UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)



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



	For the quarterly period ended:	March 31, ~~2018~~2019



☐	TRANSITION REPORT PURSUANT TOSECTION 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)
Commission File Number:	001-34482 (Vornado Realty L.P.)

Vornado Realty Trust

Vornado Realty L.P.



	~~Vornado Realty Trust~~ ~~Vornado Realty L.P.~~

(Exact name of registrants as specified in its charter)



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

Vornado Realty L.P.	Delaware	13-3925979
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

888 Seventh Avenue, New York, New York 10019

(Address of principal executive offices) (Zip Code)

(212) 894-7000

(Registrants’ telephone number, including area code)

N/A

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding

12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Vornado Realty Trust: Yes☑ No ☐ Vornado Realty L.P.: 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).

Vornado Realty Trust: Yes☑ No ☐ Vornado Realty L.P.: Yes☑ No ☐

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



Vornado Realty Trust:
☑Large Accelerated Filer		☐Accelerated Filer
☐Non-Accelerated Filer ~~(Do not check if smaller reporting company)~~		☐Smaller Reporting Company
		☐Emerging Growth Company



Vornado Realty L.P.:
☐ Large Accelerated Filer		☐Accelerated Filer
☑ Non-Accelerated Filer ~~(Do not check if smaller reporting company)~~		☐Smaller Reporting Company
		☐Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Vornado Realty Trust: Yes☐ No ☑ Vornado Realty L.P.: Yes☐ No ☑

As of March 31, ~~2018, 190,169,168~~2019, 190,761,498 of Vornado Realty Trust’s common shares of beneficial interest are outstanding.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended March 31, ~~2018~~2019 of Vornado Realty Trust and Vornado Realty L.P. Unless stated otherwise or the context otherwise requires, references to “Vornado” refer to Vornado Realty Trust, a Maryland real estate investment trust (“REIT”), and references to the “Operating Partnership” refer to Vornado Realty L.P., a Delaware limited partnership. References to the “Company,” “we,” “us” and “our” mean collectively Vornado, the Operating Partnership and those subsidiaries consolidated by Vornado.

The Operating Partnership is the entity through which we conduct substantially all of our business and own, either directly or through subsidiaries, substantially all of our assets. Vornado is the sole general partner and also a 93.4%limited partner of the Operating Partnership. As the sole general partner of the Operating Partnership, Vornado has exclusive control of the Operating Partnership’s day-to-day management.

Under the limited partnership agreement of the Operating Partnership, unitholders may present their Class A units for redemption at any time (subject to restrictions agreed upon at the time of issuance of the units that may restrict such right for a period of time). Class A units may be tendered for redemption to the Operating Partnership for cash; Vornado, at its 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. This one-for-one exchange ratio is subject to specified adjustments to prevent dilution. Vornado generally expects that it will elect to issue its common shares in connection with each such presentation for redemption rather than having the Operating Partnership pay cash. With each such exchange or redemption, Vornado’s percentage ownership in the Operating Partnership will increase. In addition, whenever Vornado issues common shares other than to acquire Class A units of the Operating Partnership, Vornado must contribute any net proceeds it receives to the Operating Partnership and the Operating Partnership must issue to Vornado an equivalent number of Class A units of the Operating Partnership. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT.

The Company believes that combining the quarterly reports on Form 10-Q of Vornado and the Operating Partnership into this single report provides the following benefits:

enhances investors’ understanding of Vornado and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

eliminates duplicative disclosure and provides a more streamlined and readable presentation because a substantial portion of the disclosure applies to both Vornado and the Operating Partnership; and

creates time and cost efficiencies in the preparation of one combined report instead of two separate reports.

The Company believes it is important to understand the few differences between Vornado and the Operating Partnership in the context of how Vornado and the Operating Partnership operate as a consolidated company. The financial results of the Operating Partnership are consolidated into the financial statements of Vornado. Vornado does not have any significant assets, liabilities or operations, other than its investment in the Operating Partnership. The Operating Partnership, not Vornado, generally executes all significant business relationships other than transactions involving the securities of Vornado. The Operating Partnership holds substantially all of the assets of Vornado. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by Vornado, the net proceeds of debt offerings by Vornado, and the net proceeds which are contributed to the Operating Partnership in exchange for debt securities of the Operating Partnership, which are contributed to the capital of the Operating Partnership in exchange for units of limited partnership in the Operating Partnership, as applicable, the Operating Partnership generates all remaining capital required by the Company’s business. These sources may include working capital, net cash provided by operating activities, borrowings under the revolving credit facility, the issuance of secured and unsecured debt and equity securities and proceeds received from the disposition of certain properties.

To help investors better understand the key differences between Vornado and the Operating Partnership, certain information for Vornado and the Operating Partnership in this report has been separated, as set forth below:

Item 1. Financial Statements (unaudited), which includes the following specific disclosures for Vornado Realty Trust and Vornado Realty L.P.:

~~Note 12. Redeemable Noncontrolling Interests/Redeemable Partnership Units~~

~~Note 20. (Loss) Income Per Share/(Loss) Income Per Class A Unit~~


•	Note 12. Redeemable Noncontrolling Interests/Redeemable Partnership Units


•	Note 13. Shareholders' Equity/Partners' Capital


•	Note 19. Income (Loss) Per Share/Income (Loss) Per Class A Unit

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations includes information specific to each entity, where applicable.

This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of Vornado and the Operating Partnership in order to establish that the requisite certifications have been made and that Vornado and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.



PART I.		Financial Information:	Page Number

	Item 1.	Financial Statements of Vornado Realty Trust:

		Consolidated Balance Sheets (Unaudited) as of March 31, ~~2018~~2019 and December 31, ~~2017~~2018	5

		Consolidated Statements of Income (Unaudited) for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	6

		Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	7

		Consolidated Statements of Changes in Equity (Unaudited) for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	8

		Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	10

		Financial Statements of Vornado Realty L.P.:

		Consolidated Balance Sheets (Unaudited) as of March 31, ~~2018~~2019 and December 31, ~~2017~~2018	12

		Consolidated Statements of Income (Unaudited) for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	13

		Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	14

		Consolidated Statements of Changes in Equity (Unaudited) for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	15

		Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	17

		Vornado Realty Trust and Vornado Realty L.P.:

		Notes to Consolidated Financial Statements (Unaudited)	19

		Reports of Independent Registered Public Accounting Firm	4248

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4450

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7277

	Item 4.	Controls and Procedures	7378

PART II.		Other Information:

	Item 1.	Legal Proceedings	7479

	Item 1A.	Risk Factors	7479

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7479

	Item 3.	Defaults Upon Senior Securities	7479

	Item 4.	Mine Safety Disclosures	7479

	Item 5.	Other Information	7479

	Item 6.	Exhibits	7479

EXHIBIT INDEX			7580

SIGNATURES			7681

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VORNADO REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(Amounts in thousands, except unit, share, and per share amounts)	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
ASSETS
Real estate, at cost:
Land	$	3,170,158		$	3,143,648		$	2,608,770		$	3,306,280
Buildings and improvements	9,946,225			9,898,605			7,821,301			10,110,992
Development costs and construction in progress	1,705,244			1,615,101			1,961,512			2,266,491
Moynihan Train Hall development expenditures							550,996			445,693
Leasehold improvements and equipment	104,710			98,941			115,756			108,427
Total	14,926,337			14,756,295			13,058,335			16,237,883
Less accumulated depreciation and amortization	(2,962,983		)	(2,885,283		)	(2,845,120		)	(3,180,175		)
Real estate, net	11,963,354			11,871,012			10,213,215			13,057,708
Assets held for sale							3,027,058			—
Right-of-use assets							457,662			—
Cash and cash equivalents	1,327,384			1,817,655			307,047			570,916
Restricted cash	90,684			97,157			593,759			145,989
Marketable securities	149,766			182,752			39,866			152,198
Tenant and other receivables, net of allowance for doubtful accounts of $5,171 and $5,526	64,387			58,700
Tenant and other receivables, net of allowance for doubtful accounts of $4,154 as of December 31, 2018							73,404			73,322
Investments in partially owned entities	1,033,228			1,056,829			730,264			858,113
Real estate fund investments	336,552			354,804			322,858			318,758
Receivable arising from the straight-lining of rents, net of allowance of $739 and $954	934,535			926,711
Deferred leasing costs, net of accumulated amortization of $194,078 and $191,827	405,209			403,492
Identified intangible assets, net of accumulated amortization of $157,062 and $150,837	152,834			159,260
Assets related to discontinued operations	275			1,357
220 Central Park South condominium units ready for sale							229,567			99,627
Receivable arising from the straight-lining of rents, net of allowance of $1,644 as of December 31, 2018							766,634			935,131
Deferred leasing costs, net of accumulated amortization of $180,953 and $207,529							345,241			400,313
Identified intangible assets, net of accumulated amortization of $97,749 and $172,114							34,161			136,781
Other assets	406,275			468,205			497,219			431,938
	$	16,864,483		$	17,397,934		$	17,637,955		$	17,180,794
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgages payable, net	$	8,102,238		$	8,137,139		$	6,519,189		$	8,167,798
Senior unsecured notes, net	843,125			843,614			845,261			844,002
Unsecured term loan, net	749,114			748,734			745,076			744,821
Unsecured revolving credit facilities	80,000			—			530,000			80,000
Liabilities related to assets held for sale							1,097,350			—
Lease liabilities							484,173			—
Moynihan Train Hall obligation							550,996			445,693
Accounts payable and accrued expenses	431,094			415,794			442,496			430,976
Deferred revenue	200,648			227,069			71,328			167,730
Deferred compensation plan	109,525			109,177			101,922			96,523
Liabilities related to discontinued operations	1,176			3,620
Preferred shares redeemed on January 4 and 11, 2018	—			455,514
Other liabilities	465,659			464,635			292,187			311,806
Total liabilities	10,982,579			11,405,296			11,679,978			11,289,349
Commitments and contingencies
Redeemable noncontrolling interests:
Class A units - 12,653,821 and 12,528,899 units outstanding	851,598			979,509
Series D cumulative redeemable preferred units - 177,101 units outstanding	5,428			5,428
Class A units - 12,789,891 and 12,544,477 units outstanding							862,550			778,134
Series D cumulative redeemable preferred units - 141,401 and 177,101 units outstanding							4,535			5,428
Total redeemable noncontrolling interests	857,026			984,937			867,085			783,562
Vornado's shareholders' equity:
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 36,799,573 shares	891,325			891,988
Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 190,169,168 and 189,983,858 shares	7,584			7,577
Shareholders' equity:
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 36,797,580 and 36,798,580 shares							891,263			891,294
Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 190,761,498 and 190,535,499 shares							7,609			7,600
Additional capital	7,629,013			7,492,658			7,676,770			7,725,857
Earnings less than distributions	(4,198,088		)	(4,183,253		)	(4,120,265		)	(4,167,184		)
Accumulated other comprehensive income	30,258			128,682
Total Vornado shareholders' equity	4,360,092			4,337,652
Accumulated other comprehensive (loss) income							(11,385		)	7,664
Total shareholders' equity							4,443,992			4,465,231
Noncontrolling interests in consolidated subsidiaries	664,786			670,049			646,900			642,652
Total equity	5,024,878			5,007,701			5,090,892			5,107,883
	$	16,864,483		$	17,397,934		$	17,637,955		$	17,180,794

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


(Amounts in thousands, except per share amounts)	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2018			2017			2019			2018
REVENUES:
Property rentals	$	440,110		$	414,892
Tenant expense reimbursements	60,310			59,033
Rental revenues							$	499,877		$	500,420
Fee and other income	36,017			34,133			34,791			36,017
Total revenues	536,437			508,058			534,668			536,437
EXPENSES:
Operating	237,602			220,659			(246,895		)	(237,602		)
Depreciation and amortization	108,686			105,128			(116,709		)	(108,686		)
General and administrative	43,633			47,237			(58,020		)	(42,533		)
(Income) expense from deferred compensation plan liability	(404		)	2,469
(Expense) benefit from deferred compensation plan liability							(5,433		)	404
Transaction related costs and other	13,156			752			(149		)	(13,156		)
Total expenses	402,673			376,245			(427,206		)	(401,573		)
Operating income	133,764			131,813
(Loss) income from partially owned entities	(9,904		)	1,358
(Loss) income from real estate fund investments	(8,807		)	268
Interest and other investment (loss) income, net	(24,384		)	6,695
(Loss) income from deferred compensation plan assets	(404		)	2,469

Income (loss) from partially owned entities							7,320			(9,904		)
Loss from real estate fund investments							(167		)	(8,807		)
Interest and other investment income (loss), net							5,045			(24,384		)
Income (loss) from deferred compensation plan assets							5,433			(404		)
Interest and debt expense	(88,166		)	(82,724		)	(102,463		)	(88,166		)
Net gains on disposition of wholly owned and partially owned assets	—			501			220,294			—
Income before income taxes	2,099			60,380			242,924			3,199
Income tax expense	(1,454		)	(1,851		)	(29,743		)	(2,554		)
Income from continuing operations	645			58,529			213,181			645
(Loss) income from discontinued operations	(363		)	15,318
Loss from discontinued operations							(137		)	(363		)
Net income	282			73,847			213,044			282
Less net loss (income) attributable to noncontrolling interests in:
Less net (income) loss attributable to noncontrolling interests in:
Consolidated subsidiaries	8,274			(6,737		)	(6,820		)	8,274
Operating Partnership	1,124			(3,229		)	(12,202		)	1,124
Net income attributable to Vornado	9,680			63,881			194,022			9,680
Preferred share dividends	(13,035		)	(16,129		)	(12,534		)	(13,035		)
Preferred share issuance costs	(14,486		)	—			—			(14,486		)
NET (LOSS) INCOME attributable to common shareholders	$	(17,841	)	$	47,752
NET INCOME (LOSS) attributable to common shareholders							$	181,488		$	(17,841	)

(LOSS) INCOME PER COMMON SHARE – BASIC:
(Loss) income from continuing operations, net	$	(0.09	)	$	0.18
Income from discontinued operations, net	—			0.07
Net (loss) income per common share	$	(0.09	)	$	0.25
INCOME (LOSS) PER COMMON SHARE – BASIC:
Net income (loss) per common share							$	0.95		$	(0.09	)
Weighted average shares outstanding	190,081			189,210			190,689			190,081

(LOSS) INCOME PER COMMON SHARE – DILUTED:
(Loss) income from continuing operations, net	$	(0.09	)	$	0.18
Income from discontinued operations, net	—			0.07
Net (loss) income per common share	$	(0.09	)	$	0.25
INCOME (LOSS) PER COMMON SHARE – DILUTED:
Net income (loss) per common share							$	0.95		$	(0.09	)
Weighted average shares outstanding	190,081			190,372			190,996			190,081

DIVIDENDS PER COMMON SHARE	$	0.63		$	0.71

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(Amounts in thousands) For the Three Months Ended March 31,
2018 2017
Net income $ 282
$ 73,847
Other comprehensive income (loss):
Increase in value of interest rate swaps 10,258
5,842
Pro rata share of other comprehensive income (loss) of nonconsolidated subsidiaries 346
(51 )
Reduction in unrealized net gain on available-for-sale securities —
(15,009 )
Pro rata share of amounts reclassified from accumulated other comprehensive income
of a nonconsolidated subsidiary
—
9,268
Comprehensive income 10,886
73,897
Less comprehensive loss (income) attributable to noncontrolling interests 8,744
(9,969 )
Comprehensive income attributable to Vornado $ 19,630
$ 63,928



(Amounts in thousands)	For the Three Months Ended March 31,
	2019			2018
Net income	$	213,044		$	282
Other comprehensive (loss) income:
(Reduction) increase in value of interest rate swaps	(17,029		)	10,258
Amount reclassified from accumulated other comprehensive loss relating to a nonconsolidated subsidiary	(2,311		)	—
Other comprehensive (loss) income of nonconsolidated subsidiaries	(985		)	346
Comprehensive income	192,719			10,886
Less comprehensive (income) loss attributable to noncontrolling interests	(17,746		)	8,744
Comprehensive income attributable to Vornado	$	174,973		$	19,630

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)


(Amounts in thousands)																										Preferred Shares					Common Shares					Additional Capital				Earnings Less Than Distributions				Accumulated Other Comprehensive (Loss) Income				Non-controlling Interests in Consolidated Subsidiaries				Total Equity
	Preferred Shares				Common Shares			Additional Capital			Earnings Less Than Distributions				Accumulated Other Comprehensive Income				Non-controlling Interests in Consolidated Subsidiaries				Total Equity			Shares		Amount			Shares			Amount						Earnings Less Than Distributions				Accumulated Other Comprehensive (Loss) Income				Non-controlling Interests in Consolidated Subsidiaries				Total Equity
	Shares	Amount			Shares	Amount					Earnings Less Than Distributions
Balance, December 31, 2017	36,800	$	891,988		189,984	$	7,577	Additional Capital		$	7,492,658			$	Accumulated Other Comprehensive Income			(4,183,253	Non-controlling Interests in Consolidated Subsidiaries			)	Total Equity			$	128,682		$	670,049		$	5,007,701
Cumulative effect of accounting change (see Note 3)	—	—			—	—		—			122,893				(108,374		)		—				14,519
Balance, December 31, 2018																										36,800		$	891,294		190,535			$	7,600	Additional Capital			$	7,725,857			$	(4,167,184	)		$	7,664			$	642,652			$	5,107,883
Net income attributable to Vornado	—	—			—	—		—			9,680				—				—				9,680			—		—			—			—		—				194,022				—				—				194,022
Net loss attributable to noncontrolling interests in consolidated subsidiaries	—	—			—	—		—			—				—				(8,274		)		(8,274		)
Net income attributable to noncontrolling interests in consolidated subsidiaries																										—		—			—			—		—				—				—				6,820				6,820
Dividends on common shares	—	—			—	—		—			(119,764		)		—				—				(119,764		)	—		—			—			—		—				(125,876		)		—				—				(125,876		)
Dividends on preferred shares	—	—			—	—		—			(13,035		)		—				—				(13,035		)	—		—			—			—		—				(12,534		)		—				—				(12,534		)
Preferred share issuance costs	—	—			—	—		—			(14,486		)		—				—				(14,486		)
Common shares issued:
Upon redemption of Class A units, at redemption value	—	—			118	5		8,387			—				—				—				8,392			—		—			48			2		3,179				—				—				—				3,181
Under employees' share option plan	—	—			55	2		3,432			—				—				—				3,434			—		—			162			7		1,164				(8,692		)		—				—				(7,521		)
Under dividend reinvestment plan	—	—			5	—		335			—				—				—				335			—		—			5			—		340				—				—				—				340
Contributions	—	—			—	—		—			—				—				8,370				8,370
Contributions:
Real estate fund investments																										—		—			—			—		—				—				—				3,384				3,384
Other																										—		—			—			—		—				—				—				1,810				1,810
Distributions:
Real estate fund investments	—	—			—	—		—			—				—				(1,910		)		(1,910		)	—		—			—			—		—				—				—				—				—
Other	—	—			—	—		—			—				—				(3,450		)		(3,450		)	—		—			—			—		—				—				—				(7,764		)		(7,764		)
Preferred share issuance	—	(663		)	—	—		—			—				—				—				(663		)
Conversion of Series A preferred shares to common shares																										(1	)	(31		)	2			—		31				—				—				—				—
Deferred compensation shares and options	—	—			7	—		298			(121		)		—				—				177			—		—			9			—		297				—				—				—				297
Pro rata share of other comprehensive income of nonconsolidated subsidiaries	—	—			—	—		—			—				346				—				346
Increase in value of interest rate swaps	—	—			—	—		—			—				10,258				—				10,258
Unearned 2015 Out-Performance Plan awards acceleration	—	—			—	—		9,046			—				—				—				9,046
Amount reclassified related to a nonconsolidated subsidiary																										—		—			—			—		—				—				(2,311		)		—				(2,311		)
Other comprehensive loss of nonconsolidated subsidiaries																										—		—			—			—		—				—				(985		)		—				(985		)
Reduction in value of interest rate swaps																										—		—			—			—		—				—				(17,029		)		—				(17,029		)
Unearned 2016 Out-Performance Plan awards acceleration																										—		—			—			—		11,720				—				—				—				11,720
Adjustments to carry redeemable Class A units at redemption value	—	—			—	—		114,856			—				—				—				114,856			—		—			—			—		(65,818		)		—				—				—				(65,818		)
Redeemable noncontrolling interests' share of above adjustments	—	—			—	—		—			—				(654		)		—				(654		)	—		—			—			—		—				—				1,276				—				1,276
Other	—	—			—	—		1			(2		)		—				1				—			(1	)	—			—			—		—				(1		)		—				(2		)		(3		)
Balance, March 31, 2018	36,800	$	891,325		190,169	$	7,584	$	7,629,013		$	(4,198,088	)		$	30,258			$	664,786			$	5,024,878
Balance, March 31, 2019																										36,798		$	891,263		190,761			$	7,609	$	7,676,770			$	(4,120,265	)		$	(11,385	)		$	646,900			$	5,090,892

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED

(UNAUDITED)


(Amounts in thousands)								Additional Capital			Earnings Less Than Distributions				Accumulated Other Comprehensive Income				Non- controlling Interests in Consolidated Subsidiaries				Total Equity				Preferred Shares						Common Shares						Additional Capital			Earnings Less Than Distributions				Accumulated Other Comprehensive Income				Non- controlling Interests in Consolidated Subsidiaries				Total Equity
	Preferred Shares				Common Shares													Shares								Amount			Shares			Amount							Additional Capital			Earnings Less Than Distributions				Accumulated Other Comprehensive Income				Non- controlling Interests in Consolidated Subsidiaries				Total Equity
	Shares	Amount			Shares	Amount
Balance, December 31, 2016	42,825	$	1,038,055		189,101	$	7,542			$	7,153,332			$				(1,419,382				)					$	118,972		$	719,977			$	7,618,496
Balance, December 31, 2017																											36,800		$	891,988			189,984			$	7,577		$	7,492,658		$	(4,183,253	)		$	128,682			$	670,049			$	5,007,701
Cumulative effect of accounting change																											—		—				—			—			—			122,893				(108,374		)		—				14,519
Net income attributable to Vornado	—	—			—	—				—				63,881				—				—				63,881			—			—				—		—			—				9,680				—				—				9,680
Net income attributable to noncontrolling interests in consolidated subsidiaries	—	—			—	—		—			—				—					6,737				6,737
Net loss attributable to noncontrolling interests in consolidated subsidiaries																											—		—				—			—			—			—				—				(8,274		)		(8,274		)
Dividends on common shares	—	—			—	—		—			(134,332		)		—				—				(134,332		)		—		—				—			—			—			(119,764		)		—				—				(119,764		)
Dividends on preferred shares	—	—			—	—		—			(16,129		)		—				—				(16,129		)		—		—				—			—			—			(13,035		)		—				—				(13,035		)
Preferred share issuance costs																											—		—				—			—			—			(14,486		)		—				—				(14,486		)
Common shares issued:
Upon redemption of Class A units, at redemption value	—	—			140	6		14,733			—				—				—				14,739				—		—				118			5			8,387			—				—				—				8,392
Under employees' share option plan	—	—			96	3		8,094			—				—				—				8,097				—		—				55			2			3,432			—				—				—				3,434
Under dividend reinvestment plan	—	—			3	—		387			—				—				—				387				—		—				5			—			335			—				—				—				335
Contributions	—	—			—	—		—			—				—				75				75				—		—				—			—			—			—				—				8,370				8,370
Distributions:
Real estate fund investments	—	—			—	—		—			—				—				(4,528		)		(4,528		)		—		—				—			—			—			—				—				(1,910		)		(1,910		)
Other	—	—			—	—		—			—				—				(590		)		(590		)		—		—				—			—			—			—				—				(3,450		)		(3,450		)
Conversion of Series A preferred shares to common shares	—	(6		)	—	—		6			—				—				—				—
Preferred share issuance																											—		(663		)		—			—			—			—				—				—				(663		)
Deferred compensation shares and options	—	—			3	—		575			(264		)		—				—				311				—		—				7			—			298			(121		)		—				—				177
Reduction in unrealized net gain on available-for-sale securities	—	—			—	—		—			—				(15,009		)		—				(15,009		)
Pro rata share of amounts reclassified related to a nonconsolidated subsidiary	—	—			—	—		—			—				9,268				—				9,268
Pro rata share of other comprehensive loss of nonconsolidated subsidiaries	—	—			—	—		—			—				(51		)		—				(51		)
Other comprehensive income of nonconsolidated subsidiaries																											—		—				—			—			—			—				346				—				346
Increase in value of interest rate swaps	—	—			—	—		—			—				5,842				—				5,842				—		—				—			—			—			—				10,258				—				10,258
Unearned 2015 Out-Performance Plan awards acceleration																											—		—				—			—			9,046			—				—				—				9,046
Adjustments to carry redeemable Class A units at redemption value	—	—			—	—		6,197			—				—				—				6,197				—		—				—			—			114,856			—				—				—				114,856
Redeemable noncontrolling interests' share of above adjustments	—	—			—	—		—			—				(3		)		—				(3		)		—		—				—			—			—			—				(654		)		—				(654		)
Other	—	—			—	—		—			(10		)		—				(51		)		(61		)		—		—				—			—			1			(2		)		—				1				—
Balance, March 31, 2017	42,825	$	1,038,049		189,343	$	7,551	$	7,183,324		$	(1,506,236	)		$	119,019			$	721,620			$	7,563,327
Balance, March 31, 2018																											36,800		$	891,325			190,169			$	7,584		$	7,629,013		$	(4,198,088	)		$	30,258			$	664,786			$	5,024,878

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


(Amounts in thousands)	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2018			2017			2019			2018
Cash Flows from Operating Activities:
Net income	$	282		$	73,847		$	213,044		$	282
Adjustments to reconcile net income to net cash provided by operating activities:
Net gains on disposition of wholly owned and partially owned assets							(220,294		)	—
Depreciation and amortization (including amortization of deferred financing costs)	115,337			145,886			123,135			115,337
Decrease in fair value of marketable securities	32,986			—
Stock-based compensation expense							31,654			13,669
Distributions of income from partially owned entities	20,559			18,226			14,316			20,559
Equity in net (income) loss of partially owned entities							(7,320		)	9,904
Amortization of below-market leases, net							(6,525		)	(10,581		)
Straight-lining of rents							1,140			(7,430		)
(Increase) decrease in fair value of marketable securities							(461		)	32,986
Net realized and unrealized (gain) loss on real estate fund investments							(100		)	911
Return of capital from real estate fund investments	14,966			—			—			14,966
Amortization of below-market leases, net	(10,581		)	(11,459		)
Equity in net loss (income) of partially owned entities	9,904			(1,445		)
Straight-lining of rents	(7,430		)	(15,522		)
Net realized and unrealized losses on real estate fund investments	911			6,946
Net gains on sale of real estate and other	—			(2,267		)
Net gains on disposition of wholly owned and partially owned assets	—			(501		)
Other non-cash adjustments	14,736			17,535			1,639			1,067
Changes in operating assets and liabilities:
Real estate fund investments	(2,950		)	—			(4,000		)	(2,950		)
Tenant and other receivables, net	(5,702		)	2,027			(835		)	(5,702		)
Prepaid assets	77,053			72,051			(82,862		)	77,053
Other assets	(15,151		)	(11,452		)	(6,044		)	(15,151		)
Accounts payable and accrued expenses	19,835			(670		)	10,426			19,835
Other liabilities	663			8,083			(2,795		)	663
Net cash provided by operating activities	265,418			301,285			64,118			265,418

Cash Flows from Investing Activities:
Proceeds from sale of condominium units at 220 Central Park South							425,484			—
Proceeds from sales of marketable securities							167,755			—
Development costs and construction in progress	(86,808		)	(98,227		)	(143,302		)	(86,808		)
Moynihan Train Hall expenditures							(123,533		)	—
Proceeds from sale of real estate and related investment							108,512			—
Additions to real estate	(54,284		)	(67,363		)	(55,759		)	(54,284		)
Distributions of capital from partially owned entities							24,851			2,086
Investments in partially owned entities							(918		)	(7,519		)
Proceeds from repayments of loans receivable							204			—
Acquisitions of real estate and other	(44,095		)	(1,171		)	—			(44,095		)
Investments in partially owned entities	(7,519		)	(6,679		)
Distributions of capital from partially owned entities	2,086			11,592
Proceeds from sales of real estate and related investments	—			5,180
Proceeds from repayments of mortgage loans receivable	—			14
Net cash used in investing activities	(190,620		)	(156,654		)
Net cash provided by (used in) investing activities							403,294			(190,620		)

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(UNAUDITED)


(Amounts in thousands)	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2018			2017			2019			2018
Cash Flows from Financing Activities:
Redemption of preferred shares	$	(470,000	)	$	—
Repayments of borrowings							$	(686,555	)	$	(144,822	)
Proceeds from borrowings	185,701			2,529			456,741			185,701
Repayments of borrowings	(144,822		)	(6,987		)
Dividends paid on common shares	(119,764		)	(134,332		)	(125,876		)	(119,764		)
Moynihan Train Hall reimbursement from Empire State Development							123,533			—
Distributions to noncontrolling interests							(16,252		)	(13,266		)
Dividends paid on preferred shares	(16,628		)	(16,129		)	(12,534		)	(16,628		)
Distributions to noncontrolling interests	(13,266		)	(14,281		)
Debt issuance costs							(10,860		)	(3,300		)
Repurchase of shares related to stock compensation agreements and related tax withholdings and other							(8,692		)	(784		)
Contributions from noncontrolling interests	8,370			75			5,194			8,370
Proceeds received from exercise of employee share options and other	3,769			8,484			1,511			3,769
Debt issuance costs	(3,300		)	(43		)
Redemption of preferred shares							(893		)	(470,000		)
Debt prepayment and extinguishment costs	(818		)	—			—			(818		)
Repurchase of shares related to stock compensation agreements and related tax withholdings and other	(784		)	(264		)
Net cash used in financing activities	(571,542		)	(160,948		)	(274,683		)	(571,542		)
Net decrease in cash and cash equivalents and restricted cash	(496,744		)	(16,317		)
Net increase (decrease) in cash and cash equivalents and restricted cash							192,729			(496,744		)
Cash and cash equivalents and restricted cash at beginning of period	1,914,812			1,599,322			716,905			1,914,812
Cash and cash equivalents and restricted cash at end of period	$	1,418,068		$	1,583,005		$	909,634		$	1,418,068

Reconciliation of Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period	$	1,817,655		$	1,501,027		$	570,916		$	1,817,655
Restricted cash at beginning of period	97,157			95,032			145,989			97,157
Restricted cash included in discontinued operations at beginning of period	—			3,263
Cash and cash equivalents and restricted cash at beginning of period	$	1,914,812		$	1,599,322		$	716,905		$	1,914,812

Cash and cash equivalents at end of period	$	1,327,384		$	1,484,814		$	307,047		$	1,327,384
Restricted cash at end of period	90,684			93,463			593,759			90,684
Restricted cash included in discontinued operations at end of period	—			4,728
Restricted cash included in "assets held for sale" at end of period							8,828			—
Cash and cash equivalents and restricted cash at end of period	$	1,418,068		$	1,583,005		$	909,634		$	1,418,068

Supplemental Disclosure of Cash Flow Information:
Cash payments for interest, excluding capitalized interest of $13,272 and $9,364	$	84,566		$	88,078
Cash payments for interest, excluding capitalized interest of $21,371 and $13,272							$	85,796		$	84,566
Cash payments for income taxes	$	1,646		$	1,512		$	8,741		$	1,646

Non-Cash Investing and Financing Activities:
Reclassification of assets and related liabilities held for sale:
Assets held for sale							$	3,027,058		$	—
Liabilities related to assets held for sale							1,097,350			—
Lease liabilities arising from the recognition of right-of-use assets							526,866			—
Reclassification of condominium units from "development costs and construction in progress" to "220 Central Park South condominium units ready for sale"							395,893			—
Accrued capital expenditures included in accounts payable and accrued expenses							77,115			51,431
Adjustments to carry redeemable Class A units at redemption value	$	114,856		$	6,197		(65,818		)	114,856
Accrued capital expenditures included in accounts payable and accrued expenses	51,431			57,993
Write-off of fully depreciated assets	(15,707		)	(15,809		)	(58,309		)	(15,707		)
Reduction in unrealized net gain on available-for-sale securities	—			(15,009		)
Amounts related to our investment in Pennsylvania Real Estate Investment Trust reclassified from "investments in partially owned entities" and "accumulated other comprehensive income" to "marketable securities" upon conversion of operating partnership units to common shares							54,962			—

See notes to consolidated financial statements (unaudited).

VORNADO REALTY L.P.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(Amounts in thousands, except unit amounts)	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
ASSETS
Real estate, at cost:
Land	$	3,170,158		$	3,143,648		$	2,608,770		$	3,306,280
Buildings and improvements	9,946,225			9,898,605			7,821,301			10,110,992
Development costs and construction in progress	1,705,244			1,615,101			1,961,512			2,266,491
Moynihan Train Hall development expenditures							550,996			445,693
Leasehold improvements and equipment	104,710			98,941			115,756			108,427
Total	14,926,337			14,756,295			13,058,335			16,237,883
Less accumulated depreciation and amortization	(2,962,983		)	(2,885,283		)	(2,845,120		)	(3,180,175		)
Real estate, net	11,963,354			11,871,012			10,213,215			13,057,708
Assets held for sale							3,027,058			—
Right-of-use assets							457,662			—
Cash and cash equivalents	1,327,384			1,817,655			307,047			570,916
Restricted cash	90,684			97,157			593,759			145,989
Marketable securities	149,766			182,752			39,866			152,198
Tenant and other receivables, net of allowance for doubtful accounts of $5,171 and $5,526	64,387			58,700
Tenant and other receivables, net of allowance for doubtful accounts of $4,154 as of December 31, 2018							73,404			73,322
Investments in partially owned entities	1,033,228			1,056,829			730,264			858,113
Real estate fund investments	336,552			354,804			322,858			318,758
Receivable arising from the straight-lining of rents, net of allowance of $739 and $954	934,535			926,711
Deferred leasing costs, net of accumulated amortization of $194,078 and $191,827	405,209			403,492
Identified intangible assets, net of accumulated amortization of $157,062 and $150,837	152,834			159,260
Assets related to discontinued operations	275			1,357
220 Central Park South condominium units ready for sale							229,567			99,627
Receivable arising from the straight-lining of rents, net of allowance of $1,644 as of December 31, 2018							766,634			935,131
Deferred leasing costs, net of accumulated amortization of $180,953 and $207,529							345,241			400,313
Identified intangible assets, net of accumulated amortization of $97,749 and $172,114							34,161			136,781
Other assets	406,275			468,205			497,219			431,938
	$	16,864,483		$	17,397,934		$	17,637,955		$	17,180,794
LIABILITIES, REDEEMABLE PARTNERSHIP UNITS AND EQUITY
Mortgages payable, net	$	8,102,238		$	8,137,139		$	6,519,189		$	8,167,798
Senior unsecured notes, net	843,125			843,614			845,261			844,002
Unsecured term loan, net	749,114			748,734			745,076			744,821
Unsecured revolving credit facilities	80,000			—			530,000			80,000
Liabilities related to assets held for sale							1,097,350			—
Lease liabilities							484,173			—
Moynihan Train Hall obligation							550,996			445,693
Accounts payable and accrued expenses	431,094			415,794			442,496			430,976
Deferred revenue	200,648			227,069			71,328			167,730
Deferred compensation plan	109,525			109,177			101,922			96,523
Liabilities related to discontinued operations	1,176			3,620
Preferred units redeemed on January 4 and 11, 2018	—			455,514
Other liabilities	465,659			464,635			292,187			311,806
Total liabilities	10,982,579			11,405,296			11,679,978			11,289,349
Commitments and contingencies
Redeemable partnership units:
Class A units - 12,653,821 and 12,528,899 units outstanding	851,598			979,509
Series D cumulative redeemable preferred units - 177,101 units outstanding	5,428			5,428
Class A units - 12,789,891 and 12,544,477 units outstanding							862,550			778,134
Series D cumulative redeemable preferred units - 141,401 and 177,101 units outstanding							4,535			5,428
Total redeemable partnership units	857,026			984,937			867,085			783,562
Equity:
Partners' equity:
Partners' capital	8,527,922			8,392,223			8,575,642			8,624,751
Earnings less than distributions	(4,198,088		)	(4,183,253		)	(4,120,265		)	(4,167,184		)
Accumulated other comprehensive income	30,258			128,682
Total Vornado Realty L.P. equity	4,360,092			4,337,652
Accumulated other comprehensive (loss) income							(11,385		)	7,664
Total partners' equity							4,443,992			4,465,231
Noncontrolling interests in consolidated subsidiaries	664,786			670,049			646,900			642,652
Total equity	5,024,878			5,007,701			5,090,892			5,107,883
	$	16,864,483		$	17,397,934		$	17,637,955		$	17,180,794

See notes to consolidated financial statements (unaudited).

VORNADO REALTY L.P.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


(Amounts in thousands, except per unit amounts)	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2018			2017			2019			2018
REVENUES:
Property rentals	$	440,110		$	414,892
Tenant expense reimbursements	60,310			59,033
Rental revenues							$	499,877		$	500,420
Fee and other income	36,017			34,133			34,791			36,017
Total revenues	536,437			508,058			534,668			536,437
EXPENSES:
Operating	237,602			220,659			(246,895		)	(237,602		)
Depreciation and amortization	108,686			105,128			(116,709		)	(108,686		)
General and administrative	43,633			47,237			(58,020		)	(42,533		)
(Income) expense from deferred compensation plan liability	(404		)	2,469
(Expense) benefit from deferred compensation plan liability							(5,433		)	404
Transaction related costs and other	13,156			752			(149		)	(13,156		)
Total expenses	402,673			376,245			(427,206		)	(401,573		)
Operating income	133,764			131,813
(Loss) income from partially owned entities	(9,904		)	1,358
(Loss) income from real estate fund investments	(8,807		)	268
Interest and other investment (loss) income, net	(24,384		)	6,695
(Loss) income from deferred compensation plan assets	(404		)	2,469

Income (loss) from partially owned entities							7,320			(9,904		)
Loss from real estate fund investments							(167		)	(8,807		)
Interest and other investment income (loss), net							5,045			(24,384		)
Income (loss) from deferred compensation plan assets							5,433			(404		)
Interest and debt expense	(88,166		)	(82,724		)	(102,463		)	(88,166		)
Net gains on disposition of wholly owned and partially owned assets	—			501			220,294			—
Income before income taxes	2,099			60,380			242,924			3,199
Income tax expense	(1,454		)	(1,851		)	(29,743		)	(2,554		)
Income from continuing operations	645			58,529			213,181			645
(Loss) income from discontinued operations	(363		)	15,318
Loss from discontinued operations							(137		)	(363		)
Net income	282			73,847			213,044			282
Less net loss (income) attributable to noncontrolling interests in consolidated subsidiaries	8,274			(6,737		)
Less net (income) loss attributable to noncontrolling interests in consolidated subsidiaries							(6,820		)	8,274
Net income attributable to Vornado Realty L.P.	8,556			67,110			206,224			8,556
Preferred unit distributions	(13,084		)	(16,178		)	(12,575		)	(13,084		)
Preferred unit issuance costs	(14,486		)	—			—			(14,486		)
NET (LOSS) INCOME attributable to Class A unitholders	$	(19,014	)	$	50,932
NET INCOME (LOSS) attributable to Class A unitholders							$	193,649		$	(19,014	)

(LOSS) INCOME PER CLASS A UNIT – BASIC:
(Loss) income from continuing operations, net	$	(0.10	)	$	0.17
Income from discontinued operations, net	—			0.08
Net (loss) income per Class A unit	$	(0.10	)	$	0.25
INCOME (LOSS) PER CLASS A UNIT – BASIC:
Net income (loss) per Class A unit							$	0.95		$	(0.10	)
Weighted average units outstanding	201,929			200,845			202,772			201,929

(LOSS) INCOME PER CLASS A UNIT – DILUTED:
(Loss) income from continuing operations, net	$	(0.10	)	$	0.17
Income from discontinued operations, net	—			0.08
Net (loss) income per Class A unit	$	(0.10	)	$	0.25
INCOME (LOSS) PER CLASS A UNIT – DILUTED:
Net income (loss) per Class A unit							$	0.95		$	(0.10	)
Weighted average units outstanding	201,929			202,647			203,344			201,929

DISTRIBUTIONS PER CLASS A UNIT	$	0.63		$	0.71

See notes to consolidated financial statements (unaudited).

VORNADO REALTY L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(Amounts in thousands) For the Three Months Ended March 31,
2018 2017
Net income $ 282
$ 73,847
Other comprehensive income (loss):
Increase in value of interest rate swaps 10,258
5,842
Pro rata share of other comprehensive income (loss) of nonconsolidated subsidiaries 346
(51 )
Reduction in unrealized net gain on available-for-sale securities —
(15,009 )
Pro rata share of amounts reclassified from accumulated other comprehensive income
of a nonconsolidated subsidiary
—
9,268
Comprehensive income 10,886
73,897
Less comprehensive loss (income) attributable to noncontrolling interests in consolidated subsidiaries 8,274
(6,737 )
Comprehensive income attributable to Vornado L.P. $ 19,160
$ 67,160



(Amounts in thousands)	For the Three Months Ended March 31,
	2019			2018
Net income	$	213,044		$	282
Other comprehensive (loss) income:
(Reduction) increase in value of interest rate swaps	(17,029		)	10,258
Amount reclassified from accumulated other comprehensive loss relating to a nonconsolidated subsidiary	(2,311		)	—
Other comprehensive (loss) income of nonconsolidated subsidiaries	(985		)	346
Comprehensive income	192,719			10,886
Less comprehensive (income) loss attributable to noncontrolling interests in consolidated subsidiaries	(6,820		)	8,274
Comprehensive income attributable to Vornado Realty L.P.	$	185,899		$	19,160

See notes to consolidated financial statements (unaudited).

VORNADO REALTY L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)


(Amounts in thousands)																							Preferred Units					Class A Units Owned by Vornado						Earnings Less Than Distributions				Accumulated Other Comprehensive (Loss) Income				Non- controlling Interests in Consolidated Subsidiaries				Total Equity
	Preferred Units				Class A Units Owned by Vornado			Earnings Less Than Distributions				Accumulated Other Comprehensive Income				Non- controlling Interests in Consolidated Subsidiaries				Total Equity			Units		Amount			Units			Amount							Accumulated Other Comprehensive (Loss) Income				Non- controlling Interests in Consolidated Subsidiaries				Total Equity
	Units	Amount			Units	Amount
Balance, December 31, 2017	36,800	$	891,988		189,984	$	7,500,235	Earnings Less Than Distributions			$	Accumulated Other Comprehensive Income			(4,183,253	Non- controlling Interests in Consolidated Subsidiaries			)	Total Equity			$	128,682		$	670,049		$	5,007,701
Cumulative effect of accounting change (see Note 3)	—	—			—	—		122,893				(108,374		)		—				14,519
Balance, December 31, 2018																							36,800		$	891,294		190,535			$	7,733,457		Earnings Less Than Distributions			$	(4,167,184	)		$	7,664			$	642,652			$	5,107,883
Net income attributable to Vornado Realty L.P.	—	—			—	—		8,556				—				—				8,556			—		—			—			—			206,224				—				—				206,224
Net income attributable to redeemable partnership units	—	—			—	—		1,124				—				—				1,124			—		—			—			—			(12,202		)		—				—				(12,202		)
Net loss attributable to noncontrolling interests in consolidated subsidiaries	—	—			—	—		—				—				(8,274		)		(8,274		)
Net income attributable to noncontrolling interests in consolidated subsidiaries																							—		—			—			—			—				—				6,820				6,820
Distributions to Vornado	—	—			—	—		(119,764		)		—				—				(119,764		)	—		—			—			—			(125,876		)		—				—				(125,876		)
Distributions to preferred unitholders	—	—			—	—		(13,035		)		—				—				(13,035		)	—		—			—			—			(12,534		)		—				—				(12,534		)
Preferred unit issuance costs	—	—			—	—		(14,486		)		—				—				(14,486		)
Class A Units issued to Vornado:
Upon redemption of redeemable Class A units, at redemption value	—	—			118	8,392		—				—				—				8,392			—		—			48			3,181			—				—				—				3,181
Under Vornado's employees' share option plan	—	—			55	3,434		—				—				—				3,434			—		—			162			1,171			(8,692		)		—				—				(7,521		)
Under Vornado's dividend reinvestment plan	—	—			5	335		—				—				—				335			—		—			5			340			—				—				—				340
Contributions	—	—			—	—		—				—				8,370				8,370
Distributions:
Contributions:
Real estate fund investments	—	—			—	—		—				—				(1,910		)		(1,910		)	—		—			—			—			—				—				3,384				3,384
Other	—	—			—	—		—				—				(3,450		)		(3,450		)	—		—			—			—			—				—				1,810				1,810
Preferred unit issuance	—	(663		)	—	—		—				—				—				(663		)
Distributions:
Other																							—		—			—			—			—				—				(7,764		)		(7,764		)
Conversion of Series A preferred units to Class A units																							(1	)	(31		)	2			31			—				—				—				—
Deferred compensation units and options	—	—			7	298		(121		)		—				—				177			—		—			9			297			—				—				—				297
Pro rata share of other comprehensive income of nonconsolidated subsidiaries	—	—			—	—		—				346				—				346
Increase in value of interest rate swaps	—	—			—	—		—				10,258				—				10,258
Unearned 2015 Out-Performance Plan awards acceleration	—	—			—	9,046		—				—				—				9,046
Amount reclassified related to a nonconsolidated subsidiary																							—		—			—			—			—				(2,311		)		—				(2,311		)
Other comprehensive loss of nonconsolidated subsidiaries																							—		—			—			—			—				(985		)		—				(985		)
Reduction in value of interest rate swaps																							—		—			—			—			—				(17,029		)		—				(17,029		)
Unearned 2016 Out-Performance Plan awards acceleration																							—		—			—			11,720			—				—				—				11,720
Adjustments to carry redeemable Class A units at redemption value	—	—			—	114,856		—				—				—				114,856			—		—			—			(65,818		)	—				—				—				(65,818		)
Redeemable partnership units' share of above adjustments	—	—			—	—		—				(654		)		—				(654		)	—		—			—			—			—				1,276				—				1,276
Other	—	—			—	1		(2		)		—				1				—			(1	)	—			—			—			(1		)		—				(2		)		(3		)
Balance, March 31, 2018	36,800	$	891,325		190,169	$	7,636,597	$	(4,198,088	)		$	30,258			$	664,786			$	5,024,878
Balance, March 31, 2019																							36,798		$	891,263		190,761			$	7,684,379		$	(4,120,265	)		$	(11,385	)		$	646,900			$	5,090,892

See notes to consolidated financial statements (unaudited).

VORNADO REALTY L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED

(UNAUDITED)


(Amounts in thousands)																							Preferred Units					Class A Units Owned by Vornado					Earnings Less Than Distributions				Accumulated Other Comprehensive Income				Non- controlling Interests in Consolidated Subsidiaries				Total Equity
	Preferred Units				Class A Units Owned by Vornado			Earnings Less Than Distributions				Accumulated Other Comprehensive Income				Non- controlling Interests in Consolidated Subsidiaries				Total Equity			Units		Amount			Units			Amount						Accumulated Other Comprehensive Income				Non- controlling Interests in Consolidated Subsidiaries				Total Equity
	Units	Amount			Units	Amount
Balance, December 31, 2016	42,825	$	1,038,055		189,101	$	7,160,874	Earnings Less Than Distributions			$	Accumulated Other Comprehensive Income			(1,419,382	Non- controlling Interests in Consolidated Subsidiaries			)	Total Equity			$	118,972		$	719,977		$	7,618,496
Balance, December 31, 2017																							36,800		$	891,988		189,984			$	7,500,235	Earnings Less Than Distributions			$	(4,183,253	)		$	128,682			$	670,049			5,007,701
Cumulative effect of accounting change																							—		—			—			—		122,893				(108,374		)		—				14,519
Net income attributable to Vornado Realty L.P.	—	—			—	—		67,110				—				—				67,110			—		—			—			—		8,556				—				—				8,556
Net income attributable to redeemable partnership units	—	—			—	—		(3,229		)		—				—				(3,229		)	—		—			—			—		1,124				—				—				1,124
Net income attributable to noncontrolling interests in consolidated subsidiaries	—	—			—	—		—				—				6,737				6,737
Net loss attributable to noncontrolling interests in consolidated subsidiaries																							—		—			—			—		—				—				(8,274		)		(8,274		)
Distributions to Vornado	—	—			—	—		(134,332		)		—				—				(134,332		)	—		—			—			—		(119,764		)		—				—				(119,764		)
Distributions to preferred unitholders	—	—			—	—		(16,129		)		—				—				(16,129		)	—		—			—			—		(13,035		)		—				—				(13,035		)
Preferred unit issuance costs																							—		—			—			—		(14,486		)		—				—				(14,486		)
Class A Units issued to Vornado:
Upon redemption of redeemable Class A units, at redemption value	—	—			140	14,739		—				—				—				14,739			—		—			118			8,392		—				—				—				8,392
Under Vornado's employees' share option plan	—	—			96	8,097		—				—				—				8,097			—		—			55			3,434		—				—				—				3,434
Under Vornado's dividend reinvestment plan	—	—			3	387		—				—				—				387			—		—			5			335		—				—				—				335
Contributions	—	—			—	—		—				—				75				75			—		—			—			—		—				—				8,370				8,370
Distributions:
Real estate fund investments	—	—			—	—		—				—				(4,528		)		(4,528		)	—		—			—			—		—				—				(1,910		)		(1,910		)
Other	—	—			—	—		—				—				(590		)		(590		)	—		—			—			—		—				—				(3,450		)		(3,450		)
Conversion of Series A preferred units to Class A units	—	(6		)	—	6		—				—				—				—
Preferred unit issuance																							—		(663		)	—			—		—				—				—				(663		)
Deferred compensation units and options	—	—			3	575		(264		)		—				—				311			—		—			7			298		(121		)		—				—				177
Reduction in unrealized net gain on available-for-sale securities	—	—			—	—		—				(15,009		)		—				(15,009		)
Pro rata share of amounts reclassified related to a nonconsolidated subsidiary	—	—			—	—		—				9,268				—				9,268
Pro rata share of other comprehensive loss of nonconsolidated subsidiaries	—	—			—	—		—				(51		)		—				(51		)
Other comprehensive income of nonconsolidated subsidiaries																							—		—			—			—		—				346				—				346
Increase in value of interest rate swaps	—	—			—	—		—				5,842				—				5,842			—		—			—			—		—				10,258				—				10,258
Unearned 2015 Out-Performance Plan awards acceleration																							—		—			—			9,046		—				—				—				9,046
Adjustments to carry redeemable Class A units at redemption value	—	—			—	6,197		—				—				—				6,197			—		—			—			114,856		—				—				—				114,856
Redeemable partnership units' share of above adjustments	—	—			—	—		—				(3		)		—				(3		)	—		—			—			—		—				(654		)		—				(654		)
Other	—	—			—	—		(10		)		—				(51		)		(61		)	—		—			—			1		(2		)		—				1				—
Balance, March 31, 2017	42,825	$	1,038,049		189,343	$	7,190,875	$	(1,506,236	)		$	119,019			$	721,620			$	7,563,327
Balance, March 31, 2018																							36,800		$	891,325		190,169			$	7,636,597	$	(4,198,088	)		$	30,258			$	664,786			$	5,024,878

See notes to consolidated financial statements (unaudited).

VORNADO REALTY L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


(Amounts in thousands)	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2018			2017			2019			2018
Cash Flows from Operating Activities:
Net income	$	282		$	73,847		$	213,044		$	282
Adjustments to reconcile net income to net cash provided by operating activities:
Net gains on disposition of wholly owned and partially owned assets							(220,294		)	—
Depreciation and amortization (including amortization of deferred financing costs)	115,337			145,886			123,135			115,337
Decrease in fair value of marketable securities	32,986			—
Stock-based compensation expense							31,654			13,669
Distributions of income from partially owned entities	20,559			18,226			14,316			20,559
Equity in net (income) loss of partially owned entities							(7,320		)	9,904
Amortization of below-market leases, net							(6,525		)	(10,581		)
Straight-lining of rents							1,140			(7,430		)
(Increase) decrease in fair value of marketable securities							(461		)	32,986
Net realized and unrealized (gain) loss on real estate fund investments							(100		)	911
Return of capital from real estate fund investments	14,966			—			—			14,966
Amortization of below-market leases, net	(10,581		)	(11,459		)
Equity in net loss (income) of partially owned entities	9,904			(1,445		)
Straight-lining of rents	(7,430		)	(15,522		)
Net realized and unrealized losses on real estate fund investments	911			6,946
Net gains on sale of real estate and other	—			(2,267		)
Net gains on disposition of wholly owned and partially owned assets	—			(501		)
Other non-cash adjustments	14,736			17,535			1,639			1,067
Changes in operating assets and liabilities:
Real estate fund investments	(2,950		)	—			(4,000		)	(2,950		)
Tenant and other receivables, net	(5,702		)	2,027			(835		)	(5,702		)
Prepaid assets	77,053			72,051			(82,862		)	77,053
Other assets	(15,151		)	(11,452		)	(6,044		)	(15,151		)
Accounts payable and accrued expenses	19,835			(670		)	10,426			19,835
Other liabilities	663			8,083			(2,795		)	663
Net cash provided by operating activities	265,418			301,285			64,118			265,418

Cash Flows from Investing Activities:
Proceeds from sale of condominium units at 220 Central Park South							425,484			—
Proceeds from sales of marketable securities							167,755			—
Development costs and construction in progress	(86,808		)	(98,227		)	(143,302		)	(86,808		)
Moynihan Train Hall expenditures							(123,533		)	—
Proceeds from sale of real estate and related investment							108,512			—
Additions to real estate	(54,284		)	(67,363		)	(55,759		)	(54,284		)
Distributions of capital from partially owned entities							24,851			2,086
Investments in partially owned entities							(918		)	(7,519		)
Proceeds from repayments of loans receivable							204			—
Acquisitions of real estate and other	(44,095		)	(1,171		)	—			(44,095		)
Investments in partially owned entities	(7,519		)	(6,679		)
Distributions of capital from partially owned entities	2,086			11,592
Proceeds from sales of real estate and related investments	—			5,180
Proceeds from repayments of mortgage loans receivable	—			14
Net cash used in investing activities	(190,620		)	(156,654		)
Net cash provided by (used in) investing activities							403,294			(190,620		)

See notes to consolidated financial statements (unaudited).

VORNADO REALTY L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(UNAUDITED)


(Amounts in thousands)	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2018			2017			2019			2018
Cash Flows from Financing Activities:
Redemption of preferred units	$	(470,000	)	$	—
Repayments of borrowings							$	(686,555	)	$	(144,822	)
Proceeds from borrowings	185,701			2,529			456,741			185,701
Repayments of borrowings	(144,822		)	(6,987		)
Distributions to Vornado	(119,764		)	(134,332		)	(125,876		)	(119,764		)
Moynihan Train Hall reimbursement from Empire State Development							123,533			—
Distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries							(16,252		)	(13,266		)
Distributions to preferred unitholders	(16,628		)	(16,129		)	(12,534		)	(16,628		)
Distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries	(13,266		)	(14,281		)
Debt issuance costs							(10,860		)	(3,300		)
Repurchase of Class A units related to stock compensation agreements and related tax withholdings and other							(8,692		)	(784		)
Contributions from noncontrolling interests in consolidated subsidiaries	8,370			75			5,194			8,370
Proceeds received from exercise of Vornado stock options and other	3,769			8,484			1,511			3,769
Debt issuance costs	(3,300		)	(43		)
Redemption of preferred units							(893		)	(470,000		)
Debt prepayment and extinguishment costs	(818		)	—			—			(818		)
Repurchase of Class A units related to stock compensation agreements and related tax withholdings and other	(784		)	(264		)
Net cash used in financing activities	(571,542		)	(160,948		)	(274,683		)	(571,542		)
Net decrease in cash and cash equivalents and restricted cash	(496,744		)	(16,317		)
Net increase (decrease) in cash and cash equivalents and restricted cash							192,729			(496,744		)
Cash and cash equivalents and restricted cash at beginning of period	1,914,812			1,599,322			716,905			1,914,812
Cash and cash equivalents and restricted cash at end of period	$	1,418,068		$	1,583,005		$	909,634		$	1,418,068

Reconciliation of Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period	$	1,817,655		$	1,501,027		$	570,916		$	1,817,655
Restricted cash at beginning of period	97,157			95,032			145,989			97,157
Restricted cash included in discontinued operations at beginning of period	—			3,263
Cash and cash equivalents and restricted cash at beginning of period	$	1,914,812		$	1,599,322		$	716,905		$	1,914,812

Cash and cash equivalents at end of period	$	1,327,384		$	1,484,814		$	307,047		$	1,327,384
Restricted cash at end of period	90,684			93,463			593,759			90,684
Restricted cash included in discontinued operations at end of period	—			4,728
Restricted cash included in "assets held for sale" at end of period							8,828			—
Cash and cash equivalents and restricted cash at end of period	$	1,418,068		$	1,583,005		$	909,634		$	1,418,068

Supplemental Disclosure of Cash Flow Information:
Cash payments for interest, excluding capitalized interest of $13,272 and $9,364	$	84,566		$	88,078
Cash payments for interest, excluding capitalized interest of $21,371 and $13,272							$	85,796		$	84,566
Cash payments for income taxes	$	1,646		$	1,512		$	8,741		$	1,646

Non-Cash Investing and Financing Activities:
Reclassification of assets and related liabilities held for sale:
Assets held for sale							$	3,027,058		$	—
Liabilities related to assets held for sale							1,097,350			—
Lease liabilities arising from the recognition of right-of-use assets							526,866			—
Reclassification of condominium units from "development costs and construction in progress" to "220 Central Park South condominium units ready for sale"							395,893			—
Accrued capital expenditures included in accounts payable and accrued expenses							77,115			51,431
Adjustments to carry redeemable Class A units at redemption value	$	114,856		$	6,197		(65,818		)	114,856
Accrued capital expenditures included in accounts payable and accrued expenses	51,431			57,993
Write-off of fully depreciated assets	(15,707		)	(15,809		)	(58,309		)	(15,707		)
Reduction in unrealized net gain on available-for-sale securities	—			(15,009		)
Amounts related to our investment in Pennsylvania Real Estate Investment Trust reclassified from "investments in partially owned entities" and "accumulated other comprehensive income" to "marketable securities" upon conversion of operating partnership units to common shares							54,962			—

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


1.	Organization

Vornado Realty Trust (“Vornado”) is a ~~fully integrated~~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”). Vornado is the sole general partner of, and owned approximately93.4% of the common limited partnership interest in the Operating Partnership as of March 31, ~~2018.~~2019. All references to the “Company,” “we,” ~~“us,”~~“us” and “our” mean, collectively, Vornado, the Operating Partnership and those entities/subsidiaries consolidated by Vornado.


2.	Basis of Presentation

The accompanying consolidated financial statements are unaudited and include the accounts of Vornado and the Operating Partnership and their consolidated subsidiaries. All inter-company amounts have been ~~eliminated. In our opinion,~~eliminated and all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, as filed with the SEC.

We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three months ended March 31, ~~2018~~2019 are not necessarily indicative of the operating results for the full year.

Certain prior year balances have been reclassified in order to conform to the current period presentation. For the three months ended March 31, ~~2017, $2,469,000~~2018, expense of ~~expense~~$1,100,000 related to ~~the mark-to-market of our deferred compensation plan liability~~New York City Unincorporated Business Tax was reclassified from "general and ~~administrative expenses"~~administrative" expenses to ~~"(income)~~"income tax expense" on our consolidated statements of income. In addition, for the three months ended March 31, 2018, "property rentals" and "tenant expense ~~from deferred compensation plan liability"~~reimbursements" of $440,110,000 and ~~$2,469,000~~$60,310,000, respectively, were grouped into "rental revenues" on our consolidated statements of income ~~related to the mark-to-market~~in accordance with Accounting Standards Codification ("ASC") Topic 205, Presentation of ~~our deferred compensation plan assets was reclassified from "interest and other investment (loss) income, net" to "(loss) income from deferred compensation plan assets."~~Financial Statements.


3.	Recently Issued Accounting Literature

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued an update (“ASU ~~2014-09”~~2016-02”) establishing ~~Accounting Standards Codification (“ASC”)~~ASC Topic ~~606,~~ ~~Revenue from Contracts with Customers~~ (“842, Leases ("ASC ~~606”~~842")~~. ASU 2014-09,~~, as amended by subsequent ASUs on the topic, 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. This standard, which is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, requires an entity to recognize revenue to depict the transfer of 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. We adopted this standard effective January 1, 2018 using the modified retrospective method applied to all existing contracts not yet completed as of January 1, 2018 and recorded a $14,519,000 cumulative-effect adjustment to beginning accumulated deficit. The adoption of ASC 606 did not have a material impact on our financial statements (see Note 4 - ~~Revenue Recognition~~).

~~VORNADO REALTY TRUST AND VORNADO REALTY L.P.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(UNAUDITED)~~


3.	~~Recently Issued Accounting Literature - continued~~

~~In January 2016, the FASB issued an update (“ASU 2016-01”)~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~ ~~to ASCTopic 825, Financial Instruments~~. ASU 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We adopted this update effective January 1, 2018 using the modified retrospective approach. While the adoption of this update requires us to continue to measure "marketable securities" at fair value on each reporting date, the changes in fair value will be recognized in current period earnings as opposed to "other comprehensive income (loss)." As a result, on January 1, 2018 we recorded a decrease to beginning accumulated deficit of $111,225,000 to recognize the unrealized gains previously recorded in "accumulated other comprehensive income" on our consolidated balance sheets. Subsequent changes in the fair value of our marketable securities will be recorded to "interest and other investment (loss) income, net" on our consolidated income statements. For the three months ended March 31, 2018 we recorded a $32,986,000 decrease in the fair value of our marketable securities which is included in "interest and other investment (loss) income, net" on our consolidated statements of income.

~~In February 2016, the FASB issued an update ("ASU 2016-02") establishing ASC Topic 842,~~ ~~Leases~~, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU 2016-02 requires lessees to apply a ~~dual~~two-method approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase. Lessees are required to record a right-of-use asset ("ROU") and a lease liability for all leases with a term of greater than 12 months. Lease liabilities equal the present value of future lease payments. Right-of-use assets equal the lease liabilities less adjustments for accrued rent expense, initial direct costs and prepaid lease payments. Leases with a term of 12 months or less will be accounted for similar to the previously existing lease guidance ~~for operating leases. Lessees will recognize~~under ASC Topic 840, Leases ("ASC 840"). Lease expense is recognized based on the effective interest method for finance leases or on a straight-line basis for operating leases. The accounting applied by the lessor is largely unchanged from that applied under ~~the existing lease standard.~~ASC 840. We ~~are currently evaluating~~adopted this standard effective January 1, 2019. We have completed our evaluation of the overall impact of the adoption of ASU 2016-02 on our consolidated financial statements and ~~believe that~~accounting policies. In transitioning to ASC 842, we elected to use the ~~standard will more significantly impact the accounting for leases in which we are a lessee.~~practical expedient package available to us and did not elect to use hindsight. We have ~~a number of~~12 ground leases, which are classified as operating leases, for which we ~~will be~~are required to record a right-of-use asset and a lease liability equal to the present value of the ~~remaining minimum~~future lease payments, and will continue to recognize expense on a straight-line basis ~~upon~~for these leases. On January 1, 2019, we recorded an aggregate of $526,866,000 of right-of-use assets and a corresponding $526,866,000 of lease liabilities as a result of the adoption of this ~~standard.~~ standard (see Note 20 - Leases).

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


3.	Recently Issued Accounting Literature - continued

Under ASU 2016-02, initial direct costs for both lessees and lessors would include only those costs that are incremental to the arrangement and would not have been incurred if the lease had not been obtained. As a result, beginning January 1, 2019, we ~~will~~ no longer ~~be able to~~ capitalize internal leasing costs and instead ~~will be required to~~ expense these costs as ~~incurred. During~~incurred, as a component of "general and administrative" expense on our consolidated statements of income. For the three months ended March 31, 2018, ~~and 2017,~~ we capitalized $1,348,000 of internal leasing ~~costs~~costs. In addition, the new standard requires changes to our provision policy for lease receivables. Under ASC 842, we must assess whether it is probable that we will collect substantially all of ~~$1,348,000 and $974,000, respectively, excluding~~the lease payments based on the credit risk factors of our ~~former Washington, DC segment~~tenants. Changes to the collectability of our operating leases are recorded as adjustments to "rental revenues" on our consolidated statements of income which ~~was spun-off on July 17, 2017. ASU 2016-02 is effective~~resulted in a $890,000 decrease for ~~reporting periods beginning after December 15, 2018, with early adoption permitted. We will adopt this standard effective January 1, 2019 using~~ the ~~modified retrospective approach and will elect to use the practical expedients provided by this standard.~~three months ending March 31, 2019.

In February ~~2017,~~2016, the FASB issued an update (“ASU ~~2017-05”~~2016-13”) ~~Clarifying~~Measurement of Credit Losses on Financial Instruments establishing ASC Topic 326, Financial Instruments - Credit Losses (“ASC 326”), as amended by subsequent ASUs on the ~~Scope~~topic. ASU 2016-13 changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current “incurred loss” model with an “expected loss” model that requires consideration of ~~Asset Derecognition Guidance and Accounting for Partial Sales~~a broader range of ~~Nonfinancial Assets~~information to ~~ASC Subtopic 610-20,~~ ~~Other Income-Gains and Losses from~~estimate expected credit losses over the ~~Derecognition~~lifetime of ~~Nonfinancial Assets~~.the financial asset. ASU 2017-05 clarifies the scope of recently established guidance on nonfinancial asset derecognition, as well as the accounting for partial sales of nonfinancial assets. This update conforms the derecognition guidance on nonfinancial assets with the model for transactions in ASC 606. ASU 2017-052016-13 is effective for interim and annual reporting periods in fiscal years beginning after December 15, ~~2017.~~2019. We ~~adopted~~are currently evaluating the impact of the adoption of ASU 2016-13 on our consolidated financial statements, but do not believe the adoption of this standard will have a material impact on our consolidated financial statements.

In August 2018, the FASB issued an update on(“ASU 2018-13”) Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement to ASC Topic 820, Fair Value Measurement (“ASC 820”). ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying, and/or adding certain disclosures. ASU 2018-13 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2019. We elected to early adopt ASU 2018-13 effective January 1, ~~2018 using the modified retrospective approach to all contracts not yet completed.~~2019. The adoption of this update did not have a material impact on our consolidated financial ~~statements.~~statements and disclosures.

In ~~May 2017,~~October 2018, the FASB issued an update (“("ASU ~~2017-09”~~2018-16")~~Scope~~ Inclusion of ~~Modification~~the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes to ASC Topic ~~718,~~ ~~Compensation - Stock Compensation~~ ~~("ASC 718")~~815, Derivatives and Hedging. ASU ~~2017-09 provides guidance about which changes to~~2018-16 expands the ~~terms and conditions~~list of ~~a share-based payment award require~~U.S. benchmark interest rates permitted in the application of hedge accounting by adding the OIS rate based on SOFR as an ~~entity to apply modification accounting in ASC 718.~~eligible benchmark interest rate. ASU ~~2017-09~~2018-16 is effective for interim and annual reporting periods in fiscal years beginning after December 15, ~~2017. The adoption of~~2018. We adopted this update oneffective January 1, ~~2018 did not have a material impact on our consolidated financial statements.~~

~~In August 2017, the FASB issued an update (“ASU 2017-12”)~~ ~~Targeted Improvements to Accounting for Hedging Activities~~ ~~to ASC Topic 815,~~ ~~Derivatives and Hedging~~ ("ASC 815"). ASU 2017-12 amends the hedge accounting recognition and presentation requirements in ASC 815. The update is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting and increase transparency as to the scope and results of hedge programs. ASU 2017-12 requires subsequent changes in fair value of a hedging instrument that has been designated and qualifies as a cash flow hedge to be recognized as a component of "other comprehensive income (loss)." ASU 2017-12 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018, with early adoption permitted. We early adopted ASU 2017-12 on January 1, 2018 using the modified retrospective approach.2019. The adoption of this update did not have ~~a material~~an impact on our consolidated financial statements.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


4.	Revenue Recognition

On January 1, 2018, we adopted ASC 606 which 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. This standard requires us to recognize for certain of our revenue sources the transfer of promised goods or services to customers in an amount that reflects the consideration we are entitled to in exchange for those goods or services. We adopted this standard effective January 1, 2018 using the modified retrospective method applied to all existing contracts not yet completed as of January 1, 2018 and recorded a $14,519,000 cumulative-effect adjustment to beginning accumulated deficit. The adoption of ASC 606 did not have a material impact on our consolidated financial statements.

Our revenues primarily consist of ~~property rentals, tenant expense reimbursements,~~rental revenues and fee and other income. We operate in two reportable segments: New York and Other, with a significant portion of our revenues included in the ~~"New York"~~New York segment. We have the following revenue sources and revenue recognition policies:

Base rent is revenue 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. 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.

~~Hotel revenue arising~~Rental revenues include revenues from the ~~operation~~leasing of space at our properties to tenants and revenues from the Hotel Pennsylvania, consists of rooms revenue, food and beverage revenue, and banquet revenue. Room revenue is recognized when rooms are occupied. Food and beverage and banquet revenue are recognized when the services have been transferred.

~~Trade shows revenue arising from the operation of~~ trade shows ~~is primarily booth rentals. This revenue is recognized upon the occurrence of the trade shows.~~and tenant services.

◦

Revenues from the leasing of space at our properties to tenants includes (i) lease components, including fixed and variable lease payments, and nonlease components which include reimbursement of common area maintenance expenses, and (ii) reimbursement of real estate taxes and insurance expenses. As lessor, we have elected to combine the lease and nonlease components of our operating lease agreements and account for the components as a single lease component in accordance with ASC 842. Lease revenues and reimbursement of common area maintenance, real estate taxes and insurance are presented on the following page as "property rentals." Revenues derived from fixed lease payments are recognized on a straight-line basis over the non-cancelable period of the lease, together with renewal options that are reasonably certain of being exercised. We commence rental revenue recognition when the underlying asset is available for use by the lessee. Revenue derived from the reimbursement of real estate taxes, insurance expenses and common area maintenance expenses are generally recognized in the same period as the related expenses are incurred.

Operating expense reimbursements is 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 common areas of our properties. Revenue is recognized in the same period as the related expenses are incurred.


◦	Hotel revenue arising from the operation of Hotel Pennsylvania consists of room revenue, food and beverage revenue, and banquet revenue. Room revenue is recognized when the rooms are made available for the guest, in accordance with ASC 842.


◦	Trade shows revenue arising from the operation of trade shows is primarily booth rentals. This revenue is recognized upon the occurrence of the trade shows when the trade show booths are made available for use by the exhibitors, in accordance with ASC 842.

Tenant services is revenue arising from sub-metered electric, elevator, trash removal and other services provided to tenants at their request. This revenue is recognized as the services are transferred.


◦	Tenant services revenue arises from sub-metered electric, elevator, trash removal and other services provided to tenants at their request. This revenue is recognized as the services are transferred in accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606").

Fee and other income includes management, leasing and other revenue arising from contractual agreements with third parties or with partially owned entities, and includes Building Maintenance Service ~~("BMS"~~(“BMS”) cleaning, engineering and security services. This revenue is recognized as the services are transferred. Fee and other income also includes lease termination fee income which is recognized immediately if a tenant vacates or is recognized on a straight-line basis over the shortened remaining lease term.

transferred in accordance with ASC 606.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


4.	Revenue Recognition - continued

Below is a summary of our revenues by segment. ~~Base rent, operating expense reimbursements and lease terminations represent revenues from leases and are recognized in accordance with ASC Topic 840,~~ ~~Leases. Revenues from Hotel Pennsylvania, trade shows, tenant services, BMS cleaning fees, management and leasing fees and other income represent revenues recognized in accordance with ASC 606.~~ Additional financial information related to these reportable segments for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 is set forth in Note 22 - Segment Information.


(Amounts in thousands)	For the Three Months Ended March 31, 2018							For the Three Months Ended March 31, 2019
	Total		New York		Other			Total		New York		Other
Base rent	$	406,565	$	344,674	$	61,891
Property rentals								$	457,741	$	385,803	$	71,938
Hotel Pennsylvania								12,609		12,609		—
Trade shows	18,873		—		18,873			16,956		—		16,956
Hotel Pennsylvania	14,672		14,672		—
Property rentals	440,110		359,346		80,764
Operating expense reimbursements	47,846		44,719		3,127
Lease revenues								487,306		398,412		88,894
Tenant services	12,464		9,771		2,693			12,571		9,225		3,346
Tenant expense reimbursements	60,310		54,490		5,820
Rental revenues								499,877		407,637		92,240
BMS cleaning fees	28,355		30,153		(1,798		)	29,785		31,757		(1,972		)	⁽¹⁾
Management and leasing fees	2,764		2,481		283			2,237		2,251		(14		)
Lease termination fees	345		308		37
Other income	4,553		1,706		2,847			2,769		1,640		1,129
Fee and other income	36,017		34,648		1,369			34,791		35,648		(857		)
Total consolidated revenues	$	536,437	$	448,484	$	87,953
Total revenues								$	534,668	$	443,285	$	91,383

____________________


(1)	Represents the elimination of theMART and 555 California Street BMS cleaning fees which are included as income in the New York segment.


(Amounts in thousands)	For the Three Months Ended March 31, 2017							For the Three Months Ended March 31, 2018
	Total		New York		Other			Total		New York		Other
Base rent	$	383,843	$	325,681	$	58,162
Property rentals								$	454,403	$	389,385	$	65,018
Hotel Pennsylvania								14,680		14,680		—
Trade shows	18,408		—		18,408			18,873		—		18,873
Hotel Pennsylvania	12,641		12,641		—
Property rentals	414,892		338,322		76,570
Operating expense reimbursements	46,401		43,005		3,396
Lease revenues								487,956		404,065		83,891
Tenant services	12,632		10,534		2,098			12,464		9,771		2,693
Tenant expense reimbursements	59,033		53,539		5,494
Rental revenues								500,420		413,836		86,584
BMS cleaning fees	25,071		26,123		(1,052		)	28,355		30,153		(1,798		)	⁽¹⁾
Management and leasing fees	2,275		2,027		248			2,764		2,481		283
Lease termination fees	3,850		3,727		123
Other income	2,937		2,501		436			4,898		2,014		2,884
Fee and other income	34,133		34,378		(245		)	36,017		34,648		1,369
Total consolidated revenues	$	508,058	$	426,239	$	81,819
Total revenues								$	536,437	$	448,484	$	87,953

____________________


(1)	Represents the elimination of theMART and 555 California Street BMS cleaning fees which are included as income in the New York segment.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


5.	~~Acquisition~~

On February 9, 2018, we acquired 537 West 26th Street, a 14,000 square foot commercial property adjacent to our 260 Eleventh Avenue office property and 55,000 square feet of additional zoning air rights, for $44,000,000.


6.	Real Estate Fund Investments

We are the general partner and investment manager of Vornado Capital Partners Real Estate Fund (the “Fund”) and own a 25.0% interest in the Fund, which had an initial eight-year term ending February 2019. On January 29, 2018, the Fund's term was extended to February 2023. The Fund's three-year investment period ended in July 2013. The Fund is accounted for under ASC Topic 946, Financial Services – Investment Companies (“ASC 946”) 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.

We are also the general partner and investment manager of the Crowne Plaza Times Square Hotel Joint Venture (the “Crowne Plaza Joint Venture”) and own a 57.1% interest in the joint venture which owns the 24.7% interest in the Crowne Plaza Times Square Hotel not owned by the Fund. The Crowne Plaza Joint Venture is also accounted for under ASC 946 and we consolidate the accounts of the joint venture into our consolidated financial statements, retaining the fair value basis of accounting.

On January 17, 2018, the Fund completed the sale of the retail condominium at 11 East 68th Street, a property located on Madison Avenue and 68th Street, for $82,000,000. From the inception of this investment through its disposition, the Fund realized a $46,259,000 net gain.

In March 2011, a joint venture (the "Joint Venture") owned 64.7% by the Fund, 30.3% by Vornado and 5.0% by a third party, acquired One Park Avenue for $394,000,000. In connection with the acquisition, the Joint Venture paid $3,000,000 of New York City real property transfer tax (the "Transfer Tax") and filed a Real Property Tax Return ("RPTR") with the New York City Department of Finance (the "Department of Finance"). The RPTR was audited by the Department of Finance in 2014 and an increased Transfer Tax was assessed. The Joint Venture appealed the increased Transfer Tax assessment and the Joint Venture's appeal was upheld by a New York City Administrative Law Judge ("ALJ") in January 2017. The Department of Finance appealed the ALJ's decision and on February 16, 2018 the New York City Tax Appeals Tribunal (the "Tax Tribunal") reversed the ALJ's decision and assessed $9,491,000 of additional Transfer Tax and $6,764,000 of interest. As a result of the Tax Tribunal's decision, we recorded an expense of $15,608,000, before noncontrolling interests, during the first quarter of 2018, which was subsequently paid on April 5, 2018, in order to permit us to appeal the Tax Tribunal's decision and stop the accrual of interest, of which $10,630,000 is included in "(loss) income from real estate fund investments" and $4,978,000 is included in "(loss) income from partially owned entities" (see Note 8 - ~~Investments in Partially Owned Entities) on our consolidated statements of income. We are appealing the Tax Tribunal's decision.~~

As of March 31, ~~2018,~~2019, we had four real estate fund investments through the Fund and the Crowne Plaza Joint Venture with an aggregate fair value of ~~$336,552,000,~~$322,858,000, or ~~$77,678,000 in excess of~~$6,706,000 below our cost, and had remaining unfunded commitments of ~~$114,872,000,~~$44,194,000, of which our share was ~~$33,513,000.~~$13,969,000. At December 31, ~~2017,~~2018, we had ~~five~~four real estate fund investments with an aggregate fair value of ~~$354,804,000.~~$318,758,000.

Below is a summary of ~~income~~loss from the Fund and the Crowne Plaza Joint Venture for the three months ended March 31, ~~2018~~2019 and ~~2017.~~2018.

(Amounts in thousands) For the Three Months Ended March 31,
2018 2017
Net investment income $ 2,734
$ 7,214
Transfer Tax (10,630 ) —
Net realized (loss) gain on exited investments (911 ) 241
Net unrealized loss on held investments —
(7,187 )
(Loss) income from real estate fund investments (8,807 ) 268
Less loss (income) attributable to noncontrolling interests in consolidated subsidiaries 5,369
(3,503 )
Loss from real estate fund investments attributable to the Operating Partnership (2018 includes $4,252 of loss related to One Park Avenue potential additional transfer taxes and reduction in carried interest) ⁽¹⁾
(3,438 ) (3,235 )
Less loss attributable to noncontrolling interests in the Operating Partnership 212
202
Loss from real estate fund investments attributable to Vornado $ (3,226 ) $ (3,033 )



(Amounts in thousands)	For the Three Months Ended March 31,
	2019			2018
Net investment (loss) income	$	(267	)	$	2,734
Net unrealized gain on held investments	100			—
New York City real property transfer tax (the "Transfer Tax")	—			(10,630		)	⁽¹⁾
Net realized loss on exited investments	—			(911		)
Loss from real estate fund investments	(167		)	(8,807		)
Less (income) loss attributable to noncontrolling interests in consolidated subsidiaries	(2,737		)	5,369
Loss from real estate fund investments attributable to the Operating Partnership	(2,904		)	(3,438		)
Less loss attributable to noncontrolling interests in the Operating Partnership	182			212
Loss from real estate fund investments attributable to Vornado	$	(2,722	)	$	(3,226	)

____________________

(1)

~~Excludes $440 and $1,000~~Due to the disputed additional Transfer Tax related to the March 2011 acquisition of ~~management and leasing fees for the three months ended March 31, 2018 and 2017, respectively,~~One Park Avenue which ~~are included~~was recorded as a ~~component~~result of ~~"fee~~the New York City Tax Appeals Tribunal (the "Tax Tribunal") decision in the first quarter of 2018. We appealed the Tax Tribunal's decision to the New York State Supreme Court, Appellate Division, First Department ("Appellate Division"). Our appeal was heard on April 2, 2019, and ~~other income"~~ on April 25, 2019 the Appellate Division entered a unanimous decision and order that confirmed the decision of the Tax Tribunal and dismissed our ~~consolidated statements of income.~~appeal. We are currently evaluating our options regarding this matter.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


7.	~~Marketable Securities~~

~~Our portfolio~~6. Marketable Securities

Lexington Realty Trust ("Lexington") (NYSE: LXP)

On March 1, 2019, we sold all of ~~marketable securities is comprised~~our 18,468,969 common shares of ~~equity securities that are presented on our consolidated balance sheets at fair value. On January 1, 2018,~~Lexington realizing net proceeds of $167,698,000. For the three months ended March 31, 2019, we ~~adopted ASU 2016-01, which requires changes~~recorded a $16,068,000 mark-to-market increase in the fair value of our ~~marketable securities to be recorded~~common shares for the period from January 1, 2019 through the date of sale, which is included in ~~current period earnings. Previously, changes in the fair value of marketable securities were recognized in "accumulated~~"interest and other ~~comprehensive income"~~investment income (loss), net" on our consolidated ~~balance sheets. As~~statements of income.

Pennsylvania Real Estate Investment Trust (“PREIT”) (NYSE: PEI)

On March 12, 2019 ("Conversion Date"), we converted all of our 6,250,000 operating partnership units into common shares and began accounting for our investment as a ~~result, on January 1, 2018~~marketable security in accordance with ASC Topic 321, Investments - Equity Securities ("ASC 321"). Prior to the Conversion Date, we accounted for our investment under the equity method. For the three months ended March 31, 2019, we recorded a $15,649,000 decrease ~~to beginning accumulated deficit~~in the value of ~~$111,225,000 to recognize~~our investment, representing the ~~unrealized gains previously recorded in “accumulated other comprehensive income” on~~difference between the carrying amount of our ~~consolidated balance sheets. Subsequent changes in~~investment at the Conversion Date and the fair value of our ~~marketable securities will be recorded to “interest~~common shares based on PREIT's March 29, 2019 quarter ended closing share price, which is included in "interest and other investment ~~(loss)~~ income ~~net”~~(loss), net" on our consolidated ~~income statements.~~statements of income.

~~Below is a summary~~The table below summarizes the changes of our marketable securities portfolio ~~as of~~for the three months ended March 31, ~~2018 and December 31, 2017.~~2019.

(Amounts in thousands) Fair Value at
Decrease in
Fair Value⁽¹⁾
March 31, 2018 December 31, 2017
Equity securities:
Lexington Realty Trust $ 145,351
$ 178,226
$ (32,875 )
Other 4,415
4,526
(111 )
$ 149,766
$ 182,752
$ (32,986 )



(Amounts in thousands)	For the Three Months Ended March 31, 2019
	Total			Lexington Realty Trust			PREIT			Other
Balance, December 31, 2018	$	152,198		$	151,630		$	—		$	568
Sale of marketable securities	(167,755		)	(167,698		)	—			(57		)
Transfer of PREIT investment balance at Conversion Date	54,962			—			54,962			—
Increase (decrease) in fair value of marketable securities⁽¹⁾	461			16,068			(15,649		)	42
Balance, March 31, 2019	$	39,866		$	—		$	39,313		$	553

____________________


(1)	~~Recognized as a component of "interest~~Included in “interest and other investment ~~(loss)~~ income ~~net"~~(loss), net” on our consolidated statements of income (see Note 1817 - Interest and Other Investment ~~(Loss)~~ Income (Loss), Net).

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


8.7.	Investments in Partially Owned Entities

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

As of March 31, ~~2018,~~2019, 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.

As of March 31, ~~2018,~~2019, the market value (“("fair ~~value”~~value" pursuant to ASC ~~Topic 820,~~ ~~Fair Value Measurements~~ ~~(“ASC 820”))~~820) of our investment in Alexander’s, based on Alexander’s March 29, ~~2018~~2019 quarter ended closing share price of ~~$381.23,~~$376.17, was ~~$630,580,000,~~$622,211,000, or ~~$514,502,000~~$515,425,000 in excess of the carrying amount on our consolidated balance sheet. As of March 31, ~~2018,~~2019, 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 ~~$39,317,000.~~$39,097,000. 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.

Alexander's paid $3,971,000 of Transfer Tax upon the November 2012 sale of its Kings Plaza Regional Shopping Center located in Brooklyn, New York. Alexander's accrued $23,797,000 of potential additional Transfer Tax and related interest based on the precedent established by the Tax Tribunal's decision regarding One Park Avenue (see Note 6 - ~~Real Estate Fund Investments~~ for details) during the first quarter of 2018 which was subsequently paid on April 5, 2018 in order to preserve Alexander's rights to continue litigation and stop accrual of interest, of which our 32.4% share is $7,708,000 and is included in "(loss) income from partially owned entities" on our consolidated statements of income.

Urban Edge Properties (“UE”) (NYSE: UE)

AsOn March 4, 2019, we converted to common shares and sold all of ~~March 31, 2018, we own~~our 5,717,184 ~~UE operating~~ partnership units ~~representing a 4.5% ownership interest in UE. We account for our investment in~~of UE, ~~under the equity method and record our share~~realizing net proceeds of UE’s net income or loss on a one-quarter lag basis. In 2018 and 2017, we provided UE with information technology support. UE is providing us with leasing and property management services for (i) certain small retail properties that we plan to sell, and (ii) our affiliate, Alexander’s, Rego Park retail assets. As of March 31, 2018, the fair value of our investment in UE, based on UE’s March 29, 2018 quarter ended closing share price of $21.35, was $122,062,000, or $77,886,000 in excess of the carrying amount on our consolidated balance sheet.

~~VORNADO REALTY TRUST AND VORNADO REALTY L.P.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(UNAUDITED)~~


8.	~~Investments in Partially Owned Entities - continued~~

~~Pennsylvania Real Estate Investment Trust (“PREIT”) (NYSE: PEI)~~

As of March 31, 2018, we own 6,250,000 PREIT operating partnership units, representing an 8.0% interest in PREIT. We account for our investment in PREIT under the equity method and record our share of PREIT’s net income or loss on a one-quarter lag basis.

As of March 31, 2018, the market value (“fair value” pursuant to ASC 820) of our investment in PREIT, based on PREIT’s March 29, 2018 quarter ended closing share price of $9.65, was $60,313,000 or $4,874,000 below the carrying amount on our consolidated balance sheet. As of March 31, 2018, the carrying amount of our investment in PREIT exceeds our share of the equity in the net assets of PREIT by approximately $33,976,000.$108,512,000. The ~~majority of this basis difference~~sale resulted from the excess of the fair value of the PREIT operating units received over our share of the book value of PREIT’s net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of PREIT’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 PREIT’s net loss. The basis difference related to the land will be recognized upon disposition of our investment.

~~Independence Plaza~~

~~We have a 50.1% economic interest~~ in a ~~joint venture that owns Independence Plaza, a three-building 1,327 unit residential complex in the Tribeca submarket~~net gain of Manhattan. The joint venture paid $1,730,000 of Transfer Tax upon its acquisition of the property in December 2012. The joint venture accrued $13,103,000 of potential additional Transfer Tax and related interest based on the precedent established by the Tax Tribunal's decision regarding One Park Avenue (see Note 6 - ~~Real Estate Fund Investments~~ ~~for details) during the first quarter of 2018,~~$62,395,000 which was subsequently paid on April 5, 2018, in order to preserve the joint venture's rights to continue litigation and stop accrual of interest. Because we consolidate the entity that incurred the potential additional Transfer Tax, $13,103,000 of expense is included in ~~"transaction related costs~~"net gains on disposition of wholly owned and ~~other" and $6,538,000 is allocated to "noncontrolling interests in consolidated subsidiaries"~~partially owned assets" on our consolidated statements of ~~income.~~income for the three months ended March 31, 2019.

61 Ninth Avenue

On January 28, 2019, the joint venture, in which we have a 45.1% interest, completed a $167,500,000 refinancing of 61 Ninth Avenue, a 166,000 square foot newly constructed office and retail property in the Meatpacking district of Manhattan which is fully leased to Aetna and Starbucks. The seven-year interest only loan carries a rate of LIBOR plus 1.35% (3.85% as of March 31, 2019) and matures in January 2026. We realized net proceeds of approximately $31,000,000. The loan replaces the previous $90,000,000 construction loan that bore interest at LIBOR plus 3.05% and was scheduled to mature in 2021.

Toys "R" Us, Inc. ("Toys")

~~We own 32.5% of Toys.~~ On September 18, 2017, Toys filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code. ~~On March 15,~~In the second quarter of 2018, Toys ~~sought authorization to wind down its~~ceased U.S. ~~operations, including closing U.S. stores~~operations. On February 1, 2019, the plan of reorganization for Toys "R" Us, Inc., in which we owned a 32.5% interest, was declared effective, and ~~liquidating all U.S. inventory, which relief~~our stock in Toys was ~~granted on an interim basis on March 22, 2018. We carry~~canceled. At December 31, 2018, we carried our Toys investment at zero. ~~Further, we do not hold any debt~~The canceling of our stock in Toys ~~and do not guarantee any of Toys’ obligations. For income~~will result in approximately a $420,000,000 capital loss deduction for tax purposes ~~we carry our investment~~ in ~~Toys at approximately $420,000,000, which could~~2019 (which if not offset by capital gains will result in a ~~tax deduction in future periods.~~capital loss carry over available for five years).

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


7.	Investments in Partially Owned Entities - continued

Below is a schedule summarizing our investments in partially owned entities.


(Amounts in thousands)	(Amounts in thousands)	Percentage Ownership at	Balance as of						Percentage Ownership at March 31, 2019	Balance as of
		March 31, 2018	March 31, 2018			December 31, 2017			Percentage Ownership at March 31, 2019	March 31, 2019			December 31, 2018
Investments:	Investments:
Partially owned office buildings/land⁽¹⁾									Various	$	478,240		$	499,005
Alexander’s									32.4%	106,786			107,983
PREIT⁽²⁾									N/A	—			59,491
UE⁽³⁾									N/A	—			45,344
Other investments⁽⁴⁾									Various	145,238			146,290
	Partially owned office buildings/land ⁽¹⁾	Various	$	497,735		$	504,393			$	730,264		$	858,113
	Alexander’s	32.4%	116,078			126,400
Investments in partially owned entities included in other liabilities⁽⁵⁾:
330 Madison Avenue									25.0%	$	(60,054	)	$	(58,117	)
7 West 34th Street									53.0%	(51,464		)	(51,579		)
85 Tenth Avenue									49.9%	(5,857		)	—
	PREIT	8.0%	65,187			66,572				$	(117,375	)	$	(109,696	)
	UE	4.5%	44,176			46,152
	Other investments ⁽²⁾	Various	310,052			313,312
			$	1,033,228		$	1,056,829

	330 Madison Avenue⁽³⁾	25.0%	$	(54,878	)	$	(53,999	)
	7 West 34th Street ⁽⁴⁾	53.0%	(47,582		)	(47,369		)
			$	(102,460	)	$	(101,368	)

____________________


(1)	Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 512 West 22nd Street, ~~85 Tenth Avenue,~~ 61 Ninth Avenue and others.


(2)	On March 12, 2019, we converted all of our PREIT operating partnership units into common shares and began accounting for our investment as a marketable security in accordance with ASC 321 (see Note 6 - Marketable Securities).


(3)	Sold on March 4, 2019 (see page 25 for details).


(4)	Includes interests in Independence Plaza, Fashion Centre Mall/Washington Tower, Rosslyn Plaza, 50-70 West 93rd Street ~~Moynihan Office Building, Toys (which has a carrying amount of zero), 666 Fifth Avenue Office Condominium~~ and others.


~~(3)~~(5)	Our negative basis ~~resulted~~results from ~~a refinancing distribution and is included~~distributions in ~~"other liabilities" on~~excess of our ~~consolidated balance sheets.~~


~~(4)~~	~~Our negative basis resulted from a deferred gain from the sale of a 47.0% ownership interest in the property on May 27, 2016 and is included in "other liabilities" on our consolidated balance sheets.~~investment.

~~VORNADO REALTY TRUST AND VORNADO REALTY L.P.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(UNAUDITED)~~


8.	~~Investments in Partially Owned Entities - continued~~

Below is a schedule of net income (loss) ~~income~~ from partially owned entities.


(Amounts in thousands)	(Amounts in thousands)	Percentage Ownership at March 31, 2018		For the Three Months Ended March 31,							Percentage Ownership at March 31, 2019		For the Three Months Ended March 31,
			2018				2017					2019			2018
Our share of net (loss) income:
Our share of net income (loss):
Alexander's (see page 25 for details):
Equity in net income (loss)⁽¹⁾											32.4%		$	5,717		$	(3,209	)
Management, leasing and development fees													1,057			1,208
	Partially owned office buildings⁽¹⁾	Various		$	(4,283	)		$	810				6,774			(2,001		)
Partially owned office buildings⁽²⁾											Various		106			(4,283		)
Other investments⁽³⁾											Various		440			(3,620		)
													$	7,320		$	(9,904	)
	Alexander's (see page 24 for details):
	Equity in net (loss) income⁽²⁾	32.4%		(3,209		)		6,892
	Management, leasing and development fees			1,208				1,509
				(2,001		)		8,401

	UE (see page 24 for details):
	Equity in net (loss) income	4.5%		(717		)		1,091
	Management, leasing and development fees			76				209
				(641		)		1,300

	PREIT (see page 25 for details):	8.0%		(429		)		(2,830		)

	Other investments⁽³⁾	Various		(2,550		)		(6,323		)

				$	(9,904	)		$	1,358

____________________


(1)	2018 includes our $7,708 share of Alexander's disputed additional Transfer Tax related to the November 2012 sale of Kings Plaza Regional Shopping Center based on the precedent established by the Tax Tribunal's decision regarding One Park Avenue (see Note 5 - Real Estate Fund Investments).


(2)	Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 7 West 34th Street, 330 Madison Avenue, 512 West 22nd Street, 85 Tenth Avenue and others. 2018 includes our ~~$4,978~~$4,978 share of ~~potential~~disputed additional Transfer Tax related to the March 2011 acquisition of One Park Avenue (see Note 65 - Real Estate Fund Investments).


~~(2)~~	~~2018 includes our~~ ~~$7,708~~ ~~share of Alexander's potential additional Transfer Tax.~~


(3)	Includes interests in Independence Plaza, Fashion Centre Mall/Washington Tower, Rosslyn Plaza, 50-70 West 93rd Street, 666 Fifth Avenue Office Condominium (sold on August 3, 2018), UE (sold on March 4, 2019), PREIT (accounted as a marketable security from March 12, 2019) and others.


8.	220 Central Park South ("220 CPS")

26We are constructing a residential condominium tower containing 397,000 salable square feet at 220 CPS. The development cost of this project (exclusive of land cost) is estimated to be approximately $1.4 billion, of which $1.3 billion has been expended as of March 31, 2019.

During the first quarter of 2019, we closed on the sale of 12 condominium units at 220 CPS for net proceeds aggregating $425,484,000 and resulting in a financial statement net gain of $157,899,000 which is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income. In connection with these sales, $26,945,000 of income tax expense was recognized in our consolidated statements of income. From inception to March 31, 2019, we closed on the sale of 23 units for aggregate net proceeds of $640,260,000 which was used to pay $637,000,000 of the $950,000,000 220 CPS loan.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


9.	~~Dispositions~~Properties Held for Sale

~~Discontinued Operations~~On April 18, 2019 ("Closing Date"), we entered into a transaction agreement (the "Transaction Agreement") with a group of institutional investors (the "Investors"). The Transaction Agreement provides for a series of transactions (collectively, the "Transaction") pursuant to which (i) prior to the Closing Date, the Operating Partnership contributed its interests in properties located at 640 Fifth Avenue, 655 Fifth Avenue, 666 Fifth Avenue, 689 Fifth Avenue, 697-703 Fifth Avenue, 1535 Broadway and 1540 Broadway (collectively, the “Properties”) to subsidiaries of a newly formed joint venture ("Fifth Avenue and Times Square JV") and (ii) on the Closing Date, transferred a 48.5% common interest in Fifth Avenue and Times Square JV to the Investors. The 48.5% common interest in the joint venture represents an effective 47.2% interest in the Properties. The Properties include approximately 489,000 square feet of retail space, 327,000 square feet of office space, signage associated with 1535 and 1540 Broadway, the parking garage at 1540 Broadway and the theatre at 1535 Broadway.

We retained the remaining 51.5% common interest in Fifth Avenue and Times Square JV which represents an effective 51.0% interest in the Properties and an aggregate $1.828 billion of preferred equity interests in certain of the properties. The ~~tables below set forth~~preferred equity has an annual coupon of 4.25% for the first five years, increasing to 4.75% for the next five years and thereafter at a formulaic rate. It can be redeemed under certain conditions on a tax deferred basis.

Net cash proceeds to us from the Transaction are approximately $1.198 billion, after (i) deductions for the repayment of a $390,000,000 mortgage loan on 666 Fifth Avenue and a $140,000,000 mortgage loan on 655 Fifth Avenue, (ii) anticipated proceeds from a new $500,000,000 mortgage loan on 640 Fifth Avenue, (iii) approximately $26,000,000 used to purchase noncontrolling investors' interests and (iv) approximately $56,000,000 of estimated transaction costs. Until the new mortgage closes, Vornado will retain $500 million of preferred equity interests in addition to the $1.828 billion referenced above.

The Transaction values the Properties at $5.556 billion resulting in a financial statement net gain of approximately $2.6 billion from the Transaction and the related step-up in our basis of the assets ~~and liabilities related~~ to ~~discontinued operations as~~fair value. The net gain will be recognized in our consolidated statements of ~~March 31, 2018 and December 31, 2017, and their combined results of operations and cash flows~~income for the three months ended ~~March 31, 2018~~June 30, 2019. Our tax gain is approximately $735,000,000. We continue to manage the Properties and ~~2017.~~share control over major decisions of the joint venture. Accordingly, the Properties will be deconsolidated and the joint venture will be accounted for under the equity method from the date of transfer.

The table below summarizes our effective ownership interests in the Properties transferred to Fifth Avenue and Times Square JV and our preferred equity interests following the Transaction and the anticipated closing of the mortgage loan on 640 Fifth Avenue.



(Amounts in thousands)	Vornado's Effective Ownership Interest Percentage		Vornado's Preferred Equity Interests
Properties transferred to Fifth Avenue and Times Square JV:
640 Fifth Avenue	52.0	%	$	—
655 Fifth Avenue	50.0	%	140,000
666 Fifth Avenue	52.0	%	390,000
689 Fifth Avenue	52.0	%	130,000
697-703 Fifth Avenue	44.8	%	—
1535 Broadway	52.0	%	628,875
1540 Broadway	52.0	%	538,875
			$	1,827,750

(Amounts in thousands) Balance as of
March 31, 2018 December 31, 2017
Assets related to discontinued operations:
Other assets $ 275
$ 1,357

Liabilities related to discontinued operations:
Other liabilities $ 1,176
$ 3,620

(Amounts in thousands) For the Three Months Ended March 31,
2018 2017
(Loss) income from discontinued operations:
Total revenues $ 354
$ 116,283
Total expenses 717
95,712
(363 ) 20,571
JBG SMITH Properties spin-off transaction costs —
(7,253 )
Net gains on sale of real estate and other —
2,354
Pretax (loss) income from discontinued operations (363 ) 15,672
Income tax expense —
(354 )
(Loss) income from discontinued operations $ (363 ) $ 15,318

(Amounts in thousands) For the Three Months Ended March 31,
2018 2017
Cash flows related to discontinued operations:
Cash flows from operating activities $ (1,725 ) $ 41,306
Cash flows from investing activities —
(25,210 )

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


9.	Properties Held for Sale - continued

The following table summarizes the assets and liabilities associated with the Properties classified as held for sale:



(Amounts in thousands)	Balance as of March 31, 2019
	Balance as of March 31, 2019
Assets held for sale:
Real estate, net	$	2,656,509
Right-of-use asset	49,134
Restricted cash	8,828
Receivable arising from the straight-lining of rents	167,612
Deferred leasing costs, net	70,511
Identified intangible assets, net	74,464
	$	3,027,058

Liabilities related to assets held for sale:
Mortgages payable, net	$	971,618
Lease liability	41,235
Deferred revenue	84,497
	$	1,097,350

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


10.	Identified Intangible Assets and Liabilities

The following summarizes our identified intangible assets (primarily above-market leases) and liabilities (primarily acquired below-market leases) as of March 31, ~~2018~~2019 and December 31, ~~2017.~~2018.



(Amounts in thousands)	Balance as of
	March 31, 2019			December 31, 2018
Identified intangible assets:
Gross amount	$	131,910		$	308,895
Accumulated amortization	(97,749		)	(172,114		)
Total, net	$	34,161		$	136,781
Identified intangible liabilities (included in deferred revenue):
Gross amount	$	386,512		$	503,373
Accumulated amortization	(321,152		)	(341,779		)
Total, net	$	65,360		$	161,594

(Amounts in thousands) Balance as of
March 31, 2018 December 31, 2017
Identified intangible assets:
Gross amount $ 309,896
$ 310,097
Accumulated amortization (157,062 ) (150,837 )
Total, net $ 152,834
$ 159,260
Identified intangible liabilities (included in deferred revenue):
Gross amount $ 529,951
$ 530,497
Accumulated amortization (336,049 ) (324,897 )
Total, net $ 193,902
$ 205,600

Amortization of acquired below-market leases, net of acquired above-market leases, resulted in an increase to rental ~~income~~revenues of ~~$10,581,000~~$6,525,000 and ~~$11,116,000~~$10,581,000 for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, 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, ~~2019~~2020 is as follows:

(Amounts in thousands)
2019 $ 30,529

2020 22,246

2021 17,475

2022 14,292

2023 11,590



(Amounts in thousands)
2020	$	16,605
2021	11,932
2022	8,800
2023	6,269
2024	2,497

Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was ~~$4,876,000~~$3,545,000 and ~~$6,981,000~~$4,876,000 for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, 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, ~~2019~~2020 is as follows:

(Amounts in thousands)
2019 $ 15,169

2020 11,961

2021 10,981

2022 9,426

2023 9,295

We are a tenant under ground leases for certain properties. Amortization of these acquired below-market leases, net of above-market leases, resulted in an increase to rent expense (a component of operating expense) of $437,000 for the three months ended March 31, 2018 and 2017, respectively. Estimated annual amortization of these below-market leases, net of above-market leases, for each of the five succeeding years commencing January 1, 2019 is as follows:



(Amounts in thousands)
2020	$	6,308
2021	4,779
2022	3,049
2023	2,962
2024	2,350

(Amounts in thousands)
2019 $ 1,747

2020 1,747

2021 1,747

2022 1,747

2023 1,747

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


11.	Debt

On ~~January 5, 2018,~~February 4, 2019, we completed a ~~$100,000,000~~$95,700,000 refinancing of ~~33-00 Northern Boulevard (Center Building),~~435 Seventh Avenue, a ~~471,000~~43,000 square foot ~~office building~~Manhattan retail property. The interest-only loan carries a rate of LIBOR plus 1.30% (3.78% as of March 31, 2019) and matures in ~~Long Island City, New York.~~2024. The ~~seven-year~~recourse loan isreplaces the previous $95,700,000 loan that bore interest at LIBOR plus ~~1.80%, which~~2.25% and was ~~swapped~~scheduled to mature in August 2019.

On February 12, 2019, we completed a ~~fixed~~$580,000,000 refinancing of 100 West 33rd Street, a 1.1 million square foot Manhattan property comprised of 859,000 square feet of office space and the 256,000 square foot Manhattan Mall. The interest-only loan carries a rate of ~~4.14%. We realized net proceeds~~LIBOR plus 1.55% (4.03% as of ~~approximately $37,200,000 after repayment~~March 31, 2019) and matures in April 2024, with two one-year extension options. The loan replaces the previous $580,000,000 loan that bore interest at LIBOR plus 1.65% and was scheduled to mature in July 2020.

Senior Unsecured Notes

On March 1, 2019, we called for redemption all of our $400,000,000 5.00% senior unsecured notes. The notes, which were scheduled to mature in January 2022, were redeemed on April 1, 2019 at a redemption price of 105.51% of the ~~existing 4.43% $59,800,000 mortgage~~principal amount plus accrued interest. In connection therewith, we expensed $22,540,000 relating to debt prepayment costs which is included in "interest and ~~closing costs.~~debt expense" on our consolidated statements of income for the three months ended March 31, 2019.

Unsecured Revolving Credit Facility

On March 26, 2019, we increased to $1.5 billion (from $1.25 billion) and extended to March 2024 (as fully extended) from February 2022 one of our two unsecured revolving credit facilities. The interest rate on the extended facility was lowered from LIBOR plus 1.00% to LIBOR plus 0.90%. Thefacility fee remains unchanged at 20 basis points.

The following is a summary of our debt:



(Amounts in thousands)	Weighted Average Interest Rate at March 31, 2019	Balance as of
	Weighted Average Interest Rate at March 31, 2019	March 31, 2019			December 31, 2018
Mortgages Payable:
Fixed rate	3.52%	$	4,610,526		$	5,003,465
Variable rate	4.20%	1,945,508			3,212,382
Total	3.72%	6,556,034			8,215,847
Deferred financing costs, net and other		(36,845		)	(48,049		)
Total, net		$	6,519,189		$	8,167,798

Unsecured Debt:
Senior unsecured notes	4.21%	$	850,000		$	850,000
Deferred financing costs, net and other		(4,739		)	(5,998		)
Senior unsecured notes, net		845,261			844,002

Unsecured term loan	3.87%	750,000			750,000
Deferred financing costs, net and other		(4,924		)	(5,179		)
Unsecured term loan, net		745,076			744,821

Unsecured revolving credit facilities	3.46%	530,000			80,000

Total, net		$	2,120,337		$	1,668,823

(Amounts in thousands) Interest Rate at March 31, 2018 Balance as of
March 31, 2018 December 31, 2017
Mortgages Payable:
Fixed rate 3.53% $ 5,012,026
$ 5,461,706
Variable rate 3.60% 3,152,692
2,742,133
Total 3.56% 8,164,718
8,203,839
Deferred financing costs, net and other (62,480 ) (66,700 )
Total, net $ 8,102,238
$ 8,137,139

Unsecured Debt:
Senior unsecured notes 4.21% $ 850,000
$ 850,000
Deferred financing costs, net and other (6,875 ) (6,386 )
Senior unsecured notes, net 843,125
843,614

Unsecured term loan 3.02% 750,000
750,000
Deferred financing costs, net and other (886 ) (1,266 )
Unsecured term loan, net 749,114
748,734

Unsecured revolving credit facilities 2.72% 80,000
—

Total, net $ 1,672,239
$ 1,592,348

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


12.	Redeemable Noncontrolling Interests/Redeemable Partnership Units

Redeemable noncontrolling interests on Vornado’s consolidated balance sheets and redeemable partnership units on the consolidated balance sheets of the Operating Partnership 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 Vornado’s consolidated statements of changes in equity and to “partners’ capital” on the consolidated balance sheets of the Operating Partnership.



(Amounts in thousands)
Balance, December 31, 2018	$	783,562
Net income	12,202
Other comprehensive loss	(1,276		)
Distributions	(8,488		)
Redemption of Class A units for Vornado common shares, at redemption value	(3,181		)
Adjustments to carry redeemable Class A units at redemption value	65,818
Other, net	18,448
Balance, March 31, 2019	$	867,085

Balance, December 31, 2017	$	984,937
Net loss	(1,124		)
Other comprehensive income	654
Distributions	(7,906		)
Redemption of Class A units for Vornado common shares, at redemption value	(8,392		)
Adjustments to carry redeemable Class A units at redemption value	(114,856		)
Other, net	3,713
Balance, March 31, 2018	$	857,026

(Amounts in thousands)
Balance, December 31, 2016 $ 1,278,446
Net income 3,229
Other comprehensive income 3
Distributions (9,163 )
Redemption of Class A units for Vornado common shares, at redemption value (14,739 )
Adjustments to carry redeemable Class A units at redemption value (6,197 )
Other, net 14,495
Balance, March 31, 2017 $ 1,266,074

Balance, December 31, 2017 $ 984,937
Net loss (1,124 )
Other comprehensive income 654
Distributions (7,906 )
Redemption of Class A units for Vornado common shares, at redemption value (8,392 )
Adjustments to carry redeemable Class A units at redemption value (114,856 )
Other, net 3,713
Balance, March 31, 2018 $ 857,026

As of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, the aggregate redemption value of redeemable Class A units of the Operating Partnership, which are those units held by third parties, was ~~$851,598,000~~$862,550,000 and ~~$979,509,000,~~$778,134,000, respectively.

Redeemable noncontrolling interests/redeemable partnership units exclude our Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units, as they are accounted for as liabilities in accordance with ASC Topic 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 $50,561,000 as of March 31, ~~2018~~2019 and December 31, ~~2017.~~2018. Changes in the value from period to period, if any, are charged to “interest and debt expense” on our consolidated statements of income.


~~13.~~	~~Shareholders' Equity/Partners' Capital~~

On January 4 and 11, 2018, we redeemed all of the outstanding 6.625% Series G and Series I cumulative redeemable preferred shares/units at their redemption price of $25.00 per share/unit, or $470,000,000 in the aggregate, plus accrued and unpaid dividends/distributions through the date of redemption, and expensed $14,486,000 of previously capitalized issuance costs.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


~~14.~~13.	~~Accumulated Other Comprehensive Income ("AOCI")~~Shareholders' Equity/Partners' Capital

The following table sets forth the details of our dividends/distributions per common share/Class A unit and dividends/distributions per share/unit for each class of preferred shares/units of beneficial interest for the three months ended March 31, 2019 and 2018.



	Per Share/Unit For the Three Months Ended March 31,
Shares/Units:	2019		2018
Common shares/Class A units held by Vornado: authorized 250,000,000 shares/units	$	0.66	$	0.63
Convertible Preferred⁽¹⁾:
6.5% Series A: authorized 83,977 shares/units⁽²⁾	0.8125		0.8125
Cumulative Redeemable Preferred⁽¹⁾:
5.70% Series K: authorized 12,000,000 shares/units⁽³⁾	0.3563		0.3563
5.40% Series L: authorized 12,000,000 shares/units⁽³⁾	0.3375		0.3375
5.25% Series M: authorized 12,780,000 shares/units⁽³⁾	0.3281		0.3281

____________________


(1)	Dividends on preferred shares and distributions on preferred units are cumulative and are payable quarterly in arrears.


(2)	Redeemable at the option of Vornado under certain circumstances, at a redemption price of 1.9531 common shares/Class A units per Series A preferred share/unit plus accrued and unpaid dividends/distributions through the date of redemption, or convertible at any time at the option of the holder for 1.9531 common shares/ Class A units per Series A preferred share/unit.


(3)	Redeemable at Vornado's option at a redemption price of $25.00 per share/unit, plus accrued and unpaid dividends/distributions through the date of redemption.

Accumulated Other Comprehensive (Loss) Income

The following tables set forth the changes in accumulated other comprehensive (loss) income by ~~component.~~component for the three months ended March 31, 2019 and 2018.

(Amounts in thousands) Total Marketable securities
Pro rata share of
nonconsolidated
subsidiaries' OCI

Interest
rate
swaps
Other
For the Three Months Ended March 31, 2018
Balance as of December 31, 2017 $ 128,682
$ 109,554
$ 3,769
$ 23,542
$ (8,183 )

Cumulative effect of accounting change (see Note 3) (108,374 ) (109,554 ) (1,671 ) 2,851
—
Net current period OCI:
OCI before reclassifications 9,950
—
346
10,258
(654 )
Amounts reclassified from AOCI —
—
—
—
—
9,950
—
346
10,258
(654 )
Balance as of March 31, 2018 $ 30,258
$ —
$ 2,444
$ 36,651
$ (8,837 )

For the Three Months Ended March 31, 2017
Balance as of December 31, 2016 $ 118,972
$ 130,505
$ (12,058 ) $ 8,066
$ (7,541 )
Net current period OCI:
OCI before reclassifications (9,221 ) (15,009 ) (51 ) 5,842
(3 )
Amounts reclassified from AOCI 9,268
—
9,268
⁽¹⁾
—
—
47
(15,009 ) 9,217
5,842
(3 )
Balance as of March 31, 2017 $ 119,019
$ 115,496
$ (2,841 ) $ 13,908
$ (7,544 )



(Amounts in thousands)	Total			Marketable securities			Pro rata share of nonconsolidated subsidiaries' OCI			Interest rate swaps			Other
For the Three Months Ended March 31, 2019
Balance, December 31, 2018	$	7,664		$	—		$	3,253		$	11,759		$	(7,348	)
Net current period other comprehensive (loss) income	(16,738		)	—			(985		)	(17,029		)	1,276
Amount reclassified from AOCI⁽¹⁾	(2,311		)	—			(2,311		)	—			—
Balance, March 31, 2019	$	(11,385	)	$	—		$	(43	)	$	(5,270	)	$	(6,072	)

For the Three Months Ended March 31, 2018
Balance, December 31, 2017	$	128,682		$	109,554		$	3,769		$	23,542		$	(8,183	)
Cumulative effect of accounting change	(108,374		)	(109,554		)	(1,671		)	2,851			—
Net current period other comprehensive income (loss)	9,950			—			346			10,258			(654		)
Balance, March 31, 2018	$	30,258		$	—		$	2,444		$	36,651		$	(8,837	)

____________________


(1)	~~Reclassified upon receipt of proceeds~~Amount reclassified related to the ~~sale~~conversion of ~~an investment by a nonconsolidated subsidiary.~~our PREIT operating partnership units into common shares.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


~~15.~~14.	Variable Interest Entities ("VIEs")

Unconsolidated VIEs

As of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, we have several unconsolidated VIEs. 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 87 – Investments in Partially Owned Entities). As of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, the net carrying amount of our investments in these entities was ~~$341,516,000~~$213,719,000 and ~~$352,925,000,~~$257,882,000, respectively, and our maximum exposure to loss in these entities is limited to the carrying amount of our investments.

Consolidated VIEs

Our most significant consolidated VIEs are the Operating Partnership (for Vornado), ~~real estate fund investments,~~the Fund and the Crowne Plaza Joint Venture, the Farley joint venture and certain properties that have non-controlling interests. These entities are VIEs because the non-controlling interests do not have substantive kick-out or participating rights. We consolidate these entities because we control all ~~of their~~ significant business activities.

As of March 31, 2019, the total assets and liabilities of our consolidated VIEs, excluding the Operating Partnership, were $4,601,771,000 and $2,381,310,000, respectively. As of December 31, 2018, the total assets and liabilities of our consolidated VIEs, excluding the Operating Partnership, were ~~$3,575,404,000~~$4,445,436,000 and ~~$1,828,460,000, respectively. As of December 31, 2017, the total assets and liabilities of our consolidated VIEs, excluding the Operating Partnership, were $3,561,062,000 and $1,753,798,000,~~$2,533,753,000, respectively.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)

~~16. Fair Value Measurements~~


15.	Fair Value Measurements

ASC 820 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 sheets), (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, and 6.625% Series G and Series I cumulative redeemable preferred units which were redeemed on January 4 and 11, 2018 (see Note 13 -~~ ~~Shareholders' Equity/Partners' Capital~~))units). The tables below aggregate the fair values of these financial assets and liabilities by their levels in the fair value hierarchy atas of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.



(Amounts in thousands)	As of March 31, 2019
	Total		Level 1		Level 2		Level 3
Marketable securities	$	39,866	$	39,866	$	—	$	—
Real estate fund investments	322,858		—		—		322,858
Deferred compensation plan assets ($8,747 included in restricted cash and $93,176 in other assets)	101,923		64,361		—		37,562
Interest rate swaps (included in other assets)	19,613		—		19,613		—
Total assets	$	484,260	$	104,227	$	19,613	$	360,420

Mandatorily redeemable instruments (included in other liabilities)	$	50,561	$	50,561	$	—	$	—
Interest rate swaps (included in other liabilities)	24,851		—		24,851		—
Total liabilities	$	75,412	$	50,561	$	24,851	$	—

(Amounts in thousands)	As of December 31, 2018
	Total		Level 1		Level 2		Level 3
Marketable securities	$	152,198	$	152,198	$	—	$	—
Real estate fund investments	318,758		—		—		318,758
Deferred compensation plan assets ($8,402 included in restricted cash and $88,122 in other assets)	96,524		58,716		—		37,808
Interest rate swaps (included in other assets)	27,033		—		27,033		—
Total assets	$	594,513	$	210,914	$	27,033	$	356,566

Mandatorily redeemable instruments (included in other liabilities)	$	50,561	$	50,561	$	—	$	—
Interest rate swaps (included in other liabilities)	15,236		—		15,236		—
Total liabilities	$	65,797	$	50,561	$	15,236	$	—

(Amounts in thousands) As of March 31, 2018
Total Level 1 Level 2 Level 3
Marketable securities $ 149,766
$ 149,766
$ —
$ —
Real estate fund investments 336,552
—
—
336,552
Deferred compensation plan assets ($11,392 included in restricted cash and $98,133 in other assets) 109,525
70,040
—
39,485
Interest rate swaps (included in other assets) 36,678
—
36,678
—
Total assets $ 632,521
$ 219,806
$ 36,678
$ 376,037

Mandatorily redeemable instruments (included in other liabilities) $ 50,561
$ 50,561
$ —
$ —

(Amounts in thousands) As of December 31, 2017
Total Level 1 Level 2 Level 3
Marketable securities $ 182,752
$ 182,752
$ —
$ —
Real estate fund investments 354,804
—
—
354,804
Deferred compensation plan assets ($11,545 included in restricted cash and $97,633 in other assets) 109,178
69,050
—
40,128
Interest rate swaps (included in other assets) 27,472
—
27,472
—
Total assets $ 674,206
$ 251,802
$ 27,472
$ 394,932

Mandatorily redeemable instruments (included in other liabilities) $ 520,561
$ 520,561
$ —
$ —
Interest rate swaps (included in other liabilities) 1,052
—
1,052
—
Total liabilities $ 521,613
$ 520,561
$ 1,052
$ —

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


~~16.~~15.	Fair Value Measurements - continued

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued

Real Estate Fund Investments

As of March 31, ~~2018,~~2019, we had four real estate fund investments with an aggregate fair value of ~~$336,552,000,~~$322,858,000, or ~~$77,678,000 in excess of~~$6,706,000 below our 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 4.8 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, current and anticipated market conditions, 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 real estate fund investments atas of March 31, ~~2018~~2019 and December 31, ~~2017.~~2018.



	Range		Weighted Average (based on fair value of investments)
Unobservable Quantitative Input	March 31, 2019	December 31, 2018	March 31, 2019	December 31, 2018
Discount rates	10.0% to 15.0%	10.0% to 15.0%	13.4%	13.4%
Terminal capitalization rates	5.5% to 7.7%	5.4% to 7.7%	5.8%	5.7%

Range
Weighted Average
(based on fair value of investments)
Unobservable Quantitative Input March 31, 2018 December 31, 2017 March 31, 2018 December 31, 2017
Discount rates 10.0% to 15.1% 2.0% to 14.9% 12.6% 11.9%
Terminal capitalization rates 4.7% to 5.8% 4.7% to 6.7% 5.6% 5.5%

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 real estate fund investments that are classified as Level 3, for the three months ended March 31, ~~2018~~2019 and ~~2017.~~2018.



(Amounts in thousands)	For the Three Months Ended March 31,
	2019		2018
Beginning balance	$	318,758	$	354,804
Purchases/additional fundings	4,000		2,950
Net unrealized gain on held investments	100		—
Dispositions	—		(20,291		)
Net realized loss on exited investments	—		(911		)
Ending balance	$	322,858	$	336,552

(Amounts in thousands) For the Three Months Ended March 31,
2018 2017
Beginning balance $ 354,804
$ 462,132
Dispositions (20,291 ) —
Purchases 2,950
—
Net realized (loss) gain on exited investments (911 ) 241
Net unrealized loss on held investments —
(7,187 )
Other, net —
(240 )
Ending balance $ 336,552
$ 454,946

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


~~16.~~15.	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 period of time over which these underlying assets are expected to be liquidated is unknown. The third party 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 three months ended March 31, ~~2018~~2019 and ~~2017.~~2018.



(Amounts in thousands)	For the Three Months Ended March 31,
	2019			2018
Beginning balance	$	37,808		$	40,128
Sales	(2,114		)	(1,635		)
Purchases	908			14
Realized and unrealized gains	523			678
Other, net	437			300
Ending balance	$	37,562		$	39,485

(Amounts in thousands) For the Three Months Ended March 31,
2018 2017
Beginning balance $ 40,128
$ 57,444
Purchases 14
463
Sales (1,635 ) (2,737 )
Realized and unrealized gains 678
1,075
Other, net 300
665
Ending balance $ 39,485
$ 56,910

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 required to be measured for impairment at December 31, 2018. The fair values of real estate assets required to be measured for impairment were determined using comparable sales activity. There were no assets measured at fair value on a nonrecurring basis on our consolidated balance ~~sheets at~~sheet as of March 31, ~~2018 and December 31, 2017.~~2019.



(Amounts in thousands)	As of December 31, 2018
	Total		Level 1		Level 2		Level 3
Real estate asset	$	14,971	$	—	$	—	$	14,971

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


15.	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), 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 values of cash equivalents and borrowings under our unsecured revolving credit facilities and unsecured term loan are classified as Level 1. The fair values of our secured and unsecured debt are classified as Level 2. The table below summarizes the carrying amounts and fair value of these financial instruments as of March 31, ~~2018~~2019 and December 31, ~~2017.~~2018.



(Amounts in thousands)		As of March 31, 2019					As of December 31, 2018
		Carrying Amount			Fair Value		Carrying Amount			Fair Value
Cash equivalents		$	207,481		$	207,000	$	261,981		$	262,000
Debt:
	Mortgages payable	$	6,556,034		$	6,565,000	$	8,215,847		$	8,179,000
	Senior unsecured notes	850,000			868,000		850,000			847,000
	Unsecured term loan	750,000			750,000		750,000			750,000
	Unsecured revolving credit facilities	530,000			530,000		80,000			80,000
	Total	$	8,686,034	⁽¹⁾	$	8,713,000	$	9,895,847	⁽¹⁾	$	9,856,000

(Amounts in thousands) As of March 31, 2018 As of December 31, 2017

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value
Cash equivalents $ 1,110,550
$ 1,111,000
$ 1,500,227
$ 1,500,000
Debt:
Mortgages payable $ 8,164,718
$ 8,124,000
$ 8,203,839
$ 8,194,000
Senior unsecured notes 850,000
853,000
850,000
878,000
Unsecured term loan 750,000
750,000
750,000
750,000
Unsecured revolving credit facilities 80,000
80,000
—
—
Total $ 9,844,718
⁽¹⁾
$ 9,807,000
$ 9,803,839
⁽¹⁾
$ 9,822,000

____________________


(1)	Excludes ~~$70,241~~$46,508 and ~~$74,352~~$59,226 of deferred financing costs, net and other as of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

~~VORNADO REALTY TRUST AND VORNADO REALTY L.P.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(UNAUDITED)~~


~~17.~~16.	Stock-based Compensation

Vornado’s 2010 Omnibus Share Plan (the ~~"Plan"~~“Plan”) provides the Compensation Committee of ~~our~~Vornado's Board of Trustees (the ~~"Committee"~~“Committee”) the ability to grant incentive and non-qualified Vornado stock options, restricted stock, restricted Operating Partnership units ("OP units"), out-performance plan awards ~~and~~("OPPs"), appreciation-only long-term incentive plan units (“AO LTIP Units”) and Performance Conditioned Appreciation-Only Long-Term Incentive Plan Units ("Performance Conditioned AO LTIP Units") to certain of our employees and officers. We account for all equity-based compensation in accordance with ASC ~~718. Equity-based~~Topic 718, Compensation - Stock Compensation. Stock-based compensation expense, a component of "general and administrative" expenses on our consolidated statements of income, was ~~$13,669,000~~$31,654,000 and ~~$13,559,000~~$13,669,000 for the three months ended March 31, 2019 and 2018, respectively. General and ~~2017, respectively.~~administrative expense for the three months ended March 31, 2019 includes $16,211,000 of non-cash expense for the accelerated vesting of previously issued OP Units and Vornado restricted stock due to the removal of the time-based vesting requirement to participants who have reached 65 years of age. The right to sell such awards remains subject to original terms of grant. The increase in expense in the first quarter of 2019 will be completely offset by lower non-cash stock-based compensation expense of $2,578,000 in each of the second, third and fourth quarters of 2019 and $8,477,000 thereafter.

Performance Conditioned AO LTIP Units

On January ~~12, 2018,~~14, 2019, the Committee approved the issuance of Performance Conditioned AO LTIP Units pursuant to the Plan to ~~certain of~~ our named executive officers ~~and employees. In connection with the approval of AO LTIP Units, Vornado,~~ in its capacity as sole general partner of the Operating Partnership, amended the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership (the “Partnership Agreement”our 2019 proxy statement ("NEOs") ~~in order to establish the terms of the new class of partnership interests known as AO LTIP Units.~~

. Performance Conditioned AO LTIP Units are a class of partnership interests in the Operating Partnership that are intended to qualify as “profits interests” for federal income tax purposes and generally only allow the recipient to realize value to the extent the fair market value of a Vornado common share exceeds the threshold level set at the time the AO LTIP Units that require the achievement of certain performance conditions by a specified date or they are ~~granted, subject to any vesting conditions applicable to the award.~~forfeited. The ~~threshold level~~performance based condition is ~~intended to be equal to 100%~~met if Vornado common shares trade at or above 110% of the ~~then fair market value~~$64.48 grant price per share for any 20 consecutive days on or before the fourth anniversary following the date of ~~a Vornado common share on~~grant. If the performance conditions are not met, the awards are forfeited. If the performance conditions are met, once vested, the awards may be converted into Class A Operating Partnership units in the same manner as AO LTIP Units until ten years from the date of grant. The value of vested AO LTIP Units is realized through conversion of the AO LTIP Units into Class A Operating Partnership units. The number of Class A Units into which vested AO LTIP Units may be converted is determined based on the quotient of (i) the excess of the conversion value on the conversion date over the threshold value designated at the time the AO LTIP Unit was granted, divided by (ii) the conversion value on the conversion date. The “conversion value” is the value of a Vornado common share on the conversion date multiplied by the Conversion Factor as defined in the Partnership Agreement, which is currently one. AO LTIP Units vest ratably over four years and have a term of ten years from the grant date. The fair value of the Performance Conditioned AO LTIP Units on the date of grant was ~~$3,484,000,~~$8,983,000, of which ~~$622,000~~$7,481,000 was immediately expensed due to the acceleration of vesting for employees who are retirement ~~eligible (have reached age 65 or age 60 with at least 20 years of service).~~eligible. The remaining ~~$2,862,000~~$1,502,000 is being amortized into expense over a four-year period from the date of grant using a graded vesting attribution model.

Each holder will generally receive special income allocations in respect of an AO LTIP Unit equal to 10% (or such other percentage specified in the applicable award agreement) of the income allocated in respect of a Class A Unit. Upon conversion of AO LTIP Units to Class A Units, holders will be entitled to receive in respect of each such AO LTIP Unit, on a per unit basis, a special distribution equal to 10% (or such other percentage specified in the applicable award agreement) of the distributions received by a holder of an equivalent number of Class A Units during the period from the grant date of the AO LTIP Units through the date of conversion.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


17.	~~Stock-based Compensation - continued~~

~~2018 Outperformance Plan (“2018 OPP”)~~

On March 15, 2018, the Committee approved the 2018 OPP, a multi-year, $35,000,000 performance-based equity compensation plan of which $27,354,000 was granted to senior executives. The fair value of the 2018 OPP granted was $10,283,000, of which $8,040,000 was immediately expensed due to the acceleration of vesting for employees who are retirement eligible (have reached age 65 or age 60 with at least 20 years of service). The remaining $2,243,000 is being amortized into expense over a five-year period from the date of grant using a graded vesting attribution model.

Under the 2018 OPP, participants have the opportunity to earn compensation payable in the form of equity awards if Vornado outperforms a predetermined total shareholder return (“TSR”) and/or outperforms the market with respect to relative total TSR during the three-year performance period (the “Performance Period”) from March 15, 2018 to March 15, 2021 (the “Measurement Date”). Specifically, awards under the 2018 OPP may potentially be earned if Vornado (i) achieves a TSR above a benchmark weighted index (the “Index”) comprised 70% of the SNL US Office REIT Index and 30% of the SNL US Retail Index over the Performance Period (the “Relative Component”), and/or (ii) achieves a TSR greater than 21% over the Performance Period (the “Absolute Component”). The value of awards under the Relative Component and Absolute Component will be calculated separately and will each be subject to an aggregate $35,000,000 maximum award cap for all participants. The two components will be added together to determine the aggregate award size, which shall also be subject to the aggregate $35,000,000 maximum award cap for all participants. In the event awards are earned under the Absolute Component, but Vornado underperforms the Index by more than 200 basis points per annum over the Performance Period (600 basis points over the three years), the amount earned under the Absolute Component will be reduced (and potentially fully negated) based on the degree by which the Index exceeds Vornado’s TSR. In the event awards are earned under the Relative Component, but Vornado fails to achieve a TSR of at least 3% per annum, awards earned under the Relative Component will be reduced on a ratable sliding scale based on Vornado’s absolute TSR performance, with awards earned under the Relative Component being reduced by a maximum of 50% in the event Vornado’s TSR during the Measurement Period is 0% or negative. If the designated performance objectives are achieved, awards under the 2018 OPP will vest ratably on the Measurement Date and the first and second anniversary of the Measurement Date. In addition, all of Vornado’s Named Executive Officers (as defined in Vornado’s Proxy Statement filed on Schedule 14A with the Securities and Exchange Commission on April 6, 2018) are required to hold any earned and vested awards for one year following each such vesting date. Dividends on awards granted under the 2018 OPP accrue during the Performance Period and are paid to participants if awards are ultimately earned based on the achievement of the designated performance objectives.


~~18.~~	Interest and Other Investment ~~(Loss)~~ Income (Loss), Net

The following table sets forth the details of interest and other investment income (loss) ~~income,~~, net:



(Amounts in thousands)	For the Three Months Ended March 31,
	2019			2018
Increase (decrease) in fair value of marketable securities:
Lexington(see page 24 for details)	$	16,068		$	(32,875	)
PREIT (see page 24 for details)	(15,649		)	—
Other	42			(111		)
	461			(32,986		)
Interest on cash and cash equivalents and restricted cash	2,067			3,557
Interest on loans receivable	1,606			743
Dividends on marketable securities	—			3,353
Other, net	911			949
	$	5,045		$	(24,384	)

(Amounts in thousands) For the Three Months Ended March 31,
2018 2017
Decrease in fair value of marketable securities (see Note 7 for details) $ (32,986 ) $ —
Dividends on marketable securities 3,353
3,307
Interest on loans receivable 743
743
Other, net 4,506
2,645
$ (24,384 ) $ 6,695


~~19.~~18.	Interest and Debt Expense

The following table sets forth the details of interest and debt expense:



(Amounts in thousands)	For the Three Months Ended March 31,
	2019			2018
Interest expense⁽¹⁾	$	117,647		$	94,788
Capitalized interest and debt expense	(23,325		)	(14,726		)
Amortization of deferred financing costs	8,141			8,104
	$	102,463		$	88,166

(Amounts in thousands) For the Three Months Ended March 31,
2018 2017
Interest expense $ 94,788
$ 84,970
Amortization of deferred financing costs 8,104
8,569
Capitalized interest and debt expense (14,726 ) (10,815 )
$ 88,166
$ 82,724
____________________


(1)	Includes $22,540 debt prepayment costs in connection with the redemption of $400,000 5.00% senior unsecured notes which were scheduled to mature in January 2022.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


~~20.~~19.	Income (Loss) ~~Income~~ Per Share/Income (Loss) ~~Income~~ Per Class A Unit

Vornado Realty Trust

The following table provides a reconciliation of both net income attributable to Vornado and the number of common shares used in the computation of (i) basic income (loss) ~~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 (loss) ~~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, restricted stock awards, OP Performance Units, AO LTIP Units, Performance Conditioned AO LTIP Units and ~~Out-Performance Plan awards.~~OPPs.


(Amounts in thousands, except per share amounts)	(Amounts in thousands, except per share amounts)	For the Three Months Ended March 31,						For the Three Months Ended March 31,
		2018			2017			2019			2018
Numerator:	Numerator:
	Income from continuing operations, net of income attributable to noncontrolling interests	$	10,021		$	49,519
	(Loss) income from discontinued operations, net of income attributable to noncontrolling interests	(341		)	14,362
	Net income attributable to Vornado	9,680			63,881
	Preferred share dividends	(13,035		)	(16,129		)
	Preferred share issuance costs	(14,486		)	—
	Net (loss) income attributable to common shareholders	(17,841		)	47,752
	Earnings allocated to unvested participating securities	(11		)	(15		)
	Numerator for basic and diluted (loss) income per share	$	(17,852	)	$	47,737
Income from continuing operations, net of income attributable to noncontrolling interests								$	194,150		$	10,021
Loss from discontinued operations, net of income attributable to noncontrolling interests								(128		)	(341		)
Net income attributable to Vornado								194,022			9,680
Preferred share dividends								(12,534		)	(13,035		)
Preferred share issuance costs								—			(14,486		)
Net income (loss) attributable to common shareholders								181,488			(17,841		)
Earnings allocated to unvested participating securities								(19		)	(11		)
Numerator for basic income (loss) per share								181,469			(17,852		)
Impact of assumed conversions:
Convertible preferred share dividends								15			—
Numerator for diluted income (loss) per share								$	181,484		$	(17,852	)

Denominator:	Denominator:
Denominator for basic income (loss) per share – weighted average shares								190,689			190,081
Effect of dilutive securities⁽¹⁾:
Employee stock options and restricted share awards								271			—
Convertible preferred shares								36			—
Denominator for diluted income (loss) per share – weighted average shares and assumed conversions								190,996			190,081
	Denominator for basic (loss) income per share – weighted average shares	190,081			189,210
INCOME (LOSS) PER COMMON SHARE – BASIC:
Income (loss) from continuing operations, net								$	0.95		$	(0.09	)
Net income (loss) per common share								$	0.95		$	(0.09	)
	Effect of dilutive securities⁽¹⁾:
	Employee stock options and restricted share awards	—			1,162
	Denominator for diluted (loss) income per share – weighted average shares and assumed conversions	190,081			190,372

(LOSS) INCOME PER COMMON SHARE – BASIC:
	(Loss) income from continuing operations, net	$	(0.09	)	$	0.18
	Income from discontinued operations, net	—			0.07
	Net (loss) income per common share	$	(0.09	)	$	0.25

(LOSS) INCOME PER COMMON SHARE – DILUTED:
	(Loss) income from continuing operations, net	$	(0.09	)	$	0.18
	Income from discontinued operations, net	—			0.07
	Net (loss) income per common share	$	(0.09	)	$	0.25
INCOME (LOSS) PER COMMON SHARE – DILUTED:
Income (loss) from continuing operations, net								$	0.95		$	(0.09	)
Net income (loss) per common share								$	0.95		$	(0.09	)

____________________


(1)	The effect of dilutive securities for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 excludes an aggregate of12,525and 13,334 ~~and 12,405~~ weighted average common share equivalents, respectively, as their effect was anti-dilutive.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


~~20.~~19.	Income (Loss) ~~Income~~ Per Share/Income (Loss) ~~Income~~ Per Class A Unit - continued

Vornado Realty L.P.

The following table provides a reconciliation of both net income attributable to Vornado Realty L.P. and the number of Class A units used in the computation of (i) basic income (loss) ~~income~~ per Class A unit - which includes the weighted average number of Class A units outstanding without regard to dilutive potential Class A units, and (ii) diluted income (loss) ~~income~~ per Class A unit - which includes the weighted average Class A units and dilutive unit equivalents. Dilutive unit equivalents may include our Series A convertible preferred units, Vornado stock options, Vornado restricted ~~unit~~stock awards, OP Units, AO LTIP Units, Performance Conditioned AO LTIP Units and ~~Out-Performance Plan awards.~~OPPs.


(Amounts in thousands, except per unit amounts)	(Amounts in thousands, except per unit amounts)	For the Three Months Ended March 31,						For the Three Months Ended March 31,
		2018			2017			2019			2018
Numerator:	Numerator:
	Income from continuing operations, net of income attributable to noncontrolling interests	$	8,919		$	51,792
	(Loss) income from discontinued operations	(363		)	15,318
	Net income attributable to Vornado Realty L.P.	8,556			67,110
	Preferred unit distributions	(13,084		)	(16,178		)
	Preferred unit issuance costs	(14,486		)	—
	Net (loss) income attributable to Class A unitholders	(19,014		)	50,932
	Earnings allocated to unvested participating securities	(771		)	(1,018		)
	Numerator for basic and diluted (loss) income per Class A unit	$	(19,785	)	$	49,914
Income from continuing operations, net of income attributable to noncontrolling interests in consolidated subsidiaries								$	206,361		$	8,919
Loss from discontinued operations								(137		)	(363		)
Net income attributable to Vornado Realty L.P.								206,224			8,556
Preferred unit distributions								(12,575		)	(13,084		)
Preferred unit issuance costs								—			(14,486		)
Net income (loss) attributable to Class A unitholders								193,649			(19,014		)
Earnings allocated to unvested participating securities								(1,147		)	(771		)
Numerator for basic income (loss) per Class A unit								192,502			(19,785		)
Impact of assumed conversions:
Convertible preferred unit distributions								15			—
Numerator for diluted income (loss) per Class A unit								$	192,517		$	(19,785	)

Denominator:	Denominator:
Denominator for basic income (loss) per Class A unit – weighted average units								202,772			201,929
Effect of dilutive securities⁽¹⁾:
Vornado stock options and restricted unit awards								536			—
Convertible preferred units								36			—
Denominator for diluted income (loss) per Class A unit – weighted average units and assumed conversions								203,344			201,929
	Denominator for basic (loss) income per Class A unit – weighted average units	201,929			200,845
INCOME (LOSS) PER CLASS A UNIT – BASIC:
Income (loss) from continuing operations, net								$	0.95		$	(0.10	)
Net income (loss) per Class A unit								$	0.95		$	(0.10	)
	Effect of dilutive securities⁽¹⁾:
	Vornado stock options and restricted unit awards	—			1,802
	Denominator for diluted (loss) income per Class A unit – weighted average units and assumed conversions	201,929			202,647

(LOSS) INCOME PER CLASS A UNIT – BASIC:
	(Loss) income from continuing operations, net	$	(0.10	)	$	0.17
	Income from discontinued operations, net	—			0.08
	Net (loss) income per Class A unit	$	(0.10	)	$	0.25

(LOSS) INCOME PER CLASS A UNIT – DILUTED:
	(Loss) income from continuing operations, net	$	(0.10	)	$	0.17
	Income from discontinued operations, net	—			0.08
	Net (loss) income per Class A unit	$	(0.10	)	$	0.25
INCOME (LOSS) PER CLASS A UNIT – DILUTED:
Income (loss) from continuing operations, net								$	0.95		$	(0.10	)
Net income (loss) per Class A unit								$	0.95		$	(0.10	)

____________________


(1)	The effect of dilutive securities for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 excludes an aggregate of ~~1,446~~177 and ~~130~~1,446 weighted average Class A unit equivalents, respectively, as their effect was anti-dilutive.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


20.	Leases

As lessor

We lease space to tenants under operating leases. Most of the leases provide for the payment of fixed base rent payable monthly in advance. Office building leases generally require tenants to reimburse us for operating costs and real estate taxes above their base year costs. Certain leases provide for pass-through to tenants for their share of real estate taxes, insurance and common area maintenance. Certain leases also require additional variable rent payments based on a percentage of the tenants’ sales. None of our tenants accounted for more than 10% of total revenues for the three months ended March 31, 2019 and 2018. We have elected to account for lease revenues (including base and variable rent) and the reimbursement of common area maintenance expenses as a single lease component recorded as "rental revenues" on our consolidated statements of income. As of March 31, 2019, under ASC 842, future undiscounted cash flows under non-cancelable operating leases were as follows:



(Amounts in thousands)	As of March 31, 2019
For the remainder of 2019	$	1,977,372
For the year ended December 31,
2020	1,525,340
2021	1,492,760
2022	1,433,740
2023	1,298,470
2024	1,080,729
Thereafter	4,929,317

As of December 31, 2018, under ASC 840, future undiscounted cash flows under non-cancelable operating leases were as follows:



(Amounts in thousands)	As of December 31, 2018
For the year ended December 31,
2019	$	1,547,162
2020	1,510,097
2021	1,465,024
2022	1,407,615
2023	1,269,141
Thereafter	5,832,467

The components of lease revenues for the three months ended March 31, 2019 were as follows:



(Amounts in thousands)	For the Three Months Ended March 31, 2019
Fixed lease revenues	$	414,877
Variable lease revenues	72,429
Lease revenues	$	487,306

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)

20. Leases - continued

As lessee

We have a number of ground leases which are classified as operating leases. On January 1, 2019, we recorded $526,866,000 of ROU assets and lease liabilities. Our ROU assets were reduced by $37,269,000 of accrued rent expense reclassified from “other liabilities” and $4,267,000 of acquired above-market lease liabilities, net, reclassified from “deferred revenue” and increased by $23,665,000 of acquired below-market lease assets, net, reclassified from “identified intangible assets, net of accumulated amortization” and $1,584,000 of prepaid lease payments reclassified from "other assets." As of March 31, 2019, our ROU assets and lease liabilities were $457,662,000 and $484,173,000, respectively.

The discount rate applied to measure each ROU asset and lease liability is based on our incremental borrowing rate ("IBR"). We consider the general economic environment and our credit rating and factor in various financing and asset specific adjustments to ensure the IBR is appropriate to the intended use of the underlying lease. As we did not elect to apply hindsight, lease term assumptions determined under ASC 840 were carried forward and applied in calculating the lease liabilities recorded under ASC 842. Certain of our ground leases offer renewal options which we assess against relevant economic factors to determine whether we are reasonably certain of exercising or not exercising the option. Lease payments associated with renewal periods that we are reasonably certain will be exercised are included in the measurement of the corresponding lease liability and ROU asset.

The following table sets forth information related to the measurement of our lease liabilities as of March 31, 2019:



(Amounts in thousands)	As of March 31, 2019
Weighted average remaining lease term (in years)	41.55
Weighted average discount rate	4.89		%
Cash paid for operating leases	$	6,111

We recognize rent expense as a component of "operating" expenses on our consolidated statements of income. Rent expense is comprised of fixed and variable lease payments. Variable lease payments include percentage rent and rent resets based on an index or rate. The following table sets forth the details of rent expense for the three months ended March 31, 2019:



(Amounts in thousands)	For the Three Months Ended March 31, 2019
Fixed rent expense	$	10,626
Variable rent expense	620
Rent expense	$	11,246

As of March 31, 2019, future lease payments under operating ground leases were as follows:



(Amounts in thousands)	As of March 31, 2019
For the remainder of 2019	$	20,361
For the year ended December 31,
2020	28,352
2021	28,745
2022	29,646
2023	30,061
2024	30,495
Thereafter	1,037,252
Total undiscounted cash flows	1,204,912
Present value discount	(720,739		)
Lease liabilities	$	484,173

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)

20. Leases - continued

As lessee - continued

The future lease payments detailed on the previous page exclude the ground and building lease at the Farley Office and Retail Building (the "Project"). We have a 95% ownership interest in a joint venture with the Related Companies ("Related") which was designated by Empire State Development ("ESD"), an entity of New York State, to develop the Project. The Project will include a new Moynihan Train Hall and approximately 850,000 rentable square feet of commercial space, comprised of approximately 730,000 square feet of office space and approximately 120,000 square feet of retail space. The joint venture has a 99-year triple-net lease with ESD for the commercial space at the Project. The lease has not yet commenced since construction of the Project is on-going.

The joint venture has entered into a development agreement with ESD to build the adjacent Moynihan Train Hall, with Vornado and Related each guaranteeing the joint venture's obligations. The joint venture has entered into a design-build contract with Skanska Moynihan Train Hall Builders pursuant to which they will build the Moynihan Train Hall, thereby fulfilling all of the joint venture's obligations to ESD. The obligations of Skanska Moynihan Train Hall Builders have been bonded by Skanska USA and bear a full guaranty from Skanska AB. As a result of our involvement in the construction of the asset, we have been deemed the accounting owner of the property in accordance with ASC 842-40-55. Future undiscounted cash flows for the lease, including fixed payments in lieu of real estate taxes, as of March 31, 2019 were as follows:



(Amounts in thousands)	As of March 31, 2019
For the remainder of 2019	$	6,822
For the year ended December 31,
2020	10,402
2021	7,229
2022	7,444
2023	7,809
2024	8,330
Thereafter	519,048

As of December 31, 2018, under ASC 840, future lease payments under operating ground leases were as follows:



(Amounts in thousands)	As of December 31, 2018
For the year ended December 31,
2019	$	46,147
2020	45,258
2021	42,600
2022	43,840
2023	44,747
Thereafter	1,612,627

Certain of our ground leases are subject to fair market rent resets based on a percentage of the appraised value of the underlying assets at specified future dates. Fair market rent resets do not give rise to remeasurement of the related right-of-use assets and lease liabilities. Fair market rent resets, which may be material, will be recognized in the periods in which they are incurred.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


21.	Commitments and Contingencies

Insurance

We maintain general liability insurance with limits of $300,000,000 per occurrence and per property, and all risk property and rental value insurance with limits of $2.0 billion per occurrence, with sub-limits for certain perils such as flood and earthquake. Our California properties have earthquake insurance with coverage of ~~$180,000,000~~$260,000,000 per occurrence and in the aggregate, subject to a deductible in the amount of 5% of the value of the affected property. 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 the Terrorism Risk Insurance Program Reauthorization Act of 2015, which expires in December 2020.

~~VORNADO REALTY TRUST AND VORNADO REALTY L.P.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(UNAUDITED)~~


~~21.~~	~~Commitments and Contingencies - continued~~

~~Insurance - continued~~

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 acts of terrorism including 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 ~~$1,601,000~~$1,453,000 and ~~18%~~19% of the balance of a covered loss and the Federal government is responsible for the remaining portion of a covered loss. We are ultimately responsible for any loss incurred by PPIC.

We continue to monitor the state of the insurance market and the scope and cost of coverage for acts of terrorism. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for deductibles and losses in excess of our insurance coverage, which could be material.

Our debt instruments, consisting of mortgage loans secured by our properties, ~~which are generally 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 a reasonable cost in the future. Further, if lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance or refinance our properties and expand our portfolio.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


21.	Commitments and Contingencies - continued

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 currently 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 cost to us.

~~Generally, our~~Our mortgage loans are non-recourse to ~~us. However, in~~us, except for the mortgage loan secured by 7 West 34th Street and 435 Seventh Avenue, which we guaranteed and therefore is part of our tax basis. 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 March 31, ~~2018,~~2019, the aggregate dollar amount of these guarantees and master leases is approximately ~~$647,000,000.~~ $582,000,000.

As of March 31, ~~2018, $8,921,000~~2019, $15,365,000 of letters of credit was outstanding under one of our unsecured revolving credit facilities. Our unsecured revolving credit facilities contain financial covenants that require us to maintain minimum interest rate 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 unsecured 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.

~~In September 2016, our 50.1%~~A joint venture ~~with Related Companies ("Related")~~in which we own a 95.0% ownership interest was designated by Empire State Development ("ESD"), an entity of New York State, to ~~redevelop~~develop the ~~historic~~ Farley ~~Post~~ Office and Retail Building. The joint venture entered into a development agreement with ESD and a design-build contract with Skanska Moynihan Train Hall Builders. Under the development agreement with ESD, the joint venture is obligated to build the Moynihan Train Hall, with Vornado and Related each guaranteeing the joint venture’s obligations. Under the design-build agreement, Skanska Moynihan Train Hall Builders is obligated to fulfill all of the joint venture’s obligations. The obligations of Skanska Moynihan Train Hall Builders have been bonded by Skanska USA and bear a full guaranty from Skanska AB.

As of March 31, ~~2018,~~2019, we expect to fund additional capital to certain of our partially owned entities aggregating approximately ~~$52,000,000.~~$16,000,000.

As of March 31, ~~2018,~~2019, we have construction commitments aggregating approximately ~~$389,000,000.~~$774,000,000.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


22.	Segment Information

Net Operating Income ~~("NOI"~~(“NOI”) represents total revenues less operating expenses. We consider NOI to be the primary non-GAAP financial 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 NOI, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI should not be considered a substitute for net income. NOI may not be comparable to similarly titled measures employed by other companies.

Below is a reconciliation of net income, the most directly comparable GAAP financial measure, to NOI at share and NOI at share - cash basis for the three months ended March 31, ~~2018~~2019 and ~~2017.~~2018.


(Amounts in thousands)	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2018			2017			2019			2018
Net income	$	282		$	73,847		$	213,044		$	282

Deduct:
Loss (income) from partially owned entities	9,904			(1,358		)
Loss (income) from real estate fund investments	8,807			(268		)
Interest and other investment loss (income), net	24,384			(6,695		)
(Income) loss from partially owned entities							(7,320		)	9,904
Interest and other investment (income) loss, net							(5,045		)	24,384
Net gains on disposition of wholly owned and partially owned assets	—			(501		)	(220,294		)	—
Loss (income) from discontinued operations	363			(15,318		)
NOI attributable to noncontrolling interests in consolidated subsidiaries	(17,312		)	(16,338		)	(17,403		)	(17,312		)

Add:
Loss from real estate fund investments							167			8,807
Depreciation and amortization expense	108,686			105,128			116,709			108,686
General and administrative expense	43,633			47,237			58,020			42,533
Transaction related costs and other	13,156			752			149			13,156
NOI from partially owned entities	67,513			66,097			67,402			67,513
Interest and debt expense	88,166			82,724			102,463			88,166
Loss from discontinued operations							137			363
Income tax expense	1,454			1,851			29,743			2,554
NOI at share	349,036			337,158			337,772			349,036
Non cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other	(17,948		)	(20,481		)
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other							(5,181		)	(17,948		)
NOI at share - cash basis	$	331,088		$	316,677		$	332,591		$	331,088

VORNADO REALTY TRUST AND VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)


22.	Segment Information - continued

~~22. Segment Information - continued~~

Below is a summary of NOI at share and NOI at share - cash basisby segment for the three months ended March 31, ~~2018~~2019 and ~~2017.~~2018.


(Amounts in thousands)	For the Three Months Ended March 31, 2018									For the Three Months Ended March 31, 2019
	Total			New York			Other			Total			New York			Other
Total revenues	$	536,437		$	448,484		$	87,953		$	534,668		$	443,285		$	91,383
Operating expenses	237,602			197,916			39,686			246,895			198,095			48,800
NOI - consolidated	298,835			250,568			48,267			287,773			245,190			42,583
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries	(17,312		)	(11,745		)	(5,567		)	(17,403		)	(11,407		)	(5,996		)
Add: Our share of NOI from partially owned entities	67,513			49,773			17,740
Add: NOI from partially owned entities										67,402			49,575			17,827
NOI at share	349,036			288,596			60,440			337,772			283,358			54,414
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other	(17,948		)	(17,323		)	(625		)
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other										(5,181		)	(6,618		)	1,437
NOI at share - cash basis	$	331,088		$	271,273		$	59,815		$	332,591		$	276,740		$	55,851



(Amounts in thousands)	For the Three Months Ended March 31, 2018
	Total			New York			Other
Total revenues	$	536,437		$	448,484		$	87,953
Operating expenses	237,602			197,916			39,686
NOI - consolidated	298,835			250,568			48,267
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries	(17,312		)	(11,745		)	(5,567		)
Add: NOI from partially owned entities	67,513			49,773			17,740
NOI at share	349,036			288,596			60,440
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other	(17,948		)	(17,323		)	(625		)
NOI at share - cash basis	$	331,088		$	271,273		$	59,815

(Amounts in thousands) For the Three Months Ended March 31, 2017
Total New York Other
Total revenues $ 508,058
$ 426,239
$ 81,819
Operating expenses 220,659
183,107
37,552
NOI - consolidated 287,399
243,132
44,267
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries (16,338 ) (11,439 ) (4,899 )
Add: Our share of NOI from partially owned entities 66,097
45,462
20,635
NOI at share 337,158
277,155
60,003
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other (20,481 ) (18,372 ) (2,109 )
NOI at share - cash basis $ 316,677
$ 258,783
$ 57,894

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Trustees of Vornado Realty Trust

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Vornado Realty Trust and subsidiaries (the "Company") as of March 31, ~~2018,~~2019, the related consolidated statements of income and comprehensive income for the three-month periods ended March 31, 2019 and 2018, and of changes in equity, and cash flows, for the three-month periods ended March 31, ~~2018~~2019 and ~~2017,~~2018, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, ~~2017,~~2018, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended; and in our report dated February ~~12, 2017,~~11, 2019, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, ~~2017,~~2018, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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

/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey

April ~~30, 2018~~29, 2019

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of Vornado Realty L.P.

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Vornado Realty L.P. and subsidiaries (the "Partnership") as of March 31, ~~2018,~~2019, the related consolidated statements of income and comprehensive income for the three-month periods ended March 31, 2019 and 2018, and of changes in equity, and cash flows, for the three-month periods ended March 31, ~~2018~~2019 and ~~2017,~~2018, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Partnership as of December 31, ~~2017,~~2018, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended; and in our report dated February ~~12, 2017,~~11, 2019, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, ~~2017,~~2018, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey

April ~~30, 2018~~29, 2019

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

Certain statements contained in this Quarterly Report constitute forward‑looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Quarterly Report on Form 10‑Q. 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 Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or the date of any document incorporated by reference. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a discussion of our consolidated financial statements for the three months ended March 31, ~~2018.~~2019. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three months ended March 31, ~~2018~~2019 are not necessarily indicative of the operating results for the full year. Certain prior year balances have been reclassified in order to conform to the current year presentation.

Overview

Vornado Realty Trust (“Vornado”) is a ~~fully integrated~~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”). Vornado is the sole general partner of, and owned approximately 93.4% of the common limited partnership interest in the Operating Partnership as of March 31, ~~2018.~~2019. All references to the “Company,” “we,” ~~“us,”~~“us” and “our” mean, collectively, Vornado, the Operating Partnership and those entities/subsidiaries consolidated by Vornado.

We compete with a large number of real estate property owners and developers, some of which may be willing to accept lower returns on their investments. Principal factors of competition are rents charged, sales prices, attractiveness of location, the quality of the property and the breadth and the quality of services provided. Our success depends upon, among other factors, trends of the global, national, regional and local economies, the financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation, population and employment trends. See ~~"Risk Factors"~~“Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018 for additional information regarding these factors.

Vornado Realty Trust

Quarter Ended March 31, ~~2018~~2019 Financial Results Summary

Net ~~loss~~income attributable to common shareholders for the quarter ended March 31, ~~2018~~2019 was ~~$17,841,000,~~$181,488,000, or ~~$0.09~~$0.95 per diluted share, compared to a net ~~income attributable to common shareholders~~loss of ~~$47,752,000,~~$17,841,000, or ~~$0.25~~$0.09 per diluted share, for the prior year’s quarter. The quarters ended March 31, ~~2018~~2019 and ~~2017~~2018 include certain items that impact the comparability of period to period net income (loss) ~~income~~ attributable to common shareholders, which are listed in the table ~~below.~~on the following page. The aggregate of these items, net of amounts attributable to noncontrolling interests, increased net ~~loss attributable to common shareholders for the quarter ended March 31, 2018 by $74,229,000, or $0.39 per diluted share, and increased net~~ income attributable to common shareholders for the quarter ended March 31, ~~2017~~2019 by ~~$879,000,~~$156,674,000, or ~~$0.00~~$0.82 per diluted ~~share.~~share, and increased net loss attributable to common shareholders by $73,181,000, or $0.38 per diluted share, for the quarter ended March 31, 2018. The decrease in net income attributable to common shareholders was partially due to $16,211,000, or $0.08 per share, of non-cash expense for the accelerated vesting of previously issued OP Units and Vornado restricted stock due to the removal of the time-based vesting requirement to participants who have reached 65 years of age. The right to sell such awards remains subject to original terms of grant. The increase in expense in the first quarter of 2019 will be completely offset by lower non-cash stock-based compensation expense of $2,578,000 in each of the second, third and fourth quarters of 2019 and $8,477,000 thereafter.

Funds From Operations ~~("FFO"~~(“FFO”) attributable to common shareholders plus assumed conversions for the quarter ended March 31, ~~2018~~2019 was ~~$102,479,000,~~$247,684,000, or ~~$0.54~~ $1.30per diluted share, compared to ~~$205,729,000,~~$135,000,000, or ~~$1.08~~ $0.71per diluted share, for the prior year’s quarter. FFO attributable to common shareholders plus assumed conversions for the quarters ended March 31, ~~2018~~2019 and ~~2017~~2018 include certain items that impact the comparability of period to period FFO, which are listed in the table ~~below.~~on the following page. The aggregate of these items, net of amounts attributable to noncontrolling interests, ~~decreased~~ increasedFFO attributable to common shareholders plus assumed conversions for the quarter ended March 31, ~~2018~~2019 by ~~$71,363,000,~~$97,745,000, or ~~$0.37~~ $0.51per diluted share, and ~~increased~~decreased FFO attributable to common shareholders plus assumed conversions by $37,907,000, or $0.20 per diluted share, for the quarter ended March 31, ~~2017 by $45,624,000,~~2018. The decrease in FFO attributable to common shareholders was partially due to $16,211,000, or ~~$0.24~~$0.08 per ~~diluted share.~~

share, of non-cash expense for the accelerated vesting of previously issued OP Units and Vornado restricted stock, as described above.

(Amounts in thousands) For the Three Months Ended March 31,
2018 2017
Certain expense (income) items that impact net (loss) income attributable to common shareholders:
Decrease in fair value of marketable securities resulting from a new GAAP accounting standard effective January 1, 2018 $ 34,660
$ —
Our share of potential additional New York City transfer taxes based on a Tax Tribunal interpretation which Vornado is appealing 23,503
—
Preferred share issuance costs 14,486
—
666 Fifth Avenue Office Condominium (49.5% interest) 3,492
10,197
Our share of real estate fund investments (excluding our $4,252 share of One Park Avenue potential additional transfer taxes and reduction in carried interest) (814 ) 3,235
Loss (income) from discontinued operations (primarily related to JBG SMITH Properties operating results and transaction costs through July 17, 2017 spin-off) 363
(15,318 )
Other 3,420
949
79,110
(937 )
Noncontrolling interests' share of above adjustments (4,881 ) 58
Total of certain expense (income) items that impact net (loss) income attributable to common shareholders $ 74,229
$ (879 )

Overview - continued

(Amounts in thousands) For the Three Months Ended March 31,
2018 2017
Certain expense (income) items that impact FFO attributable to common shareholders plus assumed conversions:
Decrease in fair value of marketable securities resulting from a new GAAP accounting standard effective January 1, 2018 $ 34,660
$ —
Our share of potential additional New York City transfer taxes based on a Tax Tribunal interpretation which Vornado is appealing 23,503
—
Preferred share issuance costs 14,486
—
Our share of real estate fund investments (excluding our $4,252 share of One Park Avenue potential additional transfer taxes and reduction in carried interest) (814 ) 3,235
FFO from discontinued operations (primarily related to JBG SMITH Properties operating results and transaction costs through July 17, 2017 spin-off) 363
(48,093 )
666 Fifth Avenue Office Condominium (49.5% interest) 137
(3,553 )
Other 3,721
(249 )
76,056
(48,660 )
Noncontrolling interests' share of above adjustments (4,693 ) 3,036
Total of certain expense (income) items that impact FFO attributable to common shareholders plus assumed conversions $ 71,363
$ (45,624 )

~~Vornado Realty L.P.~~

~~Quarter Ended March 31, 2018 Financial Results Summary~~

~~Net loss~~The following table reconciles the difference between our net income (loss) attributable to ~~Class A unitholders for the quarter ended March 31, 2018 was $19,014,000, or $0.10 per diluted Class A unit, compared to~~common shareholders and our net income attributable to Class A unitholders of $50,932,000, or $0.25 per diluted Class A unit, for the prior year’s quarter. The quarters ended March 31, 2018 and 2017 include certain items that impact net (loss) income attributable to Class A unitholders, which are listed in the table below. The aggregate of these items increased net loss attributable to Class A unitholders for the quarter ended March 31, 2018 by $79,110,000, or $0.39 per diluted Class A unit, and increased net income attributable to Class A unitholders for the quarter ended March 31, 2017 by $937,000, or $0.00 per diluted Class A unit.

common shareholders, as adjusted:

(Amounts in thousands) For the Three Months Ended March 31,
2018 2017
Certain expense (income) items that impact net (loss) income attributable to Class A unitholders:
Decrease in fair value of marketable securities resulting from a new GAAP accounting standard effective January 1, 2018 $ 34,660
$ —
Our share of potential additional New York City transfer taxes based on a Tax Tribunal interpretation which Vornado is appealing 23,503
—
Preferred unit issuance costs 14,486
—
666 Fifth Avenue Office Condominium (49.5% interest) 3,492
10,197
Our share of real estate fund investments (excluding our $4,252 share of One Park Avenue potential additional transfer taxes and reduction in carried interest) (814 ) 3,235
Loss (income) from discontinued operations (primarily related to JBG SMITH Properties operating results and transaction costs through July 17, 2017 spin-off) 363
(15,318 )
Other 3,420
949
Total of certain expense (income) items that impact net (loss) income attributable to Class A unitholders $ 79,110
$ (937 )



(Amounts in thousands)	For the Three Months Ended March 31,
	2019			2018
Certain (income) expense items that impact net income (loss) attributable to common shareholders:
After-tax net gain on sale of 220 Central Park South ("220 CPS") condominium units	$	(130,954	)	$	—
Net gain from sale of Urban Edge Properties ("UE") common shares	(62,395		)	—
Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 2022	22,540			—
Mark-to-market (increase) decrease in Lexington Realty Trust ("Lexington") common shares (sold on March 1, 2019)	(16,068		)	32,875
Mark-to-market decrease in Pennsylvania Real Estate Investment Trust ("PREIT") common shares (accounted for as a marketable security from March 12, 2019)	15,649			—
Our share of disputed additional New York City transfer taxes based on a Tax Tribunal interpretation	—			23,503
Preferred share issuance costs	—			14,486
Previously capitalized internal leasing costs⁽¹⁾	—			(1,348		)
Other	4,056			8,666
	(167,172		)	78,182
Noncontrolling interests' share of above adjustments	10,498			(5,001		)
Total of certain (income) expense items that impact net income (loss) attributable to common shareholders	$	(156,674	)	$	73,181


(1)	The three months ended March 31, 2018 have been reduced by $1,348 for previously capitalized internal leasing cost to present 2018 “as adjusted” financial results on a comparable basis with the current year as a result of the January 1, 2019 adoption of a new GAAP accounting standard under which internal leasing costs can no longer be capitalized.

The following table reconciles the difference between our FFO attributable to common shareholders plus assumed conversions and our FFO attributable to common shareholders plus assumed conversions, as adjusted:



(Amounts in thousands)	For the Three Months Ended March 31,
	2019			2018
Certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions:
After-tax net gain on sale of 220 CPS condominium units	$	(130,954	)	$	—
Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 2022	22,540			—
Our share of disputed additional New York City transfer taxes based on a Tax Tribunal interpretation	—			23,503
Preferred share issuance costs	—			14,486
Previously capitalized internal leasing costs⁽¹⁾	—			(1,348		)
Other	4,110			3,607
	(104,304		)	40,248
Noncontrolling interests' share of above adjustments	6,559			(2,341		)
Total of certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions, net	$	(97,745	)	$	37,907


(1)	The three months ended March 31, 2018 have been reduced by $1,348 for previously capitalized internal leasing cost to present 2018 “as adjusted” financial results on a comparable basis with the current year as a result of the January 1, 2019 adoption of a new GAAP accounting standard under which internal leasing costs can no longer be capitalized.

Overview - continued

Vornado Realty Trust and Vornado Realty L.P.

Same Store Net Operating Income ~~("NOI"~~(“NOI”) At Share

The percentage (decrease) increase ~~(decrease)~~ in same store NOI at share and same store NOI at share - cash basis of our New York segment, theMART and 555 California Street are summarized below.


		New York			theMART			555 California Street			Total		New York⁽¹⁾		theMART			555 California Street
Same store NOI at share % increase (decrease):
Same store NOI at share % (decrease) increase:										Same store NOI at share % (decrease) increase:
	Three months ended March 31, 2018 compared to March 31, 2017	4.0	%	⁽¹⁾	3.4	%		12.3	%	Three months ended March 31, 2019 compared to March 31, 2018	(0.1	)%	(0.1	)%	(4.3	)%		7.3	%
	Three months ended March 31, 2018 compared to December 31, 2017	(5.6	)%	⁽¹⁾	10.7	%	⁽²⁾	12.6	%	Three months ended March 31, 2019 compared to December 31, 2018	1.0	%	(3.0	)%	106.2	%	⁽²⁾	3.4	%

Same store NOI at share - cash basis % increase (decrease):	Same store NOI at share - cash basis % increase (decrease):									Same store NOI at share - cash basis % increase (decrease):
	Three months ended March 31, 2018 compared to March 31, 2017	5.6	%	⁽¹⁾	10.0	%		13.3	%	Three months ended March 31, 2019 compared to March 31, 2018	3.0	%	2.6	%	0.9	%		15.0	%
	Three months ended March 31, 2018 compared to December 31, 2017	(4.5	)%	⁽¹⁾	10.9	%	⁽²⁾	7.6	%	Three months ended March 31, 2019 compared to December 31, 2018	0.2	%	(4.2	)%	88.6	%	⁽²⁾	6.9	%

____________________



		Increase ~~(Decrease)~~
(1)	Excluding Hotel Pennsylvania, - same store NOI at share % ~~increase (decrease):~~increase:
	Three months ended March 31, ~~2018~~2019 compared to March 31, ~~2017~~2018	~~3.7~~0.5	%	%
	Three months ended March 31, ~~2018~~2019 compared to December 31, ~~2017~~2018	~~(2.2~~1.2	)%

	Excluding Hotel Pennsylvania, - same store NOI at share - cash basis % ~~increase (decrease):~~increase:
	Three months ended March 31, ~~2018~~2019 compared to March 31, ~~2017~~2018	~~5.3~~3.3	%	%
	Three months ended March 31, ~~2018~~2019 compared to December 31, ~~2017~~2018	~~(0.8~~0.2	)%

(2)	The three months ended December 31, 2018 includes an additional $12,124,000 real estate tax expense accrual due to an increase in the tax-assessed value of theMART.

~~(2)~~ ~~Excluding tradeshows seasonality, same store NOI at share and same store NOI at share - cash basis decreased by 0.7% and 0.5%, respectively.~~

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

Overview - continued

~~Acquisition~~Dispositions

~~On February 9, 2018,~~220 Central Park South ("220 CPS")

During the first quarter of 2019, we ~~acquired 537 West 26th Street, a 14,000 square foot commercial property adjacent to our 260 Eleventh Avenue office property and 55,000 square feet of additional zoning air rights, for $44,000,000.~~

~~Disposition~~

~~On January 17, 2018, Vornado Capital Partners Real Estate Fund (the "Fund") completed~~closed on the sale of ~~the retail~~12 condominium ~~at 11 East 68th Street, a property located on Madison Avenue and 68th Street, for $82,000,000. From the inception of this investment through its disposition, the Fund realized a $46,259,000 net gain.~~

~~Financings~~

~~On January 4 and 11, 2018, we redeemed all of the outstanding 6.625% Series G and Series I cumulative redeemable preferred shares/~~units at ~~their redemption price~~220 CPS for net proceeds aggregating $425,484,000 and resulting in a financial statement net gain of ~~$25.00 per share/unit, or $470,000,000~~$157,899,000 which is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income. In connection with these sales, $26,945,000 of income tax expense was recognized in our consolidated statements of income. From inception to March 31, 2019, we closed on the ~~aggregate, plus accrued and unpaid dividends/distributions through the date~~sale of ~~redemption, and expensed $14,486,000 of previously capitalized issuance costs.~~

On January 5, 2018, we completed a $100,000,000 refinancing of 33-00 Northern Boulevard (Center Building), a 471,000 square foot office building in Long Island City, New York. The seven-year loan is at LIBOR plus 1.80%, which was swapped to a fixed rate of 4.14%. We realized23 units for aggregate net proceeds of ~~approximately $37,200,000 after repayment~~$640,260,000 which was used to pay $637,000,000 of the ~~existing 4.43% $59,800,000 mortgage and closing costs.~~$950,000,000 220 CPS loan.

Lexington Realty Trust ("Lexington")

~~Critical Accounting Policies~~

~~A summary~~On March 1, 2019, we sold all of our ~~critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2017 in Management’s Discussion and Analysis~~18,468,969 common shares of ~~Financial Condition and Results~~Lexington realizing net proceeds of ~~Operations.~~$167,698,000. For the three months ended March 31, ~~2018, there were no material changes~~2019, we recorded a $16,068,000 mark-to-market increase in the fair value of our common shares for the period from January 1, 2019 through the date of sale, which is included in "interest and other investment income (loss), net" on our consolidated statements of income.

Urban Edge Properties ("UE")

On March 4, 2019, we converted to ~~these policies, other than~~common shares and sold all of our 5,717,184 partnership units of UE, realizing net proceeds of $108,512,000. The sale resulted in a net gain of $62,395,000 which is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income for the ~~adoption~~three months ended March 31, 2019.

Fifth Avenue and Times Square JV

On April 18, 2019 ("Closing Date"), we entered into a transaction agreement (the "Transaction Agreement") with a group of institutional investors (the "Investors"). The Transaction Agreement provides for a series of transactions (collectively, the "Transaction") pursuant to which (i) prior to the Closing Date, the Operating Partnership contributed its interests in properties located at 640 Fifth Avenue, 655 Fifth Avenue, 666 Fifth Avenue, 689 Fifth Avenue, 697-703 Fifth Avenue, 1535 Broadway and 1540 Broadway (collectively, the “Properties”) to subsidiaries of a newly formed joint venture ("Fifth Avenue and Times Square JV") and (ii) on the Closing Date, transferred a 48.5% common interest in Fifth Avenue and Times Square JV to the Investors. The 48.5% common interest in the joint venture represents an effective 47.2% interest in the Properties. The Properties include approximately 489,000 square feet of retail space, 327,000 square feet of office space, signage associated with 1535 and 1540 Broadway, the parking garage at 1540 Broadway and the theatre at 1535 Broadway.

We retained the remaining 51.5% common interest in Fifth Avenue and Times Square JV which represents an effective 51.0% interest in the Properties and an aggregate $1.828 billion of preferred equity interests in certain of the ~~Accounting Standards Codification Topic 606,~~ ~~Revenue~~properties. The preferred equity has an annual coupon of 4.25% for the first five years, increasing to 4.75% for the next five years and thereafter at a formulaic rate. It can be redeemed under certain conditions on a tax deferred basis.

Net cash proceeds to us from ~~Contracts with Customers, described~~the Transaction are approximately $1.198 billion, after (i) deductions for the repayment of a $390,000,000 mortgage loan on 666 Fifth Avenue and a $140,000,000 mortgage loan on 655 Fifth Avenue, (ii) anticipated proceeds from a new $500,000,000 mortgage loan on 640 Fifth Avenue, (iii) approximately $26,000,000 used to purchase noncontrolling investors' interests and (iv) approximately $56,000,000 of estimated transaction costs. Until the new mortgage closes, Vornado will retain $500 million of preferred equity interests in ~~Note 3~~addition to the ~~unaudited~~$1.828 billion referenced above.

The Transaction values the Properties at $5.556 billion resulting in a financial statement net gain of approximately $2.6 billion from the Transaction and the related step-up in our basis of the assets to fair value. The net gain will be recognized in our consolidated ~~financial~~ statements ~~in Part I, Item I~~ of ~~this Quarterly Report~~income for the three months ended June 30, 2019. Our tax gain is approximately $735,000,000. We continue to manage the Properties and share control over major decisions of the joint venture. Accordingly, the Properties will be deconsolidated and the joint venture will be accounted for under the equity method from the date of transfer. As of March 31, 2019, the assets and liabilities associated with the Properties were classified as “assets held for sale” and “liabilities related to assets held for sale”, respectively, on ~~Form 10-Q.~~our consolidated balance sheets.

~~Recently Issued Accounting Literature~~

~~Refer to Note 3 -~~ ~~Recently Issued Accounting Literature~~ ~~to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for information regarding recent accounting pronouncements that may affect us.~~

Overview - continued

Financings

On February 4, 2019, we completed a $95,700,000 refinancing of 435 Seventh Avenue, a 43,000 square foot Manhattan retail property. The interest-only loan carries a rate of LIBOR plus 1.30% (3.78% as of March 31, 2019) and matures in 2024. The recourse loan replaces the previous $95,700,000 loan that bore interest at LIBOR plus 2.25% and was scheduled to mature in August 2019.

On February 12, 2019, we completed a $580,000,000 refinancing of 100 West 33rd Street, a 1.1 million square foot Manhattan property comprised of 859,000 square feet of office space and the 256,000 square foot Manhattan Mall. The interest-only loan carries a rate of LIBOR plus 1.55% (4.03% as of March 31, 2019) and matures in April 2024, with two one-year extension options. The loan replaces the previous $580,000,000 loan that bore interest at LIBOR plus 1.65% and was scheduled to mature in July 2020.

On March 1, 2019, we called for redemption all of our $400,000,000 5.00% senior unsecured notes. The notes, which were scheduled to mature in January 2022, were redeemed on April 1, 2019 at a redemption price of 105.51% of the principal amount plus accrued interest. In connection therewith, we expensed $22,540,000 relating to debt prepayment costs which is included in "interest and debt expense" on our consolidated statements of income for the three months ended March 31, 2019.

Overview - continued

Leasing Activity

The leasing activity and related statistics in the table below are based on leases signed during the period and are not intended to coincide with the commencement of rental revenue in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Second generation relet space represents square footage that has not been vacant for more than nine months and tenant improvements and leasing commissions are based on our share of square feet leased during the period.


(Square feet in thousands)	(Square feet in thousands)	New York														(Square feet in thousands)	New York
		Office				Retail				theMART			555 California Street				Office			Retail			theMART			555 California Street
Three Months Ended March 31, 2018
Three Months Ended March 31, 2019																Three Months Ended March 31, 2019
	Total square feet leased	424				77				119			89			Total square feet leased	396			49			159			61
	Our share of square feet leased:	359				77				119			62			Our share of square feet leased:	350			43			159			43
	Initial rent⁽¹⁾	$	82.07			$	212.03			$	50.39		$	85.89		Initial rent⁽¹⁾	$	75.91		$	113.37		$	46.67		$	81.05
	Weighted average lease term (years)	10.5				4.5				5.7			7.1			Weighted average lease term (years)	9.0			3.4			7.0			5.1
	Second generation relet space:															Second generation relet space:
	Square feet	285				77				113			30			Square feet	312			38			157			43
	GAAP basis:															GAAP basis:
	Straight-line rent⁽²⁾	$	85.11			$	222.11			$	51.08		$	99.34		Straight-line rent⁽²⁾	$	73.27		$	116.99		$	45.37		$	84.32
	Prior straight-line rent	$	52.39			$	253.14			$	37.40		$	71.29		Prior straight-line rent	$	72.64		$	114.48		$	40.76		$	49.92
	Percentage increase (decrease)	62.5		%	⁽³⁾	(12.3		)%	⁽⁴⁾	36.6		%	39.3		%	Percentage increase	0.9		%	2.2		%	11.3		%	68.9		%
	Cash basis:															Cash basis:
	Initial rent⁽¹⁾	$	83.96			$	212.03			$	50.31		$	96.68		Initial rent⁽¹⁾	$	74.43		$	115.36		$	46.59		$	81.05
	Prior escalated rent	$	55.87			$	265.50			$	39.31		$	82.61		Prior escalated rent	$	73.13		$	126.09		$	43.85		$	58.92
	Percentage increase (decrease)	50.3		%	⁽³⁾	(20.1		)%	⁽⁴⁾	28.0		%	17.0		%	Percentage increase (decrease)	1.8		%	(8.5		)%	6.2		%	37.6		%
	Tenant improvements and leasing commissions:
	Per square foot	$	97.99			$	63.26			$	23.89		$	82.65		Tenant improvements and leasing commissions:
	Per square foot per annum	$	9.33			$	14.06			$	4.19		$	11.64		Per square foot	$	87.05		$	20.15		$	35.20		$	49.14
	Percentage of initial rent	11.4		%		6.6		%		8.3		%	13.6		%	Per square foot per annum	$	9.67		$	5.93		$	5.03		$	9.64
																Percentage of initial rent	12.7		%	5.2		%	10.8		%	11.9		%

____________________


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


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


~~(3)~~	~~Excluding a single lease at 770 Broadway for 77 square feet, the GAAP and cash basis mark-to-markets were positive 20.2% and 12.5%, respectively.~~


~~(4)~~	~~Excluding a single lease at 435 Seventh Avenue for 43 square feet, the GAAP and cash basis mark-to-markets were positive 19.2% and 4.9%, respectively.~~

Overview - continued

Square Footage (in service) and Occupancy as of March 31, ~~2018~~2019


(Square feet in thousands)		Square Feet (in service)					Square Feet (in service)
	Number of Properties	Total Portfolio	Our Share	Occupancy %		Number of Properties	Total Portfolio	Our Share	Occupancy %
New York:
Office	36	20,241	16,965	96.8	%	36	19,948	16,641	97.0	%
Retail (includes retail properties that are in the base of our office properties)	72	2,671	2,421	96.7	%	71	2,621	2,404	97.1	%
Residential - 1,696 units	11	1,568	835	96.9	%
Alexander's, including 312 residential units	7	2,437	790	99.1	%
Residential - 1,683 units						10	1,529	796	96.7	%
Alexander's, Inc. ("Alexander's") including 312 residential units						7	2,242	726	97.3	%
Hotel Pennsylvania	1	1,400	1,400			1	1,400	1,400
		28,317	22,411	96.9	%		27,740	21,967	97.0	%
Other:
theMART	3	3,693	3,684	99.1	%	3	3,695	3,686	94.9	%
555 California Street	3	1,741	1,219	97.8	%	3	1,743	1,220	99.4	%
Other	11	2,522	1,187	93.6	%	10	2,527	1,192	92.8	%
		7,956	6,090				7,965	6,098

Total square feet as of March 31, 2018		36,273	28,501
Total square feet as of March 31, 2019							35,705	28,065

Square Footage (in service) and Occupancy as of December 31, ~~2017~~2018


(Square feet in thousands)		Square Feet (in service)					Square Feet (in service)
	Number of properties	Total Portfolio	Our Share	Occupancy %		Number of properties	Total Portfolio	Our Share	Occupancy %
New York:
Office	36	20,256	16,982	97.1	%	36	19,858	16,632	97.2	%
Retail (includes retail properties that are in the base of our office properties)	71	2,720	2,471	96.9	%	71	2,648	2,419	97.3	%
Residential - 1,697 units	11	1,568	835	96.7	%
Residential - 1,687 units						10	1,533	800	96.6	%
Alexander's, including 312 residential units	7	2,437	790	99.3	%	7	2,437	790	91.4	%
Hotel Pennsylvania	1	1,400	1,400			1	1,400	1,400
		28,381	22,478	97.2	%		27,876	22,041	97.0	%
Other:
theMART	3	3,689	3,680	98.6	%	3	3,694	3,685	94.7	%
555 California Street	3	1,741	1,219	94.2	%	3	1,743	1,220	99.4	%
Other	11	2,525	1,188	93.6	%	10	2,522	1,187	92.8	%
		7,955	6,087				7,959	6,092

Total square feet as of December 31, 2017		36,336	28,565
Total square feet as of December 31, 2018							35,835	28,133

Critical Accounting Policies

50A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2018. For the three months ended March 31, 2019, there were no material changes to these policies, other than the adoption of the Accounting Standards Codification Topic 842, Leases, described in Note 3 - Recently Issued Accounting Literature and Note20 - Leases to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Reporton Form 10-Q.

Recently Issued Accounting Literature

Refer to Note 3 - Recently Issued Accounting Literature to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for information regarding recent accounting pronouncements that may affect us.

Net Operating Income At Share by Segment for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018

~~Net Operating Income ("NOI")~~NOI represents total revenues less operating expenses. We consider NOI to be the primary non-GAAP financial 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 NOI, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI should not be considered a substitute for net income. NOI may not be comparable to similarly titled measures employed by other companies.

Below is a summary of NOI at share and NOI at share - cash basisby segment for the three months ended March 31, ~~2018~~2019 and ~~2017.~~2018.


(Amounts in thousands)	For the Three Months Ended March 31, 2018									For the Three Months Ended March 31, 2019
	Total			New York			Other			Total			New York			Other
Total revenues	$	536,437		$	448,484		$	87,953		$	534,668		$	443,285		$	91,383
Operating expenses	237,602			197,916			39,686			246,895			198,095			48,800
NOI - consolidated	298,835			250,568			48,267			287,773			245,190			42,583
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries	(17,312		)	(11,745		)	(5,567		)	(17,403		)	(11,407		)	(5,996		)
Add: Our share of NOI from partially owned entities	67,513			49,773			17,740
Add: NOI from partially owned entities										67,402			49,575			17,827
NOI at share	349,036			288,596			60,440			337,772			283,358			54,414
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other	(17,948		)	(17,323		)	(625		)
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other										(5,181		)	(6,618		)	1,437
NOI at share - cash basis	$	331,088		$	271,273		$	59,815		$	332,591		$	276,740		$	55,851


(Amounts in thousands)	For the Three Months Ended March 31, 2017									For the Three Months Ended March 31, 2018
	Total			New York			Other			Total			New York			Other
Total revenues	$	508,058		$	426,239		$	81,819		$	536,437		$	448,484		$	87,953
Operating expenses	220,659			183,107			37,552			237,602			197,916			39,686
NOI - consolidated	287,399			243,132			44,267			298,835			250,568			48,267
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries	(16,338		)	(11,439		)	(4,899		)	(17,312		)	(11,745		)	(5,567		)
Add: Our share of NOI from partially owned entities	66,097			45,462			20,635
Add: NOI from partially owned entities										67,513			49,773			17,740
NOI at share	337,158			277,155			60,003			349,036			288,596			60,440
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other	(20,481		)	(18,372		)	(2,109		)
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other										(17,948		)	(17,323		)	(625		)
NOI at share - cash basis	$	316,677		$	258,783		$	57,894		$	331,088		$	271,273		$	59,815

Net Operating Income At Share by Segment for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018- continued

The elements of our New York and Other NOI at share for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 are summarized below.


(Amounts in thousands)	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2018			2017			2019			2018
New York:
Office	$	187,156		$	174,724		$	183,540		$	187,156
Retail	87,909			89,048			88,267			87,909
Residential	6,141			6,278			6,045			6,141
Alexander's	11,575			11,743			11,322			11,575
Hotel Pennsylvania	(4,185		)	(4,638		)	(5,816		)	(4,185		)
Total New York	288,596			277,155			283,358			288,596

Other:
theMART	26,875			25,889			23,523			26,875
555 California Street	13,511			12,034			14,501			13,511
Other investments(1)	20,054			22,080			16,390			20,054
Total Other	60,440			60,003			54,414			60,440

NOI at share	$	349,036		$	337,158		$	337,772		$	349,036

___________________


(1)	The three months ended March 31, 2018 includes $5,273 from 666 Fifth Avenue Office Condominium (sold on August 3, 2018).

The elements of our New York and Other NOI at share - cash basis for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 are summarized below.


(Amounts in thousands)	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2018			2017			2019			2018
New York:
Office	$	178,199		$	166,339		$	184,370		$	178,199
Retail	79,589			79,419			80,936			79,589
Residential	5,599			5,542			5,771			5,599
Alexander's	12,039			12,088			11,527			12,039
Hotel Pennsylvania	(4,153		)	(4,605		)	(5,864		)	(4,153		)
Total New York	271,273			258,783			276,740			271,273

Other:
theMART	27,079			24,532			24,912			27,079
555 California Street	12,826			11,325			14,745			12,826
Other investments(1)	19,910			22,037			16,194			19,910
Total Other	59,815			57,894			55,851			59,815

NOI at share - cash basis	$	331,088		$	316,677		$	332,591		$	331,088

___________________


(1)	The three months ended March 31, 2018 includes $5,180 from 666 Fifth Avenue Office Condominium (sold on August 3, 2018).

Reconciliation of Net Income to Net Operating Income At Share for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018

Below is a reconciliation of net income to NOI at share and NOI at share - cash basis for the three months ended March 31, ~~2018~~2019 and ~~2017.~~2018.


(Amounts in thousands)	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2018			2017			2019			2018
Net income	$	282		$	73,847		$	213,044		$	282

Deduct:
Loss (income) from partially owned entities	9,904			(1,358		)
Loss (income) from real estate fund investments	8,807			(268		)
Interest and other investment loss (income), net	24,384			(6,695		)
(Income) loss from partially owned entities							(7,320		)	9,904
Interest and other investment (income) loss, net							(5,045		)	24,384
Net gains on disposition of wholly owned and partially owned assets	—			(501		)	(220,294		)	—
Loss (income) from discontinued operations	363			(15,318		)
NOI attributable to noncontrolling interests in consolidated subsidiaries	(17,312		)	(16,338		)	(17,403		)	(17,312		)

Add:
Loss from real estate fund investments							167			8,807
Depreciation and amortization expense	108,686			105,128			116,709			108,686
General and administrative expense	43,633			47,237			58,020			42,533
Transaction related costs and other	13,156			752			149			13,156
NOI from partially owned entities	67,513			66,097			67,402			67,513
Interest and debt expense	88,166			82,724			102,463			88,166
Loss from discontinued operations							137			363
Income tax expense	1,454			1,851			29,743			2,554
NOI at share	349,036			337,158			337,772			349,036
Non cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other	(17,948		)	(20,481		)
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other							(5,181		)	(17,948		)
NOI at share - cash basis	$	331,088		$	316,677		$	332,591		$	331,088

NOI At Share by Region

Below is a summary of the percentages of NOI at share by geographic ~~region.~~region for the three months ended March 31, 2019 and 2018.


	For the Three Months Ended March 31,				For the Three Months Ended March 31,
	2018		2017		2019		2018
Region:
New York City metropolitan area	88	%	88	%	88	%	88	%
Chicago, IL	8	%	8	%	7	%	8	%
San Francisco, CA	4	%	4	%	5	%	4	%
	100	%	100	%	100	%	100	%

Results of Operations – Three Months Ended March 31, ~~2018~~2019 Compared to March 31, ~~2017~~

2018

Revenues

Our revenues, which consist of ~~property rentals, tenant expense reimbursements,~~rental revenues and fee and other income, were ~~$536,437,000~~$534,668,000 for the three months ended March 31, ~~2018~~2019 compared to ~~$508,058,000~~$536,437,000 for the prior year’s quarter, ~~an increase~~a decrease of ~~$28,379,000.~~$1,769,000. Below are the details of the (decrease) increase by segment:

(Amounts in thousands) Total New York Other
Increase (decrease) due to:
Property rentals:
Acquisitions, dispositions and other $ 2,816
$ 2,816
$ —
Development and redevelopment (125 ) (266 ) 141
Hotel Pennsylvania 1,757
1,757
—
Trade shows 391
—
391
Same store operations 20,379
16,717
3,662
25,218
21,024
4,194
Tenant expense reimbursements:
Acquisitions, dispositions and other 14
14
—
Development and redevelopment 140
(52 ) 192
Same store operations 1,123
989
134
1,277
951
326
Fee and other income:
BMS cleaning fees 3,284
4,030
(746 )
Management and leasing fees 489
454
35
Lease termination fees (3,505 ) (3,419 ) (86 )
Other income 1,616
(795 ) 2,411
1,884
270
1,614

Total increase in revenues $ 28,379
$ 22,245
$ 6,134

~~Results of Operations – Three Months Ended March 31, 2018 Compared to March 31, 2017 - continued~~



(Amounts in thousands)	Total			New York			Other
(Decrease) increase due to:
Rental revenues:
Acquisitions, dispositions and other	$	(2,249	)	$	(1,962	)	$	(287	)
Development and redevelopment	(1,793		)	(1,859		)	66
Hotel Pennsylvania	(1,869		)	(1,869		)	—
Trade shows	(2,075		)	—			(2,075		)
Same store operations	7,443			(509		)	7,952
	(543		)	(6,199		)	5,656
Fee and other income:
BMS cleaning fees	1,430			1,604			(174		)
Management and leasing fees	(527		)	(230		)	(297		)
Lease termination fees	217			180			37
Other income	(2,346		)	(554		)	(1,792		)
	(1,226		)	1,000			(2,226		)

Total (decrease) increase in revenues	$	(1,769	)	$	(5,199	)	$	3,430

Expenses

Our expenses, which consist of operating, depreciation and amortization, general and administrative, ~~(income)~~ expense from deferred compensation plan liability, and transaction related costs and other, were ~~$402,673,000~~$427,206,000 for the three months ended March 31, ~~2018,~~2019, compared to ~~$376,245,000~~$401,573,000 for the prior year’s quarter, an increase of ~~$26,428,000.~~$25,633,000. Below are the details of the increase (decrease) by segment:


(Amounts in thousands)	(Amounts in thousands)	Total			New York				Other				(Amounts in thousands)	Total				New York				Other
Increase (decrease) due to:	Increase (decrease) due to:												Increase (decrease) due to:
Operating:	Operating:												Operating:
	Acquisitions, dispositions and other	$	366		$	366			$	—			Acquisitions, dispositions and other	$	287			$	287			$	—
	Development and redevelopment	384			(278		)		662				Development and redevelopment	(586		)		(762		)		176
	Non-reimbursable expenses, including bad debt reserves	1,856			1,870				(14		)		Non-reimbursable expenses	(3,591		)		(3,812		)		221
	Hotel Pennsylvania	1,304			1,304				—				Hotel Pennsylvania	(232		)		(232		)		—
	Trade shows	112			—				112				Trade shows	140				—				140
	BMS expenses	2,591			3,307				(716		)		BMS expenses	1,697				1,697				—
	Same store operations	10,330			8,240				2,090				Same store operations	11,578				3,001				8,577
		16,943			14,809				2,134					9,293				179				9,114
Depreciation and amortization:	Depreciation and amortization:												Depreciation and amortization:
	Acquisitions, dispositions and other	78			78				—				Acquisitions, dispositions and other	72				72				—
	Development and redevelopment	3,185			3,150				35				Development and redevelopment	(1,693		)		(1,710		)		17
	Same store operations	295			(1,549		)		1,844				Same store operations	9,644				9,299				345
		3,558			1,679				1,879					8,023				7,661				362

General and administrative	General and administrative	(3,604		)	(1,127		)		(2,477		)		General and administrative	15,487			⁽¹⁾	5,448				10,039

(Income) expense from deferred compensation plan liability		(2,873		)	—				(2,873		)	⁽¹⁾
Expense from deferred compensation plan liability													Expense from deferred compensation plan liability	5,837				—				5,837

Transaction related costs and other	Transaction related costs and other	12,404			13,103			⁽²⁾	(699		)		Transaction related costs and other	(13,007		)		(13,103		)	⁽²⁾	96

Total increase (decrease) in expenses		$	26,428		$	28,464			$	(2,036	)
Total increase in expenses													Total increase in expenses	$	25,633			$	185			$	25,448

~~____________________~~___________________

(1)

~~This decrease~~Primarily due to $16,211 of non-cash expense for the accelerated vesting of previously issued OP Units and Vornado restricted stock due to the removal of the time-based vesting requirement to participants who have reached 65 years of age. The right to sell such awards remains subject to original terms of grant. The increase in expense ~~is entirely~~in the first quarter of 2019 will be completely offset by ~~a corresponding increase~~lower non-cash stock-based compensation expense of $2,578 in ~~"(loss) income from deferred compensation plan assets" on our consolidated statements~~each of ~~income.~~the second, third and fourth quarters of 2019 and $8,477 thereafter.

(2)

~~Potential~~

Disputed additional New York City real property transfer tax ("Transfer Tax") related to the December 2012 acquisition of Independence ~~Plaza.~~Plaza recorded in the first quarter of 2018. The joint venture, in which we have a 50.1% economic interest, that owns Independence Plaza recorded this expense based on the precedent established by the New York City Tax Appeals Tribunal (the "Tax Tribunal") decision regarding One Park Avenue. See Note 5 - Real Estate Fund Investments to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for additional information regarding this matter.

Results of Operations – Three Months Ended March 31, 2019 Compared to March 31, 2018 - continued

Income (Loss) ~~Income~~ from Partially Owned Entities

Below are the components of income (loss) ~~income~~ from partially owned entities for the three months ended March 31, ~~2018~~2019 and ~~2017.~~2018.

(Amounts in thousands) Ownership
Percentage at
March 31, 2018 For the Three Months Ended March 31,
2018 2017
Equity in Net (Loss) Income:
Partially owned office buildings⁽¹⁾
Various $ (4,283 ) $ 810
Alexander's⁽²⁾
32.4% (2,001 ) 8,401
Urban Edge Properties 4.5% (641 ) 1,300
Pennsylvania Real Estate Investment Trust 8.0% (429 ) (2,830 )
Other investments⁽³⁾
Various (2,550 ) (6,323 )
$ (9,904 ) $ 1,358



(Amounts in thousands)	Ownership Percentage at March 31, 2019	For the Three Months Ended March 31,
	Ownership Percentage at March 31, 2019	2019		2018
Our share of net income (loss):
Alexander's⁽¹⁾	32.4%	$	6,774	$	(2,001	)
Partially owned office buildings⁽²⁾	Various	106		(4,283		)
Other investments⁽³⁾	Various	440		(3,620		)
		$	7,320	$	(9,904	)

____________________

(1)

2018 includes our $7,708 share of Alexander’s disputed additional Transfer Tax related to the November 2012 sale of Kings Plaza Regional Shopping Center. Alexander's recorded this expense based on the precedent established by the Tax Tribunal decision regarding One Park Avenue. See Note 5 - Real Estate Fund Investments to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for additional information regarding this matter.


(2)	Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 7 West 34th Street, 330 Madison Avenue, 512 West 22nd Street, 85 Tenth Avenue and others. 2018 includes our $4,978 share of ~~potential~~disputed additional Transfer Tax related to the March 2011 acquisition of One Park Avenue.


~~(2)~~	~~2018 includes our~~ ~~$7,708~~ ~~share~~ See Note 5 - Real Estate Fund Investments to the unaudited consolidated financial statements in Part I, Item I of ~~Alexander's potential~~this Quarterly Report on Form 10-Q for additional ~~Transfer Tax.~~information regarding this matter.


(3)	Includes interests in Independence Plaza, Fashion Centre Mall/Washington Tower, Rosslyn Plaza, 50-70 West 93rd Street, 666 Fifth Avenue Office Condominium (sold on August 3, 2018), UE (sold on March 4, 2019), PREIT (accounted as a marketable security from March 12, 2019) and others.

~~Results of Operations – Three Months Ended March 31, 2018 Compared to March 31, 2017 - continued~~

~~(Loss) Income~~Loss from Real Estate Fund Investments

Below are the components of the ~~(loss) income~~loss from our real estate fund investments for the three months ended March 31, ~~2018~~2019 and ~~2017.~~2018.



(Amounts in thousands)	For the Three Months Ended March 31,
	2019			2018
Net investment (loss) income	$	(267	)	$	2,734
Net unrealized gain on held investments	100			—
Transfer Tax	—			(10,630		)
Net realized loss on exited investments	—			(911		)
Loss from real estate fund investments	(167		)	(8,807		)
Less (income) loss attributable to noncontrolling interests in consolidated subsidiaries	(2,737		)	5,369
Loss from real estate fund investments attributable to the Operating Partnership	(2,904		)	(3,438		)
Less loss attributable to noncontrolling interests in the Operating Partnership	182			212
Loss from real estate fund investments attributable to Vornado	$	(2,722	)	$	(3,226	)

~~____________________~~


~~(1)~~	Excludes $440 and $1,000 of management and leasing fees for the three months ended March 31, 2018 and 2017, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.

Interest and Other Investment Income (Loss) ~~Income,~~, net

Below are the components of interest and other investment income (loss) ~~income,~~, net for the three months ended March 31, ~~2018~~2019 and ~~2017.~~2018.


(Amounts in thousands)	For the Three Months Ended March 31,					For the Three Months Ended March 31,
	2018			2017		2019			2018
Decrease in fair value of marketable securities⁽¹⁾	$	(32,986	)	$	—
Interest on cash and cash equivalents and restricted cash						$	2,067		$	3,557
Interest on loans receivable						1,606			743
Increase (decrease) in fair value of marketable securities						461		⁽¹⁾	(32,986		)	⁽²⁾
Dividends on marketable securities	3,353			3,307		—			3,353
Interest on loans receivable	743			743
Other, net	4,506			2,645		911			949
	$	(24,384	)	$	6,695	$	5,045		$	(24,384	)

____________________

(1)

~~On January 1, 2018, we adopted ASU 2016-01,~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities, which requires changes~~Primarily due to a $16,068 mark-to-market increase in ~~the~~ fair value of our ~~marketable securities~~Lexington common shares through March 1, 2019, the date of sale of our investment, partially offset by a $15,649 decrease in the value of our investment in PREIT.


(2)	Primarily due to ~~be recorded~~a $32,875 mark-to-market decrease in ~~current period earnings. Previously, changes in the~~ fair value of ~~marketable securities were recognized in "accumulated other comprehensive income" on~~ our ~~consolidated balance sheets.~~Lexington common shares.

~~Interest and Debt Expense~~

Interest and debt expense was $88,166,000 for the three months ended March 31, 2018, compared to $82,724,000 in the prior year’s quarter, an increase of $5,442,000. This increase was primarily due to (i) $5,895,000 of higher interest expense relating to our variable rate loans, (ii) $2,827,000 of higher interest expense on our $750,000,000 delayed draw term loan which was fully drawn in October 2017, (iii) $1,231,000 of higher interest expense from the refinancing of 33-00 Northern Boulevard including prepayment expense, partially offset by (iv) $3,911,000 higher capitalized interest and debt expense.

~~Income Tax Expense~~

~~For the three months ended March 31, 2018, income tax expense was $1,454,000, compared to $1,851,000 for the prior year’s quarter, a decrease of $397,000.~~

Results of Operations – Three Months Ended March 31, ~~2018~~2019 Compared to March 31, ~~2017~~2018 - continued

Interest and Debt Expense

~~(Loss)~~

Interest and debt expense for the three months ended March 31, 2019 was $102,463,000 compared to $88,166,000 for the prior year’s quarter, an increase of $14,297,000. This increase resulted primarily due to (i) $22,540,000 of debt prepayment costs relating to redemption of our $400,000,000 5.00% senior unsecured notes and (ii) $4,897,000 of higher interest expense resulting from higher average interest rates on our variable rate loans, partially offset by (iii) $8,599,000 higher capitalized interest and debt expense and (iv) $4,640,000 lower capital lease interest.

Net Gains on Disposition of Wholly Owned and Partially Owned Assets

Net gains on disposition of wholly owned and partially owned assets for the three months ended March 31, 2019 were $220,294,000, due to (i) $157,899,000 of net gains on sale of 220 CPS condominium units and (ii) $62,395,000 net gain from the sale of all our UE partnership units.

Income Tax Expense

Income tax expense for the three months ended March 31, 2019 was $29,743,000 compared to $2,554,000 for the prior year’s quarter, an increase of $27,189,000. This increase resulted primarily from $26,945,000 of income tax expense on the sale of 220 CPS condominium units in the three months ended March 31, 2019.

Loss from Discontinued Operations

~~The table below sets forth the combined results of operations of assets related to~~Loss from discontinued operations for the three months ended March 31, ~~2018 and 2017, substantially all~~2019 was $137,000 compared to $363,000 for the prior year’s quarter, a decrease of ~~which is related to our former Washington, DC business which was spun-off on July 17, 2017.~~$226,000.

(Amounts in thousands) For the Three Months Ended March 31,
2018 2017
Total revenues $ 354
$ 116,283
Total expenses 717
95,712
(363 ) 20,571
JBG SMITH Properties spin-off transaction costs —
(7,253 )
Net gains on sale of real estate, a lease position and other —
2,354
Pretax (loss) income from discontinued operations (363 ) 15,672
Income tax expense —
(354 )
(Loss) income from discontinued operations $ (363 ) $ 15,318

Net Income (Loss) ~~Income~~ Attributable to Noncontrolling Interests in Consolidated Subsidiaries

Net ~~loss~~income attributable to noncontrolling interests in consolidated subsidiaries was ~~$8,274,000~~$6,820,000 for the three months ended March 31, ~~2018,~~2019, compared to ~~income~~a loss of ~~$6,737,000~~$8,274,000 for the prior year’s quarter, ~~a decrease~~an increase in income of ~~$15,011,000.~~$15,094,000. This ~~decrease~~increase resulted primarily from $6,538,000 of ~~potential~~disputed additional Transfer Tax allocated to ~~the~~ noncontrolling interests related to the December 2012 acquisition of Independence Plaza and $6,378,000 of ~~potential~~disputed additional Transfer Tax allocated to noncontrolling interests of our real estate fund investments related to the March 2011 acquisition of One Park ~~Avenue.~~Avenue in the three months ended March 31, 2018.

Net Income (Loss) ~~Income~~ Attributable to Noncontrolling Interests in the Operating Partnership (Vornado Realty Trust)

Net ~~loss~~income attributable to noncontrolling interests in the Operating Partnership was ~~$1,124,000~~$12,202,000 for the three months ended March 31, ~~2018,~~2019, compared to ~~income~~a net loss of ~~$3,229,000~~$1,124,000 for the prior year’s quarter, ~~a decrease~~an increase in income of ~~$4,353,000.~~$13,326,000. This ~~decrease~~increase resulted primarily from ~~lower~~higher net income subject to allocation to ~~Class A~~ unitholders.

Preferred Share Dividends of Vornado Realty Trust

Preferred share dividends were ~~$13,035,000~~$12,534,000 for the three months ended March 31, ~~2018,~~2019, compared to ~~$16,129,000~~$13,035,000 for the prior year’s quarter, a decrease of $3,094,000. The decrease is comprised of $7,288,000 of savings from the redemption of all of the outstanding 6.625% Series G and Series I cumulative redeemable preferred shares in January 2018, partially offset by a $4,194,000 increase due to the issuance of 5.25% Series M cumulative redeemable preferred shares in December 2017.$501,000.

Preferred Unit Distributions of Vornado Realty L.P.

Preferred unit distributions were ~~$13,084,000~~$12,575,000 for the three months ended March 31, ~~2018,~~2019, compared to ~~$16,178,000~~$13,084,000 for the prior year’s quarter, a decrease of $3,094,000. The decrease is comprised of $7,288,000 of savings from the redemption of all the outstanding 6.625% Series G and Series I cumulative redeemable preferred units in January 2018, partially offset by a $4,194,000 increase due to the issuance of 5.25% Series M cumulative redeemable preferred units in December 2017.$509,000.

Preferred Share/Unit Issuance Costs

In the three months ended March 31, 2018, we recognized apreferred share/unit issuance costs of $14,486,000 ~~expense in connection with~~representing the write-off of issuance costs upon the redemption of all the outstanding 6.625% Series G and Series I cumulative redeemable preferred shares/units in January 2018.

Results of Operations – Three Months Ended March 31, ~~2018~~2019 Compared to March 31, ~~2017~~2018 - continued

Same Store Net Operating Income At Share

Same store NOI at share represents NOI at share from property operations which are owned by us and in service in both the current and prior year reporting periods. Same store NOI at share - cash basis is NOI at share from operations before straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments which are owned by us and in service in both the current and prior year reporting periods. 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 NOI at share and same store NOI at share - cash basis should not be considered as an alternative to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.

Below are reconciliations of NOI at share to same store NOI at share for our New York segment, theMART, ~~and~~ 555 California Street and other investments for the three months ended March 31, ~~2018~~2019 compared to March 31, ~~2017.~~2018.

(Amounts in thousands) New York theMART 555 California Street
NOI at share for the three months ended March 31, 2018 $ 288,596
$ 26,875
$ 13,511
Less NOI at share from:
Acquisitions (350 ) (85 ) —
Dispositions 40
—
—
Development properties placed into and out of service (412 ) —
—
Lease termination income, net of straight-line and FAS 141 adjustments (1,127 ) —
—
Other non-operating income, net (579 ) —
—
Same store NOI at share for the three months ended March 31, 2018 $ 286,168
$ 26,790
$ 13,511

NOI at share for the three months ended March 31, 2017 $ 277,155
$ 25,889
$ 12,034
Less NOI at share from:
Acquisitions —
31
—
Dispositions (228 ) —
—
Development properties placed into and out of service 16
—
—
Lease termination income, net of straight-line and FAS 141 adjustments (638 ) (20 ) —
Other non-operating income, net (1,084 ) —
—
Same store NOI at share for the three months ended March 31, 2017 $ 275,221
$ 25,900
$ 12,034

Increase in same store NOI at share for the three months ended March 31, 2018 compared to March 31, 2017 $ 10,947
$ 890
$ 1,477

% increase in same store NOI at share 4.0 %
⁽¹⁾
3.4 % 12.3 %



(Amounts in thousands)		Total			New York				theMART			555 California Street			Other
NOI at share for the three months ended March 31, 2019		$	337,772		$	283,358			$	23,523		$	14,501		$	16,390
	Less NOI at share from:
	Acquisitions	(227		)	(227		)		—			—			—
	Dispositions	2			2				—			—			—
	Development properties	(11,710		)	(11,710		)		—			—			—
	Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net	1,902			1,902				—			—			—
	Other non-same store income, net	(18,779		)	(558		)		(1,831		)	—			(16,390		)
Same store NOI at share for the three months ended March 31, 2019		$	308,960		$	272,767			$	21,692		$	14,501		$	—

NOI at share for the three months ended March 31, 2018		$	349,036		$	288,596			$	26,875		$	13,511		$	20,054
	Less NOI at share from:
	Acquisitions	(121		)	(121		)		—			—			—
	Dispositions	(62		)	(62		)		—			—			—
	Development properties	(13,686		)	(13,686		)		—			—			—
	Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net	(1,127		)	(1,127		)		—			—			—
	Other non-same store income, net	(24,805		)	(551		)		(4,200		)	—			(20,054		)
Same store NOI at share for the three months ended March 31, 2018		$	309,235		$	273,049			$	22,675		$	13,511		$	—

(Decrease) increase in same store NOI at share for the three months ended March 31, 2019 compared to March 31, 2018		$	(275	)	$	(282	)		$	(983	)	$	990		$	—

% (decrease) increase in same store NOI at share		(0.1		)%	(0.1		)%	⁽¹⁾	(4.3		)%	7.3		%	—		%

____________________


(1)	Excluding Hotel Pennsylvania, same store NOI at share increased by ~~3.7%~~0.5%.

Results of Operations – Three Months Ended March 31, ~~2018~~2019 Compared to March 31, ~~2017~~2018 - continued

Same Store Net Operating Income At Share - continued

Below are reconciliations of NOI at share - cash basis to same store NOI at share - cash basis for our New York segment, theMART, ~~and~~ 555 California Street and other investments for the three months ended March 31, ~~2018~~2019 compared to March 31, ~~2017.~~2018.

(Amounts in thousands) New York theMART 555 California Street
NOI at share - cash basis for the three months ended March 31, 2018 $ 271,273
$ 27,079
$ 12,826
Less NOI at share - cash basis from:
Acquisitions (200 ) (85 ) —
Dispositions 40
—
—
Development properties placed into and out of service (603 ) —
—
Lease termination income (1,061 ) —
—
Other non-operating income, net (579 ) —
—
Same store NOI at share - cash basis for the three months ended March 31, 2018 $ 268,870
$ 26,994
$ 12,826

NOI at share - cash basis for the three months ended March 31, 2017 $ 258,783
$ 24,532
$ 11,325
Less NOI at share - cash basis from:
Acquisitions —
31
—
Dispositions (228 ) —
—
Development properties placed into and out of service 106
—
—
Lease termination income (3,030 ) (31 ) —
Other non-operating income, net (1,029 ) —
—
Same store NOI at share - cash basis for the three months ended March 31, 2017 $ 254,602
$ 24,532
$ 11,325

Increase in same store NOI at share - cash basis for the three months ended March 31, 2018 compared to March 31, 2017 $ 14,268
$ 2,462
$ 1,501

% increase in same store NOI at share - cash basis 5.6 %
⁽¹⁾
10.0 % 13.3 %



(Amounts in thousands)		Total			New York				theMART			555 California Street			Other
NOI at share - cash basis for the three months ended March 31, 2019		$	332,591		$	276,740			$	24,912		$	14,745		$	16,194
	Less NOI at share - cash basis from:
	Acquisitions	(228		)	(228		)		—			—			—
	Dispositions	2			2				—			—			—
	Development properties	(14,286		)	(14,286		)		—			—			—
	Lease termination income	(429		)	(429		)		—			—			—
	Other non-same store income, net	(18,585		)	(560		)		(1,831		)	—			(16,194		)
Same store NOI at share - cash basis for the three months ended March 31, 2019		$	299,065		$	261,239			$	23,081		$	14,745		$	—

NOI at share - cash basis for the three months ended March 31, 2018		$	331,088		$	271,273			$	27,079		$	12,826		$	19,910
	Less NOI at share - cash basis from:
	Acquisitions	(121		)	(121		)		—			—			—
	Dispositions	(65		)	(65		)		—			—			—
	Development properties	(14,945		)	(14,945		)		—			—			—
	Lease termination income	(1,061		)	(1,061		)		—			—			—
	Other non-same store income, net	(24,661		)	(551		)		(4,200		)	—			(19,910		)
Same store NOI at share - cash basis for the three months ended March 31, 2018		$	290,235		$	254,530			$	22,879		$	12,826		$	—

Increase (decrease) in same store NOI at share - cash basis for the three months ended March 31, 2019 compared to March 31, 2018		$	8,830		$	6,709			$	202		$	1,919		$	—

% increase (decrease) in same store NOI at share - cash basis		3.0		%	2.6		%	⁽¹⁾	0.9		%	15.0		%	—		%

____________________


(1)	Excluding Hotel Pennsylvania, same store NOI at share - cash basis increased by ~~5.3%~~3.3%.

SUPPLEMENTAL INFORMATION

Net Operating Income At Share by Segment for the Three Months Ended March 31, ~~2018~~2019 and December 31, ~~2017~~2018

NOI represents total revenues less operating expenses. We consider NOI to be the primary non-GAAP financial 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 NOI, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI should not be considered a substitute for net income. NOI may not be comparable to similarly titled measures employed by other companies.

Below is a summary of NOIat share and NOI at share - cash basis by segment for the three months ended March 31, ~~2018~~2019 and December 31, ~~2017.~~2018.


(Amounts in thousands)	For the Three Months Ended March 31, 2018									For the Three Months Ended March 31, 2019
	Total			New York			Other			Total			New York			Other
Total revenues	$	536,437		$	448,484		$	87,953		$	534,668		$	443,285		$	91,383
Operating expenses	237,602			197,916			39,686			246,895			198,095			48,800
NOI - consolidated	298,835			250,568			48,267			287,773			245,190			42,583
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries	(17,312		)	(11,745		)	(5,567		)	(17,403		)	(11,407		)	(5,996		)
Add: Our share of NOI from partially owned entities	67,513			49,773			17,740
Add: NOI from partially owned entities										67,402			49,575			17,827
NOI at share	349,036			288,596			60,440			337,772			283,358			54,414
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other	(17,948		)	(17,323		)	(625		)
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other										(5,181		)	(6,618		)	1,437
NOI at share - cash basis	$	331,088		$	271,273		$	59,815		$	332,591		$	276,740		$	55,851


(Amounts in thousands)	For the Three Months Ended December 31, 2017									For the Three Months Ended December 31, 2018
	Total			New York			Other			Total			New York			Other
Total revenues	$	536,226		$	462,597		$	73,629		$	543,417		$	466,554		$	76,863
Operating expenses	225,011			195,421			29,590			254,320			206,696			47,624
NOI - consolidated	311,215			267,176			44,039			289,097			259,858			29,239
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries	(16,533		)	(11,648		)	(4,885		)	(19,771		)	(13,837		)	(5,934		)
Add: Our share of NOI from partially owned entities	69,175			48,700			20,475
Add: NOI from partially owned entities										60,205			49,178			11,027
NOI at share	363,857			304,228			59,629			329,531			295,199			34,332
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other	(21,579		)	(21,441		)	(138		)
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other										(5,532		)	(6,266		)	734
NOI at share - cash basis	$	342,278		$	282,787		$	59,491		$	323,999		$	288,933		$	35,066

SUPPLEMENTAL INFORMATION - CONTINUED

Net Operating Income At Share by Segment for the Three Months Ended March 31, ~~2018~~2019 and December 31, ~~2017~~2018 - continued

The elements of our New York and Other NOI at share for the three months ended March 31, ~~2018~~2019 and December 31, ~~2017~~2018 are summarized below.


(Amounts in thousands)	For the Three Months Ended					For the Three Months Ended
	March 31, 2018			December 31, 2017		March 31, 2019			December 31, 2018
New York:
Office	$	187,156		$	189,481	$	183,540		$	186,832
Retail	87,909			90,853		88,267			85,549
Residential	6,141			5,920		6,045			5,834
Alexander's	11,575			11,656		11,322			11,023
Hotel Pennsylvania	(4,185		)	6,318		(5,816		)	5,961
Total New York	288,596			304,228		283,358			295,199

Other:
theMART	26,875			24,249		23,523			10,981		⁽¹⁾
555 California Street	13,511			12,003		14,501			14,005
Other investments	20,054			23,377		16,390			9,346
Total Other	60,440			59,629		54,414			34,332

NOI at share	$	349,036		$	363,857	$	337,772		$	329,531

___________________


(1)	The three months ended December 31, 2018 includes an additional $12,124 real estate tax expense accrual due to an increase in the tax-assessed value of theMART.

The elements of our New York and Other NOI at share - cash basis for the three months ended March 31, ~~2018~~2019 and December 31, ~~2017~~2018 are summarized below.


(Amounts in thousands)	For the Three Months Ended					For the Three Months Ended
	March 31, 2018			December 31, 2017		March 31, 2019			December 31, 2018
New York:
Office	$	178,199		$	175,787	$	184,370		$	185,624
Retail	79,589			83,320		80,936			80,515
Residential	5,599			5,325		5,771			5,656
Alexander's	12,039			12,004		11,527			11,129
Hotel Pennsylvania	(4,153		)	6,351		(5,864		)	6,009
Total New York	271,273			282,787		276,740			288,933

Other:
theMART	27,079			24,396		24,912			12,758		⁽¹⁾
555 California Street	12,826			11,916		14,745			13,784
Other investments	19,910			23,179		16,194			8,524
Total Other	59,815			59,491		55,851			35,066

NOI at share - cash basis	$	331,088		$	342,278	$	332,591		$	323,999

___________________


(1)	The three months ended December 31, 2018 includes an additional $12,124 real estate tax expense accrual due to an increase in the tax-assessed value of theMART.

SUPPLEMENTAL INFORMATION - CONTINUED

Reconciliation of Net Income to Net Operating Income At Share for the Three Months Ended March 31, ~~2018~~2019 and December 31, ~~2017~~2018



(Amounts in thousands)	For the Three Months Ended
	March 31, 2019			December 31, 2018
Net income	$	213,044		$	97,821

Deduct:
Income from partially owned entities	(7,320		)	(3,090		)
Interest and other investment income, net	(5,045		)	(7,656		)
Net gains on disposition of wholly owned and partially owned assets	(220,294		)	(81,203		)
Purchase price fair value adjustment	—			(44,060		)
NOI attributable to noncontrolling interests in consolidated subsidiaries	(17,403		)	(19,771		)

Add:
Loss from real estate fund investments	167			51,258
Depreciation and amortization expense	116,709			112,869
General and administrative expense	58,020			32,934
Transaction related costs, impairment loss and other	149			14,637
NOI from partially owned entities	67,402			60,205
Interest and debt expense	102,463			83,175
Loss (income) from discontinued operations	137			(257		)
Income tax expense	29,743			32,669
NOI at share	337,772			329,531
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other	(5,181		)	(5,532		)
NOI at share - cash basis	$	332,591		$	323,999

SUPPLEMENTAL INFORMATION - CONTINUED

Three Months Ended March 31, 2019 Compared to December 31, 2018

Same Store Net Operating Income At Share

Below ~~is a reconciliation~~are reconciliations of ~~net income~~NOI at share to same store NOI at share for our New York segment, theMART, 555 California Street and other investments for the three months ended March 31, ~~2018 and December 31, 2017.~~

(Amounts in thousands) For the Three Months Ended
March 31, 2018 December 31, 2017
Net income $ 282
$ 53,551

Deduct:
Loss (income) from partially owned entities 9,904
(9,622 )
Loss (income) from real estate fund investments 8,807
(4,889 )
Interest and other investment loss (income), net 24,384
(8,294 )
Loss (income) from discontinued operations 363
(1,273 )
NOI attributable to noncontrolling interests in consolidated subsidiaries (17,312 ) (16,533 )

Add:
Depreciation and amortization expense 108,686
114,166
General and administrative expense 43,633
35,139
Transaction related costs and other 13,156
703
NOI from partially owned entities 67,513
69,175
Interest and debt expense 88,166
93,073
Income tax expense 1,454
38,661
NOI at share 349,036
363,857
Non cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other (17,948 ) (21,579 )
NOI at share - cash basis $ 331,088
$ 342,278

~~SUPPLEMENTAL INFORMATION - CONTINUED~~

~~Three Months Ended March 31, 2018 Compared to December 31, 2017~~

~~Same Store Net Operating Income~~

Same store NOI represents NOI from operations which are owned by us and in service in both the current and prior year reporting periods. Same store NOI - cash basis is NOI from operations before straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments which are owned by us and in service in both the current and prior year reporting periods. 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 NOI and same store NOI - cash basis should not be considered as an alternative to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.

~~Below are reconciliations of NOI to same store NOI for our New York segment, theMART and 555 California Street for the three months ended March 31, 2018~~2019 compared to December 31, ~~2017.~~2018.

(Amounts in thousands) New York theMART 555 California Street
NOI at share for the three months ended March 31, 2018 $ 288,596
$ 26,875
$ 13,511
Less NOI at share from:
Acquisitions (109 ) (85 ) —
Dispositions 40
—
—
Development properties placed into and out of service (412 ) —
—
Lease termination income, net of straight-line and FAS 141 adjustments (1,127 ) —
—
Other non-operating income, net (579 ) —
—
Same store NOI at share for the three months ended March 31, 2018 $ 286,409
$ 26,790
$ 13,511

NOI at share for the three months ended December 31, 2017 $ 304,228
$ 24,249
$ 12,003
Less NOI at share from:
Acquisitions 2
(46 ) —
Dispositions (8 ) —
—
Development properties placed into and out of service 309
—
—
Lease termination income, net of straight-line and FAS 141 adjustments (984 ) —
—
Other non-operating income, net (16 ) —
—
Same store NOI at share for the three months ended December 31, 2017 $ 303,531
$ 24,203
$ 12,003

(Decrease) increase in same store NOI at share for the three months ended March 31, 2018 compared to December 31, 2017 $ (17,122 ) $ 2,587
$ 1,508

% (decrease) increase in same store NOI at share (5.6 )%
⁽¹⁾
10.7 %
⁽²⁾
12.6 %



(Amounts in thousands)		Total			New York				theMART				555 California Street			Other
NOI at share for the three months ended March 31, 2019		$	337,772		$	283,358			$	23,523			$	14,501		$	16,390
	Less NOI at share from:
	Dispositions	2			2				—				—			—
	Development properties	(11,710		)	(11,710		)		—				—			—
	Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net	1,902			1,902				—				—			—
	Other non-same store income, net	(18,780		)	(559		)		(1,831		)		—			(16,390		)
Same store NOI at share for the three months ended March 31, 2019		$	309,186		$	272,993			$	21,692			$	14,501		$	—

NOI at share for the three months ended December 31, 2018		$	329,531		$	295,199			$	10,981			$	14,005		$	9,346
	Less NOI at share from:
	Dispositions	19			19				—				—			—
	Development properties	(12,986		)	(13,000		)		—				14			—
	Lease termination income, net of write-offs of straight-line receivables and acquired below-market leases, net	(95		)	368				(463		)		—			—
	Other non-same store income, net	(10,414		)	(1,068		)		—				—			(9,346		)
Same store NOI at share for the three months ended December 31, 2018		$	306,055		$	281,518			$	10,518			$	14,019		$	—

Increase (decrease) in same store NOI at share for the three months ended March 31, 2019 compared to December 31, 2018		$	3,131		$	(8,525	)		$	11,174			$	482		$	—

% increase (decrease) in same store NOI at share		1.0		%	(3.0		)%	⁽¹⁾	106.2		%	⁽²⁾	3.4		%	—		%

____________________


(1)	Excluding Hotel Pennsylvania, same store NOI at share ~~decreased~~increased by ~~2.2%~~1.2%.


(2)	~~Excluding tradeshows seasonality, same store NOI at share decreased by 0.7%.~~ The three months ended December 31, 2018 includes an additional $12,124 real estate tax expense accrual due to an increase in the tax-assessed value of theMART.

SUPPLEMENTAL INFORMATION - CONTINUED

Three Months Ended March 31, ~~2018~~2019 Compared to December 31, ~~2017~~2018 - continued

Same Store Net Operating Income At Share - continued

(Amounts in thousands) New York theMART 555 California Street
NOI at share - cash basis for the three months ended March 31, 2018 $ 271,273
$ 27,079
$ 12,826
Less NOI at share - cash basis from:
Acquisitions (109 ) (85 ) —
Dispositions 40
—
—
Development properties placed into and out of service (603 ) —
—
Lease termination income (1,061 ) —
—
Other non-operating income, net (579 ) —
—
Same store NOI at share - cash basis for the three months ended March 31, 2018 $ 268,961
$ 26,994
$ 12,826

NOI at share - cash basis for the three months ended December 31, 2017 $ 282,787
$ 24,396
$ 11,916
Less NOI at share - cash basis from:
Acquisitions 2
(46 ) —
Dispositions (8 ) —
—
Development properties placed into and out of service 253
—
—
Lease termination income (1,393 ) —
—
Other non-operating income, net (16 ) —
—
Same store NOI at share - cash basis for the three months ended December 31, 2017 $ 281,625
$ 24,350
$ 11,916

(Decrease) increase in same store NOI at share - cash basis for the three months ended March 31, 2018 compared to December 31, 2017 $ (12,664 ) $ 2,644
$ 910

% (decrease) increase in same store NOI at share - cash basis (4.5 )%
⁽¹⁾
10.9 %
⁽²⁾
7.6 %



(Amounts in thousands)		Total			New York				theMART				555 California Street			Other
NOI at share - cash basis for the three months ended March 31, 2019		$	332,591		$	276,740			$	24,912			$	14,745		$	16,194
	Less NOI at share - cash basis from:
	Dispositions	2			2				—				—			—
	Development properties	(14,286		)	(14,286		)		—				—			—
	Lease termination income	(429		)	(429		)		—				—			—
	Other non-same store income, net	(18,585		)	(560		)		(1,831		)		—			(16,194		)
Same store NOI at share - cash basis for the three months ended March 31, 2019		$	299,293		$	261,467			$	23,081			$	14,745		$	—

NOI at share - cash basis for the three months ended December 31, 2018		$	323,999		$	288,933			$	12,758			$	13,784		$	8,524
	Less NOI at share - cash basis from:
	Dispositions	19			19				—				—			—
	Development properties	(15,041		)	(15,055		)		—				14			—
	Lease termination income	(563		)	(43		)		(520		)		—			—
	Other non-same store income, net	(9,590		)	(1,066		)		—				—			(8,524		)
Same store NOI at share - cash basis for the three months ended December 31, 2018		$	298,824		$	272,788			$	12,238			$	13,798		$	—

Increase (decrease) in same store NOI at share - cash basis for the three months ended March 31, 2019 compared to December 31, 2018		$	469		$	(11,321	)		$	10,843			$	947		$	—

% increase (decrease) in same store NOI at share - cash basis		0.2		%	(4.2		)%	⁽¹⁾	88.6		%	⁽²⁾	6.9		%	—		%

____________________


(1)	Excluding Hotel Pennsylvania, same store NOI at share - cash basis ~~decreased~~increased by ~~0.8%~~0.2%.


(2)	~~Excluding tradeshows seasonality, same store NOI at share - cash basis decreased by 0.5%.~~The three months ended December 31, 2018 includes an additional $12,124 real estate tax expense accrual due to an increase in the tax-assessed value of theMART.

Liquidity and Capital Resources

~~Property rental income~~Rental revenue 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, unsecured term ~~loan~~loans and unsecured 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 expect to generate approximately $1 billion of after tax cash flow and net income resulting from the sales of 100% of the residential condominium units at 220 Central Park South.

We may from time to time purchase or retire outstanding debt securities or redeem our equity 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.

Cash Flows for the Three Months Ended March 31, 2019 and 2018

Our cash flow activities for the three months ended March 31, 2019 and 2018 are summarized as follows:



(Amounts in thousands)	For the Three Months Ended March 31,						(Decrease) Increase in Cash Flow
	2019			2018			(Decrease) Increase in Cash Flow
Net cash provided by operating activities	$	64,118		$	265,418		$	(201,300	)
Net cash provided by (used in) investing activities	403,294			(190,620		)	593,914
Net cash used in financing activities	(274,683		)	(571,542		)	296,859

Cash and cash equivalents and restricted cash ~~were $1,418,068,000 as of~~was $909,634,000 at March 31, ~~2018,~~2019, a ~~$496,744,000 decrease from the balance at December 31, 2017. Our consolidated outstanding debt, net was $9,774,477,000 as of March 31, 2018, a $44,990,000~~$192,729,000 increase from the balance at December 31, 2017. As of March 31, 2018 and December 31, 2017, $80,000,000 and $0, respectively, was outstanding under our revolving credit facilities. During the remainder of 2018 and 2019, $0 and $210,033,000, respectively, of our outstanding debt matures; we may refinance this maturing debt as it comes due or choose to repay it.2018.

~~Net Cash Provided by Operating Activities~~

Net cash provided by operating activities of ~~$265,418,000~~$64,118,000 for the three months ended March 31, 2019 was comprised of ~~(i) net income~~$150,228,000 of $282,000, (ii) $155,863,000 of non-cash adjustments, which include depreciation and amortization expense, the decrease in the fair value of marketable securities, amortization of below-market leases, net, equity in net losscash from ~~partially owned entities, the effect of straight-lining of rents and net realized and unrealized losses on real estate fund investments, (iii)~~operations, including distributions of income from partially owned entities of ~~$20,559,000, (iv) return~~$14,316,000, and a net decrease of ~~capital from real estate fund investments~~$86,110,000 in cash due to the timing of ~~$14,966,000~~cash receipts and ~~(v) the net change~~payments related to changes in operating assets and ~~liabilities of $73,748,000.~~liabilities.

~~Net Cash Used in Investing Activities~~

~~Net~~The following table details the cash ~~used in~~provided by (used in) investing activities of $190,620,000 was comprised of (i) $86,808,000 of development costs and construction in progress, (ii) $54,284,000 of additions to real estate, (iii) $44,095,000 of acquisitions of real estate and other and (iv) $7,519,000 of investments in partially owned entities, partially offset by (v) $2,086,000 of capital distributions from partially owned entities.

~~Net Cash Used in Financing Activities~~

~~Net cash used in financing activities of Vornado Realty Trust of $571,542,000 was primarily comprised of (i) $470,000,000~~ for the redemption of preferred shares, (ii) $144,822,000 of repayments of borrowings, (iii) $119,764,000 of dividends paid on common shares, (iv) $16,628,000 of dividends paid on preferred shares, (v) $13,266,000 of distributions to noncontrolling interests, (vi) $3,300,000 of debt issuance coststhree months ended March 31, 2019 and (vii) $818,000 of debt prepayment and extinguishment costs, partially offset by (viii) $185,701,000 of proceeds from borrowings, (ix) $8,370,000 of contributions from noncontrolling interests and (x) $3,769,000 of proceeds received from the exercise of employee share options and other.

Net cash used in financing activities of the Operating Partnership of $571,542,000 was primarily comprised of (i) $470,000,000 for the redemption of preferred units, (ii) $144,822,000 of repayments of borrowings, (iii) $119,764,000 of distributions to Vornado, (iv) $16,628,000 of distributions to preferred unitholders, (v) $13,266,000 of distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries, (vi) $3,300,000 of debt issuance costs and (vii) $818,000 of debt prepayment and extinguishment costs, partially offset by (viii) $185,701,000 of proceeds from borrowings, (ix) $8,370,000 of contributions from noncontrolling interests in consolidated subsidiaries and (x) $3,769,000 of proceeds received from the exercise of Vornado stock options and other.

2018:



(Amounts in thousands)	For the Three Months Ended March 31,						Increase (Decrease) in Cash Flow
	2019			2018			Increase (Decrease) in Cash Flow
Proceeds from sale of condominium units at 220 Central Park South	$	425,484		$	—		$	425,484
Proceeds from sales of marketable securities	167,755			—			167,755
Development costs and construction in progress	(143,302		)	(86,808		)	(56,494		)
Moynihan Train Hall expenditures	(123,533		)	—			(123,533		)
Proceeds from sale of real estate and related investment	108,512			—			108,512
Additions to real estate	(55,759		)	(54,284		)	(1,475		)
Distributions of capital from partially owned entities	24,851			2,086			22,765
Investments in partially owned entities	(918		)	(7,519		)	6,601
Proceeds from repayments of loans receivable	204			—			204
Acquisitions of real estate and other	—			(44,095		)	44,095
Net cash provided by (used in) investing activities	$	403,294		$	(190,620	)	$	593,914

Liquidity and Capital Resources - continued

Cash Flows for the Three Months Ended March 31, 2019 and 2018 - continued

The following table details the cash used in financing activities for the three months ended March 31, 2019 and 2018:



(Amounts in thousands)	For the Three Months Ended March 31,						(Decrease) Increase in Cash Flow
	2019			2018			(Decrease) Increase in Cash Flow
Repayments of borrowings	$	(686,555	)	$	(144,822	)	$	(541,733	)
Proceeds from borrowings	456,741			185,701			271,040
Dividends paid on common shares/Distributions to Vornado	(125,876		)	(119,764		)	(6,112		)
Moynihan Train Hall reimbursement from Empire State Development	123,533			—			123,533
Distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries	(16,252		)	(13,266		)	(2,986		)
Dividends paid on preferred shares/Distributions to preferred unitholders	(12,534		)	(16,628		)	4,094
Debt issuance costs	(10,860		)	(3,300		)	(7,560		)
Repurchase of shares/Class A units related to stock compensation agreements and related tax withholdings and other	(8,692		)	(784		)	(7,908		)
Contributions from noncontrolling interests in consolidated subsidiaries	5,194			8,370			(3,176		)
Proceeds received from exercise of Vornado stock options and other	1,511			3,769			(2,258		)
Redemption of preferred shares/units	(893		)	(470,000		)	469,107
Debt prepayment and extinguishment costs	—			(818		)	818
Net cash used in financing activities	$	(274,683	)	$	(571,542	)	$	296,859

Capital Expenditures for the Three Months Ended March 31, ~~2018~~2019

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.

Below is a summary of amounts paid for capital expenditures and leasing commissions ~~and a reconciliation of total expenditures on an accrual basis to the cash expended~~ for the three months ended March 31, ~~2018.~~2019.

(Amounts in thousands) Total New York theMART
555 California
Street
Expenditures to maintain assets $ 18,087
$ 11,965
$ 2,651
$ 3,471
Tenant improvements 24,102
20,836
2,433
833
Leasing commissions 11,590
10,973
254
363
Non-recurring capital expenditures 12,283
8,182
156
3,945
Total capital expenditures and leasing commissions (accrual basis) 66,062
51,956
5,494
8,612
Adjustments to reconcile to cash basis:
Expenditures in the current period applicable to prior periods 23,534
20,524
2,044
966
Expenditures to be made in future periods for the current period (30,352 ) (27,227 ) (2,977 ) (148 )
Total capital expenditures and leasing commissions (cash basis) $ 59,244
$ 45,253
$ 4,561
$ 9,430
Tenant improvements and leasing commissions:
Per square foot per annum $ 8.66
$ 9.73
$ 4.19
$ 11.64
Percentage of initial rent 9.4 % 9.3 % 8.3 % 13.6 %



(Amounts in thousands)	Total		New York		theMART		555 California Street
Expenditures to maintain assets	$	26,377	$	24,106	$	2,019	$	252
Tenant improvements	9,479		8,462		1,015		2
Leasing commissions	5,122		5,122		—		—
Recurring tenant improvements, leasing commissions and other capital expenditures	40,978		37,690		3,034		254
Non-recurring capital expenditures	12,704		12,622		74		8
Total capital expenditures and leasing commissions	$	53,682	$	50,312	$	3,108	$	262

Liquidity and Capital Resources - continued

Development and Redevelopment Expenditures for the Three Months Ended March 31, ~~2018~~2019

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. Our development project ~~budgets~~estimates below include initial leasing costs, which are reflected as non-recurring capital expenditures in the table ~~above.~~on the previous page.

We are constructing a residential condominium tower containing 397,000 salable square feet at 220 ~~Central Park South.~~CPS. The development cost of this project (exclusive of land cost of $515.4 million) is estimated to be approximately $1.4 billion, of which ~~$970.0 million~~$1.3 billion has been expended as of March 31, ~~2018.~~2019.

We are developing a 173,000 square foot Class A office building, located along the western edge of the High Line at 512 West 22nd Street in the West Chelsea submarket of Manhattan (55.0% interest). The development cost of this project is estimated to be approximately $130,000,000, of which our share is $72,000,000. As of March 31, ~~2018, $80,947,000~~2019, $98,705,000 has been expended, of which our share is ~~$44,521,000.~~$54,288,000.

We are developing a 170,000 square foot office and retail building at 61 Ninth Avenue, located on the southwest corner of Ninth Avenue and 15th Street in the West Chelsea submarket of Manhattan (45.1% interest). The development cost of this project is estimated to be approximately $152,000,000, of which our share is $69,000,000. As of March 31, 2018, $114,913,000 has been expended, of which our share is $51,826,000.

~~Liquidity and Capital Resources - continued~~

~~Development and Redevelopment Expenditures for the Three Months Ended March 31, 2018 - continued~~

~~We are developing a 34,000~~35,000 square foot office and retail building at 606 Broadway, located on the northeast corner of Broadway and Houston Street in Manhattan (50.0% interest). The development cost of this project is estimated to be approximately $60,000,000, of which our share is $30,000,000. As of March 31, ~~2018, $38,390,000~~2019, $53,839,000 has been expended, of which our share is ~~$19,195,000.~~$26,920,000.

A joint venture with the Related Companies ("Related") in which we have a 50.1% ownership interest is redeveloping the historic Farley Post Office building which will include a new Moynihan Train Hall and approximately 850,000 rentable square feet of commercial space, comprised of approximately 730,000 square feet of office space and approximately 120,000 square feet of retail space. As of March 31, 2018, $290,628,000 has been expended, of which our share is $145,605,000. The joint venture has also entered into a development agreement with Empire State Development (“ESD”) and a design-build contract with Skanska Moynihan Train Hall Builders. Under the development agreement with ESD, the joint venture is obligated to build the Moynihan Train Hall, with Vornado and Related each guaranteeing the joint venture’s obligations. Under the design-build agreement, Skanska Moynihan Train Hall Builders is obligated to fulfill all of the joint venture’s obligations. The obligations of Skanska Moynihan Train Hall Builders have been bonded by Skanska USA and bear a full guaranty from Skanska AB.

We are redeveloping a ~~64,000~~78,000 square foot Class A office building at 345 Montgomery Street, a part of our 555 California Street complex in San Francisco (70.0% interest) located at the corner of California and Pine Street. The development cost of this project is estimated to be approximately $46,000,000, of which our share is $32,000,000. As of March 31, ~~2018, $4,510,000~~2019, $23,488,000 has been expended, of which our share is ~~$3,157,000.~~$16,442,000.

We are redeveloping a 165,000 square foot office building at 825 Seventh Avenue, located at the corner of 53rd Street and Seventh Avenue (50.0% interest). The redevelopment cost of this project is estimated to be approximately $30,000,000, of which our share is $15,000,000. As of March 31, ~~2018, $2,207,000~~2019, $14,265,000 has been expended, of which our share is ~~$1,103,000.~~$7,133,000.

We are redeveloping PENN1, a 2,543,000 square foot office building located on 34th Street between Seventh and Eighth Avenue. The development cost of this project is estimated to be over $200,000,000, of which $41,872,000 has been expended as of March 31, 2019.

We are in the planning phase to redevelop PENN2, a 1,634,000 square foot office building located on the west side of 7th Avenue between 31st and 33rd Street.

Farley Office and Retail Building and Moynihan Train Hall

Our 95.0% joint venture (the remaining 5.0% is owned by the Related Companies ("Related") is developing the Farley Office and Retail Building (the "Project"), which will include approximately 850,000 rentable square feet of commercial space, comprised of approximately 730,000 square feet of office space and approximately 120,000 square feet of retail space. The total development cost of the Project is estimated to be approximately $800,000,000 (exclusive of a $230,000,000 upfront contribution and net of anticipated historic tax credits). As of March 31, 2019, $207,115,000 has been expended.

The joint venture has entered into a development agreement with Empire State Development (“ESD”), an entity of New York State, to build the adjacent Moynihan Train Hall, with Vornado and Related each guaranteeing the joint venture's obligations. The joint venture has entered into a design-build contract with Skanska Moynihan Train Hall Builders pursuant to which they will build the Moynihan Train Hall, thereby fulfilling all of the joint venture's obligations to ESD. The obligations of Skanska Moynihan Train Hall Builders have been bonded by Skanska USA and bear a full guaranty from Skanska AB. The development expenditures for the Moynihan Train Hall are estimated to be approximately $1.6 billion, which will be funded by governmental agencies. Pursuant to Accounting Standards Codification 842-40-55, the joint venture, which we consolidate on our consolidated balance sheets, is required to recognize all development expenditures for the Moynihan Train Hall. Accordingly, the development expenditures paid for by governmental agencies through March 31, 2019 and December 31, 2018of $550,996,000 and $445,693,000, respectively, are shown as “Moynihan Train Hall development expenditures” with a corresponding obligation recorded in “Moynihan Train Hall obligation” on our consolidated balance sheets. Upon completion of the development, the "Moynihan Train Hall development expenditures" and the offsetting “Moynihan Train Hall obligation” will be removed from our consolidated balance sheets.

Liquidity and Capital Resources - continued

Development and Redevelopment Expenditures for the Three Months Ended March 31, 2019 - continued

We are also evaluating other development and redevelopment opportunities at certain of our properties in Manhattan, including, in particular, the Penn ~~Plaza~~ District.

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.

Below is a summary of amounts paid for development and redevelopment expenditures ~~incurred~~for the three months ended March 31, 2019. These expenditures include interest and debt expense of $23,325,000, payroll of $4,590,000 and other soft costs (primarily architectural and engineering fees, permits, real estate taxes and professional fees) aggregating $13,030,000, which were capitalized in connection with the development and redevelopment of these projects.



(Amounts in thousands)	Total		New York		theMART		555 California Street		Other
220 Central Park South	$	54,623	$	—	$	—	$	—	$	54,623
Farley Office and Retail Building	51,506		51,506		—		—		—
606 Broadway	4,980		4,980		—		—		—
PENN1	4,941		4,941		—		—		—
345 Montgomery Street	3,250		—		—		3,250		—
1535 Broadway	1,031		1,031		—		—		—
Other	22,971		20,018		686		1,388		879
	$	143,302	$	82,476	$	686	$	4,638	$	55,502

Capital Expenditures for the Three Months Ended March 31, 2018

Below is a summary of amounts paid for capital expenditures and leasing commissions for the three months ended March 31, 2018.



(Amounts in thousands)	Total		New York		theMART		555 California Street
Expenditures to maintain assets	$	20,544	$	13,593	$	2,517	$	4,434
Tenant improvements	20,188		16,323		2,044		1,821
Leasing commissions	7,813		7,813		—		—
Recurring tenant improvements, leasing commissions and other capital expenditures	48,545		37,729		4,561		6,255
Non-recurring capital expenditures	10,699		7,524		—		3,175
Total capital expenditures and leasing commissions	$	59,244	$	45,253	$	4,561	$	9,430

Development and Redevelopment Expenditures for the Three Months Ended March 31, 2018

Below is a summary of amounts paid for development and redevelopment expenditures for the three months ended March 31, 2018. These expenditures include interest and debt expense of $14,726,000, payroll of $1,709,000, and other soft costs (primarily architectural and engineering fees, permits, real estate taxes and professional fees) aggregating $9,756,000, which were capitalized in connection with the development and redevelopment of these projects.


(Amounts in thousands)	Total		New York		theMART		555 California Street		Other		Total		New York		theMART		555 California Street		Other
220 Central Park South	$	75,239	$	—	$	—	$	—	$	75,239	$	75,239	$	—	$	—	$	—	$	75,239
606 Broadway	4,791		4,791		—		—		—		4,791		4,791		—		—		—
345 Montgomery Street	2,196		—		—		2,196		—		2,196		—		—		2,196		—
Penn Plaza	1,218		1,218		—		—		—
PENN1											926		926		—		—		—
Other	3,364		2,806		265		134		159		3,656		3,098		265		134		159
	$	86,808	$	8,815	$	265	$	2,330	$	75,398	$	86,808	$	8,815	$	265	$	2,330	$	75,398

Liquidity and Capital Resources - continued

~~Cash Flows for the Three Months Ended March 31, 2017~~

Our cash and cash equivalents and restricted cash were $1,583,005,000 at March 31, 2017, a $16,317,000 decrease from the balance at December 31, 2016. The decrease is due to cash flows used in investing and financing activities, partially offset by cash flows provided by operating activities, as discussed below.

~~Net Cash Provided by Operating Activities~~

Net cash provided by operating activities of $301,285,000 was comprised of (i) net income of $73,847,000, (ii) $139,173,000 of non-cash adjustments, which include depreciation and amortization expense, the effect of straight-lining of rents, amortization of below-market leases, net, net realized and unrealized losses on real estate fund investments, net gains on sale of real estate and other, equity in net income from partially owned entities and net gains on disposition of wholly owned and partially owned assets, (iii) distributions of income from partially owned entities of $18,226,000 and (iv) the net change in operating assets and liabilities of $70,039,000.

~~Net Cash Used in Investing Activities~~

Net cash used in investing activities of $156,654,000 was primarily comprised of (i) $98,227,000 of development costs and construction in progress, (ii) $67,363,000 of additions to real estate and (iii) $6,679,000 of investments in partially owned entities, partially offset by (iv) $11,592,000 of capital distributions from partially owned entities and (v) $5,180,000 of proceeds from sales of real estate and related investments.

~~Net Cash Used in Financing Activities~~

Net cash used in financing activities of Vornado Realty Trust of $160,948,000 was primarily comprised of (i) $134,332,000 of dividends paid on common shares, (ii) $16,129,000 of dividends paid on preferred shares, (iii) $14,281,000 of distributions to noncontrolling interests and (iv) $6,987,000 for the repayments of borrowings, partially offset by (v) $8,484,000 of proceeds received from exercise of employee share options and other and (vi) $2,529,000 of proceeds from borrowings.

Net cash used in financing activities of the Operating Partnership of $160,948,000 was primarily comprised of (i) $134,332,000 of distributions to Vornado, (ii) $16,129,000 of distributions to preferred unitholders, (iii) $14,281,000 of distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries and (iv) $6,987,000 for the repayments of borrowings, partially offset by (v) $8,484,000 of proceeds received from exercise of Vornado stock options and other and (vi) $2,529,000 of proceeds from borrowings.

~~Liquidity and Capital Resources - continued~~

~~Capital Expenditures for the Three Months Ended March 31, 2017~~

~~Below is a summary of capital expenditures, leasing commissions and a reconciliation of total expenditures on an accrual basis to the cash expended for the three months ended March 31, 2017.~~

(Amounts in thousands) Total New York theMART
555 California
Street
Other
Expenditures to maintain assets $ 23,867
$ 17,830
$ 584
$ 968
$ 4,485

Tenant improvements 45,801
9,041
4,762
3,454
28,544

Leasing commissions 10,267
3,889
834
768
4,776

Non-recurring capital expenditures 22,327
20,916
86
60
1,265

Total capital expenditures and leasing commissions (accrual basis) 102,262
51,676
6,266
5,250
39,070

Adjustments to reconcile to cash basis:
Expenditures in the current period applicable to prior periods 33,810
13,940
2,254
6,967
10,649

Expenditures to be made in future periods for the current period (58,120 ) (27,379 ) (4,268 ) 3,529
(30,002 )
Total capital expenditures and leasing commissions (cash basis) $ 77,952
$ 38,237
$ 4,252
$ 15,746
$ 19,717
⁽¹⁾
Tenant improvements and leasing commissions:
Per square foot per annum $ 8.72
$ 11.26
$ 6.99
$ 8.30
n/a

Percentage of initial rent 11.7 % 14.1 % 14.7 % 9.6 % n/a

~~__________~~

~~(1)~~ Effective July 17, 2017, the date of the spin-off of our Washington, DC segment, capital expenditures and leasing commissions by our former Washington, DC segment have been reclassified to the Other segment. We have reclassified the prior period capital expenditures and leasing commissions to conform to the current period presentation.

~~Development and Redevelopment Expenditures for the Three Months Ended March 31, 2017~~

Below is a summary of development and redevelopment expenditures incurred for the three months ended March 31, 2017. These expenditures include interest of $11,270,000, payroll of $2,105,000, and other soft costs (primarily architectural and engineering fees, permits, real estate taxes and professional fees) aggregating $7,380,000, which were capitalized in connection with the development and redevelopment of these projects.

(Amounts in thousands) Total New York theMART
555 California
Street
Other
220 Central Park South $ 66,284
$ —
$ —
$ —
$ 66,284

90 Park Avenue 3,447
3,447
—
—
—

606 Broadway 2,765
2,765
—
—
—

304 Canal Street 2,128
2,128
—
—
—

Penn Plaza 1,274
1,274
—
—
—

Marriott Marquis Times Square - retail and signage 1,266
1,266
—
—
—

640 Fifth Avenue 1,090
1,090
—
—
—

theMART 1,034
—
1,034
—
—

Other 18,939
847
101
3,294
14,697
⁽¹⁾
$ 98,227
$ 12,817
$ 1,135
$ 3,294
$ 80,981

~~__________~~

~~Liquidity and Capital Resources - continued~~

Other Commitments and Contingencies

~~In September 2016, our 50.1%~~A joint venture ~~with Related~~in which we own a 95.0% ownership interest was designated by ESD, an entity of New York State, to ~~redevelop~~develop the ~~historic~~ Farley ~~Post~~ Office and Retail Building. The joint venture entered into a development agreement with ESD and a design-build contract with Skanska Moynihan Train Hall Builders. Under the development agreement with ESD, the joint venture is obligated to build the Moynihan Train Hall, with Vornado and Related each guaranteeing the joint venture’s obligations. Under the design-build agreement, Skanska Moynihan Train Hall Builders is obligated to fulfill all of the joint venture’s obligations. The obligations of Skanska Moynihan Train Hall Builders have been bonded by Skanska USA and bear a full guaranty from Skanska AB.

As of March 31, ~~2018,~~2019, we expect to fund additional capital to certain of our partially owned entities aggregating approximately ~~$52,000,000.~~$16,000,000.

As of March 31, ~~2018,~~2019, we have construction commitments aggregating approximately ~~$389,000,000.~~$774,000,000.

Funds From Operations (“FFO”)

Vornado Realty Trust

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~~depreciable real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specified ~~non-cash~~ items, including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are non-GAAP financial measures 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 flow as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies. The calculations of both the numerator and denominator used in the computation of income per share are disclosed in Note 2019 – Income (Loss) ~~Income~~ Per Share/Income (Loss) ~~Income~~ Per Class A Unit, in our consolidated financial statements on page 37 39of this Quarterly Report on Form 10-Q.

In accordance with the NAREIT December 2018 restated definition of FFO, we have elected to exclude the mark-to-market adjustments of marketable equity securities from the calculation of FFO. Our FFO for the three months ended March 31, 2018 has been adjusted to exclude the $34,660,000, or $0.17 per share, decrease in fair value of marketable equity securities previously reported.

FFO attributable to common shareholders plus assumed conversions was ~~$102,479,000,~~$247,684,000, or ~~$0.54~~$1.30 per diluted share for the three months ended March 31, ~~2018,~~2019, compared to ~~$205,729,000,~~$135,000,000, or ~~$1.08~~$0.71 per diluted share, for the prior year’s three months. Details of certain adjustments to FFO are discussed in the financial results summary of our “Overview”.


(Amounts in thousands, except per share amounts)	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2018			2017			2019			2018
Reconciliation of our net (loss) income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions:
Net (loss) income attributable to common shareholders	$	(17,841	)	$	47,752
Reconciliation of our net income (loss) attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions:
Net income (loss) attributable to common shareholders							$	181,488		$	(17,841	)
Per diluted share	$	(0.09	)	$	0.25		$	0.95		$	(0.09	)

FFO adjustments:
Depreciation and amortization of real property	$	100,410		$	130,469		$	108,483		$	100,410
Net gains on sale of real estate	—			(2,267		)
Proportionate share of adjustments to equity in net (loss) income of partially owned entities to arrive at FFO:
Net gain from sale of UE common shares							(62,395		)	—
(Increase) decrease in fair value of marketable securities:
Lexington							(16,068		)	32,875
PREIT							15,649			—
Other							(42		)	111
Proportionate share of adjustments to equity in net income (loss) of partially owned entities to arrive at FFO:
Depreciation and amortization of real property	28,106			39,074			24,990			28,106
Net gains on sale of real estate	(305		)	(1,853		)	—			(305		)
Real estate impairment losses	4			3,051
(Increase) decrease in fair value of marketable securities							(12		)	1,674
	128,215			168,474			70,605			162,871
Noncontrolling interests' share of above adjustments	(7,911		)	(10,517		)	(4,424		)	(10,046		)
FFO adjustments, net	$	120,304		$	157,957		$	66,181		$	152,825

FFO attributable to common shareholders	$	102,463		$	205,709		$	247,669		$	134,984
Convertible preferred share dividends	16			20			15			16
FFO attributable to common shareholders plus assumed conversions	$	102,479		$	205,729		$	247,684		$	135,000
Per diluted share	$	0.54		$	1.08		$	1.30		$	0.71

Reconciliation of Weighted Average Shares
Weighted average common shares outstanding	190,081			189,210			190,689			190,081
Effect of dilutive securities:
Employee stock options and restricted share awards	938			1,162			271			938
Convertible preferred shares	38			40			36			38
Denominator for FFO attributable to common shareholders plus assumed conversions per diluted share	191,057			190,412
Denominator for FFO per diluted share							190,996			191,057

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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


(Amounts in thousands, except per share and per unit amounts)	2018						2017			2019						2018
	March 31, Balance		Weighted Average Interest Rate	Effect of 1% Change In Base Rates			December 31, Balance		Weighted Average Interest Rate	March 31, Balance		Weighted Average Interest Rate	Effect of 1% Change In Base Rates			December 31, Balance		Weighted Average Interest Rate
Consolidated debt:
Variable rate	$	3,982,692	3.47%	$	39,827		$	3,492,133	3.19%	$	2,475,508	4.04%	$	24,755		$	3,292,382	4.31%
Fixed rate	5,862,026		3.63%	—			6,311,706		3.72%	6,210,526		3.65%	—			6,603,465		3.65%
	$	9,844,718	3.56%	39,827			$	9,803,839	3.53%	$	8,686,034	3.76%	24,755			$	9,895,847	3.87%
Pro rata share of debt of non-consolidated entities (non-recourse):
Variable rate – excluding Toys "R" Us, Inc.	$	1,415,799	3.54%	14,158			$	1,395,001	3.24%
Variable rate – Toys "R" Us, Inc.	1,077,782		9.29%	10,778			1,269,522		8.20%
Fixed rate - excluding Toys "R" Us, Inc.	2,043,856		4.75%	—			2,035,888		4.89%
Fixed rate - Toys "R" Us, Inc.	595,946		10.10%	—			587,865		10.31%
Pro rata share of debt of non-consolidated entities⁽¹⁾⁽²⁾:
Variable rate										$	1,266,752	4.10%	12,668			$	1,237,388	4.06%
Fixed rate										1,192,648		4.23%	—			1,382,068		4.19%
	$	5,133,383	5.99%	24,936			$	5,288,276	5.85%	$	2,459,400	4.16%	12,668			$	2,619,456	4.13%
Noncontrolling interests' share of consolidated subsidiaries				(1,477		)							(282		)
Total change in annual net income attributable to the Operating Partnership				63,286									37,141
Noncontrolling interests’ share of the Operating Partnership				(3,905		)							(2,332		)
Total change in annual net income attributable to Vornado				$	59,381								$	34,809
Total change in annual net income attributable to the Operating Partnership per diluted Class A unit				$	0.31								$	0.18
Total change in annual net income attributable to Vornado per diluted share				$	0.31								$	0.19

____________________

(1) As a result of Toys “R” Us (“Toys”) filing a voluntary petition under chapter 11 of the United States Bankruptcy Code, we determined the Company no longer has the ability to exercise significant influence over Toys. Accordingly, we have excluded our share of Toys debt in 2018. The voluntary petition was declared effective in 2019 and our stock was canceled. As a result we no longer hold an investment in Toys.


(2)	Our pro rata share of debt of non-consolidated entities as of March 31, 2019 and December 31, 2018 is net of our $63,409 share of Alexander's participation in its Rego Park II shopping center mortgage loan which is considered partially extinguished as the participation interest is a reacquisition of debt.

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 March 31, ~~2018,~~2019, we have an interest rate swap on a $375,000,000 mortgage loan on 888 Seventh Avenue that swapped the rate from LIBOR plus 1.60% ~~(3.26%~~(4.09% as of March 31, ~~2018)~~2019) to a fixed rate of 3.15% through December ~~2020 and~~2020; an interest rate swap on a $700,000,000 mortgage loan on 770 Broadway that swapped the rate from LIBOR plus1.75% ~~(3.45%~~(4.23% as of March 31, ~~2018)~~2019) to a fixed rate of 2.56%through September ~~2020.~~

~~In connection with the $100,000,000 refinancing of 33-00 Northern Boulevard, we entered into~~2020; an interest rate swap on a $100,000,000 mortgage loan on 33-00 Northern Boulevard that swapped the rate from LIBOR plus 1.80% ~~(3.52%~~ (4.30%as of March 31, ~~2018~~)2019) to a fixed rate of 4.14% through January ~~2025.~~2025; and an interest rate swap on our $750,000,000 unsecured term loan that swapped the rate from LIBOR plus 1.00% (3.50% as of March 31, 2019) to a fixed rate of 3.87% through October 2023.

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 March 31, ~~2018,~~2019, the estimated fair value of our consolidated debt was ~~$9,807,000,000.~~$8,713,000,000.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures (Vornado Realty Trust)

Disclosure Controls and Procedures: Our management, with the participation of Vornado’s 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 report. Based on such evaluation, Vornado’s Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, ~~2018,~~2019, such disclosure controls and procedures were effective.

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

Evaluation of Disclosure Controls and Procedures (Vornado Realty L.P.)

Disclosure Controls and Procedures: Vornado Realty L.P.’s management, with the participation of Vornado’s 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 report. Based on such evaluation, Vornado’s Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, ~~2018,~~2019, such disclosure controls and procedures were effective.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

There were no material changes to the Risk Factors disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

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

Vornado Realty Trust

None.

Vornado Realty L.P.

During the quarter ended March 31, ~~2018,~~2019, we issued ~~312,505~~762,145 Class A units in connection with equity awards issued pursuant to Vornado’s omnibus share plan, including with respect to grants of restricted Vornado common shares and restricted units of the Operating Partnership and upon conversion, surrender or exchange of the Operating Partnership’s units or Vornado stock options, and consideration received included ~~$3,798,660~~$11,670,545 in cash proceeds. Such units were issued in reliance on an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

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



EXHIBIT INDEX
Exhibit No.
~~10.35~~10.40	**	—	~~Form of Vornado Realty Trust 2018 Outperformance Plan Award~~Second Amended and Restated Revolving Credit Agreement dated as of March ~~15, 2018~~26, 2019, 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.
15.1		—	Letter regarding Unaudited Interim Financial Information of Vornado Realty Trust
15.2		—	Letter regarding Unaudited Interim Financial Information of Vornado Realty L.P.
31.1		—	Rule 13a-14 (a) Certification of the Chief Executive Officer of Vornado Realty Trust
31.2		—	Rule 13a-14 (a) Certification of the Chief Financial Officer of Vornado Realty Trust
31.3		—	Rule 13a-14 (a) Certification of the Chief Executive Officer of Vornado Realty L.P.
31.4		—	Rule 13a-14 (a) Certification of the Chief Financial Officer of Vornado Realty L.P.
32.1		—	Section 1350 Certification of the Chief Executive Officer of Vornado Realty Trust
32.2		—	Section 1350 Certification of the Chief Financial Officer of Vornado Realty Trust
32.3		—	Section 1350 Certification of the Chief Executive Officer of Vornado Realty L.P.
32.4		—	Section 1350 Certification of the Chief Financial Officer of Vornado Realty L.P.
101.INS		—	XBRL Instance Document of Vornado Realty Trust and Vornado Realty L.P. - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		—	XBRL Taxonomy Extension Schema of Vornado Realty Trust and Vornado Realty L.P.
101.CAL		—	XBRL Taxonomy Extension Calculation Linkbase of Vornado Realty Trust and Vornado Realty L.P.
101.DEF		—	XBRL Taxonomy Extension Definition Linkbase of Vornado Realty Trust and Vornado Realty L.P.
101.LAB		—	XBRL Taxonomy Extension Label Linkbase of Vornado Realty Trust and Vornado Realty L.P.
101.PRE		—	XBRL Taxonomy Extension Presentation Linkbase of Vornado Realty Trust and Vornado Realty L.P.
			~~_________________________________________~~
	**		~~Management contract or compensatory agreement.~~

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: April ~~30, 2018~~29, 2019	By:	/s/ Matthew Iocco
		Matthew Iocco, Chief Accounting Officer (duly authorized officer and principal accounting officer)

SIGNATURES

~~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 L.P.
		(Registrant)


Date: April ~~30, 2018~~29, 2019	By:	/s/ Matthew Iocco
		Matthew Iocco, Chief Accounting Officer of Vornado Realty Trust, sole General Partner of Vornado Realty L.P. (duly authorized officer and principal accounting officer)

7782



(Amounts in thousands)	Fair Value at				Decrease in Fair Value⁽¹⁾
	March 31, 2018		December 31, 2017		Decrease in Fair Value⁽¹⁾
Equity securities:
Lexington Realty Trust	$	145,351	$	178,226	$	(32,875	)
Other	4,415		4,526		(111		)
	$	149,766	$	182,752	$	(32,986	)



(Amounts in thousands)
2019	$	30,529
2020	22,246
2021	17,475
2022	14,292
2023	11,590



(Amounts in thousands)
2019	$	15,169
2020	11,961
2021	10,981
2022	9,426
2023	9,295



(Amounts in thousands)
2019	$	1,747
2020	1,747
2021	1,747
2022	1,747
2023	1,747



(Amounts in thousands)	Interest Rate at March 31, 2018	Balance as of
	Interest Rate at March 31, 2018	March 31, 2018			December 31, 2017
Mortgages Payable:
Fixed rate	3.53%	$	5,012,026		$	5,461,706
Variable rate	3.60%	3,152,692			2,742,133
Total	3.56%	8,164,718			8,203,839
Deferred financing costs, net and other		(62,480		)	(66,700		)
Total, net		$	8,102,238		$	8,137,139

Unsecured Debt:
Senior unsecured notes	4.21%	$	850,000		$	850,000
Deferred financing costs, net and other		(6,875		)	(6,386		)
Senior unsecured notes, net		843,125			843,614

Unsecured term loan	3.02%	750,000			750,000
Deferred financing costs, net and other		(886		)	(1,266		)
Unsecured term loan, net		749,114			748,734

Unsecured revolving credit facilities	2.72%	80,000			—

Total, net		$	1,672,239		$	1,592,348



(Amounts in thousands)
Balance, December 31, 2016	$	1,278,446
Net income	3,229
Other comprehensive income	3
Distributions	(9,163		)
Redemption of Class A units for Vornado common shares, at redemption value	(14,739		)
Adjustments to carry redeemable Class A units at redemption value	(6,197		)
Other, net	14,495
Balance, March 31, 2017	$	1,266,074

Balance, December 31, 2017	$	984,937
Net loss	(1,124		)
Other comprehensive income	654
Distributions	(7,906		)
Redemption of Class A units for Vornado common shares, at redemption value	(8,392		)
Adjustments to carry redeemable Class A units at redemption value	(114,856		)
Other, net	3,713
Balance, March 31, 2018	$	857,026



(Amounts in thousands)	As of March 31, 2018
	Total		Level 1		Level 2		Level 3
Marketable securities	$	149,766	$	149,766	$	—	$	—
Real estate fund investments	336,552		—		—		336,552
Deferred compensation plan assets ($11,392 included in restricted cash and $98,133 in other assets)	109,525		70,040		—		39,485
Interest rate swaps (included in other assets)	36,678		—		36,678		—
Total assets	$	632,521	$	219,806	$	36,678	$	376,037

Mandatorily redeemable instruments (included in other liabilities)	$	50,561	$	50,561	$	—	$	—

(Amounts in thousands)	As of December 31, 2017
	Total		Level 1		Level 2		Level 3
Marketable securities	$	182,752	$	182,752	$	—	$	—
Real estate fund investments	354,804		—		—		354,804
Deferred compensation plan assets ($11,545 included in restricted cash and $97,633 in other assets)	109,178		69,050		—		40,128
Interest rate swaps (included in other assets)	27,472		—		27,472		—
Total assets	$	674,206	$	251,802	$	27,472	$	394,932

Mandatorily redeemable instruments (included in other liabilities)	$	520,561	$	520,561	$	—	$	—
Interest rate swaps (included in other liabilities)	1,052		—		1,052		—
Total liabilities	$	521,613	$	520,561	$	1,052	$	—



(Amounts in thousands)	Ownership Percentage at March 31, 2018	For the Three Months Ended March 31,
		2018			2017
Equity in Net (Loss) Income:
Partially owned office buildings⁽¹⁾	Various	$	(4,283	)	$	810
Alexander's⁽²⁾	32.4%	(2,001		)	8,401
Urban Edge Properties	4.5%	(641		)	1,300
Pennsylvania Real Estate Investment Trust	8.0%	(429		)	(2,830		)
Other investments⁽³⁾	Various	(2,550		)	(6,323		)
		$	(9,904	)	$	1,358