VORNADO REALTY TRUST 2014 ANNUAL REPORT

VORNADO REALTY TRUST 2014 ANNUAL REPORT

10JUL201211394241

6APR201118555177 This Annual Report is printed on recycled paper and is recyclable.

VORNADO COMPANY PROFILE

Vornado Realty Trust is a fully-integrated real estate investment trust. We own all or portions of: New York:  20.1 million square feet of Manhattan office space in 31 properties;  2.5 million square feet of Manhattan street retail space in 56 properties;  Four residential properties containing 1,654 units;  The 1,700 room Hotel Pennsylvania located on Seventh Avenue at 33rd Street in the heart of the Penn Plaza district;  A 32.4% interest in Alexander’s, Inc. (NYSE:ALX) which owns six properties in the greater New York metropolitan area including 731 Lexington Avenue, the 1.3 million square foot Bloomberg L.P. headquarters building;  Signage throughout Penn Plaza and Times Square;  BMS, our wholly owned subsidiary, which provides cleaning and security services for our buildings and third parties, employing 2,700 associates; Washington:  16.1 million square feet of office space in 59 properties with a concentration of 7.4 million square feet in Crystal City, Arlington, Virginia, just across the Potomac from the capital and adjacent to Reagan National Airport;  Seven residential properties containing 2,414 units; Other Real Estate/Investments:  The 3.6 million square foot Mart in Chicago; (1)  A 70% controlling interest in 555 California Street,(1) a three-building office complex in San Francisco’s financial district aggregating 1.8 million square feet, known as Bank of America Center;  A 25.0% interest in Vornado Capital Partners, our real estate fund. We are the general partner and investment manager of the fund;  Other real estate and related investments.

Vornado’s common shares are listed on the New York Stock Exchange and are traded under the symbol: VNO.

1

TheMart and 555 California Street are reported in the Other Segment. They are operated by the New York Division.

FINANCIAL HIGHLIGHTS*

Year Ended December 31, As Reported

2014

2013

Revenues

$

2,635,940,000

$

2,669,269,000

Net income

$

783,388,000

$

392,034,000

Net income per sharebasic

$

4.18

$

2.10

Net income per sharediluted

$

4.15

$

2.09

Total assets

$

21,248,320,000

$

20,097,224,000

Total equity

$

7,489,382,000

$

7,594,744,000

EBITDA (before noncontrolling interests and gains on sale of real estate)

$

1,795,400,000

$

1,650,400,000

Funds from operations

$

911,130,000

$

641,037,000

Funds from operations per share

$

4.83

$

3.41

Year Ended December 31, 2014

As Adjusted for Comparability (an apples-to-apples comparison of our continuing business, eliminating certain one-timers)

2013

Revenues

$

2,635,940,000

$

2,573,301,000

Net income

$

411,800,000

$

365,400,000

Net income per sharebasic

$

2.21

$

1.96

Net income per sharediluted

$

2.18

$

1.95

Total assets

$

24,399,800,000

$

22,140,800,000

EBITDA

$

1,672,096,000

$

1,606,441,000

Funds from operations

$

980,252,000

$

896,539,000

Funds from operations per share

$

5.20

$

4.77

*

In these financial highlights and in the Chairman’s letter to our shareholders that follows, we present certain nonGAAP measures, including Revenues, Net income and Total assets adjusted for comparability, EBITDA before noncontrolling interests and gains on sale of real estate, EBITDA adjusted for comparability, Funds from Operations (“FFO”) and Funds from Operations Adjusted for Comparability. We have provided reconciliations of these non-GAAP measures to the applicable GAAP measures in the appendix section of this Chairman’s letter and in the Company’s Annual Report on Form 10-K under “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which accompanies this letter or can be viewed at www.vno.com.

To Our Shareholders Funds from Operations, as Adjusted for Comparability (an apples-to-apples comparison of our continuing business, eliminating certain one-timers) for the year ended December 31, 2014 was $980.3 million, $5.20 per diluted share, compared to $896.5 million, $4.77 per diluted share, for the previous year, a 9.0% increase per share – a very good year.

Funds from Operations, as Reported (apples-to-apples plus one-timers) for the year ended December 31, 2014 was $911.1 million, $4.83 per diluted share, compared to $641.0 million, $3.41 per diluted share, for the previous year. (See page 4 for a reconciliation of Funds from Operations, as Reported to Funds from Operations, as Adjusted for Comparability.) Net Income attributable to common shares for the year ended December 31, 2014 was $783.4 million, $4.15 per diluted share, versus $392.0 million, $2.09 per diluted share, for the previous year. Our core business is concentrated in New York, the most important city in the world, and in Washington, DC, our nation’s capital, and is office and retail centric. We have run Vornado for 35 years. In each year, cash flow from the core business has increased in both total dollars and on a same-store basis until 2012 when for the first time, there was a decrease caused by BRAC in Washington. 2013 began another run of increases. Here are our financial results (presented in EBITDA format) by business segment:

($ IN MILLIONS)

EBITDA: New York: Office Street Retail Alexander’s Hotel Pennsylvania Total New York

EBITDA

2014 Same Store % Increase/ (Decrease) Cash GAAP

% of 2014 EBITDA(2)

Increase/ (Decrease) 2013/2014

2014

2013

2012

623.2 279.6 41.7 30.7 975.2 333.8

596.7 245.9 42.2 30.7 915.5 341.2

531.5 188.9 40.4 28.3 789.1 355.5

7.8% 7.1% 18.2% -7.6% (2.3%)

5.0% 5.5% 0.1% -4.7% (2.4%)

41.3% 18.6% 2.8% 2.0% 64.7% 22.1%

26.5 33.7 (0.5) -59.7 (7.4)

0.7% (0.8%)

8.8% 11.6%

5.3% 3.2% 4.7%

7.7 6.1 20.8 86.9

79.6 48.8 70.3 1,507.7

71.9 42.7 49.5 1,420.8

62.5 40.5 24.6 1,272.2

2.3%

1.7%

N/A 100.0%

6.7 93.6

Other (see page 3 for details)

204.9 1,712.6 82.8

198.2 1,619.0 31.4

195.7 1,467.9 357.8

EBITDA before non-controlling interest and gains on sale of real estate

1,795.4

1,650.4

1,825.7

Washington theMart 555 California Street Real Estate Fund EBITDA before Retail(2) RetailStrips and Malls(2)

This letter and this Annual Report contain 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. The Company’s future results, financial condition and business may differ materially from those expressed in these forward-looking statements. These forward-looking statements are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond our ability to control or predict. For further discussion of these factors, see “Forward-Looking Statements” and “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, a copy of which accompanies this letter or can be viewed at www.vno.com.

2

The RetailStrips and Malls Segment was spun off in January 2015. Accordingly, to more meaningfully reflect the continuing business, the table above has been presented before the Retail Segment and the percentages of 2014 EBITDA column is on a pro-forma basis to reflect the spin-off as if it occurred in 2014.

2

Other EBITDA is comprised of: ($ IN THOUSANDS) Corporate general and administrative expenses Investment income Other investments JCPenney losses(3) Toys “R” Us EBITDA, including impairment losses of 240.8 million in 2013 and 40.0 million in 2012 Lexington Realty Trust equity and gains from stock issuances Gains on sale of marketable securities, land, trade shows and residential condos Acquisition – related costs and tenant buy-out costs Stop & Shop litigation settlement income Recognition of unamortized discount on subordinated debt of Independence Plaza 1290 Avenue of the Americas and 555 California Street priority return Discontinued operations – EBITDA of properties and investments sold Other, net Total

3

2014 (94,929) 31,665 24,528 --

2013

2012

(94,904) 49,295 29,776 (127,888)(3)

(96,001) 42,685 39,386 (300,752)(3)

103,632

(5,529)

281,289

20,443

51,662

58,245 (24,857) 59,599

44,452 (11,248) 5,900

-13,568 (31,348) ---

--

60,396

--

--

13,222

39,525 (3,841) 82,800

66,474 746 31,400

232,153 (5,344) 357,800

Total economic loss on JCPenney was $256 million. That amount cannot be reconciled to the presentation above because of mark-to-market income recognition in prior periods.

3

The following chart reconciles Funds from Operations to Funds from Operations, as Adjusted for Comparability: ($ IN MILLIONS, EXCEPT PER SHARE)

Funds from Operations, as Reported Adjustments for certain items that affect comparability: Acquisition related costs Write-off of deferred financing costs and defeasance cost in connection with financings and in 2012 net gain on extinguishment of debt Net gain on sale of marketable securities, land, Canadian trade shows and residential condos Impairment loss and loan reserve Recognition of unamortized discount on subordinated debt of Independence Plaza Net gain from Lexington’s stock issuance Stop & Shop litigation settlement income Toys “R” Us (Negative FFO) FFO JCPenney losses(3) Discontinued operations – FFO of real estate sold Other Noncontrolling interests’ share Total adjustments Funds from Operations, as Adjusted for Comparability Funds from Operations, as Adjusted for Comparability per share

2014 911.1

2013 641.0

2012 818.6

(31.3)

(24.9)

(11.2)

(22.7)

(8.8)

8.9

13.5 (10.3)

58.2 --

33.0 --

--59.6 (312.8) (127.9)(3) 80.8 3.9 16.4 (255.5) 896.5 4.77

60.4 14.1 5.9 65.7 (300.7)(3) 184.9 13.4 (4.5) 69.9 748.7 4.02

--(60.0) -39.5 (2.1) 4.2 (69.2) 980.3 5.20

Funds from Operations, as Adjusted for Comparability increased by $83.8 million in 2014, to $5.20 from $4.77 per share, or $0.43, 9.0%, as detailed below:

($ IN MILLIONS, EXCEPT PER SHARE)

Same Store Operations: New York Washington theMart 555 California Street Retail Acquisitions, net of interest expense Vornado Capital Partners Interest Expense Investment income, decrease resulting from lower mezz loans outstanding Other, primarily lease termination income last year Increase in Comparable FFO

4

Amount

Per Share

42.3 (8.8) 6.9 5.0 3.4 19.2 20.8 28.3

0.21 (0.04) 0.04 0.03 0.02 0.10 0.10 0.14

(17.4) (15.9)

(0.09) (0.08)

83.8

0.43

Report Card Here is a chart showing Vornado’s total return to shareholders compared to the Office REIT and RMS indices for various periods ending December 31, 2014 and for 2015 year-to-date: Vornado 4.9% 36.4% 70.8% 100.6% 131.1% 637.5% 1,648.8%

2015 YTD One-year Three-year Five-year Ten-year Fifteen-year Twenty-year

Office REIT Index 7.2% 25.9% 51.7% 78.2% 89.5% 323.8% 892.8%

RMS Index 5.4% 30.4% 57.3% 119.7% 122.2% 492.5% 755.0%

Growth As is our custom, we present the chart below that traces our ten-year record of growth, both in absolute dollars and per share amounts:

Adjusted for Comparability FFO ($ AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

2014 2013 2012 2011 2010 2009 2008 2007 2006 2005

EBITDA

Amount

Per Share

Shares Outstanding

1,672,096 1,606,441 1,459,008 1,481,883 1,434,833 1,380,842 1,376,396 1,348,229 1,031,867 927,680

980,252 896,539 748,699 766,371 767,594 605,925 663,730 672,394 511,429 488,195

5.20 4.77 4.02 4.00 4.04 3.49 4.05 4.10 3.28 3.36

198,477 197,811 197,310 196,541 195,746 194,082 168,903 167,672 166,513 156,487

FFO has grown this year by 9.3% (9.0% on a per share basis), 10.1% per year over five years (8.3% on a per share basis) and 7.8% per year over ten years (4.1% on a per share basis).

5

Acquisitions/Dispositions(4) Our external growth has never been programmed, formulaic or linear, i.e. we do not budget acquisition activity. Each year, we mine our deal flow for opportunities and, as such, our acquisition volume is lumpy. Our acquisition activity since 2012 has ebbed in response to a rising market. Acquisitions during that period have been focused almost entirely in New York and on Street Retail. If we were an industrial company, you might call them bolt-on acquisitions. Our disposition activity since 2012 has increased four-fold as we have implemented our strategic simplification.

Here is a ten-year schedule of acquisitions and dispositions:

($ IN THOUSANDS)

2015 to date 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005

Acquisitions Number of Asset Transactions Cost 3 199,800 6 648,100 6 813,300 10 1,365,200 12 1,499,100 15 542,400 --3 31,500 38 4,063,600 32 2,177,000 31 4,686,000 156 16,026,000

Dispositions(5) Number of Transactions 3 11 20 23 7 5 16 6 5 3 -99

Proceeds 505,170 1,061,400 1,429,800 1,222,274 389,212 137,792 262,838 493,172 186,259 105,187 -5,793,104

Net Gains 23,900 523,400 434,100 454,005 137,846 56,830 42,987 171,110 60,126 31,662 -1,935,966

2014 and 2015 to date acquisitions are shown below: ($ IN THOUSANDS EXCEPT SQUARE FEET) 2015 to date: Center Building – Office (Long Island City) Crowne Plaza Times Square (increased ownership to 33.0% from 11.0%) 138 – 142 West 32nd Street – Retail 2014: St. Regis Fifth Avenue – Retail (75% interest) 715 Lexington Avenue – land One Park Avenue – Office (increased ownership to 55% from 49.7%) 304-306 Canal Street – Retail Development rights and land

4 5

Excludes marketable securities. Excludes $3.7 billion Urban Edge spin-off.

6

NY

Asset Cost 142,000

Square Feet Our Ownership Total 437,000 437,000

NY NY

39,000 18,800 199,800

46,000 5,000

211,000 5,000

NY NY

525,000 63,000

19,000 --

25,000 --

NY NY DC

22,700 16,400 21,000 648,100

80,000 15,000 --

943,000 15,000 --

As I wrote last year, we sell assets for several reasons:    

To make an outsized profit, i.e. where we would rather have the cash amount offered than the asset. This is a rare event…in most instances we’d rather have the asset than the cash. By the way, history shows that the unique, irreplaceable, timeless assets should never be sold…and I agree. To cut losses where an investment isn’t turning out as we expected or where we have made a mistake. To raise cash for current or future needs. For strategic reasons, where an asset no longer fits either geographically or by line of business or whatever or no longer fits our quality profile.

To lift us out of the “lost-our-luster” period (a very unhappy time for us, and for me personally, I must say), we have shifted strategy to focus our business on our core strengths, trimmed, pruned and simplified. We exited business lines, (the mall business,(6) the showroom business, LNR, etc.), disposed of mistakes (JCPenney and even a few real estate mistakes) and sold anything off the fairway. We executed over $4.2 billion of asset sales in 57 transactions. We separated the strip shopping center business by pro-rata tax-free spin-off to our shareholders. In January 2015, we completed the spin-off of substantially all of our retail segment comprised of 79 strip shopping centers, three malls, a warehouse park and $225 million of cash to Urban Edge Properties (NYSE:UE). As part of the spin-off, our shareholders received 94.6% of the shares and Vornado retained a 5.4% ownership interest in the form of 5,712,000 UE operating partnership units. We are providing transitional services to UE for an initial period of up to two years and they are providing us with leasing and property management services for certain assets. I am a member of the Board of Trustees of UE. The spin-off was effected by Vornado distributing one UE common share for every two Vornado common shares. Beginning in the first quarter of 2015, the historical financial results of UE will be reflected in our consolidated financial statements as discontinued operations for all periods presented. Our strategy here was that both Vornado and UE would benefit from being separate and focused. I firmly believe that UE’s dedicated management team, led by CEO Jeff Olson and COO Bob Minutoli, focusing solely on these fine assets, will create a ton of value. In December, we sold 1740 Broadway for $605 million, $1,000 per square foot. The financial statement gain on the sale was $439 million. The tax gain of $484 million was deferred in a like-kind exchange for the acquisition of the St. Regis Fifth Avenue retail. Last week we completed the transfer of Springfield Town Center to PREIT. Proceeds to us were $465 million, comprised of $340 million in cash and 6.25 million common units valued at $20 per share (current market is $23.38). The units are tax protected in favor of our original seller; accordingly, these units are in the hold-for-a-while box. We (as well as other analysts and investors) think the shares at $20 are a good investment. We are rooting for PREIT CEO Joe Coradino and team. Our IRR on this investment is basically breakeven, a result we are very happy with. In 2010/2011, we tried to sell the site and the opportunity to the usual suspects. The answer was no bid, no bid and a low-ball bid which was retraded and then withdrawn. With no viable alternative, this then became an easy decision, use our balance sheet and development capability to build the job ourselves and then sell the finished product. Thanks to Bob Minutoli and his team(7) who built a first class A mall, basically from the ground up, on schedule and on budget. Our friends at PREIT will do very well with this asset. I AM DELIGHTED WITH THE SCALE, SPEED AND FINANCIAL OUTCOME OF OUR SIMPLIFICATION PROGRAM. The action here takes place on the 45th floor where our acquisitions/dispositions teams reside. Special thanks to Michael and Wendy and to SVPs Dan Guglielmone, Cliff Broser, Mario Ramirez, Adam Green and the rest of the team. 6 7

For someone who has been in the mall and strip shopping center business my whole life, this was a difficult and courageous decision. Bob Byrne, Bill Rowe, Michael Khouri and their colleagues; each a senior member of the Springfield development team deserve special mention – Stacy Meyer, Allison Fee, Terry Furry, Jessica Secreti, Jill Creps, Leigh Lyons, Rob Mercer, Joe Lemarb, David Perl, Mara Olguin, Karen Smith, Trish Ketelsen, Michael Lowe, Ben Levine, Irene Gardiner, Genevieve Kelly, Jennifer DeDermott, Trish Zafferese, Mara Licari.

7

Michael Franco  Chief Investment Officer I am delighted to announce that Michael Franco has been appointed Chief Investment Officer, a promotion from his previous role as co-head. Michael oversees acquisitions/dispositions and capital markets. Michael, 46, is a highly intelligent, seasoned, well known and well respected, measured real estate executive. After four long dog years with us, and 12 years in senior positions at Morgan Stanley’s fund business, Michael is a veteran. At Vornado, capital allocation is a main event (right up there with lease, lease, lease). David, Mitchell, Steve and Joe all participate with Michael and me at the capital allocation table. Thank you and congratulations, Michael.

8

Capital Markets  Thank You Wendy  Welcome Mark At year-end we had $4.091 billion of liquidity comprised of $1.591 billion of cash, restricted cash and marketable securities and our $2.5 billion revolving credit facilities (with no outstandings). Today, after adjusting year end liquidity for the repayment of $500 million of unsecured debt in January and for the $225 million of cash spun-off to UE, we have $3.365 billion in liquidity. We expect our cash balance to approach $2 billion by year end resulting from the now completed transfer of Springfield Town Center to PREIT, financing the St. Regis retail condo and financing other asset(s), thereby increasing our liquidity to $4.5 billion. Since January 1, 2014, we have executed the following capital markets transactions: 

In January 2015, when they first became freely repayable, we repaid $500 million of 4.25% senior unsecured notes due April 2015.



In December 2014, we completed a $575 million refinancing ($355 per square foot) of Two Penn Plaza. The loan is interest-only at LIBOR plus 1.65% and matures in 2019 with two one-year extension options. We realized net proceeds of $143 million. The previous $422 million loan on the property had been swapped to a fixed rate of 4.78% through March 2018. Therefore, $422 million of the new loan bears interest at a fixed rate of 4.78% through March 2018 and the balance of $153 million floats through March 2018; the entire $575 million will float thereafter for the duration of the new loan.



In October 2014, on the first open call date, we redeemed at par the $445 million of 7.875% senior unsecured notes due October 2039.



Also in October, we completed a $140 million financing of 655 Fifth Avenue, the Ferragamo flagship store. This loan is interest only at LIBOR plus 1.40% (1.56% at December 31, 2014) and matures in October 2019 with two one-year extension options.



In September 2014, we extended one of our two $1.25 billion unsecured revolving credit facilities to November 2018 from November 2015 with two six-month extension options. The interest rate on the extended facility was lowered to LIBOR plus 105 basis points from LIBOR plus 125 basis points and the facility fee was reduced to 20 basis points from 25.



In August 2014, we obtained a standby commitment for up to $500 million of five-year mezzanine loan financing to fund a portion of the development expenditures at 220 Central Park South.



Also in August, we completed a $185 million financing ($270 per square foot) of the Universal buildings. This loan bears interest at LIBOR plus 1.90% (2.06% at December 31, 2014) and matures in August 2019 with two one-year extension options.



In June 2014, we issued $450 million, 2.50% 5-year senior unsecured green bonds.



In April 2014, we completed a $350 million financing ($411 per square foot) of 909 Third Avenue. The seven-year interest only loan bears interest at 3.91% and matures in May 2021. We realized net proceeds of $145 million.



In January 2014, we completed a $600 million loan secured by our 220 Central Park South development site. The loan bears interest at LIBOR plus 2.75% (2.92% at December 31, 2014) and matures in January 2016, with three one-year extension options.

Debt is now 31.5% of our enterprise value. Since stock prices fluctuate, we believe an even better measure of leverage may be debt to EBITDA – ours is currently 7.0x. Vornado remains committed to maintaining our investment grade rating.

9

One of the hallmarks of a blue chip REIT is access to the four corners of the capital markets. Vornado is an investment-grade blue chip that enjoys such access. But, let’s think about it. For purposes of this discussion, let’s call the four corners of the capital markets common stock, preferred stock,(8) unsecured debt and secured or project-level debt. From the beginning in 1980, through 1992, our principal financial strategy was to relentlessly acquire our undervalued shares. We acquired 52.6 million(9) shares (66% of the outstanding) at an average price of $3.64 per share.(9) We believe this 12-year buy-back program was at that time the largest percentage cap shrink in the history of the NYSE. Then we switched to growth mode. From 1997 through our last issuance in 2010, we issued 108 million shares of common stock and units at an average price of $50.14 per share. It’s easy to issue stock; many managements think they have an unlimited supply of script, just roll the printing press. Buying assets for stock certainly grows the business (and maybe gets the CEO a front table or larger car/plane), but it is per share growth which creates the shareholder value we seek. Let’s focus on two large, transformative deals where we had to use stock. In 2002, we acquired the Washington, Charles E. Smith Company using $600 million of units, valued at $38 per share, as part of the purchase price. Those shares are now valued at $123(10) or 3.2x. The assets have not gone up that much. But in this case, the seller would only transact assets for stock on a tax protected basis, i.e. no stock, no deal. And, it is not really fair to focus just on the stock portion of the deal, the $1.3 billion balance of the purchase price was paid with cash, so all the accretion there came to us. In 1997, we acquired the Mendik Company, the foundation of our New York business, using 5.3 million units valued at $26.00 per share. Those shares appreciated 4.73x, but in this case the assets have gone up more. Even better, the equity portion of this deal was only 22%. The long and short of it is that I value our stock even more than cash. We will issue shares reluctantly and be very wary of dilution. Unsecured debt is an attractive vehicle and trades in a very efficient marketplace. An investment grade company, using its pre-filed shelf registration, need merely call its friendly investment banker to get $500 million, or even $1 billion, in a matter of days - no fuss, no muss, no roadshow…easy. But, like cigarettes, there should be two warnings on the label of unsecured debt. First, that it bears the full faith and credit of the issuer, in effect a personal guarantee and, second, that markets are volatile and unpredictable and even a market as big, deep and strong as the unsecured debt market shuts down cold in every cycle, at the very worst time. To safely partake in this market, one should have modest maturities and have back-up liquidity. We partake, but we partake in this market in a very measured way. Secured or project-level debt is different. It is a much more cumbersome and time-consuming process to execute…but it has no covenants and is recourse solely to the asset that is pledged. Here is Vornado’s debt structure: ($ IN THOUSANDS) Nonrecourse Secured Debt Unsecured Debt

Nonrecourse Joint Venture Debt Total

8,358,950 847,159 9,206,109 1,924,494 11,130,603

We calculate that Vornado has about $20 billion of assets at fair value pledged to its secured creditors  very low leverage. The remainder of our assets are unencumbered. Interestingly, if, say, 60% is an appropriate loan-to-value ratio for secured debt (as opposed to our current 42%), the math says we should then be able to unencumber up to an additional $6 billion of assets (a worthy goal). 8

9 10

For us, and most everyone else in the industry (except for Public Storage), preferred stock is a minor event and therefore need not be discussed here; but I must say preferred stock with its due date of never is attractive, as is its being open after five years to an issuer call at par. Adjusted for stock splits aggregating 15 for 1. $111.52 Vornado stock price plus one-half of $23.52 Urban Edge Properties stock price.

10

Thank You Wendy After 17 years at Vornado, Wendy Silverstein, Head of Capital Markets and more recently Co-Head of Acquisitions and Capital Markets, has decided it is her time and she will be leaving us. Wendy led the team that executed the financings that fueled our growth from a $3 billion NJ-based strip center company to the $35 billion company we are now. All told, she oversaw over $30 billion of debt and equity financing in 134 separate transactions. Wendy was our Capital Markets Queen - Plus. She loves deals and even a little complexity here and there. She has been heavily involved in the buying and selling of Toys “R” Us, LNR and AmeriCold and has represented us on those companies’ boards (she avoided JCPenney, that was all mine). She was also instrumental in raising and investing our real estate fund and led our mezzanine lending platform. Wendy is highly intelligent, strong willed, has an incredible work ethic, a fierce competitive drive and a love of challenge. I met Wendy when the bank she then worked for repossessed a third of Alexander’s shares. We had some fun, the outcome of which was Vornado bought those shares for $40.50 per share (current value $580 per share, $122 from a special dividend plus shares valued today at $458). Interestingly, we will come full circle here, as Wendy, who was on the Alexander’s Board in the mid 1990’s representing her bank, will now, 20 years later, rejoin the Alexander’s Board. I thank Wendy for her commitment and contributions to Vornado over the years. She is part of the history of Vornado and a part of our family.

Welcome Mark We are delighted to announce that Mark A. Hudspeth will be joining us as Executive Vice President – Head of Capital Markets. Mark, 40, comes to us after a 15-year career at Morgan Stanley in real estate finance. Mark is the full package: smart, entrepreneurial, battle tested and well known to all of the financial counterparties we deal with (and even a few more) both home and abroad. Mark is a capital structure expert. He will be joining us this summer when his garden leave ends. Mark will report to Chief Investment Officer Michael Franco (and I guess a little bit to me, too). Mark will be a senior member of our talented 45th floor deal and finance teams. On the finance side, special thanks to Richard and Jan and Dan and Adam for their contributions this year and every year.

11

Operating Platforms…Lease, Lease, Lease The mission of our business is to create value for shareholders by growing our asset base through the addition of carefully selected properties and by adding value through intensive and efficient management. Our operating platforms are where the rubber meets the road. And…in our business, leasing is the main event. In New York, we leased an unprecedented 4.2 million square feet. In Washington, we leased a strong 2.1 million square feet, notwithstanding difficult market conditions. As in past years, we present below leasing and occupancy statistics for our businesses.

(SQUARE FEET IN THOUSANDS)

Total

New York

Office 2014 Square feet leased GAAP Mark-to-Market Number of transactions

7,138 12.5% 519

4,151 18.8% 158

2013 Square feet leased GAAP Mark-to-Market Number of transactions

6,446 13.7% 599

2,410

5,675

1,950

14.0% 162

Washington

Retail

Street Retail 119

1,817 (11)

62.3% 30

(3.3) % 192

138 92.6% 27

1,836 3.8 % 182

1,051 9.0% 139

2,062 13.7% 228

2012 Square feet leased GAAP Mark-to-Market Number of transactions Occupancy rate: 2014 2013 2012 2011 2010 2009 2008 2007

192

2,111

1,422

8.8% 529

4.9 % 139

29.5% 23

3.4 % 201

20.5 % 166

92.2% 91.8% 91.5% 93.4% 94.5% 94.1% 94.3% 94.8%

96.9% 96.6% 95.8% 96.2% 96.1% 95.5% 96.7% 97.6%

96.4% 97.4% 96.8% 95.6% 96.4%

83.8 % 83.4 % 84.1 % 90.6 % 95.0 % 93.3 % 95.0 % 93.3 %

95.9% 94.3% 93.7% 93.2% 92.6% 91.6% 92.0% 94.2%

(12) (12) (12)

I call attention with pride, that our New York Office occupancy rate is in the high 90’s percent year-in and year-out. That’s some performance. Thanks to EVP Glen Weiss and his leasing team, Josh, Craig, Jared, Andy, Jared and Eddie.

11 12

Excludes 247 square feet of non-office leases. Included in New York Office.

12

Leasing highlights this year in the New York division include: 

Amazon at 7 West 34th Street – 470,000 square feet;



Neuberger Berman at 1290 Avenue of the Americas – 402,000 square feet;



AMC Networks at 11 Penn Plaza – 324,000 square feet;



Madison Square Garden at 2 Penn Plaza – 312,000 square feet;



Bloomberg, L.P. at 731 Lexington Avenue – 189,000 square feet;



New York and Company at 330 West 34th Street – 178,000 square feet;



Facebook at 770 Broadway – 97,000 square feet;



555 California Street – 502,000 square feet in 11 leases;



theMART – 372,000 square feet in 57 leases.

Leasing highlights this year in the Washington division include: 

Department of Justice at Skyline Tower – 169,000 square feet;



WeWork at 2221 S. Clarke Street (Crystal City) – 165,000 square feet;



Army Surgeon General at 5109 Leesburg Pike – 97,000 square feet;



WeWork at 1875 Connecticut Avenue –83,000 square feet;



American Diabetes Association at 2451 Crystal Drive – 78,000 square feet;



The Department of Labor at 201 12th Street – 75,000 square feet;



Booz Allen at 1550 Crystal Drive – 59,000 square feet.

Growth in this cycle is coming from the creative side. We are market leaders here, completing company wide in 2014, 92 deals totaling 2.9 million square feet including: Cisco Systems, Aruba Wireless Networks, CommVault Systems, Dimension Data, SRA America, North Highland, Technologent, CS Technology, China Laws & Technology, CSC Holding LLC, Madison Square Garden, UBM, Axiom Markets, Tetra Tech, AMC, Yodle, Deutsch, Amazon, ET Publishing International, Hachette Book Company, Wenner Media, Facebook, Factset, Earthlink, ABC Enterprise, The Health Pub, Sapient Corp, Young & Rubicam, Microsoft, Matter, Yelp, Braintree, 1871, Alenia Aermacchi North America, Applied Information Sciences, Arete Associates, Booz Allen Hamilton Inc., Chinook Systems, Clarabridge, General Dynamics Information, L-3 Communications Corporation, L-3 National Security Solutions, Lockheed Martin Corp., Raytheon Company, Science Applications International, Technology Service Corporation, Uber Technologies, Vista Research, WeWork, Eastern Foundry. Thank you to our all-star leasing captains: Glen Weiss, Sherri White, Jim Creedon, Bruce Pascal and Paul Heinen. And, we thank Michael Zucker and Leigh Lyons, who lead the Urban Edge leasing team. Real Estate is a deal oriented business: buying is a deal; selling is a deal; leasing is a deal. But one of the essential things we do every day and embedded in our culture is CUSTOMER SERVICE. Customer service is one of the key reasons brokers bring their tenants to us, tenants prefer to lease space from us and tenants renew with us. Our customer facing teams are at the head of the class, keeping our buildings at the highest level of maintenance, cleaned and polished 24-7, technology at the cutting edge, staff well trained, well-dressed and courteous…you get the picture.

13

Street Retail We own the best in-class 56-property, 2.5 million square foot street retail business in Manhattan, concentrated in the best submarkets – Madison Avenue, Fifth Avenue, Times Square, Penn Plaza and Soho. While the street retail portfolio accounts for 9% of our total Manhattan square footage, it generates 29% of the New York division EBITDA.

There has been a lot of attention shown by market participants recently in Manhattan street retail (a business we have been in for 20 years), as well there should be. The key shopping streets of New York are the ultimate definition of supply constraint – the centuries old street grid is not changing. Almost without exception, if a retailer has a store in New York, it is their number one store; if they have two stores in New York, they are number one and number two – you get the picture. The growth in retail rents in the hot spots of New York has been extraordinary. Street retail asset values have been soaring(13) in the private market fueled by all manner of global investors and local sharp-shooters. Manhattan is not an outlier here, the best retail assets in the other global cities are priced similarly. Here’s an interesting table – note the comparison of retail rent growth to office rent growth.

$ Rents Per SF Manhattan Retail Rents: Upper Fifth Avenue- 49th to 57th St. Times Square Madison Avenue Soho Manhattan Office Rents: Penn Plaza Sixth Avenue/Rockefeller Center Midtown South Plaza District Grand Central West Side Downtown

% Increase

2004

2014

10-Yr CAGR

742 331 667 212

3,420 2,317 1,709 830

361% 600% 156% 292%

16.5% 21.5% 9.9% 14.6%

42 52 37 58 47 51 34

59 83 66 92 66 76 55

42% 60% 82% 59% 40% 48% 60%

3.6% 4.8% 6.2% 4.7% 3.4% 4.0% 4.8%

(Sources: REBNY Retail Report and C&W Research)

13

Here’s the math. Simplistically, using Fifth Avenue as an example, values have risen from, say, $12,000 per on-grade square foot in 2004 to, say, $85,000 per on-grade square foot in 2014, this calculated by applying a 6% cap rate to 2004 rents and a 4% cap rate to 2014 rents.

14

Here is a numerical tour(14) of our assets and some recent acquisitions on upper Fifth Avenue:

Year Purchased

Fifth Avenue Frontage

Cost Per Front Foot

Cost Per Square Foot on Grade

Vornado: 640 Fifth Avenue 689 Fifth Avenue 666 Fifth Avenue Ferragamo St Regis

1997 1998 2012 2013 2014

100 50 126 50 100

$ 315,000 $ 401,000 $ 5,611,000 $ 5,137,000 $ 7,000,000

$ 2,000 $ 4,000 $ 50,000 $ 54,000 $ 87,000

Other Recent Transactions: 685 Fifth Avenue Crown Building

2014 2014

58 100

$ 7,172,000 $ 11,724,000

$ 80,000 $ 96,000

In November 2014, a partnership in which we own a 75% interest completed the purchase of the St. Regis Fifth Avenue retail for $700 million. There are lots of things which make this asset attractive to us. The asset is prime pitch (as the British say), on the east side of Fifth Avenue at 55th Street bookended by the new Polo flagship on one side and the new Valentino flagship on the other.(15) It had short term leases, which would allow us to get to market rents quickly. And, perhaps most important of all, its physical configuration was perfect to create small stores for luxury retailers. We will shortly announce, after only four months of ownership, leases with new tenants for the entire space, which more than achieves our underwriting and validates the acquisition.

14 15

These numbers were calculated by Charlie adjusting the purchase price by deducting value ascribed to office and off-grade retail. We also own 689 Fifth Avenue on the same block.

15

I Love Our Business Vornado is a big business, $22 billion of equity at market after spinning-off UE. We operate in New York, the most important city in the world and in Washington, DC, our nation’s capital. In New York, we own office towers and the best portfolio of irreplaceable, timeless retail on the streets of Manhattan. Vornado is a vertically integrated operating platform. On our most recent conference call, I made the following comment: We are one of only a handful of firms who have the track record, heft, talent, relationships and trust in the marketplace to lease, acquire, develop, finance and manage million foot towers and Fifth Avenue retail. It’s a complicated business, rookies need not apply. Kudos to our 4,200 team members. I am very constructive on New York where demand, activity and absorption are accelerating and where office rents are now rising. The Big Kahuna for us is the Penn Plaza District where we are the dominant owner with 9 million square feet including office, retail and the Hotel Pennsylvania. The Penn Plaza district benefits enormously from the Hudson Yards development a few blocks to the West, and from the overflow (and direct flow) of creative class tenants in neighboring sub-markets a few blocks South and a few blocks East. We will focus, reposition and invest here towards the goal of driving office rents and long-term values. Welcome Marc Ricks, SVP, a government affairs veteran who joins Judy Kessler and, of course, Barry Langer on the dedicated Penn Plaza development team we are building. Construction is advancing on our 220 Central Park South super-tall luxury condo project. Our offering document has now been approved and last month we opened a sales gallery for friends and family. Our goal is to make this amenities-heavy, limestone tower, designed by Robert A.M. Stern, Architects and the Office of Thierry Despont, the best building in New York. Initial response from brokers and buyers has been excellent. Barry Langer and Mel Blum lead our development team here and Eli Zamek leads our construction team (together with Peter Lehrer, we are fielding very much the same leadership team here who so successfully developed and built our 731 Lexington Avenue/Beacon Court tower). We are busy in New York and Washington. We just transformed 7 West 34th Street and 330 West 34th Street into 1.1 million square feet of space targeted to the creative class market, a recurring theme and already we have leased 470,000 square feet at 7 West 34th Street to Amazon and 340,000 square feet at 330 West 34th Street; in the bowtie in Times Square at 1535 Broadway, the Marriott Marquis, directly across from our 1540 Broadway, we launched the world’s largest 10K LED sign in November with Google as the first advertiser, we now have Beats/Apple; at 608 Fifth Avenue we created a 44,000 square foot 4-level flagship for TopShop/TopMan; at our Alexander’s affiliate, we built a 312 unit rental apartment tower on top of the Rego Park II shopping center – we expect to begin leasing apartments in May; at 61 Ninth Avenue in the heart of the Meatpacking District, adjacent to the Apple store and Chelsea Market and across from 111 Eighth Avenue – Google’s 3 million square foot New York headquarters building, we together with a partner will be developing a ground-up new build 130,000 square foot office building; we have commenced a building wide redevelopment program at 90 Park Avenue and have almost completed the repositioning and retenanting of 280 Park Avenue (50% owned); we are doing plans to redevelop 20 Broad Street after the NYSE vacates in 2016; we are repositioning theMart in Chicago to continue to attract creative class tenants by adding amenity rich spaces; we are well into construction at The Bartlett, a 699-unit residential project in Pentagon City with a 37,000 square foot Whole Foods Market at the base of the building, expected to be completed in 2016; in Crystal City we are renovating a 165,000 square foot building for WeWork’s residential concept which is scheduled to open later this year; we will demolish two older contiguous buildings, where we will develop 1700 M Street, our new 335,000 square foot trophy office building in the heart of the District; and, of course, we continue to keep our buildings in tip top shape by transforming our lobbies and common areas. We thank our New York development team – Barry, Geoff, James, Alan, Mark, Alejandro, Eli, Dave, Sandy, Brian and Eric. We thank our Washington development team – Mitch, Paul, Toby and Gordon.

16

*

*

*

We are confident that we will do very well in Washington as over time we raise the occupancy rate and income level back to normal and execute on the trove of development opportunities we have. Nevertheless, we have considered and are still considering options with respect to our Washington business, such as inviting in a new investor(s) or even separating the business in a spin or in a spin-merge. Ditto for our Street Retail business. That we continuously consider our options should not be a revelation or a surprise to anyone  everything-is-on-the-table.(16) At Toys, we invested in a club with two renowned private equity firms who are focused on improving operations and growing earnings. Our suggestions of realizing value through real estate played second fiddle…as did our suggestion that the global business should be split into its three natural geographies. I am beginning to get a little wary. It looks like the easy money has been made for this cycle. Asset prices today are high, well past the 2007 peak, and acquisitions are getting dicey. Our sense is that this may be a better time to harvest than to invest…and that this is the time in the cycle when the smart guys start to build cash. At Vornado, we will continue to build cash reserves for opportunities that will undoubtedly present themselves in the future.

*

*

*

Sustainability Vornado continues to lead the industry in sustainability – it’s important to our tenants and it is important to us. From energy procurement, to utilities management, energy efficiency and infrastructure upgrades, demand response and metering, we are unique in our focus on energy issues. We are also committed to other critical issues like air quality, green cleaning and water efficiency, as the link between health and the office environment is better understood. Between 2013 and 2014, we reduced our energy consumption by 27,000 megawatt hours and diverted over 15,000 tons of waste from landfills. We issued a $450 million green bond in 2014, with the use of proceeds tied to projects related to our sustainability efforts. We continue to be recognized for our efforts. In 2014, we were named ENERGY STAR Partner of the Year, we won NAREIT’s Leader in the Light award (5th year in a row), and Global Real Estate Sustainability Benchmark gave us its Green Star ranking. Sustainability is serious business with us. Our industry leading team is led by SVP Sukanya Paciorek. For more detail on our 2014 sustainability efforts, and a breakdown of our green bond’s use of proceeds, please see our sustainability report at www.vno.com.

16

Of course, there can be no assurance that any transaction will occur here.

17

*

*

*

After 31 years at Vornado, Ross Morrison will be retiring in April. For all those years, Ross was the go-to guy in the Finance Department. He was the know-it-all, in the sense that he did…really know it all (or knew where to find it). He was always there…late at night…over the weekend…whenever there was a job to do…he did it. He did it with joy in his heart, intelligence in his head and judgment in his belly. He was a zero tolerance for mistakes kind of guy…he himself was always 100% accurate. And through it all, with his check shirts and fancy ties he was sartorially splendid. I for one have always been a bit jealous of his fast-growing full head of unruly hair. Ross, we wish you long life and happy times…we will miss you and hope that you miss us. For sure we will be calling you, for you are our institutional historian. *

*

*

This year for the first time we are recognizing our very talented divisional executive vice presidents by listing them on Vornado’s Corporate Information page. These are our team leaders, deal makers and executors. We continually broaden our leadership team through promotions from within our Company. Please join me in congratulating this year’s class; they deserve it. Barry S. Langer was promoted to Executive Vice President, Head of Development; Matthew Iocco was promoted to Executive Vice President, Chief Accounting Officer; Adam Green was promoted to SVP, Acquisitions & Capital Markets; Joshua Glick was promoted to SVP, Leasing; Lisa Vogel was promoted to SVP, Marketing; Gavin Stephenson was promoted to SVP & Senior Financial Officer; Richard Famularo was promoted to SVP, Controller; Steve Santora was promoted to SVP, Financial Operations; Nicholas Stello was promoted to SVP, IT Infrastructure; Joanne Porrazzo was promoted to VP – New York Operations; Valerie Bilenker, was promoted to VP – New York Leasing Counsel, Niles Llolla, was promoted to VP – New York Operations, Bridget Cunningham, was promoted to VP – New York Operations, Brian Cantrell was promoted to VP, Acquisitions & Capital Markets; Jared Toothman was promoted to VP, Acquisitions & Capital Markets; Sandy Michaels was promoted to VP, Leasing; Holly Baglieri was promoted to VP, Tax & Compliance; Melissa Graffeo was promoted to VP, SEC Reporting; Jonathan Sherick was promoted to VP, NY Retail Controller. Welcome Dave Bellman, Senior Vice President – Construction, Marc Ricks, Senior Vice President – Development and Robyn Neff, Vice President – Leasing Counsel to our New York Office team and Shawn Kyle, Senior Vice President – Management Services to our Washington Division. I am happy to say year after year that I am fortunate to work every day with the gold medal team. Our operating platforms are the best in the business. Thanks again to my partners David Greenbaum, Mitchell Schear, Michael Franco, Joe Macnow, and Steve Theriot. Special thanks to our operating officers Gaston Silva, Patrick Tyrrell, Myron Maurer and Michael Doherty. Thanks to Laurie, Ernie, Tom and to the Paramus team…Matt, Rich and Chris, Craig and Frank, Brian and Steve, Bob, Errol and Cathy. Thank you as well to our very talented and hardworking 38 Senior Vice Presidents and 80 Vice Presidents who make the trains run on time, every day. Our Vornado Family has grown with 14 marriages and 34 births this year, 15 girls and 19 boys, but who’s counting. On behalf of Vornado’s Board, senior management and 4,168 associates, we thank our shareholders, analysts and other stake holders for their continued support. Steven Roth Chairman and CEO April 3, 2015 Again this year, I offer to assist shareholders with tickets to my wife’s productions on Broadway – the new musical It Shoulda Been You, starring Tyne Daly, and Tony award winning best musical Kinky Boots. Please call if I can be of help. Abigail became a bat mitzvah in Israel two weeks ago. She is a curly-haired beauty, caring, happy, smart, strong, slightly irreverent, a little stubborn in a charming sort of way. Gammy and Pop love you and congratulate you.

18

19

Below is a reconciliation of Net Income to EBITDA: ($ IN MILLIONS)

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

Net Income

864.9

476.0

617.3

662.3

647.9

106.2

359.3

541.5

554.8

536.9

Interest and debt expense Depreciation, amortization, and income taxes

654.4

758.8

760.5

797.9

828.1

826.8

821.9

853.5

698.4

418.9

710.2

759.1

742.3

782.2

706.4

739.0

568.1

680.9

530.7

346.2

EBITDA

2,229.5

1,993.9

2,120.1

2,242.2

2,182.4

1,672.0

1,749.3

2,075.9

1,783.9

1,302.0

Gains on sale of real estate

(518.8)

(412.1)

(471.4)

(61.4)

(63.0)

(46.7)

Real estate impairment loss

26.5

43.7

131.8

28.8

109.0

23.2

--

--

--

--

Noncontrolling interests EBITDA before noncontrolling interests and gains on sale of real estate

59.2

24.9

45.3

55.9

55.2

25.1

55.4

69.8

79.9

133.5

1,796.4

1,650.4

1,825.8

2,265.7

2,283.6

1,673.6

1,737.7

2,065.2

1,817.9

1,401.0

Non-comparable items

(124.3)

EBITDA adjusted for comparability

1,672.1

(44.0) 1,606.4

(366.7)

(783.9)

1,459.1

(848.7)

1,481.8

1,434.9

2011

2010

(292.8) 1,380.8

(67.0)

(361.3) 1,376.4

(80.5)

(717.0) 1,348.2

(45.9)

(34.5)

(786.0)

(473.3)

1,031.9

927.7

Below is a reconciliation of Net Income to FFO: ($ IN MILLIONS, EXCEPT SHARE AMOUNTS)

Net Income Preferred share dividends Net Income applicable to common shares Depreciation and amortization of real property Net gains on sale of real estate and insurance settlements Real estate impairment losses Partially-owned entities adjustments: Depreciation and amortization of real property Net gains on sale of real estate Income tax effect of adjustments included above Real estate impairment losses Noncontrolling interests’ share of above adjustments Interest on exchangeable senior debentures Preferred share dividends Funds From Operations

2009

2008

2007

2006

2005

662.3

647.9

106.2

359.3

541.5

554.8

(60.5)

(51.2)

(57.1)

(57.1)

(57.1)

(57.5)

(46.5)

601.8

596.7

49.1

302.2

484.4

497.3

490.4

530.1

505.8

508.6

509.4

451.3

337.7

276.9

(51.6)

(57.2)

(45.3)

(57.5)

(60.8)

(33.8)

(31.6)

28.8

97.5

23.2

--

--

170.9

148.3

140.6

115.9

(9.8)

(5.8)

(1.4)

(9.5)

(24.6)

(24.6)

(22.9)

(23.2)

--

11.5

--

(41.0)

(46.8)

(47.0)

26.3

25.9

0.3

0.2

1,231.1

1,251.5

605.1

813.1

943.2

858.2

757.2

$6.42

$6.59

$3.49

$4.97

$5.75

$5.51

$5.21

Funds From Operations per share

--

536.9

--

--

134.0

105.6

42.1

(15.5)

(13.2)

(2.9)

(28.8)

(21.0)

(4.6)

--

--

--

(49.7)

(46.7)

(39.8)

(32.0)

--

25.3

25.0

24.7

18.0

0.2

0.2

0.3

0.7

0.9

Below is a reconciliation of Revenues to Revenues as adjusted for comparability:

Below is a reconciliation of Total Assets to Total Assets as adjusted for comparability:

($ IN MILLIONS)

($ IN MILLIONS)

Revenues Less: non-comparable items: Cleveland Medical Mart Stop & Shop litigation settlement income Revenues, adjusted for comparability

2014

2013

2,635.9

2,669.3

--2,635.9

36.4 59.6 2,573.3

20

2014

2013

Total Assets Less: non-comparable items: Assets related to discontinued operations Investment in Toys “R” Us Cash available to repay revolving credit facilities Accumulated depreciation

21,248.3

20,097.2

477.6 --(3,629.1 )

874.0 83.2 295.9 (3,296.7 )

Total assets, adjusted for comparability

24,399.8

22,140.8

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549

FORM 10-K 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended:

December 31, 2014 OR



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

For the transition period from

to

Commission File Number:

001-11954

VORNADO REALTY TRUST (Exact name of Registrant as specified in its charter) Maryland (State or other jurisdiction of incorporation or organization)

22-1657560 (I.R.S. Employer Identification Number)

888 Seventh Avenue, New York, New York (Address of Principal Executive Offices)

10019 (Zip Code)

Registrant’s telephone number including area code:

(212) 894-7000

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

Name of Each Exchange on Which Registered

Common Shares of beneficial interest, $.04 par value per share

New York Stock Exchange

Cumulative Redeemable Preferred Shares of beneficial interest, no par value: 6.625% Series G

New York Stock Exchange

6.625% Series I

New York Stock Exchange

6.875% Series J

New York Stock Exchange

5.70% Series K

New York Stock Exchange

5.40% Series L

New York Stock Exchange

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

NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES 

NO 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES 

NO 

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 

NO 

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 

NO 

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

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.  Large Accelerated Filer  Non-Accelerated Filer (Do not check if smaller reporting company)

 Accelerated Filer  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  NO 

The aggregate market value of the voting and non-voting common shares held by non-affiliates of the registrant, i.e. by persons other than officers and trustees of Vornado Realty Trust, was $18,241,786,000 at June 30, 2014.

As of December 31, 2014, there were 187,887,498 of the registrant’s common shares of beneficial interest outstanding.

Documents Incorporated by Reference

Part III: Portions of Proxy Statement for Annual Meeting of Shareholders to be held on May 21, 2015. This Annual Report on Form 10-K omits financial statements required under Rule 3-09 of Regulation S-X, for Toys “R” Us, Inc. An amendment to this Annual Report on Form 10-K will be filed as soon as practicable following the availability of such financial statements.

INDEX Item PART I.

PART II.

1.

PART IV.

Page Number

Business

4

1A.

Risk Factors

8

1B.

Unresolved Staff Comments

17

2.

Properties

18

3.

Legal Proceedings

32

4.

Mine Safety Disclosures

32

5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

33

6.

Selected Financial Data

35

7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

37

Quantitative and Qualitative Disclosures about Market Risk

94

8.

Financial Statements and Supplementary Data

95

9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

143

9A.

Controls and Procedures

143

9B.

Other Information

145

10.

Directors, Executive Officers and Corporate Governance(1)

145

11.

Executive Compensation(1)

146

12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters(1)

146

13.

Certain Relationships and Related Transactions, and Director Independence(1)

146

14.

Principal Accounting Fees and Services(1)

146

15.

Exhibits, Financial Statement Schedules

147

7A.

PART III.

Financial Information:

148

Signatures (1)

These items are omitted in whole or in part because the registrant will file a definitive Proxy Statement pursuant to Regulation 14A under the Securities Exchange Act of 1934 with the Securities and Exchange Commission no later than 120 days after December 31, 2014, portions of which are incorporated by reference herein.

2

FORWARD-LOOKING STATEMENTS

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 future 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 Annual Report on Form 10-K. We also note the following forward-looking statements: in the case of our development and redevelopment projects, the estimated completion date, estimated project cost and cost to complete; and estimates of future capital expenditures, dividends to common and preferred shareholders and operating partnership distributions. 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 this Annual Report on Form 10-K. 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 Annual Report on Form 10-K 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 Annual Report on Form 10-K.

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PART I ITEM 1.

BUSINESS

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 94.1% of the common limited partnership interest in the Operating Partnership at December 31, 2014. All references to “we,” “us,” “our,” the “Company” and “Vornado” refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership. On January 15, 2015, we completed the spin-off of substantially all of our retail segment comprised of 79 strip shopping centers, three malls, a warehouse park and $225 million of cash to Urban Edge Properties (“UE”) (NYSE: UE). As part of this transaction, we received 5,712,000 UE operating partnership units (5.4% ownership interest). We currently own all or portions of: New York: •

20.1 million square feet of Manhattan office space in 31 properties;

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2.5 million square feet of Manhattan street retail space in 56 properties;

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Four residential properties containing 1,654 units;

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The 1,700 room Hotel Pennsylvania located on Seventh Avenue at 33rd Street in the heart of the Penn Plaza district;

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A 32.4% interest in Alexander’s, Inc. (NYSE: ALX), which owns six properties in the greater New York metropolitan area, including 731 Lexington Avenue, the 1.3 million square foot Bloomberg, L.P. headquarters building;

Washington, DC: •

16.1 million square feet of office space in 59 properties;

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Seven residential properties containing 2,414 units;

Other Real Estate and Related Investments: •

The 3.6 million square foot Mart in Chicago;

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A 70% controlling interest in 555 California Street, a three-building office complex in San Francisco’s financial district aggregating 1.8 million square feet, known as the Bank of America Center;

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A 25.0% interest in Vornado Capital Partners, our real estate fund. We are the general partner and investment manager of the fund;

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A 32.6% interest in Toys “R” Us, Inc.; and

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Other real estate and related investments.

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OBJECTIVES AND STRATEGY Our business objective is to maximize shareholder value. We intend to achieve this objective by continuing to pursue our investment philosophy and execute 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 our existing properties to increase returns and maximize value 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 these securities in the future.

ACQUISITIONS Since January 1, 2014, we completed the following acquisitions: • • • •

A 74.3% interest in the retail condominium of the St. Regis Hotel, located on the Southeast corner of 55th Street and Fifth Avenue, for $700 million The land under our 715 Lexington Avenue retail property, located on the Southeast corner of 58th Street and Lexington Avenue in Manhattan, for $63 million We increased our ownership in One Park Avenue to 55.0% from 46.5% through a joint venture with an institutional investor We increased our ownership in Crowne Plaza Times Square Hotel to 33% from 11% by co-investing with our 25% owned Real Estate Fund and one of the Fund’s limited partners to buy out the Fund’s joint venture partner’s 57% interest

Additional details about our acquisitions are provided in the “Overview” of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

DISPOSITIONS Since January 1, 2014, we sold nine assets for an aggregate of $1.025 billion, with net proceeds of approximately $989 million. Below is a summary of these sales. • • • •

1740 Broadway for $605 million resulting in net proceeds of approximately $580 million Beverly Connection Shopping Center for $260 million resulting in net proceeds of $252 million Broadway Mall for $94 million resulting in net proceeds of $92.2 million Six retail assets for an aggregate of $66.4 million resulting in net proceeds of $64.8 million

Additional details about our dispositions are provided in the “Overview” of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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FINANCINGS Since January 1, 2014, we completed the following financing transactions: • • • • •

Extended one of two $1.25 billion unsecured revolving credit facilities to November 2018 with two six-month extension options, lowering the interest rate to LIBOR plus 1.05% from LIBOR plus 1.25% and reducing the facility fee to 20 basis points from 25 basis points Issued $450 million 2.50% senior unsecured notes due June 2019 Redeemed $445 million 7.875% senior unsecured notes due October 2039 Redeemed $500 million 4.25% senior unsecured notes due April 2015 Obtained $2.0 billion of mortgage financings and repaid $519 million and defeased $193 million of existing mortgages for aggregate net proceeds of $1.3 billion

Additional details about our financings are provided in the “Overview” of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

SEGMENT DATA We operate in the following business segments: New York, Washington, DC, Retail Properties, and Toys “R” Us (“Toys”). Financial information related to these business segments for the years ended December 31, 2014, 2013 and 2012 is set forth in Note 25 – Segment Information to our consolidated financial statements in this Annual Report on Form 10-K.

SEASONALITY 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 and substantially all of Toys’ net income is generated in its fourth quarter, which we record on a one-quarter lag basis in our first quarter. The New York and Washington, DC segments have historically experienced higher utility costs in the first and third quarters of the year. The Retail Properties segment revenue in the fourth quarter is typically higher due to the recognition of percentage and specialty rental income.

TENANTS ACCOUNTING FOR OVER 10% OF REVENUES None of our tenants accounted for more than 10% of total revenues in any of the years ended December 31, 2014, 2013 and 2012.

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CERTAIN ACTIVITIES We do not base our acquisitions and investments on specific allocations by type of property. We have historically held our properties for long-term investment; however, it is possible that properties in our portfolio may be sold when circumstances warrant. Further, we have not adopted a policy that limits the amount or percentage of assets which could be invested in a specific property or property type. While we may seek the vote of our shareholders in connection with any particular material transaction, generally our activities are reviewed and may be modified from time to time by our Board of Trustees without the vote of shareholders.

EMPLOYEES As of December 31, 2014, we have approximately 4,503 employees, of which 329 are corporate staff. The New York segment has 3,400 employees, including 2,735 employees of Building Maintenance Services LLC, a wholly owned subsidiary, which provides cleaning, security and engineering services primarily to our New York and Washington, DC properties and 508 employees at the Hotel Pennsylvania. The Washington, DC and Retail Properties segments have 457 and 77 employees, respectively and the Mart properties have 240 employees. The foregoing does not include employees of partially owned entities.

PRINCIPAL EXECUTIVE OFFICES Our principal executive offices are located at 888 Seventh Avenue, New York, New York 10019; telephone (212) 894-7000.

MATERIALS AVAILABLE ON OUR WEBSITE Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, as well as Reports on Forms 3, 4 and 5 regarding officers, trustees or 10% beneficial owners of us, filed or furnished pursuant to Section 13(a), 15(d) or 16(a) of the Securities Exchange Act of 1934 are available free of charge through our website (www.vno.com) as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission. Also available on our website are copies of our Audit Committee Charter, Compensation Committee Charter, Corporate Governance and Nominating Committee Charter, Code of Business Conduct and Ethics and Corporate Governance Guidelines. In the event of any changes to these charters or the code or guidelines, changed copies will also be made available on our website. Copies of these documents are also available directly from us free of charge. Our website also includes other financial information, including certain non-GAAP financial measures, none of which is a part of this Annual Report on Form 10-K. Copies of our filings under the Securities Exchange Act of 1934 are also available free of charge from us, upon request.

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ITEM 1A.

RISK FACTORS

Material factors that may adversely affect our business, operations and financial condition are summarized below. The risks and uncertainties described herein may not be the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. See “Forward-Looking Statements” contained herein on page 3. REAL ESTATE INVESTMENTS’ VALUE AND INCOME FLUCTUATE DUE TO VARIOUS FACTORS. The value of real estate fluctuates depending on conditions in the general economy and the real estate business. These conditions may also adversely impact our revenues and cash flows. The factors that affect the value of our real estate investments include, among other things: • global, national, regional and local economic conditions; • competition from other available space; • local conditions such as an oversupply of space or a reduction in demand for real estate in the area; • how well we manage our properties; • the development and/or redevelopment of our properties; • changes in market rental rates; • the timing and costs associated with property improvements and rentals; • whether we are able to pass all or portions of any increases in operating costs through to tenants; • changes in real estate taxes and other expenses; • whether tenants and users such as customers and shoppers consider a property attractive; • the financial condition of our tenants, including the extent of tenant bankruptcies or defaults; • availability of financing on acceptable terms or at all; • inflation or deflation; • fluctuations in interest rates; • our ability to obtain adequate insurance; • changes in zoning laws and taxation; • government regulation; • consequences of any armed conflict involving, or terrorist attacks against, the United States or individual acts of violence in public spaces including retail centers; • potential liability under environmental or other laws or regulations; • natural disasters; • general competitive factors; and • climate changes. The rents or sales proceeds we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of these factors. If rental revenues, sales proceeds and/or occupancy levels decline, we generally would expect to have less cash available to pay indebtedness and for distribution to shareholders. In addition, some of our major expenses, including mortgage payments, real estate taxes and maintenance costs generally do not decline when the related rents decline.

Capital markets and economic conditions can materially affect our liquidity, financial condition and results of operations as well as the value of our debt and equity securities. There are many factors that can affect the value of our debt and equity securities, including the state of the capital markets and the economy. Demand for office and retail space may decline nationwide, as it did in 2008 and 2009 due to the economic downturn, bankruptcies, downsizing, layoffs and cost cutting. Government action or inaction may adversely affect the state of the capital markets. The cost and availability of credit may be adversely affected by illiquid credit markets and wider credit spreads, which may adversely affect our liquidity and financial condition, including our results of operations, and the liquidity and financial condition of our tenants. Our inability or the inability of our tenants to timely refinance maturing liabilities and access the capital markets to meet liquidity needs may materially affect our financial condition and results of operations and the value of our debt and equity securities.

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Real estate is a competitive business. We compete with a large number of property owners and developers, some of which may be willing to accept lower returns on their investments than we are. Principal factors of competition include rents charged, sales prices, attractiveness of location, the quality of the property and the breadth and quality of services provided. Our success depends upon, among other factors, trends of the global, national, regional and local economies, financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulation, legislation and population and employment trends. We depend on leasing space to tenants on economically favorable terms and collecting rent from tenants who may not be able to pay. Our financial results depend significantly on leasing space in our properties to tenants on economically favorable terms. In addition, because a majority of our income comes from renting of real property, our income, funds available to pay indebtedness and funds available for distribution to shareholders will decrease if a significant number of our tenants cannot pay their rent or if we are not able to maintain occupancy levels on favorable terms. If a tenant does not pay its rent, we may not be able to enforce our rights as landlord without delays and may incur substantial legal costs. During periods of economic adversity, there may be an increase in the number of tenants that cannot pay their rent and an increase in vacancy rates. Bankruptcy or insolvency of tenants may decrease our revenue, net income and available cash. From time to time, some of our tenants have declared bankruptcy, and other tenants may declare bankruptcy or become insolvent in the future. The bankruptcy or insolvency of a major tenant could cause us to suffer lower revenues and operational difficulties, including leasing the remainder of the property. As a result, the bankruptcy or insolvency of a major tenant could result in decreased revenue, net income and funds available to pay our indebtedness or make distributions to shareholders. We may incur significant costs to comply with environmental laws and environmental contamination may impair our ability to lease and/or sell real estate. Our operations and properties are subject to various federal, state and local laws and regulations concerning the protection of the environment, including air and water quality, hazardous or toxic substances and health and safety. Under some environmental laws, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property. The owner or operator may also be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused the release. The presence of contamination or the failure to remediate contamination may impair our ability to sell or lease real estate or to borrow using the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and also govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) are also regulated by federal and state laws. We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. Our predecessor companies may be subject to similar liabilities for activities of those companies in the past. We could incur fines for environmental compliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or related claims arising out of environmental contamination or human exposure to contamination at or from our properties. Each of our properties has been subject to varying degrees of environmental assessment. To date, these environmental assessments have not revealed any environmental condition material to our business. However, identification of new compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination, human exposure to contamination or changes in clean-up or compliance requirements could result in significant costs to us. In addition, we may become subject to costs or taxes, or increases therein, associated with natural resource or energy usage (such as a “carbon tax”). These costs or taxes could increase our operating costs and decrease the cash available to pay our obligations or distribute to equity holders.

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We face risks associated with our tenants being designated “Prohibited Persons” by the Office of Foreign Assets Control and similar requirements. Pursuant to Executive Order 13224 and other laws, the Office of Foreign Assets Control of the United States Department of the Treasury (“OFAC”) maintains a list of persons designated as terrorists or who are otherwise blocked or banned (“Prohibited Persons”) from conducting business or engaging in transactions in the United States and thereby restricts our doing business with such persons. Our leases, loans and other agreements may require us to comply with OFAC and related requirements. If a tenant or other party with whom we conduct business is placed on the OFAC list or is otherwise a party with which we are prohibited from doing business, we may be required to terminate the lease or other agreement. Any such termination could result in a loss of revenue or otherwise negatively affect our financial results and cash flows. Our business and operations would suffer in the event of system failures. Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan for our internal information technology systems, our systems are vulnerable to damages from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. We may also incur additional costs to remedy damages caused by such disruptions. The occurrence of cyber incidents, or a deficiency in our cyber security, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results. A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our information resources. More specifically, a cyber incident is an intentional attack or an unintentional event that can include gaining unauthorized access to systems to disrupt operations, corrupt data, or steal confidential information. As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced. Our primary risks that could directly result from the occurrence of a cyber incident are theft of assets, operational interruption, damage to our relationship with our tenants, and private data exposure. We have implemented processes, procedures and controls to help mitigate these risks, but these measures, as well as our increased awareness of a risk of a cyber incident, do not guarantee that our financial results will not be negatively impacted by such an incident. Some of our potential losses may not be covered by 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, with sub-limits for certain perils such as floods. Our California properties have earthquake insurance with coverage of $180,000,000 per occurrence, subject to a deductible in the amount of 5% of the value of the affected property, up to a $180,000,000 annual aggregate. We maintain coverage for terrorism acts with limits of $4.0 billion per occurrence and in the aggregate, and $2.0 billion per occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological (“NBCR”) terrorism events, as defined by Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2020. Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a portion of all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for NBCR acts. 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. For NBCR acts, PPIC is responsible for a deductible of $3,200,000 and 15% of the balance of a covered loss (16% effective January 1, 2016) and the Federal government is responsible for the remaining 85% of a covered loss (84% effective January 1, 2016). We are ultimately responsible for any loss incurred 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 the future. Our debt instruments, consisting of mortgage loans secured by our properties which are non-recourse to us, senior unsecured notes 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.

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Compliance or failure to comply with the Americans with Disabilities Act or other safety regulations and requirements could result in substantial costs. The Americans with Disabilities Act (“ADA”) generally requires that public buildings, including our properties, meet certain federal requirements related to access and use by disabled persons. Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants and/or legal fees to their counsel. From time to time persons have asserted claims against us with respect to some of our properties under the ADA, but to date such claims have not resulted in any material expense or liability. If, under the ADA, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations, as well as the amount of cash available for distribution to shareholders. Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations. OUR INVESTMENTS ARE CONCENTRATED IN THE NEW YORK CITY METROPOLITAN AREA AND WASHINGTON, DC / NORTHERN VIRGINIA AREA. CIRCUMSTANCES AFFECTING THESE AREAS GENERALLY COULD ADVERSELY AFFECT OUR BUSINESS. A significant portion of our properties are located in the New York City / New Jersey metropolitan area and Washington, DC / Northern Virginia area and are affected by the economic cycles and risks inherent to those areas. In 2014, approximately 98% of our EBITDA, excluding items that affect comparability, came from properties located in the New York City metropolitan area and the Washington, DC / Northern Virginia area. We may continue to concentrate a significant portion of our future acquisitions in these areas or in other geographic real estate markets in the United States or abroad. Real estate markets are subject to economic downturns and we cannot predict how economic conditions will impact these markets in either the short or long term. Declines in the economy or declines in real estate markets in these areas could hurt our financial performance and the value of our properties. In addition to the factors affecting the national economic condition generally, the factors affecting economic conditions in these regions include: • financial performance and productivity of the media, advertising, financial, technology, retail, insurance and real estate industries; • space needs of, and budgetary constraints affecting, the United States Government, including the effect of a deficit reduction plan and/or base closures and repositioning under the Defense Base Closure and Realignment Act of 2005, as amended; • business layoffs or downsizing; • industry slowdowns; • relocations of businesses; • changing demographics; • increased telecommuting and use of alternative work places; • infrastructure quality; and • any oversupply of, or reduced demand for, real estate. It is impossible for us to assess the future effects of trends in the economic and investment climates of the geographic areas in which we concentrate, and more generally of the United States, or the real estate markets in these areas. Local, national or global economic downturns, would negatively affect our businesses and profitability. Terrorist attacks, such as those of September 11, 2001 in New York City and the Washington, DC area, may adversely affect the value of our properties and our ability to generate cash flow. We have significant investments in large metropolitan areas, including the New York, Washington, DC, Chicago and San Francisco metropolitan areas. In the aftermath of a terrorist attack, tenants in these areas may choose to relocate their businesses to less populated, lower-profile areas of the United States that may be perceived to be less likely targets of future terrorist activity and fewer customers may choose to patronize businesses in these areas. This, in turn, would trigger a decrease in the demand for space in these areas, which could increase vacancies in our properties and force us to lease space on less favorable terms. As a result, the value of our properties and the level of our revenues and cash flows could decline materially. Natural Disasters could have a concentrated impact on the areas where we operate and could adversely impact our results. Our investments are concentrated in the New York, Washington, DC, Chicago and San Francisco metropolitan areas. Natural disasters, including earthquakes, storms and hurricanes, could impact our properties in these and other areas in which we operate. Potentially adverse consequences of “global warming” could similarly have an impact on our properties. As a result, we could become subject to significant losses and/or repair costs that may or may not be fully covered by insurance and to the risk of business interruption. The incurrence of these losses, costs or business interruptions may adversely affect our operating and financial results. 11

WE MAY ACQUIRE OR SELL ASSETS OR ENTITIES OR DEVELOP PROPERTIES. OUR FAILURE OR INABILITY TO CONSUMMATE THESE TRANSACTIONS OR MANAGE THE RESULTS OF THESE TRANSACTIONS COULD ADVERSELY AFFECT OUR OPERATIONS AND FINANCIAL RESULTS. We may acquire, develop or redevelop real estate and acquire related companies and this may create risks. We may acquire, develop or redevelop properties or acquire real estate related companies when we believe doing so is consistent with our business strategy. We may not succeed in (i) developing, redeveloping or acquiring real estate and real estate related companies; (ii) completing these activities on time or within budget; and (iii) leasing or selling developed, redeveloped or acquired properties at amounts sufficient to cover our costs. Competition in these activities could also significantly increase our costs. Difficulties in integrating acquisitions may prove costly or time-consuming and could divert management’s attention. Acquisitions or developments in new markets or industries where we do not have the same level of market knowledge may result in weaker than anticipated performance. We may also abandon acquisition or development opportunities that we have begun pursuing and consequently fail to recover expenses already incurred. Furthermore, we may be exposed to the liabilities of properties or companies acquired, some of which we may not be aware of at the time of acquisition. From time to time we have made, and in the future we may seek to make, one or more material acquisitions. The announcement of such a material acquisition may result in a rapid and significant decline in the price of our common shares. We are continuously looking at material transactions that we believe will maximize shareholder value. However, an announcement by us of one or more significant acquisitions could result in a quick and significant decline in the price of our common shares. It may be difficult to buy and sell real estate quickly, which may limit our flexibility. Real estate investments are relatively difficult to buy and sell quickly. Consequently, we may have limited ability to vary our portfolio promptly in response to changes in economic or other conditions. We may not be permitted to dispose of certain properties or pay down the debt associated with those properties when we might otherwise desire to do so without incurring additional costs. In addition, when we dispose of or sell assets, we may not be able to reinvest the sales proceeds and earn similar returns. As part of an acquisition of a property, or a portfolio of properties, we may agree, and in the past have agreed, not to dispose of the acquired properties or reduce the mortgage indebtedness for a long-term period, unless we pay certain of the resulting tax costs of the seller. These agreements could result in us holding on to properties that we would otherwise sell and not pay down or refinance. In addition, when we dispose of or sell assets, we may not be able to reinvest the sales proceeds and earn returns similar to those generated by the assets that were sold. From time to time we have made, and in the future we may seek to make, investments in companies over which we do not have sole control. Some of these companies operate in industries with different risks than investing and operating real estate. From time to time we have made, and in the future we may seek to make, investments in companies that we may not control, including, but not limited to, Alexander’s, Inc. (“Alexander’s”), Toys “R” Us (“Toys”), Lexington Realty Trust (“Lexington”), and other equity and mezzanine investments. Although these businesses generally have a significant real estate component, some of them operate in businesses that are different from investing and operating real estate, including operating or managing toy stores. Consequently, we are subject to operating and financial risks of those industries and to the risks associated with lack of control, such as having differing objectives than our partners or the entities in which we invest, or becoming involved in disputes, or competing directly or indirectly with these partners or entities. In addition, we rely on the internal controls and financial reporting controls of these entities and their failure to maintain effectiveness or comply with applicable standards may adversely affect us. We are subject to risks that affect the general and New York City retail environments. Certain of our properties are Manhattan street retail properties. As such, these properties are affected by the general and New York City retail environments, including the level of consumer spending and consumer confidence, the threat of terrorism and increasing competition from retailers, outlet malls, retail websites and catalog companies. These factors could adversely affect the financial condition of our retail tenants and the willingness of retailers to lease space in our retail locations, and in turn, adversely affect us.

12

Our investment in Toys has in the past and may in the future result in increased seasonality and volatility in our reported earnings. We carry our Toys investment at zero. As a result, we no longer record our equity in Toys' income or loss. Because Toys is a retailer, its operations subject us to the risks of a retail company that are different than those presented by our other lines of business. The business of Toys is highly seasonal and substantially all of Toys net income is generated in its fourth quarter. It is possible that the value of Toys may increase and we could again resume recording our equity in Toys' income or loss, which would increase the seasonality and volatility of our reported earnings. Our decision to dispose of real estate assets would change the holding period assumption in our valuation analyses, which could result in material impairment losses and adversely affect our financial results. We evaluate real estate assets for impairment based on the projected cash flow of the asset over our anticipated holding period. If we change our intended holding period, due to our intention to sell or otherwise dispose of an asset, then under accounting principles generally accepted in the United States of America, we must reevaluate whether that asset is impaired. Depending on the carrying value of the property at the time we change our intention and the amount that we estimate we would receive on disposal, we may record an impairment loss that would adversely affect our financial results. This loss could be material to our results of operations in the period that it is recognized. We invest in marketable equity securities. The value of these investments may decline as a result of operating performance or economic or market conditions. We invest in marketable equity securities of publicly-traded companies, such as Lexington Realty Trust. As of December 31, 2014, our marketable securities have an aggregate carrying amount of $206,323,000, at market. Significant declines in the value of these investments due to, among other reasons, operating performance or economic or market conditions, may result in the recognition of impairment losses which could be material.

OUR ORGANIZATIONAL AND FINANCIAL STRUCTURE GIVES RISE TO OPERATIONAL AND FINANCIAL RISKS. We may not be able to obtain capital to make investments. We depend primarily on external financing to fund the growth of our business. This is because one of the requirements of the Internal Revenue Code of 1986, as amended, for a REIT is that it distributes 90% of its taxable income, excluding net capital gains, to its shareholders. There is a separate requirement to distribute net capital gains or pay a corporate level tax in lieu thereof. Our access to debt or equity financing depends on the willingness of third parties to lend or make equity investments and on conditions in the capital markets generally. Although we believe that we will be able to finance any investments we may wish to make in the foreseeable future, there can be no assurance that new financing will be available or available on acceptable terms. For information about our available sources of funds, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and the notes to the consolidated financial statements in this Annual Report on Form 10-K. Vornado Realty Trust (“Vornado”) depends on dividends and distributions from its direct and indirect subsidiaries. The creditors and preferred security holders of these subsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or distributions to Vornado. Substantially all of Vornado’s assets are held through its Operating Partnership that holds substantially all of its properties and assets through subsidiaries. The Operating Partnership’s cash flow is dependent on cash distributions to it by its subsidiaries, and in turn, substantially all of Vornado’s cash flow is dependent on cash distributions to it by the Operating Partnership. The creditors of each of Vornado’s direct and indirect subsidiaries are entitled to payment of that subsidiary’s obligations to them, when due and payable, before distributions may be made by that subsidiary to its equity holders. Thus, the Operating Partnership’s ability to make distributions to holders of its units depends on its subsidiaries’ ability first to satisfy their obligations to their creditors and then to make distributions to the Operating Partnership. Likewise, Vornado’s ability to pay dividends to holders of common and preferred shares depends on the Operating Partnership’s ability first to satisfy its obligations to its creditors and make distributions payable to holders of preferred units and then to make distributions to Vornado.

13

Furthermore, the holders of preferred units of the Operating Partnership are entitled to receive preferred distributions before payment of distributions to holders of Class A units of the Operating Partnership, including Vornado. Thus, Vornado’s ability to pay cash dividends to its shareholders and satisfy its debt obligations depends on the Operating Partnership’s ability first to satisfy its obligations to its creditors and make distributions to holders of its preferred units and then to holders of its Class A units, including Vornado. As of December 31, 2014, there were three series of preferred units of the Operating Partnership not held by Vornado with a total liquidation value of $56,206,000. In addition, Vornado’s participation in any distribution of the assets of any of its direct or indirect subsidiaries upon the liquidation, reorganization or insolvency, is only after the claims of the creditors, including trade creditors and preferred security holders, are satisfied. We have outstanding debt, and the amount of debt and its cost may increase and refinancing may not be available on acceptable terms. We rely on both secured and unsecured, variable rate and non-variable rate debt to finance acquisitions and development activities and for working capital. If we are unable to obtain debt financing or refinance existing indebtedness upon maturity, our financial condition and results of operations would likely be adversely affected. In addition, the cost of our existing debt may increase, especially in the case of a rising interest rate environment, and we may not be able to refinance our existing debt in sufficient amounts or on acceptable terms. If the cost or amount of our indebtedness increases or we cannot refinance our debt in sufficient amounts or on acceptable terms, we are at risk of credit ratings downgrades and default on our obligations that could adversely affect our financial condition and results of operations. Covenants in our debt instruments could adversely affect our financial condition and our acquisitions and development activities. The mortgages on our properties contain customary covenants such as those that limit our ability, without the prior consent of the lender, to further mortgage the applicable property or to discontinue insurance coverage. Our unsecured indebtedness and debt that we may obtain in the future may contain customary restrictions, requirements and other limitations on our ability to incur indebtedness, including covenants that limit our ability to incur debt based upon the level of our ratio of total debt to total assets, our ratio of secured debt to total assets, our ratio of EBITDA to interest expense, and fixed charges, and that require us to maintain a certain level of unencumbered assets to unsecured debt. Our ability to borrow is subject to compliance with these and other covenants. In addition, failure to comply with our covenants could cause a default under the applicable debt instrument, and we may then be required to repay such debt with capital from other sources or give possession of a secured property to the lender. Under those circumstances, other sources of capital may not be available to us, or may be available only on unattractive terms. Vornado may fail to qualify or remain qualified as a REIT and may be required to pay income taxes at corporate rates. Although we believe that we will remain organized and will continue to operate so as to qualify as a REIT for federal income tax purposes, we may fail to remain so qualified. Qualifications are governed by highly technical and complex provisions of the Internal Revenue Code for which there are only limited judicial or administrative interpretations and depend on various facts and circumstances that are not entirely within our control. In addition, legislation, new regulations, administrative interpretations or court decisions may significantly change the relevant tax laws and/or the federal income tax consequences of qualifying as a REIT. If, with respect to any taxable year, we fail to maintain our qualification as a REIT and do not qualify under statutory relief provisions, we could not deduct distributions to shareholders in computing our taxable income and would have to pay federal income tax on our taxable income at regular corporate rates. The federal income tax payable would include any applicable alternative minimum tax. If we had to pay federal income tax, the amount of money available to distribute to shareholders and pay our indebtedness would be reduced for the year or years involved, and we would no longer be required to make distributions to shareholders. In addition, we would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost, unless we were entitled to relief under the relevant statutory provisions. We face possible adverse changes in tax laws, which may result in an increase in our tax liability. From time to time changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. The shortfall in tax revenues for states and municipalities in recent years may lead to an increase in the frequency and size of such changes. If such changes occur, we may be required to pay additional taxes on our assets or income. These increased tax costs could adversely affect our financial condition and results of operations and the amount of cash available for payment of dividends. Loss of our key personnel could harm our operations and adversely affect the value of our common shares. We are dependent on the efforts of Steven Roth, the Chairman of the Board of Trustees and Chief Executive Officer of Vornado. While we believe that we could find a replacement for him and other key personnel, the loss of their services could harm our operations and adversely affect the value of our common shares.

14

VORNADO’S CHARTER DOCUMENTS AND APPLICABLE LAW MAY HINDER ANY ATTEMPT TO ACQUIRE US. Our Amended and Restated Declaration of Trust (the “declaration of trust”) sets limits on the ownership of our shares. Generally, for Vornado to maintain its qualification as a REIT under the Internal Revenue Code, not more than 50% in value of the outstanding shares of beneficial interest of Vornado may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of Vornado’s taxable year. The Internal Revenue Code defines “individuals” for purposes of the requirement described in the preceding sentence to include some types of entities. Under Vornado’s declaration of trust, as amended, no person may own more than 6.7% of the outstanding common shares of any class, or 9.9% of the outstanding preferred shares of any class, with some exceptions for persons who held common shares in excess of the 6.7% limit before Vornado adopted the limit and other persons approved by Vornado’s Board of Trustees. These restrictions on transferability and ownership may delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of the shareholders. The Maryland General Corporation Law (the “MGCL”) contains provisions that may reduce the likelihood of certain takeover transactions. The MGCL imposes conditions and restrictions on certain “business combinations” (including, among other transactions, a merger, consolidation, share exchange, or, in certain circumstances, an asset transfer or issuance of equity securities) between a Maryland REIT and certain persons who beneficially own at least 10% of the corporation’s stock (an “interested shareholder”). Unless approved in advance by the board of trustees of the trust, or otherwise exempted by the statute, such a business combination is prohibited for a period of five years after the most recent date on which the interested shareholder became an interested shareholder. After such five-year period, a business combination with an interested shareholder must be: (a) recommended by the board of trustees of the trust, and (b) approved by the affirmative vote of at least (i) 80% of the trust’s outstanding shares entitled to vote and (ii) twothirds of the trust’s outstanding shares entitled to vote which are not held by the interested shareholder with whom the business combination is to be effected, unless, among other things, the trust’s common shareholders receive a “fair price” (as defined by the statute) for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for his or her shares. In approving a transaction, the Board may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the Board. Vornado’s Board has adopted a resolution exempting any business combination between Vornado and any trustee or officer of Vornado or its affiliates. As a result, any trustee or officer of Vornado or its affiliates may be able to enter into business combinations with Vornado that may not be in the best interest of Vornado’s shareholders. With respect to business combinations with other persons, the business combination provisions of the MGCL may have the effect of delaying, deferring or preventing a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of the shareholders. The business combination statute may discourage others from trying to acquire control of Vornado and increase the difficulty of consummating any offer. Vornado has a classified Board of Trustees and that may reduce the likelihood of certain takeover transactions. Vornado’s Board of Trustees is divided into three classes of trustees. Trustees of each class are chosen for three-year staggered terms. Staggered terms of trustees may reduce the possibility of a tender offer or an attempt to change control of Vornado, even though a tender offer or change in control might be in the best interest of Vornado’s shareholders. We may issue additional shares in a manner that could adversely affect the likelihood of certain takeover transactions. Vornado’s declaration of trust authorizes the Board of Trustees to: • cause Vornado to issue additional authorized but unissued common shares or preferred shares; • classify or reclassify, in one or more series, any unissued preferred shares; • set the preferences, rights and other terms of any classified or reclassified shares that Vornado issues; and • increase, without shareholder approval, the number of shares of beneficial interest that Vornado may issue. The Board of Trustees could establish a series of preferred shares whose terms could delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of Vornado’s shareholders, although the Board of Trustees does not now intend to establish a series of preferred shares of this kind. Vornado’s declaration of trust and bylaws contain other provisions that may delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of our shareholders.

15

We may change our policies without obtaining the approval of our shareholders. Our operating and financial policies, including our policies with respect to acquisitions of real estate or other companies, growth, operations, indebtedness, capitalization and dividends, are exclusively determined by our Board of Trustees. Accordingly, our shareholders do not control these policies.

OUR OWNERSHIP STRUCTURE AND RELATED-PARTY TRANSACTIONS MAY GIVE RISE TO CONFLICTS OF INTEREST. Steven Roth and Interstate Properties may exercise substantial influence over us. They and some of our other trustees and officers have interests or positions in other entities that may compete with us. As of December 31, 2014, Interstate Properties, a New Jersey general partnership, and its partners owned an aggregate of approximately 6.6% of the common shares of Vornado and 26.3% of the common stock of Alexander’s Inc. (NYSE: ALX) (“Alexander’s”), which is described below. Steven Roth, David Mandelbaum and Russell B. Wight, Jr. are the three partners of Interstate Properties. Mr. Roth is the Chairman of the Board and Chief Executive Officer of Vornado, the managing general partner of Interstate Properties and the Chairman of the Board and Chief Executive Officer of Alexander’s. Messrs. Wight and Mandelbaum are trustees of Vornado and also directors of Alexander’s. Because of these overlapping interests, Mr. Roth and Interstate Properties and its partners may have substantial influence over Vornado and on the outcome of any matters submitted to Vornado’s shareholders for approval. In addition, certain decisions concerning our operations or financial structure may present conflicts of interest among Messrs. Roth, Mandelbaum and Wight and Interstate Properties and our other equity or debt holders. In addition, Mr. Roth, Interstate Properties and its partners, and Alexander’s currently and may in the future engage in a wide variety of activities in the real estate business which may result in conflicts of interest with respect to matters affecting us, such as which of these entities or persons, if any, may take advantage of potential business opportunities, the business focus of these entities, the types of properties and geographic locations in which these entities make investments, potential competition between business activities conducted, or sought to be conducted, competition for properties and tenants, possible corporate transactions such as acquisitions and other strategic decisions affecting the future of these entities. We manage and lease the real estate assets of Interstate Properties under a management agreement for which we receive an annual fee equal to 4% of base rent and percentage rent. See the related party disclosures in the notes to the consolidated financial statements in this Annual Report on Form 10-K for additional information. There may be conflicts of interest between Alexander’s and us. As of December 31, 2014, we owned 32.4% of the outstanding common stock of Alexander’s. Alexander’s is a REIT that has six properties, which are located in the greater New York metropolitan area. In addition to the 2.1% that they indirectly own through Vornado, Interstate Properties, which is described above, and its partners owned 26.3% of the outstanding common stock of Alexander’s as of December 31, 2014. Mr. Roth is the Chairman of the Board and Chief Executive Office of Vornado, the Managing General Partner of Interstate Properties, and the Chairman of the Board and Chief Executive Officer of Alexander’s. Messrs. Wight and Mandelbaum are trustees of Vornado and also directors of Alexander’s and general partners of Interstate Properties. Dr. Richard West is a trustee of Vornado and a director of Alexander’s. In addition, Joseph Macnow, our Executive Vice President – Finance and Chief Administrative Officer, is the Executive Vice President and Chief Financial Officer of Alexander’s, and Stephen W. Theriot, our Chief Financial Officer, is the Assistant Treasurer of Alexander’s. We manage, develop and lease Alexander’s properties under management and development agreements and leasing agreements under which we receive annual fees from Alexander’s. See the related party disclosures in the notes to the consolidated financial statements in this Annual Report on Form 10-K for additional information.

16

THE NUMBER OF SHARES OF VORNADO REALTY TRUST AND THE MARKET FOR THOSE SHARES GIVE RISE TO VARIOUS RISKS. The trading price of our common shares has been volatile and may fluctuate. The trading price of our common shares has been volatile and may continue to fluctuate widely as a result of a number of factors, many of which are outside our control. In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of the shares of many companies. These broad market fluctuations have in the past and may in the future adversely affect the market price of our common shares. Among the factors that could affect the price of our common shares are: • our financial condition and performance; • the financial condition of our tenants, including the extent of tenant bankruptcies or defaults; • actual or anticipated quarterly fluctuations in our operating results and financial condition; • our dividend policy; • the reputation of REITs and real estate investments generally and the attractiveness of REIT equity securities in comparison to other equity securities, including securities issued by other real estate companies, and fixed income securities; • uncertainty and volatility in the equity and credit markets; • fluctuations in interest rates; • changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs; • failure to meet analysts’ revenue or earnings estimates; • speculation in the press or investment community; • strategic actions by us or our competitors, such as acquisitions or restructurings; • the extent of institutional investor interest in us; • the extent of short-selling of our common shares and the shares of our competitors; • fluctuations in the stock price and operating results of our competitors; • general financial and economic market conditions and, in particular, developments related to market conditions for REITs and other real estate related companies; • domestic and international economic factors unrelated to our performance; and • all other risk factors addressed elsewhere in this Annual Report on the Form 10-K. A significant decline in our stock price could result in substantial losses for shareholders. Vornado has many shares available for future sale, which could hurt the market price of its shares. The interests of our current shareholders could be diluted if we issue additional equity securities. As of December 31, 2014, we had authorized but unissued, 62,112,502 common shares of beneficial interest, $.04 par value and 57,266,023 preferred shares of beneficial interest, no par value; of which 19,488,139 common shares are reserved for issuance upon redemption of Class A Operating Partnership units, convertible securities and employee stock options and 11,200,000 preferred shares are reserved for issuance upon redemption of preferred Operating Partnership units. Any shares not reserved may be issued from time to time in public or private offerings or in connection with acquisitions. In addition, common and preferred shares reserved may be sold upon issuance in the public market after registration under the Securities Act or under Rule 144 under the Securities Act or other available exemptions from registration. We cannot predict the effect that future sales of our common and preferred shares or Operating Partnership Class A and preferred units will have on the market prices of our outstanding shares. In addition, under Maryland law, the Board has the authority to increase the number of authorized shares without shareholder approval. ITEM 1B.

UNRESOLVED STAFF COMMENTS

There are no unresolved comments from the staff of the Securities Exchange Commission as of the date of this Annual Report on Form 10-K.

17

ITEM 2.

PROPERTIES

We operate in four business segments: New York, Washington, DC, Retail Properties and Toys “R” Us. The following pages provide details of our real estate properties as of December 31, 2014.

% Property Ownership NEW YORK: One Penn Plaza (ground leased through 2098) 100.0% 1290 Avenue of the Americas 70.0% Two Penn Plaza 100.0% 666 Fifth Avenue Office Condominium (1) 49.5% 909 Third Avenue (ground leased through 2063) 100.0% 280 Park Avenue (1) 50.0% Independence Plaza, Tribeca (1,328 units) (1) 50.1% Eleven Penn Plaza 100.0% 770 Broadway 100.0% One Park Avenue (1) 55.0% 90 Park Avenue 100.0% 888 Seventh Avenue (ground leased through 2067) 100.0% 100 West 33rd Street 100.0% 330 Madison Avenue (1) 25.0% 330 West 34th Street (ground leased through 2148) 100.0% 650 Madison Avenue (1) 20.1% 350 Park Avenue 100.0% 150 East 58th Street 100.0% 7 West 34th Street 100.0% 20 Broad Street (ground leased through 2081) 100.0% 640 Fifth Avenue 100.0% 595 Madison Avenue 100.0% 50-70 W 93rd Street (326 units) (1) 49.9% Manhattan Mall 100.0% 40 Fulton Street 100.0% 4 Union Square South 100.0% 57th Street (5 buildings) (1) 50.0% 825 Seventh Avenue (1) 51.1% 1540 Broadway 100.0% Paramus 100.0% 608 Fifth Avenue (ground leased through 2033) 100.0% 666 Fifth Avenue Retail Condominium 100.0% 1535 Broadway (Marriott Marquis - retail and signage) (ground and building leased through 2032) 100.0% 689 Fifth Avenue 100.0% 478-486 Broadway (2 buildings) 100.0% 510 Fifth Avenue 100.0% 655 Fifth Avenue 92.5% 155 Spring Street 100.0% 3040 M Street 100.0% 435 Seventh Avenue 100.0% 692 Broadway 100.0% 697-703 Fifth Avenue (St. Regis) 74.3% 715 Lexington 100.0% 1131 Third Avenue 100.0% 828-850 Madison Avenue 100.0% 443 Broadway 100.0% 484 Eighth Avenue 100.0% 334 Canal Street 100.0% 304 Canal Street 100.0% 40 East 66th Street 100.0% 431 Seventh Avenue 100.0% 677-679 Madison Avenue 100.0% 148 Spring Street 100.0% 150 Spring Street 100.0%

Type

% Occupancy

In Service

Square Feet Under Development or Not Available for Lease

Total Property

Office / Retail Office / Retail Office / Retail Office / Retail Office Office / Retail Residential / Retail Office / Retail Office / Retail Office / Retail Office / Retail Office / Retail Office Office / Retail Office / Retail Office / Retail Office / Retail Office / Retail Office / Retail Office Office / Retail Office / Retail Residential Retail Office / Retail Retail Office / Retail Office / Retail Retail Office Office / Retail Retail

95.1% 97.8% 97.7% 76.9% 100.0% 100.0% 94.9% 99.1% 100.0% 96.8% 97.2% 93.7% 99.6% 99.1% 100.0% 87.9% 99.4% 98.2% 100.0% 99.3% 89.9% 98.7% 98.8% 92.6% 99.0% 100.0% 96.6% 100.0% 100.0% 96.1% 96.0% 100.0%

2,521,000 2,109,000 1,619,000 1,416,000 1,344,000 755,000 1,241,000 1,152,000 1,148,000 943,000 936,000 877,000 849,000 838,000 379,000 598,000 570,000 544,000 480,000 472,000 325,000 322,000 283,000 256,000 249,000 206,000 158,000 174,000 160,000 129,000 125,000 114,000

486,000 292,000 27,000 -

2,521,000 2,109,000 1,619,000 1,416,000 1,344,000 1,241,000 1,241,000 1,152,000 1,148,000 943,000 936,000 877,000 849,000 838,000 671,000 598,000 570,000 544,000 480,000 472,000 325,000 322,000 283,000 256,000 249,000 206,000 185,000 174,000 160,000 129,000 125,000 114,000

Retail / Theatre Office / Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail

100.0% 100.0% 100.0% 90.6% 100.0% 98.5% 100.0% 100.0% 100.0% 100.0% 100.0% 85.9% 100.0% 100.0% n/a 100.0% n/a 100.0% 100.0% 100.0% 100.0% 100.0%

66,000 99,000 85,000 65,000 57,000 49,000 44,000 43,000 35,000 25,000 23,000 22,000 18,000 16,000 16,000 3,000 11,000 10,000 8,000 7,000 7,000

42,000 12,000 14,000 -

108,000 99,000 85,000 65,000 57,000 49,000 44,000 43,000 35,000 25,000 23,000 22,000 18,000 16,000 16,000 15,000 14,000 11,000 10,000 8,000 7,000 7,000

18

ITEM 2.

PROPERTIES - CONTINUED

Property NEW YORK - continued: 966 Third Avenue 267 West 34th Street 488 Eighth Avenue 968 Third Avenue (1) Hotel Pennsylvania Alexander's, Inc.: 731 Lexington Avenue (1) Rego Park II, Queens (1) Rego Park I, Queens (1) Rego Park II Apartment Tower, Queens (1) Flushing, Queens (1) Paramus, New Jersey (30.3 acres ground leased through 2041) (1) Rego Park III, Queens (3.2 acres) (1) Total New York

% Ownership

% Occupancy

Type

Total Property

100.0% 100.0% 100.0% 50.0%

Retail Retail Retail Retail

100.0% 100.0% 100.0% 100.0%

7,000 6,000 6,000 6,000

-

7,000 6,000 6,000 6,000

100.0%

Hotel

n/a

1,400,000

-

1,400,000

32.4% 32.4% 32.4% 32.4% 32.4%

Office / Retail Retail Retail Residential Retail

100.0% 98.9% 100.0% n/a 100.0%

1,059,000 609,000 343,000 167,000

255,000 -

1,059,000 609,000 343,000 255,000 167,000

32.4% 32.4%

Retail n/a

100.0% n/a 96.4%

27,604,000

1,128,000

28,732,000

96.9%

21,856,000

699,000

22,555,000

Vornado's Ownership Interest WASHINGTON, DC: 2011-2451 Crystal Drive (5 buildings) Skyline Properties (7 buildings) S. Clark Street / 12th Street (5 buildings) 1550-1750 Crystal Drive / 241-251 18th Street (4 buildings) 1800, 1851 and 1901 South Bell Street (3 buildings) Fashion Centre Mall (1) Rosslyn Plaza (4 buildings) (1) 1825-1875 Connecticut Avenue, NW (Universal Buildings ) (2 buildings) Waterfront Station (1) 2200 / 2300 Clarendon Blvd (Courthouse Plaza) (ground leased through 2062) (2 buildings) 1299 Pennsylvania Avenue, NW (Warner Building) (1) Fairfax Square (3 buildings) (1) 2100 / 2200 Crystal Drive (2 buildings) One Skyline Tower Commerce Executive (3 buildings) 2101 L Street, NW 1501 K Street, NW (1) 223 23rd Street / 2221 South Clark Street (2 buildings) 1750 Pennsylvania Avenue, NW 1150 17th Street, NW 875 15th Street, NW (Bowen Building) Democracy Plaza One (ground leased through 2084) 1101 17th Street, NW (1) 1730 M Street, NW Washington Tower (1) 2001 Jefferson Davis Highway 1399 New York Avenue, NW 1726 M Street, NW Crystal City Shops at 2100 Crystal Drive Retail

In Service

Square Feet Under Development or Not Available for Lease

100.0% 100.0% 100.0%

Office Office Office

89.3% 42.2% 76.9%

2,321,000 2,130,000 1,540,000

100.0% 100.0% 7.5% 46.2%

Office Office Office Office

80.4% 93.8% 98.0% 55.8%

1,484,000 506,000 821,000 534,000

363,000 202,000

1,484,000 869,000 821,000 736,000

100.0% 2.5%

Office Office

98.4% n/a

685,000 -

675,000

685,000 675,000

100.0%

Office

94.7%

638,000

55.0% 20.0% 100.0% 100.0% 100.0% 100.0% 5.0%

Office Office Office Office Office Office Office

77.4% 86.2% 100.0% 100.0% 86.8% 99.0% 100.0%

613,000 559,000 529,000 518,000 400,000 380,000 379,000

19,000 -

613,000 559,000 529,000 518,000 419,000 380,000 379,000

100.0% 100.0% 100.0% 100.0%

Office Office Office Office

n/a 94.0% 91.7% 100.0%

277,000 241,000 231,000

316,000 -

316,000 277,000 241,000 231,000

100.0% 55.0% 100.0% 7.5% 100.0% 100.0% 100.0% 100.0% 100.0%

Office Office Office Office Office Office Office Office Office

92.4% 97.2% 90.8% 100.0% 63.1% 90.4% 98.0% 96.0% 100.0%

216,000 214,000 203,000 170,000 162,000 129,000 92,000 80,000 57,000

19

-

-

-

2,321,000 2,130,000 1,540,000

638,000

216,000 214,000 203,000 170,000 162,000 129,000 92,000 80,000 57,000

ITEM 2.

PROPERTIES - CONTINUED

Property WASHINGTON, DC - continued: Riverhouse (1,670 units) (3 buildings) The Bartlett West End 25 (283 units) 220 20th Street (265 units) Crystal City Hotel Rosslyn Plaza (196 units) (2 buildings) (1) Met Park / Warehouses Other (3 buildings) Total Washington, DC

% Ownership 100.0% 100.0% 100.0% 100.0% 100.0% 43.7% 100.0% 100.0%

% Occupancy

Type Residential Residential Residential Residential Hotel Residential Warehouse Other

Vornado's Ownership Interest RETAIL PROPERTIES: Wayne Town Center, Wayne, NJ (ground leased through 2064) Allentown, PA Bronx (Bruckner Boulevard), NY East Brunswick, NJ North Bergen (Tonnelle Avenue), NJ East Hanover (200 - 240 Route 10 West), NJ Wilkes-Barre, PA (461 - 499 Mundy Street), PA Huntington, NY Buffalo (Amherst), NY Bricktown, NJ Union (Route 22 and Morris Avenue), NJ Hackensack, NJ Totowa, NJ Cherry Hill, NJ Jersey City, NJ Union (2445 Springfield Avenue), NJ Middletown, NJ Lancaster, PA Woodbridge NJ Chicopee, MA Marlton, NJ North Plainfield, NJ Bergen Town Center - East, Paramus, NJ Manalapan, NJ Rochester, NY East Rutherford, NJ Garfield, NJ Mt. Kisco, NY Newington, CT Bensalem, PA Springfield, MA Morris Plains, NJ

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip Strip

20

In Service

Square Feet Under Development or Not Available for Lease

Total Property

97.4% n/a 96.8% 98.5% 100.0% 95.9% 100.0% 100.0% 84.5%

1,802,000 273,000 269,000 266,000 253,000 109,000 9,000 19,090,000

618,000 20,000 2,000 2,215,000

1,802,000 618,000 273,000 269,000 266,000 253,000 129,000 11,000 21,305,000

83.8%

16,570,000

1,442,000

18,012,000

100.0% 100.0% 89.6% 100.0% 98.9% 86.3% 91.7% 100.0% 100.0% 92.8% 99.4% 74.5% 100.0% 97.3% 100.0% 100.0% 94.9% 82.1% 100.0% 100.0% 100.0% 88.3% 93.6% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 98.9% 100.0% 95.9%

544,000 554,000 501,000 427,000 410,000 343,000 329,000 324,000 311,000 278,000 276,000 275,000 271,000 261,000 236,000 232,000 231,000 228,000 226,000 224,000 213,000 212,000 211,000 208,000 205,000 197,000 195,000 189,000 188,000 185,000 182,000 177,000

119,000 -

663,000 554,000 501,000 427,000 410,000 343,000 329,000 324,000 311,000 278,000 276,000 275,000 271,000 261,000 236,000 232,000 231,000 228,000 226,000 224,000 213,000 212,000 211,000 208,000 205,000 197,000 195,000 189,000 188,000 185,000 182,000 177,000

ITEM 2.

PROPERTIES - CONTINUED

Property RETAIL PROPERTIES - continued: Dover, NJ Freeport (437 East Sunrise Highway), NY Lodi (Route 17 North), NJ Watchung, NJ Broomall, PA Rochester (Henrietta), NY (ground leased through 2056) Staten Island, NY Baltimore (Towson), MD Waterbury, CT Bethlehem, PA Lawnside, NJ Annapolis, MD (ground and building leased through 2042) Hazlet, NJ Glen Burnie, MD Norfolk, VA (ground and building leased through 2069) York, PA Kearny, NJ Glenolden, PA New Hyde Park, NY (ground and building leased through 2029) Inwood, NY Turnersville, NJ Rockville, MD Lodi (Washington Street), NJ Milford, MA (ground and building leased through 2019) Carlstadt, NJ (ground leased through 2050) Bronx (1750-1780 Gun Hill Road), NY Wyomissing, PA (ground and building leased through 2065) West Babylon, NY Wheaton, MD (ground leased through 2060) Paramus, NJ (ground leased through 2033) North Bergen (Kennedy Boulevard), NJ South Plainfield, NJ (ground leased through 2039) San Francisco (2675 Geary Street), CA (ground and building leased through 2043)

% Ownership

% Occupancy

Type

In Service

Square Feet Under Development or Not Available for Lease

Total Property

100.0% 100.0% 100.0% 100.0% 100.0%

Strip Strip Strip Strip Strip

93.0% 100.0% 100.0% 96.6% 100.0%

173,000 173,000 171,000 170,000 169,000

-

173,000 173,000 171,000 170,000 169,000

100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Strip Strip Strip Strip Strip Strip

96.2% 88.2% 100.0% 68.8% 98.9% 100.0%

165,000 165,000 155,000 148,000 147,000 145,000

-

165,000 165,000 155,000 148,000 147,000 145,000

100.0% 100.0% 100.0%

Strip Strip Strip

100.0% 100.0% 90.5%

128,000 123,000 121,000

-

128,000 123,000 121,000

100.0% 100.0% 100.0% 100.0%

Strip Strip Strip Strip

100.0% 86.2% 100.0% 100.0%

114,000 111,000 104,000 102,000

-

114,000 111,000 104,000 102,000

100.0% 100.0% 100.0% 100.0% 100.0%

Strip Strip Strip Strip Strip

100.0% 80.1% 96.3% 98.1% 94.1%

101,000 96,000 96,000 94,000 85,000

-

101,000 96,000 96,000 94,000 85,000

100.0% 100.0% 100.0%

Strip Strip Strip

100.0% 100.0% 90.7%

83,000 78,000 77,000

-

83,000 78,000 77,000

100.0% 100.0%

Strip Strip

93.2% 95.4%

76,000 66,000

-

76,000 66,000

100.0% 100.0% 100.0%

Strip Strip Strip

100.0% 100.0% 100.0%

66,000 63,000 62,000

-

66,000 63,000 62,000

100.0%

Strip

85.9%

56,000

-

56,000

100.0%

Strip

100.0%

55,000

-

55,000

21

ITEM 2.

PROPERTIES - CONTINUED

Property RETAIL PROPERTIES - continued: Cambridge, MA (ground and building leased through 2033) Commack, NY (ground and building leased through 2021) Arlington Heights, IL (ground and building leased through 2043) Dewitt, NY (ground leased through 2041) Charleston, SC (ground leased through 2063) Signal Hill, CA Vallejo, CA (ground leased through 2043) Freeport (240 West Sunrise Highway), NY (ground and building leased through 2040) San Antonio, TX (ground and building leased through 2041) Chicago, IL (ground and building leased through 2051) Englewood, NJ Springfield, PA (ground and building leased through 2025) Tyson's Corner, VA (ground and building leased through 2035) Salem, NH (ground leased through 2102) Owensboro, KY (ground and building leased through 2046) Eatontown, NJ Walnut Creek (1149 South Main Street), CA East Hanover (280 Route 10 West), NJ Montclair, NJ Oceanside, NY Walnut Creek (Mt. Diablo), CA Monmouth Mall, Eatontown, NJ (1) Bergen Town Center - West, Paramus, NJ Montehiedra, Puerto Rico Las Catalinas, Puerto Rico Total Retail Properties

% Ownership

% Occupancy

Type

In Service

Square Feet Under Development or Not Available for Lease

Total Property

100.0%

Strip

100.0%

48,000

-

48,000

100.0%

Strip

100.0%

47,000

-

47,000

100.0%

Strip

100.0%

46,000

-

46,000

100.0%

Strip

100.0%

46,000

-

46,000

100.0% 100.0%

Strip Strip

100.0% 100.0%

45,000 45,000

-

45,000 45,000

100.0%

Strip

100.0%

45,000

-

45,000

100.0%

Strip

100.0%

44,000

-

44,000

100.0%

Strip

100.0%

43,000

-

43,000

100.0% 100.0%

Strip Strip

100.0% 73.6%

41,000 41,000

-

41,000 41,000

100.0%

Strip

100.0%

41,000

-

41,000

100.0%

Strip

100.0%

38,000

-

38,000

100.0%

Strip

100.0%

37,000

-

37,000

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 95.0%

Strip Strip Strip Strip Strip Strip Strip

100.0% 73.7% 100.0% 100.0% 100.0% 100.0% 100.0%

32,000 30,000 29,000 26,000 18,000 16,000 7,000

-

32,000 30,000 29,000 26,000 18,000 16,000 7,000

50.0% 100.0% 100.0% 100.0%

Mall Mall Mall Mall

92.5% 99.4% 90.9% 94.0% 95.8%

1,463,000 952,000 542,000 494,000 16,797,000

119,000

1,463,000 952,000 542,000 494,000 16,916,000

95.9%

15,273,000

119,000

15,392,000

Vornado's Ownership Interest

22

ITEM 2.

PROPERTIES - CONTINUED Square Feet

Property OTHER (The Mart): The Mart, Chicago Other (1) Total The Mart

% Ownership

100.0% 50.0%

Type Office / Retail / Showroom Retail

Vornado's Ownership Interest OTHER (555 California Street): 555 California Street 315 Montgomery Street 345 Montgomery Street Total 555 California Street

70.0% 70.0% 70.0%

Office Office / Retail Office / Retail

Vornado's Ownership Interest OTHER (Vornado Capital Partners Real Estate Fund) (2) : 800 Corporate Pointe, Culver City, CA (2 buildings) 100.0% Crowne Plaza Times Square, NY Lucida, 86th Street and Lexington Avenue, NY (ground leased through 2082) 1100 Lincoln Road, Miami, FL 520 Broadway, Santa Monica, CA 11 East 68th Street Retail, NY 501 Broadway, NY Total Real Estate Fund Properties

38.2%

Office Office / Retail / Hotel

100.0% 100.0% 100.0% 100.0% 100.0%

Retail / Residential Retail / Theatre Office Retail Retail

Vornado's Ownership Interest OTHER: 85 Tenth Avenue, Manhattan East Hanover Warehouse Park (5 buildings) Total Other

n/a (3) 100.0%

Office / Retail Warehouse

Vornado's Ownership Interest

% Occupancy

In Service

Under Development or Not Available for Lease

Total Property

94.7% 100.0% 94.7%

3,568,000 19,000 3,587,000

-

3,568,000 19,000 3,587,000

94.7%

3,578,000

-

3,578,000

97.0% 100.0% 100.0% 97.6%

1,506,000 231,000 64,000 1,801,000

-

1,506,000 231,000 64,000 1,801,000

97.6%

1,261,000

-

1,261,000

57.0%

243,000

-

243,000

100.0%

235,000

-

235,000

100.0% 100.0% 90.9% 100.0% 100.0% 84.4%

146,000 127,000 112,000 8,000 9,000 880,000

3,000 3,000

146,000 127,000 112,000 11,000 9,000 883,000

84.4%

184,000

1,000

185,000

100.0% 60.8% 76.3%

613,000 942,000 1,555,000

-

613,000 942,000 1,555,000

60.8%

942,000

-

942,000

(1) Denotes property not consolidated in the accompanying consolidated financial statements and related financial data included in the Annual Report on Form 10-K. (2) We own a 25% interest in the Fund. The ownership percentage in this section represents the Fund's ownership in the underlying asset. (3) As of December 31, 2014, we own junior and senior mezzanine loans of 85 Tenth Avenue with an accreted balance of $147.6 million. The junior and senior mezzanine loans bear paid-in-kind interest of 12% and 9%, respectively and mature in May 2017. We account for our investment in 85 Tenth Avenue using the equity method of accounting because we will receive a 49.9% interest in the property after repayment of the junior mezzanine loan. As a result of recording our share of the GAAP losses of the property, the net carrying amount of these loans is $28.2 million on our consolidated balance sheets.

23

NEW YORK As of December 31, 2014, our New York segment consisted of 27.6 million square feet in 72 properties. The 27.6 million square feet is comprised of 20.1 million square feet of office space in 31 properties, 2.5 million square feet of retail space in 56 properties, four residential properties containing 1,654 units, the 1.4 million square foot Hotel Pennsylvania, and our 32.4% interest in Alexander’s, Inc. (“Alexander’s”), which owns six properties in the greater New York metropolitan area. The New York segment also includes 10 garages totaling 1.7 million square feet (4,909 spaces) which are managed by, or leased to, third parties. New York lease terms generally range from five to seven years for smaller tenants to as long as 20 years for major tenants, and may provide for extension options at market rates. Leases typically provide for periodic step-ups in rent over the term of the lease and pass through to tenants their share of increases in real estate taxes and operating expenses over a base year. Electricity is provided to tenants on a sub-metered basis or included in rent based on surveys and adjusted for subsequent utility rate increases. Leases also typically provide for free rent and tenant improvement allowances for all or a portion of the tenant’s initial construction costs of its premises. As of December 31, 2014, the occupancy rate for our New York segment was 96.9%. Occupancy and weighted average annual rent per square foot: Office: Vornado's Ownership Interest

As of December 31, 2014 2013 2012 2011 2010

Total Property Square Feet 20,052,000 19,217,000 18,792,000 18,637,000 15,592,000

Square Feet 16,808,000 15,776,000 15,811,000 15,664,000 14,413,000

Occupancy Rate 96.9 % 96.5 % 95.7 % 96.1 % 96.0 %

Weighted Average Annual Rent Per Square Foot $ 65.37 61.86 60.18 58.68 56.13

Retail: Vornado's Ownership Interest

As of December 31, 2014 2013 2012 2011 2010

Total Property Square Feet 2,450,000 2,370,000 2,192,000 2,234,000 1,991,000

Square Feet 2,179,000 2,147,000 2,032,000 1,975,000 1,899,000

Number of Units 1,654 1,653 1,651

Occupancy Rate 95.2 % 94.8 % 96.5 %

Occupancy Rate 96.4 % 97.4 % 96.8 % 95.6 % 96.4 %

Residential: As of December 31, 2014 2013 2012

24

Average Monthly Rent Per Unit $ 3,163 2,864 2,672

Weighted Average Annual Rent Per Square Foot $ 174.08 162.92 148.71 105.36 101.82

NEW YORK – CONTINUED

Tenants accounting for 2% or more of revenues: Square Feet Leased 755,000 423,000 646,000

Tenant IPG and affiliates AXA Equitable Life Insurance Macy’s

$

2014 Revenues 40,327,000 37,725,000 35,337,000

2014 rental revenue by tenants’ industry: Industry Office: Financial Services Communications Family Apparel Real Estate Legal Services Insurance Advertising / Marketing Publishing Technology Banking Pharmaceutical Engineering, Architect & Surveying Home Entertainment & Electronics Government Health Services Other Retail: Family Apparel Women's Apparel Luxury Retail Banking Restaurants Department Stores Discount Stores Other

Percentage 14 % 7% 6% 6% 6% 4% 4% 3% 3% 2% 2% 2% 2% 2% 1% 10 % 74 % 8% 5% 3% 2% 2% 1% 1% 4% 26 % 100 %

Total

25

Percentage of New York Revenues 2.8 % 2.6 % 2.4 %

Percentage of Total Revenues 1.5 % 1.4 % 1.3 %

NEW YORK – CONTINUED Lease expirations as of December 31, 2014, assuming none of the tenants exercise renewal options: Number of Expiring Leases

Square Feet of Expiring Leases

Percentage of New York Square Feet

Weighted Average Annual Rent of Expiring Leases Total Per Square Foot

Year Office: Month to month 13 38,000 0.2 % $ 2,044,000 $ 53.79 2015 100 846,000 (1) 5.5 % 54,370,000 64.27 (1) 2016 156 1,246,000 8.0 % 78,552,000 63.04 2017 85 713,000 4.6 % 45,551,000 63.89 2018 96 1,017,000 (2) 6.6 % 76,091,000 74.82 2019 95 987,000 6.4 % 66,135,000 67.01 2020 97 1,367,000 8.8 % 81,391,000 59.54 2021 58 1,139,000 7.4 % 74,125,000 65.08 2022 56 862,000 5.6 % 54,673,000 63.43 2023 44 1,587,000 10.2 % 110,510,000 69.63 2024 59 1,098,000 7.1 % 79,538,000 72.44 Retail: Month to month 4 32,000 1.7 % $ 4,809,000 $ 150.28 2015 18 94,000 (3) 5.1 % 20,242,000 215.34 (3) (4) 2016 14 56,000 3.0 % 16,378,000 292.46 2017 7 14,000 0.8 % 2,999,000 214.21 2018 29 159,000 8.6 % 38,525,000 242.30 2019 20 121,000 6.5 % 30,882,000 255.22 2020 19 61,000 3.3 % 8,909,000 146.05 2021 8 38,000 (5) 2.1 % 7,361,000 193.71 2022 8 30,000 1.6 % 3,641,000 121.37 2023 12 81,000 4.4 % 18,271,000 225.57 2024 11 171,000 9.2 % 53,064,000 310.32 (1) Based on current market conditions, we expect to re-lease this space at weighted average rents ranging from $70 to $75 per square foot. (2) Excludes 492,000 square feet leased to the U.S. Post Office through 2038 (including four 5-year renewal options) for which the annual escalated rent is $11.27 per square foot. (3) Based on current market conditions, we expect to re-lease this space at weighted average rents ranging from $550 to $600 per square foot. (4) Excludes 141,000 square feet leased to Kmart through 2036 (including four 5-year renewal options) for which the annual escalated rent is $43.94 per square foot. (5) Excludes 146,000 square feet leased to Kmart through 2036 (including four 5-year renewal options) for which the annual escalated rent is $37.64 per square foot.

Alexander’s As of December 31, 2014, we own 32.4% of the outstanding common stock of Alexander’s, which owns six properties in the greater New York metropolitan area aggregating 2.2 million square feet, including 731 Lexington Avenue, the 1.3 million square foot Bloomberg L.P. headquarters building. Alexander’s had $1.03 billion of outstanding debt at December 31, 2014, of which our pro rata share was $334.6 million, none of which is recourse to us. Hotel Pennsylvania We own the Hotel Pennsylvania which is located in New York City on Seventh Avenue opposite Madison Square Garden and consists of a hotel portion containing 1,000,000 square feet of hotel space with 1,700 rooms and a commercial portion containing 400,000 square feet of retail and office space.

2014 Hotel: Average occupancy rate Average daily rate Revenue per available room

$ $

2013

92.0 % 161.93 $ 148.93 $

26

Year Ended December 31, 2012 2011

93.4 % 158.01 $ 147.63 $

89.1 % 152.79 $ 136.21 $

89.1 % 152.53 $ 135.87 $

2010 83.2 % 144.21 120.00

WASHINGTON, DC As of December 31, 2014, our Washington, DC segment consisted of 72 properties aggregating 19.1 million square feet comprised of 16.1 million square feet of office space in 59 properties, seven residential properties containing 2,414 units and a hotel property. In addition, we are in the process of developing a 699-unit residential project with a 37,000 square foot Whole Foods Market at the base of the building and own 18.2 acres of undeveloped land. The Washington, DC segment also includes 56 garages totaling approximately 8.9 million square feet (29,628 spaces) which are managed by, or leased to, third parties. Washington, DC office lease terms generally range from five to seven years for smaller tenants to as long as 15 years for major tenants, and may provide for extension options at either pre-negotiated or market rates. Leases typically provide for periodic step-ups in rent over the term of the lease and pass through to tenants, the tenants’ share of increases in real estate taxes and certain property operating expenses over a base year. Periodic step-ups in rent are usually based upon either fixed percentage increases or the consumer price index. Leases also typically provide for free rent and tenant improvement allowances for all or a portion of the tenant’s initial construction costs of its premises. As of December 31, 2014, the occupancy rate for our Washington DC segment was 83.8%, and 25.8% of the occupied space was leased to various agencies of the U.S. Government. Occupancy and weighted average annual rent per square foot: Office: Vornado's Ownership Interest

As of December 31, 2014 2013 2012 2011 2010

Total Property Square Feet 16,109,000 16,233,000 16,106,000 16,623,000 17,219,000

Square Feet 13,731,000 13,803,000 13,637,000 14,162,000 14,035,000

As of December 31, 2014 2013 2012 2011 2010

Number of Units 2,414 2,405 2,414 2,414 2,414

Occupancy Rate 97.4% 96.3% 97.9% 96.6% 95.5%

Occupancy Rate 80.9 % 80.7 % 81.2 % 89.3 % 94.8 %

Weighted Average Annual Rent Per Square Foot $ 42.80 42.44 41.57 40.80 39.65

Residential: Average Monthly Rent Per Unit $ 2,078 2,101 2,145 2,056 1,925

Tenants accounting for 2% or more of revenues:

Tenant U.S. Government Boeing Lockheed Martin Family Health International Arlington County

Square Feet Leased 3,576,000 253,000 329,000 359,000 241,000

$

27

2014 Revenues 133,050,000 17,249,000 14,755,000 12,407,000 11,728,000

Percentage of Washington, DC Revenues 24.8 % 3.2 % 2.8 % 2.3 % 2.2 %

Percentage of Total Revenues 5.0 % 0.7 % 0.6 % 0.5 % 0.4 %

WASHINGTON, DC – CONTINUED 2014 rental revenue by tenants’ industry: Industry U.S. Government Government Contractors Membership Organizations Legal Services Manufacturing Business Services Management Consulting Services State and Local Government Computer and Data Processing Health Services Food Real Estate Education Communication Television Broadcasting Other

Percentage 29% 14% 8% 5% 4% 3% 3% 2% 2% 2% 2% 2% 2% 1% 1% 20% 100%

Lease expirations as of December 31, 2014, assuming none of the tenants exercise renewal options:

Year Month to month 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Number of Expiring Leases 38 211 140 88 97 80 61 24 35 12 30

Square Feet of Expiring Leases 324,000 1,680,000 1,179,000 626,000 987,000 1,557,000 728,000 573,000 963,000 161,000 374,000

(1)

Percentage of Washington, DC Square Feet 3.1 % 16.1 % 11.3 % 6.0 % 9.5 % 15.0 % 7.0 % 5.5 % 9.3 % 1.5 % 3.6 %

$

Weighted Average Annual Rent of Expiring Leases Total Per Square Foot 9,293,000 $ 28.70 72,084,000 42.90 50,596,000 42.93 25,649,000 40.97 43,790,000 44.36 65,604,000 42.13 36,326,000 49.89 26,117,000 45.58 42,194,000 43.80 7,473,000 46.38 14,547,000 38.85

(1)

(1) Based on current market conditions, we expect to re-lease this space at weighted average rents ranging from $35 to $40 per square foot.

Base Realignment and Closure (“BRAC”) Our Washington, DC segment was impacted by the BRAC statute, which required the Department of Defense (“DOD”) to relocate from 2,395,000 square feet in our buildings in the Northern Virginia area to government owned military bases. See page 47 for the status of BRAC related move-outs.

28

RETAIL PROPERTIES During 2014, we substantially completed our exit from our Retail Properties segment which comprises our non-Manhattan strip shopping centers and regional malls business as follows: On February 24, 2014, we sold the Broadway Mall in Hicksville, Long Island, New York, for $94,000,000. On March 2, 2014, we entered into an agreement to transfer upon completion, the redeveloped Springfield Town Center, a 1,350,000 square foot mall located in Springfield, Fairfax County, Virginia, to Pennsylvania Real Estate Investment Trust (NYSE: PEI) (“PREIT”) in exchange for $465,000,000 comprised of $340,000,000 of cash and $125,000,000 of PREIT operating partnership units. The redevelopment was substantially completed in October 2014, at which time we reclassified the assets, liabilities and financial results to discontinued operations. The transfer of the property to PREIT is expected to be completed no later than March 31, 2015. On July 8, 2014, we sold the Beverly Connection, a 335,000 square foot power shopping center in Los Angeles, California, for $260,000,000, of which $239,000,000 was cash and $21,000,000 was 10-year mezzanine seller financing. We sold six small retail assets during 2014 in separate transactions, for an aggregate of $66,410,000 in cash. On January 15, 2015, we spun-off 79 strip shopping centers, three malls, and a warehouse park to Urban Edge Properties (“UE”) (NYSE: UE). Beginning with the first quarter of 2015, the financial results of these properties will be classified as discontinued operations. Retail Properties’ lease terms generally range from five years or less in some instances for smaller tenants to as long as 25 years for major tenants. Leases generally provide for reimbursements of real estate taxes, insurance and common area maintenance charges (including roof and structure in strip shopping centers, unless it is the tenant’s direct responsibility), and percentage rents based on tenant sales volume. Percentage rents accounted for less than 1% of the Retail Properties total revenues during 2014. As of December 31, 2014, the occupancy rate for the Retail Properties segment was 95.9%. Occupancy and weighted average annual rent per square foot: Strip Shopping Centers:

As of December 31, 2014 2013 2012 2011 2010

Vornado's Ownership Interest Weighted Average Occupancy Annual Net Rent Square Feet Rate Per Square Foot 12,920,000 96.1 % $ 17.45 12,923,000 95.4 % 17.24 12,701,000 95.2 % 16.93 12,747,000 95.3 % 16.69 12,675,000 94.6 % 15.98

Total Property Square Feet 13,346,000 13,302,000 13,080,000 13,126,000 13,028,000

Regional Malls:

As of December 31, 2014 2013 2012 2011 2010

Total Property Square Feet 3,451,000 3,451,000 3,424,000 3,409,000 3,362,000

Square Feet 2,353,000 2,352,000 2,326,000 2,305,000 2,133,000

29

Vornado's Ownership Interest Weighted Average Annual Net Rent Per Square Foot Mall and Occupancy Mall Anchor Rate Tenants Tenants 95.1 % $ 43.89 $ 26.30 95.4 % 43.83 25.95 93.6 % 46.37 26.20 92.9 % 45.07 25.49 93.5 % 45.18 26.47

RETAIL PROPERTIES – CONTINUED Tenants accounting for 2% or more of revenues:

Tenant The Home Depot Wal-Mart Lowe's Best Buy The TJX Companies, Inc. Stop & Shop / Koninklijke Ahold NV Kohl's Sears Holding Company (Kmart Corp. and Sears Corp.) Shop Rite BJ's Wholesale Club

Square Feet Leased 994,000 1,439,000 976,000 443,000 567,000 633,000 716,000 547,000 337,000 454,000

$

2014 Revenues 19,431,000 18,144,000 13,120,000 12,536,000 11,902,000 10,471,000 9,554,000 7,733,000 7,587,000 7,411,000

2014 rental revenue by type of retailer Industry Discount Stores Home Improvement Supermarkets Family Apparel Restaurants Home Entertainment and Electronics Banking and Other Business Services Personal Services Sporting Goods, Toys and Hobbies Home Furnishings Membership Warehouse Clubs Women's Apparel Other

30

Percentage 20 % 11 % 11 % 8% 8% 7% 4% 4% 4% 3% 3% 3% 14 % 100 %

Percentage of Retail Properties Revenues 5.9 % 5.5 % 4.0 % 3.8 % 3.6 % 3.2 % 2.9 % 2.4 % 2.3 % 2.3 %

Percentage of Total Revenues 0.7 % 0.7 % 0.5 % 0.5 % 0.5 % 0.4 % 0.4 % 0.3 % 0.3 % 0.3 %

RETAIL PROPERTIES – CONTINUED Lease expirations as of December 31, 2014, assuming none of the tenants exercise renewal options:

Year Strip Shopping Centers: Month to month 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Regional Malls: Month to month 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Number of Expiring Leases

Percentage of Retail Properties Square Feet

Square Feet of Expiring Leases

7 32 60 55 53 75 47 32 43 39 46

38,000 177,000 606,000 425,000 1,293,000 1,317,000 1,142,000 578,000 927,000 1,136,000 1,225,000

10 33 33 21 24 26 23 12 6 8 10

30,000 80,000 87,000 40,000 53,000 173,000 105,000 130,000 37,000 37,000 105,000

(1)

(2)

Weighted Average Annual Net Rent of Expiring Leases Total Per Square Foot

0.3 % 1.3 % 4.3 % 3.0 % 9.2 % 9.4 % 8.2 % 4.1 % 6.6 % 8.1 % 8.7 %

$

0.2 % 0.6 % 0.6 % 0.3 % 0.4 % 1.2 % 0.7 % 0.9 % 0.3 % 0.3 % 0.7 %

$

1,036,000 5,798,000 10,304,000 7,525,000 18,767,000 20,056,000 15,751,000 8,572,000 11,147,000 18,424,000 14,966,000

$

952,000 3,408,000 4,065,000 2,453,000 3,476,000 6,298,000 4,738,000 3,721,000 1,370,000 1,454,000 3,253,000

$

27.03 32.62 16.99 17.69 14.51 15.23 13.79 14.83 12.03 16.22 12.22

32.10 42.27 46.75 61.82 65.09 36.38 45.22 28.72 37.28 39.55 31.06

(1) Based on current market conditions, we expect the space to be re-leased at weighted average rents ranging from $33 to $37 per square foot. (2) Based on current market conditions, we expect the space to be re-leased at weighted average rents ranging from $43 to $47 per square foot.

31

(1)

(2)

OTHER INVESTMENTS The Mart As of December 31, 2014, we own the 3.6 million square foot the Mart in Chicago, whose largest tenant is Motorola Mobility, guaranteed by Google, which leases 608,000 square feet. The Mart is encumbered by a $550,000,000 mortgage loan that bears interest at a fixed rate of 5.57% and matures in December 2016. As of December 31, 2014 the Mart had an occupancy rate of 94.7% and a weighted average annual rent per square foot of $35.97.

555 California Street As of December 31, 2014, we own a 70% controlling interest in a three-building office complex containing 1.8 million square feet, known as the Bank of America Center, located at California and Montgomery Streets in San Francisco’s financial district (“555 California Street”). 555 California Street is encumbered by a $597,868,000 mortgage loan that bears interest at a fixed rate of 5.10% and matures in September 2021. As of December 31, 2014, 555 California Street had an occupancy rate of 97.6% and a weighted average annual rent per square foot of $65.98.

Vornado Capital Partners Real Estate Fund (the “Fund”) As of December 31, 2014, we own a 25.0% interest in the Fund. We are the general partner and investment manager of the Fund. At December 31, 2014, the Fund had seven investments which are carried at an aggregate fair value of $513,973,000. Our share of unfunded commitments is $36,031,000.

Toys “R” Us, Inc. (“Toys”) As of December 31, 2014 we own a 32.6% interest in Toys, a worldwide specialty retailer of toys and baby products, which has 1,826 stores worldwide. Toys had $11.3 billion of total assets and $5.7 billion of outstanding debt at November 1, 2014, of which our pro rata share of the outstanding debt was $1.9 billion, none of which is recourse to us.

ITEM 3. LEGAL PROCEEDINGS 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 is not expected to have a material adverse effect on our financial position, results of operations or cash flows.

ITEM 4. MINE SAFETY DISCLOSURES Not applicable.

32

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Vornado’s common shares are traded on the New York Stock Exchange under the symbol “VNO.” Quarterly high and low sales prices of the common shares and dividends paid per common share for the years ended December 31, 2014 and 2013 were as follows: Year Ended December 31, 2014 Quarter 1st 2nd 3rd 4th

High $

100.02 109.01 109.12 120.23

Low $

87.82 96.93 99.26 93.09

Year Ended December 31, 2013 Dividends $

0.73 0.73 0.73 0.73

High $

85.94 88.73 89.35 91.91

Low $

79.43 76.19 79.56 82.73

Dividends $

0.73 0.73 0.73 0.73

As of February 1, 2015, there were 1,117 holders of record of our common shares.

Recent Sales of Unregistered Securities During the fourth quarter of 2014, we issued 6,179 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 this Annual Report on Form 10-K and such information is incorporated by reference herein.

Recent Purchases of Equity Securities None

33

Performance Graph The following graph is a comparison of the five-year cumulative return of our common shares, the Standard & Poor’s 500 Index (the “S&P 500 Index”) and the National Association of Real Estate Investment Trusts’ (“NAREIT”) All Equity Index, a peer group index. The graph assumes that $100 was invested on December 31, 2009 in our common shares, the S&P 500 Index and the NAREIT All Equity Index and that all dividends were reinvested without the payment of any commissions. There can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the graph below.

Vornado Realty Trust S&P 500 Index The NAREIT All Equity Index

2009 $ 100 100 100

2010 $ 123 115 128

34

2011 $ 118 117 139

2012 $ 128 136 166

2013 $ 147 180 171

2014 $ 201 205 218

ITEM 6.

SELECTED FINANCIAL DATA

(Amounts in thousands, except per share amounts) Operating Data: Revenues: Property rentals Tenant expense reimbursements Cleveland Medical Mart development project Fee and other income Total revenues Expenses: Operating Depreciation and amortization General and administrative Cleveland Medical Mart development project Acquisition and transaction related costs, and impairment losses Total expenses Operating income Income (loss) from Real Estate Fund (Loss) income applicable to Toys "R" Us Income from partially owned entities Interest and debt expense Interest and other investment income (loss), net Net gain on disposition of wholly owned and partially owned assets Net loss on extinguishment of debt Income before income taxes Income tax (expense) benefit Income from continuing operations Income from discontinued operations Net income Less net income attributable to noncontrolling interests in: Consolidated subsidiaries Operating Partnership Preferred unit distributions of the Operating Partnership Net income attributable to Vornado Preferred share dividends Preferred unit and share redemptions Net income attributable to common shareholders Per Share Data: Income (loss) from continuing operations, net - basic Income (loss) from continuing operations, net - diluted Net income per common share - basic Net income per common share - diluted Dividends per common share Balance Sheet Data: Total assets Real estate, at cost Accumulated depreciation Debt Total equity

2014

$

$

2013

2,110,797 329,398 195,745 2,635,940

$

Year Ended December 31, 2012 2011

2,081,115 301,167 36,369 250,618 2,669,269

$

1,990,784 279,075 235,234 144,124 2,649,217

$

2010

2,015,461 288,889 154,080 149,165 2,607,595

$ 2,002,920 290,998 146,140 2,440,058

1,064,753 536,230 185,924 -

1,030,951 515,724 196,267 32,210

988,883 490,028 190,109 226,619

959,166 493,657 188,450 145,824

950,453 467,475 198,117 -

33,391 1,820,298 815,642 163,034 (73,556) 15,425 (467,715) 38,787

43,857 1,819,009 850,260 102,898 (362,377) 23,592 (481,304) (24,876)

25,786 1,921,425 727,792 63,936 14,859 408,267 (484,794) (261,179)

35,205 1,822,302 785,293 22,886 48,540 70,072 (508,555) 148,537

36,958 1,653,003 787,055 (303) 71,624 20,869 (509,912) 234,913

13,568 505,185 (11,002) 494,183 514,843 1,009,026

3,407 111,600 6,406 118,006 446,734 564,740

13,347 482,228 (8,132) 474,096 220,445 694,541

15,134 581,907 (23,925) 557,982 182,018 740,000

81,432 (10,782) 674,896 (22,137) 652,759 55,272 708,031

(96,561) (47,563) (50) 864,852 (81,464) 783,388

(63,952) (23,659) (1,158) 475,971 (82,807) (1,130) 392,034

(32,018) (35,327) (9,936) 617,260 (76,937) 8,948 549,271

(21,786) (41,059) (14,853) 662,302 (65,531) 5,000 601,771

(4,920) (44,033) (11,195) 647,883 (55,534) 4,382 596,731

$

1.59 1.58 4.18 4.15 2.92

$ 21,248,320 18,845,392 (3,629,135) 10,898,859 7,489,382

(1) Includes a special long-term capital gain dividend of $1.00 per share.

35

$

$

(0.14) (0.14) 2.10 2.09 2.92

$ 20,097,224 17,418,946 (3,296,717) 9,978,718 7,594,744

$

$

1.83 1.82 2.95 2.94 3.76

$ 22,065,049 17,365,533 (2,966,067) 11,042,050 7,904,144

$

$

(1)

2.34 2.32 3.26 3.23 2.76

$ 20,446,487 15,444,754 (2,742,244) 9,710,265 7,508,447

$

$

2.99 2.96 3.27 3.24 2.60

$ 20,517,471 15,165,420 (2,395,247) 9,971,527 6,830,405

ITEM 6.

SELECTED FINANCIAL DATA - CONTINUED

(Amounts in thousands) Other Data: Funds From Operations ("FFO")(1): Net income attributable to Vornado $ Depreciation and amortization of real property Net gains on sale of real estate Real estate impairment losses Proportionate share of adjustments to equity in net (loss) income of Toys, to arrive at FFO: Depreciation and amortization of real property Net gains on sale of real estate Real estate impairment losses Income tax effect of above adjustments 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 Net gains on sale of real estate Real estate impairment losses Noncontrolling interests' share of above adjustments FFO Preferred share dividends Preferred unit and share redemptions FFO attributable to common shareholders Convertible preferred share dividends Interest on 3.88% exchangeable senior debentures FFO attributable to common shareholders plus assumed conversions(1) $

2014

864,852 517,493 (507,192) 26,518

2013

$

Year Ended December 31, 2012 2011

475,971 501,753 (411,593) 37,170

$

617,260 504,407 (245,799) 129,964

$

662,302 530,113 (51,623) 28,799

2010

$

647,883 505,806 (57,248) 97,500

21,579 (760) (7,287)

69,741 6,552 (26,703)

68,483 9,824 (27,493)

70,883 (491) (24,634)

70,174 (24,561)

96,187 (10,820) (8,073) 992,497 (81,464) 911,033 97 -

87,529 (465) (15,089) 724,866 (82,807) (1,130) 640,929 108 -

86,197 (241,602) 1,849 (16,649) 886,441 (76,937) 8,948 818,452 113 -

99,992 (9,276) (40,957) 1,265,108 (65,531) 5,000 1,204,577 124 26,272

78,151 (5,784) 11,481 (46,794) 1,276,608 (55,534) 4,382 1,225,456 160 25,917

1,230,973

$ 1,251,533

911,130

$

641,037

$

818,565

$

________________________________ (1) 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, real estate impairment losses, 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.

36

ITEM 7.

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

Overview Overview - Leasing activity Critical Accounting Policies Net Income and EBITDA by Segment for the Years Ended December 31, 2014, 2013 and 2012 Results of Operations: Year Ended December 31, 2014 Compared to December 31, 2013 Year Ended December 31, 2013 Compared to December 31, 2012 Supplemental Information: Net Income and EBITDA by Segment for the Three Months Ended December 31, 2014 and 2013 Three Months Ended December 31, 2014 Compared to December 31, 2013 Three Months Ended December 31, 2014 Compared to September 30, 2014 Related Party Transactions Liquidity and Capital Resources Financing Activities and Contractual Obligations Certain Future Cash Requirements Cash Flows for the Year Ended December 31, 2014 Cash Flows for the Year Ended December 31, 2013 Cash Flows for the Year Ended December 31, 2012 Funds From Operations for the Three Months and Years Ended December 31, 2014 and 2013

37

Page Number 38 43 48 51 56 63

71 76 78 80 81 81 84 87 89 91 93

Overview 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 94.1% of the common limited partnership interest in the Operating Partnership at December 31, 2014. All references to “we,” “us,” “our,” the “Company” and “Vornado” refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership. On January 15, 2015, we completed the spin-off of substantially all of our retail segment comprised of 79 strip shopping centers, three malls, a warehouse park and $225 million of cash to Urban Edge Properties (“UE”) (NYSE: UE). As part of this transaction, we received 5,712,000 UE operating partnership units (5.4% ownership interest). We are providing transition services to UE for an initial period of up to two years, including information technology, human resources, tax and public reporting. UE is providing us with leasing and property management services for (i) the Monmouth Mall, (ii) certain small retail properties which did not fit UE’s strategy that we plan to sell, and (iii) our affiliate, Alexander’s, Inc. (NYSE: ALX), Rego Park retail assets. Steven Roth, our Chairman and Chief Executive Officer is a member of the Board of Trustees of UE. The spin-off distribution was effected by Vornado distributing one UE common share for every two Vornado common shares. Beginning in the first quarter of 2015, the historical financial results of UE will be reflected in our consolidated financial statements as discontinued operations for all periods presented. We own and operate office and retail properties (our “core” operations) with large concentrations in the New York City metropolitan area and in the Washington, DC / Northern Virginia area. In addition, we have a 32.4% interest in Alexander’s, Inc. (NYSE: ALX) (“Alexander’s”), which owns six properties in the greater New York metropolitan area, a 32.6% interest in Toys “R” Us, Inc. (“Toys”) as well as interests in other real estate and related investments. 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 FTSE NAREIT Office Index (“Office REIT”) and the Morgan Stanley REIT Index (“RMS”) for the following periods ended December 31, 2014: Total Return(1) Three-months One-year Three-year Five-year Ten-year

Vornado 18.5% 36.4% 70.8% 100.6% 131.1%

Office REIT 12.7% 25.9% 51.7% 78.2% 89.5%

RMS 14.3% 30.4% 57.3% 119.7% 122.2%

(1) Past performance is not necessarily indicative of future performance.

We intend to achieve our business objective by continuing to pursue our investment philosophy and execute 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 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 securities in the future. We compete with a large number of property owners and developers, some of which may be willing to accept lower returns on their investments than we are. Principal factors of competition include rents charged, sales prices, attractiveness of location, the quality of the property and the breadth and the quality of services provided. See “Risk Factors” in Item 1A for additional information regarding these factors.

38

Overview - continued Year Ended December 31, 2014 Financial Results Summary Net income attributable to common shareholders for the year ended December 31, 2014 was $783,388,000, or $4.15 per diluted share, compared to $392,034,000, or $2.09 per diluted share for the year ended December 31, 2013. Net income for the years ended December 31, 2014 and 2013 includes $518,772,000 and $412,058,000, respectively, of net gains on sale of real estate, and $26,518,000 and $43,722,000, respectively, of real estate impairment losses. In addition, the years ended December 31, 2014 and 2013 include certain items that affect comparability which are listed in the table below. The aggregate of net gains on sale of real estate, real estate impairment losses and the items in the table below, net of amounts attributable to noncontrolling interests, increased net income attributable to common shareholders for the year ended December 31, 2014 by $371,567,000, or $1.97 per diluted share and $26,657,000, or $0.14 per diluted share for the year ended December 31, 2013. Funds from operations attributable to common shareholders plus assumed conversions (“FFO”) for the year ended December 31, 2014 was $911,130,000, or $4.83 per diluted share, compared to $641,037,000, or $3.41 per diluted share for the prior year. FFO for the years ended December 31, 2014 and 2013 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, decreased FFO for the year ended December 31, 2014 by $69,122,000, or $0.37 per diluted share and $255,502,000, or $1.36 per diluted share for the year ended December 31, 2013.

(Amounts in thousands) Items that affect comparability income (expense): Toys "R" Us negative FFO (including impairment losses of $75,196 and $240,757, respectively) FFO from discontinued operations, including LNR in 2013 Acquisition and transaction related costs Write-off of deferred financing costs and defeasance costs in connection with refinancings Net gain on sale of residential condominiums and land parcels Impairment loss and loan reserve on investment in Suffolk Downs Losses from the disposition of investment in J.C. Penney Stop & Shop litigation settlement income Net gain on sale of marketable securities Net gain on sale of Harlem Park property under development Other, net Noncontrolling interests' share of above adjustments Items that affect comparability, net

For the Year Ended December 31, 2014 2013

$

(60,024) 39,525 (31,348) (22,660) 13,568 (10,263) (2,097) (73,299) 4,177 (69,122)

$

$

$

(312,788) 80,779 (24,857) (8,814) 2,997 (127,888) 59,599 31,741 23,507 3,847 (271,877) 16,375 (255,502)

The percentage increase (decrease) in same store Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and cash basis same store EBITDA of our operating segments for the year ended December 31, 2014 over the year ended December 31, 2013 is summarized below. Same Store EBITDA: December 31, 2014 vs. December 31, 2013 Same store EBITDA Cash basis same store EBITDA

New York

Washington, DC 4.7% 7.6%

39

(2.4%) (2.3%)

Retail Properties 1.7% 2.3%

Overview - continued Quarter Ended December 31, 2014 Financial Results Summary Net income attributable to common shareholders for the quarter ended December 31, 2014 was $513,238,000, or $2.72 per diluted share, compared to a net loss of $68,887,000, or $0.37 per diluted share for the quarter ended December 31, 2013. Net income for the quarter ended December 31, 2014 and net loss for the quarter ended December 31, 2013 include $460,216,000 and $127,512,000, respectively, of net gains on sale of real estate, and $5,676,000 and $32,899,000, respectively, of real estate impairment losses. In addition, the quarters ended December 31, 2014 and 2013 include certain other items that affect comparability which are listed in the table below. The aggregate of net gains on sale of real estate, real estate impairment losses and the items in the table below, net of amounts attributable to noncontrolling interests, increased net income attributable to common shareholders for the quarter ended December 31, 2014 by $400,211,000, or $2.12 per diluted share and decreased net loss attributable to common shareholders for the quarter ended December 31, 2013 by $167,086,000, or $0.89 per diluted share. FFO for the quarter ended December 31, 2014 was a positive $230,143,000, or $1.22 per diluted share, compared to a negative $6,784,000, or $0.04 per diluted share for the prior year’s quarter. FFO for the quarters ended December 31, 2014 and 2013 include certain items that affect comparability which are listed in the table below. The aggregate of these items, net of amounts attributable to noncontrolling interests, decreased FFO for the quarter ended December 31, 2014 by $25,994,000, or $0.14 per diluted share and $241,605,000, or $1.29 per diluted share for the quarter ended December 31, 2013.

(Amounts in thousands) Items that affect comparability income (expense): Acquisition and transaction related costs Write-off of deferred financing costs and defeasance costs in connection with refinancings FFO from discontinued operations Toys "R" Us FFO (negative FFO) (including a $162,215 impairment loss in 2013) Net gain on sale of residential condominiums and land parcels Net gain on sale of Harlem Park property under development Deferred income tax reversal Other, net Noncontrolling interests' share of above adjustments Items that affect comparability, net

For the Three Months Ended December 31, 2014 2013 $

(18,376) (16,747) 8,656 606 363 (2,097) (27,595) 1,601 (25,994)

$

$

$

(18,088) (8,436) 15,757 (282,041) 481 23,507 16,055 (4,183) (256,948) 15,343 (241,605)

The percentage increase (decrease) in same store EBITDA and cash basis same store EBITDA of our operating segments for the quarter ended December 31, 2014 over the quarter ended December 31, 2013 and the trailing quarter ended September 30, 2014 are summarized below.

Same Store EBITDA: December 31, 2014 vs. December 31, 2013 Same store EBITDA Cash basis same store EBITDA December 31, 2014 vs. September 30, 2014 Same store EBITDA Cash basis same store EBITDA

New York

Washington, DC

Retail Properties

3.3% 8.2%

(2.3%) (3.8%)

1.9% 2.4%

1.8% 4.7%

(3.0%) (3.4%)

0.6% 0.7%

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.

40

Overview – continued Acquisitions On June 26, 2014, we invested an additional $22,700,000 to increase our ownership in One Park Avenue to 55.0% from 46.5% through a joint venture with an institutional investor, who increased its ownership interest to 45.0%. The transaction was based on a property value of $560,000,000. The property is encumbered by a $250,000,000 interest-only mortgage loan that bears interest at 4.995% and matures in March 2016. On July 23, 2014, a joint venture in which we are a 50.1% partner entered into a 99-year ground lease for 61 Ninth Avenue located on the Southwest corner of Ninth Avenue and 15th Street in Manhattan. The venture’s current plans are to construct an office building, with retail at the base, of approximately 130,000 square feet. Total development costs are currently estimated to be approximately $125,000,000. On August 1, 2014, we acquired the land under our 715 Lexington Avenue retail property located on the Southeast corner of 58th Street and Lexington Avenue in Manhattan, for $63,000,000. On October 28, 2014, we completed the purchase of the retail condominium of the St. Regis Hotel for $700,000,000. We own a 74.3% controlling interest of the joint venture which owns the property. The acquisition was used in a like-kind exchange for income tax purposes for the sale of 1740 Broadway (see below). We consolidate the accounts of the venture into our consolidated financial statements from the date of acquisition. On November 21, 2014, we entered into an agreement to acquire the Center Building, an eight story 437,000 square foot office building, located at 33-00 Northern Boulevard in Long Island City, New York. The building is 98% leased. The purchase price is approximately $142,000,000, including the assumption of an existing $62,000,000 4.43% mortgage maturing in October 2018. The purchase is expected to close in the first quarter of 2015, subject to customary closing conditions. As of December 31, 2014, our $14,200,000 non-refundable deposit was included in “other assets” on our consolidated balance sheet. On January 20, 2015, we co-invested with our 25% owned Fund and one of the Fund’s limited partners to buy out the Fund’s joint venture partner’s 57% interest in the Crowne Plaza Times Square Hotel. The purchase price for the 57% interest was approximately $95,000,000 (our share $39,000,000) which valued the property at approximately $480,000,000. The property is encumbered by a newly placed $310,000,000 mortgage loan bearing interest at LIBOR plus 2.80% and maturing in December 2018 with a one-year extension option. Our aggregate ownership interest in the property increased to 33% from 11%. Dispositions New York On December 18, 2014, we completed the sale of 1740 Broadway, a 601,000 square foot office building in Manhattan for $605,000,000. The sale resulted in net proceeds of approximately $580,000,000, after closing costs, and resulted in a financial statement gain of approximately $441,000,000. The tax gain of approximately $484,000,000, was deferred in like-kind exchanges, primarily for the acquisition of the St. Regis Fifth Avenue retail. Retail Properties On February 24, 2014, we completed the sale of Broadway Mall in Hicksville, Long Island, New York, for $94,000,000. The sale resulted in net proceeds of $92,174,000 after closing costs. On March 2, 2014, we entered into an agreement to transfer upon completion, the redeveloped Springfield Town Center, a 1,350,000 square foot mall located in Springfield, Fairfax County, Virginia, to Pennsylvania Real Estate Investment Trust (NYSE: PEI) (“PREIT”) in exchange for $465,000,000 comprised of $340,000,000 of cash and $125,000,000 of PREIT operating partnership units. In connection therewith, we recorded a non-cash impairment loss of $20,000,000 in the first quarter of 2014, which is included in “income from discontinued operations” on our consolidated statements of income. The redevelopment was substantially completed in October 2014, at which time we reclassified the assets, liabilities and financial results to discontinued operations, and the transfer of the property to PREIT is expected to be completed no later than March 31, 2015. On July 8, 2014, we completed the sale of Beverly Connection, a 335,000 square foot power shopping center in Los Angeles, California, for $260,000,000, of which $239,000,000 was cash and $21,000,000 was 10-year mezzanine seller financing. The sale resulted in a net gain of $44,155,000, which was recognized in the third quarter of 2014. In addition to the above, during 2014, we sold six of the 22 strip shopping centers which did not fit UE’s strategy, in separate transactions, for an aggregate of $66,410,000 in cash, which resulted in a net gain aggregating $22,500,000. 41

Overview – continued Financings Secured Debt On January 31, 2014, we completed a $600,000,000 loan secured by our 220 Central Park South development site. The loan bears interest at LIBOR plus 2.75% (2.92% at December 31, 2014) and matures in January 2016, with three one-year extension options. On April 16, 2014, we completed a $350,000,000 refinancing of 909 Third Avenue, a 1.3 million square foot Manhattan office building. The seven-year interest only loan bears interest at 3.91% and matures in May 2021. We realized net proceeds of approximately $145,000,000 after defeasing the existing 5.64%, $193,000,000 mortgage, defeasance cost and other closing costs. On July 16, 2014, we completed a $130,000,000 financing of Las Catalinas, a 494,000 square foot mall located in the San Juan area of Puerto Rico. The 10-year fixed rate loan bears interest at 4.43% and matures in August 2024. The loan amortizes based on a 30-year schedule beginning in year six. On August 12, 2014, we completed a $185,000,000 financing of the Universal buildings, a 690,000 square foot, two-building office complex located in Washington, DC. The loan bears interest at LIBOR plus 1.90% (2.06% at December 31, 2014) and matures in August 2019 with two one-year extension options. The loan amortizes based on a 30-year schedule beginning in the fourth year. On August 26, 2014, we obtained a standby commitment for up to $500,000,000 of five-year mezzanine loan financing to fund a portion of the development expenditures at 220 Central Park South. On October 27, 2014, we completed a $140,000,000 financing of 655 Fifth Avenue, a 57,500 square foot retail and office property. The loan is interest only at LIBOR plus 1.40% (1.56% at December 31, 2014) and matures in October 2019 with two oneyear extension options. On December 8, 2014, we completed a $575,000,000 refinancing of Two Penn Plaza, a 1.6 million square foot Manhattan office building. The loan is interest-only at LIBOR plus 1.65% (1.81% at December 31, 2014) and matures in 2019 with two one-year extension options. We realized net proceeds of approximately $143,000,000. Pursuant to an existing swap agreement, the $422,000,000 previous loan on the property was swapped to a fixed rate of 4.78% through March 2018. Therefore, $422,000,000 of the new loan bears interest at a fixed rate of 4.78% through March 2018 and the balance of $153,000,000 floats through March 2018. The entire $575,000,000 will float thereafter for the duration of the new loan. On January 6, 2015, we completed the modification of the $120,000,000, 6.04% mortgage loan secured by our Montehiedra Town Center, in the San Juan area of Puerto Rico. The loan has been extended from July 2016 to July 2021 and separated into two tranches, a senior $90,000,000 position with interest at 5.33% to be paid currently, and a junior $30,000,000 position with interest accruing at 3%. Montehiedra Town Center and the loan were included in the spin-off to UE on January 15, 2015. As part of the planned redevelopment of the property, UE is committed to fund $20,000,000 through a loan for leasing and building capital expenditures of which $8,000,000 has been funded. This loan is senior to the $30,000,000 position noted above and accrues interest at 10%. Senior Unsecured Notes On June 16, 2014, we completed a green bond public offering of $450,000,000 2.50% senior unsecured notes due June 30, 2019. The notes were sold at 99.619% of their face amount to yield 2.581%. On October 1, 2014, we redeemed all of the $445,000,000 principal amount of our outstanding 7.875% senior unsecured notes, which were scheduled to mature on October 1, 2039, at a redemption price of 100% of the principal amount plus accrued interest through the redemption date. In the fourth quarter of 2014, we wrote off $12,532,000 of unamortized deferred financing costs, which are included as a component of “interest and debt expense” on our consolidated statements of income. On January 1, 2015, we redeemed all of the $500,000,000 principal amount of our outstanding 4.25% senior unsecured notes, which were scheduled to mature on April 1, 2015, at a redemption price of 100% of the principal amount plus accrued interest through December 31, 2014. Unsecured Revolving Credit Facility On September 30, 2014, we extended one of our two $1.25 billion unsecured revolving credit facilities from November 2015 to November 2018 with two six-month extension options. The interest rate on the extended facility was lowered to LIBOR plus 105 basis points from LIBOR plus 125 basis points and the facility fee was reduced to 20 basis points from 25 basis points. 42

Overview - continued

Leasing Activity 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 square feet leased during the period. Second generation relet space represents square footage that has not been vacant for more than nine months. The leasing activity for the New York segment excludes Alexander’s, the Hotel Pennsylvania and residential. New York (Square feet in thousands) Quarter Ended December 31, 2014: Total square feet leased Our share of square feet leased Initial rent (1) Weighted average lease term (years) Second generation relet space: Square feet Cash basis: Initial rent (1) Prior escalated rent Percentage increase (decrease) GAAP basis: Straight-line rent (2) Prior straight-line rent Percentage increase (decrease) Tenant improvements and leasing commissions: Per square foot Per square foot per annum: Percentage of initial rent Year Ended December 31, 2014: Total square feet leased Our share of square feet leased Initial rent (1) Weighted average lease term (years) Second generation relet space: Square feet Cash basis: Initial rent (1) Prior escalated rent Percentage increase (decrease) GAAP basis: Straight-line rent (2) Prior straight-line rent Percentage increase (decrease) Tenant improvements and leasing commissions: Per square foot Per square foot per annum: Percentage of initial rent

Office

$

Washington, DC Office

Retail

1,248 1,095 66.79 12.3

51 51 410.63 11.5

$

732

$

45

Retail Properties Strips Malls

658 619 36.86 9.4

$

461

210 210 18.98 6.6

$

92

57 51 49.18 6.4 15

$ $

68.25 60.63 12.6%

$ $

260.31 175.49 48.3%

$ $

36.64 39.68 (7.7%)

$ $

13.16 13.16 -

$ $

69.20 69.64 (0.6%)

$ $

67.80 55.87 21.4%

$ $

307.92 173.75 77.2%

$ $

34.42 36.89 (6.7%)

$ $

13.21 12.72 3.9%

$ $

70.22 67.21 4.5%

$ $

78.45 6.38 9.5%

$ $

177.43 15.43 3.8%

$ $

61.48 6.54 17.7%

$ $

5.24 0.79 4.2%

$ $

16.53 2.58 5.3%

$

3,973 3,416 66.78 11.3

119 114 327.38 11.2

$

2,550

$

92

1,817 1,674 38.57 8.2

(3) (3)

$

1,121

890 890 19.15 6.8

$

434

161 142 36.19 5.6 70

$ $

68.18 60.50 12.7%

$ $

289.74 206.62 40.2%

$ $

38.57 41.37 (6.8%)

$ $

20.31 19.45 4.4%

$ $

34.16 32.98 3.6%

$ $

67.44 56.76 18.8%

$ $

331.33 204.15 62.3%

$ $

36.97 38.25 (3.3%)

$ $

20.53 18.77 9.4%

$ $

34.71 32.29 7.5%

$ $

75.89 6.72 10.1%

$ $

110.60 9.88 3.0%

$ $

46.77 5.70 14.8%

$ $

10.66 1.57 8.2%

$ $

11.96 2.14 5.9%

See notes on the following page.

43

(4) (4) (4)

Overview - continued Leasing Activity - continued New York (Square feet in thousands) Year Ended December 31, 2013: Total square feet leased Our share of square feet leased: Initial rent (1) Weighted average lease term (years) Second generation relet space: Square feet Cash basis: Initial rent (1) Prior escalated rent Percentage increase (decrease) GAAP basis: Straight-line rent(2) Prior straight-line rent Percentage increase Tenant improvements and leasing commissions: Per square foot Per square foot per annum: Percentage of initial rent

Office

$

2,410 2,024 60.78 11.0

Washington, DC Office

Retail

138 121 268.52 8.6

$

1,716

$

103

1,836 1,392 39.91 7.0

Retail Properties Strips Malls

$

910

1,388 1,388 17.27 6.2

$

959

$ $

60.04 56.84 5.6%

$ $

262.67 117.45 123.7%

$ $

40.91 $ 41.16 $ (0.6%)

$ $

59.98 52.61 14.0%

$ $

293.45 152.34 92.6%

$ $

40.87 39.36 3.8%

$ $

61.78 5.61 9.2%

$ $

100.93 11.64 4.3%

$ $

33.24 4.75 11.9%

674 600 26.39 8.1 205

16.57 15.18 9.2%

$ $

23.59 22.76 3.6%

$ $

16.91 14.76 14.6%

$ $

24.04 21.87 9.9%

$ $

3.96 0.64 3.7%

$ $

20.69 2.55 9.7%

(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) Excludes (i) 165 square feet leased to WeWork that will be redeveloped into rental residential apartments, and (ii) 82 square feet of retail space that was leased at an initial rent of $46.76 per square foot. (4) Tenant improvements and leasing commissions for the year ended December 31, 2014 reflect first generation leasing activity at our Kearny strip shopping center.

44

Overview - continued Square footage (in service) and Occupancy as of December 31, 2014:

(Square feet in thousands)

Square Feet (in service) Total Our Portfolio Share

Number of properties

Occupancy %

New York: Office Retail Alexander's Hotel Pennsylvania Residential - 1,654 units

31 56 6 1 4

20,052 2,450 2,178 1,400 1,524 27,604

16,808 2,179 706 1,400 763 21,856

96.9% 96.4% 99.7%

Washington, DC: Office, excluding the Skyline Properties Skyline Properties

51 8

13,461 2,648

11,083 2,648

87.5% 53.5%

59 7 6

16,109 2,597 384

13,731 2,455 384

80.9% 97.4% 100.0%

19,090

16,570

83.8%

Total Office Residential - 2,414 units Other

95.2% 96.9%

Retail Properties: Strip Shopping Centers Regional Malls

86 4

13,346 3,451 16,797

12,920 2,353 15,273

96.1% 95.1% 95.9%

Other: The Mart 555 California Street Primarily Warehouses

2 3 6

3,587 1,801 1,555 6,943

3,578 1,261 942 5,781

94.7% 97.6% 60.8%

70,434

59,480

Total square feet at December 31, 2014

45

Overview - continued Square footage (in service) and Occupancy as of December 31, 2013:

(Square feet in thousands)

Square Feet (in service) Total Our Portfolio Share

Number of properties

Occupancy %

New York: Office Retail Alexander's Hotel Pennsylvania Residential - 1,653 units

30 54 6 1 4

19,217 2,370 2,178 1,400 1,523 26,688

15,776 2,147 706 1,400 762 20,791

96.5% 97.4% 99.4%

Washington, DC: Office, excluding the Skyline Properties Skyline Properties

51 8

13,581 2,652

11,151 2,652

85.4% 60.8%

59 7 5

16,233 2,588 379

13,803 2,446 379

80.7% 96.3% 100.0%

19,200

16,628

83.4%

Total Office Residential - 2,405 units Other

94.8% 96.7%

Retail Properties: Strip Shopping Centers Regional Malls

89 4

13,302 3,451 16,753

12,923 2,352 15,275

95.4% 95.4% 95.4%

Other: The Mart 555 California Street Primarily Warehouses

3 3 6

3,703 1,795 1,555 7,053

3,694 1,257 942 5,893

96.3% 94.5% 45.6%

69,694

58,587

Total square feet at December 31, 2013

46

Overview - continued

Washington, DC Segment Of the 2,395,000 square feet subject to the effects of the Base Realignment and Closure (“BRAC”) statute, 393,000 square feet has been taken out of service for redevelopment and 1,137,000 square feet has been leased or is pending. The table below summarizes the status of the BRAC space. Rent Per Square Foot Resolved: Relet Leases pending Taken out of service for redevelopment

$

To Be Resolved: Vacated Expiring in 2015

Total square feet subject to BRAC

Total

Square Feet Crystal City Skyline

Rosslyn

37.19 34.29

1,126,000 11,000 393,000 1,530,000

664,000 11,000 393,000 1,068,000

381,000 381,000

81,000 81,000

35.92 43.79

771,000 94,000 865,000

281,000 88,000 369,000

425,000 6,000 431,000

65,000 65,000

2,395,000

1,437,000

812,000

146,000

Due to the effects of BRAC related move-outs and the sluggish leasing environment in the Washington, DC / Northern Virginia area, EBITDA from continuing operations for the year ended December 31, 2013 was lower than 2012 by $14,254,000 and EBITDA from continuing operations for the year ended December 31, 2014 was lower than 2013 by $5,633,000, which was offset by an interest expense reduction of $18,568,000 from the restructuring of the Skyline properties mortgage loan in October 2013. We expect 2015 EBITDA from continuing operations will be flat to 2014.

47

Critical Accounting Policies

In preparing the consolidated financial statements we have made estimates and assumptions that affect the reported amounts of 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. Set forth below is a summary of the accounting policies that we believe are critical to the preparation of our consolidated financial statements. The summary should be read in conjunction with the more complete discussion of our accounting policies included in Note 2 to the consolidated financial statements in this Annual Report on Form 10-K. Real Estate Real estate is carried at cost, net of accumulated depreciation and amortization. Betterments, major renewals and certain costs directly related to the improvement and leasing of real estate are capitalized. Maintenance and repairs are expensed as incurred. For redevelopment of existing operating properties, the net book value of the existing property under redevelopment plus the cost for the construction and improvements incurred in connection with the redevelopment are capitalized to the extent the capitalized costs of the property do not exceed the estimated fair value of the redeveloped property when complete. If the cost of the redeveloped property, including the net book value of the existing property, exceeds the estimated fair value of redeveloped property, the excess is charged to expense. Depreciation is recognized on a straight-line basis over estimated useful lives which range from 7 to 40 years. Tenant allowances are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets. Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above and below-market leases, acquired in-place leases and tenant relationships) and acquired liabilities and we allocate the purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions. We record acquired intangible assets (including acquired above-market leases, acquired in-place leases and tenant relationships) and acquired intangible liabilities (including below–market leases) at their estimated fair value separate and apart from goodwill. We amortize identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired. As of December 31, 2014 and 2013, the carrying amounts of real estate, net of accumulated depreciation, were $15.2 billion and $14.1 billion, respectively. As of December 31, 2014 and 2013, the carrying amounts of identified intangible assets (including acquired above-market leases, tenant relationships and acquired in-place leases) were $276,239,000 and $307,436,000, respectively, and the carrying amounts of identified intangible liabilities, a component of “deferred revenue” on our consolidated balance sheets, were $488,868,000 and $496,489,000, respectively. Our properties, including any related intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

48

Critical Accounting Policies – continued Partially Owned Entities We consolidate entities in which we have a controlling financial interest. In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity (“VIE”) and we are the primary beneficiary. We are deemed to be the primary beneficiary of a VIE when we have (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. We generally do not control a partially owned entity if the entity is not considered a VIE and the approval of all of the partners/members is contractually required with respect to major decisions, such as operating and capital budgets, the sale, exchange or other disposition of real property, the hiring of a chief executive officer, the commencement, compromise or settlement of any lawsuit, legal proceeding or arbitration or the placement of new or additional financing secured by assets of the venture. We account for investments under the equity method when the requirements for consolidation are not met, and we have significant influence over the operations of the investee. Equity method investments are initially recorded at cost and subsequently adjusted for our share of net income or loss and cash contributions and distributions each period. Investments that do not qualify for consolidation or equity method accounting are accounted for on the cost method. Investments in partially owned entities are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods and available information at the time the analyses are prepared. The ultimate realization of our investments in partially owned entities is dependent on a number of factors, including the performance of each investment and market conditions. If our estimates of the projected future cash flows, the nature of development activities for properties for which such activities are planned and the estimated fair value of the investment change based on market conditions or otherwise, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. As of December 31, 2014 and 2013, the carrying amounts of investments in partially owned entities, including Toys “R” Us, was $1.2 billion and $1.2 billion, respectively.

Mortgage and Mezzanine Loans Receivable We invest in mortgage and mezzanine loans of entities that have significant real estate assets. These investments are either secured by the real property or by pledges of the equity interests of the entities owning the underlying real estate. We record these investments at the stated principal amount net of any unamortized discount or premium. We accrete or amortize any discount or premium over the life of the related receivable utilizing the effective interest method or straight-line method, if the result is not materially different. We evaluate the collectibility of both interest and principal of each of our loans whenever events or changes in circumstances indicate such amounts may not be recoverable. A loan is impaired when it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient, to the value of the collateral if the loan is collateral dependent. Interest on impaired loans is recognized when received in cash. If our estimates of the collectability of both interest and principal or the fair value of our loans change based on market conditions or otherwise, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. As of December 31, 2014 and 2013, the carrying amounts of mortgage and mezzanine loans receivable were $16,748,000 and $170,972,000, respectively, net of an allowance of $5,811,000 and $5,845,000, respectively, and are included in “other assets” on our consolidated balance sheets.

49

Critical Accounting Policies – continued

Allowance For Doubtful Accounts We periodically evaluate the collectability of amounts due from tenants and maintain an allowance for doubtful accounts ($17,060,000 and $21,869,000 as of December 31, 2014 and 2013, respectively) for estimated losses resulting from the inability of tenants to make required payments under the lease agreements. We also maintain an allowance for receivables arising from the straight-lining of rents ($3,188,000 and $4,355,000 as of December 31, 2014 and 2013, respectively). This receivable arises from earnings recognized in excess of amounts currently due under the lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates. These estimates may differ from actual results, which could be material to our consolidated financial statements. Revenue Recognition We have the following revenue sources and revenue recognition policies: •

Base Rent — income arising from tenant leases. These rents are recognized over the non-cancelable term of the related leases on a straight-line basis which includes the effects of rent steps and rent abatements under the leases. We commence rental revenue recognition when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. In addition, in circumstances where we provide a tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of rental revenue on a straight-line basis over the term of the lease.

•

Percentage Rent — income arising from retail tenant leases that is contingent upon tenant sales exceeding defined thresholds. These rents are recognized only after the contingency has been removed (i.e., when tenant sales thresholds have been achieved).

•

Hotel Revenue — income arising from the operation of the Hotel Pennsylvania which consists of rooms revenue, food and beverage revenue, and banquet revenue. Income is recognized when rooms are occupied. Food and beverage and banquet revenue are recognized when the services have been rendered.

•

Trade Shows Revenue — income arising from the operation of trade shows, including rentals of booths. This revenue is recognized when the trade shows have occurred.

•

Expense Reimbursements — revenue arising from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred.

•

Management, Leasing and Other Fees — income arising from contractual agreements with third parties or with partially owned entities. This revenue is recognized as the related services are performed under the respective agreements.

• Cleveland Medical Mart — revenue arising from the development of the Cleveland Medical Mart. This revenue was recognized as the related services were performed under the respective agreements using the criteria set forth in ASC 605-25, Multiple Element Arrangements. Before we recognize revenue, we assess, among other things, its collectibility. If our assessment of the collectibility of revenue changes, the impact on our consolidated financial statements could be material. Income Taxes We operate in a manner intended to enable us to continue to qualify as a Real Estate Investment Trust (“REIT”) under Sections 856-860 of the Internal Revenue Code of 1986, as amended. Under those sections, a REIT which distributes at least 90% of its REIT taxable income as a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We distribute to our shareholders 100% of our taxable income and therefore, no provision for Federal income taxes is required. If we fail to distribute the required amount of income to our shareholders, or fail to meet other REIT requirements, we may fail to qualify as a REIT which may result in substantial adverse tax consequences.

50

Net Income and EBITDA by Segment for the Years Ended December 31, 2014, 2013 and 2012

Below is a summary of net income and a reconciliation of net income to EBITDA(1) by segment for the years ended December 31, 2014, 2013 and 2012.

(Amounts in thousands) Total Total revenues Total expenses Operating income (loss) (Loss) income from partially owned entities, including Toys Income from Real Estate Fund Interest and other investment income, net Interest and debt expense Net gain on disposition of wholly owned and partially owned assets Income (loss) before income taxes Income tax expense Income (loss) from continuing operations Income from discontinued operations Net income (loss) Less net income attributable to noncontrolling interests Net income (loss) attributable to Vornado Interest and debt expense(2) Depreciation and amortization(2) Income tax expense(2) EBITDA(1)

$

$

2,635,940 1,820,298 815,642

New York $

For the Year Ended December 31, 2014 Retail Washington, DC Properties

1,520,845 946,466 574,379

$

537,151 358,019 179,132

$

326,947 197,206 129,741

Toys $

Other -

$

(58,131) 163,034

20,701 -

(3,677) -

1,730 -

38,787 (467,715)

6,711 (183,427)

183 (75,395)

35 (54,754)

13,568 505,185 (11,002)

418,364 (4,305)

100,243 (242)

76,752 (1,721)

(73,556) -

13,568 (16,618) (4,734)

494,183

414,059

100,001

75,031

(73,556)

(21,352)

514,843 1,009,026

463,163 877,222

100,001

50,873 125,904

(73,556)

807 (20,545)

(144,174)

(8,626)

864,852 654,398 685,973 24,248 2,229,471

868,596 241,959 324,239 4,395 1,439,189

$

-

(3)

$

____________________________ See notes on pages 53 and 54.

51

100,001 89,448 145,853 288 335,590

(73,556) -

250,997 318,607 (67,610)

-

(119)

(4)

$

125,785 59,322 73,433 1,721 260,261

(3,329) 163,034 31,858 (154,139)

-

(5)

$

(73,556) 100,549 64,533 12,106 103,632

(135,429)

$

(155,974) 163,120 77,915 5,738 90,799 (6)

Net Income and EBITDA by Segment for the Years Ended December 31, 2014, 2013 and 2012 - continued (Amounts in thousands) Total Total revenues Total expenses Operating income (loss) (Loss) income from partially owned entities, including Toys Income from Real Estate Fund Interest and other investment (loss) income, net Interest and debt expense Net gain on disposition of wholly owned and partially owned assets Income (loss) before income taxes Income tax benefit (expense) Income (loss) from continuing operations Income (loss) from discontinued operations Net income (loss) Less net income attributable to noncontrolling interests Net income (loss) attributable to Vornado Interest and debt expense(2) Depreciation and amortization(2) Income tax expense (benefit)(2) EBITDA(1)

$

$

2,669,269 1,819,009 850,260

New York $

1,470,907 910,498 560,409

$

541,161 347,686 193,475

$

372,435 199,650 172,785

Toys

Other

$

-

$

(6,968) -

2,097 -

(24,876) (481,304)

5,357 (181,966)

129 (102,277)

11 (55,219)

3,407 111,600 6,406

399,327 (2,794)

84,359 14,031

1,377 121,051 (2,311)

(362,377) -

2,030 (130,760) (2,520)

118,006

396,533

98,390

118,740

(362,377)

(133,280)

446,734 564,740

160,314 556,847

98,390

287,067 405,807

(362,377)

(647) (133,927)

(88,769)

(10,786)

475,971 758,781 732,757 26,371 1,993,880

546,061 236,645 293,974 3,002 1,079,682

$

2,649,217 1,921,425 727,792

New York $

-

(3)

$

(362,377) -

284,766 361,175 (76,409)

15,527 -

Total $

$

(338,785) 102,898

(Amounts in thousands)

Total revenues Total expenses Operating income (loss) Income (loss) from partially owned entities, including Toys Income from Real Estate Fund Interest and other investment (loss) income, net Interest and debt expense Net gain on disposition of wholly owned and partially owned assets Income (loss) before income taxes Income tax expense Income (loss) from continuing operations Income (loss) from discontinued operations Net income (loss) Less net (income) loss attributable to noncontrolling interests Net income (loss) attributable to Vornado Interest and debt expense(2) Depreciation and amortization(2) Income tax expense (benefit)(2) EBITDA(1)

For the Year Ended December 31, 2013 Retail Washington, DC Properties

-

(3,065)

98,390 116,131 142,409 (15,707) 341,223 (4) $

402,742 63,803 72,161 2,311 541,017

$

554,028 360,056 193,972

$

(30,373) (141,842)

-

(5)

$

For the Year Ended December 31, 2012 Retail Washington, DC Properties

1,319,470 835,563 483,907

12,936 102,898

318,566 189,480 129,086

(362,377) 181,586 135,178 33,532 (12,081)

(74,918)

$

Toys $

(208,845) 160,616 89,035 3,233 44,039 (6)

Other -

$

423,126 63,936

207,773 -

(5,612) -

1,458 -

(261,179) (484,794)

4,002 (146,350)

126 (115,574)

21 (53,772)

13,347 482,228 (8,132)

549,332 (3,491)

72,912 (1,650)

8,491 85,284 -

14,859 -

4,856 (240,159) (2,991)

474,096

545,841

71,262

85,284

14,859

(243,150)

220,445 694,541

30,293 576,134

167,766 239,028

(52,561) 32,723

14,859

74,947 (168,203)

(77,281)

(2,138)

617,260 760,523 735,293 7,026 2,120,102

573,996 187,855 252,257 3,751 1,017,859

$

-

(3)

$

____________________________ See notes on pages 53 and 54.

52

239,028 133,625 157,816 1,943 532,412

14,859 -

457,153 536,326 (79,173)

-

1,812

(4)

$

34,535 79,462 86,529 200,526

204,648 63,936 (265,328) (169,098)

-

(5)

$

14,859 147,880 135,179 (16,629) 281,289

(76,955)

$

(245,158) 211,701 103,512 17,961 88,016 (6)

Net Income and EBITDA by Segment for the Years Ended December 31, 2014, 2013 and 2012 - 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 expense (benefit) in the reconciliation of net income (loss) to EBITDA includes our share of these items from partially owned entities.

(3)

The elements of "New York" EBITDA are summarized below. (Amounts in thousands) Office(a) Retail(b) Alexander's (c) Hotel Pennsylvania Total New York (a)

(b)

(c)

(4)

$

$

2014, 2013 and 2012 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $462,239, $163,528 and $37,129, respectively. Excluding these items, EBITDA was $623,023, $596,413 and $531,389, respectively. 2014, 2013 and 2012 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $1,751, $934 and $510, respectively. Excluding these items, EBITDA was $279,677, $245,874 and $188,974, respectively. 2014, 2013 and 2012 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $171, $730 and $191,040, respectively. Excluding these items, EBITDA was $41,575, $41,480 and $40,362, respectively.

The elements of "Washington, DC" EBITDA are summarized below.

(Amounts in thousands) Office, excluding the Skyline Properties (a) Skyline properties Total Office Residential Total Washington, DC (a)

(5)

For the Year Ended December 31, 2014 2013 2012 1,085,262 $ 759,941 $ 568,518 281,428 246,808 189,484 41,746 42,210 231,402 30,753 30,723 28,455 1,439,189 $ 1,079,682 $ 1,017,859

For the Year Ended December 31, 2014 2013 2012 266,859 $ 268,373 $ 449,448 27,150 29,499 40,037 294,009 297,872 489,485 41,581 43,351 42,927 335,590 $ 341,223 $ 532,412

$

$

2012 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $176,935. Excluding these items, EBITDA was $272,513.

The elements of "Retail Properties" EBITDA are summarized below. (Amounts in thousands) Strip shopping centers(a) Regional malls(b) Total Retail properties (a)

(b)

For the Year Ended December 31, 2014 2013 2012 219,122 $ 285,612 $ 172,708 41,139 255,405 27,818 260,261 $ 541,017 $ 200,526

$ $

2014, 2013 and 2012 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $72,010, $143,504 and $32,697, respectively. Excluding these items, EBITDA was $147,112, $142,108 and $140,011, respectively. 2014, 2013 and 2012 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating net losses of $16,608, net gains of $199,285 and net losses of $27,826, respectively. Excluding these items, EBITDA was $57,747, $56,120 and $55,644, respectively.

53

Net Income and EBITDA by Segment for the Years Ended December 31, 2014, 2013 and 2012 - continued

Notes to preceding tabular information: (6)

The elements of "other" EBITDA are summarized below. (Amounts in thousands)

For the Year Ended December 31, 2014 2013 2012

Our share of Real Estate Fund: Income before net realized/unrealized gains Net realized/unrealized gains on investments Carried interest Total The Mart and trade shows 555 California Street India real estate ventures LNR (a) Lexington (b) Other investments

$

Corporate general and administrative expenses(c) Investment income and other, net(c) Acquisition and transaction related costs, and impairment losses(d) Net gain on sale of marketable securities, land parcels and residential condominiums Our share of net gains on extinguishment of debt and net gains on sale of real estate of partially owned entities Suffolk Downs impairment loss and loan reserve Our share of impairment losses of partially owned entities Losses from the disposition of investment in J.C. Penney Severance costs (primarily reduction in force at the Mart) Purchase price fair value adjustment and accelerated amortization of discount on investment in subordinated debt of Independence Plaza The Mart discontinued operations Net gain resulting from Lexington's stock issuance and asset acquisition Net income attributable to noncontrolling interests in the Operating Partnership Preferred unit distributions of the Operating Partnership $

8,056 37,535 24,715 70,306 79,636 48,844 6,434 17,270 222,490 (94,929) 31,665 (31,348)

$

7,752 23,489 18,230 49,471 74,270 42,667 5,841 20,443 6,931 18,981 218,604 (94,904) 46,525 (24,857)

$

6,385 13,840 4,379 24,604 62,470 46,167 3,654 75,202 32,595 25,612 270,304 (89,082) 45,563 (17,386)

13,568

56,868

4,856

13,000 (10,263) (5,771) -

(127,888) (5,492)

(4,936) (300,752) (3,005)

(47,563) (50) 90,799

(23,659) (1,158) 44,039

105,366 93,588 28,763 (35,327) (9,936) 88,016

$

$

(a)

On April 19, 2013, LNR was sold.

(b)

In the first quarter of 2013, we began accounting for our investment in Lexington as a marketable equity security available for sale. This investment was previously accounted for under the equity method.

(c)

The amounts in these captions (for this table only) exclude income/expense from the mark-to-market of our deferred compensation plan of $11,557, $10,636 and $6,809 for the years ended December 31, 2014, 2013 and 2012, respectively.

(d)

The year ended December 31, 2014, includes $14,956 of transaction costs related to the spin-off of our strip shopping centers and malls to UE on January 15, 2015.

54

Net Income and EBITDA by Segment for the Years Ended December 31, 2014, 2013 and 2012 - continued EBITDA by Region Below is a summary of the percentages of EBITDA by geographic region (excluding discontinued operations, other gains and losses that affect comparability and our Toys and Other Segments). For the Year Ended December 31, 2014 2013 2012 Region: New York City metropolitan area Washington, DC / Northern Virginia area Puerto Rico Other geographies

75% 23% 1% 1% 100%

55

73% 24% 2% 1% 100%

70% 27% 2% 1% 100%

Results of Operations – Year Ended December 31, 2014 Compared to December 31, 2013

Revenues Our revenues, which consist of property rentals (including hotel and trade show revenues), tenant expense reimbursements, and fee and other income, were $2,635,940,000 in the year ended December 31, 2014, compared to $2,669,269,000 in the prior year, a decrease of $33,329,000. This decrease was primarily attributable to income in the prior year of $59,599,000 pursuant to a settlement agreement with Stop & Shop, $36,369,000 related to the Cleveland Medical Mart development project and $23,992,000 from the deconsolidation of Independence Plaza. Excluding these items, revenues increased by $86,631,000. Below are the details of the (decrease) increase by segment: (Amounts in thousands)

(Decrease) increase due to: Property rentals: Acquisitions and other Deconsolidation of Independence Plaza (1) Properties placed into / taken out of service for redevelopment Same store operations

Total $

Tenant expense reimbursements: Acquisitions and other Properties placed into / taken out of service for redevelopment Same store operations

16,910 (23,992)

Fee and other income: BMS cleaning fees Signage revenue Management and leasing fees Lease termination fees Other income

$

20,244 (23,992)

$

(1,867) -

$

Other

(188) -

$

(1,279) -

229 30,213 26,694

(2,274) (2,399) (6,540)

1,251 3,877 4,940

(8,349) 14,216 4,588

934

353

809

(34)

(194)

(2,338) 29,635 28,231

(1,650) 17,782 16,485

94 (879) 24

(101) 9,356 9,221

(681) 3,376 2,501

(2)

-

19,152 5,063 (3,254) (75,454) (380) (54,873) $

Retail Properties

Washington, DC

(9,143) 45,907 29,682

(36,369)

Cleveland Medical Mart development project

Total (decrease) increase in revenues

New York

(33,329)

19,358 5,063 (862) (17,093) (4) 293 6,759 $

49,938

-

(36,369)

(2)

(87) (59,187) (5) (375) (59,649)

(206) 464 (3,312) (1,435) (4,489)

(3)

-

(2,769) 4,138 1,137 2,506 $

(4,010)

$

(45,488)

$

(33,769)

(1)

On June 7, 2013, we sold an 8.65% economic interest in our investment of Independence Plaza, which reduced our economic interest to 50.1%. As a result, we determined that we were no longer the primary beneficiary of the VIE and accordingly, we deconsolidated the operations of the property on June 7, 2013 and began accounting for our investment under the equity method.

(2)

Due to the completion of the project. This decrease in revenue is substantially offset by a decrease in development costs expensed in the period. See note (4) on page 57.

(3)

Represents the change in the elimination of intercompany fees from operating segments upon consolidation. See note (3) on page 57.

(4)

Primarily due to a $19,500 termination fee from a tenant at 1290 Avenue of the Americas recognized during the third quarter of 2013.

(5)

Results primarily from $59,599 of income recognized in the first quarter of 2013 pursuant to a settlement with Stop & Shop.

56

Results of Operations – Year Ended December 31, 2014 Compared to December 31, 2013 - continued

Expenses Our expenses, which consist primarily of operating (including hotel and trade show expenses), depreciation and amortization and general and administrative expenses, were $1,820,298,000 in the year ended December 31, 2014, compared to $1,819,009,000 in the prior year, an increase of $1,289,000. Excluding expenses of $32,210,000 related to the Cleveland Medical Mart development project in 2013 and $25,899,000 from the deconsolidation of Independence Plaza, expenses increased by $59,398,000. Below are the details of the increase (decrease) by segment: (Amounts in thousands)

Increase (decrease) due to: Operating: Acquisitions and other Deconsolidation of Independence Plaza(1) Properties placed into / taken out of service for redevelopment Non-reimbursable expenses, including bad-debt reserves BMS expenses Same store operations

Total $

Depreciation and amortization: Acquisitions and other Deconsolidation of Independence Plaza(1) Properties placed into / taken out of service for redevelopment Same store operations

General and administrative: Mark-to-market of deferred compensation plan liability (2) Non-same store Same store operations

(728) (9,592)

(197) (9,592)

$

1,008 -

$

Other

(71) -

$

(1,468) -

(4,374)

(1,113)

1,966

(6,637)

87 11,813 42,380 33,802

1,301 12,019 27,651 26,808

4,927 4,822

(12) 7,984 9,867

(1,202) (206) (3) 1,818 (7,695)

9,734 (16,307)

9,856 (16,307)

(111) -

(11) -

27,676 (597) 20,506

23,488 (7,150) 9,887

(649) 5,881 5,232

8,004 1,102 8,995

(3,167) (430) (3,608)

921 (5,403) (5,861) (10,343)

(727) (727)

279 279

(2,306) (2,306)

921 (5,403) (3,107) (7,589)

-

-

-

-

(32,210)

Impairment losses, acquisition related costs and tenant buy-outs

(10,466) $

$

Retail Properties

Washington, DC

(10,158)

Cleveland Medical Mart development project

Total increase (decrease) in expenses

New York

1,289

(4)

$

35,968

-

$

10,333

-

(32,210)

(19,000) $

(2,444)

(4)

8,534 $

(42,568)

(1)

On June 7, 2013, we sold an 8.65% economic interest in our investment of Independence Plaza, which reduced our economic interest to 50.1%. As a result, we determined that we were no longer the primary beneficiary of the VIE and accordingly, we deconsolidated the operations of the Property on June 7, 2013 and began accounting for our investment under the equity method.

(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 (loss), net” on our consolidated statements of income.

(3)

Represents the change in the elimination of intercompany fees from operating segments upon consolidation. See note (3) on page 56.

(4)

Due to the completion of the project. This decrease in expense is offset by the decrease in development revenue in the period. See note (2) on page 56.

57

Results of Operations – Year Ended December 31, 2014 Compared to December 31, 2013 - continued (Loss) Applicable to Toys We account for Toys on the equity method, which means our investment is increased or decreased for our pro rata share of Toys undistributed net income or loss. We have not guaranteed any of Toys’ obligations and are not committed to provide any support to Toys. Pursuant to ASC 323-10-35-20, we discontinued applying the equity method for our Toys’ investment when the carrying amount was reduced to zero in the third quarter of 2014. We will resume application of the equity method if during the period the equity method was suspended our share of unrecognized net income exceeds our share of unrecognized net losses. In the year ended December 31, 2014, we recognized a net loss of $73,556,000 from our investment in Toys, comprised of (i) $4,691,000 for our share of Toys’ net loss and a (ii) $75,196,000 non-cash impairment loss, partially offset by (iii) $6,331,000 of management fee income. In the year ended December 31, 2013, we recognized a net loss of $362,377,000 from our investment in Toys, comprised of (i) $128,919,000 for our share of Toys’ net loss and (ii) $240,757,000 non-cash impairment losses, partially offset by (iii) $7,299,000 of management fee income. In the first quarter of 2013, we recognized our share of Toys’ fourth quarter net income of $78,542,000 and a corresponding noncash impairment loss of the same amount to continue to carry our investment at fair value. At December 31, 2013, we estimated that the fair value of our investment in Toys was approximately $80,062,000 ($83,224,000 including $3,162,000 for our share of Toys’ accumulated other comprehensive income), or $162,215,000 less than the carrying amount after recognizing our share of Toys’ third quarter net loss in our fourth quarter. In determining the fair value of our investment, we considered, among other inputs, a December 31, 2013 third-party valuation of Toys. As of December 31, 2013, we have concluded that the decline in the value of our investment was “other-than-temporary” based on, among other factors, Toys’ 2013 holiday sales results, compression of earnings multiples of comparable retailers and our inability to forecast a recovery in the near term. Accordingly, we recognized an additional non-cash impairment loss of $162,215,000 in the fourth quarter of 2013. In the first quarter of 2014, we recognized our share of Toys’ fourth quarter net income of $75,196,000 and a corresponding noncash impairment loss of the same amount to continue to carry our investment at fair value.

Income from Partially Owned Entities Summarized below are the components of income (loss) from partially owned entities for the years ended December 31, 2014 and 2013.

(Amounts in thousands) Equity in Net Income (Loss): Alexander's India real estate ventures (1) Partially owned office buildings (2) Other investments (3) LNR (4) Lexington (5)

Percentage Ownership at December 31, 2014 32.4% 4.1%-36.5% Various Various n/a n/a

For the Year Ended December 31, 2014 2013 $

$

30,009 (8,309) 93 (6,368) 15,425

$

$

24,402 (3,533) (4,212) (10,817) 18,731 (979) 23,592

(1)

Includes a $5,771 non-cash impairment loss in 2014.

(2)

(4)

Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue and others. Includes interests in Independence Plaza, Monmouth Mall, 85 Tenth Avenue, Fashion Center Mall, 50-70 West 93rd Street and others. In the third quarter of 2014, we recognized a $10,263 non-cash impairment loss and loan loss reserve on our equity and debt investments in Suffolk Downs race track and adjacent land. On April 19, 2013, LNR was sold.

(5)

In the first quarter of 2013, we began accounting for our investment in Lexington as a marketable security - available for sale.

(3)

58

Results of Operations – Year Ended December 31, 2014 Compared to December 31, 2013 - continued

Income from Real Estate Fund Below are the components of the income from our Real Estate Fund for the years ended December 31, 2014 and 2013. (Amounts in thousands) Net investment income Net realized gains Net unrealized gains Income from Real Estate Fund Less income attributable to noncontrolling interests Income from Real Estate Fund attributable to Vornado (1)

$

$

For the Year Ended December 31, 2014 2013 12,895 $ 8,943 76,337 8,184 73,802 85,771 163,034 102,898 (92,728) (53,427) 70,306 $ 49,471

___________________________________ (1) Excludes management and leasing fees of $2,865 and $2,992 in the years ended December 31, 2014 and 2013, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.

Interest and Other Investment Income (Loss), net Interest and other investment income (loss), net was income of $38,787,000 in the year ended December 31, 2014, compared to a loss of $24,876,000 in the prior year, an increase in income of $63,663,000. This increase resulted from: (Amounts in thousands) Losses from the disposition of investment in J.C. Penney in 2013 Lower average mezzanine loans receivable balances in 2014 Higher dividends on marketable securities 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) Other, net

$

$

72,974 (15,575) 1,261 921 4,082 63,663

Interest and Debt Expense Interest and debt expense was $467,715,000 in the year ended December 31, 2014, compared to $481,304,000 in the prior year, a decrease of $13,589,000. This decrease was primarily due to (i) $20,483,000 of higher capitalized interest and debt expense and (ii) $18,568,000 of interest savings from the restructuring of the Skyline properties mortgage loan in the fourth quarter of 2013, partially offset by (iii) $13,287,000 of interest expense from the $600,000,000 financing of our 220 Central Park South development site in January 2014, (iv) $6,265,000 of interest expense from the issuance of the $450,000,000 unsecured notes in June 2014, and (v) $5,589,000 of defeasance cost in connection with the refinancing of 909 Third Avenue. Net Gain on Disposition of Wholly Owned and Partially Owned Assets Net gain on disposition of wholly owned and partially owned assets was $13,568,000 in the year ended December 31, 2014, primarily from the sale of residential condominiums and a land parcel, compared to $3,407,000 in the year ended December 31, 2013, primarily of net gains from the sale of marketable securities, land parcels (including Harlem Park), and residential condominiums aggregating $58,245,000, partially offset by a $54,914,000 net loss on sale of J.C. Penney common shares. Income Tax (Expense) Benefit In the year ended December 31, 2014, we had an income tax expense of $11,002,000, compared to a benefit of $6,406,000 in the prior year, an increase in expense of $17,408,000. This increase resulted primarily from a reversal of previously accrued deferred tax liabilities in the prior year due to a change in the effective tax rate resulting from an amendment of the Washington, DC Unincorporated Business Tax Statute.

59

Results of Operations – Year Ended December 31, 2014 Compared to December 31, 2013 - continued

Income from Discontinued Operations We have reclassified the revenues and expenses of the properties that were sold or are currently held for sale to “income from discontinued operations” and the related assets and liabilities to “assets related to discontinued operations” and “liabilities related to discontinued operations” for all the periods presented in the accompanying financial statements. The table below sets forth the combined results of assets related to discontinued operations for the years ended December 31, 2014 and 2013. (Amounts in thousands) Total revenues Total expenses

$

Net gains on sales of real estate Impairment losses Income from discontinued operations

$

For the Year Ended December 31, 2014 2013 70,593 $ 129,860 36,424 79,458 34,169 50,402 507,192 414,502 (26,518) (18,170) 514,843 $ 446,734

Net Income Attributable to Noncontrolling Interests in Consolidated Subsidiaries Net income attributable to noncontrolling interests in consolidated subsidiaries was $96,561,000 in the year ended December 31, 2014, compared to $63,952,000 in the prior year, an increase of $32,609,000. This increase resulted primarily from higher net income allocated to the noncontrolling interests, including noncontrolling interests of our Real Estate Fund.

Net Income Attributable to Noncontrolling Interests in the Operating Partnership Net income attributable to noncontrolling interests in the Operating Partnership was $47,563,000 in the year ended December 31, 2014, compared to $23,659,000 in the prior year, an increase of $23,904,000. This increase resulted primarily from higher net income subject to allocation to unitholders.

Preferred Unit Distributions of the Operating Partnership Preferred unit distributions of the Operating Partnership were $50,000 in the year ended December 31, 2014, compared to $1,158,000 in the prior year, a decrease of $1,108,000. This decrease resulted from the redemption of the 6.875% Series D-15 cumulative redeemable preferred units in May 2013. Preferred Share Dividends Preferred share dividends were $81,464,000 in the year ended December 31, 2014, compared to $82,807,000 in the prior year, a decrease of $1,343,000. This decrease resulted primarily from the redemption of $262,500,000 of 6.75% Series F and Series H cumulative redeemable preferred shares in February 2013.

Preferred Unit and Share Redemptions In the year ended December 31, 2014, we recognized $0 of expense in connection with preferred unit and share redemptions. In the year ended December 31, 2013, we recognized $1,130,000 of expense in connection with preferred unit and share redemptions, comprised of $9,230,000 of expense from the redemption of the 6.75% Series F and Series H cumulative redeemable preferred shares in February 2013, partially offset by an $8,100,000 discount from the redemption of all of the 6.875% Series D-15 cumulative redeemable preferred units in May 2013.

60

Results of Operations – Year Ended December 31, 2014 Compared to December 31, 2013 - 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 also present same store EBITDA on 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 is the reconciliation of EBITDA to same store EBITDA for each of our segments for the year ended December 31, 2014, compared to the year ended December 31, 2013.

(Amounts in thousands)

New York

EBITDA for the year ended December 31, 2014 Add-back: Non-property level overhead expenses included above Less EBITDA from: Acquisitions Dispositions, including net gains on sale Properties taken out-of-service for redevelopment Other non-operating income Same store EBITDA for the year ended December 31, 2014

$

EBITDA for the year ended December 31, 2013 Add-back: Non-property level overhead expenses included above Less EBITDA from: Acquisitions Dispositions, including net gains on sale Properties taken out-of-service for redevelopment Other non-operating income Same store EBITDA for the year ended December 31, 2013 Increase (decrease) in same store EBITDA Year ended December 31, 2014 vs. December 31, 2013(1) % increase (decrease) in same store EBITDA

1,439,189

61

Retail Properties

$

$

335,590

260,261

28,479

27,339

16,686

$

(33,917) (463,991) (26,056) (9,013) 934,691

$

(1,858) (1,432) (5,446) 354,193

$

(54,499) (2,660) (18,217) 201,571

$

1,079,682

$

341,223

$

541,017

29,206

27,060

18,992

$

(4,764) (160,232) (20,013) (31,522) 892,357

$

(150) (4,056) (1,129) 362,948

$

(302,264) (2,758) (56,698) 198,289

$

42,334

$

(8,755)

$

3,282

4.7%

(1) See notes on following page

Washington, DC

(2.4%)

1.7%

Results of Operations – Year Ended December 31, 2014 Compared to December 31, 2013 - continued

Notes to preceding tabular information:

New York: The $42,334,000 increase in New York same store EBITDA resulted primarily from higher (i) rental revenue of $30,213,000 (primarily due to an increase in average rent per square foot) and (ii) cleaning fees, signage revenue, and other income of $26,882,000, partially offset by (iii) higher office operating expenses, net of reimbursements, of $14,761,000.

Washington, DC: The $8,755,000 decrease in Washington, DC same store EBITDA resulted primarily from (i) lower rental revenue of $2,399,000, (ii) lower management and leasing fee income of $2,769,000 and (iii) higher operating expenses of $4,927,000, partially offset by an increase in other income of $1,538,000.

Retail Properties: The $3,282,000 increase in Retail Properties same store EBITDA resulted primarily from an increase in rental revenue of $3,877,000, primarily due to an increase in average same store occupancy, partially offset by higher operating expenses, net of reimbursements.

Reconciliation of Same Store EBITDA to Cash basis Same Store EBITDA (Amounts in thousands)

New York

Washington, DC

Retail Properties

Same store EBITDA for the year ended December 31, 2014 Less: Adjustments for straight line rents, amortization of acquired below-market leases, net, and other non-cash adjustments Cash basis same store EBITDA for the year ended December 31, 2014

$

934,691

$

354,193

$

201,571

$

(103,496) 831,195

$

(9,726) 344,467

$

(6,174) 195,397

Same store EBITDA for the year ended December 31, 2013 Less: Adjustments for straight line rents, amortization of acquired below-market leases, net, and other non-cash adjustments Cash basis same store EBITDA for the year ended December 31, 2013

$

892,357

$

362,948

$

198,289

$

(119,625) 772,732

$

(10,198) 352,750

$

(7,346) 190,943

$

58,463

$

(8,283)

$

4,454

Increase (decrease) in Cash basis same store EBITDA Year ended December 31, 2014 vs. December 31, 2013 % increase (decrease) in Cash basis same store EBITDA

7.6%

62

(2.3%)

2.3%

Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012

Revenues Our revenues, which consist primarily of property rentals (including hotel and trade show revenues), tenant expense reimbursements, and fee and other income, were $2,669,269,000 in the year ended December 31, 2013, compared to $2,649,217,000 in the year ended December 31, 2012, an increase of $20,052,000. Below are the details of the increase (decrease) by segment: (Amounts in thousands)

Increase (decrease) due to: Property rentals: Acquisitions and other Properties placed into / taken out of service for redevelopment Same store operations

Total $

Tenant expense reimbursements: Acquisitions and other Properties placed into / taken out of service for redevelopment Same store operations

Fee and other income: BMS cleaning fees Signage revenue Management and leasing fees Lease termination fees Other income

Total increase (decrease) in revenues

64,524

$

75,004

$

462

$

Other

(10,369)

$

(573)

(1,138) 32,602 106,468

(2,333) (15,267) (17,138)

735 2,850 (6,784)

(46) 8,404 7,785

1,287

2,715

(604)

(1,728)

904

67 20,738 22,092

(402) 8,385 10,698

193 2,443 2,032

374 3,939 2,585

(98) 5,971 6,777

(1)

-

(1,079) 11,974 2,788 90,136 2,675 106,494 $

Retail Properties

Washington, DC

(2,782) 28,589 90,331

(198,865)

Cleveland Medical Mart development project

New York

20,052

(9,208) 11,974 4,177 25,333 1,995 34,271 $

151,437

-

-

1,691 983 (435) 2,239

(3)

$

(12,867)

(1,567) 59,793 (158) 58,068 $

(198,865)

(1)

8,129 (1,513) 4,027 1,273 11,916

(2)

(4)

53,869

$

(5)

(172,387)

(1)

Due to the completion of the project. This decrease in revenue is substantially offset by a decrease in development costs expensed in the period. See note (3) on page 64.

(2)

Represents the change in the elimination of intercompany fees from operating segments upon consolidation. See note (2) on page 64.

(3)

Primarily due to a $19,500 termination fee from a tenant at 1290 Avenue of the Americas recognized during the third quarter of 2013.

(4)

Results primarily from $59,599 of income recognized in the first quarter of 2013 pursuant to a settlement with Stop & Shop.

(5)

Primarily due to $3,000 in 2013 from the termination of our subsidiaries' agreements with Cuyahoga County to operate the Cleveland Medical Mart Convention Center.

63

Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012 - continued

Expenses Our expenses, which consist primarily of operating (including hotel and trade show expenses), depreciation and amortization and general and administrative expenses, were $1,819,009,000 in the year ended December 31, 2013, compared to $1,921,425,000 in the year ended December 31, 2012, a decrease of $102,416,000. Below are the details of the (decrease) increase by segment:

(Amounts in thousands) (Decrease) increase due to: Operating: Acquisitions and other Properties placed into / taken out of service for redevelopment Non-reimbursable expenses, including bad-debt reserves BMS expenses Same store operations

Total $

Depreciation and amortization: Acquisitions and other Properties placed into / taken out of service for redevelopment Same store operations

General and administrative: Mark-to-market of deferred compensation plan liability (1) Non-same store Same store operations

Impairment losses, acquisition related costs and tenant buy-outs Total (decrease) increase in expenses

23,791

$

26,583

$

-

$

Other

(1,209)

$

(1,583)

(1,933)

(992)

(1,382)

(1,138)

928 (4,151) 26,945 42,068

(3,366) (7,889) 20,812 34,207

2,045 1,053

1,470 4,747 3,626

2,824 3,738 (659) 3,182

39,154

41,047

(1,519)

(374)

(16,216) 2,758 25,696

(552) (2,955) 37,540

(16,177) 2,369 (13,808)

513 1,612 606

1,732 1,358

3,827 9,244 (6,913) 6,158

3,188 3,188

385 385

(4,662) (4,662)

3,827 9,244 (5,824) 7,247

(3)

18,071 $

Retail Properties

Washington, DC

(5,445)

(194,409)

Cleveland Medical Mart development project

New York

(102,416)

$

-

-

-

-

-

74,935

$

(12,370)

-

(194,409)

10,600 $

10,170

(2)

(3)

7,471 $

(175,151)

(1)

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 (loss), net” on our consolidated statements of income.

(2)

Represents the change in the elimination of intercompany fees from operating segments upon consolidation. See note (2) on page 63.

(3)

Due to the completion of the project. This decrease in expense is offset by the decrease in development revenue in the period. See note (1) on page 63.

64

Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012 - continued (Loss) Income Applicable to Toys In the year ended December 31, 2013, we recognized a net loss of $362,377,000 from our investment in Toys, comprised of (i) $128,919,000 for our share of Toys’ net loss and (ii) $240,757,000 non-cash impairment losses, partially offset by (iii) $7,299,000 of management fee income. In the year ended December 31, 2012, we recognized net income of $14,859,000 from our investment in Toys, comprised of (i) $45,267,000 for our share of Toys’ net income and (ii) $9,592,000 of management fee income, partially offset by a (iii) $40,000,000 non-cash impairment loss. At December 31, 2012, we estimated that the fair value of our investment was $40,000,000 less than the carrying amount of $518,041,000 and concluded that the decline in the value of our investment was “other-than-temporary” based on, among other factors, compression of earnings multiples of comparable retailers and our inability to forecast a recovery in the near term. Accordingly, we recognized a non-cash impairment loss of $40,000,000 in the fourth quarter of 2012. In the first quarter of 2013, we recognized our share of Toys’ fourth quarter net income of $78,542,000 and a corresponding noncash impairment loss of the same amount to continue to carry our investment at fair value. At December 31, 2013, we estimated that the fair value of our investment in Toys was approximately $80,062,000 ($83,224,000 including $3,162,000 for our share of Toys’ accumulated other comprehensive income), or $162,215,000 less than the carrying amount after recognizing our share of Toys’ third quarter net loss in our fourth quarter. In determining the fair value of our investment, we considered, among other inputs, a December 31, 2013 third-party valuation of Toys. As of December 31, 2013, we have concluded that the decline in the value of our investment was “other-than-temporary” based on, among other factors, Toys’ 2013 holiday sales results, compression of earnings multiples of comparable retailers and our inability to forecast a recovery in the near term. Accordingly, we recognized an additional non-cash impairment loss of $162,215,000 in the fourth quarter of 2013.

Income from Partially Owned Entities Summarized below are the components of income (loss) from partially owned entities for the years ended December 31, 2013 and 2012.

(Amounts in thousands) Equity in Net Income (Loss): Alexander's (1) India real estate ventures Partially owned office buildings (2) Other investments(3) (4) LNR (5) Lexington (6)

Percentage Ownership at December 31, 2013 32.4% 4.1%-36.5% Various Various n/a n/a

For the Year Ended December 31, 2013 2012 $

$ (1) (2) (3) (4)

(5) (6)

24,402 (3,533) (4,212) (10,817) 18,731 (979) 23,592

$

$

218,391 (5,008) (3,770) 103,644 66,270 28,740 408,267

2012 includes $186,357 of income comprised of (i) a $179,934 net gain and (ii) $6,423 of commissions in connection with the sale of real estate. Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue and others. Includes interests in Independence Plaza, Monmouth Mall, 85 Tenth Avenue, Fashion Center Mall, 50-70 West 93rd Street and others. 2012 includes $105,366 of income from Independence Plaza comprised of (i) $60,396 from the accelerated amortization of discount on investment in the subordinated debt of the property and (ii) a $44,970 purchase price fair value adjustment from the exercise of a warrant to acquire 25% of the equity interest in the property. On April 19, 2013, LNR was sold. 2012 includes a $28,763 net gain resulting primarily from Lexington's stock issuances. In the first quarter of 2013, we began accounting for our investment in Lexington as a marketable equity security - available for sale.

65

Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012 - continued

Income from Real Estate Fund Below are the components of the income from our Real Estate Fund for the years ended December 31, 2013 and 2012. (Amounts in thousands) Net investment income Net realized gains Net unrealized gains Income from Real Estate Fund Less income attributable to noncontrolling interests Income from Real Estate Fund attributable to Vornado (1)

$

$

For the Year Ended December 31, 2013 2012 8,943 $ 8,575 8,184 85,771 55,361 102,898 63,936 (53,427) (39,332) 49,471 $ 24,604

___________________________________ (1) Excludes management and leasing fees of $2,992 and $3,278 in the years ended December 31, 2013 and 2012, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.

Interest and Other Investment Loss, net Interest and other investment loss, net was a loss of $24,876,000 in the year ended December 31, 2013, compared to a loss of $261,179,000 in the year ended December 31, 2012, a decrease in loss of $236,303,000. This decrease resulted from:

(Amounts in thousands) Non-cash impairment loss on J.C. Penney common shares ($39,487 in 2013, compared to $224,937 in 2012) J.C. Penney derivative position ($33,487 mark-to-market loss in 2013, compared to a $75,815 mark-to-market loss in 2012) Higher interest on mezzanine loans receivable 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) Lower dividends and interest on marketable securities Other, net

$

185,450 42,328 5,634

$

3,827 (533) (403) 236,303

Interest and Debt Expense Interest and debt expense was $481,304,000 in the year ended December 31, 2013, compared to $484,794,000 in the year ended December 31, 2012, a decrease of $3,490,000. This decrease was primarily due to (i) $25,502,000 of higher capitalized interest and (ii) $4,738,000 of interest savings from the restructuring of the Skyline properties mortgage loan in the fourth quarter of 2013, partially offset by (iii) interest expense of $12,319,000 from the financing of the retail condominium at 666 Fifth Avenue in the first quarter of 2013, (iv) an $8,436,000 prepayment penalty in connection with the refinancing of Eleven Penn Plaza, and (v) interest expense of $6,855,000 from the financing of 1290 Avenue of the Americas in the fourth quarter of 2012.

Net Gain on Disposition of Wholly Owned and Partially Owned Assets Net gain on disposition of wholly owned and partially owned assets was $3,407,000 in year ended December 31, 2013 (comprised primarily of net gains from the sale of marketable securities, land parcels (including Harlem Park), and residential condominiums aggregating $58,245,000, partially offset by a $54,914,000 net loss on sale of J.C. Penney common shares), compared to $13,347,000, in the year ended December 31, 2012 (comprised of net gains from the sale of marketable securities, land parcels and residential condominiums).

66

Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012 - continued

Income Tax Benefit (Expense) Income tax benefit (expense) was a benefit of $6,406,000 in the year ended December 31, 2013, compared to an expense of $8,132,000 in the year ended December 31, 2012 a decrease in expense of $14,538,000. This decrease resulted primarily from a reversal of previously accrued deferred tax liabilities in the current year due to a change in the effective tax rate resulting from an amendment of the Washington, DC Unincorporated Business Tax Statute.

Income from Discontinued Operations The table below sets forth the combined results of operations of assets related to discontinued operations for the years ended December 31, 2013 and 2012. For the Year Ended December 31, 2013 2012

(Amounts in thousands) Total revenues Total expenses

$

Net gains on sales of real estate Impairment losses Gain on sale of Canadian Trade Shows, net of $11,448 of income taxes Income from discontinued operations

$

129,860 79,458 50,402 414,502 (18,170) 446,734

$

$

264,878 190,450 74,428 245,799 (119,439) 19,657 220,445

Net Income Attributable to Noncontrolling Interests in Consolidated Subsidiaries Net income attributable to noncontrolling interests in consolidated subsidiaries was $63,952,000 in the year ended December 31, 2013, compared to $32,018,000 in the year ended December 31, 2012, an increase of $31,934,000. This increase resulted primarily from (i) $14,095,000 of higher net income allocated to the noncontrolling interests of our Real Estate Fund, (ii) $13,222,000 of lower income in the prior year resulting from a priority return on our investment in 1290 Avenue of the Americas and 555 California Street, and (iii) $2,909,000 of income allocated to the noncontrolling interest for its share of the net gain on sale of a retail property in Tampa, Florida.

Net Income Attributable to Noncontrolling Interests in the Operating Partnership Net income attributable to noncontrolling interests in the Operating Partnership was $23,659,000 in the year ended December 31, 2013, compared to $35,327,000 in the year ended December 31, 2012, a decrease of $11,668,000. This decrease resulted primarily from lower net income subject to allocation to unitholders.

Preferred Unit Distributions of the Operating Partnership Preferred unit distributions of the Operating Partnership were $1,158,000 in the year ended December 31, 2013, compared to $9,936,000 in the year ended December 31, 2012, a decrease of $8,778,000. This decrease resulted primarily from the redemption of the 6.875% Series D-15 cumulative redeemable preferred units in May 2013, and the 7.0% Series D-10 and 6.75% Series D-14 cumulative redeemable preferred units in July 2012.

67

Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012 - continued

Preferred Share Dividends Preferred share dividends were $82,807,000 in the year ended December 31, 2013, compared to $76,937,000 in the year ended December 31, 2012, an increase of $5,870,000. This increase resulted from the issuance of $300,000,000 of 5.70% Series K cumulative redeemable preferred shares in July 2012 and $300,000,000 of 5.40% Series L cumulative redeemable preferred shares in January 2013, partially offset by the redemption of $262,500,000 of 6.75% Series F and Series H cumulative redeemable preferred shares in February 2013 and $75,000,000 of 7.0% Series E cumulative redeemable preferred shares in August 2012.

Preferred Unit and Share Redemptions In the year ended December 31, 2013, we recognized $1,130,000 of expense in connection with preferred unit and share redemptions, comprised of $9,230,000 of expense from the redemption of the 6.75% Series F and Series H cumulative redeemable preferred shares in February 2013, partially offset by an $8,100,000 discount from the redemption of all of the 6.875% Series D-15 cumulative redeemable preferred units in May 2013. In the year ended December 31, 2012, we recognized an $8,948,000 discount primarily from the redemption of all of the 7.0% Series D-10 and 6.75% Series D-14 cumulative redeemable preferred units.

68

Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012 - continued Same Store EBITDA Below is the reconciliation of EBITDA to same store EBITDA for each of our segments for the year ended December 31, 2013, compared to the year ended December 31, 2012.

(Amounts in thousands)

New York

EBITDA for the year ended December 31, 2013 Add-back: Non-property level overhead expenses included above Less EBITDA from: Acquisitions Dispositions, including net gains on sale Properties taken out-of-service for redevelopment Other non-operating income Same store EBITDA for the year ended December 31, 2013

$

EBITDA for the year ended December 31, 2012 Add-back: Non-property level overhead expenses included above Less EBITDA from: Acquisitions Dispositions, including net gains on sale Properties taken out-of-service for redevelopment Other non-operating income Same store EBITDA for the year ended December 31, 2012 Increase (decrease) in same store EBITDA Year ended December 31, 2013 vs. December 31,2012(1) % increase (decrease) in same store EBITDA (1)

1,079,682

69

Retail Properties

$

$

341,223

541,017

29,206

27,630

18,992

$

(67,613) (160,232) (20,050) (27,418) 833,575

$

(150) (4,457) (1,129) 363,117

$

(300,995) (5,089) (41,741) 212,184

$

1,017,859

$

532,412

$

200,526

26,096

27,237

23,654

$

(4,131) (221,076) (20,056) (6,790) 791,902

$

(176,052) (9,319) (838) 373,440

$

(8,576) (1,394) (4,519) 209,691

$

41,673

$

(10,323)

$

2,493

5.3%

See notes on following page.

Washington, DC

(2.8%)

1.2%

Results of Operations – Year Ended December 31, 2013 Compared to December 31, 2012 - continued

Notes to preceding tabular information:

New York: The $41,673,000 increase in New York same store EBITDA resulted primarily from increases in Office and Retail of $29,693,000 and $9,229,000, respectively. The Office increase resulted primarily from higher (i) rental revenue of $13,983,000 (primarily due to a $1.85 increase in average annual rents per square foot) and (ii) signage revenue and management and leasing fees of $16,037,000. The Retail increase resulted primarily from higher rental revenue of $10,414,000, (primarily due to a $9.35 increase in average annual rents per square foot).

Washington, DC: The $10,323,000 decrease in Washington, DC same store EBITDA resulted primarily from lower rental revenue of $15,267,000, primarily due to a 330 basis point decrease in office average same store occupancy to 82.8% from 86.1%, a significant portion of which resulted from the effects of BRAC related move-outs and the sluggish leasing environment in the Washington, DC / Northern Virginia area (see page 47 for details).

Retail Properties: The $2,493,000 increase in Retail Properties same store EBITDA resulted primarily from higher rental revenue of $2,847,000, due to a 70 basis point increase in average same store occupancy to 94.2% from 93.5%, and a $0.23 increase in average annual rents per square foot.

Reconciliation of Same Store EBITDA to Cash basis Same Store EBITDA (Amounts in thousands)

New York

Washington, DC

Retail Properties

Same store EBITDA for the year ended December 31, 2013 Less: Adjustments for straight line rents, amortization of acquired below-market leases, net, and other non-cash adjustments Cash basis same store EBITDA for the year ended December 31, 2013

$

833,575

$

363,117

$

212,184

$

(105,981) 727,594

$

(10,181) 352,936

$

(7,902) 204,282

Same store EBITDA for the year ended December 31, 2012 Less: Adjustments for straight line rents, amortization of acquired below-market leases, net, and other non-cash adjustments Cash basis same store EBITDA for the year ended December 31, 2012

$

791,902

$

373,440

$

209,691

$

(115,711) 676,191

$

(6,484) 366,956

$

(9,039) 200,652

$

51,403

$

(14,020)

$

3,630

Increase (decrease) in Cash basis same store EBITDA Year ended December 31, 2013 vs. December 31, 2012 % increase (decrease) in Cash basis same store EBITDA

7.6%

70

(3.8%)

1.8%

Supplemental Information Net Income and EBITDA by Segment for the Three Months Ended December 31, 2014 and 2013

Below is a summary of net income and a reconciliation of net income to EBITDA(1) by segment for the three months ended December 31, 2014 and 2013.

(Amounts in thousands)

For the Three Months Ended December 31, 2014 Retail New York Washington, DC Properties Toys

Total Total revenues Total expenses Operating income (loss) Income from partially owned entities, including Toys Income from Real Estate Fund Interest and other investment income, net Interest and debt expense Net gain on disposition of wholly owned and partially owned assets Income (loss) before income taxes Income tax expense Income (loss) from continuing operations Income from discontinued operations Net income (loss) Less net income attributable to noncontrolling interests Net income (loss) attributable to Vornado Interest and debt expense(2) Depreciation and amortization(2) Income tax expense(2) EBITDA(1)

$

$

679,101 476,146 202,955

$

400,159 243,739 156,420

$

133,506 92,720 40,786

$

83,478 49,329 34,149

19,295 20,616

4,329 -

1,248 -

480 -

9,947 (126,102)

1,822 (48,457)

90 (18,703)

363 127,074 (2,644)

114,114 (1,308)

124,430

$

Other -

$

61,958 90,358 (28,400)

606 -

12,632 20,616

9 (14,453)

-

8,026 (44,489)

23,421 (196)

20,185 (146)

606 -

363 (31,252) (994)

112,806

23,225

20,039

606

(32,246)

451,556 575,986

445,762 558,568

23,225

5,794 25,833

606

(32,246)

(42,383)

(1,423)

-

(40,955)

533,603 143,674 155,921 2,759 835,957

557,145 61,809 83,199 1,326 703,479

$

-

(3)

$

_________________________ See notes on pages 73 and 74.

71

23,225 21,979 37,486 200 82,890

(5)

(4)

$

25,828 15,597 17,046 146 58,617

(5)

$

606 606

$

(73,201) 44,289 18,190 1,087 (9,635) (6)

Supplemental Information – continued Net Income and EBITDA by Segment for the Three Months Ended December 31, 2014 and 2013 - continued

(Amounts in thousands)

For the Three Months Ended December 31, 2013 Retail New York Washington, DC Properties Toys

Total Total revenues Total expenses Operating income (loss) (Loss) income from partially owned entities, including Toys Income from Real Estate Fund Interest and other investment income, net Interest and debt expense Net gain on disposition of wholly owned and partially owned assets (Loss) income before income taxes Income tax benefit (expense) (Loss) income from continuing operations Income (loss) from discontinued operations Net (loss) income Less net (income) loss attributable to noncontrolling interests Net (loss) income attributable to Vornado Interest and debt expense(2) Depreciation and amortization(2) Income tax expense (benefit)(2) EBITDA(1)

$

$

649,403 475,446 173,957

$

370,040 222,117 147,923

$

134,509 89,095 45,414

$

79,009 66,448 12,561

$

Other -

$

(293,165) 28,951

1,507 -

(423) -

585 -

8,196 (120,625)

1,418 (56,538)

30 (18,927)

8 (13,339)

23,988 (178,698) 12,578

94,310 (1,496)

26,094 15,980

(185) (831)

(293,066) -

23,988 (5,851) (1,075)

(166,120)

92,814

42,074

(1,016)

(293,066)

(6,926)

127,361 (38,759)

135,528 228,342

42,074

(8,349) (9,365)

(293,066)

182 (6,744)

(9,760)

(1,268)

(48,519) 207,424 183,685 8,270 350,860

227,074 73,066 73,694 1,558 375,392

$

(3)

$

_________________________ See notes on pages 73 and 74.

72

-

14

42,074 22,416 36,610 (17,841) 83,259 (4) $

(9,351) 14,503 19,721 831 25,704 (5) $

(293,066) -

65,845 97,786 (31,941) (1,768) 28,951

-

6,740 (31,821)

(293,066) 62,239 31,446 22,573 (176,808)

(8,506)

$

(15,250) 35,200 22,214 1,149 43,313 (6)

Supplemental Information – continued Net Income and EBITDA by Segment for the Three Months Ended December 31, 2014 and 2013 - 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 expense (benefit) in the reconciliation of net income (loss) to EBITDA includes our share of these items from partially owned entities.

(3)

The elements of "New York" EBITDA are summarized below. For the Three Months Ended December 31, 2014 2013 $ 604,982 $ 283,092 75,959 69,414 10,658 11,069 11,880 11,817 $ 703,479 $ 375,392

(Amounts in thousands) Office(a) Retail(b) Alexander's (c) Hotel Pennsylvania Total New York (a)

2014 and 2013 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $445,464 and $135,064, respectively. Excluding these items, EBITDA was $159,518 and $148,028, respectively.

(b)

2014 and 2013 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $464 and $484, respectively. Excluding these items, EBITDA was $75,495 and $68,930, respectively.

(c)

2014 and 2013 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating $171 and $730, respectively. Excluding these items, EBITDA was $10,487 and $10,339, respectively.

(4)

The elements of "Washington, DC" EBITDA are summarized below. For the Three Months Ended December 31, (Amounts in thousands) 2014 2013 Office, excluding the Skyline Properties $ 66,641 $ 65,910 Skyline properties 5,880 6,953 Total Office 72,521 72,863 Residential 10,369 10,396 Total Washington, DC $ 82,890 $ 83,259

(5)

The elements of "Retail Properties" EBITDA are summarized below. For the Three Months Ended December 31, (Amounts in thousands) 2014 2013 Strip shopping centers(a) $ 40,623 $ 21,547 Regional malls(b) 17,994 4,157 Total Retail properties $ 58,617 $ 25,704 (a)

2014 and 2013 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating net gains of $4,133 and net losses of $14,563, respectively. Excluding these items, EBITDA was $36,490 and $36,110, respectively.

(b)

2014 and 2013 includes EBITDA from discontinued operations, net gains on sale of real estate and other items that affect comparability, aggregating to net income in 2014 of $2,315 and to a net loss of $10,184 in 2013. Excluding these items, EBITDA was $15,679 and $14,341, respectively.

73

Supplemental Information – continued Net Income and EBITDA by Segment for the Three Months Ended December 31, 2014 and 2013 - continued

Notes to preceding tabular information: (6)

The elements of "other" EBITDA from continuing operations are summarized below. For the Three Months Ended December 31, 2014 2013

(Amounts in thousands) Our share of Real Estate Fund: Income before net realized/unrealized gains Net realized/unrealized gains on investments Carried interest Total The Mart and trade shows 555 California Street India real estate ventures Other investments

$

Corporate general and administrative expenses(a) Investment income and other, net(a) Acquisition and transaction related costs, and impairment losses(b) Our share of debt satisfaction gains and net gains on sale of real estate of partially owned entities Our share of impairment losses of partially owned entities Net gain on sale of land parcels and residential condominiums Severance costs (primarily reduction in force at the Mart) Net (income) loss attributable to noncontrolling interests in the Operating Partnership Preferred unit distributions of the Operating Partnership $ (a)

(b)

1,380 4,646 3,079 9,105 18,598 13,278 1,860 3,445 46,286 (22,977) 8,901 (18,376) 13,000 (5,771) 363 (31,049) (12) (9,635)

$

$

2,015 6,574 6,256 14,845 20,038 10,296 1,133 4,774 51,086 (23,850) 7,372 (18,088) 23,988 (1,338) 4,155 (12) 43,313

The amounts in these captions (for this table only) exclude income/expense from the mark-to-market of our deferred compensation plan of $3,425 and $4,429 for the three months ended December 31, 2014 and 2013, respectively. The three months ended December 31, 2014, includes $5,612 of transaction costs related to the spin-off of our strip shopping centers and malls.

74

Supplemental Information – continued Net Income and EBITDA by Segment for the Three Months Ended December 31, 2014 and 2013 - continued EBITDA by Region Below is a summary of the percentages of EBITDA by geographic region (excluding discontinued operations, other gains and losses that affect comparability and our Toys and Other Segments). For the Three Months Ended December 31, 2014 2013 Region: New York City metropolitan area Washington, DC / Northern Virginia area Puerto Rico Other geographies

76% 22% 1% 1% 100%

75

74% 23% 2% 1% 100%

Supplemental Information – continued Three Months Ended December 31, 2014 Compared to December 31, 2013

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 also present same store EBITDA on 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 is the reconciliation of EBITDA to same store EBITDA for each of our segments for the three months ended December 31, 2014, compared to the three months ended December 31, 2013. (Amounts in thousands)

New York

EBITDA for the three months ended December 31, 2014 Add-back: Non-property level overhead expenses included above Less EBITDA from: Acquisitions Dispositions, including net gains on sale Properties taken out-of-service for redevelopment Other non-operating (income) expense Same store EBITDA for the three months ended December 31, 2014

$

EBITDA for the three months ended December 31, 2013 Add-back: Non-property level overhead expenses included above Less EBITDA from: Acquisitions Dispositions, including net gains on sale Properties taken out-of-service for redevelopment Other non-operating (income) expense Same store EBITDA for the three months ended December 31, 2013 Increase (decrease) in GAAP basis same store EBITDA Three months ended December 31, 2014 vs. December 31, 2013 % increase (decrease) in same store EBITDA

703,479

Retail Properties

$

$

82,890

58,617

6,055

6,866

3,757

$

(9,711) (445,928) (8,761) (2,467) 242,667

$

(1,785) (47) (1,336) 86,588

$

(5,562) (574) (7,869) 48,369

$

375,392

$

83,259

$

25,704

7,318

6,848

4,168

$

(4,525) (135,548) (5,269) (2,442) 234,926

$

(33) (1,124) (316) 88,634

$

5,681 (749) 12,656 47,460

$

7,741

$

(2,046)

$

909

3.3%

76

Washington, DC

(2.3%)

1.9%

Supplemental Information – continued Three Months Ended December 31, 2014 Compared to December 31, 2013 - continued Reconciliation of Same Store EBITDA to Cash basis Same Store EBITDA (Amounts in thousands)

New York 242,667

Washington, DC

Retail Properties

$

$

Same store EBITDA for the three months ended December 31, 2014 Less: Adjustments for straight line rents, amortization of acquired below-market leases, net, and other non-cash adjustments Cash basis same store EBITDA for the three months ended December 31, 2014

$

$

218,368

$

83,446

$

47,669

Same store EBITDA for the three months ended December 31, 2013 Less: Adjustments for straight line rents, amortization of acquired below-market leases, net, and other non-cash adjustments Cash basis same store EBITDA for the three months ended December 31, 2013

$

234,926

$

88,634

$

47,460

(24,299)

(3,142)

(33,195)

Increase (decrease) in Cash basis same store EBITDA Three months ended December 31, 2014 vs. December 31, 2013 % increase (decrease) in Cash basis same store EBITDA

48,369 (700)

(1,909)

(927)

$

201,731

$

86,725

$

46,533

$

16,637

$

(3,279)

$

1,136

8.2%

77

86,588

(3.8%)

2.4%

Supplemental Information – continued Three Months Ended December 31, 2014 Compared to September 30, 2014 Below is the reconciliation of Net Income to EBITDA for the three months ended September 30, 2014.

(Amounts in thousands) Net income attributable to Vornado for the three months ended September 30, 2014 Interest and debt expense Depreciation and amortization Income tax expense EBITDA for the three months ended September 30, 2014

New York $

$

112,381 58,010 79,446 746 250,583

Washington, DC

Retail Properties

$

$

$

24,955 22,208 36,411 145 83,719

$

85,198 11,205 15,256 525 112,184

Below is the reconciliation of EBITDA to same store EBITDA for each of our segments for the three months ended December 31, 2014, compared to the three months ended September 30, 2014. (Amounts in thousands)

New York

EBITDA for the three months ended December 31, 2014 Add-back: Non-property level overhead expenses included above Less EBITDA from: Acquisitions Dispositions, including net gains on sale Properties taken out-of-service for redevelopment Other non-operating income Same store EBITDA for the three months ended December 31, 2014

$

EBITDA for the three months ended September 30, 2014 Add-back: Non-property level overhead expenses included above Less EBITDA from: Acquisitions Dispositions, including net gains on sale Properties taken out-of-service for redevelopment Other non-operating income Same store EBITDA for the three months ended September 30, 2014 Increase (decrease) in same store EBITDA Three months ended December 31, 2014 vs. September 30, 2014 % increase (decrease) in same store EBITDA

703,479

Retail Properties

$

$

82,890

58,617

6,055

6,866

3,757

$

(4,191) (445,929) (8,761) (2,467) 248,186

$

(1,785) (47) (1,336) 86,588

$

(5,562) (574) (7,869) 48,369

$

250,583

$

83,719

$

112,184

7,986

6,454

4,163

$

50 (5,851) (5,897) (3,078) 243,793

$

(73) (400) (421) 89,279

$

(60,273) (618) (7,379) 48,077

$

4,393

$

(2,691)

$

292

1.8%

78

Washington, DC

(3.0%)

0.6%

Supplemental Information – continued Three Months Ended December 31, 2014 Compared to September 30, 2014 - continued Reconciliation of Same Store EBITDA to Cash basis Same Store EBITDA (Amounts in thousands)

New York 248,186

Washington, DC

Retail Properties

$

$

Same store EBITDA for the three months ended December 31, 2014 Less: Adjustments for straight line rents, amortization of acquired below-market leases, net, and other non-cash adjustments Cash basis same store EBITDA for the three months ended December 31, 2014

$

$

222,494

$

83,446

$

47,669

Same store EBITDA for the three months ended September 30, 2014 Less: Adjustments for straight line rents, amortization of acquired below-market leases, net, and other non-cash adjustments Cash basis same store EBITDA for the three months ended September 30, 2014

$

243,793

$

89,279

$

48,077

(25,692)

(3,142)

(31,353)

Increase (decrease) in Cash basis same store EBITDA Three months ended December 31, 2014 vs. September 30, 2014 % increase (decrease) in Cash basis same store EBITDA

48,369 (700)

(2,918)

(743)

$

212,440

$

86,361

$

47,334

$

10,054

$

(2,915)

$

335

4.7%

79

86,588

(3.4%)

0.7%

Related Party Transactions

Alexander’s We own 32.4% of Alexander’s. Steven Roth, the Chairman of our Board and Chief Executive Officer is also the Chairman of the Board and Chief Executive Officer of Alexander’s. We provide various services to Alexander’s in accordance with management, development and leasing agreements. These agreements are described in Note 6 - Investments in Partially Owned Entities to our consolidated financial statements in this Annual Report on Form 10-K. On January 15, 2015, we completed the spin-off of 79 strip shopping centers, three malls, a warehouse park and $225,000,000 of cash to UE and the transfer of all of the employees responsible for the management and leasing of those assets. In addition, we entered into agreements with UE to provide management and leasing services, on our behalf, for Alexander’s Rego Park retail assets. Fees for these services are similar to the fees we are receiving from Alexander’s as described in Note 6 - Investments in Partially Owned Entities to our consolidated financial statements in this Annual Report on Form 10-K. Interstate Properties (“Interstate”) Interstate is a general partnership in which Mr. Roth is the managing general partner. David Mandelbaum and Russell B. Wight, Jr., Trustees of Vornado and Directors of Alexander’s, are Interstate’s two other partners. As of December 31, 2014, Interstate and its partners beneficially owned an aggregate of approximately 6.6% of the common shares of beneficial interest of Vornado and 26.3% of Alexander’s common stock. We manage and lease the real estate assets of Interstate pursuant to a management agreement for which we receive an annual fee equal to 4% of annual base rent and percentage rent. The management agreement has a term of one year and is automatically renewable unless terminated by either of the parties on 60 days’ notice at the end of the term. We believe, based upon comparable fees charged by other real estate companies, that the management agreement terms are fair to us. We earned $535,000, $606,000, and $794,000 of management fees under the agreement for the years ended December 31, 2014, 2013 and 2012. On January 15, 2015, we completed the spin-off of 79 strip shopping centers, three malls, a warehouse park and $225,000,000 of cash to UE and the transfer of all of the employees responsible for the management and leasing of those assets. In addition, we entered into agreements with UE to provide management and leasing services, on our behalf, for Interstate’s properties. Fees for these services are similar to the fees we are receiving from Interstate described above.

80

Liquidity and Capital Resources

Property rental income is our primary source of cash flow and is dependent upon the occupancy and rental rates of our properties. Our cash requirements include property operating expenses, capital improvements, tenant improvements, debt service, leasing commissions, dividends to shareholders and distributions to unitholders of the Operating Partnership, as well as acquisition and development costs. 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. 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 may require funding from borrowings and/or equity offerings. 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.

Dividends On January 21, 2015, we declared a quarterly common dividend of $0.63 per share (an indicated annual rate of $2.52 per common share). This dividend, if continued for all of 2015, would require us to pay out approximately $474,000,000 of cash for common share dividends. In addition, during 2015, we expect to pay approximately $82,000,000 of cash dividends on outstanding preferred shares and approximately $29,000,000 of cash distributions to unitholders of the Operating Partnership.

Financing Activities and Contractual Obligations We have an effective shelf registration for the offering of our equity and debt securities that is not limited in amount due to our status as a “well-known seasoned issuer.” We have issued senior unsecured notes from a shelf registration statement that contain financial covenants that restrict our ability to incur debt, and that require us to maintain a level of unencumbered assets based on the level of our secured debt. Our revolving 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 revolving credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal. As of December 31, 2014, we are in compliance with all of the financial covenants required by our senior unsecured notes and our revolving credit facilities.

As of December 31, 2014, we had $1,198,477,000 of cash and cash equivalents and $2,460,448,000 of borrowing capacity under our revolving credit facilities, net of outstanding borrowings and letters of credit of $0 and $39,552,000, respectively. A summary of our consolidated debt as of December 31, 2014 and 2013 is presented below. 2014 (Amounts in thousands) Consolidated debt: Variable rate Fixed rate

2013 Weighted Average Interest Rate 2.20% 4.37% 4.00%

December 31, Balance $ 1,840,769 9,058,090 $ 10,898,859

December 31, Balance $ 1,064,730 8,913,988 $ 9,978,718

Weighted Average Interest Rate 2.01% 4.73% 4.44%

During 2015, $742,712,000 of our outstanding debt matures; we may refinance this maturing debt as it comes due or choose to repay it using cash and cash equivalents or our revolving credit facilities. We may also refinance or prepay other outstanding debt depending 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.

81

Liquidity and Capital Resources – continued

Financing Activities and Contractual Obligations – continued

Below is a schedule of our contractual obligations and commitments at December 31, 2014. (Amounts in thousands) Contractual cash obligations (principal and interest(1)): Notes and mortgages payable $ Operating leases Senior unsecured notes due 2019 Senior unsecured notes due 2022 Senior unsecured notes due 2015 Capital lease obligations Purchase obligations, primarily construction commitments Total contractual cash obligations $ Commitments: Capital commitments to partially owned entities Standby letters of credit Total commitments

$ $

Total 11,501,953 1,450,782 500,625 540,833 505,313 397,292 664,728 15,561,526

104,050 39,552 143,602

Less than 1 Year $ 809,644 39,925 11,250 20,000 505,313 12,500 332,364 $ 1,730,996

1 – 3 Years $ 2,798,399 80,836 22,500 40,000 25,000 332,364 $ 3,299,099

3 – 5 Years $ 1,784,666 77,912 466,875 40,000 25,000 $ 2,394,453

Thereafter $ 6,109,244 1,252,109 440,833 334,792 $ 8,136,978

$

$

$

$

$

90,277 39,552 129,829

$

13,773 13,773

$

-

$

-

________________________ (1) Interest on variable rate debt is computed using rates in effect at December 31, 2014.

Details of 2014 financing activities are provided in the “Overview” of Management’s Discussion and Analysis of Financial Conditions and Results of Operations. Details of 2013 financing activities are discussed below. Secured Debt On February 20, 2013, we completed a $390,000,000 financing of the retail condominium located at 666 Fifth Avenue at 53rd Street, which we had acquired in December 2012. The 10-year fixed-rate interest only loan bears interest at 3.61%. This property was previously unencumbered. The net proceeds from this financing were approximately $387,000,000. On March 25, 2013, we completed a $300,000,000 financing of the Outlets at Bergen Town Center, a 948,000 square foot shopping center located in Paramus, New Jersey. The 10-year fixed-rate interest only loan bears interest at 3.56%. The property was previously encumbered by a $282,312,000 floating-rate loan. On June 7, 2013, we completed a $550,000,000 refinancing of Independence Plaza, a three-building 1,328 unit residential complex in the Tribeca submarket of Manhattan. The five-year fixed-rate interest only mortgage loan bears interest at 3.48%. The property was previously encumbered by a $323,000,000 floating-rate loan. The net proceeds of $219,000,000, after repaying the existing loan and closing costs, were distributed to the partners, of which our share was $137,000,000. On October 30, 2013, we completed the restructuring of the $678,000,000 (face amount) 5.74% Skyline properties mortgage loan. The loan was separated into two tranches; a senior $350,000,000 position and a junior $328,000,000 position. The maturity date has been extended from February 2017 to February 2022, with a one-year extension option. The effective interest rate is 2.965%. Amounts expended to re-lease the property are senior to the $328,000,000 junior position. On November 27, 2013, we completed a $450,000,000 refinancing of Eleven Penn Plaza, a 1.1 million square foot Manhattan office building. The seven-year fixed-rate interest only loan bears interest at 3.95%. The net proceeds from this refinancing were approximately $107,000,000 after repaying the existing loan and closing costs.

82

Liquidity and Capital Resources – continued

Unsecured Revolving Credit Facility On March 28, 2013, we extended one of our two $1.25 billion revolving credit facilities from June 2015 to June 2017, with two six-month extension options. The interest on the extended facility was reduced from LIBOR plus 135 basis points to LIBOR plus 115 basis points. In addition, the facility fee was reduced from 30 basis points to 20 basis points. Preferred Securities On January 25, 2013, we sold 12,000,000 5.40% Series L Cumulative Redeemable Preferred Shares at a price of $25.00 per share in an underwritten public offering pursuant to an effective registration statement. We retained aggregate net proceeds of $290,306,000, after underwriters’ discounts and issuance costs, and contributed the net proceeds to the Operating Partnership in exchange for 12,000,000 Series L Preferred Units (with economic terms that mirror those of the Series L Preferred Shares). On February 19, 2013, we redeemed all of the outstanding 6.75% Series F Cumulative Redeemable Preferred Shares and 6.75% Series H Cumulative Redeemable Preferred Shares at par, for an aggregate of $262,500,000 in cash, plus accrued and unpaid dividends through the date of redemption. On May 9, 2013, we redeemed all of the outstanding 6.875% Series D-15 Cumulative Redeemable Preferred Units with an aggregate face amount of $45,000,000 for $36,900,000 in cash, plus accrued and unpaid distributions through the date of redemption.

Acquisitions and Investments Details of 2014 acquisitions and investments are provided in the “Overview” of Management’s Discussion and Analysis of Financial Conditions and Results of Operations. Details of 2013 acquisitions and investments are discussed below. 650 Madison Avenue On September 30, 2013, a joint venture, in which we have a 20.1% interest, acquired 650 Madison Avenue, a 27-story, 594,000 square foot Class A office and retail tower located on Madison Avenue between 59th and 60th Street, for $1.295 billion. The property contains 523,000 square feet of office space and 71,000 square feet of retail space. The purchase price was funded with cash and a new $800,000,000 seven-year 4.39% interest-only loan. 655 Fifth Avenue On October 4, 2013, we acquired a 92.5% interest in 655 Fifth Avenue, a 57,500 square foot retail and office property located at the northeast corner of Fifth Avenue and 52nd Street in Manhattan, for $277,500,000 in cash. 220 Central Park South On October 15, 2013, we acquired, for $194,000,000 in cash, land and air rights for 137,000 zoning square feet thereby completing the assemblage for our 220 Central Park South development site in Manhattan. Other In addition to the above, during 2013, we acquired three Manhattan street retail properties, in separate transactions, for an aggregate of $65,300,000.

83

Liquidity and Capital Resources – continued Certain Future Cash Requirements Capital Expenditures The following table summarizes anticipated 2015 capital expenditures. (Amounts in millions, except square foot data) Expenditures to maintain assets Tenant improvements Leasing commissions Total capital expenditures and leasing commissions

Total

New York

$

130.0 155.0 38.0

$

$

323.0

$

Square feet budgeted to be leased (in thousands) Weighted average lease term (years) Tenant improvements and leasing commissions: Per square foot Per square foot per annum

$ $

Other (2)

Washington, DC 60.0 (1) $ 54.0 24.0

138.0

$

27.0 88.0 12.0

$

43.0 13.0 2.0

127.0

$

58.0

1,200

1,800

10

8

65.00 6.50

$ $

55.00 6.85

(1) Includes $15.0 related to 2014 that is expected to be expended in 2015. (2) Primarily The Mart and 555 California Street.

The table above excludes anticipated capital expenditures of each of our partially owned non-consolidated subsidiaries, as these entities fund their capital expenditures without additional equity contributions from us.

84

Liquidity and Capital Resources – continued

Development and Redevelopment Expenditures On March 2, 2014, we entered into an agreement to transfer upon completion, the redeveloped Springfield Town Center, a 1,350,000 square foot mall located in Springfield, Fairfax County, Virginia, to Pennsylvania Real Estate Investment Trust (NYSE: PEI) (“PREIT’) in exchange for $465,000,000 comprised of $340,000,000 of cash and $125,000,000 of PREIT operating partnership units. The incremental development cost of this project was approximately $250,000,000, of which $225,000,000 has been expended as of December 31, 2014. The redevelopment was substantially completed in October 2014 and the transfer of the property to PREIT is expected to be completed no later than March 31, 2015. We are in the process of redeveloping and substantially expanding the existing retail space at the Marriott Marquis Times Square Hotel, including converting the below grade parking garage into retail, which is expected to be completed by the end of 2015. Upon completion of the redevelopment, the retail space will include 20,000 square feet on grade and 20,000 square feet below grade. As part of the redevelopment, we have completed the construction of a six-story, 300 foot wide block front, dynamic LED sign, which was lit for the first time in November 2014. The incremental development cost of this project is approximately $220,000,000, of which $170,000,000 has been expended as of December 31, 2014. We are constructing a residential condominium tower containing 472,000 zoning square feet on our 220 Central Park South development site. The incremental development cost of this project is approximately $1.0 billion, of which $94,000,000 has been expended as of December 31, 2014. In January 2014, we completed a $600,000,000 loan secured by this site. On August 26, 2014, we obtained a standby commitment for up to $500,000,000 of five-year mezzanine loan financing to fund a portion of the development expenditures at 220 Central Park South. We are developing The Bartlett, a 699-unit residential project in Pentagon City, which is expected to be completed in 2016. The project will include a 37,000 square foot Whole Foods Market at the base of the building. The incremental development cost of this project is approximately $250,000,000, of which $49,000,000 has been expended as of December 31, 2014. We plan to redevelop an existing 165,000 square foot office building in Crystal City (2221 S. Clark Street), which we have leased to WeWork, into approximately 250 rental residential units. The incremental development cost of this project is approximately $40,000,000. The redevelopment is expected to be completed in the second half of 2015. We are in the process of repositioning and re-tenanting 280 Park Avenue (50% owned). Our share of the incremental development cost of this project is approximately $62,000,000, of which $34,700,000 was expended prior to 2014, and $22,000,000 has been expended in 2014. We are also evaluating other development and redevelopment opportunities at certain of our properties in Manhattan, including the Penn Plaza District, and in Washington, including 1900 Crystal Drive, Rosslyn and Pentagon City. There can be no assurance that any of our development or redevelopment projects will commence, or if commenced, be completed, or completed on schedule or within budget.

85

Liquidity and Capital Resources – continued

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, with sub-limits for certain perils such as floods. Our California properties have earthquake insurance with coverage of $180,000,000 per occurrence, subject to a deductible in the amount of 5% of the value of the affected property, up to a $180,000,000 annual aggregate. We maintain coverage for terrorism acts with limits of $4.0 billion per occurrence and in the aggregate, and $2.0 billion per occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological (“NBCR”) terrorism events, as defined by Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2020. Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a portion of all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for NBCR acts. 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. For NBCR acts, PPIC is responsible for a deductible of $3,200,000 and 15% of the balance of a covered loss (16% effective January 1, 2016) and the Federal government is responsible for the remaining 85% of a covered loss (84% effective January 1, 2016). We are ultimately responsible for any loss incurred 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 the future. Our debt instruments, consisting of mortgage loans secured by our properties which are non-recourse to us, senior unsecured notes 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.

Other Commitments and Contingencies 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 is not expected to have a material adverse effect on our financial position, results of operations or cash flows. 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. 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 December 31, 2014, the aggregate dollar amount of these guarantees and master leases is approximately $359,000,000. At December 31, 2014, $39,552,000 of letters of credit were outstanding under one of our revolving credit facilities. Our revolving 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 revolving 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. As of December 31, 2014, we expect to fund additional capital to certain of our partially owned entities aggregating approximately $104,000,000.

86

Liquidity and Capital Resources – continued

Cash Flows for the Year Ended December 31, 2014 Our cash and cash equivalents were $1,198,477,000 at December 31, 2014, a $615,187,000 increase over the balance at December 31, 2013. Our consolidated outstanding debt was $10,898,859,000 at December 31, 2014, a $920,141,000 increase over the balance at December 31, 2013. As of December 31, 2014 and 2013, $0 and $295,870,000, respectively, was outstanding under our revolving credit facilities. During 2015 and 2016, $742,712,000 and $1,530,311,000, respectively, of our outstanding debt matures; we may refinance this maturing debt as it comes due or choose to repay it. Cash flows provided by operating activities of $1,135,310,000 was comprised of (i) net income of $1,009,026,000, (ii) return of capital from Real Estate Fund investments of $215,676,000, and (iii) distributions of income from partially owned entities of $96,286,000, partially offset by (iv) $89,536,000 of non-cash adjustments, which include depreciation and amortization expense, the effect of straight-lining of rental income, equity in net loss of partially owned entities and net gains on sale of real estate and (v) the net change in operating assets and liabilities of $96,142,000, including $3,392,000 related to Real Estate Fund investments. Net cash used in investing activities of $574,465,000 was comprised of (i) $544,187,000 of development costs and construction in progress, (ii) $279,206,000 of additions to real estate, (iii) $211,354,000 of acquisitions of real estate and other, (iv) $120,639,000 of investments in partially owned entities, and (v) $30,175,000 of investments in mortgage and mezzanine loans receivable and other, partially offset by (vi) $388,776,000 of proceeds from sales of real estate and related investments, (vii) $99,464,000 of changes in restricted cash, (viii) $96,913,000 of proceeds from sales and repayments of mortgages and mezzanine loans receivable and other, and (ix) $25,943,000 of capital distributions from partially owned entities. Net cash provided by financing activities of $54,342,000 was comprised of (i) $2,428,285,000 of proceeds from borrowings, (ii) $30,295,000 of contributions from noncontrolling interests, and (iii) $19,245,000 of proceeds received from exercise of employee share options, partially offset by (iv) $1,312,258,000 for the repayments of borrowings, (v) $547,831,000 of dividends paid on common shares, (vi) $220,895,000 of distributions to noncontrolling interests, (vii) purchase of marketable securities in connection with the defeasance of mortgage notes payable of $198,884,000, (viii) $81,468,000 of dividends paid on preferred shares, (ix) $58,336,000 of debt issuance and other costs, and (x) $3,811,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings.

Capital Expenditures for the Year Ended December 31, 2014 Capital expenditures consist of expenditures to maintain assets, tenant improvement allowances and leasing commissions. Recurring capital expenditures 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.

87

Liquidity and Capital Resources – continued

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 year ended December 31, 2014.

(Amounts in thousands) Expenditures to maintain assets Tenant improvements Leasing commissions Non-recurring capital expenditures Total capital expenditures and leasing commissions (accrual basis) Adjustments to reconcile to cash basis: Expenditures in the current year applicable to prior periods Expenditures to be made in future periods for the current period Total capital expenditures and leasing commissions (cash basis)

$

Total 107,728 205,037 79,636 122,330

New York $ 48,518 143,007 66,369 64,423

Washington, DC $ 23,425 37,842 5,857 37,798

Retail Properties $ 16,715 551 145 10,014

514,731

322,317

104,922

27,425

60,067

140,490

67,577

45,084

5,124

22,705

(313,746)

(205,258)

(63,283)

(9,814)

(35,391)

$

341,475

$

184,636

$

Tenant improvements and leasing commissions: Per square foot per annum $ Percentage of initial rent

5.98 10.6%

$

6.82 9.1%

$

86,723 5.70 14.8%

$

22,735

$

1.63 7.6%

$

$

Other 19,070 23,637 7,265 10,095

47,381

$

-

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 capitalized interest, debt 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 year ended December 31, 2014. These expenditures include interest of $62,787,000, payroll of $7,319,000, and other soft costs (primarily architectural and engineering fees, permits, real estate taxes and professional fees) aggregating $67,939,000, that were capitalized in connection with the development and redevelopment of these projects. Retail (Amounts in thousands) Springfield Mall Marriott Marquis Times Square - retail and signage 220 Central Park South 330 West 34th Street The Bartlett 608 Fifth Avenue Wayne Towne Center 7 West 34th Street Other

$

Total 127,467

$

112,390 78,059 41,592 38,163 20,377 19,740 11,555 94,844 544,187

New York $

112,390 41,592 20,377 11,555 27,892 213,806

$

88

Washington, DC $ -

Properties $ 127,467

38,163 45,482 83,645

19,740 8,048 155,255

$

$

Other $

$

78,059 13,422 91,481

Liquidity and Capital Resources – continued Cash Flows for the Year Ended December 31, 2013 Our cash and cash equivalents were $583,290,000 at December 31, 2013, a $377,029,000 decrease over the balance at December 31, 2012. Our consolidated outstanding debt was $9,978,718,000 at December 31, 2013, a $1,626,297,000 decrease over the balance at December 31, 2012. Cash flows provided by operating activities of $1,040,789,000 was comprised of (i) net income of $564,740,000, (ii) $426,643,000 of non-cash adjustments, which include depreciation and amortization expense, the effect of straight-lining of rental income, equity in net loss of partially owned entities and net gains on sale of real estate, (iii) return of capital from Real Estate Fund investments of $56,664,000, and (iv) distributions of income from partially owned entities of $54,030,000, partially offset by (v) the net change in operating assets and liabilities of $61,288,000, including $37,817,000 related to Real Estate Fund investments. Net cash provided by investing activities of $722,076,000 was comprised of (i) $1,027,608,000 of proceeds from sales of real estate and related investments, (ii) $378,709,000 of proceeds from sales of, and return of investment in, marketable securities, (iii) $290,404,000 of capital distributions from partially owned entities, (iv) $240,474,000 of proceeds from the sale of LNR, (v) $101,150,000 from the return of the J.C. Penney derivative collateral, and (vi) $50,569,000 of proceeds from sales and repayments of mortgage and mezzanine loans receivable and other, partially offset by (vii) $469,417,000 of development costs and construction in progress, (viii) $260,343,000 of additions to real estate, (ix) $230,300,000 of investments in partially owned entities, (x) $193,417,000 of acquisitions of real estate, (xi) $186,079,000 for the funding of the J.C. Penney derivative collateral and settlement of derivative position, (xii) $26,892,000 of changes in restricted cash, and (xiii) $390,000 of investments in mortgage and mezzanine loans receivable and other. Net cash used in financing activities of $2,139,894,000 was comprised of (i) $3,580,100,000 for the repayments of borrowings, (ii) $545,913,000 of dividends paid on common shares, (iii) $299,400,000 for purchases of outstanding preferred units and shares, (iv) $215,247,000 of distributions to noncontrolling interests, (v) $83,188,000 of dividends paid on preferred shares, (vi) $19,883,000 of debt issuance and other costs, and (vii) $443,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings, partially offset by (viii) $2,262,245,000 of proceeds from borrowings, (ix) $290,306,000 of proceeds from the issuance of preferred shares, (x) $43,964,000 of contributions from noncontrolling interests, and (xi) $7,765,000 of proceeds received from exercise of employee share options.

89

Liquidity and Capital Resources – continued

Capital Expenditures in the year ended December 31, 2013

(Amounts in thousands) Expenditures to maintain assets Tenant improvements Leasing commissions Non-recurring capital expenditures Total capital expenditures and leasing commissions (accrual basis) Adjustments to reconcile to cash basis: Expenditures in the current year applicable to prior periods Expenditures to be made in future periods for the current period Total capital expenditures and leasing commissions (cash basis)

$

$

Tenant improvements and leasing commissions: Per square foot per annum $ Percentage of initial rent

Total 73,130 120,139 51,476 49,441

New York $ 34,553 87,275 39,348 11,579

Washington, DC $ 22,165 6,976 4,389 37,342

Retail Properties $ 5,664 12,431 2,113 -

294,186

172,755

70,872

20,208

30,351

155,035

56,345

26,075

5,562

67,053

(150,067)

(91,107)

(36,702)

(14,011)

(8,247)

299,154

$

137,993

4.33 $ 9.5%

$

5.89 $ 8.1%

60,245

$

4.75 $ 11.9%

11,759

$

$

1.33 $ 6.6%

Other 10,748 13,457 5,626 520

89,157

-

Development and Redevelopment Expenditures in the year ended December 31, 2013 Below is a summary of development and redevelopment expenditures incurred in the year ended December 31, 2013. These expenditures include interest of $42,303,000, payroll of $4,534,000, and other soft costs (primarily architectural and engineering fees, permits, real estate taxes and professional fees) aggregating $27,812,000, that were capitalized in connection with the development and redevelopment of these projects.

(Amounts in thousands) 220 Central Park South Springfield Mall Marriott Marquis Times Square - retail and signage 1290 Avenue of the Americas Other

$

$

Total 243,687 68,716 40,356 13,865 102,793 469,417

New York $

40,356 13,865 31,764 85,985

$

90

Washington, DC $ -

$

41,701 41,701

Retail Properties $

$

68,716 25,210 93,926

$

$

Other 243,687 4,118 247,805

Liquidity and Capital Resources – continued

Cash Flows for the Year Ended December 31, 2012 Our cash and cash equivalents were $960,319,000 at December 31, 2012, a $353,766,000 increase over the balance at December 31, 2011. Our consolidated outstanding debt was $11,605,015,000 at December 31, 2012, a $1,038,979,000 increase from the balance at December 31, 2011. Cash flows provided by operating activities of $825,049,000 was comprised of (i) net income of $694,541,000, (ii) distributions of income from partially owned entities of $226,172,000, (iii) return of capital from Real Estate Fund investments of $63,762,000, and (iv) $151,954,000 of non-cash adjustments, which include depreciation and amortization expense, impairment loss on J.C. Penney common shares, the effect of straight-lining of rental income, equity in net income of partially owned entities and net gains on sale of real estate, partially offset by (v) the net change in operating assets and liabilities of $311,380,000, including $262,537,000 related to Real Estate Fund investments. Net cash used in investing activities of $642,262,000 was comprised of (i) $673,684,000 of acquisitions of real estate and other, (ii) $205,652,000 of additions to real estate, (iii) $191,330,000 for the funding of the J.C. Penney derivative collateral, (iv) $156,873,000 of development costs and construction in progress, (v) $134,994,000 of investments in partially owned entities, (vi) $94,094,000 of investments in mortgage and mezzanine loans receivable and other, and (vii) $75,138,000 of changes in restricted cash, partially offset by (viii) $445,683,000 of proceeds from sales of real estate and related investments, (ix) $144,502,000 of capital distributions from partially owned entities, (x) $134,950,000 from the return of the J.C. Penney derivative collateral, (xi) $60,258,000 of proceeds from sales of marketable securities, (xii) $52,504,000 of proceeds from the sale of the Canadian Trade Shows, (xiii) $38,483,000 of proceeds from sales and repayments of mezzanine loans receivable and other, and (xiv) $13,123,000 of proceeds from the repayment of loan to officer. Net cash provided by financing activities of $170,979,000 was comprised of (i) $3,593,000,000 of proceeds from borrowings, (ii) $290,971,000 of proceeds from the issuance of preferred shares, (iii) $213,132,000 of contributions from noncontrolling interests, and (iv) $11,853,000 of proceeds from exercise of employee share options, partially offset by (v) $2,747,694,000 for the repayments of borrowings, (vi) $699,318,000 of dividends paid on common shares, (vii) $243,300,000 for purchases of outstanding preferred units and shares, (viii) $104,448,000 of distributions to noncontrolling interests, (ix) $73,976,000 of dividends paid on preferred shares, (x) $39,073,000 of debt issuance and other costs, and (xi) $30,168,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings.

91

Liquidity and Capital Resources – continued

Capital Expenditures in the year ended December 31, 2012

(Amounts in thousands) Expenditures to maintain assets Tenant improvements Leasing commissions Non-recurring capital expenditures Total capital expenditures and leasing commissions (accrual basis) Adjustments to reconcile to cash basis: Expenditures in the current year applicable to prior periods Expenditures to be made in future periods for the current period Total capital expenditures and leasing commissions (cash basis) Tenant improvements and leasing commissions: Per square foot per annum Percentage of initial rent

$

$

$

Total 69,912 169,205 56,203 17,198

New York $ 27,434 71,572 27,573 5,822

Washington, DC $ 20,582 41,846 11,393 10,296

Retail Properties $ 4,676 9,052 2,368 -

312,518

132,401

84,117

16,096

79,904

105,350

41,975

24,370

10,353

28,652

(170,744)

(76,283)

(43,600)

(7,754)

(43,107)

247,124

$

98,093

4.16 $ 9.6%

$

5.48 $ 8.8%

64,887

$

4.86 $ 12.0%

18,695

$

$

Other 17,220 46,735 14,869 1,080

65,449

1.04 $ 5.2%

-

Development and Redevelopment Expenditures in the Year Ended December 31, 2012 Below is a summary of development and redevelopment expenditures incurred in the year ended December 31, 2012. These expenditures include interest of $16,801,000, payroll of $1,412,000, and other soft costs (primarily architectural and engineering fees, permits, real estate taxes and professional fees) aggregating $23,749,000, that were capitalized in connection with the development and redevelopment of these projects.

(Amounts in thousands) Springfield Mall 1290 Avenue of the Americas Crystal Square 5 220 Central Park South Bergen Town Center 510 Fifth Avenue Other

$

$

Total 18,278 16,778 15,039 12,191 11,404 10,206 72,977 156,873

New York $

16,778 10,206 24,576 51,560

$

92

Washington, DC $ 15,039 24,295 $ 39,334

Retail Properties $ 18,278 11,404 23,864 $ 53,546

Other $

$

12,191 242 12,433

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 gains from sales of depreciated real estate assets, real estate impairment losses, 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. FFO attributable to common shareholders plus assumed conversions was $911,130,000, or $4.83 per diluted share for the year ended December 31, 2014, compared to $641,037,000, or $3.41 per diluted share for the year ended December 31, 2013. FFO attributable to common shareholders plus assumed conversions was a positive $230,143,000, or $1.22 per diluted share for the three months ended December 31, 2014, compared to a negative $6,784,000, or $0.04 per diluted share for the three months ended December 31, 2013. Details of certain items that affect comparability are discussed in the financial results summary of our “Overview.”

(Amounts in thousands, except per share amounts) Reconciliation of our net income (loss) to FFO (negative FFO): Net income (loss) attributable to Vornado Depreciation and amortization of real property Net gains on sale of real estate Real estate impairment losses Proportionate share of adjustments to equity in net loss of Toys, to arrive at FFO: Depreciation and amortization of real property Net gains on sale of real estate Real estate impairment losses Income tax effect of above adjustments 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 Net gains on sale of real estate Noncontrolling interests' share of above adjustments FFO Preferred share dividends Preferred unit and share redemptions FFO (negative FFO) attributable to common shareholders Convertible preferred share dividends FFO (negative FFO) attributable to common shareholders plus assumed conversions

$

$

Reconciliation of Weighted Average Shares Weighted average common shares outstanding Effect of dilutive securities: Employee stock options and restricted share awards Convertible preferred shares Denominator for FFO (negative FFO) per diluted share FFO (negative FFO) attributable to common shareholders plus assumed conversions per diluted share

$

93

For The Year Ended December 31, 2014 2013 864,852 $ 475,971 517,493 501,753 (507,192) (411,593) 26,518 37,170

21,579 (760) (7,287)

69,741 6,552 (26,703)

96,187 (10,820) (8,073) 992,497 (81,464) 911,033 97

87,529 (465) (15,089) 724,866 (82,807) (1,130) 640,929 108

911,130

$

641,037

$

For The Three Months Ended December 31, 2014 2013 533,603 $ (48,519) 129,944 124,611 (449,396) (127,512) 5,676 32,443

-

16,506 456 (5,937)

24,350 (10,820) 17,127 250,484 (20,365) 230,119 24 $

230,143

25,282 (3,746) 13,584 (20,368) (6,784) $

(6,784)

187,572

186,941

187,776

187,109

1,075 43 188,690

768 48 187,757

1,153 41 188,970

187,109

4.83

$

3.41

$

1.22

$

(0.04)

ITEM 7A.

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 nontrading activity) is as follows: (Amounts in thousands, except per share amounts)

Consolidated debt: Variable rate Fixed rate Prorata share of debt of nonconsolidated entities (non-recourse): Variable rate – excluding Toys Variable rate – Toys Fixed rate (including $674,443 and $682,484 of Toys debt in 2014 and 2013)

2014 Weighted Average Interest Rate 2.20% 4.37% 4.00%

December 31, Balance $ 1,840,769 9,058,090 $ 10,898,859

$

$

2013 Effect of 1% Change In Base Rates $ 18,408 18,408

319,387 1,199,835

1.74% 6.47%

3,194 11,998

2,754,410 4,273,632

6.43% 6.09%

15,192

Redeemable noncontrolling interests’ share of above Total change in annual net income Per share-diluted

$ $

December 31, Balance $ 1,064,730 8,913,988 $ 9,978,718

$

$

Weighted Average Interest Rate 2.01% 4.73% 4.44%

196,240 1,179,001

2.09% 5.45%

2,814,162 4,189,403

6.46% 5.97%

(1,949) 31,651 0.17

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 December 31, 2014, we have one interest rate cap with a principal amount of $60,000,000 and a weighted average interest rate of 2.36%. This cap is based on a notional amount of $60,000,000 and caps LIBOR at a rate of 7.00%. In addition, we have one interest rate swap on a $422,000,000 mortgage loan that swapped the rate from LIBOR plus 1.65% (1.81% at December 31, 2014) to a fixed rate of 4.78% through March 2018.

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 current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt. As of December 31, 2014, the estimated fair value of our consolidated debt was $10,936,000,000.

94

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS Page Number Report of Independent Registered Public Accounting Firm

96

Consolidated Balance Sheets at December 31, 2014 and 2013

97

Consolidated Statements of Income for the years ended December 31, 2014, 2013 and 2012

98

Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2013 and 2012

99

Consolidated Statements of Changes in Equity for the years ended December 31, 2014, 2013 and 2012

100

Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012

103

Notes to Consolidated Financial Statements

105

95

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Trustees Vornado Realty Trust New York, New York We have audited the accompanying consolidated balance sheets of Vornado Realty Trust (the “Company”) as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2014. Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Vornado Realty Trust at December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control— Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 17, 2015 expressed an unqualified opinion on the Company’s internal control over financial reporting. /s/ DELOITTE & TOUCHE LLP Parsippany, New Jersey February 17, 2015

96

VORNADO REALTY TRUST CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share amounts) ASSETS Real estate, at cost: Land Buildings and improvements Development costs and construction in progress Leasehold improvements and equipment Total Less accumulated depreciation and amortization Real estate, net Cash and cash equivalents Restricted cash Marketable securities Tenant and other receivables, net of allowance for doubtful accounts of $17,060 and $21,869 Investments in partially owned entities Investment in Toys "R" Us Real Estate Fund investments Receivable arising from the straight-lining of rents, net of allowance of $3,188 and $4,355 Deferred leasing and financing costs, net of accumulated amortization of $300,227 and $259,286 Identified intangible assets, net of accumulated amortization of $225,841 and $276,426 Assets related to discontinued operations Other assets

December 31, 2014 $

$ LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY Mortgages payable Senior unsecured notes Revolving credit facility debt Accounts payable and accrued expenses Deferred revenue Deferred compensation plan Deferred tax liabilities Liabilities related to discontinued operations Other liabilities Total liabilities Commitments and contingencies Redeemable noncontrolling interests: Class A units - 11,356,550 and 11,292,038 units outstanding Series D cumulative redeemable preferred units - 1 unit outstanding Total redeemable noncontrolling interests Vornado shareholders' equity: Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 52,678,939 and 52,682,807 shares Common shares of beneficial interest: $.04 par value per share; authorized 250,000,000 shares; issued and outstanding 187,887,498 and 187,284,688 shares Additional capital Earnings less than distributions Accumulated other comprehensive income Total Vornado shareholders' equity Noncontrolling interests in consolidated subsidiaries Total equity

$

$ See notes to the consolidated financial statements.

97

December 31, 2013

4,240,009 13,338,445 1,136,344 130,594 18,845,392 (3,629,135) 15,216,257 1,198,477 186,512 206,323 124,144 1,246,496 513,973 877,486 503,384 276,239 477,620 421,409 21,248,320

$

9,551,700 1,347,159 499,702 519,280 117,284 1,146 211 384,676 12,421,158

$

$

4,016,851 12,245,111 1,024,714 132,270 17,418,946 (3,296,717) 14,122,229 583,290 262,440 191,917 115,862 1,166,443 83,224 667,710 795,256 404,907 307,436 874,050 522,460 20,097,224

8,331,993 1,350,855 295,870 422,276 529,002 116,515 1,280 14,709 436,360 11,498,860

1,336,780 1,000 1,337,780

1,002,620 1,000 1,003,620

1,277,026

1,277,225

7,493 6,873,025 (1,505,385) 93,267 6,745,426 743,956 7,489,382

7,469 7,143,840 (1,734,839) 71,537 6,765,232 829,512 7,594,744

21,248,320

$

20,097,224

VORNADO REALTY TRUST CONSOLIDATED STATEMENTS OF INCOME

2014 (Amounts in thousands, except per share amounts) REVENUES: Property rentals Tenant expense reimbursements Cleveland Medical Mart development project Fee and other income Total revenues EXPENSES: Operating Depreciation and amortization General and administrative Cleveland Medical Mart development project Acquisition and transaction related costs, and impairment losses Total expenses Operating income Income from Real Estate Fund (Loss) income applicable to Toys "R" Us Income from partially owned entities Interest and debt expense Interest and other investment income (loss), net Net gain on disposition of wholly owned and partially owned assets Income before income taxes Income tax (expense) benefit Income from continuing operations Income from discontinued operations Net income Less net income attributable to noncontrolling interests in: Consolidated subsidiaries Operating Partnership Preferred unit distributions of the Operating Partnership Net income attributable to Vornado Preferred share dividends Preferred unit and share redemptions NET INCOME attributable to common shareholders

$

$

INCOME (LOSS) PER COMMON SHARE - BASIC: Income (loss) from continuing operations, net Income from discontinued operations, net Net income per common share

2,110,797 329,398 195,745 2,635,940

$

$

(96,561) (47,563) (50) 864,852 (81,464) 783,388

(63,952) (23,659) (1,158) 475,971 (82,807) (1,130) 392,034

(32,018) (35,327) (9,936) 617,260 (76,937) 8,948 549,271

1.59 2.59 4.18

1.58 2.57 4.15 188,690

See notes to consolidated financial statements.

98

1,990,784 279,075 235,234 144,124 2,649,217 988,883 490,028 190,109 226,619 25,786 1,921,425 727,792 63,936 14,859 408,267 (484,794) (261,179) 13,347 482,228 (8,132) 474,096 220,445 694,541

$

$ $

187,572

$

$

1,030,951 515,724 196,267 32,210 43,857 1,819,009 850,260 102,898 (362,377) 23,592 (481,304) (24,876) 3,407 111,600 6,406 118,006 446,734 564,740

$

INCOME (LOSS) PER COMMON SHARE - DILUTED: Income (loss) from continuing operations, net Income from discontinued operations, net Net income per common share Weighted average shares outstanding

2,081,115 301,167 36,369 250,618 2,669,269

2012

1,064,753 536,230 185,924 33,391 1,820,298 815,642 163,034 (73,556) 15,425 (467,715) 38,787 13,568 505,185 (11,002) 494,183 514,843 1,009,026

$

Weighted average shares outstanding

Year Ended December 31, 2013

(0.14) 2.24 2.10

$

$ $

186,941

$ $

(0.14) 2.23 2.09 187,709

1.83 1.12 2.95 185,810

$ $

1.82 1.12 2.94 186,530

VORNADO REALTY TRUST CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

Year Ended December 31, 2013

2014

Net income Other comprehensive income (loss): Change in unrealized net gain (loss) on securities available-for-sale Amounts reclassified from accumulated other comprehensive income: Non-cash impairment loss on J.C. Penney common shares Sale of available-for-sale securities Pro rata share of other comprehensive income (loss) of nonconsolidated subsidiaries Change in value of interest rate swap Other Comprehensive income Less comprehensive income attributable to noncontrolling interests Comprehensive income attributable to Vornado

$

1,009,026 14,465 -

$

2,509 6,079 1,032,079 (145,497) 886,582

See notes to consolidated financial statements.

99

$

$

564,740

2012 $

694,541

142,281

(283,649)

(42,404)

224,937 (3,582)

(22,814) 18,183 533 660,519 (94,065) 566,454

(31,758) (5,659) 329 595,159 (70,574) 524,585

$

VORNADO REALTY TRUST CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Amounts in thousands)

Balance, December 31, 2013 Net income attributable to Vornado Net income attributable to noncontrolling interests in consolidated subsidiaries Dividends on common shares Dividends on preferred shares Common shares issued: Upon redemption of Class A units, at redemption value Under Omnibus share plan Under dividend reinvestment plan Contributions: Real Estate Fund Other Distributions: Real Estate Fund Other Transfer of noncontrolling interest in Real Estate Fund Conversion of Series A preferred shares to common shares Deferred compensation shares and options Change in unrealized net gain on securities available-for-sale Pro rata share of other comprehensive income of nonconsolidated subsidiaries Change in value of interest rate swap Adjustments to carry redeemable Class A units at redemption value Redeemable noncontrolling interests' share of above adjustments Other Balance, December 31, 2014

Preferred Shares Shares Amount 52,683 $ 1,277,225 -

Common Shares Shares Amount 187,285 $ 7,469 -

Additional Capital $ 7,143,840 -

Accumulated Earnings Other Less Than Comprehensive Distributions Income (Loss) $ (1,734,839) $ 71,537 864,852 -

-

(3,393) -

-

96,561 -

96,561 (547,831) (81,464)

-

-

-

-

-

271 304 17

11 12 1

-

-

-

-

-

-

-

5,297 32,998

5,297 32,998

-

-

-

-

-

-

-

(182,964) (4,463)

(182,964) (4,463)

-

-

-

-

-

-

-

(33,028)

(33,028)

-

-

-

(340)

-

-

5,512

27,262 17,428 1,803

(547,831) (81,464)

Total Equity $ 7,594,744 864,852

-

(4)

-

Noncontrolling Interests $ 829,512 -

-

27,273 14,047 1,804

(193)

5

-

193

-

-

5

-

5,852

-

-

-

-

-

-

14,465

-

14,465

-

-

-

-

-

-

2,509 6,079

-

2,509 6,079

-

-

-

-

-

(315,276)

52,679

(6) $ 1,277,026

187,887

$

7,493

(315,276)

$

(8,077) 6,873,025 $

(2,370) (1,505,385) $

See notes to consolidated financial statements.

100

(1,323) 93,267 $

43 743,956

-

$

(1,323) (10,410) 7,489,382

VORNADO REALTY TRUST CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED

(Amounts in thousands)

Balance, December 31, 2012 Net income attributable to Vornado Net income attributable to noncontrolling interests in consolidated subsidiaries Dividends on common shares Dividends on preferred shares Issuance of Series L preferred shares Redemption of Series F and Series H preferred shares Common shares issued: Upon redemption of Class A units, at redemption value Under Omnibus share plan Under dividend reinvestment plan Upon acquisition of real estate Contributions: Real Estate Fund Other Distributions: Real Estate Fund Other Conversion of Series A preferred shares to common shares Deferred compensation shares and options Change in unrealized net gain on securities available-for-sale Amounts reclassified related to sale of available-for-sale securities Pro rata share of other comprehensive loss of nonconsolidated subsidiaries Change in value of interest rate swap Adjustments to carry redeemable Class A units at redemption value Redeemable noncontrolling interests' share of above adjustments Preferred unit and share redemptions Deconsolidation of partially owned entity Consolidation of partially owned entity Other Balance, December 31, 2013

Preferred Shares Shares Amount 51,185 $ 1,240,278 -

Common Shares Shares Amount 186,735 $ 7,440 -

Additional Capital $ 7,195,438 -

12,000

290,306

-

-

-

(10,500)

(253,269)

-

-

-

Accumulated Earnings Other NonLess Than Comprehensive controlling Distributions Income (Loss) Interests $ (1,573,275) $ (18,946) $ 1,053,209 475,971 -

(545,913) (82,807) -

63,952 -

63,952 (545,913) (82,807) 290,306

-

-

-

(253,269)

(107) -

-

-

25,317 5,808 1,851 11,461

-

-

299 104 22 128

12 23 1 5

-

-

-

-

-

-

-

28,078 15,886

28,078 15,886

-

-

-

-

-

-

-

(47,268) (133,153)

(47,268) (133,153)

90

-

-

-

(307)

-

-

9,270

-

142,281

(2)

25,305 5,892 1,850 11,456

-

Total Equity $ 7,904,144 475,971

(90)

3

-

-

-

(6)

(12)

-

-

-

-

-

-

142,281

-

-

-

-

-

-

(42,404)

-

-

-

-

-

-

(22,814) 18,183

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

52,683

$ 1,277,225

187,285

$

7,469

9,589

(108,252)

$

2,472 7,143,840

(1,130) -

$

(7,271) (1,734,839) $

See notes to consolidated financial statements.

101

(42,404)

(5,296) 533 71,537

-

-

(22,814) 18,183

-

(108,252)

-

(5,296)

-

(1,130)

(165,427)

$

16,799 (2,564) 829,512 $

(165,427) 16,799 (6,830) 7,594,744

VORNADO REALTY TRUST CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED

(Amounts in thousands)

Balance, December 31, 2011 Net income attributable to Vornado Net income attributable to noncontrolling interests in consolidated subsidiaries Dividends on common shares Dividends on preferred shares Issuance of Series K preferred shares Redemption of Series E preferred shares Common shares issued: Upon redemption of Class A units, at redemption value Under Omnibus share plan Under dividend reinvestment plan Upon acquisition of real estate Contributions: Real Estate Fund Other Distributions: Real Estate Fund Other Conversion of Series A preferred shares to common shares Deferred compensation shares and options Change in unrealized net loss on securities available-for-sale Non-cash impairment loss on J.C. Penney common shares Amounts reclassified related to sale of available-for-sale securities Pro rata share of other comprehensive loss of nonconsolidated subsidiaries Change in value of interest rate swap Adjustments to carry redeemable Class A units at redemption value Redeemable noncontrolling interests' share of above adjustments Preferred unit and share redemptions Consolidation of partially owned entity Other Balance, December 31, 2012

Preferred Shares Shares Amount 42,187 $ 1,021,660 -

Common Shares Shares Amount 185,080 $ 7,373 -

Additional Capital $ 7,127,258 -

12,000

290,971

-

-

-

(3,000)

(72,248)

-

-

-

45 18 1 3

(699,318) (76,937) -

89,717 9,521 2,306 5,121

(16,389) -

-

Noncontrolling Interests $ 680,131 -

Total Equity $ 7,508,447 617,260

32,018 -

32,018 (699,318) (76,937) 290,971

-

-

(72,248)

-

-

89,762 (6,850) 2,307 5,124

-

-

-

-

-

-

-

-

-

195,029 18,103

195,029 18,103

-

-

-

-

-

-

-

(48,138) (59)

(48,138) (59)

-

-

-

(473)

-

-

13,054

(2)

1,121 434 29 64

Accumulated Earnings Other Less Than Comprehensive Distributions Income (Loss) $ (1,401,704) $ 73,729 617,260 -

(105)

3

-

105

-

-

4

-

13,527

-

-

-

-

-

-

(283,649)

-

(283,649)

-

-

-

-

-

-

224,937

-

224,937

-

-

-

-

-

-

(3,582)

-

(3,582)

-

-

-

-

-

-

(31,758) (5,659)

-

(31,758) (5,659)

-

-

-

-

-

(52,117)

-

-

-

-

-

-

6,707

-

-

-

-

-

-

8,948

51,185

$ 1,240,278

186,735

$

7,440

(52,117)

$

7,195,438

8,948

$

(4,662) (1,573,275) $

See notes to consolidated financial statements.

102

6,707 -

176,132 329 (7) (18,946) $ 1,053,209 $

-

176,132 (4,340) 7,904,144

VORNADO REALTY TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS

2014 (Amounts in thousands) Cash Flows from Operating Activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization (including amortization of deferred financing costs) Net gains on sale of real estate Return of capital from Real Estate Fund investments Net realized and unrealized gains on Real Estate Fund investments Distributions of income from partially owned entities Straight-lining of rental income Equity in net loss (income) of partially owned entities, including Toys “R” Us Amortization of below-market leases, net Other non-cash adjustments Impairment losses and tenant buy-outs Net gain on disposition of wholly owned and partially owned assets Defeasance cost in connection with the refinancing of mortgage notes payable Losses from the disposition of investment in J.C. Penney Gain on sale of Canadian Trade Shows Changes in operating assets and liabilities: Real Estate Fund investments Tenant and other receivables, net Prepaid assets Other assets Accounts payable and accrued expenses Other liabilities Net cash provided by operating activities Cash Flows from Investing Activities: Development costs and construction in progress Additions to real estate Proceeds from sales of real estate and related investments Acquisitions of real estate and other Investments in partially owned entities Restricted cash Proceeds from sales and repayments of mortgage and mezzanine loans receivable and other Investments in mortgage and mezzanine loans receivable and other Distributions of capital from partially owned entities Proceeds from sales of, and return of investment in, marketable securities Proceeds from the sale of LNR Funding of J.C. Penney derivative collateral; and settlement of derivative in 2013 Return of J.C. Penney derivative collateral Proceeds from the sale of Canadian Trade Shows Proceeds from the repayment of loan to officer Net cash (used in) provided by investing activities

$

See notes to consolidated financial statements.

103

Year Ended December 31, 2013 2012

1,009,026

$

564,740

$

694,541

583,408 (507,192) 215,676 (150,139) 96,286 (82,800) 58,131 (46,786) 37,303 26,518 (13,568) 5,589 -

561,998 (414,502) 56,664 (85,771) 54,030 (69,391) 338,785 (52,876) 41,663 37,170 (3,407) 72,974 -

557,888 (245,799) 63,762 (55,361) 226,172 (69,648) (423,126) (54,359) 52,082 133,977 (13,347) 300,752 (31,105)

(3,392) (8,282) (8,786) (123,435) 44,628 3,125 1,135,310

(37,817) 83,897 (2,207) (50,856) (41,729) (12,576) 1,040,789

(262,537) (23,271) (10,549) (46,573) 21,595 9,955 825,049

(544,187) (279,206) 388,776 (211,354) (120,639) 99,464

(469,417) (260,343) 1,027,608 (193,417) (230,300) (26,892)

(156,873) (205,652) 445,683 (673,684) (134,994) (75,138)

96,913 (30,175) 25,943 (574,465)

50,569 (390) 290,404 378,709 240,474 (186,079) 101,150 722,076

38,483 (94,094) 144,502 60,258 (191,330) 134,950 52,504 13,123 (642,262)

VORNADO REALTY TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 2014 (Amounts in thousands) Cash Flows from Financing Activities: Proceeds from borrowings Repayments of borrowings Dividends paid on common shares Distributions to noncontrolling interests Purchase of marketable securities in connection with the defeasance of mortgage notes payable Dividends paid on preferred shares Debt issuance and other costs Contributions from noncontrolling interests Proceeds received from exercise of employee share options Repurchase of shares related to stock compensation agreements and related tax withholdings Purchases of outstanding preferred units and shares Proceeds from the issuance of preferred shares Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental Disclosure of Cash Flow Information: Cash payments for interest (net of amounts capitalized of $53,139, $42,303 and $16,801) Cash payments for income taxes Non-Cash Investing and Financing Activities: Like-kind exchange of real estate: Acquisitions Dispositions Adjustments to carry redeemable Class A units at redemption value Marketable securities transferred in connection with the defeasance of mortgage notes payable Defeasance of mortgage notes payable Write-off of fully depreciated assets Accrued capital expenditures included in accounts payable and accrued expenses Elimination of a mortgage and mezzanine loan asset and liability Transfer of interest in Real Estate Fund to unconsolidated joint venture Transfer of noncontrolling interest in Real Estate Fund Beverly Connection seller financing Financing assumed in acquisitions Financing transferred in dispositions L.A. Mart seller financing Marriott Marquis Times Square - retail and signage capital lease: Asset (included in development costs and construction in progress) Liability (included in other liabilities) Increase in assets and liabilities resulting from the consolidation of partially owned entities: Real estate, net Notes and mortgages payable Decrease in assets and liabilities resulting from the deconsolidation of discontinued operations and/or investments that were previously consolidated: Real estate, net Notes and mortgages payable

$

Year Ended December 31, 2013 2012

2,428,285 (1,312,258) (547,831) (220,895)

$

2,262,245 (3,580,100) (545,913) (215,247)

$

3,593,000 (2,747,694) (699,318) (104,448)

(198,884) (81,468) (58,336) 30,295 19,245

(83,188) (19,883) 43,964 7,765

(73,976) (39,073) 213,132 11,853

$

(3,811) 54,342 615,187 583,290 1,198,477

(443) (299,400) 290,306 (2,139,894) (377,029) 960,319 $ 583,290

$

(30,168) (243,300) 290,971 170,979 353,766 606,553 960,319

$

443,538

$

465,260

$

491,869

$

11,696

$

9,023

$

21,709

$

606,816 (630,352) (315,276)

$

66,076 (128,767) (108,252)

$

230,913 (230,913) (52,117)

See notes to consolidated financial statements. 104

198,884 (193,406) (121,673) 100,528 59,375 (58,564) (33,028) 13,620 -

(77,106) 72,042 79,253 -

(177,367) 80,350 (163,144) 35,000

-

-

240,000 (240,000)

-

-

342,919 334,225

-

(852,166) (322,903)

-

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1.

Organization and Business

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 94.1% of the common limited partnership interest in the Operating Partnership at December 31, 2014. All references to “we,” “us,” “our,” the “Company” and “Vornado” refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership. On January 15, 2015, we completed the spin-off of substantially all of our retail segment comprised of 79 strip shopping centers, three malls, a warehouse park and $225 million of cash to Urban Edge Properties (“UE”) (NYSE: UE). As part of this transaction, we received 5,712,000 UE operating partnership units (5.4% ownership interest). We are providing transition services to UE for an initial period of up to two years, including information technology, human resources, tax and public reporting. UE is providing us with leasing and property management services for (i) the Monmouth Mall, (ii) certain small retail properties which did not fit UE’s strategy that we plan to sell, and (iii) our affiliate, Alexander’s, Inc. (NYSE: ALX), Rego Park retail assets. Steven Roth, our Chairman and Chief Executive Officer is a member of the Board of Trustees of UE. The spin-off distribution was effected by Vornado distributing one UE common share for every two Vornado common shares. Beginning in the first quarter of 2015, the historical financial results of UE will be reflected in our consolidated financial statements as discontinued operations for all periods presented. We currently own all or portions of: New York: •

20.1 million square feet of Manhattan office space in 31 properties;

•

2.5 million square feet of Manhattan street retail space in 56 properties;

•

Four residential properties containing 1,654 units;

•

The 1,700 room Hotel Pennsylvania located on Seventh Avenue at 33rd Street in the heart of the Penn Plaza district;

•

A 32.4% interest in Alexander’s, Inc. (NYSE: ALX), which owns six properties in the greater New York metropolitan area, including 731 Lexington Avenue, the 1.3 million square foot Bloomberg, L.P. headquarters building;

Washington, DC: •

16.1 million square feet of office space in 59 properties;

•

Seven residential properties containing 2,414 units;

Other Real Estate and Related Investments: •

The 3.6 million square foot Mart in Chicago;

•

A 70% controlling interest in 555 California Street, a three-building office complex in San Francisco’s financial district aggregating 1.8 million square feet, known as the Bank of America Center;

•

A 25.0% interest in Vornado Capital Partners, our real estate fund. We are the general partner and investment manager of the fund;

•

A 32.6% interest in Toys “R” Us, Inc.; and

•

Other real estate and related investments.

105

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 2.

Basis of Presentation and Significant Accounting Policies

Basis of Presentation The accompanying consolidated financial statements include the accounts of Vornado and its consolidated subsidiaries, including the Operating Partnership. All inter-company amounts have been eliminated. Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Recently Issued Accounting Literature In April 2014, the Financial Accounting Standards Board (“FASB”) issued an update (“ASU 2014-08”) Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity to ASC Topic 205, Presentation of Financial Statements and ASC Topic 360, Property Plant and Equipment. Under ASU 2014-08, only disposals that represent a strategic shift that has (or will have) a major effect on the entity’s results and operations would qualify as discontinued operations. In addition, ASU 2014-08 expands the disclosure requirements for disposals that meet the definition of a discontinued operation and requires entities to disclose information about disposals of individually significant components that do not meet the definition of discontinued operations. ASU 2014-08 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2014. Upon adoption of this standard, individual properties sold in the ordinary course of business are not expected to qualify as discontinued operations. The financial results of our strip shopping centers and malls, which were spun off to UE on January 15, 2015, will be treated as a discontinued operation in the first quarter of 2015. In May 2014, the FASB issued an update ("ASU 2014-09") establishing ASC Topic 606, Revenue from Contracts with Customers. ASU 2014-09 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. ASU 2014-09 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2016. We are currently evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements. In June 2014, the FASB issued an update (“ASU 2014-12 requires an entity to treat performance targets ended, as a performance condition that affects vesting. years that begin after December 15, 2015. We are consolidated financial statements.

2014-12”) to ASC Topic 718, Compensation – Stock Compensation. ASU that can be met after the requisite service period of a share based award has ASU 2014-12 is effective for interim and annual reporting periods in fiscal currently evaluating the impact of the adoption of ASU 2014-12 on our

106

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 2.

Basis of Presentation and Significant Accounting Policies - continued Significant Accounting Policies

Real Estate: Real estate is carried at cost, net of accumulated depreciation and amortization. Betterments, major renewals and certain costs directly related to the improvement and leasing of real estate are capitalized. Maintenance and repairs are expensed as incurred. For redevelopment of existing operating properties, the net book value of the existing property under redevelopment plus the cost for the construction and improvements incurred in connection with the redevelopment are capitalized to the extent the capitalized costs of the property do not exceed the estimated fair value of the redeveloped property when complete. If the cost of the redeveloped property, including the net book value of the existing property, exceeds the estimated fair value of redeveloped property, the excess is charged to expense. Depreciation is recognized on a straight-line basis over estimated useful lives which range from 7 to 40 years. Tenant allowances are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets. Additions to real estate include interest and debt expense capitalized during construction of $62,786,000 and $42,303,000 for the years ended December 31, 2014 and 2013, respectively. Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above and below-market leases, acquired in-place leases and tenant relationships) and acquired liabilities and we allocate the purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions. We record acquired intangible assets (including acquired above-market leases, acquired in-place leases and tenant relationships) and acquired intangible liabilities (including below–market leases) at their estimated fair value separate and apart from goodwill. We amortize identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired. Our properties, including any related intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. The table below summarizes impairment losses, acquisition related costs and tenant buy-outs in the years ended December 31, 2014, 2013 and 2012. (Amounts in thousands)

For the Year Ended December 31, 2013 2012 $ 19,000 $ 14,538 33,391 24,857 (1) 11,248 33,391 $ 43,857 $ 25,786

2014 Impairment losses Acquisition related costs

$ $

(1) Includes a $10,949 prepayment penalty in connection with the repayment of the mortgage loan upon the acquisition of 655 Fifth Avenue.

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VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 2.

Basis of Presentation and Significant Accounting Policies – continued

Partially Owned Entities: We consolidate entities in which we have a controlling financial interest. In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity (“VIE”) and we are the primary beneficiary. We are deemed to be the primary beneficiary of a VIE when we have (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. We generally do not control a partially owned entity if the entity is not considered a VIE and the approval of all of the partners/members is contractually required with respect to major decisions, such as operating and capital budgets, the sale, exchange or other disposition of real property, the hiring of a chief executive officer, the commencement, compromise or settlement of any lawsuit, legal proceeding or arbitration or the placement of new or additional financing secured by assets of the venture. We account for investments under the equity method when the requirements for consolidation are not met, and we have significant influence over the operations of the investee. Equity method investments are initially recorded at cost and subsequently adjusted for our share of net income or loss and cash contributions and distributions each period. Investments that do not qualify for consolidation or equity method accounting are accounted for on the cost method. Investments in partially owned entities are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods and available information at the time the analyses are prepared. In the years ended December 31, 2014, 2013 and 2012, we recognized non-cash impairment losses on investments in partially owned entities, aggregating $85,459,000, $281,098,000 and $44,936,000, respectively. Included in these amounts are $75,196,000, $240,757,000 and $40,000,000 of impairment losses related to our investment in Toys in 2014, 2013 and 2012, respectively. Mortgage and Mezzanine Loans Receivable: We invest in mortgage and mezzanine loans of entities that have significant real estate assets. These investments are either secured by the real property or by pledges of the equity interests of the entities owning the underlying real estate. We record these investments at the stated principal amount net of any unamortized discount or premium. We accrete or amortize any discount or premium over the life of the related receivable utilizing the effective interest method or straightline method, if the result is not materially different. We evaluate the collectibility of both interest and principal of each of our loans whenever events or changes in circumstances indicate such amounts may not be recoverable. A loan is impaired when it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient, to the value of the collateral if the loan is collateral dependent. Interest on impaired loans is recognized when received in cash. Mortgage and mezzanine loans receivable are included in “other assets” on our consolidated balance sheets.

Cash and Cash Equivalents: Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less and are carried at cost, which approximates fair value due to their short-term maturities. The majority of our cash and cash equivalents consists of (i) deposits at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation limit, (ii) United States Treasury Bills, and (iii) Certificate of Deposits placed through an Account Registry Service (“CDARS”). To date, we have not experienced any losses on our invested cash.

Restricted Cash: Restricted cash consists of security deposits, cash restricted for the purposes of facilitating a Section 1031 Like-Kind exchange, cash restricted in connection with our deferred compensation plan and cash escrowed under loan agreements for debt service, real estate taxes, property insurance and capital improvements.

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VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 2.

Basis of Presentation and Significant Accounting Policies – continued

Allowance for Doubtful Accounts: We periodically evaluate the collectibility of amounts due from tenants and maintain an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under the lease agreements. We also maintain an allowance for receivables arising from the straight-lining of rents. This receivable arises from earnings recognized in excess of amounts currently due under the lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates. As of December 31, 2014 and 2013, we had $17,060,000 and $21,869,000, respectively, in allowances for doubtful accounts. In addition, as of December 31, 2014 and 2013, we had $3,188,000 and $4,355,000, respectively, in allowances for receivables arising from the straight-lining of rents.

Deferred Charges: Direct financing costs are deferred and amortized over the terms of the related agreements as a component of interest expense. Direct costs related to successful leasing activities are capitalized and amortized on a straight line basis over the lives of the related leases. All other deferred charges are amortized on a straight line basis, which approximates the effective interest rate method, in accordance with the terms of the agreements to which they relate. Revenue Recognition: We have the following revenue sources and revenue recognition policies: •

Base Rent — income arising from tenant leases. These rents are recognized over the non-cancelable term of the related leases on a straight-line basis which includes the effects of rent steps and rent abatements under the leases. We commence rental revenue recognition when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. In addition, in circumstances where we provide a tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of rental revenue on a straight-line basis over the term of the lease.

•

Percentage Rent — income arising from retail tenant leases that is contingent upon tenant sales exceeding defined thresholds. These rents are recognized only after the contingency has been removed (i.e., when tenant sales thresholds have been achieved).

•

Hotel Revenue — income arising from the operation of the Hotel Pennsylvania which consists of rooms revenue, food and beverage revenue, and banquet revenue. Income is recognized when rooms are occupied. Food and beverage and banquet revenue is recognized when the services have been rendered.

•

Trade Shows Revenue — income arising from the operation of trade shows, including rentals of booths. This revenue is recognized when the trade shows have occurred.

•

Expense Reimbursements — revenue arising from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred.

•

Management, Leasing and Other Fees — income arising from contractual agreements with third parties or with partially owned entities. This revenue is recognized as the related services are performed under the respective agreements.

•

Cleveland Medical Mart — revenue arising from the development of the Cleveland Medical Mart. This revenue was recognized as the related services were performed under the respective agreements using the criteria set forth in ASC 605-25, Multiple Element Arrangements.

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VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 2.

Basis of Presentation and Significant Accounting Policies – continued

Derivative Instruments and Hedging Activities: ASC 815, Derivatives and Hedging, as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. As of December 31, 2014 and 2013, our derivative instruments consisted of an interest rate cap and an interest rate swap. We record all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (loss) (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. We assess the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. For derivatives not designated as hedges, changes in fair value are recognized in earnings. Income Taxes: We operate in a manner intended to enable us to continue to qualify as a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended. Under those sections, a REIT which distributes at least 90% of its REIT taxable income as a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We distribute to our shareholders 100% of our taxable income and therefore, no provision for Federal income taxes is required. Dividends distributed for the years ended December 31, 2014 and 2013, were characterized, for federal income tax purposes, as ordinary income. Dividend distributions for the year ended December 31, 2012, were characterized, for Federal income tax purposes, as 62.7% ordinary income and 37.3% long-term capital gain. We have elected to treat certain consolidated subsidiaries, and may in the future elect to treat newly formed subsidiaries, as taxable REIT subsidiaries pursuant to an amendment to the Internal Revenue Code that became effective January 1, 2001. Taxable REIT subsidiaries may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to Federal and State income tax at regular corporate tax rates. Our taxable REIT subsidiaries had a combined current income tax expense of approximately $10,777,000, $9,608,000 and $20,336,000 for the years ended December 31, 2014, 2013 and 2012, respectively, and have immaterial differences between the financial reporting and tax basis of assets and liabilities. At December 31, 2014 and 2013, we had deferred tax assets from our taxable REIT subsidiaries of $94,100,000 and $87,800,000, respectively, against which we have recorded a full valuation allowance because we have not determined that it is more likely than not that we will realize these net operating loss carryforwards which expire in 2034. The year over year change in the valuation allowance relates to an increase in the net operating loss carryforwards.

The following table reconciles net income attributable to common shareholders to estimated taxable income for the years ended December 31, 2014, 2013 and 2012. (Amounts in thousands) Net income attributable to common shareholders Book to tax differences (unaudited): Depreciation and amortization Impairment losses on marketable equity securities Straight-line rent adjustments Earnings of partially owned entities Stock options Sale of real estate Derivatives Other, net Estimated taxable income (unaudited)

$

$

For the Year Ended December 31, 2014 2013 2012 783,388 $ 392,034 $ 549,271 219,403 (77,526) 71,960 (9,566) (477,061) 1,260 511,858

$

155,401 37,236 (64,811) 339,376 4,884 (324,936) 31,578 4,608 575,370

$

205,155 211,328 (64,679) (60,049) (28,701) (123,905) 71,228 17,080 776,728

The net basis of our assets and liabilities for tax reporting purposes is approximately $3.6 billion lower than the amounts reported in our consolidated balance sheet at December 31, 2014.

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VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 3.

Vornado Capital Partners Real Estate Fund (the “Fund”)

We are the general partner and investment manager of the Fund, which has an eight-year term and a three-year investment period that ended in July 2013. During the investment period, the Fund was our exclusive investment vehicle for all investments that fit within its investment parameters, as defined. The Fund is accounted for under the AICPA Investment Company Guide 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, retaining the fair value basis of accounting. On June 26, 2014, the Fund sold its 64.7% interest in One Park Avenue to a newly formed joint venture that we and an institutional investor own 55% and 45%, respectively (see Note 6 - Investments in Partially Owned Entities - One Park Avenue). This transaction was based on a property value of $560,000,000. From the inception of this investment through its disposition, the Fund realized a $75,529,000 net gain. On August 21, 2014, the Fund and its 50% joint venture partner completed the sale of The Shops at Georgetown Park, a 305,000 square foot retail property, for $272,500,000. From the inception of this investment through its disposition, the Fund realized a $51,124,000 net gain. On January 20, 2015, we co-invested with the Fund and one of the Fund’s limited partners to buy out the Fund’s joint venture partner’s 57% interest in the Crowne Plaza Times Square Hotel. The purchase price for the 57% interest was approximately $95,000,000 (our share $39,000,000) which valued the property at approximately $480,000,000. The property is encumbered by a newly placed $310,000,000 mortgage loan bearing interest at LIBOR plus 2.80% and maturing in December 2018 with a one-year extension option. Our aggregate ownership interest in the property increased to 33% from 11%. At December 31, 2014, the Fund had seven investments with an aggregate fair value of $513,973,000, or $176,899,000 in excess of cost, and had remaining unfunded commitments of $144,123,000, of which our share was $36,031,000. At December 31, 2013, the Fund had nine investments with an aggregate fair value of $667,710,000. Below is a summary of income from the Fund for the years ended December 31, 2014, 2013 and 2012: (Amounts in thousands) Net investment income Net realized gains Net unrealized gains Income from Real Estate Fund Less income attributable to noncontrolling interests Income from Real Estate Fund attributable to Vornado (1) (1)

4.

$

$

For the Year Ended December 31, 2014 2013 2012 12,895 $ 8,943 $ 8,575 76,337 8,184 73,802 85,771 55,361 163,034 102,898 63,936 (92,728) (53,427) (39,332) 70,306 $ 49,471 $ 24,604

Excludes $2,865, $2,992, and $3,278 of management and leasing fees in the years ended December 31, 2014, 2013 and 2012, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.

Acquisitions

On August 1, 2014, we acquired the land under our 715 Lexington Avenue retail property located on the Southeast corner of 58th Street and Lexington Avenue in Manhattan, for $63,000,000. On October 28, 2014, we completed the purchase of the retail condominium of the St. Regis Hotel for $700,000,000. We own a 74.3% controlling interest of the joint venture which owns the property. The acquisition was used in a like-kind exchange for income tax purposes for the sale of 1740 Broadway (see Note 8 – Dispositions). We consolidate the accounts of the venture into our consolidated financial statements from the date of acquisition. On November 21, 2014, we entered into an agreement to acquire the Center Building, an eight story 437,000 square foot office building, located at 33-00 Northern Boulevard in Long Island City, New York. The building is 98% leased. The purchase price is approximately $142,000,000, including the assumption of an existing $62,000,000 4.43% mortgage maturing in October 2018. The purchase is expected to close in the first quarter of 2015, subject to customary closing conditions. As of December 31, 2014, our $14,200,000 non-refundable deposit was included in “other assets” on our consolidated balance sheet. On January 20, 2015, we co-invested with our 25% owned Fund and one of the Fund’s limited partners to acquire the Fund’s joint venture partner’s 57% interest in the Crowne Plaza Times Square Hotel (see Note 3 – Vornado Capital Partners Real Estate Fund). 111

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 5.

Marketable Securities and Derivative Instruments

Our portfolio of marketable securities is comprised of equity securities that are classified as available-for-sale. Available-for-sale securities are presented on our consolidated balance sheets at fair value. Unrealized gains and losses resulting from the mark-tomarket of these securities are included in “other comprehensive income (loss).” Realized 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. We evaluate our portfolio of marketable securities for impairment each reporting period. For each of the securities in our portfolio with unrealized losses, we review the underlying cause of the decline in value and the estimated recovery period, as well as the severity and duration of the decline. In our evaluation, we consider our ability and intent to hold these investments for a reasonable period of time sufficient for us to recover our cost basis. We also evaluate the near-term prospects for each of these investments in relation to the severity and duration of the decline.

Below is a summary of our marketable securities portfolio as of December 31, 2014 and 2013. As of December 31, 2014 GAAP Unrealized Fair Value Cost Gain Equity securities: Lexington Realty Trust Other

$ $

202,789 3,534 206,323

$ $

72,549 72,549

$ $

130,240 3,534 133,774

As of December 31, 2013 GAAP Unrealized Fair Value Cost Gain $ $

188,567 3,350 191,917

$ $

72,549 59 72,608

$ $

116,018 3,291 119,309

Investment in Lexington Realty Trust (“Lexington”) (NYSE: LXP) From the inception of our investment in Lexington in 2008, until the first quarter of 2013, we accounted for our investment under the equity method because of our ability to exercise significant influence over Lexington’s operating and financial policies. As a result of Lexington’s common share issuances, our ownership interest was reduced over time from approximately 17.2% to 8.8% at March 31, 2013. In the first quarter of 2013, we concluded that we no longer have the ability to exercise significant influence over Lexington’s operating and financial policies, and began accounting for this investment as a marketable equity security – available for sale, in accordance with ASC Topic 320, Investments – Debt and Equity Securities.

Investment in J.C. Penney Company, Inc. (“J.C. Penney”) (NYSE: JCP) In the first quarter of 2013, we wrote down 8,584,010 J.C. Penney common shares we owned to fair value, based on J.C. Penney’s March 31, 2013 closing share price of $15.11 per share, and recorded a $39,487,000 impairment loss. On September 19, 2013, we settled a forward contract and received 4,815,990 J.C. Penney common shares. In connection therewith, we recognized a $33,487,000 loss from the mark-to-market of the derivative position through its settlement date. These losses are included in “interest and other investment income (loss), net” on our consolidated statements of income. In March 2013 and September 2013, we sold an aggregate of 23,400,000 J.C. Penney common shares at a price of $14.29 per share, or $334,500,000, resulting in a net loss of $54,914,000. The net losses resulting from these sales are included in “net gain on disposition of wholly owned and partially owned assets” on our consolidated statements of income.

Other Investments During 2013 and 2012, we sold other marketable securities for aggregate proceeds of $44,209,000 and $58,718,000, respectively, resulting in net gains of $31,741,000 and $3,582,000, respectively, which are included as a component of “net gain on disposition of wholly owned and partially owned assets” on our consolidated statements of income.

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VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 6.

Investments in Partially Owned Entities

Toys “R” Us (“Toys”) As of December 31, 2014, we own 32.6% of Toys. We account for our investment in Toys under the equity method and record our 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. The business of Toys is highly seasonal and substantially all of Toys’ net income is generated in its fourth quarter. We have not guaranteed any of Toys’ obligations and are not committed to provide any support to Toys. Pursuant to ASC 32310-35-20, we discontinued applying the equity method for our Toys’ investment when the carrying amount was reduced to zero in the third quarter of 2014. We will resume application of the equity method if during the period the equity method was suspended our share of unrecognized net income exceeds our share of unrecognized net losses. In the first quarter of 2013, we recognized our share of Toys’ fourth quarter net income of $78,542,000 and a corresponding noncash impairment loss of the same amount to continue to carry our investment at fair value. At December 31, 2013, we estimated that the fair value of our investment in Toys was approximately $80,062,000 ($83,224,000 including $3,162,000 for our share of Toys’ accumulated other comprehensive income), or $162,215,000 less than the carrying amount after recognizing our share of Toys’ third quarter net loss in our fourth quarter. In determining the fair value of our investment, we considered, among other inputs, a December 31, 2013 third-party valuation of Toys. As of December 31, 2013, we have concluded that the decline in the value of our investment was “other-than-temporary” based on, among other factors, Toys’ 2013 holiday sales results, compression of earnings multiples of comparable retailers and our inability to forecast a recovery in the near term. Accordingly, we recognized an additional non-cash impairment loss of $162,215,000 in the fourth quarter of 2013. In the first quarter of 2014, we recognized our share of Toys’ fourth quarter net income of $75,196,000 and a corresponding noncash impairment loss of the same amount to continue to carry our investment at fair value. Below is a summary of Toys’ latest available financial information on a purchase accounting basis: (Amounts in thousands) Balance Sheet: Assets Liabilities Noncontrolling interests Toys “R” Us, Inc. equity (1)

Income Statement: Total revenues Net (loss) income attributable to Toys (1)

Balance as of November 1, 2014 November 2, 2013 $ 11,267,000 $ 11,756,000 10,377,000 10,437,000 82,000 75,000 808,000 1,244,000 For the Twelve Months Ended November 1, 2014 November 2, 2013 October 27, 2012 $ 12,645,000 $ 13,046,000 $ 13,698,000 (343,000) (396,000) 138,000

At December 31, 2014, the carrying amount of our investment in Toys is less than our share of Toys' equity by approximately $263,455. This basis difference results primarily from non-cash impairment losses aggregating $355,953 that we have recognized through December 31, 2014. We have allocated the basis difference primarily to Toys' real estate, which is being amortized over its remaining estimated useful life.

Alexander’s, Inc. (“Alexander’s”) (NYSE: ALX) As of December 31, 2014, 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 agreements which expire in March of each year and are automatically renewable.

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VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 6.

Investments in Partially Owned Entities – continued

Alexander’s, Inc. (“Alexander’s”) (NYSE: ALX) - continued As of December 31, 2014 the market value (“fair value” pursuant to ASC 820) of our investment in Alexander’s, based on Alexander’s December 31, 2014 closing share price of $437.18, was $723,125,000, or $591,509,000 in excess of the carrying amount on our consolidated balance sheet. As of December 31, 2014, 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 $42,048,000. 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. Management, Leasing and Development Agreements We receive an annual fee for managing Alexander’s and all of its properties equal to the sum of (i) $2,800,000, (ii) 2% of the gross revenue from the Rego Park II Shopping Center, (iii) $0.50 per square foot of the tenant-occupied office and retail space at 731 Lexington Avenue, and (iv) $280,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue. In addition, we are entitled to a development fee of 6% of development costs, as defined. We provide Alexander’s with leasing services for a fee of 3% of rent for the first ten years of a lease term, 2% of rent for the eleventh through twentieth year of a lease term and 1% of rent for the twenty-first through thirtieth year of a lease term, subject to the payment of rents by Alexander’s tenants. In the event third-party real estate brokers are used, our fee increases by 1% and we are responsible for the fees to the third-parties. We are also entitled to a commission upon the sale of any of Alexander’s assets equal to 3% of gross proceeds, as defined, for asset sales less than $50,000,000, and 1% of gross proceeds, as defined, for asset sales of $50,000,000 or more. The total of these amounts was payable to us in annual installments in an amount not to exceed $4,000,000 with interest on the unpaid balance at one-year LIBOR plus 1.0% (1.58% at December 31, 2014). On December 22, 2014, the leasing agreements with Alexander’s were amended to eliminate the annual installment cap of $4,000,000. In addition, Alexander’s repaid to us the outstanding balance of $40,353,000. On January 15, 2015, we completed the spin-off of 79 strip shopping centers, three malls, a warehouse park and $225,000,000 of cash to UE and the transfer of all of the employees responsible for the management and leasing of those assets. In addition, we entered into agreements with UE to provide management and leasing services, on our behalf, for Alexander’s Rego Park retail assets. Fees for these services are similar to the fees we are receiving from Alexander’s described above. Other Agreements Building Maintenance Services (“BMS”), our wholly-owned subsidiary, supervises (i) cleaning, engineering and security services at Alexander’s 731 Lexington Avenue property and (ii) security services at Alexander’s Rego Park I and Rego Park II properties, for an annual fee of the costs for such services plus 6%. During the years ended December 31, 2014, 2013 and 2012, we recognized $2,318,000, $2,036,000 and $2,362,000 of income, respectively, under these agreements. Below is a summary of Alexander’s latest available financial information: (Amounts in thousands) Balance Sheet: Assets Liabilities Stockholders' equity

Income Statement: Total revenues Net income attributable to Alexander’s (1)

$

$

Balance as of December 31, 2014 2013 1,423,000 $ 1,458,000 1,075,000 1,124,000 348,000 334,000

For the Year Ended December 31, 2014 2013 201,000 $ 196,000 $ 68,000 57,000

(1) 2012 includes a $600,000 net gain on sale of real estate.

114

2012 191,000 674,000

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 6.

Investments in Partially Owned Entities – continued

LNR Property LLC (“LNR”) In January 2013, we and the other equity holders of LNR entered into a definitive agreement to sell LNR for $1.053 billion, of which our share of the net proceeds was $240,474,000. The definitive agreement provided that LNR would not (i) make any cash distributions to the equity holders, including us, through the completion of the sale, which occurred on April 19, 2013, and (ii) take any of the following actions (among others) without the purchaser’s approval, the lending or advancing of any money, the acquisition of assets in excess of specified amounts, or the issuance of equity interests. Notwithstanding the terms of the definitive agreement, in accordance with GAAP, we recorded our pro rata share of LNR’s earnings on a one-quarter lag basis through the date of sale, which increased the carrying amount of our investment in LNR above our share of the net sales proceeds and resulted in us recognizing a $27,231,000 “other-than-temporary” impairment loss on our investment in the three months ended March 31, 2013. One Park Avenue On June 26, 2014, we invested an additional $22,700,000 to increase our ownership in One Park Avenue to 55.0% from 46.5% through a joint venture with an institutional investor, who increased its ownership interest to 45.0% (see Note 3 – Vornado Capital Partners Real Estate Fund). The transaction was based on a property value of $560,000,000. The property is encumbered by a $250,000,000 interest-only mortgage loan that bears interest at 4.995% and matures in March 2016. We account for our investment in the joint venture under the equity method because we share control over major decisions with our joint venture partner. 61 Ninth Avenue On July 23, 2014, a joint venture in which we are a 50.1% partner entered into a 99-year ground lease for 61 Ninth Avenue located on the Southwest corner of Ninth Avenue and 15th Street in Manhattan. The venture’s current plans are to construct an office building, with retail at the base, of approximately 130,000 square feet. Total development costs are currently estimated to be approximately $125,000,000. We account for our investment in the joint venture under the equity method because we share control over major decisions with our joint venture partner. The following is a summary of condensed combined financial information for all of our partially owned entities, including Toys, Alexander’s and LNR (sold in April 2013), as of December 31, 2014 and 2013 and for the years ended December 31, 2014, 2013 and 2012. (Amounts in thousands) Balance Sheet: Assets Liabilities Noncontrolling interests Equity

Income Statement: Total revenue Net (loss) income(1)

$

$

(1) 2012 includes a $600,000 net gain on sale of real estate.

115

Balance as of December 31, 2014 2013 21,389,000 $ 21,773,000 17,986,000 17,982,000 104,000 96,000 3,299,000 3,695,000

For the Year Ended December 31, 2014 2013 2012 13,620,000 $ 14,092,000 $ 15,119,000 (434,000) (368,000) 1,091,000

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 6.

Investments in Partially Owned Entities - continued

Below are schedules summarizing our investments in, and income from, partially owned entities. Percentage Ownership at December 31, 2014 32.6%

(Amounts in thousands) Investments: Toys Alexander’s India real estate ventures Partially owned office buildings (1) Other investments (2)

$

32.4% 4.1%-36.5% Various Various

$

$

As of December 31, 2014 2013 $ 83,224 131,616 76,752 760,749 277,379 1,246,496

$

$

167,785 88,467 621,294 288,897 1,166,443

______________________________________________________

(1) (2)

Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue and others. Includes interests in Independence Plaza, Monmouth Mall, 85 Tenth Avenue, Fashion Center Mall, 50-70 West 93rd Street and others.

(Amounts in thousands) Our Share of Net (Loss) Income: Toys: Equity in net (loss) earnings Non-cash impairment losses (see page 113 for details) Management fees

Percentage Ownership at December 31, 2014 32.6%

For the Year Ended December 31, 2014 2013 2012 $

$ Alexander's: Equity in net income Management, leasing and development fees Net gain on sale of real estate

32.4%

India real estate ventures (1)

$

4.1%-36.5%

(4,691) (75,196) 6,331 (73,556)

$

21,287 8,722 30,009

$

$

(128,919) (240,757) 7,299 (362,377)

$

17,721 6,681 24,402

$

$

45,267 (40,000) 9,592 14,859 24,709 13,748 179,934 218,391

(8,309)

(3,533)

(5,008)

Partially owned office buildings (2)

Various

93

(4,212)

(3,770)

Other investments (3)

Various

(6,368)

(10,817)

103,644

-

42,186 (27,231) 3,776 18,731

66,270 66,270

-

(979)

(23)

-

(979)

28,763 28,740

LNR (see page 115 for details): Equity in net income Impairment loss Net gain on sale

n/a

Lexington (see page 112 for details): (4) Equity in net loss Net gain resulting from Lexington's stock issuance and asset acquisition

n/a

$

15,425

$

23,592

$

408,267

______________________________________________________

(1) (2) (3)

(4)

Includes a $5,771 non-cash impairment loss in 2014. Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue and others. Includes interests in Independence Plaza, Monmouth Mall, 85 Tenth Avenue, Fashion Center Mall, 50-70 West 93rd Street and others. In the third quarter of 2014, we recognized a $10,263 non-cash charge, comprised of a $5,959 impairment loss and a $4,304 loan loss reserve, on our equity and debt investments in Suffolk Downs. In the first quarter of 2013, we began accounting for our investment in Lexington as a marketable equity security - available for sale.

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VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 6.

Investments in Partially Owned Entities - continued Below is a summary of the debt of our partially owned entities as of December 31, 2014 and 2013, none of which is recourse to us. Percentage Ownership at December 31, 2014

Maturity

Interest Rate at December 31, 2014

Toys: Notes, loans and mortgages payable

32.6%

2015-2021

7.23%

$

5,748,350 $

5,702,247

Alexander's: Mortgages payable

32.4%

2015-2021

2.59%

$

1,032,780 $

1,049,959

Partially owned office buildings(1): Mortgages payable

Various

2015-2023

5.59%

$

3,691,274 $

3,622,759

India Real Estate Ventures: TCG Urban Infrastructure Holdings mortgages payable

25.0%

2015-2026

13.25%

$

183,541 $

199,021

Other(2): Mortgages payable

Various

2015-2023

4.33%

$

1,480,485 $

1,709,509

(Amounts in thousands)

(1) (2)

100% Partially Owned Entities’ Debt at December 31, 2014 2013

Includes 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue and others. Includes Independence Plaza, Monmouth Mall, Fashion Center Mall, 50-70 West 93rd Street and others.

Based on our ownership interest in the partially owned entities above, our pro rata share of the debt of these partially owned entities, was $4,273,632,000 and $4,189,403,000 as of December 31, 2014 and 2013, respectively. 7.

Mortgage and Mezzanine Loans Receivable

In October 2012, we acquired a 25% participation in a $475,000,000 first mortgage and mezzanine loan for the acquisition and redevelopment of a 10-story retail building at 701 Seventh Avenue in Times Square. The loan had an interest rate of LIBOR plus 10.2%, with a LIBOR floor of 1.0%. Of the $475,000,000, we funded $93,750,000, representing our 25% share of the $375,000,000 that was funded at acquisition. In March 2013, we transferred at par, the 25% participation in the mortgage loan. The transfer did not qualify for sale accounting given our continuing interest in the mezzanine loan. Accordingly, we continued to include the 25% participation in the mortgage loan in “other assets” and recorded a $59,375,000 liability in “other liabilities” on our consolidated balance sheet as of December 31, 2013. On January 14, 2014, the mortgage and mezzanine loans were repaid; accordingly, the $59,375,000 asset and liability were eliminated. On April 17, 2013, a $50,091,000 mezzanine loan that was scheduled to mature in August 2015, was repaid. In connection therewith, we received net proceeds of $55,358,000, including prepayment penalties, which resulted in income of $5,267,000, which is included in “interest and other investment income (loss), net” on our consolidated statement of income. In March 2014, a $30,000,000 mezzanine loan that was scheduled to mature in January 2015 was repaid. In May 2014, a $25,000,000 mezzanine loan that was scheduled to mature in November 2014 was repaid. As of December 31, 2014 and 2013, the carrying amounts of mortgage and mezzanine loans receivable were $16,748,000 and $170,972,000, respectively, net of an allowance of $5,811,000 and $5,845,000, respectively, and are included in “other assets” on our consolidated balance sheets. These loans have a weighted average interest rate of 9.1% and 11.0% at December 31, 2014 and 2013, respectively and have maturities ranging from April 2015 to May 2016.

117

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 8.

Dispositions

Discontinued Operations 2014 Activity: New York On December 18, 2014, we completed the sale of 1740 Broadway, a 601,000 square foot office building in Manhattan for $605,000,000. The sale resulted in net proceeds of approximately $580,000,000, after closing costs, and resulted in a financial statement gain of approximately $441,000,000. The tax gain of approximately $484,000,000, was deferred in like-kind exchanges, primarily for the acquisition of the St. Regis Fifth Avenue retail (see Note 4 – Acquisitions). Retail Properties On February 24, 2014, we completed the sale of Broadway Mall in Hicksville, Long Island, New York, for $94,000,000. The sale resulted in net proceeds of $92,174,000 after closing costs. On March 2, 2014, we entered into an agreement to transfer upon completion, the redeveloped Springfield Town Center, a 1,350,000 square foot mall located in Springfield, Fairfax County, Virginia, to Pennsylvania Real Estate Investment Trust (NYSE: PEI) (“PREIT”) in exchange for $465,000,000 comprised of $340,000,000 of cash and $125,000,000 of PREIT operating partnership units. In connection therewith, we recorded a non-cash impairment loss of $20,000,000 in the first quarter of 2014, which is included in “income from discontinued operations” on our consolidated statements of income. The redevelopment was substantially completed in October 2014, at which time we reclassified the assets, liabilities and financial results to discontinued operations, and the transfer of the property to PREIT is expected to be completed no later than March 31, 2015. On July 8, 2014, we completed the sale of Beverly Connection, a 335,000 square foot power shopping center in Los Angeles, California, for $260,000,000, of which $239,000,000 was cash and $21,000,000 was 10-year mezzanine seller financing. The sale resulted in a net gain of $44,155,000, which was recognized in the third quarter of 2014. In addition to the above, during 2014, we sold six of the 22 strip shopping centers which did not fit UE’s strategy (see Note 1 – Organization and Business), in separate transactions, for an aggregate of $66,410,000 in cash, which resulted in a net gain aggregating $22,500,000. 2013 Activity: New York On December 17, 2013, we sold 866 United Nations Plaza, a 360,000 square foot office building in Manhattan for $200,000,000. The sale resulted in net proceeds of $146,439,000 after repaying the existing loan and closing costs, and a net gain of $127,512,000. Retail Properties On January 24, 2013, we sold the Green Acres Mall located in Valley Stream, New York, for $500,000,000. The sale resulted in net proceeds of $185,000,000 after repaying the existing loan and closing costs, and a net gain of $202,275,000. On April 15, 2013, we sold The Plant, a power strip shopping center in San Jose, California, for $203,000,000. The sale resulted in net proceeds of $98,000,000 after repaying the existing loan and closing costs, and a net gain of $32,169,000. On April 15, 2013, we sold a retail property in Philadelphia, which is a part of the Gallery at Market Street, for $60,000,000. The sale resulted in net proceeds of $58,000,000, and a net gain of $33,058,000. On September 23, 2013, we sold a retail property in Tampa, Florida for $45,000,000, of which our 75% share was $33,750,000. Our share of the net proceeds after repaying the existing loan and closing costs were $20,810,000, and our share of the net gain was $8,728,000. In addition to the above, during 2013, we sold 12 other properties, in separate transactions, for an aggregate of $82,300,000, in cash, which resulted in a net gain aggregating $7,851,000. 118

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 8.

Dispositions - continued

2012 Activity: Washington, DC On July 26, 2012, we sold 409 Third Street S.W., a 409,000 square foot office building in Washington, DC, for $200,000,000, which resulted in a net gain of $126,621,000. On November 7, 2012, we sold three office buildings (“Reston Executive”) located in suburban Fairfax County, Virginia, containing 494,000 square feet for $126,250,000, which resulted in a net gain of $36,746,000. Merchandise Mart On January 6, 2012, we sold the 350 West Mart Center, a 1.2 million square foot office building in Chicago, Illinois, for $228,000,000, which resulted in a net gain of $54,911,000. On June 22, 2012, we sold the L.A. Mart, a 784,000 square foot showroom building in Los Angeles, California, for $53,000,000, of which $18,000,000 was cash and $35,000,000 was nine-month seller financing at 6.0%, which was paid on December 28, 2012. On July 26, 2012, we sold the Washington Design Center, a 393,000 square foot showroom building in Washington, DC and the Canadian Trade Shows, for an aggregate of $103,000,000. The sale of the Canadian Trade Shows resulted in an after-tax net gain of $19,657,000. On December 31, 2012, we sold the Boston Design Center, a 554,000 square foot showroom building in Boston, Massachusetts, for $72,400,000, which resulted in a net gain of $5,252,000. Retail Properties In 2012, we sold 12 other properties in separate transactions, for an aggregate of $157,000,000, which resulted in a net gain aggregating $22,266,000. In accordance with the provisions of ASC 360, Property, Plant, and Equipment, we have reclassified the revenues and expenses of all of the properties discussed above to “income from discontinued operations” and the related assets and liabilities to “assets related to discontinued operations” and “liabilities related to discontinued operations” for all of the periods presented in the accompanying financial statements. The net gains resulting from the sale of these properties are included in “income from discontinued operations” on our consolidated statements of income. The tables below set forth the assets and liabilities related to discontinued operations at December 31, 2014 and 2013, and their combined results of operations for the years ended December 31, 2014, 2013 and 2012.

(Amounts in thousands)

Retail New York Total

Assets Related to Discontinued Operations as of December 31, 2014 2013 $ 477,620 $ 735,888 138,162 $ 477,620 $ 874,050

(Amounts in thousands) Total revenues Total expenses

$

Net gains on sales of real estate Impairment losses Gain on sale of Canadian Trade Shows, net of $11,448 of income taxes Income from discontinued operations

119

$

Liabilities Related to Discontinued Operations as of December 31, 2014 2013 $ 211 $ 14,709 $ 211 $ 14,709

For the Year Ended December 31, 2014 2013 2012 70,593 $ 129,860 $ 264,878 36,424 79,458 190,450 34,169 50,402 74,428 507,192 414,502 245,799 (26,518) (18,170) (119,439) 19,657 514,843 $ 446,734 $ 220,445

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 9.

Identified Intangible Assets and Liabilities

The following summarizes our identified intangible assets (primarily acquired above-market leases) and liabilities (primarily acquired below-market leases) as of December 31, 2014 and 2013.

(Amounts in thousands) Identified intangible assets: Gross amount Accumulated amortization Net Identified intangible liabilities (included in deferred revenue): Gross amount Accumulated amortization Net

Balance as of December 31, 2014 2013 $ $ $ $

502,080 (225,841) 276,239

$

885,763 (396,895) 488,868

$

$

$

583,862 (276,426) 307,436 855,860 (359,371) 496,489

Amortization of acquired below-market leases, net of acquired above-market leases resulted in an increase to rental income of $46,277,000, $50,128,000 and $51,271,000 for the years ended December 31, 2014, 2013 and 2012, 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, 2015 is as follows: (Amounts in thousands) 2015 2016 2017 2018 2019

$

57,202 45,333 42,457 41,311 30,950

Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was $29,870,000, $64,196,000 and $49,442,000 for the years ended December 31, 2014, 2013 and 2012, 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, 2015 is as follows: (Amounts in thousands) 2015 2016 2017 2018 2019

$

27,210 21,437 17,859 13,533 11,553

We are a tenant under ground leases at certain properties. Amortization of these acquired below-market leases, net of abovemarket leases resulted in an increase to rent expense of $3,363,000, $4,290,000 and $1,261,000 for the years ended December 31, 2014, 2013 and 2012, respectively. Estimated annual amortization of these below-market leases, net of above-market leases for each of the five succeeding years commencing January 1, 2015 is as follows: (Amounts in thousands) 2015 2016 2017 2018 2019

$

120

3,363 3,363 3,363 3,363 3,363

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 10.

Debt Secured Debt

On January 31, 2014, we completed a $600,000,000 loan secured by our 220 Central Park South development site. The loan bears interest at LIBOR plus 2.75% (2.92% at December 31, 2014) and matures in January 2016, with three one-year extension options. On April 16, 2014, we completed a $350,000,000 refinancing of 909 Third Avenue, a 1.3 million square foot Manhattan office building. The seven-year interest only loan bears interest at 3.91% and matures in May 2021. We realized net proceeds of approximately $145,000,000 after defeasing the existing 5.64%, $193,000,000 mortgage, defeasance cost and other closing costs. On July 16, 2014, we completed a $130,000,000 financing of Las Catalinas, a 494,000 square foot mall located in the San Juan area of Puerto Rico. The 10-year fixed rate loan bears interest at 4.43% and matures in August 2024. The loan amortizes based on a 30-year schedule beginning in year six. On August 12, 2014, we completed a $185,000,000 financing of the Universal buildings, a 690,000 square foot, two-building office complex located in Washington, DC. The loan bears interest at LIBOR plus 1.90% (2.06% at December 31, 2014) and matures in August 2019 with two one-year extension options. The loan amortizes based on a 30-year schedule beginning in the fourth year. On August 26, 2014, we obtained a standby commitment for up to $500,000,000 of five-year mezzanine loan financing to fund a portion of the development expenditures at 220 Central Park South. On October 27, 2014, we completed a $140,000,000 financing of 655 Fifth Avenue, a 57,500 square foot retail and office property. The loan is interest only at LIBOR plus 1.40% (1.56% at December 31, 2014) and matures in October 2019 with two oneyear extension options. On December 8, 2014, we completed a $575,000,000 refinancing of Two Penn Plaza, a 1.6 million square foot Manhattan office building. The loan is interest-only at LIBOR plus 1.65% (1.81% at December 31, 2014) and matures in 2019 with two one-year extension options. We realized net proceeds of approximately $143,000,000. Pursuant to an existing swap agreement, the $422,000,000 previous loan on the property was swapped to a fixed rate of 4.78% through March 2018. Therefore, $422,000,000 of the new loan bears interest at a fixed rate of 4.78% through March 2018 and the balance of $153,000,000 floats through March 2018. The entire $575,000,000 will float thereafter for the duration of the new loan. On January 6, 2015, we completed the modification of the $120,000,000, 6.04% mortgage loan secured by our Montehiedra Town Center, in the San Juan area of Puerto Rico. The loan has been extended from July 2016 to July 2021 and separated into two tranches, a senior $90,000,000 position with interest at 5.33% to be paid currently, and a junior $30,000,000 position with interest accruing at 3%. Montehiedra Town Center and the loan were included in the spin-off to UE on January 15, 2015. As part of the planned redevelopment of the property, UE is committed to fund $20,000,000 through a loan for leasing and building capital expenditures of which $8,000,000 has been funded. This loan is senior to the $30,000,000 position noted above and accrues interest at 10%. Senior Unsecured Notes On June 16, 2014, we completed a green bond public offering of $450,000,000 2.50% senior unsecured notes due June 30, 2019. The notes were sold at 99.619% of their face amount to yield 2.581%. On October 1, 2014, we redeemed all of the $445,000,000 principal amount of our outstanding 7.875% senior unsecured notes, which were scheduled to mature on October 1, 2039, at a redemption price of 100% of the principal amount plus accrued interest through the redemption date. In the fourth quarter of 2014, we wrote off $12,532,000 of unamortized deferred financing costs, which are included as a component of “interest and debt expense” on our consolidated statements of income. On January 1, 2015, we redeemed all of the $500,000,000 principal amount of our outstanding 4.25% senior unsecured notes, which were scheduled to mature on April 1, 2015, at a redemption price of 100% of the principal amount plus accrued interest through December 31, 2014.

121

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10.

Debt – continued

Unsecured Revolving Credit Facility On September 30, 2014, we extended one of our two $1.25 billion unsecured revolving credit facilities from November 2015 to November 2018 with two six-month extension options. The interest rate on the extended facility was lowered to LIBOR plus 105 basis points from LIBOR plus 125 basis points and the facility fee was reduced to 20 basis points from 25 basis points.

The following is a summary of our debt: Weighted Average Interest Rate at December 31, 2014

(Amounts in thousands) Mortgages Payable: Fixed rate Variable rate

Unsecured Debt: Senior unsecured notes Unsecured revolving credit facilities

Balance at December 31, 2014 2013

4.45% 2.20% 4.02%

$

3.89% 3.89%

$

$

$

7,710,931 1,840,769 9,551,700

$

1,347,159 1,347,159

$

$

$

7,563,133 768,860 8,331,993

1,350,855 295,870 1,646,725

The net carrying amount of properties collateralizing the mortgages payable amounted to $10.4 billion at December 31, 2014. As of December 31, 2014, the principal repayments required for the next five years and thereafter are as follows:

(Amounts in thousands) Year Ending December 31, 2015 2016 2017 2018 2019 Thereafter

$

Mortgages Payable 433,699 1,552,419 626,525 340,442 996,579 5,601,148

122

$

Senior Unsecured Debt and Revolving Credit Facilities 500,000 450,000 400,000

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 11.

Redeemable Noncontrolling Interests

Redeemable noncontrolling interests on our consolidated balance sheets are primarily comprised of Class A Operating Partnership units held by third parties and 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. Class A units may be tendered for redemption to the Operating Partnership for cash; we, at our option, may assume that obligation and pay the holder either cash or Vornado common shares on a one-for-one basis. Because the number of Vornado common shares outstanding at all times equals the number of Class A units owned by Vornado, the redemption value of each Class A unit is equivalent to the market value of one Vornado common share, and the quarterly distribution to a Class A unitholder is equal to the quarterly dividend paid to a Vornado common shareholder. Below are the details of redeemable noncontrolling interests as of December 31, 2014 and 2013. (Amounts in thousands, except units and per unit amounts)

Balance as of December 31, 2014 2013

Unit Series

Units Outstanding at December 31, 2014 2013

Preferred or Annual Distribution Rate

Per Unit Liquidation Preference

Common: Class A

$

1,336,780

$

1,002,620

11,356,550

11,292,038

Perpetual Preferred: (1) 5.00% D-16 Cumulative Redeemable

$

1,000

$

1,000

1

1

n/a $

$ 1,000,000.00

$

2.92

50,000.00

(1) Holders may tender units for redemption to the Operating Partnership for cash at their stated redemption amount; we, at our option, may assume that obligation and pay the holders either cash or Vornado preferred shares on a one-for-one basis. These units are redeemable at our option at any time.

Below is a table summarizing the activity of redeemable noncontrolling interests. (Amounts in thousands) Balance at December 31, 2012 Net income Other comprehensive income Distributions Redemption of Class A units for common shares, at redemption value Adjustments to carry redeemable Class A units at redemption value Redemption of Series D-15 redeemable units Other, net Balance at December 31, 2013 Net income Other comprehensive income Distributions Redemption of Class A units for common shares, at redemption value Adjustments to carry redeemable Class A units at redemption value Other, net Balance at December 31, 2014

$

$

944,152 24,817 5,296 (34,053) (25,317) 108,252 (36,900) 17,373 1,003,620 47,613 1,323 (33,469) (27,273) 315,276 30,690 1,337,780

Redeemable noncontrolling interests exclude our Series G 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 December 31, 2014 and 2013.

123

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 12.

Shareholders’ Equity Common Shares

As of December 31, 2014, there were 187,887,498 common shares outstanding. During 2014, we paid an aggregate of $547,831,000 of common dividends comprised of quarterly common dividends of $0.73 per share. Preferred Shares The following table sets forth the details of our preferred shares of beneficial interest as of December 31, 2014 and 2013. (Amounts in thousands, except share and per share amounts) Preferred Shares Convertible Preferred: 6.5% Series A: authorized 83,977 shares(2) $ Cumulative Redeemable: 6.625% Series G: authorized 8,000,000 shares(3) 6.625% Series I: authorized 10,800,000 shares(3) 6.875% Series J: authorized 9,850,000 shares(3) 5.70% Series K: authorized 12,000,000 shares(3) 5.40% Series L: authorized 12,000,000 shares(3) $

Balance as of December 31, 2014 2013 1,393 193,135 262,379 238,842 290,971 290,306 1,277,026

Shares Outstanding at December 31, 2014 2013

Per Share Liquidation Preference

Annual Dividend Rate(1)

$

1,592

28,939

32,807

$

50.00

$

3.25

8,000,000 10,800,000 9,850,000 12,000,000 12,000,000 52,678,939

8,000,000 10,800,000 9,850,000 12,000,000 12,000,000 52,682,807

$ $ $ $ $

25.00 25.00 25.00 25.00 25.00

$ $ $ $ $

1.65625 1.65625 1.71875 1.425 1.35

$

193,135 262,379 238,842 290,971 290,306 1,277,225

(1) Dividends on preferred shares are cumulative and are payable quarterly in arrears. (2) Redeemable at our option under certain circumstances, at a redemption price of 1.4334 common shares per Series A Preferred Share plus accrued and unpaid dividends through the date of redemption, or convertible at any time at the option of the holder for 1.4334 common shares per Series A Preferred Share. (3) Redeemable at our option at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption.

Accumulated Other Comprehensive Income (Loss) The following tables set forth the changes in accumulated comprehensive income (loss) by component.

(Amounts in thousands) Balance as of December 31, 2013 Net current period OCI Balance as of December 31, 2014

13.

$ $

Total 71,537 21,730 93,267

For the Year Ended December 31, 2014 Securities Pro rata share of Interest availablenonconsolidated rate for-sale subsidiaries' OCI swap $ 119,309 $ (11,501) $ (31,882) 14,465 2,509 6,079 $ 133,774 $ (8,992) $ (25,803)

$ $

Other (4,389) (1,323) (5,712)

Variable Interest Entities (“VIEs”)

Unconsolidated VIEs At December 31, 2014, we have unconsolidated VIEs comprised of our investments in the entities that own One Park Avenue, Independence Plaza, and the Warner Building, and at December 31, 2013, our unconsolidated VIEs comprised of our investments in the entities that own Independence Plaza and the Warner Building. We do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities does not give us power over decisions that significantly affect these entities’ economic performance. We account for our investment in these entities under the equity method (see Note 6 – Investments in Partially Owned Entities). As of December 31, 2014 and 2013, the net carrying amount of our investments in these entities was $286,783,000 and $152,929,000, respectively, and our maximum exposure to loss in these entities, is limited to our investments. We did not have any consolidated VIEs as of December 31, 2014 and 2013. 124

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 14. 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 on a Recurring Basis Financial assets and liabilities that are measured at fair value on our consolidated balance sheets consist of (i) marketable securities, (ii) Real Estate Fund investments, (iii) the assets in our deferred compensation plan (for which there is a corresponding liability on our consolidated balance sheet), (iv) interest rate swaps 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 these financial assets and liabilities by their levels in the fair value hierarchy at December 31, 2014 and 2013, respectively.

(Amounts in thousands) Marketable securities Real Estate Fund investments (75% of which is attributable to noncontrolling interests) Deferred compensation plan assets (included in other assets) Total assets Mandatorily redeemable instruments (included in other liabilities) Interest rate swap (included in other liabilities) Total liabilities

(Amounts in thousands) Marketable securities Real Estate Fund investments (75% of which is attributable to noncontrolling interests) Deferred compensation plan assets (included in other assets) Total assets Mandatorily redeemable instruments (included in other liabilities) Interest rate swap (included in other liabilities) Total liabilities

$

Total 206,323

$

513,973 117,284 837,580

$ $

55,097 25,797 80,894

$

Total 191,917

$

667,710 116,515 976,142

$ $

125

55,097 31,882 86,979

As of December 31, 2014 Level 1 Level 2 $ 206,323 $ -

$ $ $

53,969 260,292 55,097 55,097

$ $ $

25,797 25,797

As of December 31, 2013 Level 1 Level 2 $ 191,917 $ -

$ $ $

47,733 239,650 55,097 55,097

$ $ $

31,882 31,882

Level 3 $

$

513,973 63,315 577,288

$

-

$

Level 3 $

$ $ $

667,710 68,782 736,492 -

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 14. Fair Value Measurements - continued

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued Real Estate Fund Investments At December 31, 2014, our Real Estate Fund had seven investments with an aggregate fair value of $513,973,000, or $176,899,000 in excess of cost. These investments are classified as Level 3. We use a discounted cash flow valuation technique to estimate the fair value of each of these investments, which is updated quarterly by personnel responsible for the management of each investment and reviewed by senior management at each reporting period. The discounted cash flow valuation technique requires us to estimate cash flows for each investment over the anticipated holding period, which currently ranges from 0.8 to 6.0 years. Cash flows are derived from property rental revenue (base rents plus reimbursements) less operating expenses, real estate taxes and capital and other costs, plus projected sales proceeds in the year of exit. Property rental revenue is based on leases currently in place and our estimates for future leasing activity, which are based on current market rents for similar space plus a projected growth factor. Similarly, estimated operating expenses and real estate taxes are based on amounts incurred in the current period plus a projected growth factor for future periods. Anticipated sales proceeds at the end of an investment’s expected holding period are determined based on the net cash flow of the investment in the year of exit, divided by a terminal capitalization rate, less estimated selling costs. The fair value of each property is calculated by discounting the future cash flows (including the projected sales proceeds), using an appropriate discount rate and then reduced by the property’s outstanding debt, if any, to determine the fair value of the equity in each investment. Significant unobservable quantitative inputs used in determining the fair value of each investment include capitalization rates and discount rates. These rates are based on the location, type and nature of each property, and current and anticipated market conditions, which are derived from original underwriting assumptions, industry publications and from the experience of our Acquisitions and Capital Markets departments. Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of these Fund investments at December 31, 2014.

Unobservable Quantitative Input Discount rates Terminal capitalization rates

Range 12.0% to 17.5% 4.7% to 6.5%

Weighted Average (based on fair value of investments) 13.7% 5.3%

The above inputs are subject to change based on changes in economic and market conditions and/or changes in use or timing of exit. Changes in discount rates and terminal capitalization rates result in increases or decreases in the fair values of these investments. The discount rates encompass, among other things, uncertainties in the valuation models with respect to terminal capitalization rates and the amount and timing of cash flows. Therefore, a change in the fair value of these investments resulting from a change in the terminal capitalization rate, may be partially offset by a change in the discount rate. It is not possible for us to predict the effect of future economic or market conditions on our estimated fair values. The table below summarizes the changes in the fair value of Fund investments that are classified as Level 3, for the years ended December 31, 2014 and 2013. Real Estate Fund Investments For The Year Ended December 31, 2014 2013 $ 667,710 $ 600,786 3,392 43,816 (307,268) (70,848) 73,802 85,771 76,337 8,184 1 $ 513,973 $ 667,710

(Amounts in thousands) Beginning balance Purchases Dispositions / Distributions Net unrealized gains Net realized gains Other, net Ending balance

126

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 14. Fair Value Measurements - continued

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued Deferred Compensation Plan Assets Deferred compensation plan assets that are classified as Level 3 consist of investments in limited partnerships and investment funds, which are managed by third parties. We receive quarterly financial reports from a third-party administrator, which are compiled from the quarterly reports provided to them from each limited partnership and investment fund. The quarterly reports provide net asset values on a fair value basis which are audited by independent public accounting firms on an annual basis. The thirdparty administrator does not adjust these values in determining our share of the net assets and we do not adjust these values when reported in our consolidated financial statements. The table below summarizes the changes in the fair value of Deferred Compensation Plan Assets that are classified as Level 3, for the years ended December 31, 2014 and 2013. Deferred Compensation Plan Assets For The Year Ended December 31, 2014 2013 $ 68,782 $ 62,631 14,162 5,018 (24,951) (7,306) 3,415 7,189 1,907 1,250 $ 63,315 $ 68,782

(Amounts in thousands) Beginning balance Purchases Sales Realized and unrealized gains Other, net Ending balance

Fair Value Measurements on a Nonrecurring Basis Assets measured at fair value on a nonrecurring basis on our consolidated balance sheets consist primarily of real estate assets and our investment in Toys that were written-down to estimated fair value during 2014 or 2013. See Note 2 – Basis of Presentation and Significant Accounting Policies for details of impairment losses recognized during 2014 and 2013. See Note 6 – Investments in Partially Owned Entities for details of impairment losses related to Toys recognized during 2014 and 2013. The fair value of our real estate assets was determined using widely accepted valuation techniques, including (i) discounted cash flow analysis, which considers, among other things, leasing assumptions, growth rates, discount rates and terminal capitalization rates, (ii) income capitalization approach, which considers prevailing market capitalization rates, and (iii) comparable sales activity. In determining the fair value of our investment in Toys, we considered, among other inputs, a December 31, 2013 third-party valuation of Toys and Toys’ historical results, financial forecasts and business outlook. Our determination of the fair value of our investment in Toys included consideration of the following widely-used valuation methodologies: (i) market multiple methodology, that considered comparable publicly traded retail companies and a range of EBITDA multiples from 5.75x to 6.5x, (ii) comparable sales transactions methodology, that considered sales of retailers ranging in size from $150 million to $3 billion, (iii) a discounted cash flow methodology, that utilized five-year financial projections and assumed a terminal EBITDA multiple of 5.75x, a 10% discount rate and a 38% tax rate, and (iv) a Black-Scholes valuation analysis, that assumed one, two and three year time-to-expiration periods and 24% to 29% volatility factors. Generally, we consider multiple valuation techniques when measuring fair values but in certain circumstances, a single valuation technique may be appropriate. The tables below aggregate the fair values of these assets by their levels in the fair value hierarchy.

(Amounts in thousands) Real estate assets

(Amounts in thousands) Real estate assets Investment in Toys Total assets

$

$ $

127

Total 4,848

As of December 31, 2014 Level 1 Level 2 $ $ -

Total 354,341 83,224 437,565

As of December 31, 2013 Level 1 Level 2 $ $ $ $ -

$

Level 3 4,848

Level 3 354,341 83,224 $ 437,565 $

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 14. Fair Value Measurements – continued

Financial Assets and Liabilities not Measured at Fair Value Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash equivalents (primarily money market funds, which invest in obligations of the United States government), mortgage and mezzanine loans receivable (included in “other assets” in our consolidated balance sheets) and our secured and unsecured debt. Estimates of the fair value of these instruments are determined by the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate, which is provided by a third-party specialist. For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash flows we would be required to make under the instrument. The fair value of cash equivalents is classified as Level 1 and the fair value of our mortgage and mezzanine loans receivable is classified as Level 3. The fair value of our secured and unsecured debt is classified as Level 2. The table below summarizes the carrying amounts and fair value of these financial instruments as of December 31, 2014 and 2013.

(Amounts in thousands) Cash equivalents Mortgage and mezzanine loans receivable (included in other assets)

$

$ Debt: Mortgages payable Senior unsecured notes Revolving credit facility debt

$

$

As of December 31, 2014 Carrying Fair Amount Value 749,418 $ 749,000 16,748 766,166 9,551,700 1,347,159 10,898,859

128

$ $

$

17,000 766,000 9,551,000 1,385,000 10,936,000

$

$ $

$

As of December 31, 2013 Carrying Fair Amount Value 295,000 $ 295,000 170,972 465,972 8,331,993 1,350,855 295,870 9,978,718

$ $

$

171,000 466,000 8,104,000 1,402,000 296,000 9,802,000

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 15.

Stock-based Compensation

Our Omnibus Share Plan (the “Plan”), which was approved in May 2010, provides the Compensation Committee of the Board (the “Committee”) the ability to grant incentive and non-qualified stock options, restricted stock, restricted Operating Partnership units and outperformance plan awards to certain of our employees and officers. Under the Plan, awards may be granted up to a maximum of 6,000,000 shares, if all awards granted are Full Value Awards, as defined, and up to 12,000,000 shares, if all of the awards granted are Not Full Value Awards, as defined, plus shares in respect of awards forfeited after May 2010 that were issued pursuant to our 2002 Omnibus Share Plan. Full Value Awards are awards of securities, such as restricted shares, that, if all vesting requirements are met, do not require the payment of an exercise price or strike price to acquire the securities. Not Full Value Awards are awards of securities, such as options, that do require the payment of an exercise price or strike price. This means, for example, if the Committee were to award only restricted shares, it could award up to 6,000,000 restricted shares. On the other hand, if the Committee were to award only stock options, it could award options to purchase up to 12,000,000 shares (at the applicable exercise price). The Committee may also issue any combination of awards under the Plan, with reductions in availability of future awards made in accordance with the above limitations. As of December 31, 2014, we have approximately 4,004,000 shares available for future grants under the Plan, if all awards granted are Full Value Awards, as defined.

In the years ended December 31, 2014, 2013 and 2012, we recognized an aggregate of $36,641,000, $34,914,000 and $30,588,000, respectively, of stock-based compensation expense, which is included as a component of “general and administrative” expenses on our consolidated statements of income. The details of the various components of our stock-based compensation are discussed below.

Out-Performance Plans (“the OPPs”) OPPs are multi-year, performance-based equity compensation plans under which participants, including our Chairman and Chief Executive Officer, have the opportunity to earn compensation payable in the form of equity awards if, and only if, we outperform a predetermined total shareholder return (“TSR”) and/or outperform the market with respect to a relative TSR in any year during the requisite performance periods as described below. The aggregate notional amounts of the 2012, 2013, 2014 and 2015 OPPs are $40,000,000, $40,000,000, $50,000,000 and $40,000,000, respectively. Awards under the 2012 OPP have been earned. Awards under the 2013 OPP may be earned if we (i) achieve a TSR greater than 14% over the two-year performance measurement period, or 21% over the three-year performance measurement period (the “Absolute Component”), and/or (ii) achieve a TSR above that of the SNL REIT Index (the “Index”) over the two-year or three-year performance measurement period (the “Relative Component”). Awards under the 2014 and 2015 OPP may be earned if we (i) achieve a TSR level greater than 7% per annum, or 21% over the three-year performance measurement periods (the “Absolute Component”), and/or (ii) achieve a TSR above that of the Index over the three-year performance measurement periods (the “Relative Component”). To the extent awards would be earned under the Absolute Component of each of the OPPs, but we underperform the Index, such awards would be reduced (and potentially fully negated) based on the degree to which we underperform the Index. In certain circumstances, in the event we outperform the Index but awards would not otherwise be fully earned under the Absolute Component, awards may still be earned or increased under the Relative Component. To the extent awards would otherwise be earned under the Relative Component but we fail to achieve at least a 6% per annum absolute TSR, such awards earned under the Relative Component would be reduced based on our absolute TSR, with no awards being earned in the event our TSR during the applicable measurement period is 0% or negative, irrespective of the degree to which we may outperform the Index. Dividends on awards issued accrue during the performance period. If the designated performance objectives are achieved, OPP units are subject to time-based vesting requirements. Awards earned under the OPPs vest 33% in year three, 33% in year four and 34% in year five. Our executive officers (for the purposes of Section 16 of the Exchange Act) are required to hold earned 2013, 2014 and 2015 OPP awards for one year following vesting. The fair value of the 2012, 2013, 2014 and 2015 OPPs on the date of grant was $12,250,000, $6,814,000, $8,202,000, and $9,120,000, respectively. Such amounts are being amortized into expense over a five-year period from the date of grant, using a graded vesting attribution model. In the years ended December 31, 2014, 2013 and 2012, we recognized $6,185,000, $3,226,000 and $2,826,000, respectively, of compensation expense related to OPPs. As of December 31, 2014, there was $11,937,000 of total unrecognized compensation cost related to the OPPs, which will be recognized over a weighted-average period of 1.4 years.

129

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 15.

Stock-based Compensation - continued

Stock Options Stock options are granted at an exercise price equal to the average of the high and low market price of our common shares on the NYSE on the date of grant, generally vest over four years and expire 10 years from the date of grant. Compensation expense related to stock option awards is recognized on a straight-line basis over the vesting period. In the years ended December 31, 2014, 2013 and 2012, we recognized $4,550,000, $8,234,000 and $8,638,000, respectively, of compensation expense related to stock options that vested during each year. As of December 31, 2014, there was $1,855,000 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 1.5 years.

Below is a summary of our stock option activity for the year ended December 31, 2014.

Outstanding at January 1, 2014 Granted Exercised Cancelled or expired Outstanding at December 31, 2014

Shares 3,248,699 49,088 (434,204) (43,468) 2,820,115

WeightedAverage Exercise Price $ 67.51 91.32 67.27 104.74 $ 67.38

Options vested and expected to vest at December 31, 2014

2,818,587

$

Options exercisable at December 31, 2014

2,606,260

$

WeightedAverage Remaining Contractual Term

Aggregate Intrinsic Value

4.6

$

145,317,000

67.37

4.6

$

145,271,000

65.62

4.4

$

138,912,000

The fair value of each option grant is estimated on the date of grant using an option-pricing model with the following weightedaverage assumptions for grants in the years ended December 31, 2014, 2013 and 2012.

Expected volatility Expected life Risk free interest rate Expected dividend yield

2014 36.00% 5.0 years 1.81% 4.10%

December 31, 2013 36.00% 5.0 years 0.91% 4.30%

2012 36.00% 5.0 years 1.05% 4.30%

The weighted average grant date fair value of options granted during the years ended December 31, 2014, 2013 and 2012 was $20.31, $17.18 and $17.50, respectively. Cash received from option exercises for the years ended December 31, 2014, 2013 and 2012 was $17,441,000, $5,915,000 and $9,546,000, respectively. The total intrinsic value of options exercised during the years ended December 31, 2014, 2013 and 2012 was $18,223,000, $3,386,000 and $40,887,000, respectively.

130

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 15.

Stock-based Compensation - continued

Restricted Stock Restricted stock awards are granted at the average of the high and low market price of our common shares on the NYSE on the date of grant and generally vest over four years. Compensation expense related to restricted stock awards is recognized on a straightline basis over the vesting period. In the years ended December 31, 2014, 2013 and 2012, we recognized $1,303,000, $1,344,000 and $1,604,000, respectively, of compensation expense related to restricted stock awards that vested during each year. As of December 31, 2014, there was $1,468,000 of total unrecognized compensation cost related to unvested restricted stock, which is expected to be recognized over a weighted-average period of 1.7 years. Dividends paid on unvested restricted stock are charged directly to retained earnings and amounted to $88,000, $110,000 and $200,000 for the years ended December 31, 2014, 2013 and 2012, respectively. Below is a summary of our restricted stock activity under the Plan for the year ended December 31, 2014. Weighted-Average Grant-Date Shares Fair Value 29,664 $ 79.24 11,475 91.31 (15,733) 74.61 (2,957) 87.42 22,449 87.58

Unvested Shares Unvested at January 1, 2014 Granted Vested Cancelled or expired Unvested at December 31, 2014

Restricted stock awards granted in 2014, 2013 and 2012 had a fair value of $1,048,000, $857,000 and $929,000, respectively. The fair value of restricted stock that vested during the years ended December 31, 2014, 2013 and 2012 was $1,174,000, $1,194,000 and $1,864,000, respectively.

Restricted Operating Partnership Units (“OP Units”) OP Units are granted at the average of the high and low market price of our common shares on the NYSE on the date of grant, vest ratably over four years and are subject to a taxable book-up event, as defined. Compensation expense related to OP Units is recognized ratably over the vesting period using a graded vesting attribution model. In the years ended December 31, 2014, 2013 and 2012, we recognized $24,603,000, $22,110,000 and $17,520,000, respectively, of compensation expense related to OP Units that vested during each year. As of December 31, 2014, there was $20,798,000 of total unrecognized compensation cost related to unvested OP Units, which is expected to be recognized over a weighted-average period of 1.7 years. Distributions paid on unvested OP Units are charged to “net income attributable to noncontrolling interests in the Operating Partnership” on our consolidated statements of income and amounted to $2,866,000, $2,598,000 and $3,203,000 in the years ended December 31, 2014, 2013 and 2012, respectively. Below is a summary of restricted OP unit activity under the Plan for the year ended December 31, 2014. Weighted-Average Grant-Date Units Fair Value 765,971 $ 76.27 226,638 86.79 (327,555) 69.48 (6,575) 83.16 658,479 83.20

Unvested Units Unvested at January 1, 2014 Granted Vested Cancelled or expired Unvested at December 31, 2014

OP Units granted in 2014, 2013 and 2012 had a fair value of $19,669,000, $31,947,000 and $16,464,000, respectively. The fair value of OP Units that vested during the years ended December 31, 2014, 2013 and 2012 was $22,758,000, $16,404,000 and $15,014,000, respectively. 131

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 16.

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

For the Year Ended December 31, 2014 2013 2012

(Amounts in thousands)

BMS cleaning fees Signage revenue Management and leasing fees Lease termination fees(1) Other income

$

$

85,658 37,929 21,382 17,042 33,734 195,745

$

$

66,505 32,866 24,637 92,497 34,113 250,618

$

$

67,584 20,892 21,849 2,361 31,438 144,124

__________________________ (1) The year ended December 31, 2013 includes (i) $59,599 of income pursuant to a settlement agreement with Stop & Shop, which terminates our right to receive $6,000 of additional annual rent under a 1992 agreement, for a period potentially through 2031, (ii) $19,500 from a tenant at 1290 Avenue of the Americas, of which our 70% share, net of a $1,529 write-off of the straight lining of rents, was $12,121, and (iii) $3,000 from the termination of our subsidiaries' agreements with Cuyahoga County to operate the Cleveland Medical Mart Convention Center.

The above table excludes fee income from partially owned entities, which is included in “income from partially owned entities” (see Note 6 – Investments in Partially Owned Entities).

17.

Interest and Other Investment Income (Loss), Net The following table sets forth the details of our interest and other investment income (loss):

(Amounts in thousands)

For the Year Ended December 31, 2014 2013 2012

Dividends and interest on marketable securities Mark-to-market of investments in our deferred compensation plan (1) Interest on mezzanine loans receivable Losses from the disposition of investment in J.C. Penney Other, net

$

$

12,707 11,557 3,920 10,603 38,787

$

$

11,446 10,636 19,495 (72,974) 6,521 (24,876)

$

$

11,979 6,809 13,861 (300,752) 6,924 (261,179)

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

18.

Interest and Debt Expense The following table sets forth the details of our interest and debt expense.

(Amounts in thousands) Interest expense Amortization of deferred financing costs Capitalized interest and debt expense

$

$

132

For the Year Ended December 31, 2014 2013 2012 483,578 $ 498,050 $ 478,688 46,923 25,557 22,907 (62,786) (42,303) (16,801) 467,715 $ 481,304 $ 484,794

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 19.

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 includes the weighted average number of common shares outstanding without regard to dilutive potential common shares, and (ii) diluted income per common share - which includes the weighted average common shares and dilutive share equivalents. Dilutive share equivalents may include our Series A convertible preferred shares, employee stock options and restricted stock awards. (Amounts in thousands, except per share amounts) 2014 Numerator: Income from continuing operations, net of income attributable to noncontrolling interests Income from discontinued operations, net of income attributable to noncontrolling interests Net income attributable to Vornado Preferred share dividends Preferred unit and share redemptions Net income attributable to common shareholders Earnings allocated to unvested participating securities Numerator for basic income per share Impact of assumed conversions: Convertible preferred share dividends Numerator for diluted income per share

$

$

$ $

INCOME (LOSS) PER COMMON SHARE – DILUTED: Income (loss) from continuing operations, net Income from discontinued operations, net Net income per common share

(1)

379,333

$

485,519 864,852 (81,464) 783,388 (125) 783,263

Denominator: Denominator for basic income per share – weighted average shares Effect of dilutive securities (1): Employee stock options and restricted share awards Convertible preferred shares Denominator for diluted income per share – weighted average shares and assumed conversions INCOME (LOSS) PER COMMON SHARE – BASIC: Income (loss) from continuing operations, net Income from discontinued operations, net Net income per common share

Year Ended December 31, 2013

$ $

97 783,360

57,727

$

418,244 475,971 (82,807) (1,130) 392,034 (110) 391,924

$

391,924

2012 408,439 208,821 617,260 (76,937) 8,948 549,271 (202) 549,069

$

113 549,182

187,572

186,941

185,810

1,075 43

768 -

670 50

188,690

187,709

186,530

1.59 2.59 4.18

$

1.58 2.57 4.15

$

$

$

(0.14) 2.24 2.10

$

(0.14) 2.23 2.09

$

$

$

1.83 1.12 2.95

1.82 1.12 2.94

The effect of dilutive securities in the years ended December 31, 2014, 2013 and 2012 excludes an aggregate of 11,238, 11,752 and 14,400 weighted average common share equivalents, respectively, as their effect was anti-dilutive.

133

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 20. Leases As lessor: We lease space to tenants under operating leases. Most of the leases provide for the payment of fixed base rentals payable monthly in advance. Office building leases generally require the tenants to reimburse us for operating costs and real estate taxes above their base year costs. Shopping center leases provide for pass-through to tenants the tenant’s share of real estate taxes, insurance and maintenance. Shopping center leases also provide for the payment by the lessee of additional rent based on a percentage of the tenants’ sales. As of December 31, 2014, future base rental revenue under non-cancelable operating leases, excluding rents for leases with an original term of less than one year and rents resulting from the exercise of renewal options, are as follows: (Amounts in thousands) Year Ending December 31: 2015 2016 2017 2018 2019 Thereafter

$

1,783,293 1,717,984 1,671,172 1,578,671 1,399,001 8,055,804

These amounts do not include percentage rentals based on tenants’ sales. These percentage rents approximated $7,963,000, $8,578,000 and $8,090,000, for the years ended December 31, 2014, 2013 and 2012, respectively. None of our tenants accounted for more than 10% of total revenues in any of the years ended December 31, 2014, 2013 and 2012.

As lessee: We are a tenant under operating leases for certain properties. These leases have terms that expire during the next thirty years. Future minimum lease payments under operating leases at December 31, 2014 are as follows: (Amounts in thousands) Year Ending December 31: 2015 2016 2017 2018 2019 Thereafter

$

39,925 39,833 41,003 38,920 38,992 1,252,109

Rent expense was $50,556,000, $49,968,000 and $41,778,000 for the years ended December 31, 2014, 2013 and 2012, respectively.

134

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 20. Leases - continued We are also a lessee under a capital lease under which we will redevelop the retail and signage components of the Marriott Marquis Times Square Hotel. The lease has put/call options, which if exercised would lead to our ownership. Capitalized leases are recorded at the present value of future minimum lease payments or the fair market value of the property. Capitalized leases are depreciated on a straight-line basis over the estimated life of the asset or life of the related lease. Depreciation expense on capital leases is included in “depreciation and amortization” on our consolidated statements of income. As of December 31, 2014, future minimum lease payments under this capital lease are as follows:

(Amounts in thousands) Year Ending December 31: 2015 2016 2017 2018 2019 Thereafter Total minimum obligations Interest portion Present value of net minimum payments

$

$

12,500 12,500 12,500 12,500 12,500 334,792 397,292 (157,292) 240,000

At December 31, 2014, the carrying amount of the property leased under the capital lease was $249,253,000, which is included as a component of “development costs and construction in progress” on our consolidated balance sheet and present value of net minimum payments of $240,000,000 is included in “other liabilities” on our consolidated balance sheet.

21. Multiemployer Benefit Plans Our subsidiaries make contributions to certain multiemployer defined benefit plans (“Multiemployer Pension Plans”) and health plans (“Multiemployer Health Plans”) for our union represented employees, pursuant to the respective collective bargaining agreements. Multiemployer Pension Plans Multiemployer Pension Plans differ from single-employer pension plans in that (i) contributions to multiemployer plans may be used to provide benefits to employees of other participating employers and (ii) if other participating employers fail to make their contributions, each of our participating subsidiaries may be required to bear its then pro rata share of unfunded obligations. If a participating subsidiary withdraws from a plan in which it participates, it may be subject to a withdrawal liability. As of December 31, 2014, our subsidiaries’ participation in these plans were not significant to our consolidated financial statements. In the years ended December 31, 2014, 2013 and 2012, our subsidiaries contributed $11,431,000, $10,223,000 and $10,683,000, respectively, towards Multiemployer Pension Plans, which is included as a component of “operating” expenses on our consolidated statements of income. Our subsidiaries’ contributions did not represent more than 5% of total employer contributions in any of these plans for the years ended December 31, 2014, 2013 and 2012. Multiemployer Health Plans Multiemployer Health Plans in which our subsidiaries participate provide health benefits to eligible active and retired employees. In the years ended December 31, 2014, 2013 and 2012, our subsidiaries contributed $29,073,000, $26,262,000 and $26,759,000, respectively, towards these plans, which is included as a component of “operating” expenses on our consolidated statements of income.

135

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 22. 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, with sub-limits for certain perils such as floods. Our California properties have earthquake insurance with coverage of $180,000,000 per occurrence, subject to a deductible in the amount of 5% of the value of the affected property, up to a $180,000,000 annual aggregate. We maintain coverage for terrorism acts with limits of $4.0 billion per occurrence and in the aggregate, and $2.0 billion per occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological (“NBCR”) terrorism events, as defined by Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2020. Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a portion of all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for NBCR acts. 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. For NBCR acts, PPIC is responsible for a deductible of $3,200,000 and 15% of the balance of a covered loss (16% effective January 1, 2016) and the Federal government is responsible for the remaining 85% of a covered loss (84% effective January 1, 2016). We are ultimately responsible for any loss incurred 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 the future. Our debt instruments, consisting of mortgage loans secured by our properties which are non-recourse to us, senior unsecured notes 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.

Other Commitments and Contingencies 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 is not expected to have a material adverse effect on our financial position, results of operations or cash flows. 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. 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 December 31, 2014, the aggregate dollar amount of these guarantees and master leases is approximately $359,000,000. At December 31, 2014, $39,552,000 of letters of credit were outstanding under one of our revolving credit facilities. Our revolving 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 revolving 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. As of December 31, 2014, we expect to fund additional capital to certain of our partially owned entities aggregating approximately $104,000,000.

136

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 23. Related Party Transactions Alexander’s We own 32.4% of Alexander’s. Steven Roth, the Chairman of our Board and Chief Executive Officer is also the Chairman of the Board and Chief Executive Officer of Alexander’s. We provide various services to Alexander’s in accordance with management, development and leasing agreements. These agreements are described in Note 6 - Investments in Partially Owned Entities. On January 15, 2015, we completed the spin-off of 79 strip shopping centers, three malls, a warehouse park and $225,000,000 of cash to UE and the transfer of all of the employees responsible for the management and leasing of those assets. In addition, we entered into agreements with UE to provide management and leasing services, on our behalf, for Alexander’s Rego Park retail assets. Fees for these services are similar to the fees we are receiving from Alexander’s described in Note 6 - Investments in Partially Owned Entities.

Interstate Properties (“Interstate”) Interstate is a general partnership in which Mr. Roth is the managing general partner. David Mandelbaum and Russell B. Wight, Jr., Trustees of Vornado and Directors of Alexander’s, are Interstate’s two other partners. As of December 31, 2014, Interstate and its partners beneficially owned an aggregate of approximately 6.6% of the common shares of beneficial interest of Vornado and 26.3% of Alexander’s common stock. We manage and lease the real estate assets of Interstate pursuant to a management agreement for which we receive an annual fee equal to 4% of annual base rent and percentage rent. The management agreement has a term of one year and is automatically renewable unless terminated by either of the parties on 60 days’ notice at the end of the term. We believe, based upon comparable fees charged by other real estate companies, that the management agreement terms are fair to us. We earned $535,000, $606,000, and $794,000 of management fees under the agreement for the years ended December 31, 2014, 2013 and 2012. On January 15, 2015, we completed the spin-off of 79 strip shopping centers, three malls, a warehouse park and $225,000,000 of cash to UE and the transfer of all of the employees responsible for the management and leasing of those assets. In addition, we entered into agreements with UE to provide management and leasing services, on our behalf, for Interstate’s properties. Fees for these services are similar to the fees we are receiving from Interstate described above.

24. Summary of Quarterly Results (Unaudited) The following summary represents the results of operations for each quarter in 2014 and 2013:

(Amounts in thousands, except per share amounts) 2014 December 31 September 30 June 30 March 31 2013 December 31 September 30 June 30 March 31 _______________________________

Revenues

Net Income (Loss) Attributable to Common Shareholders (1)

Net Income (Loss) Per Common Share (2) Basic Diluted

$

679,101 657,209 652,972 646,658

$

513,238 131,159 76,642 62,349

$

$

649,403 655,883 658,550 705,433

$

(68,887) $ 83,005 145,926 231,990

2.73 0.70 0.41 0.33

$

2.72 0.69 0.41 0.33

(0.37) $ 0.44 0.78 1.24

(0.37) 0.44 0.78 1.24

(1)

Fluctuations among quarters resulted primarily from non-cash impairment losses, mark-to-market of derivative instruments, net gains on sale of real estate and from seasonality of business operations.

(2)

The total for the year may differ from the sum of the quarters as a result of weighting.

137

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 25.

Segment Information

Below is a summary of net income and a reconciliation of net income to EBITDA(1) by segment for the years ended December 31, 2014, 2013 and 2012.

(Amounts in thousands) Total Total revenues Total expenses Operating income (loss) (Loss) income from partially owned entities, including Toys Income from Real Estate Fund Interest and other investment income, net Interest and debt expense Net gain on disposition of wholly owned and partially owned assets Income (loss) before income taxes Income tax expense Income (loss) from continuing operations Income from discontinued operations Net income (loss) Less net income attributable to noncontrolling interests Net income (loss) attributable to Vornado Interest and debt expense(2) Depreciation and amortization(2) Income tax expense(2) EBITDA(1) Balance Sheet Data: Real estate at cost Investments in partially owned entities Total assets

$

$ $

2,635,940 1,820,298 815,642

New York $

For the Year Ended December 31, 2014 Retail Washington, DC Properties

1,520,845 946,466 574,379

$

537,151 358,019 179,132

$

326,947 197,206 129,741

Toys $

Other -

$

(58,131) 163,034

20,701 -

(3,677) -

1,730 -

38,787 (467,715)

6,711 (183,427)

183 (75,395)

35 (54,754)

13,568 505,185 (11,002)

418,364 (4,305)

100,243 (242)

76,752 (1,721)

(73,556) -

13,568 (16,618) (4,734)

494,183

414,059

100,001

75,031

(73,556)

(21,352)

514,843 1,009,026

463,163 877,222

100,001

50,873 125,904

(73,556)

807 (20,545)

(144,174)

(8,626)

864,852 654,398 685,973 24,248 2,229,471

868,596 241,959 324,239 4,395 1,439,189

18,845,392 1,246,496 21,248,320

$ $

9,732,818 1,036,130 10,752,763

-

(3)

$ $

See notes on pages 141 and 142.

138

100,001 89,448 145,853 288 335,590 4,383,418 102,635 4,310,974

(73,556) -

250,997 318,607 (67,610)

-

(119)

(4)

$ $

125,785 59,322 73,433 1,721 260,261 2,057,374 6,007 3,580,803

(3,329) 163,034 31,858 (154,139)

-

(5)

$

(73,556) 100,549 64,533 12,106 103,632 -

(135,429)

$ $

(155,974) 163,120 77,915 5,738 90,799 (6) 2,671,782 101,724 2,603,780

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 25.

Segment Information – continued

(Amounts in thousands) Total Total revenues Total expenses Operating income (loss) (Loss) income from partially owned entities, including Toys Income from Real Estate Fund Interest and other investment (loss) income, net Interest and debt expense Net gain on disposition of wholly owned and partially owned assets Income (loss) before income taxes Income tax benefit (expense) Income (loss) from continuing operations Income (loss) from discontinued operations Net income (loss) Less net income attributable to noncontrolling interests Net income (loss) attributable to Vornado Interest and debt expense(2) Depreciation and amortization(2) Income tax expense (benefit)(2) EBITDA(1) Balance Sheet Data: Real estate at cost Investments in partially owned entities Total assets

$

$

$

2,669,269 1,819,009 850,260

New York $

For the Year Ended December 31, 2013 Retail Washington, DC Properties

1,470,907 910,498 560,409

$

541,161 347,686 193,475

$

372,435 199,650 172,785

Toys $

Other -

$

(338,785) 102,898

15,527 -

(6,968) -

2,097 -

(24,876) (481,304)

5,357 (181,966)

129 (102,277)

11 (55,219)

3,407 111,600 6,406

399,327 (2,794)

84,359 14,031

1,377 121,051 (2,311)

(362,377) -

2,030 (130,760) (2,520)

118,006

396,533

98,390

118,740

(362,377)

(133,280)

446,734 564,740

160,314 556,847

98,390

287,067 405,807

(362,377)

(647) (133,927)

(88,769)

(10,786)

475,971 758,781 732,757 26,371 1,993,880

546,061 236,645 293,974 3,002 1,079,682

17,418,946 1,249,667 20,097,224

$

$

8,422,297 904,278 9,255,964

-

(3)

$

$

See notes on page 141 and 142.

139

$

402,742 63,803 72,161 2,311 541,017

2,060,093 6,640 3,374,896

12,936 102,898

-

(3,065)

98,390 116,131 142,409 (15,707) 341,223 (4) $

4,243,048 100,543 4,107,636

(362,377) -

284,766 361,175 (76,409)

(30,373) (141,842)

-

(5)

$

$

(362,377) 181,586 135,178 33,532 (12,081)

83,224 83,224

(74,918)

$

$

(208,845) 160,616 89,035 3,233 44,039 (6)

2,693,508 154,982 3,275,504

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 25.

Segment Information – continued

(Amounts in thousands) Total Total revenues Total expenses Operating income (loss) Income (loss) from partially owned entities, including Toys Income from Real Estate Fund Interest and other investment (loss) income, net Interest and debt expense Net gain on disposition of wholly owned and partially owned assets Income (loss) before income taxes Income tax expense Income (loss) from continuing operations Income (loss) from discontinued operations Net income (loss) Less net (income) loss attributable to noncontrolling interests Net income (loss) attributable to Vornado Interest and debt expense(2) Depreciation and amortization(2) Income tax expense (benefit)(2) EBITDA(1) Balance Sheet Data: Real estate at cost Investments in partially owned entities Total assets

$

$ $

2,649,217 1,921,425 727,792

New York $

For the Year Ended December 31, 2012 Retail Washington, DC Properties

1,319,470 835,563 483,907

$

554,028 360,056 193,972

$

318,566 189,480 129,086

Toys $

Other -

$

423,126 63,936

207,773 -

(5,612) -

1,458 -

(261,179) (484,794)

4,002 (146,350)

126 (115,574)

21 (53,772)

13,347 482,228 (8,132)

549,332 (3,491)

72,912 (1,650)

8,491 85,284 -

14,859 -

4,856 (240,159) (2,991)

474,096

545,841

71,262

85,284

14,859

(243,150)

220,445 694,541

30,293 576,134

167,766 239,028

(52,561) 32,723

14,859

74,947 (168,203)

(77,281)

(2,138)

617,260 760,523 735,293 7,026 2,120,102

573,996 187,855 252,257 3,751 1,017,859

17,365,533 1,704,297 22,065,049

$ $

8,687,141 576,336 9,215,438

-

(3)

$ $

See notes on page 141 and 142.

140

239,028 133,625 157,816 1,943 532,412 4,171,879 95,670 4,196,694

14,859 -

457,153 536,326 (79,173)

-

1,812

(4)

$ $

34,535 79,462 86,529 200,526 2,108,328 7,083 3,583,999

204,648 63,936 (265,328) (169,098)

-

(5)

$ $

14,859 147,880 135,179 (16,629) 281,289 478,041 478,041

(76,955)

$ $

(245,158) 211,701 103,512 17,961 88,016 (6) 2,398,185 547,167 4,590,877

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 25.

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

(3)

The elements of "New York" EBITDA are summarized below.

(Amounts in thousands) Office(a) Retail Alexander's(b) Hotel Pennsylvania Total New York (a) (b)

(4)

$

2014 and 2013 includes $440,537 and $127,512 net gains on sale of real estate, respectively. 2012 includes $179,934 for our share of net gain on sale of Kings Plaza.

The elements of "Washington, DC" EBITDA are summarized below.

(Amounts in thousands) Office, excluding the Skyline Properties (a) Skyline properties Total Office Residential Total Washington, DC (a)

(5)

$

For the Year Ended December 31, 2014 2013 2012 1,085,262 $ 759,941 $ 568,518 281,428 246,808 189,484 41,746 42,210 231,402 30,753 30,723 28,455 1,439,189 $ 1,079,682 $ 1,017,859

$

$

For the Year Ended December 31, 2014 2013 2012 266,859 $ 268,373 $ 449,448 27,150 29,499 40,037 294,009 297,872 489,485 41,581 43,351 42,927 335,590 $ 341,223 $ 532,412

2012 includes $163,367 of net gains on sale of real estate.

The elements of "Retail Properties" EBITDA are summarized below.

(Amounts in thousands) Strip shopping centers(a) Regional malls(b) Total Retail properties

$ $

For the Year Ended December 31, 2014 2013 2012 219,122 $ 285,612 $ 172,708 41,139 255,405 27,818 260,261 $ 541,017 $ 200,526

(a)

2014 includes $66,023 of net gains on sale of real estate and $5,676 of impairment losses. 2013 includes $81,806 of net gains on sale of real estate, $59,599 of income pursuant to a settlement agreement with Stop & Shop and a $19,000 real estate impairment loss. 2012 includes $15,821 of net gains on sale of real estate and a $33,775 real estate impairment loss.

(b)

2014 includes $20,842 of impairment losses. 2013 includes a $202,275 net gain on sale of the Green Acres Mall and a $13,443 real estate impairment loss. 2012 includes a $70,100 real estate impairment loss.

141

VORNADO REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 25.

Segment Information – continued

Notes to preceding tabular information: (6)

The elements of "other" EBITDA from continuing operations are summarized below. (Amounts in thousands)

For the Year Ended December 31, 2014 2013 2012

Our share of Real Estate Fund: Income before net realized/unrealized gains Net realized/unrealized gains on investments Carried interest Total The Mart and trade shows 555 California Street India real estate ventures LNR(a) Lexington(b) Other investments

$

Corporate general and administrative expenses(c) Investment income and other, net(c) Acquisition and transaction related costs, and impairment losses(d) Net gain on sale of marketable securities, land parcels and residential condominiums Our share of debt satisfaction gains and net gains on sale of real estate of partially owned entities Suffolk Downs impairment loss and loan reserve Our share of impairment losses of partially owned entities Losses from the disposition of investment in J.C. Penney Severance costs (primarily reduction in force at the Mart) Purchase price fair value adjustment and accelerated amortization of discount on investment in subordinated debt of Independence Plaza The Mart discontinued operations Net gain resulting from Lexington's stock issuance and asset acquisition Net income attributable to noncontrolling interests in the Operating Partnership Preferred unit distributions of the Operating Partnership $

8,056 37,535 24,715 70,306 79,636 48,844 6,434 17,270 222,490 (94,929) 31,665 (31,348)

$

7,752 $ 23,489 18,230 49,471 74,270 42,667 5,841 20,443 6,931 18,981 218,604 (94,904) 46,525 (24,857)

6,385 13,840 4,379 24,604 62,470 46,167 3,654 75,202 32,595 25,612 270,304 (89,082) 45,563 (17,386)

13,568

56,868

4,856

13,000 (10,263) (5,771) -

(127,888) (5,492)

(4,936) (300,752) (3,005)

(47,563) (50) 90,799

$

(23,659) (1,158) 44,039 $

105,366 93,588 28,763 (35,327) (9,936) 88,016

(a)

On April 19, 2013, LNR was sold.

(b)

In the first quarter of 2013, we began accounting for our investment in Lexington as a marketable equity security available for sale. This investment was previously accounted for under the equity method (see page 112 for details). The amounts in these captions (for this table only) exclude income/expense from the mark-to-market of our deferred compensation plan of $11,557, $10,636 and $6,809 for the years ended December 31, 2014, 2013 and 2012, respectively. The year ended December 31, 2014, includes $14,956 of transaction costs related to the spin-off of our strip shopping centers and malls.

(c)

(d)

142

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures: Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our 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 annual report on Form 10-K. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective. Internal Control Over Financial Reporting: There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934, as amended) during the fourth quarter of the fiscal year to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management of Vornado Realty Trust, together with its consolidated subsidiaries (the “Company”), is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed under the supervision of our principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America. As of December 31, 2014, management conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that our internal control over financial reporting as of December 31, 2014 was effective. Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures are being made only in accordance with authorizations of management and our trustees; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements. The effectiveness of our internal control over financial reporting as of December 31, 2014 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing on page 144, which expresses an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2014.

143

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Trustees Vornado Realty Trust New York, New York We have audited the internal control over financial reporting of Vornado Realty Trust, together with its consolidated subsidiaries (the “Company”) as of December 31, 2014, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of trustees, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and trustees of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2014 of the Company and our report dated February 17, 2015 expressed an unqualified opinion on those financial statements and financial statement schedules. /s/ DELOITTE & TOUCHE LLP Parsippany, New Jersey February 17, 2015

144

ITEM 9B.

OTHER INFORMATION

None. PART III ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information relating to trustees of the Registrant, including its audit committee and audit committee financial expert, will be contained in a definitive Proxy Statement involving the election of trustees under the caption “Election of Trustees” which the Registrant will file with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934 not later than 120 days after December 31, 2014, and such information is incorporated herein by reference. Also incorporated herein by reference is the information under the caption “16(a) Beneficial Ownership Reporting Compliance” of the Proxy Statement. The following is a list of the names, ages, principal occupations and positions with Vornado of the executive officers of Vornado and the positions held by such officers during the past five years. All executive officers of Vornado have terms of office that run until the next succeeding meeting of the Board of Trustees of Vornado following the Annual Meeting of Shareholders unless they are removed sooner by the Board. PRINCIPAL OCCUPATION, POSITION AND OFFICE (Current and during past five years with Vornado unless otherwise stated)

Name

Age

Steven Roth

73

Chairman of the Board; Chief Executive Officer since April 2013 and from May 1989 to May 2009; Managing General Partner of Interstate Properties, an owner of shopping centers and an investor in securities and partnerships; Chief Executive Officer of Alexander’s, Inc. since March 1995, a Director since 1989, and Chairman since May 2004.

Michael J. Franco

46

Executive Vice President - Co-Head of Acquisitions and Capital Markets since November 2010; Managing Director (2003-2010) and Executive Director (2001-2003) of the Real Estate Investing Group of Morgan Stanley.

David R. Greenbaum

63

President of the New York Division since April 1997 (date of our acquisition); President of Mendik Realty (the predecessor to the New York Office division) from 1990 until April 1997.

Joseph Macnow

69

Executive Vice President - Finance and Chief Administrative Officer since June 2013; Executive Vice President - Finance and Administration from January 1998 to June 2013, and Chief Financial Officer from March 2001 to June 2013; Executive Vice President and Chief Financial Officer of Alexander's, Inc. since August 1995.

Mitchell N. Schear

56

President of Vornado/Charles E. Smith L.P. (our Washington, DC division) since April 2003; President of the Kaempfer Company from 1998 to April 2003 (date acquired by us).

Wendy Silverstein

54

Executive Vice President - Co-Head of Acquisitions and Capital Markets since November 2010; Executive Vice President of Capital Markets since 1998; Senior Credit Officer of Citicorp Real Estate and Citibank, N.A. from 1986 to 1998.

Stephen W. Theriot

55

Chief Financial Officer since June 2013; Assistant Treasurer of Alexander's, Inc. since May 2014; Partner at Deloitte & Touche LLP (1994 - 2013) and most recently, leader of its Northeast Real Estate practice (2011 - 2013).

The Registrant has adopted a Code of Business Conduct and Ethics that applies to, among others, Steven Roth, its principal executive officer, and Stephen W. Theriot, its principal financial and accounting officer. This Code is available on our website at www.vno.com.

145

ITEM 11.

EXECUTIVE COMPENSATION

Information relating to executive officer and trustee compensation will be contained in the Proxy Statement referred to above in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Executive Compensation” and such information is incorporated herein by reference.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information relating to security ownership of certain beneficial owners and management will be contained in the Proxy Statement referred to in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Principal Security Holders” and such information is incorporated herein by reference. Equity compensation plan information The following table provides information as of December 31, 2014 regarding our equity compensation plans.

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the second column)

Plan Category Equity compensation plans approved by security holders 4,668,945 (1) $ 67.38 4,003,507 (2) Equity compensation awards not approved by security holders Total 4,668,945 $ 67.38 4,003,507 ___________________________ (1) Includes an aggregate of 1,848,830 shares/units, comprised of (i) 22,449 restricted common shares, (ii) 913,009 restricted Operating Partnership units and (iii) 913,372 Out-Performance Plan units, which do not have an exercise price. (2)

Based on awards being granted as "Full Value Awards," as defined. If we were to grant "Not Full Value Awards," as defined, the number of securities available for future grants would be 8,007,014.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information relating to certain relationships and related transactions will be contained in the Proxy Statement referred to in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Certain Relationships and Related Transactions” and such information is incorporated herein by reference.

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

Information relating to Principal Accounting fees and services will be contained in the Proxy Statement referred to in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Ratification of Selection of Independent Auditors” and such information is incorporated herein by reference.

146

PART IV ITEM 15. (a)

EXHIBITS, FINANCIAL STATEMENT SCHEDULES The following documents are filed as part of this report: 1.

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

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

II--Valuation and Qualifying Accounts--years ended December 31, 2014, 2013 and 2012 III--Real Estate and Accumulated Depreciation as of December 31, 2014

Pages in this Annual Report on Form 10-K 149 158

Schedules other than those listed above are omitted because they are not applicable or the information required is included in the consolidated financial statements or the notes thereto. The following exhibits listed on the Exhibit Index, which is incorporated herein by reference, are filed with this Annual Report on Form 10-K. Exhibit No. 12 21 23 31.1 31.2 32.1 32.2 101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE

Computation of Ratios Subsidiaries of Registrant Consent of Independent Registered Public Accounting Firm Rule 13a-14 (a) Certification of Chief Executive Officer Rule 13a-14 (a) Certification of Chief Financial Officer Section 1350 Certification of the Chief Executive Officer Section 1350 Certification of the Chief Financial Officer XBRL Instance Document XBRL Taxonomy Extension Schema XBRL Taxonomy Extension Calculation Linkbase XBRL Taxonomy Extension Definition Linkbase XBRL Taxonomy Extension Label Linkbase XBRL Taxonomy Extension Presentation Linkbase

147

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: February 17, 2015

By:

/s/ Stephen W. Theriot Stephen W. Theriot, Chief Financial Officer (duly authorized officer and principal financial and accounting officer)

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

Title

Date

By: /s/Steven Roth (Steven Roth)

Chairman of the Board of Trustees and Chief Executive Officer

February 17, 2015

By: /s/Candace K. Beinecke (Candace K. Beinecke)

Trustee

February 17, 2015

By: /s/Michael D. Fascitelli (Michael D. Fascitelli)

Trustee

February 17, 2015

By: /s/Robert P. Kogod (Robert P. Kogod)

Trustee

February 17, 2015

By: /s/Michael Lynne (Michael Lynne)

Trustee

February 17, 2015

By: /s/David Mandelbaum (David Mandelbaum)

Trustee

February 17, 2015

By: /s/Daniel R. Tisch (Daniel R. Tisch)

Trustee

February 17, 2015

By: /s/Richard R. West (Richard R. West)

Trustee

February 17, 2015

By: /s/Russell B. Wight (Russell B. Wight, Jr.)

Trustee

February 17, 2015

By: /s/Stephen W. Theriot (Stephen W. Theriot)

Chief Financial Officer (Principal Financial and Accounting Officer)

February 17, 2015

148

VORNADO REALTY TRUST SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS December 31, 2014 (Amounts in Thousands)

Column A

Column B

Column C Additions Charged Against Operations

Balance at Beginning of Year

Description

Column D

Column E

Uncollectible Accounts Written-off

Balance at End of Year

Year Ended December 31, 2014: Allowance for doubtful accounts

$

32,069

$

3,614

$

(9,624)

$

26,059

Year Ended December 31, 2013: Allowance for doubtful accounts

$

40,839

$

11,417

$

(20,187)

$

32,069

Year Ended December 31, 2012: Allowance for doubtful accounts

$

46,531

$

9,697

$

(15,389)

$

40,839

149

COLUMN B

923,653 $ 584,230 363,381 471,072 412,169 247,970 249,285 214,208 231,903 164,903 113,473 95,686 175,890 117,269 120,723 85,259 25,992 80,216 62,888 28,261 26,903 55,220 8,599 18,728 13,375 28,760 26,388 13,446 41,186 34,635 30,544 19,091 27,490 22,908 9,640 6,688

Building and improvements

Initial cost to company (1)

COLUMN C

Description Encumbrances Land New York New York Manhattan 1290 Avenue of the Americas $ 950,000 $ 515,539 $ 697-703 5th Avenue (St. Regis) 152,825 350 Park Avenue 294,484 265,889 666 Fifth Avenue (Retail Condo) 390,000 189,005 One Penn Plaza 100 West 33rd Street (Manhattan Mall) 223,242 242,776 1535 Broadway (Marriott Marquis) 1540 Broadway 105,914 655 Fifth Avenue 140,000 102,594 Two Penn Plaza 575,000 53,615 Manhattan Mall 101,758 88,595 770 Broadway 353,000 52,898 90 Park Avenue 8,000 888 Seventh Avenue 318,554 909 Third Avenue 350,000 Eleven Penn Plaza 450,000 40,333 7 West 34th Street 640 Fifth Avenue 38,224 150 East 58th Street 39,303 595 Madison Avenue 62,731 828-850 Madison Avenue 80,000 107,937 715 Lexington Avenue 4 Union Square South 119,847 24,079 330 West 34th Street 510 Fifth Avenue 30,154 34,602 478-482 Broadway 20,000 20 Broad Street 40 Fulton Street 15,732 689 Fifth Avenue 19,721 443 Broadway 11,187 40 East 66th Street 13,616 155 Spring Street 13,700 435 Seventh Avenue 98,000 19,893 3040 M Street 7,830 692 Broadway 6,053 608 Fifth Avenue 677-679 Madison Avenue 13,070 484-486 Broadway 10,000

COLUMN A

150

125,754 $ 44,888 195,595 31,257 123,615 26,132 88,592 71,769 96,360 51,271 116,624 81,627 70,124 179,579 113,920 35,385 22,407 10 63,000 2,614 67,997 18,806 28,546 27,302 13,932 19,764 142 2,469 37 3,256 3,536 30,826 388 5,040

Costs capitalized subsequent to acquisition

COLUMN D

515,540 $ 152,825 265,890 189,005 242,777 105,914 102,594 52,689 88,595 52,898 8,000 40,333 34,614 38,224 39,303 62,731 107,937 63,000 24,079 34,602 20,000 15,732 19,721 11,187 13,616 13,700 19,893 7,830 6,053 13,070 10,000

Land

1,049,406 $ 584,230 408,268 471,072 607,764 279,226 372,900 240,340 231,903 254,421 185,242 192,046 227,161 233,893 202,350 155,383 144,965 139,912 115,601 85,295 28,271 26,903 57,834 76,596 37,534 41,921 56,062 40,320 33,210 41,186 34,777 33,013 19,128 30,746 26,444 30,826 10,028 11,728

Buildings and improvements

COLUMN F

COLUMN G

204,622 2,591 82,124 25,020 249,036 52,608 528 35,089 7,305 124,324 44,006 81,108 96,584 97,295 70,234 67,353 58,186 70,078 46,971 30,921 6,831 6,553 14,903 1,957 4,541 6,490 19,666 16,298 7,999 1,651 7,848 6,589 5,964 6,978 6,124 1,334 2,145 1,746

2009

1932

2002

2009 1956 1987 1925

1923 1965/2004 1925

1968 2009 1907 1964 1980 1969 1923 1901 1950 1969 1968

1972 1911

1960

1963

Accumulated depreciation and Date of amortization construction (3)

1,564,946 $ 737,055 674,158 660,077 607,764 522,003 372,900 346,254 334,497 307,110 273,837 244,944 235,161 233,893 202,350 195,716 179,579 178,136 154,904 148,026 136,208 89,903 81,913 76,596 72,136 61,921 56,062 56,052 52,931 52,373 48,393 46,713 39,021 38,576 32,497 30,826 23,098 21,728

Total (2)

Gross amount at which carried at close of period

COLUMN E

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

2007 2014 2006 2012 1998 2007 2012 2006 2013 1997 2007 1998 1997 1998 1999 1997 2000 1997 1998 1999 2005 2001 1993 1998 2010 2007 1998 1998 1998 2013 2005 2007 1997 2006 2005 2012 2006 2007

Date acquired

COLUMN H

(4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4)

Life on which depreciation in latest income statement is computed

COLUMN I

Washington, DC Washington, DC 2011-2451 Crystal Drive 2001 Jefferson Davis Highway, 2100/2200 Crystal Drive, 223 23rd Street, 2221 South Clark Street, Crystal City Shops at 2100, 220 20th Street 1550-1750 Crystal Drive/ 241-251 18th Street Riverhouse Apartments Skyline Place (6 buildings) 1215, 1225 S. Clark Street/ 200, 201 12th Street S. 1229-1231 25th Street (West End 25) Met Park / Warehouses 2101 L Street 2200 / 2300 Clarendon Blvd 1800, 1851 and 1901 South Bell Street Bowen Building - 875 15th Street, NW 1875 Connecticut Ave, NW One Skyline Tower 100,935

57,213 64,817 118,421 41,986 47,594 67,049 106,946 32,815 37,551 30,077 36,303 12,266

71,256 40,865 259,546 456,421 58,829 101,671 148,922 35,132 115,022 92,500 138,938

2,375,755

29,903

-

223,652

4,474,039

-

Total New York

-

Other Properties Hotel Pennsylvania

COLUMN D

Gross amount at which carried at close of period

COLUMN E

COLUMN F

COLUMN G

177,373 5,039 1,326 51,642 105,475 118,806 98,962 82,004 75,343

218,330 125,078 221,869

131,206

409,920

5,349,041

121,712

-

151

44,496 106,659 67,761 83,554 45,831 (7,053) 1,962 7,269 36,416

78,232 69,507 29,537

180,729

138,116

1,968,720

81,199

27,521

47,465 68,198 82,898 39,768 37,551 30,176 35,886 12,231

64,652 138,819 41,862

49,683

100,229

2,469,688

29,903

1,033

221,998 110,549 93,135 128,243 151,306 111,753 100,825 89,690 111,794

296,727 174,187 251,530

319,465

548,742

7,223,828

202,911

26,488

269,463 178,747 176,033 168,011 151,306 149,304 131,001 125,576 124,025

361,379 313,006 293,392

369,148

648,971

9,693,516

232,814

27,521

72,395 14,439 1,321 30,848 50,525 31,493 24,031 20,162 38,697

99,573 35,074 84,826

71,562

196,953

1,694,581

85,990

16,868

1975 1988-1989 1968 2004 1963 1988

1983-1987

1973-1984

1974-1980

1964-1969

1984-1989

1919

1967

Costs Accumulated Building capitalized Buildings depreciation and subsequent and and Date of improvements to acquisition Land improvements Total (2) amortization construction (3) $ 7,844 $ 5,197 $ 7,844 $ 13,041 $ 20,885 $ 363 2,751 16,700 2,751 19,451 533 12,905 3,511 12,905 16,416 6,507 7,107 1,693 13,614 15,307 5 10,037 5,099 10,037 15,136 295 8,914 4,086 8,914 13,000 1,912 1990 3,631 8,869 3,631 12,500 121 8,112 392 3,200 8,504 11,704 1,396 5,822 266 3,200 6,088 9,288 1,016 1,767 (4,674) 6,859 884 7,743 156 762 383 3,856 1,145 5,001 345 697 33 1,483 730 2,213 322 5,548 88,732 94,280 94,280 13,659 5,227,329 1,860,000 2,438,752 6,994,429 9,433,181 1,591,723

Initial cost to company (1)

COLUMN C

Encumbrances Land $ - $ 7,844 16,700 3,511 1,693 5,099 4,086 8,869 3,200 3,200 10,650 3,856 1,483 4,474,039 2,345,852

COLUMN B

New Jersey Paramus

Description 1135 Third Avenue 431 Seventh Avenue 304 - 306 Canal Street 334 Canal Street 267 West 34th Street 1540 Broadway Garage 966 Third Avenue 148 Spring Street 150 Spring Street 488 Eighth Avenue 484 Eighth Avenue 825 Seventh Avenue Other (Including Signage) Total New York

COLUMN A

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

2002 2007 2007 2003 2002 2002 2005 2007 2002

2002 2007 2002

2002

2002

1997

1987

Date acquired 1997 2007 2014 2011 2013 2006 2013 2008 2008 2007 1997 1997

COLUMN H

(4) (4) (4) (4) (4) (4) (4) (4) (4)

(4) (4) (4)

(4)

(4)

(4)

(4)

Life on which depreciation in latest income statement is computed (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4)

COLUMN I

Connecticut Waterbury Newington Total Connecticut

Retail Properties California Walnut Creek (1149 S. Main St) Signal Hill Walnut Creek (1556 Mount Diablo Blvd) Vallejo Total California

Description 1399 New York Avenue, NW Commerce Executive Seven Skyline Place 1825 Connecticut Ave, NW 1235 S. Clark Street H Street - North 10-1D Land Parcel 1750 Pennsylvania Avenue Crystal City Hotel 1150 17th Street 1730 M Street Democracy Plaza One 1726 M Street Crystal Drive Retail 1109 South Capitol Street South Capitol H Street Other Total Washington, DC

COLUMN A

13,643 10,969 24,612

667 2,421 3,088

2,699 9,652 5,909 18,260

COLUMN D

Gross amount at which carried at close of period

COLUMN E

COLUMN F

COLUMN G

4,504 1,200 5,704

19,930 2,940 2,945 25,815

152

4,666 1,193 5,859

2 1,536 221 1,759 667 2,421 3,088

2,699 9,653 5,908 18,260

9,170 2,393 11,563

19,930 2,941 1,537 3,166 27,574

9,837 4,814 14,651

22,629 12,594 7,445 3,166 45,834

6,077 801 6,878

4,599 607 129 654 5,989 1969 1965

Costs Accumulated Building capitalized Buildings depreciation and subsequent and and Date of improvements to acquisition Land improvements Total (2) amortization construction (3) $ 67,363 $ 5,736 $ 34,178 $ 72,402 $ 106,580 $ 7,425 58,705 20,283 13,140 79,249 92,389 25,710 1985-1989 58,351 23,086 10,262 81,467 91,729 18,906 2001 61,316 (4,958) 32,726 56,722 89,448 13,335 1956 53,894 18,636 15,826 72,530 88,356 22,186 1981 55 (33,488) 61,970 9,070 71,040 30,032 15,094 21,170 43,976 65,146 11,250 1964 47,191 9,316 8,000 56,507 64,507 14,565 1968 24,876 15,224 24,723 38,736 63,459 14,992 1970 17,541 9,895 10,687 26,844 37,531 10,198 1963 33,628 3,321 36,949 36,949 16,407 1987 22,062 3,433 9,455 25,490 34,945 6,036 1964 20,465 6,771 27,236 27,236 10,325 2004 178 (253) 11,597 (131) 11,466 6,273 (1,741) 8,541 8,541 641 41 1,763 682 2,445 161 51,767 (37,673) 14,094 14,094 156 2,376,711 935,739 1,004,915 3,360,308 4,365,223 943,551

Initial cost to company (1)

COLUMN C

Encumbrances Land $ - $ 33,481 13,401 103,971 10,292 92,500 33,090 15,826 104,473 20,020 8,000 28,728 23,359 14,853 10,095 9,450 11,541 4,009 1,763 1,982,806 1,052,773

COLUMN B

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

1969 1965

2006 2006 2007 2006

Date acquired 2011 2002 2002 2007 2002 2007 2002 2004 2002 2002 2002 2006 2004 2007 2005 2005

COLUMN H

(4) (4)

(4) (4) (4) (4)

Life on which depreciation in latest income statement is computed (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4)

COLUMN I

New Jersey Paramus (Bergen Town Center) North Bergen (Tonnelle Ave) Union (Springfield Avenue) Wayne Towne Center East Rutherford Garfield East Hanover I and II Lodi (Washington Street) Bricktown East Brunswick II (339-341 Route 18 S.) Hazlet Totowa Carlstadt

New Hampshire Salem

Massachusetts Springfield Chicopee Cambridge Total Massachusetts

Description Maryland Rockville Baltimore (Towson) Annapolis Wheaton Glen Burnie Total Maryland

COLUMN A

$

300,000 75,000 27,822 13,269 41,786 31,192 11,503 24,183 -

-

5,591 8,106 13,697

- $ 15,248 15,248

Encumbrances

COLUMN B

19,884 24,493 19,700 45 2,232 7,606 1,391 2,098 7,400 120 -

6,083

2,797 895 3,692

3,470 $ 581 462 4,513

Land

81,723 45,090 26,137 36,727 8,068 18,241 13,125 11,179 10,949 9,413 11,994 16,457

-

2,471 2,471

20,599 $ 3,227 9,652 5,367 2,571 41,416

Building and improvements

Initial cost to company (1)

COLUMN C

153

376,240 63,717 22,842 60 25,707 12,033 2,596 6,317 4,056 4,653 1

-

591 260 851

810 $ 10,498 1,807 13,115

Costs capitalized subsequent to acquisition

COLUMN D

37,635 31,806 19,700 45 2,671 7,606 1,391 2,098 7,400 92 -

6,083

2,797 895 3,692

3,470 $ 581 462 4,513

Land

440,212 56,404 45,090 48,979 36,787 33,775 29,835 15,721 17,496 15,005 9,413 16,675 16,458

-

3,062 260 3,322

21,409 $ 13,725 9,652 5,367 4,378 54,531

Buildings and improvements

477,847 88,210 64,790 48,979 36,787 33,820 32,506 23,327 18,887 17,103 16,813 16,767 16,458

6,083

5,859 895 260 7,014

COLUMN F

COLUMN G

82,904 9,486 8,548 5,575 5,284 6,962 15,472 3,494 12,300 9,184 1,784 12,839 2,959

-

1,111 176 1,287

5,106 5,741 2,956 1,107 3,088 17,998

1957/1999

1968 1972

2007 2009 1962

1957/2009 2009

1993 1969

1958

1968

Accumulated depreciation and Date of amortization construction (3)

24,879 $ 14,306 9,652 5,367 4,840 59,044

Total (2)

Gross amount at which carried at close of period

COLUMN E

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

2003 2006 2007 2010 2007 1998 1962/1998 2004 1968 1972 2007 1957 2007

2006

1966 1969

2005 1968 2005 2006 1958

Date acquired

COLUMN H

(4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4)

(4)

(4) (4)

(4) (4) (4) (4) (4)

Life on which depreciation in latest income statement is computed

COLUMN I

COLUMN B

New York Bronx (Bruckner Blvd) Huntington Mt. Kisco Bronx (1750-1780 Gun Hill Road) Staten Island Inwood Buffalo (Amherst) West Babylon Freeport (437 E. Sunrise Highway) Dewitt Oceanside 16,265 27,733 17,000 20,866 -

66,100 21,200 22,700 6,427 11,446 12,419 5,743 6,720 1,231 2,710

COLUMN D

259,503 33,667 26,700 11,885 21,262 19,097 4,056 13,786 4,747 7,116 2,306

154

(63,515) 1,690 784 19,159 2,725 795 13,008 201 3,091 -

Costs Building capitalized and subsequent improvements to acquisition $ 13,983 $ (5,507) $ 3,464 9,960 10,219 3,284 7,470 3,394 7,189 5,534 2,694 4,177 10,044 1,582 5,463 1,711 17,245 (8,390) 6,363 3,598 4,999 326 9,446 6,411 1,101 7,495 468 6,220 1,959 5,248 2,450 2,675 1,969 3,164 1,351 3,376 1,489 1,342 1,094 636 13 419 381 424,668 550,166

Initial cost to company (1)

COLUMN C

Description Encumbrances Land North Plainfield $ - $ 6,577 Marlton 16,853 1,611 Hackensack 39,592 692 Union (Route 22 and Morris Ave) 31,567 3,025 Manalapan 20,545 725 Cherry Hill 13,536 5,864 South Plainfield 5,003 Watchung 14,713 4,178 Englewood 11,571 2,300 Dover 12,841 559 Eatontown 4,653 Lodi (Route 17 N.) 11,075 238 Morris Plains 20,866 1,104 Jersey City 19,796 652 East Brunswick I (325-333 Route 18 S.) 24,290 319 Middletown 16,960 283 Woodbridge 20,171 1,509 Lawnside 10,433 851 Kearny 309 Turnersville 900 North Bergen (Kennedy Blvd) 4,976 2,308 Montclair 2,568 66 Total New Jersey 822,111 123,692

COLUMN A

61,618 21,200 23,297 6,428 11,446 12,419 5,107 6,720 1,231 2,710

Land 6,577 1,454 692 3,025 1,046 4,864 4,441 1,495 559 4,653 238 1,104 652 319 283 1,539 851 309 900 2,308 66 147,819

COLUMN F

COLUMN G

200,470 35,357 26,887 31,043 23,987 19,892 17,700 13,987 7,838 7,116 2,306

262,088 56,557 50,184 37,471 35,433 32,311 22,807 20,707 9,069 7,116 5,016

6,160 6,173 4,653 5,028 6,075 4,974 6,306 2,700 5,343 1,453 437

1981

1968

2009

Accumulated Buildings depreciation and and Date of improvements Total (2) amortization construction (3) $ 8,476 $ 15,053 $ 2,999 1955 13,581 15,035 8,538 1973 13,503 14,195 9,657 1963 10,864 13,889 5,275 1962 12,402 13,448 8,177 1971 7,871 12,735 3,985 1964 11,626 11,626 2,221 6,911 11,352 4,240 1994 9,660 11,155 566 9,961 10,520 6,628 1964 5,325 9,978 1,371 9,446 9,684 3,599 1999 7,512 8,616 6,934 1961 7,963 8,615 2,799 1965 8,179 8,498 6,725 1957 7,698 7,981 5,669 1963 4,614 6,153 2,636 1959 4,515 5,366 4,313 1969 4,865 5,174 3,667 1938 2,436 3,336 2,194 1974 649 2,957 447 1993 800 866 694 1972 950,707 1,098,526 270,125

Gross amount at which carried at close of period

COLUMN E

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

2007 2007 2007 2005 2004 2004 1968 2007 1981 2006 2007

Date acquired 1989 1973 1963 1962 1971 1964 2007 1959 2007 1964 2005 1975 1985 1965 1957 1963 1959 1969 1959 1974 1959 1972

COLUMN H

(4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4)

Life on which depreciation in latest income statement is computed (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4)

COLUMN I

Total Retail Properties

Other

Total Puerto Rico

1,288,535

-

250,000

130,000 120,000

-

Virginia Norfolk

29,266 14,526 5,457 10,433 5,083 5,270 6,688 76,723 -

Puerto Rico Las Catalinas Montehiedra

Initial cost to company (1)

COLUMN C

COLUMN D

357,701

-

24,462

15,280 9,182

-

-

6,053 187 2,727 827 850 409 3,140 850 15,043

1,108,967

-

131,121

64,370 66,751

3,927

3,634

26,646 15,580 6,698 5,200 2,646 2,171 2,568 63 1,820 63,392

155

586,771

4,232

18,449

10,121 8,328

15

-

794 1,933 1,895 1,334 2,381 1,680 1,395 689 613 80 12,794

Costs Building capitalized and subsequent Encumbrances Land improvements to acquisition $ - $ - $ 2,647 $ 1,149 $ 4,280 2,172 260 43 184 4 86,144 158,868 406,819 (20,469)

COLUMN B

South Carolina Charleston

Pennsylvania Wilkes-Barre Allentown Bensalem Bethlehem Wyomissing Broomall York Lancaster Glenolden Springfield Total Pennsylvania

Description Rochester (Henrietta) Rochester Freeport (240 West Sunrise Highway) Commack New Hyde Park Total New York

COLUMN A

COLUMN F

COLUMN G

377,405

-

24,547

15,280 9,267

-

-

6,053 187 2,727 839 850 409 3,140 850 15,055

1,676,034

4,232

149,485

74,491 74,994

3,942

3,634

27,440 17,513 8,593 6,522 5,027 3,851 3,963 752 2,433 80 76,174

2,053,439

4,232

174,032

89,771 84,261

3,942

3,634

33,493 17,700 11,320 7,361 5,027 4,701 4,372 3,892 3,283 80 91,229

462,239

591

62,151

30,478 31,673

2,885

750

4,931 13,818 3,689 5,593 3,471 2,792 3,566 518 2,101 80 40,559

1996 1996

1966 1970 1966 1975

1957 1972/1999 1966

Accumulated Buildings depreciation and and Date of Land improvements Total (2) amortization construction (3) - $ 3,796 $ 3,796 $ 3,324 1971 2,172 2,172 1966 260 260 151 227 227 123 4 4 126 1970 154,348 390,870 545,218 53,026

Gross amount at which carried at close of period

COLUMN E

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

2002 1997

2005

2006

2007 1957 1972 1966 2005 1966 1970 1966 1975 2005

Date acquired 1971 1966 2005 2006 1976

COLUMN H

(4)

(4) (4)

(4)

(4)

(4) (4) (4) (4) (4) (4) (4) (4) (4) (4)

Life on which depreciation in latest income statement is computed (4) (4) (4) (4) (4)

COLUMN I

9,551,700 $ 4,335,924 $

$

Leasehold Improvements Equipment and Other Total December 31, 2014

576 221,903 115,720 83,089 29,199 1,462 28,052 479,425

597,868 600,000 58,452 1,256,320

-

69,694

-

64,528 $ 5,166 69,694

Land

10,158,224 $

893,324 16,420 7 85,798 1,058 996,607

7,752

319,146

-

319,146 $ 319,146

Building and improvements

Initial cost to company (1)

COLUMN C

555 California Street 220 Central Park South Borgata Land, Atlantic City, NJ 40 East 66th Residential 677-679 Madison Other Total Other

Warehouse/Industrial New Jersey East Hanover

550,000

Total The Mart

550,000 $ 550,000 -

$

Encumbrances

COLUMN B

New York MMPI Piers

Description Other The Mart Illinois The Mart, Chicago 527 W. Kinzie, Chicago Total Illinois

COLUMN A

221,903 83,090 10,990 1,626 317,609

691

69,701

-

156

1,190,610 593,081 83,090 28,301 2,804 121 1,898,007

28,058

676,555

12,794

658,595 $ 5,166 663,761

Total (2)

COLUMN F

COLUMN G

1972

1930

100,975 3,629,135

197,170 1922/1969/1970 3,686 322 201,178

14,259

212,352

1,020

211,332 211,332

Accumulated depreciation and Date of amortization construction (3)

130,594 130,594 14,605,383 $ 18,845,392 $

968,707 593,081 17,311 1,178 121 1,580,398

27,367

606,854

12,794

594,060 $ 594,060

Buildings and improvements

64,535 $ 5,166 69,701

Land

COLUMN E

Gross amount at which carried at close of period

130,594 4,351,244 $ 4,240,009 $

75,383 460,941 (6) (86,696) 284 (27,931) 421,975

19,730

287,715

12,794

274,921 $ 274,921

Costs capitalized subsequent to acquisition

COLUMN D

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

2007 2005 2010 2005 2006 2005

1972

2008

1998

Date acquired

COLUMN H

(4) (4) (4) (4) (4) (4)

(4)

(4)

(4)

Life on which depreciation in latest income statement is computed

COLUMN I

VORNADO REALTY TRUST SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION Notes: (1) (2) (3) (4)

Initial cost is cost as of January 30, 1982 (the date on which Vornado commenced real estate operations) unless acquired subsequent to that date see Column H. The net basis of the Company’s assets and liabilities for tax purposes is approximately $3.6 billion lower than the amount reported for financial statement purposes. Date of original construction –– many properties have had substantial renovation or additional construction –– see Column D. Depreciation of the buildings and improvements are calculated over lives ranging from the life of the lease to forty years.

157

VORNADO REALTY TRUST SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION (AMOUNTS IN THOUSANDS) The following is a reconciliation of real estate assets and accumulated depreciation:

2014 Real Estate Balance at beginning of period Additions during the period: Land Buildings & improvements Less: Assets sold, written-off and deconsolidated Balance at end of period Accumulated Depreciation Balance at beginning of period Additions charged to operating expenses

$

17,418,946

$ 17,365,533

$

225,536 1,348,153 18,992,635 147,243 18,845,392

$

Less: Accumulated depreciation on assets sold and written-off Balance at end of period

158

Year Ended December 31, 2013 2012

$

3,296,717 461,689 3,758,406 129,271 3,629,135

$

15,444,754

131,646 1,014,876 18,512,055 1,093,109 $ 17,418,946

$

514,950 1,615,077 17,574,781 209,248 17,365,533

$

$

$

2,966,067 423,844 3,389,911 93,194 3,296,717

$

2,742,244 427,189 3,169,433 203,366 2,966,067

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, 5.40% Series L Cumulative Redeemable Preferred Shares of Beneficial Interest, liquidation preference $25.00 per share, no par value – Incorporated by reference to Exhibit 3.6 to Vornado Realty Trust’s Registration Statement on Form 8-A (File No. 001-11954), filed on January 25, 2013

*

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.

159

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

*

*

_______________________ Incorporated by reference.

160

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

*

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.

161

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

*

3.48

-

Forty-Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership dated as of July 18, 2012 – Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on Form 8-K (File No. 001-34482), filed on July 18, 2012

*

3.49

-

Forty-Fifth Amendment to Second Amended and Restated Agreement of Limited Partnership, dated as of January 25, 2013 – Incorporated by reference to Exhibit 3.1 to Vornado Realty L.P.’s Current Report on Form 8-K (File No. 001-34482), filed on January 25, 2013

*

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 March 31, 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 *

_______________________ Incorporated by reference.

162

10.1

-

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

*

10.2

**

-

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

*

10.3

**

-

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

*

10.4

-

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

*

10.5

-

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

*

10.6

**

-

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

*

10.7

**

-

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

*

-

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

*

10.8

10.9

**

-

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

*

10.10

**

-

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

*

10.11

**

-

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

*

* **

_______________________ Incorporated by reference. Management contract or compensatory agreement.

163

10.12

**

-

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

*

10.13

**

-

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

*

10.14

**

-

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

*

10.15

**

-

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

*

10.16

**

-

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

*

10.17

**

-

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

*

10.18

**

-

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

*

10.19

**

-

Form of Vornado Realty Trust 2010 Omnibus Share Plan Incentive / Non-Qualified Stock Option Agreement. Incorporated by reference to Exhibit 99.1 to Vornado Realty Trust's Current Report on Form 8-K (File No. 001-11954) filed on April 5, 2012

*

10.20

**

-

Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted Stock Agreement. Incorporated by reference to Exhibit 99.2 to Vornado Realty Trust's Current Report on Form 8-K (File No. 001-11954) filed on April 5, 2012

*

10.21

**

-

Form of Vornado Realty Trust 2010 Omnibus Share Plan Restricted LTIP Unit Agreement. Incorporated by reference to Exhibit 99.3 to Vornado Realty Trust's Current Report on Form 8-K (File No. 001-11954) filed on April 5, 2012

*

10.22

**

-

Form of Vornado Realty Trust 2012 Outperformance Plan Award 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, 2012 (File No. 001-11954) filed on February 26, 2013

*

10.23

**

-

Letter Agreement between Vornado Realty Trust and Michael D. Fascitelli, dated February 27, 2013. Incorporated by reference to Exhibit 99.1 to Vornado Realty Trust’s Current Report on Form 8-K (File No. 001-11954), filed on February 27, 2013

*

* **

_______________________ Incorporated by reference. Management contract or compensatory agreement.

164

10.24

**

10.25

-

Waiver and Release between Vornado Realty Trust and Michael D. Fascitelli, dated February 27, 2013. Incorporated by reference to Exhibit 99.2 to Vornado Realty Trust’s Current Report on Form 8-K (File No. 001-11954), filed on February 27, 2013

*

-

Amendment to June 2011 Revolving Credit Agreement dated as of March 28, 2013, by and among Vornado Realty L.P., as Borrower, the banks listed on the signature pages, and J.P. Morgan Chase Bank N.A., as Administrative Agent. Incorporated by reference to Exhibit 10.48 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (File No. 001-11954), filed on May 6, 2013

*

10.26

**

-

Form of Vornado Realty Trust 2013 Outperformance Plan Award Agreement. Incorporated by reference to Exhibit 10.50 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (File No. 001-11954), filed on May 6, 2013

*

10.27

**

-

Employment agreement between Vornado Realty Trust and Stephen W. Theriot dated June 1, 2013. Incorporated by reference to Exhibit 10.51 to Vornado Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (File No. 001-11954), filed on August 5, 2013

*

10.28

**

-

Employment agreement between Vornado Realty Trust and Michael J. Franco dated January 10, 2014. Incorporated by reference to Exhibit 10.52 to Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (File No. 001-11954), filed on May 5, 2014

*

10.29

**

-

Form of Vornado Realty Trust 2014 Outerperformance Plan Award Agreement. Incorporated by reference to Exhibit 10.53 to Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (File No. 001-11954), filed on May 5, 2014

*

-

Amended and Restated Revolving Credit Agreement dated as of September 30, 2014, by and among Vornado Realty L.P. as borrower, Vornado Realty Trust as General Partner, the Banks listed on the signature pages thereof, and JPMorgan Chase Bank N.A. as Administrative Agent for the Banks. Incorporated by reference to Exhibit 10.54 to Vornado Realty Trust's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 (File No. 001-11954), filed on November 3, 2014

*

10.30

* **

_______________________ Incorporated by reference. Management contract or compensatory agreement.

165

12

-

Computation of Ratios

21

-

Subsidiaries of the Registrant

23

-

Consent of Independent Registered Public Accounting Firm

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

166

VORNADO CORPORATE INFORMATION TRUSTEES

CORPORATE OFFICERS

STEVEN ROTH

STEVEN ROTH

Chairman of the Board

Chairman of the Board and Chief Executive Officer

CANDACE K. BEINECKE

Chair of Hughes Hubbard & Reed LLP

DAVID R. GREENBAUM President of the New York Division

MICHAEL D. FASCITELLI

Owner of MDF Capital LLC and former President and Chief Executive Officer of Vornado

MITCHELL N. SCHEAR

President of the Vornado/Charles E. Smith Washington DC Division

ROBERT P. KOGOD* President of Charles E. Smith Management LLC

MICHAEL J. FRANCO

MICHAEL LYNNE

Executive Vice President – Chief Investment Officer

Principal of Unique Features JOSEPH MACNOW DAVID M. MANDELBAUM

Partner, Interstate Properties DANIEL R. TISCH* Managing Member, TowerView LLC

Executive Vice President – Finance and Chief Administrative Officer STEPHEN W. THERIOT Chief Financial Officer

RICHARD R. WEST*

Dean Emeritus, Leonard N. Stern School of Business, New York University RUSSELL B. WIGHT, JR. Partner, Interstate Properties

DIVISION EXECUTIVE VICE PRESIDENTS GLEN J.WEISS Executive Vice President Leasing – New York Office SHERRI A. WHITE

*Members of the Audit Committee

Executive Vice President Leasing – New York Retail BARRY S. LANGER Executive Vice President Development – New York GASTON SILVA

Chief Operating Officer – New York MYRON MAURER

Chief Operating Officer – theMart

JAMES E. CREEDON

Executive Vice President Leasing – Washington, DC LAURIE H. KRAMER Executive Vice President Finance – Washington, DC PATRICK J. TYRRELL Chief Operating Officer – Washington DC

ROBERT ENTIN

Executive Vice President Chief Information Officer MATTHEW IOCCO

Executive Vice President Chief Accounting Officer

COMPANY DATA EXECUTIVE OFFICES

888 Seventh Avenue New York, New York 10019 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Deloitte & Touche LLP Parsippany, New Jersey COUNSEL

Sullivan & Cromwell LLP New York, New York TRANSFER AGENT AND REGISTRAR

American Stock Transfer & Trust Co. New York, New York MANAGEMENT CERTIFICATIONS

The Company’s Chief Executive Officer and Chief Financial Officer provided certifications to the Securities and Exchange Commission as required by Section 302 of the Sarbanes-Oxley Act of 2002 and these certifications are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. In addition, as required by Section 303A.12(a) of the New York Stock Exchange (NYSE) Listed Company Manual, on June 6, 2014 the Company’s Chief Executive Officer submitted to the NYSE the annual CEO certification regarding the Company’s compliance with the NYSE’s corporate governance listing standards. REPORT ON FORM 10-K Shareholders may obtain a copy of the Company’s annual report on Form 10-K as filed with the Securities and Exchange Commission free of charge (except for exhibits), by writing to the Secretary, Vornado Realty Trust, 888 Seventh Avenue, New York, New York 10019; or, visit the Company’s website at www.vno.com and refer to the Company’s SEC Filings. ANNUAL MEETING

The annual meeting of shareholders of Vornado Realty Trust, will be held at 12:00 PM on Thursday, May 21, 2015 at the Saddle Brook Marriott, Interstate 80 and the Garden State Parkway, Saddle Brook, New Jersey 07663.