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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 26, 1995

   
                                                       Registration No. 33-62395

                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549
                           -------------------------

                                AMENDMENT NO. 1
                                       TO

                                    FORM S-3
                             REGISTRATION STATEMENT
                                      AND
                       POST-EFFECTIVE AMENDMENT NO. 1 TO
                      REGISTRATION STATEMENT NO. 33-52441
                                     UNDER
                           THE SECURITIES ACT OF 1933
                                 ______________
                              VORNADO REALTY TRUST
             (Exact name of registrant as specified in its charter)

              MARYLAND                                   22-1657560
  (State or other jurisdiction of          (IRS employer identification number)
   incorporation or organization)

             PARK 80 WEST, PLAZA II, SADDLE BROOK, NEW JERSEY 07663
                                 (201) 587-1000
         (Address, including zip code, and telephone number, including
            area code, of registrant's principal executive offices)

                                 JOSEPH MACNOW
                              VORNADO REALTY TRUST
             PARK 80 WEST, PLAZA II, SADDLE BROOK, NEW JERSEY 07663
                                 (201) 587-1000
      (Name, address, including zip code, and telephone number, including
                        area code, of agent for service)

                                    Copy to:
                           Patricia A. Ceruzzi, Esq.
                           Janet T. Geldzahler, Esq.
                              Sullivan & Cromwell
                                125 Broad Street
                            New York, New York 10004

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  FROM TIME TO
TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AS DETERMINED BY
MARKET CONDITIONS.

                 If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. / /

                 If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /x/

                 If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ____________________

   
                 If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ____________________

   
                 If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. / /
    
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                        CALCULATION OF REGISTRATION FEE

====================================================================================================================================
                                                                            Proposed Maximum        Proposed
          Title of Each Class of                             Amount to be   Aggregate Price     Maximum Aggregate      Amount of
        Securities to be Registered                         Registered(1)     Per Unit(2)     Offering Price(1)(2)  Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        
Common Shares (par value $.04 per share)(3)..............                                                                  N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Preferred Shares (no par value per share)(4).............                                                                  N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Depositary Shares representing Preferred Shares(5).......                                                                  N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Debt Securities(6).......................................                                                                  N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Debt Warrants(7).........................................                                                                  N/A
- ------------------------------------------------------------------------------------------------------------------------------------
         Total...........................................  $235,000,000(8)                     $235,000,000(8)(9)     $81,034.48(10)
====================================================================================================================================

(1)      In U.S. Dollars or the equivalent thereof denominated in one or more
         foreign currencies or units or two or more foreign currencies or
         composite currencies (such as European Currency Units).

(2)      Estimated for the sole purpose of computing the registration fee.

(3)      There are being registered hereunder an indeterminate number of Common
         Shares of Beneficial Interest of the Registrant as may be sold, from
         time to time, by the Registrant. There are also being registered
         hereunder an indeterminate number of Common Shares of Beneficial
         Interest of the Registrant as shall be issuable upon conversion of
         convertible Debt Securities or Preferred Shares registered hereby.

(4)      There are being registered hereunder an indeterminate number of
         Preferred Shares of Beneficial Interest of the Registrant as may be
         sold, from time to time, by the Registrant. There are also being
         registered hereunder an indeterminate number of Preferred Shares of
         Beneficial Interest of the Registrant as shall be issuable upon
         conversion of convertible Debt Securities registered hereby.

(5)      There are being registered hereunder an indeterminate number of
         Depositary Shares to be evidenced by Depositary Receipts issued
         pursuant to a Deposit Agreement. In the event the Registrant elects to
         offer to the public fractional interests in Preferred Shares registered
         hereunder, Depositary Receipts will be distributed to those persons
         purchasing such fractional interests and Preferred Shares will be
         issued to the Depositary under the Deposit Agreement. No separate
         consideration will be received for the Depositary Shares.

(6)      There are being registered hereunder an indeterminate amount of Debt
         Securities.

(7)      Debt Warrants may be sold separately or with Debt Securities.

(8)      Such amount represents the principal amount of any Debt Securities
         issued at their principal amount, the issue price rather than the
         principal amount of any Debt Securities issued at an original issue
         discount, the liquidation preference of any Preferred Stock, the amount
         computed pursuant to Rule 457(c) for any Common Stock, the issue price
         of any Debt Warrants and the exercise price of any Debt Securities
         issuable upon the exercise of Debt Warrants.

(9)      No separate consideration will be received for the Debt Securities,
         Preferred Stock, Common Stock or the Depositary Shares issuable upon
         conversion of or in exchange for Debt Securities or Preferred Stock.

(10)     Calculated pursuant to Rule 457(o) of the rules and regulations under
         the Securities Act of 1933, as amended (the "Securities Act"), in
         respect of the $235,000,000 of previously unregistered securities
         registered hereby. This filing fee was paid on September 6, 1995. An
         additional filing fee of $91,379.31 was previously paid for
         $265,000,000 aggregate principal amount of unsold securities registered
         under Registration Statement No. 33-52441.

         PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT INCLUDES A PROSPECTUS WHICH MAY RELATE TO SECURITIES
REGISTERED UNDER REGISTRATION STATEMENT NO. 33-52441. THIS REGISTRATION
STATEMENT, WHICH IS A NEW REGISTRATION STATEMENT, ALSO CONSTITUTES A
POST-EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT NO. 33-52441. SUCH
POST-EFFECTIVE AMENDMENT SHALL HEREAFTER BECOME EFFECTIVE CONCURRENTLY WITH THE
EFFECTIVENESS OF THIS REGISTRATION STATEMENT IN ACCORDANCE WITH SECTION 8(c) OF
THE SECURITIES ACT OF 1933.

         THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT AND
POST-EFFECTIVE AMENDMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT AND POST-EFFECTIVE
AMENDMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT AND
POST-EFFECTIVE AMENDMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

                             SUBJECT TO COMPLETION

                 PRELIMINARY PROSPECTUS DATED OCTOBER 26, 1995
                                  $500,000,000

Prospectus                    VORNADO REALTY TRUST
          DEBT SECURITIES, PREFERRED SHARES, DEPOSITORY SHARES, COMMON
                            SHARES AND DEBT WARRANTS

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

         Vornado Realty Trust (the "Company") may offer from time to time,
together or separately, in one or more series (i) debt securities ("Debt
Securities"), which may be either senior debt securities (the "Senior Debt
Securities") or subordinated debt securities (the "Subordinated Debt
Securities"), (ii) preferred shares of beneficial interest of the Company
("Preferred Shares"), which may be issued in the form of depositary shares (the
"Depositary Shares") evidenced by depositary receipts, (iii) common shares of
beneficial interest of the Company ("Common Shares") and (iv) warrants to
purchase debt securities of the Company as shall be designated by the Company at
the time of the offering (the "Debt Warrants") (the Debt Securities,  Preferred
Shares, Common Shares and Debt Warrants are collectively referred to as the
"Securities"), at an aggregate initial offering price not to exceed U.S.
$500,000,000, in amounts, at prices and on terms to be determined at the time of
sale. The Debt Securities, Preferred Shares, Common Shares and Debt Warrants may
be offered separately or together, in separate series in amounts, at prices and
on terms to be set forth in a supplement to this Prospectus (a "Prospectus
Supplement").

         The accompanying Prospectus Supplement will set forth with regard to
the particular Securities in respect of which this Prospectus is being delivered
(i) in the case of Debt Securities, the title, aggregate principal amount,
denominations (which may be in United States dollars, or in any other currency,
currencies or currency unit, including the European Currency Unit), maturity,
rate, if any (which may be fixed or variable), or method of calculation thereof,
time of payment of any interest, any terms for redemption at the option of the
Company or the holder, any terms for sinking fund payments, rank, any conversion
or exchange rights, any listing on a securities exchange, and the initial public
offering price and any other terms in connection with the offering and sale of
such Debt Securities, (ii) in the case of Preferred Shares, the specific title,
the aggregate amount and the stated value, any dividend (including the method of
calculating the payment of dividend), liquidation, redemption, conversion,
voting or other rights and the initial offering price, (iii) in the case of
Common Shares, the number of shares of Common Shares, the initial offering price
and the terms of the offering thereof and (iv) in the case of Debt Warrants, the
duration, purchase price, exercise price and detachability of such Debt
Warrants. The Prospectus Supplement will also contain ,as applicable, a
discussion of the material United States Federal income tax considerations
relating to the Securities in respect of which this Prospectus is being
delivered to the extent not contained herein.

         The Common Shares of the Company are listed on the New York Stock
Exchange ("NYSE") under the symbol "VNO". The Prospectus Supplement will also
contain information, where applicable, as to any listing on a securities
exchange of the Securities covered by such Prospectus Supplement.

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

           THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
              THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
                SECURITIES COMMISSION NOR HAS THE SECURITIES AND
                  EXCHANGE COMMISSION OR ANY STATE SECURITIES
                     COMMISSION PASSED UPON THE ACCURACY OR
                        ADEQUACY OF THIS PROSPECTUS. ANY
                         REPRESENTATION TO THE CONTRARY
                             IS A CRIMINAL OFFENSE.

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

          THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
                ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
                  REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

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

         The Company may sell Securities to or through underwriters, and also
may sell Securities directly to other purchasers or through agents. The
accompanying Prospectus Supplement will set forth the names of any underwriters
or agents involved in the sale of the Securities in respect of which this
Prospectus is  being delivered, the amounts of Securities, if any, to be
purchased by underwriters and the compensation, if any, of such underwriters or
agents. See "Plan of Distribution" herein.

             The date of this Prospectus is _______________, 1995.
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         NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITERS, AGENTS OR DEALERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER
TO BUY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY AND ITS SUBSIDIARIES
SINCE THE DATE HEREOF OR THE INFORMATION CONTAINED HEREIN IS CORRECT AT ANY TIME
SUBSEQUENT TO THE DATE HEREOF.

                             AVAILABLE INFORMATION

         The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following regional offices of
the Commission: 7 World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such information can be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Company's Common Shares are listed on the New York Stock
Exchange ("NYSE") and similar information can be inspected and copied at the
NYSE, 20 Broad Street, 17th Floor, New York, New York 10005.

         This Prospectus constitutes a part of a registration statement on Form
S-3 (the "Registration Statement") filed by the Company with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"). As
permitted by the rules and regulations of the Commission, this Prospectus omits
certain of the information contained in the Registration Statement and reference
is hereby made to the Registration Statement and related exhibits for further
information with respect to the Company and the Securities offered hereby.
Statements contained herein concerning the provisions of any documents filed as
an exhibit to the Registration Statement or otherwise filed with the Commission
are not necessarily complete, and in each instance reference is made to the copy
of such document so filed. Each such statement is qualified in its entirety by
such reference.

                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, Quarterly Reports on Form 10-Q for the quarterly periods
ended March 31, 1995 and June 30, 1995 and Current Reports on Form 8-K dated
February 6, 1995, April 26, 1995 and June 22, 1995 have been filed by the
Company with the Commission and are hereby incorporated by reference into this
Prospectus. All other documents and reports filed pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act from the date of this Prospectus and
prior to the termination of the offering of the Securities shall be deemed to be
incorporated by reference herein and shall be deemed to be a part hereof from
the date of the filing of such reports and documents (provided, however, that
the information referred to in item 402(a)(8) of Regulation S-K of the
Commission shall not be deemed specifically incorporated by reference herein).

         Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

         The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, on written or oral request of such person, a
copy of any or all documents which are incorporated herein by

                                      -2-
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reference (not including the exhibits to such documents, unless such exhibits
are specifically incorporated by reference in the document which this Prospectus
incorporates). Requests should be directed to the Secretary of the Company, Park
80 West, Plaza II, Saddle Brook, New Jersey 07663, telephone number (201)
587-1000.

                                  THE COMPANY

         The Company is a fully-integrated real estate investment trust 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 900,000 square feet built by tenants on land leased from the
Company. Further, the Company owns eight warehouse/industrial properties in New
Jersey containing 2.0 million square feet and one office building in New Jersey
containing 100,000 square feet, for an aggregate of 11.6 million square feet. In
addition, the Company owns 29.3% of the common stock of Alexander's Inc.
("Alexander's"), which has eight properties in the greater New York metropolitan
area. The Company's portfolio consists largely of the former locations of the
Two Guys discount department stores, which were developed by Two Guys for its
own use. The Company's shopping centers generally are located on major regional
highways in mature, densely populated areas.

         Vornado, Inc., the immediate predecessor of the Company, was merged
into the Company on May 6, 1993 in connection with the Company's conversion to a
real estate investment trust ("REIT"). While the Company has elected to be
treated as a REIT commencing with its taxable year ending December 31, 1993, it
has been a fully-integrated real estate company since 1981, with present
management taking control in 1980 and thereafter converting the Two Guys
discount department store business into a full service real estate company. The
Company administers all operating functions, including leasing, management,
construction, finance, legal, accounting and data processing, from its executive
office (other than the leasing of the Company's three Texas properties, which is
done by an employee locally).

         In order to maintain its qualification as a REIT for federal income tax
purposes, the Company is required to distribute at least 95% of its taxable
income each year. Dividends on any Preferred Shares would be included as
distributions for this purpose.

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

         The Company (or a predecessor) has been listed on the New York Stock
Exchange for over 30 years.

THE COMPANY'S TENANTS; LEASES

         As of December 31, 1994, approximately eighty percent of the leased
square footage of the Company's shopping centers was occupied by large stores
(over 20,000 square feet). The Company's large tenants include destination
retailers such as discount department stores, supermarkets, home improvement
stores, discount apparel stores, membership warehouse clubs and "category
killers". "Category killers" are large stores which offer a complete selection
of a category of items (e.g., toys, office supplies, etc.) at low prices, often
in a warehouse format. The Company's largest tenant is Bradlees Inc.
("Bradlees"), which accounted for approximately 19% of property rentals for the
year ended December 31, 1994 and 18% for the years ended December 31, 1993 and
1992. On June 23, 1995, Bradlees announced that it filed for protection and will
reorganize under Chapter 11 of the U.S. Bankruptcy Code. The leases for 19 of
the 21 Bradlees locations are fully guaranteed by Stop & Shop Companies, Inc.
Further, Montgomery Ward & Co., Inc. remains liable for that portion of the rent
it was obligated to pay in 8 of these 19 locations. Home Depot, Shop-Rite, Sam's
Wholesale/Wal*Mart and Staples each accounted for between 3% and 4.5% of
property rentals for the year ended December 31, 1994. No other tenant
represented more than 2.5% of the Company's property rentals in 1994.

                                      -3-
   6
         Substantially all of the Company's large store leases are long-term
with fixed base rents and 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. Such percentage rents account for
approximately 1% of the Company's property rental income. The Company's leases
generally pass through to tenants the tenants' share of all common area charges
(including roof and structure, unless it is the tenants' direct responsibility),
real estate taxes, insurance costs and certain capital expenditures.

MATERIAL INDEBTEDNESS OF THE COMPANY AND ITS SUBSIDIARIES

         As of June 30, 1995, the Company and its consolidated subsidiaries had
aggregate indebtedness outstanding of $233,804,000.

   
         Of this $233,804,000, Vornado Finance Corp., a Delaware corporation and
a wholly-owned subsidiary of the Company ("Vornado Finance"), has outstanding an
aggregate principal amount of $227,000,000 of its 6.36% Collateralized Notes Due
December 1, 2000 ("the Collateralized Notes"), secured by a mortgage note,
mortgage and various other instruments, documents and agreements executed in
connection therewith by other subsidiaries of the Company owning, in the
aggregate, the interests in forty-four of the Company's properties.

         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%. As of August 1, 1995, the Company had no outstanding amounts borrowed
under the facility.

                                USE OF PROCEEDS

         The Company anticipates that the net proceeds of the sales of the
Securities will be used for general corporate purposes or such other uses as may
be set forth in a Prospectus Supplement.

                CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
      AND COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDEND REQUIREMENTS

         For purposes of calculating the following ratios, (i) earnings
represent income from continuing operations before income taxes, plus fixed
charges, and (ii) fixed charges represent interest expense on all indebtedness
(including amortization of deferred debt issuance costs) and the portion of
operating lease rental expense that is representative of the interest factor
(deemed to be one-third of operating lease rentals). There were no preferred
shares outstanding during any of the periods below indicated and therefore the
ratio of earnings to combined fixed charges and preferred share dividend
requirements would have been the same as the ratio of earnings to fixed charges
for each period indicated.

                                      Six Months        Year Ended December 31,
                                      Ended June   --------------------------------
                                       30, 1995    1994   1993   1992   1991   1990
                                      ----------   ----   ----   ----   ----   ----
                                                             
Ratio of earnings to fixed charges:      3.73      3.44   1.79   1.07   1.51   1.30

                                      -4-
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                         DESCRIPTION OF DEBT SECURITIES

         The Debt Securities may be issued from time to time in one or more
series. The particular terms of each series of Debt Securities offered by any
Prospectus Supplement or Prospectus Supplements will be described therein. The
Senior Debt Securities are to be issued under an Indenture (the "Senior
Indenture") between the Company and The Bank of New York, as trustee (the
"Senior Trustee"), a copy of the form of which Senior Indenture is filed as an
exhibit to the Registration Statement. The Subordinated Debt Securities are to
be issued under a separate Indenture (the "Subordinated Indenture") between the
Company and The Bank of New York, as trustee (the "Subordinated Trustee"), a
copy of the form of which Subordinated Indenture is filed as an exhibit to the
Registration Statement. The Senior Indenture and the Subordinated Indenture are
sometimes referred to collectively as the "Indentures" and the Senior Trustee
and Subordinated Trustee are sometimes referred to collectively as the
"Trustees."

         The following summaries of certain provisions of the Senior Debt
Securities, the Subordinated Debt Securities, the Senior Indenture and the
Subordinated Indenture, as modified or superseded by any applicable Prospectus
Supplement, are brief summaries of certain provisions thereof, do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to all the provisions of the Indenture applicable to a particular
series of Debt Securities. Wherever particular Sections, Articles or defined
terms of the Indentures are referred to herein or in a Prospectus Supplement,
such Sections, Articles or defined terms are incorporated herein or therein by
reference.

GENERAL

         Unless otherwise specified in the applicable Prospectus Supplement,
the Debt Securities will be general unsecured obligations of the Company. The
Indentures do not limit the aggregate amount of Debt Securities which may be
issued thereunder, and Debt Securities may be issued thereunder from time to
time in separate series up to the aggregate amount from time to time authorized
by the Company for each series. Unless otherwise specified in the Prospectus
Supplement, the Senior Debt Securities when issued will be unsubordinated
obligations of the Company and will rank equally and ratably with all other
unsecured and unsubordinated indebtedness of the Company. The Subordinated Debt
Securities when issued will be subordinated in right of payment to the prior
payment in full of all Senior Debt (as defined in the Subordinated Indenture)
of the Company as described below under "-- Subordination of Subordinated Debt
Securities" and in the Prospectus Supplement applicable to an offering of
Subordinated Debt Securities.

         The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the series of Debt Securities in respect of
which this Prospectus is being delivered: (1) the title of such Debt
Securities; (2) any limit on the aggregate principal amount of such Debt
Securities; (3) the person to whom any interest on any Debt Security of the
series shall be payable if other than the person in whose name the Debt
Security is registered on the regular record date; (4) the date or dates on
which such Debt Securities will mature; (5) the rate or rates of interest, if
any, or the method of calculation thereof, which such Debt Securities will
bear, the date or dates from which any such interest will accrue, the interest
payment dates on which any such interest on such Debt Securities will be
payable and the regular record date for any interest payable on any interest
payment date; (6) the place or places where the principal of, premium, if any,
and interest on such Debt Securities will be payable; (7) the period or periods
within which, the events upon the occurrence of which, and the price or prices
at which, such Debt Securities may, pursuant to any optional or mandatory
provisions, be redeemed or purchased, in whole or in part, by the Company and
any terms and conditions relevant thereto; (8) the obligations of the Company,
if any, to redeem or repurchase such Debt Securities at the option of the
Holders; (9) the denominations in which any such Debt Securities will be
issuable, if other than denominations of $1,000 and any integral multiple
thereof; (10) any index or formula used to determine the amount of payments of
principal of and any premium and interest on such Debt Securities; (11) the
currency, currencies or currency unit or units of payment of principal of and
any premium and interest on such Debt Securities if other than U.S. dollars;
(12) if the principal of, or premium, if any, or interest on such Debt
Securities is to be payable, at the election of the Company or a holder
thereof, in one or more

                                      -5-

   8

currencies or currency units other than that or those in which such Debt
Securities are stated to be payable, the currency, currencies or currency units
in which payment of the principal of and any premium and interest on Debt
Securities of such series as to which such election is made shall be payable,
and the periods within which and the terms and conditions upon which such
election is to be made; (13) if other than the principal amount thereof, the
portion of the principal amount of such Debt Securities of the series which
will be payable upon acceleration of the maturity thereof; (14) if the
principal amount of any Debt Securities which will be payable at the maturity
thereof will not be determinable as of any date prior to such maturity, the
amount which will be deemed to be the outstanding principal amount of such Debt
Securities; (15) the applicability of any provisions described under
"Defeasance"; (16) whether any of such Debt Securities are to be issuable in
permanent global form ("Global Security") and, if so, the terms and conditions,
if any, upon which interests in such Securities in global form may be
exchanged, in whole or in part, for the individual Debt Securities represented
thereby; (17) the applicability of any provisions described under "Event of
Default" and any additional Event of Default applicable thereto; (18) any
covenants applicable to such Debt Securities; (19) the terms and conditions, if
any, pursuant to which the Debt Securities are convertible or exchangeable into
Common Shares or other securities; and (20) any other terms of such Debt
Securities not inconsistent with the provisions of the Indentures. (Section
301) Debt Securities may also be issued under the Indentures upon the exercise
of Debt Warrants. See "Description of Debt Warrants."

         Debt Securities may be issued at a discount from their principal
amount. United States Federal income tax considerations and other special
considerations applicable to any such original issue discount Securities will
be described in the applicable Prospectus Supplement.

         If the purchase price of any of the Debt Securities is denominated in
a foreign currency or currencies or a foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or a foreign currency unit or
units, the restrictions, elections, general tax considerations, specific terms
and other information with respect to such issue of Debt Securities will be set
forth in the applicable Prospectus Supplement.

         Since the Company is a holding company, the rights of the Company, and
hence the right of creditors of the Company (including the Holders of Debt
Securities), to participate in any distribution of the assets of any subsidiary
upon its liquidation or reorganization or otherwise is necessarily subject to
the prior claims of creditors of any such subsidiary, except to the extent that
claims of the Company itself as a creditor of the subsidiary may be recognized.

         The Indentures do not contain any provisions that limit the Company's
ability to incur indebtedness. Except as may be indicated in the applicable
Prospectus Supplement with respect to a particular series of Debt Securities,
Holders of Debt Securities will not have the benefit of any specific covenants
or provisions in the applicable Indenture or Debt Securities that would protect
them in the event the Company engages in or becomes the subject of a highly
leveraged transaction and the limitations on mergers, consolidations and
transfers of substantially all of the Company's properties and assets as an
entirety to any person as described below under "-- Consolidation, Merger and
Sale of Assets." Such covenants may not be waived or modified by the Company or
its Board of Trustees, although Holders of Debt Securities could waive or
modify such covenants as more fully described below under "-- Modification and
Waiver."

   
         The applicable Prospectus Supplement with respect to any particular
series of Debt Securities that provide for the optional redemption, prepayment
or conversion of such Debt Securities upon the occurrence of certain events
(i.e., a change of control) will describe the following: (1) the effects that
such provisions may have in deterring certain mergers, tender offers or other
takeover attempts, as well as that there may be possible adverse effects on the
market price of the Company's securities or ability to obtain financing; (2)
that the Company will comply with the requirements of applicable securities
laws, including Rules 14e-1 and 13e-4 under the Exchange Act, in connection
with such provisions and any related offers by the Company; (3) whether the
occurrence of the specified events may give rise to cross-defaults on other
indebtedness such that payment on the offered Debt Securities may be
effectively subordinated; (4) limitations on the Company's

                                      -6-

   9

financial or legal ability to repurchase the offered Debt Securities upon the
triggering of an event risk provision requiring such a repurchase or offer to
repurchase; (5) the impact, if any, under the governing instrument of the
failure to repurchase, including whether such failure to make any required
repurchases in the event of a change of control will create an event of default
with respect to the offered Debt Securities or will become an event of default
only after the continuation of such failure for a specified period of time
after written notice is given to the Company by the Trustee or to the Company
and the Trustee by the holders of a specified percentage in aggregate principal
amount of the debt outstanding; (6) that there can be no assurance that
sufficient funds will be available at the time of the triggering of an event
risk provision to make any required repurchases; (7) if such offered Debt
Securities are to be subordinated to other obligations of the Company or its
subsidiaries that would be accelerated upon the triggering of a change in
control or similar event, the material effect thereof on such acceleration
provision and such offered Debt Securities; and (8) to the extent that there is
a definition of "change of control" in a supplemental indenture relating to
such offered Debt Securities that includes the concept of "all or substantially
all," the established meaning of such phrase under New York law, including
whether such a Change of Control will be triggered if there is a change of
control of the Board of Trustees as a result of a proxy contest involving the
solicitation of revocable proxies.

   
         The indenture relating to the Collateralized Notes of Vornado Finance
provides that all cash flows from 44 of the Company's properties will be
deposited in a segregated trust account. So long as no event of default under
the indenture has occurred and is continuing, Vornado Finance may withdraw
funds from such trust account to the extent that the amounts in such account
exceed a certain minimum reserve level. Such minimum reserve level equals the
sum of (i) the amount of current or past due operating expenses of Vornado
Finance and its subsidiaries, (ii) indebtedness of Vornado Finance and its
subsidiaries due prior to such withdrawal and (iii) accrued and unpaid interest
on the Collateralized Notes; provided that (a) if the debt service coverage
ratio (as defined in the indenture relating to the Collateralized Notes) is
less than 2.0 and greater than or equal to 1.8, the amount in (iii) above is
increased by an amount equal to six months interest on the Collateralized Notes
and (b) if the debt service coverage ratio is less than 1.8, the amount in
(iii) above is increased by an amount equal to eighteen months interest on the
Collateralized Notes. As a result of these limitations on cash flows relating
to such properties, which cash flows represented approximately 85% of cash flows
from properties of the Company and its consolidated subsidiaries in 1994, the
Company's ability to pay interest and principal on its Debt Securities may be
adversely affected.

CONVERSION OR EXCHANGE OF DEBT SECURITIES

         If so indicated in the applicable Prospectus Supplement with respect
to a particular series of Debt Securities, such series will be convertible or
exchangeable into Common Shares or other securities on the terms and conditions
set forth therein. Such terms shall include provisions as to whether conversion
is mandatory, at the option of the holder or at the option of the Company, and
may include provisions pursuant to which the number of Common Shares or other
securities of the Company to be received by the holders of Debt Securities
would be calculated according to the market price of Common Shares or other
securities of the Company as of a time stated in the Prospectus Supplement. The
applicable Prospectus Supplement will indicate certain restrictions on
ownership which may apply in the event of a conversion or exchange. See
"Description of Preferred Shares -- Restrictions on Ownership" and "Description
of Common Shares -- Restrictions on Ownership."

FORM, EXCHANGE, REGISTRATION, CONVERSION, TRANSFER AND PAYMENT

         Unless otherwise indicated in the applicable Prospectus Supplement,
the Debt Securities will be issued only in fully registered form in
denominations of $1,000 or integral multiples thereof. (Section 302) Unless
otherwise indicated in the applicable Prospectus Supplement, payment of
principal, premium, if any, and interest on the Debt Securities will be
payable, and the exchange, conversion and transfer of Debt Securities will be
registerable, at the office or agency of the Company maintained for such
purposes and at any other office or agency maintained for such purpose.
(Sections 301, 305 and 1002) No service charge will be made for any
registration of transfer or exchange

                                      -7-

   10

of the Debt Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge imposed in connection therewith.
(Section 305)

         All monies paid by the Company to a Paying Agent for the payment of
principal of and any premium or interest on any Debt Security which remain
unclaimed for two years after such principal, premium or interest has become
due and payable may be repaid to the Company and thereafter the Holder of such
Debt Security may look only to the Company for payment thereof. (Section 1003)

BOOK-ENTRY DEBT SECURITIES

         The Debt Securities of a series may be issued in whole or in part in
the form of one or more Global Securities that will be deposited with, or on
behalf of, a depositary (the "Global Depositary") or its nominee identified in
the applicable Prospectus Supplement. In such a case, one or more Global
Securities will be issued in a denomination or aggregate denomination equal to
the portion of the aggregate principal amount of Outstanding Debt Securities of
the series to be represented by such Global Security or Securities. Unless and
until it is exchanged in whole or in part for Debt Securities in registered
form, a Global Security may not be registered for transfer or exchange except
as a whole by the Global Depositary for such Global Security to a nominee of
such Global Depositary or by a nominee of such Global Depositary to such Global
Depositary or another nominee of such Global Depositary or by such Global
Depositary or any nominee to a successor Global Depositary or a nominee of such
successor Global Depositary and except in the circumstances described in the
applicable Prospectus Supplement. (Sections 204 and 305)

         The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. The Company expects
that the following provisions will apply to depositary arrangements although no
assurance can be given that such will be the case.

         Unless otherwise specified in the applicable Prospectus Supplement,
Debt Securities which are to be represented by a Global Security to be
deposited with or on behalf of a Global Depositary will be represented by a
Global Security registered in the name of such Global Depositary or its
nominee. Upon the issuance of such Global Security, and the deposit of such
Global Security with or on behalf of the Global Depositary for such Global
Security, the Global Depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Debt Securities
represented by such Global Security to the accounts of institutions that have
accounts with such Global Depositary or its nominee ("participants"). The
accounts to be credited will be designated by the underwriters or agents of
such Debt Securities or by the Company, if such Debt Securities are offered and
sold directly by the Company. Ownership of beneficial interest in such Global
Security will be limited to participants or Persons that may hold interests
through participants. Ownership of beneficial interests by participants in such
Global Security will be shown on, and the transfer of that ownership interest
will be effected only through, records maintained by the Global Depositary or
its nominee for such Global Security. Ownership of beneficial interests in such
Global Security by Persons that hold through participants will be shown on, and
the transfer of such ownership interests within such participant will be
effected only through, records maintained by such participant. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in certificated form. The foregoing limitations and
such laws may impair the ability to transfer beneficial interests in such
Global Securities.

         So long as the Global Depositary for a Global Security, or its
nominee, is the registered owner of such Global Security, such Global
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Securities represented by such Global Security for all
purposes under the applicable Indenture. Except as set forth below, unless
otherwise specified in the applicable Prospectus Supplement, owners of
beneficial interests in such Global Security will not be entitled to have Debt
Securities of the series represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
Debt Securities of such series in certificated form and will not be considered
the holders thereof for any purposes under the applicable

                                      -8-

   11

Indenture. (Sections 204 and 305) Accordingly, each Person owning a beneficial
interest in such Global Security must rely on the procedures of the Global
Depositary and, if such Person is not a participant, on the procedures of the
participant through which such Person owns its interest, to exercise any rights
of a holder under the applicable Indenture. The Company understands that under
existing industry practices, if the Company requests any action of holders or
an owner of a beneficial interest in such Global Security desires to give any
notice or take any action a holder is entitled to give or take under the
applicable Indenture, the Global Depositary would authorize the participants to
give such notice or take such action, and participants would authorize
beneficial owners owning through such participants to give such notice or take
such action or would otherwise act upon the instructions of beneficial owners
owning through them.

         If the Global Depositary for Debt Securities of a series is at any
time unwilling, unable or ineligible to continue as Global Depositary and a
successor Global Depositary is not appointed by the Company within 90 days or
an Event of Default under the applicable Indenture has occurred and is
continuing, the Company will issue Debt Securities of such series in definitive
form in exchange for the Global Security or Securities representing the Debt
Securities of such series. In addition, the Company may at any time and in its
sole discretion, subject to any limitations described in the applicable
Prospectus Supplement, determine not to have any Debt Securities of a series
represented by one or more Global Securities and, in such event, will issue
Debt Securities of such series in definitive form in exchange for the Global
Security or Securities representing such Debt Securities. Further, if the
Company so specifies with respect to the Debt Securities of a series, an owner
of a beneficial interest in a Global Security representing Debt Securities of
such series may, on terms acceptable to the Company and the Global Depositary
for such Global Security, receive Debt Securities of such series in definitive
form in exchange for such beneficial interests, subject to any limitations
described in the applicable Prospectus Supplement relating to such Debt
Securities. In any such instance, an owner of a beneficial interest in a Global
Security will be entitled to physical delivery in definitive form of Debt
Securities of the series represented by such Global Security equal in principal
amount to such beneficial interest and to have such Debt Securities registered
in its name (if the Debt Securities of such series are issuable as registered
securities).

         Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.

CERTAIN COVENANTS OF THE COMPANY

         If so indicated in the applicable Prospectus Supplement with respect
to a particular series of Debt Securities, the Company will be subject to the
covenants described therein.

EVENTS OF DEFAULT

         The following are Events of Default under the Indentures with respect
to Debt Securities of any series: (a) failure to pay principal of or premium,
if any, on any Debt Security of that series when due; (b) failure to pay any
interest on any Debt Security of that series when due, continued for 30 days;
(c) failure in the deposit of any sinking fund payment in respect of any Debt
Security of that series; (d) failure to perform any other covenant of the
Company in the Indentures (other than a covenant included in the applicable
Indenture solely for the benefit of a series of Debt Securities other than that
series), continued for 60 days after written notice to the Company as provided
in the applicable Indenture; (e) the acceleration of, or failure to pay at
maturity (including any applicable grace period), any indebtedness for money
borrowed by the Company with at least $50,000,000 in principal amount
outstanding, which acceleration or failure to pay is not rescinded or annulled
or such indebtedness paid, in each case within 10 days after the date on which
written notice thereof shall have first been given to the Company as provided
in the applicable Indenture; (f) certain events of bankruptcy, insolvency or
reorganization; and (g) any other Event of Default provided with respect to
Debt Securities of that series. (Section 501)

         If an Event of Default with respect to Outstanding Debt Securities of
any series shall occur and be continuing, either the applicable Trustee or the
Holders of not less than 25% in principal amount of the Outstanding

                                      -9-

   12

Debt Securities of that series by notice as provided in the Indentures may
declare the principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of that series) of all Debt Securities of that series
to be due and payable immediately. However, at any time after a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree based on such acceleration has been obtained, the
Holders of a majority in principal amount of the Outstanding Debt Securities of
that series may, under certain circumstances, rescind and annul such
acceleration. (Section 502) For information as to waiver or defaults, see "--
Modification and Waiver" below.

         The Indentures provide that, subject to the duty of the Trustees
thereunder during an Event of Default to act with the required standard of
care, such Trustees will be under no obligation to exercise any of its rights
or powers under the Indentures at the request or direction of any of the
Holders, unless such Holders shall have offered to such Trustees reasonable
security or indemnity. (Sections 601 and 603) Subject to certain provisions,
including those requiring security or indemnification of the Trustees, the
Holders of a majority in principal amount of the Outstanding Debt Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustees, or
exercising any trust or power conferred on such Trustees, with respect to the
Debt Securities of that series. (Section 512)

         No Holder of a Debt Security of any series will have any right to
institute any proceeding with respect to the Indentures or for any remedy
thereunder, unless (i) such Holder shall have previously given to the
applicable Trustee written notice of a continuing Event of Default (as defined)
with respect to Debt Securities of that series; (ii) the Holders of not less
than 25% in aggregate principal amount of the Outstanding Debt Securities of
the same series shall have made written request, and offered reasonable
indemnity, to the applicable Trustee to institute proceedings in respect of
such Event of Default in its own name as trustee under the Indenture; (iii) the
Trustee shall have failed to institute such proceedings within 60 days; and
(iv) the Trustee shall not have received from the Holders of a majority in
aggregate principal amount of the outstanding Debt Securities of the same
series a direction inconsistent with such request (Section 507); provided,
however, that such limitations do not apply to a suit instituted by a Holder of
a Debt Security for enforcement of payment of the principal of and any premium
and interest on such Debt Security on or after the respective due dates
expressed in such Debt Security, or in the case of convertible Debt Securities,
for enforcement of a right of conversion. (Section 508)

         The Company will be required to furnish to the Trustees annually a
statement as to the performance by the Company of its obligations under the
Indentures and as to any default in such performance. (Section 1004)

MODIFICATION AND WAIVER

         Without the consent of any Holder of Outstanding Debt Securities, the
Company and the applicable Trustee may amend or supplement the applicable
Indenture or the Debt Securities to cure any ambiguity, defect or
inconsistency, or to make any change that does not materially adversely affect
the rights of any Holder of Debt Securities. (Section 901) Other modifications
and amendments of the Indentures may be made by the Company and the applicable
Trustee only with the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Debt Securities of each series
affected thereby; provided, however, that no such modification or amendment
may, without the consent of the Holder of each Outstanding Debt Security
affected thereby: (a) change the Stated Maturity of the principal of, or any
installment of principal of, or interest on, any Debt Security; (b) reduce the
principal amount of, the rate of interest on, or the premium, if any, payable
upon the redemption of, any Debt Security; (c) reduce the amount of principal
of an Original Issue Discount Security payable upon acceleration of the
Maturity thereof; (d) change the place or currency of payment of principal of,
or premium, if any, or interest on any Debt Security; (e) impair the right to
institute suit for the enforcement of any payment on or with respect to any
Debt Security on or after the Stated Maturity or Redemption Date thereof; (f)
modify the conversion provisions applicable to convertible Debt Securities in a
manner adverse to the holders thereof; (g) modify the subordination provisions
applicable to any series of Debt Securities in a manner adverse to the holders
thereof; or (h) reduce the percentage in principal amount of Outstanding Debt
Securities of any series, the

                                      -10-

   13

consent of the Holders of which is required for modification or amendment of
the Indentures or for waiver of compliance with certain provisions of the
applicable Indenture or for waiver of certain defaults. (Section 902)

         The Holders of at least a majority in aggregate principal amount of
the Outstanding Debt Securities of any series may on behalf of the Holders of
all Debt Securities of that series waive, insofar as that series is concerned,
compliance by the Company with certain covenants of the Indentures. (Section
1008) The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may, on behalf of the Holders of all
Debt Securities of that series, waive any past default under the applicable
Indenture with respect to that series, except a default in the payment of the
principal of, or premium, if any, or interest on, any Debt Security of that
series or in respect of a provision which under such applicable Indenture
cannot be modified or amended without the consent of the Holder of each
Outstanding Debt Security of that series affected. (Section 513)

CONSOLIDATION, MERGER AND SALE OF ASSETS

         The Company, without the consent of any Holders of outstanding Debt
Securities, may consolidate with or merge into, or transfer or lease its assets
substantially as an entirety to, any Person, and any other Person may
consolidate with or merge into, or transfer or lease its assets substantially
as an entirety to, the Company, provided that (a) the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or
which acquires or leases the assets of the Company substantially as an entirety
assumes the Company's obligations on the Debt Securities and under the
Indenture relating thereto and (b) after giving effect to such transaction no
Event of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have happened and be continuing.
(Article Eight) A Prospectus Supplement may set forth any additional provisions
regarding a consolidation with, merger into, or transfer or lease of its assets
substantially as an entirety to, any Person (or of such Person with, into or to
the Company).

DEFEASANCE

         If so indicated in the applicable Prospectus Supplement with respect
to the Debt Securities of a series, the Company, at its option (i) will be
discharged from any and all obligations in respect of the Debt Securities of
such series (except for certain obligations to register the transfer or
exchange of Debt Securities of such series, to replace destroyed, stolen, lost
or mutilated Debt Securities of such series, and to maintain an office or
agency in respect of the Debt Securities and hold moneys for payment in trust)
or (ii) will be released from its obligations to comply with any covenants that
may be specified in the applicable Prospectus Supplement with respect to the
Debt Securities of such series, and the occurrence of an event described in
clause (d) under "Events of Default" above with respect to any defeased
covenants shall no longer be an Event of Default, if in either case the Company
irrevocably deposits with the applicable Trustee, in trust, money or U.S.
Government Obligations that through the payment of interest thereon and
principal thereof in accordance with their terms will provide money in an
amount sufficient to pay all of the principal of and premium, if any, and any
interest on the Debt Securities of such series on the dates such payments are
due (which may include one or more redemption dates designated by the Company)
in accordance with the terms of such Debt Securities. Such a trust may only be
established if, among other things, (a) no Event of Default or event which with
the giving of notice or lapse of time, or both, would become an Event of
Default under the applicable Indenture shall have occurred and be continuing on
the date of such deposit, (b) no Event of Default described under clause (e)
under "Events of Default" above or event which with the giving of notice or
lapse of time, or both, would become an Event of Default described under such
clause (e) shall have occurred and be continuing at any time during the period
ending on the 91st day following such date of deposit, and (c) the Company
shall have delivered an Opinion of Counsel to the effect that the Holders of
the Debt Securities will not recognize gain or loss for United States federal
income tax purposes as a result of such deposit or defeasance and will be
subject to United States federal income tax in the same manner as if such
deposit and defeasance had not occurred, which Opinion of Counsel, in the case
of a deposit and defeasance of such Indenture with respect to the Debt
Securities of any series as described under clause (i) above, shall be based on
either (A) a ruling to such effect that the Company has received from, or that
has been published by, the Internal Revenue Service or (B) a change in the
applicable federal income tax law, occurring after the date of the applicable
Indenture, to such effect. In the event

                                      -11-

   14

the Company omits to comply with its remaining obligations under such Indenture
after a defeasance of such Indenture with respect to the Debt Securities of any
series as described under clause (ii) above and the Debt Securities of such
series are declared due and payable because of the occurrence of any undefeased
Event of Default, the amount of money and U.S. Government Obligations on
deposit with the applicable Trustee may be insufficient to pay amounts due on
the Debt Securities of such series at the time of the acceleration resulting
from such Event of Default. However, the Company will remain liable in respect
to such payments. (Article Thirteen)

SUBORDINATION OF SUBORDINATED DEBT SECURITIES

         Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to the Subordinated Debt Securities.

         The Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior payment
in full of all Senior Debt, including the Senior Debt Securities. Upon any
payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshalling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Senior Debt will first be
entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt before the holders of the Subordinated
Debt Securities will be entitled to receive or retain any payment in respect of
the principal of (and premium, if any) or interest, if any, on the Subordinated
Debt Securities. (Article Fifteen of the Subordinated Indenture)

         By reason of such subordination, in the event of liquidation or
insolvency, creditors of the Company who are not holders of Senior Debt or
Subordinated Debt Securities may recover less, ratably, than holders of Senior
Debt and may recover more, ratably, than the holders of the Subordinated Debt
Securities.

         In the event of the acceleration of the maturity of any Subordinated
Debt Securities, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon before the Holders of the Subordinated Debt Securities will be
entitled to receive any payment upon the principal of (or premium, if any) or
interest, if any, on the Subordinated Debt Securities.

         No payments on account of principal (or premium, if any) or interest,
if any, in respect of the Subordinated Debt Securities may be made if there
shall have occurred and be continuing a default in any payment with respect to
Senior Debt, or an event of default with respect to any Senior Debt resulting
in the acceleration of the maturity thereof, or if any judicial proceeding
shall be pending with respect to any such default. For purposes of the
subordination provisions, the payment, issuance and delivery of cash, property
or securities (other than stock and certain subordinated securities of the
Company) upon conversion of a Subordinated Debt Security will be deemed to
constitute payment on account of the principal of such Subordinated Debt
Security.

         "Senior Debt" is defined to mean the principal of (and premium, if
any) and interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company to the
extent such claim for post-petition interest is allowed in such proceeding) on
all indebtedness of the Company (including indebtedness of others guaranteed by
the Company), other than the Subordinated Debt Securities whether outstanding
on the date of the Subordinated Indenture or thereafter created, incurred or
assumed, which is: (i) for money borrowed, (ii) evidenced by a note or similar
instrument given in connection with the acquisition of any businesses,
properties or assets of any kind or (iii) obligations of the Company as lessee
under leases required to be capitalized on the balance sheet of the lessee
under generally accepted accounting principles or leases of property or assets
made as part of any sale and lease-back transaction to which the Company is a
party, including amendments, renewals, extensions, modifications and refundings
of any such indebtedness or obligation, unless in any case in the instrument
creating or evidencing any such indebtedness or obligation or pursuant to which
the same is outstanding it is provided that such indebtedness or obligation is
not superior in right of payment to the Subordinated Debt Securities.

                                      -12-

   15

         The Subordinated Indenture does not limit or prohibit the incurrence
of additional Senior Debt, which may include indebtedness that is senior to the
Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities, when issued, will constitute Senior Debt.

         The Prospectus Supplement will set forth the aggregate amount of
outstanding indebtedness as of the most recent practicable date that by the
terms of such indebtedness and the terms of the offered Subordinated Debt
Securities would rank senior to or pari passu with such Subordinated Debt
Securities and any limitation on the issuance of additional senior or pari
passu indebtedness. The Prospectus Supplement may further describe the
provisions, if any, applicable to the subordination of the Subordinated Debt
Securities of a particular series.

GOVERNING LAW

         The Indentures and the Debt Securities will be governed by, and
construed in accordance with, the laws of the State of New York. (Section 112)

REGARDING THE TRUSTEES

         The Company and certain of its subsidiaries in the ordinary course of
business maintain general banking relations with The Bank of New York. Pursuant
to the provisions of the Trust Indenture Act of 1939, upon a default under
either the Senior Indenture or the Subordinated Indenture, The Bank of New York
may be deemed to have a conflicting interest by virtue of its acting as both
the Senior Trustee and the Subordinated Trustee requiring it to resign and be
replaced by a successor trustee in one of such positions.

                  DESCRIPTION OF SHARES OF BENEFICIAL INTEREST

         The following descriptions and the descriptions contained in
"Description of Preferred Shares" and "Description of Common Shares" do not
purport to be complete and are subject to, and qualified in their entirety by
reference to, the more complete descriptions thereof set forth in the following
documents: (i) the Company's Amended and Restated Declaration of Trust (the
"Declaration of Trust"); and (ii) its Bylaws, which documents are exhibits to
this Registration Statement.

         For the Company to qualify as a REIT under the Internal Revenue Code
of 1986, as amended (the "Code"), not more than 50% of the value of the
outstanding stock may be owned, directly or indirectly, by five or fewer
individuals (as defined in the Code to include certain entities) during the
last half of a taxable year and the stock must be beneficially owned by 100 or
more persons during at least 335 days of a taxable year of 12 months (or during
a proportionate part of a shorter taxable year). Accordingly, the Declaration
of Trust contains provisions that restrict the ownership and transfer of shares
of beneficial interest.

         The Declaration of Trust authorizes the issuance of up to 102,000,000
shares, consisting of 50,000,000 common shares of beneficial interest, $.04 par
value per share ("Common Shares"), 1,000,000 preferred shares of beneficial
interest, no par value per share ("Preferred Shares"), and 51,000,000 excess
shares of beneficial interest, $.04 par value per share ("Excess Shares").

DESCRIPTION OF PREFERRED SHARES

         The following is a description of certain general terms and provisions
of the Preferred Shares. The particular terms of any series of Preferred Shares
will be described in the applicable Prospectus Supplement. If so indicated in a
Prospectus Supplement, the terms of any such series may differ from the terms
set forth below.

         The summary of terms of the Company's Preferred Shares contained in
this Prospectus does not purport to be complete and is subject to, and
qualified in its entirety by, the provisions of the Declaration of Trust and
the

                                      -13-

   16

articles supplementary relating to each series of the Preferred Shares (the
"Articles Supplementary"), which will be filed as an exhibit to or incorporated
by reference in the Registration Statement of which this Prospectus is a part
at or prior to the time of issuance of such series of the Preferred Shares.

         The Declaration of Trust authorizes the issuance of 1,000,000
Preferred Shares. No Preferred Shares are outstanding as of the date of this
Prospectus. The Preferred Shares authorized by the Declaration of Trust may be
issued from time to time in one or more series in such amounts and with such
designations, preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption as may be fixed by the Board of Trustees. Under
certain circumstances, the issuance of Preferred Shares could have the effect
of delaying, deferring or preventing a change of control of the Company and may
adversely affect the voting and other rights of the holders of Common Shares.
The Declaration of Trust authorizes the Board of Trustees to classify or
reclassify any unissued Preferred Shares by setting or changing the
designations, preferences, conversion or other rights, voting powers,
restrictions, limitations as to distributions, qualifications and terms and
conditions of redemption of such Preferred Shares.

         The Preferred Shares shall have the dividend, liquidation, redemption
and voting rights set forth below unless otherwise described in a Prospectus
Supplement relating to a particular series of the Preferred Shares. The
applicable Prospectus Supplement will describe the following terms of the
series of Preferred Shares in respect of which this Prospectus is being
delivered: (1) the title of such Preferred Shares and the number of shares
offered; (2) the amount of liquidation preference per share; (3) the initial
public offering price at which such Preferred Shares will be issued; (4) the
dividend rate (or method of calculation), the dates on which dividends shall be
payable and the dates from which dividends shall commence to cumulate, if any;
(5) any redemption or sinking fund provisions; (6) any conversion or exchange
rights; (7) any additional voting, dividend, liquidation, redemption, sinking
fund and other rights, preferences, privileges, limitations and restrictions;
(8) any listing of such Preferred Shares on any securities exchange; (9) a
discussion of federal income tax considerations applicable to such Preferred
Shares; (10) the relative ranking and preferences of such Preferred Shares as
to dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company; (11) any limitations on issuance of any series of
Preferred Shares ranking senior to or on a parity with such series of Preferred
Shares as to dividend rights and rights upon liquidation, dissolution or
winding up of the affairs of the Company; and (12) any limitations on direct or
beneficial ownership and restrictions on transfer, in each case as may be
appropriate to preserve the status of the Company as a REIT.

         General

         The Preferred Shares offered hereby will be issued in one or more
series. The Preferred Shares, upon issuance against full payment of the
purchase price therefor, will be fully paid and nonassessable. The liquidation
preference is not indicative of the price at which the Preferred Shares will
actually trade on or after the date of issuance.

         Rank

         The Preferred Shares shall, with respect to dividend rights and rights
upon liquidation, dissolution and winding up of the Company, rank prior to the
Common Shares and Excess Shares (other than certain Excess Shares resulting
from the conversion of Preferred Shares) and to all other classes and series of
equity securities of the Company now or hereafter authorized, issued or
outstanding (the Common Shares and such other classes and series of equity
securities collectively may be referred to herein as the "Junior Stock"), other
than any classes or series of equity securities of the Company which by their
terms specifically provide for a ranking on a parity with (the "Parity Stock")
or senior to (the "Senior Stock") the Preferred Shares as to dividend rights
and rights upon liquidation, dissolution or winding up of the Company. The
Preferred Shares shall be junior to all outstanding debt of the Company. The
Preferred Shares shall be subject to creation of Senior Stock, Parity Stock and
Junior Stock to the extent not expressly prohibited by the Declaration of
Trust.

                                      -14-

   17
         Dividends

         Holders of Preferred Shares shall be entitled to receive, when, as and
if declared by the Board of Trustees out of assets of the Company legally
available for payment, dividends, or distributions in cash, property or other
assets of the Company or in Securities of the Company or from any other source
as the Board of Trustees in their discretion shall determine and at such dates
and at such rates per share per annum as described in the applicable Prospectus
Supplement. Such rate may be fixed or variable or both. Each declared dividend
shall be payable to holders of record as they appear at the close of business
on the books of the Company on such record dates, not more than 90 calendar
days preceding the payment dates therefor, as are determined by the Board of
Trustees (each of such dates, a "Record Date").

         Such dividends may be cumulative or noncumulative, as described in the
applicable Prospectus Supplement. If dividends on a series of Preferred Shares
are noncumulative and if the Board of Trustees fails to declare a dividend in
respect of a dividend period with respect to such series, then holders of such
Preferred Shares will have no right to receive a dividend in respect of such
dividend period, and the Company will have no obligation to pay the dividend
for such period, whether or not dividends are declared payable on any future
dividend payment dates. If dividends of a series of Preferred Shares are
cumulative, the dividends on such shares will accrue from and after the date
set forth in the applicable Prospectus Supplement.

         No full dividends shall be declared or paid or set apart for payment
on Preferred Shares of any series ranking, as to dividends, on a parity with or
junior to the series of Preferred Shares offered by the applicable Prospectus
Supplement for any period unless full dividends for the immediately preceding
dividend period on such Preferred Shares (including any accumulation in respect
of unpaid dividends for prior dividend periods, if dividends on such Preferred
Shares are cumulative) have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof is set apart for such
payment. When dividends are not so paid in full (or a sum sufficient for such
full payment is not so set apart) upon such Preferred Shares and any other
Preferred Shares of the Company ranking on a parity as to dividends with the
Preferred Shares, dividends upon such Preferred Shares and dividends on such
other Preferred Shares ranking on a parity with the Preferred Shares shall be
declared pro rata so that the amount of dividends declared per share on such
Preferred Shares and such other Preferred Shares ranking on a parity with the
Preferred Shares shall in all cases bear to each other the same ratio that
accrued dividends for the then-current dividend period per share on such
Preferred Shares (including any accumulation in respect of unpaid dividends for
prior dividend periods, if dividends on such Preferred Shares are cumulative)
and accrued dividends, including required or permitted accumulations, if any,
on shares of such other Preferred Shares, bear to each other. No interest, or
sum of money in lieu of interest, shall be payable in respect of any dividend
payment(s) on Preferred Shares which may be in arrears. Unless full dividends
on the series of Preferred Shares offered by the applicable Prospectus
Supplement have been declared and paid or set apart for payment for the
immediately preceding dividend period (including any accumulation in respect of
unpaid dividends for prior dividend periods, if dividends on such Preferred
Shares are cumulative), (a) no cash dividend or distribution (other than in
shares of Junior Stock) may be declared, set aside or paid on the Junior Stock,
(b) the Company may not, directly or indirectly, repurchase, redeem or
otherwise acquire any shares of its Junior Stock (or pay any monies into a
sinking fund for the redemption of any shares) except by conversion into or
exchange for Junior Stock, and (c) the Company may not, directly or indirectly,
repurchase, redeem or otherwise acquire any Preferred Shares or Parity Stock
(or pay any monies into a sinking fund for the redemption of any shares of any
such stock) otherwise than pursuant to pro rata offers to purchase or a
concurrent redemption of all, or a pro rata portion, of the outstanding
Preferred Shares and shares of Parity Stock (except by conversion into or
exchange for Junior Stock).

         Any dividend payment made on a series of Preferred Shares shall first
be credited against the earliest accrued but unpaid dividend due with respect
to shares of such series.

                                      -15-
   18
         Redemption

         The terms, if any, on which Preferred Shares of any series may be
redeemed will be set forth in the applicable Prospectus Supplement.

         Liquidation

         In the event of a voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, the holders of a series of Preferred
Shares will be entitled, subject to the rights of creditors, but before any
distribution or payment to the holders of Common Shares, Excess Shares (other
than certain Excess Shares resulting from the conversion of Preferred Shares)
or any Junior Stock on liquidation, dissolution or winding up of the Company,
to receive a liquidating distribution in the amount of the liquidation
preference per share as set forth in the applicable Prospectus Supplement plus
accrued and unpaid dividends for the then-current dividend period (including
any accumulation in respect of unpaid dividends for prior dividend periods, if
dividends on such series of Preferred Shares are cumulative). If the amounts
available for distribution with respect to the Preferred Shares and all other
outstanding Parity Stock are not sufficient to satisfy the full liquidation
rights of all the outstanding Preferred Shares and Parity Stock, then the
holders of each series of such stock will share ratably in any such
distribution of assets in proportion to the full respective preferential amount
(which in the case of Preferred Shares may include accumulated dividends) to
which they are entitled. After payment of the full amount of the liquidation
distribution, the holders of Preferred Shares will not be entitled to any
further participation in any distribution of assets by the Company.

         Voting

         The Preferred Shares of a series will not be entitled to vote, except
as described below or in the applicable Prospectus Supplement. Without the
affirmative vote of a majority of the Preferred Shares then outstanding (voting
separately as a class together with any Parity Stock), the Company may not (i)
increase or decrease the aggregate number of authorized shares of such class or
any security ranking prior to the Preferred Shares, (ii) increase or decrease
the par value of the shares of holders of such class, or (iii) alter or change
the voting or other powers, preferences or special rights of such class so as
to affect them adversely. An amendment which increases the number of authorized
shares of or authorizes the creation or issuance of other classes or series of
Junior Stock or Parity Stock, or substitutes the surviving entity in a merger,
consolidation, reorganization or other business combination for the Company,
shall not be considered to be such an adverse change.

         No Other Rights

         The shares of a series of Preferred Shares will not have any
preferences, voting powers or relative, participating, optional or other special
rights except as set forth above or in the applicable Prospectus Supplement, the
Declaration of Trust and in the applicable Articles Supplementary or as
otherwise required by law.

         Transfer Agent and Registrar

         The transfer agent for each series of Preferred Shares will be
described in the related Prospectus Supplement.

         Restrictions on Ownership

         As discussed below, for the Company to qualify as a REIT under the
Code, not more than 50% in value of its outstanding shares of beneficial
interest may be owned, directly or constructively, by five or fewer individuals
(as defined in the Code to include certain entities) during the last half of a
taxable year, and the shares of beneficial interest must be beneficially owned
by 100 or more persons during at least 335 days of a taxable year of 12 months
(or during a proportionate part of a shorter taxable year). Therefore, the
Declaration of Trust contains, and the

                                      -16-

   19

Articles Supplementary for each series of Preferred Shares may contain,
provisions restricting the ownership and transfer of the Preferred Shares.

         In order to prevent any Company shareholder from owning shares in an
amount which would cause more than 50% of the value of the outstanding shares
of the Company to be held by five or fewer individuals, the Declaration of
Trust contains a limitation that restricts shareholders from owning, under the
applicable attribution rules of the Code, more than 9.9% of the outstanding
Preferred Shares of any series (the "Preferred Shares Beneficial Ownership
Limit"). The attribution rules which apply for purposes of the Common Shares
Beneficial Ownership Limit (as defined below) also apply for purposes of the
Preferred Shares Beneficial Ownership Limit. See "Description of Common Shares
- -- Restrictions on Ownership". Shareholders should be aware that events other
than a purchase or other transfer of Preferred Shares may result in ownership,
under the applicable attribution rules of the Code, of Preferred Shares in
excess of the Preferred Shares Beneficial Ownership Limit. Shareholders are
urged TO consult their own tax advisors concerning the application of the
attribution rules of the Code in their particular circumstances.

   
         Holders of Preferred Shares are also subject to the Constructive
Ownership Limit (as defined below in "Description of Common Shares --
Restrictions on Ownership"), which restricts them from owning, under the
applicable attribution rules of the Code, more than 9.9% of the outstanding
Preferred Shares of any series. The attribution rules which apply for purposes
of the Constructive Ownership Limit differ from those that apply for purposes
of the Preferred Shares Beneficial Ownership Limit. See "Description of Common
Shares -- Restrictions on Ownership". Shareholders should be aware that events
other than a purchase or other transfer of Preferred Shares may result in
ownership, under the applicable attribution rules of the Code, of Preferred
Shares in excess of the Constructive Ownership Limit. Shareholders are urged
to consult their own tax advisors concerning the application of the attribution
rules of the Code in their particular circumstances.

         The Declaration of Trust provides that a transfer of Preferred Shares
that would otherwise result in ownership, under the applicable attribution
rules of the Code, of Preferred Shares in excess of the Preferred Shares
Beneficial Ownership Limit or the Constructive Ownership Limit, or which would
cause the shares of beneficial interest of the Company to be beneficially owned
by fewer than 100 persons, will be null and void and the purported transferee
will acquire no rights or economic interest in such Preferred Shares. In
addition, Preferred Shares that would otherwise be owned, under the applicable
attribution rules of the Code, in excess of the Preferred Shares Beneficial
Ownership Limit or the Constructive Ownership Limit will be automatically
exchanged for Excess Shares that will be transferred, by operation of law, to
the Company as trustee of a trust for the exclusive benefit of a beneficiary
designated by the purported transferee or purported holder. While so held in
trust, Excess Shares are not entitled to vote and are not entitled to
participate in any dividends or distributions made by the Company. Any
dividends or distributions received by the purported transferee or other
purported holder of such Excess Shares prior to the discovery by the Company of
the automatic exchange for Excess Shares shall be repaid to the Company upon
demand.

         If the purported transferee or purported holder elects to designate a
beneficiary of an interest in the trust with respect to such Excess Shares,
only a person whose ownership of the shares will not violate the Preferred
Shares Beneficial Ownership Limit or the Constructive Ownership Limit may be
designated, at which time the Excess Shares will be automatically exchanged for
Preferred Shares of the same class as the Preferred Shares which were
originally exchanged for such Excess Shares. The Declaration of Trust contains
provisions designed to ensure that the purported transferee or other purported
holder of the Excess Shares may not receive in return for such a transfer an
amount that reflects any appreciation in the Preferred Shares for which such
Excess Shares were exchanged during the period that such Excess Shares were
outstanding but will bear the burden of any decline in value during such
period. Any amount received by a purported transferee or other purported holder
for designating a beneficiary in excess of the amount permitted to be received
must be turned over to the Company. The Declaration of Trust provides that the
Company may purchase any Excess Shares that have been automatically exchanged
for Preferred Shares as a result of a purported transfer or other event.  The
price at which the Company may purchase such Excess Shares shall be equal to
the lesser of (i) in the case of Excess Shares resulting from a purported
transfer

                                      -17-

   20

for value, the price per share in the purported transfer that resulted in the
automatic exchange for Excess Shares or, in the case of Excess Shares resulting
from some other event, the market price of the Preferred Shares exchanged on the
date of the automatic exchange for Excess Shares and (ii) the market price of
the Preferred Shares exchanged for such Excess Shares on the date that the
Company accepts the deemed offer to sell such Excess Shares. The Company's
purchase right with respect to Excess Shares shall exist for 90 days, beginning
on the date that the automatic exchange for Excess Shares occurred or, if the
Company did not receive a notice concerning the purported transfer that resulted
in the automatic exchange for Excess Shares, the date that the Board of Trustees
determines in good faith that an exchange for Excess Shares has occurred.

         The Board of Trustees may exempt certain persons from the Preferred
Shares Beneficial Ownership Limit or the Constructive Ownership Limit if
evidence satisfactory to the trustees is presented showing that such exemption
will not jeopardize the Company's status as a REIT under the Code. As a
condition of such exemption, the Board of Trustees may require a ruling from
the Internal Revenue Service and/or an opinion of counsel satisfactory to it
and/or representations and undertakings from the applicant with respect to
preserving the REIT status of the Company.

         The foregoing restrictions on transferability and ownership will not
apply if the Board of Trustees determines that it is no longer in the best
interests of the Company to attempt to qualify, or to continue to qualify, as a
REIT.

         All certificates representing Preferred Shares will bear a legend
referring to the restrictions described above.

         All persons who own, directly or by virtue of the applicable
attribution rules of the Code, more than 2% of the outstanding Preferred Shares
of any series must give a written notice to the Company containing the
information specified in the Declaration of Trust by January 30 of each year. In
addition, each shareholder shall upon demand be required to disclose to the
Company such information as the Company may request, in good faith, in order to
determine the Company's status as a REIT or to comply with Treasury Regulations
promulgated under the REIT provisions of the Code.

DEPOSITARY SHARES

         The description set forth below and in any Prospectus Supplement of
certain provisions of the Deposit Agreement and of the Depositary Shares and
Depositary Receipts (each as defined below) does not purport to be complete and
is subject to and qualified in its entirety by reference to the forms of
Deposit Agreement and Depositary Receipts relating to each series of the
Preferred Stock which have been or will be filed with the Commission at or
prior to the time of the offering of such series of the Preferred Stock.  If so
indicated in a Prospectus Supplement, the terms of any series of Depositary
Shares may differ from the terms set forth herein.

         General

         The Company may, at its option, elect to offer receipts for fractional
interests ("Depositary Shares") in Preferred Shares, rather than full Preferred
Shares. In such event, receipts ("Depositary Receipts") for Depositary Shares,
each of which will represent a fraction (to be set forth in the Prospectus
Supplement relating to a particular series of Preferred Shares) of a share of a
particular series of Preferred Shares, will be issued as described below.

         The shares of any series of Preferred Shares represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Company and the depositary (the "Depositary"). Subject to the terms
of the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a Preferred Share represented by such
Depositary Share, to all the rights and preferences of the Preferred Shares
represented thereby (including dividend, voting, redemption, subscription and
liquidation rights).

                                      -18-

   21

         Dividends and Other Distributions

         The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Shares to the record holders
of Depositary Shares relating to such Preferred Shares in proportion to the
numbers of such Depositary Shares owned by such holders.

         In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
in an equitable manner, unless the Depositary determines that it is not
feasible to make such distribution, in which case the Depositary may sell such
property and distribute the net proceeds from such sale to such holders.

         WITHDRAWAL OF PREFERRED STOCK

   
         Upon surrender of Depositary Receipts at the corporate trust office of
the depositary (unless the related Depositary Shares have previously been called
for redemption or converted into Excess Shares or otherwise), the holders
thereof will be entitled to delivery at such office, to or upon such holder's
order, of the number of whole or fractional shares of the class or series of
Preferred Shares and any money or other property represented by the Depositary
Shares evidenced by such Depositary Receipts. Holders of Depositary Receipts
will be entitled to receive whole or fractional shares of the related class or
series of Preferred Shares on the basis of the proportion of Preferred Shares
represented by each Depositary Share as specified in the applicable Prospectus
Supplement, but holders of such Preferred Shares will not thereafter be entitled
to receive Depositary Shares thereof. If the Depositary Receipts delivered by
the holder evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of shares of Preferred Shares to be
withdrawn, the Depositary will deliver to such holder at the same time a new
Depositary Receipt evidencing such excess number of Depositary Shares.

         Redemption of Depositary Shares

         If a series of Preferred Shares represented by Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of Preferred Shares held by the Depositary. The redemption price
per Depositary Share will be equal to the applicable fraction of the redemption
price per share payable with respect to such series of the Preferred Shares.
Whenever the Company redeems Preferred Shares held by the Depositary, the
Depositary will redeem as of the same redemption date the number of Depositary
Shares representing Preferred Shares so redeemed. If fewer than all the
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will
be selected by lot, pro rata or by any other equitable method as may be
determined by the Depositary.

         Voting the Preferred Shares

         Upon receipt of notice of any meeting at which the holders of the
Preferred Shares are entitled to vote, the Depositary will mail the information
contained in such notices of meeting to the record holders of the Depositary
Shares relating to such Preferred Shares. Each record holder of such Depositary
Shares on the record date (which will be the same date as the record date for
the Preferred Shares) will be entitled to instruct the Depositary as to the
exercise of the voting rights pertaining to the amount of the Preferred Shares
represented by such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the amount of the Preferred Shares represented
by such Depositary Shares in accordance with such instructions, and the Company
will agree to take all reasonable action which may be deemed necessary by the
Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting the Preferred Shares to the extent it does not receive
specific instructions from the holder of Depositary Shares representing such
Preferred Shares.

         Amendment and Termination of the Deposit Agreement

                                      -19-

   22

         The form of Depositary Receipt evidencing the Depositary Shares and
any provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the holders of Depositary Shares will not be
effective unless such amendment has been approved by the holders of at least a
majority of the Depositary Shares then outstanding. The Deposit Agreement will
only terminate if (i) all outstanding Depositary Shares have been redeemed or
(ii) there has been a final distribution in respect of the Preferred Shares in
connection with any liquidation, dissolution or winding up of the Company and
such distribution has been distributed to the holders of the related Depositary
Shares.

         Charges of Depositary

         The Company will pay all transfer and other taxes and governmental
charges arising solely from the existence of the depositary arrangements. The
Company will pay charges of the Depositary in connection with the initial
deposit of the Preferred Shares and issuance of Depositary Receipts, all
withdrawals of Preferred Shares by owners of Depositary Shares and any
redemption of the Preferred Shares. Holders of Depositary Receipts will pay
other transfer and other taxes and governmental charges and such other charges
as are expressly provided in the Deposit Agreement to be for their accounts.

         Resignation and Removal of Depositary

         The Depositary may resign at any time by delivering to the Company
notice of its election to do so, and the Company may at any time remove the
Depositary, any such resignation or removal to take effect upon the appointment
of a successor Depositary and its acceptance of such appointment. Such
successor Depositary must be appointed within 60 days after delivery of the
notice of resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.

         Restrictions on Ownership

         In order to safeguard the Company against an inadvertent loss of REIT
status, the Deposit Agreement or the Declaration of Trust will contain
provisions restricting the ownership and transfer of Depositary Shares. Such
restrictions will be described in the applicable Prospectus Supplement.

         Miscellaneous

         The Depositary will forward all reports and communications from the
Company which are delivered to the Depositary and which the Company is required
or otherwise determines to furnish to the holders of the Preferred Shares.

         Neither the Depositary nor the Company will be liable if it is
prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Depositary under the Deposit Agreement will be limited to
performance in good faith of their duties thereunder and they will not be
obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Preferred Shares unless satisfactory indemnity is
furnished. They may rely upon written advice of counsel or accountants, or
information provided by persons presenting Preferred Shares for deposit,
holders of Depositary Shares or other persons believed to be competent and on
documents believed to be genuine.

DESCRIPTION OF COMMON SHARES

         As of August 1, 1995, 24,238,937 Common Shares were issued and
outstanding and no Preferred Shares or Excess Shares are issued and
outstanding. The Common Shares of the Company are listed on the New York Stock
Exchange under the symbol "VNO".

                                      -20-

   23

         The holders of Common Shares are entitled to receive dividends when,
if and as declared by the Board of Trustees of the Company out of assets
legally available therefor, provided that if any Preferred Shares are at the
time outstanding, the payment of dividends on Common Shares or other
distributions (including purchases of Common Shares) may be subject to the
declaration and payment of full cumulative dividends, and the absence of
arrearages in any mandatory sinking fund, on outstanding Preferred Shares.

         The holders of Common Shares are entitled to one vote for each share
on all matters voted on by stockholders, including elections of trustees. There
is no cumulative voting in the election of trustees, which means that the
holders of a majority of the outstanding Common Shares can elect all of the
trustees then standing for election. The holders of Common Shares do not have
any conversion, redemption or preemptive rights to subscribe to any securities
of the Company. In the event of the dissolution, liquidation or winding up,
holders of Common Shares are entitled to share ratably in any assets remaining
after the satisfaction in full of the prior rights of creditors, including
holders of the Company's indebtedness, and the aggregate liquidation preference
of any Preferred Shares then outstanding.

         The Common Shares have equal dividend, distribution, liquidation and
other rights, and shall have no preference, appraisal or exchange rights. All
outstanding shares of Common Shares are, and any Common Shares offered by a
Prospectus Supplement, upon issuance, will be, fully paid and non-assessable.

         The transfer agent for the Common Shares is First Fidelity Bank, N.A.,
New Jersey.

         Restrictions on Ownership

         The Declaration of Trust contains a number of provisions which
restrict the ownership and transfer of shares and which are designed to
safeguard the Company against an inadvertent loss of REIT status. In order to
prevent any Company shareholder from owning shares in an amount which would
cause more than 50% in value of the outstanding shares of the Company to be
owned by five or fewer individuals, the Declaration of Trust contains a
limitation that restricts, with certain exceptions, shareholders from owning,
under the applicable attribution rules of the Code, more than 2.0% of the
outstanding Common Shares (the "Common Shares Beneficial Ownership Limit"). The
shareholders who owned, under the applicable attribution rules of the Code,
more than 2.0% of the Common Shares immediately after the merger of Vornado,
Inc. into the Company in May 1993 (the "Merger") may continue to do so and may
acquire additional Common Shares through stock option and similar plans or from
other shareholders who owned, under the applicable attribution rules of the
Code, more than 2.0% of the Common Shares immediately after the Merger, subject
to the restriction that Common Shares cannot be transferred if, as a result,
more than 50% in value of the outstanding shares of the Company would be owned
by five or fewer individuals. While such shareholders are not generally
permitted to acquire additional Common Shares from any other source, such
shareholders may acquire additional Common Shares from any source in the event
that additional Common Shares are issued by the Company, up to the percentage
held by them immediately prior to such issuance.

         Shareholders should be aware that events other than a purchase or
other transfer of Common Shares can result in ownership, under the applicable
attribution rules of the Code, of Common Shares in excess of the Common Shares
Beneficial Ownership Limit. For instance, if two shareholders, each of whom
owns, under the applicable attribution rules of the Code, 1.5% of the
outstanding Common Shares, were to marry, then after their marriage both
shareholders would own, under the applicable attribution rules of the Code,
3.0% of the outstanding Common Shares, which is in excess of the Common Shares
Beneficial Ownership Limit. Similarly, if a shareholder who owns, under the
applicable attribution rules of the Code, 1.9% of the outstanding Common Shares
were to purchase a 50% interest in a corporation which owns 1.8% of the
outstanding Common Shares, then the shareholder would own, under the applicable
attribution rules of the Code, 2.8% of the outstanding Common Shares.
Shareholders are urged to consult their own tax advisers concerning the
application of the attribution rules of the Code in their particular
circumstances.

                                      -21-

   24

         Under the Code, rental income received by a REIT from persons in which
the REIT is treated, under the applicable attribution rules of the Code, as
owning a 10% or greater interest does not constitute qualifying income for
purposes of the income requirements that REITs must satisfy. For these
purposes, a REIT is treated as owning any stock owned, under the applicable
attribution rules of the Code, by a person that owns 10% or more of the value
of the outstanding shares of the REIT. Therefore, in order to ensure that
rental income of the Company will not be treated as nonqualifying income under
the rule described above, and thus to ensure that there will not be an
inadvertent loss of REIT status as a result of the ownership of shares of a
tenant, or a person that holds an interest in a tenant, the Declaration of
Trust also contains an ownership limit that restricts, with certain exceptions,
shareholders from owning, under the applicable attribution rules of the Code
(which are different from those applicable with respect to the Common Shares
Beneficial Ownership Limit), more than 9.9% of the outstanding shares of any
class (the "Constructive Ownership Limit"). The shareholders who owned, under
the applicable attribution rules of the Code, shares in excess of the
Constructive Ownership Limit immediately after the Merger generally are not
subject to the Constructive Ownership Limit. Subject to an exception for
tenants and subtenants from whom the REIT receives, directly or indirectly,
rental income that is not in excess of a specified threshold, the Declaration
of Trust also contains restrictions that are designed to ensure that the
shareholders who owned, under the applicable attribution rules of the Code,
shares in excess of the Constructive Ownership Limit immediately after the
Merger will not, in the aggregate, own an interest in a tenant or subtenant of
the REIT of sufficient magnitude to cause rental income received, directly or
indirectly, by the REIT from such tenant or subtenant to be treated as
nonqualifying income for purposes of the income requirements that REITs must
satisfy.

         Shareholders should be aware that events other than a purchase or
other transfer of shares can result in ownership, under the applicable
attribution rules of the Code, of shares in excess of the Constructive
Ownership Limit. As the attribution rules that apply with respect to the
Constructive Ownership Limit differ from those that apply with respect to the
Common Shares Beneficial Ownership Limit, the events other than a purchase or
other transfer of shares which can result in share ownership in excess of the
Constructive Ownership Limit can differ from those which can result in share
ownership in excess of the Common Shares Beneficial Ownership Limit.
Shareholders are urged to consult their own tax advisers concerning the
application of the attribution rules of the Code in their particular
circumstances.

         The Declaration of Trust provides that a transfer of Common Shares
that would otherwise result in ownership, under the applicable attribution
rules of the Code, of Common Shares in excess of the Common Shares Beneficial
Ownership Limit or the Constructive Ownership Limit, or which would cause the
shares of beneficial interest of the Company to be beneficially owned by fewer
than 100 persons, will be null and void and the purported transferee will
acquire no rights or economic interest in such Common Shares. In addition,
Common Shares that would otherwise be owned, under the applicable attribution
rules of the Code, in excess of the Common Shares Beneficial Ownership Limit or
the Constructive Ownership Limit will be automatically exchanged for Excess
Shares that will be transferred, by operation of law, to the Company as trustee
of a trust for the exclusive benefit of a beneficiary designated by the
purported transferee or purported holder. While so held in trust, Excess Shares
are not entitled to vote and are not entitled to participate in any dividends
or distributions made by the Company. Any dividends or distributions received
by the purported transferee or other purported holder of such Excess Shares
prior to the discovery by the Company of the automatic exchange for Excess
Shares shall be repaid to the Company upon demand.

         If the purported transferee or purported holder elects to designate a
beneficiary of an interest in the trust with respect to such Excess Shares,
only a person whose ownership of the shares will not violate the Common Shares
Beneficial Ownership Limit or the Constructive Ownership Limit may be
designated, at which time the Excess Shares will be automatically exchanged for
Common Shares. The Declaration of Trust contains provisions designed to ensure
that the purported transferee or other purported holder of the Excess Shares
may not receive in return for such a transfer an amount that reflects any
appreciation in the Common Shares for which such Excess Shares were exchanged
during the period that such Excess Shares were outstanding but will bear the
burden of any decline in value during such period. Any amount received by a
purported transferee or other purported holder for designating a beneficiary in
excess of the amount permitted to be received must be turned over to the
Company.

                                      -22-

   25

The Declaration of Trust provides that the Company may purchase any Excess
Shares that have been automatically exchanged for Common Shares as a result of a
purported transfer or other event. The price at which the Company may purchase
such Excess Shares shall be equal to the lesser of (i) in the case of Excess
Shares resulting from a purported transfer for value, the price per share in the
purported transfer that resulted in the automatic exchange for Excess Shares or,
in the case of Excess Shares resulting from some other event, the market price
of the Common Shares exchanged on the date of the automatic exchange for Excess
Shares and (ii) the market price of the Common Shares exchanged for such Excess
Shares on the date that the Company accepts the deemed offer to sell such Excess
Shares. The Company's purchase right with respect to Excess Shares shall exist
for 90 days, beginning on the date that the automatic exchange for Excess Shares
occurred or, if the Company did not receive a notice concerning the purported
transfer that resulted in the automatic exchange for Excess Shares, the date
that the Board of Trustees determines in good faith that an exchange for Excess
Shares has occurred.

         The Board of Trustees of the Company may exempt certain persons from
the Common Shares Beneficial Ownership Limit or the Constructive Ownership
Limit, including the limitations applicable to holders who owned in excess of
2.0% of the Common Shares immediately after the Merger, if evidence satisfactory
to the Board of Trustees is presented showing that such exemption will not
jeopardize the Company's status as a REIT under the Code. As a condition of such
exemption, the Board of Trustees may require a ruling from the Internal Revenue
Service and/or an opinion of counsel satisfactory to it and/or representations
and undertakings from the applicant with respect to preserving the REIT status
of the Company.

         The foregoing restrictions on transferability and ownership will not
apply if the Board of Trustees determines that it is no longer in the best
interests of the Company to attempt to qualify, or to continue to qualify, as a
REIT.

         All persons who own, directly or by virtue of the applicable
attribution rules of the Code, more than 2% of the outstanding Common Shares
must give a written notice to the Company containing the information specified
in the Declaration of Trust by January 31 of each year. In addition, each
shareholder shall upon demand be required to disclose to the Company such
information as the Company may request, in good faith, in order to determine
the Company's status as a REIT or to comply with Treasury Regulations
promulgated under the REIT provisions of the Code.

         The ownership restrictions described above may have the effect of
precluding acquisition of control of the Company unless the Board of Trustees
determines that maintenance of REIT status is no longer in the best interests
of the Company.

                          DESCRIPTION OF DEBT WARRANTS

         The Company may issue Debt Warrants to purchase Debt Securities ("Debt
Warrants"). Debt Warrants may be issued independently or together with any Debt
Securities and may be attached to or separate from such Debt Securities. The
Debt Warrants are to be issued under warrant agreements (each a "Warrant
Agreement") to be entered into between the Company and a bank or trust company,
as warrant agent (the "Warrant Agent"), all as shall be set forth in the
Prospectus Supplement relating to Debt Warrants being offered pursuant thereto.
If so indicated in a Prospectus Supplement, the terms of any Debt Warrants may
differ from the terms set forth below.

         The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and the debt warrant certificates representing such Debt Warrants, including
the following: (1) the title of such Debt Warrants; (2) the aggregate number of
such Debt Warrants; (3) the price or prices at which such Debt Warrants will be
issued; (4) the currency or currencies, including composite currencies or
currency units, in which the price of such Debt Warrants may be payable; (5)
the designation, aggregate principal amount and terms of the Debt Securities
purchasable upon exercise of such Debt Warrants, and the procedures and
conditions relating to the exercise of such Debt Warrants; (6) the designation
and

                                      -23-

   26

terms of any related Debt Securities with which such Debt Warrants are issued,
and the number of such Debt Warrants issued with each such Debt Security; (7)
the currency or currencies, including composite currencies or currency units,
in which the principal of (or premium, if any), or interest, if any, on the
Debt Securities purchasable upon exercise of such Debt Warrants will be
payable; (8) the date, if any, on and after which such Debt Warrants and the
related Debt Securities will be separately transferable; (9) the principal
amount of Debt Securities purchasable upon exercise of each Debt Warrant, and
the price at which and the currency, including composite currency or currency
unit, in which such principal amount of Debt Securities may be purchased upon
such exercise; (10) the date on which the right to exercise such Debt Warrants
shall commence, and the date on which such right shall expire; (11) the maximum
or minimum number of such Debt Warrants which may be exercised at any time;
(12) a discussion of material federal income tax considerations, if any; and
(13) any other terms of such Debt Warrants and terms, procedures and
limitations relating to the exercise of such Debt Warrants.

         Debt warrant certificates will be exchangeable for new debt warrant
certificates of different denominations and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated
in the Prospectus Supplement. Prior to the exercise of their Debt Warrants,
holders of Debt Warrants will not have any of the rights of holders of the Debt
Securities purchasable upon such exercise and will not be entitled to payments
of principal of (or premium, if any) or interest, if any, on the Debt
Securities purchasable upon such exercise.

EXERCISE OF DEBT WARRANTS

         Each Debt Warrant will entitle the holder of such Debt Warrant to
purchase for cash such principal amount of Debt Securities at such exercise
price as shall in each case be set forth in, or be determinable as set forth
in, the Prospectus Supplement relating to the Debt Warrants offered thereby.
Debt Warrants may be exercised at any time up to the close of business on the
expiration date set forth in the Prospectus Supplement relating to the Debt
Warrants offered thereby. After the close of business on the expiration date,
unexercised Debt Warrants will become void.

         Debt Warrants may be exercised as set forth in the Prospectus
Supplement relating to the Debt Warrants offered thereby.  Upon receipt of
payment and the warrant certificate properly completed and duly executed at the
corporate trust office of the Warrant Agent or any other office indicated in
the Prospectus Supplement, the Company will, as soon as practicable, forward
the Debt Securities purchasable upon such exercise. If less than all of the
Debt Warrants represented by such warrant certificate are exercised, a new
warrant certificate will be issued for the remaining Debt Warrants.

   
                       FEDERAL INCOME TAX CONSIDERATIONS

   

         The following summary of the taxation of the Company and the material
federal income tax consequences to holders of the Securities is for general
information only, and is not tax advice. The summary of the material federal
income tax consequences to holders of the Securities is based upon the opinion
of Sullivan & Cromwell, special federal income tax counsel to the Company. The
tax treatment of a holder of Securities will vary depending upon the holder's
particular situation, and this discussion addresses only holders that hold
Securities as capital assets and does not purport to deal with all aspects of
taxation that may be relevant to particular holders in light of their personal
investment or tax circumstances, or to certain types of holders (including
dealers in securities or currencies, banks, tax-exempt organizations, life
insurance companies, persons that hold Securities that are a hedge or that are
hedged against currency risks or that are part of a straddle or conversion
transaction) subject to special treatment under the federal income tax laws.
This summary is based on the Code, its legislative history, existing and
proposed regulations thereunder, published rulings and court decisions, all as
currently in effect and all subject to change at any time, perhaps with
retroactive effect.

                                      -24-
   27

INVESTORS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE TAX
CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND SALE OF SECURITIES,
INCLUDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF SUCH
ACQUISITION, OWNERSHIP AND SALE IN THEIR PARTICULAR CIRCUMSTANCES AND POTENTIAL
CHANGES IN APPLICABLE LAWS.

TAXATION OF THE COMPANY AS A REIT

         General

         The Company believes that, commencing with its taxable year ending
December 31, 1993, it has been organized and has operated in such a manner as
to qualify for taxation as a REIT under Sections 856 through 860 of the Code.
The Company intends to continue to qualify to be taxed as a REIT, but no
assurance of continued qualification can be given.

         The sections of the Code applicable to REITs are highly technical and
complex. The material aspects thereof are summarized below.

         As a REIT, the Company generally will not be subject to federal
corporate income taxes on its net income that is currently distributed to
shareholders. This treatment substantially eliminates the "double taxation" (at
the corporate and shareholder levels) that generally results from investment in
a regular corporation. However, the Company will be subject to federal income
tax as follows. First, the Company will be taxed at regular corporate rates on
any undistributed real estate investment trust taxable income, including
undistributed net capital gains. Second, under certain circumstances, the
Company may be subject to the "alternative minimum tax" on its items of tax
preference. Third, if the Company has (i) net income from the sale or other
disposition of "foreclosure property" which is held primarily for sale to
customers in the ordinary course of business or (ii) other non-qualifying
income from foreclosure property, it will be subject to tax at the highest
corporate rate on such income. Fourth, if the Company has net income from
"prohibited transactions" (which are, in general, certain sales or other
dispositions of property, other than foreclosure property, held primarily for
sale to customers in the ordinary course of business), such income will be
subject to a 100% tax. Fifth, if the Company should fail to satisfy the 75%
gross income test or the 95% gross income test (as discussed below), but has
nonetheless maintained its qualification as a REIT because certain other
requirements have been met, it will be subject to a 100% tax on an amount equal
to (a) the gross income attributable to the greater of the amount by which the
Company fails the 75% or 95% test, multiplied by (b) a fraction intended to
reflect the Company's profitability. Sixth, if the Company should fail to
distribute during each calendar year at least the sum of (i) 85% of its real
estate investment trust ordinary income for such year, (ii) 95% of its real
estate investment trust capital gain net income for such year, and (iii) any
undistributed taxable income from prior periods, the Company would be subject
to a 4% excise tax on the excess of such required distribution over the amounts
actually distributed. Seventh, if during the 10-year period (the "Recognition
Period") beginning on the first day of the first taxable year for which the
Company qualified as a REIT, the Company recognizes gain on the disposition of
any asset held by the Company as of the beginning of the Recognition Period,
then, to the extent of the excess of (a) fair market value of such asset as of
the beginning of the Recognition Period over (b) the Company's adjusted basis
in such asset as of the beginning of the Recognition Period (the "Built-in
Gain"), such gain will be subject to tax at the highest regular corporate rate
pursuant to Treasury regulations that have not been promulgated; provided,
however, that the Company shall not be subject to tax on recognized Built-in
Gain with respect to assets held as of the first day of the Recognition Period
to the extent that the aggregate amount of such recognized Built-in Gain
exceeds the net aggregate amount of the Company's unrealized Built-in Gain as
of the first day of the Recognition Period. Eighth, if the Company acquires any
asset from a C corporation (i.e., generally a corporation subject to full
corporate-level tax) in certain transactions in which the basis of the asset in
the hands of the Company is determined by reference to the basis of the asset
(or any other property) in the hands of the C corporation, and the Company
recognizes gain on the disposition of such asset during the Recognition Period
beginning on the date on which such asset was acquired by the Company, then,

                                      -25-

   28

pursuant to the Treasury regulations that have not yet been issued and to the
extent of the Built-in Gain, such gain will be subject to tax at the highest
regular corporate rate.

         Requirements for Qualification

         The Code defines a REIT as a corporation, trust or association (1)
which is managed by one or more trustees or directors, (2) the beneficial
ownership of which is evidenced by transferable shares, or by transferable
certificates of beneficial interest, (3) which would otherwise be taxable as a
domestic corporation, but for Sections 856 through 859 of the Code, (4) which
is neither a financial institution nor an insurance company subject to certain
provisions of the Code, (5) the beneficial ownership of which is held by 100 or
more persons, (6) during the last half of each taxable year, not more than 50%
in value of the outstanding stock of which is owned, directly or
constructively, by five or fewer individuals (as defined in the Code to include
certain entities) and (7) which meets certain other tests, described below,
regarding the nature of its income and assets. The Code provides that
conditions (1) to (4) must be met during the entire taxable year and that
condition (5) must be met during at least 335 days of a taxable year of 12
months, or during a proportionate part of a taxable year of less than 12
months. Conditions (5) and (6) do not apply until after the first taxable year
for which an election is made to be taxed as a REIT.

         The Company has satisfied condition (5) and believes that it has also
satisfied condition (6). In addition, the Company's Amended and Restated
Declaration of Trust provides for restrictions regarding the ownership and
transfer of the Company's shares of beneficial interest, which restrictions are
intended to assist the Company in continuing to satisfy the share ownership
requirements described in (5) and (6) above. The ownership and transfer
restrictions pertaining to the Common Shares are described above under the
headings "Description of Shares of Beneficial Interest--Description of
Preferred Shares--Restrictions on Ownership" and "Description of Shares of
Beneficial Interest--Description of Common Shares--Restrictions on Ownership."

         The Company owns and operates a number of properties through
wholly-owned subsidiaries. Code Section 856(i) provides that a corporation
which is a "qualified REIT subsidiary" shall not be treated as a separate
corporation, and all assets, liabilities, and items of income, deduction, and
credit of a "qualified REIT subsidiary" shall be treated as assets, liabilities
and such items (as the case may be) of the REIT. Thus, in applying the
requirements described herein, the Company's "qualified REIT subsidiaries" will
be ignored, and all assets, liabilities and items of income, deduction, and
credit of such subsidiaries will be treated as assets, liabilities and such
items (as the case may be) of the Company. The Company believes that all of its
wholly-owned subsidiaries are "qualified REIT subsidiaries."

         In the case of a REIT that is a partner in a partnership, Treasury
regulations provide that the REIT will be deemed to own its proportionate share
of the assets of the partnership and will be deemed to be entitled to the
income of the partnership attributable to such share. In addition, the
character of the assets and gross income of the partnership will retain the
same character in the hands of the REIT for purposes of Section 856 of the
Code, including satisfying the gross income tests and the asset tests. Thus,
the Company's proportionate share of the assets, liabilities and items of
income of any partnership in which the Company is a partner will be treated as
assets, liabilities and items of income of the Company for purposes of applying
the requirements described herein.

         Income Tests.  In order to maintain qualification as a REIT, the
Company annually must satisfy three gross income requirements. First, at least
75% of the Company's gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived directly or indirectly from
investments relating to real property or mortgages on real property (including
"rents from real property"--which term generally includes expenses of the
Company that are paid or reimbursed by tenants--and, in certain circumstances,
interest) or from certain types of temporary investments. Second, at least 95%
of the Company's gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived from such real property
investments, dividends, interest and gain from the sale or disposition of stock
or securities (or from any combination of the foregoing). Third, short-term
gain from the sale or other disposition of stock or securities, gain from
prohibited transactions and gain on the sale or other disposition of real
property held for less than four years (apart from involuntary

                                      -26-

   29

conversions and sales of foreclosure property) must represent less than 30% of
the Company's gross income (including gross income from prohibited transactions)
for each taxable year.

         Rents received by the Company will qualify as "rents from real
property" in satisfying the gross income requirements for a REIT described
above only if several conditions are met. First, the amount of rent must not be
based in whole or in part on the income or profits of any person. However, an
amount received or accrued generally will not be excluded from the terms "rents
from real property" solely by reason of being based on a fixed percentage or
percentages of receipts or sales. Second, the Code provides that rents received
from a tenant will not qualify as "rents from real property" in satisfying the
gross income tests if the REIT, directly or under the applicable attribution
rules, owns a 10% or greater interest in such tenant (a "Related Party
Tenant"). Third, if rent attributable to personal property leased in connection
with a lease of real property is greater than 15% of the total rent received
under the lease, then the portion of rent attributable to such personal
property will not qualify as "rents from real property". Finally, for rents
received to qualify as "rents from real property," the REIT generally must not
operate or manage the property or furnish or render services to the tenants of
such property, other than through an independent contractor from whom the REIT
derives no revenue; provided, however, that the Company may directly perform
certain services that are "usually or customarily rendered" in connection with
the rental of space for occupancy only and are not otherwise considered
"rendered to the occupant" of the property. The Company does not and will not
charge rent for any property to a Related Party Tenant, and the Company does
not and will not derive rental income attributable to personal property (other
than personal property leased in connection with the lease of real property,
the amount of which is less than 15% of the total rent received under the
lease). The Company directly performs services for certain of its tenants. The
Company does not believe that the provision of such services will cause its
gross income attributable to such tenants to fail to be treated as "rents from
real property."

         The term "interest" generally does not include any amount received or
accrued (directly or indirectly) if the determination of such amount depends in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "interest"
solely by reason of being based on a fixed percentage or percentages of
receipts or sales.

         If the Company fails to satisfy one or both of the 75% or 95% gross
income tests for any taxable year, it may nevertheless qualify as a REIT for
such year if it is entitled to relief under certain provisions of the Code.
These relief provisions will generally be available if the Company's failure to
meet such tests was due to reasonable cause and not due to willful neglect, the
Company attaches a schedule of the sources of its income to its federal income
tax return, and any incorrect information on the schedule was not due to fraud
with intent to evade tax. It is not possible, however, to state whether in all
circumstances the Company would be entitled to the benefit of these relief
provisions. As discussed above under "-- General," even if these relief
provisions apply, a tax would be imposed with respect to the excess net income.

         Asset Tests.  The Company, at the close of each quarter of its taxable
year, must also satisfy three tests relating to the nature of its assets.
First, at least 75% of the value of the Company's total assets must be
represented by real estate assets (including (i) real estate assets held by the
Company's qualified REIT subsidiaries and the Company's allocable share of real
estate assets held by partnerships in which the Company owns an interest, (ii)
stock or debt instruments held for not more than one year purchased with the
proceeds of a stock offering or long-term (at least five years) debt offering
of the Company and (iii) stock issued by another REIT), cash, cash items and
government securities. Second, not more than 25% of the Company's total assets
may be represented by securities other than those in the 75% asset class.
Third, of the investments included in the 25% asset class, the value of any one
issuer's securities (other than securities issued by another REIT) owned by the
Company may not exceed 5% of the value of the Company's total assets and the
Company may not own more than 10% of any one issuer's outstanding voting
securities.

         Since March 2, 1995, the Company has owned more than 10% of the voting
securities of Alexander's and the value of such securities may represent more
than 5% of the value of the total assets of the Company. The

                                      -27-

   30
Company's ownership interest in Alexander's will not cause the Company to fail
to satisfy the asset tests for REIT status so long as Alexander's qualifies as a
REIT. The Company believes that Alexander's will so qualify commencing with its
taxable year beginning January 1, 1995.

         During 1995 the Company transferred certain contract rights and
obligations to Vornado Management Corp., a New Jersey corporation ("VMC"), in
return for all of VMC's nonvoting preferred stock (the "Nonvoting Stock").  The
Company's ownership of the Nonvoting Stock entitles it to 95% of the dividends
paid by VMC.  The Company does not believe that its ownership of the Nonvoting
Stock will adversely affect its ability to satisfy the asset tests described in
the second preceding paragraph.

         Annual Distribution Requirements.  The Company, in order to qualify as
a REIT, is required to distribute dividends (other than capital gain dividends)
to its shareholders in an amount at least equal to (A) the sum of (i) 95% of
the Company's "real estate investment trust taxable income" (computed without
regard to the dividends paid deduction and the Company's net capital gain) and
(ii) 95% of the net income (after tax), if any, from foreclosure property minus
(B) the sum of certain items of non-cash income. In addition, if the Company
disposes of any asset during its Recognition Period, the Company will be
required, pursuant to Treasury regulations which have not yet been promulgated,
to distribute at least 95% of the Built-in Gain (after tax), if any, recognized
on the disposition of such asset. Such distributions must be paid in the
taxable year to which they relate, or in the following taxable year if declared
before the Company timely files its tax return for such year and if paid on or
before the first regular dividend payment after such declaration. To the extent
that the Company does not distribute all of its net capital gain or distributes
at least 95%, but less than 100%, of its "real estate investment trust taxable
income," as adjusted, it will be subject to tax thereon at regular ordinary and
capital gain corporate tax rates. Furthermore, if the Company should fail to
distribute during each calendar year at least the sum of (i) 85% of its
ordinary income for such year, (ii) 95% of its capital gain net income for such
year, and (iii) any undistributed taxable income from prior periods, the
Company would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed. The Company intends to
satisfy the annual distribution requirements.

         It is possible that the Company, from time to time, may not have
sufficient cash or other liquid assets to meet the 95% distribution requirement
due to timing differences between (i) the actual receipt of income and actual
payment of deductible expenses and (ii) the inclusion of such income and
deduction of such expenses in arriving at taxable income of the Company. In the
event that such timing differences occur, in order to meet the 95% distribution
requirement, the Company may find it necessary to arrange for short-term, or
possibly long-term, borrowings or to pay dividends in the form of taxable stock
dividends.

         Under certain circumstances, the Company may be able to rectify a
failure to meet the distribution requirement for a year by paying "deficiency
dividends" to shareholders in a later year, which may be included in the
Company's deduction for dividends paid for the earlier year. Thus, the Company
may be able to avoid being taxed on amounts distributed as deficiency
dividends; however, the Company will be required to pay interest based upon the
amount of any deduction taken for deficiency dividends.

         Failure to Qualify

         If the Company fails to qualify for taxation as a REIT in any taxable
year, and the relief provisions do not apply, the Company will be subject to
tax (including any applicable alternative minimum tax) on its taxable income at
regular corporate rates.  Distributions to shareholders in any year in which
the Company fails to qualify will not be deductible by the Company nor will
they be required to be made. In such event, to the extent of current and
accumulated earnings and profits, all distributions to shareholders will be
taxable as ordinary income and, subject to certain limitations of the Code,
corporate distributees may be eligible for the dividends received deduction.
Unless entitled to relief under specific statutory provisions, the Company will
also be disqualified from taxation as a REIT for the four taxable years
following the year during which qualification was lost. It is not possible to
state whether in all circumstances the Company would be entitled to such
statutory relief.

                                      -28-

   31

TAXATION OF HOLDERS OF DEBT SECURITIES

         As used herein, the term "U.S. Holder" means a holder of a Debt
Security who (for United States Federal income tax purposes) is (i) a citizen
or resident of the United States, (ii) a domestic corporation or (iii)
otherwise subject to United States Federal income taxation on a net income
basis in respect of the Debt Security and "U.S. Alien Holder" means a holder of
a Debt Security who (for United States Federal income tax purposes) is (i) a
nonresident alien individual or (ii) a foreign corporation, partnership or
estate or trust which is not subject to United States Federal income tax on a
net income basis in respect of income or gain from the Debt Security.

         U.S. Holders

         Payments of Interest.  Interest on a Debt Security will be taxable to
a U.S. Holder as ordinary income at the time it is received or accrued,
depending on the holder's method of accounting for tax purposes.

         Purchase, Sale and Retirement of the Debt Securities. A U.S. Holder's
tax basis in a Debt Security will generally be its U.S. dollar cost (including,
in the case of a Debt Security acquired through the exercise of a Debt Warrant,
both the cost of the Debt Warrant and the amount paid on exercise of the Debt
Warrant). A U.S. Holder will generally recognize gain or loss on the sale or
retirement of a Debt Security equal to the difference between the amount
realized on the sale or retirement and the U.S. Holder's tax basis in the Debt
Security. Except to the extent attributable to accrued but unpaid interest,
gain or loss recognized on the sale or retirement of a Debt Security will be
capital gain or loss and will be long-term capital gain or loss if the Debt
Security was held for more than one year.

         U.S. Alien Holders

         This discussion assumes that the Debt Security is not subject to the
rules of Section 871(h)(4)(A) of the Code (relating to interest payments that
are determined by reference to the income, profits, changes in the value of
property or other attributes of the debtor or a related party).

         Under present United States federal income and estate tax law, and
subject to the discussion of backup withholding below:

         (i) payments of principal, premium (if any) and interest by the
Company or any of its paying agents to any holder of a Debt Security that is a
U.S. Alien Holder will not be subject to United States Federal withholding tax
if, in the case of interest (a) the beneficial owner of the Debt Security does
not actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the Company entitled to vote, (b) the
beneficial owner of the Debt Security is not a controlled foreign corporation
that is related to the Company through stock ownership, and (c) either (A) the
beneficial owner of the Debt Security certifies to the Company or its agent,
under penalties of perjury, that it is not a U.S. person and provides its name
and address or (B) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its
trade or business (a "financial institution") and holds the Debt Security
certifies to the Company or its agent under penalties of perjury that such
statement has been received from the beneficial owner by it or by a financial
institution between it and the beneficial owner and furnishes the payor with a
copy thereof;

         (ii) a U.S. Alien Holder of a Debt Security will not be subject to
United States Federal withholding tax on any gain realized on the sale or
exchange of a Debt Security; and

         (iii) a Debt Security held by an individual who at death is not a
citizen or resident of the United States will not be includible in the
individual's gross estate for purposes of the United States Federal estate tax
as a result of the individual's death if (a) the individual did not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote and (b) the income on the Debt
Security would

                                      -29-

   32

not have been effectively connected with a United States trade or business of
the individual at the time of the individual's death.

         Information Reporting and Backup Withholding

         U.S. Holders.  In general, information reporting requirements will
apply to payments of principal, any premium and interest on a Debt Security and
the proceeds of the sale of a Debt Security before maturity within the United
States to non-corporate U.S. Holders, and "backup withholding" at a rate of
31% will apply to such payments if the U.S. Holder fails to provide an accurate
taxpayer identification number or to report all interest and dividends required
to be shown on its federal income tax returns.

         U.S. Alien Holders.  Information reporting and backup withholding will
not apply to payments of principal, premium (if any) and interest made by the
Company or a paying agent to a U.S. Alien Holder on a Debt Security if the
certification described in clause (i)(c) under "U.S. Alien Holders" above is
received, provided that the payor does not have actual knowledge that the
holder is a U.S. person.

         Payments of the proceeds from the sale by a U.S. Alien Holder of a
Debt Security made to or through a foreign office of a broker will not be
subject to information reporting or backup withholding, except that if the
broker is a U.S. person, a controlled foreign corporation for United States
Federal income tax purposes or a foreign person 50% or more of whose gross
income is effectively connected with a United States trade or business for a
specified three-year period, information reporting may apply to such payments.
Payments of the proceeds from the sale of a Debt Security to or through the
United States office of a broker is subject to information reporting and backup
withholding unless the holder or beneficial owner certifies as to its
non-United States status or otherwise establishes an exemption from information
reporting and backup withholding.

         The applicable Prospectus Supplement will contain a discussion of any
special United States Federal income tax rules with respect to Debt Securities
that are issued at a discount or premium or as a unit with other Securities,
have a maturity of one year or less, provide for conversion rights, contingent
payments, early redemption or payments that are denominated in or determined by
reference to a currency other than the U.S. dollar or otherwise subject to
special United States Federal income tax rules.

TAXATION OF HOLDERS OF DEBT WARRANTS

         Sale or Expiration

         Generally, a holder of a Debt Warrant will recognize gain or loss upon
the sale or other disposition of a Debt Warrant in an amount equal to the
difference between the amount realized on such sale or other disposition and
the holder's tax basis in the Debt Warrant. A holder of a Debt Warrant that
expires unexercised will generally recognize loss in an amount equal to such
holder's tax basis in the Debt Warrant. Gain or loss resulting from the sale,
other disposition or expiration of a Debt Warrant will generally be capital
gain or loss and will be long-term if the Debt Warrant was held for more than
one year.

         Exercise

         The exercise of a Debt Warrant with cash will not be a taxable event
for the exercising holder. Such holder's basis in the Debt Securities received
on exercise of the Debt Warrant will equal the sum of such holder's tax basis
in the exercised Debt Warrant and the exercise price of the Debt Warrant. The
holding period in a Debt Security received on exercise of a Debt Warrant will
not include the period during which the Debt Warrant was held.

         The applicable Prospectus Supplement will contain a discussion of any
special United States Federal income tax rules with respect to Debt Warrants
that are issued as a unit with other Securities.

                                      -30-
   33

TAXATION OF HOLDERS OF COMMON SHARES OR PREFERRED SHARES

         U.S. Shareholders

         As used herein, the term "U.S. Shareholder" means a holder of Common
Shares or Preferred Shares ("Shares") who (for United States Federal income tax
purposes) is (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or of any political subdivision thereof, or (iii) an estate or
trust the income of which is subject to United States Federal income taxation
regardless of its source.

         As long as the Company qualifies as a REIT, distributions made by the
Company out of its current or accumulated earnings and profits (and not
designated as capital gain dividends) will constitute dividends taxable to its
taxable U.S. Shareholders as ordinary income. Such distributions will not be
eligible for the dividends-received deduction in the case of U.S. Shareholders
that are corporations. Distributions made by the Company that are properly
designated by the Company as capital gain dividends will be taxable to U.S.
Shareholders as long-term capital gains (to the extent that they do not exceed
the Company's actual net capital gain for the taxable year) without regard to
the period for which a U.S. Shareholder has held his shares. U.S. Shareholders
that are corporations may, however, be required to treat up to 20% of certain
capital gain dividends as ordinary income.

         To the extent that the Company makes distributions (not designated as
capital gain dividends) in excess of its current and accumulated earnings and
profits, such distributions will be treated first as a tax-free return of
capital to each U.S. Shareholder, reducing the adjusted basis which such U.S.
Shareholder has in his shares for tax purposes by the amount of such
distribution (but not below zero), with distributions in excess of a U.S.
Shareholder's adjusted basis in his shares taxable as capital gains (provided
that the shares have been held as a capital asset). For purposes of determining
the portion of distributions on separate classes of Shares that will be treated
as a dividends for federal income tax purposes, current and accumulated earnings
and profits will be allocated to distributions resulting from priority rights of
Preferred Shares before being allocated to other distributions. Dividends
declared by the Company in October, November, or December of any year and
payable to a shareholder of record on a specified date in any such month shall
be treated as both paid by the Company and received by the shareholder on
December 31 of such year, provided that the dividend is actually paid by the
Company on or before January 31 of the following calendar year.  Shareholders
may not include in their own income tax returns any net operating losses or
capital losses of the Company.

         Distributions made by the Company and gain arising from the sale or
exchange by a U.S. Shareholder of Shares will not be treated as passive activity
income, and, as a result, U.S. Shareholders generally will not be able to apply
any "passive losses" against such income or gain. Distributions made by the
Company (to the extent they do not constitute a return of capital or capital
gain dividends) generally will be treated as investment income for purposes of
computing the investment interest deduction limitation. Gain arising from the
sale or other disposition of Shares, however, will not be treated as investment
income unless the U.S. Shareholder elects to reduce the amount of his total net
capital gain eligible for the 28% maximum capital gains rate by the amount of
such gain with respect to the Shares.

         Upon any sale or other disposition of Shares, a U.S. Shareholder will
recognize gain or loss for federal income tax purposes in an amount equal to the
difference between (i) the amount of cash and the fair market value of any
property received on such sale or other disposition, and (ii) the holder's
adjusted basis in the Shares for tax purposes. Such gain or loss will be capital
gain or loss if the Shares have been held by the U.S. Shareholders as a capital
asset, and will be long-term gain or loss if such Shares have been held for more
than one year. In general, any loss recognized by a U.S. Shareholder upon the
sale or other disposition of shares of the Company that have been held for six
months or less (after applying certain holding period rules) will be treated as
a long-term capital loss, to the extent of distributions received by such U.S.
Shareholder from the Company which were required to be treated as long-term
capital gains.

                                      -31-

   34

         Backup Withholding.  The Company will report to its U.S. Shareholders
and the Internal Revenue Service (the "IRS") the amount of dividends paid during
each calendar year, and the amount of tax withheld, if any. Under the backup
withholdings rules, a shareholder may be subject to backup withholding at the
rate of 31% with respect to dividends paid unless such holder (a) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact, or (b) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules. A U.S.
Shareholder that does not provide the Company with his correct taxpayer
identification number may also be subject to penalties imposed by the IRS. Any
amount paid as backup withholding will be creditable against the shareholder's
income tax liability. In addition, the Company may be required to withhold a
portion of capital gain distributions to any shareholders who fail to certify
their non-foreign status to the Company.

         Taxation of Tax-Exempt Shareholders.  Generally, a tax-exempt investor
that is exempt from tax on its investment income, such as an individual
retirement account (IRA) or a 401(k) plan, that holds the Common Shares as an
investment will not be subject to tax on dividends paid by the Company. However,
if such tax-exempt investor is treated as having purchased its Common Shares
with borrowed funds, some or all of its dividends will be subject to tax.

         Non-U.S. Shareholders

         The rules governing United States federal income taxation of the
ownership and dispositions of Shares by persons that are, for purposes of such
taxation, nonresident alien individuals, foreign corporations, foreign
partnerships or foreign estates or trusts (collectively, "Non-U.S.
Shareholders") are complex, and no attempt is made herein to provide more than a
brief summary of such rules. Accordingly, the discussion does not address all
aspects of United States Federal income taxation and does not address state,
local or foreign tax consequences that may be relevant to a Non-U.S. Shareholder
in light of its particular circumstances. In addition, this discussion is based
on current law, which is subject to change, and assumes that the Company
qualifies for taxation as a REIT. Prospective Non-U.S. Shareholders are urged to
consult with their own tax advisers to determine the impact of federal, state,
local and foreign income tax laws with regard to an investment in stock,
including any reporting requirements.

         Distributions.  Distributions by the Company to a Non-U.S. Shareholder
that are neither attributable to gain from sales or exchanges by the Company of
United States real property interests nor designated by the Company as capital
gains dividends will be treated as dividends of ordinary income to the extent
that they are made out of current or accumulated earnings and profits of the
Company. Such distributions ordinarily will be subject to withholding of United
States federal tax on a gross basis (that is, without allowance of deductions)
at a 30% rate or such lower rate as may be specified by an applicable income tax
treaty, unless the dividends are treated as effectively connected with the
conduct by the Non-U.S. Shareholder of a United States trade or business.
Dividends that are effectively connected with such a trade or business will be
subject to tax on a net basis (that is, after allowance of deductions) at
graduated rates, in the same manner as domestic shareholders are taxed with
respect to such dividends and are generally not subject to withholding. Any such
dividends received by a Non-U.S. Shareholder that is a corporation may also be
subject to an additional branch profits tax at a 30% rate or such lower rate as
may be specified by an applicable income tax treaty.

         Pursuant to current Treasury regulations, dividends paid to an address
in a country outside the United States are generally presumed to be paid to a
resident of such country for purposes of determining the applicability of
withholding discussed above and the applicability of a tax treaty rate. Under
proposed Treasury regulations, which are not currently in effect, however, a
Non-U.S. Shareholder who wished to claim the benefit of an applicable treaty
rate would be required to satisfy certain certification and other requirements.
Under certain treaties, lower withholding rates generally applicable to
dividends do not apply to dividends from a REIT, such as the Company. Certain
certification and disclosure requirements must be satisfied to be exempt from
withholding under the effectively connected income exemption discussed above.

                                      -32-

   35

         Distributions in excess of current or accumulated earnings and profits
of the Company will not be taxable to a Non-U.S. Shareholder to the extent that
they do not exceed the adjusted basis of the shareholder's Shares, but rather
will reduce the adjusted basis of such stock. To the extent that such
distributions exceed the adjusted basis of a Non-U.S. Shareholder's stock, they
will give rise to gain from the sale or exchange of his stock, the tax treatment
of which is described below. For withholding purposes, the Company is required
to treat all distributions as if made out of current or accumulated earnings and
profits. However, amounts thus withheld are generally refundable if it is
subsequently determined that such distribution was, in fact, in excess of
current or accumulated earnings and profits of the Company.

         Distributions to a Non-U.S. Shareholder that are designated by the
Company at the time of distributions as capital gains dividends (other than
those arising from the disposition of a United States real property interest)
generally will not be subject to United States federal income taxation, unless
(i) investment in the Shares is effectively connected with the Non-U.S.
Shareholder's United States trade or business, in which case the Non-U.S.
Shareholder will be subject to the same treatment as domestic shareholders with
respect to such gain (except that a shareholder that is a foreign corporation
may also be subject to the 30% branch profits tax, as discussed above), or (ii)
the Non-U.S. Shareholder is a nonresident alien individual who is present in the
United States for 183 or more days during the taxable year and has a "tax home"
in the United States, in which case the nonresident alien individual will be
subject to a 30% tax on the individual's capital gains.

         Distributions to a Non-U.S. Shareholder that are attributable to gain
from sales or exchanges by the Company of United States real property interests
will cause the Non-U.S. Shareholder to be treated as recognizing such gain as
income effectively connected with a United States trade or business. Non-U.S.
Shareholders would thus generally be taxed at the same rates applicable to
domestic shareholders (subject to a special alternative minimum tax in the case
of nonresident alien individuals). The Company is required to withhold 35% of
any such distribution. That amount is creditable against the Non-U.S.
Shareholder's United States federal income tax liability. Also, such
distribution may be subject to a 30% branch profits tax in the hands of a
Non-U.S. Shareholder that is a corporation, as discussed above.

         Sale of Stock.  Gain recognized by a Non-U.S. Shareholder upon the sale
or exchange of Shares generally will not be subject to United States taxation
unless the Shares constitute a "United States real property interest" within the
meaning of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA").
The Shares will not constitute a "United States real property interest" so long
as the Company is a "domestically controlled REIT." A "domestically controlled
REIT" is a REIT in which at all times during a specified testing period less
than 50% in value of its stock is held directly or indirectly by Non-U.S.
Shareholders.  Notwithstanding the foregoing, gain from the sale or exchange of
Shares not otherwise subject to FIRPTA will be taxable to a Non-U.S.
Shareholder if the Non-U.S. Shareholder is a nonresident alien individual who is
present in the United States for 183 days or more during the taxable year and
has a "tax home" in the United States. In such case, the nonresident alien
individual will be subject to a 30% United States withholding tax in the amount
of such individual's gain.

         If the Company is not or ceases to be a "domestically-controlled REIT,"
whether gain arising from the sale or exchange by a Non-U.S. Shareholder of
Shares would be subject to United States taxation under FIRPTA as a sale of a
"United States real property interest" will depend on whether the Shares are
"regularly traded" (as defined by applicable Treasury regulations) on an
established securities market (e.g., the New York Stock Exchange) and on the
size of the selling Non-U.S. Shareholder's interest in the Company.  If gain on
the sale or exchange of Shares were subject to taxation under FIRPTA, the
Non-U.S. Shareholder would be subject to regular United States income tax with
respect to such gain in the same manner as a U.S. Shareholder (subject to any
applicable alternative minimum tax and a special alternative minimum tax in the
case of nonresident alien individuals) and the purchaser of the Shares would be
required to withhold and remit to the IRS 10% of the purchase price.

         Backup Withholding and Information Reporting.  Backup withholding tax
(which generally is a withholding tax imposed at the rate of 31% on certain
payments to persons that fail to furnish certain information under the United
States information reporting requirements) and information reporting will
generally not apply to distributions

                                      -33-

   36

paid to Non-U.S. Shareholders outside the United States that are treated as (i)
dividends subject to the 30% (or lower treaty rate) withholding tax discussed
above, (ii) capital gains dividends or (iii) distributions attributable to gain
from the sale or exchange by the Company of United States real property
interests. As a general matter, backup withholding and information reporting
will not apply to a payment of the proceeds of a sale of Shares by or through a
foreign office of a foreign broker. Information reporting (but not backup
withholding) will apply, however, to a payment of the proceeds of a sale of
Shares by or through a foreign office of a broker that (a) is a U.S. person,
(b) derives 50% or more of its gross income for certain periods from the
conduct of a trade or business in the United States or (c) is a "controlled
foreign corporation" (generally, a foreign corporation controlled by United
States shareholders) for United States Federal income tax purposes, unless the
broker has documentary evidence in its records that the holder is a Non-U.S.
Shareholder and certain other conditions are met, or the shareholder otherwise
establishes an exemption.  Payment to or through a United States office of a
broker of the proceeds of a sale of Shares is subject to both backup
withholding and information reporting unless the shareholder certifies under
penalties of perjury that the shareholder is a Non-U.S. Shareholder, or
otherwise establishes an exemption. A Non-U.S. Shareholder may obtain a refund
of any amounts withheld under the backup withholding rules by filing the
appropriate claim for refund with the IRS.

         Estate Tax.  Shares owned by an individual who is not a citizen or
resident of the United States (as determined for purposes of U.S. Federal estate
tax law) at the time of death will generally be includible in such individual's
gross estate for federal estate tax purposes unless an applicable estate tax
treaty provides otherwise.

OTHER TAX CONSEQUENCES

         The Company and its shareholders may be subject to state or local
taxation in various state or local jurisdictions, including those in which it or
they transact business or reside. The state and local tax treatment of the
Company and its shareholders may not conform to the federal income tax
consequences discussed above. Consequently, prospective shareholders are urged
to consult their own tax advisors regarding the effect of state and local tax
laws on an investment in the Company.

                              PLAN OF DISTRIBUTION

         The Company may sell the Securities to one or more underwriters for
public offering and sale by them or may sell the Securities to investors
directly or through agents. Any such underwriter or agent involved in the offer
and sale of the Securities will be named in the related Prospectus Supplement.
The Company has reserved the right to sell the Securities directly to investors
on its own behalf in those jurisdictions where it is authorized to do so.

         Underwriters may offer and sell the Securities at a fixed price or
prices that may be changed or at negotiated prices. The Company also may, from
time to time, authorize dealers, acting as the Company's agents, to offer and
sell the Securities upon such terms and conditions as set forth in the related
Prospectus Supplement. In connection with the sale of the Securities,
underwriters may receive compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of the Securities for whom they may act as agent. Underwriters may
sell the Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concession or commissions from the
underwriters and/or commissions (which may be changed from time to time) from
the purchasers for whom they may act as agents.

         Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of the Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the related Prospectus Supplement. Dealers and agents
participating in the distribution of the Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the Securities may be deemed to be underwriting
discounts and commissions under the Securities Act. Underwriters, dealers and
agents may be entitled, under agreements entered into with the

                                      -34-

   37

Company, to indemnification against and contribution towards certain civil
liabilities, including any liabilities under the Securities Act.

         If so indicated in the related Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit agreements by
certain institutions to purchase the Securities from the Company at the public
offering price set forth in the related Prospectus Supplement pursuant to
delayed delivery contracts ("Contracts") providing for payment and delivery on
the date or dates stated in a Prospectus Supplement. Each Contract will be for
an amount specified in the applicable Prospectus Supplement.  Institutions, with
whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but will in all cases be subject
to the approval of the Company. Contracts will not be subject to any conditions
except that (i) the purchase by an institution of the Securities covered by
Contracts will not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject and (ii)
if the Securities are being sold to Underwriters, the Company shall have sold to
such Underwriters such amount specified in the applicable Prospectus Supplement.

         Any Securities issued hereunder (other than Common Shares) will be new
issues of securities with no established trading market. Any underwriters or
agents to or through whom such Securities are sold by the Company for public
offering and sale may make a market in such Securities, but such underwriters or
agents will not be obligated to do so and may discontinue any market at any time
without notice. No assurance can be given as to the liquidity of the trading
market for any such Securities.

         Certain of the underwriters, dealers or agents and their associates may
engage in transactions with, and perform services for, the Company and certain
of its affiliates in the ordinary course of business.

                                    EXPERTS

         The consolidated financial statements and the related consolidated
financial statement schedules incorporated in this Prospectus by reference from
the Company's Annual Report on Form 10-K for the year ended December 31, 1994
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.

                           VALIDITY OF THE SECURITIES

         The validity of any Debt Securities or Debt Warrants issued hereunder
will be passed upon for the Company by Sullivan & Cromwell, New York, New York,
counsel to the Company, and the validity of any Preferred Shares, Depositary
Shares or Common Shares issued hereunder will be passed upon for the Company by
Ballard Spahr Andrews & Ingersoll, Baltimore, Maryland, counsel to the Company.
The validity of any Securities issued hereunder will be passed upon for any
underwriters by the counsel named in the applicable Prospectus Supplement.

                                      -35-

   38

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

         The estimated expenses in connection with the issuance and distribution
of the securities being registered, other than Underwriting Compensation, are as
follows:

                                                   
             SEC registration fee  . . . . . . . .    $   81,034.48

             Printing and engraving expenses . . .    $  125,000.00*

             Legal fees and disbursements  . . . .    $  400,000.00*

             Accounting fees and disbursements . .    $   75,000.00*

             Transfer Agent's, Depositary's and
             Trustee's fees and disbursements. . .    $   20,000.00*

             Blue Sky fees and expenses  . . . . .    $   25,000.00*

             Miscellaneous (including listing and
               rating agency fees) . . . . . . . .    $  273,965.52*
                                                      --------------
             Total                                    $1,000,000.00*
                                                      ==============

   
             __________________________
             *   Estimated.

ITEM 15.  INDEMNIFICATION OF TRUSTEES AND OFFICERS.

         Under Maryland law, a real estate investment trust formed in Maryland
is permitted to eliminate, by provision in its declaration of trust, the
liability of its trustees and officers to the trust and its shareholders for
money damages except for liability resulting from (i) actual receipt of an
improper benefit or profit in money, property or services or (ii) active and
deliberate dishonesty established by a final judgment as being material to the
cause of action. The Company's Declaration of Trust includes such a provision
eliminating such liability to the maximum extent permitted by Maryland law.

         The Company's Bylaws require it to indemnify (a) any present or former
trustee or officer who has been successful, on the merits or otherwise, in the
defense of a proceeding to which he was made a party by reason of such status,
against reasonable expenses incurred by him in connection with the proceeding,
(b) any trustee or officer who, at the request of the Company, serves or has
served another trust, corporation or other entity as a director, officer,
partner, or trustee and (c) any present or former trustee or officer against any
claim or liability to which he may become subject by reason of such status
unless it is established that (i) his act or omission was material to the matter
giving rise to the proceeding and was committed in bad faith or was the result
of active and deliberate dishonesty, (ii) he actually received an improper
personal benefit in money, property or services or (iii) in the case of a
criminal proceeding, he had reasonable cause to believe that his act or omission
was unlawful. In addition, the Company's Bylaws require it to pay or reimburse,
in advance of final disposition of a proceeding, reasonable expenses incurred by
a present or former trustee or officer made a party to a proceeding by reason of
such status provided that the Company shall have received (i) a written
affirmation by the trustee or officer of his good faith belief that he has met
the applicable standard of conduct necessary for indemnification by the Company
as authorized by the Bylaws and (ii) a written undertaking by or on his behalf
to repay the amount paid or reimbursed by the Company if it shall ultimately be
determined that the applicable standard of conduct was not met. The Company's
Bylaws also (i) permit the Company to provide indemnification and payment or
reimbursement of expenses to a present or former trustee or officer who served a
predecessor of the Company in such capacity and

                                      II-1

   39

to any employee or agent of the Company or a predecessor of the Company, (ii)
provide that any indemnification or payment or reimbursement of the expenses
permitted by the Bylaws shall be furnished in accordance with the procedures
provided for indemnification or payment or reimbursement of expenses, as the
case may be, under Section 2-418 of the Maryland General Corporation Law (the
"MGCL") for directors of Maryland corporations and (iii) permit the Company to
provide such other and further indemnification or payment or reimbursement of
expenses as may be permitted by the MGCL, as in effect from time to time, for
directors of Maryland corporations. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to trustees and officers of
the Company pursuant to the foregoing provisions or otherwise, the Company has
been advised that, although the validity and scope of the governing statute has
not been tested in court, in the opinion of the SEC, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In addition, indemnification may be limited by state securities
laws.

ITEM 16.  EXHIBITS.

        Exhibit
        Number             Description
        -------            -----------
                
         1.1*      Form of Underwriting Agreement (for Common Shares)

         1.2*      Form of Underwriting Agreement (for Preferred Shares)

         1.3*      Form of Underwriting Agreement (for Debt Securities)

         3.1       Amended and Restated Declaration of Trust of the Company
                   (incorporated by reference to the Company's Registration
                   Statement on Form S-4 (File No. 33-60286), filed on April 15,
                   1993)

         3.2       By-laws of the Company (incorporated by reference to the
                   Company's Annual Report on Form 10-K for the year ended
                   December 31, 1993 (File No. 1-5098))

         4.1       Specimen certificate representing Common Shares

         4.2       Form of Indenture for Senior Debt Securities (incorporated by
                   reference to Exhibit 4.2 of Amendment No. 1 to the Company's
                   Registration Statement on Form S-3 (File No. 33-52441), filed
                   on May 12, 1994)

         4.3       Form of Senior Debt Security (included in Exhibit 4.2)

         4.4       Form of Indenture for Subordinated Debt Securities
                   (incorporated by reference to Exhibit 4.4 of Amendment No. 1
                   to the Company's Registration Statement on Form S-3 (File No.
                   33-52441), filed on May 12, 1994)

         4.5       Form of Subordinated Debt Security (included in Exhibit 4.4)

         4.6       Form of Deposit Agreement (incorporated by reference to
                   Exhibit 4.6 of Amendment No. 1 to the Company's Registration
                   Statement on Form S-3 (File No. 33-52441), filed on May 12,
                   1994)

         4.7       Form of Depositary Receipt (included in Exhibit 4.6)

         ____________________

         *    To be filed by amendment or 8-K.

                                      II-2
   40

              
         5.1     Opinion of Ballard Spahr Andrews & Ingersoll

         5.2     Opinion of Sullivan & Cromwell

         8.1**   Tax Opinion of Sullivan & Cromwell

         12      Statement Regarding Computation of Consolidated Ratios of
                 Earnings to Fixed Charges and Combined Fixed Charges and
                 Preferred Share Dividend Requirements

         23.1    Consent of Deloitte & Touche LLP

         23.2    Consent of Ballard Spahr Andrews & Ingersoll (included in its
                 opinion filed as Exhibit 5.1)

         23.3    Consent of Sullivan & Cromwell (included in its opinion filed as
                 Exhibit 5.2)

         24.1    Powers of Attorney (included on signature page to the
                 Company's Registration Statement on Form S-3 (File No. 33-
                 62395), filed on September 6, 1995)

         25.1    Statement of Eligibility of Senior Trustee on Form T-1

         25.2    Statement of Eligibility of Subordinated Trustee on Form T-1

         ___________________________

         **      To be filed by pre-effective amendment.

ITEM 17.  UNDERTAKINGS.

         (a)  The undersigned registrant hereby undertakes:

         (1)     To file, during any period in which offers or sales are being
                 made, a post-effective amendment to this registration
                 statement;

                 (i)      To include any prospectus required by Section
                          10(a)(3) of the Securities Act of 1933;

                 (ii)     To reflect in the prospectus any facts or events
                          arising after the effective date of the registration
                          statement (or the most recent post-effective
                          amendment thereof) which, individually or in the
                          aggregate, represent a fundamental change in the
                          information set forth in the registration statement.
                          Notwithstanding the foregoing, any increase or
                          decrease in volume of securities offered (if the
                          total dollar value of securities offered would not
                          exceed that which was registered) and any deviation
                          from the low or high end of the estimated maximum
                          offering range may be reflected in the form of
                          prospectus filed with the Commission pursuant to Rule
                          424(b) if, in the aggregate, the changes in volume
                          and price represent no more than a 20 percent change
                          in the maximum aggregate offering price set forth in
                          the "Calculation of Registration Fee" table in the
                          effective registration statement.

                 (iii)    To include any material information with respect to
                          the plan of distribution not previously disclosed in
                          the registration statement or any material change to
                          such information in the registration statement;

                                      II-3
   41

provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.

         (2)     That, for the purpose of determining any liability under the
                 Securities Act of 1933, each such post-effective amendment
                 shall be deemed to be a new registration statement relating to
                 the securities offered therein, and the offering of such
                 securities at that time shall be deemed to be the initial bona
                 fide offering thereof.

         (3)     To remove from registration by means of a post-effective
                 amendment any of the securities being registered which remain
                 unsold at the termination of the offering.

         (b)  The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

         (c)  Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise
(other than insurance), the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than insurance
payments and the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

    

                                      II-4
   42

                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, Vornado
Realty Trust certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to its Registration Statement on Form S-3 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Saddle
Brook and State of New Jersey, on October 26, 1995.

                                        VORNADO REALTY TRUST,
                                        a Maryland real estate investment trust

                                        By /s/ Steven Roth
                                           ------------------------------------
                                           Steven Roth
                                           Chairman of the Board of Trustees
                                           (Principal Executive Officer)

    

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.

          Signature                                   Title                          Date
          ---------                                   -----                          ----
                                                                         
       /s/ Steven Roth                 Chairman of the Board of Trustees
- ----------------------------           (Principal Executive Officer)
         Steven Roth                                                           October 26, 1995

      /s/ Joseph Macnow
- ----------------------------           Vice President - Chief Financial
        Joseph Macnow                  Officer and Controller (Principal
                                       Financial and Accounting Officer)
                                                                               October 26, 1995

              *
- ----------------------------           Trustee
       David Mandelbaum                                                        October 26, 1995

              *
- ----------------------------           Trustee
        Stanley Simon                                                          October 20, 1995

              *
- ----------------------------           Trustee
       Richard R. West                                                         October 26, 1995

              *
- ----------------------------           Trustee
       Ronald G. Targan                                                        October 26, 1995

              *
- ----------------------------           Trustee
    Russell B. Wight, Jr.                                                      October 26, 1995

* By:  /s/ Joseph Macnow
- ----------------------------
         Joseph Macnow
       Attorney-in-Fact

   43
                                 Exhibit Index

 Exhibit No.                      Exhibit
 -----------                      -------
             
     1.1*       Form of Underwriting Agreement (for Common Shares)
     1.2*       Form of Underwriting Agreement (for Preferred Shares)

     1.3*       Form of Underwriting Agreement (for Debt Securities)

     3.1        Amended and Restated Declaration of Trust of the Company
                (incorporated by reference to the Company's Registration
                Statement on Form S-4 (File No. 33-60286), filed on April 15,
                1993)

     3.2        By-laws of the Company (incorporated by reference to the
                Company's Annual Report on Form 10-K for the year ended
                December 31, 1993 (File No. 1-5098))

     4.1        Specimen certificate representing Common Shares

     4.2        Form of Indenture for Senior Debt Securities (incorporated by
                reference to Exhibit 4.2 of Amendment No. 1 to the Company's
                Registration Statement on Form S-3 (File No. 33-52441), filed
                on May 12, 1994)

     4.3        Form of Senior Debt Security (included in Exhibit 4.2)

     4.4        Form of Indenture for Subordinated Debt Securities
                (incorporated by reference to Exhibit 4.4 of Amendment No. 1 to
                the Company's Registration Statement on Form S-3 (File No.
                33-52441), filed on May 12, 1994)

     4.5        Form of Subordinated Debt Security (included in Exhibit 4.4)

     4.6        Form of Deposit Agreement (incorporated by reference to Exhibit
                4.6 of Amendment No. 1 to the Company's Registration Statement
                on Form S-3 (File No. 33-52441), filed on May 12, 1994)

     4.7        Form of Depositary Receipt (included in Exhibit 4.6)

     5.1        Opinion of Ballard Spahr Andrews & Ingersoll

     5.2        Opinion of Sullivan & Cromwell

     8.1**      Tax Opinion of Sullivan & Cromwell

     12         Statement Regarding Computation of Consolidated Ratios of
                Earnings to Fixed Charges and Combined Fixed Charges and
                Preferred Share Dividend Requirements

    23.1        Consent of Deloitte & Touche LLP

    23.2        Consent of Ballard Spahr Andrews & Ingersoll (included in its
                opinion filed as Exhibit 5.1)

    23.3        Consent of Sullivan & Cromwell (included in its opinion filed as
                Exhibit 5.2)

    24.1        Powers of Attorney (included on signature page to the Company's
                Registration Statement on Form S-3 (File No. 33-62395), filed
                on September 6, 1995)

    25.1        Statement of Eligibility of Senior Trustee on Form T-1

    25.2        Statement of Eligibility of Subordinated Trustee on Form T-1

_________________________________
   
*        To be filed by amendment or 8-K.

**       TO BE FILED BY PRE-EFFECTIVE AMENDMENT.
    
   1
THIS CERTIFICATE IS TRANSFERABLE
 IN THE CITIES OF NEW YORK, N.Y.                              SEE REVERSE FOR
        AND NEWARK, N.J.                                    CERTAIN DEFINITIONS

a Real Estate Investment Trust
  Organized Under the Laws of
     the State of Maryland

                                    VORNADO
                                  REALTY TRUST
THIS CERTIFIES THAT                                           CUSIP 929042 10 9

IS THE OWNER OF

     FULLY PAID AND NONASSESSABLE COMMON SHARES, $.04 PAR VALUE PER SHARE,
                         OF THE BENEFICIAL INTEREST OF

                              CERTIFICATE OF STOCK
Vornado Realty Trust transferable on the books of the Trust by the holder hereof
in person or by duly authorized attorney, upon surrender of this Certificate
properly endorsed. This Certificate and the shares represented hereby are issued
and shall be held subject to all of the provisions of the Declaration of Trust
of the Trust and any amendments thereto. This Certificate is not valid until
countersigned and registered by the Transfer Agent and Registrar.
        Witness the facsimile seal and the facsimile signatures of the duly 
authorized officers of the Trust.

Dated                                                          

                                                   CHIEF EXECUTIVE OFFICER

                           VORNADO REALTY TRUST SEAL
COUNTERSIGNED AND REGISTERED
   FIRST FIDELTY BANK, N.A., NEW JERSEY
               (NEWARK, N.J.)
                                    TRANSFER AGENT
                                     AND REGISTRAR

                              AUTHORIZED SIGNATURE       SECRETARY

   2
                              VORNADO REALTY TRUST

        The Trust will furnish to any shareholder upon request and without
charge a full statement of the designations, preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of shares of each class
authorized to be issued and, with respect to the classes of shares which may be
issued in series, the differences in the relative rights and preferences between
the shares of each series, to the extent they have been set, and the authority
of the Board of Trustees to fix and determine the relative rights and
preferences of subsequent series. Such request may be made to the Secretary of
the Trust at its principal office or to the Transfer Agent.

        The shares of Common Stock represented by this Certificate are subject 
to restrictions on ownership and transfer for the purpose of the Trust's 
maintenance of its status as a real estate investment trust under the Internal 
Revenue Code of 1986, as amended (the "Code"). No Person may Beneficially Own 
shares of Common Stock in excess of 2.0% (or such greater percentage as may be 
determined by the Board of Trustees) of the outstanding Common Equity Stock of 
the Trust (unless such Person is an Existing Holder) and no Person may 
Constructively Own shares of Common Stock in excess of 9.9% of the outstanding 
Common Equity Stock of the Trust (unless such person is an Existing
Constructive  Holder). Any Person who attempts to Beneficially Own or
Constructively Own  Shares in excess of the above limitations must immediately
notify the Trust.  All capitalized terms used in this legend have the meaning
set forth in the  Declaration of Trust, a copy of which, including the
restrictions on ownership  and transfer, will be sent without charge to each
stockholder who so requests.  If the restrictions on ownership and transfer are
violated, the shares of  Common Stock represented hereby will be automatically
exchanged for shares of  Excess Stock which will be held in trust by the Trust.
                                ---------------
          KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN
          OR DESTROYED THE TRUST WILL REQUIRE A BOND OF INDEMNITY AS A
            CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
                                ---------------
        The following abbreviations, when used in the inscription on 
the face of this Certificate, shall be construed as though they were written 
out in full according to applicable laws or regulations:

                                                    
TEN COM--as tenants in common                          UNIF GIFT MIN ACT--______________Custodian____________
TEN ENT--as tenants by the entireties                                          (Cust)               (Minor)
JT TEN --as joint tenants with right           
         of survivorship and not as tenants                                under Uniform Gifts to Minors Act
         in common                                                         _________________________________
                                                                                         (State)

    Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, _____________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO

PLEASE INSERT SOCIAL SECURITY OR OTHER
   IDENTIFYING NUMBER OF ASSIGNEE

/                                    /

- -------------------------------------------------------------------------------
  (Please Print or Typewrite Name and Address, including Zip Code of Assignee)

- ------------------------------------------------------------------------ shares
of the shares represented by the within Certificate, and do hereby irrevocably 
constitute and appoint

- ---------------------------------------------------------------------- Attorney
to transfer the said shares on the books of the within named Trust with full 
power of substitution in the premises.

Dated                              
     --------------------------------    --------------------------------------
                                         NOTICE: The Signature To This 
                                         Assignment Must Correspond With The 
                                         Name As Written Upon The Face Of The 
                                         Certificate In Every Particular, 
                                         Without Alteration Or Enlargement Or 
                                         Any Change Whatever.
   1
          [LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL]

                                         October 26, 1995

Vornado Realty Trust
Park 80 West
Plaza II
Saddle Brook, New Jersey 07662

Sullivan & Cromwell
125 Broad Street
New York, New York 10004

                 Re:  Vornado Realty Trust
                      Registration Statement and Post-Effective
                      Amendment to Registration No. 33-52441
                      (Registration No. 33-62395)
                      -----------------------------------------

Ladies and Gentlemen:

     We have acted as Maryland counsel to Vornado Realty Trust, a Maryland real 
estate investment trust (the "Trust"), in connection with certain matters of 
Maryland law arising out of the registration of (a) $235,000,000 aggregate 
amount of (i) debt securities (the "Debt Securities") of the Trust, (ii) 
preferred shares of beneficial interest, no par value per share (the 
"Preferred Shares"), of the Trust, which may be issued in the form of 
depositary shares (the "Depositary Shares") evidenced by depositary receipts 
issued against deposit of Preferred Shares pursuant to a Deposit Agreement to 
be entered into between the Trust and a bank or trust company selected by the 
Trust, (iii) common shares of beneficial interest, $.04 par value per share 
(the "Common Shares"), of the Trust and (iv) warrants to purchase the Debt 
Securities as shall be designated by the Trust at the time of the offering (the 
"Debt Warrants"), (b) such indeterminate number of Preferred Shares as shall be 
issuable in exchange for or upon conversion of convertible Debt Securities and 
(c) such indeterminate number of Common Shares as shall be issuable in exchange 
for or upon conversion of Preferred Shares or convertible Debt Securities (the 
Debt Securities, Preferred Shares, Common Shares and Debt Warrants are 
hereinafter collectively referred to as the "Securities"), covered by the
above-referenced Registration Statement, and all amendments
   2
Vornado Realty Trust
Sullivan & Cromwell
October 26, 1995
Page 2

thereto (the "Registration Statement"), under the Securities Act of 1933, as 
amended (the "1933 Act"). Unless otherwise defined herein, capitalized terms 
used herein shall have the meanings assigned to them in the Registration 
Statement. 

        In connection with our representation of the Trust, and as a basis for 
the opinion hereinafter set forth, we have examined originals, or copies 
certified or otherwise identified to our satisfaction, of the following 
documents (hereinafter collectively referred to as the "Documents"):

        1.  The Registration Statement and the related form of prospectus 
included therein;

        2.  The Amended and Restated Declaration of Trust of the Trust, as 
amended (the "Declaration of Trust"), certified as of a recent date by the 
State Department of Assessments and Taxation of Maryland (the "SDAT");

        3.  The Bylaws of the Trust, certified as of a recent date by its 
Secretary;

        4.  Resolutions adopted by the Board of Trustees of the Trust relating 
to the registration, sale and issuance of the Securities, certified as of a 
recent date by the Secretary of the Trust;

5.  A certificate of the SDAT as to the good standing of the Trust,  dated
October 26, 1995;

        6.  A certificate executed by Susan D. Schmider, Secretary of the 
Trust, dated October 26, 1995; and

        7.  Such other documents and matters as we have deemed necessary or 
appropriate to express the opinion set forth in this letter, subject to the 
assumptions, limitations and qualifications stated herein.

        In expressing the opinion set forth below, we have assumed, and so far 
as is known to us there are no facts inconsistent with, the following:

        1.  Each individual executing any of the Documents is legally competent 
to do so; and 

        2.  All Documents submitted to us as originals are authentic. All 
Documents submitted to us as certified or photostatic copies conform to the 
original documents. All

   3
Vornado Realty Trust
Sullivan & Cromwell
October 26, 1995
Page 3

signatures on all such Documents are genuine. All public records reviewed or 
relied upon by us or on our behalf are true and complete.

        The phrase "known to us" means the actual knowledge, without 
independent inquiry (other than receipt of the certificates referred to in 
paragraphs 5 and 6 above), of the lawyers at our firm who have performed legal 
services in connection with the issuance of this opinion.

        Based upon the foregoing, and subject to the assumptions, limitations 
and qualifications stated herein, it is our opinion that:

        1.  The Trust is a real estate investment trust duly organized and 
existing under and by virtue of the laws of the State of Maryland and is in 
good standing with the SDAT.

        2.  Assuming that no more than 1,000,000 Preferred Shares and no more
than 25,761,063 Common Shares, in the aggregate, are issued, upon (a) the
effectiveness of the Registration Statement under the  1933 Act, (b) filing for
record with the SDAT of the articles supplementary  with respect to the
Preferred Shares and (c) sale and delivery against full  payment of the
purchase price therefor in the manner described in the  Registration Statement
and, in the case of Preferred Shares issued in exchange  for or upon conversion
of convertible Debt Securities, when duly issued upon  such exchange or
conversion, and, in the case of Common Shares issued in  exchange for or upon
conversion of Preferred Shares or convertible Debt  Securities, when duly
issued upon such exchange or conversion, the Common  Shares, Preferred Shares
and Depositary Shares will be duly and validly  authorized and will be duly and
validly issued, fully paid and nonassessable.
                                                             
        3.  The Debt Securities and Debt Warrants have been duly and validly 
authorized.

        The foregoing opinion is limited to the laws of the State of Maryland 
and we do not express any opinion herein concerning any other law. We express 
no opinion as to compliance with the securities (or "blue sky") laws or the 
real estate syndication laws of the State of Maryland.

        We assume no obligation to supplement this opinion if any applicable 
law changes after the date hereof or if we become aware of any fact that might 
change the opinion expressed herein after the date hereof.
   4
Vornado Realty Trust
Sullivan & Cromwell
October 26, 1995
Page 4

        We hereby consent to the filing of this opinion as an exhibit to the 
Registration Statement and to the use of the name of our firm therein.  In 
giving this consent, we do not admit that we are within the category of persons 
whose consent is required by Section 7 of the 1933 Act.

                                Very truly yours,

                                /s/ Ballard Spahr Andrews & Ingersoll
                                --------------------------------------
                                    Ballard Spahr Andrews & Ingersoll

   1
                        [SULLIVAN & CROMWELL LETTERHEAD]

                                                                October 26, 1995

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

Dear Sirs:

                 In connection with the registration under the Securities Act
of 1933 (the "Act") of (i) $235,000,000 aggregate amount of debt securities
(the "Debt Securities") of Vornado Realty Trust, a Maryland real estate
investment trust (the "Trust"), preferred shares of beneficial interest, no par
value per share (the "Preferred Shares"), of the Trust, which may be issued in
the form of depositary shares evidenced by depositary receipts issued against
deposit of Preferred Shares pursuant to a deposit agreement to be entered into
between the Trust and a bank or trust company selected by the Trust, common
shares of beneficial interest, par value $.04 per share (the "Common Shares"),
of the Trust, and warrants to purchase Debt Securities (the "Warrants"), (ii)
such indeterminate number of Preferred Shares as may be issuable in exchange
for or upon conversion

   2
Vornado Realty Trust                                                         -2-

of the Debt Securities and (iii) such indeterminate number of Common Shares as
may be issuable in exchange for or upon conversion of the Preferred Shares or
Debt Securities (the Debt Securities, Preferred Shares, Common Shares and
Warrants being herein collectively referred to as the "Securities"), we, as
your counsel, have examined such corporate records, certificates and other
documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion.

                 Upon the basis of such examination, we advise you that, in our
opinion, when the registration statement relating to the Securities (the
"Registration Statement") has become effective under the Act, the applicable
Indenture relating to the Debt Securities and the Warrant Agreement relating to
the Warrants have been duly authorized, executed and delivered, the terms of
the Debt Securities and the Warrants and of their issuance and sale have been
duly established in conformity with the applicable Indenture and Warrant
Agreement so as not to violate any applicable law or result in a default under
or breach of any agreement or instrument binding upon the Trust and so as to
comply with any requirement or restriction imposed by any court or governmental
body having jurisdiction over the Trust, the Debt Securities have been duly
executed and authenticated in

   3
Vornado Realty Trust                                                         -3-

accordance with the applicable Indenture, the Warrants have been duly executed
and countersigned in accordance with the Warrant Agreement, the Debt Securities
and the Warrants, as applicable, have been issued and sold as contemplated in
the Registration Statement, articles supplementary to the Trust's declaration
of trust with respect to the Preferred Shares of a particular series to be
issued in exchange for or upon conversion of the Debt Securities, if any, have
been duly filed with the State Department of Assessments and Taxation of
Maryland, the terms of such Preferred Shares of such series and of its issuance
and sale have been duly established in conformity with the Trust's declaration
of trust so as not to violate any applicable law or result in a default under
or breach of any agreement binding upon the Trust and so as to comply with any
requirement or restriction imposed by any court or governmental body having
jurisdiction over the Trust and the Preferred Shares or Common Shares into
which the Debt Securities are exchangeable or convertible, as the case may be,
have been duly reserved for issuance in exchange for or upon conversion of the
Debt Securities, the Debt Securities and the Warrants, as applicable, will
constitute valid and legally binding obligations of the Trust, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,

   4
Vornado Realty Trust                                                         -4-

moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles and the Preferred Shares or
Common Shares, as the case may be, when duly issued in exchange for or upon
conversion of the Debt Securities, will be validly issued, fully paid and
nonassessable.

                 We note that, as of the date of this opinion, a judgment for
money in an action based on a debt security denominated in a foreign currency
or currency unit in a Federal or state court in the United States ordinarily
would be enforced in the United States only in United States dollars.  The date
used to determine the rate of conversion of the foreign currency or currency
unit in which a particular debt security is denominated into United States
dollars will depend upon various factors, including which court renders the
judgment.  In the case of a debt security denominated in a foreign currency, a
state court in the State of New York rendering a judgment on such debt security
would be required under Section 27 of the New York Judiciary Law to render such
judgment in the foreign currency in which the debt security is denominated, and
such judgment would be converted into United States dollars at the exchange
rate prevailing on the date of entry of the judgment.

   5
Vornado Realty Trust                                                         -5-

                 The foregoing opinion is limited to the Federal laws of the
United States and the laws of the State of New York and we are expressing no
opinion as to the effect of the laws of any other jurisdiction.  With respect
to all matters of Maryland law, we have relied upon the opinion, dated the date
hereof, of Ballard Spahr Andrews & Ingersoll, and our opinion is subject to the
same assumptions, qualifications and limitations with respect to such matters
as are contained in the opinion of Ballard Spahr Andrews & Ingersoll.

                 Also, we have relied as to certain matters on information
obtained from public officials, officers of the Trust and other sources
believed by us to be responsible.

                 We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to us under the heading
"Validity of Securities" in the Prospectus.  In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Act.

                                                      Very truly yours,

                                                      /s/ SULLIVAN & CROMWELL
                                                      ------------------------
                                                      SULLIVAN & CROMWELL

   1

                                                                      EXHIBIT 12

              CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND
        COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDEND REQUIREMENTS

                                                   SIX
                                                  MONTHS                                          YEAR ENDED
                                                  ENDED     ------------------------------------------------------------------------
                                                 JUNE 30,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                                   1995         1994           1993           1992           1991           1990
                                                 --------   ------------   ------------   ------------   ------------   ------------
                                                                                                      
 Income from continuing operations
         before income taxes                     $25,022      $41,240         $25,386       $ 2,263        $18,000        $10,737

 Fixed charges                                     8,811       14,647          31,610        34,392         35,410         35,533
                                                 -------      -------         -------       -------        -------        -------

 Income from continuing operations
         before income taxes and fixed charges    33,833       55,887          56,996        36,655         53,410         46,270
                                                 =======      =======         =======       =======        =======        =======
 Fixed charges:
         Interest and debt expense                 8,572       14,209          31,155        33,910         34,930         35,120
         1/3 of Rent expense - interest factor       239          438             455           482            480            413
                                                 -------      -------         -------       -------        -------        -------
                                                   8,811       14,647          31,610        34,392         35,410         35,533

         Capitalized interest                        269        1,582             282
                                                 -------      -------         -------       -------        -------        -------
                                                   9,080       16,229          31,892        34,392         35,410         35,533
                                                 =======      =======         =======       =======        =======        =======

         Ratio of earnings to fixed charges         3.73         3.44            1.79          1.07           1.51           1.30

  NOTES:
    (1) For purposes of this calculation, earnings before fixed charges consist of earnings before income taxes plus fixed charges.
        Fixed charges consist of interest expense on all indebtedness (including amortization of deferred debt issuance costs) and
        the portion of operating lease rental expense that is representative of the interest factor (deemed to be one third of
        operating lease rentals).

         Rent Expense                                716        1,313           1,366         1,446          1,441          1,239
                                                 =======      =======         =======       =======        =======        =======

                                                          ELEVEN
                                                          MONTHS
                                                          ENDED
                                                       DECEMBER 31,
                                                           1990
                                                       ------------
                                                    
 Income from continuing operations
         before income taxes                              $11,754

 Fixed charges                                             32,568
                                                          -------
 Income from continuing operations
         before income taxes and fixed charges             44,322
                                                          =======
 Fixed charges:
         Interest and debt expense                         32,189
         1/3 of Rent expense - interest factor                379
                                                          -------
                                                           32,568

         Capitalized interest                             -------
                                                           32,568
                                                          =======

         Ratio of earnings to fixed charges                  1.36
 NOTES:
  (1)    For purposes of this calculation, earnings before fixed charges consist of earnings before income plus fixed charges.
         Fixed charges consist of interest expense on all indebtedness (including amortization of deferred debt issuance costs) and
         the portion of operating lease rental expense that is representative of the interest factor (deemed to be one third of
         operating lease rentals).

         Rent Expense                                       1,136
                                                          =======

   1
                                                         Exhibit 23.1

                         INDEPENDENT AUDITOR'S CONSENT

        We consent to the incorporation by reference in this Amendment No. 1 to 
the Registration Statement No. 33-62395 of Vornado Realty Trust on Form S-3 of 
our report dated March 9, 1995 (March 15, 1995 as to Note 17), appearing in the 
Annual Report on Form 10-K of Vornado Realty Trust for the year ended December 
31, 1994 and to the reference to us under the heading "Expert" in the 
Prospectus which is part of this Registration Statement.

/s/ Deloitte & Touche LLP
- ------------------------------
DELOITTE & TOUCHE LLP

New York, New York
October 25, 1995
   1

                                                                CONFORMED COPY
 ==============================================================================

                                    FORM T-1

                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                            STATEMENT OF ELIGIBILITY
                   UNDER THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE

                      CHECK IF AN APPLICATION TO DETERMINE
                      ELIGIBILITY OF A TRUSTEE PURSUANT TO
                             SECTION 305(b)(2) __

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

                              THE BANK OF NEW YORK
               (Exact name of trustee as specified in its charter)

         New York                                            13-5160382
         (State of incorporation                             (I.R.S. employer
         if not a U.S. national bank)                        identification no.)

         48 Wall Street, New York, N.Y.                      10286
         (Address of principal executive offices)            (Zip code)

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

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

         Maryland                                            22-1657560
         (State or other jurisdiction of                     (I.R.S. employer
         incorporation or organization)                      identification no.)

         Park 80 West, Plaza II
         Saddle Brook, New Jersey                            07663
         (Address of principal executive offices)            (Zip code)

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

                             Senior Debt Securities
                       (Title of the indenture securities)

 ==============================================================================

   2

1. General information. Furnish the following information as to the Trustee:

   (a) Name and address of each examining or supervising authority to which it
       is subject.

 -------------------------------------------------------------------------------
               Name                                        Address
 -------------------------------------------------------------------------------

     Superintendent of Banks of the State of      2 Rector Street, New York,
     New York                                     N.Y.  10006, and Albany, N.Y.
                                                  12203

     Federal Reserve Bank of New York             33 Liberty Plaza, New York,
                                                  N.Y.  10045

     Federal Deposit Insurance Corporation        Washington, D.C.  20429

     New York Clearing House Association          New York, New York

     (b)  Whether it is authorized to exercise corporate trust powers.

     Yes.

2.   Affiliations with Obligor.

     If the obligor is an affiliate of the trustee, describe each such
     affiliation.

     None.  (See Note on page 3.)

16.  List of Exhibits.

     Exhibits identified in parentheses below, on file with the
     Commission, are incorporated herein by reference as an exhibit
     hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of
     1939 (the "Act") and Rule 24 of the Commission's Rules of
     Practice.

     1.   A copy of the Organization Certificate of The Bank of New York
          (formerly Irving Trust Company) as now in effect, which contains the
          authority to commence business and a grant of powers to exercise
          corporate trust powers.  (Exhibit 1 to Amendment No. 1 to Form T-1
          filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
          Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
          to Form T-1 filed with Registration Statement No. 33-29637.)

     4.   A copy of the existing By-laws of the Trustee.  (Exhibit 4 to Form T-1
          filed with Registration Statement No. 33-31019.)

                                        -2-

   3

     6.   The consent of the Trustee required by Section 321(b) of the Act.
          (Exhibit 6 to Form T-1 filed with Registration Statement No.
          33-44051.)

     7.   A copy of the latest report of condition of the Trustee published
          pursuant to law or to the requirements of its supervising or examining
          authority.

                                      NOTE

     Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.

     Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.

                                      - 3 -

   4

                                    SIGNATURE

     Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 19th day of October, 1995.

                                       THE BANK OF NEW YORK

                                       By:    /S/ VIVIAN GEORGES
                                          ---------------------------
                                          Name:  VIVIAN GEORGES
                                          Title: ASSISTANT VICE PRESIDENT

                                       -4-
   5

                                                           EXHIBIT 7

             Consolidated Report of Condition of

                    THE BANK OF NEW YORK

              of 48 Wall Street, New York, N.Y. 10286
              And Foreign and Domestic Subsidiaries,

a member of the Federal Reserve System, at the close of business June
30, 1995, published in accordance with a call made by the Federal
Reserve Bank of this District pursuant to the provisions of the
Federal Reserve Act.

                                                 Dollar Amounts
ASSETS                                            in Thousands
                                                 --------------
                                              
Cash and balances due from depos-
  itory institutions:
  Noninterest-bearing balances and
  currency and coin ..................             $ 3,025,419
  Interest-bearing balances ..........                 881,413
Securities:
  Held-to-maturity securities ........               1,242,368
  Available-for-sale securities ......               1,774,079
Federal funds sold in domestic
  offices of the bank ................               5,503,445
Securities purchased under agree-
  ments to resell ....................                 200,634
Loans and lease financing
  receivables:
  Loans and leases, net of unearned
    income .................26,599,533
  LESS: Allowance for loan and
    lease losses ..............516,283
    Loans and leases, net of unearned
    income and allowance                            26,083,250
Assets held in trading accounts ......               1,455,639
Premises and fixed assets (including
  capitalized leases) ................                 612,547
Other real estate owned ..............                  79,667
Investments in unconsolidated
  subsidiaries and associated
  companies ..........................                 198,737
Customers' liability to this bank on
  acceptances outstanding ............               1,111,464
Intangible assets ....................                 105,263
Other assets .........................               1,237,264
                                                   -----------
Total assets .........................             $43,511,189
                                                   ===========
LIABILITIES
Deposits:
  In domestic offices ................             $19,233,885
  Noninterest-bearing .......7,677,954
  Interest-bearing .........11,555,931
  In foreign offices, Edge and
  Agreement subsidiaries, and IBFs ...              12,641,676
  Noninterest-bearing ..........72,479
  Interest-bearing .........12,569,197
Federal funds purchased and secu-
  rities sold under agreements to re-
  purchase in domestic offices of
  the bank and of its Edge and
  Agreement subsidiaries, and in
  IBFs:
  Federal funds purchased ............               1,747,659
  Securities sold under agreements
    to repurchase ....................                  73,553
Demand notes issued to the U.S.
  Treasury ...........................                 300,000
Trading liabilities ..................                 738,317
Other borrowed money:
  With original maturity of one year
    or less ..........................               1,586,443
  With original maturity of more than
    one year .........................                 220,877
Bank's liability on acceptances exe-
  cuted and outstanding ..............               1,113,102
Subordinated notes and debentures ....               1,053,860
Other liabilities ....................               1,489,252
                                                    ----------
Total liabilities ....................              40,198,624
                                                    ==========
EQUITY CAPITAL
Common stock ........................                  942,284
Surplus .............................                  525,666
Undivided profits and capital
  reserves ..........................                1,849,221
Net unrealized holding gains
  (losses) on available-for-sale
  securities ........................                (    662)
Cumulative foreign currency transla-
  tion adjustments ..................              (    3,944)
                                                   -----------
Total equity capital ................                3,312,565
                                                   -----------
Total liabilities and equity
  capital ...........................              $43,511,189
                                                   ===========

    

   I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued by the Board
of Governors of the Federal Reserve System and is true to the best of
my knowledge and belief.

                                             Robert E. Keilman

   We, the undersigned directors, attest to the correctness of this
Report of Condition and declare that it has been examined by us and to
the best of our knowledge and belief has been prepared in conformance
with the instructions issued by the Board of Governors of the Federal
Reserve System and is true and correct.

   J. Carter Bacot     )
   Thomas A. Renyi     )     Directors
   Samuel F. Chevalier )

   1

                                                                CONFORMED COPY
================================================================================

                                    FORM T-1

                       SECURITIES AND EXCHANGE COMMISSION
   
                            Washington, D.C.  20549

                            STATEMENT OF ELIGIBILITY 
                   UNDER THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE

                      CHECK IF AN APPLICATION TO DETERMINE
                      ELIGIBILITY OF A TRUSTEE PURSUANT TO
   
                             SECTION 305(b)(2) __

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

                              THE BANK OF NEW YORK
               (Exact name of trustee as specified in its charter)

      New York                                               13-5160382
      (State of incorporation                                (I.R.S. employer
      if not a U.S. national bank)                           identification no.)

      48 Wall Street, New York, N.Y.                         10286
      (Address of principal executive offices)               (Zip code)

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

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

      Maryland                                               22-1657560
      (State or other jurisdiction of                        (I.R.S. employer
      incorporation or organization)                         identification no.)

      Park 80 West, Plaza II
      Saddle Brook, New Jersey                               07663
      (Address of principal executive offices)               (Zip code)

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

                          Subordinated Debt Securities
                       (Title of the indenture securities)

================================================================================

   2

1.  General information.  Furnish the following information as to the Trustee:

    (a)  Name and address of each examining or supervising authority to which it
         is subject.

- --------------------------------------------------------------------------------
                  Name                                        Address
- --------------------------------------------------------------------------------

     Superintendent of Banks of the State of      2 Rector Street, New York,
     New York                                     N.Y.  10006, and Albany, N.Y.
                                                  12203

     Federal Reserve Bank of New York             33 Liberty Plaza, New York,
                                                  N.Y.  10045

     Federal Deposit Insurance Corporation        Washington, D.C.  20429

     New York Clearing House Association          New York, New York

     (b)  Whether it is authorized to exercise corporate trust powers.

     Yes.

2.   Affiliations with Obligor.

     If the obligor is an affiliate of the trustee, describe each such
     affiliation.

     None.  (See Note on page 3.)

16.  List of Exhibits.

     Exhibits identified in parentheses below, on file with the
     Commission, are incorporated herein by reference as an exhibit
     hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of
     1939 (the "Act") and Rule 24 of the Commission's Rules of
     Practice.

     1.   A copy of the Organization Certificate of The Bank of New York
          (formerly Irving Trust Company) as now in effect, which contains the
          authority to commence business and a grant of powers to exercise
          corporate trust powers.  (Exhibit 1 to Amendment No. 1 to Form T-1
          filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
          Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
          to Form T-1 filed with Registration Statement No. 33-29637.)

     4.   A copy of the existing By-laws of the Trustee.  (Exhibit 4 to Form T-1
          filed with Registration Statement No. 33-31019.)

                                       -2-

   3

     6.  The consent of the Trustee required by Section 321(b) of the Act.
         (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)

     7.  A copy of the latest report of condition of the Trustee published
         pursuant to law or to the requirements of its supervising or examining
         authority.

                                      NOTE

     Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.

     Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.

                                      - 3 -

   4

                                    SIGNATURE

     Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 19th day of October, 1995.

                                       THE BANK OF NEW YORK

                                       By:    /S/ VIVIAN GEORGES
                                          ---------------------------
                                          Name:  VIVIAN GEORGES
                                          Title: ASSISTANT VICE PRESIDENT

                                       -4-
   5

                                                           EXHIBIT 7

             Consolidated Report of Condition of

                    THE BANK OF NEW YORK

              of 48 Wall Street, New York, N.Y. 10286
              And Foreign and Domestic Subsidiaries,

a member of the Federal Reserve System, at the close of business June
30, 1995, published in accordance with a call made by the Federal
Reserve Bank of this District pursuant to the provisions of the
Federal Reserve Act.

                                                 Dollar Amounts
ASSETS                                            in Thousands
                                                 --------------
                                              
Cash and balances due from depos-
  itory institutions:
  Noninterest-bearing balances and
  currency and coin ..................             $ 3,025,419
  Interest-bearing balances ..........                 881,413
Securities:
  Held-to-maturity securities ........               1,242,368
  Available-for-sale securities ......               1,774,079
Federal funds sold in domestic
  offices of the bank ................               5,503,445
Securities purchased under agree-
  ments to resell ....................                 200,634
Loans and lease financing
  receivables:
  Loans and leases, net of unearned
    income .................26,599,533
  LESS: Allowance for loan and
    lease losses ..............516,283
    Loans and leases, net of unearned
    income and allowance                            26,083,250
Assets held in trading accounts ......               1,455,639
Premises and fixed assets (including
  capitalized leases) ................                 612,547
Other real estate owned ..............                  79,667
Investments in unconsolidated
  subsidiaries and associated
  companies ..........................                 198,737
Customers' liability to this bank on
  acceptances outstanding ............               1,111,464
Intangible assets ....................                 105,263
Other assets .........................               1,237,264
                                                   -----------     
Total assets .........................             $43,511,189
                                                   ===========
LIABILITIES
Deposits:
  In domestic offices ................             $19,233,885
  Noninterest-bearing .......7,677,954
  Interest-bearing .........11,555,931
  In foreign offices, Edge and
  Agreement subsidiaries, and IBFs ...              12,641,676
  Noninterest-bearing ..........72,479
  Interest-bearing .........12,569,197
Federal funds purchased and secu-
  rities sold under agreements to re-
  purchase in domestic offices of
  the bank and of its Edge and
  Agreement subsidiaries, and in
  IBFs:
  Federal funds purchased ............               1,747,659
  Securities sold under agreements
    to repurchase ....................                  73,553
Demand notes issued to the U.S.
  Treasury ...........................                 300,000
Trading liabilities ..................                 738,317
Other borrowed money:
  With original maturity of one year
    or less ..........................               1,586,443
  With original maturity of more than
    one year .........................                 220,877
Bank's liability on acceptances exe-
  cuted and outstanding ..............               1,113,102
Subordinated notes and debentures ....               1,053,860
Other liabilities ....................               1,489,252
                                                   -----------
Total liabilities ....................              40,198,624
                                                   ===========

EQUITY CAPITAL
Common stock ........................                  942,284
Surplus .............................                  525,666
Undivided profits and capital
  reserves ..........................                1,849,221
Net unrealized holding gains
  (losses) on available-for-sale
  securities ........................                     (662)
Cumulative foreign currency transla-
  tion adjustments ..................                   (3,944)
                                                  ------------
Total equity capital ................                3,312,565
                                                  ------------
Total liabilities and equity
  capital ...........................              $43,511,189
                                                   ===========

   I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued by the Board
of Governors of the Federal Reserve System and is true to the best of
my knowledge and belief.

                                             Robert E. Keilman

   We, the undersigned directors, attest to the correctness of this
Report of Condition and declare that it has been examined by us and to
the best of our knowledge and belief has been prepared in conformance
with the instructions issued by the Board of Governors of the Federal
Reserve System and is true and correct.

   J. Carter Bacot     )
   Thomas A. Renyi     )     Directors
   Samuel F. Chevalier )