vrt2q2011.htm - Generated by SEC Publisher for SEC Filing

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended:

June 30, 2011

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

For the transition period from:

Commission File Number:

001-11954

VORNADO REALTY TRUST

(Exact name of registrant as specified in its charter)

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

888 Seventh Avenue, New York, New York		10019
(Address of principal executive offices)		(Zip Code)

(212) 894-7000

(Registrant’s telephone number, including area code)

N/A

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

x Large Accelerated Filer		o Accelerated Filer
o Non-Accelerated Filer (Do not check if smaller reporting company)		o Smaller Reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of June 30, 2011, 184,427,825 of the registrant’s common shares of beneficial interest are outstanding.


PART I.		Financial Information:	Page Number

	Item 1.	Financial Statements:

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

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

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

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

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

		Notes to the Consolidated Financial Statements (Unaudited)	9

		Report of Independent Registered Public Accounting Firm	35

	Item 2.	Management's Discussion and Analysis of Financial
		Condition and Results of Operations	36

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	72

	Item 4.	Controls and Procedures	73


PART II.		Other Information:

	Item 1.	Legal Proceedings	74

	Item 1A.	Risk Factors	75

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	75

	Item 3.	Defaults Upon Senior Securities	75

	Item 5.	Other Information	75

	Item 6.	Exhibits	75

Signatures			76

Exhibit Index			77

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(Amounts in thousands, except share and per share amounts)			June 30,		December 31,
ASSETS			2011		2010
Real estate, at cost:
	Land		$	4,592,075	$	4,598,303
	Buildings and improvements			12,753,909		12,733,487
	Development costs and construction in progress			236,393		218,156
	Leasehold improvements and equipment			126,784		124,976
		Total		17,709,161		17,674,922
	Less accumulated depreciation and amortization			(2,941,929)		(2,763,997)
Real estate, net				14,767,232		14,910,925
Cash and cash equivalents				591,515		690,789
Restricted cash				155,320		200,822
Marketable securities				791,676		766,116
Accounts receivable, net of allowance for doubtful accounts of $71,939 and $62,979				168,624		157,146
Investments in partially owned entities				1,160,292		927,672
Investment in Toys "R" Us				558,755		447,334
Real Estate Fund investments				255,795		144,423
Mezzanine loans receivable, net				155,613		202,412
Receivable arising from the straight-lining of rents, net of allowance of $8,148 and $7,323				739,784		720,806
Deferred leasing and financing costs, net of accumulated amortization of $236,577 and $223,131				366,421		368,314
Identified intangible assets, net of accumulated amortization of $363,341 and $338,508				317,257		348,745
Assets related to discontinued operations				-		234,464
Due from officers				13,183		13,187
Other assets				497,397		384,316
			$	20,538,864	$	20,517,471

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Notes and mortgages payable			$	8,575,022	$	8,259,298
Senior unsecured notes				982,629		1,082,928
Exchangeable senior debentures				494,403		491,000
Convertible senior debentures				187,994		186,413
Revolving credit facility debt				300,000		874,000
Accounts payable and accrued expenses				436,229		438,479
Deferred credit				555,709		583,369
Deferred compensation plan				100,374		91,549
Deferred tax liabilities				13,256		13,278
Liabilities related to discontinued operations				-		255,922
Other liabilities				104,257		82,856
	Total liabilities			11,749,873		12,359,092
Commitments and contingencies
Redeemable noncontrolling interests:
	Class A units - 12,561,359 and 12,804,202 units outstanding			1,170,467		1,066,974
	Series D cumulative redeemable preferred units - 10,000,001 and 10,400,001 units outstanding			251,000		261,000
		Total redeemable noncontrolling interests		1,421,467		1,327,974
Vornado shareholders' equity:
	Preferred shares of beneficial interest: no par value per share; authorized 110,000,000
		shares; issued and outstanding 41,188,509 and 32,340,009 shares		997,446		783,088
	Common shares of beneficial interest: $.04 par value per share; authorized
		250,000,000 shares; issued and outstanding 184,427,825 and 183,661,875 shares		7,347		7,317
	Additional capital			6,885,223		6,932,728
	Earnings less than distributions			(1,244,254)		(1,480,876)
	Accumulated other comprehensive income			114,479		73,453
		Total Vornado shareholders' equity		6,760,241		6,315,710
Noncontrolling interests in consolidated subsidiaries				607,283		514,695
	Total equity			7,367,524		6,830,405
			$	20,538,864	$	20,517,471

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

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

REVENUES:
	Property rentals	$	573,646	$	565,412	$	1,144,806	$	1,117,869
	Tenant expense reimbursements		82,325		86,420		173,284		178,350
	Cleveland Medical Mart development project		32,369		-		73,068		-
	Fee and other income		41,811		32,157		76,104		73,084
Total revenues			730,151		683,989		1,467,262		1,369,303
EXPENSES:
	Operating		273,152		261,845		563,925		536,538
	Depreciation and amortization		131,898		133,277		264,125		267,070
	General and administrative		50,251		49,540		109,254		98,170
	Cleveland Medical Mart development project		29,940		-		68,218		-
	Acquisition and other costs		1,897		1,930		20,167		1,930
Total expenses			487,138		446,592		1,025,689		903,708
Operating income			243,013		237,397		441,573		465,595
(Loss) income applicable to Toys "R" Us			(22,846)		(21,004)		90,098		104,866
Income from partially owned entities			26,403		4,452		42,687		15,796
Income from Real Estate Fund (of which $12,102 and $12,028 is
	allocated to noncontrolling interests, in the three and six months
	ended June 30, 2011, respectively)		19,058		-		20,138		-
Interest and other investment income, net			8,007		3,876		125,115		18,580
Interest and debt expense (including amortization of deferred
	financing costs of $5,235 and $4,514 in each three-month
	period, respectively, and $9,868 and $8,915 in each six-month
	period, respectively)		(137,202)		(142,175)		(271,967)		(277,902)
Net (loss) on extinguishment of debt			-		(1,072)		-		(1,072)
Net gain on disposition of wholly owned and partially owned assets			-		4,382		6,677		7,687
Income before income taxes			136,433		85,856		454,321		333,550
Income tax expense			(5,922)		(4,964)		(12,304)		(10,544)
Income from continuing operations			130,511		80,892		442,017		323,006
Income (loss) from discontinued operations			458		(3,681)		134,773		(13,251)
Net income			130,969		77,211		576,790		309,755
Less:
	Net income attributable to noncontrolling interests in
	consolidated subsidiaries		(13,657)		(981)		(15,007)		(1,194)
	Net income attributable to noncontrolling interests in the
	Operating Partnership, including unit distributions		(8,731)		(4,124)		(40,539)		(21,903)
Net income attributable to Vornado			108,581		72,106		521,244		286,658
Preferred share dividends			(16,668)		(14,266)		(30,116)		(28,533)
NET INCOME attributable to common shareholders		$	91,913	$	57,840	$	491,128	$	258,125

INCOME PER COMMON SHARE - BASIC:
	Income from continuing operations, net	$	0.50	$	0.34	$	1.98	$	1.49
	(Loss) income from discontinued operations, net		-		(0.02)		0.69		(0.07)
	Net income per common share	$	0.50	$	0.32	$	2.67	$	1.42
	Weighted average shares		184,268		182,027		184,129		181,786

INCOME PER COMMON SHARE - DILUTED:
	Income from continuing operations, net	$	0.49	$	0.33	$	1.97	$	1.48
	(Loss) income from discontinued operations, net		-		(0.02)		0.66		(0.07)
	Net income per common share	$	0.49	$	0.31	$	2.63	$	1.41
	Weighted average shares		186,144		183,644		191,736		183,598

DIVIDENDS PER COMMON SHARE		$	0.69	$	0.65	$	1.38	$	1.30

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)


		For the Three				For the Six
		Months Ended June 30,				Months Ended June 30,
(Amounts in thousands)		2011		2010		2011		2010

Net income		$	130,969	$	77,211	$	576,790	$	309,755
Other comprehensive income:
	Change in unrealized net gain on securities available-for-sale		(27,195)		7,943		40,844		25,531
	Pro rata share of other comprehensive income of
	nonconsolidated subsidiaries		30,156		(277)		26,365		(15,965)
	Change in value of interest rate swap and caps		(10,887)		-		(18,034)		-
	Other		(5,105)		(22)		(5,045)		(418)
Comprehensive income			117,938		84,855		620,920		318,903
Less:
	Comprehensive income attributable to noncontrolling interests		(21,875)		(5,640)		(58,650)		(23,737)
Comprehensive income attributable to Vornado		$	96,063	$	79,215	$	562,270	$	295,166


See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
															Accumulated
(Amounts in thousands)													Earnings		Other		Non-
			Preferred Shares				Common Shares				Additional		Less Than		Comprehensive		controlling		Total
			Shares		Amount		Shares		Amount		Capital		Distributions		Income (Loss)		Interests		Equity
Balance, December 31, 2009				33,952	$	823,686		181,214	$	7,218	$	6,961,007	$	(1,577,591)	$	28,449	$	406,637	$	6,649,406
Net income				-		-		-		-		-		286,658		-		1,194		287,852
Dividends on common shares				-		-		-		-		-		(236,279)		-		-		(236,279)
Dividends on preferred shares				-		-		-		-		-		(28,533)		-		-		(28,533)
Common shares issued:
	Upon redemption of Class A
		units, at redemption value		-		-		495		20		35,691		-		-		-		35,711
	Under employees' share
		option plan		-		-		548		22		8,989		(25,433)		-		-		(16,422)
	Under dividend reinvestment
		plan		-		-		12		1		801		-		-		-		802
Conversion of Series A
	preferred shares to common
	shares			(3)		(152)		4		-		152		-		-		-		-
Deferred compensation shares
	and options			-		-		17		1		3,905		-		-		-		3,906
Change in unrealized net gain
	on securities available-for-sale			-		-		-		-		-		-		25,531		-		25,531
Pro rata share of other
	comprehensive income of
	nonconsolidated subsidiaries			-		-		-		-		-		-		(15,965)		-		(15,965)
Adjustments to carry redeemable
	Class A units at redemption value			-		-		-		-		(66,075)		-		-		-		(66,075)
Other				-		-		-		-		(60)		2		(418)		(545)		(1,021)
Balance, June 30, 2010				33,949	$	823,534		182,290	$	7,262	$	6,944,410	$	(1,581,176)	$	37,597	$	407,286	$	6,638,913

															Accumulated
(Amounts in thousands)													Earnings		Other		Non-
			Preferred Shares				Common Shares				Additional		Less Than		Comprehensive		controlling		Total
			Shares		Amount		Shares		Amount		Capital		Distributions		Income (Loss)		Interests		Equity
Balance, December 31, 2010				32,340	$	783,088		183,662	$	7,317	$	6,932,728	$	(1,480,876)	$	73,453	$	514,695	$	6,830,405
Net income				-		-		-		-		-		521,244		-		15,007		536,251
Dividends on common shares				-		-		-		-		-		(254,099)		-		-		(254,099)
Dividends on preferred shares				-		-		-		-		-		(30,116)		-		-		(30,116)
Issuance of Series J preferred shares				8,850		214,538		-		-		-		-		-		-		214,538
Common shares issued:
	Upon redemption of Class A
		units, at redemption value		-		-		401		16		35,192		-		-		-		35,208
	Under employees' share
		option plan		-		-		343		14		20,434		(397)		-		-		20,051
	Under dividend reinvestment
		plan		-		-		10		-		883		-		-		-		883
Contributions:
	Real Estate Fund			-		-		-		-		-		-		-		109,241		109,241
	Other			-		-		-		-		-		-		-		364		364
Distributions:
	Real Estate Fund			-		-		-		-		-		-		-		(20,796)		(20,796)
	Other			-		-		-		-		-		-		-		(15,604)		(15,604)
Conversion of Series A preferred
	shares to common shares			(1)		(75)		2		-		75		-		-		-		-
Deferred compensation shares
	and options			-		-		10		-		5,122		-		-		-		5,122
Change in unrealized net gain
	on securities available-for-sale			-		-		-		-		-		-		40,844		-		40,844
Pro rata share of other
	comprehensive income of
	nonconsolidated subsidiaries			-		-		-		-		-		-		26,365		-		26,365
Change in value of interest rate caps				-		-		-		-		-		-		(18,034)		-		(18,034)
Adjustments to carry redeemable
	Class A units at redemption value			-		-		-		-		(104,693)		-		-		-		(104,693)
Redeemable noncontrolling interests'
	share of above adjustments			-		-		-		-		-		-		(3,104)		-		(3,104)
Other				-		(105)		-		-		(4,518)		(10)		(5,045)		4,376		(5,302)
Balance, June 30, 2011				41,189	$	997,446		184,428	$	7,347	$	6,885,223	$	(1,244,254)	$	114,479	$	607,283	$	7,367,524

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

			For the Six Months Ended
			June 30,
			2011		2010
(Amounts in thousands)
Cash Flows from Operating Activities:
Net income			$	576,790	$	309,755
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization (including amortization of deferred financing costs)			273,980		280,058
	Equity in net income of partially owned entities, including Toys “R” Us			(132,785)		(120,662)
	Net (gain) loss on extinguishment of debt			(83,907)		1,072
	Mezzanine loans loss (reversal) accrual and net gain on disposition			(82,744)		6,900
	Net gain on sales of real estate			(51,623)		-
	Distributions of income from partially owned entities			43,741		18,517
	Amortization of below-market leases, net			(33,704)		(32,209)
	Straight-lining of rental income			(22,291)		(38,557)
	Other non-cash adjustments			15,173		17,007
	Unrealized gain on Real Estate Fund assets			(13,570)		-
	Income from the mark-to-market of J.C. Penney derivative position			(10,401)		-
	Net gain on disposition of wholly owned and partially owned assets			(6,677)		(7,687)
	Litigation loss accrual			-		10,056
	Changes in operating assets and liabilities:
		Real Estate Fund investments		(97,802)		-
		Accounts receivable, net		(11,478)		(400)
		Prepaid assets		(117,503)		79,289
		Other assets		(10,424)		(25,691)
		Accounts payable and accrued expenses		13,250		23,576
		Other liabilities		12,015		11,341
Net cash provided by operating activities				260,040		532,365
Cash Flows from Investing Activities:
	Investments in partially owned entities			(426,376)		(41,920)
	Distributions of capital from partially owned entities			271,375		12,638
	Proceeds from sales of real estate and related investments			130,789		49,544
	Proceeds from sales and repayments of mezzanine loans			99,990		105,061
	Restricted cash			91,127		133,888
	Additions to real estate			(86,944)		(68,925)
	Investments in mezzanine loans receivable and other			(43,516)		(48,339)
	Development costs and construction in progress			(32,489)		(68,499)
	Proceeds from sales of marketable securities			19,301		122,956
	Proceeds from maturing short-term investments			-		40,000
	Purchases of marketable securities			-		(13,917)
	Acquisitions of real estate and other			-		(15,128)
Net cash provided by investing activities				23,257		207,359

See notes to consolidated financial statements (unaudited).

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

				For the Six Months Ended
				June 30,
				2011		2010
(Amounts in thousands)
Cash Flows from Financing Activities:
	Repayments of borrowings			$	(1,636,817)	$	(1,197,525)
	Proceeds from borrowings				1,284,167		901,040
	Dividends paid on common shares				(254,099)		(236,279)
	Proceeds from the issuance of Series J preferred shares				214,538		-
	Contributions from noncontrolling interests				109,605		-
	Distributions to noncontrolling interests				(62,111)		(27,665)
	Dividends paid on preferred shares				(27,117)		(28,533)
	Debt issuance and other costs				(23,319)		(5,724)
	Proceeds received from exercise of employee share options				21,330		9,827
	Purchases of outstanding preferred units				(8,000)		(13,000)
	Repurchase of shares related to stock compensation agreements and related
		tax withholdings			(748)		(25,223)
Net cash used in financing activities					(382,571)		(623,082)
Net (decrease) increase in cash and cash equivalents					(99,274)		116,642
Cash and cash equivalents at beginning of period					690,789		535,479
Cash and cash equivalents at end of period				$	591,515	$	652,121


Supplemental Disclosure of Cash Flow Information:
	Cash payments for interest (including capitalized interest of $0 and $875)			$	256,776	$	270,997
	Cash payments for income taxes			$	5,416	$	3,861


Non-Cash Investing and Financing Activities:
	Change in unrealized gain on securities available-for-sale			$	40,844	$	25,531
	Contribution of mezzanine loan receivable to a joint venture				73,750		-
	Exchange of real estate				(45,625)		-
	Adjustments to carry redeemable Class A units at redemption value				(104,693)		(66,075)
	Common shares issued upon redemption of Class A units, at redemption value				35,208		35,711
	Extinguishment of a liability in connection with the acquisition of real estate				-		20,500
	Decrease in assets and liabilities resulting from deconsolidation
		of discontinued operations:
			Assets related to discontinued operations		(145,333)		-
			Liabilities related to discontinued operations		(232,502)		-
	Write-off of fully depreciated assets				(32,794)		(31,079)


See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization

Vornado Realty Trust (“Vornado”) is a fully‑integrated real estate investment trust (“REIT”) and conducts its business through, and substantially all of its interests in properties are held by, Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”). Accordingly, Vornado’s cash flow and ability to pay dividends to its shareholders is dependent upon the cash flow of the Operating Partnership and the ability of its direct and indirect subsidiaries to first satisfy their obligations to creditors. Vornado is the sole general partner of, and owned approximately 93.3% of the common limited partnership interest in the Operating Partnership at June 30, 2011. All references to “we,” “us,” “our,” the “Company” and “Vornado” refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership.

2. Basis of Presentation

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

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

3. Acquisitions

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

We are the general partner and investment manager of an $800,000,000 real estate investment Fund, to which we have committed $200,000,000. The Fund has a term of eight years and is our exclusive investment vehicle during its three-year investment period, which concludes in July 2013, for all investments that fit within the Fund’s investment parameters, as defined. The Fund is accounted for under the AICPA Audit and Accounting Guide for Investment Companies and its investments are reported on its balance sheet at fair value, with changes in value each period recognized in earnings. We consolidate the accounts of the Fund into our consolidated financial statements.

From inception through June 30, 2011, the Fund received aggregate capital contributions from partners of $256,100,000, including $64,031,000 from us, and as of June 30, 2011, has five investments aggregating approximately $243,836,000. In the three and six months ended June 30, 2011, the Fund recognized $19,058,000 and $20,138,000 of income, respectively, of which $12,102,000 and $12,028,000, respectively, is attributable to noncontrolling interests. Included in the Fund’s total income for the three and six months ended June 30, 2011 was $12,872,000 and $13,570,000, respectively, of net unrealized gains from the mark-to-market of investments in the Fund, and $3,085,000 of net realized gains from the disposition of an investment. Our share of income from the Fund in the three and six months ended June 30, 2011, net of amounts attributable to noncontrolling interests, was $6,956,000 and $8,110,000, respectively, and includes $2,140,000 of accrued carried interest. In addition, in the three and six months ended June 30, 2011, we recognized $865,000 and $1,165,000, respectively, of management and leasing fees which are included as a component of “fee and other income,” and incurred $403,000 and $3,451,000, respectively, of placement fees in connection with the February 2011 closing of the Fund, which are included in “general and administrative” expenses.

One Park Avenue

On March 1, 2011, we as a co-investor, together with the Fund, acquired a 95% interest in One Park Avenue, a 932,000 square foot office building located between 32^nd and 33^rd Streets in New York, for $374,000,000. The purchase price consisted of $137,000,000 in cash and 95% of a new $250,000,000 5-year mortgage that bears interest at 5.0%. The Fund accounts for its 64.7% interest in the property at fair value in accordance with the AICPA Audit and Accounting Guide for Investment Companies. We account for our directly owned 30.3% equity interest under the equity method of accounting.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

4. Marketable Securities and Derivative Instruments

Marketable Securities

Our portfolio of marketable securities is comprised of debt and equity securities that are classified as available for sale. Available for sale securities are presented on our consolidated balance sheets at fair value. Gains and losses resulting from the mark-to-market of these securities are recognized as an increase or decrease in “accumulated other comprehensive income” (a component of shareholders’ equity on our consolidated balance sheet) and not recognized in income. Gains and losses are recognized in earnings only upon the sale of the securities and are recorded based on the weighted average cost of such securities. Below is a summary of our marketable securities portfolio as of June 30, 2011 and December 31, 2010.

		As of June 30, 2011							As of December 31, 2010
					GAAP		Unrealized					GAAP		Unrealized
		Maturity	Fair Value		Cost		Gain		Maturity	Fair Value		Cost		Gain
Equity securities:
	J.C. Penney	n/a	$	641,892	$	590,366	$	51,526	n/a	$	600,449	$	590,215	$	10,234
	Other	n/a		35,413		13,561		21,852	n/a		47,399		26,632		20,767
Debt securities		04/13 - 10/18		114,371		101,816		12,555	08/11 - 10/18		118,268		104,180		14,088
			$	791,676	$	705,743	$	85,933		$	766,116	$	721,027	$	45,089

In the six months ended June 30, 2011 and 2010, we sold certain marketable securities for aggregate proceeds of $19,301,000 and $122,956,000, resulting in net gains of $2,139,000 and $3,908,000, respectively, of which $48,000 and $3,797,000 were recognized in the three months ended June 30, 2011 and 2010.

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

We own an economic interest in 23,400,000 J.C. Penney common shares, or a 9.9% voting interest in J.C. Penney’s outstanding common shares. Below are the details of our investment.

We own 18,584,010 common shares at an average cost of $25.71 per share, or $477,829,000 in the aggregate. These shares, which have an aggregate fair value of $641,892,000 at June 30, 2011, are included in marketable equity securities on our consolidated balance sheet and are classified as “available for sale.” During the six months ended June 30, 2011, we recognized $41,292,000 from the mark-to-market of these shares, which is included in “other comprehensive income.”

We also own an economic interest in 4,815,990 common shares through a forward contract executed on October 7, 2010, at a weighted average strike price of $28.72 per share, or $138,327,000 in the aggregate. The contract may be settled, at our election, in cash or common shares, in whole or in part, at any time prior to October 9, 2012. The counterparty may accelerate settlement, in whole or in part, upon one year’s notice to us. The strike price per share increases at an annual rate of LIBOR plus 80 basis points. The contract is a derivative instrument that does not qualify for hedge accounting treatment. Mark-to-market adjustments on the underlying common shares are recognized in “interest and other investment income, net” on our consolidated statements of income. During the three and six months ended June 30, 2011, we recognized a loss of $6,762,000 and income of $10,401,000, respectively, from the mark-to-market of the underlying common shares, based on J.C. Penney’s closing share price of $34.54 per share at June 30, 2011.

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

As of June 30, 2011, the aggregate economic net gain on our investment in J.C. Penney was $192,079,000, based on J.C. Penney’s closing share price of $34.54 per share and our weighted average cost of $26.33 per share.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

5. Investments in Partially Owned Entities

Toys “R” Us (“Toys”)

As of June 30, 2011, we own 32.7% of Toys. The business of Toys is highly seasonal. Historically, Toys’ fourth quarter net income accounts for more than 80% of its fiscal year net income. We account for our investment in Toys under the equity method and record our 32.7% share of Toys net income or loss on a one-quarter lag basis because Toys’ fiscal year ends on the Saturday nearest January 31, and our fiscal year ends on December 31. As of June 30, 2011, the carrying amount of our investment in Toys does not differ materially from our share of the equity in the net assets of Toys on a purchase accounting basis.

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

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

(Amounts in thousands)						Balance as of
Balance Sheet:						April 30, 2011		October 30, 2010
	Assets					$	11,951,000	$	12,810,000
	Liabilities						10,115,000		11,317,000
	Toys “R” Us, Inc. equity						1,836,000		1,493,000

		For the Three Months Ended				For the Six Months Ended
Income Statement:		April 30, 2011		May 1, 2010		April 30, 2011		May 1, 2010
	Total revenues	$	2,636,000	$	2,608,000	$	8,608,000	$	8,465,000
	Net (loss) income attributable to Toys		(77,000)		(71,000)		262,000		308,000

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

As of June 30, 2011, we own 1,654,068 Alexander’s common shares, or approximately 32.4% of Alexander’s common equity. We manage, lease and develop Alexander’s properties pursuant to the agreements described below which expire in March of each year and are automatically renewable. As of June 30, 2011, Alexander’s owed us $43,316,000 in fees under these agreements.

As of June 30, 2011, the fair value of our investment in Alexander’s, based on Alexander’s June 30, 2011 closing share price of $397.00, was $656,665,000, or $467,479,000 in excess of the carrying amount on our consolidated balance sheet. As of June 30, 2011, the carrying amount of our investment in Alexander’s, excluding amounts owed to us, exceeds our share of the equity in the net assets of Alexander’s by approximately $59,367,000. The majority of this basis difference resulted from the excess of our purchase price for the Alexander’s common stock acquired over the book value of Alexander’s net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of Alexander’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in Alexander’s net income. The basis difference related to the land will be recognized upon disposition of our investment.

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

(Amounts in thousands)						Balance as of
Balance Sheet:						June 30, 2011		December 31, 2010
	Assets					$	1,772,000	$	1,679,000
	Liabilities						1,421,000		1,335,000
	Noncontrolling interests						2,000		3,000
	Stockholders' equity						349,000		341,000

		For the Three Months Ended				For the Six Months Ended
Income Statement:		June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010
	Total revenues	$	62,000	$	59,000	$	125,000	$	118,000
	Net income attributable to Alexander’s		20,000		15,000		38,000		31,000

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

5. Investments in Partially Owned Entities – continued

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

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

Based on Lexington’s June 30, 2011 closing share price of $9.13, the fair value of our investment in Lexington was $168,622,000, or $104,583,000 in excess of the June 30, 2011 carrying amount on our consolidated balance sheet. As of June 30, 2011, the carrying amount of our investment in Lexington was less than our share of the equity in the net assets of Lexington by approximately $43,446,000. This basis difference resulted primarily from $107,882,000 of non-cash impairment charges recognized during 2008, partially offset by purchase accounting for our acquisition of an additional 8,000,000 common shares of Lexington in October 2008, of which the majority relates to our estimate of the fair values of Lexington’s real estate (land and buildings) as compared to the carrying amounts in Lexington’s consolidated financial statements. The basis difference related to the buildings is being amortized over their estimated useful lives as an adjustment to our equity in net income or loss of Lexington. This amortization is not material to our share of equity in Lexington’s net income or loss. The basis difference attributable to the land will be recognized upon disposition of our investment.

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

(Amounts in thousands)						Balance as of
Balance Sheet:						March 31, 2011		September 30, 2010
	Assets					$	3,223,000	$	3,385,000
	Liabilities						1,904,000		2,115,000
	Noncontrolling interests						76,000		71,000
	Shareholders’ equity						1,243,000		1,199,000

		For the Three Months Ended				For the Six Months Ended
Income Statement:		March 31, 2011		March 31, 2010		March 31, 2011		March 31, 2010
	Total revenues	$	83,000	$	82,000	$	169,000	$	168,000
	Net (loss) attributable to Lexington		(17,000)		(27,000)		(5,000)		(73,000)

LNR Property LLC (“LNR”)

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

LNR consolidates certain commercial mortgage-backed securities (“CMBS”) and Collateralized Debt Obligation (“CDO”) trusts for which it is the primary beneficiary. The assets of these trusts (primarily commercial mortgage loans), which aggregate approximately $141 billion as of March 31, 2011, are the sole source of repayment of the related liabilities, which are non-recourse to LNR and its equity holders, including us. Changes in the fair value of these assets each period are offset by changes in the fair value of the related liabilities through LNR’s consolidated income statement. As of June 30, 2011, the carrying amount of our investment in LNR does not materially differ from our share of LNR’s equity.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

5. Investments in Partially Owned Entities – continued

LNR Property LLC (“LNR”) – continued

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

(Amounts in thousands)		Balance as of
Balance Sheet:		March 31, 2011		September 30, 2010
	Assets	$	141,759,000	$	143,266,000
	Liabilities		141,118,000		142,720,000
	Noncontrolling interests		20,000		37,000
	LNR equity		621,000		509,000

		For the Three Months Ended		For the Six Months Ended
Income Statement:		March 31, 2011		March 31, 2011
	Total revenues	$	47,000	$	83,000
	Net income attributable to LNR		42,000		100,000

280 Park Avenue Joint Venture

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

Independence Plaza

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

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

5. Investments in Partially Owned Entities - continued

Investments in partially owned entities as of June 30, 2011 and December 31, 2010 and income recognized from these investments for the three and six months ended June 30, 2011 and 2010 are as follows:

					Percentage			Balance as of
(Amounts in thousands)					Ownership as of			June 30,		December 31,
Investments:					June 30, 2011			2011		2010
Toys							32.7 %	$	558,755	$	447,334

Alexander’s							32.4 %	$	189,186	$	186,811
Lexington							11.7 %		64,039		57,270
LNR							26.2 %		158,269		132,973
India real estate ventures							4%-36.5%		103,488		127,193
Partially owned office buildings ⁽¹⁾							Various		445,669		181,838
Other equity method investments ⁽²⁾							Various		199,641		241,587
								$	1,160,292	$	927,672

			For the Three Months Ended					For the Six Months Ended
			Ended June 30,					Ended June 30,
Our Share of Net Income (Loss):			2011			2010		2011		2010
Toys – 32.7% share of:
	Equity in net (loss) income before income taxes		$	(49,017)		$	(47,314)	$	130,822	$	126,236
	Income tax benefit (expense)			23,969			24,123		(45,049)		(25,587)
	Equity in net (loss) income			(25,048)			(23,191)		85,773		100,649
	Interest and other income			2,202			2,187		4,325		4,217
			$	(22,846)		$	(21,004)	$	90,098	$	104,866

Alexander’s – 32.4% share of:
	Equity in net income		$	6,351		$	4,920	$	12,070	$	8,697
	Management, leasing and development fees			2,287			2,146		4,579		4,829
				8,638			7,066		16,649		13,526

Lexington – 11.7% share in 2011 and 13.8% share in 2010 of
	equity in net income (loss) ⁽³⁾			8,654			(428)		10,826		5,617

LNR – 26.2% share of equity in net income (acquired in
	July 2010) ⁽⁴⁾			11,003			-		26,257		-

India real estate ventures – 4% to 36.5% range in our
	share of equity in net income (loss)			205			606		(2)		2,257

Partially owned office buildings ⁽⁵⁾				(2,366)			1,023		(6,990)		1,778

Other equity method investments				269			(3,815)		(4,053)		(7,382)
			$	26,403		$	4,452	$	42,687	$	15,796
___________________________________
(1)		Includes interests in 330 Madison Avenue (25%), One Park Avenue (30.3%), 280 Park Avenue (49.5%), 825 Seventh Avenue (50%), Warner Building and 1101 17th Street (55%), Fairfax Square (20%), Kaempfer equity interests in three office buildings (2.5% to 5.0%), Rosslyn Plaza (46%) and West 57th Street properties (50%).

(2)		Includes interests in Monmouth Mall, Verde Realty Operating Partnership, 85 10th Avenue Associates and redevelopment ventures, including Harlem Park and Farley.

(3)		Includes net gains of $8,308 in the three months ended June 30, 2011, and $9,760 and $5,998 in the six months ended June 30, 2011 and 2010, respectively, resulting from Lexington's stock issuances.

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

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

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

5. Investments in Partially Owned Entities – continued

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

				Interest	100% of
				Rate at	Partially Owned Entities’ Debt at
(Amounts in thousands)				June 30,	June 30,		December 31,
			Maturity	2011	2011		2010
Toys (32.7% interest) (as of April 30, 2011 and October 30, 2010,
respectively):
	Senior unsecured notes (Face value – $950,000)		07/17	10.75 %	$	929,183	$	928,045
	Senior unsecured notes (Face value – $725,000)		12/17	8.50 %		716,070		715,577
	$700 million secured term loan facility		09/16	6.00 %		686,979		689,757
	Senior U.K. real estate facility		04/13	5.02 %		583,423		561,559
	7.625% bonds (Face value – $500,000)		08/11	8.82 %		498,787		495,943
	7.875% senior notes (Face value – $400,000)		04/13	9.50 %		388,781		386,167
	7.375% senior secured notes (Face value – $350,000)		09/16	7.38 %		349,750		350,000
	7.375% senior notes (Face value – $400,000)		10/18	9.99 %		345,970		343,528
	Japan bank loans		03/12-02/16	1.85%-2.85%		184,662		180,500
	Spanish real estate facility		02/13	4.51 %		189,580		179,511
	Junior U.K. real estate facility		04/13	6.81%-7.84%		101,828		98,266
	Japan borrowings		03/12	0.98 %		99,792		141,360
	French real estate facility		02/13	4.51 %		91,457		86,599
	8.750% debentures (Face value – $21,600)		09/21	9.17 %		21,071		21,054
	$1.85 billion credit facility		08/15	-		-		519,810
	European and Australian asset-based revolving credit facility		10/12	-		-		25,767
	Other		Various	Various		171,350		156,853
						5,358,683		5,880,296

Alexander’s (32.4% interest):
	731 Lexington Avenue mortgage note payable, collateralized by
		the office space	02/14	5.33 %		345,875		351,751
	731 Lexington Avenue mortgage note payable, collateralized by
		the retail space	07/15	4.93 %		320,000		320,000
	Rego Park construction loan payable		12/11	1.50 %		277,200		277,200
	Kings Plaza Regional Shopping Center mortgage note payable ⁽¹⁾		06/16	1.95 %		250,000		151,214
	Rego Park mortgage note payable		03/12	0.75 %		78,246		78,246
	Paramus mortgage note payable		10/11	5.92 %		68,000		68,000
						1,339,321		1,246,411

Lexington (11.7% interest) (as of March 31, 2011 and
September 30, 2010, respectively):
	Mortgage loans collateralized by Lexington’s real estate		2011-2037	5.81 %		1,721,643		1,927,729

LNR (26.2% interest) (as of March 31, 2011 and
September 30, 2010):
	Mortgage notes payable		2011-2043	4.75 %		353,803		508,547
	Liabilities of consolidated CMBS and CDO trusts		n/a	5.28 %		140,615,139		142,001,333
						140,968,942		142,509,880


(1)		On June 10, 2011, Alexander's completed a $250,000 refinancing of this loan. The five-year interest only loan is at LIBOR plus 1.70%.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

5. Investments in Partially Owned Entities - continued

				Interest	100% of
				Rate at	Partially Owned Entities’ Debt at
(Amounts in thousands)				June 30,	June 30,		December 31,
			Maturity	2011	2011		2010
Partially owned office buildings:
	280 Park Avenue (49.5% interest) mortgage notes payable
		(Face value - $740,000 at 6.37%)	06/16	3.93 %	$	823,629	$	-
	One Park Avenue (30.3% interest) mortgage note payable		03/16	5.00 %		250,000		-
	Warner Building (55% interest) mortgage note payable		05/16	6.26 %		292,700		292,700
	330 Madison Avenue (25% interest) mortgage note payable		06/15	1.77 %		150,000		150,000
	Kaempfer Properties (2.5% and 5.0% interests in two partnerships)
		mortgage notes payable, collateralized by the partnerships’ real estate	11/11-12/11	5.86 %		138,084		139,337
	Fairfax Square (20% interest) mortgage note payable		12/14	7.00 %		71,376		71,764
	Rosslyn Plaza (46% interest) mortgage note payable		12/11	1.30 %		56,680		56,680
	330 West 34th Street (34.8% interest) mortgage note payable,
		collateralized by land	07/22	5.71 %		50,150		50,150
	West 57th Street (50% interest) mortgage note payable		02/14	4.94 %		22,466		22,922
	825 Seventh Avenue (50% interest) mortgage note payable		10/14	8.07 %		20,327		20,565

India Real Estate Ventures:
	TCG Urban Infrastructure Holdings (25% interest) mortgage notes
		payable, collateralized by the entity’s real estate	2011-2022	11.53 %		255,741		196,319

Other:
	Verde Realty Operating Partnership (8.3% interest) mortgage notes
		payable, collateralized by the partnerships’ real estate	2013-2025	5.93 %		541,852		581,086
	Green Courte Real Estate Partners, LLC (8.3% interest) (as of
		March 31, 2011 and September 30, 2010), mortgage notes
		payable, collateralized by the partnerships’ real estate	2011-2018	5.60 %		295,441		296,991
	Monmouth Mall (50% interest) mortgage note payable		02/14-09/15	5.35 %		172,384		164,474
	Wells/Kinzie Garage (50% interest) mortgage note payable		12/17	5.00 %		14,917		15,022
	Orleans Hubbard Garage (50% interest) mortgage note payable		12/17	5.00 %		9,442		9,508
	Waterfront Station (2.5% interest)		n/a	n/a		-		217,106
	Other		Various	4.58 %		663,162		418,339

Based on our ownership interest in the partially owned entities above, our pro rata share of the debt of these partially owned entities was $40,339,296,000 and $40,443,346,000 as of June 30, 2011 and December 31, 2010, respectively. Excluding our pro rata share of LNR’s liabilities related to consolidated CMBS and CDO trusts which are non-recourse to LNR and its equity holders, including us, our pro rata share of partially owned entities debt is $3,534,690,000 and $3,275,917,000 at June 30, 2011 and December 31, 2010, respectively.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

6. Mezzanine Loans Receivable

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

In the first quarter of 2011, we recognized $72,270,000 of income, representing the difference between the fair value of our 280 Park Avenue Mezzanine Loan of $73,750,000, and its carrying amount of $1,480,000. The $72,270,000 of income, which is included in “interest and other investment income, net” on our consolidated statement of income, is comprised of $63,145,000 from the reversal of the loan loss reserve and $9,125,000 of previously unrecognized interest income. Our decision to reverse the loan loss reserve was based on the increase in value of the underlying collateral. On March 16, 2011, we contributed this mezzanine loan to a 50/50 joint venture with SL Green (see Note 5 – Investments in Partially Owned Entities).

As of June 30, 2011 and December 31, 2010, the carrying amount of mezzanine loans receivable was $155,613,000 and $202,412,000, respectively, net of allowances of $0 and $73,216,000, respectively. These loans have a weighted average interest rate of 5.62% and maturities ranging from November 2011 to August 2015.

7. Discontinued Operations

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

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

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

		Assets Related to				Liabilities Related to
(Amounts in thousands)		Discontinued Operations as of				Discontinued Operations as of
		June 30,		December 31,		June 30,		December 31,
		2011		2010		2011		2010
High Point		$	-	$	154,563	$	-	$	236,974
1227 25th Street			-		43,630		-		-
1140 Connecticut Avenue			-		36,271		-		18,948
Total		$	-	$	234,464	$	-	$	255,922


		For The Three Months				For The Six Months
(Amounts in thousands)		Ended June 30,				Ended June 30,
		2011		2010		2011		2010
Total revenues		$	-	$	12,116	$	5,987	$	23,137
Total expenses			-		15,797		6,744		26,332
			-		(3,681)		(757)		(3,195)
Net gain on extinguishment of High Point debt			-		-		83,907		-
Net gain on sale of 1140 Connecticut Avenue
	and 1227 25th Street		-		-		45,862		-
Net gain on sales of other real estate			458		-		5,761		-
Litigation loss accrual			-		-		-		(10,056)
Income (loss) from discontinued operations		$	458	$	(3,681)	$	134,773	$	(13,251)

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

8. Identified Intangible Assets and Liabilities

The following summarizes our identified intangible assets (primarily acquired above-market leases) and liabilities (primarily acquired below-market leases) as of June 30, 2011 and December 31, 2010.

	Balance as of
	June 30,		December 31,
(Amounts in thousands)	2011		2010
Identified intangible assets:
Gross amount	$	680,598	$	687,253
Accumulated amortization		(363,341)		(338,508)
Net	$	317,257	$	348,745
Identified intangible liabilities (included in deferred credit):
Gross amount	$	877,836	$	870,623
Accumulated amortization		(374,438)		(341,718)
Net	$	503,398	$	528,905

Amortization of acquired below-market leases, net of acquired above-market leases, resulted in an increase to rental income of $16,812,000 and $16,284,000 for the three months ended June 30, 2011 and 2010, respectively, and $33,571,000 and $32,055,000 for the six months ended June 30, 2011 and 2010, respectively. Estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding years commencing January 1, 2012 is as follows:

(Amounts in thousands)
2012	$	52,025
2013		44,095
2014		38,240
2015		35,472
2016		32,093

Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was $13,623,000 and $15,757,000 for the three months ended June 30, 2011 and 2010, respectively, and $27,885,000 and $30,610,000 for the six months ended June 30, 2011 and 2010, respectively. Estimated annual amortization of all other identified intangible assets including acquired in-place leases, customer relationships, and third party contracts for each of the five succeeding years commencing January 1, 2012 is as follows:

(Amounts in thousands)
2012	$	44,777
2013		37,281
2014		18,885
2015		13,929
2016		11,325

We are a tenant under ground leases for certain properties. Amortization of these acquired below-market leases, net of above-market leases resulted in an increase to rent expense of $334,000 and $509,000 for the three months ended June 30, 2011 and 2010, respectively, and $648,000 and $1,018,000 for the six months ended June 30, 2011 and 2010, respectively. Estimated annual amortization of these below-market leases, net of above-market leases, for each of the five succeeding years commencing January 1, 2012 is as follows:

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

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

9. Debt

The following is a summary of our debt:

				Interest
(Amounts in thousands)				Rate at	Balance at
				June 30,	June 30,		December 31,
Notes and mortgages payable:			Maturity (1)	2011	2011		2010
Fixed rate:
	New York Office:
		350 Park Avenue	01/12	5.48 %	$	430,000	$	430,000
		Two Penn Plaza ⁽²⁾	03/18	5.13 %		425,000		277,347
		1290 Avenue of the Americas	01/13	5.97 %		418,657		424,136
		770 Broadway	03/16	5.65 %		353,000		353,000
		888 Seventh Avenue	01/16	5.71 %		318,554		318,554
		909 Third Avenue	04/15	5.64 %		205,142		207,045
		Eleven Penn Plaza	12/11	5.20 %		197,260		199,320

	Washington, DC Office:
		Skyline Place	02/17	5.74 %		678,000		678,000
		River House Apartments	04/15	5.43 %		195,546		195,546
		2121 Crystal Drive ⁽³⁾	03/23	5.51 %		150,000		-
		Bowen Building	06/16	6.14 %		115,022		115,022
		1215 Clark Street, 200 12th Street and 251 18th Street	01/25	7.09 %		109,891		110,931
		Universal Buildings	04/14	6.38 %		101,182		103,049
		West End 25 ⁽⁴⁾	06/21	4.88 %		101,671		-
		Reston Executive I, II, and III	01/13	5.57 %		93,000		93,000
		2011 Crystal Drive	08/17	7.30 %		81,005		81,362
		1550 and 1750 Crystal Drive	11/14	7.08 %		78,142		79,411
		220 20th Street ⁽⁵⁾	02/18	4.61 %		75,704		-
		1235 Clark Street	07/12	6.75 %		51,815		52,314
		2231 Crystal Drive	08/13	7.08 %		45,211		46,358
		1750 Pennsylvania Avenue	06/12	7.26 %		44,734		45,132
		1225 Clark Street	08/13	7.08 %		27,044		27,616
		1800, 1851 and 1901 South Bell Street	12/11	6.91 %		5,162		10,099

	Retail:
		Cross-collateralized mortgages on 40 strip shopping centers	09/20	4.19 %		591,327		597,138
		Montehiedra Town Center	07/16	6.04 %		120,000		120,000
		Broadway Mall	07/13	5.30 %		88,994		90,227
		828-850 Madison Avenue Condominium	06/18	5.29 %		80,000		80,000
		North Bergen (Tonnelle Avenue) ⁽⁶⁾	01/18	4.59 %		75,000		-
		Las Catalinas Mall	11/13	6.97 %		56,912		57,737
		510 5th Avenue	01/16	5.60 %		31,961		32,189
		Other	03/12-05/36	5.10%-7.33%		100,476		101,251

	Merchandise Mart:
		Merchandise Mart	12/16	5.57 %		550,000		550,000
		Boston Design Center	09/15	5.02 %		67,947		68,538
		Washington Design Center	11/11	6.95 %		43,021		43,447

	Other:
		555 California Street	09/11	5.79 %		642,163		640,911
		Borgata Land ⁽⁷⁾	02/21	5.14 %		60,000		-
		Industrial Warehouses	n/a	n/a		-		24,358
Total fixed rate notes and mortgages payable				5.59 %	$	6,808,543	$	6,253,038
___________________
		See notes on page 21.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

9. Debt - continued

					Interest
(Amounts in thousands)					Rate at	Balance at
				Spread over	June 30,	June 30,		December 31,
Notes and mortgages payable:			Maturity (1)	LIBOR	2011	2011		2010
Variable rate:
	New York Office:
		Manhattan Mall	02/12	L+55	0.74 %	$	232,000	$	232,000
		866 UN Plaza ⁽⁸⁾	05/16	L+125 ⁽⁸⁾	1.52 %		44,978		44,978
	Washington, DC Office:
		2101 L Street	02/13	L+120	1.45 %		150,000		150,000
		River House Apartments	04/18	n/a ⁽⁹⁾	1.53 %		64,000		64,000
		2200/2300 Clarendon Boulevard	01/15	L+75	0.94 %		56,320		59,278
		1730 M and 1150 17th Street	06/14	L+140	1.65 %		43,581		43,581
		West End 25 ⁽⁴⁾	n/a	n/a	n/a		-		95,220
		220 20th Street ⁽⁵⁾	n/a	n/a	n/a		-		83,573
	Retail:
		Green Acres Mall	02/13	L+140	1.65 %		325,045		335,000
		Bergen Town Center	03/13	L+150	1.77 %		279,044		279,044
		San Jose Strip Center	03/13	L+400	4.25 %		117,025		120,863
		Beverly Connection ⁽¹⁰⁾	07/12	L+350 ⁽¹⁰⁾	5.00 %		100,000		100,000
		4 Union Square South	04/14	L+325	3.52 %		75,000		75,000
		Cross-collateralized mortgages on 40 strip
		shopping centers ⁽¹¹⁾	09/20	L+136 ⁽¹¹⁾	2.36 %		60,000		60,000
		435 Seventh Avenue ⁽¹²⁾	08/14	L+300 ⁽¹²⁾	5.00 %		51,603		51,844
		Other	11/12	L+375	3.94 %		21,733		21,862
	Other:
		220 Central Park South	10/11	L+235–L+245	2.58 %		123,750		123,750
		Other	11/11	L+250	2.78 %		22,400		66,267
	Total variable rate notes and mortgages payable				2.17 %		1,766,479		2,006,260
	Total notes and mortgages payable				4.89 %	$	8,575,022	$	8,259,298

Senior unsecured notes:
	Senior unsecured notes due 2015		04/15		4.25 %	$	499,379	$	499,296
	Senior unsecured notes due 2039 ⁽¹³⁾		10/39		7.88 %		460,000		460,000
	Floating rate senior unsecured notes due 2011		12/11	L+200	2.30 %		23,250		23,250
	Senior unsecured notes due 2011		n/a		n/a		-		100,382
	Total senior unsecured notes				5.90 %	$	982,629	$	1,082,928

3.88% exchangeable senior debentures due 2025
	(see page 22)		04/12		5.32 %	$	494,403	$	491,000

Convertible senior debentures: (see page 22)
	3.63% due 2026		11/11		5.32 %	$	177,954	$	176,499
	2.85% due 2027		04/12		5.45 %		10,040		9,914
	Total convertible senior debentures ⁽¹⁴⁾				5.33 %	$	187,994	$	186,413

Unsecured revolving credit facilities:
	$1.595 billion unsecured revolving credit facility		09/12	L+55	0.72 %	$	300,000	$	669,000
	$1.25 billion unsecured revolving credit facility
		($21,534 reserved for outstanding letters of credit) ⁽¹⁵⁾	06/16	L+135	-		-		205,000
	Total unsecured revolving credit facilities				0.72 %	$	300,000	$	874,000
___________________________
	See notes on the following page.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

9. Debt - continued

	Notes to preceding tabular information (Amounts in thousands):

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

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

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

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

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

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

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

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

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

	(10)	This loan has a LIBOR floor of 1.50%. The spread over LIBOR increases from 3.50% currently to 5.00% in August 2011.

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

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

	(13)	These notes may be redeemed at our option in whole or in part beginning on October 1, 2014, at a price equal to the principal amount plus accrued interest.

	(14)	The net proceeds from the offering of these debentures were contributed to the Operating Partnership in the form of an inter-company loan and the Operating Partnership fully and unconditionally guaranteed payment of these debentures. There are no restrictions which limit the Operating Partnership from making distributions to Vornado and Vornado has virtually no independent assets or operations outside of the Operating Partnership.

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

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

9. Debt – continued

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

			2.85% Convertible				3.63% Convertible				3.88% Exchangeable
(Amounts in thousands, except per share amounts)			Senior Debentures due 2027				Senior Debentures due 2026				Senior Debentures due 2025
			June 30,		December 31,		June 30,		December 31,		June 30,		December 31,
Balance Sheet:			2011		2010		2011		2010		2011		2010
	Principal amount of debt component		$	10,233	$	10,233	$	179,052	$	179,052	$	499,982	$	499,982
	Unamortized discount			(193)		(319)		(1,098)		(2,553)		(5,579)		(8,982)
	Carrying amount of debt component		$	10,040	$	9,914	$	177,954	$	176,499	$	494,403	$	491,000
	Carrying amount of equity component		$	956	$	956	$	9,604	$	9,604	$	32,301	$	32,301
	Effective interest rate			5.45 %		5.45 %		5.32 %		5.32 %		5.32 %		5.32 %
	Maturity date (period through which
		discount is being amortized)		4/1/12				11/15/11				4/15/12
	Conversion price per share, as adjusted		$	157.18			$	148.46			$	87.17
	Number of shares on which the
		aggregate consideration to be
		delivered upon conversion is
		determined		- ⁽¹⁾				- ⁽¹⁾				5,736
__________________

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

		Three Months Ended				Six Months Ended
(Amounts in thousands)		June 30,				June 30,
Income Statement:		2011		2010		2011		2010
2.85% Convertible Senior Debentures due 2027:
	Coupon interest	$	72	$	160	$	145	$	320
	Discount amortization – original issue		11		23		22		46
	Discount amortization – ASC 470-20 implementation		52		107		104		215
		$	135	$	290	$	271	$	581

3.63% Convertible Senior Debentures due 2026:
	Coupon interest	$	1,622	$	3,842	$	3,245	$	7,805
	Discount amortization – original issue		200		447		396		903
	Discount amortization – ASC 470-20 implementation		533		1,198		1,059		2,416
		$	2,355	$	5,487	$	4,700	$	11,124

3.88% Exchangeable Senior Debentures due 2025:
	Coupon interest	$	4,844	$	4,844	$	9,688	$	9,688
	Discount amortization – original issue		404		384		803		762
	Discount amortization – ASC 470-20 implementation		1,309		1,241		2,600		2,466
		$	6,557	$	6,469	$	13,091	$	12,916

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

10. Redeemable Noncontrolling Interests

Redeemable noncontrolling interests on our consolidated balance sheets represent Operating Partnership units held by third parties and are comprised of Class A units and Series D-10, D-11, D-14, D-15 and D-16 (collectively, “Series D”) cumulative redeemable preferred units. Redeemable noncontrolling interests on our consolidated balance sheets are recorded at the greater of their carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to “additional capital” in our consolidated statements of changes in equity. Below is a table summarizing the activity of redeemable noncontrolling interests.

(Amounts in thousands)
Balance at December 31, 2009	$	1,251,628
Net income		21,903
Distributions		(27,338)
Conversion of Class A units into common shares, at redemption value		(35,711)
Adjustments to carry redeemable Class A units at redemption value		66,075
Redemption of Series D-12 redeemable units		(13,000)
Other, net		7,356
Balance at June 30, 2010	$	1,270,913


Balance at December 31, 2010	$	1,327,974
Net income		40,539
Distributions		(25,711)
Conversion of Class A units into common shares, at redemption value		(35,208)
Adjustments to carry redeemable Class A units at redemption value		104,693
Redemption of Series D-11 redeemable units		(8,000)
Other, net		17,180
Balance at June 30, 2011	$	1,421,467

As of June 30, 2011 and December 31, 2010, the aggregate redemption value of redeemable Class A units was $1,170,467,000 and $1,066,974,000, respectively.

Redeemable noncontrolling interests exclude our Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units, as they are accounted for as liabilities in accordance with ASC 480, Distinguishing Liabilities and Equity, because of their possible settlement by issuing a variable number of Vornado common shares. Accordingly the fair value of these units is included as a component of “other liabilities” on our consolidated balance sheets and aggregated $55,097,000 as of June 30, 2011 and December 31, 2010.

In June 2011, we redeemed 400,000 Series D-11 cumulative redeemable preferred units for $8,000,000 in cash. In March and May of 2010, we redeemed 246,153 and 553,847 Series D-12 cumulative redeemable preferred units, respectively, for an aggregate of $13,000,000 in cash.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

11. Shareholders’ Equity

On April 20, 2011, we sold 7,000,000 6.875% Series J Cumulative Redeemable Preferred Shares at a price of $25.00 per share, in an underwritten public offering pursuant to an effective registration statement. On April 21, 2011, the underwriters exercised their option to purchase an additional 1,050,000 shares to cover over-allotments. On May 5, 2011, we sold an additional 800,000 shares at a price of $25.00 per share. We retained aggregate net proceeds of $214,538,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 8,850,000 Series J Preferred Units (with economic terms that mirror those of the Series J Preferred Shares). Dividends on the Series J Preferred Shares are cumulative and payable quarterly in arrears. The Series J Preferred Shares are not convertible into, or exchangeable for, any of our properties or securities. On or after five years from the date of issuance (or sooner under limited circumstances), we, at our option, may redeem the Series J Preferred Shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption. The Series J Preferred Shares have no maturity date and will remain outstanding indefinitely unless redeemed by us.

12. Fair Value Measurements

ASC 820, Fair Value Measurement and Disclosures defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities. Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets.

Financial Assets and Liabilities Measured at Fair Value

Financial assets and liabilities that are measured at fair value in our consolidated financial statements consist of (i) marketable securities, (ii) derivative positions in marketable equity securities, (iii) the assets of our deferred compensation plan, which are primarily marketable equity securities and equity investments in limited partnerships, (iv) Real Estate Fund investments, and (v) mandatorily redeemable instruments (Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units). The tables below aggregate the fair values of financial assets and liabilities by the levels in the fair value hierarchy at June 30, 2011 and December 31, 2010, respectively.

			As of June 30, 2011
(Amounts in thousands)			Total		Level 1		Level 2		Level 3
	Marketable securities		$	791,676	$	791,676	$	-	$	-
	Real Estate Fund investments (75% of which is attributable to
		noncontrolling interests)		255,795		-		-		255,795
	Deferred compensation plan assets (included in other assets)			100,374		46,650		-		53,724
	Derivative positions in marketable equity securities
		(included in other assets)		28,017		-		28,017		-
		Total assets	$	1,175,862	$	838,326	$	28,017	$	309,519

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

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

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

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

12. Fair Value Measurements - continued

Financial Assets and Liabilities Measured at Fair Value - continued

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

Real Estate Fund Investments:
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in thousands)	2011		2010		2011		2010
Beginning balance	$	230,657	$	-	$	144,423	$	-
Purchases		22,808		-		123,047		-
Sales		(12,831)		-		(12,831)		-
Realized and unrealized gains		15,957		-		16,655		-
Other, net		(796)		-		(15,499)		-
Ending balance	$	255,795	$	-	$	255,795	$	-


Deferred Compensation Plan Assets:
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in thousands)	2011		2010		2011		2010
Beginning balance	$	51,612	$	43,263	$	47,850	$	39,589
Purchases		17,818		3,210		19,104		6,342
Sales		(16,347)		(3,014)		(17,494)		(3,580)
Realized and unrealized gains		594		41		4,217		1,149
Other, net		47		98		47		98
Ending balance	$	53,724	$	43,598	$	53,724	$	43,598

Financial Assets and Liabilities not Measured at Fair Value

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

			As of June 30, 2011				As of December 31, 2010
			Carrying		Fair		Carrying		Fair
(Amounts in thousands)			Amount		Value		Amount		Value
	Mezzanine loans receivable		$	155,613	$	149,948	$	202,412	$	197,581
	Debt:
		Notes and mortgages payable	$	8,575,022	$	8,757,884	$	8,259,298	$	8,450,812
		Senior unsecured notes		982,629		1,046,369		1,082,928		1,119,512
		Exchangeable senior debentures		494,403		564,355		491,000		554,355
		Convertible senior debentures		187,994		190,391		186,413		191,510
		Revolving credit facility debt		300,000		300,000		874,000		874,000
			$	10,540,048	$	10,858,999	$	10,893,639	$	11,190,189

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

13. Stock-based Compensation

Our Share Option Plan (the “Plan”) provides for grants of incentive and non-qualified stock options, restricted stock, restricted Operating Partnership units and out-performance plan rewards to certain of our employees and officers. We account for all stock-based compensation in accordance ASC 718, Compensation – Stock Compensation. Stock-based compensation expense for the three months ended June 30, 2011 and 2010 consists of stock option awards, restricted stock awards, Operating Partnership unit awards and out-performance plan awards. Stock-based compensation expense was $6,919,000 and $8,480,000 in the three months ended June 30, 2011 and 2010, respectively, and $14,065,000 and $14,957,000 in the six months ended June 30, 2011 and 2010, respectively.

14. Fee and Other Income

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

	For the Three Months				For the Six Months
(Amounts in thousands)	Ended June 30,				Ended June 30,
	2011		2010		2011		2010
Tenant cleaning fees	$	15,409	$	13,468	$	30,832	$	27,120
Management and leasing fees		6,989		3,380		11,095		12,520
Lease termination fees		7,323		2,841		8,499		7,811
Other income		12,090		12,468		25,678		25,633
	$	41,811	$	32,157	$	76,104	$	73,084

Fee and other income above includes management fee income from Interstate Properties, a related party, of $194,000 and $192,000 for the three months ended June 30, 2011 and 2010, respectively, and $391,000 and $392,000 for the six months ended June 30, 2011 and 2010, respectively. The above table excludes management fee income from partially owned entities which is included in income from partially owned entities (see Note 5 – Investments in Partially Owned Entities).

15. Interest and Other Investment Income, Net

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

		For the Three Months				For the Six Months
(Amounts in thousands)		Ended June 30,				Ended June 30,
		2011		2010		2011		2010
Mezzanine loans loss (accrual) reversal and net gain on disposition		$	-	$	(6,900)	$	82,744	$	(6,900)
Mark-to-market of investments in our deferred compensation plan⁽¹⁾			1,793		(986)		6,745		1,777
(Loss) income from the mark-to-market of J.C. Penney derivative position			(6,762)		-		10,401		-
Dividends and interest on marketable securities			7,669		7,377		15,336		14,622
Interest on mezzanine loans			3,083		2,325		5,727		5,040
Other, net			2,224		2,060		4,162		4,041
		$	8,007	$	3,876	$	125,115	$	18,580
__________________________

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

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

16. Income Per Share

The following table provides a reconciliation of both net income and the number of common shares used in the computation of (i) basic income per common share - which utilizes the weighted average number of common shares outstanding without regard to dilutive potential common shares, and (ii) diluted income per common share - which includes the weighted average common shares and potentially dilutive share equivalents. Potentially dilutive share equivalents include our Series A convertible preferred shares, employee stock options, restricted stock and exchangeable senior debentures due 2025.

			For the Three Months				For the Six Months
(Amounts in thousands, except per share amounts)			Ended June 30,				Ended June 30,
			2011		2010		2011		2010
Numerator:
	Income from continuing operations, net of income
		attributable to noncontrolling interests	$	108,152	$	75,787	$	395,099	$	299,909
	Income (loss) from discontinued operations, net of income
		attributable to noncontrolling interests		429		(3,681)		126,145		(13,251)
	Net income attributable to Vornado			108,581		72,106		521,244		286,658
	Preferred share dividends			(16,668)		(14,266)		(30,116)		(28,533)
	Net income attributable to common shareholders			91,913		57,840		491,128		258,125
	Earnings allocated to unvested participating securities			(48)		(29)		(184)		(49)
	Numerator for basic income per share			91,865		57,811		490,944		258,076
	Impact of assumed conversions:
		Interest on 3.88% exchangeable senior debentures		-		-		13,090		-
		Convertible preferred share dividends		-		-		64		81
	Numerator for diluted income per share		$	91,865	$	57,811	$	504,098	$	258,157

Denominator:
	Denominator for basic income per share –
		weighted average shares		184,268		182,027		184,129		181,786
	Effect of dilutive securities ⁽¹⁾:
		3.88% exchangeable senior debentures		-		-		5,736		-
		Employee stock options and restricted share awards		1,876		1,617		1,815		1,741
		Convertible preferred shares		-		-		56		71
	Denominator for diluted income per share –
		weighted average shares and assumed conversions		186,144		183,644		191,736		183,598

INCOME PER COMMON SHARE – BASIC:
	Income from continuing operations, net		$	0.50	$	0.34	$	1.98	$	1.49
	(Loss) income from discontinued operations, net			-		(0.02)		0.69		(0.07)
	Net income per common share		$	0.50	$	0.32	$	2.67	$	1.42

INCOME PER COMMON SHARE – DILUTED:
	Income from continuing operations, net		$	0.49	$	0.33	$	1.97	$	1.48
	(Loss) income from discontinued operations, net			-		(0.02)		0.66		(0.07)
	Net income per common share		$	0.49	$	0.31	$	2.63	$	1.41


(1)		The effect of dilutive securities above excludes anti-dilutive weighted average common share equivalents of 18,349 and 20,075 in the three months ended June 30, 2011 and 2010, respectively, and 12,922 and 19,941 in the six months ended June 30, 2011 and 2010, respectively.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

17. Cleveland Medical Mart Development Project

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

We account for these agreements using criteria set forth in ASC 605-25, Multiple-Element Arrangements, as our subsidiaries are providing development, marketing, leasing, and other property management related services over the 17-year term. We recognize development fees using the percentage of completion method of accounting. In the three and six months ended June 30, 2011, we recognized $32,369,000 and $73,068,000 of revenue, respectively, which is offset by development costs expensed of $29,940,000 and $68,218,000, respectively.

18. Commitments and Contingencies

Insurance

We maintain general liability insurance with limits of $300,000,000 per occurrence and all risk property and rental value insurance with limits of $2.0 billion per occurrence, including coverage for terrorist acts, with sub-limits for certain perils such as floods. Our California properties have earthquake insurance with coverage of $150,000,000 per occurrence, subject to a deductible in the amount of 5% of the value of the affected property, up to a $150,000,000 annual aggregate.

Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a portion of our earthquake insurance coverage and as a direct insurer for coverage for acts of terrorism, including nuclear, biological, chemical and radiological (“NBCR”) acts, as defined by the Terrorism Risk Insurance Program Reauthorization Act. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to PPIC. Our coverage for NBCR losses is up to $2 billion per occurrence, for which PPIC is responsible for a deductible of $3,200,000 and 15% of the balance of a covered loss and the Federal government is responsible for the remaining 85% of a covered loss. We are ultimately responsible for any loss borne by PPIC.

We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism. However, we cannot anticipate what coverage will be available on commercially reasonable terms in future policy years.

Our debt instruments, consisting of mortgage loans secured by our properties which are non-recourse to us, senior unsecured notes, exchangeable senior debentures, convertible senior debentures and revolving credit agreements contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain it could adversely affect our ability to finance our properties and expand our portfolio.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

18. Commitments and Contingencies – continued

Other Commitments and Contingencies

Our mortgage loans are non-recourse to us. However, in certain cases we have provided guarantees or master leased tenant space. These guarantees and master leases terminate either upon the satisfaction of specified circumstances or repayment of the underlying loans. As of June 30, 2011, the aggregate dollar amount of these guarantees and master leases is approximately $168,124,000.

At June 30, 2011, $21,534,000 of letters of credit were outstanding under one of our revolving credit facilities. Our credit facilities contain financial covenants that require us to maintain minimum interest coverage and maximum debt to market capitalization ratios, and provide for higher interest rates in the event of a decline in our ratings below Baa3/BBB. Our credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and also contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.

Each of our properties has been subjected to varying degrees of environmental assessment at various times. The environmental assessments did not reveal any material environmental contamination. However, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites, or changes in cleanup requirements would not result in significant costs to us.

We are committed to fund additional capital to certain of our partially owned entities aggregating approximately $189,300,000, of which $135,969,000 is committed to our Real Estate Fund. In addition, we have agreed in principle to contribute up to $52,000,000 to a new investment management fund which will be managed by LNR.

As part of the process of obtaining the required approvals to demolish and develop our 220 Central Park South property into a new residential tower, we have committed to fund the estimated project cost of approximately $400,000,000 to $425,000,000.

Litigation

We are from time to time involved in legal actions arising in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters, including the matter referred to below, is not expected to have a material adverse effect on our financial position, results of operations or cash flows.

On January 8, 2003, Stop & Shop filed a complaint with the United States District Court for the District of New Jersey (“USDC-NJ”) claiming that we had no right to reallocate and therefore continue to collect the $5,000,000 of annual rent from Stop & Shop pursuant to the Master Agreement and Guaranty, because of the expiration of the East Brunswick, Jersey City, Middletown, Union and Woodbridge leases to which the $5,000,000 of additional rent was previously allocated. Stop & Shop asserted that a prior order of the Bankruptcy Court for the Southern District of New York dated February 6, 2001, as modified on appeal to the District Court for the Southern District of New York on February 13, 2001, froze our right to reallocate which effectively terminated our right to collect the additional rent from Stop & Shop. On March 3, 2003, after we moved to dismiss for lack of jurisdiction, Stop & Shop voluntarily withdrew its complaint. On March 26, 2003, Stop & Shop filed a new complaint in New York State Supreme Court, asserting substantially the same claims as in its USDC-NJ complaint. We removed the action to the United States District Court for the Southern District of New York. In January 2005, that court remanded the action to the New York State Supreme Court. On February 14, 2005, we served an answer in which we asserted a counterclaim seeking a judgment for all the unpaid additional rent accruing through the date of the judgment and a declaration that Stop & Shop will continue to be liable for the additional rent as long as any of the leases subject to the Master Agreement and Guaranty remain in effect. On May 17, 2005, we filed a motion for summary judgment. On July 15, 2005, Stop & Shop opposed our motion and filed a cross-motion for summary judgment. On December 13, 2005, the Court issued its decision denying the motions for summary judgment. Both parties appealed the Court’s decision and on December 14, 2006, the Appellate Court division issued a decision affirming the Court’s decision. On January 16, 2007, we filed a motion for the reconsideration of one aspect of the Appellate Court’s decision which was denied on March 13, 2007. A trial was held in November 2010 and closing arguments were held in March 2011. As of June 30, 2011, we have a $39,483,000 receivable from Stop & Shop, of which $21,855,000 has been reserved. We believe, after consultation with counsel, that the maximum reasonably possible loss is up to the total amount of the receivable of $39,483,000.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

19. Segment Information

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


(Amounts in thousands)			For the Three Months Ended June 30, 2011
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	548,485	$	197,135	$	141,770	$	106,662	$	56,363	$	-	$	46,555
Straight-line rent adjustments					8,349		3,890		(706)		3,730		653		-		782
Amortization of acquired below-
	market leases, net				16,812		8,178		512		6,996		17		-		1,109
Total rentals					573,646		209,203		141,576		117,388		57,033		-		48,446
Tenant expense reimbursements					82,325		31,483		8,936		36,636		3,744		-		1,526
Cleveland Medical Mart development
	project				32,369		-		-		-		32,369		-		-
Fee and other income:
	Tenant cleaning fees				15,409		23,679		-		-		-		-		(8,270)
	Management and leasing fees				6,989		2,112		4,074		1,343		200		-		(740)
	Lease termination fees				7,323		5,571		900		852		-		-		-
	Other				12,090		5,103		5,317		1,692		(158)		-		136
Total revenues					730,151		277,151		160,803		157,911		93,188		-		41,098
Operating expenses					273,152		116,221		49,748		57,194		32,861		-		17,128
Depreciation and amortization					131,898		45,854		34,065		27,750		11,113		-		13,116
General and administrative					50,251		4,579		6,462		7,291		6,848		-		25,071
Cleveland Medical Mart development
	project				29,940		-		-		-		29,940		-		-
Acquisition and other costs					1,897		-		-		-		-		-		1,897
Total expenses					487,138		166,654		90,275		92,235		80,762		-		57,212
Operating income (loss)					243,013		110,497		70,528		65,676		12,426		-		(16,114)
(Loss) applicable to Toys					(22,846)		-		-		-		-		(22,846)		-
Income (loss) from partially owned
	entities				26,403		(845)		(767)		924		178		-		26,913
Income from Real Estate Fund					19,058		-		-		-		-		-		19,058
Interest and other investment
	income (loss), net				8,007		148		48		(6)		9		-		7,808
Interest and debt expense					(137,202)		(35,033)		(30,729)		(23,344)		(9,437)		-		(38,659)
Income (loss) before income taxes					136,433		74,767		39,080		43,250		3,176		(22,846)		(994)
Income tax expense					(5,922)		(440)		(569)		-		(911)		-		(4,002)
Income (loss) from continuing
	operations				130,511		74,327		38,511		43,250		2,265		(22,846)		(4,996)
Income from discontinued
	operations				458		-		-		458		-		-		-
Net income (loss)					130,969		74,327		38,511		43,708		2,265		(22,846)		(4,996)
Less:
	Net income attributable to
		noncontrolling interests in
		consolidated subsidiaries			(13,657)		(2,325)		-		(69)		-		-		(11,263)
	Net income attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(8,731)		-		-		-		-		-		(8,731)
Net income (loss) attributable to
	Vornado				108,581		72,002		38,511		43,639		2,265		(22,846)		(24,990)
Interest and debt expense⁽²⁾					202,956		36,953		34,093		24,468		9,595		43,393		54,454
Depreciation and amortization⁽²⁾					182,496		47,621		38,306		28,400		11,227		32,896		24,046
Income tax (benefit) expense⁽²⁾					(17,343)		440		607		-		911		(23,969)		4,668
EBITDA⁽¹⁾				$	476,690	$	157,016	$	111,517	$	96,507	$	23,998	$	29,474	$	58,178


See notes of page 34.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

19. Segment Information – continued


(Amounts in thousands)			For the Three Months Ended June 30, 2010
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	531,576	$	195,248	$	142,952	$	96,335	$	54,441	$	-	$	42,600
Straight-line rent adjustments					17,552		7,255		964		7,761		725		-		847
Amortization of acquired below-
	market leases, net				16,284		9,134		621		4,933		15		-		1,581
Total rentals					565,412		211,637		144,537		109,029		55,181		-		45,028
Tenant expense reimbursements					86,420		32,431		12,546		35,351		3,829		-		2,263
Fee and other income:
	Tenant cleaning fees				13,468		20,639		-		-		-		-		(7,171)
	Management and leasing fees				3,380		1,393		2,384		321		19		-		(737)
	Lease termination fees				2,841		2,297		82		428		34		-		-
	Other				12,468		4,513		5,061		1,005		744		-		1,145
Total revenues					683,989		272,910		164,610		146,134		59,807		-		40,528
Operating expenses					261,845		111,055		50,013		55,648		28,727		-		16,402
Depreciation and amortization					133,277		44,271		36,018		27,528		11,387		-		14,073
General and administrative					49,540		4,767		6,202		6,807		7,157		-		24,607
Acquisition and other costs					1,930		-		-		-		-		-		1,930
Total expenses					446,592		160,093		92,233		89,983		47,271		-		57,012
Operating income (loss)					237,397		112,817		72,377		56,151		12,536		-		(16,484)
(Loss) applicable to Toys					(21,004)		-		-		-		-		(21,004)		-
Income from partially owned
	entities				4,452		1,337		188		1,129		55		-		1,743
Interest and other investment
	income, net				3,876		163		23		186		12		-		3,492
Interest and debt expense					(142,175)		(33,047)		(34,068)		(20,315)		(9,464)		-		(45,281)
Net (loss) on extinguishment
	of debt				(1,072)		-		-		-		-		-		(1,072)
Net gain (loss) on disposition of wholly
	owned and partially owned assets				4,382		-		-		-		(31)		-		4,413
Income (loss) before income taxes					85,856		81,270		38,520		37,151		3,108		(21,004)		(53,189)
Income tax (expense) benefit					(4,964)		(335)		595		-		(402)		-		(4,822)
Income (loss) from continuing
	operations				80,892		80,935		39,115		37,151		2,706		(21,004)		(58,011)
(Loss) income from discontinued
	operations				(3,681)		-		1,137		(333)		(4,485)		-		-
Net income (loss)					77,211		80,935		40,252		36,818		(1,779)		(21,004)		(58,011)
Less:
	Net (income) loss attributable to
		noncontrolling interests in
		consolidated subsidiaries			(981)		(2,556)		-		256		-		-		1,319
	Net income attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(4,124)		-		-		-		-		-		(4,124)
Net income (loss) attributable to
	Vornado				72,106		78,379		40,252		37,074		(1,779)		(21,004)		(60,816)
Interest and debt expense⁽²⁾					207,512		31,595		34,943		22,526		16,478		42,093		59,877
Depreciation and amortization⁽²⁾					184,103		42,736		39,694		28,500		12,785		34,444		25,944
Income tax (benefit) expense⁽²⁾					(19,140)		335		(617)		-		402		(24,123)		4,863
EBITDA⁽¹⁾				$	444,581	$	153,045	$	114,272	$	88,100	$	27,886	$	31,410	$	29,868


See notes of page 34.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

19. Segment Information – continued


(Amounts in thousands)			For the Six Months Ended June 30, 2011
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	1,088,957	$	391,377	$	280,654	$	214,109	$	118,928	$	-	$	83,889
Straight-line rent adjustments					22,278		11,760		(711)		7,911		1,443		-		1,875
Amortization of acquired below-
	market leases, net				33,571		16,355		978		13,956		34		-		2,248
Total rentals					1,144,806		419,492		280,921		235,976		120,405		-		88,012
Tenant expense reimbursements					173,284		65,359		18,233		75,967		7,767		-		5,958
Cleveland Medical Mart development
	project				73,068		-		-		-		73,068		-		-
Fee and other income:
	Tenant cleaning fees				30,832		47,109		-		-		-		-		(16,277)
	Management and leasing fees				11,095		3,607		6,959		1,898		303		-		(1,672)
	Lease termination fees				8,499		5,636		2,011		852		-		-		-
	Other				25,678		9,866		10,662		3,099		1,878		-		173
Total revenues					1,467,262		551,069		318,786		317,792		203,421		-		76,194
Operating expenses					563,925		238,130		98,584		117,874		74,807		-		34,530
Depreciation and amortization					264,125		92,000		67,749		56,291		22,175		-		25,910
General and administrative					109,254		9,943		12,999		15,313		14,446		-		56,553
Cleveland Medical Mart development
	project				68,218		-		-		-		68,218		-		-
Acquisition and other costs					20,167		-		-		15,000		3,040		-		2,127
Total expenses					1,025,689		340,073		179,332		204,478		182,686		-		119,120
Operating income (loss)					441,573		210,996		139,454		113,314		20,735		-		(42,926)
Income applicable to Toys					90,098		-		-		-		-		90,098		-
Income (loss) from partially owned
	entities				42,687		243		(4,682)		1,242		254		-		45,630
Income from Real Estate Fund					20,138		-		-		-		-		-		20,138
Interest and other investment
	income, net				125,115		320		80		2		18		-		124,695
Interest and debt expense					(271,967)		(68,119)		(59,655)		(46,413)		(18,775)		-		(79,005)
Net gain on disposition of wholly
	owned and partially owned assets				6,677		-		-		-		-		-		6,677
Income before income taxes					454,321		143,440		75,197		68,145		2,232		90,098		75,209
Income tax expense					(12,304)		(959)		(1,307)		(5)		(1,321)		-		(8,712)
Income from continuing
	operations				442,017		142,481		73,890		68,140		911		90,098		66,497
Income from discontinued operations					134,773		-		46,466		5,761		82,546		-		-
Net income					576,790		142,481		120,356		73,901		83,457		90,098		66,497
Less:
	Net (income) loss attributable to
		noncontrolling interests in
		consolidated subsidiaries			(15,007)		(4,596)		-		86		-		-		(10,497)
	Net income attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(40,539)		-		-		-		-		-		(40,539)
Net income attributable to
	Vornado				521,244		137,885		120,356		73,987		83,457		90,098		15,461
Interest and debt expense⁽²⁾					401,804		68,947		66,314		48,632		22,502		83,528		111,881
Depreciation and amortization⁽²⁾					368,344		92,714		80,205		57,376		22,402		67,569		48,078
Income tax expense⁽²⁾					49,485		959		1,455		5		1,321		45,049		696
EBITDA⁽¹⁾				$	1,340,877	$	300,505	$	268,330	$	180,000	$	129,682	$	286,244	$	176,116


See notes on page 34.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

19. Segment Information – continued


(Amounts in thousands)			For the Six Months Ended June 30, 2010
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	1,048,199	$	387,852	$	279,778	$	191,442	$	112,098	$	-	$	77,029
Straight-line rent adjustments					37,615		15,049		5,172		14,119		1,827		-		1,448
Amortization of acquired below-
	market leases, net				32,055		18,339		1,242		9,449		(106)		-		3,131
Total rentals					1,117,869		421,240		286,192		215,010		113,819		-		81,608
Tenant expense reimbursements					178,350		65,683		27,463		72,946		7,806		-		4,452
Fee and other income:
	Tenant cleaning fees				27,120		41,057		-		-		-		-		(13,937)
	Management and leasing fees				12,520		2,850		10,480		545		33		-		(1,388)
	Lease termination fees				7,811		3,025		528		3,836		422		-		-
	Other				25,633		8,923		10,898		1,745		2,706		-		1,361
Total revenues					1,369,303		542,778		335,561		294,082		124,786		-		72,096
Operating expenses					536,538		226,104		104,770		108,775		65,937		-		30,952
Depreciation and amortization					267,070		87,978		72,230		55,325		23,366		-		28,171
General and administrative					98,170		9,346		12,095		13,748		14,355		-		48,626
Acquisition and other costs					1,930		-		-		-		-		-		1,930
Total expenses					903,708		323,428		189,095		177,848		103,658		-		109,679
Operating income (loss)					465,595		219,350		146,466		116,234		21,128		-		(37,583)
Income applicable to Toys					104,866		-		-		-		-		104,866		-
Income (loss) from partially owned
	entities				15,796		2,640		(4)		2,520		231		-		10,409
Interest and other investment
	income, net				18,580		327		49		189		24		-		17,991
Interest and debt expense					(277,902)		(65,733)		(68,225)		(37,957)		(18,827)		-		(87,160)
Net (loss) on extinguishment
	of debt				(1,072)		-		-		-		-		-		(1,072)
Net gain on disposition of wholly
	owned and partially owned assets				7,687		-		-		-		765		-		6,922
Income (loss) before income taxes					333,550		156,584		78,286		80,986		3,321		104,866		(90,493)
Income tax expense					(10,544)		(809)		(91)		(35)		(596)		-		(9,013)
Income (loss) from continuing
	operations				323,006		155,775		78,195		80,951		2,725		104,866		(99,506)
(Loss) from discontinued operations					(13,251)		-		(7,186)		(535)		(5,530)		-		-
Net income (loss)					309,755		155,775		71,009		80,416		(2,805)		104,866		(99,506)
Less:
	Net (income) loss attributable to
		noncontrolling interests in
		consolidated subsidiaries			(1,194)		(4,848)		-		498		-		-		3,156
	Net income attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(21,903)		-		-		-		-		-		(21,903)
Net income (loss) attributable to
	Vornado				286,658		150,927		71,009		80,914		(2,805)		104,866		(118,253)
Interest and debt expense⁽²⁾					403,699		62,587		70,114		41,880		29,487		83,233		116,398
Depreciation and amortization⁽²⁾					370,252		84,810		79,535		57,311		26,267		69,771		52,558
Income tax expense⁽²⁾					36,566		809		107		35		655		25,587		9,373
EBITDA⁽¹⁾				$	1,097,175	$	299,133	$	220,765	$	180,140	$	53,604	$	283,457	$	60,076


See notes on the following page.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

19. Segment Information - continued

	Notes to preceding tabular information:

(1)	EBITDA represents "Earnings Before Interest, Taxes, Depreciation and Amortization." We consider EBITDA a supplemental measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. As properties are bought and sold based on a multiple of EBITDA, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. EBITDA should not be considered a substitute for net income. EBITDA may not be comparable to similarly titled measures employed by other companies.

(2)	Interest and debt expense, depreciation and amortization and income tax (benefit) expense in the reconciliation of net income (loss) to EBITDA includes our share of these items from partially owned entities.

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

			For the Three Months				For the Six Months
(Amounts in thousands)			Ended June 30,				Ended June 30,
			2011		2010		2011		2010
Our share of Real Estate Fund:
	Operations		$	827	$	-	$	1,807	$	-
	Net unrealized gains			3,218		-		3,392		-
	Net realized gains			771		-		771		-
	Carried interest			2,140		-		2,140		-
Total				6,956		-		8,110		-
Alexander's				15,821		14,260		30,989		28,659
Lexington⁽¹⁾				17,313		11,435		29,306		29,283
LNR (acquired in July 2010)⁽²⁾				13,410		-		22,800		-
555 California Street				10,423		11,136		21,388		22,624
Hotel Pennsylvania				8,677		6,616		8,609		6,169
Other investments				11,735		8,469		19,936		18,615
				84,335		51,916		141,138		105,350
Corporate general and administrative expenses⁽³⁾				(20,024)		(20,642)		(41,379)		(39,956)
Investment income and other, net⁽³⁾				11,954		14,554		26,330		26,068
Mezzanine loans loss (accrual) reversal and net gain on disposition				-		(6,900)		82,744		(6,900)
(Loss) income from the mark-to-market of J.C. Penney derivative
	position			(6,762)		-		10,401		-
Net gain on sale of condominiums				-		722		4,586		3,149
Acquisition costs				(2,191)		(1,930)		(3,714)		(1,930)
Real Estate Fund placement fees				(403)		(2,656)		(3,451)		(2,730)
Net loss on extinguishment of debt				-		(1,072)		-		(1,072)
Net income attributable to noncontrolling interests in the Operating
	Partnership, including unit distributions			(8,731)		(4,124)		(40,539)		(21,903)
			$	58,178	$	29,868	$	176,116	$	60,076


(1)		Includes net gains of $8,308 in the three months ended June 30, 2011, and $9,760 and $5,998 in the six months ended June 30, 2011 and 2010,
		respectively, resulting from Lexington's stock issuances.

(2)		The three and six months ended June 30, 2011 include $6,020 for our share of net gains from asset sales. The six months ended June 30, 2011
		also includes $8,977 for our share of a tax settlement gain.

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

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Trustees

Vornado Realty Trust

New York, New York

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

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

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

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

/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey

August 1, 2011

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

Certain statements contained herein constitute forward‑looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Quarterly Report on Form 10‑Q. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or the date of any document incorporated by reference. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a discussion of our consolidated financial statements for the three and six months ended June 30, 2011. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Critical Accounting Policies

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

Overview

Business Objective and Operating Strategy

Our business objective is to maximize shareholder value, which we measure by the total return provided to our shareholders. Below is a table comparing our performance to the Morgan Stanley REIT Index (“RMS”) and the SNL REIT Index (“SNL”) for the following periods ended June 30, 2011:

		Total Return⁽¹⁾
		Vornado	RMS	SNL
	One-year	31.6%	34.1%	34.7%
	Three-year	17.2%	17.1%	20.8%
	Five-year	13.2%	12.7%	17.4%
	Ten-year	278.8%	173.1%	186.6%


(1) Past performance is not necessarily indicative of how we will perform in the future.

We intend to achieve our business objective by continuing to pursue our investment philosophy and executing our operating strategies through:

· Maintaining a superior team of operating and investment professionals and an entrepreneurial spirit;

· Investing in properties in select markets, such as New York City and Washington, DC, where we believe there is a high likelihood of capital appreciation;

· Acquiring quality properties at a discount to replacement cost and where there is a significant potential for higher rents;

· Investing in retail properties in select under-stored locations such as the New York City metropolitan area;

· Developing and redeveloping existing properties to increase returns and maximize value; and

· Investing in operating companies that have a significant real estate component.

We expect to finance our growth, acquisitions and investments using internally generated funds, proceeds from possible asset sales and by accessing the public and private capital markets. We may also offer Vornado common or preferred shares or Operating Partnership units in exchange for property and may repurchase or otherwise reacquire our shares or any other securities in the future.

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

Overview - continued

2011 Acquisitions and Investments

One Park Avenue

280 Park Avenue Joint Venture

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

Independence Plaza

2011 Dispositions

Overview - continued

2011 Financing Activities

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

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

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

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

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

On April 20, 2011, we sold 7,000,000 6.875% Series J Cumulative Redeemable Preferred Shares at a price of $25.00 per share, in an underwritten public offering pursuant to an effective registration statement. On April 21, 2011, the underwriters exercised their option to purchase an additional 1,050,000 shares to cover over-allotments. On May 5, 2011 we sold an additional 800,000 shares at a price of $25.00 per share. We retained aggregate net proceeds of $214,538,000, after underwriters’ discounts and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 8,850,000 Series J Preferred Units (with economic terms that mirror those of the Series J Preferred Shares). Dividends on the Series J Preferred Shares are cumulative and payable quarterly in arrears. The Series J Preferred Shares are not convertible into, or exchangeable for, any of our properties or securities. On or after five years from the date of issuance (or sooner under limited circumstances), we, at our option, may redeem the Series J Preferred Shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption. The Series J Preferred Shares have no maturity date and will remain outstanding indefinitely unless redeemed by us.

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

On June 8, 2011, we renewed one of our two unsecured revolving credit facilities, and increased it to $1,250,000,000 from $1,000,000,000. The renewed facility matures in four years, has a one-year extension option and bears interest on drawn amounts at LIBOR plus 1.35% plus a .30% facility fee (drawn or undrawn), based on our credit ratings. We plan to extend our second revolving credit facility of $1,595,000,000, which matures in September 2012. Our total revolving credit facilities are now $2,845,000,000, of which $300,000,000 is outstanding at June 30, 2011.

Overview - continued

Quarter Ended June 30, 2011 Financial Results Summary

Net income attributable to common shareholders for the quarter ended June 30, 2011 was $91,913,000, or $0.49 per diluted share, compared to $57,840,000, or $0.31 per diluted share, for the quarter ended June 30, 2010. Net income for the quarter ended June 30, 2011 includes $3,069,000 of net gains on sale of real estate. In addition, the quarters ended June 30, 2011 and 2010 include certain other items that affect comparability, which are listed in the table below. The aggregate of net gains on sale of real estate and the items in the table below, net of amounts attributable to noncontrolling interests, increased net income attributable to common shareholders by $11,036,000, or $0.06 per diluted share for the quarter ended June 30, 2011 and decreased net income attributable to common shareholders for the quarter ended June 30, 2010 by $13,298,000, or $0.07 per diluted share.

Funds From Operations attributable to common shareholders plus assumed conversions (“FFO”) for the quarter ended June 30, 2011 was $243,418,000, or $1.27 per diluted share, compared to $204,772,000, or $1.11 per diluted share, for the prior year’s quarter. FFO for the quarters ended June 30, 2011 and 2010 include certain items that affect comparability which are listed in the table below. The aggregate of these items, net of amounts attributable to noncontrolling interests, increased FFO by $8,184,000, or $0.04 per diluted share for the quarter ended June 30, 2011 and decreased FFO for the quarter ended June 30, 2010 by $9,980,000, or $0.05 per diluted share.

		For the Three Months Ended
		June 30,
(Amounts in thousands)		2011		2010
Items that affect comparability income (expense):
	Net gain resulting from Lexington's stock issuances	$	8,308	$	-
	Our share of LNR's net gain from asset sales		6,020		-
	Discount on redemption of perpetual preferred units		2,000		4,818
	Loss from the mark-to-market of J.C. Penney derivative position		(6,762)		-
	Real Estate Fund placement fees		(403)		(2,656)
	Mezzanine loans loss accrual		-		(6,900)
	Default interest and fees accrued on loans in special servicing		-		(6,558)
	Net loss on extinguishment of debt		-		(1,072)
	FFO attributable to discontinued operations		-		2,819
	Other, net		(430)		(1,208)
			8,733		(10,757)
Noncontrolling interests' share of above adjustments			(549)		777
Items that affect comparability, net		$	8,184	$	(9,980)

The percentage increase (decrease) in GAAP basis and cash basis same store Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) of our operating segments for the quarter ended June 30, 2011 over the quarter ended June 30, 2010 and the trailing quarter ended March 31, 2011 are summarized below.

			New York		Washington, DC			Merchandise
Same Store EBITDA:			Office		Office		Retail	Mart
	June 30, 2011 vs. June 30, 2010
		GAAP basis	(1.3%	)	0.3%		4.6%	(2.0%	)
		Cash Basis	0.2%		1.8%		10.3%	(1.8%	)
	June 30, 2011 vs. March 31, 2011
		GAAP basis	4.0%		(0.3%	)	0.1%	1.6%
		Cash Basis	5.8%		0.3%		1.0%	2.1%

Overview - continued

Six Months Ended June 30, 2011 Financial Results Summary

Net income attributable to common shareholders for the six months ended June 30, 2011 was $491,128,000, or $2.63 per diluted share, compared to $258,125,000, or $1.41 per diluted share, for the six months ended June 30, 2010. Net income for the six months ended June 30, 2011 and 2010 include $55,883,000 and $307,000, respectively, for our share of net gains on sale of real estate. In addition, six months ended June 30, 2011 and 2010 include certain items that affect comparability which are listed in the table below. The aggregate of net gains on sale of real estate and the items in the table below, net of amounts attributable to noncontrolling interests, increased net income attributable to common shareholders for the six months ended June 30, 2011 by $228,075,000, or $1.19 per diluted share, and decreased net income attributable to common shareholders for the six months ended June 30, 2010 by $10,913,000, or $0.06 per diluted share.

FFO for the six months ended June 30, 2011 was $749,349,000, or $3.91 per diluted share, compared to $565,066,000, or $2.98 per diluted share, for the six months ended June 30, 2010. FFO for six months ended June 30, 2011 and 2010 includes certain items that affect comparability which are listed in the table below. The aggregate of these items, net of amounts attributable to noncontrolling interests, increased FFO for the six months ended June 30, 2011 by $175,711,000, or $0.92 per diluted share, and decreased FFO for the six months ended June 30, 2010 by $4,753,000, or $0.03 per diluted share.

		For the Six Months Ended
		June 30,
(Amounts in thousands)		2011		2010
Items that affect comparability income (expense):
	Net gain (loss) on extinguishment of debt	$	83,907	$	(1,072)
	Mezzanine loans loss (accrual) reversal and net gain on disposition		82,744		(6,900)
	Our share of LNR's asset sales and tax settlement gains		14,997		-
	Income from the mark-to-market of J.C. Penney derivative position		10,401		-
	Net gain resulting from Lexington's stock issuances		9,760		5,998
	Net gain on sale of condominiums		4,586		3,149
	Discount on redemption of perpetual preferred units		2,000		6,972
	Buy-out of a below-market lease		(15,000)		-
	Real Estate Fund placement fees		(3,451)		(2,730)
	Litigation loss accrual		-		(10,056)
	Default interest and fees accrued on loans in special servicing		-		(6,558)
	(Negative FFO) FFO attributable to discontinued operations		(757)		6,569
	Other, net		(1,666)		(483)
			187,521		(5,111)
Noncontrolling interests' share of above adjustments			(11,810)		358
Items that affect comparability, net		$	175,711	$	(4,753)

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

			New York	Washington, DC		Merchandise
Same Store EBITDA:			Office	Office	Retail	Mart
	June 30, 2011 vs. June 30, 2010
		GAAP basis	(1.5%)	2.8%	4.2%	3.5%
		Cash Basis	(0.2%)	6.1%	8.5%	4.1%

Calculations of same store EBITDA, reconciliations of our net income to EBITDA and FFO and the reasons we consider these non-GAAP financial measures useful are provided in the following pages of Management’s Discussion and Analysis of the Financial Condition and Results of Operations.

Overview - continued

The leasing activity presented below is based on leases signed during the period and is not intended to coincide with the commencement of rental revenue in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Tenant improvements and leasing commissions presented below are based on our share of square feet leased during the period.

(Square feet in thousands)					New York		Washington, DC				Merchandise Mart
As of June 30, 2011:					Office		Office		Retail ⁽⁴⁾		Office		Showroom
	Total square feet (in service)					19,651		20,550		25,443		2,624		4,187
	Our share of square feet (in service)					17,110		17,821		23,472		2,624		4,187
	Number of properties					30		82		158		6		6
	Occupancy rate					94.8%		93.1%⁽³⁾		92.3%		90.9%		92.9%

Leasing Activity:
Quarter Ended June 30, 2011:
	Total square feet leased					561		383		392		40		104
	Our share of square feet leased:					448		361		369		40		104
		Initial rent⁽¹⁾			$	68.66	$	40.37	$	18.43	$	30.27	$	32.80
		Weighted average lease term (years)				6.6		5.1		6.5		6.4		4.3
		Relet space (included above):
			Square feet			366		331		197		40		104
			Cash basis:
				Initial rent⁽¹⁾	$	72.08	$	40.32	$	11.57	$	30.27	$	32.80
				Prior escalated rent	$	63.04	$	39.67	$	11.48	$	28.24	$	34.30
				Percentage increase (decrease)		14.3%		1.6%		0.8%		7.2%		(4.4%)
			GAAP basis:
				Straight-line rent⁽²⁾	$	71.82	$	38.78	$	12.03	$	30.35	$	30.62
				Prior straight-line rent	$	62.57	$	37.30	$	10.97	$	23.90	$	30.93
				Percentage increase (decrease)		14.8%		4.0%		9.7%		27.0%		(1.0%)
		Tenant improvements and leasing
			commissions:
			Per square foot		$	44.15	$	22.79	$	4.70	$	37.45	$	3.43
			Per square foot per annum:		$	6.69	$	4.47	$	0.72	$	5.84	$	0.80
				Percentage of initial rent		9.7%		11.1%		3.9%		19.3%		2.4%

Six Months Ended June 30, 2011:
	Total square feet leased					1,233		787		745		40		220
	Our share of square feet leased:					784		672		715		40		220
		Initial rent⁽¹⁾			$	60.84	$	39.07	$	24.78	$	30.27	$	34.52
		Weighted average lease term (years)				9.7		4.5		7.8		6.4		5.7
		Relet space (included above):
			Square feet			549		599		272		40		220
			Cash basis:
				Initial rent⁽¹⁾	$	67.16	$	38.61	$	15.63	$	30.27	$	34.52
				Prior escalated rent	$	58.45	$	37.72	$	14.15	$	28.24	$	35.99
				Percentage increase (decrease)		14.9%		2.4%		10.5%		7.2%		(4.1%)
			GAAP basis:
				Straight-line rent⁽²⁾	$	66.57	$	38.39	$	16.15	$	30.35	$	33.01
				Prior straight-line rent	$	57.58	$	36.01	$	13.62	$	23.90	$	33.16
				Percentage increase (decrease)		15.6%		6.6%		18.6%		27.0%		(0.5%)
		Tenant improvements and leasing
			commissions:
			Per square foot		$	50.12	$	17.81	$	7.27	$	37.45	$	3.26
			Per square foot per annum:		$	5.16	$	3.96	$	0.93	$	5.84	$	0.57
				Percentage of initial rent		8.5%		10.1%		3.8%		19.3%		1.7%


See notes on the following table

Overview - continued


(Square feet in thousands)		New York		Washington, DC				Merchandise Mart
		Office		Office		Retail ⁽⁴⁾		Office		Showroom
As of March 31, 2011:
	Total square feet (in service)		18,445		21,171		25,266		2,621		4,191
	Our share of square feet (in service)		16,501		17,829		23,424		2,621		4,191
	Number of properties		29		82		160		6		6
	Occupancy rate		95.7%		93.4% ⁽³⁾		92.4%		90.8%		93.1%

As of December 31, 2010:
	Total square feet (in service)		17,454		21,149		25,557		2,608		4,204
	Our share of square feet (in service)		16,194		17,823		23,453		2,608		4,204
	Number of properties		28		82		161		6		6
	Occupancy rate		95.6%		94.3% ⁽³⁾		92.3%		91.5%		93.2%

As of June 30, 2010:
	Total square feet (in service)		17,499		21,186		25,159		2,598		4,211
	Our share of square feet (in service)		16,187		18,239		22,767		2,598		4,211
	Number of properties		28		82		164		6		6
	Occupancy rate		95.5%		95.1% ⁽³⁾		92.3%		91.0%		93.3%

(1)

Represents the cash basis weighted average starting rent per square foot, which is generally indicative of market rents. Most leases include free rent and periodic step-ups in rent which are not included in the initial cash basis rent per square foot but are included in the GAAP basis straight-line rent per square foot.

(2)

Represents the GAAP basis weighted average rent per square foot that is recognized over the term of the respective leases, and includes the effect of free rent and periodic step-ups in rent.

(3)

Excluding residential and other properties, occupancy rates for the office properties were as follows.

June 30, 2011

92.2%

March 31, 2011

92.5%

December 31, 2010

94.0%

June 30, 2010

94.8%

(4)

Mall sales per square foot, including partially owned malls, for the trailing twelve months ended June 30, 2011 and 2010 were $465 and

$468, respectively.

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

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


(Amounts in thousands)			For the Three Months Ended June 30, 2011
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	548,485	$	197,135	$	141,770	$	106,662	$	56,363	$	-	$	46,555
Straight-line rent adjustments					8,349		3,890		(706)		3,730		653		-		782
Amortization of acquired below-
	market leases, net				16,812		8,178		512		6,996		17		-		1,109
Total rentals					573,646		209,203		141,576		117,388		57,033		-		48,446
Tenant expense reimbursements					82,325		31,483		8,936		36,636		3,744		-		1,526
Cleveland Medical Mart development
	project				32,369		-		-		-		32,369		-		-
Fee and other income:
	Tenant cleaning fees				15,409		23,679		-		-		-		-		(8,270)
	Management and leasing fees				6,989		2,112		4,074		1,343		200		-		(740)
	Lease termination fees				7,323		5,571		900		852		-		-		-
	Other				12,090		5,103		5,317		1,692		(158)		-		136
Total revenues					730,151		277,151		160,803		157,911		93,188		-		41,098
Operating expenses					273,152		116,221		49,748		57,194		32,861		-		17,128
Depreciation and amortization					131,898		45,854		34,065		27,750		11,113		-		13,116
General and administrative					50,251		4,579		6,462		7,291		6,848		-		25,071
Cleveland Medical Mart development
	project				29,940		-		-		-		29,940		-		-
Acquisition and other costs					1,897		-		-		-		-		-		1,897
Total expenses					487,138		166,654		90,275		92,235		80,762		-		57,212
Operating income (loss)					243,013		110,497		70,528		65,676		12,426		-		(16,114)
(Loss) applicable to Toys					(22,846)		-		-		-		-		(22,846)		-
Income (loss) from partially owned
	entities				26,403		(845)		(767)		924		178		-		26,913
Income from Real Estate Fund					19,058		-		-		-		-		-		19,058
Interest and other investment
	income (loss), net				8,007		148		48		(6)		9		-		7,808
Interest and debt expense					(137,202)		(35,033)		(30,729)		(23,344)		(9,437)		-		(38,659)
Income (loss) before income taxes					136,433		74,767		39,080		43,250		3,176		(22,846)		(994)
Income tax expense					(5,922)		(440)		(569)		-		(911)		-		(4,002)
Income (loss) from continuing
	operations				130,511		74,327		38,511		43,250		2,265		(22,846)		(4,996)
Income from discontinued
	operations				458		-		-		458		-		-		-
Net income (loss)					130,969		74,327		38,511		43,708		2,265		(22,846)		(4,996)
Less:
	Net income attributable to
		noncontrolling interests in
		consolidated subsidiaries			(13,657)		(2,325)		-		(69)		-		-		(11,263)
	Net income attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(8,731)		-		-		-		-		-		(8,731)
Net income (loss) attributable to
	Vornado				108,581		72,002		38,511		43,639		2,265		(22,846)		(24,990)
Interest and debt expense⁽²⁾					202,956		36,953		34,093		24,468		9,595		43,393		54,454
Depreciation and amortization⁽²⁾					182,496		47,621		38,306		28,400		11,227		32,896		24,046
Income tax (benefit) expense⁽²⁾					(17,343)		440		607		-		911		(23,969)		4,668
EBITDA⁽¹⁾				$	476,690	$	157,016	$	111,517	$	96,507	$	23,998	$	29,474	$	58,178

____________________

See notes on page 46.

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


(Amounts in thousands)			For the Three Months Ended June 30, 2010
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	531,576	$	195,248	$	142,952	$	96,335	$	54,441	$	-	$	42,600
Straight-line rent adjustments					17,552		7,255		964		7,761		725		-		847
Amortization of acquired below-
	market leases, net				16,284		9,134		621		4,933		15		-		1,581
Total rentals					565,412		211,637		144,537		109,029		55,181		-		45,028
Tenant expense reimbursements					86,420		32,431		12,546		35,351		3,829		-		2,263
Fee and other income:
	Tenant cleaning fees				13,468		20,639		-		-		-		-		(7,171)
	Management and leasing fees				3,380		1,393		2,384		321		19		-		(737)
	Lease termination fees				2,841		2,297		82		428		34		-		-
	Other				12,468		4,513		5,061		1,005		744		-		1,145
Total revenues					683,989		272,910		164,610		146,134		59,807		-		40,528
Operating expenses					261,845		111,055		50,013		55,648		28,727		-		16,402
Depreciation and amortization					133,277		44,271		36,018		27,528		11,387		-		14,073
General and administrative					49,540		4,767		6,202		6,807		7,157		-		24,607
Acquisition and other costs					1,930		-		-		-		-		-		1,930
Total expenses					446,592		160,093		92,233		89,983		47,271		-		57,012
Operating income (loss)					237,397		112,817		72,377		56,151		12,536		-		(16,484)
(Loss) applicable to Toys					(21,004)		-		-		-		-		(21,004)		-
Income from partially owned
	entities				4,452		1,337		188		1,129		55		-		1,743
Interest and other investment
	income, net				3,876		163		23		186		12		-		3,492
Interest and debt expense					(142,175)		(33,047)		(34,068)		(20,315)		(9,464)		-		(45,281)
Net (loss) on extinguishment
	of debt				(1,072)		-		-		-		-		-		(1,072)
Net gain (loss) on disposition of wholly
	owned and partially owned assets				4,382		-		-		-		(31)		-		4,413
Income (loss) before income taxes					85,856		81,270		38,520		37,151		3,108		(21,004)		(53,189)
Income tax (expense) benefit					(4,964)		(335)		595		-		(402)		-		(4,822)
Income (loss) from continuing
	operations				80,892		80,935		39,115		37,151		2,706		(21,004)		(58,011)
(Loss) income from discontinued
	operations				(3,681)		-		1,137		(333)		(4,485)		-		-
Net income (loss)					77,211		80,935		40,252		36,818		(1,779)		(21,004)		(58,011)
Less:
	Net (income) loss attributable to
		noncontrolling interests in
		consolidated subsidiaries			(981)		(2,556)		-		256		-		-		1,319
	Net income attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(4,124)		-		-		-		-		-		(4,124)
Net income (loss) attributable to
	Vornado				72,106		78,379		40,252		37,074		(1,779)		(21,004)		(60,816)
Interest and debt expense⁽²⁾					207,512		31,595		34,943		22,526		16,478		42,093		59,877
Depreciation and amortization⁽²⁾					184,103		42,736		39,694		28,500		12,785		34,444		25,944
Income tax (benefit) expense⁽²⁾					(19,140)		335		(617)		-		402		(24,123)		4,863
EBITDA⁽¹⁾				$	444,581	$	153,045	$	114,272	$	88,100	$	27,886	$	31,410	$	29,868

__________________________

See notes on the following page.

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

Notes to preceding tabular information:

(1) EBITDA represents “Earnings Before Interest, Taxes, Depreciation and Amortization.” We consider EBITDA a supplemental measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. As properties are bought and sold based on a multiple of EBITDA, we utilize these measures to make investment decisions as well as to compare the performance of our assets to that of our peers. EBITDA should not be considered a substitute for net income. EBITDA may not be comparable to similarly titled measures employed by other companies.

(2) Interest and debt expense, depreciation and amortization and income tax (benefit) expense in the reconciliation of our net income (loss) to EBITDA includes our share of these items from partially owned entities.

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


			For the Three Months
(Amounts in thousands)			Ended June 30,
				2011		2010
Our share of Real Estate Fund:
	Operations		$	827	$	-
	Net unrealized gains			3,218		-
	Net realized gains			771		-
	Carried interest			2,140		-
Total				6,956		-
Lexington⁽¹⁾				17,313		11,435
Alexander's				15,821		14,260
LNR (acquired in July 2010)⁽²⁾				13,410		-
555 California Street				10,423		11,136
Hotel Pennsylvania				8,677		6,616
Other investments				11,735		8,469
				84,335		51,916
Corporate general and administrative expenses⁽³⁾				(20,024)		(20,642)
Investment income and other, net⁽³⁾				11,954		14,554
Loss from the mark-to-market of J.C. Penney derivative position				(6,762)		-
Acquisition costs				(2,191)		(1,930)
Real Estate Fund placement fees				(403)		(2,656)
Mezzanine loans loss accrual				-		(6,900)
Net loss on extinguishment of debt				-		(1,072)
Net gain on sale of condominiums				-		722
Net income attributable to noncontrolling interests in the Operating Partnership,
	including unit distributions			(8,731)		(4,124)
			$	58,178	$	29,868


(1)		Includes net gains of $8,308 in the three months ended June 30, 2011, resulting from Lexington's stock issuances.

(2)		The three months ended June 30, 2011 includes $6,020 for our share of net gains from asset sales.

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

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

Below is a summary of the percentages of EBITDA by geographic region (excluding discontinued operations and other gains and losses that affect comparability), from our New York Office, Washington DC Office, Retail and Merchandise Mart segments.

		For the Three Months
		Ended June 30,
		2011	2010
Region:
	New York City metropolitan area	60%	60%
	Washington, DC / Northern Virginia metropolitan area	29%	30%
	California	2%	2%
	Chicago	5%	5%
	Puerto Rico	2%	1%
	Other geographies	2%	2%
		100%	100%

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

Revenues

Our revenues, which consist of property rentals, tenant expense reimbursements, hotel revenues, trade shows revenues, amortization of acquired below-market leases, net of above-market leases and fee income, were $730,151,000 for the three months ended June 30, 2011, compared to $683,989,000 in the prior year’s quarter, an increase of $46,162,000, of which $32,369,000 relates to the Cleveland Medical Mart development project. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)

						New York		Washington, DC				Merchandise
Increase (decrease) due to:			Total			Office		Office		Retail		Mart			Other
Property rentals:
	Acquisitions, sale of partial interests
		and other	$	(4,616)		$	(1,919)	$	(8,384)	$	4,138	$	-		$	1,549
	Development			2,414			-		1,932		482		-			-
	Hotel Pennsylvania			3,058			-		-		-		-			3,058
	Trade Shows			661			-		-		-		661			-
	Amortization of acquired below-market
		leases, net		342			(956)		(109)		2,063		2			(658)
	Leasing activity (see page 42)			6,375			441		3,600		1,676		1,189			(531)
				8,234			(2,434)		(2,961)		8,359		1,852			3,418

Tenant expense reimbursements:
	Acquisitions/development, sale of partial
		interests and other		(1,575)			-		(3,588)		2,013		-			-
	Operations			(2,520)			(948)		(22)		(728)		(85)			(737)
				(4,095)			(948)		(3,610)		1,285		(85)			(737)

Cleveland Medical Mart development
	project			32,369	⁽¹⁾		-		-		-		32,369	⁽¹⁾		-

Fee and other income:
	BMS cleaning fees			1,941			3,040		-		-		-			(1,099)	⁽²⁾
	Management and leasing fees			3,609			719		1,690		1,022		181			(3)
	Lease cancellation fee income			4,482			3,274		818		424		(34)			-
	Other			(378)			590		256		687		(902)			(1,009)
				9,654			7,623		2,764		2,133		(755)			(2,111)

Total increase (decrease) in revenues			$	46,162		$	4,241	$	(3,807)	$	11,777	$	33,381		$	570



(1)		$29,940 is offset by development costs expensed in the quarter. See note (3) on page 49.

(2)		Primarily from the elimination of intercompany fees from operating segments upon consolidation. See note (1) on page 49.

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

Expenses

Our expenses, which consist primarily of operating, depreciation and amortization and general and administrative expenses, were $487,138,000 for the three months ended June 30, 2011, compared to $446,592,000 in the prior year’s quarter, an increase of $40,546,000, of which $29,940,000 relates to the Cleveland Medical Mart development project. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)

						New York		Washington, DC				Merchandise
Increase (decrease) due to:			Total			Office		Office		Retail		Mart			Other
Operating:
	Acquisitions, sale of partial interests
		and other	$	(1,790)		$	-	$	(4,769)	$	2,979	$	-		$	-
	Development/redevelopment			35			-		(164)		199		-			-
	Non-reimbursable expenses, including
		bad debt reserves		1,527			663		1,529		(3,010)		2,345			-
	Hotel Pennsylvania			917			-		-		-		-			917
	Trade Shows			1,040			-		-		-		1,040			-
	BMS expenses			2,717			2,717		-		-		-			-
	Operations			6,861			1,786		3,139		1,378		749			(191)	⁽¹⁾
				11,307			5,166		(265)		1,546		4,134			726

Depreciation and amortization:
	Acquisitions/development, sale of partial
		interests and other		(1,782)			-		(2,990)		1,208		-			-
	Operations			403			1,583		1,037		(986)		(274)			(957)
				(1,379)			1,583		(1,953)		222		(274)			(957)

General and administrative:
	Mark-to-market of deferred compensation
		plan liability ⁽²⁾		2,779			-		-		-		-			2,779
	Real Estate Fund placement fees			(2,253)			-		-		-		-			(2,253)
	Operations			185			(188)		260		484		(309)			(62)
				711			(188)		260		484		(309)			464

Cleveland Medical Mart development
	project			29,940	⁽³⁾		-		-		-		29,940	⁽³⁾		-

Acquisition and other costs				(33)			-		-		-		-			(33)

Total increase (decrease) in expenses			$	40,546		$	6,561	$	(1,958)	$	2,252	$	33,491		$	200



(1)		Primarily from the elimination of intercompany fees from operating segments upon consolidation. See note (2) on page 48.

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

(3)		This expense is entirely offset by development revenue in the quarter. See note (1) on page 48.

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

Loss Applicable to Toys

In the three months ended June 30, 2011, we recognized net loss of $22,846,000 from our investment in Toys, comprised of $25,048,000 for our 32.7% share of Toys’ net loss ($49,017,000 before our share of Toys’ income tax benefit) and $2,202,000 of interest and other income.

In the three months ended June 30, 2010, we recognized net loss of $21,004,000 from our investment in Toys, comprised of $23,191,000 for our 32.7% share of Toys’ net loss ($47,314,000 before our share of Toys’ income tax benefit) and $2,187,000 of interest and other income.

Income from Partially Owned Entities

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

		For the Three Months Ended
		June 30,
(Amounts in thousands)		2011		2010
Equity in Net Income (Loss):
Alexander's - 32.4% share of equity in net income		$	8,638	$	7,066

Lexington - 11.7% share in 2011 and 13.8% share in 2010 of equity in net income (loss) ⁽¹⁾			8,654		(428)

LNR - 26.2% share of equity in net income (acquired in July 2010)⁽²⁾			11,003		-

India real estate ventures - 4% to 36.5% range in our share of equity in net income			205		606

Partially owned office buildings			(2,366)		1,023

Other equity method investments⁽³⁾			269		(3,815)
		$	26,403	$	4,452


(1)	The three months ended June 30, 2011 includes an $8,308 net gain resulting from Lexington's stock issuances.

(2)	Includes $6,020 for our share of net gains from asset sales.

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

Income from Real Estate Fund

In the three months ended June 30, 2011, we recognized $19,058,000 of income from the Fund, including $12,872,000 of net unrealized gains from the mark-to-market of investments in the Fund, and $3,085,000 of net realized gains from the disposition of an investment. Of the $19,058,000, $12,102,000 is attributable to noncontrolling interests. Accordingly, our share of the Fund’s income was $6,956,000 and includes $2,140,000 of accrued carried interest. In addition, we recognized $865,000 of management and leasing fees which are included as a component of “fee and other income,” and incurred $403,000 of placement fees in connection with the February 2011 closing of the Fund, which is included in “general and administrative” expenses.

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

Interest and Other Investment Income, net

Interest and other investment income, net (comprised of the mark-to-market of derivative positions in marketable equity securities, interest income on mezzanine loans receivable, other interest income and dividend income) was $8,007,000 in the three months ended June 30, 2011, compared to $3,876,000 in the prior year’s quarter, an increase of $4,131,000. This increase resulted from:


(Amounts in thousands)
Mezzanine loan loss accrual in 2010		$	6,900
Loss from the mark-to-market of J.C. Penney derivative position			(6,762)
Increase in the value of investments in our deferred compensation plan (offset by a corresponding
	increase in the liability for plan assets in general and administrative expenses)		2,779
Other, net			1,214
		$	4,131

Interest and Debt Expense

Interest and debt expense was $137,202,000 in the three months ended June 30, 2011, compared to $142,175,000 in the prior year’s quarter, a decrease of $4,973,000. This decrease was primarily due to savings of (i) $7,001,000 from the repayment of the Springfield Mall mortgage at a discount in December 2010, (ii) $4,630,000 from the deconsolidation of the Warner Building resulting from the sale of a 45% interest in October 2010, and (iii) $3,288,000 applicable to the repurchase and retirement of our convertible senior debentures, partially offset by (iv) $6,549,000 from the issuance of $660,000,000 of cross-collateralized debt secured by 40 of our strip shopping centers, and (v) $4,070,000 from the financing of 2121 Crystal Drive and Two Penn Plaza in the first quarter of 2011.

Net Gain on Disposition of Wholly Owned and Partially Owned Assets

Net gain on disposition of wholly owned and partially owned assets was $4,382,000 in the three months ended June 30, 2010 and resulted primarily from the sale of marketable securities.

Income Tax Expense

Income tax expense was $5,922,000 in the three months ended June 30, 2011, compared to $4,964,000 in the prior year’s quarter, an increase of $958,000. This increase resulted primarily from higher taxable income of our taxable REIT subsidiaries.

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

Income (Loss) from Discontinued Operations

The table below sets forth the combined results of assets related to discontinued operations for the three months ended June 30, 2011 and 2010, including the High Point Complex in North Carolina, which was disposed by the receiver on March 31, 2011.


	For the Three Months Ended
	June 30,
(Amounts in thousands)	2011		2010
Total revenues	$	-	$	12,116
Total expenses		-		15,797
		-		(3,681)
Net gain on sale of real estate		458		-
Income (loss) from discontinued operations	$	458	$	(3,681)

Net Income Attributable to Noncontrolling Interests in Consolidated Subsidiaries

Net income attributable to noncontrolling interests in consolidated subsidiaries was $13,657,000 in the three months ended June 30, 2011, compared to $981,000 in the prior year’s quarter, an increase of $12,676,000. This increase resulted primarily from $12,102,000 of income allocated to the noncontrolling interests in our Real Estate Fund.

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

Net income attributable to noncontrolling interests in the Operating Partnership, including unit distributions for the three months ended June 30, 2011 and 2010 is primarily comprised of allocations of income to redeemable noncontrolling interests of $6,283,000 and $4,451,000, respectively, and preferred unit distributions of the Operating Partnership of $4,448,000 and $4,491,000, respectively. The increase of $1,832,000 in allocations of income to redeemable noncontrolling interests resulted primarily from higher net income subject to allocation to unitholders.

Preferred Share Dividends

Preferred share dividends were $16,668,000 for the three months ended June 30, 2011, compared to $14,266,000 for the prior year’s quarter, an increase of $2,402,000. This increase resulted from the issuance of Series J preferred shares during the second quarter of 2011.

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

Same Store EBITDA

Same store EBITDA represents EBITDA from property level operations which are owned by us in both the current and prior year reporting periods. Same store EBITDA excludes segment-level overhead expenses, which are expenses that we do not consider to be property-level expenses, as well as other non-operating items. We present same store EBITDA on both a GAAP basis and a cash basis, which excludes income from the straight-lining of rents, amortization of below-market leases, net of above-market leases and other non-cash adjustments. We present these non-GAAP measures to (i) facilitate meaningful comparisons of the operational performance of our properties and segments, (ii) make decisions on whether to buy, sell or refinance properties, and (iii) compare the performance of our properties and segments to those of our peers. Same store EBITDA should not be considered as an alternative to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.

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

			New York		Washington, DC				Merchandise
(Amounts in thousands)			Office		Office		Retail		Mart
EBITDA for the three months ended June 30, 2011			$	157,016	$	111,517	$	96,507	$	23,998
	Add-back: non-property level overhead
		expenses included above		4,579		6,462		7,291		6,848
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(7,864)		(2,348)		(8,083)		(1,002)
GAAP basis same store EBITDA for the three months
		ended June 30, 2011		153,731		115,631		95,715		29,844
	Less: Adjustments for straight-line rents,
		amortization of below-market leases, net, and other
		non-cash adjustments		(12,286)		1,095		(5,884)		(670)
Cash basis same store EBITDA for the three months
		ended June 30, 2011	$	141,445	$	116,726	$	89,831	$	29,174


EBITDA for the three months ended June 30, 2010			$	153,045	$	114,272	$	88,100	$	27,886
	Add-back: non-property level overhead
		expenses included above		4,767		6,202		6,807		7,157
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(2,103)		(5,187)		(3,366)		(4,595)
GAAP basis same store EBITDA for the three months
		ended June 30, 2010		155,709		115,287		91,541		30,448
	Less: Adjustments for straight-line rents,
		amortization of below-market leases, net, and other
		non-cash adjustments		(14,578)		(586)		(10,097)		(740)
Cash basis same store EBITDA for the three months
		ended June 30, 2010	$	141,131	$	114,701	$	81,444	$	29,708


(Decrease) increase in GAAP basis same store EBITDA for
		the three months ended June 30, 2011 over the
		three months ended June 30, 2010	$	(1,978)	$	344	$	4,174	$	(604)

Increase (decrease) in Cash basis same store EBITDA for
		the three months ended June 30, 2011 over the
		three months ended June 30, 2010	$	314	$	2,025	$	8,387	$	(534)


% (decrease) increase in GAAP basis same store EBITDA				(1.3%)		0.3%		4.6%		(2.0%)

% increase (decrease) in Cash basis same store EBITDA				0.2%		1.8%		10.3%		(1.8%)

Net Income and EBITDA by Segment for the Six Months Ended June 30, 2011 and 2010

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


(Amounts in thousands)			For the Six Months Ended June 30, 2011
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	1,088,957	$	391,377	$	280,654	$	214,109	$	118,928	$	-	$	83,889
Straight-line rent adjustments					22,278		11,760		(711)		7,911		1,443		-		1,875
Amortization of acquired below-
	market leases, net				33,571		16,355		978		13,956		34		-		2,248
Total rentals					1,144,806		419,492		280,921		235,976		120,405		-		88,012
Tenant expense reimbursements					173,284		65,359		18,233		75,967		7,767		-		5,958
Cleveland Medical Mart development
	project				73,068		-		-		-		73,068		-		-
Fee and other income:
	Tenant cleaning fees				30,832		47,109		-		-		-		-		(16,277)
	Management and leasing fees				11,095		3,607		6,959		1,898		303		-		(1,672)
	Lease termination fees				8,499		5,636		2,011		852		-		-		-
	Other				25,678		9,866		10,662		3,099		1,878		-		173
Total revenues					1,467,262		551,069		318,786		317,792		203,421		-		76,194
Operating expenses					563,925		238,130		98,584		117,874		74,807		-		34,530
Depreciation and amortization					264,125		92,000		67,749		56,291		22,175		-		25,910
General and administrative					109,254		9,943		12,999		15,313		14,446		-		56,553
Cleveland Medical Mart development
	project				68,218		-		-		-		68,218		-		-
Acquisition and other costs					20,167		-		-		15,000		3,040		-		2,127
Total expenses					1,025,689		340,073		179,332		204,478		182,686		-		119,120
Operating income (loss)					441,573		210,996		139,454		113,314		20,735		-		(42,926)
Income applicable to Toys					90,098		-		-		-		-		90,098		-
Income (loss) from partially owned
	entities				42,687		243		(4,682)		1,242		254		-		45,630
Income from Real Estate Fund					20,138		-		-		-		-		-		20,138
Interest and other investment
	income, net				125,115		320		80		2		18		-		124,695
Interest and debt expense					(271,967)		(68,119)		(59,655)		(46,413)		(18,775)		-		(79,005)
Net gain on disposition of wholly
	owned and partially owned assets				6,677		-		-		-		-		-		6,677
Income before income taxes					454,321		143,440		75,197		68,145		2,232		90,098		75,209
Income tax expense					(12,304)		(959)		(1,307)		(5)		(1,321)		-		(8,712)
Income from continuing
	operations				442,017		142,481		73,890		68,140		911		90,098		66,497
Income from discontinued operations					134,773		-		46,466		5,761		82,546		-		-
Net income					576,790		142,481		120,356		73,901		83,457		90,098		66,497
Less:
	Net (income) loss attributable to
		noncontrolling interests in
		consolidated subsidiaries			(15,007)		(4,596)		-		86		-		-		(10,497)
	Net income attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(40,539)		-		-		-		-		-		(40,539)
Net income attributable to
	Vornado				521,244		137,885		120,356		73,987		83,457		90,098		15,461
Interest and debt expense⁽²⁾					401,804		68,947		66,314		48,632		22,502		83,528		111,881
Depreciation and amortization⁽²⁾					368,344		92,714		80,205		57,376		22,402		67,569		48,078
Income tax expense⁽²⁾					49,485		959		1,455		5		1,321		45,049		696
EBITDA⁽¹⁾				$	1,340,877	$	300,505	$	268,330	$	180,000	$	129,682	$	286,244	$	176,116

____________________

See notes on page 56.

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


(Amounts in thousands)			For the Six Months Ended June 30, 2010
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	1,048,199	$	387,852	$	279,778	$	191,442	$	112,098	$	-	$	77,029
Straight-line rent adjustments					37,615		15,049		5,172		14,119		1,827		-		1,448
Amortization of acquired below-
	market leases, net				32,055		18,339		1,242		9,449		(106)		-		3,131
Total rentals					1,117,869		421,240		286,192		215,010		113,819		-		81,608
Tenant expense reimbursements					178,350		65,683		27,463		72,946		7,806		-		4,452
Fee and other income:
	Tenant cleaning fees				27,120		41,057		-		-		-		-		(13,937)
	Management and leasing fees				12,520		2,850		10,480		545		33		-		(1,388)
	Lease termination fees				7,811		3,025		528		3,836		422		-		-
	Other				25,633		8,923		10,898		1,745		2,706		-		1,361
Total revenues					1,369,303		542,778		335,561		294,082		124,786		-		72,096
Operating expenses					536,538		226,104		104,770		108,775		65,937		-		30,952
Depreciation and amortization					267,070		87,978		72,230		55,325		23,366		-		28,171
General and administrative					98,170		9,346		12,095		13,748		14,355		-		48,626
Acquisition and other costs					1,930		-		-		-		-		-		1,930
Total expenses					903,708		323,428		189,095		177,848		103,658		-		109,679
Operating income (loss)					465,595		219,350		146,466		116,234		21,128		-		(37,583)
Income applicable to Toys					104,866		-		-		-		-		104,866		-
Income (loss) from partially owned
	entities				15,796		2,640		(4)		2,520		231		-		10,409
Interest and other investment
	income, net				18,580		327		49		189		24		-		17,991
Interest and debt expense					(277,902)		(65,733)		(68,225)		(37,957)		(18,827)		-		(87,160)
Net (loss) on extinguishment
	of debt				(1,072)		-		-		-		-		-		(1,072)
Net gain on disposition of wholly
	owned and partially owned assets				7,687		-		-		-		765		-		6,922
Income (loss) before income taxes					333,550		156,584		78,286		80,986		3,321		104,866		(90,493)
Income tax expense					(10,544)		(809)		(91)		(35)		(596)		-		(9,013)
Income (loss) from continuing
	operations				323,006		155,775		78,195		80,951		2,725		104,866		(99,506)
(Loss) from discontinued operations					(13,251)		-		(7,186)		(535)		(5,530)		-		-
Net income (loss)					309,755		155,775		71,009		80,416		(2,805)		104,866		(99,506)
Less:
	Net (income) loss attributable to
		noncontrolling interests in
		consolidated subsidiaries			(1,194)		(4,848)		-		498		-		-		3,156
	Net income attributable to
		noncontrolling interests in the
		Operating Partnership, including
		unit distributions			(21,903)		-		-		-		-		-		(21,903)
Net income (loss) attributable to
	Vornado				286,658		150,927		71,009		80,914		(2,805)		104,866		(118,253)
Interest and debt expense⁽²⁾					403,699		62,587		70,114		41,880		29,487		83,233		116,398
Depreciation and amortization⁽²⁾					370,252		84,810		79,535		57,311		26,267		69,771		52,558
Income tax expense⁽²⁾					36,566		809		107		35		655		25,587		9,373
EBITDA⁽¹⁾				$	1,097,175	$	299,133	$	220,765	$	180,140	$	53,604	$	283,457	$	60,076

___________________________

See notes on the following page.

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

Notes to preceding tabular information:

			For the Six Months
(Amounts in thousands)			Ended June 30,
			2011		2010
Our share of Real Estate Fund:
	Operations		$	1,807	$	-
	Net unrealized gains			3,392		-
	Net realized gains			771		-
	Carried interest			2,140		-
Total				8,110		-
Alexander's				30,989		28,659
Lexington⁽¹⁾				29,306		29,283
LNR (acquired in July 2010)⁽²⁾				22,800		-
555 California Street				21,388		22,624
Hotel Pennsylvania				8,609		6,169
Other investments				19,936		18,615
				141,138		105,350
Corporate general and administrative expenses⁽³⁾				(41,379)		(39,956)
Investment income and other, net⁽³⁾				26,330		26,068
Mezzanine loans loss (accrual) reversal and net gain on disposition				82,744		(6,900)
Income from the mark-to-market of J.C. Penney derivative position				10,401		-
Net gain on sale of condominiums				4,586		3,149
Acquisition costs				(3,714)		(1,930)
Real Estate Fund placement fees				(3,451)		(2,730)
Net loss on extinguishment of debt				-		(1,072)
Net income attributable to noncontrolling interests in the Operating Partnership,
	including unit distributions			(40,539)		(21,903)
			$	176,116	$	60,076


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

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

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

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

		For the Six Months
		Ended June 30,
		2011	2010
Region:
	New York City metropolitan area	60%	60%
	Washington, DC / Northern Virginia metropolitan area	30%	31%
	California	2%	2%
	Chicago	5%	5%
	Puerto Rico	1%	1%
	Other geographies	2%	1%
		100%	100%

Results of Operations – Six Months Ended June 30, 2011 Compared to June 30, 2010

Revenues

Our revenues, which consist of property rentals, tenant expense reimbursements, hotel revenues, trade shows revenues, amortization of acquired below-market leases, net of above-market leases and fee income, were $1,467,262,000 for the six months ended June 30, 2011, compared to $1,369,303,000 in the prior year’s six months, an increase of $97,959,000, of which $73,068,000 relates to the Cleveland Medical Mart development project. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)

						New York		Washington, DC					Merchandise
Increase (decrease) due to:			Total			Office		Office			Retail		Mart			Other
Property rentals:
	Acquisitions, sale of partial interests
		and other	$	(6,592)		$	(1,919)	$	(16,794)		$	9,135	$	-		$	2,986
	Development			4,780			-		4,501			279		-			-
	Hotel Pennsylvania			5,072			-		-			-		-			5,072
	Trade Shows			2,975			-		-			-		2,975			-
	Amortization of acquired below-market
		leases, net		1,516			(1,984)		(264)			4,507		140			(883)
	Leasing activity (see page 42)			19,186			2,155		7,286			7,045		3,471			(771)
				26,937			(1,748)		(5,271)			20,966		6,586			6,404

Tenant expense reimbursements:
	Acquisitions/development, sale of partial
		interests and other		(3,792)			-		(7,409)			930		-			2,687
	Operations			(1,274)			(324)		(1,821)			2,091		(39)			(1,181)
				(5,066)			(324)		(9,230)			3,021		(39)			1,506

Cleveland Medical Mart development
	project			73,068	⁽¹⁾		-		-			-		73,068	⁽¹⁾		-

Fee and other income:
	BMS cleaning fees			3,712			6,052		-			-		-			(2,340)	⁽²⁾
	Management and leasing fees			(1,425)			757		(3,521)	⁽³⁾		1,353		270			(284)
	Lease cancellation fee income			688			2,611		1,483			(2,984)		(422)			-
	Other			45			943		(236)			1,354		(828)			(1,188)
				3,020			10,363		(2,274)			(277)		(980)			(3,812)

Total increase (decrease) in revenues			$	97,959		$	8,291	$	(16,775)		$	23,710	$	78,635		$	4,098



(1)		$68,218 is offset by development costs expensed in the period. See note (4) on page 59.

(2)		Primarily from the elimination of intercompany fees from operating segments upon consolidation. See note (1) on page 59.

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

Results of Operations – Six Months Ended June 30, 2011 Compared to June 30, 2010 - continued

Expenses

Our expenses, which consist primarily of operating, depreciation and amortization and general and administrative expenses, were $1,025,689,000 for the six months ended June 30, 2011, compared to $903,708,000 in the prior year’s six months, an increase of $121,981,000, of which $68,218,000 relates to the Cleveland Medical Mart development project. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)

						New York		Washington, DC					Merchandise
Increase (decrease) due to:			Total			Office		Office		Retail			Mart			Other
Operating:
	Acquisitions, sale of partial interests
		and other	$	(221)		$	-	$	(9,565)	$	6,657		$	-		$	2,687
	Development/redevelopment			543			-		(175)		718			-			-
	Non-reimbursable expenses, including
		bad debt reserves		4,673			854		1,276		(2,297)			4,840
	Hotel Pennsylvania			2,479			-		-		-			-			2,479
	Trade Shows			2,002			-		-		-			2,002			-
	BMS expenses			5,437			5,437		-		-			-			-
	Operations			12,474			5,735		2,278		4,021			2,028			(1,588)	⁽¹⁾
				27,387			12,026		(6,186)		9,099			8,870			3,578

Depreciation and amortization:
	Acquisitions/development, sale of partial
		interests and other		(4,809)			-		(7,048)		2,239			-			-
	Operations			1,864			4,022		2,567		(1,273)			(1,191)			(2,261)
				(2,945)			4,022		(4,481)		966			(1,191)			(2,261)

General and administrative:
	Mark-to-market of deferred compensation
		plan liability ⁽²⁾		4,968			-		-		-			-			4,968
	Real Estate Fund placement fees			721			-		-		-			-			721
	Operations			5,395			597		904		1,565			91			2,238	⁽³⁾
				11,084			597		904		1,565			91			7,927

Cleveland Medical Mart development
	project			68,218	⁽⁴⁾		-		-		-			68,218	⁽⁴⁾		-

Acquisition and other costs				18,237			-		-		15,000	⁽⁵⁾		3,040			197

Total increase (decrease) in expenses			$	121,981		$	16,645	$	(9,763)	$	26,630		$	79,028		$	9,441



(1)		Primarily from the elimination of intercompany fees from operating segments upon consolidation. See note (2) on page 58.

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

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

(4)		This expense is entirely offset by development revenue in the period. See note (1) on page 58.

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

Results of Operations – Six Months Ended June 30, 2011 Compared to June 30, 2010 - continued

Income Applicable to Toys

In the six months ended June 30, 2011, we recognized net income of $90,098,000 from our investment in Toys, comprised of $85,773,000 for our 32.7% share of Toys’ net income ($130,822,000 before our share of Toys’ income tax expense) and $4,325,000 of interest and other income.

In the six months ended June 30, 2010, we recognized net income of $104,866,000 from our investment in Toys, comprised of $100,649,000 for our 32.7% share of Toys’ net income ($126,236,000 before our share of Toys’ income tax expense) and $4,217,000 of interest and other income.

Income from Partially Owned Entities

Summarized below are the components of income from partially owned entities for the six months ended June 30, 2011 and 2010.

		For the Six Months Ended
		June 30,
(Amounts in thousands)		2011		2010
Equity in Net Income (Loss):
Alexander's - 32.4% share of equity in net income		$	16,649	$	13,526

Lexington - 11.7% share in 2011 and 13.8% share in 2010 of equity in net income⁽¹⁾			10,826		5,617

LNR - 26.2% share of equity in net income (acquired in July 2010)⁽²⁾			26,257		-

India real estate ventures - 4% to 36.5% range in our share of equity in net (loss) income			(2)		2,257

Partially owned office buildings⁽³⁾			(6,990)		1,778

Other equity method investments⁽⁴⁾			(4,053)		(7,382)
		$	42,687	$	15,796


(1)	The six months ended June 30, 2011 and 2010 includes $9,760 and $5,998, respectively, of net gains resulting from Lexington's stock issuances.

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

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

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

Income from Real Estate Fund

In the six months ended June 30, 2011, we recognized $20,138,000 of income from the Fund, including $13,570,000 of net unrealized gains from the mark-to-market of investments in the Fund, and $3,085,000 of net realized gains from the disposition of an investment. Of the $20,138,000, $12,028,000 is attributable to noncontrolling interests. Accordingly, our share of the Fund’s income was $8,110,000 and includes $2,140,000 of accrued carried interest. In addition, we recognized $1,165,000 of management and leasing fees which are included as a component of “fee and other income,” and incurred $3,451,000 of placement fees in connection with the February 2011 closing of the Fund, which is included in “general and administrative” expenses.

Results of Operations – Six Months Ended June 30, 2011 Compared to June 30, 2010 - continued

Interest and Other Investment Income, net

Interest and other investment income, net (comprised of the mark-to-market of derivative positions in marketable equity securities, interest income on mezzanine loans receivable, other interest income and dividend income) was $125,115,000 in the six months ended June 30, 2011, compared to $18,580,000 in the prior year’s six months, an increase of $106,535,000. This increase resulted from:


(Amounts in thousands)
Mezzanine loans ($82,744 loss reversal and net gain on disposition in 2011, compared to a $6,900
	loss accrual in 2010)	$	89,644
Income from the mark-to-market of J.C. Penney derivative position			10,401
Increase in the value of investments in our deferred compensation plan (offset by a corresponding
	increase in the liability for plan assets in general and administrative expenses)		4,968
Other, net			1,522
		$	106,535

Interest and Debt Expense

Interest and debt expense was $271,967,000 in the six months ended June 30, 2011, compared to $277,902,000 in the prior year’s six months, a decrease of $5,935,000. This decrease was primarily due to savings of (i) $10,951,000 from the repayment of the Springfield Mall mortgage at a discount in December 2010, (ii) $9,209,000 from the deconsolidation of the Warner Building resulting from the sale of a 45% interest in October 2010, and (iii) $6,734,000 applicable to the repurchase and retirement of our convertible senior debentures, partially offset by (iv) $13,194,000 from the issuance of $660,000,000 of cross-collateralized debt secured by 40 of our strip shopping centers, (v) $5,630,000 from the financing of 2121 Crystal Drive and Two Penn Plaza in the first quarter of 2011, and (vi) $2,532,000 from the consolidation of the San Jose Shopping Center resulting from the October 2010 acquisition of the 55% interest we did not previously own.

Net Gain on Disposition of Wholly Owned and Partially Owned Assets

Net gain on disposition of wholly owned and partially owned assets was $6,677,000 in the six months ended June 30, 2011, compared to $7,687,000 in the prior year’s six months and resulted primarily from the sale of residential condominiums and marketable securities.

Income Tax Expense

Income tax expense was $12,304,000 in the six months ended June 30, 2011, compared to $10,544,000 in the prior year’s six months, an increase of $1,760,000. This increase resulted primarily from higher taxable income of our taxable REIT subsidiaries.

Results of Operations – Six Months Ended June 30, 2011 Compared to June 30, 2010 - continued

Income (Loss) from Discontinued Operations

The table below sets forth the combined results of assets related to discontinued operations for the six months ended June 30, 2011 and 2010, including the High Point Complex in North Carolina, which was disposed by the receiver on March 31, 2011.


	For the Six Months Ended
	June 30,
(Amounts in thousands)	2011		2010
Total revenues	$	5,987	$	23,137
Total expenses		6,744		26,332
		(757)		(3,195)
Net gain on extinguishment of High Point debt		83,907		-
Net gain on sale of 1140 Connecticut Avenue and 1227 25th Street		45,862		-
Net gain on sales of other real estate		5,761		-
Litigation loss accrual		-		(10,056)
Income (loss) from discontinued operations	$	134,773	$	(13,251)

Net Income Attributable to Noncontrolling Interests in Consolidated Subsidiaries

Net income attributable to noncontrolling interests in consolidated subsidiaries was $15,007,000 in the six months ended June 30, 2011, compared to $1,194,000 in the prior year’s six months, an increase of $13,813,000. This increase resulted primarily from $12,028,000 of income allocated to the noncontrolling interests in our Real Estate Fund.

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

Net income attributable to noncontrolling interests in the Operating Partnership, including unit distributions for the six months ended June 30, 2011 and 2010 is primarily comprised of allocations of income to redeemable noncontrolling interests of $33,588,000 and $19,666,000, respectively, and preferred unit distributions of the Operating Partnership of $8,951,000 and $9,209,000, respectively. The increase of $13,922,000 in allocations of income to redeemable noncontrolling interests resulted primarily from higher net income subject to allocation to unitholders.

Preferred Share Dividends

Preferred share dividends were $30,116,000 for the six months ended June 30, 2011, compared to $28,533,000 for the prior year’s six months, an increase of $1,583,000. This increase resulted from the issuance of Series J preferred shares during the second quarter of 2011, partially offset by the redemption of Series D-10 preferred shares in September 2010.

Results of Operations – Six Months Ended June 30, 2011 Compared to June 30, 2010 - continued

Same Store EBITDA

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

			New York		Washington, DC				Merchandise
(Amounts in thousands)			Office		Office		Retail		Mart
EBITDA for the six months ended June 30, 2011			$	300,505	$	268,330	$	180,000	$	129,682
	Add-back: non-property level overhead
		expenses included above		9,943		12,999		15,313		14,446
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(9,188)		(49,530)		(2,101)		(82,598)
GAAP basis same store EBITDA for the six months
		ended June 30, 2011		301,260		231,799		193,212		61,530
	Less: Adjustments for straight-line rents,
		amortization of below-market leases, net, and other
		non-cash adjustments		(26,325)		1,566		(12,718)		(1,477)
Cash basis same store EBITDA for the six months
		ended June 30, 2011	$	274,935	$	233,365	$	180,494	$	60,053


EBITDA for the six months ended June 30, 2010			$	299,133	$	220,765	$	180,140	$	53,604
	Add-back: non-property level overhead
		expenses included above		9,346		12,095		13,748		14,355
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(2,727)		(7,468)		(8,482)		(8,535)
GAAP basis same store EBITDA for the six months
		ended June 30, 2010		305,752		225,392		185,406		59,424
	Less: Adjustments for straight-line rents,
		amortization of below-market leases, net, and other
		non-cash adjustments		(30,186)		(5,497)		(19,126)		(1,721)
Cash basis same store EBITDA for the six months
		ended June 30, 2010	$	275,566	$	219,895	$	166,280	$	57,703


(Decrease) increase in GAAP basis same store EBITDA for
		the six months ended June 30, 2011 over the
		six months ended June 30, 2010	$	(4,492)	$	6,407	$	7,806	$	2,106

(Decrease) increase in Cash basis same store EBITDA for
		the six months ended June 30, 2011 over the
		six months ended June 30, 2010	$	(631)	$	13,470	$	14,214	$	2,350


% (decrease) increase in GAAP basis same store EBITDA				(1.5%)		2.8%		4.2%		3.5%

% (decrease) increase in Cash basis same store EBITDA				(0.2%)		6.1%		8.5%		4.1%

SUPPLEMENTAL INFORMATION

Three Months Ended June 30, 2011 vs. Three Months Ended March 31, 2011

Our revenues and expenses are subject to seasonality during the year which impacts quarterly net earnings, cash flows and funds from operations, and therefore impacts comparisons of the current quarter to the previous quarter. The business of Toys is highly seasonal. Historically, Toys’ fourth quarter net income, which we record on a one-quarter lag basis in our first quarter, accounts for more than 80% of Toys’ fiscal year net income. The Office and Merchandise Mart segments have historically experienced higher utility costs in the first and third quarters of the year. The Merchandise Mart segment also has experienced higher earnings in the second and fourth quarters of the year due to major trade shows occurring in those quarters. The Retail segment revenue in the fourth quarter is typically higher due to the recognition of percentage rental income.

Below are the same store EBITDA results on a GAAP and cash basis for each of our segments for the three months ended June 30, 2011, compared to the three months ended March 31, 2011.

			New York		Washington, DC				Merchandise
(Amounts in thousands)			Office		Office		Retail		Mart
EBITDA for the three months ended June 30, 2011			$	157,016	$	111,517	$	96,507	$	23,998
	Add-back: non-property level overhead expenses
		included above		4,579		6,462		7,291		6,848
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(7,864)		(2,269)		(4,965)		-
GAAP basis same store EBITDA for the three months
	ended June 30, 2011			153,731		115,710		98,833		30,846
	Less: Adjustments for straight-line rents, amortization of
		below-market leases, net, and other non-cash adjustments		(12,286)		1,103		(8,125)		(670)
Cash basis same store EBITDA for the three months
	ended June 30, 2011		$	141,445	$	116,813	$	90,708	$	30,176


EBITDA for the three months ended March 31, 2011⁽¹⁾			$	143,489	$	156,813	$	83,493	$	105,684
	Add-back: non-property level overhead expenses
		included above		5,364		6,537		8,022		7,598
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(1,070)		(47,262)		7,254		(82,919)
GAAP basis same store EBITDA for the three months
	ended March 31, 2011			147,783		116,088		98,769		30,363
	Less: Adjustments for straight-line rents, amortization of
		below-market leases, net, and other non-cash adjustments		(14,038)		335		(8,983)		(807)
Cash basis same store EBITDA for the three months
	ended March 31, 2011		$	133,745	$	116,423	$	89,786	$	29,556


Increase (decrease) in GAAP basis same store EBITDA for
	the three months ended June 30, 2011 over the
	three months ended March 31, 2011		$	5,948	$	(378)	$	64	$	483

Increase in Cash basis same store EBITDA for
	the three months ended June 30, 2011 over the
	three months ended March 31, 2011		$	7,700	$	390	$	922	$	620


% increase (decrease) in GAAP basis same store EBITDA				4.0%		(0.3%)		0.1%		1.6%

% increase in Cash basis same store EBITDA				5.8%		0.3%		1.0%		2.1%


(1)		Below is the reconciliation of net income to EBITDA for the three months ended March 31, 2011

			New York		Washington, DC				Merchandise
(Amounts in thousands)			Office		Office		Retail		Mart
Net income attributable to Vornado for the three months
	ended March 31, 2011		$	65,883	$	81,845	$	30,348	$	81,192
Interest and debt expense				31,994		32,221		24,164		12,907
Depreciation and amortization				45,093		41,899		28,976		11,175
Income tax expense				519		848		5		410
EBITDA for the three months ended March 31, 2011			$	143,489	$	156,813	$	83,493	$	105,684

LIQUIDITY AND CAPITAL RESOURCES

We anticipate that cash flow from continuing operations over the next twelve months will be adequate to fund our business operations, cash distributions to unitholders of the Operating Partnership, cash dividends to shareholders, debt amortization and recurring capital expenditures. Capital requirements for development expenditures and acquisitions (excluding Fund acquisitions) may require funding from borrowings and/or equity offerings. In addition, the Fund has aggregate unfunded equity commitments of $543,900,000 for acquisitions, including $135,969,000 from us. We may from time to time purchase or retire outstanding debt securities. Such purchases, if any, will depend on prevailing market conditions, liquidity requirements and other factors. The amounts involved in connection with these transactions could be material to our consolidated financial statements.

Property rental income is our primary source of cash flow and is dependent upon the occupancy and rental rates of our properties. Other sources of liquidity to fund cash requirements include proceeds from debt financings, including mortgage loans, senior unsecured borrowings, and our revolving credit facilities; proceeds from the issuance of common and preferred equity; and asset sales. Our cash requirements include property operating expenses, capital improvements, tenant improvements, leasing commissions, dividends to shareholders, distributions to unitholders of the Operating Partnership, as well as acquisition and development costs.

Cash Flows for the Six Months Ended June 30, 2011

Our cash and cash equivalents were $591,515,000 at June 30, 2011, a $99,274,000 decrease over the balance at December 31, 2010. This decrease was primarily due to cash flows from financing activities, partially offset by cash flows from operating activities, as discussed below.

Our consolidated outstanding debt was $10,540,048,000 at June 30, 2011, a $353,591,000 decrease over the balance at December 31, 2010. As of June 30, 2011 and December 31, 2010, $300,000,000 and $874,000,000, respectively, was outstanding under our revolving credit facilities. During the remainder of 2011 $1,234,960,000 of our outstanding debt matures; we may refinance this maturing debt as it comes due or choose to repay it using a portion of our $3,136,515,000 of available capacity (comprised of $591,515,000 of cash and cash equivalents and $2,545,000,000 of availability under our revolving credit facilities).

Cash flows provided by operating activities of $260,040,000 was comprised of (i) net income of $576,790,000 and (ii) distributions of income from partially owned entities of $43,741,000, partially offset by (iii) $148,548,000 of non-cash adjustments, which include depreciation and amortization expense, the effect of straight-lining of rental income and equity in net income of partially owned entities, and (iv) the net change in operating assets and liabilities of $211,943,000, including $97,802,000 related to Real Estate Fund investments.

Net cash provided by investing activities of $23,257,000 was comprised of (i) $271,375,000 of capital distributions from partially owned entities, (ii) $130,789,000 of proceeds from sales of real estate and related investments, (iii) $99,990,000 of proceeds from sales and repayments of mezzanine loans (iv) changes in restricted cash of $91,127,000 and (v) $19,301,000 of proceeds from sales of, and return of investments in, marketable securities, partially offset by (vi) $426,376,000 of investments in partially owned entities, (vii) $86,944,000 of additions to real estate, (viii) $43,516,000 of investments in mezzanine loans receivable and other and (ix) $32,489,000 of development costs and construction in progress.

Net cash used in financing activities of $382,571,000 was comprised of (i) $1,636,817,000 for the repayments of borrowings, (ii) $254,099,000 of dividends paid on common shares, (iii) $62,111,000 of distributions to noncontrolling interests, (iv) $27,117,000 of dividends paid on preferred shares, (v) $23,319,000 of debt issuance and other costs and (vi) $8,000,000 for the purchase of outstanding preferred units and (vii) $748,000 for the repurchase of shares related to stock compensation agreements and related tax holdings, partially offset by (viii) $1,284,167,000 of proceeds from borrowings, (ix) $214,538,000 of proceeds from the issuance of Series J preferred shares, (x) $109,605,000 of contributions from noncontrolling interests and (xi) $21,330,000 of proceeds received from exercise of employee share options.

LIQUIDITY AND CAPITAL RESOURCES – continued

Cash Flows for the Six Months Ended June 30, 2010

Our cash and cash equivalents were $652,121,000 at June 30, 2010, a $116,642,000 increase over the balance at December 31, 2009. This increase resulted from $532,365,000 of net cash provided by operating activities and $207,359,000 of net cash provided by investing activities, partially offset by $623,082,000 of net cash used in financing activities.

Cash flows provided by operating activities of $532,365,000 was comprised of (i) net income of $309,755,000, (ii) $115,978,000 of non-cash adjustments, including depreciation and amortization expense, the effect of straight-lining of rental income and equity in net income of partially owned entities, (iii) distributions of income from partially owned entities of $18,517,000 and (iv) the net change in operating assets and liabilities of $88,115,000.

Net cash provided by investing activities of $207,359,000 was comprised of (i) restricted cash of $133,888,000, (ii) proceeds from sales of marketable securities of $122,956,000, (iii) proceeds from sales and repayments of mezzanine loans receivable of $105,061,000, (iv) proceeds from the sale of real estate and related investments of $49,544,000, (v) proceeds from maturing short-term investments of $40,000,000 and (vi) distributions of capital from partially owned entities of $12,638,000, partially offset by (vii) additions to real estate of $68,925,000, (viii) development and redevelopment expenditures of $68,499,000, (ix) investments in mezzanine loans receivable and other of $48,339,000, (x) investments in partially owned entities of $41,920,000, (xi) acquisitions of real estate and other of $15,128,000, and (xii) purchases of marketable securities of $13,917,000.

Net cash used in financing activities of $623,082,000 was comprised of (i) repayments of borrowings, including the purchase of our senior unsecured notes, of $1,197,525,000, (ii) dividends paid on common shares of $236,279,000, (iii) dividends paid on preferred shares of $28,533,000, (iv) distributions to noncontrolling interests of $27,665,000, (v) repurchase of shares related to stock compensation arrangements and related tax withholdings of $25,223,000, (vi) purchases of outstanding preferred units of $13,000,000 and (vii) debt issuance costs of $5,724,000, partially offset by (viii) proceeds from borrowings of $901,040,000.

LIQUIDITY AND CAPITAL RESOURCES - continued

Capital Expenditures

Capital expenditures consist of expenditures to maintain assets, tenant improvement allowances and leasing commissions. Recurring capital improvements include expenditures to maintain a property’s competitive position within the market and tenant improvements and leasing commissions necessary to re-lease expiring leases or renew or extend existing leases. Non-recurring capital improvements include expenditures to lease space that has been vacant for more than nine months and expenditures completed in the year of acquisition and the following two years that were planned at the time of acquisition, as well as tenant improvements and leasing commissions for space that was vacant at the time of acquisition of a property. Below is a summary of capital expenditures, leasing commissions and a reconciliation of total expenditures on an accrual basis to the cash expended in the six months ended June 30, 2011.

						New York		Washington, DC				Merchandise
(Amounts in thousands)				Total		Office		Office		Retail		Mart		Other
Expenditures to maintain assets				$	20,864	$	7,803	$	4,124	$	2,984	$	4,326	$	1,627
Tenant improvements					38,972		21,584		12,608		2,319		2,139		322
Leasing commissions					10,142		6,854		2,177		916		72		123
Non-recurring capital expenditures					14,945		11,031		-		1,967		-		1,947
Total capital expenditures and leasing
	commissions (accrual basis)				84,923		47,272		18,909		8,186		6,537		4,019
Adjustments to reconcile to cash basis:
		Expenditures in the current year
			applicable to prior periods		62,082		20,109		9,028		12,907		19,210		828
		Expenditures to be made in future
			periods for the current period		(49,923)		(29,135)		(13,547)		(5,194)		(2,047)		-
Total capital expenditures and leasing
	commissions (cash basis)			$	97,082	$	38,246	$	14,390	$	15,899	$	23,700	$	4,847

Tenant improvements and leasing commissions:
	Per square foot per annum			$	3.31	$	5.16	$	3.96	$	0.93	$	1.47	$	-
	Percentage of initial rent				8.0%		8.5%		10.1%		3.8%		4.3%		-

Development and Redevelopment Expenditures

Development and redevelopment expenditures consist of all hard and soft costs associated with the development or redevelopment of a property, including tenant improvements, leasing commissions, capitalized interest and operating costs until the property is substantially completed and ready for its intended use. Below is a summary of development and redevelopment expenditures incurred in the six months ended June 30, 2011.

			New York		Washington, DC				Merchandise
(Amounts in thousands)	Total		Office		Office		Retail		Mart		Other
Bergen Town Center	$	10,105	$	-	$	-	$	10,105	$	-	$	-
Green Acres Mall		3,539		-		-		3,539		-		-
West End 25		1,841		-		1,841		-		-		-
North Bergen, New Jersey		1,494		-		-		1,494		-		-
510 Fifth Avenue		1,492		-		-		1,492		-		-
Crystal City Hotel		1,207		-		1,207		-		-		-
Crystal Square		1,046		-		1,046		-		-		-
Crystal Plaza 5		1,013		-		1,013		-		-		-
Poughkeepsie, New York		796		-		-		796		-		-
Other		9,956		2,055		3,559		2,164		310		1,868
	$	32,489	$	2,055	$	8,666	$	19,590	$	310	$	1,868

As of June 30, 2011, the estimated costs to complete the above projects are approximately $29,700,000. In addition, during 2012, we plan to redevelop 1851 South Bell Street, a 348,000 square foot office building in Crystal City, into a new 700,000 square foot office building (readdressed as 1900 Crystal Drive). The estimated cost of this project is approximately $300,000,000, or $425 per square foot. There can be no assurance that this project will commence, or, if commenced, be completed on schedule or within budget.

LIQUIDITY AND CAPITAL RESOURCES - continued

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

						New York		Washington, DC				Merchandise
(Amounts in thousands)				Total		Office		Office		Retail		Mart		Other
Expenditures to maintain assets				$	20,389	$	10,237	$	3,161	$	1,539	$	2,721	$	2,731
Tenant improvements					70,845		25,300		6,127		7,045		27,550		4,823
Leasing commissions					15,516		6,781		2,283		1,416		3,804		1,232
Non-recurring capital expenditures					3,985		-		-		898		-		3,087
Total capital expenditures and leasing
	commissions (accrual basis)				110,735		42,318		11,571		10,898		34,075		11,873
Adjustments to reconcile to cash basis:
		Expenditures in the current year
			applicable to prior periods		47,536		26,786		7,803		6,772		2,777		3,398
		Expenditures to be made in future
			periods for the current period		(73,756)		(22,985)		(7,149)		(9,278)		(28,644)		(5,700)
Total capital expenditures and leasing
	commissions (cash basis)			$	84,515	$	46,119	$	12,225	$	8,392	$	8,208	$	9,571

Tenant improvements and leasing commissions:
	Per square foot per annum			$	3.93	$	7.17	$	3.03	$	1.59	$	4.19	$	-
	Percentage of initial rent				12.5%		15.2%		7.9%		7.5%		17.0%		-

Development and Redevelopment Expenditures

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

			New York		Washington, DC				Merchandise
(Amounts in thousands)	Total		Office		Office		Retail		Mart		Other
Residential condominiums	$	10,275	$	-	$	-	$	-	$	-	$	10,275
West End 25		7,639		-		7,639		-		-		-
1540 Broadway		6,182		-		-		6,182		-		-
Green Acres Mall		6,085		-		-		6,085		-		-
Bergen Town Center		5,976		-		-		5,976		-		-
220 20th Street		3,794		-		3,794		-		-		-
Beverly Connection		3,184		-		-		3,184		-		-
North Bergen, New Jersey		3,078		-		-		3,078		-		-
Garfield, New Jersey		1,288		-		-		1,288		-		-
Poughkeepsie, New York		953		-		-		953		-		-
Other		20,045		3,742		7,758		2,999		824		4,722
	$	68,499	$	3,742	$	19,191	$	29,745	$	824	$	14,997

LIQUIDITY AND CAPITAL RESOURCES – continued

Insurance

Other Commitments and Contingencies

LIQUIDITY AND CAPITAL RESOURCES - continued

Other Commitments and Contingencies - continued

Litigation

On January 8, 2003, Stop & Shop filed a complaint with the United States District Court for the District of New Jersey (“USDC-NJ”) claiming that we had no right to reallocate and therefore continue to collect the $5,000,000 of annual rent from Stop & Shop pursuant to the Master Agreement and Guaranty, because of the expiration of the East Brunswick, Jersey City, Middletown, Union and Woodbridge leases to which the $5,000,000 of additional rent was previously allocated. Stop & Shop asserted that a prior order of the Bankruptcy Court for the Southern District of New York dated February 6, 2001, as modified on appeal to the District Court for the Southern District of New York on February 13, 2001, froze our right to reallocate which effectively terminated our right to collect the additional rent from Stop & Shop. On March 3, 2003, after we moved to dismiss for lack of jurisdiction, Stop & Shop voluntarily withdrew its complaint. On March 26, 2003, Stop & Shop filed a new complaint in New York State Supreme Court, asserting substantially the same claims as in its USDC-NJ complaint. We removed the action to the United States District Court for the Southern District of New York. In January 2005, that court remanded the action to the New York State Supreme Court. On February 14, 2005, we served an answer in which we asserted a counterclaim seeking a judgment for all the unpaid additional rent accruing through the date of the judgment and a declaration that Stop & Shop will continue to be liable for the additional rent as long as any of the leases subject to the Master Agreement and Guaranty remain in effect. On May 17, 2005, we filed a motion for summary judgment. On July 15, 2005, Stop & Shop opposed our motion and filed a cross-motion for summary judgment. On December 13, 2005, the Court issued its decision denying the motions for summary judgment. Both parties appealed the Court’s decision and on December 14, 2006, the Appellate Court division issued a decision affirming the Court’s decision. On January 16, 2007, we filed a motion for the reconsideration of one aspect of the Appellate Court’s decision which was denied on March 13, 2007. A trial was held in November 2010 and closing arguments were held in March 2011. As of June 30, 2011, we have a $39,483,000 receivable from Stop and Shop, of which $21,855,000 has been reserved. We believe, after consultation with counsel, that the maximum reasonably possible loss is up to the total amount of the receivable of $39,483,000.

FUNDS FROM OPERATIONS (“FFO”)

FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gain from sales of depreciated real estate assets, depreciation and amortization expense from real estate assets, extraordinary items and other specified non-cash items, including the pro-rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flows as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies. The calculations of both the numerator and denominator used in the computation of income per share are disclosed in footnote 16 – Income per Share, in the notes to our consolidated financial statements on page 27 of this Quarterly Report on Form 10-Q.

FFO for the Three and Six Months Ended June 30, 2011 and 2010

FFO attributable to common shareholders plus assumed conversions was $243,418,000, or $1.27 per diluted share for the three months ended June 30, 2011, compared to $204,772,000, or $1.11 per diluted share, for the prior year’s quarter. FFO attributable to common shareholders plus assumed conversions was $749,349,000, or $3.91 per diluted share, for the six months ended June 30, 2011, compared to $565,066,000, or $2.98 per diluted share, for the prior year’s six months. Details of certain items that affect comparability are discussed in the financial results summary of our “Overview.”

			For The Three Months				For The Six Months
(Amounts in thousands, except per share amounts)			Ended June 30,				Ended June 30,
Reconciliation of our net income to FFO:			2011		2010		2011		2010
Net income attributable to Vornado			$	108,581	$	72,106	$	521,244	$	286,658
Depreciation and amortization of real property				124,326		127,181		248,647		254,795
Net gain on sales of real estate				(458)		-		(51,623)		-
Proportionate share of adjustments to equity in net income of Toys,
	to arrive at FFO:
		Depreciation and amortization of real property		17,168		17,663		34,897		35,164
		Net gain on sales of real estate		(491)		-		(491)		-
		Income tax effect of above adjustment		(5,835)		(6,182)		(12,040)		(12,307)
Proportionate share of adjustments to equity in net income of partially
	owned entities, excluding Toys, to arrive at FFO:
		Depreciation and amortization of real property		22,233		19,533		46,202		39,074
		Net gain on sales of real estate		(2,120)		-		(3,769)		(307)
Noncontrolling interests' share of above adjustments				(9,906)		(11,303)		(16,756)		(22,474)
FFO				253,498		218,998		766,311		580,603
Preferred share dividends				(16,668)		(14,266)		(30,116)		(28,533)
FFO attributable to common shareholders				236,830		204,732		736,195		552,070
Interest on 3.88% exchangeable senior debentures				6,556		-		13,090		12,915
Convertible preferred share dividends				32		40		64		81
FFO attributable to common shareholders plus assumed conversions			$	243,418	$	204,772	$	749,349	$	565,066

Reconciliation of Weighted Average Shares
	Weighted average common shares outstanding			184,268		182,027		184,129		181,786
	Effect of dilutive securities:
		3.88% exchangeable senior debentures		5,736		-		5,736		5,736
		Employee stock options and restricted share awards		1,876		1,617		1,815		1,741
		Convertible preferred shares		55		71		56		71
	Denominator for FFO per diluted share			191,935		183,715		191,736		189,334

FFO attributable to common shareholders plus assumed conversions
	per diluted share		$	1.27	$	1.11	$	3.91	$	2.98

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have exposure to fluctuations in market interest rates. Market interest rates are sensitive to many factors that are beyond our control. Our exposure to a change in interest rates on our consolidated and non-consolidated debt (all of which arises out of non-trading activity) is as follows:

(Amounts in thousands, except per share amounts)			2011						2010
						Weighted	Effect of 1%				Weighted
			June 30,			Average	Change In		December 31,		Average
Consolidated debt:			Balance			Interest Rate	Base Rates		Balance		Interest Rate
	Variable rate		$	2,089,729		1.96%	$	20,897	$	2,903,510		1.76%
	Fixed rate			8,450,319		5.61%		-		7,990,129		5.66%
			$	10,540,048		4.89%		20,897	$	10,893,639		4.62%
Pro-rata share of debt of non-consolidated
	entities (non-recourse):
	Variable rate – excluding Toys		$	295,924		2.79%		2,959	$	345,308		1.39%
	Variable rate – Toys			313,305		6.38%		3,133		501,623		4.95%
	Fixed rate (including $1,438,984,000 and
		$1,421,820 of Toys debt in 2011 and 2010)		2,925,461	⁽¹⁾	6.96%		-		2,428,986		6.86%
			$	3,534,690		6.56%		6,092	$	3,275,917		5.99%
Noncontrolling interests’ share of above								(1,700)
Total change in annual net income							$	25,289
Per share-diluted							$	0.13



(1)	Excludes $36.8 billion for our 26.2% pro rata shares of liabilities related to consolidated CMBS and CDO trusts which are non-recourse to LNR and its equity holders, including us.

We may utilize various financial instruments to mitigate the impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies, depending on our analysis of the interest rate environment and the costs and risks of such strategies. As of June 30, 2011, variable rate debt with an aggregate principal amount of $560,628,000 and a weighted average interest rate of 2.79% was subject to LIBOR caps. These caps are based on a notional amount of $558,603,000 and cap LIBOR at a weighted average rate of 5.68%. In addition, we have one interest rate swap on a $425,000,000 loan that swapped the rate from LIBOR plus 2.00% (2.19% at June 30, 2011) to a fixed rate of 5.13% for the remaining seven-year term of the loan.

As of June 30, 2011, we have investments in mezzanine loans with an aggregate carrying amount of $74,845,000 that are based on variable interest rates which partially mitigate our exposure to a change in interest rates on our variable rate debt.

Fair Value of Debt

The estimated fair value of our consolidated debt is calculated based on current market prices and discounted cash flows at the rate at which similar loans could be made currently to borrowers with similar credit ratings, for the remaining term of such debt. As of June 30, 2011, the estimated fair value of our consolidated debt was $10,858,999,000.

Derivative Instruments

We have, and may in the future enter into, derivative positions that do not qualify for hedge accounting treatment, including our economic interest in J.C. Penney common shares. Because these derivatives do not qualify for hedge accounting treatment, the gains or losses resulting from their mark-to-market at the end of each reporting period are recognized as an increase or decrease in “interest and other investment income, net” on our consolidated statements of income. In addition, we are, and may in the future be, subject to additional expense based on the notional amount of the derivative positions and a specified spread over LIBOR. Because the market value of these instruments can vary significantly between periods, we may experience significant fluctuations in the amount of our investment income or expense in any given period. During the six months ended June 30, 2011 we recognized $10,401,000 of income from derivative instruments.

Item 4. Controls and Procedures

Disclosure Controls and Procedures: The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a‑15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2011, such disclosure controls and procedures were effective.

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On January 8, 2003, Stop & Shop filed a complaint with the United States District Court for the District of New Jersey (“USDC-NJ”) claiming that we had no right to reallocate and therefore continue to collect the $5,000,000 of annual rent from Stop & Shop pursuant to the Master Agreement and Guaranty, because of the expiration of the East Brunswick, Jersey City, Middletown, Union and Woodbridge leases to which the $5,000,000 of additional rent was previously allocated. Stop & Shop asserted that a prior order of the Bankruptcy Court for the Southern District of New York dated February 6, 2001, as modified on appeal to the District Court for the Southern District of New York on February 13, 2001, froze our right to reallocate which effectively terminated our right to collect the additional rent from Stop & Shop. On March 3, 2003, after we moved to dismiss for lack of jurisdiction, Stop & Shop voluntarily withdrew its complaint. On March 26, 2003, Stop & Shop filed a new complaint in New York State Supreme Court, asserting substantially the same claims as in its USDC-NJ complaint. We removed the action to the United States District Court for the Southern District of New York. In January 2005, that court remanded the action to the New York State Supreme Court. On February 14, 2005, we served an answer in which we asserted a counterclaim seeking a judgment for all the unpaid additional rent accruing through the date of the judgment and a declaration that Stop & Shop will continue to be liable for the additional rent as long as any of the leases subject to the Master Agreement and Guaranty remain in effect. On May 17, 2005, we filed a motion for summary judgment. On July 15, 2005, Stop & Shop opposed our motion and filed a cross-motion for summary judgment. On December 13, 2005, the Court issued its decision denying the motions for summary judgment. Both parties appealed the Court’s decision and on December 14, 2006, the Appellate Court division issued a decision affirming the Court’s decision. On January 16, 2007, we filed a motion for the reconsideration of one aspect of the Appellate Court’s decision which was denied on March 13, 2007. A trial was held in November 2010 and closing arguments were held in March 2011. As of June 30, 2011, we have a $39,483,000 receivable from Stop and Shop, of which $21,855,000 has been reserved. We believe, after consultation with counsel, that the maximum reasonably possible loss is up to the total amount of the receivable of $39,483,000.

Item 1A. Risk Factors

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

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

In the second quarter of 2011, we issued 80,679 common shares upon the redemption of Class A units of the Operating Partnership held by persons who received units, in private placements in earlier periods, in exchange for their interests in limited partnerships that owned real estate. The common shares were issued without registration under the Securities Act of 1933 in reliance on Section 4 (2) of that Act.

Information relating to compensation plans under which our equity securities are authorized for issuance is set forth under Part III, Item 12 of the Annual Report on Form 10-K for the year ended December 31, 2010, and such information is incorporated by reference herein.

Item 3. Defaults Upon Senior Securities

None.

Item 5. Other Information

None.

Item 6. Exhibits

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

SIGNATURES

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

		VORNADO REALTY TRUST
		(Registrant)


Date: August 1, 2011	By:	/s/ Joseph Macnow
		Joseph Macnow, Executive Vice President - Finance and Administration and Chief Financial Officer (duly authorized officer and principal financial and accounting officer)

	EXHIBIT INDEX

Exhibit No.
	3.1		-	Articles of Restatement of Vornado Realty Trust, as filed with the State		*
					Department of Assessments and Taxation of Maryland on July 30, 2007 - Incorporated
					by reference to Exhibit 3.75 to Vornado Realty Trust’s Quarterly Report on Form 10-Q
					for the quarter ended June 30, 2007 (File No. 001-11954), filed on July 31, 2007

	3.2		-	Amended and Restated Bylaws of Vornado Realty Trust, as amended on March 2, 2000 -		*
					Incorporated by reference to Exhibit 3.12 to Vornado Realty Trust’s Annual Report on
					Form 10-K for the year ended December 31, 1999 (File No. 001-11954), filed on
					March 9, 2000

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

	3.4		-	Second Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P.,		*
					dated as of October 20, 1997 (the “Partnership Agreement”) – Incorporated by reference
					to Exhibit 3.26 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for the quarter
					ended March 31, 2003 (File No. 001-11954), filed on May 8, 2003

	3.5		-	Amendment to the Partnership Agreement, dated as of December 16, 1997 – Incorporated by		*
					reference to Exhibit 3.27 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for
					the quarter ended March 31, 2003 (File No. 001-11954), filed on May 8, 2003

	3.6		-	Second Amendment to the Partnership Agreement, dated as of April 1, 1998 – Incorporated		*
					by reference to Exhibit 3.5 to Vornado Realty Trust’s Registration Statement on Form S-3
					(File No. 333-50095), filed on April 14, 1998

	3.7		-	Third Amendment to the Partnership Agreement, dated as of November 12, 1998 -		*
					Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on
					Form 8-K (File No. 001-11954), filed on November 30, 1998

	3.8		-	Fourth Amendment to the Partnership Agreement, dated as of November 30, 1998 -		*
					Incorporated by reference to Exhibit 3.1 to Vornado Realty Trust’s Current Report on
					Form 8-K (File No. 001-11954), filed on February 9, 1999

	3.9		-	Fifth Amendment to the Partnership Agreement, dated as of March 3, 1999 - Incorporated by		*
					reference to Exhibit 3.1 to Vornado Realty Trust’s Current Report on Form 8-K
					(File No. 001-11954), filed on March 17, 1999

	3.10		-	Sixth Amendment to the Partnership Agreement, dated as of March 17, 1999 - Incorporated		*
					by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on Form 8-K
					(File No. 001-11954), filed on July 7, 1999

	3.11		-	Seventh Amendment to the Partnership Agreement, dated as of May 20, 1999 - Incorporated		*
					by reference to Exhibit 3.3 to Vornado Realty Trust’s Current Report on Form 8-K
					(File No. 001-11954), filed on July 7, 1999

	3.12		-	Eighth Amendment to the Partnership Agreement, dated as of May 27, 1999 - Incorporated		*
					by reference to Exhibit 3.4 to Vornado Realty Trust’s Current Report on Form 8-K
					(File No. 001-11954), filed on July 7, 1999

	3.13		-	Ninth Amendment to the Partnership Agreement, dated as of September 3, 1999 -		*
					Incorporated by reference to Exhibit 3.3 to Vornado Realty Trust’s Current Report on
					Form 8-K (File No. 001-11954), filed on October 25, 1999


					_______________________
		*			Incorporated by reference.

3.14		-	Tenth Amendment to the Partnership Agreement, dated as of September 3, 1999 -		*
				Incorporated by reference to exhibit 3,4 to Vornado Realty Trust's Current Report on
				Form 8-K (File No. 001-11954), filed on October 25, 1999

3.15		-	Eleventh Amendment to the Partnership Agreement, dated as of November 24, 1999 -		*
				Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on
				Form 8-K (File No. 001-11954), filed on December 23, 1999

3.16		-	Twelfth Amendment to the Partnership Agreement, dated as of May 1, 2000 - Incorporated		*
				by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on Form 8-K
				(File No. 001-11954), filed on May 19, 2000

3.17		-	Thirteenth Amendment to the Partnership Agreement, dated as of May 25, 2000 -		*
				Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on
				Form 8-K (File No. 001-11954), filed on June 16, 2000

3.18		-	Fourteenth Amendment to the Partnership Agreement, dated as of December 8, 2000 -		*
				Incorporated by reference to Exhibit 3.2 to Vornado Realty Trust’s Current Report on
				Form 8-K (File No. 001-11954), filed on December 28, 2000

3.19		-	Fifteenth Amendment to the Partnership Agreement, dated as of December 15, 2000 -		*
				Incorporated by reference to Exhibit 4.35 to Vornado Realty Trust’s Registration
				Statement on Form S-8 (File No. 333-68462), filed on August 27, 2001

3.20		-	Sixteenth Amendment to the Partnership Agreement, dated as of July 25, 2001 - Incorporated		*
				by reference to Exhibit 3.3 to Vornado Realty Trust’s Current Report on Form 8-K
				(File No. 001 11954), filed on October 12, 2001

3.21		-	Seventeenth Amendment to the Partnership Agreement, dated as of September 21, 2001 -		*
				Incorporated by reference to Exhibit 3.4 to Vornado Realty Trust’s Current Report on
				Form 8 K (File No. 001-11954), filed on October 12, 2001

3.22		-	Eighteenth Amendment to the Partnership Agreement, dated as of January 1, 2002 -		*
				Incorporated by reference to Exhibit 3.1 to Vornado Realty Trust’s Current Report on
				Form 8-K/A (File No. 001-11954), filed on March 18, 2002

3.23		-	Nineteenth Amendment to the Partnership Agreement, dated as of July 1, 2002 - Incorporated		*
				by reference to Exhibit 3.47 to Vornado Realty Trust’s Quarterly Report on Form 10-Q
				for the quarter ended June 30, 2002 (File No. 001-11954), filed on August 7, 2002

3.24		-	Twentieth Amendment to the Partnership Agreement, dated April 9, 2003 - Incorporated by		*
				reference to Exhibit 3.46 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for
				the quarter ended March 31, 2003 (File No. 001-11954), filed on May 8, 2003

3.25		-	Twenty-First Amendment to the Partnership Agreement, dated as of July 31, 2003 -		*
				Incorporated by reference to Exhibit 3.47 to Vornado Realty Trust’s Quarterly Report
				on Form 10-Q for the quarter ended September 30, 2003 (File No. 001-11954), filed on
				November 7, 2003

3.26		-	Twenty-Second Amendment to the Partnership Agreement, dated as of November 17, 2003 –		*
				Incorporated by reference to Exhibit 3.49 to Vornado Realty Trust’s Annual Report on
				Form 10-K for the year ended December 31, 2003 (File No. 001-11954), filed on
				March 3, 2004

3.27		-	Twenty-Third Amendment to the Partnership Agreement, dated May 27, 2004 – Incorporated		*
				by reference to Exhibit 99.2 to Vornado Realty Trust’s Current Report on Form 8-K
				(File No. 001-11954), filed on June 14, 2004



				_______________________
	*			Incorporated by reference.

3.28		-	Twenty-Fourth Amendment to the Partnership Agreement, dated August 17, 2004 –		*
				Incorporated by reference to Exhibit 3.57 to Vornado Realty Trust and Vornado Realty
				L.P.’s Registration Statement on Form S-3 (File No. 333-122306), filed on
				January 26, 2005

3.29		-	Twenty-Fifth Amendment to the Partnership Agreement, dated November 17, 2004 –		*
				Incorporated by reference to Exhibit 3.58 to Vornado Realty Trust and Vornado Realty
				L.P.’s Registration Statement on Form S-3 (File No. 333-122306), filed on
				January 26, 2005

3.30		-	Twenty-Sixth Amendment to the Partnership Agreement, dated December 17, 2004 –		*
				Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on
				Form 8-K (File No. 000-22685), filed on December 21, 2004

3.31		-	Twenty-Seventh Amendment to the Partnership Agreement, dated December 20, 2004 –		*
				Incorporated by reference to Exhibit 3.2 to Vornado Realty L.P.’s Current Report on
				Form 8-K (File No. 000-22685), filed on December 21, 2004

3.32		-	Twenty-Eighth Amendment to the Partnership Agreement, dated December 30, 2004 -		*
				Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on
				Form 8-K (File No. 000-22685), filed on January 4, 2005

3.33		-	Twenty-Ninth Amendment to the Partnership Agreement, dated June 17, 2005 - Incorporated		*
				by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on Form 8-K
				(File No. 000-22685), filed on June 21, 2005

3.34		-	Thirtieth Amendment to the Partnership Agreement, dated August 31, 2005 - Incorporated by		*
				reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on Form 8-K
				(File No. 000-22685), filed on September 1, 2005

3.35		-	Thirty-First Amendment to the Partnership Agreement, dated September 9, 2005 -		*
				Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on
				Form 8-K (File No. 000-22685), filed on September 14, 2005

3.36		-	Thirty-Second Amendment and Restated Agreement of Limited Partnership, dated as of		*
				December 19, 2005 – Incorporated by reference to Exhibit 3.59 to Vornado Realty L.P.’s
				Quarterly Report on Form 10-Q for the quarter ended March 31, 2006
				(File No. 000-22685), filed on May 8, 2006

3.37		-	Thirty-Third Amendment to Second Amended and Restated Agreement of Limited		*
				Partnership, dated as of April 25, 2006 – Incorporated by reference to Exhibit 10.2 to
				Vornado Realty Trust’s Form 8-K (File No. 001-11954), filed on May 1, 2006

3.38		-	Thirty-Fourth Amendment to Second Amended and Restated Agreement of Limited		*
				Partnership, dated as of May 2, 2006 – Incorporated by reference to Exhibit 3.1 to
				Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on
				May 3, 2006

3.39		-	Thirty-Fifth Amendment to Second Amended and Restated Agreement of Limited		*
				Partnership, dated as of August 17, 2006 – Incorporated by reference to Exhibit 3.1 to
				Vornado Realty L.P.’s Form 8-K (File No. 000-22685), filed on August 23, 2006

3.40		-	Thirty-Sixth Amendment to Second Amended and Restated Agreement of Limited		*
				Partnership, dated as of October 2, 2006 – Incorporated by reference to Exhibit 3.1 to
				Vornado Realty L.P.’s Form 8-K (File No. 000-22685), filed on January 22, 2007


				_______________________
	*			Incorporated by reference.

3.41		-	Thirty-Seventh Amendment to Second Amended and Restated Agreement of Limited		*
				Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.1 to
				Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on
				June 27, 2007

3.42		-	Thirty-Eighth Amendment to Second Amended and Restated Agreement of Limited		*
				Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.2 to
				Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on
				June 27, 2007

3.43		-	Thirty-Ninth Amendment to Second Amended and Restated Agreement of Limited		*
				Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.3 to
				Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on
				June 27, 2007

3.44		-	Fortieth Amendment to Second Amended and Restated Agreement of Limited		*
				Partnership, dated as of June 28, 2007 – Incorporated by reference to Exhibit 3.4 to
				Vornado Realty L.P.’s Current Report on Form 8-K (File No. 000-22685), filed on
				June 27, 2007

3.45		-	Forty-First Amendment to Second Amended and Restated Agreement of Limited		*
				Partnership, dated as of March 31, 2008 – Incorporated by reference to Exhibit 3.44 to
				Vornado Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31,
				2008 (file No. 001-11954), filed on May 6, 2008

3.46		-	Forty-Second Amendment to Second Amended and Restated Agreement of Limited Partnership,		*
				dated as of December 17, 2010 – Incorporated by reference to Exhibit 99.1 to Vornado
				Realty L.P.'s Current Report on Form 8-K (File No. 000-22685), filed on December 21, 2010

3.47		-	Forty-Third Amendment to Second Amended and Restated Agreement of Limited Partnership,		*
				dated as of April 20, 2011 – Incorporated by reference to Exhibit 3.1 to Vornado
				Realty L.P.'s Current Report on Form 8-K (File No. 000-22685), filed on April 21, 2011

4.1		-	Indenture, dated as of November 25, 2003, between Vornado Realty L.P. and The Bank of		*
				New York, as Trustee - Incorporated by reference to Exhibit 4.10 to Vornado Realty
				Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005
				(File No. 001-11954), filed on April 28, 2005

4.2		-	Indenture, dated as of November 20, 2006, among Vornado Realty Trust, as Issuer, Vornado		*
				Realty L.P., as Guarantor and The Bank of New York, as Trustee – Incorporated by
				reference to Exhibit 4.1 to Vornado Realty Trust’s Current Report on Form 8-K
				(File No. 001-11954), filed on November 27, 2006

			Certain instruments defining the rights of holders of long-term debt securities of Vornado
				Realty Trust and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation
				S-K. Vornado Realty Trust hereby undertakes to furnish to the Securities and Exchange
				Commission, upon request, copies of any such instruments.

10.1		-	Master Agreement and Guaranty, between Vornado, Inc. and Bradlees New Jersey, Inc. dated		*
				as of May 1, 1992 - Incorporated by reference to Vornado, Inc.’s Quarterly Report on
				Form 10-Q for the quarter ended March 31, 1992 (File No. 001-11954), filed May 8, 1992

10.2		-	Registration Rights Agreement between Vornado, Inc. and Steven Roth, dated December 29,		*
				1992 - Incorporated by reference to Vornado Realty Trust’s Annual Report on Form 10-K
				for the year ended December 31, 1992 (File No. 001-11954), filed February 16, 1993
				______________________
	*			Incorporated by reference.

10.3	**	-	Stock Pledge Agreement between Vornado, Inc. and Steven Roth dated December 29, 1992		*
				- Incorporated by reference to Vornado, Inc.’s Annual Report on Form 10-K for the year
				ended December 31, 1992 (File No. 001-11954), filed February 16, 1993

10.4	**	-	Management Agreement between Interstate Properties and Vornado, Inc. dated July 13, 1992		*
				- Incorporated by reference to Vornado, Inc.’s Annual Report on Form 10-K for the year
				ended December 31, 1992 (File No. 001-11954), filed February 16, 1993

10.5	**	-	Employment Agreement, dated as of April 15, 1997, by and among Vornado Realty Trust,		*
				The Mendik Company, L.P. and David R. Greenbaum - Incorporated by reference to
				Exhibit 10.4 to Vornado Realty Trust’s Current Report on Form 8-K
				(File No. 001-11954), filed on April 30, 1997

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

10.7	**	-	Letter agreement, dated November 16, 1999, between Steven Roth and Vornado Realty Trust		*
				- Incorporated by reference to Exhibit 10.51 to Vornado Realty Trust’s Annual Report on
				Form 10-K for the year ended December 31, 1999 (File No. 001-11954), filed on
				March 9, 2000

10.8		-	Agreement and Plan of Merger, dated as of October 18, 2001, by and among Vornado Realty		*
				Trust, Vornado Merger Sub L.P., Charles E. Smith Commercial Realty L.P., Charles E.
				Smith Commercial Realty L.L.C., Robert H. Smith, individually, Robert P. Kogod,
				individually, and Charles E. Smith Management, Inc. - Incorporated by reference to
				Exhibit 2.1 to Vornado Realty Trust’s Current Report on Form 8-K (File No. 001-11954),
				filed on January 16, 2002

10.9		-	Tax Reporting and Protection Agreement, dated December 31, 2001, by and among Vornado,		*
				Vornado Realty L.P., Charles E. Smith Commercial Realty L.P. and Charles E. Smith
				Commercial Realty L.L.C. - Incorporated by reference to Exhibit 10.3 to Vornado Realty
				Trust’s Current Report on Form 8-K/A (File No. 1-11954), filed on March 18, 2002

10.10		-	Employment Agreement between Vornado Realty Trust and Michael D. Fascitelli, dated		*
				March 8, 2002 - Incorporated by reference to Exhibit 10.7 to Vornado Realty Trust’s
				Quarterly Report on Form 10-Q for the quarter ended March 31, 2002
				(File No. 001-11954), filed on May 1, 2002

10.11	**	-	First Amendment, dated October 31, 2002, to the Employment Agreement between Vornado		*
				Realty Trust and Michael D. Fascitelli, dated March 8, 2002 - Incorporated by reference
				to Exhibit 99.6 to the Schedule 13D filed by Michael D. Fascitelli on November 8, 2002

10.12	**	-	Amendment to Real Estate Retention Agreement, dated as of July 3, 2002, by and between		*
				Alexander’s, Inc. and Vornado Realty L.P. - Incorporated by reference to Exhibit
				10(i)(E)(3) to Alexander’s Inc.’s Quarterly Report for the quarter ended June 30, 2002
				(File No. 001-06064), filed on August 7, 2002

10.13		-	59th Street Real Estate Retention Agreement, dated as of July 3, 2002, by and between		*
				Vornado Realty L.P., 731 Residential LLC and 731 Commercial LLC - Incorporated by
				reference to Exhibit 10(i)(E)(4) to Alexander’s Inc.’s Quarterly Report for the quarter
				ended June 30, 2002 (File No. 001-06064), filed on August 7, 2002



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

10.14		-	Amended and Restated Management and Development Agreement, dated as of July 3, 2002,		*
				by and between Alexander's, Inc., the subsidiaries party thereto and Vornado
				Management Corp. - Incorporated by reference to Exhibit 10(i)(F)(1) to Alexander's
				Inc.'s Quarterly Report for the quarter ended June 30, 2002 (File No. 001-06064),
				filed on August 7, 2002

10.15		-	Amendment dated May 29, 2002, to the Stock Pledge Agreement between Vornado Realty		*
				Trust and Steven Roth dated December 29, 1992 - Incorporated by reference to Exhibit 5
				of Interstate Properties’ Schedule 13D/A dated May 29, 2002 (File No. 005-44144), filed
				on May 30, 2002

10.16	**	-	Vornado Realty Trust’s 2002 Omnibus Share Plan - Incorporated by reference to Exhibit 4.2		*
				to Vornado Realty Trust’s Registration Statement on Form S-8 (File No. 333-102216)
				filed December 26, 2002

10.17	**	-	Form of Stock Option Agreement between the Company and certain employees –		*
				Incorporated by reference to Exhibit 10.77 to Vornado Realty Trust’s
				Annual Report on Form 10-K for the year ended December 31, 2004
				(File No. 001-11954), filed on February 25, 2005

10.18	**	-	Form of Restricted Stock Agreement between the Company and certain employees –		*
				Incorporated by reference to Exhibit 10.78 to Vornado Realty Trust’s Annual Report on
				Form 10-K for the year ended December 31, 2004 (File No. 001-11954), filed on
				February 25, 2005

10.19	**	-	Amendment, dated March 17, 2006, to the Vornado Realty Trust Omnibus Share Plan –		*
				Incorporated by reference to Exhibit 10.50 to Vornado Realty Trust’s Quarterly Report on
				Form 10-Q for the quarter ended March 31, 2006 (File No. 001-11954), filed on
				May 2, 2006

10.20	**	-	Form of Vornado Realty Trust 2006 Out-Performance Plan Award Agreement, dated as of		*
				April 25, 2006 – Incorporated by reference to Exhibit 10.1 to Vornado Realty Trust’s
				Form 8-K (File No. 001-11954), filed on May 1, 2006

10.21	**	-	Form of Vornado Realty Trust 2002 Restricted LTIP Unit Agreement – Incorporated by		*
				reference to Vornado Realty Trust’s Form 8-K (Filed No. 001-11954), filed on
				May 1, 2006

10.22	**	-	Amendment No.2, dated May 18, 2006, to the Vornado Realty Trust Omnibus Share Plan		*
				– Incorporated by reference to Exhibit 10.53 to Vornado Realty Trust’s Quarterly
				Report on Form 10-Q for the quarter ended June 30, 2006 (File No. 001-11954), filed
				on August 1, 2006

10.23	**	-	Amended and Restated Employment Agreement between Vornado Realty Trust and Joseph		*
				Macnow dated July 27, 2006 – Incorporated by reference to Exhibit 10.54 to Vornado
				Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006
				(File No. 001-11954), filed on August 1, 2006

10.24		-	Guaranty, made as of June 28, 2006, by Vornado Realty Trust, for the benefit of JP Morgan		*
				Chase Bank - Incorporated by reference to Exhibit 10.53 to Vornado Realty Trust's
				Quarterly Report on Form 10-Q for the quarter ended September 30, 2006
				(File No. 001-11954), filed on October 31, 2006
				_______________________
	*			Incorporated by reference.
	**			Management contract or compensatory agreement.


10.25	**	-	Amendment, dated October 26, 2006, to the Vornado Realty Trust Omnibus Share Plan –		*
				Incorporated by reference to Exhibit 10.54 to Vornado Realty Trust’s Quarterly Report
				on Form 10-Q for the quarter ended September 30, 2006 (File No. 001-11954), filed on
				October 31, 2006

10.26	**	-	Amendment to Real Estate Retention Agreement, dated January 1, 2007, by and between		*
				Vornado Realty L.P. and Alexander’s Inc. – Incorporated by reference to Exhibit 10.55
				to Vornado Realty Trust’s Annual Report on Form 10-K for the year ended
				December 31, 2006 (File No. 001-11954), filed on February 27, 2007

10.27	**	-	Amendment to 59th Street Real Estate Retention Agreement, dated January 1, 2007, by and		*
				among Vornado Realty L.P., 731 Retail One LLC, 731 Restaurant LLC, 731 Office One
				LLC and 731 Office Two LLC. – Incorporated by reference to Exhibit 10.56 to
				Vornado Realty Trust’s Annual Report on Form 10-K for the year ended
				December 31, 2006 (File No. 001-11954), filed on February 27, 2007

10.28	**	-	Employment Agreement between Vornado Realty Trust and Mitchell Schear, as of April 19,		*
				2007 – Incorporated by reference to Exhibit 10.46 to Vornado Realty Trust’s Quarterly
				Report on Form 10-Q for the quarter ended March 31, 2007 (File No. 001-11954),
				filed on May 1, 2007

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

10.30		-	Second Amendment to Revolving Credit Agreement, dated as of September 28, 2007, by and		*
				among Vornado Realty L.P. as borrower, Vornado Realty Trust as General Partner, the
				Banks listed on the signature pages thereof, and J.P. Morgan Chase Bank N.A., as
				Administrative Agent for the Banks - Incorporated by reference to Exhibit 10.2 to
				Vornado Realty Trust’s Current Report on Form 8-K (File No. 001-11954),
				filed on October 4, 2007

10.31	**	-	Form of Vornado Realty Trust 2002 Omnibus Share Plan Non-Employee Trustee Restricted		*
				LTIP Unit Agreement – Incorporated by reference to Exhibit 10.45 to Vornado Realty
				Trust’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No.
				001-11954) filed on February 26, 2008

10.32	**	-	Form of Vornado Realty Trust 2008 Out-Performance Plan Award Agreement – Incorporated		*
				by reference to Exhibit 10.46 to Vornado Realty Trust’s Quarterly Report on Form 10-Q
				for the quarter ended March 31, 2008 (File No. 001-11954) filed on May 6, 2008

10.33	**	-	Amendment to Employment Agreement between Vornado Realty Trust and Michael D.		*
				Fascitelli, dated December 29, 2008. Incorporated by reference to Exhibit 10.47 to
				Vornado Realty Trust’s Annual Report on Form 10-K for the year ended December 31,
				2008 (File No. 001-11954) filed on February 24, 2009


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

10.34	**	-	Amendment to Employment Agreement between Vornado Realty Trust and Joseph Macnow,		*
				dated December 29, 2008. Incorporated by reference to Exhibit 10.48 to Vornado Realty
				Trust’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No.
				001-11954) filed on February 24, 2009

10.35	**	-	Amendment to Employment Agreement between Vornado Realty Trust and David R.		*
				Greenbaum, dated December 29, 2008. Incorporated by reference to Exhibit 10.49 to
				Vornado Realty Trust’s Annual Report on Form 10-K for the year ended December 31,
				2008 (File No. 001-11954) filed on February 24, 2009

10.36	**	-	Amendment to Indemnification Agreement between Vornado Realty Trust and David R.		*
				Greenbaum, dated December 29, 2008. Incorporated by reference to Exhibit 10.50 to
				Vornado Realty Trust’s Annual Report on Form 10-K for the year ended December 31,
				2008 (File No. 001-11954) filed on February 24, 2009

10.37	**	-	Amendment to Employment Agreement between Vornado Realty Trust and Mitchell N.		*
				Schear, dated December 29, 2008. Incorporated by reference to Exhibit 10.51 to Vornado
				Realty Trust’s Annual Report on Form 10-K for the year ended December 31, 2008 (File
				No. 001-11954) filed on February 24, 2009

10.38	**	-	Amendment to Employment Agreement between Vornado Realty Trust and Christopher G.		*
				Kennedy, dated December 29, 2008. Incorporated by reference to Exhibit 10.53 to
				Vornado Realty Trust’s Annual Report on Form 10-K for the year ended December 31,
				2008 (File No. 001-11954) filed on February 24, 2009

10.39	**	-	Vornado Realty Trust's 2010 Omnibus Share Plan. Incorporated by reference to Exhibit 10.41 to		*
				Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010
				(File No. 001-11954) filed on August 3, 2010

10.40	**	-	Employment Agreement between Vornado Realty Trust and Michael J. Franco, dated		*
				September 24, 2010. Incorporated by reference to Exhibit 10.42 to Vornado Realty Trust's
				Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 (File No. 001-11954)
				filed on November 2, 2010

10.41	**	-	Form of Vornado Realty Trust 2010 Omnibus Share Plan Stock Agreement. Incorporated by		*
				reference to Exhibit 10.42 to Vornado Realty Trust's Annual Report on Form 10-K for the year
				ended December 31, 2010 (File No. 001-11954) filed on February 23, 2011

10.42	**	-	Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted LTIP Unit Agreement		*
				Incorporated by reference to Exhibit 10.43 to Vornado Realty Trust's Annual Report on Form
				10-K for the year ended December 31, 2010 (File No. 001-11954) filed on February 23, 2011

10.43	**	-	Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted Stock Agreement		*
				Incorporated by reference to Exhibit 10.44 to Vornado Realty Trust's Annual Report on Form
				10-K for the year ended December 31, 2010 (File No. 001-11954) filed on February 23, 2011

10.44	**	-	Letter Agreement between Vornado Realty Trust and Michelle Felman, dated December 21, 2010.		*
				Incorporated by reference to Exhibit 10.45 to Vornado Realty Trust's Annual Report on Form
				10-K for the year ended December 31, 2010 (File No. 001-11954) filed on February 23, 2011


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

10.45	**	-	Waiver and Release between Vornado Realty Trust and Michelle Felman, dated December 21,		*
				2010. Incorporated by reference to Exhibit 10.46 to Vornado Realty Trust's Annual Report
				on Form 10-K for the year ended December 31, 2010 (File No. 001-11954) filed on
				February 23, 2011

10.46		-	Revolving Credit Agreement dated as of June 8, 2011, by and among Vornado Realty L.P. as
				borrower, Vornado Realty Trust as General Partner, the Banks listed on the signature pages
				thereof, and J.P. Morgan Chase Bank N.A., as Administrative Agent for the Banks

15.1		-	Letter regarding Unaudited Interim Financial Information

31.1		-	Rule 13a-14 (a) Certification of the Chief Executive Officer

31.2		-	Rule 13a-14 (a) Certification of the Chief Financial Officer

32.1		-	Section 1350 Certification of the Chief Executive Officer

32.2		-	Section 1350 Certification of the Chief Financial Officer

101.INS		-	XBRL Instance Document

101.SCH		-	XBRL Taxonomy Extension Schema

101.CAL		-	XBRL Taxonomy Extension Calculation Linkbase

101.DEF		-	XBRL Taxonomy Extension Definition Linkbase

101.LAB		-	XBRL Taxonomy Extension Label Linkbase

101.PRE		-	XBRL Taxonomy Extension Presentation Linkbase


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