1

                                                        EXHIBIT INDEX ON PAGE 17

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

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

For the quarterly period ended:           SEPTEMBER 30, 1996
                                ------------------------------------------------

                                       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:   1-11954

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

                                                                                    
                   MARYLAND                                                                 22-1657560
- -------------------------------------------------------------------------------------------------------------------
(State or other jurisdiction of incorporation                                            (I.R.S. Employer
               or organization)                                                        Identification Number)

PARK 80 WEST, PLAZA II, SADDLE BROOK, NEW JERSEY                                                 07663
- -------------------------------------------------------------------------------------------------------------------
    (Address of principal executive offices)                                                   (Zip Code)

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

                                      N/A             
- --------------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed since last
                                    report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
                              [ X ] Yes    [  ] No

         As of October 25, 1996 there were 24,540,157 common shares outstanding.

                                  Page 1 of 19
   2
                              VORNADO REALTY TRUST

                                     INDEX

                                                                                                                Page Number
                                                                                                                -----------
                                                                                                                  
PART I.           FINANCIAL INFORMATION:
                  ----------------------

     Item 1.      Financial Statements:

                  Consolidated Balance Sheets as of September 30, 1996
                  and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       3

                  Consolidated Statements of Income for the Three and Nine Months
                  Ended September 30, 1996 and September 30, 1995 . . . . . . . . . . . . . . . . . . . . . . .       4

                  Consolidated Statements of Cash Flows for the Nine Months
                  Ended September 30, 1996 and September 30, 1995 . . . . . . . . . . . . . . . . . . . . . . .       5

                  Notes to Consolidated Financial Statements  . . . . . . . . . . . . . . . . . . . . . . . . .       6

     Item 2.      Management's Discussion and Analysis of Financial
                  Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      10

PART II.          OTHER INFORMATION:
                  -----------------

     Item 1.      Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      15

     Item 6.      Exhibits and Reports on Form 8-K  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      15

Signatures        . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      16

Exhibit Index     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      17

Exhibit 11        . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      18

Exhibit 27        . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      19

                                  Page 2 of 19
   3
PART I.  FINANCIAL INFORMATION

                              VORNADO REALTY TRUST

                          CONSOLIDATED BALANCE SHEETS
                  (AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS)

                                                SEPTEMBER 30,     DECEMBER 31,
                                                     1996             1995    
                                                -------------     ------------
                                                                     
ASSETS:                                                                       
                                                                              
Real estate, at cost:                                                         
    Land                                         $   61,278       $   61,278 
    Buildings and improvements                      324,541          314,265 
    Leasehold improvements and equipment              8,115            6,933 
                                                 ----------       ---------- 
         Total                                      393,934          382,476 
    Less accumulated depreciation and                                        
     amortization                                  (148,155)        (139,495)
                                                 ----------       ---------- 
    Real estate, net                                245,779          242,981 

Cash and cash equivalents, including U.S.                                    
    government obligations under repurchase                                  
    agreements of $12,299 and $12,575                21,769           19,127 
Marketable securities                                31,004           70,997 
Investment in and advances to Alexander's, Inc.     104,777          109,686 
Investment in and advances to Vornado                                        
    Management Corp.                                  5,006            5,074 
Due from officer                                      8,418            8,418 
Accounts receivable, net of allowance for                                    
    doubtful accounts of $516 and $578                8,274            7,086 
Mortgage note receivable                             17,000              -   
Receivable arising from the                                                  
    straight-lining of rents                         16,288           14,376
Other assets                                         15,571           13,751
                                                 ----------       ----------

TOTAL ASSETS                                     $  473,886       $  491,496
                                                 ==========       ==========

                                                SEPTEMBER 30,     DECEMBER 31, 
                                                     1996             1995     
                                                -------------     ------------ 
                                                                
LIABILITIES AND SHAREHOLDERS' EQUITY:                                      
                                                                           
Notes and mortgages payable                        $232,572         $233,353   
Due for U.S. treasury obligations                    13,563           43,875   
Amounts due under revolving credit facility          10,000              -     
Accounts payable and accrued expenses                 5,743            6,545   
Deferred leasing fee income                           6,725            8,888   
Other liabilities                                     4,316            4,561  
                                                   --------         --------  
             Total liabilities                      272,919          297,222  
                                                   --------         --------  
                                                                              
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,                                   
     24,536,719 and 24,246,913                                                
     shares in each period                              981              970  
    Additional capital                              284,586          279,231  
    Accumulated deficit                             (77,958)         (79,380) 
                                                   --------         --------  
                                                    207,609          200,821  
    Unrealized loss on securities                                             
     available for sale                              (1,535)          (1,362) 
    Due from officers for purchase of common                                  
     shares of beneficial interest                   (5,107)          (5,185) 
                                                   --------         --------  
             Total shareholders' equity             200,967          194,274  
                                                   --------         --------  
                                                                              
TOTAL LIABILITIES AND                                                         
     SHAREHOLDERS' EQUITY                          $473,886         $491,496  
                                                   ========         ======== 

                See notes to consolidated financial statements.

                                 Page 3 of 19
   4

                              VORNADO REALTY TRUST

                       CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands except share amounts)

                                                          FOR THE THREE MONTHS ENDED          FOR THE NINE MONTHS ENDED
                                                      ---------------------------------   --------------------------------
                                                       SEPTEMBER 30,      SEPTEMBER 30,    SEPTEMBER 30,    SEPTEMBER 30,
                                                           1996               1995             1996             1995
                                                      ---------------   ---------------   ---------------  ---------------
                                                                                                  
Revenues:
  Property rentals                                         $21,927            $20,406         $ 65,084          $ 59,390
  Expense reimbursements                                     6,410              5,859           20,111            16,873
  Other income (including fee income from
   related parties of $671 and $365 
   and $1,476 and $3,564)                                      726                365            1,723             3,639
                                                           -------            -------         --------          --------
Total revenues                                              29,063             26,630           86,918            79,902
                                                           -------            -------         --------          --------

Expenses:
  Operating                                                  8,885              8,095           26,944            23,082
  Depreciation and amortization                              2,929              2,739            8,661             7,979
  General and administrative                                 1,381              1,181            3,889             5,018
                                                           -------            -------         --------          --------
Total expenses                                              13,195             12,015           39,494            36,079
                                                           -------            -------         --------          --------

Operating income                                            15,868             14,615           47,424            43,823

Income/(loss) applicable to Alexander's:
  Equity in loss                                              (185)              (564)            (304)           (1,660)
  Depreciation                                                (157)              (156)            (472)             (260)
  Interest income on loan                                    1,708              1,994            5,167             4,379
Income from investment in and advances
  to Vornado Management Corp.                                  344                338            1,723               338
Interest income on mortgage
  note receivable                                              661                 -             1,911                -
Interest and dividend income                                   728              1,183            2,501             4,233
Interest and debt expense                                   (4,208)            (3,922)         (12,623)          (12,494)
Net gain on marketable securities                              180                 79              654               230
                                                           -------            -------         --------          --------

NET INCOME                                                 $14,939            $13,567         $ 45,981          $ 38,589
                                                           =======            =======         ========          ========

Net Income Per Share                                         $ .61              $ .56            $1.88             $1.66
                                                             =====              =====            =====             =====

Weighted average number of common
 shares and common share equivalents 
 outstanding during period                              24,553,758         24,422,032       24,498,095        23,265,433

Dividends per share                                          $ .61              $ .56            $1.83             $1.68

                See notes to consolidated financial statements.

                                  Page 4 of 19
   5
                              VORNADO REALTY TRUST

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)

                                                                                   FOR THE NINE MONTHS ENDED
                                                                          ---------------------------------------------
                                                                            SEPTEMBER 30,              SEPTEMBER 30,
                                                                                1996                        1995
                                                                          -----------------          -----------------
                                                                                                   
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                    $ 45,981                  $ 38,589
  Adjustments to reconcile net income to net
   cash provided by operations:                     
     Depreciation and amortization                  
      (including debt issuance costs)                                              9,431                     8,739
     Straight-lining of rental income                                             (1,912)                   (1,877)
     Equity in loss of Alexander's,                 
      including depreciation of $472 and $260                                        776                     1,920
     Net gain on marketable securities                                              (654)                     (230)
  Changes in assets and liabilities:
   Trading securities                                                             (1,016)                   (1,295)
   Accounts receivable                                                            (1,188)                     (680)
   Accounts payable and accrued expenses                                            (802)                      561
   Other                                                                            (719)                   (1,872)
                                                                              ----------                 ---------
Net cash provided by operating activities                                         49,897                    43,855
                                                                              ----------                 ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Investment in mortgage note receivable                                         (17,000)                      -
  Additions to real estate                                                       (11,459)                  (14,454)
  Investment in and advances to Alexander's                                          -                    (100,251)
  Investment in Vornado Management Corp.                                             -                      (5,000)
  Proceeds from sale or maturity of securities
    available for sale                                                            41,490                    12,641
  Purchases of securities available for sale                                         -                      (2,063)
                                                                               ---------                ----------
Net cash provided by (used in) investing activities                               13,031                  (109,127)
                                                                               ---------                 ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of borrowings on U.S. treasury obligations                           (40,312)                  (10,093)
  Proceeds from borrowings on U.S. treasury obligations                           10,000                    31,800
  Proceeds from revolving credit facility                                         10,000                    60,000
  Repayments on mortgages and revolving credit facility                             (781)                  (60,623)
  Dividends paid                                                                 (44,559)                  (39,298)
  Exercise of stock options                                                        5,366                     1,216
  Net proceeds from issuance of common shares                                        -                      79,831
                                                                               ---------                 ---------
Net cash (used in) provided by financing activities                              (60,286)                   62,833
                                                                               ---------                 ---------

Net increase/(decrease) in cash and cash equivalents                               2,642                    (2,439)
Cash and cash equivalents at beginning of period                                  19,127                    23,559
                                                                               ---------                 ---------

Cash and cash equivalents at end of period                                      $ 21,769                  $ 21,120
                                                                                ========                  ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash payments for interest                                                    $ 11,853                  $ 11,734
                                                                                ========                  ========

NON-CASH TRANSACTIONS:
  Unrealized loss on securities available for sale                              $   (173)                 $ (3,110)*
                                                                                ========                  ========

        *   Reflects a reduction of $3,435 to the Company's investment in
            Alexander's as a result of the change from fair value to the 
            equity method of accounting.

                See notes to consolidated financial statements.

                                  Page 5 of 19
   6
                              VORNADO REALTY TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       CONSOLIDATED FINANCIAL STATEMENTS

         The consolidated balance sheet as of September 30, 1996, the
consolidated statements of income for the three and nine months ended September
30, 1996 and September 30, 1995 and the consolidated statements of changes in
cash flows for the nine months ended September 30, 1996 and September 30, 1995
are unaudited.  In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and changes in cash flows have been made.

         Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted.  These condensed consolidated
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's 1995 Annual Report to
Shareholders.  The results of operations for the period ended September 30,
1996 are not necessarily indicative of the operating results for the full year.

2.       INVESTMENTS IN AND ADVANCES TO ALEXANDER'S (A RELATED PARTY):

         Below are summarized Statements of Operations of Alexander's:

                                                             Nine Months                    Period from
                                                                Ended                    March 2, 1995 to
                                                          September 30, 1996            September 30, 1995
                                                          ------------------           --------------------
                                                                                    
         Statement of Operations:
           Revenues                                           $ 15,749,000                $ 7,834,000
           Expenses                                             (8,689,000)                (6,593,000)
                                                              ------------                -----------
           Operating income                                      7,060,000                  1,241,000
           Interest and debt expense                           (10,393,000)                (8,382,000)
           Other income and interest income, net                 2,294,000                  1,005,000
                                                              ------------                -----------
           Loss from continuing operations
             before income tax benefit                          (1,039,000)                (6,136,000)
           Reversal of deferred taxes                                   -                     469,000
                                                              ------------                -----------
           Net loss from continuing operations                $ (1,039,000)               $(5,667,000)
                                                              ============                ===========

         Vornado's 29.3% equity in loss                       $   (304,000)               $(1,660,000)
                                                              ============                ===========

                                  Page 6 of 19
   7

                              VORNADO REALTY TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.       INVESTMENT IN AND ADVANCES TO ALEXANDER'S (A RELATED PARTY) -
         CONTINUED

         The unaudited proforma information set forth below presents the
condensed statement of income for Vornado for the nine months ended September
30, 1995, as if on January 1, 1994, the investment in Alexander's and related
agreements were consummated and 1,880,000 common shares of beneficial interest
of Vornado were issued to partially fund the investment.

                                                                                 Proforma
                                                                            Nine Months Ended
                                                                            September 30, 1995
                                                                         ------------------------
                                                                          
         Revenues                                                            $ 79,762,000
         Expenses                                                              36,079,000
                                                                             ------------
         Operating income                                                      43,683,000
         Income/(loss) applicable to Alexander's:
           Equity in loss                                                      (2,464,000)
           Depreciation                                                          (364,000)
           Interest income on loan                                              5,941,000
         Income from investment in and advances
           to Vornado Management Corp.                                            338,000
         Interest and dividend income                                           3,601,000
         Interest and debt expense                                            (11,651,000)
         Net gain on marketable securities                                        230,000
                                                                             ------------

         Net income                                                          $ 39,314,000
                                                                             ============

         Net income per share                                                       $1.65
                                                                                    =====

         The Company recognized leasing fee income under a leasing agreement
(the "Leasing Agreement") with Alexander's of $157,000 and $125,000 for the
three months ended September 30, 1996 and 1995 and $514,000 and $1,313,000 for
the nine months ended September 30, 1996 and 1995.  Leasing fee income for the
nine months ended September 30, 1995 included $915,000 applicable to 1993 and
1994 (no leasing fee income was recognized prior to 1995 because required
conditions had not been met).  Subject to the payment of rents by Alexander's
tenants, the Company is due $4,357,000 at September 30, 1996 under such
agreement.  The lease which the Company had previously negotiated with Caldor
on behalf of Alexander's for its Rego Park I property was rejected in March
1996 in Caldor's bankruptcy proceedings, resulting in $1,717,000 of previously
recorded leasing fees receivable and a corresponding credit (deferred leasing
fee income) being reversed in the quarter ended March 31, 1996.  In addition to
the leasing fees received by the Company, Vornado Management Corp. receives
management fees from Alexander's (see Note 3).

                                  Page 7 of 19
   8

                              VORNADO REALTY TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.       VORNADO MANAGEMENT CORP.

         In July 1995, the Company assigned its management and development
agreement (the "Management Agreement") with Alexander's to Vornado Management
Corp. ("VMC").  In exchange, the Company received 100% of the non-voting
preferred stock of VMC which entitles it to 95% of the distributions by VMC to
its shareholders.  Steven Roth and Richard West, Trustees of the Company, own
the common stock of VMC.  In addition, the Company lent $5,000,000 to VMC for
working capital purposes under a three-year term loan bearing interest at the
prime rate plus 2%.  VMC is responsible for its pro-rata share of compensation
and fringe benefits of employees and 30% of other expenses which are common to
both Vornado and VMC.  This entity is not consolidated and accordingly, the
Company accounts for its investment in VMC on the equity method.  Below are
summarized Statements of Operations of VMC:

                                                          Three                   Nine               Period from
                                                          Months                 Months              July 6, 1995
                                                          Ended                  Ended                    to
                                                      September 30,          September 30,          September 30,
                                                          1996                    1996                   1995
                                                    -----------------       ----------------       ----------------
                                                                                              
         Revenues:
            Management fees from
              Alexander's                               $1,037,000             $ 4,405,000             $1,088,000

         Expenses:
            General and administrative                     585,000               1,819,000                596,000
            Interest, net                                   74,000                 216,000                 44,000
                                                        ----------            ------------             ----------

         Income before income taxes                        378,000               2,370,000                448,000
         Income taxes                                      154,000                 968,000                183,000
                                                        ----------            ------------             ----------
            Net income                                     224,000               1,402,000                265,000
         Preferred dividends to Vornado                   (213,000)             (1,332,000)              (252,000)
                                                        ----------            ------------             ----------
         Net income available to
            common shareholders                         $   11,000            $     70,000             $   13,000
                                                        ==========            ============             ==========

         The fee income in the nine months ended September 30, 1996, includes
$1,443,000 of fees related to the substantial completion of the redevelopment
of Alexander's Rego Park I property.  In addition to the preferred dividends
the Company received, it also earned interest income on its loan to VMC of
$131,000 for the three months ended September 30, 1996, $391,000 for the nine
months ended September 30, 1996, and $86,000 for the period from July 6, 1995
to September 30, 1995.

4.       OTHER RELATED PARTY TRANSACTIONS

         The Company currently manages and leases the real estate assets of
Interstate Properties pursuant to a management agreement.  Management fees
earned by the Company pursuant to the management agreement were $565,000 and
$192,000 for the three months ended September 30, 1996 and 1995 and $1,112,000
and $680,000 for the nine months ended September 30, 1996 and 1995.

                                  Page 8 of 19
   9

                              VORNADO REALTY TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.       MORTGAGE NOTE RECEIVABLE

         In January 1996, the Company provided $17 million of
debtor-in-possession financing to Rickel Home Centers, Inc.  ("Rickel"), which
is operating under Chapter 11 of the Bankruptcy Code.  The loan is secured by
27 of Rickel's leasehold properties and has a term of one year plus two annual
extensions, but is due not later than the date on which Rickel's plan of
reorganization is confirmed.  The loan bears interest at 13% per annum for the
first year and at a fixed rate of LIBOR plus 7.50% for the extension periods.
In addition, the Company received a loan origination fee of 2% or $340,000 and
will receive an additional fee of 2% of the outstanding principal amount on
each extension.

6.       EMPLOYEES' SHARE OPTION PLAN

         In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (SFAS No. 123), which was effective for the Company
as of January 1, 1996.  SFAS No. 123 requires expanded disclosures of
stock-based compensation arrangements with employees and encourages, but does
not require compensation cost to be measured based on the fair value of the
equity instrument awarded.  Companies are permitted, however, to continue to
apply Accounting Principles Board ("APB") Opinion No. 25, which recognizes
compensation cost based on the intrinsic value of the equity instrument
awarded.  The Company will continue to apply APB Opinion No. 25 to its stock
based compensation awards to employees and will disclose the required pro forma
effect on net income and earnings per share in its annual financial statements.

7.       PRINCIPAL TENANT

         Bradlees, Inc. ("Bradlees") accounted for 22% of property rentals for
the nine months ended September 30, 1996.  The Company leases 21 locations to
Bradlees, of which 18 are fully guaranteed by Stop & Shop Companies, Inc.  
("Stop & Shop"), a wholly-owned subsidiary of Royal Ahold NV, a leading 
international food retailer with annual sales of $18 billion and a nineteenth
is guaranteed as to 70% of rent. Further, Montgomery Ward & Co., Inc. 
remains liable on eight of such leases, including rent it was obligated 
to pay -- approximately 70% of rent.

         In June 1995, Bradlees filed for protection under Chapter 11 of the
U.S. Bankruptcy Code.  In October 1996, Bradlees filed an action in the United
States Bankruptcy Court, Southern District of New York, seeking a declaration
that certain provisions of an agreement among Bradlees, the Company and Stop &
Shop be held unenforceable insofar as they restrict Bradlees rights to assume
and assign or to reject the leases that are subject to such agreement.  All of
such leases are guaranteed by Stop & Shop.

                                  Page 9 of 19
   10
                              VORNADO REALTY TRUST

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

         The Company's revenues, which consist of property rentals, tenant
expense reimbursements and other income were $29,063,000 in the quarter ended
September 30, 1996, compared to $26,630,000 in the prior year's quarter, an
increase of $2,433,000 or 9.1%.  Revenues were $86,918,000 for the nine months
ended September 30, 1996 compared to $79,902,000 in the prior year's nine
months, an increase of $7,016,000 or 8.8%.

         Property rentals were $21,927,000 in the quarter ended September 30,
1996, compared to $20,406,000 in the prior year's quarter, an increase of
$1,521,000 or 7.5%.  Property rentals were $65,084,000 for the nine months
ended September 30, 1996, compared to $59,390,000 in the prior year's nine
months, an increase of $5,694,000 or 9.6%.  Of these increases (i) $1,245,000
and $3,072,000 resulted from step-ups in leases which are not subject to the
straight-line method of revenue recognition, (ii) $285,000 and $357,000
resulted from the Company's purchase of an office building in June 1996 and
(iii) $248,000 and $1,935,000 resulted from expansions of shopping centers and
the previous acquisition of a retail property.  The increase for the current
year's quarter is net of $257,000 of property rentals lost from vacating
tenants over property rentals received from new tenants.  The rentals from
tenants who vacated have been replaced at higher per square foot levels.  The
replacement rents will commence by the first quarter of 1997.  The increase for
the current year's nine month period includes $330,000 of property rentals
received from new tenants over property rentals lost from vacating tenants.

         Tenant expense reimbursements were $6,410,000 in the quarter ended
September 30, 1996, compared to $5,859,000 in the prior year's quarter, an
increase of $551,000.  Tenant expense reimbursements were $20,111,000 for the
nine months ended September 30, 1996, compared to $16,873,000 in the prior
year's nine months, an increase of $3,238,000.  These increases reflect a
corresponding increase in operating expenses passed through to tenants.

         Other income was $726,000 in the quarter ended September 30, 1996,
compared to $365,000 in the prior year's quarter, an increase of $361,000.
This increase resulted primarily from development fees and commissions in
connection with the Company's management agreement with Interstate Properties.
Other income was $1,723,000 for the nine months ended September 30, 1996,
compared to $3,639,000 in the prior year's nine months, a decrease of
$1,916,000.  This decrease resulted from (i) including fee income pursuant to
the Management Agreement with Alexander's in "Income from investment in and
advances to Vornado Management Corp." (see page 11) for a full nine months in
1996, compared to a partial period in 1995 (July 6th to September 30th) and
(ii) the recognition of fee income in the first quarter of 1995 in connection
with the Leasing Agreement with Alexander's of $915,000 applicable to 1993 and
1994 (no leasing fee income was recognized prior to 1995 because required
conditions had not been met), partially offset by (iii) the increase in fee
income from Interstate Properties noted above.

         Operating expenses were $8,885,000 in the quarter ended September 30,
1996, as compared to $8,095,000 in the prior year's quarter, an increase of
$790,000.  Operating expenses were $26,944,000 in the nine months ended
September 30, 1996, compared to $23,082,000 in the prior year's nine months, an
increase of $3,862,000.  These increases resulted primarily from higher snow
removal costs in the first six months of this year and higher real estate
taxes, both of which were passed through to tenants.

         Depreciation and amortization expense increased in 1996 as compared
to 1995, primarily as a result of property expansions.

                                 Page 10 of 19
   11
                              VORNADO REALTY TRUST

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         General and administrative expenses were $1,381,000 in the quarter
ended September 30, 1996, compared to $1,181,000 in the prior year's quarter,
an increase of $200,000.  This increase resulted primarily from higher
professional fees.  General and administrative expenses were $3,889,000 in the
nine months ended September 30, 1996, compared to $5,018,000 in the prior
year's nine months, a decrease of $1,129,000.  This decrease resulted primarily
from a reduction in general corporate office expenses resulting from the
assignment of the Company's Management Agreement with Alexander's to VMC in the
third quarter of 1995.

         Income applicable to Alexander's was $1,366,000 in the three months
ended September 30, 1996, compared to $1,274,000 in the prior year's quarter,
an increase of $92,000.  Income applicable to Alexander's was $4,391,000 for
the nine months ended September 30, 1996, compared to $2,459,000 in the prior
year's nine months, an increase of $1,932,000.  These increases resulted
primarily from the commencement of rent from Alexander's Rego Park I property
in March 1996 and interest income on the loan to Alexander's for a full nine
months in 1996, compared to a partial period in 1995 (March 2nd to September
30th).

         In July 1995, the Company assigned its Management Agreement with
Alexander's to VMC.  In exchange, the Company received 100% of the non-voting
preferred stock of VMC which entitles it to 95% of the distributions by VMC to
its shareholders.  In addition, the Company lent $5,000,000 to VMC for working
capital purposes under a three year term loan bearing interest at the prime
rate plus 2%.  VMC is responsible for its pro-rata share of compensation and
fringe benefits of employees and 30% of other  expenses which are common to
both Vornado and VMC.  Income from investment in and advances to VMC was
$344,000 and $1,723,000 for the three and nine months ended September 30, 1996
as compared to $338,000 for the period from July 6th to September 30th in 1995.
Income from investment in and advances to VMC for the nine months ended
September 30, 1996 reflects additional fee income earned by VMC in the first
quarter of 1996 relating to the substantial completion of the redevelopment of
Alexander's Rego Park I property.

         In January 1996, the Company lent Rickel Home Centers, Inc.
("Rickel") $17,000,000.  The Company recognized $661,000 and $1,911,000 of
interest income on this loan to Rickel in the three and nine months ended
September 30, 1996.

         Investment income (interest income on mortgage note receivable,
interest and dividend income and net gains/(losses) on marketable securities)
was $1,569,000 for the quarter ended September 30, 1996, compared to $1,262,000
in the prior year's quarter, an increase of $307,000 or 24.3%.  Investment
income was $5,066,000 for the nine months ended September 30, 1996, compared to
$4,463,000 for the prior year's nine months an increase of $603,000 or 13.5%.
These increases resulted from net gains on marketable securities and income
earned on the mortgage note receivable exceeding income earned on the
investment of such funds in 1995.

         The increases in interest and debt expense of $286,000 for the
current year's quarter and $129,000 for the current year's nine month period
resulted primarily from a reduction in interest capitalized during
construction, partially offset by lower average borrowings for the nine months
ended September 30, 1996.

         The Company operates in a manner intended to enable it 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 real
estate investment trust which distributes at least 95% of its REIT taxable
income as a dividend to its shareholders each year and which meets certain
other conditions will not be taxed on that portion of its taxable income which
is distributed to its shareholders.  The Company intends to distribute to its
shareholders an amount greater than its taxable income.  Therefore, no
provision for federal income taxes is required.

                                 Page 11 of 19
   12
                              VORNADO REALTY TRUST

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

         Nine Months Ended September 30, 1996
         ------------------------------------

         Cash flows provided by operating activities of $49,897,000 was
comprised of (i) net income of $45,981,000 and (ii) adjustments for non-cash
items of $7,641,000, less (iii) the net change in operating assets and
liabilities of $3,725,000.  The adjustments for non-cash items are primarily
comprised of depreciation and amortization of $9,431,000, plus equity in
income/(loss) of Alexander's of $776,000, offset by the effect of
straight-lining of rental income of $1,912,000.  Further, during this period in
connection with the rejection of a lease by an Alexander's tenant, "Leasing
fees and other receivables" decreased by $1,717,000 and "Deferred leasing fee
income" correspondingly decreased.  "Leasing fees and other receivables" of
$1,592,000 were collected during this period. These amounts have been included
in "Changes in assets and liabilities: other" in the Consolidated Statements of
Cash Flows and are part of the net change in operating assets and liabilities
shown in item (iii) above.

         Net cash provided by investing activities of $13,031,000 was
comprised of (i) proceeds from sale or maturity of securities available for
sale of $41,490,000, offset by (ii) the Company's investment in a mortgage note
receivable (see Note 5) of $17,000,000 and (iii) capital expenditures of
$11,459,000 (including $8,923,000 for the purchase of an office building - see
page 13).

         Net cash used in financing activities of $60,286,000 was primarily
comprised of (i) the net repayment of borrowings on U.S. Treasury obligations
of $30,312,000 (ii) dividends paid of $44,559,000, offset by (iii) the proceeds
from borrowings of $10,000,000 and (iv) the proceeds from the exercise of stock
options of $5,366,000.

         Nine Months Ended September 30, 1995
         ------------------------------------

         Cash flows provided by operating activities of $43,855,000 was
comprised of (i) net income of $38,589,000 and (ii) adjustments for non-cash
items of $8,552,000 less (iii) the net change in operating assets and
liabilities of $3,286,000.  The adjustments for non-cash items are primarily
comprised of depreciation and amortization of $8,739,000, plus equity in loss
of Alexander's of $1,920,000, offset by the effect of straight-lining of rental
income of $1,877,000.

         Net cash used in investing activities of $109,127,000 was comprised
of (i) the Company's investment in and advances to Alexander's of $100,251,000,
(ii) capital expenditures of $14,454,000, and (iii) a loan to Vornado
Management Corp. of $5,000,000, offset by (iv) the net proceeds from sale of
securities available for sale of $10,578,000.

         Net cash provided by financing activities of $62,833,000 was
primarily comprised of (i) net proceeds from issuance of common shares of
$79,831,000 and (ii) net borrowings on U.S. Treasury obligations of
$21,707,000, offset by (iii) dividends paid of $39,298,000.
         
         Funds from Operations for the Three and Nine Months Ended September 
         -------------------------------------------------------------------
30, 1996 and 1995
- -----------------

         Management considers funds from operations an appropriate
supplemental measure of the Company's operating performance.  Funds from
operations were $17,575,000 in the quarter ended September 30, 1996, compared
to $16,253,000 in the prior year's quarter, an increase of $1,322,000 or  8.1%.
Funds from operations were $53,550,000 in the nine months ended September 30,
1996, compared

                                 Page 12 of 19
   13
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

to $45,407,000 in the nine months ended September 30, 1995, an increase of
$8,143,000 or 17.9%.  The following table reconciles funds from operations and
net income:

                                                       Three Months Ended                    Nine Months Ended
                                               ----------------------------------   ---------------------------------
                                                September 30,       September 30,     September 30,    September 30,
                                                     1996                1995              1996             1995
                                               ---------------     ---------------  ----------------  ---------------
                                                                                             
         Net income                               $14,939,000        $13,567,000        $45,981,000      $38,589,000
         Depreciation and amortization of
           real property                            2,828,000          2,681,000          8,394,000        7,679,000
         Straight-lining of property rentals         (635,000)          (690,000)        (1,912,000)      (1,877,000)
         Leasing fees received in excess
           of income recognized                       468,000            625,000          1,358,000          437,000
         Loss on sale of securities
           available for sale                             -                  -                  -            360,000
         Proportionate share of adjustments
           to Alexander's income/(loss)
           to arrive at funds from operations         (25,000)            70,000           (271,000)         219,000
                                                  -----------        -----------        -----------      -----------
         Funds from operations *                  $17,575,000        $16,253,000        $53,550,000      $45,407,000
                                                  ===========        ===========        ===========      ===========

       * The Company's definition of funds from operations does not conform
         to the NAREIT definition because the Company deducts the effect of
         straight-lining of property rentals.

         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.  Below are the cash flows provided by (used
in) operating, investing and financing activities:

                                                 Three Months Ended                    Nine Months Ended
                                          ----------------------------------   ---------------------------------
                                           September 30,       September 30,    September 30,     September 30,
                                                1996               1995              1996             1995
                                           --------------     --------------   ---------------   --------------
                                                                                      
         Operating activities               $ 16,121,000        $16,216,000      $ 49,897,000     $  43,855,000
                                            ============        ===========      ============     =============

         Investing activities               $   (129,000)       $(9,757,000)     $ 13,031,000     $(109,127,000)
                                            ============        ===========      ============     =============

         Financing activities               $(10,971,000)       $(3,373,000)     $(60,286,000)    $  62,833,000
                                            ============        ===========      ============     =============

         Bradless, Inc. ("Bradlees") accounted for 22% of property rentals for
the nine months ended September 30, 1996.  The Company leases 21 locations to
Bradlees, of which 18 are fully guaranteed by Stop & Shop Companies, Inc. 
("Stop & Shop"), a wholly-owned subsidiary of Royal Ahold NV, a leading 
international food retailer with annual sales of $18 billion and a nineteenth
is quaranteed as to 70% of rent.  Further, Montgomery Ward & Co., Inc. 
remains liable on eight of such leases, including rent it was obligated 
to pay -- approximately 70% of rent.

         In June 1995, Bradlees filed for protection under Chapter 11 of the
U.S. Bankruptcy Code.  In October 1996, Bradlees filed an action in the United
States Bankruptcy Court, Southern District of New York, seeking a declaration
that certain provisions of an agreement among Bradlees, the Company and Stop &
Shop be held unenforceable insofar as they restrict Bradlees rights to assume
and assign or to reject the leases that are subject to such agreement.  All of
such leases are guaranteed by Stop & Shop.

                                 Page 13 of 19
   14
                              VORNADO REALTY TRUST

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         In January 1996, the Company provided $17 million of
debtor-in-possession financing to Rickel, which is operating under Chapter 11
of the Bankruptcy Code.  The loan is secured by 27 of Rickel's leasehold
properties and has a term of one year plus two annual extensions, but is due
not later than the date on which Rickel's plan of reorganization is confirmed.
The loan bears interest at 13% per annum for the first year and at a fixed rate
of LIBOR plus 7.50% for the extension periods.  In addition, the Company
received a loan origination fee of 2% or $340,000 and will receive an
additional fee of 2% of the outstanding principal amount on each extension.

         At September 30, 1996, the Company had $10,000,000 of borrowings
outstanding under its unsecured revolving credit facility which provides for
borrowings of up to $75,000,000.  Average borrowings were $10,000,000 during
the three months ended September 30, 1996 and $8,577,000 and $16,575,000 during
the nine months ended September 30, 1996 and 1995.  There were no borrowings
outstanding during the three months ended September 30, 1995.  Borrowings bear
annual interest, at the Company's election, at LIBOR plus 1.35% or the higher
of the federal funds rate plus .50% or the prime rate.

         In June 1996, the Company entered into a joint venture (50% interest)
to purchase the 149,000 square foot office portion of a multi-use building in
midtown Manhattan, New York City.  The space is 100% leased to a single tenant
whose lease expires in 1999.  The Company advanced the $8,923,000 purchase
price and is entitled to an annual preferred return on its funds invested and
the return of its funds invested prior to the other joint venture partner
receiving any distributions.  Vornado's consolidated financial statements
include the accounts of the joint venture since Vornado currently exercises
control over its operating and financial affairs.

         The Company anticipates that cash from continuing operations, net
liquid assets, 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 obligations and the payment of dividends.

                                 Page 14 of 19
   15
                              VORNADO REALTY TRUST

PART II.   OTHER INFORMATION

    ITEM 1.  LEGAL PROCEEDINGS.

                     Bradlees, Inc. ("Bradlees") accounted for 22% of
             property rentals for the nine months ended September 30,
             1996.  The Company leases 21 locations to Bradlees, of which
             18 are fully guaranteed by Stop & Shop Companies, Inc.  ("Stop &
             Shop"), a wholly-owned subsidiary of Royal Ahold NV, a
             leading international food retailer with annual sales of $18
             billion and a nineteenth is guaranteed as to 70% of rent.  
             Further, Montgomery Ward & Co., Inc. remains liable
             on eight of such leases, including rent it was obligated to
             pay -- approximately 70% of rent.

                     In June 1995, Bradlees filed for protection under
             Chapter 11 of the U.S. Bankruptcy Code.  In October 1996,
             Bradlees filed an action in the United States Bankruptcy
             Court, Southern District of New York, seeking a declaration
             that certain provisions of an agreement among Bradlees, the
             Company and Stop & Shop be held unenforceable insofar as they
             restrict Bradlees rights to assume and assign or to reject
             the leases that are subject to such agreement.  All of such
             leases are guaranteed by Stop & Shop.

    ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

             (a)     Exhibits:  The following exhibits are filed with this
                                    Quarterly Report on Form 10-Q.

                     11 Statement Re Computation of Per Share Earnings.

                     27 Financial Data Schedule.

             (b)     Reports on Form 8-K

                     None

                                 Page 15 of 19
   16
                              VORNADO REALTY TRUST

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                 VORNADO REALTY TRUST
                                      -----------------------------------------
                                                     (Registrant)

Date:  November 7, 1996                           /s/ Joseph Macnow
                                      -----------------------------------------
                                                    JOSEPH MACNOW
                                            Vice President - Chief Financial
                                          Officer and Chief Accounting Officer

                                 Page 16 of 19
   17
                              VORNADO REALTY TRUST

                                 EXHIBIT INDEX

                                                                              PAGE NUMBER IN
                                                                                 SEQUENTIAL
   EXHIBIT NO.                                                                   NUMBERING
   -----------                                                               ----------------
                                                                             
        11           Statement Re Computation of Per Share Earnings.               18

        27           Financial Data Schedule.                                      19

                                 Page 17 of 19
   1
                                   EXHIBIT 11

                              VORNADO REALTY TRUST

                 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS

                                                               Three Months Ended                       Nine Months Ended
                                                         -----------------------------------  ---------------------------------
                                                          September 30,       September 30,     September 30,    September 30,
                                                               1996                1995              1996             1995
                                                         ---------------     ---------------  ----------------  ---------------
                                                                                                       
Weighted average number of
    shares outstanding                                       24,454,393         24,238,937         24,338,899       23,089,836

Common share equivalents for
    options after applying
    treasury stock method                                        99,365            183,095            159,196          175,597
                                                            -----------        -----------        -----------      -----------

Weighted Average Number of
    Shares and Common Share
    Equivalents Outstanding                                  24,553,758         24,422,032         24,498,095       23,265,433
                                                             ==========         ==========         ==========       ==========

Net income                                                  $14,939,000        $13,567,000        $45,981,000      $38,589,000
                                                            ===========        ===========        ===========      ===========

Net Income Per Share                                              $ .61              $ .56              $1.88            $1.66
                                                                  =====              =====              =====            =====

                                 Page 18 of 19

 5

THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

1,000

                   9-MOS
                          DEC-31-1996
                               SEP-30-1996
                                          21,769
                                    31,004
                                    8,274
                                       516
                                          0
                                     0
                                         393,934
                                 148,155
                                 473,886
                                0
                                        242,572
                                0
                                          0
                                           981
                                     199,986
                   473,886
                                              0
                                86,918
                                                0
                                   26,944
                                12,550
                                     0
                              12,623
                                 45,981
                                         0
                             45,981
                                       0
                                      0
                                            0
                                    45,981
                                     1.88
                                     1.88