UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-K

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

For the Fiscal Year Ended:	December 31, 2010

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

For the transition period from		to

Commission File Number:	000‑22635

VORNADO REALTY L.P.

(Exact name of Registrant as specified in its charter)

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)

Registrant’s telephone number including area code:

(212) 894‑7000

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

NONE

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

Class A Units of Limited Partnership Interest

Series A Preferred Units of Limited Partnership Interest

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

YES x NO o

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

YES o NO x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

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

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

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

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

YES o NO x

There is no public market for the Class A units of limited partnership interest. Based on the June 30, 2010 closing share price of Vornado Realty Trust’s common shares, which are issuable upon redemption of the Class A units, the aggregate market value of the Class A units held by non-affiliates of the registrant, i.e. by persons other than Vornado Realty Trust and its officers and Trustees, was $11,920,063,000 at June 30, 2010.

Documents Incorporated by Reference

Part III: Portions of Proxy Statement for Annual Meeting of Vornado Realty Trust’s Shareholders to be held on May 26, 2011.

			INDEX

		Item	Financial Information:	Page Number

PART I.		1.	Business	4

		1A.	Risk Factors	10

		1B.	Unresolved Staff Comments	23

		2.	Properties	23

		3.	Legal Proceedings	60

PART II.		5.	Market for Registrant’s Common Equity, Related Stockholder Matters and
			Issuer Purchases of Equity Securities	61

		6.	Selected Financial Data	63

		7.	Management's Discussion and Analysis of Financial Condition and
			Results of Operations	64

		7A.	Quantitative and Qualitative Disclosures about Market Risk	110

		8.	Financial Statements and Supplementary Data	111

		9.	Changes in and Disagreements with Accountants on
			Accounting and Financial Disclosure	164

		9A.	Controls and Procedures	164

		9B.	Other Information	166

PART III.		10.	Directors, Executive Officers and Corporate Governance⁽¹⁾	167

		11.	Executive Compensation⁽¹⁾	167

		12.	Security Ownership of Certain Beneficial Owners and Management
			and Related Stockholder Matters⁽¹⁾	167

		13.	Certain Relationships and Related Transactions, and Director Independence⁽¹⁾	167

		14.	Principal Accounting Fees and Services⁽¹⁾	167

PART IV.		15.	Exhibits and Financial Statement Schedules	168

Signatures				169


(1)	These items are omitted in whole or in part because Vornado Realty Trust, the registrant’s sole general partner, will file a definitive Proxy Statement pursuant to Regulation 14A under the Securities Exchange Act of 1934 with the Securities and Exchange Commission not later than 120 days after December 31, 2010, portions of which are incorporated by reference herein.

Forward-Looking Statements

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Annual Report on Form 10‑K. We also note the following forward-looking statements: in the case of our development projects, the estimated completion date, estimated project cost and cost to complete; and estimates of future capital expenditures and partnership distributions. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Item 1A. Risk Factors” in this Annual Report on Form 10-K.

For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K or the date of any document incorporated by reference. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report on Form 10-K.

PART I

ITEM 1. BUSINESS

The Company

Vornado Realty L.P. (the “Operating Partnership” and/or the “Company”) is a Delaware limited partnership. Vornado Realty Trust (“Vornado”) is the sole general partner of, and owned approximately 93.2% of the common limited partnership interest in the Operating Partnership at December 31, 2010. All references to “we,” “us,” “our,” the “Company” and “Operating Partnership” refer to Vornado Realty L.P. and its consolidated subsidiaries.

As of December 31, 2010, we own:

Office Properties:

(i) all or portions of 28 properties aggregating 17.4 million square feet in the New York City metropolitan area (primarily Manhattan);

(ii) all or portions of 82 properties aggregating 21.1 million square feet in the Washington, DC / Northern Virginia area;

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

Retail Properties:

(iv) 161 properties aggregating 25.6 million square feet primarily in Manhattan, the northeast states, California and Puerto Rico;

Merchandise Mart Properties:

(v) 6 properties aggregating 6.9 million square feet of showroom and office space, including the 3.5 million square foot Merchandise Mart in Chicago;

Toys “R” Us, Inc. (“Toys”):

(vi) a 32.7% interest in Toys which owns and/or operates 1,589 stores worldwide, including 857 stores in the United States and 732 stores internationally;

Other Investments:

(vii) 32.4% of the common stock of Alexander’s, Inc. (NYSE: ALX), which has seven properties aggregating 3.2 million square feet in the greater New York metropolitan area;

(viii) the Hotel Pennsylvania containing 1.4 million square feet in New York City;

(ix) a 9.9% economic interest in J.C. Penney Company, Inc. (NYSE: JCP), a major retailer that operates 1,108 department stores nationwide;

(x) a 26.2% equity interest in LNR Property Corporation, an industry leading servicer and special servicer of commercial mortgage loans and CMBS, and a diversified real estate, investment and finance company;

(xi) a 36.4% interest in our real estate investment fund in which we are the general partner and investment manager with aggregate equity commitments of $550 million, of which we committed $200 million; and

(xii) other real estate and investments, including marketable securities and mezzanine loans on real estate.

Objectives and Strategy

Our business objective is to maximize Vornado shareholder value. We intend to achieve this objective by continuing to pursue our investment philosophy and executing our operating strategies through:

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

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

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

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

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

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

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

BUSINESS ENVIRONMENT

Substantially all businesses, including ours, were negatively affected by the 2008/2009 economic recession and illiquidity and volatility in the capital and financial markets. Although there are signs of an economic recovery and greater stability in the capital and financial markets, it is not possible for us to predict whether these trends will continue in the future or quantify the impact of these or any other trends on our financial results.

ACQUISITIONS and investments

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

On July 6, 2010, we completed an initial closing of the Fund with aggregate equity commitments of $550,000,000, of which we committed $200,000,000. We closed on an additional $250,000,000 of equity commitments in the first quarter of 2011. We are the general partner and investment manager of the Fund and it is our exclusive investment vehicle during the three-year investment period for all investments that fit within the Fund’s investment parameters, including debt, equity and other interests in real estate, and excluding (i) investments in vacant land and ground-up development; (ii) investments acquired by merger or primarily for our securities or properties; (iii) properties which can be combined with or relate to our existing properties; (iv) securities of commercial mortgage loan servicers an d investments derived from any such investments; (v) noncontrolling interests in equity and debt securities; and (vi) investments located outside of North America. The Fund has a term of eight years. We consolidate the accounts of the Fund into our consolidated financial statements. In 2010, we incurred $6,482,000 for organization costs of the Fund, net of the Fund’s reimbursement to us, which are included in “general and administrative” expenses on our consolidated statement of income.

The Fund is accounted for under the AICPA Investment Company Guide and its investments are reported on its balance sheet at fair value, with changes in value each period recognized in earnings. As of December 31, 2010, the Fund received $146,789,000 of capital from partners, including $53,378,000 from us. During the second half of 2010, the Fund made four investments aggregating approximately $145,000,000 and reimbursed us for $1,500,000 of organization costs.

ACQUISITIONS and investments – continued

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

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

We own 18,584,010 common shares at an average price of $25.70 per share, or $477,678,000 in the aggregate. These shares, which have an aggregate fair value of $600,449,000 at December 31, 2010, are included in marketable equity securities on our consolidated balance sheet and are classified as “available for sale.” Of these shares, 15,500,000 were acquired through the exercise of a call option that originated on September 28, 2010 and settled on November 9, 2010. During the period in which the call option was outstanding and classified as a derivative instrument, we recognized $112,537,000 of income from the mark-to-market of the underlying common shares, which is included in “interest and other investment income (loss), net” on our consolidated statement of income. During the period from November 10 through December 31, 2010, we recognized $10,234,000 from the mark-to-market of the common shares classified as available-for-sale, which is included in “accumulated other comprehensive income” (a component of equity on our consolidated balance sheet).

We also own an economic interest in 4,815,990 common shares through a forward contract executed on October 7, 2010, at a weighted average strike price of $28.65 per share, or $137,989,000 in the aggregate. The contract may be settled, at our election, in cash or common shares, in whole or in part, at any time prior to October 9, 2012. The counterparty may accelerate settlement, in whole or in part, upon one year’s notice to us. The strike price per share increases at an annual rate of LIBOR plus 80 basis points and decreases for dividends received on the shares. The contract is a derivative instrument that does not qualify for hedge accounting treatment. Mark-to-market adjustments on the underlying common shares are recognized in “interest and other investment income (loss), net” on our consolidated statement of income. During the period from October 7, 2010 through December 31, 2010, we recognized $17,616,000 of income from the mark-to-market of this position, based on J.C. Penney’s closing share price of $32.31 per share at December 31, 2010.

As of December 31, 2010, the aggregate economic net gain on our investment in J.C. Penney was $140,387,000, based on J.C. Penney’s closing share price of $32.31 per share and our weighted average cost of $26.31 per share.

Investment in LNR Property Corporation (“LNR”)

On July 29, 2010, as a part of LNR’s recapitalization, we acquired a 26.2% equity interest in LNR for $116,000,000 in cash and conversion into equity of our $15,000,000 mezzanine loan (the then current carrying amount) made to LNR’s parent, Riley Holdco Corp. The recapitalization involved an infusion of a total of $417,000,000 in new cash equity and the reduction of LNR’s total debt to $425,000,000 from $1.3 billion, excluding liabilities related to the consolidated CMBS and CDO trusts described below. We account for our equity interest in LNR under the equity method on a one-quarter lag basis.

LNR consolidates certain commercial mortgage-backed securities (“CMBS”) and Collateralized Debt Obligation (“CDO”) trusts for which it is the primary beneficiary. The assets of these trusts (primarily commercial mortgage loans), which aggregate approximately $142 billion as of September 30, 2010, are the sole source of repayment of the related liabilities, which are non-recourse to LNR and its equity holders, including us. Changes in the fair value of these assets each period are offset by changes in the fair value of the related liabilities through LNR’s consolidated income statement.

510 Fifth Avenue

San Jose, California

Atlantic City, New Jersey

On November 4, 2010, we acquired 11.3 acres of the land under a portion of the Borgata Hotel and Casino complex for $83,000,000 in cash. The land is leased to the partnership that controls the Borgata Hotel and Casino complex through December 2070. In January 2011, we completed a 10-year $60,000,000 financing of this land. The loan has a fixed interest rate of 5.14% and amortizes beginning in the third year, based on a 30-year schedule.

Dispositions

On October 20, 2010, we sold a 45% ownership interest in 1299 Pennsylvania Avenue (the Warner Building) and 1101 17^th Street, for $236,700,000, comprised of $91,000,000 in cash and the assumption of existing mortgage debt. We retained the remaining 55% ownership interest and continue to manage and lease the properties. Based on the Warner Building’s implied fair value of $445,000,000, we recognized a net gain of $54,000,000 in the fourth quarter of 2010. The gain on 1101 17^th Street, based on an implied fair value of $81,000,000, will be recognized when we monetize our investment.

On January 12, 2011, we sold 1140 Connecticut Avenue and contracted to sell 1227 25^th Street, subject to customary closing conditions, for an aggregate price of $127,000,000. We will retain net proceeds of approximately $107,000,000, after repaying an existing mortgage and recognize a net gain of approximately $44,000,000 in the first quarter of 2011.

Financing Activities

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

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

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

In December 2010, we acquired the mortgage loan secured by the Springfield Mall, located in Fairfax County, Virginia for $115,000,000 in cash. The loan had an outstanding balance of $171,500,000. In a separate transaction, we acquired our partner’s interest in the partnership that owns the mall in exchange for $25,000,000 in partnership units. These transactions resulted in a $102,932,000 net gain on early extinguishment of debt.

In August 2010, we sold $660,000,000 of 10-year mortgage notes in a single issuer securitization. The notes are comprised of a $600,000,000 fixed rate component and a $60,000,000 variable rate component and are cross-collateralized by 40 of our strip shopping centers. The $600,000,000 fixed rate portion bears interest at an initial rate of 4.18% and a weighted average rate of 4.31% over the 10-year term and amortizes based on a 30-year schedule. The variable rate portion bears interest at LIBOR plus 1.36%, with a 1% floor (2.36% at December 31, 2010).

In March 2010, we completed a public offering of $500,000,000 aggregate principal amount of 4.25% senior unsecured notes due April 1, 2015 and retained net proceeds of approximately $496,000,000. The notes were sold at 99.834% of their face amount to yield 4.287%. The notes can be redeemed without penalty beginning January 1, 2015.

In 2010, through open market repurchases and tender offers, we purchased $270,491,000 aggregate face amount ($264,476,000 aggregate carrying amount) of our convertible senior debentures due to Vornado and $17,000,000 aggregate face amount ($16,981,000 aggregate carrying amount) of our senior unsecured notes for $274,857,000 and $17,382,000 in cash, respectively, resulting in a net loss of $10,381,000 and $401,000, respectively.

Development and Redevelopment Projects

We expended $156,775,000 in 2010 to complete development projects.

On October 1, 2010, Arlington County adopted a new Sector Plan for Crystal City that provides for additional density and increased building heights which would permit us to grow our assets in Crystal City from 8.0 million square feet currently to as much as 11.5 million square feet.

During 2010, we entered into agreements with Cuyahoga County, Ohio (the “County”) to develop and operate the Cleveland Medical Mart and Convention Center (the “Facility”), a 1,000,000 square foot showroom, trade show and conference center in Cleveland’s central business district. The County will fund the development of the Facility, using proceeds from the issuance of general obligation bonds and other sources, up to the development budget of $465,000,000 and maintain effective control of the property. During the 17-year development and operating period, we will receive net settled payments of approximately $10,000,000 per year, which is net of our $36,000,000 annual obligation to the County. Our obligation has been pledged by the County to the bondholders, but is payable by us only to the extent that we first receive at least an equal payment from the County. We engaged a contractor to construct the Facility pursuant to a guaranteed maximum price contract. Although we are ultimately responsible for cost overruns, the contractor is responsible for all costs incurred in excess of its contract and has provided a completion guaranty. Construction of the Facility is expected to be completed in 2013. Subsequent thereto, we are required to fund $11,500,000, primarily for tenant improvements, are responsible for all operating expenses and are entitled to the net operating income, if any, of the Facility. The County may terminate the operating agreement five years from the completion of development and periodically thereafter, if we fail to achieve certain performance thresholds. We plan to account for these agreements using criteria set forth in ASC 605-25, Multiple-Element Arrangements, as we are providing development, marketing, leasing, and other property management related services over the 17-year term. We plan to recognize development fees using the percentage of completion method of accounting.

We are also evaluating other development and redevelopment opportunities for which final plans, budgeted costs and financing have yet to be determined. These projects include the Springfield Mall in Springfield, Virginia and the Hotel Pennsylvania and 220 Central Park South in Manhattan.

There can be no assurance that any of our development projects will commence, or if commenced, be completed on schedule or within budget.

Segment Data

We operate in the following business segments: New York Office Properties, Washington, DC Office Properties, Retail Properties, Merchandise Mart Properties and Toys “R” Us. Financial information related to these business segments for the years ended December 31, 2010, 2009 and 2008 is set forth in Note 22 – Segment Information to our consolidated financial statements in this Annual Report on Form 10-K. The Merchandise Mart Properties segment has trade show operations in Canada and Switzerland. The Toys segment has 732 locations internationally.

SEASONALITY

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

tenants ACCOUNTING FOR over 10% of revenues

None of our tenants accounted for more than 10% of total revenues in any of the years ended December 31, 2010, 2009 and 2008.

Certain Activities

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

Employees

As of December 31, 2010, we have approximately 4,780 employees, of which 317 are corporate staff. The New York Office Properties segment has 126 employees and an additional 2,680 employees of Building Maintenance Services LLC, a wholly owned subsidiary, which provides cleaning, security and engineering services primarily to our New York Office and Washington, DC Office properties. The Washington, DC Office Properties, Retail Properties and Merchandise Mart Properties segments have 400, 176 and 576 employees, respectively, and the Hotel Pennsylvania has 505 employees. The foregoing does not include employees of partially owned entities, including Toys or Alexander’s, of which we own 32.7% and 32.4%, respectively.

principal executive offices

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

MATERIALS AVAILABLE ON VORNADO’S WEBSITE

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

ITEM 1A. RISK FACTORS

Material factors that may adversely affect our business, operations and financial condition are summarized below.

Real Estate Investments’ Value and Income Fluctuate Due to Various Factors.

The value of real estate fluctuates depending on conditions in the general economy and the real estate business. These conditions may also adversely impact our revenues and cash flows.

The factors that affect the value of our real estate investments include, among other things:

· national, regional and local economic conditions;

· competition from other available space;

· local conditions such as an oversupply of space or a reduction in demand for real estate in the area;

· how well we manage our properties;

· the development and/or redevelopment of our properties;

· changes in market rental rates;

· the timing and costs associated with property improvements and rentals;

· whether we are able to pass all or portions of any increases in operating costs through to tenants;

· changes in real estate taxes and other expenses;

· whether tenants and users such as customers and shoppers consider a property attractive;

· the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;

· availability of financing on acceptable terms or at all;

· fluctuations in interest rates;

· our ability to obtain adequate insurance;

· changes in zoning laws and taxation;

· government regulation;

· consequences of any armed conflict involving, or terrorist attack against, the United States;

· potential liability under environmental or other laws or regulations;

· natural disasters;

· general competitive factors; and

· climate changes.

The rents we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of these factors. If rental revenues and/or occupancy levels decline, we generally would expect to have less cash available to pay indebtedness and for distribution to unitholders. In addition, some of our major expenses, including mortgage payments, real estate taxes and maintenance costs generally do not decline when the related rents decline.

Capital markets and economic conditions can materially affect our financial condition and results of operations and the value of our debt and equity securities.

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

Real estate is a competitive business.

Our business segments – New York Office Properties, Washington, DC Office Properties, Retail Properties, Merchandise Mart Properties and Toys – operate in a highly competitive environment. We have a large concentration of properties in the New York City metropolitan area and in the Washington, DC / Northern Virginia area. We compete with a large number of property owners and developers, some of which may be willing to accept lower returns on their investments. Principal factors of competition are rents charged, attractiveness of location, the quality of the property and the breadth and quality of services provided. Our success depends upon, among other factors, trends of the national, regional and local economies, financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulation, legislation and population trends.

We depend on leasing space to tenants on economically favorable terms and collecting rent from tenants who may not be able to pay.

Our financial results depend significantly on leasing space in our properties to tenants on economically favorable terms. In addition, because a majority of our income comes from renting of real property, our income, funds available to pay indebtedness and funds available for distribution to shareholders will decrease if a significant number of our tenants cannot pay their rent or if we are not able to maintain occupancy levels on favorable terms. If a tenant does not pay its rent, we may not be able to enforce our rights as landlord without delays and may incur substantial legal costs. During periods of economic adversity, there may be an increase in the number of tenants that cannot pay their rent and an increase in vacancy rates.

Bankruptcy or insolvency of tenants may decrease our revenue, net income and available cash.

From time to time, some of our tenants have declared bankruptcy, and other tenants may declare bankruptcy or become insolvent in the future. In the case of our shopping centers, the bankruptcy or insolvency of a major tenant could cause us to suffer lower revenues and operational difficulties, including leasing the remainder of the property. As a result, the bankruptcy or insolvency of a major tenant could result in decreased revenue, net income and funds available for the payment of indebtedness or for distribution to unitholders.

We may incur costs to comply with environmental laws.

Our operations and properties are subject to various federal, state and local laws and regulations concerning the protection of the environment, including air and water quality, hazardous or toxic substances and health and safety. Under some environmental laws, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property. The owner or operator may also be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused the release. The presence of contamination or the failure to remediate contamination may impair our ability to sell or lease real estate or to borrow using the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and also govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) and underground storage tanks are also regulated by federal and state laws. We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. We could incur fines for environmental compliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or tanks or related claims arising out of environmental contamination or human exposure to contamination at or from our properties.

Each of our properties has been subject to varying degrees of environmental assessment. The environmental assessments did not, as of this date, reveal any environmental condition material to our business. However, identification of new compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination, discovery of additional sites, human exposure to the contamination or changes in clean-up or compliance requirements could result in significant costs to us.

Inflation or deflation may adversely affect our financial condition and results of operations.

Although neither inflation nor deflation has materially impacted our operations in the recent past, increased inflation could have a pronounced negative impact on our mortgages and interest rates and general and administrative expenses, as these costs could increase at a rate higher than our rents. Inflation could also have an adverse effect on consumer spending which could impact our tenants’ sales and, in turn, our percentage rents, where applicable. Conversely, deflation could lead to downward pressure on rents and other sources of income. In addition, we own residential properties which are leased to tenants with one-year lease terms. Because these are short-term leases, declines in market rents will impact our residential properties faster than if the leases were for longer terms.

Some of our potential losses may not be covered by insurance.

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

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

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

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

Because we operate a hotel, we face the risks associated with the hospitality industry.

We own and operate the Hotel Pennsylvania in New York City. The following factors, among others, are common to the hotel industry and may reduce the revenues generated by the hotel, which would reduce cash available for distribution to our unitholders:

· our hotel competes for guests with other hotels, a number of which have greater marketing and financial resources;

· if there is an increase in operating costs resulting from inflation and other factors, we may not be able to offset such increase by increasing room rates;

· our hotel is subject to the fluctuating and seasonal demands of business travelers and tourism;

· our hotel is subject to general and local economic and social conditions that may affect demand for travel in general, including war and terrorism; and

· physical condition, which may require substantial additional capital.

Because of the ownership structure of the Hotel Pennsylvania, we face potential adverse effects from changes to the applicable tax laws.

Under the Internal Revenue Code, REITs like Vornado are not allowed to operate hotels directly or indirectly. Accordingly, we lease the Hotel Pennsylvania to our taxable REIT subsidiary (“TRS”). While the TRS structure allows the economic benefits of ownership to flow to us, the TRS is subject to tax on its income from the operations of the hotel at the federal and state level. In addition, the TRS is subject to detailed tax regulations that affect how it may be capitalized and operated. If the tax laws applicable to a TRS are modified, we may be forced to modify the structure for owning the hotel, and such changes may adversely affect the cash flows from the hotel. In addition, the Internal Revenue Service, the United States Treasury Department and Congress frequently review federal income tax legislation, and we cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. Any such actions may prospectively or retroactively modify the tax treatment of the TRS and, therefore, may adversely affect our after-tax returns from the hotel.

Compliance or failure to comply with the Americans with Disabilities Act or other safety regulations and requirements could result in substantial costs.

The Americans with Disabilities Act (“ADA”) generally requires that public buildings, including our properties, meet certain federal requirements related to access and use by disabled persons. Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants. From time to time persons have asserted claims against us with respect to some of our properties under the ADA, but to date such claims have not resulted in any material expense or liability. If, under the ADA, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations, as well as the amount of cash available for distribution to unitholders.

Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations.

Our business and operations would suffer in the event of system failures.

Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan for our internal information technology systems, our systems are vulnerable to damages from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. We may also incur additional costs to remedy damages caused by such disruptions.

We face risks associated with our tenants being designated “Prohibited Persons” by the Office of Foreign Assets Control.

Pursuant to Executive Order 13224 and other laws, the Office of Foreign Assets Control of the United States Department of the Treasury (“OFAC”) maintains a list of persons designated as terrorists or who are otherwise blocked or banned (“Prohibited Persons”) from conducting business or engaging in transactions in the United States. Our leases, loans and other agreements may require us to comply with OFAC requirements. If a tenant or other party with whom we conduct business is placed on the OFAC list we may be required to terminate the lease or other agreement. Any such termination could result in a loss of revenue or otherwise negatively affect our financial results and cash flows.

Our Investments Are Concentrated in the New York CITY METROPOLITAN AREA and Washington, DC / NORTHERN VIRGINIA Area. Circumstances Affecting These Areas Generally Could Adversely Affect Our Business.

A significant portion of our properties are located in the New York City / New Jersey metropolitan area and Washington, DC / Northern Virginia area and are affected by the economic cycles and risks inherent to those areas.

During 2010, approximately 74% of our EBITDA, excluding items that affect comparability, came from properties located in the New York City / New Jersey metropolitan areas and the Washington, DC / Northern Virginia area. We may continue to concentrate a significant portion of our future acquisitions in these areas or in other geographic real estate markets in the United States or abroad. Real estate markets are subject to economic downturns and we cannot predict how economic conditions will impact these markets in either the short or long term. Declines in the economy or a decline in the real estate markets in these areas could hurt our financial performance and the value of our properties. The factors affecting economic conditions in these regions include:

· financial performance and productivity of the publishing, advertising, financial, technology, retail, insurance and real estate industries;

· space needs of the United States Government, including the effect of a deficit reduction plan and/or base closures and repositioning under the Defense Base Closure and Realignment Act of 2005, as amended;

· business layoffs or downsizing;

· industry slowdowns;

· relocations of businesses;

· changing demographics;

· increased telecommuting and use of alternative work places;

· infrastructure quality; and

· any oversupply of, or reduced demand for, real estate.

It is impossible for us to assess the future effects of trends in the economic and investment climates of the geographic areas in which we concentrate, and more generally of the United States, or the real estate markets in these areas. Local, national or global economic downturns, would negatively affect our businesses and profitability.

Terrorist attacks, such as those of September 11, 2001 in New York City and the Washington, DC area, may adversely affect the value of our properties and our ability to generate cash flow.

We have significant investments in large metropolitan areas, including the New York, Washington, DC, Chicago, Boston and San Francisco metropolitan areas. In the aftermath of a terrorist attack, tenants in these areas may choose to relocate their businesses to less populated, lower-profile areas of the United States that may be perceived to be less likely targets of future terrorist activity and fewer customers may choose to patronize businesses in these areas. This, in turn, would trigger a decrease in the demand for space in these areas, which could increase vacancies in our properties and force us to lease space on less favorable terms. As a result, the value of our properties and the level of our revenues and cash flows could decline materially.

We May Acquire or Sell Assets or Entities or Develop Properties. Our Failure or Inability to Consummate These Transactions or Manage the Results of These Transactions Could Adversely Affect Our Operations and Financial Results.

We have grown rapidly since 1999 through acquisitions. We may not be able to maintain this rapid growth and our failure to do so could adversely affect Vornado’s stock price and the value of our Class A units.

We have experienced rapid growth since 1999, increasing our total assets from approximately $5.5 billion at December 31, 1999 to approximately $20.5 billion at December 31, 2010. We may not be able to maintain a similar rate of growth in the future or manage growth effectively. Our failure to do so may have a material adverse effect on our financial condition and results of operations as well as the amount of cash available for distributions to unitholders, Vornado’s stock price and the value of our Class A units.

We may acquire or develop properties or acquire other real estate related companies and this may create risks.

We may acquire or develop properties or acquire other real estate related companies when we believe that an acquisition or development is consistent with our business strategy. We may not, however, succeed in consummating desired acquisitions or in completing developments on time or within budget. In addition, we may face competition in pursuing acquisition or development opportunities that could increase our costs. When we do pursue a project or acquisition, we may not succeed in leasing newly developed or acquired properties at rents sufficient to cover costs of acquisition or development and operations. Difficulties in integrating acquisitions may prove costly or time-consuming and could divert management’s attention. Acquisitions or developments in new markets or industries where we do not have the same level of market knowledge may result in weaker than anticipated performance. We may also abandon acquisition or development opportunities that we have begun pursuing and consequently fail to recover expenses already incurred and have devoted management time to a matter not consummated. Furthermore, acquisitions of new properties or companies will expose us to the liabilities of those properties or companies, some of which we may not be aware at the time of acquisition. Development of our existing properties presents similar risks.

From time to time we have made, and in the future we may seek to make, one or more material acquisitions. The announcement of such a material acquisition may result in a rapid and significant decline in the price of Vornado’s common shares and the value of our Class A units.

We are continuously looking at material transactions that we believe will maximizeVornadoshareholder value. However, an announcement by us of one or more significant acquisitions could result in a quick and significant decline in the price of Vornado’s common shares and the value of our Class A units.

It may be difficult to buy and sell real estate quickly, which may limit our flexibility.

Real estate investments are relatively difficult to buy and sell quickly. Consequently, we may have limited ability to vary our portfolio promptly in response to changes in economic or other conditions.

We may not be permitted to dispose of certain properties or pay down the debt associated with those properties when we might otherwise desire to do so without incurring additional costs.

As part of an acquisition of a property, or a portfolio of properties, we may agree, and in the past have agreed, not to dispose of the acquired properties or reduce the mortgage indebtedness for a long-term period, unless we pay certain of the resulting tax costs of the seller. These agreements could result in us holding on to properties that we would otherwise sell and not pay down or refinance.

From time to time we make investments in companies over which we do not have sole control. Some of these companies operate in industries that differ from our current operations, with different risks than investing in real estate.

From time to time we make debt or equity investments in other companies that we may not control or over which we may not have sole control. These investments include but are not limited to, Alexander’s, Inc. (“Alexander’s”), Toys “R” Us (“Toys”), Lexington Realty Trust (“Lexington”), J.C. Penney Company, Inc. (“J.C. Penney”), LNR Property Corporation (“LNR”) and other equity and mezzanine investments. Although these businesses generally have a significant real estate component, some of them operate in businesses that are different from our primary lines of business including, without limitation, operating or managing toy stores and department stores. Consequently, investments in these businesses, among other risks, subjects us to the operating and fina ncial risks of industries other than real estate and to the risk that we do not have sole control over the operations of these businesses. From time to time we may make additional investments in or acquire other entities that may subject us to similar risks. Investments in entities over which we do not have sole control, including joint ventures, present additional risks such as having differing objectives than our partners or the entities in which we invest, or becoming involved in disputes, or competing with those persons. In addition, we rely on the internal controls and financial reporting controls of these entities and their failure to maintain effectiveness or comply with applicable standards may adversely affect us.

We are subject to risks that affect the general retail environment.

A substantial portion of our properties are in the retail shopping center real estate market and we have a significant investment in retailers such as Toys and J.C. Penney. This means that we are subject to factors that affect the retail environment generally, including the level of consumer spending and consumer confidence, the threat of terrorism and increasing competition from discount retailers, outlet malls, retail websites and catalog companies. These factors could adversely affect the financial condition of our retail tenants and the retailers in which we hold an investment and the willingness of retailers to lease space in our shopping centers, and in turn, adversely affect us.

Our investment in Toys subjects us to risks that are different from our other lines of business and may result in increased seasonality and volatility in our reported earnings.

Because Toys is a retailer, its operations subject us to the risks of a retail company that are different than those presented by our other lines of business. The business of Toys is highly seasonal. Historically, Toys fourth quarter net income accounts for more than 80% of its fiscal year net income. In addition, our fiscal year ends on December 31 whereas, as is common for retailers, Toys’ fiscal year ends on the Saturday nearest to January 31. Therefore, we record our pro-rata share of Toys’ net earnings on a one-quarter lag basis. For example, our financial results for the year ended December 31, 2010 include Toys’ financial results for its first, second and third quarters ended October 30, 2010, as well as Toys’ fourth quarter results of 2009. Because of the seasonality of Toys, our reported net income shows increased volatility. We may also, in the future and from time to time, invest in other businesses that may report financial results that are more volatile than our historical financial results.

We depend upon our anchor tenants to attract shoppers.

We own several regional malls and other shopping centers that are typically anchored by well-known department stores and other tenants who generate shopping traffic at the mall or shopping center. The value of our properties would be adversely affected if tenants or anchors failed to meet their contractual obligations, sought concessions in order to continue operations or ceased their operations, including as a result of bankruptcy. If the sales of stores operating in our properties were to decline significantly due to economic conditions, closing of anchors or for other reasons, tenants may be unable to pay their minimum rents or expense recovery charges. In the event of a default by a tenant or anchor, we may experience delays and costs in enforcing our rights as landlord.

Our decision to dispose of real estate assets would change the holding period assumption in our valuation analyses, which could result in material impairment losses and adversely affect our financial results.

We evaluate real estate assets for impairment based on the projected cash flow of the asset over our anticipated holding period. If we change our intended holding period, due to our intention to sell or otherwise dispose of an asset, then under accounting principles generally accepted in the United States of America, we must reevaluate whether that asset is impaired. Depending on the carrying value of the property at the time we change our intention and the amount that we estimate we would receive on disposal, we may record an impairment loss that would adversely affect our financial results. This loss could be material to our results of operations in the period that it is recognized.

We invest in subordinated or mezzanine debt of certain entities that have significant real estate assets. These investments involve greater risk of loss than investments in senior mortgage loans.

We invest, and may in the future invest, in subordinated or mezzanine debt of certain entities that have significant real estate assets. These investments, which are subordinate to the mortgage loans secured by the real property, are generally secured by pledges of the equity interests of the entities owning the underlying real estate. These investments involve greater risk of loss than investments in senior mortgage loans which are secured by real property. If a borrower defaults on debt to us or on debt senior to us, or declares bankruptcy, we may not be able to recover some or all of our investment. In addition, there may be significant delays and costs associated with the process of foreclosing on collateral securing or supporting these investments. The value of the assets securing or supporting our investments could deteriorate over time due to factors beyond our control, including acts or omissions by owners, changes in business, economic or market conditions, or foreclosure. Such deteriorations in value may result in the recognition of impairment losses and/or valuation allowances on our statements of income. As of December 31, 2010, our investments in mezzanine debt securities have an aggregate carrying amount of $202,412,000, net of a $73,216,000 valuation allowance.

We evaluate the collectability of both interest and principal of each of our loans whenever events or changes in circumstances indicate such amounts may not be recoverable. A loan is impaired when it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the estimated fair value of the loan or, as a practical expedient, to the value of the collateral if the loan is collateral dependent. There can be no assurance that our estimates of collectible amounts will not change over time or that they will be representative of the amounts we will actually collect, including amounts we would collect if we chose to sell these investments before their maturity. If we collect less than our estimates, we will record impairment losses which could be material.

We invest in marketable equity securities of companies that have significant real estate assets. The value of these investments may decline as a result of operating performance or economic or market conditions.

We invest in marketable equity securities of publicly-traded real estate companies or companies that have significant real estate assets, such as J.C. Penney. As of December 31, 2010, our marketable securities have an aggregate carrying amount of $766,116,000. Significant declines in the value of these investments due to operating performance or economic or market conditions may result in the recognition of impairment losses which could be material.

VORNADO’S Organizational and Financial Structure Gives Rise to Operational and Financial Risks.

We May Not Be Able to Obtain Capital to Make Investments.

We depend primarily on external financing to fund the growth of our business. This is because one of the requirements of the Internal Revenue Code of 1986, as amended, for a REIT like Vornado, is that it distributes 90% of its taxable income, excluding net capital gains, to its shareholders. There is a separate requirement to distribute net capital gains or pay a corporate level tax in lieu thereof. Our access to debt or equity financing depends on the willingness of third parties to lend or make equity investments and on conditions in the capital markets generally. Although we believe that we will be able to finance any investments we may wish to make in the foreseeable future, there can be no assurance that new financing will be available or available on acceptable terms. For information about our available sources of funds, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and the notes to the consolidated financial statements in this Annual Report on Form 10-K.

We depend on dividends and distributions from our direct and indirect subsidiaries. The creditors and preferred security holders of these subsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or distributions to us.

Our cash flow is dependent on cash distributions to us by our subsidiaries. The creditors of each of our direct and indirect subsidiaries are entitled to payment of that subsidiary’s obligations to them, when due and payable, before distributions may be made by that subsidiary to its equity holders. Thus, our ability to make distributions to holders of our units depends on our subsidiaries’ ability first to satisfy their obligations to their creditors and then to make distributions to us.

Furthermore, holders of our preferred units are entitled to receive preferred distributions before payment of distributions to our Class A unit unitholders. In addition, our participation in any distribution of the assets of any of our direct or indirect subsidiaries upon the liquidation, reorganization or insolvency, is only after the claims of the creditors, including trade creditors and preferred security holders, are satisfied.

We have outstanding debt, and the amount of debt and its cost may increase and refinancing may not be available on acceptable terms.

As of December 31, 2010, we had approximately $13.8 billion of total debt outstanding, including our pro rata share of debt of partially owned entities, and excluding $37 billion for our pro rata share of LNR’s liabilities related to its consolidated CMBS and CDO trusts, which are non-recourse to LNR and its equity holders, including us. Vornado’s ratio of total debt to total enterprise value was approximately 44%. When we say “enterprise value” in the preceding sentence, we mean market equity value of Vornado’s common and preferred shares plus total debt outstanding, including our pro rata share of debt of partially owned entities, and excluding LNR’s liabilities related to its consolidated CMBS and CDO trusts. In the future, we may incur additional debt to finance acquisitions or property developments and thus increase Vornado’s ratio of total debt to total enterprise value. If our level of indebtedness increases, there may be an increased risk of a credit rating downgrade or a default on our obligations that could adversely affect our financial condition and results of operations. In addition, in a rising interest rate environment, the cost of existing variable rate debt and any new debt or other market rate security or instrument may increase. Furthermore, we may not be able to refinance existing indebtedness in sufficient amounts or on acceptable terms.

Covenants in our debt instruments could adversely affect our financial condition and our acquisitions and development activities.

The mortgages on our properties contain customary covenants such as those that limit our ability, without the prior consent of the lender, to further mortgage the applicable property or to discontinue insurance coverage. Our unsecured credit facilities, unsecured debt securities and other loans that we may obtain in the future contain, or may contain, customary restrictions, requirements and other limitations on our ability to incur indebtedness, including covenants that limit our ability to incur debt based upon the level of our ratio of total debt to total assets, our ratio of secured debt to total assets, our ratio of EBITDA to interest expense, and fixed charges, and that require us to maintain a certain level of unencumbered assets to unsecured debt. Our ability to borrow is subject to compliance with these and other covenants. In addition, failure to comply with our covenants could cause a default under the applicable debt instrument, and we may then be required to repay such debt with capital from other sources. Under those circumstances, other sources of capital may not be available to us, or may be available only on unattractive terms.

We rely on debt financing, including borrowings under our unsecured credit facilities, issuances of unsecured debt securities and debt secured by individual properties, to finance acquisitions and development activities and for working capital. If we are unable to obtain debt financing from these or other sources, or refinance existing indebtedness upon maturity, our financial condition and results of operations would likely be adversely affected. If we breach covenants in our debt agreements, the lenders can declare a default and, if the debt is secured, can take possession of the property securing the defaulted loan.

Vornado may fail to qualify or remain qualified as a REIT and may be required to pay income taxes at corporate rates.

Although we believe that Vornado will remain organized and will continue to operate so as to qualify as a REIT for federal income tax purposes, Vornado may fail to remain qualified in this way. Qualification as a REIT for federal income tax purposes is governed by highly technical and complex provisions of the Internal Revenue Code for which there are only limited judicial or administrative interpretations. Vornado’s qualification as a REIT also depends on various facts and circumstances that are not entirely within our control. In addition, legislation, new regulations, administrative interpretations or court decisions may significantly change the tax laws with respect to the requirements for qualification as a REIT or the federal income tax consequences of qualifying as a REIT.

If, with respect to any taxable year, Vornado fails to maintain its qualification as a REIT and does not qualify under statutory relief provisions, Vornado may undertake restructuring or other actions that may affect us. Although Vornado intends to operate in a manner designed to allow it to qualify as a REIT, future economic, market, legal, tax or other considerations may cause Vornado to revoke the REIT election or fail to qualify Vornado a REIT.

We face possible adverse changes in tax laws, which may result in an increase in our tax liability.

From time to time changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. The shortfall in tax revenues for states and municipalities in recent years may lead to an increase in the frequency and size of such changes. If such changes occur, we may be required to pay additional taxes on our assets or income. These increased tax costs could adversely affect our financial condition and results of operations and the amount of cash available for payment of distributions.

Loss of Vornado’s key personnel could harm our operations and adversely affect the value of Vornado’s common shares and our Class A units.

We are dependent on the efforts of Steven Roth, the Chairman of the Board of Trustees of Vornado, and Michael D. Fascitelli, the President and Chief Executive Officer of Vornado. While we believe that we could find replacements for these and other key personnel, the loss of their services could harm our operations and adversely affect the value of our equity.

Vornado’s charter documents and applicable law may hinder any attempt to acquire IT OR US BECAUSE VORNADO IS OUR SOLE GENERAL PARTNER.

Vornado’s Amended and Restated Declaration of Trust sets limits on the ownership of Vornado’s shares.

Generally, for Vornado to maintain its qualification as a REIT under the Internal Revenue Code, not more than 50% in value of the outstanding shares of beneficial interest of Vornado may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of Vornado’s taxable year. The Internal Revenue Code defines “individuals” for purposes of the requirement described in the preceding sentence to include some types of entities. Under Vornado’s Amended and Restated Declaration of Trust, as amended, no person may own more than 6.7% of the outstanding common shares of any class, or 9.9% of the outstanding preferred shares of any class, with some exceptions for persons who held common shares in excess of the 6.7% limit before Vornado adopted the limit and other persons approved by Vornado’s Board of Trustees. These restrictions on transferability and ownership may delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of Vornado’s shareholders or our unitholders. We refer to Vornado’s Amended and Restated Declaration of Trust, as amended, as the “declaration of trust.”

Vornado has a classified Board of Trustees and that may reduce the likelihood of certain takeover transactions.

Vornado’s Board of Trustees is divided into three classes of trustees. Trustees of each class are chosen for three-year staggered terms. Staggered terms of trustees may reduce the possibility of a tender offer or an attempt to change control of Vornado, even though a tender offer or change in control might be in the best interest of Vornado’s shareholders or our unitholders.

Vornado may issue additional shares in a manner that could adversely affect the likelihood of certain takeover transactions.

Vornado’s declaration of trust authorizes the Board of Trustees to:

· cause Vornado to issue additional authorized but unissued common shares or preferred shares;

· classify or reclassify, in one or more series, any unissued preferred shares;

· set the preferences, rights and other terms of any classified or reclassified shares that Vornado issues; and

· increase, without shareholder approval, the number of shares of beneficial interest that Vornado may issue.

Vornado Board of Trustees could establish a series of preferred shares whose terms could delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of Vornado’s shareholders or our unitholders, although the Board of Trustees does not now intend to establish a series of preferred shares of this kind. Vornado’s declaration of trust and bylaws contain other provisions that may delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of our shareholders.

The Maryland General Corporation Law contains provisions that may reduce the likelihood of certain takeover transactions.

Under the Maryland General Corporation Law, as amended, which we refer to as the “MGCL,” as applicable to REITs, certain “business combinations,” including certain mergers, consolidations, share exchanges and asset transfers and certain issuances and reclassifications of equity securities, between a Maryland REIT and any person who beneficially owns ten percent or more of the voting power of the trust’s shares or an affiliate or an associate, as defined in the MGCL, of the trust who, at any time within the two-year period before the date in question, was the beneficial owner of ten percent or more of the voting power of the then outstanding voting shares of beneficial interest of the trust, which we refer to as an “interested shareholder,” or an affiliate of the interested shareholder, are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. After that five-year period, any business combination of these kinds must be recommended by the board of trustees of the trust and approved by the affirmative vote of at least (a) 80% of the votes entitled to be cast by holders of outstanding voting shares of beneficial interest of the trust and (b) two-thirds of the votes entitled to be cast by holders of voting shares of beneficial interest of the trust other than shares held by the interested shareholder with whom, or with whose affiliate, the business combination is to be effected or held by an affiliate or associate of the interested shareholder. These supermajority voting requirements do not apply if the trust’s common shareholders receive a minimum price, as defined in the MGCL, for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its common shares.

The provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by the board of trustees of the applicable trust before the interested shareholder becomes an interested shareholder, and a person is not an interested shareholder if the board of trustees approved in advance the transaction by which the person otherwise would have become an interested shareholder.

In approving a transaction, the Board may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the Board. Vornado’s Board has adopted a resolution exempting any business combination between Vornado and any trustee or officer of Vornado or its affiliates. As a result, any trustee or officer of Vornado or its affiliates may be able to enter into business combinations with Vornado that may not be in the best interest of Vornado’s shareholders. With respect to business combinations with other persons, the business combination provisions of the MGCL may have the effect of delaying, deferring or preventing a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of the shareholders. The business combination statute may discourage others from trying to acquire control of Vornado and increase the difficulty of consummating any offer.

We may change our policies without obtaining the approval of our unitholders.

Our operating and financial policies, including our policies with respect to acquisitions of real estate or other companies, growth, operations, indebtedness, capitalization and distributions, are exclusively determined by Vornado’s Board of Trustees. Accordingly, our unitholders do not control these policies.

Our Ownership Structure and Related-Party Transactions May Give Rise to Conflicts of Interest.

Steven Roth and Interstate Properties may exercise substantial influence over us. They and some of our other trustees and officers have interests or positions in other entities that may compete with us.

As of December 31, 2010, Interstate Properties, a New Jersey general partnership, and its partners owned approximately 7.0% of the common shares of Vornado and approximately 27.2% of the common stock of Alexander’s, which is described below. Steven Roth, David Mandelbaum and Russell B. Wight, Jr. are the three partners of Interstate Properties. Mr. Roth is the Chairman of the Board of Vornado, the managing general partner of Interstate Properties and the Chairman of the Board and Chief Executive Officer of Alexander’s. Messrs. Wight and Mandelbaum are trustees of Vornado and also directors of Alexander’s.

Because of these overlapping interests, Mr. Roth and Interstate Properties and its partners may have substantial influence over Vornado and on the outcome of any matters submitted to Vornado’s shareholders for approval. In addition, certain decisions concerning our operations or financial structure may present conflicts of interest among Messrs. Roth, Mandelbaum and Wight and Interstate Properties and our other equity or debt holders. In addition, Mr. Roth, Interstate Properties and its partners, and Alexander’s currently and may in the future engage in a wide variety of activities in the real estate business which may result in conflicts of interest with respect to matters affecting us, such as which of these entities or persons, if any, may take advantage of potential business opportunities, the business focus of these entities, the types of properties and geographic locations in which these entities make investments, potential competition between business activities conducted, or sought to be conducted, competition for properties and tenants, possible corporate transactions such as acquisitions and other strategic decisions affecting the future of these entities.

We currently manage and lease the real estate assets of Interstate Properties under a management agreement for which we receive an annual fee equal to 4% of base rent and percentage rent. The management agreement has a one-year term and is automatically renewable unless terminated by either of the parties on 60 days’ notice at the end of the term. Because of the relationship among Vornado, Interstate Properties and Messrs. Roth, Mandelbaum and Wight, as described above, the terms of the management agreement and any future agreements between us and Interstate Properties may not be comparable to those we could have negotiated with an unaffiliated third party.

There may be conflicts of interest between Alexander’s and us.

As of December 31, 2010, we owned 32.4% of the outstanding common stock of Alexander’s. Alexander’s is a REIT engaged in leasing, managing, developing and redeveloping properties, focusing primarily on the locations where its department stores operated before they ceased operations in 1992. Alexander’s has seven properties, which are located in the greater New York metropolitan area. In addition to the 2.3% that they indirectly own through Vornado, Interstate Properties, which is described above, and its partners owned 27.2% of the outstanding common stock of Alexander’s as of December 31, 2010. Mr. Roth is the Chairman of the Board of Vornado, the managing general partner of Interstate, and the Chairman of the Board and Chief Executive Officer of Alexander’s. Messrs. Wight and Mandelbaum are trustees of Vornado and also directors of Alexander’s and general partners of Interstate. Michael D. Fascitelli is the President and Chief Executive Officer of Vornado and the President of Alexander’s and Dr. Richard West is a trustee of Vornado and a director of Alexander’s. In addition, Joseph Macnow, our Executive Vice President and Chief Financial Officer, holds the same position with Alexander’s. Alexander’s common stock is listed on the New York Stock Exchange under the symbol “ALX.”

We manage, develop and lease Alexander’s properties under management and development agreements and leasing agreements under which we receive annual fees from Alexander’s. These agreements have a one-year term expiring in March of each year and are all automatically renewable. Because Vornado and Alexander’s share common senior management and because certain of the trustees of Vornado constitute a majority of the directors of Alexander’s, the terms of the foregoing agreements and any future agreements between us and Alexander’s may not be comparable to those we could have negotiated with an unaffiliated third party.

For a description of Interstate Properties’ ownership of Vornado and Alexander’s, see “Steven Roth and Interstate Properties may exercise substantial influence over us. They and some of Vornado’s other trustees and officers have interests or positions in other entities that may compete with us” above.

The Number of Shares of Vornado Realty Trust and the Market for Those Shares Give Rise to Various Risks.

The trading price of Vornado’s common shares has been volatile and may fluctuate.

The trading price of Vornado’s common shares has been volatile and may continue to fluctuate widely as a result of a number of factors, many of which are outside our control. In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of the shares of many companies. These broad market fluctuations have in the past and may in the future adversely affect the market price of Vornado’s common shares and the redemption price of our Class A units. Among those factors are:

· our financial condition and performance;

· the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;

· the reputation of REITs and real estate investments generally and the attractiveness of REIT equity securities in
comparison to other equity securities, including securities issued by other real estate companies, and fixed
income securities;

· uncertainty and volatility in the equity and credit markets;

· changes in revenue or earnings estimates or publication of research reports and recommendations by financial
analysts or actions taken by rating agencies with respect to our securities or those of other real estate investment
trusts;

· failure to meet analysts’ revenue or earnings estimates;

· speculation in the press or investment community;

· strategic actions by us or our competitors, such as acquisitions or restructurings;

· the extent of institutional interest in us;

· the extent of short-selling of Vornado’s common shares and the shares of our competitors;

· fluctuations in the stock price and operating results of our competitors;

· general financial and economic market conditions and, in particular, developments related to market conditions
for real estate investment trusts and other real estate related companies;

· domestic and international economic factors unrelated to our performance; and

· all other risk factors addressed elsewhere in this document.

A significant decline in Vornado’s stock price could result in substantial losses for Vornado’s shareholders and our unitholders.

Vornado has many shares available for future sale, which could hurt the market price of its shares and the redemption price of our units.

The interests of our current unitholders could be diluted if we issue additional equity securities. As of December 31, 2010, Vornado had authorized but unissued, 66,338,125 common shares of beneficial interest, $.04 par value and 77,659,991 preferred shares of beneficial interest, no par value; of which 39,203,325 common shares are reserved for issuance upon redemption of our Class A units, convertible securities and employee stock options and 7,200,000 preferred shares are reserved for issuance upon redemption of our preferred units. Any shares not reserved may be issued from time to time in public or private offerings or in connection with acquisitions. In addition, common and preferred shares reserved may be sold upon issuance in the public market after registration under the Securities Act or under Rule 144 under the Securities Act or other available exemptions from registration. We cannot predict the effect that future sales of Vornado’s common and preferred shares or our Class A and preferred units will have on the market prices of Vornado’s outstanding shares and our outstanding securities.

Increased market interest rates may hurt the value of Vornado’s common and preferred shares and our units.

We believe that investors consider the distribution rate on REIT shares, expressed as a percentage of the price of the shares, relative to market interest rates as an important factor in deciding whether to buy or sell the shares. If market interest rates go up, prospective purchasers of REIT shares may expect a higher distribution rate. Higher interest rates would likely increase our borrowing costs and might decrease funds available for distribution. Thus, higher market interest rates could cause a decline in the market price of Vornado’s common and preferred shares and the redemption price of our units.

Item 1b. unresolved staff comments

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

Item 2. Properties

We operate in five business segments: New York Office Properties, Washington, DC Office Properties, Retail Properties, Merchandise Mart Properties and Toys “R” Us. The following pages provide details of our real estate properties.

ITEM 2. PROPERTIES - Continued

						Square Feet
								Out of Service
Property	% Ownership	% Occupancy		Annualized Rent PSF (1)		Total Property	Owned By Tenant	Under Development	Encumbrances (in thousands)		Major Tenants
NEW YORK OFFICE:
New York City:
Penn Plaza:
One Penn Plaza	100.0 %	96.2 %	$	54.61		2,461,000	-	-	$	-	BMG Columbia House, Buck Consultants,
(ground leased through 2098)											Cisco, Kmart, MWB Leasing, Parsons Brinkerhoff,
											United Health Care, United States Customs Department,
											URS Corporation Group Consulting

Two Penn Plaza	100.0 %	99.1 %		47.25		1,588,000	-	-		277,347	LMW Associates, EMC, Forest Electric, IBI,
											Madison Square Garden, McGraw-Hill Co., Inc.

Eleven Penn Plaza	100.0 %	94.2 %		51.47		1,068,000	-	-		199,320	Macy's, Madison Square Garden, Rainbow Media Holdings

100 West 33rd Street	100.0 %	93.7 %		46.29		847,000	-	-		159,361	Bank of America, Draft FCB

330 West 34th Street	100.0 %	99.2 %		34.53		635,000	-	-		-	City of New York, Interieurs Inc.,
(ground leased through 2148)											The Bank of New York

Total Penn Plaza		96.6 %		49.33		6,599,000	-	-		636,028

East Side:
909 Third Avenue	100.0 %	92.5 %		57.26	⁽²⁾	1,327,000	-	-		207,045	J.P. Morgan Securities Inc., Citibank, Forest Laboratories,
(ground leased through 2063)											Geller & Company, Morrison Cohen LLP, Robeco USA Inc.,
											United States Post Office,
											The Procter & Gamble Distributing LLC.

150 East 58th Street	100.0 %	94.2 %		60.35		536,000	-	-		-	Castle Harlan, Tournesol Realty LLC (Peter Marino),
											Various showroom tenants

Total East Side		92.9 %		58.15		1,863,000	-	-		207,045

West Side:
888 Seventh Avenue	100.0 %	95.6 %		78.13		858,000	-	-		318,554	Kaplan Management LLC, New Line Realty,
(ground leased through 2067)											Soros Fund, TPG-Axon Capital,
											Vornado Executive Headquarters

1740 Broadway	100.0 %	99.3 %		60.21		596,000	-	-		-	Davis & Gilbert, Limited Brands,
											Dept. of Taxation of the State of N.Y.

57th Street	50.0 %	91.5 %		44.65		188,000	-	-		22,922	Various

825 Seventh Avenue	50.0 %	100.0 %		45.44		165,000	-	-		20,565	Young & Rubicam

Total West Side		96.8 %		65.75		1,807,000	-	-		362,041

Park Avenue:
350 Park Avenue	100.0 %	92.5 %		75.30		555,000	-	-		430,000	Tweedy Browne Company, MFA Financial Inc., M&T Bank,
											Ziff Brothers Investment Inc., Kissinger Associates, Inc.

Grand Central:
90 Park Avenue	100.0 %	97.4 %		59.41		906,000	-	-		-	Alston & Bird, Amster, Rothstein & Ebenstein,
											Capital One N.A., First Manhattan Consulting,
											Sanofi-Synthelabo Inc., STWB Inc.

330 Madison Avenue	25.0 %	100.0 %		54.09		802,000	-	181,000		150,000	Acordia Northeast Inc., Artio Global Management,
											Dean Witter Reynolds Inc., HSBC Bank AFS

Total Grand Central		98.6 %		56.91		1,708,000	-	181,000		150,000

ITEM 2. PROPERTIES - - Continued

					Square Feet
							Out of Service
Property	% Ownership	% Occupancy	Annualized Rent PSF (1)		Total Property	Owned By Tenant	Under Development	Encumbrances (in thousands)		Major Tenants
NEW YORK OFFICE (Continued):
Madison/Fifth:
640 Fifth Avenue	100.0 %	97.1 %	$	75.76	323,000	-	-	$	-	ROC Capital Management LP, Citibank N.A.,
										Fidelity Investments, Hennes & Mauritz,
										Janus Capital Group Inc., GSL Enterprises Inc.,
										Scout Capital Management,
										Legg Mason Investment Counsel

595 Madison Avenue	100.0 %	88.9 %		64.76	319,000	-	-		-	Beauvais Carpets, Coach, Levin Capital Strategies LP,
										Prada, Cosmetech Mably Int'l LLC.

689 Fifth Avenue	100.0 %	94.1 %		69.81	89,000	-	-		-	Elizabeth Arden, Red Door Salons, Zara,
										Yamaha Artist Services Inc.

Total Madison/Fifth		93.2 %		70.24	731,000	-	-		-

United Nations:
866 United Nations Plaza	100.0 %	94.7 %		54.36	358,000	-	-		44,978	Fross Zelnick, Mission of Japan,
										The United Nations, Mission of Finland

Midtown South:
770 Broadway	100.0 %	99.8 %		52.14	1,071,000	-	-		353,000	AOL, J. Crew, Kmart, Structure Tone,
										Nielsen Company (US) Inc.

Rockefeller Center:
1290 Avenue of the Americas	70.0 %	94.2 %		60.03	2,061,000	-	-		424,136	AXA Equitable Life Insurance, Bank of New York Mellon,
										Broadpoint Gleacher Securities Group, Bryan Cave LLP,
										Microsoft Corporation, Morrison & Foerster LLP,
										Warner Music Group, Cushman & Wakefield, Fitzpatrick,
										Cella, Harper & Scinto

Downtown:
20 Broad Street	100.0 %	97.6 %		52.15	472,000	-	-		-	New York Stock Exchange
(ground leased through 2081)

40 Fulton Street	100.0 %	76.4 %		34.25	249,000	-	-		-	Graphnet Inc., Market News International Inc., Sapient Corp.

40-42 Thompson Street	100.0 %	100.0 %		46.81	29,000	-	-		-	Crown Management

Total Downtown		90.7 %		46.00	750,000	-	-		-

Total New York City		95.8 %		55.52	17,503,000	-	181,000		2,607,228

New Jersey
Paramus	100.0 %	87.1 %		20.28	132,000	-	-		-	Vornado's Administrative Headquarters


Total New York City Office		95.7 %	$	55.51	17,635,000	-	181,000	$	2,607,228

Vornado's Ownership Interest		95.6 %	$	55.45	16,239,000	-	45,000	$	2,347,771


(1) Annualized Rent PSF excludes retail rent in office buildings, ground rent, storage rent and garages.
(2) Excludes US Post Office leased through 2038 (including five five-year renewal options for which the annual escalated rent is $11.12 PSF).

ITEM 2. PROPERTIES - - Continued

						Square Feet
									Out of Service
Property		% Ownership	% Occupancy	Annualized Rent PSF (1)		Total Property		Owned By Tenant	Under Development	Encumbrances (in thousands)		Major Tenants
WASHINGTON, DC OFFICE:
Crystal City:
2011-2451 Crystal Drive - 5 buildings		100.0 %	98.9 %	$	40.29	2,298,000		-	-	$	127,720	General Services Administration, Lockheed Martin,
												Conservation International, Boeing,
												Smithsonian Institution, Natl. Consumer Coop. Bank,
												Archstone Trust, Council on Foundations,
												Vornado / Charles E. Smith Headquarters,
												KBR, General Dynamics, Scitor Corp.,
												Food Marketing Institute

S. Clark Street / 12th Street - 5 buildings		100.0 %	96.6 %		40.06	1,510,000		-	-		145,389	General Services Administration,
												SAIC, Inc., Boeing, L-3 Communications,
							��					The Int'l Justice Mission

1550-1750 Crystal Drive / 241-251 18th Street		100.0 %	96.1 %		40.46	1,482,000		-	-		124,883	General Services Administration,
	- 4 buildings											Alion Science & Technologies, Booz Allen, SAIC, Inc.,
												Arete Associates, L-3 Communications,
												Battelle Memorial Institute

1800, 1851 and 1901 South Bell Street		100.0 %	97.2 %		35.34	868,000		-	-		10,099	General Services Administration,
	- 3 buildings											Lockheed Martin

2100 / 2200 Crystal Drive - 2 buildings		100.0 %	100.0 %		31.82	529,000		-	-		-	General Services Administration,
												Public Broadcasting Service

223 23rd Street / 2221 South Clark Street		100.0 %	51.7 %		39.01	309,000		-	147,000		-	General Services Administration
	- 2 buildings

2001 Jefferson Davis Highway		100.0 %	77.4 %		36.21	162,000		-	-		-	National Crime Prevention, Institute for Psychology,
												Qinetiq North America

Crystal City Shops at 2100		100.0 %	58.9 %		33.29	81,000		-	-		-	Various

Crystal Drive Retail		100.0 %	88.5 %		44.46	57,000		-	-		-	Various

Total Crystal City		100.0 %	95.6 %		38.89	7,296,000		-	147,000		408,091

Central Business District:
Universal Buildings		100.0 %	94.9 %		45.13	615,000		-	-		103,049	Academy for Educational Development
	1825-1875 Connecticut Avenue, NW
	- 2 buildings

Warner Building - 1299 Pennsylvania		55.0 %	99.0 %		67.68	604,000		-	-		292,700	Howrey LLP, Baker Botts, LLP,
	Avenue, NW											General Electric

409 3rd Street, NW		100.0 %	97.3 %		39.39	403,000		-	-		-	General Services Administration

2101 L Street, NW		100.0 %	91.0 %		57.12	380,000		-	-		150,000	Greenberg Traurig, LLP, US Green Building Council,
												American Insurance Association, RTKL Associates,
												Cassidy & Turley

1750 Pennsylvania Avenue, NW		100.0 %	97.0 %		46.16	257,000		-	-		45,132	General Services Administration,
												PA Consulting Group Holdings

1150 17th Street, NW		100.0 %	87.1 %		45.71	233,000		-	-		28,728	American Enterprise Institute

Bowen Building - 875 15th Street, NW		100.0 %	100.0 %		65.99	231,000		-	-		115,022	Paul, Hastings, Janofsky & Walker LLP,
												Millennium Challenge Corporation

1101 17th Street, NW		55.0 %	94.9 %		44.95	213,000		-	-		-	AFSME

1730 M Street, NW		100.0 %	88.9 %		43.05	203,000		-	-		14,853	General Services Administration

ITEM 2. PROPERTIES - - Continued

						Square Feet
								Out of Service
Property	% Ownership		% Occupancy	Annualized Rent PSF (1)		Total Property	Owned By Tenant	Under Development	Encumbrances (in thousands)		Major Tenants
WASHINGTON, DC OFFICE (Continued):
1726 M Street, NW	100.0 %		75.3 %	$	39.32	90,000	-	-	$	-	Aptima, Inc., Nelnet Corporation

Kaempfer Interests:
401 M Street, SW	2.5 %		100.0 %		46.85	2,100,000	-	1,471,000		217,106	District of Columbia

1501 K Street, NW	5.0 %		98.2 %		57.93	379,000	-	-		100,250	Sidley Austin LLP, UBS

1399 New York Avenue, NW	2.5 %		94.8 %		88.31	123,000	-	-		39,087	Bloomberg

Total Central Business District			95.6 %		52.73	5,831,000	-	1,471,000		1,105,927

I-395 Corridor:
Skyline Place - 7 buildings	100.0 %		92.2 %		33.21	2,117,000	-	-		543,300	General Services Administration, SAIC, Inc.,
											Northrop Grumman, Axiom Resource Management,
											Booz Allen, Jacer Corporation, Intellidyne, Inc.

One Skyline Tower	100.0 %		100.0 %		32.73	518,000	-	-		134,700	General Services Administration

Total I-395 Corridor	100.0 %		93.7 %		33.11	2,635,000	-	-		678,000

Rosslyn / Ballston:
2200 / 2300 Clarendon Blvd	100.0 %		94.9 %		39.31	631,000	-	-		59,278	Arlington County, General Services Administration,
(Courthouse Plaza) - 2 buildings											AMC Theaters

Rosslyn Plaza - Office - 4 buildings	46.0 %		86.2 %		32.72	725,000	-	-		56,680	General Services Administration

Total Rosslyn / Ballston			91.9 %		35.88	1,356,000	-	-		115,958

Reston:
Reston Executive - 3 buildings	100.0 %		75.1 %		31.71	493,000	-	-		93,000	SAIC, Inc., Quadramed Corp

Commerce Executive - 3 buildings	100.0 %	`	98.3 %		28.96	397,000	-	-		-	L-3 Communications, SAIC, Inc.,
											BT North America

Total Reston			85.4 %		30.31	890,000	-	-		93,000

Rockville/Bethesda:
Democracy Plaza One	100.0 %		87.2 %		41.38	214,000	-	-		-	National Institutes of Health

Tysons Corner:
Fairfax Square - 3 buildings	20.0 %		85.4 %		37.39	523,000	-	-		71,764	EDS Information Services, Dean & Company,
											Womble Carlyle

Total Tysons Corner			85.4 %		37.39	523,000	-	-		71,764

Pentagon City:
Fashion Centre Mall	7.5 %		98.4 %		38.25	818,000	-	-		146,453	Macy's, Nordstrom

Washington Tower	7.5 %		100.0 %		45.80	170,000	-	-		40,000	The Rand Corporation

Total Pentagon City			98.7 %		39.56	988,000	-	-		186,453

Total Washington, DC office properties			94.2 %	$	40.68	19,733,000	-	1,618,000	$	2,659,193

Vornado's Ownership Interest			94.0 %	$	39.43	15,115,000	-	184,000	$	1,921,965

ITEM 2. PROPERTIES - - Continued

					Square Feet
								Out of Service
Property	% Ownership	% Occupancy	Annualized Rent PSF (1)		Total Property		Owned By Tenant	Under Development	Encumbrances (in thousands)		Major Tenants
WASHINGTON, DC OFFICE (Continued):
Other:
For rent residential:
Riverhouse (1,680 units)	100.0 %	95.2 %	$	-	1,802,000		-	-	$	259,546

West End 25 (283 units)	100.0 %	95.7 %		-	272,000		-	-		95,220

220 20th Street (265 units)	100.0 %	96.0 %		-	272,000		-	-		83,573

Rosslyn Plaza (196 units)	43.7 %	99.1 %		-	253,000		-	-		-

Crystal City Hotel	100.0 %	100.0 %		-	266,000		-	-		-

Warehouses	100.0 %	100.0 %		-	160,000		-	-		-

Other - 3 buildings	100.0 %	100.0 %		-	11,000		-	2,000		-

Total Other					3,036,000		-	2,000		438,339

Total Washington, DC Properties		94.5 %	$	40.68	22,769,000	⁽²⁾	-	1,620,000	$	3,097,532

Vornado's Ownership Interest		94.3 %	$	39.42	18,009,000		-	186,000	$	2,360,304


(1) Annualized Rent PSF excludes ground rent, storage rent and garages.
(2) Excludes 24,000 square feet representing our 7.5% pro rata share of the Ritz Carlton building which is owned by the ground lessee on land leased by us.

ITEM 2. PROPERTIES - - Continued

					Square Feet
						In Service		Out of Service
Property	% Ownership	% Occupancy	Annualized Rent PSF (1)		Total Property	Owned by Company	Owned By Tenant	Under Development	Encumbrances (in thousands)			Major Tenants
RETAIL:
STRIP SHOPPING CENTERS:
New Jersey:
Wayne Town Center, Wayne	100.0 %	100.0%	$	0.41	717,000	-	227,000	490,000	$	-		J.C. Penney
(ground leased through 2064)

North Bergen (Tonnelle Avenue)	100.0 %	100.0 %		23.72	410,000	185,000	206,000	19,000		-		Wal-Mart, BJ's Wholesale Club

Totowa	100.0 %	100.0 %		18.59	317,000	178,000	139,000	-		26,171	⁽²⁾	The Home Depot, Bed Bath & Beyond (3), Marshalls

Garfield	100.0 %	100.0 %		25.54	302,000	20,000	145,000	137,000		-		Wal-Mart

Bricktown	100.0 %	98.7 %		17.03	279,000	276,000	3,000	-		33,755	⁽²⁾	Kohl's, ShopRite, Marshalls

Union (Route 22 and Morris Avenue)	100.0 %	100.0 %		25.87	276,000	113,000	163,000	-		34,160	⁽²⁾	Lowe's, Toys "R" Us

Hackensack	100.0 %	95.9 %		21.16	275,000	209,000	66,000	-		42,845	⁽²⁾	The Home Depot (3), Pathmark

Bergen Town Center - East, Paramus	100.0 %	-		-	272,000	-	-	272,000		-		Lowe's (under development by tenant)

East Hanover (240 Route 10 West)	100.0 %	98.6 %		17.91	268,000	262,000	6,000	-		30,107	⁽²⁾	The Home Depot, Dick's Sporting Goods, Marshalls

Cherry Hill	100.0 %	97.5 %		15.79	263,000	51,000	212,000	-		14,649	⁽²⁾	Wal-Mart, Toys "R" Us

Jersey City	100.0 %	100.0 %		21.05	236,000	66,000	170,000	-		21,423	⁽²⁾	Lowe's, P.C. Richard & Son

East Brunswick (325 - 333 Route 18 South)	100.0 %	100.0 %		15.95	232,000	222,000	10,000	-		26,287	⁽²⁾	Kohl's, Dick's Sporting Goods, P.C. Richard & Son,
												T.J. Maxx

Union (2445 Springfield Avenue)	100.0 %	100.0 %		17.85	232,000	232,000	-	-		30,108	⁽²⁾	The Home Depot

Middletown	100.0 %	83.1 %		14.47	231,000	179,000	52,000	-		18,354	⁽²⁾	Kohl's, Stop & Shop

Woodbridge	100.0 %	100.0 %		18.30	227,000	87,000	140,000	-		21,828	⁽²⁾	Wal-Mart, Syms

North Plainfield	100.0 %	57.3 %		6.93	219,000	219,000	-	-		-		Kmart
(ground leased through 2060)

Marlton	100.0 %	100.0 %		12.32	211,000	207,000	4,000	-		18,239	⁽²⁾	Kohl's (3), ShopRite, PetSmart

Manalapan	100.0 %	97.8 %		15.30	208,000	206,000	2,000	-		22,234	⁽²⁾	Best Buy, Bed Bath & Beyond, Babies "R" Us

East Rutherford	100.0 %	97.9 %		31.36	197,000	42,000	155,000	-		14,359	⁽²⁾	Lowe's

East Brunswick (339-341 Route 18 South)	100.0 %	100.0 %		-	196,000	33,000	163,000	-		12,449	⁽²⁾	Lowe's, LA Fitness (lease not commenced)

Bordentown	100.0 %	90.9 %		7.17	179,000	179,000	-	-		-		ShopRite

Morris Plains	100.0 %	100.0 %		19.50	177,000	176,000	1,000	-		22,581	⁽²⁾	Kohl's, ShopRite

Dover	100.0 %	93.9 %		11.25	173,000	167,000	6,000	-		13,896	⁽²⁾	ShopRite, T.J. Maxx

Delran	100.0 %	76.6 %		4.25	171,000	168,000	3,000	-		-		Sam's Club

Lodi (Route 17 North)	100.0 %	100.0 %		10.60	171,000	171,000	-	-		11,985	⁽²⁾	National Wholesale Liquidators

Watchung	100.0 %	97.3 %		23.19	170,000	54,000	116,000	-		15,923	⁽²⁾	BJ's Wholesale Club

Lawnside	100.0 %	100.0 %		12.82	145,000	142,000	3,000	-		11,291	⁽²⁾	The Home Depot, PetSmart

Hazlet	100.0 %	100.0 %		2.44	123,000	123,000	-	-		-		Stop & Shop

ITEM 2. PROPERTIES - - Continued

					Square Feet
						In Service		Out of Service
Property	% Ownership	% Occupancy	Annualized Rent PSF (1)		Total Property	Owned by Company	Owned By Tenant	Under Development	Encumbrances (in thousands)			Major Tenants
RETAIL (Continued):
Kearny	100.0 %	100.0 %	$	14.24	104,000	32,000	72,000	-	$	-		Pathmark, Marshalls

Turnersville	100.0 %	100.0 %		6.25	96,000	89,000	7,000	-		-		Haynes Furniture (3)

Lodi (Washington Street)	100.0 %	47.8 %		23.31	85,000	85,000	-	-		9,881		Rite Aid

Carlstadt	100.0 %	90.7 %		22.22	78,000	78,000	-	-		7,442		Stop & Shop
(ground leased through 2050)

East Hanover (200 Route 10 West)	100.0 %	86.9 %		22.57	76,000	76,000	-	-		10,306	⁽²⁾	Loehmann's

North Bergen (Kennedy Boulevard)	100.0 %	100.0 %		29.78	62,000	6,000	56,000	-		5,385	⁽²⁾	Waldbaum's

South Plainfield	100.0 %	100.0 %		21.14	56,000	56,000	-	-		5,414	⁽²⁾	Staples
(ground leased through 2039)

Englewood	100.0 %	100.0 %		30.73	41,000	41,000	-	-		12,222		New York Sports Club

Eatontown	100.0 %	100.0 %		26.14	30,000	30,000	-	-		-		Petco

East Hanover (280 Route 10 West)	100.0 %	94.0 %		32.00	26,000	26,000	-	-		4,806	⁽²⁾	REI

Montclair	100.0 %	100.0 %		23.34	18,000	18,000	-	-		2,779	⁽²⁾	Whole Foods Market

Total New Jersey					7,549,000	4,504,000	2,127,000	918,000		500,879

New York:
Poughkeepsie	100.0 %	78.9 %		7.62	522,000	519,000	3,000	-		-		Kmart, Burlington Coat Factory, ShopRite,
												Hobby Lobby, Christmas Tree Shops,
												Bob's Discount Furniture

Bronx (Bruckner Boulevard)	100.0 %	95.4 %		20.98	500,000	386,000	114,000	-		-		Kmart, Toys "R" Us, Key Food

Buffalo (Amherst)	100.0 %	59.8 %		5.64	296,000	227,000	69,000	-		-		T.J. Maxx, Toys "R" Us,

Huntington	100.0 %	96.5 %		13.26	208,000	208,000	-	-		17,602	⁽²⁾	Kmart, Marshalls, Old Navy

Rochester	100.0 %	100.0 %		-	205,000	-	205,000	-		4,632	⁽²⁾	Wal-Mart

Mt. Kisco	100.0 %	98.4 %		21.04	189,000	72,000	117,000	-		29,382		Target, A&P

Freeport (437 East Sunrise Highway)	100.0 %	100.0 %		17.70	173,000	173,000	-	-		22,581	⁽²⁾	The Home Depot, Staples

Staten Island	100.0 %	95.7 %		17.52	165,000	165,000	-	-		17,400		Western Beef, Bally Total Fitness

Rochester (Henrietta)	100.0 %	89.2 %		3.31	158,000	158,000	-	-		-		Kohl's, Ollie's Bargain Outlet
(ground leased through 2056)

Albany (Menands)	100.0 %	74.0 %		9.00	140,000	140,000	-	-		-		Bank of America

New Hyde Park (ground and building	100.0 %	100.0 %		18.73	101,000	101,000	-	-		-		Stop & Shop
leased through 2029)

North Syracuse (ground and building	100.0 %	100.0 %		-	98,000	-	98,000	-		-		Wal-Mart
leased through 2014)

Inwood	100.0 %	97.8 %		20.65	96,000	96,000	-	-		-		Stop & Shop

Bronx (1750-1780 Gun Hill Road)	100.0 %	52.6 %		43.23	83,000	83,000	-	-		-		ALDI (lease not commenced) T.G.I. Friday's

ITEM 2. PROPERTIES - - Continued

					Square Feet
							In Service			Out of Service
Property	% Ownership	% Occupancy	Annualized Rent PSF (1)		Total Property		Owned by Company	Owned By Tenant		Under Development	Encumbrances (in thousands)			Major Tenants
RETAIL (Continued):
West Babylon	100.0 %	85.7 %	$	11.82	79,000		79,000	-		-	$	-		Waldbaum's

Queens	100.0 %	100.0 %		36.26	56,000		56,000	-		-		-		New York Sports Club

Commack	100.0 %	100.0 %		20.11	47,000		47,000	-		-		-		PetSmart
(ground and building leased through 2021)

Dewitt	100.0 %	100.0 %		18.60	46,000		46,000	-		-		-		Best Buy
(ground leased through 2041)

Freeport (240 West Sunrise Highway)	100.0 %	100.0 %		18.44	44,000		44,000	-		-		-		Bob's Discount Furniture
(ground and building leased through 2040)

Oceanside	100.0 %	100.0 %		27.83	16,000		16,000	-		-		-		Party City

Total New York					3,222,000		2,616,000	606,000		-		91,597

Pennsylvania:
Allentown	100.0 %	99.6 %		15.10	627,000		270,000	357,000		-		31,670	⁽²⁾	Wal-Mart, ShopRite, Burlington Coat Factory,
														T.J. Maxx, Dick's Sporting Goods

Philadelphia	100.0 %	78.1 %		12.52	430,000		430,000	-		-		-		Kmart, Health Partners

Wilkes-Barre	100.0 %	83.3 %		13.26	329,000	⁽⁴⁾	204,000	125,000	⁽⁴⁾	-		20,727		Target (4), Babies "R" Us, Ross Dress for Less

Lancaster	100.0 %	100.0 %		4.52	228,000		58,000	170,000		-		5,703	⁽²⁾	Lowe's, Weis Markets

Bensalem	100.0 %	98.9 %		11.15	185,000		177,000	8,000		-		15,720	⁽²⁾	Kohl's (3), Ross Dress for Less, Staples

Broomall	100.0 %	100.0 %		10.73	169,000		147,000	22,000		-		11,291	⁽²⁾	Giant Food (3), A.C. Moore, PetSmart

Bethlehem	100.0 %	87.1 %		5.82	167,000		164,000	3,000		-		5,906	⁽²⁾	Giant Food, Superpetz

Upper Moreland	100.0 %	100.0 %		2.00	122,000		122,000	-		-		-		Benjamin Foods

York	100.0 %	100.0 %		8.16	110,000		110,000	-		-		5,501	⁽²⁾	Ashley Furniture

Levittown	100.0 %	100.0 %		6.25	105,000		105,000	-		-		-		Haynes Furniture (3)

Glenolden	100.0 %	93.5 %		26.00	102,000		10,000	92,000		-		7,238	⁽²⁾	Wal-Mart

Wilkes-Barre	100.0 %	50.1 %		6.53	81,000		81,000	-		-		-		Ollie's Bargain Outlet
(ground and building leased through 2040)

Wyomissing	100.0 %	89.0 %		14.47	79,000		79,000	-		-		-		LA Fitness, PetSmart
(ground and building leased through 2065)

Springfield	100.0 %	100.0 %		19.00	41,000		41,000	-		-		-		PetSmart
(ground and building leased through 2025)

Total Pennsylvania					2,775,000		1,998,000	777,000		-		103,756

California:
San Jose	100.0 %	93.1 %		29.24	649,000	⁽⁴⁾	486,000	163,000	⁽⁴⁾	-		120,863		Target (4), The Home Depot, Toys "R" Us, Best Buy

Beverly Connection, Los Angeles	100.0 %	75.3 %		36.17	306,000		306,000	-		-		100,000		Marshalls, Old Navy, Sports Chalet,
														Nordstrom Rack, Ross Dress for Less

Pasadena (ground leased through 2077)	100.0 %	62.1 %		30.45	133,000		133,000	-		-		-		Trader Joe's

ITEM 2. PROPERTIES - - Continued

					Square Feet
						In Service		Out of Service
Property	% Ownership	% Occupancy	Annualized Rent PSF (1)		Total Property	Owned by Company	Owned By Tenant	Under Development	Encumbrances (in thousands)			Major Tenants
RETAIL (Continued):
San Francisco (2675 Geary Street)	100.0 %	100.0 %	$	45.76	55,000	55,000	-	-	$	-		Best Buy
(ground and building leased through 2043)

Redding	100.0 %	100.0 %		10.53	45,000	45,000	-	-		-		PetSmart

Signal Hill	100.0 %	100.0 %		21.89	45,000	45,000	-	-		-		Best Buy

Vallejo	100.0 %	100.0 %		15.92	45,000	45,000	-	-		-		Best Buy
(ground leased through 2043)

Merced	100.0 %	100.0 %		13.27	31,000	31,000	-	-		-		PetSmart

San Francisco (3700 Geary Boulevard)	100.0 %	100.0 %		30.00	30,000	30,000	-	-		-		OfficeMax

Walnut Creek (1149 South Main Street)	100.0 %	100.0 %		45.11	29,000	29,000	-	-		-		Barnes & Noble

Total California					1,368,000	1,205,000	163,000	-		220,863

Maryland:
Baltimore (Towson)	100.0 %	86.0 %		15.33	150,000	150,000	-	-		16,502	⁽²⁾	Shoppers Food Warehouse, hhgregg, Staples,
												Golf Galaxy

Annapolis	100.0 %	100.0 %		8.99	128,000	128,000	-	-		-		The Home Depot
(ground and building leased through 2042)

Glen Burnie	100.0 %	78.5 %		10.42	121,000	65,000	56,000	-		-		Weis Markets

Rockville	100.0 %	99.3 %		23.39	94,000	94,000	-	-		-		Regal Cinemas

Wheaton	100.0 %	100.0 %		13.58	66,000	66,000	-	-		-		Best Buy
(ground leased through 2060)

Total Maryland					559,000	503,000	56,000	-		16,502

Massachusetts:
Chicopee	100.0 %	100.0 %		-	224,000	-	224,000	-		8,772	⁽²⁾	Wal-Mart

Springfield	100.0 %	97.3 %		15.09	152,000	33,000	119,000	-		6,051	⁽²⁾	Wal-Mart

Milford	100.0 %	100.0 %		8.01	83,000	83,000	-	-		-		Kohl's (3)
(ground and building leased through 2019)

Cambridge	100.0 %	100.0 %		19.84	48,000	48,000	-	-		-		PetSmart
(ground and building leased through 2033)

Dorchester	100.0 %	100.0 %		29.85	45,000	45,000	-	-		-		Best Buy

Total Massachusetts					552,000	209,000	343,000	-		14,823

Florida:
Tampa (Hyde Park Village)	75.0 %	79.2 %		20.52	262,000	262,000	-	-		21,862		Pottery Barn, CineBistro, Brooks Brothers,
												Williams Sonoma, Lifestyle Family Fitness

Tampa (1702 North Dale Mabry)	100.0 %	100.0 %		19.80	45,000	45,000	-	-		-		Nordstrom Rack

Miami	100.0 %	100.0 %		13.17	33,000	33,000	-	-		-		Office Depot
(ground and building leased through 2034)

Total Florida					340,000	340,000	-	-		21,862

ITEM 2. PROPERTIES - - Continued

					Square Feet
						In Service			Out of Service
Property	% Ownership	% Occupancy	Annualized Rent PSF (1)		Total Property	Owned by Company		Owned By Tenant	Under Development	Encumbrances (in thousands)			Major Tenants
RETAIL (Continued):
Connecticut:
Newington	100.0 %	100.0 %	$	14.45	188,000	43,000		145,000	-	$	11,870	⁽²⁾	Wal-Mart, Staples

Waterbury	100.0 %	100.0 %		14.99	148,000	143,000		5,000	-		14,765	⁽²⁾	ShopRite

Total Connecticut					336,000	186,000		150,000	-		26,635

Michigan:
Roseville	100.0 %	100.0 %		5.31	119,000	119,000		-	-		-		J.C. Penney

Battle Creek	100.0 %	-		-	47,000	47,000		-	-		-

Midland (ground leased through 2043)	100.0 %	83.6 %		8.38	31,000	31,000		-	-		-		PetSmart

Total Michigan					197,000	197,000		-	-		-

Virginia:
Norfolk	100.0 %	100.0 %		6.44	114,000	114,000		-	-		-		BJ's Wholesale Club
(ground and building leased through 2069)

Tyson's Corner	100.0 %	100.0 %		35.57	38,000	38,000		-	-		-		Best Buy
(ground and building leased through 2035)

Total Virginia					152,000	152,000		-	-		-

Illinois:
Lansing	100.0 %	100.0 %		10.00	47,000	47,000		-	-		-		Forman Mills

Arlington Heights	100.0 %	100.0 %		9.00	46,000	46,000		-	-		-		RVI
(ground and building leased through 2043)

Chicago	100.0 %	100.0 %		10.94	41,000	41,000		-	-		-		Best Buy
(ground and building leased through 2051)

Total Illinois					134,000	134,000		-	-		-

Texas:
San Antonio	100.0 %	100.0 %		9.06	43,000	43,000	^��	-	-		-		Best Buy
(ground and building leased through 2041)

Texarkana (ground leased through 2043)	100.0 %	100.0 %		4.39	31,000	31,000		-	-		-		Home Zone

Total Texas					74,000	74,000		-	-		-

Ohio:
Springdale	100.0 %	-		-	47,000	47,000		-	-		-
(ground and building leased through 2046)

Washington:
Bellingham	100.0 %	100.0 %		-	46,000	46,000		-	-		-		Savers (lease not commenced)

Utah:
Ogden	100.0 %	-		-	46,000	46,000		-	-		-

Tennessee:
Antioch	100.0 %	100.0 %		6.96	45,000	45,000		-	-		-		Best Buy


South Carolina:
Charleston	100.0 %	100.0 %		13.51	45,000	45,000		-	-		-		Best Buy
(ground leased through 2063)

ITEM 2. PROPERTIES - - Continued

						Square Feet
								In Service			Out of Service
Property	% Ownership	% Occupancy	Annualized Rent PSF (1)			Total Property		Owned by Company	Owned By Tenant		Under Development	Encumbrances (in thousands)		Major Tenants
RETAIL (Continued):
Wisconsin:
Fond Du Lac	100.0 %	100.0 %	$	7.12		43,000		43,000	-		-	$	-	PetSmart
(ground leased through 2073)

Washington, DC
3040 M Street	100.0 %	100.0 %		46.36		42,000		42,000	-		-		-	Barnes & Noble, Barneys

New Hampshire:
Salem (ground leased through 2102)	100.0 %	100.0 %		-		37,000		-	37,000		-		-	Babies "R" Us

Kentucky:
Owensboro	100.0 %	100.0 %		6.96		32,000		32,000	-		-		-	Best Buy
(ground and building leased through 2046)

Iowa:
Dubuque	100.0 %	100.0 %		9.00		31,000		31,000	-		-		-	PetSmart
(ground leased through 2043)

CALIFORNIA SUPERMARKETS
Colton (1904 North Rancho Avenue)	100.0 %	100.0 %		4.44		73,000		73,000	-		-		-	Stater Brothers

Riverside (9155 Jurupa Road)	100.0 %	100.0 %		6.00		42,000		42,000	-		-		-	Stater Brothers

San Bernadino (1522 East Highland Avenue)	100.0 %	100.0 %		7.23		40,000		40,000	-		-		-	Stater Brothers

Riverside (5571 Mission Boulevard)	100.0 %	100.0 %		4.97		39,000		39,000	-		-		-	Stater Brothers

Mojave (ground leased through 2079)	100.0 %	100.0 %		6.55		34,000		34,000	-		-		-	Stater Brothers

Corona (ground leased through 2079)	100.0 %	100.0 %		7.76		33,000		33,000	-		-		-	Stater Brothers

Yucaipa	100.0 %	100.0 %		4.13		31,000		31,000	-		-		-	Stater Brothers

Barstow	100.0 %	100.0 %		7.15		30,000		30,000	-		-		-	Stater Brothers

Moreno Valley	100.0 %	-		-		30,000		30,000	-		-		-

San Bernadino (648 West 4th Street)	100.0 %	100.0 %		6.74		30,000		30,000	-		-		-	Stater Brothers

Desert Hot Springs	100.0 %	100.0 %		5.61		29,000		29,000	-		-		-	Stater Brothers

Rialto	100.0 %	100.0 %		5.74		29,000		29,000	-		-		-	Stater Brothers

Total California Supermarkets						440,000		440,000	-		-		-

Total Strip Shopping Centers		92.1 %	$	15.71		18,112,000		12,935,000	4,259,000		918,000	$	996,917

Vornado's Ownership Interest		92.1 %	$	15.68		17,784,000		12,870,000	3,996,000		918,000	$	991,452


REGIONAL MALLS:
Green Acres Mall, Valley Stream, NY	100.0 %	91.2 %	$	45.15	⁽⁵⁾	1,827,000		1,748,000	79,000		-	$	335,000	Macy's, Sears, Wal-Mart, J.C. Penney, Best Buy,
(10% ground and building leased														BJ's Wholesale Club, Kohl's, Raymour & Flanigan
through 2039)

Monmouth Mall, Eatontown, NJ	50.0 %	87.1 %		36.84	⁽⁵⁾	1,461,000	⁽⁴⁾	742,000	719,000	⁽⁴⁾	-		164,474	Macy's (4), J.C. Penney (4), Lord & Taylor, Loews Theatre,
														Barnes & Noble

ITEM 2. PROPERTIES - - Continued

						Square Feet
								In Service			Out of Service
Property	% Ownership	% Occupancy	Annualized Rent PSF (1)			Total Property		Owned by Company	Owned By Tenant		Under Development	Encumbrances (in thousands)		Major Tenants
RETAIL (Continued):
Springfield Mall, Springfield, VA	97.5 %	100.0 %	$	24.09	⁽⁵⁾	1,408,000	⁽⁴⁾	532,000	390,000	⁽⁴⁾	486,000	$	-	Macy's, J.C. Penney (4), Target (4)

Broadway Mall, Hicksville, NY	100.0 %	87.5 %		34.18	⁽⁵⁾	1,142,000	⁽⁴⁾	766,000	376,000	⁽⁴⁾	-		90,227	Macy's, Ikea, Target (4), National Amusement

Bergen Town Center - West, Paramus, NJ	100.0 %	99.0 %		45.52	⁽⁵⁾	930,000		853,000	13,000		64,000		279,044	Target, Century 21, Whole Foods Market,
														Marshalls, Nordstrom Rack, Saks Off 5th,
														Neiman Marcus Last Call Studio, Bloomingdale's Outlet,
														Nike Factory Store, Blink Fitness

Montehiedra, Puerto Rico	100.0 %	91.9 %		41.16	⁽⁵⁾	540,000		540,000	-		-		120,000	The Home Depot, Kmart, Marshalls,
														Caribbean Theatres, Tiendas Capri

Las Catalinas, Puerto Rico	100.0 %	89.1 %		55.74	⁽⁵⁾	495,000	⁽⁴⁾	356,000	139,000	⁽⁴⁾	-		57,737	Kmart, Sears (4)


Total Regional Malls		91.9 %	$	39.37		7,803,000		5,537,000	1,716,000		550,000	$	1,046,482

Vornado's Ownership Interest		92.2 %	$	39.73		6,018,000		5,153,000	327,000		538,000	$	964,246

MANHATTAN STREET RETAIL
Manhattan Mall	100.0 %	97.5 %	$	85.90		243,000		243,000	-		-	$	72,639	J.C. Penney, Charlotte Russe, Aeropostale, Express,
														Victoria's Secret

4 Union Square South	100.0 %	100.0 %		55.07		203,000		203,000	-		-		75,000	Filene's Basement, Whole Foods Market,
														DSW, Forever 21

1540 Broadway	100.0 %	100.0 %		115.03		160,000		160,000	-		-		-	Forever 21, Planet Hollywood, Disney, Swarovski,
														MAC Cosmetics

478-486 Broadway	100.0 %	100.0 %		98.57		85,000		85,000	-		-		-	Top Shop, Madewell, J. Crew

25 West 14th Street	100.0 %	100.0 %		58.67		62,000		62,000	-		-		-	Guitar Center, Levi's

510 5th Avenue	100.0 %	66.0 %		53.00		59,000		59,000	-		-		32,189	Joe Fresh

155 Spring Street	100.0 %	100.0 %		88.92		46,000		46,000	-		-		-	Sigrid Olsen

435 Seventh Avenue	100.0 %	100.0 %		165.32		43,000		43,000	-		-		51,844	Hennes & Mauritz

692 Broadway	100.0 %	43.3 %		43.33		35,000		35,000	-		-		-	Equinox

1135 Third Avenue	100.0 %	100.0 %		98.43		25,000		25,000	-		-		-	GAP

715 Lexington (ground leased through	100.0 %	100.0 %		155.56		23,000		23,000	-		-		-	New York & Company, Zales
2041)

7 West 34th Street	100.0 %	100.0 %		197.53		21,000		21,000	-		-		-	Express

828-850 Madison Avenue	100.0 %	100.0 %		332.12		18,000		18,000	-		-		80,000	Gucci, Chloe, Cartier

484 Eighth Avenue	100.0 %	100.0 %		87.27		14,000		14,000	-		-		-	T.G.I. Friday's

40 East 66th Street	100.0 %	100.0 %		387.85		12,000		12,000	-		-		-	Dennis Basso, Nespresso USA, J. Crew

431 Seventh Avenue	100.0 %	75.0 %		49.38		10,000		10,000	-		-		-

387 West Broadway	100.0 %	100.0 %		135.54		9,000		9,000	-		-		-	Reiss

677-679 Madison Avenue	100.0 %	100.0 %		346.23		8,000		8,000	-		-		-	Anne Fontaine

148 Spring Street	100.0 %	100.0 %		87.17		7,000		7,000	-		-		-

ITEM 2. PROPERTIES - Continued

					Square Feet
						In Service		Out of Service
Property	% Ownership	% Occupancy	Annualized Rent PSF (1)		Total Property	Owned by Company	Owned By Tenant	Under Development	Encumbrances (in thousands)		Major Tenants
RETAIL (Continued):
150 Spring Street	100.0 %	100.0 %	$	113.30	7,000	7,000	-	-	$	-	Puma

488 8th Avenue	100.0 %	100.0 %		60.85	6,000	6,000	-	-		-

968 Third Avenue	50.0 %	100.0 %		175.81	6,000	6,000	-	-		-	ING Bank

386 West Broadway	100.0 %	-		-	4,000	4,000	-	-		4,197

825 Seventh Avenue	100.0 %	100.0 %		181.55	4,000	4,000	-	-		-	Lindy's


Total Manhattan Street Retail		95.3 %	$	100.18	1,110,000	1,110,000	-	-	$	315,869

Vornado's Ownership Interest		95.3 %	$	99.95	1,107,000	1,107,000	-	-	$	315,869

Total Retail Space		92.3 %			27,025,000	19,582,000	5,975,000	1,468,000	$	2,359,268

Vornado's Ownership Interest		92.3 %			24,909,000	19,130,000	4,323,000	1,456,000	$	2,271,566


(1) Annualized Rent PSF excludes ground rent, storage rent and garages.
(2) These encumbrances are cross-collaterized under a blanket mortgage in the amount of $657,138 as of December 31, 2010.
(3) The leases for these former Bradlees locations are guaranteed by Stop and Shop (70% as to Totowa).
(4) Includes square footage of anchors who own the land and building.
(5) Annualized Base Rent shown is for mall tenants only.

ITEM 2. PROPERTIES - Continued

						Square Feet
								Out of Service
Property	% Ownership	% Occupancy	Annualized Rent PSF (1)			Total Property	Owned By Tenant	Under Development	Encumbrances (in thousands)		Major Tenants
MERCHANDISE MART:
Illinois:												^��
Merchandise Mart, Chicago	100.0 %	93.7 %	$	30.16		3,492,000	-	-	$	550,000	American Intercontinental University (AIU),
											Baker, Knapp & Tubbs, Royal Bank of Canada,
											CCC Information Services, Ogilvy Group (WPP),
											Chicago Teachers Union,
											Office of the Special Deputy Receiver, Publicis Groupe,
											Bankers Life & Casualty, Holly Hunt Ltd.,
											Merchandise Mart Headquarters, Steelcase,
											Chicago School of Professional Psychology

350 West Mart Center, Chicago	100.0 %	89.2 %		25.31		1,242,000	-	-		-	21st Century Telecom/RCN, Ameritech,
											Chicago Sun-Times, Comcast, Fiserv Solutions,
					��						Ogilvy Group (WPP), Illinois Institute of Art,
											Ronin Capital, Upshot, Getco Holdings,
											TCS Education Systems

Other	50.0 %	93.9 %		33.77		19,000	-	-		24,530

Total Illinois		92.5 %		28.99		4,753,000	-	-		574,530

California
L.A. Mart	100.0 %	87.9 %		21.30		784,000	-	-		-	Penstan Investments,
											County of L.A. - Dept of Children & Family Services

Massachusetts
Boston Design Center	100.0 %	96.8 %		29.23		553,000	-	-		68,538	Boston Brewing/Fitch Puma, Robert Allen
(ground leased through 2060)

New York
7 West 34th Street	100.0 %	94.6 %		39.03		419,000	-	-		-	Kurt Adler

Washington, DC
Washington Design Center	100.0 %	93.1 %		37.68		393,000	-	-		43,447	General Services Administration


Total Merchandise Mart		92.5 %	$	29.33		6,902,000	-	-	$	686,515

Vornado's Ownership Interest		92.5 %	$	29.33		6,893,000	-	-	$	674,250


(1) Annualized Rent PSF excludes ground rent, storage rent and garages.

ITEM 2. PROPERTIES - - Continued


					Square Feet
							Out of Service
Property	% Ownership	% Occupancy		Annualized Rent PSF (1)	Total Property	Owned By Tenant	Under Development	Encumbrances (in thousands)			Major Tenants
555 CALIFORNIA STREET:
555 California Street	70.0 %	91.7 %	$	56.35	1,503,000	-	-	$	640,911	⁽²⁾	Bank of America, N.A., Dodge & Cox,
											Goldman Sachs & Co., Jones Day,
											Kirkland & Ellis LLP, Morgan Stanley & Co. Inc.,
											McKinsey & Company Inc., UBS Financial Services

315 Montgomery Street	70.0 %	100.0 %		40.97	228,000	-	-		-		Bank of America, N.A.

345 Montgomery Street	70.0 %	100.0 %		98.25	64,000	-	-		-		Bank of America, N.A.


Total 555 California Street		93.0 %	$	55.97	1,795,000	-	-	$	640,911

Vornado's Ownership Interest		93.0 %	$	55.97	1,257,000	-	-	$	448,169


(1) Annualized Rent PSF excludes ground rent, storage rent and garages.
(2) Cross-collateralized by 555 California Street and 315 and 345 Montgomery Street.

ITEM 2. PROPERTIES - - Continued

					Square Feet
							Out of Service
Property	% Ownership	% Occupancy	Annualized Rent PSF (1)		Total Property	Owned By Tenant	Under Development	Encumbrances (in thousands)		Major Tenants
WAREHOUSES:
NEW JERSEY
East Hanover - Five Buildings	100.0 %	62.6 %	$	5.61	942,000	-	-	$	24,358	Five Star Group Inc., Foremost Groups Inc.,
										Fidelity Paper & Supply Inc., Givaudan Flavors Corp.,
										Gardner Industries

Edison	100.0 %	-		-	272,000	-	-		-


Total Warehouses		48.6 %	$	5.61	1,214,000	-	-	$	24,358

Vornado's Ownership Interest		48.6 %	$	5.61	1,214,000	-	-	$	24,358


(1) Annualized Rent PSF excludes ground rent, storage rent and garages.

ITEM 2. PROPERTIES - - Continued

					Square Feet
						In Service			Out of Service
Property	% Ownership	% Occupancy	Annualized Rent PSF (1)		Total Property	Owned by Company	Owned By Tenant		Under Development	Encumbrances (in thousands)		Major Tenants
ALEXANDER'S INC.:
New York:
731 Lexington Avenue, Manhattan
Office	32.4 %	100.0 %	$	82.14	885,000	885,000	-		-	$	351,751	Bloomberg

Retail	32.4 %	100.0 %		161.23	174,000	174,000	-		-		320,000	Hennes & Mauritz, The Home Depot,
												The Container Store

					1,059,000	1,059,000	-		-		671,751

Kings Plaza Regional Shopping Center,	32.4 %	93.6 %		41.86	1,096,000	757,000	339,000	⁽²⁾	-		151,214	Sears, Lowe's (ground lessee), Macy's (2)
Brooklyn (24.3 acres)												Best Buy

Rego Park I, Queens (4.8 acres)	32.4 %	85.4 %		32.28	343,000	343,000	-		-		78,246	Sears, Bed Bath & Beyond, Marshalls,
												Burlington Coat Factory (lease not commenced)

Rego Park II (adjacent to Rego Park I),	32.4 %	100.0 %		38.01	615,000	550,000	-		65,000		277,200	Century 21, Costco, Kohl's, TJ Maxx,
Queens (6.6 acres)												Toys "R" Us
(89.4% of total square feet is in service)

Flushing, Queens⁽³⁾ (1.0 acre)	32.4 %	100.0 %		14.99	167,000	167,000	-		-		-	New World Mall LLC

New Jersey:
Paramus, New Jersey	32.4 %	100.0 %		-	-	-	-		-		68,000	IKEA (ground lessee)
(30.3 acres ground leased to IKEA
through 2041)

Property to be Developed:
Rego Park III (adjacent to Rego Park II),	32.4 %	-		-	-	-	-		-		-
Queens, NY (3.4 acres)


Total Alexander's		96.5 %	$	57.97	3,280,000	2,876,000	339,000		65,000	$	1,246,411

Vornado's Ownership Interest		96.5 %	$	57.97	1,063,000	932,000	110,000		21,000	$	403,837


(1) Annualized Rent PSF excludes ground rent, storage rent and garages.
(2) Owned by Macy's, Inc.
(3) Leased by Alexander's through January 2037.

New York Office Properties

As of December 31, 2010, our portfolio consisted of 28 office properties in Manhattan aggregating 17.4 million square feet, of which we own 16.2 million square feet, which is comprised of 15.2 million square feet of office space, 821,000 square feet of retail space and 183,000 square feet of showroom space. In addition, we own 1,107,000 square feet of retail space in New York City that is not part of our office buildings and is included in our Retail Properties segment. The New York Office Properties segment also includes 6 garages totaling 368,000 square feet (1,739 spaces) which are managed by, or leased to, third parties. The garage space is excluded from the statistics provided in this section.


Occupancy and average annual escalated rent per square foot:

						Average Annual
		Rentable	Occupancy			Escalated Rent
	As of December 31,	Square Feet	Rate			per Square Foot
	2010	16,194,000		95.6	%	$	55.45
	2009	16,173,000		95.5	%		55.00
	2008	16,108,000		96.7	%		53.08
	2007	15,994,000		97.6	%		49.34
	2006	13,692,000		97.5	%		46.33


2010 New York Office Properties rental revenue by tenants’ industry:


	Industry	Percentage
	Finance	16	%
	Retail	15	%
	Legal Services	9	%
	Banking	7	%
	Communications	5	%
	Insurance	5	%
	Technology	5	%
	Publishing	4	%
	Government	4	%
	Real Estate	4	%
	Advertising	3	%
	Pharmaceutical	3	%
	Not-for-Profit	2	%
	Engineering	2	%
	Service Contractors	1	%
	Health Services	1	%
	Other	14	%
		100	%

New York Office Properties lease terms generally range from five to seven years for smaller tenants to as long as 15 years for major tenants, and may provide for extension options at market rates. Leases typically provide for periodic step-ups in rent over the term of the lease and pass through to tenants their share of increases in real estate taxes and operating expenses over a base year. Electricity is provided to tenants on a sub-metered basis or included in rent based on surveys and adjusted for subsequent utility rate increases. Leases also typically provide for tenant improvement allowances for all or a portion of the tenant’s initial construction costs of its premises.

NEW YORK OFFICE PROPERTIES – CONTINUED


Tenants accounting for 2% or more of 2010 New York Office Properties total revenues:

					Percentage of		Percentage
					New York Office		of Total
		Square Feet	2010		Properties		Company
	Tenant	Leased	Revenues		Revenues		Revenues
	Macy’s, Inc.	537,000	$	29,166,000	2.6	%	1.0	%
	McGraw-Hill Companies, Inc.	480,000		22,859,000	2.1	%	0.8	%
	Limited Brands	368,000		22,219,000	2.0	%	0.8	%


2010 New York Office Properties Leasing Activity:

					Average Initial
				Square	Rent Per
		Location		Feet	Square Foot (1)
			One Penn Plaza	346,000	$	48.31
			90 Park Avenue	152,000		55.75
			40 Fulton Street	123,000		31.84
			866 United Nations Plaza	113,000		49.67
			909 Third Avenue	80,000		47.69
			Two Penn Plaza	69,000		47.54
			595 Madison Ave	62,000		59.34
			640 Fifth Avenue	49,000		53.03
			Manhattan Mall	47,000		38.17
			Eleven Penn Plaza	46,000		44.10
			350 Park Avenue	45,000		103.77
			150 East 58th Street	37,000		51.82
			20 Broad Street	36,000		31.32
			57th Street	22,000		41.46
			330 Madison Avenue	21,000		65.17
			888 Seventh Avenue	16,000		61.09
			1290 Avenue of Americas	9,000		50.00
			689 Fifth Avenue	4,000		58.00
		Total		1,277,000		49.81
	_______________________
	(1) Most leases include periodic step-ups in rent, which are not reflected in the initial rent per square foot leased.

In addition to the office space noted above, during 2010 we leased 23,000 square feet of retail space contained in office buildings at an average initial rent of $111.19, a 42.6% increase over the prior escalated rent per square foot.

NEW YORK OFFICE PROPERTIES – CONTINUED


Lease expirations as of December 31, 2010, assuming none of the tenants exercise renewal options:

					Percentage of
Office Space:					New York		Annual Escalated
		Number of	Square Feet of		Office Properties		Rent of Expiring Leases
Year		Expiring Leases	Expiring Leases		Square Feet		Total		Per Square Foot
Office Space:
Month to month		57	72,000		0.4	%	$	2,967,000	$	41.21
2011		93	1,047,000		6.3	%		57,452,000		54.87
2012		98	1,807,000		10.9	%		96,304,000		53.29
2013		72	940,000	⁽¹⁾	5.6	%		47,646,000		50.69
2014		89	812,000		4.9	%		46,838,000		57.68
2015		104	2,120,000		12.7	%		121,246,000		57.19
2016		62	1,043,000		6.3	%		56,721,000		54.38
2017		41	894,000		5.4	%		50,585,000		56.58
2018		35	778,000		4.7	%		50,115,000		64.42
2019		31	649,000		3.9	%		38,404,000		59.17
2020		28	1,287,000		7.7	%		68,742,000		53.41

Retail Space:
(contained in office buildings)
Month to month		3	2,000		-	%	$	205,000	$	102.50
2011		7	48,000		0.3	%		2,349,000		49.75
2012		6	23,000		0.1	%		4,507,000		195.96
2013		17	52,000		0.3	%		8,284,000		159.31
2014		10	77,000		0.5	%		19,335,000		251.10
2015		12	39,000		0.2	%		7,930,000		203.33
2016		4	319,000		1.9	%		17,950,000		56.27
2017		1	4,000		-	%		412,000		103.00
2018		8	128,000		0.8	%		13,360,000		104.38
2019		7	33,000		0.2	%		8,344,000		252.85
2020		6	21,000		0.1	%		2,548,000		121.33

_______________________________
(1)	Excludes 492,000 square feet at 909 Third Avenue leased to the U.S. Post Office through 2038 (including five 5-year renewal options) for which the annual escalated rent is $11.12 per square foot.

Washington, DC Office Properties

As of December 31, 2010, our portfolio consisted of 82 properties aggregating 21.1 million square feet, of which we own 17.8 million square feet, which is comprised of 74 office buildings, 7 residential properties, a hotel property and 20.8 acres of undeveloped land. In addition, the Washington, DC Office Properties segment includes 57 garages totaling approximately 9.4 million square feet (31,419 spaces) which are managed by or leased to third parties. The garage space is excluded from the statistics provided in this section.

As of December 31, 2010, 32% percent of the space in our Washington, DC Office Properties segment was leased to various agencies of the U.S. Government.


Occupancy and average annual escalated rent per square foot:

						Average Annual
		Rentable	Occupancy			Escalated Rent
	As of December 31,	Square Feet	Rate			per Square Foot
	2010	17,823,000		94.3	%	$	39.42
	2009	17,646,000		93.3	%		38.37
	2008	16,981,000		94.1	%		37.03
	2007	16,715,000		94.0	%		34.47
	2006	15,181,000		92.7	%		32.08


2010 Washington, DC Office Properties rental revenue by tenants’ industry:

	Industry	Percentage
	U.S. Government	37	%
	Government Contractors	24	%
	Legal Services	7	%
	Membership Organizations	6	%
	Real Estate	3	%
	Manufacturing	3	%
	Computer and Data Processing	3	%
	Business Services	2	%
	Television Broadcasting	1	%
	Health Services	1	%
	Communication	1	%
	Education	1	%
	Other	11	%
		100	%

Washington, DC Office Properties lease terms generally range from five to seven years, and may provide for extension options at either pre-negotiated or market rates. Leases typically provide for periodic step-ups in rent over the term of the lease and pass through to tenants, the tenants’ share of increases in real estate taxes and certain property operating expenses over a base year. Periodic step-ups in rent are usually based upon either fixed percentage increases or the consumer price index. Leases also typically provide for tenant improvement allowances for all or a portion of the tenant’s initial construction costs of its premises.

WASHINGTON, DC OFFICE PROPERTIES – CONTINUED


Tenants accounting for 2% or more of Washington, DC Office Properties total revenues:

					Percentage of		Percentage
					Washington, DC		of Total
		Square Feet	2010		Office Properties		Company
	Tenant	Leased	Revenues		Revenues		Revenues
	U.S. Government	6,277,000	$	191,804,000	28.9	%	6.9	%
	Howrey LLP	327,000		17,013,000	2.6	%	0.6	%
	Academy for Educational Development	368,000		16,824,000	2.5	%	0.6	%
	Boeing	378,000		15,978,000	2.4	%	0.6	%
	SAIC, Inc.	433,000		14,711,000	2.2	%	0.5	%


2010 Washington, DC Office Properties Leasing Activity:

				Average Initial
			Square	Rent Per
	Location		Feet	Square Foot (1)
	Skyline Place / One Skyline Tower		368,000	$	36.70
	2011-2451 Crystal Drive		230,000		41.30
	1550-1750 Crystal Drive / 241-251 18th Street		154,000		41.45
	S. Clark Street / 12th Street		147,000		41.93
	1800, 1851 and 1901 South Bell Street		135,000		37.73
	Reston Executive		120,000		29.62
	1750 Pennsylvania Avenue, NW		100,000		44.02
	Commerce Executive		97,000		28.98
	Partially Owned Entities		55,000		34.09
	2001 Jefferson Davis Highway and 223 23rd Street / 2221 South
		Clark Street	55,000		36.01
	Universal Buildings (1825-1875 Connecticut Avenue, NW)		44,000		43.93
	1101 17th Street, NW		42,000		42.98
	2200 / 2300 Clarendon Blvd (Courthouse Plaza)		38,000		40.24
	1150 17th Street, NW		29,000		43.06
	1140 Connecticut Avenue, NW		25,000		42.20
	1730 M Street, NW		22,000		42.18
	1726 M Street, NW		19,000		39.68
	409 3rd Street, NW		8,000		39.32
	1227 25th Street, NW		5,000		41.50
	Democracy Plaza One		4,000		34.90
			1,697,000		38.41
____________________
(1) Most leases (excluding US Government leases) include periodic step-ups in rent which are not reflected in the initial rent per square foot leased.

WASHINGTON, DC OFFICE PROPERTIES – CONTINUED


Lease expirations as of December 31, 2010, assuming none of the tenants exercise renewal options:

				Percentage of
				Washington, DC		Annual Escalated
		Number of	Square Feet of	Office Properties		Rent of Expiring Leases
	Year	Expiring Leases	Expiring Leases	Square Feet		Total		Per Square Foot
	Month to month	94	586,000	4.2	%	$	20,825,000	$	35.51
	2011	317	1,918,000	13.6	%		69,924,000		36.45
	2012	264	2,894,000	20.5	%		112,206,000		38.78
	2013	168	929,000	6.6	%		35,997,000		38.75
	2014	139	1,396,000	9.9	%		51,900,000		37.18
	2015	130	1,417,000	10.1	%		54,178,000		38.24
	2016	71	1,026,000	7.3	%		38,878,000		37.90
	2017	45	392,000	2.8	%		13,988,000		35.71
	2018	47	840,000	6.0	%		38,887,000		46.30
	2019	43	1,029,000	7.3	%		40,503,000		39.35
	2020	58	928,000	6.6	%		43,239,000		46.57

Base Realignment and Closure (“BRAC”)

The lease expiration table above includes 2,395,000 square feet occupied by the Department of Defense subject to the BRAC statute. Of this amount, 348,000 square feet at 1851 South Bell Street will be taken out of service for redevelopment and approximately 286,000 square feet is expected to be relet for approximately 10 years. The remaining space is scheduled to expire as follows:

	Annual Escalated
	Rent of
	Expiring Leases		Square Feet of Expiring Leases
Year	Per Square Foot		Total	Crystal City	Skyline	Rosslyn
2011	$	28.41	446,000	-	446,000	-
2012		39.96	821,000	653,000	158,000	10,000
2013		35.96	140,000	-	-	140,000
2014		32.82	329,000	128,000	201,000	-
2015		40.21	25,000	20,000	5,000	-
			1,761,000	801,000	810,000	150,000

RETAIL PROPERTIES

As of December 31, 2010, our portfolio consisted of 161 retail properties, of which 130 are strip shopping centers located primarily in the Northeast, Mid-Atlantic and California; 7 are regional malls located in New York, New Jersey, Virginia and San Juan, Puerto Rico; and 24 are retail properties located in Manhattan (“Manhattan Street Retail”). Our strip shopping centers and malls are generally located on major highways in mature, densely populated areas, and therefore attract consumers from a regional, rather than a neighborhood market place.

Strip Shopping Centers

Our strip shopping centers contain an aggregate of 17.2 million square feet, of which we own 16.9 million square feet. These properties are substantially (approximately 80%) leased to large stores (over 20,000 square feet). Tenants include destination retailers such as discount department stores, supermarkets, home improvement stores, discount apparel stores and membership warehouse clubs. Tenants typically offer basic consumer necessities such as food, health and beauty aids, moderately priced clothing, building materials and home improvement supplies, and compete primarily on the basis of price and location.

Regional Malls

The Green Acres Mall in Valley Stream, Long Island, New York contains 1.8 million square feet, and is anchored by Macy’s, Sears, Wal-Mart, Kohl’s, J.C. Penney, Best Buy and BJ’s Wholesale Club.

The Monmouth Mall in Eatontown, New Jersey, in which we own a 50% interest, contains 1.5 million square feet and is anchored by Macy’s, Lord & Taylor and J.C. Penney, two of which own their stores aggregating 457,000 square feet.

The Springfield Mall in Springfield, Virginia, contains 1.4 million square feet and is anchored by Macy’s, J.C. Penney and Target, two of which own their stores aggregating 390,000 square feet. We continue to evaluate plans to renovate and reposition the mall.

The Bergen Town Center in Paramus, New Jersey contains 930,000 square feet and is anchored by Century 21, Whole Foods and Target.

The Broadway Mall in Hicksville, Long Island, New York contains 1.1 million square feet and is anchored by Macy’s, Ikea, National Amusements and Target, which owns its store containing 141,000 square feet.

The Montehiedra Mall in San Juan, Puerto Rico contains 540,000 square feet and is anchored by Home Depot, Kmart, and Marshalls.

The Las Catalinas Mall in San Juan, Puerto Rico, contains 495,000 square feet and is anchored by Kmart and Sears, which owns its 139,000 square foot store.

Manhattan Street Retail

Manhattan Street Retail is comprised of 24 properties containing 1.1 million square feet. In addition, we own 821,000 square feet of retail space in certain of our New York office buildings, which is part of our New York Office Properties segment. Our Manhattan Street Retail properties include (i) properties in the Penn Plaza district, such as the Manhattan Mall which contains 243,000 square feet, anchored by JC Penney; (ii) 4 Union Square which contains 203,000 square feet, anchored by Whole Foods Market, Filenes Basement and DSW; (iii) 1540 Broadway in Times Square which contains 160,000 square feet, anchored by Forever 21 and Disney, (iv) 510 Fifth Avenue which contains 59,000 square feet, anchored by Joe Fresh; and (v) properties on Madison Avenue and in So-Ho occupied by retailers including H&M, Top Shop, Madewell, GAP, Gucci, Chloe and Cartier.

RETAIL PROPERTIES – CONTINUED

Occupancy and average annual net rent per square foot:

As of December 31, 2010, the aggregate occupancy rate for the entire Retail Properties segment of 25.6 million square feet was 92.3%. Details of our ownership interest in the strip shopping centers, regional malls and Manhattan Street retail for the past five years are provided below.


Strip Shopping Centers:

						Average Annual
		Rentable	Occupancy			Net Rent per
	As of December 31,	Square Feet	Rate			Square Foot
	2010	16,866,000		92.1	%	$	15.68
	2009	16,107,000		91.5	%		15.30
	2008	15,755,000		91.9	%		14.52
	2007	15,463,000		94.1	%		14.12
	2006	12,933,000		92.9	%		13.48


Regional Malls:

					Average Annual Net Rent
					Per Square Foot
							Mall and
		Rentable	Occupancy				Anchor
	As of December 31,	Square Feet	Rate		Mall Tenants		Tenants
	2010	5,480,000	92.2	%	$	39.73	$	21.47
	2009	5,439,000	91.1	%		39.56		20.67
	2008	5,232,000	93.0	%		37.59		20.38
	2007	5,528,000	96.1	%		34.94		19.11
	2006	5,640,000	93.4	%		32.64		18.12

For the years ending December 31, 2010 and 2009, mall sales per square foot, including partially owned malls, were $461.00 and $466.00, respectively.


Manhattan Street Retail:

						Average Annual
		Rentable	Occupancy			Net Rent per
	As of December 31,	Square Feet	Rate			per Square Foot
	2010	1,107,000		95.3	%	$	99.95
	2009	1,007,000		95.3	%		96.37
	2008	874,000		90.4	%		97.18
	2007	943,000		86.8	%		89.86
	2006	691,000		83.6	%		83.53

RETAIL PROPERTIES – CONTINUED


2010 Retail Properties rental revenue by type of retailer


	Industry	Percentage
	Discount Stores	14	%
	Women's Apparel	11	%
	Family Apparel	10	%
	Supermarkets	9	%
	Home Improvement	6	%
	Restaurants	6	%
	Department Stores	5	%
	Home Entertainment and Electronics	5	%
	Personal Services	4	%
	Banking and Other Business Services	3	%
	Home Furnishings	3	%
	Jewelry	2	%
	Membership Warehouse Clubs	2	%
	Other	20	%
		100	%

Retail Properties lease terms generally range from five years or less in some instances for smaller tenants to as long as 25 years for major tenants. Leases generally provide for reimbursements of real estate taxes, insurance and common area maintenance charges (including roof and structure in strip shopping centers, unless it is the tenant’s direct responsibility), and percentage rents based on tenant sales volume. Percentage rents accounted for less than 1% of the Retail Properties total revenues during 2010.


Tenants accounting for 2% or more of 2010 Retail Properties total revenues:

				Percentage of		Percentage of
	Square Feet	2010		Retail Properties		Total Company
Tenant	Leased	Revenues		Revenues		Revenues
The Home Depot, Inc	1,135,000	$	20,037,000	3.3	%	0.7	%
Wal-Mart/Sam's Club	1,754,000		19,640,000	3.2	%	0.7	%
Forever 21	149,000		15,712,000	2.6	%	0.6	%
Best Buy Co. Inc.	664,000		15,538,000	2.6	%	0.6	%
J.C. Penney	787,000		14,885,000	2.4	%	0.5	%
Stop & Shop Companies, Inc. (Stop & Shop)	729,000		14,853,000	2.4	%	0.5	%

RETAIL PROPERTIES – CONTINUED


Lease expirations as of December 31, 2010, assuming none of the tenants exercise renewal options:

			Percentage of		Annual Net Rent
	Number of	Square Feet of	Retail Properties		of Expiring Leases
Year	Expiring Leases	Expiring Leases	Square Feet		Total		Per Square Foot
Strip Shopping Centers:
Month to month	24	81,000	0.4	%	$	1,404,000	$	17.37
2011	58	690,000	3.2	%		6,608,000		9.58
2012	65	1,148,000	5.4	%		14,601,000		12.72
2013	108	1,899,000	8.9	%		24,600,000		12.96
2014	102	1,445,000	6.8	%		20,248,000		14.01
2015	68	699,000	3.3	%		14,801,000		21.17
2016	52	807,000	3.8	%		11,688,000		14.48
2017	36	340,000	1.6	%		4,937,000		14.53
2018	54	1,008,000	4.7	%		17,316,000		17.18
2019	43	911,000	4.3	%		16,828,000		18.46
2020	35	849,000	4.0	%		11,108,000		13.08

Regional Malls:
Month to month	65	155,000	0.7	%	$	4,141,000	$	26.80
2011	62	206,000	1.0	%		6,963,000		33.96
2012	47	225,000	1.1	%		5,560,000		24.71
2013	55	270,000	1.3	%		7,530,000		27.86
2014	42	335,000	1.6	%		6,391,000		19.05
2015	45	234,000	1.1	%		7,395,000		31.60
2016	36	394,000	1.8	%		4,801,000		12.19
2017	34	439,000	2.1	%		6,372,000		14.53
2018	40	91,000	0.4	%		4,723,000		52.03
2019	37	164,000	0.8	%		5,769,000		35.22
2020	32	140,000	0.7	%		5,044,000		36.13

Manhattan Street Retail:
Month to month	4	4,000	-	%	$	184,000	$	41.15
2011	12	101,000	0.5	%		6,679,000		66.48
2012	8	36,000	0.2	%		2,074,000		57.18
2013	7	32,000	0.1	%		4,601,000		145.42
2014	7	28,000	0.1	%		4,034,000		142.99
2015	6	23,000	0.1	%		2,519,000		110.76
2016	7	19,000	0.1	%		3,513,000		185.72
2017	4	10,000	-	%		1,447,000		152.21
2018	15	123,000	0.6	%		19,822,000		160.62
2019	11	62,000	0.3	%		9,998,000		161.75
2020	7	67,000	0.3	%		5,315,000		79.61

RETAIL PROPERTIES – CONTINUED


2010 Retail Properties Leasing Activity:

					Average Initial
					Rent Per
		Location		Square Feet	Square Foot (1)
		Strip Shopping Centers:
			Marlton, NJ	104,000	$	9.11
			Bordentown, NJ	57,000		6.50
			Bergen Town Center - East, Paramus, NJ	54,000		42.60
			Amherst, NY	50,000		12.19
			Lansing, IL	47,000		10.00
			Bellingham, WA	46,000		4.73
			Broomall, PA	41,000		14.12
			Chicago, IL	41,000		12.03
			Huntington, NY	37,000		19.73
			East Brunswick (339-341 Route 18 South), NJ	33,000		20.00
			3040 M Street, Washington, DC	32,000		29.13
			Newington, CT	27,000		20.29
			Tampa (Hyde Park Village), FL	25,000		25.57
			Redding, CA	22,000		17.50
			Commack, NY	19,000		18.47
			Bronx (1750-1780 Gun Hill Road), NY	19,000		20.00
			Glen Burnie, MD	18,000		13.25
			Poughkeepsie, NY	17,000		16.95
			Queens, NY	15,000		25.00
			Bricktown, NJ	14,000		20.70
			Staten Island, NY	10,000		24.11
			Other	142,000		36.95
				870,000		19.85

		Regional Malls:
			Bergen Town Center - West, Paramus, NJ	126,000		34.85
			Green Acres Mall, Valley Stream, NY	59,000		34.73
			Springfield Mall, Springfield, VA	35,000		17.82
			Monmouth Mall, Eatontown, NJ	28,000		25.92
			Broadway Mall, Hicksville, NY	28,000		37.20
			Las Catalinas Mall, Puerto Rico	22,000		57.65
			Montehiedra, Puerto Rico	18,000		35.34
				316,000		33.98

		Manhattan Street Retail:
			692 Broadway, New York, NY	15,000		43.33
			Other	8,000		95.86
				23,000		62.04

				1,209,000		24.36

	____________________________
	(1)	Most leases include periodic step-ups in rent, which are not reflected in the initial rent per square foot leased.

MERCHANDISE MART PROPERTIES

As of December 31, 2010, we own 6 Merchandise Mart Properties containing an aggregate of 6.9 million square feet. The Merchandise Mart Properties segment also contains 6 garages totaling 908,000 square feet (2,965 spaces). The garage space is excluded from the statistics provided in this section.


Square feet by location and use as of December 31, 2010:


(Amounts in thousands)					Showroom
							Temporary
			Total	Office	Total	Permanent	Trade Show	Retail
	Chicago, Illinois:
		Merchandise Mart	3,492	1,033	2,392	1,810	582	67
		350 West Mart Center	1,242	1,159	83	83	-	-
		Other	10	-	-	-	-	10
		Total Chicago, Illinois	4,744	2,192	2,475	1,893	582	77
	Los Angeles, California:
		L.A. Mart	784	170	614	560	54	-
	Boston, Massachusetts:
		Boston Design Center	553	126	423	423	-	4
	New York, New York:
		7 West 34th Street	419	10	409	362	47	-
	Washington, DC:
		Washington Design Center	393	110	283	283	-	-
	Total Merchandise Mart Properties		6,893	2,608	4,204	3,521	683	81

	Occupancy rate		92.5%	91.5%	93.2%			91.0%

In March 2010, we ceased making debt service payments on the mortgage loan secured by the High Point Complex in North Carolina as a result of insufficient cash flow and the loan went into default. In November 2010, the property was placed in receivership. While the receivership process is inherently lengthy, we anticipate that the property will be sold in the first half of 2011, at which time the assets and liabilities will be removed from our consolidated balance sheet and we will recognize a net gain of approximately $80,000,000. Accordingly, we have reclassified the results of operations of the property to “(loss) income from discontinued operations,” and the related assets and liabilities to “assets related to discontinued operations” and “liabilities related to discontinued operations” for all periods presented in the accompanying consolidated financial statements.

MERCHANDISE MART PROPERTIES – CONTINUED


Office Space


Occupancy and average annual escalated rent per square foot:

						Average Annual
		Rentable				Escalated Rent
	As of December 31,	Square Feet	Occupancy Rate			Per Square Foot
	2010	2,608,000		91.5	%	$	25.31
	2009	2,432,000		88.8	%		23.86
	2008	2,393,000		96.4	%		25.18
	2007	2,724,000		97.1	%		26.86
	2006	2,702,000		97.4	%		25.64



2010 Merchandise Mart Properties office rental revenues by tenants’ industry:

	Industry	Percentage
	Advertising and Marketing	17	%
	Education	13	%
	Telecommunications	12	%
	Government	11	%
	Financial Services	8	%
	Banking	7	%
	Business Services	6	%
	Publications	6	%
	Insurance	5	%
	Information Research	5	%
	Other	10	%
		100	%

Office lease terms generally range from three to seven years for smaller tenants to as long as 15 years for major tenants. Leases typically provide for periodic step-ups in rent over the term of the lease and pass through to tenants their share of increases in real estate taxes and operating expenses over a base year. Electricity is provided to tenants on a sub-metered basis or included in rent and adjusted for subsequent utility rate increases. Leases also typically provide for tenant improvement allowances for all or a portion of the tenant’s initial construction of its premises.



Office tenants accounting for 2% or more of Merchandise Mart Properties’ 2010 total revenues

					Percentage of		Percentage
					Merchandise		of Total
		Square Feet	2010		Mart Properties		Company
	Tenant	Leased	Revenues		Revenues		Revenues
	Ogilvy Group (WPP)	270,000	$	7,537,000	3.1	%	0.3	%
	Ameritech (AT&T)	171,000		4,924,000	2.0	%	0.2	%

MERCHANDISE MART PROPERTIES– CONTINUED


2010 leasing activity – Merchandise Mart Properties office space:

			Average Initial
			Rent Per
		Square Feet	Square Foot (1)
	350 West Mart Center	193,000	$	27.64
	L.A. Mart	142,000		31.98
	Merchandise Mart	29,000		23.87
	Total	364,000		29.04
	_________________________
	(1) Most leases include periodic step-ups in rent, which are not reflected in the initial rent per square foot leased.




Lease expirations for Merchandise Mart Properties office space as of December 31, 2010, assuming none of the tenants exercise renewal options:


				Percentage of
				Merchandise Mart		Annual Escalated
		Number of	Square Feet of	Properties Office		Rent of Expiring Leases
	Year	Expiring Leases	Expiring Leases	Square Feet		Total		Per Square Foot
	2011	18	69,000	3.0	%	$	1,961,000	$	28.35
	2012	10	107,000	4.7	%		3,164,000		29.58
	2013	18	80,000	3.5	%		3,163,000		39.51
	2014	5	106,000	4.6	%		3,132,000		29.51
	2015	12	189,000	8.3	%		5,735,000		30.33
	2016	5	138,000	6.0	%		3,678,000		26.70
	2017	4	76,000	3.3	%		1,594,000		21.05
	2018	10	287,000	12.6	%		8,517,000		29.64
	2019	4	8,000	0.4	%		334,000		40.73
	2020	6	310,000	13.5	%		9,106,000		29.41

MERCHANDISE MART PROPERTIES – CONTINUED

Showroom Space

The showrooms provide manufacturers and wholesalers with permanent and temporary space in which to display products for buyers, specifiers and end users. The showrooms are also used for hosting trade shows for the contract furniture, casual furniture, gift, carpet, crafts, apparel and design industries. Merchandise Mart Properties own and operate five of the leading furniture and gift trade shows, including the contract furniture industry’s largest trade show, NeoCon, which attracts over 50,000 attendees each June and is hosted at the Merchandise Mart building in Chicago.


Occupancy and average escalated rent per square foot:


						Average Annual
		Rentable				Escalated Rent
	As of December 31,	Square Feet	Occupancy Rate			Per Square Foot
	2010	4,204,000		93.2	%	$	31.43
	2009	4,351,000		89.4	%		31.56
	2008	4,377,000		93.3	%		30.84
	2007	4,385,000		89.3	%		30.43
	2006	4,388,000		91.5	%		29.25


2010 Merchandise Mart Properties showroom rental revenues by tenants’ industry:


	Industry	Percentage
	Residential Design	34	%
	Contract Furnishing	22	%
	Gift	22	%
	Casual Furniture	8	%
	Apparel	6	%
	Building Products	5	%
	Art	3	%
		100	%


2010 Leasing Activity – Merchandise Mart Properties showroom space:


				Average Initial
				Rent Per
			Square Feet	Square Foot (1)
		Merchandise Mart	297,000	$	38.83
		L.A. Mart	105,000		21.95
		7 West 34th Street	89,000		41.09
		Boston Design Center	81,000		39.07
		Washington Design Center	24,000		38.20
		350 West Mart Center	14,000		29.18
		Total	610,000		36.03


	(1) Most leases include periodic step-ups in rent which are not reflected in the initial rent per square foot leased.

MERCHANDISE MART PROPERTIES – CONTINUED


Lease expirations for the Merchandise Mart Properties showroom space as of December 31, 2010, assuming none of the tenants exercise renewal options:

				Percentage of
				Merchandise Mart		Annual Escalated
		Number of	Square Feet of	Properties’ Showroom		Rent of Expiring Leases
	Year	Expiring Leases	Expiring Leases	Square Feet		Total		Per Square Foot
	2011	125	390,000	9.2	%	$	12,655,000	$	32.45
	2012	116	300,000	7.1	%		10,635,000		35.47
	2013	154	454,000	10.7	%		16,163,000		35.58
	2014	111	381,000	9.0	%		14,249,000		37.43
	2015	95	288,000	6.8	%		10,719,000		37.20
	2016	45	198,000	4.7	%		6,751,000		34.12
	2017	48	356,000	8.4	%		12,521,000		35.19
	2018	36	260,000	6.1	%		9,082,000		34.97
	2019	21	109,000	2.6	%		3,994,000		36.62
	2020	26	120,000	2.8	%		4,589,000		38.19

Retail Space

The Merchandise Mart Properties segment also contains approximately 91,000 square feet of retail space, of which we own 81,000 square feet that was 91.0% occupied at December 31, 2010.

TOYS “R” US, INC. (“TOYS”)

As of December 31, 2010 we own a 32.7% interest in Toys, a worldwide specialty retailer of toys and baby products, which has a significant real estate component. Toys had $5.9 billion of outstanding debt at October 30, 2010, of which our pro rata share was $1.9 billion, none of which is recourse to us.

The following table sets forth the total number of stores operated by Toys as of December 31, 2010:

			Building
			Owned on
			Leased
	Total	Owned	Ground	Leased
Domestic	857	297	229	331
International	522	79	26	417
Subtotal	1,379	376	255	748
Franchised stores	210
Total	1,589

OTHER INVESTMENTS

555 California Street Complex

As of December 31, 2010, we own a 70% controlling interest in a three-building complex containing 1.8 million square feet, known as The Bank of America building, located at California and Montgomery Streets in San Francisco’s financial district (“555 California Street”), which we acquired in 2007.


Occupancy and average annual rent per square foot as of December 31, 2010:


						Average Annual
	As of	Rentable				Escalated Rent
	December 31,	Square Feet	Occupancy Rate			Per Square Foot
	2010	1,795,000		93.0	%	$	55.97
	2009	1,794,000		94.8	%		57.25
	2008	1,789,000		94.0	%		57.98
	2007	1,789,000		95.0	%		59.84


2010 rental revenue by tenants’ industry:


	Industry	Percentage
	Banking	42	%
	Finance	41	%
	Legal Services	13	%
	Retail	1	%
	Others	3	%
		100	%

Lease terms generally range from five to seven years for smaller tenants to as long as 15 years for major tenants, and may provide for extension options at market rates. Leases typically provide for periodic step-ups in rent over the term of the lease and pass through to tenants their share of increases in real estate taxes and operating expenses over a base year. Leases also typically provide for tenant improvement allowances for all or a portion of the tenant’s initial construction costs of its premises.


Tenants accounting for 2% or more of 555 California Street's revenues:


					Percentage of
					555 California
					Street		Percentage of
		Square	2010		Complex’s		Total Company
	Tenant	Feet Leased	Revenues		Revenues		Revenues
	Bank of America	659,000	$	36,673,000	34.7	%	1.3	%
	UBS Financial Services	107,000		7,007,000	6.6	%	0.3	%
	Morgan Stanley & Company, Inc.	89,000		6,289,000	5.9	%	0.2	%
	Kirkland & Ellis LLP	125,000		6,217,000	5.9	%	0.2	%
	Goldman, Sachs & Co.	82,000		4,229,000	4.0	%	0.2	%
	McKinsey & Company Inc.	54,000		4,171,000	3.9	%	0.2	%
	Dodge & Cox	62,000		3,935,000	3.7	%	0.1	%
	Jones Day	81,000		3,467,000	3.3	%	0.1	%

2010 leasing activity:

During 2010 we leased 202,000 square feet at a weighted average rent initial rent of $54.81 per square foot.

OTHER INVESTMENTS – CONTINUED

Alexander’s, Inc. (“Alexander’s”)

As of December 31, 2010, we own 32.4% of the outstanding common stock of Alexander’s, which has seven properties in the greater New York metropolitan area. Alexander’s had $1.2 billion of outstanding debt at December 31, 2010, of which our pro rata share was $404 million, none of which is recourse to us.

Lexington Realty Trust (“Lexington”)

As of December 31, 2010, we own 12.8% of the outstanding common shares of Lexington, which has interests in 229 properties, encompassing approximately 43.0 million square feet across 42 states, generally net-leased to major corporations. Lexington had approximately $1.9 billion of outstanding debt at September 30, 2010, of which our pro rata share was $265 million, none of which is recourse to us.

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

OTHER INVESTMENTS – CONTINUED

Hotel Pennsylvania

We own the Hotel Pennsylvania which is located in New York City on Seventh Avenue opposite Madison Square Garden and consists of a hotel portion containing 1,000,000 square feet of hotel space with 1,700 rooms and a commercial portion containing 400,000 square feet of retail and office space.


				Year Ended December 31,
				2010			2009			2008			2007			2006
Rental information:
	Hotel:
		Average occupancy rate			83.2	%		71.5	%		84.1	%		84.4	%		82.1	%
		Average daily rate		$	143.28		$	133.20		$	171.32		$	154.78		$	133.33
		Revenue per available room		$	119.23		$	95.18		$	144.01		$	130.70		$	109.53
	Commercial:
		Office space:
			Average occupancy rate		33.4	%		30.4	%		30.4	%		57.0	%		41.2	%
			Annual rent per square foot	$	7.52		$	20.54		$	18.78		$	22.23		$	16.42
		Retail space:
			Average occupancy rate		62.3	%		70.7	%		69.5	%		73.3	%		79.9	%
			Annual rent per square foot	$	31.42		$	35.05		$	41.75		$	33.63		$	27.54

Warehouse/Industrial Properties

As of December 31, 2010, we own 6 warehouse/industrial properties in New Jersey containing approximately 1.2 million square feet. Average lease terms range from three to five years. The following table sets forth the occupancy rate and average annual rent per square foot at the end of each of the past five years.


				Average Annual Rent
December 31,	Occupancy Rate			Per Square Foot
2010		48.6	%	$	5.61
2009		69.4	%		5.40
2008		100.0	%		4.70
2007		100.0	%		4.70
2006		96.9	%		4.17

Item 3. Legal Proceedings

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

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

In July 2005, we acquired H Street Building Corporation (“H Street”) which has a subsidiary that owns, among other things, a 50% tenancy in common interest in land located in Arlington County, Virginia, known as "Pentagon Row," leased to two tenants, Street Retail, Inc. and Post Apartment Homes, L.P. In April 2007, H Street acquired the remaining 50% interest in that fee. On September 25, 2008, both tenants filed suit against us and the former owners claiming the right of first offer to purchase the fee interest, damages in excess of $75,000,000 and punitive damages. In April 2010, the Trial Court entered judgment in favor of the tenants, that we sell the land to the tenants for a net sales price of $14,992,000, representing the Trial Court’s allocation of our purchase price for H Street. The request for damages and punitive damages was denied. As a result of the Trial Court’s decision, we recorded a $10,056,000 loss accrual in the first quarter of 2010. We filed a motion to appeal the Trial Court’s decision, which the appeals court refused to hear. Accordingly, in the fourth quarter of 2010, we sold the property to the tenants for $14,992,000 in cash (our reduced carrying amount).

PART II

Item 5. Market for Registrant’s Common Equity, Related STOCKholder Matters and issuer purchases of equity securities

There is no established trading market for our Class A units. At February 1, 2011, there were 1,347 Class A unitholders of record. On January 12, 2011, we increased our quarterly Class A unit distributions to $0.69 per Class A unit (an indicated annual rate of $2.76 per Class A unit).

Recent Sales of Unregistered Securities

During the fourth quarter of 2010, we issued 19,074 Class A units to Vornado in connection with Vornado’s issuance of 19,074 common shares upon the redemption of Class A units held by third parties. These Class A units were issued in reliance on an exemption from registration under Section 4 (2) of the Securities Act of 1933, as amended.

Recent Purchases of Equity Securities

We did not repurchase any of our equity securities during the fourth quarter of 2010 .

Performance Graph

The following graph is a comparison of the five-year cumulative return of Vornado’s common shares, the Standard & Poor’s 500 Index (the “S&P 500 Index”) and the National Association of Real Estate Investment Trusts’ (“NAREIT”) All Equity Index (excluding health care real estate investment trusts), a peer group index. The graph assumes that $100 was invested on December 31, 2005 in Vornado’s common shares, the S&P 500 Index and the NAREIT All Equity Index and that all dividends were reinvested without the payment of any commissions. There can be no assurance that the performance of Vornado’s shares will continue in line with the same or similar trends depicted in the graph below.

	2005	2006	2007	2008	2009	2010
Vornado Realty Trust	100	151	113	81	100	124
S&P 500 Index	100	116	122	77	97	112
The NAREIT All Equity Index	100	135	114	71	91	116

ITEM 6. SELECTED FINANCIAL DATA

			Year Ended December 31,
(in thousands, except per unit amounts)			2010			2009			2008		2007		2006
Operating Data:
Revenues:
	Property rentals		$	2,271,357		$	2,182,194		$	2,160,073	$	1,923,622	$	1,494,314
	Tenant expense reimbursements			360,448			357,186			353,602		319,847		258,641
	Fee and other income			147,922			157,312			126,816		109,663		103,312
Total revenues				2,779,727	��		2,696,692			2,640,491		2,353,132		1,856,267
Expenses:
	Operating			1,099,478			1,067,229			1,048,537		932,865		722,405
	Depreciation and amortization			530,704			531,637			529,134		433,030		311,230
	General and administrative			214,225			231,010			193,969		188,777		179,751
	Impairment losses and acquisition costs			129,458			75,963			81,447		10,375		-
Total expenses				1,973,865			1,905,839			1,853,087		1,565,047		1,213,386
Operating income				805,862			790,853			787,404		788,085		642,881
Income (loss) applicable to Toys "R" Us				71,624			92,300			2,380		(14,337)		(47,520)
Income (loss) from partially owned entities				22,438			(19,910)			(159,207)		82,480		45,825
(Loss) from Real Estate Fund				(303)			-			-		-		-
Interest and other investment income (loss), net				235,315			(116,350)			(2,747)		226,242		255,242
Interest and debt expense				(560,270)			(617,994)			(619,531)		(583,281)		(379,753)
Net gain (loss) on early extinguishment of debt				94,789			(25,915)			9,820		-		-
Net gain on dispositions of wholly owned and partially
	owned assets			81,432			5,641			7,757		39,493		76,073
Income before income taxes				750,887			108,625			25,876		538,682		592,748
Income tax (expense) benefit				(22,476)			(20,642)			204,644		(9,057)		(345)
Income from continuing operations				728,411			87,983			230,520		529,625		592,403
(Loss) income from discontinued operations				(20,380)			40,467			180,925		78,208		40,953
Net income				708,031			128,450			411,445		607,833		633,356
Net (income) loss attributable to noncontrolling interests
	in consolidated subsidiaries			(4,920)			2,839			3,263		3,494		1,363
Net income attributable to Vornado Realty L.P.				703,111			131,289			414,708		611,327		634,719
Preferred unit distributions				(66,729)			(76,747)			(79,453)		(76,894)		(81,941)
Discount on preferred unit redemptions				4,382			-			-		-		-
Net income attributable to Class A unitholders			$	640,764		$	54,542		$	335,255	$	534,433	$	552,778

	Income from continuing operations - basic			3.37			0.05			0.89		2.78		3.30
	Income from continuing operations - diluted			3.33			0.05			0.86		2.66		3.13
	Net income per Class A unit - basic			3.27			0.27			1.97		3.18		3.51
	Net income per Class A unit - diluted			3.23			0.27			1.91		3.05		3.33
	Distributions per Class A unit			2.60			3.20	⁽¹⁾		3.65		3.45		3.79

Balance Sheet Data:
	Total assets			20,517,471			20,185,472			21,418,048		22,478,717		17,954,384
	Real estate, at cost			17,674,922			17,574,245			17,432,906		16,622,740		11,216,340
	Accumulated depreciation			(2,763,997)			(2,441,344)			(2,117,643)		(1,765,443)		(1,409,317)
	Debt			10,893,639			10,685,703			12,180,835		11,461,067		8,164,062
	Total equity			6,830,405			6,649,406			6,214,652		6,011,240		5,006,596


(1)		Paid in a combination of cash and Class A units.

ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


				Page
	Overview			65
	Overview - Leasing activity			71
	Critical Accounting Policies			73
	Results of Operations:
		Years Ended December 31, 2010 and 2009		80
		Years Ended December 31, 2009 and 2008		86
	Supplemental Information:
		Net Income and EBITDA by Segment for the Three Months Ended
			December 31, 2010 and 2009	92
		Changes in EBITDA by segment for the Three Months Ended
			December 31, 2010 as compared to December 31, 2009	95
		Changes in EBITDA by segment for the Three Months Ended
			December 31, 2010 as compared to September 30, 2010	96
	Related Party Transactions			97
	Liquidity and Capital Resources			98
		Certain Future Cash Requirements		99
		Financing Activities and Contractual Obligations		101
		Cash Flows for the Year Ended December 31, 2010		104
		Cash Flows for the Year Ended December 31, 2009		106
		Cash Flows for the Year Ended December 31, 2008		108

Overview

We own and operate office, retail and showroom properties (our “core” operations) with large concentrations of office and retail properties in the New York City metropolitan area and in the Washington, DC / Northern Virginia area. In addition, we have a 32.7% interest in Toys “R” Us, Inc. (“Toys”) which has a significant real estate component, a 32.4% interest in Alexander’s, Inc. (NYSE: ALX) (“Alexander’s”), which has seven properties in the greater New York metropolitan area, as well as interests in other real estate and related investments.

Our business objective is to maximize Vornado shareholder value, which we measure by the total return provided to Vornado’s shareholders. Below is a table comparing Vornado’s performance to the Morgan Stanley REIT Index (“RMS”) and the SNL REIT Index (“SNL”) for the following periods ended December 31, 2010:

		Total Return⁽¹⁾
		Vornado	RMS	SNL
	One-year	23.2%	28.5%	28.9%
	Three-year	5.3%	2.5%	5.4%
	Five-year	15.1%	13.5%	17.6%
	Ten-year	255.7%	174.9%	191.1%


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

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

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

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

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

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

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

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

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

Overview - continued

Year Ended December 31, 2010 Financial Results Summary

Net income attributable to Class A unitholders for the year ended December 31, 2010 was $640,764,000, or $3.23 per diluted Class A unit, compared to $54,542,000, or $0.27 per diluted Class A unit, for the year ended December 31, 2009. Net income for the years ended December 31, 2010 and 2009 include $63,032,000 and $46,634,000, respectively, for our share of net gains on sale of real estate. In addition, the years ended December 31, 2010 and 2009 include certain items that affect comparability which are listed in the table below. The aggregate of net gains on sale of real estate and the items in the table below, increased net income attributable to Class A unitholders for the year ended December 31, 2010 by $189,199,000, or $0.96 per diluted Class A unit, and decreased net income attributable to Class A unitholders for the year ended December 31, 2009 by $256,711,000, or $1.37 per diluted Class A unit.

			For the Year Ended
			December 31,
(Amounts in thousands)			2010		2009
Items that affect comparability (income) expense:
	(Income) from the mark-to-market of derivative positions in marketable equity securities		$	(130,153)	$	-
	Net (gain) loss on early extinguishment of debt			(92,150)		25,915
	Non-cash asset write-downs:
		Real estate - development related		94,513		80,834
		Other real estate assets		33,000		6,989
		Partially owned entities		11,481		36,941
		Marketable equity securities		-		3,361
	Non-cash mezzanine loans receivable loss accrual (reversal)			(53,100)		190,738
	Litigation loss accrual and acquisitions costs			17,001		-
	Default interest and fees accrued on three loans in special servicing			15,079		-
	Net (gain) resulting from Lexington's stock issuance			(13,710)		-
	Discount on redemption of preferred units and shares			(11,354)		-
	Real Estate Fund organization costs			6,482		-
	Our share of partially owned entities:
		Toys - purchase accounting adjustments and litigation settlement income		-		(24,146)
		Alexander's - income tax benefit and stock appreciation rights		(641)		(24,773)
	Income from terminated sale of land			-		(27,089)
	Write-off of unamortized costs from the voluntary surrender of equity awards			-		32,588
	Income attributable to discontinued operations			(123)		(6,076)
	Other, net			(2,492)		8,063
Items that affect comparability (income) expense			$	(126,167)	$	303,345

The percentage increase (decrease) in GAAP basis and cash basis same store Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) of our operating segments for the year ended December 31, 2010 over the year ended December 31, 2009 is summarized below.

			New YorkOffice	Washington, DC Office		MerchandiseMart
Same Store EBITDA:			New YorkOffice	Washington, DC Office	Retail	MerchandiseMart
	December 31, 2010 vs. December 31, 2009
		GAAP basis	1.7%	5.2%	8.6%	(3.3%)
		Cash Basis	2.3%	10.0%	9.6%	(2.3%)

Overview - continued

Quarter Ended December 31, 2010 Financial Results Summary

Net income attributable to Class A unitholders for the quarter ended December 31, 2010 was $260,662,000, or $1.31 per diluted Class A unit, compared to a net loss of $163,153,000, or $0.85 per diluted Class A unit, for the quarter ended December 31, 2009. Net income for the quarter ended December 31, 2010 and net loss for the quarter ended December 31, 2009 include $62,718,000 and $2,632,000, respectively, of net gains on sale of real estate. In addition, the quarters ended December 31, 2010 and 2009 include certain other items that affect comparability which are listed in the table below. The aggregate of net gains on sale of real estate and the items in the table below, increased net income attributable to Class A unitholders for the quarter ended December 31, 2010 by $181,545,000, or $0.89 per diluted Class A unit and increased net loss attributable to Class A unitholders for the quarter ended December 31, 2009 by $202,313,000, or $1.05 per diluted Class A unit.

			For the Three Months Ended
			December 31,
(Amounts in thousands)			2010		2009
Items that affect comparability (income) expense:
	(Income) from the mark-to-market of derivative positions in marketable equity securities		$	(97,904)	$	-
	Net (gain) loss on early extinguishment of debt			(93,946)		52,911
	Non-cash asset write-downs:
		Real estate - development related		94,513		80,834
		Other real estate assets		28,000		6,989
		Partially owned entities		11,481		17,820
		Marketable equity securities		-		3,361
	Non-cash mezzanine loans receivable loss accrual (reversal)			(60,000)		68,000
	Net (gain) resulting from Lexington's stock issuance			(7,712)		-
	Acquisition costs			4,094		-
	Income from terminated sale of land			-		(27,089)
	Income attributable to discontinued operations			(527)		(85)
	Other, net			3,174		2,204
Items that affect comparability (income) expense			$	(118,827)	$	204,945

The percentage increase in GAAP basis and cash basis same store EBITDA of our operating segments for the quarter ended December 31, 2010 over the quarter ended December 31, 2009 and the trailing quarter ended September 30, 2010 are summarized below.

			New York Office	Washington, DC Office		Merchandise Mart
Same Store EBITDA:			New York Office	Washington, DC Office	Retail	Merchandise Mart
	December 31, 2010 vs. December 31, 2009
		GAAP basis	0.1%	5.4%	5.8%	(4.2%)
		Cash Basis	(0.9%)	10.0%	5.6%	(6.1%)
	December 31, 2010 vs. September 30, 2010
		GAAP basis	(0.8%)	(0.9%)	2.3%	11.1%	⁽¹⁾
		Cash Basis	(3.1%)	(0.9%)	4.9%	7.9%	⁽¹⁾


(1)	Primarily from the timing of trade shows.

Calculations of same store EBITDA and reconciliations of our net income to EBITDA 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

2010 Acquisitions and Investments

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

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

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

Overview – continued

2010 Acquisitions and Investments – continued

Investment in LNR Property Corporation (“LNR”)

510 Fifth Avenue

On October 8, 2010, we acquired 510 Fifth Avenue, a 59,000 square foot retail property located at 43^rd Street and Fifth Avenue in New York, for $57,000,000, comprised of $24,700,000 in cash and $32,300,000 of existing debt. We consolidate the accounts of this property into our consolidated financial statements from the date of the acquisition.

San Jose, California

On October 15, 2010, we acquired the 55% interest that we did not already own of a 646,000 square foot retail property located in San Jose, California, for $97,000,000, consisting of $27,000,000 in cash and $70,000,000 of existing debt. We consolidate the accounts of the property into our consolidated financial statements from the date of this acquisition.

Atlantic City, New Jersey

Overview – continued

2010 Dispositions

2010 Financing Activities

Overview - continued

Leasing Activity

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

(Square feet in thousands)					New York		Washington, DC				Merchandise Mart
As of December 31, 2010:					Office		Office		Retail ⁽³⁾		Office		Showroom
	Square feet (in service)					16,194		17,823		23,453		2,608		4,204
	Number of properties					28		82		161		6		6
	Occupancy rate					95.6%		94.3%⁽²⁾		92.3%		91.5%		93.2%

Leasing Activity:
Quarter Ended December 31, 2010:
	Total square feet leased					243		408		187		35		117
	Initial rent⁽¹⁾				$	55.70	$	38.77	$	25.86	$	27.92	$	37.32
	Weighted average lease term (years)					6.7		4.1		6.9		11.8		4.6
	Relet space (included above):
		Square feet				193		352		44		22		117
		Initial rent - cash basis⁽¹⁾			$	50.15	$	38.83	$	30.44	$	27.85	$	37.32
		Prior escalated rent - cash basis			$	50.81	$	39.52	$	26.99	$	34.82	$	38.62
		Percentage (decrease) increase:
			Cash basis			(1.3%)		(1.7%)		12.8%		(20.0%)		(3.4%)
			GAAP basis			4.3%		5.7%		19.7%		8.4%		3.2%
	Tenant improvements and leasing
		commissions:
			Per square foot		$	41.49	$	16.74	$	10.17	$	70.17	$	3.97
			Per square foot per annum:		$	6.19	$	4.08	$	1.47	$	5.95	$	0.86
				Percentage of initial rent		11.1%		10.5%		5.7%		21.3%		2.6%

Year Ended December 31, 2010:
	Total square feet leased					1,277		1,697		1,209		364		610
	Initial rent⁽¹⁾				$	49.81	$	38.41	$	24.36	$	29.04	$	36.03
	Weighted average lease term (years)					7.5		4.4		8.5		13.4		4.1
	Relet space (included above):
		Square feet				1,061		1,385		392		87		610
		Initial rent - cash basis⁽¹⁾			$	49.65	$	38.51	$	18.09	$	26.49	$	36.03
		Prior escalated rent - cash basis			$	51.91	$	36.71	$	16.76	$	27.32	$	36.80
		Percentage (decrease) increase:
			Cash basis			(4.4%)		4.9%		7.9%		(3.0%)		(2.1%)
			GAAP basis			(1.9%)		10.0%		13.4%		14.9%		4.0%
	Tenant improvements and leasing
		commissions:
			Per square foot		$	50.29	$	12.85	$	11.98	$	88.22	$	4.11
			Per square foot per annum:		$	6.70	$	2.92	$	1.41	$	6.58	$	1.00
				Percentage of initial rent		13.5%		7.6%		5.8%		22.7%		3.9%


See notes on the following table

Overview - continued


(Square feet in thousands)					New York		Washington, DC				Merchandise Mart
As of December 31, 2009:					Office		Office		Retail ⁽³⁾		Office		Showroom
	Square feet (in service)					16,173		17,646		22,553		2,432		4,351
	Number of properties					28		82		162		6		6
	Occupancy rate					95.5%		93.3%⁽²⁾		91.6%		88.8%		89.4%

Leasing Activity:
Year Ended December 31, 2009:
	Total square feet leased					1,448		3,158		1,139		203		754
	Initial rent⁽¹⁾				$	52.25	$	40.26	$	23.28	$	34.76	$	37.04
	Weighted average lease term (years)					8.8		4.3		9.7		7.1		4.2
	Relet space (included above):
		Square feet				1,304		2,849		472		203		754
		Initial rent - cash basis⁽¹⁾			$	52.42	$	40.13	$	17.99	$	34.76	$	37.04
		Prior escalated rent - cash basis			$	52.16	$	34.56	$	16.67	$	33.75	$	37.29
		Percentage (decrease) increase:
			Cash basis			0.5%		16.1%		7.9%		3.0%		(0.7%)
			GAAP basis			4.7%		18.9%		16.4%		18.0%		8.2%
	Tenant improvements and leasing
		commissions:
			Per square foot		$	48.48	$	9.03	$	8.00	$	34.30	$	3.15
			Per square foot per annum:		$	5.51	$	2.10	$	0.82	$	4.83	$	0.75
				Percentage of initial rent		10.5%		5.2%		3.5%		13.9%		2.7%



(1)	Most leases include periodic step-ups in rent which are not reflected in the initial rent per square foot leased.

(2)	Excluding residential and other properties, occupancy rates for the office properties were as follows.
		December 31, 2010	94.0%
		December 31, 2009	94.7%

(3)	Mall sales per square foot, including partially owned malls, for the trailing twelve months ended December 31, 2010 and 2009 were $461 and
	$466, respectively.

Recently Issued Accounting Literature

In the fourth quarter of 2010, the Financial Accounting Standards Board (“FASB”) issued an update to the guidance contained in Accounting Standards Codification (“ASC”) 310, Receivables. The new guidance requires companies to provide more information about the credit quality of their financing receivables in the disclosures to financial statements including, but not limited to, significant purchases and sales of financing receivables, aging information and credit quality indicators. The adoption of this accounting guidance did not have a significant impact on our consolidated financial statements.

On January 21, 2010, the FASB issued an update to ASC 820, Fair Value Measurements and Disclosures, adding new requirements for disclosures about transfers into and out of Levels 1 and 2 fair value measurements and additional disclosures about the activity within Level 3 fair value measurements. The adoption of this guidance on January 1, 2010 did not have a material effect on our consolidated financial statements.

In June 2009, the FASB issued an update to ASC 810, Consolidation, which modifies the existing quantitative guidance used in determining the primary beneficiary of a variable interest entity (“VIE”) by requiring entities to qualitatively assess whether an enterprise is a primary beneficiary, based on whether the entity has (i) power over the significant activities of the VIE, and (ii) an obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. The adoption of this guidance on January 1, 2010 did not have a material effect on our consolidated financial statements.

Critical Accounting Policies

In preparing the consolidated financial statements we have made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Set forth below is a summary of the accounting policies that we believe are critical to the preparation of our consolidated financial statements. The summary should be read in conjunction with the more complete discussion of our accounting policies included in Note 2 to the consolidated financial statements in this Annual Report on Form 10-K.

Real Estate

Real estate is carried at cost, net of accumulated depreciation and amortization. As of December 31, 2010 and 2009, the carrying amounts of real estate, net of accumulated depreciation, were $14.9 billion and $15.1 billion, respectively. Maintenance and repairs are expensed as incurred. Depreciation requires an estimate by management of the useful life of each property and improvement as well as an allocation of the costs associated with a property to its various components. If we do not allocate these costs appropriately or incorrectly estimate the useful lives of our real estate, depreciation expense may be misstated. As real estate is undergoing development activities, all property operating expenses, including interest expense, are capitalized to the cost of real property to the extent we believe such costs are recoverable through the value of the property.

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles such as acquired above and below-market leases and acquired in-place leases and tenant relationships) and acquired liabilities and we allocate purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors, including historical operating results, known trends and market/economic conditions.

Our properties, including any related intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

Critical Accounting Policies – continued

Identified Intangibles

As of December 31, 2010 and 2009, the carrying amounts of identified intangible assets (including acquired above-market leases, tenant relationships and acquired in-place leases) were $348,745,000 and $439,549,000, respectively. The carrying amounts of identified intangible liabilities, a component of “deferred credit” on our consolidated balance sheets, were $528,905,000 and $606,390,000, respectively. Identified intangibles are recorded at their estimated fair value, separate and apart from goodwill. Identified intangibles that are determined to have finite lives are amortized over the period in which they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired. Intangible assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is measured based on the excess of the carrying amount of the identified intangible over its estimated fair value. If intangible assets are impaired or estimated useful lives change, the impact to our consolidated financial statements could be material.

Mezzanine Loans Receivable

As of December 31, 2010 and 2009, the carrying amounts of mezzanine loans receivable were $202,412,000 and $203,286,000, respectively, net of valuation allowances of $73,216,000 and $190,738,000, respectively. We invest in mezzanine loans of entities that have significant real estate assets. These investments, which are subordinate to the mortgage loans secured by the real property, are generally secured by pledges of the equity interests of the entities owning the underlying real estate. We record these investments at the stated principal amount net of any unamortized discount or premium. We accrete or amortize any discount or premium over the life of the related receivable utilizing the effective interest method or straight-line method, if the result is not materially different. We evaluate the collectability of both interest and principal of each of our loans whenever events or changes in circumstances indicate such amounts may not be recoverable. A loan is impaired when it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the estimated fair value of the loan or, as a practical expedient, to the value of the collateral if the loan is collateral dependent. If our estimates of the collectability of both interest and principal or the fair value of our loans change based on market conditions or otherwise, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements.

Partially Owned Entities

As of December 31, 2010 and 2009, the carrying amounts of investments in partially owned entities, including Alexander’s and Toys “R” Us, were $1.4 billion and $1.2 billion, respectively. In determining whether we have a controlling interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity in which we have the power over significant activities of the entity and the obligation to absorb losses or receive benefits that could potentially be significant to the entity. We account for investments on the equity method when the requirements for consolidation are not met and we have significant influence over the operations of the investee. Equity method investments are initially recorded at cost and subsequently adjusted for our share of net income or loss and cash contributions and distributions each period. Investments that do not qualify for consolidation or equity method accounting are accounted for on the cost method.

Investments in partially owned entities are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods and available information at the time the analyses are prepared. The ultimate realization of our investments in partially owned entities is dependent on a number of factors, including the performance of each investment and market conditions. If our estimates of the projected future cash flows, the nature of development activities for properties for which such activities are planned and the estimated fair value of the investment change based on market conditions or otherwise, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results.

Critical Accounting Policies – continued

Allowance For Doubtful Accounts

We periodically evaluate the collectability of amounts due from tenants and maintain an allowance for doubtful accounts ($62,979,000 and $46,708,000 as of December 31, 2010 and 2009) for estimated losses resulting from the inability of tenants to make required payments under their lease agreements. We also maintain an allowance for receivables arising from the straight-lining of rents ($7,323,000 and $4,672,000 as of December 31, 2010 and 2009, respectively). This receivable arises from earnings recognized in excess of amounts currently due under the lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates. These estimates may differ from actual results, which could be material to our consolidated financial statements.

Revenue Recognition

We have the following revenue sources and revenue recognition policies:

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

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

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

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

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

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

Before we recognize revenue, we assess, among other things, its collectibility. If our assessment of the collectibility of revenue changes, the impact on our consolidated financial statements could be material.

Net Income and EBITDA by Segment for the Years Ended December 31, 2010, 2009 and 2008.


(Amounts in thousands)			For the Year Ended December 31, 2010
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	2,129,284	$	775,142	$	566,041	$	398,489	$	219,882	$	-	$	169,730
Straight-line rent adjustments					75,871		34,212		5,849		29,079		2,756		-		3,975
Amortization of acquired below-
		market leases, net			66,202		36,081		2,326		22,213		(75)		-		5,657
Total rentals					2,271,357		845,435		574,216		449,781		222,563		-		179,362
Tenant expense reimbursements					360,448		137,624		51,963		145,905		13,998		-		10,958
Fee and other income:
	Tenant cleaning fees				58,053		88,664		-		-		-		-		(30,611)
	Management and leasing fees				20,117		6,192		15,934		1,029		156		-		(3,194)
	Lease termination fees				14,826		4,270		1,148		7,641		467		-		1,300
	Other				54,926		22,283		21,427		4,172		3,904		-		3,140
Total revenues					2,779,727		1,104,468		664,688		608,528		241,088		-		160,955
Operating expenses					1,099,478		470,177		213,935		224,340		125,863		-		65,163
Depreciation and amortization					530,704		176,931		142,720		110,416		46,155		-		54,482
General and administrative					214,225		18,621		25,464		29,610		26,953		-		113,577
Impairment losses and acquisition costs					129,458		-		-		72,500		20,000		-		36,958
Total expenses					1,973,865		665,729		382,119		436,866		218,971		-		270,180
Operating income (loss)					805,862		438,739		282,569		171,662		22,117		-		(109,225)
Income applicable to Toys					71,624		-		-		-		-		71,624		-
Income (loss) from partially owned
	entities				22,438		(6,354)		(564)		9,401		(179)		-		20,134
(Loss) from Real Estate Fund					(303)		-		-		-		-		-		(303)
Interest and other investment
	income, net				235,315		608		157		180		47		-		234,323
Interest and debt expense					(560,270)		(132,279)		(130,540)		(85,281)		(37,932)		-		(174,238)
Net gain (loss) on early extinguishment
	of debt				94,789		-		-		105,571		-		-		(10,782)
Net gain on disposition of wholly
	owned and partially owned assets				81,432		-		54,742		-		765		-		25,925
Income (loss) before income taxes					750,887		300,714		206,364		201,533		(15,182)		71,624		(14,166)
Income tax expense					(22,476)		(2,167)		(1,816)		(37)		(173)		-		(18,283)
Income (loss) from continuing
	operations				728,411		298,547		204,548		201,496		(15,355)		71,624		(32,449)
(Loss) from discontinued operations					(20,380)		-		(4,481)		(2,637)		(13,262)		-		-
Net income (loss)					708,031		298,547		200,067		198,859		(28,617)		71,624		(32,449)
Net (income) loss attributable to
	noncontrolling interests in
	consolidated subsidiaries				(4,920)		(9,559)		-		(778)		-		-		5,417
Net income (loss) attributable to
	Vornado Realty L.P.				703,111		288,988		200,067		198,081		(28,617)		71,624		(27,032)
Interest and debt expense⁽²⁾					828,082		126,209		136,174		92,653		61,379		177,272		234,395
Depreciation and amortization⁽²⁾					729,426		170,505		159,283		114,335		51,064		131,284		102,955
Income tax (benefit) expense⁽²⁾					(23,036)		2,167		2,027		37		232		(45,418)		17,919
EBITDA⁽¹⁾				$	2,237,583	$	587,869	$	497,551	$	405,106	$	84,058	$	334,762	$	328,237

____________________

See notes on page 79.

Net Income and EBITDA by Segment for the Years Ended December 31, 2010, 2009 and 2008 - continued


(Amounts in thousands)			For the Year Ended December 31, 2009
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	2,021,072	$	758,557	$	526,683	$	362,689	$	213,911	$	-	$	159,232
Straight-line rent adjustments					89,168		36,805		22,683		27,104		2,107		-		469
Amortization of acquired below-
		market leases, net			71,954		40,129		3,452		22,993		89		-		5,291
Total rentals					2,182,194		835,491		552,818		412,786		216,107		-		164,992
Tenant expense reimbursements					357,186		136,541		60,620		134,670		15,517		-		9,838
Fee and other income:
	Tenant cleaning fees				53,824		75,549		-		-		-		-		(21,725)
	Management and leasing fees				11,456		4,211		8,183		1,731		88		-		(2,757)
	Lease termination fees				4,888		1,840		2,224		464		221		-		139
	Other				87,144		18,868		47,745		2,619		9,458		-		8,454
Total revenues					2,696,692		1,072,500		671,590		552,270		241,391		-		158,941
Operating expenses					1,067,229		452,370		220,333		204,224		125,602		-		64,700
Depreciation and amortization					531,637		173,923		142,415		101,353		51,064		-		62,882
General and administrative					231,010		22,820		26,205		30,339		31,017		-		120,629
Impairment losses and acquisition costs					75,963		-		24,875		11,789		-		-		39,299
Total expenses					1,905,839		649,113		413,828		347,705		207,683		-		287,510
Operating income (loss)					790,853		423,387		257,762		204,565		33,708		-		(128,569)
Income applicable to Toys					92,300		-		-		-		-		92,300		-
(Loss) income from partially owned
	entities				(19,910)		5,817		4,850		4,728		151		-		(35,456)
Interest and other investment (loss)
	income, net				(116,350)		876		786		69		95		-		(118,176)
Interest and debt expense					(617,994)		(133,647)		(128,039)		(89,070)		(38,009)		-		(229,229)
Net (loss) gain on early extinguishment
	of debt				(25,915)		-		-		769		-		-		(26,684)
Net gain on disposition of wholly
	owned and partially owned assets				5,641		-		-		-		-		-		5,641
Income (loss) before income taxes					108,625		296,433		135,359		121,061		(4,055)		92,300		(532,473)
Income tax expense					(20,642)		(1,332)		(1,482)		(319)		(2,140)		-		(15,369)
Income (loss) from continuing
	operations				87,983		295,101		133,877		120,742		(6,195)		92,300		(547,842)
Income (loss) from discontinued operations					40,467		-		52,308		(6,791)		(5,050)		-		-
Net income (loss)					128,450		295,101		186,185		113,951		(11,245)		92,300		(547,842)
Net loss (income) attributable to
	noncontrolling interests in
	consolidated subsidiaries				2,839		(9,098)		-		915		-		-		11,022
Net income (loss) attributable to
	Vornado Realty L.P.				131,289		286,003		186,185		114,866		(11,245)		92,300		(536,820)
Interest and debt expense⁽²⁾					826,827		126,968		132,610		95,990		52,862		127,390		291,007
Depreciation and amortization⁽²⁾					728,815		168,517		152,747		105,903		56,702		132,227		112,719
Income tax expense (benefit)⁽²⁾					10,193		1,332		1,590		319		2,208		(13,185)		17,929
EBITDA⁽¹⁾				$	1,697,124	$	582,820	$	473,132	$	317,078	$	100,527	$	338,732	$	(115,165)

_______________________

See notes on page 79.

Net Income and EBITDA by Segment for the Years Ended December 31, 2010, 2009 and 2008 - continued


(Amounts in thousands)			For the Year Ended December 31, 2008
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	1,975,838	$	722,445	$	497,735	$	342,714	$	215,854	$	-	$	197,090
Straight-line rent adjustments					88,703		42,766		15,720		20,384		8,516		-		1,317
Amortization of acquired below-
		market leases, net			95,532		60,355		3,998		26,546		161		-		4,472
Total rentals					2,160,073		825,566		517,453		389,644		224,531		-		202,879
Tenant expense reimbursements					353,602		135,788		57,793		127,903		18,055		-		14,063
Fee and other income:
	Tenant cleaning fees				56,416		71,833		-		-		-		-		(15,417)
	Management and leasing fees				13,397		6,411		8,940		1,673		349		-		(3,976)
	Lease termination fees				8,465		3,088		2,635		2,281		461		-		-
	Other				48,538		15,699		22,350		2,543		6,811		-		1,135
Total revenues					2,640,491		1,058,385		609,171		524,044		250,207		-		198,684
Operating expenses					1,048,537		439,012		211,687		198,802		127,437		-		71,599
Depreciation and amortization					529,134		190,925		135,351		90,974		46,823		-		65,061
General and administrative					193,969		20,217		26,522		29,836		29,252		-		88,142
Impairment losses and acquisition costs					81,447		-		-		595		-		-		80,852
Total expenses					1,853,087		650,154		373,560		320,207		203,512		-		305,654
Operating income (loss)					787,404		408,231		235,611		203,837		46,695		-		(106,970)
Income applicable to Toys					2,380		-		-		-		-		2,380		-
(Loss) income from partially owned
	entities				(159,207)		6,082		6,173		10,371		1,106		-		(182,939)
Interest and other investment (loss)
	income, net				(2,747)		2,288		2,108		464		329		-		(7,936)
Interest and debt expense					(619,531)		(139,146)		(125,141)		(85,895)		(38,214)		-		(231,135)
Net gain on early extinguishment
	of debt				9,820		-		-		-		-		-		9,820
Net gain on disposition of wholly
	owned and partially owned assets				7,757		-		-		-		-		-		7,757
Income (loss) before income taxes					25,876		277,455		118,751		128,777		9,916		2,380		(511,403)
Income tax benefit (expense)					204,644		-		221,080		(82)		(1,206)		-		(15,148)
Income (loss) from continuing
	operations				230,520		277,455		339,831		128,695		8,710		2,380		(526,551)
Income from discontinued operations					180,925		-		64,849		3,001		1,163		-		111,912
Net income (loss)					411,445		277,455		404,680		131,696		9,873		2,380		(414,639)
Net loss (income) attributable to
	noncontrolling interests in
	consolidated subsidiaries				3,263		(4,762)		-		157		(125)		-		7,993
Net income (loss) attributable to
	Vornado Realty L.P.				414,708		272,693		404,680		131,853		9,748		2,380		(406,646)
Interest and debt expense⁽²⁾					821,940		132,406		130,310		102,600		53,072		147,812		��255,740
Depreciation and amortization⁽²⁾					710,526		181,699		143,989		98,238		52,357		136,634		97,609
Income tax (benefit) expense⁽²⁾					(142,415)		-		(220,965)		82		1,260		59,652		17,556
EBITDA⁽¹⁾				$	1,804,759	$	586,798	$	458,014	$	332,773	$	116,437	$	346,478	$	(35,741)

___________________________

See notes on the following page.

Net Income and EBITDA by Segment for the Years Ended December 31, 2010, 2009 and 2008 - continued

Notes to preceding tabular information:

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

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

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


(Amounts in thousands)			For the Year Ended December 31,
			2010		2009				2008
Alexander's			$	57,425	$	81,703		$	64,683
Lexington Realty Trust ("Lexington")				55,304		50,024			35,150
555 California Street				46,782		44,757			48,316
Hotel Pennsylvania				23,763		15,108			42,269
LNR (acquired in July 2010)				6,116		-			-
Industrial warehouses				2,528		4,737			5,264
Other investments				31,587		6,981			6,321
				223,505		203,310			202,003
Corporate general and administrative expenses⁽¹⁾				(90,343)		(79,843)			(91,967)
Investment income and other, net⁽¹⁾				65,499		78,593			109,519
Income (loss) from the mark-to-market of derivative positions in marketable equity
	securities			130,153		-			(33,740)
Net (loss) gain on early extinguishment of debt				(10,782)			(26,684)		-
Real Estate Fund organization costs				(5,937)			-		-
Non-cash mezzanine loans receivable loss (accrual) reversal				53,100			(190,738)		10,300
Non-cash asset write-downs:
	Investment in Lexington			-			(19,121)		(107,882)
	Marketable equity securities			-			(3,361)		(76,352)
	Real estate - primarily development projects:
		Wholly owned entities (including acquisition costs)		(36,958)			(39,299)		(80,852)
		Partially owned entities		-			(17,820)		(96,037)
Write-off of unamortized costs from the voluntary surrender of equity awards				-			(20,202)		-
Discontinued operations of Americold (including a $112,690 net gain on sale)				-			-		129,267
			$	328,237	$		(115,165)	$	(35,741)


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

Results of Operations – Year Ended December 31, 2010 Compared to December 31, 2009

Revenues

Our revenues, which consist of property rentals, tenant expense reimbursements, hotel revenues, trade shows revenues, amortization of acquired below-market leases, net of above-market leases and fee income, were $2,779,727,000 for the year ended December 31, 2010, compared to $2,696,692,000 in the prior year, an increase of $83,035,000. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)

					New York		Washington, DC					Merchandise
Increase (decrease) due to:			Total		Office		Office			Retail		Mart			Other
Property rentals:
	Acquisitions and other		$	(1,713)	$	-	$	(6,890)		$	4,161	$	2,064		$	(1,048)
	Development/redevelopment			12,716		-		10,316			2,400		-			-
	Amortization of acquired below-market
		leases, net		(5,752)		(4,048)		(1,126)			(780)		(164)			366
	Hotel Pennsylvania			15,622		-		-			-		-			15,622	⁽¹⁾
	Trade shows			5,044		-		-			-		5,044			-
	Leasing activity (see page 71)			63,246		13,992		19,098			31,214		(488)			(570)
				89,163		9,944		21,398			36,995		6,456			14,370

Tenant expense reimbursements:
	Acquisitions/development			1,079		-		(3,236)			4,564		-			(249)
	Operations			2,183		1,083		(5,421)			6,671		(1,519)			1,369
				3,262		1,083		(8,657)			11,235		(1,519)			1,120

Fee and other income:
	Lease cancellation fee income			9,938		2,430		(1,076)			7,177		246			1,161
	Management and leasing fees			8,661		1,981		7,751	⁽²⁾		(702)		68			(437)
	BMS cleaning fees			4,229		13,115		-			-		-			(8,886)	⁽³⁾
	Other			(32,218)		3,415		(26,318)	⁽⁴⁾		1,553		(5,554)	⁽⁵⁾		(5,314)	⁽⁶⁾
				(9,390)		20,941		(19,643)			8,028		(5,240)			(13,476)

Total increase (decrease) in revenues			$	83,035	$	31,968	$	(6,902)		$	56,258	$	(303)		$	2,014



(1)		Primarily from higher REVPAR.

(2)		Primarily from leasing fees in connection with our management of a development project.

(3)		Primarily from the elimination of inter-company fees from operating segments upon consolidation. See note (3) on page 81.

(4)		Primarily from income in the prior year resulting from a forfeited non-refundable purchase deposit. See note (5) on page 86.

(5)		Primarily from income in the prior year resulting from the surrender and build-out of tenant space.

(6)		Primarily from $5,402 of income in the prior year resulting from the termination of a lease with a partially owned entity.

Results of Operations – Year Ended December 31, 2010 Compared to December 31, 2009 - continued

Expenses

Our expenses, which consist primarily of operating, depreciation and amortization and general and administrative expenses, were $1,973,865,000 for the year ended December 31, 2010, compared to $1,905,839,000 in the prior year, an increase of $68,026,000. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)

					New York			Washington, DC					Merchandise
Increase (decrease) due to:			Total		Office			Office		Retail			Mart			Other
Operating:
	Acquisitions and other		$	(6,291)	$	(4,688)		$	(3,890)	$	1,213		$	1,770		$	(696)
	Development/redevelopment			3,425		-			2,941		484			-			-
	Hotel activity			11,041		-			-		-			-			11,041
	Trade shows activity			(1,063)		-			-		-			(1,063)			-
	Operations			25,137		22,495	⁽¹⁾		(5,449)		18,419	⁽²⁾		(446)			(9,882)	⁽³⁾
				32,249		17,807			(6,398)		20,116			261			463

Depreciation and amortization:
	Acquisitions/development			(682)		-			(2,207)		2,132			-			(607)
	Operations			(251)		3,008			2,512		6,931			(4,909)			(7,793)
				(933)		3,008			305		9,063			(4,909)			(8,400)

General and administrative:
	Write-off of unamortized costs from the																	^��
		voluntary surrender of equity awards ⁽⁴⁾		(32,588)		(3,451)			(3,131)		(4,793)			(1,011)			(20,202)
	Mark-to-market of deferred compensation
		plan liability ⁽⁵⁾		(1,457)		-			-		-			-			(1,457)
	Real Estate Fund organization costs			5,937		-			-		-			-			5,937
	Operations			11,323		(748)			2,390		4,064			(3,053)	⁽⁶⁾		8,670	⁽⁷⁾
				(16,785)		(4,199)			(741)		(729)			(4,064)			(7,052)

Impairment losses and acquisition costs				53,495		-			(24,875)		60,711	⁽⁸⁾		20,000			(2,341)

Total increase (decrease) in expenses			$	68,026	$	16,616		$	(31,709)	$	89,161		$	11,288		$	(17,330)



(1)		Results from increases in (i) BMS operating expenses of $13,459, (ii) reimbursable operating expenses of $5,953 and (iii) non-reimbursable operating expenses of $3,083.

(2)		Results from increases in (i) reimbursable operating expenses of $8,604, (ii) bad debt reserves of $8,505, of which $5,300 results from a true-up of prior year's billings and (iii) non-reimbursable operating expenses of $1,310.

(3)		Primarily from the elimination of inter-company fees from operating segments upon consolidation. See note (3) on page 80.

(4)		On March 31, 2009, our nine most senior executives voluntarily surrendered their 2007 and 2008 stock option awards and their 2008 out-performance plan awards. Accordingly, we recognized $32,588 of expense in the first quarter of 2009, representing the unamortized portion of these awards.

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

(6)		Primarily due to $2,800 of pension plan termination costs in 2009.

(7)		Primarily from higher payroll costs and stock-based compensation expense as a result of awards granted in March 2010.

(8)		Results from a $64,500 non-cash impairment loss on the Springfield Mall.

Results of Operations – Year Ended December 31, 2010 Compared to December 31, 2009 - continued

Income Applicable to Toys

In the year ended December 31, 2010, we recognized net income of $71,624,000 from our investment in Toys, comprised of $61,819,000 for our 32.7% share of Toys’ net income ($16,401,000 before our share of Toys’ income tax benefit) and $9,805,000 of interest and other income.

In the year ended December 31, 2009, we recognized net income of $92,300,000 from our investment in Toys, comprised of (i) $71,601,000 for our 32.7% share of Toys’ net income ($58,416,000 before our share of Toys’ income tax benefit), (ii) $13,946,000 for our share of income from previously recognized deferred financing cost amortization expense, which we initially recorded as a reduction of the basis of our investment in Toys, and (iii) $6,753,000 of interest and other income.

Income (Loss) from Partially Owned Entities

Summarized below are the components of income (loss) from partially owned entities for the year ended December 31, 2010 and 2009.


		For the Year Ended
		December 31,
(Amounts in thousands)		2010		2009
Equity in Net Income (Loss):
Alexander's - 32.4% share of equity in net income⁽¹⁾		$	29,184	$	53,529

Lexington - 12.8% share in 2010 and 15.2% share in 2009 of equity in
	net income (loss)⁽²⁾		11,018		(25,665)

LNR - 26.2% share of equity in net income (acquired in July 2010)			1,973		-

India real estate ventures - 4% to 36.5% range in our share of equity in net income (loss)			2,581		(1,636)

Other, net⁽³⁾			(22,318)		(46,138)
		$	22,438	$	(19,910)

						^��
(1)	2009 includes an aggregate of $24,773 of income for our share of an income tax benefit and the reversal of stock appreciation rights compensation expense.

(2)	2010 includes a $13,710 net gain resulting from Lexington's 2010 stock issuance and 2009 includes $19,121 of expense for our share of impairment losses recorded by Lexington.

(3)	Represents our equity in net income or loss of partially owned office buildings in New York and Washington, DC, the Monmouth Mall, Verde Realty Operating Partnership, 85 10th Avenue Associates and others. 2010 includes $11,481 of impairment losses related to our investment in properties on West 57th Street. 2009 includes $17,820 of impairment losses, substantially all of which relates to our investment in Verde, and $7,650 of expense for our share of the Downtown Crossing, Boston lease termination payment.

Loss from Real Estate Fund

In the year ended December 31, 2010, we recognized a $303,000 loss from our Real Estate Fund.

Results of Operations – Year Ended December 31, 2010 Compared to December 31, 2009 - continued

Interest and Other Investment Income (Loss), net

Interest and other investment income (loss), net (comprised of the mark-to-market of derivative positions in marketable equity securities, interest income on mezzanine loans receivable, other interest income and dividend income) was income of $235,315,000 in the year ended December 31, 2010, compared to a loss of $116,350,000 in the prior year, an increase in income of $351,665,000. This increase resulted from:


(Amounts in thousands)
Mezzanine loans ($53,100 loss reversal in 2010, compared to $190,738 loss accrual in 2009)		$	243,838
Mark-to-market of derivative positions in marketable equity securities			130,153
Lower average mezzanine loan investments ($136,795 in 2010, compared to $345,000 in 2009)			(21,862)
Marketable securities - impairment losses in 2009			3,361
Decrease in the value of investments in our deferred compensation plan (offset by a corresponding
	decrease in the liability for plan assets in general and administrative expenses)		(1,457)
Other, net (primarily lower average yields on investments)			(2,368)
		$	351,665

Interest and Debt Expense

Interest and debt expense was $560,270,000 for the year ended December 31, 2010, compared to $617,994,000 in the prior year, a decrease of $57,724,000. This decrease was primarily due to savings of (i) $93,765,000 from the acquisition, retirement and repayment of an aggregate of $2.1 billion of our convertible senior debentures due to Vornado and senior unsecured notes in 2009 and (ii) $30,639,000 from the repayment of $400,000,000 of cross-collateralized debt secured by 42 of our strip shopping centers, partially offset by (iii) $43,515,000 from the issuance of $460,000,000 and 500,000,000 of senior unsecured notes in September 2009 and March 2010, respectively, (iv) $16,392,000 of lower capitalized interest, and (v) $9,813,000 from the issuance of $660,000,000 of cross-collateralized debt secured by 40 of our strip shopping centers.

Net Gain (Loss) on Early Extinguishment of Debt

In the year ended December 31, 2010, we recognized a $94,789,000 net gain on the early extinguishment of debt (primarily from our acquisition of the mortgage loan secured by the Springfield Mall), compared to a $25,915,000 net loss in the prior year (primarily from the acquisition of our convertible senior debentures due to Vornado and related write-off of the unamortized debt discount).

Net Gain on Disposition of Wholly Owned and Partially Owned Assets

In the year ended December 31, 2010, we recognized an $81,432,000 net gain on disposition of wholly owned and partially owned assets (primarily from the sale of a 45% interest in the Warner Building and sales of marketable securities), compared to a $5,641,000 net gain in the prior year (primarily from the sales of marketable securities and residential condominiums).

Income Tax Expense

Income tax expense was $22,476,000 in the year ended December 31, 2010, compared to $20,642,000 in the prior year, an increase of $1,834,000. This increase resulted primarily from higher income at 1290 Avenue of Americas and 555 California Street, which are subject to federal withholding taxes on dividends paid to foreign corporations.

Results of Operations – Year Ended December 31, 2010 Compared to December 31, 2009 - continued

(Loss) Income from Discontinued Operations

The table below sets forth the combined results of discontinued operations for the years ended December 31, 2010 and 2009 which include (i) four properties in our Washington, DC Office segment, (ii) 20 properties in our Retail segment and (iii) the High Point Complex in North Carolina, which is in receivership.


	For the Year Ended
	December 31,
(Amounts in thousands)	2010		2009

Total revenues	$	43,871	$	55,752
Total expenses		51,701		48,709
		(7,830)		7,043
Litigation loss accrual and impairment losses		(15,056)		(11,860)
Net gain on sale of 1999 K Street		-		41,211
Net gain on sales of other real estate		2,506		4,073
(Loss) income from discontinued operations	$	(20,380)	$	40,467

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

In the year ended December 31, 2010, we had $4,920,000 of net income attributable to noncontrolling interests in consolidated subsidiaries, compared to $2,839,000 of a net loss in the prior year, an increase in income of 7,759,000. This increase resulted primarily from higher income at 1290 Avenue of the Americas and 555 California Street.

Preferred Unit Distributions

Preferred unit distributions were $66,729,000 for the year ended December 31, 2010, compared to $76,747,000 for the prior year, a decrease of $10,018,000. This decrease was primarily due to the net gain of $6,972,000 from the redemption of Series D-12 redeemable preferred units in the current year.

Discount on Preferred Unit Redemptions

Discount on preferred unit redemptions of $4,382,000 in the year ended December 31, 2010 resulted from the redemption of Series D-10 preferred units.

Results of Operations – Year Ended December 31, 2010 Compared to December 31, 2009 - continued

Same Store EBITDA

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

Below are the same store EBITDA results on a GAAP and cash basis for each of our segments for the year ended December 31, 2010, compared to the year ended December 31, 2009.

			New York		Washington, DC				Merchandise
(Amounts in thousands)			Office		Office		Retail		Mart
EBITDA for the year ended December 31, 2010			$	587,869	$	497,551	$	405,106	$	84,058
	Add-back: non-property level overhead
		expenses included above		18,621		25,464		29,610		26,953
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		6,578		(58,001)		(55,339)		14,036
GAAP basis same store EBITDA for the year			��
		ended December 31, 2010		613,068		465,014		379,377		125,047
	Less: Adjustments for straight-line rents,
		amortization of below-market leases, net and other
		non-cash adjustments		(62,962)		(5,184)		(40,362)		(2,681)
Cash basis same store EBITDA for the year
		ended December 31, 2010	$	550,106	$	459,830	$	339,015	$	122,366


EBITDA for the year ended December 31, 2009			$	582,820	$	473,132	$	317,078	$	100,527
	Add-back: non-property level overhead
		expenses included above		22,820		26,205		30,339		31,017
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(2,741)		(57,302)		1,774		(2,203)
GAAP basis same store EBITDA for the year
		ended December 31, 2009		602,899		442,035		349,191		129,341
	Less: Adjustments for straight-line rents,
		amortization of below-market leases, net and other
		non-cash adjustments		(65,069)		(23,940)		(39,871)		(4,036)
Cash basis same store EBITDA for the year
		ended December 31, 2009	$	537,830	$	418,095	$	309,320	$	125,305


Increase (decrease) in GAAP basis same store EBITDA for
		the year ended December 31, 2010 over the
		year ended December 31, 2009	$	10,169	$	22,979	$	30,186	$	(4,294)

Increase (decrease) in Cash basis same store EBITDA for
		the year ended December 31, 2010 over the
		year ended December 31, 2009	$	12,276	$	41,735	$	29,695	$	(2,939)


% increase (decrease) in GAAP basis same store EBITDA				1.7%		5.2%		8.6%		(3.3%)

% increase (decrease) in Cash basis same store EBITDA				2.3%		10.0%		9.6%		(2.3%)

Results of Operations – Year Ended December 31, 2009 Compared to December 31, 2008

Revenues

Our revenues, which consist of property rentals, tenant expense reimbursements, hotel revenues, trade shows revenues, amortization of acquired below-market leases, net of above-market leases and fee income, were $2,696,692,000 for the year ended December 31, 2009, compared to $2,640,491,000 for the year ended December 31, 2008, an increase of $56,201,000. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)

					New York			Washington, DC					Merchandise
Increase (decrease) due to:			Total		Office			Office			Retail		Mart			Other
Property rentals:
	Acquisitions and other		$	13,135	$	-		$	-		$	11,309	$	5,430		$	(3,604)
	Development/redevelopment			2,805		-			1,333			1,472		-			-
	Amortization of acquired below-market
		leases, net		(23,578)		(20,226)	⁽¹⁾		(546)			(3,553)		(72)			819
	Hotel Pennsylvania			(32,248)		-			-			-		-			(32,248)	⁽²⁾
	Trade shows			(6,606)		-			-			-		(6,606)	⁽³⁾		-
	Leasing activity (see page 71)			68,613		30,151			34,578			13,914		(7,176)			(2,854)
				22,121		9,925			35,365			23,142		(8,424)			(37,887)

Tenant expense reimbursements:
	Acquisitions/development			(7)		-			(215)			1,182		-			(974)
	Operations			3,591		753			3,042			5,585		(2,538)			(3,251)
				3,584		753			2,827			6,767		(2,538)			(4,225)

Fee and other income:
	Lease cancellation fee income			(3,577)		(1,248)			(411)			(1,817)		(240)			139
	Management and leasing fees			(1,941)		(2,200)			(757)			58		(261)			1,219
	BMS cleaning fees			2,096		8,404			-			-		-			(6,308)	⁽⁴⁾
	Other			33,918		(1,519)			25,395	⁽⁵⁾		76		2,647			7,319	⁽⁶⁾
				30,496		3,437			24,227			(1,683)		2,146			2,369

Total increase (decrease) in revenues			$	56,201	$	14,115		$	62,419		$	28,226	$	(8,816)		$	(39,743)



(1)		Primarily from a lease modification that reduced the term of a portion of AXA Equitable Life Company's ("AXA") space at 1290 Avenue of the Americas, which resulted in additional amortization of approximately $12,000 in 2008.

(2)		Primarily from lower REVPAR.

(3)		Primarily from lower exhibitor occupancy.

(4)		Primarily from the elimination of inter-company fees from operating segments upon consolidation. See note (3) on page 87.

(5)		In December 2009, our agreement to sell an 8.6 acre parcel of land in the Pentagon City area of Arlington, Virginia, was terminated by the buyer. Accordingly, we recognized $27,089 of income, representing the buyer’s forfeited non-refundable purchase deposit. In connection therewith, we wrote down the carrying amount of the land to its fair value and recognized a $24,875 impairment loss which is included as a component of “impairment and other losses” on our consolidated statement of income.

(6)		2009 includes $5,402 of income previously deferred resulting from the termination of a lease with a partially owned entity.

Results of Operations – Year Ended December 31, 2009 Compared to December 31, 2008 - continued

Expenses

Our expenses, which consist primarily of operating, depreciation and amortization and general and administrative expenses, were $1,905,839,000 for the year ended December 31, 2009, compared to $1,853,087,000 for the year ended December 31, 2008, an increase of $52,752,000. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)

					New York			Washington, DC					Merchandise
Increase (decrease) due to:			Total		Office			Office		Retail			Mart		Other
Operating:
	Acquisitions and other		$	12,883	$	-		$	-	$	6,367		$	5,226	$	1,290
	Development/redevelopment			4,433		-			2,114		2,319			-		-
	Hotel activity			(5,734)		-			-		-			-		(5,734)
	Trade shows activity			(3,484)		-			-		-			(3,484)		-
	Operations			10,594		13,358	⁽¹⁾		6,532		(3,264)	⁽²⁾		(3,577)		(2,455)	⁽³⁾
				18,692		13,358			8,646		5,422			(1,835)		(6,899)

Depreciation and amortization:
	Acquisitions/development			4,693		-			(2,374)		9,306			-		(2,239)
	Operations (due to additions to buildings
		and improvements)		(2,190)		(17,002)	⁽⁴⁾		9,438		1,073			4,241		60
				2,503		(17,002)			7,064		10,379			4,241		(2,179)

General and administrative:
	Write-off of unamortized costs from the
		voluntary surrender of equity awards ⁽⁵⁾		32,588		3,451			3,131		4,793			1,011		20,202
	Mark-to-market of deferred compensation
		plan liability ⁽⁶⁾		23,710		-			-		-			-		23,710
	Operations			(19,257)		(848)			(3,448)		(4,290)			754		(11,425)	⁽⁷⁾
				37,041		2,603			(317)		503			1,765		32,487

Impairment losses and acquisition costs				(5,484)		-			24,875		11,194			-		(41,553)

Total increase (decrease) in expenses			$	52,752	$	(1,041)		$	40,268	$	27,498		$	4,171	$	(18,144)



(1)		Results from a $7,025 increase in BMS operating expenses and a $6,333 increase in property level operating expenses, primarily due to higher real estate taxes.

(2)		Primarily from a $8,190 decrease in bad debt expense partially offset by an increase in real estate taxes which are reimbursed by tenants.

(3)		Results primarily from an increase in the elimination of inter-company fees of our operating segments upon consolidation.

(4)		Primarily from a lease modification that reduced the term of a portion of AXA’s space at 1290 Avenue of the Americas, which resulted in additional depreciation of approximately $16,000 in 2008.

(5)		On March 31, 2009, our nine most senior executives voluntarily surrendered their 2007 and 2008 stock option awards and their 2008 out-performance plan awards. Accordingly, we recognized $32,588 of expense in the first quarter of 2009, representing the unamortized portion of these awards.

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

(7)		Primarily from lower payroll and stock-based compensation expense.

Results of Operations – Year Ended December 31, 2009 Compared to December 31, 2008 - continued

Income Applicable to Toys

In the year ended December 31, 2009, we recognized net income of $92,300,000 from our investment in Toys, comprised of (i) $71,601,000 for our 32.7% share of Toys’ net income ($58,416,000 before our share of Toys’ income tax benefit), (ii) $13,946,000 for our share of income from the reversal of previously recognized deferred financing cost amortization expense, which we initially recorded as a reduction of the basis of our investment in Toys, and (iii) $6,753,000 of interest and other income.

In the year ended December 31, 2008, we recognized $2,380,000 of income from our investment in Toys, comprised of (i) $9,115,000 for our 32.7% share of Toys’ net income ($53,867,000 before our share of Toys’ income tax expense), (ii) $8,165,000 of interest and other income, partially offset by (iii) $14,900,000 for our share of a non-cash charge adjusting Toys purchase accounting basis income tax expense resulting from the audit of Toys fiscal 2006 and 2007 purchase accounting financial statements.

Loss from Partially Owned Entities

Summarized below are the components of loss from partially owned entities for the year ended December 31, 2009 and 2008.


		For the Year Ended
		December 31,
(Amounts in thousands)		2009		2008
Equity in Net Income (Loss):
Alexander's - 32.4% share of equity in net income⁽¹⁾		$	53,529	$	36,671

Lexington⁽²⁾			(25,665)		(105,630)

India real estate ventures - 4% to 36.5% range in our share of equity in net loss			(1,636)		(3,336)

Other, net⁽³⁾			(46,138)		(86,912)
		$	(19,910)	$	(159,207)


(1)	2009 includes an aggregate of $24,773 of income for our share of an income tax benefit and the reversal of stock appreciation rights compensation expense compared to $6,583 for our share of such income in 2008.

(2)	2009 includes $19,121 for our share of impairment losses recorded by Lexington on its investment in Concord Debt Holdings LLC. 2008 includes $107,882 of impairment losses on our investment in Lexington.

(3)	Represents our equity in net income or loss of partially owned office buildings in New York and Washington, DC, the Monmouth Mall, Verde Realty Operating Partnership, 85 10th Avenue Associates and others. 2009 includes $17,820 of impairment losses, substantially all of which relates to our investment in Verde, and $7,650 of expense for our share of Downtown Crossing, Boston lease termination payment. 2008 includes $96,037 of non-cash charges for the write-off of our share of certain partially owned entities' development costs, including $37,000 for Downtown Crossing, Boston and $23,000 for the “arena move”/Moynihan East portions of the Farley project.

Results of Operations – Year Ended December 31, 2009 Compared to December 31, 2008 - continued

Interest and Other Investment (Loss) Income, net

Interest and other investment (loss) income, net was a loss of $116,350,000 for the year ended December 31, 2009, compared to a loss of $2,747,000 for the year ended December 31, 2008, an increase in loss of $113,603,000. This increase resulted primarily from:


(Amounts in thousands)
Mezzanine loans - $190,738 loss accrual in 2009, compared to $10,300 of loss reversal in 2008		$	(201,038)
Marketable equity securities - impairment losses of $3,361 in 2009, compared to $76,742 in 2008			73,381
Derivative positions in marketable equity securities in 2008			33,602
Lower average yield on investments (0.4% in 2009 compared to 2.3% in 2008)			(22,306)
Increase in value of investments in the deferred compensation plan (offset by a corresponding
	increase in the liability for plan assets in general and administrative expenses)		23,710
Lower average mezzanine loan investments - $345,000 in 2009, compared to $481,000 in 2008			(12,540)
Other, net			(8,412)
		$	(113,603)

Interest and Debt Expense

Interest and debt expense was $617,994,000 for the year ended December 31, 2009, compared to $619,531,000 for the year ended December 31, 2008, a decrease of $1,537,000. This decrease resulted primarily from savings of (i) $17,561,000 from a decrease in outstanding debt of approximately $1.5 billion, the full year effect of which is approximately $100,000,000, (ii) $27,830,000 from lower average interest rates on variable rate debt (1.61% in 2009 as compared to 3.88% in 2008), (iii) $1,953,000 from other items, partially offset by (iv) a decrease in capitalized interest of $45,807,000.

Net (Loss) Gain on Early Extinguishment of Debt

In the year ended December 31, 2009, we recognized a $25,915,000 net loss on early extinguishment of debt (primarily from the acquisition of our convertible senior debentures due to Vornado and related write-off of the unamortized debt discount), compared to a $9,820,000 net gain in the prior year (primarily from the acquisition of our senior unsecured notes and convertible senior debentures due to Vornado).

Net Gain on Disposition of Wholly Owned and Partially Owned Assets

In the year ended December 31, 2009, we recognized a $5,641,000 net gain on disposition of wholly owned and partially owned assets, compared to a $7,757,000 net gain in the prior year. The current year and prior year net gain resulted primarily from the sales of marketable securities and residential condominiums.

Income Tax Expense

Income tax expense was $20,642,000 for the year ended December 31, 2009, compared to an income tax benefit of $204,644,000 for the year ended December 31, 2008. The income tax benefit for the year ended December 31, 2008 was the result of a $222,174,000 reversal of deferred taxes recorded in connection with our acquisition of H Street. We were required to record these deferred tax liabilities because H Street and its partially owned entities were operated as C Corporations at the time they were acquired. As of January 16, 2008, we had completed all of the actions necessary to enable these entities to elect REIT status effective for the tax year beginning on January 1, 2008 and reversed the deferred tax liabilities.

Results of Operations – Year Ended December 31, 2009 Compared to December 31, 2008 - continued

Income from Discontinued Operations

The table below sets forth the combined results of operations of assets related to discontinued operations for the years ended December 31, 2009 and 2008.


	For the Year Ended
	December 31,
(Amounts in thousands)	2009		2008

Total revenues	$	55,752	$	278,986
Total expenses		48,709		268,274
		7,043		10,712
Net gain on sale of 1999 K Street		41,211		-
Net gain on sales of other real estate		4,073		692
Net gain on sale of Americold		-		112,690
Net gain on sale of Tyson Dulles Plaza		-		56,831
Impairment losses		(11,860)		-
Income from discontinued operations	$	40,467	$	180,925

Net Loss Attributable to Noncontrolling Interests in Consolidated Subsidiaries

Net loss attributable to noncontrolling interests in consolidated subsidiaries was $2,839,000 in the year ended December 31, 2009, compared to $3,263,000 for the year ended December 31, 2008.

Preferred Unit Distributions

Preferred unit distributions were $76,747,000 for the year ended December 31, 2009, compared to $79,453,000 for the year ended December 31, 2008.

Results of Operations – Year Ended December 31, 2009 Compared to December 31, 2008 - continued

Same Store EBITDA

Below are the same store EBITDA results on a GAAP and cash basis for each of our segments for the year ended December 31, 2009, compared to the year ended December 31, 2008.

			New York		Washington, DC				Merchandise
(Amounts in thousands)			Office		Office		Retail		Mart
EBITDA for the year ended December 31, 2009			$	582,820	$	473,132	$	317,078	$	100,527
	Add-back: non-property level overhead
		expenses included above		22,820		26,205		30,339		31,017
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(2,278)		(52,613)		(1,169)		(2,369)
GAAP basis same store EBITDA for the year
		ended December 31, 2009		603,362		446,724		346,248		129,175
	Less: Adjustments for straight-line rents,
		amortization of below-market leases, net and other
		non-cash adjustments		(65,069)		(25,931)		(38,396)		(4,340)
Cash basis same store EBITDA for the year
		ended December 31, 2009	$	538,293	$	420,793	$	307,852	$	124,835


EBITDA for the year ended December 31, 2008			$	586,798	$	458,014	$	332,773	$	116,437
	Add-back: non-property level overhead
		expenses included above		20,217		26,522		29,836		29,252
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(8,431)		(65,820)		(28,814)		276
GAAP basis same store EBITDA for the year
		ended December 31, 2008		598,584		418,716		333,795		145,965
	Less: Adjustments for straight-line rents,
		amortization of below-market leases, net and other
		non-cash adjustments		(88,163)		(20,354)		(37,267)		(9,408)
Cash basis same store EBITDA for the year
		ended December 31, 2008	$	510,421	$	398,362	$	296,528	$	136,557


Increase (decrease) in GAAP basis same store EBITDA for
		the year ended December 31, 2009 over the
		year ended December 31, 2008	$	4,778	$	28,008	$	12,453	$	(16,790)

Increase (decrease) in Cash basis same store EBITDA for
		the year ended December 31, 2009 over the
		year ended December 31, 2008	$	27,872	$	22,431	$	11,324	$	(11,722)


% increase (decrease) in GAAP basis same store EBITDA				0.8%		6.7%		3.7%		(11.5%)

% increase (decrease) in Cash basis same store EBITDA				5.5%		5.6%		3.8%		(8.6%)

Supplemental Information

Net Income and EBITDA by Segment for the Three Months Ended December 31, 2010 and 2009

Below is a summary of net income and a reconciliation of net income to EBITDA⁽¹⁾ by segment for the three months ended December 31, 2010 and 2009.


(Amounts in thousands)			For the Three Months Ended December 31, 2010
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	546,557	$	192,185	$	139,824	$	107,341	$	59,629	$	-	$	47,578
Straight-line rent adjustments					21,272		11,596		330		7,059		842		-		1,445
Amortization of acquired below-
		market leases, net			17,231		8,831		490		6,759		16		-		1,135
Total rentals					585,060		212,612		140,644		121,159		60,487		-		50,158
Tenant expense reimbursements					85,350		31,498		9,371		36,741		2,587		-		5,153
Fee and other income:
	Tenant cleaning fees				17,320		25,886		-		-		-		-		(8,566)
	Management and leasing fees				4,042		1,914		2,682		270		125		-		(949)
	Lease termination fees				4,714		25		(108)		3,459		38		-		1,300
	Other				16,471		7,855		4,975		1,401		383		-		1,857
Total revenues					712,957		279,790		157,564		163,030		63,620		-		48,953
Operating expenses					283,653		119,750		50,838		62,013		30,739		-		20,313
Depreciation and amortization					130,883		44,718		33,726		28,207		11,443		-		12,789
General and administrative					60,791		4,761		7,385		7,019		6,534		-		35,092
Impairment losses and acquisition costs					126,607		-		-		72,500		20,000		-		34,107
Total expenses					601,934		169,229		91,949		169,739		68,716		-		102,301
Operating income (loss)					111,023		110,561		65,615		(6,709)		(5,096)		-		(53,348)
(Loss) applicable to Toys					(30,685)		-		-		-		-		(30,685)		-
Income (loss) from partially owned
	entities				8,638		(10,699)		535		6,048		(418)		-		13,172
Income from Real Estate Fund					1,107		-		-		-		-		-		1,107
Interest and other investment
	income, net				169,639		142		27		37		12		-		169,421
Interest and debt expense					(136,752)		(33,253)		(28,948)		(23,070)		(9,549)		-		(41,932)
Net gain (loss) on early extinguishment
	of debt				96,585		-		-		105,571		-		-		(8,986)
Net gain on disposition of wholly
	owned and partially owned assets				68,673		-		54,742		-		-		-		13,931
Income (loss) before income taxes					288,228		66,751		91,971		81,877		(15,051)		(30,685)		93,365
Income tax expense					(6,483)		(497)		(724)		-		(291)		-		(4,971)
Income (loss) from continuing
	operations				281,745		66,254		91,247		81,877		(15,342)		(30,685)		88,394
Income (loss) from discontinued operations					399		-		1,295		2,953		(3,849)		-		-
Net income (loss)					282,144		66,254		92,542		84,830		(19,191)		(30,685)		88,394
Net (income) loss attributable to
	noncontrolling interests in
	consolidated subsidiaries				(3,430)		(2,269)		-		(1,673)		-		-		512
Net income (loss) attributable to
	Vornado Realty L.P.				278,714		63,985		92,542		83,157		(19,191)		(30,685)		88,906
Interest and debt expense⁽²⁾					216,089		31,805		31,819		24,378		16,009		53,481		58,597
Depreciation and amortization⁽²⁾					180,026		43,164		38,354		29,000		12,015		31,434		26,059
Income tax (benefit) expense⁽²⁾					(36,589)		497		866		-		291		(43,504)		5,261
EBITDA⁽¹⁾				$	638,240	$	139,451	$	163,581	$	136,535	$	9,124	$	10,726	$	178,823

____________________

See notes on page 94.

Supplemental Information – continued

Net Income and EBITDA by Segment for the Three Months Ended December 31, 2010 and 2009 - continued


(Amounts in thousands)			For the Three Months Ended December 31, 2009
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	518,897	$	189,673	$	135,746	$	96,188	$	54,241	$	-	$	43,049
Straight-line rent adjustments					21,939		10,281		4,672		6,369		247		-		370
Amortization of acquired below-
		market leases, net			16,076		9,611		664		4,694		18		-		1,089
Total rentals					556,912		209,565		141,082		107,251		54,506		-		44,508
Tenant expense reimbursements					89,711		32,932		15,572		35,551		2,378		-		3,278
Fee and other income:
	Tenant cleaning fees				16,790		22,970		-		-		-		-		(6,180)
	Management and leasing fees				3,201		848		2,247		483		63		-		(440)
	Lease termination fees				1,169		316		308		364		181		-		-
	Other				38,769		2,607		32,637		381		3,319		-		(175)
Total revenues					706,552		269,238		191,846		144,030		60,447		-		40,991
Operating expenses					267,672		111,818		57,480		50,037		32,630		-		15,707
Depreciation and amortization					138,639		44,039		38,684		26,111		14,107		-		15,698
General and administrative					51,083		4,232		5,668		5,425		6,336		-		29,422
Impairment losses and acquisition costs					75,963		-		24,875		11,789		-		-		39,299
Total expenses					533,357		160,089		126,707		93,362		53,073		-		100,126
Operating income (loss)					173,195		109,149		65,139		50,668		7,374		-		(59,135)
(Loss) applicable to Toys					(26,597)		-		-		-		-		(26,597)		-
(Loss) income from partially owned
	entities				(16,830)		1,332		(654)		1,564		(35)		-		(19,037)
Interest and other investment (loss)
	income, net				(52,726)		164		216		19		12		-		(53,137)
Interest and debt expense					(155,152)		(33,529)		(34,636)		(22,710)		(9,569)		-		(54,708)
Net (loss) on early extinguishment
	of debt				(52,911)		-		-		-		-		-		(52,911)
Net gain on disposition of wholly
	owned and partially owned assets				1,209		-		-		-		-		-		1,209
(Loss) income before income taxes					(129,812)		77,116		30,065		29,541		(2,218)		(26,597)		(237,719)
Income tax expense					(4,935)		(487)		(316)		(3)		(385)		-		(3,744)
(Loss) income from continuing
	operations				(134,747)		76,629		29,749		29,538		(2,603)		(26,597)		(241,463)
(Loss) income from discontinued
	operations				(8,703)		-		1,870		(9,800)		(773)		-		-
Net (loss) income					(143,450)		76,629		31,619		19,738		(3,376)		(26,597)		(241,463)
Net (income) loss attributable to
	noncontrolling interests in
	consolidated subsidiaries				(603)		(2,660)		-		285		-		-		1,772
Net (loss) income attributable to
	Vornado Realty L.P.				(144,053)		73,969		31,619		20,023		(3,376)		(26,597)		(239,691)
Interest and debt expense⁽²⁾					214,411		31,910		35,792		24,494		13,299		37,493		71,423
Depreciation and amortization⁽²⁾					189,261		42,686		42,484		27,179		15,499		30,859		30,554
Income tax (benefit) expense⁽²⁾					(13,611)		487		348		3		388		(20,520)		5,683
EBITDA⁽¹⁾				$	246,008	$	149,052	$	110,243	$	71,699	$	25,810	$	21,235	$	(132,031)

__________________________

See notes on the following page.

Supplemental Information – continued

Net Income and EBITDA by Segment for the Three Months Ended December 31, 2010 and 2009 - continued

Notes to preceding tabular information:

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

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

(3) The tables below provide information about EBITDA from certain investments that are included in the “other” column of the preceding EBITDA by segment reconciliations. The totals for each of the columns below agree to the total EBITDA for the “other” column in the preceding EBITDA by segment reconciliations.


			For the Three Months
(Amounts in thousands)			Ended December 31,
				2010		2009
Lexington			$	17,929	$	15,774
Alexander's				15,478		16,474
555 California Street				12,361		12,872
Hotel Pennsylvania				9,514		7,285
LNR (acquired in July 2010)				6,116		-
Industrial warehouses				461		835
Other investments				8,205		5,077
				70,064		58,317
Corporate general and administrative expenses⁽¹⁾				(29,675)		(23,190)
Investment income and other, net⁽¹⁾				23,623		14,233
Income from the mark-to-market of derivative positions in marketable equity securities				97,904		-
Net (loss) on early extinguishment of debt				(8,986)		(52,911)
Non-cash mezzanine loans receivable loss (accrual) reversal				60,000		(68,000)
Non-cash asset write-downs:
	Marketable equity securities			-		(3,361)
	Real estate - primarily development projects:
		Wholly owned entities (including acquisition costs)		(34,107)		(39,299)
		Partially owned entities		-		(17,820)
			$	178,823	$	(132,031)


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

Results of Operations – Three Months Ended December 31, 2010 Compared to December 31, 2009 - continued

Same Store EBITDA

Below are the same store EBITDA results on a GAAP and cash basis for each of our segments for the three months ended December 31, 2010, compared to the three months ended December 31, 2009.

			New York		Washington, DC				Merchandise
(Amounts in thousands)			Office		Office		Retail		Mart
EBITDA for the three months ended December 31, 2010			$	139,451	$	163,581	$	136,535	$	9,124
	Add-back: non-property level overhead
		expenses included above		4,761		7,385		7,019		6,534
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		8,975		(55,271)		(44,793)		15,973
GAAP basis same store EBITDA for the three months
		ended December 31, 2010		153,187		115,695		98,761		31,631
	Less: Adjustments for straight-line rents,
		amortization of below-market leases, net and other
		non-cash adjustments		(17,930)		(47)		(9,212)		(858)
Cash basis same store EBITDA for the three months
		ended December 31, 2010	$	135,257	$	115,648	$	89,549	$	30,773


EBITDA for the three months ended December 31, 2009			$	149,052	$	110,243	$	71,699	$	25,810
	Add-back: non-property level overhead
		expenses included above		4,232		5,668		5,425		6,336
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		(325)		(6,104)		16,213		880
GAAP basis same store EBITDA for the three months
		ended December 31, 2009		152,959		109,807		93,337		33,026
	Less: Adjustments for straight-line rents,
		amortization of below-market leases, net and other
		non-cash adjustments		(16,414)		(4,628)		(8,568)		(265)
Cash basis same store EBITDA for the three months
		ended December 31, 2009	$	136,545	$	105,179	$	84,769	$	32,761


Increase (decrease) increase in GAAP basis same store EBITDA
		for the three months ended December 31, 2010 over
		the three months ended December 31, 2009	$	228	$	5,888	$	5,424	$	(1,395)

(Decrease) increase in Cash basis same store EBITDA for
		the three months ended December 31, 2010 over the
		three months ended December 31, 2009	$	(1,288)	$	10,469	$	4,780	$	(1,988)


% increase (decrease) in GAAP basis same store EBITDA				0.1%		5.4%		5.8%		(4.2%)

% (decrease) increase in Cash basis same store EBITDA				(0.9%)		10.0%		5.6%		(6.1%)

Supplemental Information – continued

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

Below are the same store EBITDA results on a GAAP and cash basis for each of our segments for the three months ended December 31, 2010, compared to the three months ended September 30, 2010.

			New York		Washington, DC				Merchandise
(Amounts in thousands)			Office		Office		Retail		Mart
EBITDA for the three months ended December 31, 2010			$	139,451	$	163,581	$	136,535	$	9,124
	Add-back: non-property level overhead expenses
		included above		4,761		7,385		7,019		6,534
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		9,229		(55,271)		(44,793)		15,973
GAAP basis same store EBITDA for the three months
	ended December 31, 2010			153,441		115,695		98,761		31,631
	Less: Adjustments for straight-line rents, amortization of
		below-market leases, net and other non-cash adjustments		(17,930)		(67)		(9,212)		(858)
Cash basis same store EBITDA for the three months
	ended December 31, 2010		$	135,511	$	115,628	$	89,549	$	30,773


EBITDA for the three months ended September 30, 2010⁽¹⁾			$	149,285	$	113,205	$	88,431	$	21,330
	Add-back: non-property level overhead expenses
		included above		4,514		5,984		8,843		6,064
	Less: EBITDA from acquisitions, dispositions
		and other non-operating income or expenses		839		(2,494)		(732)		1,083
GAAP basis same store EBITDA for the three months
	ended September 30, 2010			154,638		116,695		96,542		28,477
	Less: Adjustments for straight-line rents, amortization of
		below-market leases, net and other non-cash adjustments		(14,845)		18		(11,136)		44
Cash basis same store EBITDA for the three months
	ended September 30, 2010		$	139,793	$	116,713	$	85,406	$	28,521


(Decrease) increase in GAAP basis same store EBITDA for
	the three months ended December 31, 2010 over the
	three months ended September 30, 2010		$	(1,197)	$	(1,000)	$	2,219	$	3,154

(Decrease) increase in Cash basis same store EBITDA for
	the three months ended December 31, 2010 over the
	three months ended September 30, 2010		$	(4,282)	$	(1,085)	$	4,143	$	2,252


% (decrease) increase in GAAP basis same store EBITDA				(0.8%)		(0.9%)		2.3%		11.1%

% (decrease) increase in Cash basis same store EBITDA				(3.1%)		(0.9%)		4.9%		7.9%


(1)		Below is the reconciliation of net income (loss) to EBITDA for the three months ended September 30, 2010

			New York		Washington, DC				Merchandise
(Amounts in thousands)			Office		Office		Retail		Mart
Net income (loss) attributable to Vornado Realty L.P. for the
	three monthsended September 30, 2010		$	74,076	$	36,516	$	34,010	$	(6,621)
Interest and debt expense				31,817		34,241		26,395		15,883
Depreciation and amortization				42,531		41,394		28,024		12,782
Income tax expense (benefit)				861		1,054		2		(714)
EBITDA for the three months ended September 30, 2010			$	149,285	$	113,205	$	88,431	$	21,330

Related Party Transactions

Transactions with Affiliates and Officers and Trustees

Alexander’s

We own 32.4% of Alexander’s. Steven Roth, the Chairman of Vornado’s Board, and Michael D. Fascitelli, Vornado’s President and Chief Executive Officer, are officers and directors of Alexander’s. We provide various services to Alexander’s in accordance with management, development and leasing agreements. These agreements are described in Note 5 - Investments in Partially Owned Entities to our consolidated financial statements in this Annual Report on Form 10-K.

On March 2, 2009, Mr. Roth and Mr. Fascitelli each exercised 150,000 stock appreciation rights which were scheduled to expire on March 4, 2009 and each received gross proceeds of $11,419,000.

Interstate Properties (“Interstate”)

Interstate is a general partnership in which Mr. Roth is the managing general partner. David Mandelbaum and Russell B. Wight, Jr., Trustees of Vornado and Directors of Alexander’s, are Interstate’s two other partners. As of December 31, 2010, Interstate and its partners beneficially owned approximately 7.0% of the common shares of beneficial interest of Vornado and 27.2% of Alexander’s common stock.

We manage and lease the real estate assets of Interstate pursuant to a management agreement for which we receive an annual fee equal to 4% of annual base rent and percentage rent. The management agreement has a term of one year and is automatically renewable unless terminated by either of the parties on 60 days’ notice at the end of the term. We believe, based upon comparable fees charged by other real estate companies, that the management agreement terms are fair to us.

Liquidity and Capital Resources

We anticipate that cash flow from continuing operations over the next twelve months will be adequate to fund our business operations, cash distributions to unitholders, debt amortization and recurring capital expenditures. Capital requirements for development expenditures and acquisitions (excluding Fund acquisitions as described below) may require funding from borrowings and/or equity offerings. We may from time to time purchase or retire outstanding debt securities. Such purchases, if any, will depend on prevailing market conditions, liquidity requirements and other factors. The amounts involved in connection with these transactions could be material to our consolidated financial statements.

We have raised, and may continue to raise, capital for future Real Estate acquisitions through our real estate Fund. We are the general partner and investment manager of the Fund and it is our exclusive investment vehicle for all investments that fit within the Fund’s investment parameters during its three-year investment period.

Acquisitions and Investments

Details of 2010 acquisitions and investments are provided in the “Overview” of Management’s Discussion and Analysis of Financial Conditions and Results of Operations. There were no significant acquisitions or investments during 2009.

Dispositions

Details of 2010 dispositions are provided in the “Overview” of Management’s Discussion and Analysis of Financial Conditions and Results of Operations.

On September 1, 2009, we sold 1999 K Street, a newly developed 250,000 square foot office building in Washington’s Central Business District, for $207,800,000 in cash, which resulted in a net gain of $41,211,000, which is included as a component of “(loss) income from discontinued operations” on our consolidated statement of income.

During 2009, we sold 15 retail properties in separate transactions for an aggregate of $55,000,000 in cash, which resulted in net gains aggregating $4,073,000, which is included as a component of “(loss) income from discontinued operations” on our consolidated statement of income.

Mezzanine Loans

On January 28, 2010, we were repaid the entire $99,314,000 balance of the Equinox loan including accrued interest. This loan, which we acquired in 2006 for $57,500,000, was scheduled to mature in February 2013.

On June 1, 2009, we were repaid the entire $41,758,000 balance of the Charles Square Hotel loan including accrued interest. This loan was scheduled to mature in September 2009.

Financing Activities

Details of 2010 financings are provided in the “Overview” of Management’s Discussion and Analysis of Financial Conditions and Results of Operations.

In April 2009, Vornado sold 17,250,000 common shares, including underwriters’ over-allotment, in an underwritten public offering pursuant to an effective registration statement at an initial public offering price of $43.00 per share. Vornado received net proceeds of $710,226,000, after underwriters’ discount and offering expenses and contributed the net proceeds to us in exchange for 17,250,000 Class A units.

On September 30, 2009, we completed a public offering of $460,000,000 principal amount of 7.875% callable senior unsecured 30-year notes (NYSE: VNOD) due October 1, 2039. The notes were sold to the public at par and may be redeemed at our option, in whole or in part, beginning in October 2014 at a price equal to the principal amount plus accrued and unpaid interest. We received net proceeds of approximately $446,000,000 from the offering which were used to repay debt and for general corporate purposes.

During 2009, we purchased $1,912,724,000 (aggregate face amount) of our convertible senior debentures due to Vornado and $352,740,000 (aggregate face amount) of our senior unsecured notes for $1,877,510,000 and $343,694,000 in cash, respectively. This debt was acquired directly from Vornado and through tender offers and in the open market and has been retired. We also repaid $650,285,000 of existing property level debt and completed $277,000,000 of property level financings. In connection with the above, we recognized an aggregate net loss of $25,915,000 from the early extinguishment of debt on our consolidated statement of income.

Liquidity and Capital Resources – continued

Certain Future Cash Requirements

Development and Redevelopment Expenditures

We expended $156,775,000 in 2010 to complete development projects.

There can be no assurance that any of our development projects will commence, or if commenced, be completed on schedule or within budget.

Liquidity and Capital Resources – continued

Other Capital Expenditures

The following table summarizes other anticipated 2011 capital expenditures.

							New York		Washington, DC				Merchandise
(Amounts in millions, except square foot data)					Total		Office		Office		Retail		Mart			Other (1)
	Expenditures to maintain assets				$	71.0	$	25.0	$	18.0	$	5.0	$	10.0		$	13.0
		Tenant improvements				135.0		40.0		45.0		11.0		37.0			2.0
		Leasing commissions				34.0		12.0		10.0		4.0		7.0			1.0
Total tenant improvements and
			leasing commissions			169.0		52.0		55.0		15.0		44.0			3.0
			Per square foot				$	52.00	$	36.50	$	15.00	$	44.00	⁽²⁾	$	50.00
			Per square foot per annum				$	5.75	$	5.33	$	2.24	$	4.40	⁽²⁾	$	5.60
Total capital expenditures and leasing
			commissions		$	240.0	$	77.0	$	73.0	$	20.0	$	54.0		$	16.0

			Square feet budgeted to be leased
				(in thousands)				1,000		1,500		1,000		1,000
			Weighted average lease term					9		7		7		10


(1)			Primarily 555 California Street, Hotel Pennsylvania and Warehouses.

(2)			Tenant improvements and leasing commissions per square foot budgeted for 2011 leasing activity are $74 ($5.00 per annum) and $21 ($4.00 per annum) for Merchandise Mart office and showroom space, respectively.

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

100

Liquidity and Capital Resources – continued

Distributions

On January 12, 2011, we increased our quarterly Class A distributions to $0.69 per Class A unit (an indicated annual rate of $2.76 per Class A unit. This distributions policy, if continued for all of 2011, would require us to pay out approximately $507,000,000 of cash for Class A distributions. In addition, during 2011, we expect to pay approximately $57,000,000 of cash distributions on outstanding preferred units and approximately $53,000,000 of cash distributions to redeemable security holders.

Financing Activities and Contractual Obligations

We believe that we have complied with the financial covenants required by our revolving credit facilities and our senior unsecured notes and that as of December 31, 2010 we have the ability to incur a substantial amount of additional indebtedness. We have an effective shelf registration for the offering of our equity securities and debt securities that is not limited in amount due to our status as a “well-known seasoned issuer.”

Our credit facilities contain financial covenants that require us to maintain minimum interest coverage and maximum debt to market capitalization ratios, and provides for higher interest rates in the event of a decline in our ratings below Baa3/BBB. Our credit facilities also contain customary conditions precedent to borrowing, including representations and warranties and also contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.

Below is a schedule of our contractual obligations and commitments at December 31, 2010.


(Amounts in thousands)					Less than
Contractual cash obligations (principal and interest⁽¹⁾):			Total		1 Year		1 – 3 Years		3 – 5 Years		Thereafter
	Mortgages and notes payable		$	9,885,682	$	2,226,459	$	2,939,211	$	1,246,902	$	3,473,110
	Senior unsecured notes due 2039 (PINES)			1,501,469		36,225		72,450		72,450		1,320,344
	Operating leases			1,193,361		30,542		62,263		61,732		1,038,824
	Revolving credit facilities			884,313		211,249		673,064		-		-
	Exchangeable senior debentures due 2025			525,007		19,374		505,633		-		-
	Senior unsecured notes due 2015			606,250		21,250		42,500		542,500		-
	Convertible senior debentures due to Vornado			184,731		184,731		-		-		-
	Senior unsecured notes due 2011			124,820		124,820		-		-		-
	Purchase obligations, primarily construction commitments			129,109		117,609		-		11,500		-
	Capital lease obligations			20,253		706		1,413		1,413		16,721
	Convertible senior debentures due to Vornado			10,598		292		10,306		-		-
		Total contractual cash obligations	$	15,065,593	$	2,973,257	$	4,306,840	$	1,936,497	$	5,848,999

Commitments:
	Capital commitments to partially owned entities		$	199,953	$	199,953	$	-	$	-	$	-
	Standby letters of credit			30,015		28,080		1,935		-		-
	Other guarantees			146		146		-		-		-
		Total commitments	$	230,114	$	228,179	$	1,935	$	-	$	-
________________________
(1)	Interest on variable rate debt is computed using rates in effect December 31, 2010.

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Liquidity and Capital Resources – continued

Financing Activities and Contractual Obligations – continued

Insurance

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

Other Commitments and Contingencies

Our mortgage loans are non-recourse to us. However, in certain cases we have provided guarantees or master leased tenant space. These guarantees and master leases terminate either upon the satisfaction of specified circumstances or repayment of the underlying loans. As of December 31, 2010, the aggregate dollar amount of these guarantees and master leases is approximately $263,178,000.

At December 31, 2010, $12,198,000 of letters of credit were outstanding under one of our revolving credit facilities. Our credit facilities contain financial covenants that require us to maintain minimum interest coverage and maximum debt to market capitalization ratios, and provide for higher interest rates in the event of a decline in our ratings below Baa3/BBB. Our credit facilities also contain customary conditions precedent to borrowing, including representations and warranties and also contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.

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

We are committed to fund additional capital to certain of our partially owned entities aggregating approximately $199,953,000, of which $146,622,000 is committed to our real estate Fund. In addition, we have agreed in principle to contribute up to $52,000,000 to a new investment management fund which will be managed by LNR.

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

102

Liquidity and Capital Resources – continued

Litigation

103

Liquidity and Capital Resources – continued

Cash Flows for the Year Ended December 31, 2010

Property rental income is our primary source of cash flow and is dependent upon the occupancy and rental rates of our properties. Other sources of liquidity to fund cash requirements include proceeds from debt financings, including mortgage loans, senior unsecured borrowings, and our revolving credit facilities; proceeds from the issuance of equity securities; and asset sales. Our cash requirements include property operating expenses, capital improvements, tenant improvements, leasing commissions, distributions to unitholders, as well as acquisition and development costs. Our cash and cash equivalents were $690,789,000 at December 31, 2010, a $155,310,000 increase over the balance at December 31, 2009. This increase was primarily due to cash flows from operating activities as discussed below, partially offset by our investment in J.C. Penney Company, Inc.

Our consolidated outstanding debt was $10,893,639,000 at December 31, 2010, a $207,936,000 increase over the balance at December 31, 2009. As of December 31, 2010 and December 31, 2009, $874,000,000 and $852,218,000, respectively, was outstanding under our revolving credit facilities. During 2011 and 2012, $2,070,534,000 and $2,102,531,000 of our outstanding debt matures, respectively. We may refinance our maturing debt as it comes due or choose to repay it.

Cash flows provided by operating activities of $771,086,000 was comprised of (i) net income of $708,031,000, (ii) $127,922,000 of non-cash adjustments, including depreciation and amortization expense, the effect of straight-lining of rental income, equity in net income of partially owned entities, income from the mark-to-market of derivative positions in marketable equity securities, litigation loss accrual and impairment losses, net gain on early extinguishment of debt, (iii) distributions of income from partially owned entities of $61,037,000, (iv) interest received on repayment on mezzanine loan of $40,467,000, partially offset by (v) the net change in operating assets and liabilities of $166,371,000, of which $144,423,000 relates to Real Estate Fund investments.

Net cash used in investing activities of $520,361,000 was comprised of (i) purchases of marketable equity securities, including J.C. Penney Company, Inc. common shares, of $504,096,000, (ii) acquisitions of real estate of $173,413,000, (iii) investments in partially owned entities of $165,170,000, (iv) development and redevelopment expenditures of $156,775,000, (v) additions to real estate of $144,794,000, (vi) investments in mezzanine loans receivable and other of $85,336,000, partially offset by (vii) proceeds from the sale of real estate and related investments of $280,462,000, (viii) restricted cash of $138,586,000, (ix) proceeds from sales of real estate and related investments of $127,736,000, (x) proceeds received from repayment of mezzanine loans receivable of $70,762,000, (xi) distributions of capital from investments in partially owned entities of $51,677,000, and (xii) proceeds from maturing short-term investments of $40,000,000.

Net cash used in financing activities of $95,415,000 was comprised of (i) repayments of borrowing, including the purchase of our senior unsecured notes, of $2,004,718,000, (ii) distributions to Vornado of $474,299,000 (iii) redemption of partnership units of $78,954,000, (iv) distributions to preferred unitholders of $55,669,000, (v) distributions to redeemable security holders of $53,842,000, (vi) repurchase of Class A units related to stock compensation agreements and related tax withholdings of $25,660,000, (vii) debt issuance costs of $14,980,000 partially offset by (viii) proceeds from borrowings of $2,481,883,000, (ix) contributions from noncontrolling interests of $103,831,000 and (x) proceeds received from exercise of employee share options of $26,993,000.

104

LIQUIDITY AND CAPITAL RESOURCES - continued

Capital Expenditures

Our capital expenditures consist of expenditures to maintain assets, tenant improvement allowances and leasing commissions. Recurring capital improvements include expenditures to maintain a property’s competitive position within the market and tenant improvements and leasing commissions necessary to re-lease expiring leases or renew or extend existing leases. Non-recurring capital improvements include expenditures 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. Our development and redevelopment expenditures include all hard and soft costs associated with the development or redevelopment of a property, including tenant improvements, leasing commissions, capitalized interest and operating costs until the property is substantially complete and ready for its intended use.

Below are the details of capital expenditures, leasing commissions and development and redevelopment expenditures and a reconciliation of total expenditures on an accrual basis to the cash expended in the year ended December 31, 2010.

						New York		Washington, DC				Merchandise
(Amounts in thousands)				Total		Office		Office		Retail		Mart		Other
Capital Expenditures (accrual basis):
Expenditures to maintain assets				$	53,051	$	20,472	$	17,532	$	4,838	$	6,099	$	4,110
Tenant improvements					116,939		50,387		17,464		9,827		31,742		7,519
Leasing commissions					30,351		15,325		6,044		2,215		4,761		2,006
Non-recurring capital expenditures					5,381		-		-		915		-		4,466
Total capital expenditures and leasing
	commissions (accrual basis)				205,722		86,184		41,040		17,795		42,602		18,101
Adjustments to reconcile to cash basis:
		Expenditures in the current year
			applicable to prior periods		64,216		35,080		13,296		6,698		4,825		4,317
		Expenditures to be made in future
			periods for the current period		(87,289)		(35,051)		(13,989)		(11,358)		(20,580)		(6,311)
Total capital expenditures and leasing
	commissions (cash basis)			$	182,649	$	86,213	$	40,347	$	13,135	$	26,847	$	16,107

Tenant improvements and leasing commissions:
	Per square foot per annum			$	3.89	$	6.70	$	2.92	$	1.41	$	4.69	$	-
	Percentage of initial rent				10.5%		13.5%		7.6%		5.8%		14.0%		-

Development and Redevelopment
	Expenditures:
220 Central Park South				$	46,769	$	-	$	-	$	-	$	-	$	46,769
Bergen Town Center					18,783		-		-		18,783		-		-
Residential condominiums					15,600		-		-		-		-		15,600
West End 25					9,997		-		9,997		-		-		-
1540 Broadway					8,091		-		-		8,091		-		-
Green Acres Mall					7,679		-		-		7,679		-		-
220 20th Street					4,097		-		4,097		-		-		-
Beverly Connection					3,695		-		-		3,695		-		-
Poughkeepsie, New York					3,054		-		-		3,054		-	��	-
Other					39,010		5,705		12,495		12,621		2,667		5,522
				$	156,775	$	5,705	$	26,589	$	53,923	$	2,667	$	67,891

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LIQUIDITY AND CAPITAL RESOURCES – continued

Cash Flows for the Year Ended December 31, 2009

Our cash and cash equivalents were $535,479,000 at December 31, 2009, a $991,374,000 decrease over the balance at December 31, 2008. This decrease was the result of the acquisition of our convertible senior debentures and senior unsecured notes during 2009, partially offset by cash flows from operating activities as discussed below.

Our consolidated outstanding debt was $10,685,703,000 at December 31, 2009, a $1,495,132,000 decrease from the balance at December 31, 2008. This decrease resulted primarily from the acquisition of our convertible senior debentures due to Vornado and senior unsecured notes during 2009. As of December 31, 2009 and December 31, 2008, $852,218,000 and $358,468,000, respectively, was outstanding under our revolving credit facilities.

Our share of debt of unconsolidated subsidiaries was $3,149,640,000 at December 31, 2009, a $46,945,000 decrease from the balance at December 31, 2008.

Cash flows provided by operating activities of $633,579,000 was comprised of (i) net income of $128,450,000, (ii) $620,523,000 of non-cash adjustments, including depreciation and amortization expense, non-cash impairment losses, the effect of straight-lining of rental income, equity in net income of partially owned entities and (iii) distributions of income from partially owned entities of $30,473,000, partially offset by (iv) the net change in operating assets and liabilities of $145,867,000.

Net cash used in investing activities of $242,201,000 was comprised of (i) development and redevelopment expenditures of $465,205,000, (ii) additions to real estate of $216,669,000, (iii) purchases of marketable equity securities of $90,089,000, (iv) purchases of short-term investments of $55,000,000, (v) investments in partially owned entities of $38,266,000, partially offset by, (vi) proceeds from the sale of real estate (primarily 1999 K Street) of $367,698,000, (vii) proceeds from restricted cash of $111,788,000, (viii) proceeds from the sale of marketable securities of $64,355,000, (ix) proceeds received from repayments on mezzanine loans receivable of $47,397,000, (x) proceeds from maturing short-term investments of $15,000,000 and (xi) distributions of capital from partially owned entities of $16,790,000.

Net cash used in financing activities of $1,382,752,000 was primarily comprised of (i) acquisition and retirement of convertible senior debentures due to Vornado and senior unsecured notes of $2,221,204,000, (ii) repayment of borrowings of $2,075,236,000, (iii) distributions to Vornado of $262,397,000, (iv) distributions to preferred unitholders of $57,076,000, (v) distributions to redeemable security holders of $42,451,000, (vi) repurchase of Class A units related to stock compensation arrangements and related tax withholdings of $32,203,000, (vii) redemption of partnership units of $24,330,000, (viii) debt issuance and other costs of $30,186,000, partially offset by, (ix) proceeds from borrowings of $2,648,175,000 and (xi) proceeds from issuance of Class A units to Vornado of $710,226,000.

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LIQUIDITY AND CAPITAL RESOURCES - continued

Capital Expenditures

						New York		Washington, DC				Merchandise
(Amounts in thousands)				Total		Office		Office		Retail		Mart		Other
Capital Expenditures (accrual basis):
Expenditures to maintain assets				$	41,858	$	15,559	$	17,185	$	3,406	$	5,708	$	-
Tenant improvements					76,514		44,808		18,348		4,190		9,168		-
Leasing commissions					28,913		15,432		10,040		1,710		1,731		-
Non-recurring capital expenditures					35,917		20,741		-		53		-		15,123
Total capital expenditures and leasing
	commissions (accrual basis)				183,202		96,540		45,573		9,359		16,607		15,123
Adjustments to reconcile to cash basis:
		Expenditures in the current year
			applicable to prior periods		138,590		67,903		60,208		4,293		5,224		962
		Expenditures to be made in future
			periods for the current period		(75,397)		(40,516)		(21,627)		(5,244)		(5,900)		(2,110)
Total capital expenditures and leasing
	commissions (cash basis)			$	246,395	$	123,927	$	84,154	$	8,408	$	15,931	$	13,975

Tenant improvements and leasing commissions:
	Per square foot per annum			$	2.79	$	5.51	$	2.10	$	0.82	$	2.03	$	-
	Percentage of initial rent				7.1%		10.5%		5.2%		3.5%		5.5%		-

Development and Redevelopment
	Expenditures:
West End 25				$	64,865	$	-	$	64,865	$	-	$	-	$	-
Bergen Town Center					57,843		-		-		57,843		-		-
Residential condominiums					49,586		-		-		-		-		49,586
220 20th Street					39,256		-		39,256		-		-		-
1999 K Street (sold in September 2009)					31,874		-		31,874		-		-		-
North Bergen, New Jersey					25,764		-		-		25,764		-		-
Manhattan Mall					21,459		-		-		21,459		-		-
Poughkeepsie, New York					20,280		-		-		20,280		-		-
Garfield, New Jersey					16,577		-		-		16,577		-		-
1540 Broadway					15,544		-		-		15,544		-		-
2101 L Street					12,923		-		12,923		-		-		-
Beverly Connection					12,854		-		-		12,854		-		-
40 East 66th Street					10,520		-		-		-		-		10,520
One Penn Plaza					9,839		9,839		-		-		-		-
Other					76,021		11,790		22,849		28,438		6,409		6,535
				$	465,205	$	21,629	$	171,767	$	198,759	$	6,409	$	66,641

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LIQUIDITY AND CAPITAL RESOURCES – continued

Cash Flow for the Year Ended December 31, 2008

Cash and cash equivalents were $1,526,853,000 at December 31, 2008, a $372,258,000 increase over the balance at December 31, 2007. This increase resulted from $817,812,000 of net cash provided by operating activities and $7,677,000 of net cash provided by financing activities, partially offset by $453,231,000 of net cash used in investing activities.

Our consolidated outstanding debt was $12,180,835,000 at December 31, 2008, a $719,768,000 increase over the balance at December 31, 2007. This increase resulted primarily from debt associated with property refinancings. As of December 31, 2008 and December 31, 2007, $358,468,000 and $405,656,000, respectively, was outstanding under our revolving credit facilities.

Our share of debt of unconsolidated subsidiaries was $3,196,585,000 at December 31, 2008, a $93,288,000 decrease from the balance at December 31, 2007.

Cash flows provided by operating activities of $817,812,000 was comprised of (i) net income of $411,445,000, (ii) $401,571,000 of non-cash adjustments, including depreciation and amortization expense, non-cash impairment losses, the effect of straight-lining of rental income, equity in net income of partially owned entities, and (iii) distributions of income from partially owned entities of $44,690,000, partially offset by (iv) the net change in operating assets and liabilities of $39,894,000.

Net cash used in investing activities of $453,231,000 was primarily comprised of (i) development and redevelopment expenditures of $598,688,000, (ii) additions to real estate of $207,885,000, (iii) investments in partially owned entities of $156,227,000, (iv) purchases of marketable equity securities of $164,886,000, partially offset by, (v) proceeds from the sale of real estate (primarily Americold and Tysons Dulles Plaza) of $390,468,000, (vi) distributions of capital from partially owned entities of $218,367,000, (vii) proceeds received from repayments on mezzanine loans receivable of $52,470,000 and (viii) proceeds from the sale of marketable securities of $51,185,000.

Net cash provided by financing activities of $7,677,000 was primarily comprised of (i) proceeds from borrowings of $1,721,974,000 and (ii) proceeds received from exercises of employee unit options of $29,377,000, partially offset by, (iii) repayments of borrowings of $993,665,000, (iv) distributions to Vornado of $561,981,000, (v) distributions to redeemable security holders of $85,419,000 and (vi) distributions to preferred unitholders of $57,112,000.

108

LIQUIDITY AND CAPITAL RESOURCES - continued

Capital Expenditures

						New York		Washington, DC				Merchandise
(Amounts in thousands)				Total		Office		Office		Retail		Mart		Other
Capital Expenditures (accrual basis):
Expenditures to maintain assets				$	50,137	$	23,380	$	10,341	$	4,024	$	10,730	$	1,662
Tenant improvements					57,573		23,433		17,223		7,881		9,036		-
Leasing commissions					29,642		16,037		6,385		3,145		4,075		-
Non-recurring capital expenditures					70,860		28,773		20,888		4,109		11,146		5,944
Total capital expenditures and leasing
	commissions (accrual basis)				208,212		91,623		54,837		19,159		34,987		7,606
Adjustments to reconcile to cash basis:
		Expenditures in the current year
			applicable to prior periods		114,778		57,001		15,539		9,590		28,576		4,072
		Expenditures to be made in future
			periods for the current period		(78,614)		(33,571)		(22,076)		(15,135)		(7,729)		(103)
Total capital expenditures and leasing
	commissions (cash basis)			$	244,376	$	115,053	$	48,300	$	13,614	$	55,834	$	11,575

Tenant improvements and leasing commissions:
	Per square foot per annum			$	3.12	$	5.35	$	2.16	$	2.03	$	3.07	$	-
	Percentage of initial rent				7.0%		7.5%		5.6%		5.3%		9.7%		-

Development and Redevelopment
	Expenditures:
Bergen Town Center				$	126,673	$	-	$	-	$	126,673	$	-	$	-
Residential condominiums					61,867		-		-		-		-		61,867
Manhattan Mall					51,474		-		-		51,474		-		-
1999 K Street (sold in September 2009)					45,742		-		45,742		-		-		-
40 East 66th Street					41,827		-		-		-		-		41,827
220 20th Street					36,014		-		36,014		-		-		-
220 Central Park South					30,533		-		-		-		-		30,533
West End 25					24,002		-		24,002		-		-		-
478-486 Broadway					17,182		-		-		17,182		-		-
Hotel Pennsylvania					15,591		-		-		-		-		15,591
2101 L Street					14,992		-		14,992		-		-		-
Springfield Mall					12,948		-		-		12,948		-		-
Garfield, New Jersey					12,775		-		-		12,775		-		-
North Bergen, New Jersey					10,749		-		-		10,749		-		-
Poughkeepsie, New York					10,404		-		-		10,404		-		-
Green Acres Mall					3,914		-		-		3,914		-		-
Other					82,001		25,959		27,106		20,226		8,710		-
				$	598,688	$	25,959	$	147,856	$	266,345	$	8,710	$	149,818

109

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

(Amounts in thousands, except per unit amounts)			2010						2009
						Weighted	Effect of 1%				Weighted
			December 31,			Average	Change In		December 31,		Average
Consolidated debt:			Balance			Interest Rate	Base Rates		Balance		Interest Rate
	Variable rate		$	2,903,510		1.76%	$	29,035	$	2,657,972		1.67%
	Fixed rate			7,990,129		5.66%		-		8,027,731		5.87%
			$	10,893,639		4.62%		29,035	$	10,685,703		4.83%
Pro-rata share of debt of non-
	consolidated entities (non-recourse):
Variable rate – excluding Toys			$	345,308		1.39%		3,453	$	331,980		2.87%
	Variable rate – Toys			501,623		4.95%		5,016		852,040		3.45%
	Fixed rate (including $1,421,820 and
		$1,077,919 of Toys debt in 2010 and 2009)		2,428,986	⁽¹⁾	6.86%		-		1,965,620		7.16%
			$	3,275,917		5.99%		8,469	$	3,149,640		5.70%
Total change in annual net income							$	37,504
Per Class A unit – diluted							$	0.19



(1)	Excludes $37 billion for our 26.2% pro rata shares of liabilities related to consolidated CMBS and CDO trusts which are non-recourse to LNR and its equity holders, including us.

We may utilize various financial instruments to mitigate the impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies, depending on our analysis of the interest rate environment and the costs and risks of such strategies. As of December 31, 2010, variable rate debt with an aggregate principal amount of $564,707,181 and a weighted average interest rate of 2.84% was subject to LIBOR caps. These caps are based on a notional amount of $558,844,181 and cap LIBOR at a weighted average rate of 5.68%.

As of December 31, 2010, we have investments in mezzanine loans with an aggregate carrying amount of $138,434,000 that are based on variable interest rates which partially mitigate our exposure to a change in interest rates on our variable rate debt.

Fair Value of Debt

The estimated fair value of our consolidated debt is calculated based on current market prices and discounted cash flows at the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt. As of December 31, 2010, the estimated fair value of our consolidated debt was $11,190,189,000.

Derivative Instruments

We have, and may in the future enter into, derivative positions that do not qualify for hedge accounting treatment, including our economic interest in J.C. Penney common shares. Because these derivatives do not qualify for hedge accounting treatment, the gains or losses resulting from their mark-to-market at the end of each reporting period are recognized as an increase or decrease in “interest and other investment income (loss), net” on our consolidated statements of income. In addition, we are, and may in the future be, subject to additional expense based on the notional amount of the derivative positions and a specified spread over LIBOR. Because the market value of these instruments can vary significantly between periods, we may experience significant fluctuations in the amount of our investment income or expense in any given period. During the year ended December 31, 2010 we recognized $130,153,000 of income from derivative instruments.

110

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

		Page

	Report of Independent Registered Public Accounting Firm	112

	Consolidated Balance Sheets at December 31, 2010 and 2009	113

	Consolidated Statements of Income for the years ended December 31, 2010, 2009 and 2008	114

	Consolidated Statements of Changes in Equity for the years ended December 31, 2010, 2009 and 2008	115

	Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008	118

	Notes to Consolidated Financial Statements	120

111

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Partners

Vornado Realty L.P.

New York, New York

We have audited the accompanying consolidated balance sheets of Vornado Realty L.P. (the “Company”) as of December 31, 2010 and 2009, and the related consolidated statements of income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2010. Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Vornado Realty L.P. at December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2011 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey

February 25, 2011

112

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VORNADO REALTY L.P.
CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except unit and per unit amounts)			December 31,		December 31,
ASSETS			2010		2009
Real estate, at cost:
	Land		$	4,598,303	$	4,472,655
	Buildings and improvements			12,733,487		12,660,987
	Development costs and construction in progress			218,156		313,184
	Leasehold improvements and equipment			124,976		127,419
		Total		17,674,922		17,574,245
	Less accumulated depreciation and amortization			(2,763,997)		(2,441,344)
Real estate, net				14,910,925		15,132,901
Cash and cash equivalents				690,789		535,479
Restricted cash				200,822		293,950
Short-term investments				-		40,000
Marketable securities				766,116		380,652
Accounts receivable, net of allowance for doubtful accounts of $62,979 and $46,708				157,146		157,325
Investments in partially owned entities				927,672		799,832
Investment in Toys "R" Us				447,334		409,453
Mezzanine loans receivable, net of allowance of $73,216 and $190,738				202,412		203,286
Real Estate Fund investments				144,423		-
Receivable arising from the straight-lining of rents, net of allowance of $7,323 and $4,672				720,806		670,225
Deferred leasing and financing costs, net of accumulated amortization of $223,131 and $182,106				368,314		310,884
Identified intangible assets, net of accumulated amortization of $338,508 and $311,118				348,745		439,549
Assets related to discontinued operations				234,464		337,711
Due from officers				13,187		13,150
Other assets				384,316		461,075
			$	20,517,471	$	20,185,472

LIABILITIES, REDEEMABLE PARTNERSHIP UNITS AND EQUITY
Notes and mortgages payable			$	8,259,298	$	8,191,854
Senior unsecured notes				1,082,928		711,716
Exchangeable senior debentures				491,000		484,457
Convertible senior debentures due to Vornado				186,413		445,458
Revolving credit facility debt				874,000		852,218
Accounts payable and accrued expenses				438,479		475,242
Deferred compensation plan				91,549		80,443
Deferred credit				583,369		655,283
Deferred tax liabilities				13,278		16,495
Liabilities related to discontinued operations				255,922		282,770
Other liabilities				82,856		88,502
	Total liabilities			12,359,092		12,284,438
Commitments and contingencies
Redeemable partnership units:
	Class A units - 12,804,202 and 13,892,313 units outstanding			1,066,974		971,628
	Series D cumulative redeemable preferred units - 10,400,001 and 11,200,000 units outstanding			261,000		280,000
		Total redeemable partnership units		1,327,974		1,251,628
Equity:
	Partners’ capital			7,723,133		7,791,911
	Earnings less than distributions			(1,480,876)		(1,577,591)
	Accumulated other comprehensive income			73,453		28,449
		Total Vornado Realty L.P. equity		6,315,710		6,242,769
Noncontrolling interest in consolidated subsidiaries				514,695		406,637
	Total equity			6,830,405		6,649,406
			$	20,517,471	$	20,185,472

See notes to the consolidated financial statements.

113

VORNADO REALTY L.P.

CONSOLIDATED STATEMENTS OF INCOME


		Year Ended December 31,
		2010		2009		2008
(Amounts in thousands, except per unit amounts)
REVENUES:
	Property rentals	$	2,271,357	$	2,182,194	$	2,160,073
	Tenant expense reimbursements		360,448		357,186		353,602
	Fee and other income		147,922		157,312		126,816
Total revenues			2,779,727		2,696,692		2,640,491
EXPENSES:
	Operating		1,099,478		1,067,229		1,048,537
	Depreciation and amortization		530,704		531,637		529,134
	General and administrative		214,225		231,010		193,969
	Impairment losses and acquisition costs		129,458		75,963		81,447
Total expenses			1,973,865		1,905,839		1,853,087
Operating income			805,862		790,853		787,404
Income applicable to Toys "R" Us			71,624		92,300		2,380
Income (loss) from partially owned entities			22,438		(19,910)		(159,207)
(Loss) from Real Estate Fund (includes $805 of expenses that are
	attributable to noncontrolling interests)		(303)		-		-
Interest and other investment income (loss), net			235,315		(116,350)		(2,747)
Interest and debt expense (including amortization of deferred
	financing costs of $18,542, $17,593 and $17,409 respectively)		(560,270)		(617,994)		(619,531)
Net gain (loss) on early extinguishment of debt			94,789		(25,915)		9,820
Net gain on disposition of wholly owned and partially owned assets			81,432		5,641		7,757
Income before income taxes			750,887		108,625		25,876
Income tax (expense) benefit			(22,476)		(20,642)		204,644
Income from continuing operations			728,411		87,983		230,520
(Loss) income from discontinued operations			(20,380)		40,467		180,925
Net income			708,031		128,450		411,445
Net (income) loss attributable to noncontrolling interests in
	consolidated subsidiaries		(4,920)		2,839		3,263
Net income attributable to Vornado Realty L.P.			703,111		131,289		414,708
Preferred unit distributions			(66,729)		(76,747)		(79,453)
Discount on preferred unit redemptions			4,382		-		-
NET INCOME attributable to Class A unitholders		$	640,764	$	54,542	$	335,255


INCOME PER CLASS A UNIT - BASIC:
	Income from continuing operations	$	3.37	$	0.05	$	0.89
	(Loss) income from discontinued operations		(0.10)		0.22		1.08
	Net income per Class A unit	$	3.27	$	0.27	$	1.97
	Weighted average units		195,002		184,893		168,057

INCOME PER CLASS A UNIT - DILUTED:
	Income from continuing operations	$	3.33	$	0.05	$	0.86
	(Loss) income from discontinued operations		(0.10)		0.22		1.05
	Net income per Class A unit	$	3.23	$	0.27	$	1.91
	Weighted average units		197,360		187,419		172,907

See notes to consolidated financial statements.

114

VORNADO REALTY L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

														Accumulated
(Amounts in thousands)							Class A Units					Earnings		Other		Non-
			Preferred Units				Owned by Vornado					Less Than		Comprehensive		controlling		Total
			Units		Amount		Units			Amount		Distributions		Income (Loss)		Interests		Equity
Balance, December 31, 2007				33,980	$	825,095		153,077		$	5,497,252	$	(757,177)	$	29,772	$	416,298	$	6,011,240
Net income (excludes income attributable to redeemable partnership units - See Note 10)				-		-		-			-		359,297		-		3,263		362,560
Distributions to Vornado				-		-		-			-		(561,981)		-		-		(561,981)
Distributions to preferred unitholders				-		-		-			-		(57,091)		-		-		(57,091)
Conversion of Series A
	preferred units to Class A units			(26)		(1,312)		36			1,312		-		-		-		-
Deferred compensation units
	and options			-		-		(5)			11,411		-		-		-		11,411
Class A units issued to Vornado:
	Upon redemption of redeemable
		Class A units, at redemption value		-		-		1,012			82,330		-		-		-		82,330
	Under Vornado’s employees' share
		option plan		-		-		1,025			26,904		(30,345)		-		-		(3,441)
	In connection with Vornado’s
		dividend reinvestment plan		-		-		34			2,374		-		-		-		2,374
Change in unrealized net gain									��
	or loss on securities
	available-for-sale			-		-		-			-		-		(20,150)		-		(20,150)
Sale of securities available-for-sale				-		-		-			-		-		6,128		-		6,128
Change in pension plans				-		-		-			-		-		3,251		-		3,251
Adjustments to carry redeemable
	Class A units at redemption value			-		-		-			400,647		-		-		-		400,647
Conversion of Series F-1
	preferred units			-		-		107			10,000		-		-		-		10,000
Other				-		24		-			(59)		(43)		(25,900)		(6,648)		(32,626)
Balance, December 31, 2008				33,954	$	823,807		155,286		$	6,032,171	$	(1,047,340)	$	(6,899)	$	412,913	$	6,214,652

115

VORNADO REALTY L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED

													Accumulated
(Amounts in thousands)							Class A Units				Earnings		Other		Non-
			Preferred Units				Owned by Vornado				Less Than		Comprehensive		controlling		Total
			Units		Amount		Units		Amount		Distributions		Income (Loss)		Interests		Equity
Balance, December 31, 2008				33,954	$	823,807		155,286	$	6,032,171	$	(1,047,340)	$	(6,899)	$	412,913	$	6,214,652
Net income/loss (excludes income attributable to redeemable partnership units - See Note 10)				-		-		-		-		106,169		-		(2,839)		103,330
Distributions to Vornado				-		-		6,441		285,596		(547,993)		-		-		(262,397)
Distributions to preferred unitholders				-		-		-		-		(57,076)		-		-		(57,076)
Class A units issued to Vornado:
	In connection with April 2009
		public offering		-		-		17,250		710,226		-		-		-		710,226
	Upon redemption of redeemable
		Class A units, at redemption value		-		-		1,768		90,955		-		-		-		90,955
	Under Vornado’s employees' share
		option plan		-		-		468		1,717		(31,355)		-		-		(29,638)
Conversion of Series A
	preferred units to Class A units			(2)		(89)		2		89		-		-		-		-
Deferred compensation units
	and options			-		-		(1)		13,092		-		-		-		13,092
Change in unrealized net gain
	or loss on securities
	available-for-sale			-		-		-		-		-		6,147		-		6,147
Sale of securities available-for-sale				-		-		-		-		-		7,715		-		7,715
Our share of partially owned
	entities OCI adjustments			-		-		-		-		-		22,052		-		22,052
Voluntary surrender of equity
	awards on March 31, 2009			-		-		-		32,588		-		-		-		32,588
Adjustments to carry redeemable
	Class A units at redemption value			-		-		-		(167,049)		-		-		-		(167,049)
Allocation of cash paid to the equity
	component upon repurchase of
	convertible senior debentures due to Vornado			-		-		-		(30,159)		-		-		-		(30,159)
Other				-		(32)		-		(1,001)		4		(566)		(3,437)		(5,032)
Balance, December 31, 2009				33,952	$	823,686		181,214	$	6,968,225	$	(1,577,591)	$	28,449	$	406,637	$	6,649,406

116

VORNADO REALTY L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED

													Accumulated
(Amounts in thousands)							Class A Units				Earnings		Other		Non-
			Preferred Units				Owned by Vornado				Less Than		Comprehensive		controlling		Total
			Units		Amount		Units		Amount		Distributions		Income (Loss)		Interests		Equity
Balance, December 31, 2009				33,952	$	823,686		181,214	$	6,968,225	$	(1,577,591)	$	28,449	$	406,637	$	6,649,406
Net income (excludes income attributable to redeemable partnership units - See Note 10)				-		-		-		-		647,883		-		4,920		652,803
Distributions to Vornado				-		-		-		-		(474,299)		-		-		(474,299)
Distributions to preferred unitholders				-		-		-		-		(55,669)		-		-		(55,669)
Redemption of preferred units				(1,600)		(39,982)		-		-		4,382		-		-		(35,600)
Class A units issued to Vornado:
	Upon redemption of redeemable
		Class A units, at redemption value		-		-		1,548		126,764		-		-		-		126,764
	Under Vornado’s employees' share
		option plan		-		-		812		25,323		(25,584)		-		-		(261)
	In connection with Vornado’s
		dividend reinvestment plan		-		-		22		1,657		-		-		-		1,657
Limited partners' contributions:
	Real Estate Fund			-		-		-		-		-		-		93,583		93,583
	Other			-		-		-		-		-		-		8,783		8,783
Conversion of Series A preferred units
	to Class A units			(12)		(616)		18		616		-		-		-		-
Deferred compensation units
	and options			-		-		48		9,347		-		-		-		9,347
Change in unrealized net gain
	or loss on securities
	available-for-sale			-		-		-		-		-		46,447		-		46,447
Sale of securities available-for-sale				-		-		-		-		-		(13,160)				(13,160)
Our share of partially owned
	entities OCI adjustments			-		-		-		-		-		11,853		-		11,853
Adjustments to carry redeemable
	Class A units at redemption value			-		-		-		(191,826)		-		-		-		(191,826)
Other				-		-		-		(61)		2		(136)		772		577
Balance, December 31, 2010				32,340	$	783,088		183,662	$	6,940,045	$	(1,480,876)	$	73,453	$	514,695	$	6,830,405

117

VORNADO REALTY L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS


			Year Ended December 31,
			2010		2009		2008
(Amounts in thousands)
Cash Flows from Operating Activities:
Net income			$	708,031	$	128,450	$	411,445
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization (including amortization of deferred financing costs)			556,312		559,053		577,338
	(Income) loss from the mark-to-market of derivative positions in marketable securities			(130,153)		-		33,740
	Litigation loss accrual and impairment losses			137,367		91,184		157,799
	Net (gain) loss on early extinguishment of debt			(97,728)		25,915		(9,820)
	Equity in net (income) loss of partially owned entities, including Toys “R” Us			(94,062)		(72,390)		156,459
	Straight-lining of rental income			(76,926)		(98,355)		(91,060)
	Amortization of below-market leases, net			(66,202)		(72,481)		(96,176)
	Net gain on sale of real estate			(2,506)		(45,284)		(57,523)
	Distributions of income from partially owned entities			61,037		30,473		44,690
	Mezzanine loans loss accrual (reversal)			(53,100)		190,738		(10,300)
	Interest received on repayment of mezzanine loan			40,467		-		-
	Other non-cash adjustments			36,352		15,196		83,735
	Net gain on disposition of wholly owned and partially owned assets			(81,432)		(5,641)		(7,757)
	Write-off of unamortized costs from the voluntary surrender of equity awards			-		32,588		-
	Reversal of H Street deferred tax liability			-		-		(222,174)
	Net gain on sale of Americold Realty Trust			-		-		(112,690)
	Changes in operating assets and liabilities:
		Real Estate Fund investments		(144,423)		-		-
		Other assets		(66,736)		(61,878)		(27,382)
		Prepaid assets		6,321		(90,519)		(12,449)
		Accounts payable and accrued expenses		2,645		(3,606)		(5,207)
		Accounts receivable, net		2,019		15,383		(1,646)
		Other liabilities		33,803		(5,247)		6,790
Net cash provided by operating activities				771,086		633,579		817,812
Cash Flows from Investing Activities:
	Purchases of marketable securities including J.C. Penney Company, Inc. common
		shares and other		(504,096)		(90,089)		(164,886)
	Proceeds from sales of, and return of investment in, marketable securities			280,462		64,355		51,185
	Acquisitions of real estate and other			(173,413)		-		(42,642)
	Investments in partially owned entities			(165,170)		(38,266)		(156,227)
	Development costs and construction in progress			(156,775)		(465,205)		(598,688)
	Additions to real estate			(144,794)		(216,669)		(207,885)
	Restricted cash			138,586		111,788		12,004
	Proceeds from sales of real estate and related investments			127,736		367,698		390,468
	Investments in mezzanine loans receivable and other			(85,336)		-		(7,397)
	Proceeds from repayment of mezzanine loans receivable			70,762		47,397		52,470
	Distributions of capital from partially owned entities			51,677		16,790		218,367
	Proceeds from maturing short-term investments			40,000		15,000		-
	Purchases of short-term investments			-		(55,000)		-
Net cash used in investing activities				(520,361)		(242,201)		(453,231)

See notes to consolidated financial statements.

118

VORNADO REALTY L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

				Year Ended December 31,
				2010		2009		2008
(Amounts in thousands)
Cash Flows from Financing Activities:
	Proceeds from borrowings			$	2,481,883	$	2,648,175	$	1,721,974
	Repayments of borrowings				(1,564,143)		(2,075,236)		(993,665)
	Distributions to Vornado				(474,299)		(262,397)		(561,981)
	Contributions from noncontrolling interests in consolidated subsidiaries				103,831		2,180		-
	Redemption of partnership units				(78,954)		(24,330)		-
	Distributions to preferred unitholders				(55,669)		(57,076)		(57,112)
	Distributions to redeemable security holders				(53,842)		(42,451)		(85,419)
	Repurchase of Class A units related to stock compensation agreements and related
		tax witholdings			(25,660)		(32,203)		(31,198)
	Debt issuance and other costs				(14,980)		(30,186)		(14,299)
	Acquisition of convertible senior debentures and senior unsecured notes				(440,575)		(2,221,204)		-
	Proceeds from issuance of Class A units to Vornado				-		710,226		-
	Proceeds received from exercise of employee unit options				26,993		1,750		29,377
Net cash (used in) provided by financing activities					��(95,415)		(1,382,752)		7,677
Net increase (decrease) in cash and cash equivalents					155,310		(991,374)		372,258
Cash and cash equivalents at beginning of period					535,479		1,526,853		1,154,595
Cash and cash equivalents at end of period				$	690,789	$	535,479	$	1,526,853


Supplemental Disclosure of Cash Flow Information:
	Cash payments for interest (including capitalized interest of $864, $17,256 and $63,063)			$	549,327	$	648,829	$	658,376
	Cash payments for income taxes			$	23,960	$	21,775	$	22,005


Non-Cash Investing and Financing Activities:
	Adjustments to carry redeemable Class A units at redemption value			$	(191,826)	$	(167,049)	$	400,647
	Issuance of Class A units upon redemption of redeemable partnership units				126,764		90,955		82,330
	Net unrealized gain (loss) on securities available for sale				46,447		6,147		(20,150)
	Distribution to Vornado paid in Class A units				-		285,596		-
	Distribution to redeemable security holders paid in Class A units				-		23,876		-
	Financing assumed in acquisitions				102,616		-		-
	Increase in assets and liabilities resulting from the consolidation of investments
		previously accounted for on the equity method:
			Real estate, net		102,804		-		197,600
			Notes and mortgages payable		57,563		-		100,000
	Decrease in assets and liabilities resulting from the deconsolidation of investments
		that were previously consolidated:
			Real estate, net		(401,857)		-		2,069
			Notes and mortgages payable		(316,490)		-		-


See notes to consolidated financial statements.

119

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Business

Vornado Realty L.P. (the “Operating Partnership” and/or the “Company”), is a Delaware limited partnership. Vornado Realty Trust (“Vornado”) is the sole general partner of, and owned approximately 93.2% of the common limited partnership interest in the Operating Partnership at December 31, 2010. All references to “we,” “us,” “our,” the “Company” and “Operating Partnership” refer to Vornado Realty L.P. and its consolidated subsidiaries.

As of December 31, 2010, we own:

Office Properties:

(i) all or portions of 28 properties aggregating 17.4 million square feet in the New York City metropolitan area (primarily Manhattan);

(ii) all or portions of 82 properties aggregating 21.1 million square feet in the Washington, DC / Northern Virginia area;

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

Retail Properties:

(iv) 161 properties aggregating 25.6 million square feet primarily in Manhattan, the northeast states, California and Puerto Rico;

Merchandise Mart Properties:

(v) 6 properties aggregating 6.9 million square feet of showroom and office space, including the 3.5 million square foot Merchandise Mart in Chicago;

Toys “R” Us, Inc. (“Toys”):

(vi) a 32.7% interest in Toys which owns and/or operates 1,589 stores worldwide, including 857 stores in the United States and 732 stores internationally;

Other Investments:

(vii) 32.4% of the common stock of Alexander’s, Inc. (NYSE: ALX), which has seven properties aggregating 3.2 million square feet in the greater New York metropolitan area;

(viii) the Hotel Pennsylvania containing 1.4 million square feet in New York City;

(ix) a 9.9% economic interest in J.C. Penney Company, Inc. (NYSE:JCP), a major retailer that operates 1,108 department stores nationwide;

(x) a 26.2% equity interest in LNR Property Corporation, an industry leading servicer and special servicer of commercial mortgage loans and CMBS and a diversified real estate, investment and finance company;

(xii) other real estate and investments, including marketable securities and mezzanine loans on real estate.

120

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of VornadoRealty L.P.and its consolidated subsidiaries. All significant inter-company amounts have been eliminated. We account for unconsolidated partially owned entities on the equity method of accounting. Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities 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 materially from those estimates.

Recently Issued Accounting Literature

In the fourth quarter of 2010, the Financial Accounting Standards Board (“FASB”) issued an update to the guidance contained in Accounting Standards Codification (“ASC”) 310,Receivables. The new guidance requires companies to provide more information about the credit quality of their financing receivables in the disclosures to financial statements including, but not limited to, significant purchases and sales of financing receivables, aging information and credit quality indicators. The adoption of this accounting guidance did not have a significant impact on our consolidated financial statements.

On January 21, 2010, the FASB issued an update to ASC 820,Fair Value Measurements and Disclosures, adding new requirements for disclosures about transfers into and out of Levels 1 and 2 fair value measurements and additional disclosures about the activity within Level 3 fair value measurements. The adoption of this guidance on January 1, 2010 did not have a material effect on our consolidated financial statements.

In June 2009, the FASB issued an update to ASC 810,Consolidation, which modifies the existing quantitative guidance used in determining the primary beneficiary of a variable interest entity (“VIE”) by requiring entities to qualitatively assess whether an enterprise is a primary beneficiary, based on whether the entity has (i) power over the significant activities of the VIE, and (ii) an obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. The adoption of this guidance on January 1, 2010 did not have a material effect on our consolidated financial statements.

Significant Accounting Policies

Real Estate: Real estate is carried at cost, net of accumulated depreciation and amortization. Betterments, major renewals and certain costs directly related to the improvement and leasing of real estate are capitalized. Maintenance and repairs are expensed as incurred. For redevelopment of existing operating properties, the net book value of the existing property under redevelopment plus the cost for the construction and improvements incurred in connection with the redevelopment are capitalized to the extent the capitalized costs of the property do not exceed the estimated fair value of the redeveloped property when complete. If the cost of the redeveloped property, including the undepreciated net book value of the property carried forward, exceeds the estimated fair value of re developed property, the excess is charged to expense. Depreciation is provided on a straight-line basis over estimated useful lives which range from 7 to 40 years. Tenant allowances are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets. Additions to real estate include interest expense capitalized during construction of $864,000and $17,256,000, for the years ended December 31, 2010 and 2009, respectively.

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles such as acquired above and below-market leases and acquired in-place leases and tenant relationships) and acquired liabilities and we allocate the purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions.

121

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Basis of Presentation and Significant Accounting Policies – continued

(Amounts in thousands)		For the Year Ended December 31,
		2010		2009		2008
Springfield Mall	$	64,500	$	-	$	-
Condominium units held for sale (see page 124)		30,013		13,667		23,625
Other real estate assets		28,000		6,989		1,645
Acquisition costs		6,945		-		3,009
Undeveloped land		-		38,347		12,500
Real estate - development related		-		16,960		40,668
	$	129,458	$	75,963	$	81,447

Partially Owned Entities: In determining whether we have a controlling interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity in which we have power over significant activities of the entity and the obligation to absorb losses or receive benefits that could potentially be significant to the entity. We have concluded that we do not control a partially owned entity if the entity is not considered a variable interest entity and the approval of all of the partners/members is contractually required with respect to major decisions, such as operating and capital budgets, the sale, exchange or other disposition of real property, the hiring of a chief executive officer, the commencement, compromise or settlement of any lawsuit, legal proceeding or arbitration or the placement of new or additional financing secured by assets of the venture. We account for investments on the equity method when the requirements for consolidation are not met, and we have significant influence over the operations of the investee. Equity method investments are initially recorded at cost and subsequently adjusted for our share of net income or loss and cash contributions and distributions each period. Investments that do not qualify for consolidation or equity method accounting are accounted for on the cost method. Investments in partially owned entities are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods and available information at the time the analyses are prepared.

The table below summarizes non-cash impairment losses recognized on investments in partially owned entities in the years ended December 31, 2010, 2009 and 2008.

(Amounts in thousands)		For the Year Ended December 31,
		2010		2009		2008
Investment in Lexington Realty Trust	$	-	$	-	$	107,882
Other		11,481		17,820		96,037
	$	11,481	$	17,820	$	203,919

122

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Basis of Presentation and Significant Accounting Policies – continued

Identified Intangibles: We record acquired intangible assets (including acquired above-market leases, tenant relationships and acquired in-place leases) and acquired intangible liabilities (including below–market leases) at their estimated fair value separate and apart from goodwill. We amortize identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired. Intangible assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is measured based on the excess of carrying amount of the identified intangible over its estimated fair value. As of December 31, 2010 and 2009, the carrying amounts of identified intangible assets were $348,745,000 and $439,549,000, respectively. The carrying amounts of identified intangible liabilities, a component of “deferred credit” on our consolidated balance sheets, were $528,905,000 and $606,390,000, respectively.

Mezzanine Loans Receivable: We invest in mezzanine loans of entities that have significant real estate assets. These investments, which are subordinate to the mortgage loans secured by the real property, are generally secured by pledges of the equity interests of the entities owning the underlying real estate. We record these investments at the stated principal amount net of any unamortized discount or premium. We accrete or amortize any discount or premium over the life of the related receivable utilizing the effective interest method or straight-line method, if the result is not materially different. We evaluate the collectability of both interest and principal of each of our loans whenever events or changes in circumstances indicate such amounts may not be recoverable. A loan is impaired when it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the estimated fair value of the loan or, as a practical expedient, to the value of the collateral if the loan is collateral dependent. Interest on impaired loans is recognized when received in cash. In the year ended December 31, 2009 we recorded a $190,738,000 loss accrual on our portfolio of mezzanine loans, $53,100,000 of which was reversed in 2010. In 2008, upon sale of a sub-participation in a loan, we reversed $10,300,000 of a $57,000,000 loss accrual recognized in 2007.

Cash and Cash Equivalents: Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. The majority of our cash and cash equivalents are held at major commercial banks which may at times exceed the Federal Deposit Insurance Corporation limit. To date, we have not experienced any losses on our invested cash.

Restricted Cash: Restricted cash consists of security deposits, cash restricted in connection with our deferred compensation plan and cash escrowed under loan agreements for debt service, real estate taxes, property insurance and capital improvements.

Allowance for Doubtful Accounts: We periodically evaluate the collectibility of amounts due from tenants and maintain an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under the lease agreements. We also maintain an allowance for receivables arising from the straight-lining of rents. This receivable arises from earnings recognized in excess of amounts currently due under the lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates. As of December 31, 2010 and 2009, we had $62,979,000 and $46,708,000, respectively, in allowances for doubtful accounts. In addition, as of December 31, 2010 and 2009, we had $7,323,000 and $4,672,000, respectively, in allowances for receivables arising from the straight-lining of rents.

Deferred Charges: Direct financing costs are deferred and amortized over the terms of the related agreements as a component of interest expense. Direct costs related to successful leasing activities are capitalized and amortized on a straight line basis over the lives of the related leases. All other deferred charges are amortized on a straight line basis, which approximates the effective interest rate method, in accordance with the terms of the agreements to which they relate.

Stock-Based Compensation: Stock-based compensation consists of awards to certain employees and officers and consists of stock options, restricted stock, restricted Operating Partnership units and out-performance plan awards. We account for all stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation.

123

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Basis of Presentation and Significant Accounting Policies – continued

Revenue Recognition: We have the following revenue sources and revenue recognition policies:

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

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

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

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

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

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

Condominium Units Held For Sale: Condominium units held for sale are carried at the lower of cost or expected net sales proceeds. As of December 31, 2010 and 2009, condominiums held for sale, which are included in “other assets” on our consolidated balance sheet, aggregate $84,397,000 and $187,050,000, respectively and consist of substantially completed units at our 40 East 66^th Street property in Manhattan, The Bryant in Boston and Granite Park in Pasadena. Revenue from condominium unit sales is recognized upon closing of the sale (the “completed contract method”), as all conditions for full profit recognition have been met at that time. We use the relative sales value method to allocate costs to individual condominium units. Net gains on sales of condominiums units are included in “net gains on disposition of wholly owned and partially owned assets” on our consolidated statements of income. In the years ended December 31, 2010, 2009 and 2008, we recognized non-cash impairment losses related to certain of these condominiums aggregating $30,013,000, $13,667,000 and $23,625,000, respectively, based on our assessments of the expected net sales proceeds associated with these condominium projects. These losses are included in “impairment losses and acquisition costs” on our consolidated statements of income.

Derivative Instruments and Hedging Activities: ASC 815, Derivatives and Hedging, as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. As of December 31, 2010 and 2009, our derivative instruments consisted primarily of a portion of our investment in J.C. Penney common shares (see Note 4 – Marketable Securities and Derivative Instruments) and interest rate caps. We record all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (loss) (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. We assess the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. For derivatives not designated as hedges, changes in fair value are recognized in earnings.

124

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Basis of Presentation and Significant Accounting Policies – continued

Income Per Class A Unit: Basic income per Class A unit is computed based on weighted average Class A unit outstanding. Diluted income per Class A unit considers the effect of all potentially dilutive unit equivalents, including outstanding employee unit options, restricted units and convertible or redeemable securities.

Income Taxes: As a limited partnership, our partners are required to report their respective share of taxable income on their individual tax returns. The provision for income taxes in our consolidated financial statements relate to certain taxable REIT subsidiaries pursuant to an amendment to the Internal Revenue Code that became effective January 1, 2001. Taxable REIT subsidiaries may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to Federal and State income tax at regular corporate tax rates. Our taxable REIT subsidiaries had a combined current income tax liability of approximately $24,858,000 and $20,025,000 for the years ended December 31, 2010 and 2009, respectively, and have immaterial differen ces between the financial reporting and tax basis of assets and liabilities.

In connection with purchase accounting for H Street, in July 2005 and April 2007 we recorded an aggregate of $222,174,000 of deferred tax liabilities representing the differences between the tax basis and the book basis of the acquired assets and liabilities multiplied by the effective tax rate. We were required to record these deferred tax liabilities because H Street and its partially owned entities were operated as C Corporations at the time they were acquired. As of January 16, 2008, we had completed all of the actions necessary to enable these entities to elect REIT status effective for the tax year beginning on January 1, 2008. Consequently, in the first quarter of 2008, we reversed the deferred tax liabilities and recognized an income tax benefit of $222,174,000 in our consolidated statement of income.

125

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. Acquisitions

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

On July 6, 2010, we completed an initial closing of the Fund with aggregate equity commitments of $550,000,000, of which we committed $200,000,000. We closed on an additional $250,000,000 of equity commitments in the first quarter of 2011. We are the general partner and investment manager of the Fund and it is our exclusive investment vehicle during the three-year investment period for all investments that fit within the Fund’s investment parameters, including debt, equity and other interests in real estate, and excluding (i) investments in vacant land and ground-up development; (ii) investments acquired by merger or primarily for our securities or properties; (iii) properties which can be combined with or relate to our existing properties; (iv) securities of commercial mortgage loan servicers and inve stments derived from any such investments; (v) noncontrolling interests in equity and debt securities; and (vi) investments located outside of North America. The Fund has a term of eight years. We consolidate the accounts of the Fund into our consolidated financial statements. In 2010, we incurred $6,482,000 for organization costs of the Fund, net of the Fund’s reimbursement to us, which are included in “general and administrative” expenses on our consolidated statement of income.

Other

126

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. Marketable Securities and Derivative Instruments

Marketable Securities

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

We evaluate our portfolio of marketable securities for impairment each reporting period. For each of the securities in our portfolio with unrealized losses, we review the underlying cause of the decline in value and the estimated recovery period, as well as the severity and duration of the decline. In our evaluation, we consider our ability and intent to hold these investments for a reasonable period of time sufficient for us to recover our cost basis. We also evaluate the near-term prospects for each of these investments in relation to the severity and duration of the decline. During 2009 and 2008, we concluded that certain of our investments in marketable securities were “other-than-temporarily” impaired and recognized an aggregate of $3,361,000 and $76,352,000, respectively, of non-cash impairment losses. These charges are included as a component of “interest and other investment income (loss), net” on our consolidated statements of income. Our conclusions were based on the severity and duration of the decline in the market value of these securities and our inability to forecast a recovery in the near term. No impairment losses were recognized in the year ended December 31, 2010.

The carrying amount of marketable securities classified as available for sale and their corresponding fair values at December 31, 2010 and December 31, 2009 are as follows:

		As of December 31, 2010				As of December 31, 2009
		Carrying		Fair		Carrying		Fair
(Amounts in thousands)		Amount		Value		Amount		Value
	Equity securities	$	647,848	$	647,848	$	79,925	$	79,925
	Debt securities		118,268		118,268		300,727		319,393
		$	766,116	$	766,116	$	380,652	$	399,318

During 2010, 2009 and 2008 we sold certain of our marketable securities for aggregate proceeds of $281,486,000, $64,355,000 and $51,185,000, respectively. In connection therewith, we recognized $22,604,000, $3,834,000 and $2,028,000, respectively, of net gains which are included as a component of "net gain on disposition of wholly owned and partially owned assets" on our consolidated statements of income. At December 31, 2010 and December 31, 2009, our marketable securities portfolio had $45,089,000 and $13,026,000, respectively, of gross unrealized gains. There were no unrealized losses at December 31, 2010 and $1,223,000 of gross unrealized losses at December 31, 2009.

127

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. Marketable Securities and Derivative Instruments - continued

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

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

We also own an economic interest in 4,815,990 common shares through a forward contract executed on October 7, 2010, at a weighted average strike price of $28.65 per share, or $137,989,000 in the aggregate. The contract may be settled, at our election, in cash or common shares, in whole or in part, at any time prior to October 9, 2012. The counterparty may accelerate settlement, in whole or in part, upon one year’s notice to us. The strike price per share increases at an annual rate of LIBOR plus 80 basis points and decreases for dividends received on the shares. The contract is a derivative instrument that does not qualify for hedge accounting treatment. Mark-to-market adjustments on the underlying common shares are recognized in “interest and other investment income (loss), net” on our consolidated statement of income.&n bsp; During the period from October 7, 2010 through December 31, 2010, we recognized $17,616,000 of income from the mark-to-market of this position, based on J.C.Penney’s closing share price of $32.31 per share at December 31, 2010.

5. Investments in Partially Owned Entities

The following is a summary of condensed combined financial information for all of our partially owned entities, including Toys “R” Us, Alexander’s, Inc., Lexington Realty Trust and LNR Property Corporation, as of December 31, 2010 and 2009 and for the years ended December 31, 2010, 2009 and 2008.

(Amounts in thousands)				December 31,
Balance Sheet:				2010		2009
	Assets⁽¹⁾			$	165,183,000	$	23,512,000
	Liabilities⁽¹⁾				160,203,000		18,365,000
	Noncontrolling interests				124,000		230,000
	Equity				4,856,000		4,917,000

		For the Years Ended December 31,
Income Statement:		2010		2009		2008
	Total revenue	$	15,074,000	$	14,397,000	$	15,313,000
	Net income (loss)		63,000		103,000		(54,000)



(1)	2010 includes $142 billion of assets and liabilities of LNR related to consolidated CMBS and CDO trusts which are non-recourse to LNR and its equity holders, including us.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. Investments in Partially Owned Entities - continued

LNR Property Corporation (“LNR”)

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

(Amounts in thousands)		As of
Balance Sheet:		September 30, 2010
	Assets		$	143,266,000
	Liabilities			142,720,000
	Noncontrolling interests			37,000
	LNR Property Corporation equity			509,000

		For the Period July 29, 2010 to
Income Statement:		September 30, 2010
	Total revenue		$	23,000
	Net income attributable to LNR			8,000

Toys “R” Us (“Toys”)

As of December 31, 2010, we own 32.7% of Toys. The business of Toys is highly seasonal. Historically, Toys’ fourth quarter net income accounts for more than 80% of its fiscal year net income. We account for our investment in Toys under the equity method and record our 32.7% share of Toys net income or loss on a one-quarter lag basis because Toys’ fiscal year ends on the Saturday nearest January 31, and our fiscal year ends on December 31. As of December 31, 2010, the carrying amount of our investment in Toys does not differ materially from our share of the equity in the net assets of Toys on a purchase accounting basis.

On May 28, 2010, Toys filed a registration statement with the SEC for the offering and sale of its common stock. The offering, if completed, would result in a reduction of our percentage ownership of Toys’ equity. The size of the offering and its completion are subject to market and other conditions. In August 2010, in connection with certain financing and refinancing transactions, Toys paid us an aggregate of $9,600,000 for our share of advisory fees. Since Toys has capitalized these fees and is amortizing them over the term of the related debt, we recorded the fees as a reduction of the basis of our investment in Toys and will amortize the fees into income over the term of the related debt.

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

(Amounts in thousands)				Balance as of
Balance Sheet:				October 30, 2010		October 31, 2009
	Assets			$	12,810,000	$	12,589,000
	Liabilities				11,317,000		11,198,000
	Noncontrolling interests				-		112,000
	Toys “R” Us, Inc. equity				1,493,000		1,279,000

		For the Twelve Months Ended
Income Statement:		October 30, 2010		October 31, 2009		November 1, 2008
	Total revenues	$	13,749,000	$	13,172,000	$	14,090,000
	Net (loss) income attributable to Toys		189,000		216,000		(13,000)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. Investments in Partially Owned Entities - continued

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

At December 31, 2010 and 2009, we owned 32.4%, respectively, of the outstanding common shares of Alexander’s. We manage, lease and develop Alexander’s properties pursuant to the agreements described below which expire in March of each year and are automatically renewable. At December 31, 2010 the market value (“fair value” pursuant to ASC 820) of our investment in Alexander’s, based on Alexander’s 2010 closing share price of $412.28, was $681,939,000, or $495,128,000 in excess of the carrying amount on our consolidated balance sheet.

As of December 31, 2010, the carrying amount of our investment in Alexander’s excluding amounts owed to us, exceeds our share of the equity in the net assets of Alexander’s by approximately $59,823,000. 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 or loss. The basis difference related to the land will be recognized upon disposition of our investment.

Management and Development Agreements

We receive an annual fee for managing Alexander’s and all of its properties equal to the sum of (i) $3,000,000, (ii) 3% of the gross income from the Kings Plaza Regional Shopping Center, (iii) $0.50 per square foot of the tenant-occupied office and retail space at 731 Lexington Avenue and (iv) $248,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue.

In addition, we are entitled to a development fee of 6% of development costs, as defined, with a minimum guaranteed payment of $750,000 per annum. During the years ended December 31, 2010, 2009, and 2008, we recognized $711,000, $2,710,000 and $4,101,000, respectively, of development fee income.

Leasing Agreements

We provide Alexander’s with leasing services for a fee of 3% of rent for the first ten years of a lease term, 2% of rent for the eleventh through twentieth year of a lease term and 1% of rent for the twenty-first through thirtieth year of a lease term, subject to the payment of rents by Alexander’s tenants. In the event third-party real estate brokers are used, our fee increases by 1% and we are responsible for the fees to the third-parties. We are also entitled to a commission upon the sale of any of Alexander’s assets equal to 3% of gross proceeds, as defined, for asset sales less than $50,000,000, or 1% of gross proceeds, as defined, for asset sales of $50,000,000 or more. The total of these amounts is payable to us in annual installments in an amount not to exceed $4,000,000 with interest on the unpaid balance at one-year LIBOR plus 1.0% (1.99% at December 31, 2010).

Other Agreements

Building Maintenance Services (“BMS”), our wholly-owned subsidiary, supervises the cleaning, engineering and security services at Alexander’s 731 Lexington Avenue and Kings Plaza properties for an annual fee of the costs for such services plus 6%. During the years ended December 31, 2010, 2009 and 2008, we recognized $2,775,000, $2,552,000 and $2,083,000 of income, respectively, under these agreements.

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

(Amounts in thousands)				Balance as of
Balance Sheet:				December 31, 2010		December 31, 2009
	Assets			$	1,679,000	$	1,704,000
	Liabilities				1,335,000		1,389,000
	Noncontrolling interests				3,000		2,000
	Stockholders' equity				341,000		313,000

		For the Year Ended
Income Statement:		December 31, 2010		December 31, 2009		December 31, 2008
	Total revenues	$	242,000	$	224,000	$	211,000
	Net income attributable to Alexander’s		67,000		132,000		76,000

130

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. Investments in Partially Owned Entities - continued

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

As of December 31, 2010, we own 18,468,969 Lexington common shares, or approximately 12.8% of Lexington’s common equity. We account for our investment in Lexington on the equity method because we believe we have the ability to exercise significant influence over Lexington’s operating and financial policies, based on, among other factors, our representation on Lexington’s Board of Trustees and the level of our ownership in Lexington as compared to other shareholders. We record our pro rata share of Lexington’s net income or loss on a one-quarter lag basis because we file our consolidated financial statements on Form 10-K and 10-Q prior to the time that Lexington files its financial statements.

Based on Lexington’s December 31, 2010 closing share price of $7.95, the market value (“fair value” pursuant to ASC 820) of our investment in Lexington was $146,828,000, or $89,558,000 in excess of the December 31, 2010 carrying amount on our consolidated balance sheet. As of December 31, 2010, the carrying amount of our investment in Lexington was less than our share of the equity in the net assets of Lexington by approximately $63,871,000. This basis difference resulted primarily from $107,882,000 of non-cash impairment charges recognized during 2008, partially offset by purchase accounting for our acquisition of an additional 8,000,000 common shares of Lexington in October 2008, of which the majority relates to our estimate of the fair values of Lexington’s real estate (land and buildings) as compared to the carrying amounts in Lexington’s consolidated financial statements. The basis difference related to the buildings is being amortized over their estimated useful lives as an adjustment to our equity in net income or loss of Lexington. This amortization is not material to our share of equity in Lexington’s net income or loss. The basis difference attributable to the land will be recognized upon disposition of our investment.

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

(Amounts in thousands)				Balance as of
Balance Sheet:				September 30, 2010		September 30, 2009
	Assets			$	3,385,000	$	3,702,000
	Liabilities				2,115,000		2,344,000
	Noncontrolling interests				71,000		94,000
	Shareholders’ equity				1,199,000		1,264,000

		For the Twelve Months Ended September 30,
Income Statement:		2010		2009		2008
	Total revenues	$	351,000	$	375,000	$	447,000
	Net (loss) income attributable to Lexington		(90,000)		(178,000)		49,000

Other

On October 20, 2010, we sold a 45% ownership interest in 1299 Pennsylvania Avenue (the Warner Building) and 1101 17^th Street for $236,700,000, comprised of $91,000,000 in cash and the assumption of existing mortgage debt. We retained the remaining 55% ownership interest and continue to manage and lease the properties. Based on the Warner Building’s implied fair value of $445,000,000, we recognized a net gain of $54,000,000 in the fourth quarter of 2010, which is included as a component of “net gains on dispositions of wholly owned and partially owned assets,” on our consolidated statement of income. The gain on 1101 17^th Street, based on an implied fair value of $81,000,000, will be recognized when we monetize our investment. We share control over major decisions with our joint venture partner. Accordingly, these properties are accounted for under the equity method from the date of sale.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. Investments in Partially Owned Entities - continued

Investments in partially owned entities as of December 31, 2010 and 2009 and income recognized from these investments for the years ended December 31, 2010, 2009 and 2008 are as follows:

				Percentage
(Amounts in thousands)				Ownership as of			As of December 31,
Investments:				December 31, 2010			2010		2009
Toys						32.7 %	$	447,334	$	409,453

Alexander’s						32.4 %	$	186,811	$	193,174
Partially owned office buildings						(1)		181,838		158,444
LNR (see page 129)						26.2 %		132,973		-
India real estate ventures						4%-36.5%		127,193		93,322
Lexington						12.8 %		57,270		55,106
Other equity method investments						(2)		241,587		299,786
							$	927,672	$	799,832

					For the Years Ended December 31,
Our Share of Net Income (Loss):					2010		2009		2008
Toys – 32.7% share of:
			Equity in net income before income taxes⁽³⁾		$	16,401	$	58,416	$	53,867
			Income tax benefit (expense)			45,418		13,185		(44,752)
			Equity in net income			61,819		71,601		9,115
	Non-cash purchase price accounting adjustments					-		13,946		(14,900)
	Interest and other income					9,805		6,753		8,165
					$	71,624	$	92,300	$	2,380

Alexander’s – 32.4% share of:
		Equity in net income before income taxes and reversal of
			stock appreciation rights compensation expense		$	20,059	$	17,991	$	17,484
		Income tax benefit and reversal of stock
			appreciation rights compensation expense			-		24,773		6,583
		Equity in net income				20,059		42,764		24,067
	Management, leasing and development fees					9,125		10,765		12,604
						29,184		53,529		36,671

Lexington – 12.8% share in 2010, 15.2% share in 2009
	and 17.2% share in 2008 of equity in net income (loss)⁽⁴⁾					11,018		(25,665)		(105,630)

LNR – 26.2% share of equity in net income (see page 129)						1,973		-		-

India real estate ventures – 4% to 36.5% range in our
	share of equity in net income (loss)					2,581		(1,636)		(3,336)

Other, net⁽⁵⁾						(22,318)		(46,138)		(86,912)
					$	22,438	$	(19,910)	$	(159,207)
___________________________________
(1)	Includes interests in 330 Madison Avenue (25%), 825 Seventh Avenue (50%), Warner Building (55%), Fairfax Square (20%), Kaempfer equity interests in three office buildings (2.5% to 5.0%), Rosslyn Plaza (46%) and West 57th Street properties (50%).

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

(3)	2009 includes $10,200 for our share of income from a litigation settlement.

(4)	2010 includes a $13,710 net gain resulting from Lexington's 2010 stock issuance. 2009 includes $19,121 for our share of impairment losses recorded by Lexington. 2008 includes $107,882 of impairment losses on our investment in Lexington.

(5)	2010 includes $11,481 of impairment losses related to our investment in properties on West 57th Street. 2009 includes $17,820 of impairment losses, substantially all of which relates to our investment in Verde, and $7,650 of expense for our share of the Downtown Crossing, Boston lease termination payment. 2008 includes $96,037 of non-cash charges for the write-off of our share of certain partially owned entities' development costs, including $37,000 for Downtown Crossing, Boston and $23,000 for the "arena move"/Moynihan East portions of the Farley Project.

132

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. Investments in Partially Owned Entities – continued

Below is a summary of the debt of our partially owned entities as of December 31, 2010 and December 31, 2009; none of which is recourse to us.

				Interest	100% of
				Rate at	Partially Owned Entities’ Debt at
(Amounts in thousands)				December 31,	December 31,		December 31,
			Maturity	2010	2010		2009
Toys (32.7% interest) (as of October 30, 2010 and October 31, 2009,
respectively):
	Senior unsecured notes (Face value – $950,000)		07/17	10.75%	$	928,045	$	925,931
	Senior unsecured notes (Face value – $725,000)		12/17	8.50%		715,577		-
	$700 million secured term loan facility		09/16	6.00%		689,757		-
	Senior U.K. real estate facility		04/13	5.02%		561,559		578,982
	$1.85 billion credit facility		08/15	3.04%		519,810		418,777
	7.625% bonds (Face value – $500,000)		08/11	8.82%		495,943		490,613
	7.875% senior notes (Face value – $400,000)		04/13	9.50%		386,167		381,293
	7.375% senior secured notes		09/16	7.38%		350,000		-
	7.375% senior notes (Face value – $400,000)		10/18	9.99%		343,528		338,989
	Japan bank loans		01/11-08/14	1.20%-2.85%		180,500		172,902
	Spanish real estate facility		02/13	4.51%		179,511		191,436
	Japan borrowings		03/11	0.81%		141,360		168,720
	Junior U.K. real estate facility		04/13	6.84%		98,266		101,861
	French real estate facility		02/13	4.51%		86,599		92,353
	European and Australian asset-based revolving credit facility		10/12	5.32%		25,767		102,760
	8.750% debentures (Face value – $21,600)		09/21	9.17%		21,054		21,022
	Mortgage loan		n/a	n/a		-		800,000
	$800 million secured term loan facility		n/a	n/a		-		797,911
	$181 million unsecured term loan facility		n/a	n/a		-		180,456
	Other		Various	Various		156,853		136,206
						5,880,296		5,900,212
Alexander’s (32.4% interest):
	731 Lexington Avenue mortgage note payable, collaterallized by
		the office space (prepayable without penalty after 12/13)	02/14	5.33%		351,751		362,989
	731 Lexington Avenue mortgage note payable, collateralized by
		the retail space (prepayable without penalty after 12/13)	07/15	4.93%		320,000		320,000
	Rego Park construction loan payable		12/11	1.46%		277,200		266,411
	Kings Plaza Regional Shopping Center mortgage note payable		06/11	7.46%		151,214		183,319
	Rego Park mortgage note payable (prepayable without penalty)		03/12	0.75%		78,246		78,246
	Paramus mortgage note payable (prepayable without penalty)		10/11	5.92%		68,000		68,000
						1,246,411		1,278,965

Lexington (12.8% interest) (as of September 30, 2010 and
September 30, 2009, respectively):
	Mortgage loans collateralized by Lexington’s real estate (various
		prepayment terms)	2010-2037	5.82%		1,927,729		2,132,253

LNR (26.2% interest) (as of September 30, 2010):
	Mortgage notes payable		2011-2043	5.75%		508,547		-
	Liabilities of consolidated CMBS and CDO trusts		n/a	6.06%		142,001,333		-
						142,509,880		-

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. Investments in Partially Owned Entities - continued

				Interest	100% of
				Rate at	Partially Owned Entities’ Debt at
(Amounts in thousands)				December 31,	December 31,		December 31,
			Maturity	2010	2010		2009
Partially owned office buildings:
	Warner Building (55% interest) mortgage note payable⁽¹⁾		05/16	6.26%	$	292,700	$	-
	330 Madison Avenue (25% interest) mortgage note payable		06/15	1.79%		150,000		150,000
	Kaempfer Properties (2.5% and 5.0% interests in two partnerships)
		mortgage notes payable, collateralized by the partnerships’ real estate	11/11-12/11	5.87%		139,337		141,547
	Fairfax Square (20% interest) mortgage note payable (prepayable
		without penalty after 07/14)	12/14	7.00%		71,764		72,500
	Rosslyn Plaza (46% interest) mortgage note payable		12/11	1.26%		56,680		56,680
	330 West 34th Street (34.8% interest) mortgage note payable,
		collateralized by land; we obtained a fee interest in the land upon
		foreclosure of our $9,041 mezzanine loan in 2010	07/22	5.71%		50,150		-
	West 57th Street (50% interest) mortgage note payable (prepayable
		without penalty)	02/14	4.94%		22,922		29,000
	825 Seventh Avenue (50% interest) mortgage note payable (prepayable
		without penalty after 04/14)	10/14	8.07%		20,565		20,773
India Real Estate Ventures:
	TCG Urban Infrastructure Holdings (25% interest) mortgage notes
		payable, collateralized by the entity’s real estate (various
		prepayment terms)	2010-2022	13.43%		196,319		178,553
	India Property Fund L.P. (36.5% interest) revolving credit facility,
		repaid upon maturity in 03/10	n/a	n/a		-		77,000
Other:
	Verde Realty Operating Partnership (8.3% interest) mortgage notes
		payable, collateralized by the partnerships’ real estate (various
		prepayment terms)	2010-2025	5.85%		581,086		607,089
	Green Courte Real Estate Partners, LLC (8.3% interest) (as of
		September 30, 2010 and 2009), mortgage notes payable,
		collateralized by the partnerships’ real estate (various
		prepayment terms)	2011-2018	5.50%		296,991		304,481
	Waterfront Associates (2.5% interest) up to $250 million construction
		and land loan payable	09/11	2.26% - 3.76%		217,106		183,742
	Monmouth Mall (50% interest) mortgage note payable (prepayable
		without penalty after 07/15)	09/15	5.44%		164,474		165,000
	Wells/Kinzie Garage (50% interest) mortgage note payable		12/17	5.00%		15,022		14,657
	Orleans Hubbard Garage (50% interest) mortgage note payable		12/17	5.00%		9,508		10,101
	San Jose, California (45% interest) construction loan⁽²⁾		03/13	n/a		-		132,570
	Other					418,339		425,717


(1)		On October 20, 2010, we sold a 45% ownership interest in this property and share control over major decisions with our joint venture partner. Accordingly, we account for this property under the equity method from the date of sale and no longer consolidate its accounts into our consolidated financial statements.


(2)		On October 15, 2010, we acquired the remaining 55% interest in this property for $97,000, consisting of $27,000 in cash and the assumption of $70,000 of existing debt. Accordingly we consolidate the accounts of this property into our consolidated financial statements, from the date of acquisition.

Based on our ownership interest in the partially owned entities above, our pro rata share of the debt of these partially owned entities, was $40,443,346,000 and $3,149,640,000 as of December 31, 2010 and December 31, 2009, respectively. Excluding our pro rata share of LNR’s liabilities related to consolidated CMBS and CDO trusts which are non-recourse to LNR and its equity holders, including us, our pro rata share of partially owned entities debt is $3,275,917,000 and $3,149,640,000 at December 31, 2010 and 2009, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. Mezzanine Loans Receivable

The following is a summary of our investments in mezzanine loans as of December 31, 2010 and 2009.

				Interest Rate
(Amounts in thousands)				as of	Carrying Amount as of
Mezzanine Loans Receivable:			Maturity	December 31, 2010	December 31, 2010		December 31, 2009
	Tharaldson Lodging Companies ⁽¹⁾		04/11	4.56%	$	71,084	$	74,701
	280 Park Avenue ⁽²⁾		06/16	10.25%		66,513		73,750
	Equinox ⁽³⁾		n/a	n/a		-		97,968
	Riley HoldCo Corp. (see discussion of
		LNR in Note 5)	n/a	n/a		-		74,437
	Other, net		11/11-8/15	1.36% - 8.95%		138,031		73,168
						275,628		394,024
	Valuation allowance ⁽⁴⁾					(73,216)		(190,738)
					$	202,412	$	203,286


(1)		On June 16, 2006, we acquired an 81.5% interest in a $95,968 mezzanine loan to Tharaldson Lodging Companies for $78,166 in cash. The loan is secured by a 107 hotel property portfolio with brands including Fairfield Inn, Residence Inn, Comfort Inn and Courtyard by Marriott. The loan is subordinate to $671,778 of debt and is senior to approximately $192,000 of other debt and equity. The loan provides for a 0.75% placement fee and bears interest at LIBOR plus 4.25% (4.56% at December 31, 2010). The borrower has a one-year extension option.

(2)		On June 30, 2006, we made a $73,750 mezzanine loan secured by the equity interests in 280 Park Avenue, a 1.2 million square foot office building, located between 48th and 49th Streets in Manhattan. The loan bears interest at 10.25% and matures in June 2016. The loan is subordinate to $1.036 billion of other debt and is senior to approximately $260,000 of equity and interest reserves.

(3)		In January 2010, Equinox prepaid the entire balance of this loan which was scheduled to mature in February 2013. We received $99,314, including accrued interest, for our 50% interest in the loan which we acquired in 2006 for $57,500.

(4)		Represents loan loss accruals on certain mezzanine loans based on our estimate of the net realizable value of each loan. Our estimates are based on the present value of expected cash flows, discounted at each loan’s effective interest rate, or if a loan is collateralized, based on the fair value of the underlying collateral, adjusted for estimated costs to sell. The excess of the carrying amount over the net realizable value of a loan is recognized as a reduction of “interest and other investment income (loss), net” in our consolidated statements of income.

The following is a reconciliation of our valuation allowance for the years ended December 31, 2010 and 2009.

		Balance at		Additions				Balance at
		Beginning of Year		(Reversals)		(Write-offs)		End of Year
Year Ended December 31, 2010:
	Valuation Allowance	$	190,738	$	(53,100)	$	(64,422)	$	73,216

Year Ended December 31, 2009:
	Valuation Allowance	$	46,700	$	190,738	$	(46,700)	$	190,738

135

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. Discontinued Operations

In accordance with the provisions of ASC 360, Property, Plant, and Equipment, we have reclassified the revenues and expenses of properties and businesses sold or held for sale to “(loss) income from discontinued operations” and the related assets and liabilities to “assets related to discontinued operations” and “liabilities related to discontinued operations” for all periods presented in the accompanying consolidated financial statements. The net gains resulting from the sale of the properties below are included in “(loss) income from discontinued operations” on our consolidated statements of income.

In December 2010, pursuant to a Court judgment, we sold the fee interest in land located in Arlington County, Virginia, known as Pentagon Row, to the tenants for an aggregate of $14,992,000 in cash. See Litigation, in Note 19 - Commitments and Contingencies, for further details.

In March 2010, we ceased making debt service payments on the mortgage loan secured by the Cannery, a retail property in California as a result of insufficient cash flow, and the loan went into default. On October 14, 2010, the special servicer foreclosed on the property, and the property and related debt were removed from our consolidated balance sheet.

On September 1, 2009, we sold 1999 K Street, a newly developed 250,000 square foot office building, in Washington’s Central Business District, for $207,800,000 in cash which resulted in a net gain of approximately $41,211,000.

In 2009, we sold 15 retail properties in separate transactions for an aggregate of $55,000,000 in cash which resulted in net gains aggregating $4,073,000.

On June 10, 2008, we sold our Tysons Dulles Plaza office building complex for $152,800,000 in cash which resulted in a net gain of $56,831,000.

On March 31, 2008, we sold our 47.6% interest in Americold, our Temperature Controlled Logistics segment for $220,000,000 in cash which resulted in a net gain of $112,690,000.

136

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. Discontinued Operations- continued

The tables below set forth the assets and liabilities related to discontinued operations at December 31, 2010 and 2009, and their combined results of operations for the years ended December 31, 2010, 2009 and 2008.

	Assets Related to				Liabilities Related to
(Amounts in thousands)	Discontinued Operations as of				Discontinued Operations as of
	December 31,				December 31,
	2010		2009		2010		2009
High Point	$	154,563	$	151,065	$	236,974	$	218,225
1227 25th Street		43,630		43,173		-		-
1140 Connecticut Avenue		36,271		36,811		18,948		19,431
Pentagon Row		-		51,140		-		26,547
Retail properties		-		55,522		-		18,567
Total	$	234,464	$	337,711	$	255,922	$	282,770



(Amounts in thousands)			For the Year Ended December 31,
			2010		2009		2008
Total revenues			$	43,871	$	55,752	$	278,986
Total expenses				51,701		48,709		268,274
				(7,830)		7,043		10,712
Litigation loss accrual and impairment losses				(15,056)		(11,860)		-
Net gain on sales of real estate				2,506		45,284		170,213
(Loss) income from discontinued operations			$	(20,380)	$	40,467	$	180,925

137

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. Identified Intangible Assets and Liabilities

The following summarizes our identified intangible assets (primarily acquired above-market leases) and liabilities (primarily acquired below-market leases) as of December 31, 2010 and December 31, 2009.

	Balance as of
	December 31,		December 31,
(Amounts in thousands)	2010		2009
Identified intangible assets:
Gross amount	$	687,253	$	750,667
Accumulated amortization		(338,508)		(311,118)
Net	$	348,745	$	439,549
Identified intangible liabilities (included in deferred credit):
Gross amount	$	870,623	$	913,896
Accumulated amortization		(341,718)		(307,506)
Net	$	528,905	$	606,390

Amortization of acquired below-market leases, net of acquired above-market leases resulted in an increase to rental income of $66,202,000, $71,954,000 and $95,532,000 for the years ended December 31, 2010, 2009 and 2008, 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, 2011 is as follows:

(Amounts in thousands)
2011	$	62,020
2012		51,581
2013		43,652
2014		37,800
2015		35,029

Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was $60,224,000, $64,229,000 and $85,865,000 for the years ended December 31, 2010, 2009 and 2008, 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, 2011 is as follows:

(Amounts in thousands)
2011	$	49,907
2012		44,737
2013		37,241
2014		18,844
2015		13,888

We are a tenant under ground leases for certain properties. Amortization of these acquired below-market leases, net of above-market leases resulted in an increase to rent expense of $2,036,000, $1,831,000 and $2,654,000 for the years ended December 31, 2010, 2009 and 2008, respectively. Estimated annual amortization of these below-market leases, net of above-market leases for each of the five succeeding years commencing January 1, 2011 is as follows:

(Amounts in thousands)
2011	$	1,865
2012		1,865
2013		1,865
2014		1,865
2015		1,865

138

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. Debt

The following is a summary of our debt:

				Interest
(Amounts in thousands)				Rate at	Balance at
				December 31,	December 31,			December 31,
Notes and mortgages payable:			Maturity (1)	2010	2010			2009
Fixed rate:
	New York Office:
		350 Park Avenue	01/12	5.48%	$	430,000		$	430,000
		1290 Avenue of the Americas	01/13	5.97%		424,136			434,643
		770 Broadway	03/16	5.65%		353,000			353,000
		888 Seventh Avenue	01/16	5.71%		318,554			318,554
		Two Penn Plaza⁽²⁾	02/11	4.97%		277,347			282,492
		909 Third Avenue	04/15	5.64%		207,045			210,660
		Eleven Penn Plaza	12/11	5.20%		199,320			203,198
							��
	Washington, DC Office:
		Skyline Place	02/17	5.74%		678,000			678,000
		River House Apartments	04/15	5.43%		195,546			195,546
		Bowen Building	06/16	6.14%		115,022			115,022
		1215 Clark Street, 200 12th Street and 251 18th Street	01/25	7.09%		110,931			113,267
		Universal Buildings	04/14	6.38%		103,049			106,630
		Reston Executive I, II, and III	01/13	5.57%		93,000			93,000
		2011 Crystal Drive	08/17	7.30%		81,362			82,178
		1550 and 1750 Crystal Drive	11/14	7.08%		79,411			81,822
		1235 Clark Street	07/12	6.75%		52,314			53,252
		2231 Crystal Drive	08/13	7.08%		46,358			48,533
		1750 Pennsylvania Avenue	06/12	7.26%		45,132			45,877
		1225 Clark Street	08/13	7.08%		27,616			28,925
		1800, 1851 and 1901 South Bell Street	12/11	6.91%		10,099			19,338
		Warner Building⁽³⁾	n/a	n/a		-			292,700
		1730 M and 1150 17th Street⁽⁴⁾	n/a	n/a		-			67,826
		241 18th Street⁽⁵⁾	n/a	n/a		-			45,609

	Retail:
		Cross-collateralized mortgages on 40 strip shopping centers⁽⁶⁾	09/20	4.18%		597,138			-
		Montehiedra Town Center	07/16	6.04%		120,000			120,000
		Broadway Mall	07/13	5.30%		90,227			92,601
		828-850 Madison Avenue Condominium	06/18	5.29%		80,000			80,000
		Las Catalinas Mall	11/13	6.97%		57,737			59,304
		510 5th Avenue	01/16	5.60%		32,189			-
		Springfield Mall (including present value of purchase option)⁽⁷⁾	n/a	n/a		-			242,583
		Other	03/12-05/36	5.10%-7.33%		101,251			138,696

	Merchandise Mart:
		Merchandise Mart	12/16	5.57%		550,000			550,000
		Boston Design Center	09/15	5.02%		68,538			69,667
		Washington Design Center	11/11	6.95%		43,447			44,247

	Other:
		555 California Street	09/11	5.79%		640,911			664,117
		Industrial Warehouses	10/11	6.95%		24,358			24,813
Total fixed rate notes and mortgages payable				5.65%	$	6,253,038		$	6,386,100
___________________
		See notes on page 141.

139

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. Debt - continued

					Interest
(Amounts in thousands)					Rate at	Balance at
				Spread over	December 31,	December 31,		December 31,
Notes and mortgages payable:			Maturity (1)	LIBOR	2010	2010		2009
Variable rate:
	New York Office:
		Manhattan Mall	02/12	L+55	0.81%	$	232,000	$	232,000
		866 UN Plaza	05/11	L+40	0.71%		44,978		44,978
	Washington, DC Office:
		2101 L Street	02/13	L+120	1.49%		150,000		150,000
		West End 25 (construction loan)⁽⁸⁾	02/11	L+130	1.60%		95,220		85,735
		220 20th Street⁽⁹⁾	01/11	L+115	1.43%		83,573		75,629
		River House Apartments	04/18	n/a ⁽¹⁰⁾	1.66%		64,000		64,000
		2200/2300 Clarendon Boulevard	01/15	L+75	1.01%		59,278		65,133
		1730 M and 1150 17th Street⁽⁴⁾	06/14	L+140	1.66%		43,581		-
	Retail:
		Green Acres Mall	02/13	L+140	1.69%		335,000		335,000
		Bergen Town Center (construction loan)	03/13	L+150	1.79%		279,044		261,903
		San Jose Strip Center⁽¹¹⁾	03/13	L+400	4.32%		120,863		-
		Beverly Connection⁽¹²⁾	07/12	L+350 ⁽¹²⁾	5.00%		100,000		100,000
		4 Union Square South	04/14	L+325	3.54%		75,000		75,000
		Cross-collateralized mortgages on 40 strip
		shopping centers⁽⁶⁾	09/20	L+136 ⁽⁶⁾	2.36%		60,000		-
		435 Seventh Avenue⁽¹³⁾	08/14	L+300 ⁽¹³⁾	5.00%		51,844		52,000
		Other	11/12	L+375	4.02%		21,862		22,758
	Other:
		220 Central Park South	04/11	L+235–L+245	2.64%		123,750		123,750
		Other⁽¹⁴⁾	11/11-02/12	Various	2.79%-4.00%		66,267		117,868
	Total variable rate notes and mortgages payable				2.17%		2,006,260		1,805,754
	Total notes and mortgages payable				4.80%	$	8,259,298	$	8,191,854

Senior unsecured notes:
	Senior unsecured notes due 2015⁽¹⁵⁾		04/15		4.25%	$	499,296	$	-
	Senior unsecured notes due 2039⁽¹⁶⁾		10/39		7.88%		460,000		446,134
	Senior unsecured notes due 2011 ⁽¹⁷⁾		02/11		5.60%		100,382		117,342
	Floating rate senior unsecured notes due 2011		12/11	L+200	2.26%		23,250		-
	Senior unsecured notes due 2010		n/a		n/a		-		148,240
	Total senior unsecured notes				5.87%	$	1,082,928	$	711,716

3.88% exchangeable senior debentures due 2025
	(see page 143)		04/12		5.32%	$	491,000	$	484,457

Convertible senior debentures due to Vornado: (see page 143)
	3.63% due 2026^(18)(19)		11/11		5.32%	$	176,499	$	424,207
	2.85% due 2027^(18)(19)		04/12		5.45%		9,914		21,251
	Total convertible senior debentures due to Vornado⁽²⁰⁾				5.33%	$	186,413	$	445,458

Unsecured revolving credit facilities:
	$1.595 billion unsecured revolving credit facility		09/12	L+55	0.80%	$	669,000	$	427,218
	$1.000 billion unsecured revolving credit facility
		($12,198 reserved for outstanding letters of credit)	06/11	L+55	0.80%		205,000		425,000
	Total unsecured revolving credit facilities				0.80%	$	874,000	$	852,218
___________________________
	See notes on the following page.

140

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. Debt - continued

	Notes to preceding tabular information (Amounts in thousands):

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

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

	(3)	On October 20, 2010, we sold a 45% ownership interest in this property to a joint venture and share control over major decisions with our joint venture partner. Accordingly, we account for this property under the equity method of accounting and no longer consolidate its accounts into our consolidated financial statements.

	(4)	On June 1, 2010, we refinanced this loan. The new loan, which is guaranteed by us, has a rate of LIBOR plus 1.40% (1.66% at December 31, 2010) and matures in June 2011 with three one-year extension options.

	(5)	On September 1, 2010, we repaid the $44,900 outstanding balance of this loan which was scheduled to mature in October 2010.

	(6)	In August 2010, we sold $660,000 of 10-year mortgage notes in a single issuer securitization. The notes are comprised of a $600,000 fixed rate component and a $60,000 variable rate component and are cross-collateralized by 40 of our strip shopping centers. The variable rate portion of the debt has a LIBOR floor of 1.00%.

	(7)	In December 2010, we acquired this loan, which had an outstanding balance of $171,500, for $115,000 in cash. In a separate transaction, we acquired our partner’s interest in the partnership that owns the mall for $25,000 in Operating Partnership units. These transactions resulted in a net gain on early extinguishment of debt of $102,932 in our consolidated statement of income.

	(8)	In February 2011, we repaid a portion of this loan and extended the maturity to August 2011.

	(9)	On January 18, 2011, we repaid the outstanding balance of this construction loan and closed on a new $76,100 mortgage financing at a fixed rate of 4.61%. The new loan has a 7-year term and amortizes based on a 30-year schedule.

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

	(11)	On October 15, 2010, we acquired the remaining 55% interest we did not own in this property. Accordingly, we consolidate the accounts of this property into our consolidated financial statements from the date of acquisition.

	(12)	This loan has a LIBOR floor of 1.50%. The spread over LIBOR increases to 500 bps in July 2011.

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

141

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. Debt - continued

	Notes to preceding tabular information (Amounts in thousands):

	(14)	In October 2010, we repaid a $36,000 loan which matured on September 30, 2010.

	(15)	On March 26, 2010, we completed a public offering of $500,000 aggregate principal amount of 4.25% senior unsecured notes due April 1, 2015. Interest on the notes is payable semi-annually commencing on October 1, 2010. The notes were sold at 99.834% of their face amount to yield 4.287%. The notes can be redeemed without penalty beginning January 1, 2015. We retained net proceeds of approximately $496,000.

	(16)	These notes may be redeemed at our option in whole or in part beginning on October 1, 2014, at a price equal to the principal amount plus accrued interest. In 2010, we reclassified $13,866 of deferred financing costs to “deferred leasing and financing costs” on our consolidated balance sheet.

	(17)	In the third quarter of 2010, we purchased $17,000 aggregate face amount ($16,981 aggregate carrying amount) of these senior unsecured notes for $17,382 in cash, resulting in a net loss of $401 and in February 2011, upon maturity, we repaid the $100,000 balance of these notes.

	(18)	In 2010, we purchased $68,418 aggregate face amount ($66,916 aggregate carrying amount) of our convertible senior debentures due to Vornado for $68,804 in cash, resulting in a net loss of $1,888.

	(19)	On October 1 2010, pursuant to our September 2, 2010 tender offer, we purchased $189,827 aggregate face amount of our 3.63% convertible senior debentures due to Vornado and $12,246 aggregate face amount of our 2.85% convertible senior debentures due to Vornado for an aggregate of $206,053 in cash, resulting in a net loss of $8,493.

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

142

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. Debt – continued

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

			Due to Vornado
			2.85% Convertible				3.63% Convertible				3.88% Exchangeable
(Amounts in thousands, except per unit amounts)			Senior Debentures due 2027				Senior Debentures due 2026				Senior Debentures due 2025
			December 31,		December 31,		December 31,		December 31,		December 31,		December 31,
Balance Sheet:			2010		2009		2010		2009		2010		2009
	Principal amount of debt component		$	10,233	$	22,479	$	179,052	$	437,297	$	499,982	$	499,982
	Unamortized discount			(319)		(1,228)		(2,553)		(13,090)		(8,982)		(15,525)
	Carrying amount of debt component		$	9,914	$	21,251	$	176,499	$	424,207	$	491,000	$	484,457
	Carrying amount of equity component		$	956	$	2,104	$	9,604	$	23,457	$	32,301	$	32,301
	Effective interest rate			5.45%		5.45%		5.32%		5.32%		5.32%		5.32%
	Maturity date (period through which
		discount is being amortized)		4/1/12				11/15/11				4/15/12
	Conversion price per Class A unit, as adjusted		$	157.18			$	148.46			$	87.17
	Number of Class A units on which the
		aggregate consideration to be
		delivered upon conversion is
		determined		- ⁽¹⁾				- ⁽¹⁾				5,736
__________________

(1)		Convertible senior debentures due to Vornado require that upon conversion, the entire principal amount is to be settled in cash, and at our option, any excess value above the principal amount may be settled in cash or Class A units. Based on the December 31, 2010 closing share price of Vornado’s common shares and the conversion prices in the table above, there was no excess value; accordingly, no Class A units would be issued if these securities were settled on this date. The number of Class A units on which the aggregate consideration that would be delivered upon conversion is 65 and 1,206 Class A units, respectively.


(Amounts in thousands)		For the Year Ended December 31,
Income Statement:		2010		2009		2008
2.85% Convertible Senior Debentures due to Vornado:
	Coupon interest	$	553	$	33,743	$	39,853
	Discount amortization – original issue		80		4,596		5,190
	Discount amortization – ASC 470-20 implementation		374		21,514		24,296
		$	1,007	$	59,853	$	69,339

3.63% Convertible Senior Debentures due to Vornado:
	Coupon interest	$	13,015	$	32,654	$	36,216
	Discount amortization – original issue		1,520		3,606		3,820
	Discount amortization – ASC 470-20 implementation		4,069		9,651		10,224
		$	18,604	$	45,911	$	50,260

3.88% Exchangeable Senior Debentures due 2025:
	Coupon interest	$	19,374	$	19,428	$	19,374
	Discount amortization – original issue		1,544		1,464		1,389
	Discount amortization – ASC 470-20 implementation		4,999		4,741		4,497
		$	25,917	$	25,633	$	25,260

143

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. Debt – continued

The net carrying amount of properties collateralizing the notes and mortgages payable amounted to $10.7 billion in December 31, 2010. As of December 31, 2010, the principal repayments required for the next five years and thereafter are as follows:

				Senior Unsecured
				Debt and
(Amounts in thousands)				Revolving Credit
Year Ending December 31,		Mortgages Payable		Facilities
2011	$	1,854,915	$	328,635
2012		928,512		669,000
2013		1,482,785		-
2014		342,707		-
2015		516,328		500,000
Thereafter		3,116,181		460,000

We may refinance our maturing debt as it comes due or choose to repay it.

10. Redeemable Partnership Units

Redeemable partnership units on our consolidated balance sheets represent Class A units held by third parties and are comprised of Class A units not owned by Vornado and Series D-10, D-11, D-14, D-15 and D-16 (collectively, “Series D”) cumulative redeemable preferred units. Class A units may be tendered for redemption to us for cash; we, at our option, may assume that obligation and pay the holder either cash or Vornado common shares on a one-for-one basis. Because the number of Vornado common shares outstanding at all times equals the number of Class A units owned by Vornado, the redemption value of each Class A unit is equivalent to the market value of one Vornado common share, and the quarterly distribution to a Class A unitholder is equal to the quarterly dividend paid to a Vornado common shareholder. Below are the details of our redeem able partnership units held by third parties as of December 31, 2010 and 2009:


							Preferred or
			Outstanding Units at		Per Unit		Annual		Conversion
			December 31,	December 31,	Liquidation		Distribution		Rate Into Class
Unit Series			2010	2009	Preference		Rate		A Units
Class A unitsheld by third parties			12,804,202	13,892,313		N/A	$	2.76	N/A

Redeemable Preferred:⁽¹⁾
		7.00% D-10 Cumulative Redeemable	3,200,000	3,200,000	$	25.00	$	1.75	N/A
		7.20% D-11 Cumulative Redeemable	1,400,000	1,400,000	$	25.00	$	1.80	N/A
		6.55% D-12 Cumulative Redeemable⁽²⁾	-	800,000	$	25.00	$	1.637	N/A
		6.75% D-14 Cumulative Redeemable	4,000,000	4,000,000	$	25.00	$	1.6875	N/A
		6.875% D-15 Cumulative Redeemable	1,800,000	1,800,000	$	25.00	$	1.71875	N/A
		5.00% D-16 Cumulative Redeemable⁽³⁾	1	-	$	1,000,000.00	$	50,000.00	N/A
__________________________________
(1)	Holders may tender units for redemption to us for cash at their stated redemption amount; we, at our option, may assume that obligation and pay the holders either cash or Vornado preferred shares on a one-for-one basis. These units are redeemable at our option after the 5th anniversary of the date of issuance (ranging from November 2008 to December 2011).

(2)	In 2010, we redeemed all of the outstanding Series D-12 cumulative redeemable preferred units for $16.25 per unit in cash, or $13,000,000 in the aggregate. In connection therewith, we recognized a $6,972,000 net gain which is included as a component of "preferred unit distributions" on our consolidated statement of income.

(3)	Issued in connection with the acquisition of our partner's interest in the Springfield Mall in December 2010.

144

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. Redeemable Partnership Units - continued

Redeemable partnership units on our consolidated balance sheets are recorded at the greater of their carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to “additional capital” in our consolidated statements of changes in equity. Below is a table summarizing the activity of redeemable partnership units.

(Amounts in thousands)
Balance at December 31, 2008	$	1,177,978
Net income		25,120
Distributions		(42,451)
Redemption of Class A units, at redemption value		(90,955)
Adjustment to carry redeemable Class A units at redemption value		167,049
Other, net		14,887
Balance at December 31, 2009	$	1,251,628
Net income		55,228
Distributions		(53,515)
Redemption of Class A units, at redemption value		(126,764)
Adjustment to carry redeemable Class A units at redemption value		191,826
Redemption of Series D-12 redeemable units		(13,000)
Other, net		22,571
Balance at December 31, 2010	$	1,327,974

As of December 31, 2010 and 2009, the aggregate redemption value of redeemable Class A units, which are those unitsheld by third parties, was $1,066,974,000 and $971,628,000, respectively.

Redeemable partnership units exclude our Series G convertible preferred units and Series D-13 cumulative redeemable preferred units, as they are accounted for as liabilities in accordance with ASC 480,Distinguishing Liabilities and Equity, because of their possible settlement by issuing a variable number of Vornado common shares. Accordingly the fair value of these units is included as a component of “other liabilities” on our consolidated balance sheets and aggregated $55,097,000 and $60,271,000 as of December 31, 2010 and 2009, respectively.

145

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. Partners' Capital

Preferred Units

The following table sets forth the details of Class A units owned by Vornado and preferred units of beneficial interest outstanding as of December 31, 2010 and 2009:

Units Series	Outstanding Units at		Per Unit Liquidation Preference		Preferred or Annual Distribution Rate		Conversion Rate Into Class A Units
Units Series	December 31, 2010	December 31, 2009	Per Unit Liquidation Preference		Preferred or Annual Distribution Rate		Conversion Rate Into Class A Units

Class A Units owned by Vornado (1)	183,661,875	181,214,161		N/A		N/A	N/A

Preferred Units:
Series A convertible (2)	40,009	52,324	$	50.00	$	3.25	1.38504
7.0% Series D-10 (3)	1,600,000	1,600,000	$	25.00	$	1.75	N/A
7.0% Series E (3)	3,000,000	3,000,000	$	25.00	$	1.75	N/A
6.75% Series F (3)	6,000,000	6,000,000	$	25.00	$	1.6875	N/A
6.625% Series G (3)	8,000,000	8,000,000	$	25.00	$	1.65625	N/A
6.75% Series H (3)	4,500,000	4,500,000	$	25.00	$	1.6875	N/A
6.625% Series I (3)	10,800,000	10,800,000	$	25.00	$	1.65625	N/A

______________________

(1) Represents Class A units owned by Vornado, our general partner. Class A units held by third parties are classified outside of “Equity” as “redeemable partnership units.”

(2) Distributions are cumulative and payable quarterly in arrears. The Series A Preferred units are convertible at any time at the option of their respective holders at a conversion rate of 1.4334 Class A unit per Series A Preferred unit, subject to adjustment in certain circumstances. In addition, upon the satisfaction of certain conditions we, at our option, may redeem the $3.25 Series A Preferred units at a current conversion rate of 1.4334 Class A unit per Series A Preferred unit, subject to adjustment in certain circumstances. At no time are the Series A Preferred units redeemable for cash.

(3) Distributions are cumulative and payable quarterly in arrears. Redeemable at our option at a redemption price of $25.00 per unit, plus any accrued and unpaid distributions, on or after the 5th anniversary from the date of issuance (ranging from November 2008 to August 2010), or sooner under limited circumstances. These units have no maturity date and will remain outstanding indefinitely unless they are redeemed.

Accumulated Other Comprehensive Income

Accumulated other comprehensive income was $73,453,000 and $28,449,000 as of December 31, 2010 and 2009, respectively, and primarily consists of accumulated unrealized gains from the mark-to-market of marketable securities classified as available-for-sale.

146

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. Fair Value Measurements

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

Fair Value Measurements on a Recurring Basis

Financial assets and liabilities that are measured at fair value in our consolidated financial statements consist of (i) marketable securities, (ii) derivative positions in marketable equity securities (iii) the assets of our deferred compensation plan, which are primarily marketable equity securities and equity investments in limited partnerships, (iv) Real Estate Fund investments, (v) short-term investments (CDARS classified as available-for-sale), and (vi) mandatorily redeemable instruments (Series G convertible preferred units and Series D-13 cumulative redeemable preferred units). The tables below aggregate the fair values of financial assets and liabilities by the levels in the fair value hierarchy at December 31, 2010 and 2009, respectively.

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

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

			As of December 31, 2009
(Amounts in thousands)			Total		Level 1		Level 2		Level 3
	Deferred compensation plan assets (included in other assets)		$	80,443	$	40,854	$	-	$	39,589
	Marketable equity securities			79,925		79,925		-		-
	Short-term investments			40,000		40,000		-		-
		Total assets	$	200,368	$	160,779	$	-	$	39,589

	Mandatorily redeemable instruments (included in other liabilities)		$	60,271	$	60,271	$	-	$	-

The table below summarizes the changes in the fair value of the level 3 assets above for the years ended December 31, 2010 and 2009.

	For The Years Ended December 31,
(Amounts in thousands)	2010		2009
Beginning balance	$	39,589	$	34,176
Total realized/unrealized gains		3,527		4,187
Purchases, sales, other settlements and issuances, net		149,157		1,226
Ending balance	$	192,273	$	39,589

Purchases in the year ended December 31, 2010, include the investments of our consolidated Real Estate Fund.

147

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. Fair Value Measurements - continued

Fair Value Measurements on a Nonrecurring Basis

Non-financial assets measured at fair value on a nonrecurring basis in our consolidated financial statements consist of real estate assets and investments in partially owned entities that have been written-down to estimated fair value during 2010 and 2009. See Note 2 – Basis of Presentation and Significant Accounting Policies for details of impairment losses recognized during 2010 and 2009. The fair values of these assets are determined using widely accepted valuation techniques, including (i) discounted cash flow analysis, which considers, among other things, leasing assumptions, growth rates, discount rates and terminal capitalization rates, (ii) income capitalization approach, which considers prevailing market capitalization rates and (iii) comparable sales activity. In general, we consider multiple valuation techniques when measuring fair values. However, in certain circumstances, a single valuation technique may be appropriate. The tables below aggregate the fair values of these assets by the levels in the fair value hierarchy.

		As of December 31, 2010
(Amounts in thousands)		Total		Level 1		Level 2		Level 3
	Real estate assets	$	381,889	$	-	$	-	$	381,889
	Investments in partially owned entities		11,413		-		-		11,413


		As of December 31, 2009
(Amounts in thousands)		Total		Level 1		Level 2		Level 3
	Real estate assets	$	169,861	$	-	$	-	$	169,861
	Investments in partially owned entities		36,052		-		-		36,052

Financial Assets and Liabilities not Measured at Fair Value

Financial assets and liabilities that are not measured at fair value in our consolidated financial statements include mezzanine loans receivable and debt. Estimates of the fair values of these instruments are based on our assessments of available market information and valuation methodologies, including discounted cash flow analyses. The table below summarizes the carrying amounts and fair values of these financial instruments as of December 31, 2010 and 2009.

			As of December 31, 2010				As of December 31, 2009
			Carrying		Fair		Carrying		Fair
(Amounts in thousands)			Amount		Value		Amount		Value
	Mezzanine loans receivable		$	202,412	$	197,581	$	203,286	$	192,612
	Debt:
		Notes and mortgages payable	$	8,259,298	$	8,450,812	$	8,191,854	$	7,858,873
		Senior unsecured notes		1,082,928		1,119,512		711,716		718,302
		Exchangeable senior debentures		491,000		554,355		484,457		547,480
		Convertible senior debentures due to Vornado		186,413		191,510		445,458		461,275
		Revolving credit facility debt		874,000		874,000		852,218		852,218
			$	10,893,639	$	11,190,189	$	10,685,703	$	10,438,148

148

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. Stock-based Compensation

On May 13, 2010, Vornado’s shareholders approved the 2010 Omnibus Share Plan (the “Plan’), which replaces the 2002 Omnibus Share Plan. Under the Plan, the Compensation Committee of Vornado’s BoardofTrustee’s (the “Committee”) may grant eligible participants awards of Vornado stock options, stock appreciation rights, performance shares, restricted shares and other stock-based awards and partnership units, certain of which may provide for dividends or dividend equivalents and voting rights prior to vesting. Awards may be granted up to a maximum of 16,000,000 Vornado shares, if all awards granted are Full Value Awards, as defined, and up to 12,000,000 Vornado shares, if all of the awards granted are Not Full Value Awards, as defined. Full Value Awards are awards of securities, such as Vornado restricted shares, that, if all vesting requirements are met, do not require the payment of an exercise price or strike price to acquire the securities. Not Full Value Awards are awards of securities, such as Vornado options, that do require the payment of an exercise price or strike price. This means, for example, if the Committee were to award only Vornado restricted shares, it could award up to 6,000,000 Vornado restricted shares. On the other hand, if the Committee were to award only Vornado stock options, it could award options to purchase up to 12,000,000 Vornado common shares (at the applicable exercise price). The Committee may also issue any combination of awards under the Plan, with reductions in availability of future awards made in accordance with the above limitations.

The Plan provides for grants of incentive and non-qualified Vornado stock options, Vornado restricted stock, restricted partnership units and out-performance plan awards. As of December 31, 2010, Vornado has approximately 5,942,000 shares available for future grants under the Plan, if all awards granted are Full Value Awards, as defined.

In the third quarter of 2010, we recognized $2,800,000 of expense resulting from accelerating the vesting of certain partnership units and 2006 out-performance plan units, which were scheduled to fully vest in the first quarter of 2011. In the first quarter of 2009, Vornado’s nine most senior executives voluntarily surrendered their 2008 out-performance plan awards and their 2007 and 2008 stock option awards resulting in $32,588,000 of expense, representing the write-off of the unamortized portion of these awards, which is included in “general and administrative expenses” on our consolidated statement of income.

Out-Performance Plans

On March 31, 2008, the Compensation Committee of Vornado’s Board of Trustees approved a $75,000,000 out-performance plan (the “2008 OPP”). Under the 2008 OPP, the total return to Vornado’s shareholders (the “Total Return”) resulting from both share appreciation and dividends for the four-year period from March 31, 2008 to March 31, 2012 must exceed both an absolute and a relative hurdle. The initial value from which to determine the Total Return is $86.20 per share, a 0.93% premium to the trailing 10-day average closing price on the New York Stock Exchange for Vornado’s common shares on the date the plan was adopted. During the four-year performance period, participants are entitled to receive 10% of the common dividends paid on Vornado’s common shares for each 2008 OPP unit awarded, regardless of wheth er the units are ultimately earned. The fair value of the 2008 OPP awards on the date of grant, as adjusted for estimated forfeitures, was approximately $21,600,000, and is being amortized into expense over a five-year period beginning on the date of grant through the final vesting period, using a graded vesting attribution model, with the exception of an aggregate of $13,722,000 which was accelerated into expense in the first quarter of 2009 as a result of the voluntary surrender of such awards discussed above.

On April 25, 2006, Vornado’s Compensation Committee approved a $100,000,000 Out-performance plan (the “2006 OPP”), under which 91% of the total Out-Performance Plan was awarded. The fair value of the awards on the date of grant, as adjusted for estimated forfeitures, was approximately $46,141,000 and is being amortized into expense over the five-year vesting period beginning on the date of grant, using a graded vesting attribution model. As of January 12, 2007, the maximum performance threshold under the Out-Performance Plan was achieved, concluding the performance period.

During the years ended December 31, 2010, 2009 and 2008, we recognized $5,062,000, $23,493,000 and $16,021,000 of compensation expense, respectively, for these plans. As of December 31, 2010, there was $1,250,000 of total unrecognized compensation cost related these plans, which will be recognized over a weighted-average period of 1.47 years. Distributions paid on unvested OPP Units are charged to “preferred unit distributions” on our consolidated statements of income and amounted to $815,000, $1,935,000 and $2,918,000 in 2010, 2009 and 2008, respectively.

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VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. Stock-based Compensation - continued

Stock Options

Stock options are granted at an exercise price equal to 100% of the average of the high and low market price of Vornado’s common shares on the NYSE on the date of grant, generally vest pro-rata over four years and expire 10 years from the date of grant. Compensation expense related to stock option awards is recognized on a straight-line basis over the vesting period with the exception of an aggregate of $18,866,000 which was accelerated into expense in the first quarter of 2009 as a result of voluntary surrenders. During the years ended December 31, 2010, 2009 and 2008, we recognized $7,916,000, $25,911,000 and $9,051,000, of compensation expense, respectively, for these options. As of December 31, 2010 there was $17,606,000 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.0 years.

Below is a summary of stock option activity under the Plan for the year ended December 31, 2010.


					Weighted-
			Weighted-		Average
			Average		Remaining	Aggregate
			Exercise		Contractual	Intrinsic
		Shares	Price		Term	Value

Outstanding at January 1, 2010		6,179,806	$	47.90
Granted		1,204,095		73.00
Exercised		(1,856,837)		36.84
Cancelled		(38,184)		86.15
Outstanding at December 31, 2010		5,488,880		56.89	5.1	$	157,071,000
Options vested and expected to vest at
	December 31, 2010	5,459,567	$	56.73	5.1	$	156,252,000
Options exercisable at December 31, 2010		3,196,309	$	54.92	2.7	$	98,859,000

The fair value of each option grant is estimated on the date of grant using an option-pricing model with the following weighted-average assumptions for grants in the years ended December 31, 2010, 2009 and 2008.

	December 31,
	2010	2009	2008
Expected volatility	35.00%	28.00%	19.00%
Expected life	7.9 years	7.0 years	7.7 years
Risk free interest rate	3.60%	2.30%	3.20%
Expected dividend yield	4.90%	4.60%	4.80%

The weighted average grant date fair value of options granted during the years ended December 31, 2010, 2009 and 2008 was $16.96, $5.67 and $6.80, respectively. Cash received from option exercises for the years ended December 31, 2010, 2009 and 2008 was $25,338,000, $1,749,000 and $27,587,000, respectively. The total intrinsic value of options exercised during the years ended December 31, 2010, 2009 and 2008 was $60,923,000, $62,139,000 and $79,997,000, respectively.

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VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. Stock-based Compensation - continued

Restricted Stock

Restricted stock awards are granted at the average of the high and low market price of Vornado’s common shares on the NYSE on the date of grant and generally vest over four years. Restricted stock awards granted in 2010, 2009 and 2008 had a fair value of $3,922,000, $496,000 and $595,000, respectively. Compensation expense related to restricted stock awards is recognized on a straight-line basis over the vesting period. During the years ended December 31, 2010, 2009 and 2008, we recognized $1,432,000, $2,063,000 and $3,201,000 of compensation expense, respectively, for the portion of restricted stock awards that vested during each year. The fair value of restricted stock that vested during the years ended December 31, 2010, 2009 and 2008 was $2,186,000, $3,272,000 and $4,472,000, respectively. As of December 31, 2010, there was $4,419,000 of total unrecognized compensation cost related to unvested restricted stock, which is expected to be recognized over a weighted-average period of 2.1 years. Dividends paid on unvested restricted stock are charged directly to retained earnings and amounted to $115,000, $161,000 and $308,000 for the years ended December 31, 2010, 2009 and 2008, respectively.

Below is a summary of Vornado’s restricted stock activity under the Plan for the year ended December 31, 2010.

			Weighted-Average
			Grant-Date
Non-vested Shares		Shares	Fair Value
	Non-vested at January 1, 2010	55,618	$	76.69
	Granted	48,682		80.55
	Vested	(27,795)		78.08
	Forfeited	(957)		82.12
	Non-vested at December 31, 2010	75,548		78.60

Restricted Operating Partnership Units (“OP Units”)

OP Units are granted at the average of the high and low market price of Vornado’s common shares on the NYSE on the date of grant, vest ratably over four years and are subject to a taxable book-up event, as defined. OP Units granted in 2010, 2009 and 2008 had a fair value of $31,437,000, $10,691,000, and $7,167,000, respectively. Compensation expense related to OP Units is recognized ratably over the vesting period using a graded vesting attribution model. During the years ended December 31, 2010, 2009 and 2008, we recognized $20,204,000, $8,347,000, and $6,257,000, of compensation expense, respectively, for the portion of OP Units that vested during last year. The fair value of OP Units that vested during the years ended December 31, 2010, 2009 and 2008 was $14,087,000, $4,020,000 and $1,952,000, respectively. As of December 31, 2010, there was $18,138,000 of total remaining unrecognized compensation cost related to unvested OP units, which is expected to be recognized over a weighted-average period of 1.6 years. Distributions paid on unvested OP Units are charged to “net income attributable to noncontrolling interests” on our consolidated statements of income and amounted to $2,285,000, $1,583,000, and $938,000 in 2010, 2009 and 2008, respectively.

Below is a summary of restricted OP unit activity under the Plan for the year ended December 31, 2010.


			Weighted-Average
			Grant-Date
Non-Vested Units		Units	Fair Value
	Non-vested at January 1, 2010	508,080	$	46.55
	Granted	461,865		68.07
	Vested	(247,333)		56.96
	Forfeited	(2,155)		42.20
	Non-vested at December 31, 2010	720,457		56.78

151

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14. Fee and Other Income

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


(Amounts in thousands)		For the Years Ended December 31,
		2010		2009			2008
Tenant cleaning fees		$	58,053	$	53,824		$	56,416
Management and leasing fees			20,117		11,456			13,397
Lease termination fees			14,826		4,888			8,465
Other income			54,926		87,144	⁽¹⁾		48,538
		$	147,922	$	157,312		$	126,816


(1)	In December 2009, an agreement to sell an 8.6 acre parcel of land in the Pentagon City area of Arlington, Virginia, was terminated andwe recognized $27,089 of income representing the buyer's non-refundable purchase deposit, which is included in other income.

Fee and other income above includes management fee income from Interstate Properties, a related party, of $815,000, $782,000, and $803,000 for the years ended December 31, 2010, 2009, and 2008, respectively. The above table excludes fee income from partially owned entities which is included in income from partially owned entities (see Note 5 – Investments in Partially Owned Entities).

15. Interest and Other Investment Income (Loss), Net

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


(Amounts in thousands)		For the Year Ended December 31,
		2010		2009		2008
Income (loss) from the mark-to-market of derivative positions in marketable equity securities		$	130,153	$	-	$	(33,602)
Mezzanine loans receivable loss reversal (accrual)			53,100		(190,738)		10,300
Dividends and interest on marketable securities			25,772		25,908		24,658
Interest on mezzanine loans			10,319		32,181		44,721
Mark-to-market of investments in our deferred compensation plan⁽¹⁾			8,049		9,506		(14,204)
Impairment losses on marketable equity securities			-		(3,361)		(76,742)
Other, net			7,922		10,154		42,122
		$	235,315	$	(116,350)	$	(2,747)

__________________________

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

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VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

16. Income Per Class A Unit

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


(Amounts in thousands, except per unit amounts)			Year Ended December 31,
			2010		2009		2008
Numerator:
	Income from continuing operations		$	728,411	$	87,983	$	230,520
	(Loss) income from discontinued operations			(20,380)		40,467		180,925
	Net income			708,031		128,450		411,445
	Net (income) loss attributable to noncontrolling interests in consolidated subsidiaries			(4,920)		2,839		3,263
	Net income attributable to Vornado Realty L.P.			703,111		131,289		414,708
	Preferred unit distributions			(66,729)		(76,747)		(79,453)
	Discount on preferred unit redemptions			4,382		-		-
	Net income attributable to Class A unitholders			640,764		54,542		335,255
	Earnings allocated to unvested participating securities			(3,883)		(3,790)		(4,184)
	Numerator for basic income per Class A unit			636,881		50,752		331,071
	Impact of assumed conversions:
		Convertible preferred unit distributions		160		-		-
	Numerator for diluted income per Class A unit		$	637,041	$	50,752	$	331,071

Denominator:
	Denominator for basic income per Class A unit –
		weighted average units		195,002		184,893		168,057
	Effect of dilutive securities^(1):
		Employee unit options and restricted unit awards		1,748		1,908		4,850
		Convertible preferred units		610		618		-
	Denominator for diluted income per Class A unit –
		weighted average units and assumed conversions		197,360		187,419		172,907

INCOME PER CLASS A UNIT – BASIC:
	Income from continuing operations		$	3.37	$	0.05	$	0.89
	(Loss) income from discontinued operations			(0.10)		0.22		1.08
	Net income per Class A unit		$	3.27	$	0.27	$	1.97

INCOME PER CLASS A UNIT – DILUTED:
	Income from continuing operations		$	3.33	$	0.05	$	0.86
	(Loss) income from discontinued operations			(0.10)		0.22		1.05
	Net income per Class A unit		$	3.23	$	0.27	$	1.91


(1)		The effect of dilutive securities in the years ended December 31, 2010, 2009 and 2008 excludes an aggregate of 6,483, 7,361 and 10,713 weighted average Class A unit equivalents, respectively, as their effect was anti-dilutive.

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VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

17. Comprehensive Income


(Amounts in thousands)	For the Years Ended December 31,
	2010		2009		2008
Net income	$	708,031	$	128,450	$	411,445
Other comprehensive income (loss)		45,004		35,348		(36,671)
Comprehensive income		753,035		163,798		374,774
Comprehensive (income) loss attributable to noncontrolling interests		(4,920)		2,839		3,263
Comprehensive income attributable to Vornado Realty L.P.	$	748,115	$	166,637	$	378,037

Substantially all of other comprehensive income for the years ended December 31, 2010, 2009 and 2008 relates to income from the mark-to-market of marketable securities classified as available-for-sale and our share of other comprehensive income or loss of partially owned entities.

18. Leases

As lessor:

We lease space to tenants under operating leases. Most of the leases provide for the payment of fixed base rentals payable monthly in advance. Office building leases generally require the tenants to reimburse us for operating costs and real estate taxes above their base year costs. Shopping center leases provide for pass-through to tenants the tenant’s share of real estate taxes, insurance and maintenance. Shopping center leases also provide for the payment by the lessee of additional rent based on a percentage of the tenants’ sales. As of December 31, 2010, future base rental revenue under non-cancelable operating leases, excluding rents for leases with an original term of less than one year and rents resulting from the exercise of renewal options, is as follows:


(Amounts in thousands)
Year Ending December 31:
2011	$	1,872,000
2012		1,693,000
2013		1,568,000
2014		1,446,000
2015		1,258,000
Thereafter		6,206,000

These amounts do not include rentals based on tenants’ sales. These percentage rents approximated $8,534,000, $9,051,000 and $7,322,000, for the years ended December 31, 2010, 2009 and 2008, respectively.

None of our tenants accounted for more than 10% of total revenues in any of the years ended December 31, 2010, 2009 and 2008.

Former Bradlees Locations

Pursuant to the Master Agreement and Guaranty, dated May 1, 1992, we are due $5,000,000 per annum of additional rent from Stop & Shop which was allocated to certain Bradlees former locations. On December 31, 2002, prior to the expiration of the leases to which the additional rent was allocated, we reallocated this rent to other former Bradlees leases also guaranteed by Stop & Shop. Stop & Shop is contesting our right to reallocate and claims that we are no longer entitled to the additional rent. At December 31, 2010, we were due an aggregate of $40,417,000. We believe the additional rent provision of the guaranty expires, at the earliest, in 2012, and we are vigorously contesting Stop & Shop’s position.

154

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

18. Leases - continued

As lessee:

We are a tenant under operating leases for certain properties. These leases have terms that expire during the next thirty years. Future minimum lease payments under operating leases at December 31, 2010 are as follows:


(Amounts in thousands)
Year Ending December 31:
2011	$	30,564
2012		31,072
2013		31,254
2014		31,575
2015		30,230
Thereafter		1,061,662

Rent expense was $36,872,000, $35,463,000 and $29,320,000 for the years ended December 31, 2010, 2009 and 2008, respectively.

We are also a lessee under capital leases for real estate. Lease terms generally range from 5-20 years with renewal or purchase options. Capitalized leases are recorded at the present value of future minimum lease payments or the fair market value of the property. Capitalized leases are depreciated on a straight-line basis over the estimated life of the asset or life of the related lease, whichever is shorter. Amortization expense on capital leases is included in “depreciation and amortization” on our consolidated statements of income. As of December 31, 2010, future minimum lease payments under capital leases are as follows:


(Amounts in thousands)
Year Ending December 31:
2011	$	706
2012		707
2013		706
2014		707
2015		706
Thereafter		16,721
Total minimum obligations		20,253
Interest portion		(13,539)
Present value of net minimum payments	$	6,714

At December 31, 2010 and 2009, $6,714,000 and $6,753,000, respectively, representing the present value of net minimum payments are included in “Other Liabilities” on our consolidated balance sheets. At December 31, 2010 and 2009, property leased under capital leases had a total cost of $6,216,000 and $6,216,000, respectively, and accumulated depreciation of $2,029,000 and $1,873,000, respectively.

155

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

19. Commitments and Contingencies

Insurance

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

Other Commitments and Contingencies

156

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

19. Commitments and Contingencies - continued

Litigation

157

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

20. Related Party Transactions

Transactions with Affiliates and Officers and Trustees

Alexander’s

On March 2, 2009, Mr. Roth and Mr. Fascitelli each exercised 150,000 stock appreciation rights which were scheduled to expire on March 4, 2009 and each received gross proceeds of $11,419,000.

Interstate Properties (“Interstate”)

158

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

21. Summary of Quarterly Results (Unaudited)

The following summary represents the results of operations for each quarter in 2010 and 2009:

						Net Income (Loss)
						Attributable		Net Income (Loss) Per
						to Class A		Class A Unit (2)
				Revenues		Unitholders (1)		Basic		Diluted
	(Amounts in thousands, except per unit amounts)
		2010
			December 31	$	712,957	$	260,662	$	1.33	$	1.31
			September 30		697,467		102,311		0.52		0.51
			June 30		683,989		62,291		0.31		0.31
			March 31		685,314		215,500		1.10		1.09

		2009
			December 31	$	706,552	$	(163,153)	$	(0.85)	$	(0.85)
			September 30		661,331		136,364		0.71		0.70
			June 30		661,207		(56,394)		(0.31)		(0.31)
			March 31		667,602		137,725		0.81		0.80

__________________________________
	(1)		Fluctuations among quarters resulted primarily from non-cash impairment losses, mark-to-market of derivative instruments, net gains on sale of real estate and from seasonality of business operations.

	(2)		The total for the year may differ from the sum of the quarters as a result of weighting.

159

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

22. Segment Information

The financial information summarized below is presented by reportable operating segment, consistent with how we review and manage our businesses.


(Amounts in thousands)			For the Year Ended December 31, 2010
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	2,129,284	$	775,142	$	566,041	$	398,489	$	219,882	$	-	$	169,730
Straight-line rent adjustments					75,871		34,212		5,849		29,079		2,756		-		3,975
Amortization of acquired below-
		market leases, net			66,202		36,081		2,326		22,213		(75)		-		5,657
Total rentals					2,271,357		845,435		574,216		449,781		222,563		-		179,362
Tenant expense reimbursements					360,448		137,624		51,963		145,905		13,998		-		10,958
Fee and other income:
	Tenant cleaning fees				58,053		88,664		-		-		-		-		(30,611)
	Management and leasing fees				20,117		6,192		15,934		1,029		156		-		(3,194)
	Lease termination fees				14,826		4,270		1,148		7,641		467		-		1,300
	Other				54,926		22,283		21,427		4,172		3,904		-		3,140
Total revenues					2,779,727		1,104,468		664,688		608,528		241,088		-		160,955
Operating expenses					1,099,478		470,177		213,935		224,340		125,863		-		65,163
Depreciation and amortization					530,704		176,931		142,720		110,416		46,155		-		54,482
General and administrative					214,225		18,621		25,464		29,610		26,953		-		113,577
Impairment losses and acquisition costs					��129,458		-		-		72,500		20,000		-		36,958
Total expenses					1,973,865		665,729		382,119		436,866		218,971		-		270,180
Operating income (loss)					805,862		438,739		282,569		171,662		22,117		-		(109,225)
Income applicable to Toys					71,624		-		-		-		-		71,624		-
Income (loss) from partially owned
	entities				22,438		(6,354)		(564)		9,401		(179)		-		20,134
(Loss) from Real Estate Fund					(303)		-		-		-		-		-		(303)
Interest and other investment
	income, net				235,315		608		157		180		47		-		234,323
Interest and debt expense					(560,270)		(132,279)		(130,540)		(85,281)		(37,932)		-		(174,238)
Net gain (loss) on early extinguishment
	of debt				94,789		-		-		105,571		-		-		(10,782)
Net gain on disposition of wholly
	owned and partially owned assets				81,432		-		54,742		-		765		-		25,925
Income (loss) before income taxes					750,887		300,714		206,364		201,533		(15,182)		71,624		(14,166)
Income tax expense					(22,476)		(2,167)		(1,816)		(37)		(173)		-		(18,283)
Income (loss) from continuing
	operations				728,411		298,547		204,548		201,496		(15,355)		71,624		(32,449)
(Loss) from discontinued operations					(20,380)		-		(4,481)		(2,637)		(13,262)		-		-
Net income (loss)					708,031		298,547		200,067		198,859		(28,617)		71,624		(32,449)
Net (income) loss attributable to
	noncontrolling interests in
	consolidated subsidiaries				(4,920)		(9,559)		-		(778)		-		-		5,417
Net income (loss) attributable to
	Vornado Realty L.P.				703,111		288,988		200,067		198,081		(28,617)		71,624		(27,032)
Interest and debt expense⁽²⁾					828,082		126,209		136,174		92,653		61,379		177,272		234,395
Depreciation and amortization⁽²⁾					729,426		170,505		159,283		114,335		51,064		131,284		102,955
Income tax (benefit) expense⁽²⁾					(23,036)		2,167		2,027		37		232		(45,418)		17,919
EBITDA⁽¹⁾				$	2,237,583	$	587,869	$	497,551	$	405,106	$	84,058	$	334,762	$	328,237

Balance Sheet Data:
Real estate at cost				$	17,674,922	$	5,522,291	$	4,237,438	$	4,891,526	$	1,131,528	$	-	$	1,892,139
Investments in partially owned entities					1,375,006		97,743		149,295		11,831		4,183		447,334		664,620
Total assets					20,517,471		5,743,781		3,872,209		4,284,871		1,435,714		447,334		4,733,562


See notes on page 163.

160

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

22. Segment Information – continued


(Amounts in thousands)			For the Year Ended December 31, 2009
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	2,021,072	$	758,557	$	526,683	$	362,689	$	213,911	$	-	$	159,232
Straight-line rent adjustments					89,168		36,805		22,683		27,104		2,107		-		469
Amortization of acquired below-
		market leases, net			71,954		40,129		3,452		22,993		89		-		5,291
Total rentals					2,182,194		835,491		552,818		412,786		216,107		-		164,992
Tenant expense reimbursements					357,186		136,541		60,620		134,670		15,517		-		9,838
Fee and other income:
	Tenant cleaning fees				53,824		75,549		-		-		-		-		(21,725)
	Management and leasing fees				11,456		4,211		8,183		1,731		88		-		(2,757)
	Lease termination fees				4,888		1,840		2,224		464		221		-		139
	Other				87,144		18,868		47,745		2,619		9,458		-		8,454
Total revenues					2,696,692		1,072,500		671,590		552,270		241,391		-		158,941
Operating expenses					1,067,229		452,370		220,333		204,224		125,602		-		64,700
Depreciation and amortization					531,637		173,923		142,415		101,353		51,064		-		62,882
General and administrative					231,010		22,820		26,205		30,339		31,017		-		120,629
Impairment losses and acquisition costs					75,963		-		24,875		11,789		-		-		39,299
Total expenses					1,905,839		649,113		413,828		347,705		207,683		-		287,510
Operating income (loss)					790,853		423,387		257,762		204,565		33,708		-		(128,569)
Income applicable to Toys					92,300		-		-		-		-		92,300		-
(Loss) income from partially owned
	entities				(19,910)		5,817		4,850		4,728		151		-		(35,456)
Interest and other investment (loss)
	income, net				(116,350)		876		786		69		95		-		(118,176)
Interest and debt expense					(617,994)		(133,647)		(128,039)		(89,070)		(38,009)		-		(229,229)
Net (loss) gain on early extinguishment
	of debt				(25,915)		-		-		769		-		-		(26,684)
Net gain on disposition of wholly
	owned and partially owned assets				5,641		-		-		-		-		-		5,641
Income (loss) before income taxes					108,625		296,433		135,359		121,061		(4,055)		92,300		(532,473)
Income tax expense					(20,642)		(1,332)		(1,482)		(319)		(2,140)		-		(15,369)
Income (loss) from continuing
	operations				87,983		295,101		133,877		120,742		(6,195)		92,300		(547,842)
Income (loss) from discontinued operations					40,467		-		52,308		(6,791)		(5,050)		-		-
Net income (loss)					128,450		295,101		186,185		113,951		(11,245)		92,300		(547,842)
Net loss (income) attributable to
	noncontrolling interests in
	consolidated subsidiaries				2,839		(9,098)		-		915		-		-		11,022
Net income (loss) attributable to
	Vornado Realty L. P.				131,289		286,003		186,185		114,866		(11,245)		92,300		(536,820)
Interest and debt expense⁽²⁾					826,827		126,968		132,610		95,990		52,862		127,390		291,007
Depreciation and amortization⁽²⁾					728,815		168,517		152,747		105,903		56,702		132,227		112,719
Income tax expense (benefit)⁽²⁾					10,193		1,332		1,590		319		2,208		(13,185)		17,929
EBITDA⁽¹⁾				$	1,697,124	$	582,820	$	473,132	$	317,078	$	100,527	$	338,732	$	(115,165)

Balance Sheet Data:
Real estate at cost				$	17,574,245	$	5,438,655	$	4,593,749	$	4,626,178	$	1,146,997	$	-	$	1,768,666
Investments in partially owned entities					1,209,285		128,961		119,182		22,955		6,520		409,453		522,214
Total assets					20,185,472		5,538,362		4,138,752		3,511,987		1,455,000		409,453		5,131,918


See notes on page 163.

161

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

22. Segment Information – continued


(Amounts in thousands)			For the Year Ended December 31, 2008
						New York		Washington, DC				Merchandise
				Total		Office		Office		Retail		Mart		Toys		Other⁽³⁾
Property rentals				$	1,975,838	$	722,445	$	497,735	$	342,714	$	215,854	$	-	$	197,090
Straight-line rent adjustments					88,703		42,766		15,720		20,384		8,516		-		1,317
Amortization of acquired below-
		market leases, net			95,532		60,355		3,998		26,546		161		-		4,472
Total rentals					2,160,073		825,566		517,453		389,644		224,531		-		202,879
Tenant expense reimbursements					353,602		135,788		57,793		127,903		18,055		-		14,063
Fee and other income:
	Tenant cleaning fees				56,416		71,833		-		-		-		-		(15,417)
	Management and leasing fees				13,397		6,411		8,940		1,673		349		-		(3,976)
	Lease termination fees				8,465		3,088		2,635		2,281		461		-		-
	Other				48,538		15,699		22,350		2,543		6,811		-		1,135
Total revenues					2,640,491		1,058,385		609,171		524,044		250,207		-		198,684
Operating expenses					1,048,537		439,012		211,687		198,802		127,437		-		71,599
Depreciation and amortization					529,134		190,925		135,351		90,974		46,823		-		65,061
General and administrative					193,969		20,217		26,522		29,836		29,252		-		88,142
Impairment losses and acquisition costs					81,447		-		-		595		-		-		80,852
Total expenses					1,853,087		650,154		373,560		320,207		203,512		-		305,654
Operating income (loss)					787,404		408,231		235,611		203,837		46,695		-		(106,970)
Income applicable to Toys					2,380		-		-		-		-		2,380		-
(Loss) income from partially owned
	entities				(159,207)		6,082		6,173		10,371		1,106		-		(182,939)
Interest and other investment (loss)
	income, net				(2,747)		2,288		2,108		464		329		-		(7,936)
Interest and debt expense					(619,531)		(139,146)		(125,141)		(85,895)		(38,214)		-		(231,135)
Net gain on early extinguishment
	of debt				9,820		-		-		-		-		-		9,820
Net gain on disposition of wholly
	owned and partially owned assets				7,757		-		-		-		-		-		7,757
Income (loss) before income taxes					25,876		277,455		118,751		128,777		9,916		2,380		(511,403)
Income tax benefit (expense)					204,644		-		221,080		(82)		(1,206)		-		(15,148)
Income (loss) from continuing
	operations				230,520		277,455		339,831		128,695		8,710		2,380		(526,551)
Income from discontinued operations					180,925		-		64,849		3,001		1,163		-		111,912
Net income (loss)					411,445		277,455		404,680		131,696		9,873		2,380		(414,639)
Net loss (income) attributable to
	noncontrolling interests in
	consolidated subsidiaries				3,263		(4,762)		-		157		(125)		-		7,993
Net income (loss) attributable to
	Vornado Realty L.P.				414,708		272,693		404,680		131,853		9,748		2,380		(406,646)
Interest and debt expense⁽²⁾					821,940		132,406		130,310		102,600		53,072		147,812		255,740
Depreciation and amortization⁽²⁾					710,526		181,699		143,989		98,238		52,357		136,634		97,609
Income tax (benefit) expense⁽²⁾					(142,415)		-		(220,965)		82		1,260		59,652		17,556
EBITDA⁽¹⁾				$	1,804,759	$	586,798	$	458,014	$	332,773	$	116,437	$	346,478	$	(35,741)

Balance Sheet Data:
Real estate at cost				$	17,432,906	$	5,362,129	$	4,443,887	$	4,469,378	$	1,149,357	$	-	$	2,008,155
Investments in partially owned entities					1,083,250		129,934		115,121		20,079		6,969		293,096		518,051
Total assets					21,418,048		5,287,544		3,934,039		3,733,586		1,468,470		293,096		6,701,313


See notes on the following page.

162

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

22. Segment Information - continued

	Notes to preceding tabular information:

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

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

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


(Amounts in thousands)			For the Year Ended December 31,
			2010		2009			2008
Alexander's			$	57,425	$	81,703	$	64,683
Lexington				55,304		50,024		35,150
555 California Street				46,782		44,757		48,316
Hotel Pennsylvania				23,763		15,108		42,269
LNR (acquired in July 2010)				6,116		-		-
Industrial warehouses				2,528		4,737		5,264
Other investments				31,587		6,981		6,321
				223,505		203,310		202,003
Corporate general and administrative expenses⁽¹⁾				(90,343)		(79,843)		(91,967)
Investment income and other, net⁽¹⁾				65,499		78,593		109,519
Income (loss) from the mark-to-market of derivative positions in marketable equity
	securities			130,153		-		(33,740)
Net (loss) gain on early extinguishment of debt				(10,782)		(26,684)		-
Real Estate Fund organization costs				(5,937)		-		-
Non-cash mezzanine loans receivable loss (accrual) reversal				53,100		(190,738)		10,300
Non-cash asset write-downs:
	Investment in Lexington			-		(19,121)		(107,882)
	Marketable equity securities			-		(3,361)		(76,352)
	Real estate - primarily development projects:
		Wholly owned entities (including acquisition costs)		(36,958)		(39,299)		(80,852)
		Partially owned entities		-		(17,820)		(96,037)
Write-off of unamortized costs from the voluntary surrender of equity awards				-		(20,202)		-
Discontinued operations of Americold (including a $112,690 net gain on sale)				-		-		129,267
			$	328,237	$	(115,165)	$	(35,741)


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

163

item 9. changes in and disagreements with accountants on accounting and financial disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures: Vornado’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 annual report on Form 10-K. Based on such evaluation, Vornado’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.

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

Management’s Report on Internal Control over Financial Reporting

Management of Vornado Realty Trust, sole general partner of Vornado Realty L.P. together with VornadoRealty L.P.’s consolidated subsidiaries (the “Company”), is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed under the supervision of our principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.

As of December 31, 2010, management conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework established inInternal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that our internal control over financial reporting as of December 31, 2010 was effective.

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States, and that receipts and expenditures are being made only in accordance with authorizations of management and Vornado’s trustees; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

The effectiveness of our internal control over financial reporting as of December 31, 2010 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing on page 165, which expresses an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2010.

164

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Partners

Vornado Realty L.P.

New York, New York

We have audited the internal control over financial reporting of Vornado Realty L.P., together with its consolidated subsidiaries (the “Company”) as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of trustees, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and trustees of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2010 of the Company and our report dated February 25, 2011 expressed an unqualified opinion on those financial statements and financial statement schedules.

/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey

February 25, 2011

165

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Information relating to trustees of Vornado, the Registrant’s sole general partner, including its audit committee and audit committee financial expert, will be contained in a definitive Proxy Statement of Vornado involving the election of Vornado’s trustees under the caption “Election of Trustees” which Vornado will file with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934 not later than 120 days after December 31, 2010, and such information is incorporated herein by reference. Also incorporated herein by reference is the information under the caption “16(a) Beneficial Ownership Reporting Compliance” of the Proxy Statement.

The following is a list of the names, ages, principal occupations and positions with Vornado of the executive officers of Vornado and the positions held by such officers during the past five years. All executive officers of Vornado have terms of office that run until the next succeeding meeting of the Board of Trustees of Vornado following the Annual Meeting of Vornado’s Shareholders unless they are removed sooner by Vornado’s Board.

		PRINCIPAL OCCUPATION, POSITION AND OFFICE
Name	Age	(Current and during past five years with Vornado unless otherwise stated)

Steven Roth	69	Chairman of the Board; Chief Executive Officer from May 1989 to May 2009; Managing General
		Partner of Interstate Properties, an owner of shopping centers and an investor in securities and
		partnerships; Chief Executive Officer of Alexander’s, Inc. since March 1995, a Director since 1989,
		and Chairman since May 2004.

Michael D. Fascitelli	54	Chief Executive Officer since May 2009; President and a Trustee since December 1996; President
		of Alexander’s Inc. since August 2000 and Director since December 1996; Partner at
		Goldman, Sachs & Co. in charge of its real estate practice from December 1992 to December 1996;
		and Vice President at Goldman, Sachs & Co., prior to December 1992.

Michael J. Franco	42	Executive Vice President - Co-Head of Acquisitions and Capital Markets since November 2010;
		Managing Director (2003-2010) and Executive Director (2001-2003) of the Real Estate Investing
		Group of Morgan Stanley.

David R. Greenbaum	59	President of the New York City Office Division since April 1997 (date of our acquisition); President
		of Mendik Realty (the predecessor to the New York Office division) from 1990 until April 1997.

Christopher Kennedy	47	President of the Merchandise Mart Division since September 2000; Executive Vice President of
		the Merchandise Mart Division from April 1998 to September 2000; Executive Vice President of
		Merchandise Mart Properties, Inc. from 1994 to April 1998.

Joseph Macnow	65	Executive Vice President - Finance and Administration since January 1998 and Chief Financial Officer
		since March 2001; Vice President and Chief Financial Officer of the Company from 1985 to January
		1998; Executive Vice President and Chief Financial Officer of Alexander's Inc. since August 1995.

Mitchell N. Schear	52	President of Vornado/Charles E. Smith L.P. (our Washington, DC Office division) since April 2003;
		President of the Kaempfer Company from 1998 to April 2003 (date acquired by us).

Wendy Silverstein	50	Executive Vice President - Co-Head of Acquisitions and Capital Markets since November 2010;
		Executive Vice President of Capital Markets since 1998; Senior Credit Officer of Citicorp Real Estate
		and Citibank, N.A. from 1986 to 1998.

Vornado, the sole general partner of the Registrant has adopted a Code of Business Conduct and Ethics that applies to, among others, Michael Fascitelli, Vornado’s principal executive officer, and Joseph Macnow, Vornado’s principal financial and accounting officer. This Code is available on our website at www.vno.com.

166

Item 11. Executive Compensation

Information relating toVornado'sexecutive officer and director compensation will be contained in Vornado's Proxy Statement referred to above in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Executive Compensation” and such information is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information relating to security ownership of certain beneficial owners and management will be contained in Vornado's Proxy Statement referred to in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Principal Security Holders” and such information is incorporated herein by reference.

Equity compensation plan information

The following table provides information as of December 31, 2010 regarding Vornado’s equity compensation plans.

						Number of securities remaining
		Number of securities to be			Weighted-average	available for future issuance
		issued upon exercise of			exercise price of	under equity compensation plans
		outstanding options,			outstanding options,	(excluding securities reflected in
Plan Category		warrants and rights			warrants and rights	the second column)
Equity compensation plans approved
	by security holders	6,596,962	⁽¹⁾	$	56.89	5,942,459	⁽²⁾
Equity compensation awards not
	approved by security holders	-			-	-
Total		6,596,962		$	56.89	5,942,459
___________________________
(1)	Includes 75,548 restricted Vornado common shares, 920,391 restricted partnership units and 112,143 Out-Performance Plan units which do not have an option exercise price.
(2)	All of the shares available for future issuance under plans approved by the security holders may be issued as Full Value Awards or Not Full Value Awards, as defined.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Information relating to certain relationships and related transactions will be contained in Vornado's Proxy Statement referred to in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Certain Relationships and Related Transactions” and such information is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

Information relating to Principal Accounting fees and services will be contained in Vornado’s Proxy Statement referred to in Item 10, “Directors, Executive Officers and Corporate Governance,” under the caption “Ratification of Selection of Independent Auditors” and such information is incorporated herein by reference.

167

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this report:

1. The consolidated financial statements are set forth in Item 8 of this Annual Report on Form 10-K.

The following financial statement schedules should be read in conjunction with the financial statements included in Item 8 of this Annual Report on Form 10-K.

		Pages in this
		Annual Report
		on Form 10-K
	II--Valuation and Qualifying Accounts--years ended December 31, 2010, 2009 and 2008	170
	III--Real Estate and Accumulated Depreciation as of December 31, 2010	171

Schedules other than those listed above are omitted because they are not applicable or the information required is included in the consolidated financial statements or the notes thereto.

The following exhibits listed on the Exhibit Index are filed with this Annual Report on Form 10-K.

Exhibit No.
12			Computation of Ratios
21			Subsidiaries of Registrant
23			Consent of Independent Registered Public Accounting Firm
31.1			Rule 13a-14 (a) Certification of Chief Executive Officer
31.2			Rule 13a-14 (a) Certification of Chief Financial Officer
32.1			Section 1350 Certification of the Chief Executive Officer
32.2			Section 1350 Certification of the Chief Financial Officer

168

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.
		(Sole General Partner)

		VORNADO REALTY TRUST
		(Registrant)

Date: February 25, 2011	By:	/s/ Joseph Macnow
		Joseph Macnow, Executive Vice President - Finance and Administration and Chief Financial Officer of Vornado Realty Trust, sole general partner (duly authorized officer and principal financial and accounting officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

	Signature	Title	Date

By:	/s/Steven Roth	Chairman of the Board of Trustees of Vornado Realty Trust	February 25, 2011
	(Steven Roth)

By:	/s/Michael D. Fascitelli	President and Chief Executive Officer of Vornado Realty Trust	February 25, 2011
	(Michael D. Fascitelli)	(Principal Executive Officer)

By:	/s/Candace K. Beinecke	Trustee of Vornado Realty Trust	February 25, 2011
	(Candace K. Beinecke)

By:	/s/Anthony W. Deering	Trustee of Vornado Realty Trust	February 25, 2011
	(Anthony W. Deering)

By:	/s/Robert P. Kogod	Trustee of Vornado Realty Trust	February 25, 2011
	(Robert P. Kogod)

By:	/s/Michael Lynne	Trustee of Vornado Realty Trust	February 25, 2011
	(Michael Lynne)

By:	/s/David Mandelbaum	Trustee of Vornado Realty Trust	February 25, 2011
	(David Mandelbaum)

By:	/s/Ronald G. Targan	Trustee of Vornado Realty Trust	February 25, 2011
	(Ronald G. Targan)

By:	/s/Richard R. West	Trustee of Vornado Realty Trust	February 25, 2011
	(Richard R. West)

By:	/s/Russell B. Wight	Trustee of Vornado Realty Trust	February 25, 2011
	(Russell B. Wight, Jr.)

By:	/s/Joseph Macnow	Executive Vice President — Finance and	February 25, 2011
	(Joseph Macnow)	Administration and Chief Financial Officer of Vornado Realty Trust (Principal Financial and Accounting Officer)

169

SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
December 31, 2010
(Amounts in Thousands)


	Column A			Column B		Column C		Column D		Column E
						Additions
				Balance at		Charged		Uncollectible		Balance
				Beginning		Against		Accounts		at End
		Description		of Year		Operations		Written-off		of Year

		Year Ended December 31, 2010:
			Allowance for doubtful accounts	$	242,118	$	(23,465)	$	(75,135)	$	143,518
		Year Ended December 31, 2009:
			Allowance for doubtful accounts	$	85,307	$	216,712	$	(59,901)	$	242,118
		Year Ended December 31, 2008:
			Allowance for doubtful accounts	$	79,227	$	20,931	$	(14,851)	$	85,307

170

VORNADO REALTY L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
(Amounts in thousands)
COLUMN A						COLUMN B		COLUMN C				COLUMN D		COLUMN E						COLUMN F	COLUMN G	COLUMN H	COLUMN I
														Gross amount at which									Life on which
							Initial cost to company (1)							carried at close of period									depreciation
												Costs							Accumulated				in latest
									Building			capitalized			Buildings				depreciation				income
									and			subsequent			and				and		Date of	Date	statement
Description					Encumbrances		Land		improvements			to acquisition		Land	improvements		Total (2)		amortization		construction (3)	acquired	is computed
	Office Buildings
		New York
			Manhattan
			1290 Avenue of the Americas		$	424,136	$	515,539	$	923,653	$	68,603	$	515,539	$	992,256	$	1,507,795	$	100,556	1963	2007	(4)
			350 Park Avenue			430,000		265,889		363,381		25,400		265,889		388,781		654,670		38,798	1960	2006	(4)
			One Penn Plaza			-		-		412,169		148,019		-		560,188		560,188		176,108	1972	1998	(4)
			100 W.33rd St (Manhattan Mall)			159,361		242,776		247,970		3,608		242,776		251,578		494,354		24,828	1911	2007	(4)
			Two Penn Plaza			277,347		53,615		164,903		78,470		52,689		244,299		296,988		93,497	1968	1997	(4)
			770 Broadway			353,000		52,898		95,686		73,942		52,898		169,628		222,526		55,274	1907	1998	(4)
			90 Park Avenue			-		8,000		175,890		32,211		8,000		208,101		216,101		70,516	1964	1997	(4)
			888 Seventh Avenue			318,554		-		117,269		90,982		-		208,251		208,251		68,690	1980	1998	(4)
			640 Fifth Avenue			-		38,224		25,992		111,463		38,224		137,455		175,679		46,395	1950	1997	(4)
			Eleven Penn Plaza			199,320		40,333		85,259		45,524		40,333		130,783		171,116		45,132	1923	1997	(4)
			1740 Broadway			-		26,971		102,890		36,891		26,971		139,781		166,752		42,261	1950	1997	(4)
			909 Third Avenue			207,045		-		120,723		43,689		-		164,412		164,412		43,510	1969	1999	(4)
			150 East 58th Street			-		39,303		80,216		28,657		39,303		108,873		148,176		37,385	1969	1998	(4)
			595 Madison Avenue			-		62,731		62,888		15,500		62,731		78,388		141,119		20,961	1968	1999	(4)
			866 United Nations Plaza			44,978		32,196		37,534		10,635		32,196		48,169		80,365		18,228	1966	1997	(4)
			20 Broad Street			-		-		28,760		25,953		-		54,713		54,713		14,878	1956	1998	(4)
			40 Fulton Street			-		15,732		26,388		5,758		15,732		32,146		47,878		10,999	1987	1998	(4)
			689 Fifth Avenue			-		19,721		13,446		10,844		19,721		24,290		44,011		9,315	1925	1998	(4)
			330 West 34th Street			-		-		8,599		12,764		-		21,363		21,363		9,426	1925	1998	(4)
			40-42 Thompson Street			-		6,503		10,057		721		6,503		10,778		17,281		1,414	1928	2005	(4)
			1540 Broadway Garage			-		4,086		8,914		-		4,086		8,914		13,000		1,009	1990	2006	(4)
			Other			-		-		5,548		65,866		36,106		35,308		71,414		3,547
				Total New York		2,413,741		1,424,517		3,118,135		935,500		1,459,697		4,018,455		5,478,152		932,727

		Washington, DC
			2011-2451 Crystal Drive			127,720		100,935		409,920		116,865		100,228		527,492		627,720		134,079	1984-1989	2002	(4)
			2001 Jefferson Davis Highway,
			2100/2200 Crystal Drive, 223 23rd
			Street, 2221 South Clark Street, Crystal
			City Shops at 2100, 220 20th Street			83,573		57,213		131,206		184,306		57,070		315,655		372,725		58,484	1964-1969	2002	(4)
			1550-1750 Crystal Drive/
			241-251 18th Street			124,883		64,817		218,330		51,019		64,652		269,514		334,166		72,441	1974-1980	2002	(4)
			Riverhouse Apartments			259,546		118,421		125,078		53,308		138,696		158,111		296,807		14,724		2007	(4)
			Skyline Place (6 buildings)			442,500		41,986		221,869		22,325		41,862		244,318		286,180		61,383	1973-1984	2002	(4)
			1215, 1225 S. Clark Street/ 200, 201
			12th Street S.			93,075		47,594		177,373		25,482		47,465		202,984		250,449		52,564	1983-1987	2002	(4)

171

VORNADO REALTY L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
(Amounts in thousands)
COLUMN A						COLUMN B		COLUMN C			COLUMN D	COLUMN E						COLUMN F	COLUMN G	COLUMN H	COLUMN I
												Gross amount at which									Life on which
							Initial cost to company (1)					carried at close of period									depreciation
											Costs						Accumulated				in latest
									Building		capitalized		Buildings				depreciation				income
									and		subsequent		and				and		Date of	Date	statement
Description					Encumbrances		Land		improvements		to acquisition	Land	improvements		Total (2)		amortization		construction (3)	acquired	is computed
			1800, 1851 and 1901 South Bell Street			10,099		37,551		118,806	26,418	37,551		145,224		182,775		36,256	1968	2002	(4)
			1229-1231 25th Street			95,220		67,049		5,039	105,288	68,198		109,178		177,376		3,091		2007	(4)
			2101 L Street			150,000		32,815		51,642	80,965	39,768		125,654		165,422		12,192	1975	2003	(4)
			2200-2300 Courthouse Plaza			59,278		-		105,475	26,748	-		132,223		132,223		34,991	1988-1989	2002	(4)
			Bowen Building			115,022		30,077		98,962	1,695	30,176		100,558		130,734		14,625	2004	2005	(4)
			1875 Connecticut Ave NW			51,900		36,303		82,004	1,428	35,886		83,849		119,735		10,771	1963	2007	(4)
			One Skyline Tower			134,700		12,266		75,343	31,684	12,231		107,062		119,293		23,382	1988	2002	(4)
			Reston Executive			93,000		15,424		85,722	8,150	15,380		93,916		109,296		24,980	1987-1989	2002	(4)
			H Street - North 10-1D Land Parcel			-		104,473		55	(12,230)	87,666		4,632		92,298		-		2007	(4)
			409 3rd Street			-		10,719		69,658	7,229	10,719		76,887		87,606		25,243	1990	1998	(4)
			1825 Connecticut Ave NW			51,149		33,090		61,316	(6,211)	32,726		55,469		88,195		7,077	1956	2007	(4)
			Warehouses			-		106,946		1,326	(23,394)	83,400		1,478		84,878		1,331		2007	(4)
			Commerce Executive			-		13,401		58,705	13,902	13,363		72,645		86,008		19,854	1985-1989	2002	(4)
			1235 S. Clark Street			52,314		15,826		53,894	13,803	15,826		67,697		83,523		14,391	1981	2002	(4)
			Seven Skyline Place			100,800		10,292		58,351	(3,318)	10,262		55,063		65,325		15,504	2001	2002	(4)
			1150 17th Street			28,728		23,359		24,876	14,363	24,723		37,875		62,598		10,925	1970	2002	(4)
			Crystal City Hotel			-		8,000		47,191	5,556	8,000		52,747		60,747		8,168	1968	2004	(4)
			1750 Pennsylvania Avenue			45,132		20,020		30,032	1,270	21,170		30,152		51,322		7,931	1964	2002	(4)
			1730 M Street			14,853		10,095		17,541	9,308	10,687		26,257		36,944		7,642	1963	2002	(4)
			Democracy Plaza I			-		-		33,628	(75)	-		33,553		33,553		13,087	1987	2002	(4)
			1726 M Street			-		9,450		22,062	1,686	9,455		23,743		33,198		2,652	1964	2006	(4)
			Crystal Drive Retail			-		-		20,465	5,792	-		26,257		26,257		6,900	2004	2004	(4)
			1109 South Capitol Street			-		11,541		178	26	11,597		148		11,745		178		2007	(4)
			South Capitol			-		4,009		6,273	(3,271)	-		7,011		7,011		-		2005	(4)
			H Street			-		1,763		641	41	1,763		682		2,445		91		2005	(4)
			Other			-		-		51,767	(44,150)	-		7,617		7,617		-
				Total Washington, DC		2,133,492		1,045,435		2,464,728	716,008	1,030,520		3,195,651		4,226,171		694,937

		New Jersey
			Paramus			-		-		-	23,334	1,033		22,301		23,334		13,605	1967	1987	(4)

		California
			555 California Street			640,911		221,903		893,324	22,853	221,903		916,177		1,138,080		93,905	1922/1969/1970	2007	(4)

	Total Office Buildings					5,188,144		2,691,855		6,476,187	1,697,695	2,713,153		8,152,584		10,865,737		1,735,174

172

VORNADO REALTY L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
(Amounts in thousands)
COLUMN A						COLUMN B		COLUMN C			COLUMN D	COLUMN E						COLUMN F	COLUMN G	COLUMN H	COLUMN I
												Gross amount at which									Life on which
							Initial cost to company (1)					carried at close of period									depreciation
											Costs						Accumulated				in latest
									Building		capitalized		Buildings				depreciation				income
									and		subsequent		and				and		Date of	Date	statement
Description					Encumbrances		Land		improvements		to acquisition	Land	improvements		Total (2)		amortization		construction (3)	acquired	is computed
	Shopping Centers
		California
			Los Angeles (Beverly Connection)			100,000		72,996		131,510	16,954	72,996		148,464		221,460		14,275	2008	2005	(4)
			San Jose			120,863		51,846		122,688	-	51,846		122,688		174,534		767	2008	2010	(4)
			Sacramento			-		3,897		31,370	528	3,897		31,898		35,795		4,074		2006	(4)
			Walnut Creek (1149 S. Main St)			-		2,699		19,930	-	2,699		19,930		22,629		2,555		2006	(4)
			Pasadena			-		-		18,337	546	-		18,883		18,883		1,878		2007	(4)
			San Francisco (3700 Geary Blvd)			-		11,857		4,444	27	11,857		4,471		16,328		578		2006	(4)
			Signal Hill			-		9,652		2,940	1	9,652		2,941		12,593		313		2006	(4)
			Walnut Creek (1556 Mount
			Diablo Blvd)			-		5,909		-	740	5,908		741		6,649		-		2007	(4)
			Redding			-		2,900		2,857	490	2,900		3,347		6,247		314		2006	(4)
			Merced			-		1,725		1,907	215	1,725		2,122		3,847		289		2006	(4)
			San Bernadino (1522 E. Highland Ave)			-		1,651		1,810	-	1,651		1,810		3,461		290		2004	(4)
			Corona			-		-		3,073	-	-		3,073		3,073		493		2004	(4)
			Vallejo			-		-		2,945	-	-		2,945		2,945		311		2006	(4)
			San Bernadino (648 W. 4th St)			-		1,597		1,119	-	1,597		1,119		2,716		180		2004	(4)
			Mojave			-		-		2,250	-	-		2,250		2,250		361		2004	(4)
			Barstow			-		856		1,367	-	856		1,367		2,223		219		2004	(4)
			Colton (1904 Ranchero Ave)			-		1,239		954	-	1,239		954		2,193		153		2004	(4)
			Moreno Valley			-		639		1,156	-	639		1,156		1,795		186		2004	(4)
			Rialto			-		434		1,173	-	434		1,173		1,607		188		2004	(4)
			Desert Hot Springs			-		197		1,355	-	197		1,355		1,552		217		2004	(4)
			Yucaipa			-		663		426	-	663		426		1,089		68		2004	(4)
			Riverside (9155 Jurupa Road)			-		251		783	-	251		783		1,034		126		2004	(4)
			Riverside (5571 Mission Blvd)			-		209		704	-	209		704		913		113		2004	(4)
				Total California		220,863		171,217		355,098	19,501	171,216		374,600		545,816		27,948

		Connecticut
			Waterbury			14,765		667		4,504	4,787	667		9,291		9,958		5,295	1969	1969	(4)
			Newington			11,870		2,421		1,200	860	2,421		2,060		4,481		642	1965	1965	(4)
				Total Connecticut		26,635		3,088		5,704	5,647	3,088		11,351		14,439		5,937

		Florida
			Tampa (Hyde Park)			21,862		8,000		23,293	13,476	8,000		36,769		44,769		5,015		2005	(4)
			Tampa			-		3,651		2,388	2,134	3,650		4,523		8,173		312		2006	(4)
				Total Florida		21,862		11,651		25,681	15,610	11,650		41,292		52,942		5,327

173

VORNADO REALTY L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
(Amounts in thousands)
COLUMN A					COLUMN B		COLUMN C			COLUMN D	COLUMN E						COLUMN F	COLUMN G	COLUMN H	COLUMN I
											Gross amount at which									Life on which
						Initial cost to company (1)					carried at close of period									depreciation
										Costs						Accumulated				in latest
								Building		capitalized		Buildings				depreciation				income
								and		subsequent		and				and		Date of	Date	statement
Description				Encumbrances		Land		improvements		to acquisition	Land	improvements		Total (2)		amortization		construction (3)	acquired	is computed
	Illinois
		Lansing			-		2,135		1,064	71	2,135		1,135		3,270		115		2006	(4)

	Iowa
		Dubuque			-		-		1,479	-	-		1,479		1,479		156		2006	(4)

	Maryland
		Rockville			-		3,470		20,599	123	3,470		20,722		24,192		3,019		2005	(4)
		Baltimore (Towson)			16,502		581		3,227	8,768	581		11,995		12,576		4,061	1968	1968	(4)
		Annapolis			-		-		9,652	-	-		9,652		9,652		1,952		2005	(4)
		Wheaton			-		-		5,367	-	-		5,367		5,367		570		2006	(4)
		Glen Burnie			-		462		2,571	528	462		3,099		3,561		2,602	1958	1958	(4)
			Total Maryland		16,502		4,513		41,416	9,419	4,513		50,835		55,348		12,204

	Massachusetts
		Dorchester			-		12,844		3,794	(3)	12,841		3,794		16,635		403		2006	(4)
		Springfield			6,051		2,797		2,471	595	2,797		3,066		5,863		630	1993	1966	(4)
		Chicopee			8,772		895		-	-	895		-		895		-	1969	1969	(4)
		Cambridge			-		-		-	260	-		260		260		67
			Total Massachusetts		14,823		16,536		6,265	852	16,533		7,120		23,653		1,100

	Michigan
		Roseville			-		30		6,128	1,461	30		7,589		7,619		1,569		2005	(4)
		Battle Creek			-		1,264		2,144	(2,443)	264		701		965		75		2006	(4)
		Midland			-		-		133	86	-		219		219		51		2006	(4)
			Total Michigan		-		1,294		8,405	(896)	294		8,509		8,803		1,695

	New Hampshire
		Salem			-		6,083		-	-	6,083		-		6,083		-		2006	(4)

	New Jersey
		Paramus (Bergen Town Center)			279,044		19,884		81,723	342,631	37,635		406,603		444,238		30,708	1957/2009	2003	(4)
		North Bergen (Tonnelle Ave)			-		24,493		-	61,363	31,430		54,426		85,856		2,656	2009	2006	(4)
		Union (Springfield Avenue)			30,108		19,700		45,090	-	19,700		45,090		64,790		4,039		2007	(4)
		East Rutherford			14,359		-		36,727	(1)	-		36,726		36,726		2,481	2007	2007	(4)
		East Hanover I and II			45,219		2,232		18,241	10,399	2,671		28,201		30,872		12,270	1962	1962/1998	(4)
		Garfield			-		45		8,068	20,809	45		28,877		28,922		1,132	2009	1998	(4)
		Lodi (Washington Street)			9,881		7,606		13,125	263	7,606		13,388		20,994		2,023		2004	(4)
		Englewood			12,222		2,300		17,245	-	2,300		17,245		19,545		1,545		2007	(4)
		Bricktown			33,755		1,391		11,179	6,123	1,391		17,302		18,693		9,775	1968	1968	(4)
		Totowa			26,171		1,102		11,994	4,667	1,099		16,664		17,763		10,993	1957/1999	1957	(4)
		Hazlet			-		7,400		9,413	-	7,400		9,413		16,813		843		2007	(4)
		Carlstadt			7,442		-		16,457	12	-		16,469		16,469		1,307		2007	(4)

174

VORNADO REALTY L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
(Amounts in thousands)
COLUMN A					COLUMN B		COLUMN C			COLUMN D	COLUMN E						COLUMN F	COLUMN G	COLUMN H	COLUMN I
											Gross amount at which									Life on which
						Initial cost to company (1)					carried at close of period									depreciation
										Costs						Accumulated				in latest
								Building		capitalized		Buildings				depreciation				income
								and		subsequent		and				and		Date of	Date	statement
Description				Encumbrances		Land		improvements		to acquisition	Land	improvements		Total (2)		amortization		construction (3)	acquired	is computed
		North Plainfield			-		500		13,983	1,635	500		15,618		16,118		10,173	1955	1989	(4)
		East Brunswick II (339-341 Route 18 S.)			12,449		2,098		10,949	2,750	2,098		13,699		15,797		7,671	1972	1972	(4)
		Manalapan			22,234		725		7,189	7,774	1,046		14,642		15,688		9,372	1971	1971	(4)
		Marlton			18,239		1,611		3,464	9,706	1,611		13,170		14,781		5,936	1973	1973	(4)
		Union (Route 22 and Morris Ave)			34,160		3,025		7,470	1,879	3,025		9,349		12,374		4,272	1962	1962	(4)
		Hackensack			42,845		692		10,219	1,266	692		11,485		12,177		8,468	1963	1963	(4)
		Wayne Towne Center			-		-		12,100	-	-		12,100		12,100		-	-	2010	(4)
		Watchung			15,923		4,178		5,463	1,427	4,441		6,627		11,068		3,121	1994	1959	(4)
		South Plainfield			5,414		-		10,044	224	-		10,268		10,268		917		2007	(4)
		Eatontown			-		4,653		4,999	277	4,653		5,276		9,929		745		2005	(4)
		Cherry Hill			14,649		5,864		2,694	1,347	4,864		5,041		9,905		3,777	1964	1964	(4)
		Dover			13,896		559		6,363	2,920	559		9,283		9,842		5,481	1964	1964	(4)
		Lodi (Route 17 N.)			11,985		238		9,446	-	238		9,446		9,684		2,655	1999	1975	(4)
		East Brunswick I (325-333 Route 18 S.)			26,287		319		6,220	2,682	319		8,902		9,221		8,323	1957	1957	(4)
		Jersey City			21,423		652		7,495	323	652		7,818		8,470		2,101	1965	1965	(4)
		Morris Plains			22,581		1,104		6,411	852	1,104		7,263		8,367		6,683	1961	1985	(4)
		Middletown			18,354		283		5,248	1,238	283		6,486		6,769		4,804	1963	1963	(4)
		Woodbridge			21,828		1,509		2,675	1,783	1,539		4,428		5,967		2,296	1959	1959	(4)
		Delran			-		756		4,468	545	756		5,013		5,769		4,865	1972	1972	(4)
		Lawnside			11,291		851		3,164	1,282	851		4,446		5,297		3,818	1969	1969	(4)
		Kearny			-		309		3,376	1,151	309		4,527		4,836		3,060	1938	1959	(4)
		Bordentown			-		498		3,176	1,102	717		4,059		4,776		4,010	1958	1958	(4)
		Turnersville			-		900		1,342	878	900		2,220		3,120		2,092	1974	1974	(4)
		North Bergen (Kennedy Blvd)			5,385		2,308		636	34	2,308		670		2,978		378	1993	1959	(4)
		Montclair			2,779		66		419	381	66		800		866		654	1972	1972	(4)
			Total New Jersey		779,923		119,851		418,275	489,722	144,808		883,040		1,027,848		185,444

	New York
		Valley Stream (Green Acres Mall)			335,000		147,172		134,980	58,160	146,969		193,343		340,312		45,181	1956	1997	(4)
		Bronx (Bruckner Blvd)			-		66,100		259,503	373	66,100		259,876		325,976		25,969		2007	(4)
		Hicksville (Broadway Mall)			90,227		126,324		48,904	5,969	126,324		54,873		181,197		6,645		2005	(4)
		Poughkeepsie			-		12,733		12,026	35,534	12,780		47,513		60,293		3,063	2009	2005	(4)
		Huntington			17,602		21,200		33,667	186	21,200		33,853		55,053		2,674		2007	(4)
		Mount Kisco			29,382		22,700		26,700	386	23,297		26,489		49,786		2,052		2007	(4)
		Bronx (Gun Hill Road)			-		6,427		11,885	16,556	6,428		28,440		34,868		1,457	2009	2005	(4)
		Staten Island			17,400		11,446		21,262	292	11,446		21,554		33,000		3,801		2004	(4)
		Inwood			-		12,419		19,097	524	12,419		19,621		32,040		2,919		2004	(4)
		Queens (99-01 Queens Blvd)			-		7,839		20,392	1,789	7,839		22,181		30,020		3,654		2004	(4)
		West Babylon			-		6,720		13,786	70	6,720		13,856		20,576		1,313		2007	(4)
		Freeport (437 E. Sunrise Highway)			22,581		1,231		4,747	1,480	1,231		6,227		7,458		4,725	1981	1981	(4)
		Dewitt			-		-		7,116	-	-		7,116		7,116		749		2006	(4)
		Buffalo (Amherst)			-		5,743		4,056	611	5,107		5,303		10,410		4,434	1968	1968	(4)
		Oceanside			-		2,710		2,306	-	2,710		2,306		5,016		206		2007	(4)

175

VORNADO REALTY L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
(Amounts in thousands)
COLUMN A					COLUMN B		COLUMN C			COLUMN D	COLUMN E						COLUMN F	COLUMN G	COLUMN H	COLUMN I
											Gross amount at which									Life on which
						Initial cost to company (1)					carried at close of period									depreciation
										Costs						Accumulated				in latest
								Building		capitalized		Buildings				depreciation				income
								and		subsequent		and				and		Date of	Date	statement
Description				Encumbrances		Land		improvements		to acquisition	Land	improvements		Total (2)		amortization		construction (3)	acquired	is computed
		Albany (Menands)			-		460		2,091	2,313	460		4,404		4,864		3,314	1965	1965	(4)
		Rochester (Henrietta)			-		-		2,647	1,142	-		3,789		3,789		3,381	1971	1971	(4)
		Rochester			4,632		2,172		-	-	2,172		-		2,172		-	1966	1966	(4)
		Freeport (240 Sunrise Highway)			-		-		-	260	-		260		260		61		2005	(4)
		Commack			-		-		43	213	-		256		256		15		2006	(4)
		New Hyde Park			-		-		4	-	-		4		4		126	1970	1976	(4)
	Manhattan
		1540 Broadway			-		105,914		214,208	17,856	105,914		232,064		337,978		10,704		2006	(4)
		Manhattan Mall			72,639		88,595		113,473	73,018	88,595		186,491		275,086		19,222	2009	2007	(4)
		828-850 Madison Avenue			80,000		107,937		28,261	10	107,937		28,271		136,208		4,004		2005	(4)
		4 Union Square South			75,000		24,079		55,220	388	24,079		55,608		79,687		9,292	1965/2004	1993	(4)
		478-482 Broadway			-		20,000		13,375	26,874	20,000		40,249		60,249		2,354	2009	2007	(4)
		510 5th Avenue			32,189		34,200		23,175	-	34,200		23,175		57,375		143		2010	(4)
		40 East 66th Street			-		13,616		34,635	121	13,616		34,756		48,372		4,287		2005	(4)
		25 W. 14th Street			-		29,169		17,878	341	29,169		18,219		47,388		3,166		2004	(4)
		155 Spring Street			-		13,700		30,544	1,664	13,700		32,208		45,908		2,991		2007	(4)
		435 7th Avenue			51,844		19,893		19,091	37	19,893		19,128		39,021		4,026	2002	1997	(4)
		692 Broadway			-		6,053		22,908	1,707	6,053		24,615		30,668		3,203		2005	(4)
		715 Lexington Avenue			-		-		26,903	-	-		26,903		26,903		3,794	1923	2001	(4)
		677-679 Madison Avenue			-		13,070		9,640	360	13,070		10,000		23,070		1,123		2006	(4)
		431 7th Avenue			-		16,700		2,751	-	16,700		2,751		19,451		258		2007	(4)
		484-486 Broadway			-		10,000		6,688	4,076	10,000		10,764		20,764		583	2009	2007	(4)
		1135 Third Avenue			-		7,844		7,844	-	7,844		7,844		15,688		2,549		1997	(4)
		387 West Broadway			-		5,858		7,662	364	5,858		8,026		13,884		1,376		2004	(4)
		148 Spring Street			-		3,200		8,112	109	3,200		8,221		11,421		529		2008	(4)
		150 Spring Street			-		3,200		5,822	137	3,200		5,959		9,159		392		2008	(4)
		386 West Broadway			4,197		2,624		6,160	-	2,624		6,160		8,784		937		2004	(4)
		488 8th Avenue			-		10,650		1,767	(4,674)	6,859		884		7,743		67		2007	(4)
		484 8th Avenue			-		3,856		762	-	3,856		762		4,618		265		1997	(4)
		825 7th Avenue			-		1,483		697	33	1,483		730		2,213		243		1997	(4)
			Total New York		832,693		995,037		1,282,788	248,279	991,052		1,535,052		2,526,104		191,247

	Pennsylvania
		Wilkes Barre			20,727		6,053		26,646	113	6,053		26,759		32,812		2,067		2007	(4)
		Philadelphia			-		933		23,650	6,228	933		29,878		30,811		8,066	1977	1994	(4)
		Allentown			31,670		334		15,580	348	334		15,928		16,262		11,398	1957	1957	(4)
		Bensalem			15,720		2,727		6,698	1,836	2,727		8,534		11,261		2,819	1972/1999	1972	(4)
		Bethlehem			5,906		827		5,200	300	839		5,488		6,327		5,483	1966	1966	(4)
		Wyomissing			-		-		2,646	2,411	-		5,057		5,057		2,177		2005	(4)
		York			5,501		409		2,568	1,934	409		4,502		4,911		3,487	1970	1970	(4)
		Broomall			11,291		850		2,171	774	850		2,945		3,795		2,826	1966	1966	(4)

176

VORNADO REALTY L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
(Amounts in thousands)
COLUMN A						COLUMN B		COLUMN C			COLUMN D	COLUMN E						COLUMN F	COLUMN G	COLUMN H	COLUMN I
												Gross amount at which									Life on which
							Initial cost to company (1)					carried at close of period									depreciation
											Costs						Accumulated				in latest
									Building		capitalized		Buildings				depreciation				income
									and		subsequent		and				and		Date of	Date	statement
Description					Encumbrances		Land		improvements		to acquisition	Land	improvements		Total (2)		amortization		construction (3)	acquired	is computed
			Lancaster			5,703		3,140		63	547	3,140		610		3,750		432	1966	1966	(4)
			Upper Mooreland			-		683		1,868	900	683		2,768		3,451		2,605	1974	1974	(4)
			Glenolden			7,238		850		1,820	471	850		2,291		3,141		1,800	1975	1975	(4)
			Levittown			-		183		1,008	377	183		1,385		1,568		1,369	1964	1964	(4)
			Springfield			-		-		-	167	-		167		167		-		2005	(4)
				Total Pennsylvania		103,756		16,989		89,918	16,406	17,001		106,312		123,313		44,529

		South Carolina
			Charleston			-		-		3,634	-	-		3,634		3,634		386		2006	(4)

		Tennessee
			Antioch			-		1,521		2,386	-	1,521		2,386		3,907		253		2006	(4)

		Texas
			Texarkana			-		-		458	33	-		491		491		53		2006	(4)

		Utah
			Ogden			-		1,714		2,431	(2,201)	713		1,231		1,944		113		2007	(4)

		Virginia
			Springfield (Springfield Mall)			-		35,168		265,964	(23,424)	49,516		228,192		277,708		33,789		2006	(4)
			Norfolk			-		-		3,927	15	-		3,942		3,942		2,084		2005	(4)
				Total Virginia		-		35,168		269,891	(23,409)	49,516		232,134		281,650		35,873

		Washington
			Bellingham			-		1,831		2,136	(1,970)	922		1,075		1,997		99		2005	(4)

		Washington, DC
			3040 M Street			-		7,830		27,490	45	7,830		27,535		35,365		3,412		2006	(4)

		Wisconsin
			Fond Du Lac			-		-		174	102	-		276		276		50		2006	(4)

		Puerto Rico
			Las Catalinas			57,737		15,280		64,370	8,104	15,280		72,474		87,754		22,543	1996	2002	(4)
			Montehiedra			120,000		9,182		66,751	3,591	9,267		70,257		79,524		24,304	1996	1997	(4)
				Total Puerto Rico		177,737		24,462		131,121	11,695	24,547		142,731		167,278		46,847

		Other				-		-		-	2,419	-		2,419		2,419		-			(4)

	Total Retail Properties					2,194,794		1,420,920		2,675,814	791,325	1,453,422		3,434,637		4,888,059		562,788

177

VORNADO REALTY L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
(Amounts in thousands)
COLUMN A						COLUMN B		COLUMN C				COLUMN D		COLUMN E						COLUMN F	COLUMN G	COLUMN H	COLUMN I
														Gross amount at which									Life on which
							Initial cost to company (1)							carried at close of period									depreciation
												Costs							Accumulated				in latest
									Building			capitalized			Buildings				depreciation				income
									and			subsequent			and				and		Date of	Date	statement
Description					Encumbrances		Land		improvements			to acquisition		Land	improvements		Total (2)		amortization		construction (3)	acquired	is computed
	Merchandise Mart Properties
		Illinois
			Merchandise Mart, Chicago			550,000		64,528		319,146		159,448		64,535		478,587		543,122		146,382	1930	1998	(4)
			350 North Orleans, Chicago			-		14,238		67,008		79,800		14,246		146,800		161,046		37,745	1977	1998	(4)
			527 W. Kinzie, Chicago			-		5,166		-		-		5,166		-		5,166		-
				Total Illinois		550,000		83,932		386,154		239,248		83,947		625,387		709,334		184,127

		Washington, DC
			Washington Design Center			43,447		12,274		40,662		13,468		12,274		54,130		66,404		16,202	1919	1998	(4)

		New York
			7 West 34th Street			-		34,614		94,167		35,785		34,614		129,952		164,566		30,561	1901	2000	(4)
			MMPI Piers			-		-		-		9,156		-		9,156		9,156		130		2008	(4)
				Total New York		-		34,614		94,167		44,941		34,614		139,108		173,722		30,691

		Massachusetts
			Boston Design Center			68,538		-		93,915		7,238		-		101,153		101,153		13,547	1918	2005	(4)

		California
			Gift and Furniture Mart, Los Angeles			-		10,141		43,422		5,968		10,141		49,390		59,531		17,268	1958	2000	(4)

			Other			-		-		-		3,273		-		3,273		3,273		-		2009	(4)

	Total Merchandise Mart					661,985		140,961		658,320		314,136		140,976		972,441		1,113,417		261,835

	Warehouse/Industrial
		New Jersey
			East Hanover			24,358		576		7,752		7,061		691		14,698		15,389		13,702	1972	1972	(4)
			Edison			-		-		-		4,903		704		4,199		4,903		4,179	1962	1962	(4)
				Total Warehouse/Industrial		24,358		576		7,752		11,964		1,395		18,897		20,292		17,881

	Other Properties
			Hotel Pennsylvania			-		29,903		121,712		72,410		29,904		194,121		224,025		62,224	1919	1997	(4)
			220 Central Park South			123,750		115,720		16,420		111,068		115,720		127,488		243,208		20,119		2005	(4)
			Wasserman			43,867		28,052		-		33,436		40,238		21,250		61,488		11,575		2005	(4)
			40 East 66th Residential			-		29,199		85,798		(68,187)		18,194		28,616		46,810		3,250		2005	(4)
			677-679 Madison			-		1,462		1,058		1,294		2,212		1,602		3,814		166		2006	(4)
			Atlantic City, NJ			-		83,089		7		-		83,089		7		83,096		-		2010	(4)
	Total Other Properties					167,617		287,425		224,995		150,021		289,357		373,084		662,441		97,334

	Leasehold Improvements
		Equipment and Other				-		-		-		124,976		-		124,976		124,976		88,985
		Total December 31, 2010			$	8,236,898	$	4,541,737	$	10,043,068	$	3,090,117	$	4,598,303	$	13,076,619	$	17,674,922	$	2,763,997

178

VORNADO REALTY L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION






Notes:

(1)		Initial cost is cost as of January 30, 1982 (the date on which Vornado commenced real estate operations) unless acquired subsequent to that date see Column H.
(2)		The net basis of the Company’s assets and liabilities for tax purposes is approximately $3.3 billion lower than the amount reported for financial statement purposes.
(3)		Date of original construction –– many properties have had substantial renovation or additional construction –– see Column D.
(4)		Depreciation of the buildings and improvements are calculated over lives ranging from the life of the lease to forty years.

179

VORNADO REALTY L.P.
AND SUBSIDIARIES

SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
(AMOUNTS IN THOUSANDS)

The following is a reconciliation of real estate assets and accumulated depreciation:

				Year Ended December 31,
				2010		2009		2008
	Real Estate
		Balance at beginning of period		$	17,574,245	$	17,432,906	$	16,622,740
		Additions during the period:
			Land		347,345		-		95,980
			Buildings & improvements		324,114		601,136		1,087,944
					18,245,704		18,034,042		17,806,664
		Less: Assets sold and written-off			570,782		459,797		373,758
		Balance at end of period		$	17,674,922	$	17,574,245	$	17,432,906

	Accumulated Depreciation
		Balance at beginning of period		$	2,441,344	$	2,117,643	$	1,765,443
		Additions charged to operating expenses			428,788		433,785		407,753
					2,870,132		2,551,428		2,173,196
		Less: Accumulated depreciation on assets
			sold and written-off		106,135		110,084		55,553
		Balance at end of period		$	2,763,997	$	2,441,344	$	2,117,643

180

	EXHIBIT INDEX

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

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

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

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

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

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

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

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

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

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

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

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

	3.13		-	Tenth Amendment to the Partnership Agreement, dated as of September 3, 1999 -		*
					Incorporated by reference to Exhibit 3.4 to Vornado Realty Trust’s Current Report on
					Form 8-K (File No. 001-11954), filed on October 25, 1999


					_______________________
		*			Incorporated by reference.

181

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

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

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

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

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

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

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

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

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

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

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

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

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

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

182

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

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

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

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

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

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

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

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

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

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

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

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

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

183

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

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

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

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

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

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

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

			Certain instruments defining the rights of holders of long-term debt securities of Vornado
				Realty Trust and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation
				S-K. Vornado Realty Trust hereby undertakes to furnish to the Securities and Exchange
				Commission, upon request, copies of any such instruments.
					*
10.1		-	Master Agreement and Guaranty, between Vornado, Inc. and Bradlees New Jersey, Inc. dated
				as of May 1, 1992 - Incorporated by reference to Vornado, Inc.’s Quarterly Report on
				Form 10-Q for the quarter ended March 31, 1992 (File No. 001-11954), filed May 8, 1992
					*
10.2		-	Registration Rights Agreement between Vornado, Inc. and Steven Roth, dated December 29,
				1992 - Incorporated by reference to Vornado Realty Trust’s Annual Report on Form 10-K
				for the year ended December 31, 1992 (File No. 001-11954), filed February 16, 1993
					*
10.3		-	Stock Pledge Agreement between Vornado, Inc. and Steven Roth dated December 29, 1992 -
				Incorporated by reference to Vornado, Inc.’s Annual Report on Form 10-K for the year
				ended December 31, 1992 (File No. 001-11954), filed February 16, 1993
					*
10.4	**	-	Management Agreement between Interstate Properties and Vornado, Inc. dated July 13, 1992
				- Incorporated by reference to Vornado, Inc.’s Annual Report on Form 10-K for the year
				ended December 31, 1992 (File No. 001-11954), filed February 16, 1993
				_______________________
	*			Incorporated by reference.
	**			Management contract or compensatory agreement.

184

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

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

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

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

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

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

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

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

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

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

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

185

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

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

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

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

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

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

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

10.22	**	-	Revolving Credit Agreement, dated as of June 28, 2006, among the Operating Partnership,		*
				the banks party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of
				America, N.A. and Citicorp North America, Inc., as Syndication Agents, Deutsche Bank
				Trust Company Americas, Lasalle Bank National Association, and UBS Loan Finance
				LLC, as Documentation Agents and Vornado Realty Trust – Incorporated by reference to
				Exhibit 10.1 to Vornado Realty Trust’s Form 8-K (File No. 001-11954), filed on
				June 28, 2006

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

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

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

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

186

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

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

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

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

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

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

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

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

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

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

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

187

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

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

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

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

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

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

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

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

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

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

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

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

188

12	-	Computation of Ratios

21	-	Subsidiaries of the Registrant

23	-	Consent of Independent Registered Public Accounting Firm

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

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

32.1	-	Section 1350 Certification of the Chief Executive Officer

32.2	-	Section 1350 Certification of the Chief Financial Officer

189

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Good

Vornado Realty (VNOD) 10-K2010 FY Annual report

Content analysis

PART I

Office Properties:

Retail Properties:

Merchandise Mart Properties:

Toys “R” Us, Inc. (“Toys”):

Other Investments:

Dispositions

Financing Activities