans made
prior to or without the fulfillment by Borrower of all of the conditions
precedent thereto, whether or not known to Administrative Agent and the Banks,
shall not constitute a waiver of the requirement that all conditions,
including the non-performed conditions, shall be required with respect to all
future advances.  No failure on the part of Administrative Agent or any Bank
to exercise, and no delay in exercising, any right hereunder shall operate as
a waiver thereof or preclude any other or further exercise thereof or the
exercise of any other right.  The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.

                                       47
   53

          Section 12.03  Usury.  Anything herein to the contrary
notwithstanding, the obligations of Borrower under this Agreement and the
Notes shall be subject to the limitation that payments of interest shall not
be required to the extent that receipt thereof would be contrary to provisions
of law applicable to a Bank limiting rates of interest which may be charged or
collected by such Bank.

          Section 12.04  Expenses; Indemnification.   Borrower agrees to
reimburse Administrative Agent on demand for all costs, expenses, and charges
(including, without limitation, all reasonable fees and charges of engineers,
appraisers and external legal counsel) incurred by Administrative Agent in
connection with the Loans and to reimburse each of the Banks for reasonable
legal costs, expenses and charges incurred by each of the Banks in connection
with the performance or enforcement of this Agreement, the Notes, or any other
Loan Documents; provided, however, that Borrower is not responsible for costs,
expenses and charges incurred by the Bank Parties in connection with the
administration or syndication of the Loans (other than the administration fee
required by Section 2.07(c)).  Borrower agrees to indemnify Administrative
Agent and each Bank and their respective directors, officers, employees and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses incurred by any of them arising out
of or by reason of (x) any claims by brokers due to acts or omissions by
Borrower, or (y) any investigation or litigation or other proceedings
(including any threatened investigation or litigation or other proceedings)
relating to any actual or proposed use by Borrower of the proceeds of the
Loans, including without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities, claims, damages
or expenses incurred by reason of the gross negligence or willful misconduct
of the Person to be indemnified).

          The obligations of Borrower under this Section shall survive the
repayment of all amounts due under or in connection with any of the Loan
Documents and the termination of the Loans.

          Section 12.05  Assignment; Participation.  This Agreement shall be
binding upon, and shall inure to the benefit of, Borrower, Administrative
Agent, the Banks and their respective successors and permitted assigns.
Borrower may not assign or transfer its rights or obligations hereunder.

          Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Loan (the
"Participations").  In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not Borrower or
Administrative Agent was given notice, such Bank shall remain responsible for
the performance of its

                                       48
   54
obligations hereunder, and Borrower and Administrative Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations hereunder.  Any agreement pursuant to which any Bank may grant
such a participating interest shall provide that such Bank shall retain the
sole right and responsibility to enforce the obligations of Borrower hereunder
and under any other Loan Document including, without limitation, the right to
approve any amendment, modification or waiver of any provision of this
Agreement or any other Loan Document; provided that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement described in Section 12.02 without the
consent of the Participant.

          Subject to the provisions of Section 10.14, any Bank having a Loan
Commitment in an amount of Fifteen Million Dollars ($15,000,000) or more may
at any time assign to any bank or other institution with the acknowledgment of
Administrative Agent and the consent of Borrower and UBS, which consent shall
not be unreasonably withheld or delayed (such assignee, a "Consented
Assignee"), or to one or more banks or other institutions which are majority
owned subsidiaries of a Bank or to the Parent of a Bank (each Consented
Assignee or subsidiary bank or institution, an "Assignee") all, or a
proportionate part of all, of its rights and obligations under this Agreement
and its Note, and such Assignee shall assume rights and obligations, pursuant
to an Assignment and Assumption Agreement executed by such Assignee and the
Bank, provided that, in each case, after giving effect to such assignment each
Bank's and each Assignee's portion of the Loan will be equal to or greater
than Five Million Dollars ($5,000,000).  Upon execution and delivery of such
instrument and payment by such Assignee to the Bank of an amount equal to the
purchase price agreed between the Bank and such Assignee, such Assignee shall
be a Bank Party to this Agreement and shall have all the rights and
obligations of a Bank as set forth in such Assignment and Assumption
Agreement, and the Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required.  Upon the consummation of any assignment pursuant to this paragraph,
substitute notes shall be issued to the assigning Bank and Assignee by
Borrower, in exchange for the return of the original Note.  All such
substitute notes shall constitute "Notes" and the obligations evidenced by
such substitute notes shall constitute "Obligations" for all purposes of this
Agreement and the other Loan Documents.  If the Assignee is not incorporated
under the laws of the United States of America or a state thereof, it shall,
prior to the first date on which interest or fees are payable hereunder for
its account, deliver to Borrower and Administrative Agent certification as to
exemption from deduction or withholding of any United States federal income
taxes in accordance with Section 10.13.  Each Assignee shall be deemed to have
made the representations

                                       49
   55
contained in, and shall be bound by the provisions of, Section 10.13.

          Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank.  No such
assignment shall release the transferor Bank from its obligations hereunder.

          Borrower recognizes that in connection with a Bank's selling of
Participations or making of assignments, any or all documentation, financial
statements, appraisals and other data, or copies thereof, relevant to Borrower
or the Loans may be exhibited to and retained by any such Participant or
assignee or prospective Participant or assignee.  In connection with a Bank's
delivery of any financial statements and appraisals to any such Participant or
assignee or prospective Participant or assignee, such Bank shall also indicate
that the same are delivered on a confidential basis.  Borrower agrees to
provide all assistance reasonably requested by a Bank to enable such Bank to
sell Participations or make assignments of its Loan as permitted by this
Section.  Each Bank agrees to provide Borrower with notice of all
Participations sold by such Bank.

          Section 12.06  Documentation Satisfactory.  All documentation
required from or to be submitted on behalf of Borrower in connection with this
Agreement and the documents relating hereto shall be subject to the prior
approval of, and be satisfactory in form and substance to, Administrative
Agent, its counsel and, where specifically provided herein, the Banks.  In
addition, the persons or parties responsible for the execution and delivery
of, and signatories to, all of such documentation, shall be acceptable to, and
subject to the approval of, Administrative Agent and its counsel and the
Banks.

          Section 12.07  Notices.  Unless the party to be notified otherwise
notifies the other party in writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be given to Administrative
Agent by telephone, confirmed by writing, and to the Banks and to Borrower by
ordinary mail or overnight courier or telecopy, receipt confirmed, addressed
to such party at its address on the signature page of this Agreement.  Notices
shall be effective:  (1) if by telephone, at the time of such telephone
conversation, (2) if given by mail, three (3) days after mailing; (3) if given
by overnight courier, upon receipt; and (4) if given by telecopy, upon
receipt.

          Section 12.08  Setoff.  To the extent permitted or not expressly
prohibited by applicable law, Borrower agrees that, in addition to (and
without limitation of) any right of setoff, bankers' lien or counterclaim a
Bank may otherwise have, each Bank shall be entitled, at its option, to offset
balances (general or special, time or demand, provisional or final) held

                                       50
   56
by it for the account of Borrower at any of such Bank's offices, in Dollars or
in any other currency, against any amount payable by Borrower to such Bank
under this Agreement or such Bank's Note, or any other Loan Document which is
not paid when due (regardless of whether such balances are then due to
Borrower), in which case it shall promptly notify Borrower and Administrative
Agent thereof; provided that such Bank's failure to give such notice shall not
affect the validity thereof.  Payments by Borrower hereunder or under the
other Loan Documents shall be made without setoff or counterclaim.

          Section 12.09  Table of Contents; Headings.  Any table of contents
and the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.

          Section 12.10  Severability.  The provisions of this Agreement are
intended to be severable.  If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such invalidity or unenforceability without in any manner
affecting the validity or enforceability thereof in any other jurisdiction or
the remaining provisions hereof in any jurisdiction.

          Section 12.11  Counterparts.  This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any party hereto may execute this Agreement by
signing any such counterpart.

          Section 12.12  Integration.  The Loan Documents and Supplemental Fee
Letter set forth the entire agreement among the parties hereto relating to the
transactions contemplated thereby and supersede any prior oral or written
statements or agreements with respect to such transactions.

          Section 12.13  Governing Law.  This Agreement shall be governed by,
and interpreted and construed in accordance with, the laws of the State of New
York.

          Section 12.14  Waivers.  To the extent permitted or not expressly
prohibited by applicable law, in connection with the obligations and
liabilities as aforesaid, Borrower hereby waives:  (1) promptness and
diligence; (2) notice of any actions taken by any Bank Party under this
Agreement, any other Loan Document or any other agreement or instrument
relating thereto except to the extent otherwise provided herein; (3) all other
notices, demands and protests, and all other formalities of every kind in
connection with the enforcement of the Obligations, the omission of or delay
in which, but for the provisions of this Section, might constitute grounds for
relieving Borrower of its

                                       51
   57
obligations hereunder; (4) any requirement that any Bank Party protect,
secure, perfect or insure any Lien on any collateral or exhaust any right or
take any action against Borrower or any other Person or any collateral; (5)
any right or claim of right to cause a marshalling of the assets of Borrower;
and (6) all rights of subrogation or contribution, whether arising by contract
or operation of law (including, without limitation, any such right arising
under the Federal Bankruptcy Code) or otherwise by reason of payment by
Borrower, either jointly or severally, pursuant to this Agreement or other
Loan Documents.

          Section 12.15  Jurisdiction; Immunities.  Borrower, Administrative
Agent and each Bank hereby irrevocably submit to the jurisdiction of any New
York State or United States Federal court sitting in New York City over any
action or proceeding arising out of or relating to this Agreement, the Notes
or any other Loan Document.  Borrower, Administrative Agent, and each Bank
irrevocably agree that all claims in respect of such action or proceeding may
be heard and determined in such New York State or United States Federal court.
Borrower, Administrative Agent, and each Bank irrevocably consent to the
service of any and all process in any such action or proceeding by the mailing
of copies of such process to Borrower, Administrative Agent or each Bank, as
the case may be, at the addresses specified herein.  Borrower, Administrative
Agent and each Bank agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.  Borrower,
Administrative Agent and each Bank further waive any objection to venue in the
State of New York and any objection to an action or proceeding in the State of
New York on the basis of forum non conveniens.  Borrower, Administrative Agent
and each Bank agree that any action or proceeding brought against Borrower,
Administrative Agent or any Bank, as the case may be, shall be brought only in
a New York State court sitting in New York City or a United States Federal
court sitting in New York City, to the extent permitted or not expressly
prohibited by applicable law.

          Nothing in this Section shall affect the right of Borrower,
Administrative Agent or any Bank to serve legal process in any other manner
permitted by law.

          To the extent that Borrower, Administrative Agent or any Bank have
or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether from service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, Borrower, Administrative Agent and each Bank hereby
irrevocably waive such immunity in respect of its obligations under this
Agreement, the Notes and any other Loan Document.

                                       52
   58
          BORROWER, ADMINISTRATIVE AGENT AND EACH BANK WAIVE ANY RIGHT EACH
SUCH PARTY MAY HAVE TO JURY TRIAL IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING BROUGHT WITH RESPECT TO THIS AGREEMENT, THE NOTES OR THE LOAN.  IN
ADDITION, BORROWER HEREBY WAIVES, IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS WITH RESPECT TO THE
NOTES, ANY RIGHT BORROWER MAY HAVE TO (1) TO THE EXTENT PERMITTED OR NOT
EXPRESSLY PROHIBITED BY APPLICABLE LAW, INTERPOSE ANY COUNTERCLAIM THEREIN
(OTHER THAN A COUNTERCLAIM THAT IF NOT BROUGHT IN THE SUIT, ACTION OR
PROCEEDING BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS COULD NOT BE BROUGHT
IN A SEPARATE SUIT, ACTION OR PROCEEDING OR WOULD BE SUBJECT TO DISMISSAL OR
SIMILAR DISPOSITION FOR FAILURE TO HAVE BEEN ASSERTED IN SUCH SUIT, ACTION OR
PROCEEDING BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS) OR (2) TO THE EXTENT
PERMITTED OR NOT EXPRESSLY PROHIBITED BY APPLICABLE LAW, HAVE THE SAME
CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR PROCEEDING.  NOTHING
HEREIN CONTAINED SHALL PREVENT OR PROHIBIT BORROWER FROM INSTITUTING OR
MAINTAINING A SEPARATE ACTION AGAINST ADMINISTRATIVE AGENT OR THE BANKS WITH
RESPECT TO ANY ASSERTED CLAIM.

                                       53
   59
          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.

                        VORNADO REALTY TRUST, a
                        Maryland real estate
                        investment trust

                        By:   /s/ J. Macnow
                           ----------------------
                            Name:  J. Macnow
                            Title: Vice President and Chief
                                    Financial Officer

                        Address for Notices:

                        Park 80 West
                        Plaza II
                        Saddle Brook, New Jersey 07663

                        Attention:  Steven Roth, Chairman
                                           and
                                    Joseph Macnow, Vice President and Chief
                                    Financial Officer

                        Telephone:  (201) 587-1000
                        Telecopy:   (201) 587-0600

                        with copies to:

                        Sullivan & Cromwell
                        125 Broad Street
                        New York, New York 10004

                        Attention:  Patricia A. Ceruzzi
                                          and
                                    Janet Goldzahler

                        Telephone:  (212) 558-4000
                        Telecopy:   (212) 558-3588

                                       54
   60
                                UNION BANK OF SWITZERLAND
                                (New York Branch)
                                (as Bank and Administrative Agent)

                                By:  /s/  Albert Rabil, III
                                    -----------------------------
                                   Name:  Albert Rabil, III
                                   Title: Vice President

                                By:  /s/  Joseph Bassil
                                    -----------------------------
                                   Name:  Joseph Bassil
                                   Title: Assistant Vice President

                                Address for Notices and Applicable 
                                Lending Office for Base Rate Loan 
                                and LIBOR Loan:

                                299 Park Avenue
                                38th Floor
                                New York, New York 10171-0026

                                Attention:     Albert Rabil, III and Mara Martez

                                Telephone:  (212) 821-3872
                                Telecopy:   (212) 821-3943

                                with copies to:                 

                                Dewey Ballantine
                                1301 Avenue of the Americas
                                New York, New York 10019

                                Attention:  George C. Weiss

                                Telephone:  (212) 259-7320
                                Telecopy:   (212) 259-6333

                                       55
   61
                                   EXHIBIT B

                                      NOTE

$___________                                                New York, New York
                                                            __________, 199_

          For value received, Vornado Realty Trust, a Maryland real estate
investment trust ("Borrower"), hereby promises to pay to the order of
___________ or its successors or assigns (collectively, the "Bank"), at the
principal office of Union Bank of Switzerland (New York Branch) located at 299
Park Avenue, New York, New York 10171 (the "Administrative Agent") for the
account of the Applicable Lending Office at the Bank, the principal sum of
________ Dollars ($____________), or if less, the amount loaned by the Bank to
Borrower pursuant to the Loan Agreement (as defined below) and actually
outstanding, in lawful money of the United States and in immediately available
funds, in accordance with the terms set forth in the Loan Agreement.  Borrower
also promises to pay interest on the unpaid principal balance hereof, for the
period such balance is outstanding, in like money, at said office for the
account of said Applicable Lending Office, at the time and at a rate per annum
as provided in the Loan Agreement.  Any amount of principal hereof which is
not paid when due, whether at stated maturity, by acceleration, or otherwise,
shall bear interest from the date when due until said principal amount is paid
in full, payable on demand, at the rate set forth in the Loan Agreement.

          The date and amount of each advance of the Loan made by the Bank to
Borrower under the Loan Agreement referred to below, and each payment of the
Loan, shall be recorded by the Bank on its books and, prior to any transfer of
this Note (or, at the discretion of the Bank, at any other time), endorsed by
the Bank on the schedule attached hereto and any continuation thereof.

          This Note is one of the Notes referred to in the Revolving Loan
Agreement dated as of February 27, 1995 (as the same may be amended from time
to time, the "Loan Agreement") among Borrower, the Banks named therein
(including the Bank) and Administrative Agent, as administrative agent for the
Banks.  All of the terms, conditions and provisions of the Loan Agreement are
hereby incorporated by reference.  All capitalized terms used herein and not
defined herein shall have the meanings given to them in the Loan Agreement.
   62
          The Loan Agreement contains, among other things, provisions for the
prepayment of and acceleration of this Note upon the happening of certain
stated events.

          No recourse shall be had under this Note against the VRT Principals
except as and to the extent set forth in Section 11.02 of the Loan Agreement.

          All parties to this Note, whether principal, surety, guarantor or
endorser, hereby waive presentment for payment, demand, protest, notice of
protest and notice of dishonor.

          This Note shall be governed by the laws of the State of New York,
provided that, as to the maximum lawful rate of interest which may be charged
or collected, if the laws applicable to the Bank permit it to charge or
collect a higher rate than the laws of the State of New York, then such law
applicable to the Bank shall apply to the Bank under this Note.

                              VORNADO REALTY TRUST,
                                a Maryland real estate
                                investment trust

                              By____________________________
                                   an authorized signatory

                                       2
   63

             Amount          Amount         Balance
 Date      of Advance      of Payment     Outstanding   Notation By
 ----      ----------      ----------     -----------   -----------

   1

                                   EXHIBIT 11

                              VORNADO REALTY TRUST

                 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS

                                        Year Ended                  Year Ended            Year Ended
                                       December 31,                December 31,          December 31,
                                           1994                       1993                   1992
                                      ---------------           ---------------        -------------
                                                                               
Weighted average number of                             
 shares outstanding                      21,619,312                19,457,485            15,296,978
                                                       
Common share equivalents for                           
 options after applying treasury                       
 stock method                               234,408                   332,963             1,262,351
                                         ----------                ----------            ----------
                                                       
Weighted average number of shares                      
 and common stock equivalents                          
 outstanding                             21,853,720                19,790,448            16,559,329
                                         ==========                ==========            ==========

Income from continuing operation        $41,240,000               $31,755,000            $1,183,000
                                                       
(Loss) from discontinued operation                -                  (600,000)                    -
Extraordinary item - (loss) on early                   
  extinguishment of debt                          -                (3,202,000)                    -
                                        -----------               -----------            ----------
                                                       
Net income                              $41,240,000               $27,953,000            $1,183,000
                                        ===========               ===========            ==========
                                                       
Net income (loss) per share:                           
   Continuing operations                    $1.89                    $1.60                  $ .07
   Discontinued operation                       -                     (.03)                     -
   Extraordinary item                           -                     (.16)                     - 
                                            -----                    -----                  -----
                                            $1.89                    $1.41                  $ .07
                                            =====                    =====                  =====

   1
                                   EXHIBIT 21

                                                         STATE OF        PERCENTAGE
            NAME OF SUBSIDIARY                         ORGANIZATION     OF OWNERSHIP
- ---------------------------------------                ------------     ------------
                                                                    
    14th Street Acquisition Corporation                 New York          100%
    Amherst Holding Corporation                         New York          100%
    Amherst Industries, Inc.                            New York          100%
    Atlantic City Holding Corporation                   New Jersey        100%
    Bensalem Holding Company                            Pennsylvania      100%
    Bethlehem Holding Company                           Pennsylvania      100%
    Bordentown Holding Corporation                      New Jersey        100%
    Brentwood Development Corp.                         New York          100%
    Bridgeland Warehouses, Inc.                         New Jersey        100%
    Camden Holding Corporation                          New Jersey        100%
    Chicopee Holding Corporation                        Massachusetts     100%
    Clementon Holding Corporation                       New Jersey        100%
    Cross Avenue Broadway Corporation                   New York          100%
    Cumberland Holding Corporation                      New Jersey        100%
    Dallas Skillman Abrams Crossing Corporation         Texas             100%
    Delran Holding Corporation                          New Jersey        100%
    Dover Holding Corporation                           New Jersey        100%
    Dundalk Stores Corporation                          Maryland          100%
    Durham Leasing Corp.                                New Jersey        100%
    Eudowood Holding Corporation                        Maryland          100%
    Evesham Holding Corporation                         New Jersey        100%
    Gallery Market Holding Company                      Pennsylvania      100%
    Glen Burnie Shopping Plaza, Inc.                    Maryland          100%
    Greenwich Holding Corporation                       New York          100%
    Hackbridge Corporation                              New Jersey        100%
    Hagerstown Holding Corporation                      Maryland          100%
    Hanover Holding Corporation                         New Jersey        100%
    Hanover Industries, Inc.                            New Jersey        100%
    Hanover Leasing Corporation                         New Jersey        100%
    Hanover Public Warehousing, Inc.                    New Jersey        100%
    Henrietta Holding Corp.                             New York          100%
    HEP Acquisition Corporation                         Delaware          100%
    Jersey City Leasing Corporation                     New Jersey        100%
    Kearny Holding Corp.                                New Jersey        100%
    Kearny Leasing Corporation                          New Jersey        100%
    Lancaster Holding Company                           Pennsylvania      100%
    Landthorp Enterprises, Inc.                         Delaware          100%
    Lawnside Holding Corporation                        New Jersey        100%
    Lawnside Leasing Corporation                        New Jersey        100%
    Lawnwhite Holding Corporation                       New Jersey        100%
    Lewisville Town Centre Corporation                  Texas             100%
    Littleton Holding Corporation                       New Jersey        100%
    Lodi Industries Corp.                               New Jersey        100%
    Lodi Leasing Corporation                            New Jersey        100%
    Manalapan Industries, Inc.                          New Jersey        100%
    Marple Holding Company                              Pennsylvania      100%

   2

                                                   STATE OF       PERCENTAGE
         NAME OF SUBSIDIARY                     ORGANIZATION     OF OWNERSHIP
- ----------------------------------------        ------------     ------------
                                                            
    Menands Holding Corporation                 New York          100%
    Mesquite Crossing Corporation               Texas             100%
    Middletown Holding Corporation              New Jersey        100%
    Montclair Holding Corporation               New Jersey        100%
    Morris Plains Leasing Corp.                 New Jersey        100%
    National Hydrant Corporation                New York          100%
    New Hanover, Inc.                           New Jersey        100%
    Newington Holding Corporation               Connecticut       100%
    New Woodbridge, Inc.                        New Jersey        100%
    North Bergen Stores, Inc.                   New Jersey        100%
    North Plainfield Holding Corporation        New Jersey        100%
    Oak Trading Company                         New Jersey        100%
    Philadelphia Holding Company                Pennsylvania      100%
    Phillipsburg Holding Corporation            New Jersey        100%
    Pike Holding Company                        Pennsylvania      100%
    Princeton Corridor Holding Corporation      New Jersey        100%
    Rahway Leasing Corporation                  New Jersey        100%
    RMJ Company, Inc.                           New Jersey        100%
    Rochester Holding Corporation               New York          100%
    Silver Lane Properties, Inc.                Connecticut       100%
    Springfield Holding Corporation             Massachusetts     100%
    Star Universal Corporation                  New Jersey        100%
    T.G. Hanover, Inc.                          New Jersey        100%
    T.G. Stores, Inc.                           Maryland          100%
    The Second Lawnside Corporation             New Jersey        100%
    The Second Rochester Corporation            New York          100%
    Turnersville Holding Corporation            New Jersey        100%
    Two Guys - Conn., Inc.                      Connecticut       100%
    Two Guys - Mass., Inc.                      Massachusetts     100%
    Two Guys from Harrison, Inc.                New Jersey        100%
    Two Guys from Harrison Company              Pennsylvania      100%
    Two Guys from Harrison - N.Y., Inc.         New York          100%
    Unado Corp.                                 New Jersey        100%
    Upper Moreland Holding Company              Pennsylvania      100%
    Vornado, Inc.                               New York          100%
    Vornado Acquisition Corporation             Delaware          100%
    Vornado Finance Corp.                       Delaware          100%
    Vornado Holding Corporation                 Delaware          100%
    Vornado Investments Corporation             Delaware          100%
    Vornado Lending Corp.                       New Jersey        100%
    Watchung Holding Corporation                New Jersey        100%
    White Horse Lawnside Corporation            New Jersey        100%
    West Windsor Holding Corporation            New Jersey        100%
    York Holding Company                        Pennsylvania      100%

   1
                                   EXHIBIT 23

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Amendment No. 1 to
Registration Statement No. 33-52441 on Form S-3 and Registration Statement No.
33-62344 on Form S-8 of Vornado Realty Trust of our report dated March 9, 1995
(March 15, 1995 as to Note 17), appearing in its Annual Report on Form 10-K
for the year ended December 31, 1994.

Deloitte & Touche LLP
Parsippany, New Jersey
March 15, 1995

 5

This schedule contains summary financial information extracted from the
Company's audited financial statements for the year ended December 31, 1994 and
is qualified in its entirety by reference to such financial statements.

 1,000

                   YEAR
                          DEC-31-1994
                               DEC-31-1994
                                          23,559
                                    87,206
                                    4,898
                                       457
                                          0
                                     0
                                         365,832
                                 128,705
                                 393,538
                                0
                                        234,160
                                           866
                                0
                                          0
                                     115,822
                   393,538
                                              0
                                93,998
                                                0
                                   30,223
                                16,458
                                   385
                              14,209
                                 41,240
                                         0
                             41,240
                                       0
                                      0
                                            0
                                    41,240
                                     1.89
                                     1.89