EXHIBIT INDEX ON PAGE 51

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

For the quarterly period ended: JUNE 30, 2002

                                       or

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

For the transition period from_______________________ TO _______________________

Commission File Number:  001-11954

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

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

 888 SEVENTH AVENUE, NEW YORK, NEW YORK                   10019
- ----------------------------------------  --------------------------------------
(Address of principal executive offices)               (Zip Code)

                                 (212) 894-7000
              (Registrant's telephone number, including area code)

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

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

                                 /X/ Yes  / / No

     As of August 2, 2002, 107,276,095 of the registrant's common shares of
beneficial interest are outstanding.

                                     Page 1

                                      INDEX

                                                                                                   Page Number
                                                                                                   -----------
                                                                                                    
PART I.             FINANCIAL INFORMATION:

           Item 1.    Financial Statements:

                      Consolidated Balance Sheets as of
                      June 30, 2002 and December 31, 2001.......................................        3

                      Consolidated Statements of Income for the Three Months and Six Months
                      Ended June 30, 2002 and June 30, 2001.....................................        4

                      Consolidated Statements of Cash Flows for the Six Months Ended
                      June 30, 2002 and June 30, 2001...........................................        5

                      Notes to Consolidated Financial Statements................................        6

           Item 2.    Management's Discussion and Analysis of Financial Condition
                      and Results of Operations.................................................       24

           Item 3.    Quantitative and Qualitative Disclosures About Market Risk................       48

PART II.              OTHER INFORMATION:

           Item 1.    Legal Proceedings.........................................................       49

           Item 4.    Submission of Matters to a Vote of Security Holders.......................       49

           Item 6.    Exhibits and Reports on Form 8-K..........................................       49

Signatures            ..........................................................................       50

Exhibit Index         ..........................................................................       51

                                     Page 2

    PART I.  FINANCIAL INFORMATION
       ITEM 1.    FINANCIAL STATEMENTS

                              VORNADO REALTY TRUST

                           CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share and per share amounts)                                       JUNE 30,     DECEMBER 31,
                                                                                                   2002           2001
                                                                                               -----------    ------------
                                                                                                        
                                     ASSETS
Real estate, at cost:
   Land.................................................................................       $ 1,491,706    $    895,831
   Buildings and improvements...........................................................         5,613,451       3,480,249
   Development costs and construction in progress.......................................           125,608         258,357
   Leasehold improvements and equipment.................................................            65,699          55,774
                                                                                               -----------    ------------
        Total...........................................................................         7,296,464       4,690,211
   Less accumulated depreciation and amortization.......................................          (639,704)       (506,225)
                                                                                               -----------    ------------
        Real estate, net................................................................         6,656,760       4,183,986
Cash and cash equivalents, including U.S. government obligations under
   repurchase agreements of $90,520 and $15,235.........................................           684,183         265,584
Escrow deposits and restricted cash.....................................................           355,198         204,463
Marketable securities...................................................................            77,201         126,774
Investments in and advances to partially-owned entities, including
   Alexander's of $185,953 and $188,522.................................................           948,825       1,270,195
Due from officers.......................................................................            18,266          18,197
Accounts receivable, net of allowance for doubtful accounts
   of $9,303 and $8,831.................................................................            70,698          47,406
Notes and mortgage loans receivable.....................................................            94,887         258,555
Receivable arising from the straight-lining of rents....................................           157,093         138,154
Other assets............................................................................           309,626         264,029
                                                                                               -----------    ------------
                                                                                               $ 9,372,737    $  6,777,343
                                                                                               ===========    ============
                            LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and mortgages payable.............................................................       $ 3,935,646    $  2,477,173
Senior unsecured notes due 2007.........................................................           499,283              --
Accounts payable and accrued expenses...................................................           199,960         179,597
Officers' compensation payable..........................................................            14,120           6,708
Deferred leasing fee income.............................................................            11,579          11,940
Other liabilities.......................................................................             1,707          51,895
                                                                                               -----------    ------------
   Total liabilities....................................................................         4,662,295       2,727,313
                                                                                               -----------    ------------
Minority interest of unitholders in the Operating Partnership...........................         2,083,733       1,479,658
                                                                                               -----------    ------------
Commitments and contingencies
Shareholders' equity:
   Preferred shares of beneficial interest:
     no par value per share; authorized 45,000,000 shares;
     Series A:  liquidation preference $50.00 per share; issued and outstanding
       2,027,323 and 5,520,435 shares...................................................           101,370         276,024
     Series B:  liquidation preference $25.00 per share; issued and outstanding
       3,400,000 shares.................................................................            81,805          81,805
     Series C:  liquidation preference $25.00 per share; issued and outstanding
       4,600,000 shares.................................................................           111,148         111,148
   Common shares of beneficial interest: $.04 par value per share; authorized,
     200,000,000 shares; issued and outstanding, 106,953,869 and 99,035,023 shares......             4,279           3,961
   Additional capital...................................................................         2,452,293       2,162,512
   Distributions in excess of net income................................................          (128,768)        (95,647)
                                                                                               -----------    ------------
                                                                                                 2,622,127       2,539,803
   Deferred compensation shares earned but not yet delivered............................            38,253          38,253
   Deferred compensation shares issued but not yet earned...............................           (16,286)             --
   Accumulated other comprehensive loss.................................................           (12,681)         (2,980)
   Due from officers for purchase of common shares of beneficial interest...............            (4,704)         (4,704)
                                                                                               -----------    ------------
        Total shareholders' equity......................................................         2,626,709       2,570,372
                                                                                               -----------    ------------
                                                                                               $ 9,372,737    $  6,777,343
                                                                                               ===========    ============

                See notes to consolidated financial statements.

                                     Page 3

                              VORNADO REALTY TRUST

                        CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands except per share amounts)

                                              FOR THE THREE MONTHS       FOR THE SIX MONTHS
                                                  ENDED JUNE 30,            ENDED JUNE 30,
                                             ----------------------    ----------------------
                                                2002         2001         2002         2001
                                             ---------    ---------    ---------    ---------
                                                                        
Revenues:
  Rentals .................................. $ 309,869    $ 212,252    $ 611,629    $ 416,970
  Expense reimbursements ...................    36,315       31,543       74,119       66,635
  Other income (including fee income from
    related parties of  $381 and $514 in
    each three month period and $584 and
    $884 in each six month period) .........     7,063        2,280       13,823        5,080
                                             ---------    ---------    ---------    ---------
Total revenues .............................   353,247      246,075      699,571      488,685
                                             ---------    ---------    ---------    ---------

Expenses:
  Operating ................................   126,267       96,831      253,713      197,214
  Depreciation and amortization ............    49,563       30,086       97,151       61,951
  General and administrative ...............    23,759       22,415       47,226       36,663
  Amortization of Officer's deferred
    compensation expense ...................     6,875           --       13,750           --
  Costs of acquisitions not consummated ....        --           --           --        5,000
                                             ---------    ---------    ---------    ---------
Total expenses .............................   206,464      149,332      411,840      300,828
                                             ---------    ---------    ---------    ---------

Operating income ...........................   146,783       96,743      287,731      187,857
Income applicable to Alexander's ...........     4,487        4,676       10,055       16,980
Income from partially-owned entities .......     9,826       19,228       23,612       43,218
Interest and other investment income .......     9,934       15,874       19,577       29,347
Interest and debt expense ..................   (60,119)     (43,994)    (118,137)     (93,389)
Net gain (loss) on disposition of
  wholly-owned and partially-owned assets...    (4,981)       1,934       (3,450)      (2,789)
Minority interest:
  Perpetual preferred unit distributions ...   (18,254)     (17,326)     (36,508)     (34,652)
  Minority limited partnership earnings ....   (18,411)     (10,614)     (33,094)     (20,243)
  Partially-owned entities .................      (554)        (409)      (1,543)        (768)
                                             ---------    ---------    ---------    ---------
Income before cumulative effect of change
  in accounting  principle and
  extraordinary item .......................    68,711       66,112      148,243      125,561
Cumulative effect of change in accounting
  principle ................................        --           --      (30,129)      (4,110)
Extraordinary item .........................        --           --           --        1,170
                                             ---------    ---------    ---------    ---------
Net income .................................    68,711       66,112      118,114      122,621
Preferred share dividends (including
  accretion of issuance expenses of $240
  and $958 in 2001) ........................    (5,896)      (9,192)     (12,027)     (18,865)
                                             ---------    ---------    ---------    ---------
NET INCOME applicable to common shares ..... $  62,815    $  56,920    $ 106,087    $ 103,756
                                             =========    =========    =========    =========

NET INCOME PER COMMON SHARE - BASIC ........ $     .59    $     .65    $    1.02    $    1.19
                                             =========    =========    =========    =========

NET INCOME PER COMMON SHARE - DILUTED ...... $     .57    $     .64    $     .97    $    1.16
                                             =========    =========    =========    =========

DIVIDENDS PER COMMON SHARE ................. $     .66    $     .53    $    1.32    $    1.06
                                             =========    =========    =========    =========

                See notes to consolidated financial statements.

                                     Page 4

                              VORNADO REALTY TRUST

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)
                                                                                        FOR THE SIX MONTHS ENDED JUNE 30,
                                                                                       -----------------------------------
                                                                                          2002                     2001
                                                                                       -----------             -----------
                                                                                                         
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income...............................................................          $   118,114             $   122,621
    Adjustments to reconcile net income to net
       cash provided by operating activities:
         Cumulative effect of change in accounting principle.................               30,129                   4,110
         Extraordinary item..................................................                   --                  (1,170)
         Minority interest...................................................               71,145                  55,663
         Net gain on disposition of wholly-owned and
           partially-owned assets............................................                3,450                   2,789
         Depreciation and amortization.......................................               97,151                  61,951
         Amortization of Officer's deferred compensation expense.............               13,750                      --
         Straight-lining of rental income....................................              (18,939)                (14,542)
         Equity in income of Alexander's.....................................              (10,055)                (16,980)
         Equity in income of partially-owned entities........................              (23,612)                (43,218)
         Changes in operating assets and liabilities.........................              (33,835)                 21,642
                                                                                       -----------             -----------
    Net cash provided by operating activities................................              247,298                 192,866
                                                                                       -----------             -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Development costs and construction in progress...........................              (34,841)                (74,856)
    Investments in partially-owned entities..................................              (21,984)                (25,221)
    Distributions from partially-owned entities..............................               67,454                  93,032
    Investment in notes and mortgage loans receivable........................                 (741)                (30,767)
    Repayment of notes and mortgage loans receivable.........................               60,000                   6,057
    Cash restricted, primarily mortgage escrows..............................             (113,831)                 27,851
    Additions to real estate.................................................              (60,323)                (49,326)
    Purchases of marketable securities ......................................                   --                  (9,350)
    Proceeds from sale of marketable securities .............................               53,445                   1,121
    Real estate deposits and other...........................................              (24,970)                  1,493
                                                                                       -----------             -----------
    Net cash used in investing activities....................................              (75,791)                (59,966)
                                                                                       -----------             -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from borrowings.................................................              622,765                 118,853
    Repayments of borrowings.................................................             (200,612)               (111,748)
    Debt issuance costs......................................................               (2,800)                     --
    Proceeds from issuance of common shares..................................               56,658                      --
    Distributions to minority partners.......................................              (70,782)                (53,710)
    Dividends paid on common shares..........................................             (169,838)                (90,992)
    Dividends paid on preferred shares.......................................              (12,027)                (17,926)
    Exercise of stock options................................................               23,728                   5,554
                                                                                       -----------             -----------
    Net cash provided by (used in) financing activities......................              247,092                (149,969)
                                                                                       -----------             -----------

    Net increase (decrease) in cash and cash equivalents.....................              418,599                 (17,069)
    Cash and cash equivalents at beginning of period.........................              265,584                 136,989
                                                                                       -----------             -----------
    Cash and cash equivalents at end of period...............................          $   684,183             $   119,920
                                                                                       ===========             ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash payments for interest (including capitalized interest of $4,721 in 2002
       and $7,556 in 2001)...................................................          $   113,172             $    95,737
                                                                                       ===========             ===========
NON-CASH TRANSACTIONS:
    Class A units issued in acquisitions.....................................          $   607,155             $        --
    Financing assumed in acquisitions........................................              991,980                      --
    Unrealized gain on securities available for sale.........................                   --                   2,760

                See notes to consolidated financial statements.

                                     Page 5

                              VORNADO REALTY TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   ORGANIZATION

     Vornado Realty Trust is a fully-integrated real estate investment trust
("REIT"). Vornado conducts its business through Vornado Realty L.P., a Delaware
limited partnership (the "Operating Partnership"). Vornado is the sole general
partner of, and owned approximately 79% of the common limited partnership
interest in, the Operating Partnership at June 30, 2002. All references to the
"Company" and "Vornado" refer to Vornado Realty Trust and its consolidated
subsidiaries, including the Operating Partnership.

2.   BASIS OF PRESENTATION

     The consolidated balance sheet as of June 30, 2002, the consolidated
statements of income for the three and six months ended June 30, 2002 and 2001
and the consolidated statements of cash flows for the six months ended June 30,
2002 and 2001 are unaudited. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and changes in cash flows have
been made. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. These
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in Vornado's
Annual Report on Form 10-K for the year ended December 31, 2001 as filed with
the Securities and Exchange Commission. The results of operations for the six
months ended June 30, 2002 are not necessarily indicative of the operating
results for the full year.

     The accompanying consolidated financial statements include the accounts of
Vornado Realty Trust and its majority-owned subsidiary, Vornado Realty L.P., as
well as entities in which the Company has a 50% or greater interest, provided
that the Company exercises control (where the Company does not exercise control,
such entities are accounted for under the equity method). All significant
intercompany amounts have been eliminated. Equity interests in partially-owned
corporate entities are accounted for under the equity method of accounting when
the Company's ownership interest is more than 20% but less than 50%. When
partially-owned investments are in partnership form, the 20% threshold may be
reduced. For all other investments, the Company uses the cost method. Equity
investments are recorded initially at cost and subsequently adjusted for the
Company's share of the net income or loss and cash contributions and
distributions to or from these entities.

     Management has made estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.

     Certain amounts in the prior year's financial statements have been
reclassified to conform to the current year presentation.

                                     Page 6

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

3.   RECENTLY ISSUED ACCOUNTING STANDARDS

     In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS (effective January 1, 2002). SFAS
No. 142 specifies that goodwill and some intangible assets will no longer be
amortized but instead be subject to periodic impairment testing. In the first
quarter of 2002, the Company wrote-off goodwill of approximately $30,129,000 of
which (i) $15,490,000 represents its share of the goodwill arising from the
Company's investment in Temperature Controlled Logistics and (ii) $14,639,000
represents goodwill arising from the Company's acquisition of the Hotel
Pennsylvania. The write-off has been reflected as a cumulative effect of a
change in accounting principle. Earnings allocable to the minority limited
partners has been reduced by their pro-rata share of the write-off of goodwill.
Previously reported Net Income Applicable to Common Shares for the three and six
months ended June 30, 2001 would have been approximately $300,000 and $600,000
higher if such goodwill was not amortized in the prior year's quarter and six
months.

     In August 2001, the FASB issued SFAS No. 143, ACCOUNTING FOR ASSET
RETIREMENT OBLIGATIONS (effective January 1, 2003) and SFAS No. 144, ACCOUNTING
FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS (effective January 1, 2002).
SFAS No. 143 requires the recording of the fair value of a liability for an
asset retirement obligation in the period which it is incurred. SFAS No. 144
supersedes current accounting literature and now provides for a single
accounting model for long-lived assets to be disposed of by sale and requires
discontinued operations presentation for disposals of a "component" of an
entity. The adoption of these statements did not have a material effect on the
Company's financial statements; however under SFAS No. 144, if the Company were
to dispose of a material operating property, such property's results of
operations will have to be separately disclosed as discontinued operations in
the Company's financial statements.

     In April 2002, the FASB issued SFAS No. 145, RESCISSION OF SFAS NO. 4, 44,
AND 64, AMENDMENT OF SFAS NO. 13, AND TECHNICAL CORRECTION. SFAS No. 145
rescinds SFAS No. 4, REPORTING GAINS AND LOSSES FROM EXTINGUISHMENT OF DEBT,
SFAS No. 44, ACCOUNTING FOR INTANGIBLE ASSETS OF MOTOR CARRIERS, and SFAS No.
64, EXTINGUISHMENTS OF DEBT MADE TO SATISFY SINKING-FUND REQUIREMENTS. SFAS No.
145 requires, among other things, (i) that the modification of a lease that
results in a change of the classification of the lease from capital to operating
under the provisions of SFAS No. 13 be accounted for as a sale-leaseback
transaction and (ii) the reporting of gains or losses from the early
extinguishment of debt as extraordinary items only if they met the criteria of
Accounting Principles Board Opinion No. 30, REPORTING THE RESULTS OF OPERATIONS.
The rescission of SFAS No. 4 is effective January 1, 2003. The amendment of SFAS
No. 13 is effective for transactions occurring on or after May 15, 2002. The
adoption of this statement will not have a material effect on the Company's
financial statements.

     In July 2002, the FASB issued SFAS No. 146, ACCOUNTING FOR COSTS ASSOCIATED
WITH EXIT OR DISPOSAL ACTIVITIES (effective January 1, 2003). SFAS No. 146
replaces current accounting literature and requires the recognition of costs
associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. The Company
does not anticipate the adoption of this statement will have a material
effect on the Company's financial statements.

                                     Page 7

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

4.   ACQUISITIONS AND DISPOSITIONS

ACQUISITIONS

     CHARLES E. SMITH COMMERCIAL REALTY L.P.

     On January 1, 2002, the Company completed the combination of
Charles E. Smith Commercial Realty L.P. ("CESCR") with Vornado. Prior to the
combination, Vornado owned a 34% interest in CESCR. The consideration for the
remaining 66% of CESCR was approximately $1,600,000,000, consisting of 15.6
million newly issued Vornado Operating Partnership units (valued at
$607,155,000) and $991,980,000 of debt (66% of CESCR's total debt).

     This acquisition was recorded under the purchase method of accounting. The
related purchase costs were allocated to acquired assets and assumed liabilities
using their relative fair values as of January 1, 2002 based on valuations and
other studies certain of which are not yet complete. Accordingly, the initial
valuations are subject to change as such information is finalized. The Company
believes that any such change will not be significant because the allocations
were principally to real estate.

     The unaudited pro forma information set forth below presents the condensed
consolidated statements of income for the Company for the three and six months
ended June 30, 2001 as if the following transactions had occurred on January 1,
2001, (i) the acquisition of CESCR described above and (ii) the Company's
November 21, 2001 sale of 9,775,000 common shares and the use of proceeds to
repay indebtedness.

     Condensed Consolidated Statements of Income                For the Three Months Ended       For the Six Months Ended
      (in thousands, except per share amounts)                           June 30,                        June 30,
                                                                --------------------------      --------------------------
                                                                                 Pro Forma                       Pro Forma
                                                                   2002            2001            2002            2001
                                                                -----------     ----------      ----------      ----------
                                                                                                    
     Revenues...........................................        $   353,247     $  341,686      $  699,571      $  679,542
                                                                ===========     ==========      ==========      ==========
     Income before cumulative effect of change in
       accounting principle and extraordinary item......        $    68,711     $   67,657      $  148,243      $  131,459
     Cumulative effect of change in accounting
       principle........................................                 --             --         (30,129)         (4,110)
     Extraordinary item.................................                 --             --              --           1,170
                                                                -----------     ----------      ----------      ----------
     Net income.........................................             68,711         67,657         118,114         128,519
     Preferred share dividends..........................             (5,896)        (9,192)        (12,027)        (18,865)
                                                                -----------     ----------      ----------      ----------
     Net income applicable to common shares.............        $    62,815     $   58,465      $  106,087      $  109,654
                                                                ===========     ==========      ==========      ==========
     Net income per common share - basic................        $       .59     $      .60      $     1.02      $     1.13
                                                                ===========     ==========      ==========      ==========
     Net income per common share - diluted..............        $       .57     $      .59      $      .97      $     1.10
                                                                ===========     ==========      ==========      ==========

                                     Page 8

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

4.   ACQUISITIONS AND DISPOSITIONS - CONTINUED

     INVESTMENT IN PRIMESTONE

     On September 28, 2000, the Company made a $62,000,000 loan to Primestone
Investment Partners, L.P. ("Primestone"). The Company received a 1% upfront fee
and was entitled to receive certain other fees aggregating approximately 3% upon
repayment of the loan. The loan bore interest at 16% per annum. Primestone
defaulted on the repayment of this loan on October 25, 2001. The loan was
subordinate to $37,957,000 of other debt of the borrower. On October 31, 2001,
the Company purchased the other debt for its face amount. The loans were secured
by 7,944,893 partnership units in Prime Group Realty, L.P., the operating
partnership of Prime Group Realty Trust (NYSE:PGE) and the partnership units are
exchangeable for the same number of common shares of PGE. The loans are also
guaranteed by affiliates of Primestone.

     On November 19, 2001, the Company sold, pursuant to a participation
agreement with a subsidiary of Cadim inc., a Canadian pension fund, a 50%
participation in both loans at par for approximately $50,000,000 reducing the
Company's net investment in the loans at December 31, 2001 to $56,768,000
including unpaid interest and fees of $6,790,000.

     On April 30, 2002, the Company and Cadim acquired the 7,944,893 partnership
units at a foreclosure auction. The price paid for the units by application
of a portion of Primestone's indebtedness to the Company and Cadim was $8.35
per unit, the April 30, 2002 PGE closing price on The New York Stock
Exchange.  On June 28, 2002, pursuant to the terms of the participation
agreement, the Company transferred 3,972,447 of the partnership units to
Cadim.

     In the second quarter, in accordance with foreclosure accounting, the
Company recorded a loss on the Primestone foreclosure of $17,671,000
calculated based on (i) the acquisition price of the units and (ii) its
valuation of the amounts realizable under the guarantees by affiliates of
Primestone, as compared with the net carrying amount of the investment at
April 30, 2002. At June 30, 2002, the Company's carrying amount of the
investment was $40,270,000, of which $33,170,000 represents the carrying
amount of the 3,972,447 partnership units owned by the Company ($8.35 per
unit) and $7,100,000 represents the amount realizable under the guarantees
(see Note 5. Investments in and Advances to Partially-Owned Entities).

     At July 30, 2002, PGE's closing stock price on the New York Stock Exchange
was $5.43 per share. The ultimate realization of the Company's investment
will depend upon the future performance of the Chicago real estate market and
the performance of PGE, as well as the ultimate realizable value of the net
assets supporting the guarantees and the Company's ability to collect under
the guarantees. The Company will continue to monitor this investment to
determine whether additional write-downs are required based on (i) declines
in value of the PGE stock (for which the partnership units are exchangeable)
which are "other than temporary" as used in accounting literature and (ii)
the realizable value of the guarantees.

     CRYSTAL GATEWAY ONE

     On July 1, 2002, the Company acquired a 360,000 square foot office building
from a limited partnership, which is approximately 50% owned by
Mr. Robert H. Smith and Mr. Robert P. Kogod, trustees of the Company in exchange
for approximately 325,700 newly issued Vornado Operating Partnership units
(valued at $14,800,000). The building is located in the Crystal City complex in
Arlington, Virginia where the Company already owns 24 office buildings
containing over 6.9 million square feet, which it acquired on January 1, 2002,
in connection with the Company's acquisition of CESCR. In March 2002, the
Company had purchased the mortgage on this property for $55,000,000. On June 28,
2002, the limited partnership completed a $58,500,000 mortgage refinancing which
bears interest at 6.75% and matures in July 2012 and repaid the Company's
$55,000,000 mortgage.

                                     Page 9

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

4.   ACQUISITIONS AND DISPOSITIONS - CONTINUED

     DISPOSITIONS

     The following table sets forth the details of net (loss) gain on
disposition of wholly-owned and partially-owned assets for the three and six
months ended June 30, 2002 and 2001:

                                                                   For the Three Months Ended       For the Six Months Ended
                    (amounts in thousands)                                 June 30,                          June 30,
                                                                   ---------------------------     --------------------------
                                                                      2002             2001           2002             2001
                                                                   -----------      ----------     ----------      ----------
                                                                                                       
     Wholly-owned Assets:
       Loss on Primestone foreclosure..........................    $   (17,671)     $       --     $  (17,671)     $       --
       Gain on sale of Kinzie Park condominiums units..........            344              --          1,875              --
       Net gain on sale of marketable securities...............         12,346              --         12,346              --
       Net gain from condemnation proceedings..................             --           3,050             --           3,050
       Write-off of investments in technology companies........             --         (13,561)            --         (18,284)
     Partially-owned Assets:
       Net gain on sale of 50% interest in 570 Lexington Avenue             --          12,445             --          12,445
                                                                   -----------      ----------     ----------      ----------
                                                                   $    (4,981)     $    1,934     $   (3,450)     $   (2,789)
                                                                   ===========      ==========     ==========      ==========

5.   INVESTMENTS IN AND ADVANCES TO PARTIALLY-OWNED ENTITIES

     The Company's investments in and advances to partially-owned entities and
income recognized from such investments are as follows:

     INVESTMENTS AND ADVANCES:

                  (amounts in thousands)                                 June 30, 2002         December 31, 2001
                                                                         -------------         -----------------
                                                                                            
      Temperature Controlled Logistics..........................         $     458,004            $      474,862
      Charles E. Smith Commercial Realty L.P. ("CESCR")(1)......                    --                   347,263
      Alexander's...............................................               185,953                   188,522
      Newkirk Joint Ventures (2)................................               162,247                   191,534
      Prime Group Realty, L.P. and other guarantees (3).........                40,270                        --
      Partially-Owned Office Buildings (4)......................                22,619                    23,346
      Starwood Ceruzzi Joint Ventures...........................                26,055                    25,791
      Park Laurel...............................................                 4,357                    (4,745)
      Other.....................................................                49,320                    23,622
                                                                         -------------            --------------
                                                                         $     948,825            $    1,270,195
                                                                         =============            ==============

- ----------
     (1)  On January 1, 2002, the Company acquired the remaining 66% of CESCR
          it did not previously own. Accordingly, CESCR is consolidated as of
          January 1, 2002.

     (2)  The Company's investment in and advances to Newkirk Joint Ventures is
          comprised of:

                                                     June 30, 2002    December 31, 2001
                                                     -------------    -----------------
                                                                
           Investments in limited partnerships..     $     113,982    $         143,269
           Mortgages and loans receivable.......            39,511               39,511
           Other ...............................             8,754                8,754
                                                     -------------    -----------------
           Total ...............................     $     162,247    $         191,534
                                                     =============    =================

          On January 2, 2002, the Newkirk Joint Ventures' partnership interests
          were merged into a master limited partnership (the "MLP") in which the
          Company has a 21% interest. In conjunction with the merger, the MLP
          completed a $225,000 mortgage financing collateralized by its
          properties, subject to the existing first and certain second mortgages
          on those properties. The loan bears interest at LIBOR plus 5.5% with a
          LIBOR floor of 3% (8.5% at June 30, 2002) and matures on January 31,
          2005, with two one-year extension options. As a result of the
          financing on February 6, 2002, the MLP repaid approximately $28,200 of
          existing debt and distributed approximately $37,000 to the Company.

     (3)  The Company's carrying amount of the investment consists of 3,972,447
          partnership units valued at $33,170 ($8.35 per unit) and guarantees
          valued at $7,100. The Company's 14.9% share of equity in the income or
          loss of Prime Group Realty L.P. for the period from April 30, 2002
          (date of acquisition) to June 30, 2002 will be recognized in earnings
          in the quarter ending September 30, 2002, as the investee has not
          released its earnings prior to the filing of the Company's quarterly
          report on Form 10-Q. Prior to April 30, 2002, this investment was in
          the form of a loan and was included in Notes and Mortgage Loans
          Receivable on the balance sheet.

     (4)  As at June 30, 2002, includes a 20% interest in a property which was
          part of the CESCR acquisition in 2002.

                                    Page 10

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

5.   INVESTMENTS IN AND ADVANCES TO PARTIALLY-OWNED ENTITIES - CONTINUED

     Below is a summary of the debt of partially owned entities, none of which
     is guaranteed by the Company.

(amounts in thousands)                                                   100% OF
                                                                PARTIALLY-OWNED ENTITIES
                                                                          DEBT
                                                               -------------------------
                                                                JUNE 30,    DECEMBER 31,
                                                                  2002          2001
                                                               ----------   ------------
                                                                      
Alexander's (33.1% interest) (see "Alexander's" on
  page 13 for further details):
    Term loan secured by all of Alexander's assets
       except for the Kings Plaza Regional
       Shopping Center:
         Portion financed by the Company due on
            April 15, 2003 with interest
            at 12.48% ......................................   $   95,000   $     95,000
         Portion financed by a bank, due March 15,
            2003, with interest at LIBOR + 1.85% (3.69%
            at June 30, 2002) (repaid on July 3, 2002) .....       10,000         10,000
    Unsecured Line of Credit financed by the Company,
       due on April 15, 2003 with interest at 12.48% .......       24,000         24,000
    Rego Park mortgage payable, due in June 2009, with
       interest at 7.25% ...................................       82,000         82,000
    Kings Plaza Regional Shopping Center mortgage payable,
       due in June 2011, with interest at 7.46% (prepayable
       with yield maintenance) .............................      220,571        221,831
    Paramus mortgage payable, due in October 2011, with
       interest at 5.92% (prepayable without penalty) ......       68,000         68,000
    Other notes and mortgages payable (repaid on
       July 3, 2002)........................................       15,000         15,000

Temperature Controlled Logistics (60% interest):
    Mortgage notes payable collateralized by 58
       temperature controlled warehouses, due in May 2008,
       requires amortization based on a 25 year term with
       interest at 6.89% (prepayable with yield maintenance)      589,893        563,782
    Other notes and mortgages payable ......................       15,324         38,748

Newkirk Joint Ventures (21.1% interest):
    Portion of first mortgages and contract rights,
       collateralized by the partnerships'
       real estate, due from 2002 to 2024, with a
       weighted average interest rate of 11.32% at
       June 30, 2002 (various prepayment rights) ...........    1,516,757      1,336,989

Charles E. Smith Commercial Realty L.P. (34% interest
  in 2001):
    29 mortgages payable ...................................           --      1,470,057
    Unsecured line of credit ...............................           --         33,000

Partially Owned Office Buildings:
    330 Madison Avenue (25% interest) mortgage note
       payable, due in April 2008,
       with interest at 6.52% (prepayable with yield
       maintenance) ........................................       60,000         60,000
    825 Seventh Avenue (50% interest) mortgage payable,
       due in October 2014, with interest at 8.07%
       (prepayable with yield maintenance) .................       23,416         23,552

Las Catalinas Mall (50% interest):
    Mortgage notes payable, due in November 2013 with
       interest at 6.97% (prepayable after December 2002
       with yield maintenance) .............................       68,075         68,591

RussianTea Room (50% interest) mortgages payable, due
       in March 2012, with interest at Prime plus 50
       basis points (5.25% at June 30, 2002) (1) ...........       13,000         13,000

     The Company's share of the debt of partially owned entities was
$862,529,000 and $1,319,535,000 as of June 30, 2002 and December 31, 2001,
excluding the Company's share of Prime Group Realty L.P.'s outstanding debt
as the investee has not filed its quarterly report on Form 10-Q for the
period ended June 30, 2002, subsequent to the Company's acquisition of the
partnership units. Based on Prime Group Realty L.P.'s outstanding debt of
$914,253,000 at March 31, 2002, the Company's pro-rata share would be
$136,224,000 (14.9% interest).

- ----------
(1)  On July 28, 2002 the Russian Tea Room ceased operations which represented
     an event of default under the loans.

                                     Page 11

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

5.   INVESTMENTS IN AND ADVANCES TO PARTIALLY-OWNED ENTITIES - CONTINUED

     INCOME:

                                                             For The Three Months              For The Six Months
              (amounts in thousands)                             Ended June 30,                  Ended June 30,
                                                          -----------------------------     -------------------------
                                                             2002               2001           2002           2001
                                                          -----------        ----------     ----------     ----------
                                                                                               
     Income applicable to Alexander's:
       33.1% share of equity in net (loss) income....     $      (375)(1)    $      535     $      794(1)  $    7,691(1)
       Interest income...............................           2,756             2,935          5,287          6,362
       Management and leasing fee income.............           2,106             1,206          3,974          2,927
                                                          -----------        ----------     ----------     ----------
                                                          $     4,487        $    4,676     $   10,055     $   16,980
                                                          ===========        ==========     ==========     ==========
     Temperature Controlled Logistics:
       60% share of equity in net (loss) income (2)..     $      (424)       $    2,222     $    3,383     $    6,686
       Management fee (40% of 1% per annum of
          Total Combined Assets, as defined).........           1,511             1,499          3,009          2,983
                                                          -----------        ----------     ----------     ----------
                                                                1,087             3,721          6,392          9,669
                                                          -----------        ----------     ----------     ----------

     CESCR-34% share of equity in net income (3).....              --             6,828             --         14,195
                                                          -----------        ----------     ----------     ----------

     Newkirk Joint Ventures:
       Equity in net income of limited partnerships..           5,974             6,484         11,403         12,726
       Interest and other income.....................           2,326             1,477          4,597          3,202
                                                          -----------        ----------     ----------     ----------
                                                                8,300             7,961         16,000         15,928
                                                          -----------        ----------     ----------     ----------
     Partially-Owned Office Buildings (4)............             726             1,509          1,276          2,773
     Other...........................................            (287)             (791)           (56)           653(5)
                                                          -----------        ----------     ----------     ----------
                                                          $     9,826        $   19,228     $   23,612     $   43,218
                                                          ===========        ==========     ==========     ==========

- ----------
(1)  Equity in income for the three and six months ended June 30, 2002 includes
     a charge of $1,402 representing the Company's share of Alexander's stock
     appreciation rights compensation expense of $4,236 based on Alexander's
     closing stock price of $76.80 on June 30, 2002. Equity in income for the
     six months ended June 30, 2001 includes $6,298 representing the Company's
     share of Alexander's gain on sale of its Fordham Road property and excludes
     $1,170 representing the Company's share of Alexander's extraordinary gain
     on the early extinguishment of debt on this property which is reflected as
     an extraordinary item on the consolidated statements of income.
(2)  Equity in net income for the three and six months ended June 30, 2002,
     reflects (i) a decrease in rental income of $793 and $1,351, respectively,
     and (ii) a $1,376 loss on the disposition of an asset.
(3)  On January 1, 2002, the Company acquired the remaining 66% of CESCR it did
     not previously own. Accordingly, CESCR is consolidated as of January 1,
     2002.
(4)  2002 includes a 20% interest in a property which was part of the
     acquisition of CESCR, and does not include 570 Lexington Avenue which was
     sold in May 2001.
(5)  Includes $1,300 for the Company's share of the Starwood Ceruzzi Joint
     Venture's gain on the sale of a property.

                                     Page 12

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

5.   INVESTMENTS IN AND ADVANCES TO PARTIALLY-OWNED ENTITIES - CONTINUED

     TEMPERATURE CONTROLLED LOGISTICS

     Based on the Company's policy of recognizing rental income when earned and
collection is assured or cash is received, the Company did not recognize
$3,744,000 and $5,552,000 of rent it was due for the three and six months ended
June 30, 2002 and $2,340,000 of rent it was due for the three and six months
ended June 30, 2001. At June 30, 2002, the Company's balance of the tenant's
total deferred rent is $10,553,000.

     ALEXANDER'S

     The Company owns 1,655,000 common shares or 33.1% of the common stock of
Alexander's at June 30, 2002.

     Alexander's is managed by and its properties are leased by the Company
pursuant to management, leasing and development agreements with one-year terms
expiring in March of each year, which are automatically renewable. In
conjunction with the closing of the Alexander's Lexington Avenue construction
loan on July 3, 2002, these agreements were bifurcated to cover the Alexander's
Lexington Avenue property separately. Further, the Lexington Avenue management
and development agreements were amended to provide for a term lasting until
substantial completion of the development of the property, with automatic
renewals, and for the payment of the development fee upon the earlier of January
3, 2006, or the payment in full of the construction loan encumbering the
property.

     Pursuant to both the pre and post July 3, 2002 management, leasing and
development agreements, the Company is entitled to a development fee based on 6%
of construction costs as defined. The development fee for the Alexander's
Lexington Avenue project is estimated to be approximately $26,300,000, of which
$1,957,000 and $2,988,000 have been recorded during the three and six months
ended June 30, 2002. Of these amounts, $1,425,000 and $2,115,000 have been
recognized as income and the balance has been reflected as a reduction in the
Investment account. The Company is also owed $1,073,000 under the leasing
agreement which is payable in 2002.

     At June 30, 2002, the Company has loans receivable from Alexander's of
$119,000,000, including $24,000,000 under the $50,000,000 line of credit the
Company granted to Alexander's. On March 15, 2002, the loan and the line of
credit were extended to April 15, 2003. The interest rates on the loan and line
of credit were reset on March 15, 2002, from 13.74% to 12.48%, using a Treasury
index (with a 3% floor) plus the same spread to treasuries as previously
existed. On July 3, 2002, in conjunction with the closing of Alexander's
Lexington Avenue construction loan, the maturity of the Company's loans was
extended to the earlier of January 3, 2006 or the date the Alexander's Lexington
Avenue construction loan is repaid in full and the debt was bifurcated among
various subsidiaries of Alexander's (all guaranteed by Alexander's). In
addition, amounts which may be due under the Completion Guarantee described
in the next paragraph would be due at the same time.

     On July 3, 2002, Alexander's finalized a $490,000,000 loan with HVB Real
Estate Capital (HYPO Vereinsbank) to finance the construction of its 1.3
million square foot multi-use building at its 59th Street and Lexington
Avenue location. The estimated construction costs in excess of the
construction loan of approximately $140,000,000 will be provided by
Alexander's. The loan has an interest rate of LIBOR plus 2.5% and a term of
forty-two months plus two one-year extensions. Alexander's has received an
initial funding of $55,500,000 under the loan of which $25,000,000 was used
to repay existing loans and notes payable. Pursuant to this loan, Vornado has
agreed to guarantee, among other things, the lien free, timely completion of
the construction of the project and funding of project costs in excess of a
stated loan budget, if not funded by Alexander's (the "Completion
Guarantee"). The $6,300,000 estimated fee payable by Alexander's to the
Company for the Completion Guarantee is 1% of construction costs (as defined)
and is due at the same time that the development fee is due. In addition, if
the Company should advance any funds under the Completion Guarantee in excess
of the $26,000,000 currently available under the secured line of credit,
interest on those advances is at 15% per annum.

                                     Page 13

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

6.   DEBT AND EQUITY FINANCING

          Following is a summary of the Company's debt, by segment, at June 30,
     2002:

(amounts in thousands)
                                                                     INTEREST                 BALANCE AS OF
                                                                    RATE AS AT         ---------------------------
                                                                     JUNE 30,            JUNE 30,     DECEMBER 31,
                                                         MATURITY      2002                2002          2001
                                                       -----------  -----------        -----------    ------------
                                                                                          
Notes and Mortgages Payable:
  Fixed Interest:
  NYC Office:
    Two Penn Plaza............................             03/04           7.08%       $   156,210    $    157,697
    888 Seventh Avenue........................             02/06           6.63%           105,000         105,000
    Eleven Penn Plaza.........................             05/07           8.39%            50,890          51,376
    866 UN Plaza..............................             04/04           7.79%            33,000          33,000
  CESCR Office (1):
    Crystal Park 1-5..........................         07/06-08/13   7.00%-7.21%           266,691                (1)
    Crystal Gateway 2, 3, 4/Crystal Square 5           08/13-01/25   7.11%-7.43%           158,181                (1)
    Crystal Square 2, 3 and 4.................         10/10-11/14   7.14%-7.42%           146,266                (1)
    Skyline Place 1, 3, 4, 5 and 6............         08/06-12/09         7.00%           141,636                (1)
    1101 17th , 1140 Connecticut, 1730 M &
      1150 17th...............................             08/10           7.00%            97,981                (1)
    Courthouse Plaza 1 and 2..................             01/08           7.06%            80,760                (1)
    Crystal Gateway N., Arlington Plaza and
      1919 S. Eads............................             11/07           7.00%            73,299                (1)
    Reston Executive I, II & III..............             01/06           7.00%            74,068                (1)
    Crystal Plaza 1-6.........................             10/04           7.00%            71,293                (1)
    One Skyline Tower.........................             06/08           7.12%            66,207                (1)
    Crystal Malls 1-4.........................             12/11           7.08%            68,281                (1)
    1750 Pennsylvania Avenue..................             06/32           7.26%            50,000                (1)
    One Democracy Plaza.......................             02/05           7.00%            28,028                (1)
  Retail:
    Cross collateralized mortgages payable on
      42 shopping centers.....................             03/10           7.93%           489,776         492,156
    Green Acres Mall..........................             02/08           6.75%           151,810         152,894
    Montehiedra Town Center...................             05/17           8.23%            59,999          60,359
  Merchandise Mart:
    Market Square Complex.....................             07/11           7.95%            48,966          49,702
    Washington Design Center..................             10/11           6.95%            48,730          48,959
    Washington Office Center..................             02/04           6.80%            45,774          46,572
    Other.....................................         03/09-06/13   7.03%-7.71%            44,864          18,951
  Other:
    Industrial Warehouses.....................             10/11           6.95%            49,648          50,000
    Student Housing Complex...................             11/07           7.45%            19,131          19,243
    Other.....................................                             7.95%             6,942           8,659
                                                                                       -----------    ------------
      Total Fixed Interest Notes and Mortgages
          Payable.............................                             7.29%         2,633,431       1,294,568
                                                                                       -----------    ------------

                                     Page 14

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

6.   DEBT AND EQUITY FINANCING - CONTINUED

                                                                                    INTEREST                BALANCE AS OF
     (amounts in thousands)                                                        RATE AS AT       ---------------------------
                                                                                    JUNE 30           JUNE 30,     DECEMBER 31,
                                                         MATURITY    SPREAD           2002             2002           2001
                                                       -----------  -------       -----------       -----------    ------------
                                                                                                     
Notes and Mortgages Payable:
   Variable Interest:
  NYC Office:
    One Penn Plaza (2)......................              06/03       L+125             3.23%       $   275,000     $   275,000
    770 Broadway/595 Madison Avenue
      cross-collateralized mortgage (3).....              04/03       L+40              2.24%           238,659         123,500
    909 Third Avenue........................              07/03       L+165             3.49%           106,420         105,253
    Two Park Avenue (5).....................              03/03       L+145             3.35%            90,000          90,000
  CESCR Office:
    Tyson Dulles Plaza......................              06/03       L+130             3.14%            70,000                (1)
    Commerce Executive III, IV & V..........              07/03       L+150             3.34%            53,670                (1)
    Seven Skyline (5).......................              10/02       L+135             3.20%            52,185                (1)
  Merchandise Mart:
    Merchandise Mart (5)....................              10/02       L+150             3.34%           250,000         250,000
    Furniture Plaza.........................              02/03       L+200             3.91%            48,290          43,524
    33 North Dearborn Street................              09/03       L+175             3.65%            19,000          19,000
    350 North Orleans (5)...................              06/02       L+165               --                 --          70,000
    Other...................................              01/03       P-50              4.25%               139             294
  Other:
    Palisades construction loan.............              01/03       L+185             3.90%            98,852          90,526
    Hotel Pennsylvania (4)..................              10/02       L+160               --                 --         115,508
                                                                                                    -----------    ------------
      Total Variable Interest Notes and
           Mortgages Payable................                                            3.18%         1,302,215       1,182,605
                                                                                                    -----------    ------------
  Total Notes and Mortgages Payable.........                                                        $ 3,935,646     $ 2,477,173
                                                                                                    ===========    ============
  Unsecured revolving credit facility.......              03/03       L+90                --        $        --     $        --
                                                                                                    ===========    ============
  Senior unsecured debt due 2007 (5)........              06/07       L+77              2.59%       $   499,283     $        --
                                                                                                    ===========    ============

- ----------
(1)  On January 1, 2002, the Company acquired the remaining 66% of CESCR it did
     not previously own. Prior to January 1, 2002, the Company's share of
     CESCR's debt was netted in Investments in and Advances to Partially-Owned
     Entities. In connection with the acquisition, CESCR's fixed rate debt of
     $1,289,837 was fair valued at $1,322,685 upon the application of purchase
     accounting.
(2)  On June 21, 2002, one of the lenders purchased the other participant's
     interest in the loan. At the same time, the loan was extended for one year,
     with certain modifications including, (i) making the risk of a loss due to
     terrorism (as defined) not covered by insurance recourse to the Company and
     (ii) the granting of two 1-year renewal options to the Company.
(3)  On April 1, 2002, the Company increased its mortgage financing
     cross-collateralized by its 770 Broadway/595 Madison Avenue properties by
     $115,000. The proceeds of the loan are in a restricted mortgage
     escrow account which bears interest at the same rate as the loan, and at
     June 30, 2002, totals $238,659.
(4)  On April 1, 2002, the loan was prepaid in full.
(5)  On June 24, 2002, the Company completed an offering of $500,000 aggregate
     principal amount of 5.625% senior unsecured notes due June 15, 2007.
     Interest on the notes is payable semi-annually on June 15th and December
     15th, commencing December 15, 2002. The notes were priced at 99.856% of
     their face amount to yield 5.659%. Of the net proceeds of approximately
     $496,300, (i) $70,000 was used to repay the mortgage payable on 350 North
     Orleans prior to June 30, 2002 and (ii) $393,000 was used to repay the
     mortgages on Two Park Avenue, the Merchandise Mart and a portion of Seven
     Skyline in July and August 2002. After the repayment of these mortgages,
     the balance of the Company's wholly-owned debt was $4,041,929, as compared
     to $3,970,486 at March 31, 2002. On June 27, 2002, the Company entered into
     interest rate swaps that effectively converted the interest rate on the
     $500,000 senior unsecured notes due 2007 from a fixed rate of 5.625% to a
     floating rate of LIBOR plus .7725, based upon the trailing 3 month LIBOR
     rate (2.59% if set on August 1, 2002).

                                     Page 15

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

6.   DEBT AND EQUITY FINANCING - CONTINUED

          The principal repayments for the next five years and thereafter are
as follows:

      (amounts in thousands)                                   As at            As at
      YEAR ENDING DECEMBER 31,                             June 30, 2002    July 31, 2002
      ------------------------                             -------------    -------------
                                                                      
      2002..............................................   $   302,185      $        --

      2003..............................................     1,000,030          910,030

      2004..............................................       306,093          306,093

      2005..............................................        27,197           27,197

      2006..............................................       259,429          259,429

      Thereafter........................................     2,539,995        2,539,995

     The Company's debt instruments, consisting of mortgage loans secured by
its properties (which are generally non-recourse to the Company), its
revolving credit agreement and its senior unsecured notes due 2007, contain
customary covenants requiring the Company to maintain insurance. There can be
no assurance that the lenders under these instruments will not take the
position that an exclusion from all risk insurance coverage for losses due to
terrorist acts is a breach of these debt instruments that allows the lenders
to declare an event of default and accelerate repayment of debt. The Company
has received correspondence from four lenders regarding terrorism insurance
coverage, which the Company has responded to. If lenders insist on coverage
for these risks, it could adversely affect the Company's ability to finance
and/or refinance its properties and to expand its portfolio.

EQUITY

     On February 25, 2002, the Company sold 1,398,743 common shares based on the
closing price of $42.96 on the NYSE. The net proceeds to the Company were
approximately $57,042,000.

7.   OTHER RELATED PARTY TRANSACTIONS

     The Company currently manages and leases the real estate assets of
Interstate Properties pursuant to a management agreement. Management fees earned
by the Company pursuant to the management agreement were $381,000 and $514,000
for the three months ended June 30, 2002 and 2001 and $584,000 and $884,000 for
the six months ended June 30, 2002 and 2001.

     The estate of Bernard Mendik and certain other individuals including Mr.
Greenbaum, own an entity which provides cleaning and related services and
security services to office properties, including the Company's Manhattan office
properties. The Company was charged fees in connection with these contracts of
$14,122,000 and $12,725,000 for the three months ended June 30, 2002 and 2001,
and $27,622,000 and $25,625,000 for the six months ended June 30, 2002 and 2001.

     Effective January 1, 2002, the Company extended its employment agreement
with Mr. Fascitelli for a five year period through December 31, 2006. Pursuant
to the extended employment agreement, he is entitled to receive a deferred
payment on December 31, 2006 of 626,566 Vornado common shares which are valued
for compensation purposes at $27,500,000 (the value of the shares on March 8,
2002, the date the extended employment agreement was signed). The number of
shares was set by the Company's Compensation Committee in December 2001 to
achieve a value of $25,000,000 and had appreciated $2,500,000 as of March 8,
2002. The shares are being held in an irrevocable trust for the benefit of Mr.
Fascitelli and will vest on December 31, 2002. Mr. Fascitelli will also receive
regular annual cash compensation as determined by the Company's Compensation
Committee and will continue as a member of Vornado's Board. Mr. Fascitelli may
also borrow up to $20,000,000 from the Company during the term of his 2002
employment agreement reduced by $8,600,000, the amount of his outstanding loans
under his 1996 employment agreement. Each loan will bear interest, payable
quarterly, at the applicable Federal Rate on the date the loan is made and will
mature on the fifth anniversary of the loan.

                                     Page 16

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

7.   OTHER RELATED PARTY TRANSACTIONS - CONTINUED

     On May 29, 2002, Mr. Roth replaced common shares of the Company securing
the Company's outstanding loan to Mr. Roth with options to purchase common
shares of the Company with a value of not less than two times the loan
amount. See Exhibit 10.11 to this Quarterly Report on Form 10-Q for a copy of
the related agreement.

     Pursuant to the Company's annual compensation review in February 2002 with
Joseph Macnow, the Company's Chief Financial Officer, the Compensation
Committee approved a $2,000,000 loan to Mr. Macnow, bearing interest at the
applicable federal rate of 4.65% per annum and due January 1, 2006. The loan,
which was funded on July 23, 2002, was made in conjunction with Mr. Macnow's
June 2002 exercised of options to purchase 225,000 shares of the Company's
common stock. The loan is collateralized by assets with a value of not less
than two times the loan amount.

     VORNADO OPERATING COMPANY ("VORNADO OPERATING")

     Pursuant to a revolving credit facility which expires December 31, 2004,
Vornado Operating owes the Company $31,489,000 at June 30, 2002. Vornado
Operating has disclosed that in the aggregate, its investments do not, and
for the foreseeable future, are not expected to generate sufficient cash flow
to pay all of its debts and expenses. Further, Vornado Operating states that
its only investee, AmeriCold Logistics ("Tenant"), anticipates that its
Landlord, a partnership 60% owned by the Company and 40% owned by Crescent
Real Estate Equities, will need to restructure the leases between the
Landlord and the Tenant to provide additional cash flow to the Tenant (the
Landlord has previously restructured the leases to provide additional cash
flow to the Tenant). Management anticipates a further lease restructuring and
the sale of non-core assets by AmeriCold Logistics, and accordingly, Vornado
Operating is expected to have a source to repay the debt under this facility
which may be extended. Since January 1, 2002, the Company has not recognized
income on the debt under this facility.

                                     Page 17

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

8.   INCOME PER SHARE

     The following table sets forth the computation of basic and diluted income
per share:

                                                                 For The Three Months             For The Six Months
                                                                    Ended June 30,                  Ended June 30,
                                                             --------------------------       ---------------------------
                                                                2002             2001            2002             2001
(amounts in thousands except per share amounts)              -----------      ----------      ----------      -----------

Numerator:
  Income before cumulative effect of change in
    accounting principle and extraordinary item.....         $    68,711      $   66,112      $  148,243      $   125,561
  Cumulative effect of change in accounting
    principle.......................................                  --              --         (30,129)          (4,110)
  Extraordinary item................................                  --              --              --            1,170
                                                             -----------      ----------      ----------      -----------
  Net income........................................              68,711          66,112         118,114          122,621
  Preferred share dividends.........................              (5,896)         (9,192)        (12,027)         (18,865)
                                                             -----------      ----------      ----------      -----------

Numerator for basic and diluted income per
  share - net income applicable to common shares....         $    62,815      $   56,920      $  106,087      $   103,756
                                                             ===========      ==========      ==========      ===========

Denominator:
  Denominator for basic income per share - weighted
    average shares..................................             105,903          86,901         104,486           86,864
  Effect of dilutive securities:
    Employee stock options..........................               4,464           2,701           4,204            2,637
    Deferred compensation shares issued but not yet earned           347              --             264               --
                                                             -----------      ----------      ----------      -----------

  Denominator for diluted income per share -
    adjusted weighted average shares and
    assumed conversions.............................             110,714          89,602         108,954           89,501
                                                             ===========      ==========      ==========      ===========

INCOME PER COMMON SHARE - BASIC:
    Income before cumulative effect of change in
      accounting principle and extraordinary item...         $       .59      $      .65      $     1.31      $       1.23
    Cumulative effect of change in accounting
      principle.....................................                  --              --            (.29)            (.05)
    Extraordinary item..............................                  --              --              --              .01
                                                             -----------      ----------      ----------      -----------
    Net income per common share.....................         $       .59      $      .65      $     1.02      $      1.19
                                                             ===========      ==========      ==========      ===========

INCOME PER COMMON SHARE - DILUTED:
    Income before cumulative effect of change in
      accounting principle and extraordinary item...         $       .57      $      .64      $     1.25      $      1.20
    Cumulative effect of change in accounting
       principle....................................                  --              --            (.28)            (.05)
    Extraordinary item..............................                  --              --              --              .01
                                                             -----------      ----------      ----------      -----------
    Net income per common share.....................         $       .57      $      .64      $      .97      $      1.16
                                                             ===========      ==========      ==========      ===========

                                     Page 18

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

9.   COMPREHENSIVE INCOME

     The following table sets forth the Company's comprehensive income:

      (amounts in thousands)                                  For The Three Months        For The Six Months
                                                                 Ended June 30,             Ended June 30,
                                                             -----------------------    -----------------------
                                                                2002          2001         2002         2001
                                                             -----------    --------    ----------    ---------
                                                                                          
     Net income applicable to common shares................. $    62,815    $ 56,920    $  106,087    $ 103,756
     Adjustment to record cumulative effect of change
       in accounting principle..............................          --          --            --        4,110
     Other comprehensive (loss) income......................     (11,787)      8,532        (8,862)       9,050
                                                             -----------    --------    ----------    ---------
     Comprehensive income................................... $    51,028    $ 65,452    $   97,225    $ 116,916
                                                             ===========    ========    ==========    =========

10.  COMMITMENTS AND CONTINGENCIES

     At June 30, 2002, the Company's revolving credit facility had a zero
balance, and the Company utilized $15,718,000 of availability under the facility
for letters of credit and guarantees.

     In conjunction with the closing of Alexander's Lexington Avenue
construction loan on July 3, 2002, the Company agreed to guarantee, among other
things, the lien free, timely completion of the construction of the project and
funding of all project costs in excess of a stated loan budget, if not funded by
Alexander's.

     Each of the Company's 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 the
Company.

     The Company carries comprehensive liability and all risk property insurance
(fire, flood, extended coverage and rental loss insurance) with respect to its
assets. The Company's all risk insurance policies in effect before September 11,
2001 do not expressly exclude coverage for hostile acts, except for acts of war.
Since September 11, 2001, insurance companies have for the most part excluded
terrorist acts from coverage in all risk policies. The Company has generally
been unable to obtain all risk insurance which includes coverage for terrorist
acts for policies it has renewed since September 11, 2001, for each of its
business. In 2002, the Company obtained $200,000,000 of separate coverage for
terrorist acts for each of its New York City Office, Washington, D.C. Office,
Retail and Merchandise Mart businesses and $60,000,000 for its Temperature
Controlled Logistics business. Therefore, the Company is at risk for financial
loss in excess of these limits for terrorist acts (as defined), which loss could
be material.

                                     Page 19

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

10.  COMMITMENTS AND CONTINGENCIES - CONTINUED

     The Company's debt instruments, consisting of mortgage loans secured by its
properties (which are generally non-recourse to the Company), its senior
unsecured notes due 2007 and its revolving credit agreement, contain customary
covenants requiring the Company to maintain insurance. There can be no assurance
that the lenders under these instruments will not take the position that an
exclusion from all risk insurance coverage for losses due to terrorist acts is a
breach of these debt instruments that allows the lenders to declare an event of
default and accelerate repayment of debt. The Company has received
correspondence from four lenders regarding terrorism insurance coverage,
which the Company has responded to. If lenders insist on coverage for these
risks, it could adversely affect the Company's ability to finance and/or
refinance its properties and to expand its portfolio.

     From time to time, the Company has disposed of substantial amounts of real
estate to third parties for which, as to certain properties, it remains
contingently liable for rent payments or mortgage indebtedness.

     There are various legal actions against the Company in the ordinary course
of business. In the opinion of management, after consultation with legal
counsel, the outcome of such matters will not have a material effect on the
Company's financial condition, results of operations or cash flow.

                                     Page 20

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

11.  SEGMENT INFORMATION

     The Company has four business segments: Office, Retail, Merchandise Mart
and Temperature Controlled Logistics.

                                                                   For the Three Months Ended June 30,
                                        -------------------------------------------------------------------------------------------
(amounts in thousands)                                                             2002
                                        -------------------------------------------------------------------------------------------
                                                                                                       Temperature
                                                                                       Merchandise     Controlled
                                            Total         Office           Retail         Mart          Logistics        Other(2)
                                        -------------  -------------   -------------  -------------   -------------   -------------
                                                                                                    
Rentals ..............................  $     309,869  $     213,762   $      28,922  $      52,868   $          --   $      14,317
Expense reimbursements ...............         36,315         19,949          11,800          3,872              --             694
Other income .........................          7,063          5,090             391          1,220              --             362
                                        -------------  -------------   -------------  -------------   -------------   -------------
Total revenues........................        353,247        238,801          41,113         57,960              --          15,373
                                        -------------  -------------   -------------  -------------   -------------   -------------
Operating expenses ...................        126,267         80,395          12,987         21,353              --          11,532
Depreciation and amortization ........         49,563         34,121           3,546          7,288              --           4,608
General and administrative ...........         23,759          9,400           1,796          4,894              --           7,669
Amortization of officer's deferred
  compensation expense ...............          6,875             --              --             --              --           6,875
                                        -------------  -------------   -------------  -------------   -------------   -------------
Total expenses .......................        206,464        123,916          18,329         33,535              --          30,684
                                        -------------  -------------   -------------  -------------   -------------   -------------
Operating income .....................        146,783        114,885          22,784         24,425              --         (15,311)
Income applicable to Alexander's .....          4,487             --              --             --              --           4,487
Income from partially-owned entities .          9,826            726            (298)            11           1,087(6)        8,300
Interest and other investment income .          9,934          2,758              78            143              --           6,955
Interest and debt expense ............        (60,119)       (34,748)        (14,018)        (6,687)             --          (4,666)
Net gain on disposition of
  wholly-owned and partially-owned
  assets .............................         (4,981)            --              --            344              --          (5,325)
Minority interest ....................        (37,219)       (28,976)         (2,853)        (6,474)           (668)          1,752
                                        -------------  -------------   -------------  -------------   -------------   -------------
Income before cumulative effect of
  change in accounting principle and
  extraordinary item .................         68,711         54,645           5,693         11,762             419          (3,808)
Cumulative effect of change in
  accounting principle ...............             --             --              --             --              --              --
Extraordinary item ...................             --             --              --             --              --              --
                                        -------------  -------------   -------------  -------------   -------------   -------------
Net income ...........................         68,711         54,645           5,693         11,762             419          (3,808)
Cumulative effect of change in
  accounting principle ...............             --             --              --             --              --              --
Extraordinary item ...................             --             --              --             --              --              --
Minority interest ....................         37,219         28,976           2,853          6,474             668          (1,752)
Net gain on disposition of
  wholly-owned and partially-owned
  assets .............................             --             --              --             --              --              --
Interest and debt expense(4) .........         76,199         35,253          14,653          6,687           6,302          13,304
Depreciation and amortization(4) .....         62,360         34,577           4,097          7,288           8,344           8,054
Straight-lining of rents(4) ..........         (9,224)        (7,392)           (426)          (742)             --            (664)
Other ................................            334         (1,127)            160             --             912             389
                                        -------------  -------------   -------------  -------------   -------------   -------------
EBITDA(1) ............................  $     235,599  $     144,932   $      27,030  $      31,469   $      16,645   $      15,523
                                        =============  =============   =============  =============   =============   =============

- ----------
     See footnotes on page 23.

                                                                   For the Three Months Ended June 30,
                                        -------------------------------------------------------------------------------------------
(amounts in thousands)                                                             2001
                                        -------------------------------------------------------------------------------------------
                                                                                                       Temperature
                                                                                       Merchandise     Controlled
                                            Total         Office           Retail         Mart          Logistics        Other(2)
                                        -------------  -------------   -------------  -------------   -------------   -------------

Rentals ..............................  $     212,252  $     114,260   $      28,764  $      50,118   $          --   $      19,110
Expense reimbursements ...............         31,543         15,920          11,711          3,858              --              54
Other income .........................          2,280            813             542            818              --             107
                                        -------------  -------------   -------------  -------------   -------------   -------------
Total revenues........................        246,075        130,993          41,017         54,794              --          19,271
                                        -------------  -------------   -------------  -------------   -------------   -------------
Operating expenses ...................         96,831         51,684          13,002         21,662              --          10,483
Depreciation and amortization ........         30,086         17,300           3,447          6,064              --           3,275
General and administrative ...........         22,415          2,637             819          4,650              --          14,309
Amortization of officer's deferred
  compensation expense ...............             --             --              --             --              --              --
                                        -------------  -------------   -------------  -------------   -------------   -------------
Total expenses .......................        149,332         71,621          17,268         32,376              --          28,067
                                        -------------  -------------   -------------  -------------   -------------   -------------
Operating income .....................         96,743         59,372          23,749         22,418              --          (8,796)
Income applicable to Alexander's .....          4,676             --              --             --              --           4,676
Income from partially-owned entities .         19,228          8,365             495             (4)          3,721(6)        6,651
Interest and other investment income .         15,874          1,897             416            714              --          12,847
Interest and debt expense ............        (43,994)       (14,407)        (14,264)        (8,317)             --          (7,006)
Net gain on disposition of
  wholly-owned and partially-owned
  assets .............................          1,934         12,445           3,050             --              --         (13,561)
Minority interest ....................        (28,349)       (14,734)         (4,349)        (4,125)         (2,815)         (2,326)
                                        -------------  -------------   -------------  -------------   -------------   -------------
Income before cumulative effect of
  change in accounting principle and
  extraordinary item .................         66,112         52,938           9,097         10,686             906          (7,515)
Cumulative effect of change in
  accounting principle ...............             --             --              --             --              --              --
Extraordinary item ...................             --             --              --             --              --              --
                                        -------------  -------------   -------------  -------------   -------------   -------------
Net income ...........................         66,112         52,938           9,097         10,686             906          (7,515)
Cumulative effect of change in
  accounting principle ...............             --             --              --             --              --              --
Extraordinary item ...................             --             --              --             --              --              --
Minority interest ....................         28,349         14,734           4,349          4,125           2,815           2,326
Net gain on disposition of
  wholly-owned and partially-owned
  assets .............................        (15,495)       (12,445)         (3,050)            --              --              --
Interest and debt expense(4) .........         67,151         24,859          14,906          8,317           6,773          12,296
Depreciation and amortization(4) .....         45,918         21,992           4,612          6,064           8,403           4,847
Straight-lining of rents(4) ..........         (6,339)        (4,050)           (534)        (1,280)             --            (475)
Other ................................          2,997           (630)           (498)            --              69           4,056
                                        -------------  -------------   -------------  -------------   -------------   -------------
EBITDA(1) ............................  $     188,693  $      97,398   $      28,882  $      27,912   $      18,966   $      15,535
                                        =============  =============   =============  =============   =============   =============

- ----------
     See footnotes on page 23.

                                     Page 21

11.  SEGMENT INFORMATION

     The Company has four business segments: Office, Retail, Merchandise Mart
and Temperature Controlled Logistics.

                                                                           For the Six Months Ended June 30,
                                           ---------------------------------------------------------------------------------------
(amounts in thousands)                                                              2002
                                           ---------------------------------------------------------------------------------------
                                                                                                        Temperature
                                                                                        Merchandise      Controlled
                                             Total          Office          Retail         Mart          Logistics        Other(2)
                                           ----------     ----------       ---------    -----------     -----------      ---------
                                                                                                       
Rentals..................................  $  611,629     $  427,574       $  57,992      $  99,878       $      --      $  26,185
Expense reimbursements...................      74,119         41,356          23,817          7,215              --          1,731
Other income.............................      13,823         10,073             605          2,637              --            508
                                           ----------     ----------       ---------      ---------       ---------      ---------
Total revenues...........................     699,571        479,003          82,414        109,730              --         28,424
                                           ----------     ----------       ---------      ---------       ---------      ---------
Operating expenses.......................     253,713        162,628          27,668         42,580              --         20,837
Depreciation and amortization............      97,151         68,251           6,926         13,768              --          8,206
General and administrative...............      47,226         18,510           2,366          9,705              --         16,645
Costs of acquisitions not consummated....          --             --              --             --              --             --
Amortization of officer's deferred
  compensation expense...................      13,750             --              --             --              --         13,750
                                           ----------     ----------       ---------      ---------       ---------      ---------
Total expenses...........................     411,840        249,389          36,960         66,053              --         59,438
                                           ----------     ----------       ---------      ---------       ---------      ---------
Operating income.........................     287,731        229,614          45,454         43,677              --        (31,014)
Income applicable to Alexander's.........      10,055             --              --             --              --         10,055
Income from partially-owned entities.....      23,612          1,276             (69)            13           6,392(6)      16,000
Interest and other investment income.....      19,577          3,869             157            278              --         15,273
Interest and debt expense................    (118,137)       (69,510)        (27,711)       (13,870)             --         (7,046)
Net gain on disposition of
  wholly-owned and partially-owned
  assets.................................      (3,450)            --              --          1,875              --         (5,325)
Minority interest........................     (71,145)       (61,681)         (6,473)       (12,379)          3,304          6,084
                                           ----------     ----------       ---------      ---------       ---------      ---------
Income before cumulative effect of
  change in accounting principle and
  extraordinary item.....................     148,243        103,568          11,358         19,594           9,696          4,027
Cumulative effect of change in
  accounting principle...................     (30,129)            --              --             --         (15,490)       (14,639)
Extraordinary item.......................          --             --              --             --              --             --
                                           ----------     ----------       ---------      ---------       ---------      ---------
Net income...............................     118,114        103,568          11,358         19,594          (5,794)       (10,612)
Cumulative effect of change in
  accounting principle...................      30,129             --              --             --          15,490         14,639
Extraordinary item.......................          --             --              --             --              --             --
Minority interest........................      71,145         61,681           6,473         12,379          (3,304)        (6,084)
Net gain on disposition of
  wholly-owned and partially-owned
  assets.................................          --             --              --             --              --             --
Interest and debt expense(4).............     150,492         70,519          28,981         13,870          12,861         24,261
Depreciation and amortization(4).........     122,935         69,171           7,747         13,768          17,253         14,996
Straight-lining of rents(4)..............     (18,263)       (14,702)           (855)        (1,791)             --           (915)
Other....................................          75         (2,427)            860           (123)          1,376            389
                                           ----------     ----------       ---------      ---------       ---------      ---------
EBITDA(1)                                  $  474,627     $  287,810       $  54,564      $  57,697       $  37,882      $  36,674
                                           ==========     ==========       =========      =========       =========      =========

- ----------
     See footnotes on page 23.

                                                                           For the Six Months Ended June 30,
                                           -------------------------------------------------------------------------------------
(amounts in thousands)                                                              2001
                                           -------------------------------------------------------------------------------------
                                                                                                        Temperature
                                                                                        Merchandise      Controlled
                                             Total          Office          Retail         Mart          Logistics      Other(2)
                                           ----------     ----------       ---------    -----------     -----------    ---------
                                                                                                     
Rentals..................................  $  416,970     $  228,120       $  56,901      $  97,123       $      --    $  34,826
Expense reimbursements...................      66,635         34,961          23,506          7,831              --          337
Other income.............................       5,080          1,385             905          1,537              --        1,253
                                           ----------     ----------       ---------      ---------       ---------    ---------
Total revenues...........................     488,685        264,466          81,312        106,491              --       36,416
                                           ----------     ----------       ---------      ---------       ---------    ---------
Operating expenses.......................     197,214        107,445          27,854         42,794              --       19,121
Depreciation and amortization............      61,951         35,944           7,007         12,506              --        6,494
General and administrative...............      36,663          6,007           1,402          9,245              --       20,009
Costs of acquisitions not consummated....       5,000             --              --             --              --        5,000
Amortization of officer's deferred
  compensation expense...................          --             --              --             --              --           --
                                           ----------     ----------       ---------      ---------       ---------    ---------
Total expenses...........................     300,828        149,396          36,263         64,545              --       50,624
                                           ----------     ----------       ---------      ---------       ---------    ---------
Operating income.........................     187,857        115,070          45,049         41,946              --      (14,208)
Income applicable to Alexander's.........      16,980             --              --             --              --       16,980
Income from partially-owned entities.....      43,218         17,060           2,392            109           9,669(6)    13,988
Interest and other investment income.....      29,347          4,195             416          1,377              --       23,359
Interest and debt expense................     (93,389)       (31,014)        (28,413)       (17,986)             --      (15,976)
Net gain on disposition of
  wholly-owned and partially-owned
  assets.................................      (2,789)        12,445           3,050             --              --      (18,284)
Minority interest........................     (55,663)       (28,322)         (8,476)        (7,769)         (5,825)      (5,271)
                                           ----------     ----------       ---------      ---------       ---------    ---------
Income before cumulative effect of
  change in accounting principle and
  extraordinary item.....................     125,561         89,434          14,018         17,677           3,844          588
Cumulative effect of change in
  accounting principle...................      (4,110)            --              --             --              --       (4,110)
Extraordinary item.......................       1,170             --              --             --              --        1,170
Net income...............................     122,621         89,434          14,018         17,677           3,844       (2,352)
Cumulative effect of change in
  accounting principle...................       4,110             --              --             --              --        4,110
Extraordinary item.......................      (1,170)            --              --             --              --       (1,170)
                                           ----------     ----------       ---------      ---------       ---------    ---------
Minority interest........................      55,663         28,322           8,476          7,769           5,825        5,271
Net gain on disposition of
  wholly-owned and partially-owned
  assets.................................     (15,495)       (12,445)         (3,050)            --              --           --
Interest and debt expense(4).............     140,405         52,306          29,697         17,986          13,486       26,930
Depreciation and amortization(4).........      93,836         45,636           9,339         12,506          16,811        9,544
Straight-lining of rents(4)..............     (14,076)       (10,005)           (695)        (2,388)             --         (988)
Other....................................      (7,560)        (2,220)         (1,335)            --             181       (4,186)(5)
                                           ----------     ----------       ---------      ---------       ---------    ---------
EBITDA(1)................................  $  378,334     $  191,028       $  56,450      $  53,550       $  40,147    $  37,159
                                           ==========     ==========       =========      =========       =========    =========

- ----------
     See footnotes on page 23.

                                     Page 22

                              VORNADO REALTY TRUST

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

11.  SEGMENT INFORMATION- CONTINUED

Notes to segment information:

     (1)  EBITDA represents income before interest, taxes, depreciation and
          amortization, extraordinary or non-recurring items, gains or losses on
          sales of depreciable real estate, the effect of straight-lining of
          property rentals for rent escalations and minority interest.
          Management considers EBITDA a supplemental measure for making
          decisions and assessing the performance of its segments. EBITDA may
          not be comparable to similarly titled measures employed by other
          companies.
     (2)  Other EBITDA is comprised of:

           (amounts in thousands)                                  For the Three Months           For the Six Months
                                                                      Ended June 30,                Ended June 30,
                                                                 -----------------------        -----------------------
                                                                    2002          2001            2002          2001
                                                                 ---------     ---------        ---------     ---------
                                                                                                  
           Hotel Pennsylvania (3).........................       $   2,152     $   6,141        $   2,906     $  11,421
           Newkirk Joint Ventures:
             Equity in income of limited partnerships.....          15,500        12,107           30,529        26,708
             Interest and other income....................           2,200         1,590            4,471         3,202
           Other partially-owned entities (Alexander's and
             other).......................................           6,760         4,834           14,766         9,639
           Investment income and other (7)................           8,163        13,611           17,849        26,193
           Palisades (8)..................................            (260)           --             (260)           --
           Unallocated general and administrative
               expenses...................................          (6,792)       (9,187)         (14,512)      (16,720)
           Amortization of Officer's deferred compensation
               expense....................................          (6,875)           --          (13,750)           --
           Loss on Primestone foreclosure.................         (17,671)           --          (17,671)           --
           Net gain on sale of marketable equity securities         12,346            --           12,346            --
           Costs of acquisitions not consummated..........              --            --               --        (5,000)
           Write-off of investments in technology
               companies..................................              --       (13,561)              --       (18,284)
                                                                 ---------     ---------        ---------     ---------
                    Total.................................       $  15,523     $  15,535        $  36,674     $  37,159
                                                                 =========     =========        =========     =========

     (3)  Average occupancy and REVPAR for the Hotel Pennsylvania was 66% and
          $59.37 for the three months ended June 30, 2002 compared to 77% and
          $88.37 for the prior year's quarter. Average occupancy and REVPAR for
          the Hotel Pennsylvania was 58% and $52.39 for the six months ended
          June 30, 2002 compared to 67% and $76.54 for the prior year's six
          months
     (4)  Interest and debt expense, depreciation and amortization and
          straight-lining of rents included in the reconciliation of net income
          to EBITDA reflects amounts which are netted in income from
          partially-owned entities.
     (5)  Includes the elimination of $6,298 representing the Company's share of
          Alexander's gain on sale of its Fordham Road property on January 12,
          2001.
     (6)  Net of rent not recognized of $3,744 and $5,552 for the three and six
          months ended June 30, 2002 and $2,340 for the three and six months
          ended June 30, 2001.
     (7)  No income was recognized on the Company's loans to Primestone and
          Vornado Operating Company for the three and six months ended June 30,
          2002.
     (8)  The development of the Palisades residential complex was substantially
          complete as of March 1, 2002. Accordingly the Company has placed the
          property into service on March 1, 2002 and discontinued the
          capitalization of interest and other property specific costs. As of
          June 30, 2002, the property is 23.8% occupied (128 of the 538 total
          apartments have been leased).

                                     Page 23

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     Certain statements contained herein constitute forward-looking statements
as such term is defined in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. 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
"believes," "expects," "anticipates," "intends," "plans" or similar expressions
in this quarterly report on Form 10-Q. These forward-looking statements are
subject to numerous assumptions, risks and uncertainties. Many of the factors
that will determine these items are beyond our ability to control or predict.
Factors that may cause actual results to differ materially from those
contemplated by the forward-looking statements include, but are not limited to,
those set forth in our Annual Report on Form 10-K for the year ended December
31, 2001 under "Forward-Looking Statements." For these statements, we claim
protection of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995.

     OVERVIEW

     Management's Discussion and Analysis of Financial Condition and Results of
Operations discusses the Company's consolidated financial statements for the
three and six months ended June 30, 2002 and 2001. The preparation of
financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates. A summary of the Company's significant accounting policies is
included in Note 2 -Summary of Significant Accounting Policies to the
Company's annual report on Form 10-K for the year ended December 31, 2001.

     Operating results for the three and six months ended June 30, 2002, reflect
the Company's January 1, 2002 acquisition of the remaining 66% of Charles E.
Smith Commercial Realty L.P. ("CESCR") and the resulting consolidation of
CESCR's operations. See Supplemental Information beginning on page 42 for
Condensed Pro Forma Operating Results for the three and six months ended June
30, 2001 giving effect to the CESCR acquisition as if it had occurred on January
1, 2001. Further, the Supplemental Information contains data regarding (i)
details of the changes by segment in EBITDA for the three months ended June 30,
2002 compared to the three months ended March 31, 2002, (ii) leasing activity
and (iii) pro forma senior unsecured debt covenant compliance ratios.

                                     Page 24

     RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND
     JUNE 30, 2001

     Below is a summary of Net income and EBITDA (1):

(amounts in thousands)                                                     Three Months Ended June 30, 2002
                                                   ---------------------------------------------------------------------------------
                                                                                                        Temperature
                                                                                          Merchandise    Controlled
                                                      Total       Office      Retail         Mart        Logistics       Other(2)
                                                   ----------  ----------  -----------  -------------  -------------  -------------
                                                                                                         
Rentals.......................................       $309,869    $213,762      $28,922      $  52,868     $       --       $ 14,317
Expense reimbursements........................         36,315      19,949       11,800          3,872             --            694
Other income..................................          7,063       5,090          391          1,220             --            362
                                                   ----------  ----------  -----------  -------------  -------------  -------------
Total revenues................................        353,247     238,801       41,113         57,960             --         15,373
                                                   ----------  ----------  -----------  -------------  -------------  -------------
Operating expenses............................        126,267      80,395       12,987         21,353             --         11,532
Depreciation and amortization.................         49,563      34,121        3,546          7,288             --          4,608
General and administrative....................         23,759       9,400        1,796          4,894             --          7,669
Amortization of officer's deferred
  compensation expense........................          6,875          --           --             --             --          6,875
                                                   ----------  ----------  -----------  -------------  -------------  -------------
Total expenses................................        206,464     123,916       18,329         33,535             --         30,684
                                                   ----------  ----------  -----------  -------------  -------------  -------------
Operating income..............................        146,783     114,885       22,784         24,425             --        (15,311)
Income applicable to Alexander's..............          4,487          --          --              --             --          4,487
Income from partially-owned entities..........          9,826         726         (298)            11          1,087(5)       8,300
Interest and other investment income..........          9,934       2,758           78            143             --          6,955
Interest and debt expense.....................        (60,119)    (34,748)     (14,018)        (6,687)            --         (4,666)
Net gain on disposition of wholly-owned and
 partially-owned assets.......................         (4,981)         --           --            344             --         (5,325)
Minority interest.............................        (37,219)    (28,976)      (2,853)        (6,474)          (668)         1,752
                                                   ----------  ----------  -----------  -------------  -------------  -------------
Income before cumulative effect of change in
 accounting principle and extraordinary item..         68,711      54,645        5,693         11,762            419         (3,808)
Cumulative effect of change in accounting
 principle....................................             --          --           --             --             --             --
Extraordinary item............................             --          --           --             --             --             --
                                                   ----------  ----------  -----------  -------------  -------------  -------------
Net income....................................         68,711      54,645        5,693         11,762            419         (3,808)
Cumulative effect of change in accounting
 principle....................................             --          --           --             --             --             --
Extraordinary item............................             --          --           --             --             --             --
Minority interest.............................         37,219      28,976        2,853          6,474            668         (1,752)
Net gain on disposition of assets.............             --          --           --             --             --             --
Interest and debt expense(4)..................         76,199      35,253       14,653          6,687          6,302         13,304
Depreciation and amortization(4)..............         62,360      34,577        4,097          7,288          8,344          8,054
Straight-lining of rents(4)...................         (9,224)     (7,392)        (426)          (742)            --           (664)
Other.........................................            334      (1,127)         160             --            912            389
                                                   ----------  ----------  -----------  -------------  -------------  -------------
EBITDA(1).....................................       $235,599    $144,932      $27,030      $  31,469     $   16,645       $ 15,523
                                                   ==========  ==========  ===========  =============  =============  =============

                                     Page 25

          (amounts in thousands)                                           Three Months Ended June 30, 2001
                                                   ---------------------------------------------------------------------------------
                                                                                                       Temperature
                                                                                         Merchandise    Controlled
                                                     Total       Office      Retail         Mart         Logistics       Other(2)
                                                   ----------  ----------  -----------  -------------  -------------  -------------
                                                                                                       
Rentals.......................................     $  212,252   $ 114,260     $ 28,764       $ 50,118     $       --     $   19,110
Expense reimbursements........................         31,543      15,920       11,711          3,858             --             54
Other income..................................          2,280         813          542            818             --            107
                                                   ----------  ----------  -----------  -------------  -------------  -------------
Total revenues................................        246,075     130,993       41,017         54,794             --         19,271
                                                   ----------  ----------  -----------  -------------  -------------  -------------
Operating expenses............................         96,831      51,684       13,002         21,662             --         10,483
Depreciation and amortization.................         30,086      17,300        3,447          6,064             --          3,275
General and administrative....................         22,415       2,637          819          4,650             --         14,309
Costs of acquisitions not consummated.........             --          --           --             --             --             --
                                                   ----------  ----------  -----------  -------------  -------------  -------------
Total expenses................................        149,332      71,621       17,268         32,376             --         28,067
                                                   ----------  ----------  -----------  -------------  -------------  -------------
Operating income..............................         96,743      59,372       23,749         22,418             --         (8,796)
Income applicable to Alexander's..............          4,676          --           --             --             --          4,676
Income from partially-owned entities..........         19,228       8,365          495             (4)         3,721(5)       6,651
Interest and other investment income..........         15,874       1,897          416            714             --         12,847
Interest and debt expense.....................        (43,994)    (14,407)     (14,264)        (8,317)            --         (7,006)
Net gain on disposition of wholly-owned and
  partially-owned assets......................          1,934      12,445        3,050             --             --        (13,561)
Minority interest.............................        (28,349)    (14,734)      (4,349)        (4,125)        (2,815)        (2,326)
                                                   ----------  ----------  -----------  -------------  -------------  -------------
Income before cumulative effect of change in
  accounting principle and extraordinary item.         66,112      52,938        9,097         10,686            906         (7,515)
Cumulative effect of change in accounting
  principle...................................             --          --           --             --             --             --
Extraordinary item............................             --          --           --             --             --             --
                                                   ----------  ----------  -----------  -------------  -------------  -------------
Net income....................................         66,112      52,938        9,097         10,686            906         (7,515)
Minority interest.............................         28,349      14,734        4,349          4,125          2,815          2,326
Net gain on disposition.......................        (15,495)    (12,445)      (3,050)            --             --             --
Interest and debt expense(4)..................         67,151      24,859       14,906          8,317          6,773         12,296
Depreciation and amortization(4)..............         45,918      21,992        4,612          6,064          8,403          4,847
Straight-lining of rents(4)...................         (6,339)     (4,050)        (534)        (1,280)            --           (475)
Other.........................................          2,997        (630)        (498)            --             69          4,056
                                                   ----------  ----------  -----------  -------------  -------------  -------------
EBITDA(1).....................................     $  188,693   $  97,398     $ 28,882       $ 27,912     $   18,966     $   15,535
                                                   ==========  ==========  ===========  =============  =============  =============

- ----------
(1)  EBITDA represents income before interest, taxes, depreciation and
     amortization, extraordinary or non-recurring items, gains or losses on
     sales of depreciable real estate, the effect of straight-lining of property
     rentals for rent escalations and minority interest. Management considers
     EBITDA a supplemental measure for making decisions and assessing the
     performance of its segments. EBITDA may not be comparable to similarly
     titled measures employed by other companies.
(2)  Other EBITDA is comprised of:

         (amounts in thousands)                                                   For the Three Months
                                                                                     Ended June 30,
                                                                              -----------------------------
                                                                                  2002            2001
                                                                              -----------    --------------
                                                                                         
         Hotel Pennsylvania (3).........................................       $    2,152      $    6,141
         Newkirk Joint Ventures:
           Equity in income of limited partnerships.....................           15,500          12,107
           Interest and other income....................................            2,200           1,590
         Other partially-owned entities (Alexander's and other).........            6,760           4,834
         Investment income and other (6)................................            8,163          13,611
         Palisades (7)..................................................             (260)             --
         Unallocated general and administrative expenses................           (6,792)         (9,187)
         Amortization of Officer's deferred compensation expense........           (6,875)             --
         Loss on Primestone foreclosure.................................          (17,671)             --
         Net gain on sale of marketable securities......................           12,346              --
         Costs of acquisitions not consummated..........................               --              --
         Write-off of investments in technology companies...............               --         (13,561)
                                                                              -----------    --------------
                  Total.................................................       $   15,523      $   15,535
                                                                              ===========    ==============

(3)  Average occupancy and REVPAR for the Hotel Pennsylvania was 66% and $59.37
     for the three months ended June 30, 2002 compared to 77% and $88.37 for the
     prior year's quarter.
(4)  Interest and debt expense, depreciation and amortization and
     straight-lining of rents included in the reconciliation of net income to
     EBITDA reflects amounts which are netted in income from partially-owned
     entities.
(5)  Net of rent not recognized of $3,744 and $2,340 for the three months ended
     June 30, 2002 and 2001.
(6)  No income was recognized on the Company's loans to Primestone and Vornado
     Operating Company for the three months ended June 30, 2002.
(7)  The development of the Palisades residential complex was substantially
     complete as of March 1, 2002. Accordingly the Company has placed the
     property into service on March 1, 2002 and discontinued the capitalization
     of interest and other property specific costs. As of June 30, 2002, the
     property is 23.8% occupied (128 of the 538 total apartments have been
     leased).

                                     Page 26

     THREE MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001

     Below are the details of the changes by segment in EBITDA.

                                                                                                    Temperature
                                                                                     Merchandise    Controlled
(amounts in thousands)                        Total      Office           Retail        Mart         Logistics           Other
                                            ---------  ----------       ----------  -------------  -------------      ---------
                                                                                                      
Three months ended June 30, 2001.....       $ 188,693  $    97,398       $  28,882     $   27,912         18,966        $15,535
2002 Operations:
     Same store operations(1)........           1,714        4,466             897          1,172         (2,321)(3)     (2,500)
     Acquisitions, dispositions and
        non-recurring income and
        expenses.....................          45,192       43,068          (2,749)         2,385             --          2,488
                                            ---------  -----------      ----------  -------------  -------------      ---------
Three months ended June 30, 2002.....       $ 235,599  $   144,932(2)    $  27,030     $   31,469       $ 16,645        $15,523
                                            =========  ===========      ==========  =============  =============      =========
     % increase (decrease) in same
       store operations..............             0.9%         4.6%(2)         3.1%           4.2%         (12.2%)(3)     (16.1%)

- ----------
(1)  Represents operations which were owned for the same period in each year and
     excludes non-recurring income and expenses.
(2)  EBITDA and the same store percentage increase was $78,073 and 4.8% for the
     New York City office portfolio and $66,859 and 4.0% for the CESCR
     portfolio.
(3)  The Company reflects its 60% share of the Vornado/Crescent Partnerships'
     ("the Landlord") equity in the rental income it receives from AmeriCold
     Logistics, its tenant, which leases the underlying temperature controlled
     warehouses used in its business. Based on the Company's policy of
     recognizing rental income when earned and collection is assured or cash is
     received, the Company did not recognize $3,744 of rent it was due for the
     three months ended June 30, 2002. The tenant has advised the Landlord that
     (i) its revenue for the quarter ended June 30, 2002 from the warehouses it
     leases from the Landlord, was higher than last year by 0.4 %, and (ii) its
     gross profit before rent at these warehouses for the corresponding period
     decreased by $483 (a 1.3% decrease). The increase in revenue is primarily
     attributable to higher occupancy rates, offset by a reduction in customer
     inventory turns. The decrease in gross profit is primarily attributable to
     higher insurance costs, partially offset by lower payroll expenses. In
     addition, the tenant's cash requirements for capital expenditures, debt
     service and pension liability funding were $1,579 higher in the current
     quarter than in the prior year's quarter, which impacted the ability of the
     tenant to pay rent.

                                     Page 27

     REVENUES

     The Company's revenues, which consist of property rentals, tenant expense
reimbursements, hotel revenues, trade shows revenues and other income, were
$353,247,000 for the three months ended June 30, 2002, compared to $246,075,000
in the prior year's quarter, an increase of $107,172,000 of which $99,558,000
resulted from the acquisition of the remaining 66% of CESCR and the resulting
consolidation of their operations. Below are the details of the increase
(decrease) by segment:

     (amounts in thousands)
                                           Date of                                                    Merchandise
                                         Acquisition       Total         Office         Retail            Mart          Other
                                       --------------    -----------   ----------     ----------     -------------   -----------
                                                                                                       
Property rentals:
  Acquisitions:
     CESCR (effect of acquisition of
       66% and consolidation vs.
       equity method accounting
       for 34%)..................        January 2002     $   94,300     $ 94,300      $      --         $      --       $    --
     715 Lexington Avenue........           July 2001            481          481             --                --            --
  Hotel activity.................                             (4,666)(1)       --             --                --        (4,666)(1)
  Trade Shows activity...........                              3,439           --             --             3,439            --
 Leasing activity................                              4,063        4,721            158              (689)         (127)
                                                          ----------     --------     ----------       -----------    ----------
  Total increase (decrease) in
     property rentals............                             97,617       99,502            158             2,750        (4,793)
                                                          ----------     --------     ----------       -----------    ----------
Tenant expense reimbursements:
  Increase (decrease) due to
     acquisitions................                             1,817         1,817             --                --            --
  Other..........................                              2,955        2,212             89                14           640
                                                          ----------     --------     ----------       -----------    ----------
Total increase (decrease) in tenant
     expense reimbursements......                              4,772        4,029             89                14           640
                                                          ----------     --------     ----------       -----------    ----------
Other Income:
  Increase due to acquisitions...                              3,441        3,441             --                --            --
  Other..........................                              1,342          836           (151)              402           255
                                                          ----------     --------     ----------       -----------    ----------
Total increase (decrease) in other
     income......................                              4,783        4,277           (151)              402           255
                                                          ----------     --------     ----------       -----------    ----------
Total increase (decrease) in
     revenues....................                         $  107,172     $107,808      $      96         $   3,166       $(3,898)
                                                          ==========     ========     ==========       ===========    ==========

- ----------
(1)  Average occupancy and REVPAR for the Hotel Pennsylvania was 66% and $59.37
     for the three months ended June 30, 2002 compared to 77 % and $88.37 for
     the prior year's quarter.

     See supplemental information beginning on page 42 for further details.

                                     Page 28

     EXPENSES

     The Company's expenses were $206,464,000 for the three months ended June
30, 2002, compared to $149,332,000 in the prior year's quarter, an increase of
$57,132,000 of which $47,481,000 resulted from the acquisition of the remaining
66% of CESCR and the resulting consolidation of their operations. Below are the
details of the increase (decrease) by segment:

     (amounts in thousands)                                                                      Merchandise
                                                      Total          Office         Retail           Mart          Other
                                                   ------------    -----------    -----------    ------------   ------------
                                                                                                 
 Operating:
   Acquisitions:
   CESCR (effect of acquisition of 66% and
     consolidation vs. equity method
     accounting for 34%).......................    $     25,841    $    25,841    $        --    $        --    $        --
   715 Lexington Avenue........................             251            251             --             --             --
   Hotel activity..............................            (252)            --             --             --           (252)
   Trade Shows activity........................             505             --             --            505             --
   Same store operations.......................           3,091          2,619            (15)          (814)         1,301
                                                   ------------    -----------    -----------    ------------   -----------
                                                         29,436         28,711            (15)          (309)         1,049
                                                   ------------    -----------    -----------    ------------   -----------
   Depreciation and amortization:
     Acquisitions .............................          15,635         15,635             --             --             --
     Same store operations ....................           3,842          1,186             99          1,224          1,333
                                                   ------------    -----------    -----------    ------------   -----------
                                                         19,477         16,821             99          1,224          1,333
                                                   ------------    -----------    -----------    ------------   -----------
   General and administrative:
     Appreciation in value of  Vornado shares
       and other securities held in officers'
       deferred compensation trust in the three
       months ended June 30, 2001 .............          (4,021)            --             --             --         (4,021)
     Acquisitions .............................           6,005          6,005             --             --             --
     Other expenses ...........................            (640)           758            977            244         (2,619)(1)
                                                   ------------    -----------    -----------    ------------   -----------
     Total increase (decrease) in general and
       administrative .........................           1,344          6,763            977            244         (6,640)
                                                   ------------    -----------    -----------    ------------   -----------
   Amortization of officer's deferred
     compensation expense .....................           6,875             --             --             --          6,875
                                                   ------------    -----------    -----------    ------------   -----------
                                                   $     57,132    $    52,295    $     1,061    $     1,159    $     2,617
                                                   ============    ===========    ===========    ============   ===========

     ----------
     (1) Primarily results from lower professional fees.

     INCOME APPLICABLE TO ALEXANDER'S

     Income applicable to Alexander's (loan interest income, management,
leasing, development and commitment fees, and equity in income) was $4,487,000
in the three months ended June 30, 2002, compared to $4,676,000 in the prior
year's quarter, a decrease of $189,000. This decrease resulted from Alexander's
recognizing stock appreciation rights compensation expense of $4,236,000 in the
current quarter, of which the Company's share is $1,402,000; partially offset by
higher development fees.

                                       29

     INCOME FROM PARTIALLY-OWNED ENTITIES

     In accordance with accounting principles generally accepted in the United
States, the Company reflects the income it receives from (i) entities it owns
less than 50% of and (ii) entities it owns more than 50% of, but which have a
partner who exercises significant control, on the equity method of accounting
resulting in such income appearing on one line in the Company's consolidated
statements of income. Below is the detail of income from partially-owned
entities by investment as well as the increase (decrease) in income of
partially-owned entities for the three months ended June 30, 2002 as compared to
the prior year's quarter:

  (amounts in thousands)                                                                  Starwood
                                                   Temperatur    Newkirk          Las      Ceruzzi        Partially-
                                                   Controlled     Joint         Catalinas   Joint       Owned Office
                         Total         CESCR       Logistics     Venture          Mall     Venture        Buildings       Other
                       ----------   -----------    ----------   ----------    ----------   ----------    ------------    --------
                                                                                                 
JUNE 30, 2002:
  Revenues ........... $  115,347                  $   29,143   $   72,707    $    3,937   $      117    $      9,443
  Expenses:
    Operating,
      general and
      administrative .     (8,597)                     (2,302)        (912)       (1,030)        (363)         (3,990)
    Depreciation .....    (29,447)                    (14,870)     (12,516)         (501)        (261)         (1,299)
    Interest
      expense ........    (44,583)                    (10,941)     (30,629)       (1,476)          --          (1,537)
    Other, net .......     (2,671)                     (1,987)        (336)           --         (400)             52
                       ----------                  ----------   ----------    ----------   ----------    ------------
  Net income/(loss) .. $   30,049                  $     (957)  $   28,314    $      930   $     (907)   $      2,669
                       ==========                  ==========   ==========    ==========   ==========    ============

  Vornado's
     interest ........                                     60%          21%           50%          80%             25%
  Equity in net
     income .......... $    5,839                  $     (574)  $    5,974    $      428   $     (726)   $        673    $     64
  Interest and
     other income ....      2,476                         150        2,326            --           --              --          --
  Fee income .........      1,511                       1,511           --            --           --              --          --
                       ----------                  ----------   ----------    ----------   ----------    ------------    ---------
  Income from
     partially-owned
     entities ........ $    9,826   $        --(1) $    1,087   $    8,300    $      428   $     (726)   $        673    $     64
                       ==========   ===========    ==========   ==========    ==========   ==========    ============    =========

JUNE 30, 2001:
  Revenues             $  214,090   $    94,755    $   30,465   $   73,114    $    4,115   $      414    $     11,227
  Expenses:
    Operating,
      general and
      administrative .    (44,964)      (33,285)       (1,839)      (3,505)       (1,119)        (169)         (5,047)
    Depreciation .....    (43,385)      (13,168)      (14,471)     (14,264)         (491)        (289)           (702)
    Interest
      expense ........    (77,098)      (28,417)      (11,519)     (33,574)       (1,491)          --          (2,097)
    Other, net .......      1,157           188           471         (158)                        (1)            657
                       ----------   -----------    ----------   ----------    ----------   ----------    ------------
  Net income/(loss) .. $   49,800   $    20,073    $    3,107   $   21,613    $    1,014   $      (45)   $      4,038
                       ==========   ===========    ==========   ==========    ==========   ==========    ============

  Vornado's
     interest ........                       34%           60%          30%           50%          80%             38%
  Equity in net
     income ..........     15,895   $     6,828    $    1,863   $    6,484    $      531   $      (36)   $      1,537    $ (1,312)
  Interest and
     other income      $    1,834            --           359        1,475            --           --              --          --
  Fee income .........      1,499            --         1,499           --            --           --              --          --
                       ----------   -----------    ----------   ----------    ----------   ----------    ------------    ---------
  Income from
     partially-owned
     entities ........ $   19,228   $     6,828    $    3,721  $    7,959     $      531   $      (36)   $      1,537    $ (1,312)
                       ==========   ===========    ==========   ==========    ==========   ==========    ============    =========

(DECREASE)
   INCREASE IN
INCOME FROM
   PARTIALLY-OWNED
   ENTITIES            $   (9,402)  $    (6,828)(1)$   (2,634)  $      341    $     (103)  $     (690)   $       (864)(2) $ 1,376(3)
                       ==========   ===========    ==========   ==========    ==========   ==========    ============    =========

- ----------
(1)  On January 1, 2002, the Company acquired the remaining 66% of CESCR it did
     not previously own. Accordingly, CESCR is consolidated as of January 1,
     2002.
(2)  The quarter ended June 30, 2002 excludes 570 Lexington Avenue which was
     sold in May 2001.
(3)  The prior year's quarter includes $720 for the Company's share of equity in
     loss of its Russian Tea Room ("RTR") investment. In the third quarter of
     2001, the Company wrote-off its entire net investment in RTR based on the
     operating losses and an assessment of the value of the real estate.

                                     Page 30

     INTEREST AND OTHER INVESTMENT INCOME

     Interest and other investment income (interest income on mortgage loans
receivable, other interest income, and dividend income) was $9,934,000 for
the three months ended June 30, 2002, compared to $15,874,000 in the prior
year's quarter, a decrease of $5,940,000. Of this decrease (i) $956,000
resulted from the lower yield on the investment of the proceeds received from
the repayment of its loan to NorthStar Partnership, L.P. in May 2002, (ii)
$3,751,000 resulted from not recognizing income on its loans to Primestone
and Vornado Operating Company (See "Liquidity and Capital Resources --
Vornado Operating Company") for the three months ended June 30, 2002 and
(iii) $1,233,000 resulted from lower yields on other investments.

     INTEREST AND DEBT EXPENSE

     Interest and debt expense was $60,119,000 for the three months ended June
30, 2002, compared to $43,994,000 in the prior year's quarter, an increase of
$16,125,000. This increase was primarily comprised of (i) $24,375,000 from the
acquisition of the remaining 66% of CESCR and the resulting consolidation of
their operations, partially offset by (ii) a $8,250,000 savings from a 227 basis
point reduction in weighted average interest rates of the Company's variable
rate debt and (iii) lower average outstanding debt balances.

     NET GAIN (LOSS) ON DISPOSITION OF WHOLLY-OWNED AND PARTIALLY-OWNED ASSETS

     The following table sets forth the details of net (loss) gain on
disposition of wholly-owned and partially-owned assets for the three months
ended June 30, 2002 and 2001:

          (amounts in thousands)                                       For the Three Months Ended
                                                                                June 30,
                                                                       ----------------------------
                                                                         2002              2001
                                                                       -----------      -----------
                                                                                  
          Wholly-owned Assets:
            Loss on Primestone foreclosure......................       $   (17,671)     $       --
            Gain on sale of Kinzie Park condominiums units......               344              --
            Net gain on sale of marketable securities...........            12,346           3,050
            Write-off of investments in technology companies....                --         (13,561)
          Partially-owned Assets:
            Net gain on sale of 50% interest in 570 Lexington
              Avenue ...........................................                --          12,445
                                                                       -----------      ----------
                                                                       $    (4,981)     $    1,934
                                                                       ===========      ==========

     INVESTMENT IN PRIMESTONE

     On September 28, 2000, the Company made a $62,000,000 loan to Primestone
Investment Partners, L.P. ("Primestone"). The Company received a 1% upfront fee
and was entitled to receive certain other fees aggregating approximately 3% upon
repayment of the loan. The loan bore interest at 16% per annum. Primestone
defaulted on the repayment of this loan on October 25, 2001. The loan was
subordinate to $37,957,000 of other debt of the borrower. On October 31, 2001,
the Company purchased the other debt for its face amount. The loans were secured
by 7,944,893 partnership units in Prime Group Realty, L.P., the operating
partnership of Prime Group Realty Trust (NYSE:PGE) and the partnership units are
exchangeable for the same number of common shares of PGE. The loans are also
guaranteed by affiliates of Primestone.

                                     Page 31

     On November 19, 2001, the Company sold, pursuant to a participation
agreement with a subsidiary of Cadim inc., a Canadian pension fund, a 50%
participation in both loans at par for approximately $50,000,000 reducing the
Company's net investment in the loans at December 31, 2001 to $56,768,000
including unpaid interest and fees of $6,790,000.

     On April 30, 2002, the Company and Cadim acquired the 7,944,893 partnership
units at a foreclosure auction. The price paid for the units by application
of a portion of Primestone's indebtedness to the Company and Cadim was $8.35
per unit, the April 30, 2002 PGE closing price on The New York Stock
Exchange. On June 28, 2002, pursuant to the terms of the participation
agreement, the Company transferred 3,972,447 of the partnership units to
Cadim.

     In the second quarter, in accordance with foreclosure accounting, the
Company recorded a loss on the Primestone foreclosure of $17,671,000
calculated based on (i) the acquisition price of the units and (ii) its
valuation of the amounts realizable under the guarantees by affiliates of
Primestone, as compared with the net carrying amount of the investment at
April 30, 2002. At June 30, 2002, the Company's carrying amount of the
investment was $40,270,000, of which $33,170,000 represents the carrying
amount of the 3,972,447 partnership units owned by the Company ($8.35 per
unit) and $7,100,000 represents the amount realizable under the guarantees
(see Note 5. Investments in and Advances to Partially-Owned Entities).

     At July 30, 2002, PGE's closing stock price on the New York Stock Exchange
was $5.43 per share. The ultimate realization of the Company's investment
will depend upon the future performance of the Chicago real estate market and
the performance of PGE, as well as the ultimate realizable value of the net
assets supporting the guarantees and the Company's ability to collect under
the guarantees. The Company will continue to monitor this investment to
determine whether additional write-downs are required based on (i) declines
in value of the PGE stock (for which the partnership units are exchangeable)
which are "other than temporary" as used in accounting literature and (ii)
the realizable value of the guarantees.

                                    Page 32

SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001

Below is a summary of Net income and EBITDA (1):

(amounts in thousands)                                           Six Months Ended June 30, 2002
                                        -----------------------------------------------------------------------------
                                                                                            Temperature
                                                                              Merchandise   Controlled
                                          Total        Office       Retail       Mart       Logistics        Other(2)
                                        ---------    ---------    ---------    ---------    ---------       ---------
                                                                                          
Rentals .............................   $ 611,629    $ 427,574    $  57,992    $  99,878    $      --       $  26,185
Expense reimbursements ..............      74,119       41,356       23,817        7,215           --           1,731
Other income ........................      13,823       10,073          605        2,637           --             508
                                        ---------    ---------    ---------    ---------    ---------       ---------
Total revenues ......................     699,571      479,003       82,414      109,730           --          28,424
                                        ---------    ---------    ---------    ---------    ---------       ---------
Operating expenses ..................     253,713      162,628       27,668       42,580           --          20,837
Depreciation and amortization .......      97,151       68,251        6,926       13,768           --           8,206
General and administrative ..........      47,226       18,510        2,366        9,705           --          16,645
Amortization of officer's deferred
   compensation expense .............      13,750           --           --           --           --          13,750
                                        ---------    ---------    ---------    ---------    ---------       ---------
Total expenses ......................     411,840      249,389       36,960       66,053           --          59,438
                                        ---------    ---------    ---------    ---------    ---------       ---------
Operating income ....................     287,731      229,614       45,454       43,677           --         (31,014)
Income applicable to Alexander's ....      10,055           --           --           --           --          10,055
Income from partially-owned entities       23,612        1,276          (69)          13        6,392(6)       16,000
Interest and other investment income       19,577        3,869          157          278           --          15,273
Interest and debt expense ...........    (118,137)     (69,510)     (27,711)     (13,870)          --          (7,046)
Net gain on disposition of
   wholly-owned and partially-owned
   assets ...........................      (3,450)          --           --        1,875           --          (5,325)
Minority interest ...................     (71,145)     (61,681)      (6,473)     (12,379)       3,304           6,084
                                        ---------    ---------    ---------    ---------    ---------       ---------
Income before cumulative effect of
   change in accounting principle
   and extraordinary item ...........     148,243      103,568       11,358       19,594        9,696           4,027
Cumulative effect of change in
   accounting principle .............     (30,129)          --           --           --      (15,490)        (14,639)
Extraordinary item ..................          --           --           --           --           --              --
                                        ---------    ---------    ---------    ---------    ---------       ---------
Net income ..........................     118,114      103,568       11,358       19,594       (5,794)        (10,612)
Cumulative effect of change in
   accounting principle .............      30,129           --           --           --       15,490          14,639
Extraordinary item ..................          --           --           --           --           --              --
Minority interest ...................      71,145       61,681        6,473       12,379       (3,304)         (6,084)
Net gain on disposition of assets ...          --           --           --           --           --              --
Interest and debt expense(4) ........     150,492       70,519       28,981       13,870       12,861          24,261
Depreciation and amortization(4) ....     122,935       69,171        7,747       13,768       17,253          14,996
Straight-lining of rents(4) .........     (18,263)     (14,702)        (855)      (1,791)          --            (915)
Other ...............................          75       (2,427)         860         (123)       1,376             389
                                        ---------    ---------    ---------    ---------    ---------       ---------
EBITDA(1) ...........................   $ 474,627    $ 287,810    $  54,564    $  57,697    $  37,882       $  36,674
                                        =========    =========    =========    =========    =========       =========

                                    Page 33

(amounts in thousands)                                         Six Months Ended June 30, 2001
                                       -----------------------------------------------------------------------------
                                                                                           Temperature
                                                                             Merchandise   Controlled
                                         Total        Office      Retail        Mart        Logistics       Other(2)
                                       ---------    ---------    ---------   -----------   -----------     ---------
                                                                                         
Rentals ......................         $ 416,970    $ 228,120    $  56,901    $  97,123    $      --       $  34,826
Expense reimbursements .......            66,635       34,961       23,506        7,831           --             337
Other income .................             5,080        1,385          905        1,537           --           1,253
                                       ---------    ---------    ---------    ---------    ---------       ---------
Total revenues ...............           488,685      264,466       81,312      106,491           --          36,416
                                       ---------    ---------    ---------    ---------    ---------       ---------
Operating expenses ...........           197,214      107,445       27,854       42,794           --          19,121
Depreciation and amortization             61,951       35,944        7,007       12,506           --           6,494
General and administrative ...            36,663        6,007        1,402        9,245           --          20,009
Costs of acquisitions not
   consummated ...............             5,000           --           --           --           --           5,000
                                       ---------    ---------    ---------    ---------    ---------       ---------
Total expenses ...............           300,828      149,396       36,263       64,545           --          50,624
                                       ---------    ---------    ---------    ---------    ---------       ---------
Operating income .............           187,857      115,070       45,049       41,946           --         (14,208)
Income applicable to
   Alexander's ...............            16,980           --           --           --           --          16,980
Income from partially-owned
   entities ..................            43,218       17,060        2,392          109        9,669(6)       13,988
Interest and other investment
   income ....................            29,347        4,195          416        1,377           --          23,359
Interest and debt expense ....           (93,389)     (31,014)     (28,413)     (17,986)          --         (15,976)
Net gain on disposition of
   wholly-owned and
   partially-owned assets ....            (2,789)      12,445        3,050           --           --         (18,284)
Minority interest ............           (55,663)     (28,322)      (8,476)      (7,769)      (5,825)         (5,271)
                                       ---------    ---------    ---------    ---------    ---------       ---------
Income before cumulative
   effect of change in
   accounting principle and
   extraordinary item ........           125,561       89,434       14,018       17,677        3,844             588
Cumulative effect of change
   in accounting principle ...            (4,110)          --           --           --           --          (4,110)
Extraordinary item ...........             1,170           --           --           --           --           1,170
                                       ---------    ---------    ---------    ---------    ---------       ---------
Net income ...................           122,621       89,434       14,018       17,677        3,844          (2,352)
Cumulative effect of change in
   accounting principle ......             4,110           --           --           --           --           4,110
Extraordinary item ...........            (1,170)          --           --           --           --          (1,170)
Minority interest ............            55,663       28,322        8,476        7,769        5,825           5,271
Net gain on disposition of
   wholly-owned and
   partially-owned assets ....           (15,495)     (12,445)      (3,050)          --           --              --
Interest and debt expense(4) .           140,405       52,306       29,697       17,986       13,486          26,930
Depreciation and
   amortization(4) ...........            93,836       45,636        9,339       12,506       16,811           9,544
Straight-lining of rents(4) ..           (14,076)     (10,005)        (695)      (2,388)          --            (988)
Other ........................            (7,560)      (2,220)      (1,335)          --          181          (4,186)(5)
                                       ---------    ---------    ---------    ---------    ---------       ---------
EBITDA(1) ....................         $ 378,334    $ 191,028    $  56,450    $  53,550    $  40,147       $  37,159
                                       =========    =========    =========    =========    =========       =========

- ----------
(1)  EBITDA represents income before interest, taxes, depreciation and
     amortization, extraordinary or non-recurring items, gains or losses on
     sales of depreciable real estate, the effect of straight-lining of property
     rentals for rent escalations and minority interest. Management considers
     EBITDA a supplemental measure for making decisions and assessing the
     performance of its segments. EBITDA may not be comparable to similarly
     titled measures employed by other companies.
(2)  Other EBITDA is comprised of:

         (amounts in thousands)                                                    For the Six Months
                                                                                     Ended June 30,
                                                                              -----------------------------
                                                                                   2002           2001
                                                                              -------------   -------------
                                                                                         
         Hotel Pennsylvania (3).........................................       $    2,906      $   11,421
         Newkirk Joint Ventures:
           Equity in income of limited partnerships.....................           30,529          26,708
           Interest and other income....................................            4,471           3,202
         Other partially-owned entities (Alexander's and other).........           14,766           9,639
         Investment income and other (7)................................           17,849          26,193
         Palisades......................................................             (260)             --
         Unallocated general and administrative expenses................          (14,512)        (16,720)
         Amortization of Officer's deferred compensation expense........          (13,750)             --
         Loss on Primestone foreclosure.................................          (17,671)             --
         Net gain on sale of marketable securities......................           12,346              --
         Costs of acquisitions not consummated..........................               --          (5,000)
         Write-off of investments in technology companies...............               --         (18,284)
                                                                                ---------      ----------
                  Total.................................................       $   36,674      $   37,159
                                                                               ==========      ==========

(3)  Average occupancy and REVPAR for the Hotel Pennsylvania was 58% and $52.39
     for the six months ended June 30, 2002 compared to 67% and $76.54 for the
     prior year's six months.
(4)  Interest and debt expense, depreciation and amortization and
     straight-lining of rents included in the reconciliation of net income to
     EBITDA reflects amounts which are netted in income from partially-owned
     entities.
(5)  Includes the elimination of $6,298 representing the Company's share of
     Alexander's gain on sale of its Fordham Road property on January 12, 2001.
(6)  Net of rent not recognized of $5,552 and $2,340 for the six months ended
     June 30, 2002 and 2001.
(7)  No income was recognized on the Company's loans to Primestone and Vornado
     Operating Company for the six months ended June 30, 2002.

                                    Page 34

RESULTS OF OPERATIONS

    SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001

    Below are the details of the changes by segment in EBITDA.

                                                                                                        Temperature
                                                                                         Merchandise     Controlled
(amounts in thousands)                       Total          Office          Retail           Mart         Logistics        Other
                                           ---------       ---------       --------      -----------    ------------     --------
                                                                                                       
Six months ended June 30, 2001.......      $ 378,334       $ 191,028       $ 56,450      $    53,550    $     40,147     $ 37,159

2002 Operations:
    Same store operations(1).........         10,418          11,245          1,764            2,272          (2,265)(3)   (2,598)
    Acquisitions, dispositions and
      non-recurring income and expenses       85,875          85,537         (3,650)           1,875              --        2,113
                                           ---------       ---------       --------      -----------    ------------     --------
Six months ended June 30, 2002.......      $ 474,627       $ 287,810(2)    $ 54,564      $    57,697    $     37,882     $ 36,674
                                           =========       =========       ========      ===========    ============     ========
    % increase (decrease) in same
      store operations..............             2.8%            5.9%(2)        3.1%             4.2%           (5.6%)(3)    (7.0%)

- ----------
   (1) Represents operations which were owned for the same period in each year
      and excludes non-recurring income and expenses.
   (2) EBITDA and the same store percentage increase was $155,171 and 6.8% for
      the New York City office portfolio and $132,639 and 2.7% for the CESCR
      portfolio.
   (3) The Company reflects its 60% share of the Vornado/Crescent Partnerships'
      ("the Landlord") equity in the rental income it receives from AmeriCold
      Logistics, its tenant, which leases the underlying temperature controlled
      warehouses used in its business. Based on the Company's policy of
      recognizing rental income when earned and collection is assured or cash is
      received, the Company did not recognize $5,552 of rent it was due for the
      six months ended June 30, 2002. The tenant has advised the Landlord that
      (i) its revenue for the six months ended June 30, 2002 from the warehouses
      it leases from the Landlord, is lower than last year by 0.9%, and (ii) its
      gross profit before rent at these warehouses for the corresponding period
      decreased by $116 (a 0.1% decrease). The decrease in revenue is primarily
      attributable to a reduction in customer inventory turns. The decrease in
      gross profit is primarily attributable to higher insurance costs partially
      offset by lower payroll expenses. In addition, the tenant's cash
      requirements for capital expenditures, debt service and pension liability
      funding were $1,853 higher in the current six month period than in the
      prior year's six months, which impacted the ability of the tenant to pay
      rent.

                                    Page 35

    REVENUES

    The Company's revenues, which consist of property rentals, tenant expense
reimbursements, hotel revenues, trade shows revenues and other income were
$699,571,000 for the six months ended June 30, 2002, compared to $488,685,000 in
the six months ended June 30, 2001, an increase of $210,886,000 of which
$199,419,000 resulted from the acquisition of the remaining 66% of CESCR and the
resulting consolidation of their operations. Below are the details of the
increase (decrease) by segment:

   (amounts in thousands)
                                           Date of                                                    Merchandise
Property rentals:                        Acquisition          Total        Office        Retail           Mart          Other
                                       ----------------    -----------    ---------   ------------    -----------    -----------
                                                                                                   
  Acquisitions:
     CESCR (effect of acquisition
      of 66% and consolidation vs.
      equity method accounting
      for 34%)...................      January 2002        $   187,776    $ 187,776   $         --    $        --    $        --
     715 Lexington Avenue........      July 2001                   939          939             --             --             --
  Hotel activity.................                               (7,939)(1)       --             --             --         (7,939)(1)
  Trade Shows activity...........                                1,117           --             --          1,117             --
  Leasing activity...............                               12,766       10,739          1,091          1,638           (702)
                                                           -----------    ---------   ------------    -----------    -----------
  Total increase (decrease) in
    property rentals.............                              194,659      199,454          1,091          2,755         (8,641)
                                                           -----------    ---------   ------------    -----------    -----------

Tenant expense reimbursements:
  Increase (decrease) due to
    acquisitions/dispositions....                                4,200        4,200             --             --             --
  Other..........................                                3,284        2,195            311           (616)         1,394
                                                           -----------    ---------   ------------    -----------    -----------
Total increase (decrease) in tenant
    expense reimbursements......                                 7,484        6,395            311           (616)         1,394
                                                           -----------    ---------   ------------    -----------    -----------
Other Income:
  Increase due to
    acquisitions/dispositions....                                7,443        7,443             --             --
  Other..........................                                1,300        1,245           (300)         1,100           (745)
                                                           -----------    ---------   ------------    -----------    -----------
Total increase (decrease) in other
    income.......................                                8,743        8,688           (300)         1,100           (745)
                                                           -----------    ---------   ------------    -----------    -----------
Total increase (decrease) in
     revenues.....................                         $   210,886    $ 214,537   $      1,102    $     3,239    $    (7,992)
                                                           ===========    =========   ============    ===========    ===========

- ----------
 (1) Average occupancy and REVPAR for the Hotel Pennsylvania was 58% and $52.39
     for the six months ended June 30, 2002 compared to 67% and $76.54 for the
     prior year's six months.

     See supplemental information beginning on page 42 for further details.

                                    Page 36

    EXPENSES

    The Company's expenses were $411,840,000 for the six months ended June 30,
2002, compared to $300,828,000 in the six months ended June 30, 2001, an
increase of $111,012,000 of which $95,526,000 resulted from the acquisition of
the remaining 66% of CESCR and the resulting consolidation of their operations.
Below are the details of the increase (decrease) by segment:

     (amounts in thousands)

                                                                                      Merchandise
                                              Total          Office         Retail        Mart           Other
                                          -------------    -----------    ---------   ------------    -----------
                                                                                       
   Operating:
     Acquisitions:
     CESCR (effect of
       acquisition of 66% and
       consolidation vs. equity
       method accounting
       for 34%)......................     $      52,815    $    52,815    $      --   $         --    $        --
     715 Lexington Avenue............               509            509           --             --             --
     Hotel activity..................              (486)            --           --             --           (486)
     Trade Shows activity............               172             --           --            172             --
     Same store operations...........             3,489          1,859         (186)          (386)         2,202
                                          -------------    -----------    ---------   ------------    -----------
                                                 56,499         55,183         (186)          (214)         1,716
                                          -------------    -----------    ---------   ------------    -----------
   Depreciation and amortization:
     Acquisitions....................            31,215         31,215           --             --             --
     Same store operations...........             3,985          1,092          (81)         1,262          1,712
                                          -------------    -----------    ---------   ------------    -----------
                                                 35,200         32,307          (81)         1,262          1,712
                                          -------------    -----------    ---------   ------------    -----------
   General and administrative:
     Appreciation in value of
      Vornado shares and other
      securities held in officers'
      deferred compensation trust
      in the six months ended
      June 30, 2001..................              (739)            --           --             --           (739)
      Acquisitions...................            11,496         11,496           --             --             --
     Other expenses..................              (194)         1,007          964            460         (2,625)
                                          -------------    -----------    ---------   ------------    -----------
     Total increase (decrease) in
      general and administrative.....            10,563         12,503          964            460         (3,364)
                                          -------------    -----------    ---------   ------------    -----------
   Amortization of officer's
    deferred compensation expense....            13,750             --           --             --         13,750
                                          -------------    -----------    ---------   ------------    -----------
   Costs of acquisitions not
    consummated......................            (5,000)            --           --             --         (5,000)
                                          -------------    -----------    ---------   ------------    -----------
                                          $     111,012    $    99,993    $     697   $      1,508    $     8,814
                                          =============    ===========    =========   ============    ===========

    INCOME APPLICABLE TO ALEXANDER'S

    Income applicable to Alexander's (loan interest income, management, leasing,
development and commitment fees, and equity in income) was $10,055,000 in the
six months ended June 30, 2002, compared to $16,980,000 in the six months ended
June 30, 2001, a decrease of $6,925,000. This decrease resulted primarily from
(i) the Company's $6,298,000 share of Alexander's gain on the sale of its
Fordham Road property in the prior year's six months and (ii) the Company's
$1,402,000 share of Alexander's stock appreciation rights compensation expense
in the current quarter.

                                    Page 37

     INCOME FROM PARTIALLY-OWNED ENTITIES

     In accordance with accounting principles generally accepted in the United
States, the Company reflects the income it receives from (i) entities it owns
less than 50% of and (ii) entities it owns more than 50% of, but which have a
partner who exercises significant control, on the equity method of accounting
resulting in such income appearing on one line in the Company's consolidated
statements of income. Below is the detail of income from partially-owned
entities by investment as well as the increase (decrease) in income of
partially-owned entities for the six months ended June 30, 2002 as compared to
the prior year:

(amounts in thousands)
                                                          Temperature    Newkirk       Las
                                                          Controlled      Joint     Catalinas
                                Total        CESCR        Logistics      Venture      Mall
                               ----------   ---------     -----------   ---------   ---------
                                                                     
JUNE 30, 2002:

 Revenues..................... $  234,857                 $   62,709    $ 146,050   $   7,329
 Expenses:
   Operating, general and
     administrative...........    (19,616)                    (4,217)      (4,578)     (1,939)
   Depreciation...............    (60,373)                   (29,686)     (26,498)     (1,032)
   Interest expense...........    (88,050)                   (21,873)     (60,594)     (2,519)

   Other, net.................     (1,556)                    (1,805)        (336)         --
                               ----------                 ----------    ---------   ---------

 Net income/(loss)............ $   65,262                 $    5,128(2) $  54,044   $   1,839
                               ==========                 ==========    =========   =========

 Vornado's interest...........                                    60%          21%         50%

 Equity in net income......... $   15,700                 $    3,077    $  11,403   $     937
 Interest and other income....      4,903                        306        4,597          --
 Fee income...................      3,009                      3,009           --          --
                               ----------                 ----------    ---------   ---------
 Income from partially-owned
 entities....................  $   23,612   $      --(1)  $    6,392    $  16,000   $     937
                               ==========   =========     ==========    =========   =========

JUNE 30, 2001:
 Revenues..................... $  430,355   $ 188,692     $   64,961    $ 143,808   $   7,206
 Expenses:
   Operating, general and
     administrative..........     (88,137)    (63,949)        (4,071)      (6,875)     (1,823)
   Depreciation...............    (86,603)    (25,292)       (29,113)     (27,979)     (1,007)
   Interest expense...........   (154,045)    (57,811)       (22,935)     (65,857)     (2,546)
   Other, net.................      3,515         111          1,110         (677)         --
                               ----------   ---------     ----------    ---------   ---------
 Net income/(loss)............ $  105,085   $  41,751     $    9,952    $  42,420   $   1,830
                               ==========   =========     ==========    =========   =========

 Vornado's interest...........                     34%            60%          30%         50%
 Equity in net income......... $   36,318   $  14,195     $    5,971    $  12,726   $     939
 Interest and other income....      3,917          --            715        3,202          --
 Fee income...................      2,983          --          2,983           --          --
                               ----------   ---------     ----------    ---------   ---------
 Income from partially-owned
   entities................... $   43,218   $  14,195     $    9,669    $  15,928   $     939
                               ==========   =========     ==========    =========   =========
(DECREASE) INCREASE IN
   INCOME FROM PARTIALLY-OWNED
     ENTITIES................. $  (19,606)    (14,195)(1) $   (3,277)   $      72   $      (2)
                               ==========   =========     ==========    =========   =========

(amounts in thousands)         Starwood     Partially-
                                Ceruzzi       Owned
                                 Joint       Office
                                Venture     Buildings    Other
                               --------     ---------    -------
                                                
JUNE 30, 2002:

 Revenues..................... $    117     $ 18,652
 Expenses:
   Operating, general and
     administrative...........     (913)      (7,969)
   Depreciation...............     (523)      (2,634)
   Interest expense...........       --       (3,064)

   Other, net.................       62          523
                               --------     --------

 Net income/(loss)............ $ (1,257)    $  5,508
                               ========     ========

 Vornado's interest...........       80%          22%

 Equity in net income......... $ (1,006)    $  1,237     $    52
 Interest and other income....       --           --          --
 Fee income...................       --           --          --
                               --------     --------     -------
 Income from partially-owned
 entities....................    (1,006)    $  1,237     $    52
                               ========     ========     =======

JUNE 30, 2001:
 Revenues..................... $    800     $ 24,888
 Expenses:
   Operating, general and
     administrative..........      (406)     (11,013)
   Depreciation...............     (321)      (2,891)
   Interest expense...........       --       (4,896)
   Other, net.................    1,743        1,228
                               --------     --------
 Net income/(loss)............ $  1,816     $  7,316
                               ========     ========

 Vornado's interest...........       80%          39%
 Equity in net income......... $  1,453     $  2,865     $(1,831)
 Interest and other income....       --           --          --
 Fee income...................       --           --          --
                               --------     --------     -------
 Income from partially-owned
   entities................... $  1,453     $  2,865     $(1,831)(5)
                               ========     ========     =======
(DECREASE) INCREASE IN
   INCOME FROM PARTIALLY-OWNED
     ENTITIES.................   (2,459)(3) $ (1,628)(4) $ 1,883(5)
                                =======     ========     =======

- ----------
(1) On January 1, 2002, the Company acquired the remaining 66% of CESCR it did
    not previously own. Accordingly, CESCR is consolidated as of January 1,
    2002.
(2) Excludes the write-off of goodwill of $25,817 upon the adoption of SFAS 142
    - "Goodwill and Other Intangible Assets." The Company's share of this
    write-off of $15,490 is reflected as a cumulative effect of change in
    accounting principle on the Company's Consolidated Statements of Income.
(3) The prior year's six months includes $1,300 for the Company's share of a
    gain on sale of a property.
(4) The six months ended June 30, 2002 excludes 570 Lexington Avenue which was
    sold in May 2001.
(5) The prior year's six months includes $1,352 for the Company's share of
    equity in loss of its Russian Tea Room ("RTR") investment. In the third
    quarter of 2001, the Company wrote-off its entire net investment in RTR
    based on the operating losses and an assessment of the value of the real
    estate.

                                     Page 38

    INTEREST AND OTHER INVESTMENT INCOME

    Interest and other investment income (interest income on mortgage loans
receivable, other interest income, and dividend income) was $19,577,000 for
the six months ended June 30, 2002, compared to $29,347,000 in the six months
ended June 30, 2001, a decrease of $9,770,000. Of this decrease (i)
$1,244,000 resulted from the lower yield on the investment of the proceeds
received from the repayment of it's loan to NorthStar Partnership, L.P. in
May 2002, (ii) $7,599,000 resulted primarily from the Company not recognizing
income on its loans to Primestone and Vornado Operating Company (See
"Liquidity and Capital Resources -- Vornado Operating Company") for the six
months ended June 30, 2002 and (iii) $927,000 resulted from lower yields on
other investments.

    INTEREST AND DEBT EXPENSE

    Interest and debt expense was $118,137,000 for the six months ended June 30,
2002, compared to $93,389,000 in the six months ended June 30, 2001, an increase
of $24,748,000. This increase was primarily comprised of (i) $49,404,000 from
the acquisition of the remaining 66% of CESCR and the resulting consolidation of
their operations, partially offset by (ii) a $24,656,000 savings from a 282
basis point reduction in weighted average interest rates of the Company's
variable rate debt and (iii) lower average outstanding debt balances.

    NET GAIN (LOSS) ON DISPOSITION OF WHOLLY-OWNED AND PARTIALLY-OWNED ASSETS

        The following table sets forth the details of net (loss) gain on
disposition of wholly-owned and partially-owned assets for the six months ended
June 30, 2002 and 2001:

     (amounts in thousands)                                     For the Six Months Ended
                                                                         June 30,
                                                                --------------------------
                                                                    2002           2001
                                                                ------------    ----------
                                                                          
     Wholly-owned Assets:
      Loss on Primestone foreclosure.....................       $   (17,671)    $       --
      Gain on sale of Kinzie Park condominiums units.....             1,875             --
      Net gain on sale of marketable securities..........            12,346             --
      Net gain from condemnation proceedings.............                --          3,050
      Write-off of investments in technology companies...                --        (18,284)
     Partially-owned Assets:
       Net gain on sale of 50% interest in 570 Lexington
         Avenue..........................................                --         12,445
                                                                -----------     ----------
                                                                $    (3,450)    $   (2,789)
                                                                ===========     ==========

                                    Page 39

LIQUIDITY AND CAPITAL RESOURCES

     SIX MONTHS ENDED JUNE 30, 2002

     Cash flow provided by operating activities of $247,298,000 was primarily
comprised of (i) income of $118,114,000, (ii) adjustments for non-cash items
of $159,569,000, partially offset by (iii) the net change in operating assets
and liabilities of $33,835,000. The adjustments for non-cash items were
primarily comprised of (i) a cumulative effect of change in accounting
principle of $30,129,000, (ii) amortization of Officer's deferred
compensation expense of $13,750,000, (iii) depreciation and amortization of
$97,151,000, (iv) minority interest of $71,145,000, partially offset by (v)
the effect of straight-lining of rental income of $18,939,000, and (vi)
equity in net income of partially-owned entities and income applicable to
Alexander's of $33,667,000.

     Net cash used in investing activities of $75,791,000 was primarily
comprised of (i) recurring capital expenditures of $27,851,000, (ii)
non-recurring capital expenditures of $13,603,000, (iii) development and
redevelopment expenditures of $34,831,000, (iv) investment in notes and
mortgages receivable of $741,000, (v) investments in partially-owned entities
of $21,984,000, (vi) cash restricted of $113,831,000 for funds escrowed in
connection with a mortgage financing, partially offset by (vii) distributions
from partially-owned entities of $67,454,000, (viii) repayments on notes
receivable of $60,000,000 and (ix) proceeds from the sale of marketable
securities of $53,445,000.

     Net cash provided by financing activities of $247,092,000 was primarily
comprised of (i) dividends paid on common shares of $169,838,000, (ii)
dividends paid on preferred shares of $12,027,000, (iii) distributions to
minority partners of $70,782,000, (iv) repayments of borrowings of
$200,612,000, partially offset by proceeds from (iv) the issuance of common
shares of $56,658,000, (vi) notes and mortgages payable of $622,765,000, of
which $500,000,000 was from the issuance of the Company's senior unsecured
notes on June 24, 2002, and (vii) the exercise of employee share options of
$23,728,000.

     Below are the details of capital expenditures, leasing commissions and
development and redevelopment expenditures.

     Capital expenditures are categorized as follows:

          Recurring -- capital improvements expended to maintain a property's
       competitive position within the market and tenant improvements and
       leasing commissions for costs to re-lease expiring leases or renew or
       extend existing leases.

          Non-recurring -- capital improvements completed in the year of
       acquisition and the following two years which were planned at the time of
       acquisition and tenant improvements and leasing commissions for space
       which was vacant at the time of acquisition of a property.

     Development and redevelopment expenditures include all hard and soft costs
associated with the development or redevelopment of a property, including tenant
improvements, leasing commissions and capitalized interest and operating costs
until the property is substantially complete and ready for its intended use.
(amounts in thousands)

                                                               New York
                                                                City                                   Merchandise
Capital Expenditures:                            Total         Office           CESCR       Retail        Mart          Other
                                               ---------    -------------    ----------    --------    -----------    ---------
                                                                                                    
  Expenditures to maintain the assets:
    Recurring............................      $   6,095    $       2,411    $    1,734    $    397    $     1,112    $     441
    Non-recurring........................          7,090            3,762         1,570          --          1,758           --
                                               ---------    -------------    ----------    --------    -----------    ---------
                                                  13,185            6,173         3,304         397          2,870          441
                                               ---------    -------------    ----------    --------    -----------    ---------

  Tenant improvements:
    Recurring............................         21,756            6,857        12,783         765          1,351           --
    Non-recurring........................          6,513            1,525         4,988          --             --           --
                                               ---------    -------------    ----------    --------    -----------    ---------
                                                  28,269            8,382        17,771         765          1,351           --
                                               ---------    -------------    ----------    --------    -----------    ---------
  Total..................................      $  41,454    $      14,555    $   21,075    $  1,162    $     4,221    $     441
                                               =========    =============    ==========    ========    ===========    =========

Leasing Commissions:
    Recurring............................      $   3,659    $       2,028    $    1,292    $    153    $        98    $      88

    Non-recurring........................          2,644            1,630         1,014          --             --           --
                                               ---------    -------------    ----------    --------    -----------    ---------
                                               $   6,303    $       3,658    $    2,306    $    153    $        98    $      88
                                               =========    =============    ==========    ========    ===========    =========
Total Capital Expenditures and Leasing
 Commissions:
    Recurring............................      $  31,510    $      11,296    $   15,809    $  1,315    $     2,561    $     529

    Non-recurring........................         16,247            6,917         7,572          --          1,758           --
                                               ---------    -------------    ----------    --------    -----------    ---------
                                               $  47,757    $      18,213    $   23,381    $  1,315    $     4,319    $     529
                                               =========    =============    ==========    ========    ===========    =========

Development and Redevelopment Expenditures:
      Palisades-Fort Lee, NJ (1).........      $   9,287    $          --    $       --    $     --    $        --    $   9,287

      Other..............................         25,544           20,189         5,097        (871)(2)        558          571
                                               ---------    -------------    ----------    --------    -----------    ---------
                                               $  34,831    $      20,189    $    5,097    $   (871)   $       558    $   9,858
                                               =========    =============    ==========    ========    ===========    =========

- ----------
(1) Does not include $15,421 of Fort Lee development costs funded by a
    construction loan.
(2) Represents reimbursements from tenants for expenditures incurred in the
    prior year.

                                    Page 40

     VORNADO OPERATING COMPANY ("VORNADO OPERATING")

     Pursuant to a revolving credit facility which expires December 31, 2004,
Vornado Operating owes the Company $31,489,000 at June 30, 2002. Vornado
Operating has disclosed that in the aggregate, its investments do not, and
for the foreseeable future, are not expected to generate sufficient cash flow
to pay all of its debts and expenses. Further, Vornado Operating states that
its only investee, AmeriCold Logistics ("Tenant"), anticipates that its
Landlord, a partnership 60% owned by the Company and 40% owned by Crescent
Real Estate Equities, will need to restructure the leases between the
Landlord and the Tenant to provide additional cash flow to the Tenant (the
Landlord has previously restructured the leases to provide additional cash
flow to the Tenant). Management anticipates a further lease restructuring and
the sale of non-core assets by AmeriCold Logistics, and accordingly, Vornado
Operating is expected to have a source to repay the debt under this facility
which may be extended. Since January 1, 2002, the Company has not recognized
income on the debt under this facility.

     SIX MONTHS ENDED JUNE 30, 2001

     Cash flows provided by operating activities of $192,866,000 was
primarily comprised of (i) income of $122,621,000 and (ii) adjustments for
non-cash items of $63,798,000 and (iii) the net change in operating assets
and liabilities of $21,642,000. The adjustments for non-cash items are
primarily comprised of (i) cumulative effect of change in accounting
principle of $4,110,000, (ii) the write-off of equity investments in
technology companies of $18,284,000, (iii) depreciation and amortization of
$61,951,000 and (iv) minority interest of $55,663,000, partially offset by
(v) the effect of straight-lining of rental income of $14,542,000 and (vi)
equity in net income of partially-owned entities and income applicable to
Alexander's of $60,198,000.

     Net cash used in investing activities of $59,966,000 was primarily
comprised of (i) recurring capital expenditures of $26,490,000, (ii)
non-recurring capital expenditures of $22,836,000, (iii) development and
redevelopment expenditures of $74,856,000, (iv) investment in notes and
mortgages receivable of $30,767,000, (v) investments in partially-owned
entities of $25,221,000 partially offset by, (vi) distributions from
partially-owned entities of $93,032,000 and (vii) a decrease in restricted
cash arising primarily from the repayment of mortgage escrows of $27,851,000.

     Net cash used in financing activities of $149,969,000 was primarily
comprised of (i) proceeds from borrowings of $118,853,000, partially offset
by, (ii) repayments of borrowings of $111,748,000, (iii) dividends paid on
common shares of $90,992,000, (iv) dividends paid on preferred shares of
$17,926,000, and (v) distributions to minority partners of $53,710,000.

     Below are the details of capital expenditures, leasing commissions and
development and redevelopment expenditures.

                                                            New York                    Merchandise
(amounts in thousands)                         Total       City Office      Retail          Mart          Other
                                           ------------   ------------   ------------   ------------   ------------
                                                                                        
Capital Expenditures:
   Expenditures to maintain the assets:
     Recurring .........................   $      8,268   $      4,937   $        412   $      1,187   $      1,732
     Non-recurring .....................         19,732         10,523           --            3,259          5,950
                                           ------------   ------------   ------------   ------------   ------------
                                                 28,000         15,460            412          4,446          7,682
                                           ------------   ------------   ------------   ------------   ------------
   Tenant improvements:
     Recurring .........................         18,222         15,242            265          2,715             --
     Non-recurring .....................          3,104          3,104             --             --             --
                                           ------------   ------------   ------------   ------------   ------------
                                                 21,326         18,346            265          2,715             --
                                           ------------   ------------   ------------   ------------   ------------
   Total ...............................   $     49,326   $     33,806   $        677   $      7,161   $      7,682
                                           ------------   ------------   ------------   ------------   ------------

Leasing Commissions:
   Recurring ...........................   $      6,090   $      5,710   $        195   $         48   $        137
   Non-recurring .......................             --             --             --             --             --
                                           ------------   ------------   ------------   ------------   ------------
                                           $      6,090   $      5,710   $        195   $         48   $        137
                                           ============   ============   ============   ============   ============
Development and Redevelopment:
   Expenditures:
     Park Laurel (80% interest) ......     $     29,212   $         --   $         --   $         --   $     29,212
     Market Square on Main Street ......         17,597             --             --         17,597             --
     Other .............................         28,047         14,682          1,964          1,863          9,538(1)
                                           ------------   ------------   ------------   ------------   ------------
                                           $     74,856   $     14,682   $      1,964   $     19,460   $     38,750
                                           ============   ============   ============   ============   ============

- ----------
(1) Does not include $37,592 of Fort Lee development costs funded by a
    construction loan.

                                     Page 41

SUPPLEMENTAL INFORMATION

     Below is a summary of net income, EBITDA and funds from operations for the
three and six months ended June 30, 2002 and 2001, giving effect to the
following transactions as if they had occurred on January 1, 2001: (i) the
acquisition of the remaining 66% of CESCR on January 1, 2002 and (ii) the
Company's November 21, 2001 sale of 9,775,000 common shares and the use of
proceeds to repay indebtedness.

                                                     Three Months Ended              Six Months Ended
                                                ---------------------------   ---------------------------
     (amounts in thousands)                                      June 30,                      June 30,
                                                  June 30,        2001          June 30,         2001
                                                    2002       (Pro Forma)        2002        (Pro Forma)
                                                ------------   ------------   ------------   ------------
                                                                                 
     Revenues ...............................   $    353,247   $    341,686   $    699,571   $    679,542
                                                ============   ============   ============   ============
     Net income .............................   $     68,711   $     67,657   $    118,114   $    128,519
     Preferred share dividends ..............         (5,896)        (9,192)       (12,027)       (18,865)
                                                ------------   ------------   ------------   ------------
     Net income applicable to common shares .   $     62,815   $     58,465   $    106,087   $    109,654
                                                ============   ============   ============   ============
     Net income per common share - diluted ..   $        .57   $        .59   $        .97   $       1.10
                                                ============   ============   ============   ============

     EBITDA .................................   $    235,599   $    229,575   $    474,627   $    461,745
                                                ============   ============   ============   ============
     Funds from operations(1) ...............   $    107,327   $     99,757   $    216,573   $    198,247
                                                ============   ============   ============   ============
     Shares used for determining funds from
       operations per share .................        113,563        107,395        112,526        107,294
                                                ============   ============   ============   ============

- ----------
(1) See page 45 for further details on funds from operations.

     Below are the details of the changes by segment in EBITDA for the three
months ended June 30, 2002 from the three months ended March 31, 2002.

                                                                                                    Temperature
                                                                                 Merchandise        Controlled
(amounts in thousands)           Total          Office             Retail            Mart            Logistics            Other
                             -----------    ------------       ------------    ------------        ------------        ------------
                                                                                                           
Three months ended
   March 31, 2002 .......... $   239,028    $    142,878       $     27,534          26,228        $     21,237              21,151
2002 Operations:
   Same store operations(1)        4,739           1,954                496           6,018              (4,592)                863
   Non-recurring income and
     expenses                     (8,168)            100             (1,000)           (777)                 --              (6,491)
                             -----------    ------------       ------------    ------------        ------------        ------------
Three months ended
   June 30, 2002 ...........     235,599    $    144,932       $     27,030          31,469        $     16,645              15,523
                             ===========    ============       ============    ============        ============        ============
   % increase (decrease)
     in same
     store operations ......         2.0%            1.4%(2)            1.8%           22.9%(3)           (21.6%)(4)            4.1%
                             ===========    ============       ============    ============        ============        ============

- ----------
(1) Represents operations which were owned for the same period in each year and
    excludes non-recurring income and expenses.
(2) Same store percentage increase was 1.1% for the New York City office
    portfolio, and 1.6% for the CESCR portfolio.
(3) Increase results primarily from (i) EBITDA generated by the Chicago NeoCon
    and High Point North Carolina furniture shows in the three months ended June
    30, 2002 in excess of the EBITDA generated by shows in the three months
    ended March 31, 2002 and (ii) a .7% same store increase in other operations.
(4) The tenant has advised the Landlord that (i) its revenue for the quarter
    ended June 30, 2002 from the warehouses it leases from the Landlord, was
    higher than last quarter by .6%, and (ii) its gross profit before rent at
    these warehouses decreased by $2,724 (6.2%). The increase in revenue is
    primarily attributable to higher occupancy rates, offset by a reduction in
    customer inventory turns. The decrease in gross profit is primarily
    attributable to higher insurance costs, partially offset by lower payroll
    expenses. In addition, the tenant's cash requirements for capital
    expenditures, debt service and pension liability funding were $1,668 higher
    in the current quarter than in the prior quarter, which impacted the ability
    of the tenant to pay rent.

                                     Page 42

LEASING ACTIVITY

     The following table sets forth certain information for the properties the
Company owns directly or indirectly, including leasing activity for space
previously occupied:

(square feet and cubic feet in thousands)                 Office                               Merchandise Mart
                                               ---------------------------                   ----------------------    Temperature
 As of June 30, 2002:                             New York                                                              Controlled
                                                   City           CESCR          Retail       Office      Showroom      Logistics
                                               ------------   ------------    -----------    --------    ----------    ------------
                                                                                                        
  Square feet .............................        14,325        13,008            11,301         2,831       5,497        17,509
  Cubic feet ..............................            --            --                --            --          --       441,500
  Number of properties ....................            22            51                55             9           9            88
  Occupancy rate ..........................          96.1%         94.7%             88.5%(3)      89.8%       94.9%         78.6%

  Leasing Activity:
      For the quarter ended
        June 30, 2002:
          Square feet .....................           100(2)        454               403            29         213            --
          Rent per square foot:
            Initial rent (1) ..............    $    42.69      $  32.25       $     12.04     $   20.51    $  19.80            --
            Prior escalated rent ..........    $    36.33      $  31.44       $      9.91     $   18.35    $  20.16            --
            Percentage increase(decrease) .          17.5%          2.6%             21.5%         11.8%       (1.7%)          --

      For the Six Months Ended
        June 30, 2002:
          Square feet .....................           221(2)        913               509            85         416            --
          Rent per square foot:
            Initial Rent(1) ...............    $    46.27      $  32.03       $     12.35     $   20.88    $  17.45            --
            Prior escalated rent ..........    $    34.51      $  30.50       $      9.67     $   19.81    $  16.95            --
            Percentage increase ...........          34.1%          5.0%             27.7%          5.4%        3.0%           --

As of March 31, 2002:
  Square feet .............................        14,317        13,008            11,301         2,822       5,490        17,695
  Cubic feet ..............................            --            --                --            --          --       445,200
  Number of properties ....................            22            51                55             9           9            89
  Occupancy rate ..........................          96.7%         94.1%             91.0%         90.4%       95.3%         75.1%

As of December 31, 2001:
  Square feet .............................        14,300         4,386            11,301         2,840       5,532        17,695
  Cubic feet ..............................            --            --                --            --          --       445,200
  Number of properties ....................            22            51                55             9           9            89
  Occupancy rate ..........................          97.4%         94.7%             92.0%         90.9%       95.5%         80.7%

As of June 30, 2001:
  Square feet .............................        14,465         4,249            11,301         2,869       5,044        17,569
  Cubic feet ..............................            --            --                --            --          --       440,200
  Number of properties ....................            22            50                55             9           9            88
  Occupancy rate ..........................          95.0%         96.0%             92.0%         90.2%       96.8%        74.06%

- ----------
(1)  Most leases include periodic step-ups in rent, which are not reflected in
     the initial rent per square foot leased.
(2)  In addition to the above, the Company leased 45 and 67 square feet of
     previously vacant space (first generation space - space which has been
     vacant for more than nine months) at an average initial rent per square
     foot of $50.83 and $53.03 for the three and six months ended June 30, 2002.
(3)  On June 29, 2002, K-Mart rejected its lease at the Company's Green Acres
     location (131 square feet at $13.64 per square foot).

                                     Page 43

SENIOR UNSECURED DEBT COVENANT COMPLIANCE RATIOS

     The following ratios as of and for the three months ended June 30,2002, are
computed pursuant to the covenants and definitions of the Company's senior
unsecured notes due 2007 and are presented on a basis to give effect to the
Company's sale of the notes and the subsequent repayment of $463 million of
mortgages payable as if these transactions had occurred on January 1, 2002.

                                                                  Actual      Required
                                                                  ------      --------
                                                               
          Total Outstanding Debt/Total Assets..................     42%       Less than 60%

          Secured Debt/Total Assets............................     37%       Less than 55%

          Interest coverage (Annualized Combined EBITDA to
            Annualized Interest Expense).......................   3.04        Greater than 1.50

          Unencumbered Assets/ Unsecured Debt..................    636%       Greater than 150%

     The covenants and definitions of the Company's senior unsecured notes due
2007 are described in Exhibit 4.2 to this quarterly report on Form 10-Q.

                                     Page 44

FUNDS FROM OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001

     Funds from operations was $107,327,000 in the three months ended June 30,
2002, compared to $83,930,000 in the prior year's quarter, an increase of
$23,397,000. Funds from operations include nonrecurring charges of
$11,856,000(1) and $13,561,000(1) in the three months ended June 30, 2002 and
2001. Funds from operations before these items and after minority interest was
$116,763,000 in the three months ended June 30, 2002, compared to $95,658,000 in
the prior year's quarter, a $21,105,000 increase over the prior year, or 5.1% on
a per share basis.

     Funds from operations was $216,573,000 in the six months ended June 30,
2002, compared to $165,837,000 in the prior year's six months, an increase of
$50,736,000. Funds from operations includes nonrecurring charges of
$17,200,000(1) and $23,284,000(1) in the six months ended June 30, 2002 and
2001. Funds from operations before these items and after minority interest was
$230,242,000 in the six months ended June 30, 2002, compared to $185,970,000 in
the prior year's six months, a $44,272,000 increase over the prior year, or 7.3%
on a per share basis.

     The following table reconciles funds from operations and net income:

(amounts in thousands)                                      For the Three Months Ended     For the Six Months Ended
                                                                      June 30                       June 30
                                                            ---------------------------   ----------------------------
                                                               2002             2001          2002           2001
                                                            ----------       ----------   ------------    ------------
                                                                                              
Net income applicable to common shares....................  $   62,815       $   56,920   $    106,087    $    103,756
Cumulative effect of a change in accounting principle.....          --               --         30,129           4,110
Extraordinary item........................................          --               --             --          (1,170)
Depreciation and amortization of real property............      47,992           29,041         93,479          60,081
Straight-lining of property rentals for rent escalations..      (8,864)          (5,819)       (17,541)        (13,074)
Leasing fees received in excess of income recognized......         432             (124)           750            (248)
Appreciation of securities held in officer's deferred
    compensation trust....................................          --            2,952             --             669
Net gain on sale of real estate and partially-owned
    entities..............................................          --          (12,445)            --         (12,445)
Net gain from condemnation proceedings....................          --           (3,050)            --          (3,050)
Proportionate share of adjustments to equity in net income
    of partially-owned entities to arrive at funds from
    operations:
      Depreciation and amortization of real property...         12,903           15,615         25,784          31,607
      Net gain on sale of real estate (Alexander's Fordham
          Road property)..................................          --               --             --          (6,298)
      Other...............................................         716             (323)           206            (751)
Minority interest in excess of preferential distributions.     (10,314)          (3,780)       (25,849)         (7,716)
                                                            ----------       ----------   ------------    ------------
                                                               105,680           78,987        213,045         155,471
Series A preferred shares.................................       1,647           4,943           3,528          10,366
                                                            ----------       ----------   ------------    ------------
Funds from operations--diluted (2)........................  $  107,327       $   83,930   $    216,573    $    165,837
                                                            ==========       ==========   ============    ============

The number of shares that should be used for determining funds from operations
per share is as follows:

(amounts in thousands)                                    For the Three Months Ended     For the Six Months Ended
                                                                    June 30,                      June 30,
                                                          ---------------------------   ----------------------------
                                                             2002             2001          2002            2001
                                                          ----------       ----------   ------------    ------------
                                                                                                  
Weighted average shares used for determining diluted
 income per share                                            110,714           89,602        108,954          89,501
    Series A preferred shares..........................        2,849            8,018          3,572           8,018
                                                          ----------       ----------   ------------    ------------
Shares used for determining diluted funds from
 operations per share (2)..............................      113,563           97,620        112,526          97,519
                                                          ==========       ==========   ============    ============

                                     Page 45

     Funds from operations does not represent cash generated from operating
activities in accordance with accounting principles generally accepted in the
United States of America and is not necessarily indicative of cash available to
fund cash needs which is disclosed in the Consolidated Statements of Cash Flows
for the applicable periods. There are no material legal or functional
restrictions on the use of funds from operations. Funds from operations should
not be considered as an alternative to net income as an indicator of the
Company's operating performance or as an alternative to cash flows as a measure
of liquidity. Management considers funds from operations a supplemental measure
of operating performance and along with cash flow from operating activities,
financing activities and investing activities, it provides investors with an
indication of the ability of the Company to incur and service debt, to make
capital expenditures and to fund other cash needs. Funds from operations may not
be comparable to similarly titled measures reported by other REITs since a
number of REITs, including the Company, calculate funds from operations in a
manner different from that used by NAREIT. Funds from operations, as defined by
NAREIT, represents net income applicable to common shares before depreciation
and amortization, extraordinary items and gains or losses on sales of real
estate. Funds from operations as disclosed above has been modified from this
definition to adjust primarily for the effect of straight-lining of property
rentals for rent escalations and leasing fee income.

- ----------
(1)  Net Nonrecurring charges which are included in funds from operations above
     are as follows:

                                                      For the Three Months Ended June 30,    For the Six Months Ended June 30,
                                                      -----------------------------------    ---------------------------------
                                                          2002              2001                  2002               2001
                                                      --------------   ------------------    --------------     --------------
                                                                                                      
  Loss on Primestone foreclosure.....................   $  (17,671)      $       --            $  (17,671)        $       --
  Gains on sale of marketable securities.............       12,346               --                12,346                 --
  Amortization of Officer's deferred compensation ...       (6,875)              --               (13,750)                --
  Gain on sale of residential condominium units .....          344               --                 1,875                 --
  Write-off of investments in technology companies...           --          (13,561)                   --            (18,284)
  Costs of acquisitions not consummated..............           --               --                    --             (5,000)
                                                        ----------       ----------            ----------         ----------
                                                        $  (11,856)      $  (13,561)           $  (17,200)        $  (23,284)
                                                        ==========       ==========            ==========         ==========

(2)  Assuming all of the convertible units of the Operating Partnership were
     converted to shares, the minority interest in partnership earnings would
     not be deducted in calculating funds from operations and the shares used in
     calculating funds from operations per share would be increased to reflect
     the conversion. Funds from operations per share would not change. The
     following table reconciles funds from operations as shown above, to the
     Operating Partnership's funds from operations for the three months and six
     months ended June 30, 2002 and 2001:

                                                     For the Three Months Ended June 30,    For the Six Months Ended June 30,
                                                     -----------------------------------    ---------------------------------
                                                          2002             2001                  2002               2001
                                                     --------------    -----------------    -------------      --------------
                                                                                                     
 Funds from operations, as above....................    $  107,327        $   83,930          $  216,573         $  165,837
 Addback of minority interest reflected as
    equity in the Operating Partnership.............        27,521            13,147              55,936             25,951
                                                        ----------        ----------          ----------         ----------
 Operating Partnership funds from operations........    $  134,848        $   97,077          $  272,509         $  191,788
                                                        ==========        ==========          ==========         ==========

     The number of shares that should be used for determining Operating
     Partnership funds from operations per share is as follows:

                                                                                                              
 Shares used for determining diluted funds from operations
  per share, as above......................................             113,563         97,620          112,526            97,519
 Convertible units:
       Non-Vornado owned Class A units.....................              21,352          6,628           21,295             6,628
       Class D units.......................................                  --            864               --               864
       B-1 units...........................................                 822            822              822               822
       B-2 units...........................................                 411            411              411               411
       C-1 units...........................................                 855            855              855               855
           E-1 units.......................................               5,680          5,680            5,680             5,680
                                                                     ----------       --------         --------          --------
 Shares used for determining Operating Partnership diluted
  funds from operations per share..........................             142,683        112,880          141,589           112,779
                                                                     ----------       --------         --------          --------

                                     Page 46

     Below are the cash flows provided by (used in) operating, investing and
     financing activities:

            (amounts in thousands)                        For the Six Months Ended June 30,
                                                          ---------------------------------
                                                              2002                2001
                                                          --------------     --------------
                                                                         
            Operating activities.................          $   247,298         $   192,866
                                                           ===========         ===========
            Investing activities.................          $   (75,791)        $   (59,966)
                                                           ===========         ===========
            Financing activities.................          $   247,092         $  (149,969)
                                                           -----------         -----------

FINANCINGS

     The Company anticipates that cash from continuing operations will be
adequate to fund business operations and the payment of dividends and
distributions on an on-going basis for more than the next twelve months;
however, capital outlays for significant acquisitions would require funding from
borrowings or equity offerings.

     On June 24, 2002, the Company completed an offering of $500,000,000
aggregate principal amount of 5.625% senior unsecured notes due June 15, 2007.
Interest on the notes is payable semi-annually on June 15th and December 15th,
commencing December 15, 2002. The notes were priced at 99.856% of their face
amount to yield 5.659%. Of the net proceeds of approximately $496,300,000, (i)
$70,000,000 was used to repay the mortgage payable on 350 North Orleans prior to
June 30, 2002, and (ii) $393,000,000 was used to repay the mortgages on Two Park
Avenue, the Merchandise Mart and a portion of Seven Skyline in July and August
2002. After the repayment of these mortgages, the balance of the Company's
wholly-owned debt was $4,041,929, as compared to $3,970,486 at March 31, 2002.
On June 27, 2002, the Company entered into interest rate swaps that effectively
converted the interest rate on the $500,000,000 senior unsecured notes due 2007
from a fixed rate of 5.625% to a floating rate of LIBOR plus .7725, based upon
the trailing 3 month LIBOR rate (2.59 % if set on August 1, 2002).

COMMITMENTS

     In conjunction with the closing of Alexander's Lexington Avenue
construction loan on July 3, 2002, the Company agreed to guarantee, among other
things, the lien free, timely completion of the construction of the project and
funding of all project costs in excess of a stated loan budget, if not funded by
Alexander's.

                                     Page 47

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

     The Company's exposure to a change in interest rates on its wholly-owned
and partially-owned debt (all of which arises out of non-trading activity) is as
follows:

      (amounts in thousands
          except per share amounts)
                                                           June 30, 2002                             December 31, 2001
                                           --------------------------------------------------    ------------------------------
                                                              Weighted        Effect of 1%                         Weighted
                                                               Average       Change In Base                         Average
                                              Balance       Interest Rate         Rates             Balance      Interest Rate
                                           --------------- ---------------  -----------------    ------------   ---------------
                                                                                                      
      Wholly-owned debt:
             Variable rate...........      $    1,801,498       3.04%         $     11,007(1)    $    1,182,605      3.39%
             Fixed rate..............           2,633,431       7.29%                   --            1,294,568      7.53%
                                           --------------                     ------------       --------------
                                           $    4,434,929       5.56%               11,007       $    2,477,173
                                           ==============                     ------------       ==============

      Partially-owned debt:
             Variable rate...........      $       14,775       5.07%                  559(2)    $       85,516      5.63%
             Fixed rate..............             847,754       8.66%                   --            1,234,019      8.29%
                                           --------------                     ------------       --------------
                                           $      862,529       8.60%                  559       $    1,319,535
                                           ==============                     ------------       ==============

      Minority interest..............                                               (2,358)
                                                                              ------------

      Total decrease in the
        Company's annual
        net income...................                                         $      9,208
                                                                              ============
           Per share-diluted.........                                         $        .08
                                                                              ============

- ----------
(1)  The effect of a 1% change in wholly-owned debt base rates shown above is
     calculated after giving effect to (i) the Company's issuance of $500,000
     senior unsecured notes due 2007 and the use of proceeds to repay existing
     variable rate debt and (ii) the exclusion of $238,659 of variable rate
     mortgage financing, cross-collateralized by the Company's 770 Broadway and
     595 Madison Avenue office properties as the proceeds are held in a
     restricted mortgage escrow account which bears interest at the same rate as
     the loans.
(2)  The effect of a 1% change in partially-owned debt base rates shown above is
     calculated after including $41,148, representing the Company's 14.9% share
     of Prime Group Realty L.P.'s ("PGE") outstanding variable rate debt as at
     March 31, 2002. PGE has not filed its quarterly report on Form 10-Q for the
     quarter ended June 30, 2002, prior to the filing of this quarterly report
     on Form 10-Q.

                                     Page 48

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     The Company is from time to time involved in legal actions arising in the
ordinary course of its business. In the opinion of management, after
consultation with legal counsel, the outcome of such matters will not have a
material adverse effect on the Company's financial condition, results of
operations or cash flows.

     As a result of the Company's April 30, 2002 foreclosure on the partnership
units of Prime Group Realty L.P., the Company's litigation against Primestone
discussed in the quarterly report on Form 10-Q for the quarter ended March 31,
2002, has been dismissed pursuant to the parties stipulation on May 28, 2002.

     As previously disclosed, on February 13, 2002, Primestone counterclaimed
against the Company, alleging, among other things, that the Company
tortiously interfered with a prospective contract with Cadim inc., and on
March 4, 2002, the Company filed an answer denying the essential allegations
of the counterclaim. On May 20, 2002, the Company served a motion for summary
judgment asking the Court to enter judgment in its favor on its claims
against Primestone and to dismiss Primestone's counterclaims. On July 31,
2002, Primestone moved for leave to amend its counterclaim, primarily to
assert that Vornado's April 30, 2002 foreclosure on the collateral pledged by
Primestone did not comply with the Uniform Commercial Code. This litigation
is continuing. SEE "Item 3. Legal Proceedings" of the Company's Annual Report
on Form 10-K for the year ended December 31, 2001 for more information about
this litigation.

     Primestone and several affiliates commenced an action against the Company
on May 3, 2002 in New York Supreme Court, alleging substantially the same
causes of action as in Primestone's February 13, 2002 counterclaim. In the
May 3, 2002 action, Primestone also alleges that Vornando's foreclosure on
the collateral pledged by Primestone did not comply with the Uniform
Commercial Code. On June 10, 2002, Vornando moved to dismiss this action.
This litigation is continuing.

     On May 9, 2002, five affiliates of Primestone asserted counterclaims in an
action which the Company had commenced against them on March 28, 2002 in New
York Supreme Court. The counterclaims are virtually identical to the claims
asserted in the May 3, 2002 action. On May 29, 2002, Vornado filed an answer
denying the essential allegations of this counterclaim. This litigation is
continuing.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     On May 29, 2002, the Company held its annual meeting of shareholders. The
matters on which the shareholders voted, in person or by proxy, were (i) the
election of four nominees to serve on the Board of Trustees for terms described
below and until their respective successors are duly elected and qualified, (ii)
to approve an amendment of the Declaration of Trust of the Company, (iii) to
adopt the 2002 Omnibus Share Plan, and (iv) a shareholder proposal to declassify
the Board of Trustees. The results of the voting are shown below:

         Election of Trustees:
                                                                                               Votes Cast
                                                                                               Against or
                          Trustee                           Term           Votes Cast for       Withheld
                  --------------------                   ---------        ----------------    ------------
                                                                                       
                   Stanley Simon                          3 years             92,329,572        2,657,160
                   Ronald Targan                          3 years             91,954,952        3,031,780
                   Robert H. Smith                        3 years             92,248,933        2,737,799
                   Robert P. Kogod                        2 years             92,264,425        2,722,307

                                                                             Votes Cast
                                                                             Against or        Broker Non-
                                                       Votes cast for         Withheld            Votes
                                                       --------------       ------------      -------------
                                                                                       
         Amendment of Declaration of Trust                 82,411,065            592,224        11,983,443
         Adoption of 2002 Omnibus Share Plan               49,144,394         33,858,895        11,983,443
         Shareholder Proposal to Declassify
          Board of Trustees                                42,537,404         40,465,885        11,983,443

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

 (a)    Exhibits required by Item 601 of Regulation S-K are incorporated herein
        by reference and are listed in the attached Exhibit Index.
 (b)    Reports on Form 8-K:
         During the quarter ended June 30, 2002, the Company did not file any
         reports on Form 8-K.

                                     Page 49

                                   SIGNATURES

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

                                               VORNADO REALTY TRUST
                                      -----------------------------------------
                                                     (Registrant)

Date:  August 7, 2002            By:        /s/ Joseph Macnow
                                     ------------------------------------------
                                       Joseph Macnow, Executive Vice President -
                                            Finance and Administration and
                                                Chief Financial Officer

                                     Page 50

                                  EXHIBIT INDEX

EXHIBIT
  NO.
- -------
                                                                                                                     
   2.1        --   Agreement and Plan of Merger, dated as of October 18, 2001, by and among Vornado, 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 of Vornado's Current Report on Form 8-K (File No.
                    001-11954), filed on January 16, 2002...............................................................   *

   3.1        --   Amended and Restated Declaration of Trust of Vornado, as filed with the State Department of
                    Assessments and Taxation of Maryland on April 16, 1993 - Incorporated by reference to Exhibit 3(a)
                    of Vornado's Registration Statement on Form S-4 (File No. 33-60286), filed on April 15,
                    1993................................................................................................   *

   3.2        --   Articles of Amendment of Declaration of Trust of Vornado, as filed with the State Department of
                    Assessments and Taxation of Maryland on May 23, 1996 - Incorporated by reference to Exhibit 3.2 of
                    Vornado's Annual Report on Form 10-K for the year ended December 31, 2001 (File No. 001-11954),
                    filed on March 11, 2002.............................................................................   *

   3.3        --   Articles of Amendment of Declaration of Trust of Vornado, as filed with the State Department of
                    Assessments and Taxation of Maryland on April 3, 1997 - Incorporated by reference to Exhibit 3.3 of
                    Vornado's Annual Report on Form 10-K for the year ended December 31, 2001 (File No. 1-11954), filed
                    on March 11, 2002...................................................................................   *

   3.4        --   Articles of Amendment of Declaration of Trust of Vornado, as filed with the State Department of
                    Assessments and Taxation of Maryland on October 14, 1997 - Incorporated by reference to Exhibit 3.2
                    of Vornado's Registration Statement on Form S-3 (File No. 333-36080), filed on May 2,
                    2000................................................................................................   *

   3.5        --   Articles of Amendment of Declaration of Trust of Vornado, as filed with the State Department of
                    Assessments and Taxation of Maryland on April 22, 1998 - Incorporated by reference to Exhibit 3.1 of
                    Vornado's Current Report on Form 8-K, dated April 22, 1998 (File No. 001-11954), filed on April 28,
                    1998................................................................................................   *

   3.6        --   Articles of Amendment of Declaration of Trust of Vornado, as filed with the State Department of
                    Assessments and Taxation of Maryland on November 24, 1999 - Incorporated by reference to Exhibit 3.4
                    of Vornado's Registration Statement on Form S-3 (File No. 333-36080), filed on May 2,
                    2000................................................................................................   *

   3.7        --   Articles of Amendment of Declaration of Trust of Vornado, as filed with the State Department of
                    Assessments and Taxation of Maryland on April 20, 2000 - Incorporated by reference to Exhibit 3.5 of
                    Vornado's Registration Statement on Form S-3 (File No. 333-36080), filed on May 2,
                    2000................................................................................................   *

   3.8        --   Articles of Amendment of Declaration of Trust of Vornado, as filed with the State Department of
                    Assessments and Taxation of Maryland on September 14, 2000 - Incorporated by reference to Exhibit
                    4.6 of Vornado's Registration Statement on Form S-8 (File No. 333-68462), filed on August 27,
                    2001................................................................................................   *

   3.9        --   Articles of Amendment of Declaration of Trust of Vornado dated May 31, 2002, as filed with the
                    Department of Assessments and Taxation of the State of Maryland on June 13, 2002

   3.10       --   Articles of Amendment of Declaration of Trust of Vornado dated June 6, 2002, as filed with the
                    Department of Assessments and Taxation of the State of Maryland on June 13, 2002

- ----------
*  Incorporated by reference

                                     Page 51

EXHIBIT
  NO.
- -------
                                                                                                                     
   3.11       --   Articles Supplementary Classifying Vornado's $3.25 Series A Preferred Shares of Beneficial Interest,
                    liquidation preference $50.00 per share - Incorporated by reference to Exhibit 4.1 of Vornado's
                    Current Report on Form 8-K, dated April 3, 1997 (File No. 001-11954), filed on April 8,
                    1997................................................................................................   *

   3.12       --   Articles Supplementary Classifying Vornado's $3.25 Series A Convertible Preferred Shares of
                    Beneficial Interest, as filed with the State Department of Assessments and Taxation of Maryland on
                    December 15, 1997 - Incorporated by reference to Exhibit 3.10 to Vornado's Annual Report on Form
                    10-K for the year ended December 31, 2001 (File No. 001-11954), filed on March 31,
                    2002................................................................................................   *

   3.13       --   Articles Supplementary Classifying Vornado's Series D-1 8.5% Cumulative Redeemable Preferred Shares
                    of Beneficial Interest, no par value (the "Series D-1 Preferred Shares") - Incorporated by reference
                    to Exhibit 3.1 of Vornado's Current Report on Form 8-K, dated November 12, 1998 (File No.
                    001-11954), filed on November 30, 1998..............................................................   *

   3.14       --   Articles Supplementary Classifying Additional Series D-1 8.5% Preferred Shares of Beneficial
                    Interest, liquidation preference $25.00 per share, no par value - Incorporated by reference to
                    Exhibit 3.2 of Vornado's Current Report on Form 8-K/A, dated November 12, 1998 (File No. 001-11954),
                    filed on February 9, 1999...........................................................................   *

   3.15       --   Articles Supplementary Classifying 8.5% Series B Cumulative Redeemable Preferred Shares of
                    Beneficial Interest, liquidation preference $25.00 per share, no par value - Incorporated by
                    reference to Exhibit 3.3 of Vornado's Current Report on Form 8-K, dated March 3, 1999 (File No.
                    001-11954), filed on March 17, 1999.................................................................   *

   3.16       --   Articles Supplementary Classifying Vornado's Series C 8.5% Cumulative Redeemable Preferred Shares of
                    Beneficial Interest, liquidation preference $25.00 per share, no par value - Incorporated by
                    reference to Exhibit 3.7 of Vornado's Registration Statement on Form 8-A (File No. 001-11954), filed
                    on May 19, 1999.....................................................................................   *

   3.17       --   Articles Supplementary Classifying Vornado Realty Trust's Series D-2 8.375% Cumulative Redeemable
                    Preferred Shares, dated as of May 27, 1999, as filed with the State Department of Assessments and
                    Taxation of Maryland on May 27, 1999 - Incorporated by reference to Exhibit 3.1 of Vornado's Current
                    Report on Form 8-K, dated May 27, 1999 (File No. 001-11954), filed on July 7,
                    1999................................................................................................   *

   3.18       --   Articles Supplementary Classifying Vornado's Series D-3 8.25% Cumulative Redeemable Preferred
                    Shares, dated September 3, 1999, as filed with the State Department of Assessments and Taxation of
                    Maryland on September 3, 1999 - Incorporated by reference to Exhibit 3.1 of Vornado's Current Report
                    on Form 8-K, dated September 3, 1999 (File No. 001-11954), filed on October 25,
                    1999................................................................................................   *

   3.19       --   Articles Supplementary Classifying Vornado's Series D-4 8.25% Cumulative Redeemable Preferred
                    Shares, dated September 3, 1999, as filed with the State Department of Assessments and Taxation of
                    Maryland on September 3, 1999 - Incorporated by reference to Exhibit 3.2 of Vornado's Current Report
                    on Form 8-K, dated September 3, 1999 (File No. 001-11954), filed on October 25,
                    1999................................................................................................   *

   3.20       --   Articles Supplementary Classifying Vornado's Series D-5 8.25% Cumulative Redeemable Preferred Shares
                    - Incorporated by reference to Exhibit 3.1 of Vornado's Current Report on Form 8-K, dated November
                    24, 1999 (File No. 001-11954), filed on December 23, 1999...........................................   *

- ----------
*  Incorporated by reference

                                     Page 52

EXHIBIT
  NO.
- -------
                                                                                                                     
   3.21       --   Articles Supplementary Classifying Vornado`s Series D-6 8.25% Cumulative Redeemable Preferred
                    Shares, dated May 1, 2000, as filed with the State Department of Assessments and Taxation of
                    Maryland on May 1, 2000 - Incorporated by reference to Exhibit 3.1 of Vornado's Current Report on
                    Form 8-K, dated May 1, 2000 (File No. 001-11954), filed May 19, 2000................................   *

   3.22       --   Articles Supplementary Classifying Vornado's Series D-7 8.25% Cumulative Redeemable Preferred
                    Shares, dated May 25, 2000, as filed with the State Department of Assessments and Taxation of
                    Maryland on June 1, 2000 - Incorporated by reference to Exhibit 3.1 of Vornado's Current Report on
                    Form 8-K, dated May 25, 2000 (File No. 001-11954), filed on June 16, 2000...........................   *

   3.23       --   Articles Supplementary Classifying Vornado's Series D-8 8.25% Cumulative Redeemable Preferred Shares
                    - Incorporated by reference to Exhibit 3.1 of Vornado's Current Report on Form 8-K, dated December
                    8, 2000 (File No. 001-11954), filed on December 28, 2000............................................   *

   3.24       --   Articles Supplementary Classifying Vornado's Series D-9 8.75% Preferred Shares, dated September 21,
                    2001, as filed with the State Department of Assessments and Taxation of Maryland on September 25,
                    2001 - Incorporated by reference to Exhibit 3.1 of Vornado's Current Report on Form 8-K (File No.
                    001-11954), filed on October 12, 2001...............................................................   *

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

   3.26       --   Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated as
                    of October 20, 1997 (the "Partnership Agreement") - Incorporated by reference to Exhibit 3.4 of
                    Vornado's Annual Report on Form 10-K for the year ended December 31, 1997 filed on March 31,
                    1998................................................................................................   *

   3.27       --   Amendment to the Partnership Agreement, dated as of December 16, 1997-Incorporated by reference to
                    Exhibit 3.5 of Vornado's Annual Report on Form 10-K for the year ended December 31, 1997 (File No.
                    001-11954) filed on March 31, 1998..................................................................   *

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

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

   3.30       --   Fourth Amendment to the Partnership Agreement, dated as of November 30, 1998 - Incorporated by
                    reference to Exhibit 3.1 of Vornado's Current Report on Form 8-K, dated December 1, 1998 (File No.
                    001-11954), filed on February 9, 1999...............................................................   *

   3.31       --   Exhibit A to the Partnership Agreement, dated as of December 22, 1998 - Incorporated by reference to
                    Exhibit 3.4 of Vornado's Current Report on Form 8-K/A, dated November 12, 1998 (File No. 001-11954),
                    filed on February 9, 1999...........................................................................   *

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

- ----------
*  Incorporated by reference

                                     Page 53

EXHIBIT
  NO.
- -------
                                                                                                                     
   3.33       --   Exhibit A to the Partnership Agreement, dated as of March 11, 1999 - Incorporated by reference to
                    Exhibit 3.2 of Vornado's Current Report on Form 8-K, dated March 3, 1999 (File No. 001-11954), filed
                    on March 17, 1999...................................................................................   *

   3.34       --   Sixth Amendment to the Partnership Agreement, dated as of March 17, 1999 - Incorporated by reference
                    to Exhibit 3.2 of Vornado's Current Report on Form 8-K, dated May 27, 1999 (File No. 001-11954),
                    filed on July 7, 1999...............................................................................   *

   3.35       --   Seventh Amendment to the Partnership Agreement, dated as of May 20, 1999 - Incorporated by reference
                    to Exhibit 3.3 of Vornado's Current Report on Form 8-K, dated May 27, 1999 (File No. 001-11954),
                    filed on July 7, 1999...............................................................................   *

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

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

   3.38       --   Tenth Amendment to the Partnership Agreement, dated as of September 3, 1999 - Incorporated by
                    reference to Exhibit 3.4 of Vornado's Current Report on Form 8-K, dated September 3, 1999 (File No.
                    001-11954), filed on October 25, 1999...............................................................   *

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

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

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

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

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

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

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

- ----------
*  Incorporated by reference

                                     Page 54

EXHIBIT
  NO.
- -------
                                                                                                                     
   3.46       --   Eighteenth Amendment to the Partnership Agreement, dated as of January 1, 2002 - Incorporated by
                    reference to Exhibit 3.1 of Vornado's Current Report on Form 8-K (File No. 1-11954), filed on March
                    18, 2002............................................................................................   *

   3.47       --   Nineteenth Amendment to the Partnership Agreement, dated as of July 1, 2002

    4.1       --   Indenture, dated as of June 24, 2002, between Vornado Realty L.P. and The Bank of New York, as
                    Trustee - Incorporated by reference to Exhibit 4.1 to Vornado Realty L.P.'s Current Report on Form
                    8-K dated June 19, 2002 (File No. 000-22685), filed on June 24, 2002................................   *

    4.2       --   Officer's Certificate pursuant to Sections 102 and 301 of the Indenture, dated June 24, 2002

   10.1       --   Amended and Restated Credit Agreement dated July 3, 2002, between 59th Street Corporation and
                    Vornado Lending L.L.C. (evidencing $40,000,000 of debt) - Incorporated by reference to Exhibit
                    10(i)(B)(1) of Alexander's Inc.'s quarterly report for the period ended June 30, 2002 (File No.
                    001-06064), filed on August 7, 2002.................................................................   *

   10.2       --   Credit Agreement, dated July 3, 2002, between Alexander's Inc. and Vornado Lending L.L.C.
                    (evidencing a $20,000,000 loan) - Incorporated by reference to Exhibit 10(i)(B)(2) of Alexander's
                    Inc.'s quarterly report for the period ended June 30, 2002 (File No. 001-06064), filed on August 7,
                    2002................................................................................................   *

   10.3       --   Amended and Restated Credit Agreement, dated July 3, 2002, between Alexander's Inc. and Vornado
                    Lending L.L.C. (evidencing a $50,000,000 line of credit facility) - Incorporated by reference to
                    Exhibit 10(i)(B)(3) of Alexander's Inc.'s quarterly report for the period ended June 30, 2002 (File
                    No. 001-06064), filed on August 7, 2002.............................................................   *

   10.4       --   Credit Agreement, dated July 3, 2002, between Alexander's and Vornado Lending L.L.C. (evidencing a
                    $35,000,000 loan) - Incorporated by reference to Exhibit 10(i)(B)(4) of Alexander's Inc.'s quarterly
                    report for the period ended June 30, 2002 (File No. 001-06064), filed on August 7,
                    2002................................................................................................   *

   10.5       --   Guaranty of Completion, dated as of July 3, 2002, executed by Vornado Realty L.P. for the benefit of
                    Bayerische Hypo- and Vereinsbank AG, New York Branch, as Agent for the Lenders - Incorporated by
                    reference to Exhibit 10(i)(C)(5) of Alexander's Inc.'s quarterly report for the period ended June
                    30, 2002 (File No. 001-06064), filed on August 7, 2002..............................................   *

   10.6       --   Reimbursement Agreement, dated as of July 3, 2002, by and between Alexander's, Inc., 731 Commercial
                    LLC, 731 Residential LLC and Vornado Realty L.P. - Incorporated by reference to Exhibit 10(i)(C)(8)
                    of Alexander's Inc.'s quarterly report for the period ended June 30, 2002 (File No. 001-06064),
                    filed on August 7, 2002.............................................................................   *

   10.7       --   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) of Alexander's
                    Inc.'s quarterly report for the period ended June 30, 2002 (File No. 001-06064), filed on August 7,
                    2002................................................................................................   *

   10.8       --   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)
                    of Alexander's Inc.'s quarterly report for the period ended June 30, 2002 (File No. 001-06064),
                    filed on August 7, 2002.............................................................................   *

   10.9       --   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) of Alexander's Inc.'s quarterly report for the period ended June
                    30, 2002 (File No. 001-06064), filed on August 7, 2002..............................................   *

- ----------
*  Incorporated by reference

                                     Page 55

EXHIBIT
  NO.
- -------
                                                                                                                     
  10.10       --   59th Street Management and Development Agreement, dated as of July 3, 2002, by and between 731
                    Commercial LLC and Vornado Management Corp. - Incorporated by reference to Exhibit 10(i)(F)(2) of
                    Alexander's Inc.'s quarterly report for the period ended June 30, 2002 (File No. 001-06064), filed
                    on August 7, 2002...................................................................................   *

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

                                     Page 56

                                                                    Exhibit 3.9

                              VORNADO REALTY TRUST

                  ARTICLES OF AMENDMENT OF DECLARATION OF TRUST

THIS IS TO CERTIFY THAT:

         FIRST: The Amended and Restated Declaration of Trust, as amended (the
"Declaration of Trust"), of Vornado Realty Trust, a Maryland real estate
investment trust (the "Trust"), is hereby amended by deleting Article VI,
Section 6.6(l)(1) of the Declaration of Trust in its entirety and replacing it
with the following:

         "        (1) The Board of Trustees, with a ruling from the Internal
         Revenue Service or an opinion of counsel, may exempt a Person from the
         Ownership Limit with respect to a class of Shares or an Existing Holder
         Limit, as the case may be, if the Board of Trustees obtains such
         representations and undertakings from such Person as are reasonably
         necessary to ascertain that no individual's Beneficial Ownership of
         Shares of such class will violate the Ownership Limit with respect to
         such class or any applicable Existing Holder Limit, in either case with
         respect to such individual, and such Person acknowledges and agrees
         that any violation or attempted violation will result in, to the extent
         necessary, the exchange of Shares held by such Person for Excess Stock
         in accordance with Section 6.6(c). In no event shall any exemption
         granted pursuant to this Section 6.6(l)(1) to a Person that is an
         individual for purposes of Section 542(a)(2) of the Code permit such
         individual to have Beneficial Ownership with respect to any class of
         Shares in excess of 9.9% of the outstanding Shares of such class."

         SECOND: The amendment to the Declaration of Trust as hereinabove set
forth has been duly advised by the Board of Trustees and approved by the
shareholders of the Trust as required by law.

         THIRD: The undersigned Chairman of the Board acknowledges this
amendment to be the trust act of the Trust and, as to all matters or facts
required to be verified under oath, the undersigned Chairman of the Board
acknowledges that, to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.

             [THE REMAINDER OF THE PAGE IS INTENTIONALLY LEFT BLANK]

         IN WITNESS WHEREOF, the Trust has caused this amendment to be signed in
its name and on its behalf by its Chairman of the Board and attested to by its
Corporate Secretary on this 31st day of May, 2002.

ATTEST:                                     VORNADO REALTY TRUST

/s/ Larry Portal                            /s/ Steven Roth            [SEAL]
- ---------------------------                 ---------------------------
Name: Larry Portal                          Name: Steven Roth
Title: Corporate Secretary                  Title: Chairman of the Board

                                       2

                                                                   Exhibit 3.10

                              VORNADO REALTY TRUST

                  ARTICLES OF AMENDMENT OF DECLARATION OF TRUST

THIS IS TO CERTIFY THAT:

         FIRST: The Amended and Restated Declaration of Trust, as amended (the
"Declaration of Trust"), of Vornado Realty Trust, a Maryland real estate
investment trust (the "Trust"), is hereby amended by deleting Article VI,
Section 6.1 of the Declaration of Trust in its entirety and replacing it with
the following:

         "SECTION 6.1 AUTHORIZED SHARES. The total number of shares of
         beneficial interest which the Trust is authorized to issue is
         540,000,000 shares, of which 70,000,000 shall be preferred shares of
         beneficial interest, no par value per share ("Preferred Stock")
         (including 5,789,239 $3.25 Series A Convertible Preferred Shares of
         Beneficial Interest, liquidation preference $50.00 per share; 3,400,000
         8.5% Series B Cumulative Redeemable Preferred Shares of Beneficial
         Interest, liquidation preference $25.00 per share; 4,600,000 8.5%
         Series C Cumulative Redeemable Preferred Shares of Beneficial Interest,
         liquidation preference $25.00 per share; 3,500,000 Series D-1 8.5%
         Cumulative Redeemable Preferred Shares of Beneficial Interest,
         liquidation preference $25.00 per share; 549,336 8.375% Series D-2
         Cumulative Redeemable Preferred Shares of Beneficial Interest,
         liquidation preference $50.00 per share; 8,000,000 Series D-3 8.25%
         Cumulative Redeemable Preferred Shares of Beneficial Interest,
         liquidation preference $25.00 per share; 5,000,000 Series D-4 8.25%
         Cumulative Redeemable Preferred Shares of Beneficial Interest,
         liquidation preference $25.00 per share; 7,480,000 Series D-5 8.25%
         Cumulative Redeemable Preferred Shares of Beneficial Interest,
         liquidation preference $25 per share; 1,000,000 Series D-6 8.25%
         Cumulative Redeemable Preferred Shares of Beneficial Interest,
         liquidation preference $25.00 per share, 7,200,000 Series D-7 8.25%
         Cumulative Redeemable Preferred Shares of Beneficial Interest,
         liquidation preference $25.00 per share, 360,000 Series D-8 8.25%
         Cumulative Redeemable Preferred Shares of Beneficial Interest,
         liquidation preference $25.00 per share and 1,800,000 Series D-9 8.25%
         Cumulative Redeemable Preferred Shares of Beneficial Interest,
         liquidation preference $25.00 per share), 200,000,000 shares shall be
         common shares of beneficial interest, $.04 par value per share ("Common
         Stock"), and 270,000,000 shares shall be excess shares of beneficial
         interest, $.04 par value per share ("Excess Stock")."

         SECOND: The foregoing amendment has been approved by the Board of
Trustees of the Trust as required by Section 8-203(a)(7) of the Maryland REIT
Law and Article IX, Section 9.1(b) of the Declaration of Trust.

         THIRD: The total number of shares of beneficial interest which the
Trust had authority to issue immediately prior to this amendment was
440,000,000, consisting of 150,000,000 common shares of beneficial

interest, $.04 par value per share, 70,000,000 preferred shares of beneficial
interest, no par value per share, and 220,000,000 excess shares of beneficial
interest, $.04 par value per share. The aggregate par value of all authorized
shares of beneficial interest having par value was $14,800,000.

         FOURTH: The number of shares of beneficial interest which the Trust
has authority to issue pursuant to the foregoing amendment is 540,000,000,
consisting of 200,000,000 common shares of beneficial interest, $.04 par
value per share, 70,000,000 preferred shares of beneficial interest, no par
value per share, and 270,000,000 excess shares of beneficial interest, $.04
par value per share. The aggregate par value of all authorized shares of
beneficial interest having par value is $18,800,000.

         FIFTH: The undersigned Chairman of the Board acknowledges this
amendment to be the trust act of the Trust and, as to all matters or facts
required to be verified under oath, the undersigned Chairman of the Board
acknowledges that, to the best of his knowledge, information and belief,
these matters and facts are true in all material respects and that this
Statement is made under the penalties for perjury.

             [THE REMAINDER OF THE PAGE IS INTENTIONALLY LEFT BLANK]

                                       2

                  IN WITNESS WHEREOF, the Trust has caused this amendment to be
signed in its name and on its behalf by its Chairman of the Board and attested
to by its Corporate Secretary on this 6th day of June, 2002.

ATTEST:                                     VORNADO REALTY TRUST

/s/ Larry Portal                            /s/ Steven Roth            [SEAL]
- --------------------------                  ---------------------------
Name: Larry Portal                          Name: Steven Roth
Title: Corporate Secretary                  Title: Chairman of the Board

                                       3

                                                                   Exhibit 3.47

                                   NINETEENTH
                                    AMENDMENT
                                       TO
                           SECOND AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP
                                       OF
                               VORNADO REALTY L.P.

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

                            Dated as of July 1, 2002

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

         THIS NINETEENTH AMENDMENT TO THE SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF VORNADO REALTY L.P. (this "AMENDMENT") is hereby
adopted by Vornado Realty Trust, a Maryland real estate investment trust
(defined therein as the "GENERAL PARTNER"), as the general partner of Vornado
Realty L.P., a Delaware limited partnership (the "PARTNERSHIP"). For ease of
reference, capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., as amended by the Amendment to
Second Amended and Restated Agreement of Limited Partnership of Vornado Realty
L.P., dated as of December 16, 1997, and further amended by the Second Amendment
to Second Amended and Restated Agreement of Limited Partnership of Vornado
Realty L.P., dated as of April 1, 1998, and the Third Amendment to Second
Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P.,
dated as of November 12, 1998, and the Fourth Amendment to Second Amended and
Restated Agreement of Limited Partnership of Vornado Realty L.P., dated as of
November 30, 1998, and the Fifth Amendment to Second Amended and Restated
Agreement of Limited Partnership of Vornado Realty L.P., dated as of March 3,
1999, and the Sixth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., dated as of March 17, 1999, and the
Seventh Amendment to Second Amended and Restated Agreement of Limited
Partnership of Vornado Realty L.P., dated as of May 20, 1999, and the Eighth
Amendment to Second Amended and Restated Agreement of Limited Partnership of
Vornado Realty L.P., dated as of May 27, 1999, and the Ninth Amendment to Second
Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P.,
dated as of September 3, 1999, and the Tenth Amendment to Second Amended and
Restated Agreement of Limited Partnership of Vornado Realty L.P., dated as of
September 3, 1999, and the Eleventh Amendment to Second Amended and Restated
Agreement of Limited Partnership of Vornado Realty L.P., dated as of November
24, 1999, and the Twelfth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., dated as of May 1, 2000, and the
Thirteenth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Vornado Realty L.P., dated as of May 25, 2000, and the Fourteenth
Amendment to

Second Amended and Restated Agreement of Limited Partnership of Vornado Realty
L.P., dated as of December 8, 2000, and the Fifteenth Amendment to Second
Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P.,
dated as of December 15, 2000, and the Sixteenth Amendment to Second Amended and
Restated Agreement of Limited Partnership of Vornado Realty L.P., dated as of
July 25, 2001, and the Seventeenth Amendment to Second Amended and Restated
Agreement of Limited Partnership of Vornado Realty L.P., dated as of September
21, 2001, and the Eighteenth Amendment to Second Amended and Restated Agreement
of Limited Partnership of Vornado Realty L.P., dated as of January 1, 2002 (as
so amended and as the same may be further amended, the "AGREEMENT").

         WHEREAS, on May 17, 2002, the Partnership, the General Partner, Vornado
Crystal Gateway L.P. (the "Transaction Sub"), a Delaware limited partnership and
wholly-owned subsidiary of the Partnership, First Gateway Associates Limited
Partnership, a Virginia limited partnership ("FIRST GATEWAY"), and Robert H.
Smith and Robert P. Kogod, each individually and as a general partner of First
Gateway, entered into a Contribution Agreement and Plan of Merger (the
"CONTRIBUTION AGREEMENT") pursuant to which the parties agreed to the conveyance
of certain property by First Gateway to the Partnership pursuant to the
Contribution Agreement and the Second Option Agreement, dated March 10, 1982, by
and among First Gateway Associates, Robert H. Smith, Robert P. Kogod and Boston
Safe Deposit and Trust Company, as trustee for the Bell System Trust, and
assigned to Lucent Technologies Inc. Master Pension Trust as of December 1, 2000
and further assigned to the Partnership as of March 6, 2002, such conveyance to
be consummated as either an asset transfer or a merger of the Transaction Sub
with and into First Gateway as set forth in the Contribution Agreement (the
"TRANSACTION");

         WHEREAS, as a condition to the closing of the transactions contemplated
by the Contribution Agreement, the General Partner and the Partnership have
agreed to amend the Agreement to acknowledge the issuance of the First Gateway
Units (as defined below) and to make certain other related changes;

         WHEREAS, in connection with the Transaction, the Partnership has agreed
to issue 325,728 additional Class A Units (such units, the "FIRST GATEWAY
UNITS") to First Gateway for distribution to the holders of partnership
interests in First Gateway;

         WHEREAS, Section 4.2.A of the Agreement grants the General Partner
authority to cause the Partnership to issue interests in the Partnership to a
person other than the General Partner in one or more classes or series, with
such designations, preferences and relative, participating, optional or other
special rights, powers and duties as may be determined by the General Partner in
its sole and absolute discretion so long as the issuance does not violate
Section 4.2.E of the Agreement;

                                                  -2-

         WHEREAS, the General Partner has determined that the issuance of the
First Gateway Units will not violate Section 4.2.E of the Agreement;

         WHEREAS, Section 14.1.B of the Agreement grants the General Partner
power and authority to amend the Agreement without the consent of any of the
Partnership's limited partners if the amendment does not adversely affect or
eliminate any right granted to a limited partner pursuant to any of the
provisions of the Agreement specified in Section 14.1.C or Section 14.1.D of the
Agreement as requiring a particular minimum vote; and

         WHEREAS, the General Partner has determined that the amendments
effected hereby do not adversely affect or eliminate any of the limited partner
rights specified in Section 14.1.C or Section 14.1.D of the Agreement as
requiring a particular minimum vote.

         NOW, THEREFORE, the General Partner hereby amends the Agreement as
follows:

         1. Section 4.2 of the Agreement is hereby supplemented by adding the
following paragraph to the end thereof:

         "U. Issuance of First Gateway Units to First Gateway Unitholders.

                  (1) In connection with the conveyance of certain property by
         First Gateway Associates Limited Partnership ("FIRST GATEWAY") to the
         Partnership on July 1, 2002 pursuant to the Contribution Agreement,
         dated as of May 17, 2002, by and among the General Partner, the
         Partnership, Vornado Crystal Gateway L.P., a wholly-owned subsidiary of
         the Partnership, First Gateway and Robert H. Smith and Robert P. Kogod,
         each individually and as a general partner of First Gateway, as
         modified by that certain Letter Agreement, dated June [26], 2002, from
         the General Partner, the Partnership, Vornado Crystal Gateway L.P. [and
         Charles E. Smith Commercial Realty L.P., a wholly-owned subsidiary of
         the Operating Partnership ("CESCR"),] to First Gateway (the
         "Contribution Agreement"), the Partnership issued 325,728 Class A Units
         (such Units, the "FIRST GATEWAY UNITS") to First Gateway for
         distribution to the holders of partnership interests in First Gateway
         (the "FIRST GATEWAY UNITHOLDERS") as reflected on amended EXHIBIT A
         attached hereto, subject to and in accordance with the terms of the
         Contribution Agreement. Notwithstanding any other provision contained
         in this Agreement, (i) holders from time to time of First Gateway Units
         shall not participate in any distribution (whether cash, securities or
         in any other form) constituting a "spin-off" of the Partnership's
         investment in, or any of the assets of, Alexander's, Inc. or any of its
         affiliates if the Partnership

                                       -3-

         Record Date for determining partners entitled to participate therein is
         on or before July 1, 2002 and (ii) upon the consummation (the "CLOSING
         TIME") of the transfer by First Gateway of its equity interest, free
         and clear of all liens or other encumbrances, in a special purpose
         entity wholly owned by First Gateway, a distribution of First Gateway
         Units to the holders of partnership interests in First Gateway and the
         execution of a limited partner acceptance of partnership agreement by
         each of the holders of the First Gateway Units satisfactory to the
         General Partner, each of the limited partners of First Gateway listed
         in the books and records of First Gateway immediately prior to the
         Closing Time automatically shall be admitted to the Partnership as an
         Additional Limited Partner, regardless of whether or not such Person
         has executed this Agreement or a counterpart signature page hereto, and
         without any further act, approval or vote of any Person. Each such
         Additional Limited Partner shall, upon such admission, be subject to,
         and bound by, this Agreement, including, without limitation, all of the
         terms and conditions of this Agreement and the power of attorney
         granted in Section 15.11 hereof.

                  (2) Except as expressly set forth in the third sentence of
         this subsection (2), holders from time to time of the First Gateway
         Units shall not be entitled to participate in any distributions in
         respect of those Units for any period prior to their issuance and,
         notwithstanding any provisions of Section 5.1.B of this Agreement to
         the contrary, in the event that the First Gateway Units are issued on
         or effective as of any date other than the first day of a period to
         which a distribution is attributable, any distributions to be made to
         holders of the First Gateway Units in respect of the distribution
         period in which the date of issuance falls shall be prorated based on
         the actual number of days in the entire period to which the
         distribution is attributable and the number of days in the period that
         the First Gateway Units were outstanding. For clarification, under
         current practices the Partnership's regular quarterly distributions
         made during any calendar quarter are attributable to the immediately
         preceding calendar quarter. If, at any time after the date of issuance
         of the First Gateway Units, the General Partner declares any
         distribution in respect of Class A Units other than a regular quarterly
         distribution (any such distribution, a "SPECIAL DISTRIBUTION"), the
         Special Distribution is attributable to any period prior to the date of
         issuance of the First Gateway Units and the Partnership Record Date for
         determining partners entitled to participate in the distribution is on
         or after the date of issuance of the First Gateway Units, then the
         holders of First Gateway Units shall be entitled to participate in that
         Special Distribution pro rata as if their First Gateway Units had been
         outstanding for the entire period to which that Special Distribution is
         attributable.

                                       -4-

                  (3) Section 8.6 of this Agreement is hereby irrevocably
         modified with respect to all First Gateway Units such that for any
         redemption of any such Units that will not qualify as either (A) a
         "block transfer" within the meaning of Regulations Section
         1.7704-1(e)(2) or any successor provision or (B) a transfer that falls
         within the "lack of actual trading" safe harbor available in
         Regulations Section 1.7704-1(j) or any successor provision (any such
         redemption, a "NON-QUALIFYING REDEMPTION"), the waiting period
         applicable to the Limited Partner between the date the Partnership
         receives a Notice of Redemption for the Limited Partner and the
         Specified Redemption Date and/or the Valuation Date shall be up to
         sixty (60) days, as determined by the General Partner in its sole
         discretion, and the General Partner shall have all requisite power and
         authority to amend the provisions of Section 8.6 of this Agreement
         applicable in respect of the First Gateway Units as it deems necessary
         or appropriate to (x) increase the waiting period between the delivery
         of a Notice of Redemption and the Specified Redemption Date and/or the
         Valuation Date to up to sixty (60) days for any Non-Qualifying
         Redemption and/or (y) implement any other amendment to this Agreement
         intended to make the redemption and transfer provisions, with respect
         to certain redemptions and transfers, more similar to the provisions
         described in Regulations Section 1.7704-1(f). In furtherance of the
         foregoing, each First Gateway Unitholder appoints the General Partner,
         any Liquidator and any authorized officers of the General Partner and
         attorneys-in-fact of each, and each of those acting singly, in each
         case with full power of substitution, as its true and lawful agent and
         attorney-in-fact, with full power and authority in its name, place and
         stead, to execute and deliver any amendment referred to in the
         foregoing sentence on such First Gateway Unitholder's behalf. The
         foregoing power of attorney is hereby declared to be irrevocable and a
         power coupled with an interest, and it shall survive and not be
         affected by the death, incompetency, dissolution, disability,
         incapacity, bankruptcy or termination of the First Gateway Unitholder
         as a Limited Partner and shall extend to the heirs, executors,
         administrators, legal representatives, successors and assigns.

                  (4) By accepting the First Gateway Units, each First Gateway
         Unitholder covenants and agrees that it does not and will not while it
         owns, directly or indirectly, equity interests in the Partnership with
         an aggregate value equal to or exceeding five (5) percent of the total
         value of the outstanding equity interests in the Partnership own,
         either directly or under the attribution rules of Section 318(a) of the
         Code (as modified by Section 856(d)(5) of the Code and using the
         principles of Section 7704(d)(3)(B) of the Code in determining when
         interests owned, directly or under the attribution rules, by a partner
         in an entity that is treated as a partnership for federal tax purposes
         are treated as owned by such entity), any equity interests in Vornado
         Operating Company, Vornado Operating L.P., or any direct or indirect
         tenant or subtenant of the Partnership or

                                       -5-

         any of its subsidiaries (Vornado Operating Company, Vornado Operating
         L.P., or any direct or indirect tenant or subtenant of the Partnership
         or any of its subsidiaries, collectively, the "VORNADO TENANTS");
         PROVIDED that the foregoing covenant shall not be treated as breached
         by a Limited Partner unless at such time the ownership of equity
         interests by such Limited Partner in one or more Vornado Tenants would
         cause either (a) the General Partner to fail to qualify as a REIT for
         purposes of Section 856 of the Code or (b) the Partnership to be
         treated as a publicly traded partnership treated as a corporation under
         Section 7704(a) of the Code. If at any time the Limited Partner would,
         but for the provisions of this paragraph (4), own both (i) five (5)
         percent or more (by value) of the outstanding equity interests in the
         Partnership and (ii) an equity interest in one or more Vornado Tenants
         in breach of the covenant set forth in the first sentence of this
         Section 4.2.T.(4) (applied taking into account the proviso in the first
         sentence of this Section 4.2.T.(4)), then, effective immediately prior
         to such point in time, the smallest portion of the interests in the
         Partnership owned (directly or indirectly) by the Limited Partner that
         is necessary to cause such Limited Partner to be considered to own
         (directly or indirectly) interests in the Partnership with a value that
         is not in excess of four and nine tenths (4.9) percent of the value of
         the Partnership's outstanding equity interests, shall become "EXCESS
         UNITS". While interests in the Partnership are Excess Units, such
         interests will be deemed to have been transferred by operation of law
         to a trust (the "SPECIAL TRUST") for the exclusive benefit of an
         organization described in Section 501(c)(3) of the Code and designated
         by the General Partner. The Partnership, as trustee for the Special
         Trust, shall be entitled to receive all distributions made in respect
         of Excess Units. Any distributions made in respect of Excess Units
         prior to the discovery that interests in the Partnership had become
         Excess Units shall be repaid by the recipients thereof to the
         Partnership as trustee of the Special Trust. The trustee shall exercise
         all rights associated with interests in the Partnership that have
         become Excess Units during the period that such interests are Excess
         Units. The Partnership shall have the right to transfer the Excess
         Units held in the Special Trust to any person. The Limited Partner (or
         its successor) shall be entitled to receive, from the proceeds of such
         a transfer, an amount not in excess of the lesser of (i) the fair
         market value of the interests that became Excess Units on the date that
         they became Excess Units and (ii) the net consideration received by the
         Partnership for the transfer of the Excess Units after deducting any
         expenses incurred by the Partnership in connection therewith. Excess
         Units shall cease to be treated as Excess Units following such a
         transfer and instead shall have the attributes that existed immediately
         before becoming Excess Units. In the event that a liquidating
         distribution is made in respect of Excess Units, the Limited Partner
         (or its successor) shall be entitled to receive a portion of such
         distribution not in excess of the fair market value of the interests
         that became Excess Units on the date that

                                       -6-

         they became Excess Units. The Partnership agrees that, if it becomes
         aware that partnership interests held by a Limited Partner or any
         person that owns ten (10) percent or more of the capital stock of the
         Limited Partner (in the case of a Limited Partner that is a
         corporation) or twenty five (25) percent or more of the capital or
         profits interests of a Limited Partner (in the case of a Limited
         Partner that is treated as a partnership for U.S. federal income tax
         purposes) have become Excess Units, then it will make commercially
         reasonable efforts to cause a transfer of such Excess Units as promptly
         as practicable (PROVIDED, HOWEVER, that it shall not be required to
         incur any material expense or expend any significant time or manpower
         in such efforts). The Limited Partner has no liability under this
         paragraph (4) for damages, monetary or otherwise, as a result of a
         breach of the covenant under this paragraph (4) other than having its
         interests become Excess Units under this paragraph (4) and, as a
         result, being liable to pay over any distribution or other amounts
         which the Limited Partner receives to which it is not entitled under
         the Excess Units provisions of this paragraph (4). The General Partner
         may, in its sole and absolute discretion exercised in good faith, take
         any commercially reasonable and appropriate actions to enforce the
         provisions of this paragraph (4).

                  (6) By accepting the First Gateway Units, each First Gateway
         Unitholder covenants and agrees that it will not transfer any interest
         in the Partnership (x) through (i) national, non-U.S., regional, local
         or other securities exchange, (ii) PORTAL or (iii) an over-the-counter
         market (including an interdealer quotation system that regularly
         disseminates firm buy or sell quotations by identified brokers or
         dealers by electronic means or otherwise) or (y) to or through (a) a
         person, such as a broker or dealer, that makes a market in, or
         regularly quotes prices for, interests in the Partnership or (b) a
         person that regularly makes available to the public (including
         customers or subscribers) bid or offer quotes with respect to any
         interests in the Partnership and stands ready to effect transactions at
         the quoted prices for itself or on behalf of others. The First Gateway
         Unitholder represents and agrees that it is not, and without the prior
         consent of the Partnership shall not become, a lender, or person
         related to a lender within the meaning of Treasury Regulations Section
         1.752-2(c), with respect to indebtedness of the Partnership or any of
         the Partnership's direct or indirect noncorporate subsidiaries.

                  (5) To the extent that the provisions of Articles 7 and 8 of
         the Tax Protection Agreement being entered into by the Partnership
         concurrently with the issuance of the First Gateway Units (and the
         related definitions in the Tax Protection Agreement and the related
         Schedules to the Tax Protection Agreement), copies of which are
         attached hereto as EXHIBIT X, address matters addressed in, and/or
         provide for rights required to be provided for in Article VI and/or
         EXHIBIT B

                                                  -7-

         and EXHIBIT C to the Agreement, the referenced portions of the Tax
         Protection Agreement constitute amendments to Article VI and/or EXHIBIT
         B and EXHIBIT C to the Agreement, as applicable, insofar as that
         Article and/or EXHIBIT B and EXHIBIT C apply to the First Gateway
         Units."

         2. EXHIBIT A of the Agreement is hereby deleted and is replaced in its
entirety by new EXHIBIT A attached hereto as ATTACHMENT 1.

         3. Except as expressly amended hereby, the Agreement shall remain in
full force and effect.

                          SIGNATURES ON FOLLOWING PAGE

                                       -8-

         IN WITNESS WHEREOF, the General Partner has executed this Amendment as
of the date first written above.

                                      VORNADO REALTY TRUST

                                      By:/s/ Joseph Macnow
                                         ---------------------------------------
                                          Name:   Joseph Macnow
                                          Title:  Executive Vice President -
                                                  Finance and Administration and
                                                  Chief Financial Officer

Acknowledged and agreed:

/s/ Robert H. Smith
- -------------------------------
ROBERT H. SMITH, as a General
Partner of First Gateway and as
a Representative of each of the
persons receiving First Gateway
Units as described in Section 1
above.

/s/ Robert P. Kogod
- --------------------------------
ROBERT P. KOGOD, as a General
Partner of First Gateway and as
a Representative of each of the
persons receiving First Gateway
Units as described in Section 1
above.

                                                                    Exhibit 4.2

                        OFFICERS' CERTIFICATE PURSUANT TO
                      SECTIONS 102 AND 301 OF THE INDENTURE

                  Pursuant to Section 301 of the Indenture, dated as of June 24,
2002 (the "Indenture"), between Vornado Realty L.P. (the "Company") and The Bank
of New York, as Trustee, the undersigned, the Executive Vice President - Finance
and Administration, Chief Financial Officer of Vornado Realty Trust ("Vornado")
and a Senior Vice President and the Controller of Vornado, respectively, do each
hereby certify on behalf of the Company that pursuant to the unanimous written
consent of the Board of Trustees of Vornado, dated February 17, 1998 (the
"February 1998 Consent"), and the resolutions adopted at a special meeting of
the Pricing Committee of Vornado on June 19, 2002 (the "Pricing Committee
Resolutions"), the Pricing Committee resolved to create a series of securities
designated the "5.625% Notes due 2007" (the "Notes"), to be issued under the
Indenture upon the terms set forth in the Pricing Committee Resolutions attached
hereto as Annex A. The terms certified under this paragraph are part of the
Indenture and are incorporated by reference in this certificate.

                  Pursuant to Section 102 of the Indenture, the undersigned
certify that they have read and are familiar with the provisions of the
Indenture and particularly of Article Three of the Indenture relating to the
issuance of the Notes thereunder and the definitions in the Indenture relating
thereto; that they are generally familiar with the affairs of the Company and
its partnership acts and proceedings; that they have reviewed the February 1998
Consent and the Pricing Committee Resolutions relating to the creation and sale
of the Notes, and such other documents as they deem necessary and proper to give
the opinion expressed herein; that, in their opinion, they have made such
examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not the covenants and conditions precedent
provided in the Indenture relating to the establishment, authentication and
delivery of the Notes have been complied with; and they are of the opinion that
all conditions precedent and covenants provided for in the Indenture relating to
the authentication and delivery of $500,000,000 aggregate principal amount of
the Notes have been complied with.

                  IN WITNESS WHEREOF, the undersigned have executed this
certificate on this 24th day of June, 2002.

/s/ Joseph Macnow                                   /s/ Ross Morrisson
- ----------------------------                        ---------------------------
Joseph Macnow                                       Ross Morrison
Executive Vice President -                          Senior Vice President and
Finance and Administration,                         Controller
Chief Financial Officer

                                                                         ANNEX A

          EXCERPTS FROM THE RESOLUTIONS OF THE PRICING COMMITTEE OF THE
                    BOARD OF TRUSTEES OF VORNADO REALTY TRUST

                  (...)

                  FURTHER RESOLVED, that there is hereby approved and
established a series of Debt Securities under the Indenture whose terms are as
follows:

         a.       The Securities of such series are known as the "5.625% Notes
                  due 2007" of the Company (the "Notes").

         b.       The aggregate principal amount of the Security of such series
                  which may be authenticated and delivered under the Indenture
                  is initially limited in aggregate principal amount to
                  U.S.$500,000,000 except for Notes authenticated and delivered
                  upon registration of transfer of, or in exchange for, or in
                  lieu of, other Notes pursuant to Section 304, 305, 306, 906,
                  1107 or 1203 of the Indenture and except for any Notes which,
                  pursuant to Section 303 of the Indenture, are deemed never to
                  have been authenticated and delivered thereunder, PROVIDED
                  that the Company may from time to time, without notice to or
                  the consent of the Holders of the Securities of this series,
                  create and issue further Securities of this series (the
                  "Additional Securities") having the same terms and ranking
                  equally and ratably with the Securities of this series in all
                  respects and with the same CUSIP number as the Securities of
                  this series, or in all respects except for the payment of
                  interest accruing prior to the Issue Date or except for the
                  first payment of interest following the issue date of such
                  Additional Securities. Any Additional Securities will be
                  consolidated and form a single series with the Securities and
                  shall have the same terms as to status, redemption and
                  otherwise as the Securities. Any Additional Securities may be
                  issued pursuant to authorization provided by a resolution of
                  the Board of Trustees of Vornado, a supplement to the
                  Indenture, or under an Officers' Certificate pursuant to the
                  Indenture.

         c.       The Notes shall be issuable in the form of one or more Global
                  Securities registered in the name of The Depository Trust
                  Company's nominee, and shall be deposited with, or on behalf
                  of, The Depository Trust Company, New York, New York. The
                  Notes may be surrendered for registration of transfer and for
                  exchange at the office or agency of the Company maintained for
                  such purpose in the Borough of Manhattan, The City of New
                  York, or at any other office or agency maintained by the
                  Company for such purpose.

                                                                         ANNEX A

         d.       The Stated Maturity of the principal of the Notes shall be
                  June 15, 2007.

         e.       The Notes shall bear interest at the rate of 5.625% per annum
                  from June 24, 2002 or from the most recent Interest Payment
                  Date to which interest has been paid or duly provided for, as
                  the case may be, payable semi-annually on June 15 and December
                  15 of each year, commencing on December 15, 2002, until the
                  principal thereof is paid or made available for payment, to
                  the Persons in whose name such Notes (or any Predecessor
                  Notes) are registered at the close of business on the Regular
                  Record Date (or in the case of Defaulted Interest, the Special
                  Record Date) next preceding the Interest Payment Date. Each
                  June 15 and December 15 shall be an Interest Payment Date for
                  the Notes, and June 1 and December 1 (whether or not a
                  Business Day), as the case may be, next preceding an Interest
                  Payment Date shall be the Regular Record Date for the interest
                  payable on such Interest Payment Date. Interest will be
                  computed on the basis of a 360-day year consisting of twelve
                  30-day months.

         f.       The principal of and the interest on the Notes shall be
                  payable at the office or agency of the Company maintained for
                  such purpose in the Borough of Manhattan, The City of New
                  York, as set forth in the form of Note attached hereto as
                  Exhibit A; PROVIDED, HOWEVER, that at the option of the
                  Company payment of interest may be made by check mailed to the
                  address of the Person entitled thereto as such address shall
                  appear in the Security Register and PROVIDED, FURTHER, that if
                  the Note is in the form of a Global Security, payment may be
                  made pursuant to the applicable procedures of the Depositary.

         g.       The Notes shall be redeemable, in whole or in part, at the
                  option of the Company at any time in accordance with Article
                  Eleven of the Indenture and upon the terms and conditions set
                  forth in the form of Note attached hereto as Exhibit A. Any
                  election by the Company to so redeem the Notes shall be
                  evidenced by a resolution of the Board of Trustees of Vornado
                  or the Committee.

         h.       The Company shall not be obligated to redeem or purchase any
                  Note pursuant to any sinking fund or analogous provision, or
                  at the option of any Holder thereof.

         i.       The Notes shall be denominated in U.S. dollars and payments of
                  principal, interest and additional amounts, if any, on the
                  Notes shall be made in U.S. dollars.

                                      - 2-

                                                                         ANNEX A

         j.       The Notes shall be defeasible pursuant to Sections 1302 and
                  1303 of the Indenture, and those Sections shall be applicable
                  in their entirety to the Notes. Any election of the Company to
                  defease the Notes pursuant to Section 1302 or Section 1303 of
                  the Indenture shall be evidenced by a resolution of the Board
                  of Trustees.

         k.       The Bank of New York is hereby appointed as a Paying Agent and
                  the Security Registrar for the Notes. The Security Register
                  for the Notes will be maintained by the Security Registrar in
                  the Borough of Manhattan, The City of New York.

         l.       In addition to the covenants set forth in the Indenture, there
                  are established pursuant to Section 301(18) of the Indenture
                  the following covenants for the benefit of the Holders of the
                  Notes and to which the Notes shall be subject:

                  i.       The Company shall not, and shall not permit any
                           Subsidiary to, Incur any Debt, other than
                           Intercompany Debt, if, immediately after giving
                           effect to the Incurrence of the additional Debt and
                           any other Debt, other than Intercompany Debt,
                           Incurred since the end of the period covered by the
                           Company's Annual Report on Form 10-K or Quarterly
                           Report on Form 10-Q, as the case may be, most
                           recently filed with the Securities and Exchange
                           Commission (the "SEC") prior to the Incurrence of the
                           additional Debt and the application of the net
                           proceeds of the additional Debt and such other Debt,
                           Total Outstanding Debt would exceed 60% of Total
                           Assets, in each case determined as of the end of the
                           period covered by that Annual Report on Form 10-K or
                           Quarterly Report on Form 10-Q, as the case may be.

                  ii.      The Company shall not, and shall not permit any
                           Subsidiary to, Incur any Secured Debt, other than
                           Secured Debt that is also Intercompany Debt, if,
                           immediately after giving effect to the Incurrence of
                           the additional Secured Debt and any other Secured
                           Debt, other than Intercompany Debt, Incurred since
                           the end of the period covered by the Company's Annual
                           Report on Form 10-K or Quarterly Report on Form 10-Q,
                           as the case may be, most recently filed with the SEC
                           prior to the Incurrence of the additional Secured
                           Debt and the application of the net proceeds of the
                           additional Secured Debt and such other Secured Debt,
                           the aggregate principal amount of all outstanding
                           Secured Debt is greater than 55% of Total Assets
                           determined as of the end of the period covered by
                           that

                                      - 3-

                                                                         ANNEX A

                           Annual Report on Form 10-K or Quarterly Report on
                           Form 10-Q, as the case may be.

                  iii.     The Company shall not, and shall not permit any
                           Subsidiary to, Incur any Debt, other than
                           Intercompany Debt, if, immediately after giving
                           effect to the Incurrence of the additional Debt, the
                           ratio of Annualized Combined EBITDA for the most
                           recent quarterly period covered by the Company's
                           Annual Report on Form 10-K or Quarterly Report on
                           Form 10-Q, as the case may be, most recently filed
                           with the SEC prior to the Incurrence of the
                           additional Debt, to Annualized Interest Expense for
                           that quarter would be less than 1.50 to 1.00 on a pro
                           forma basis after giving effect to the Incurrence of
                           the additional Debt and to the application of the net
                           proceeds therefrom, and calculated on the assumption,
                           without duplication, that:

                                    (a)      the additional Debt and any other
                                             Debt Incurred by the Company or its
                                             Subsidiaries from the first day of
                                             that quarter to the date of
                                             determination, which was
                                             outstanding at the date of
                                             determination, had been Incurred at
                                             the beginning of that period and
                                             continued to be outstanding
                                             throughout that period, and the
                                             application of the net proceeds of
                                             that Debt, including to refinance
                                             other Debt, had occurred at the
                                             beginning of that period;

                                    (b)      the repayment or retirement of any
                                             other Debt repaid or retired by the
                                             Company or its Subsidiaries from
                                             the first day of that quarter to
                                             the date of determination occurred
                                             at the beginning of that period,
                                             except that, in determining the
                                             amount of Debt so repaid or
                                             retired, the amount of Debt under
                                             any revolving credit facility will
                                             be computed based upon the average
                                             daily balance of that Debt during
                                             that period; and

                                    (c)     in the case of any acquisition or
                                            disposition of any asset or group of
                                            assets or the placement of any
                                            assets in service or removal of any
                                            assets from service by the Company
                                            or any of its Subsidiaries from the
                                            first day of that quarter to the
                                            date of determination, including,
                                            without limitation, by merger, or
                                            stock or asset

                                      - 4-

                                                                         ANNEX A

                                            purchase or sale, the acquisition,
                                            disposition, placement in service or
                                            removal from service had occurred as
                                            of the first day of that period,
                                            with the appropriate adjustments to
                                            Annualized Interest Expense with
                                            respect to the acquisition,
                                            disposition, placement in service or
                                            removal from service being included
                                            in that pro forma calculation.

                  iv.      The Company and its Subsidiaries shall maintain at
                           all times Unencumbered Assets of not less than 150%
                           of the aggregate principal amount of all outstanding
                           Unsecured Debt of the Company and its Subsidiaries.

                           "Annualized Combined EBITDA" means, for any quarter,
                           the product of Combined EBITDA for such period of
                           time multiplied by four (4), PROVIDED that any
                           non-recurring item that is an expense will be added
                           back to net income in determining such Combined
                           EBITDA before such multiplication and deducted once
                           from such product, and FURTHER PROVIDED that any
                           non-recurring item that is income will be added to
                           such product once and will not be multiplied by four.

                           "Annualized Interest Expense" means, for any quarter,
                           the Interest Expense for that quarter multiplied by
                           four (4).

                           "Another Person's Share" means, in connection with
                           the defined term "Contingent Liabilities of the
                           Company and Subsidiaries", the proportionate portion,
                           based on its direct and indirect ownership interest,
                           of a Person other than the Company or any of its
                           Subsidiaries of the applicable Unconsolidated Joint
                           Venture.

                           "Combined EBITDA" means, for any period of time,
                           without duplication (1) net income (loss) of the
                           Company and its Consolidated Subsidiaries before
                           deductions for Interest Expense, taxes, depreciation
                           and amortization and other non-cash items deducted in
                           arriving at net income (loss), extraordinary items,
                           non-recurring items as determined in good faith by
                           the Company and minority interest, and excluding
                           gains (losses) on dispositions of depreciable real
                           estate of the Company and its Consolidated
                           Subsidiaries; plus (2) net income before deductions
                           for Interest Expense, taxes, depreciation and
                           amortization and other non-cash items deducted in
                           arriving at net income (loss), extraordinary items,

                                      - 5-

                                                                         ANNEX A

                           non- recurring items as determined in good faith by
                           the Company, and minority interest and excluding
                           gains (losses) on dispositions of depreciable real
                           estate of Unconsolidated Joint Ventures multiplied by
                           the Company's and its Consolidated Subsidiaries'
                           proportionate portion, based on their direct and
                           indirect ownership interest, of such Unconsolidated
                           Joint Ventures; minus (3) the Company's income (loss)
                           from Unconsolidated Joint Ventures, in each case (1),
                           (2) and (3) for such period as reasonably determined
                           by the Company in accordance with GAAP to the extent
                           GAAP is applicable. Combined EBITDA will be adjusted,
                           without duplication, to give pro forma effect: (x) in
                           the case of any assets having been placed in service
                           or removed from service from the beginning of the
                           period to the date of determination, to include or
                           exclude, as the case may be, any Combined EBITDA
                           earned or eliminated as a result of the placement of
                           such assets in service or removal of such assets from
                           service as if the placement of such assets in service
                           or removal of such assets from service occurred at
                           the beginning of the period; and (y) in the case of
                           any acquisition or disposition of any asset or group
                           of assets from the beginning of the period to the
                           date of determination, including, without limitation,
                           by merger, or stock or asset purchase or sale, to
                           include or exclude, as the case may be, any Combined
                           EBITDA earned or eliminated as a result of the
                           acquisition or disposition of those assets as if the
                           acquisition or disposition occurred at the beginning
                           of the period.

                           "Consolidated Financial Statements" means, with
                           respect to any Person, collectively, the consolidated
                           financial statements and notes to those financial
                           statements, of that Person and its Consolidated
                           Subsidiaries prepared in accordance with GAAP. For
                           purposes of this definition, if as of any date or for
                           any period actual consolidated financial statements
                           of any Person have not been prepared, then this term
                           will include the books and records of that Person
                           ordinarily used in the preparation of such financial
                           statements.

                           "Consolidated Subsidiaries" means, collectively, each
                           Subsidiary of the Company that is consolidated in the
                           Consolidated Financial Statements of the Company.

                           "Contingent Liabilities of the Company and
                           Subsidiaries" means, as of any date, without
                           duplication, those liabilities of the Company and any
                           of its Subsidiaries consisting of indebtedness for
                           borrowed money, as determined in accordance with
                           GAAP, that are or would be stated and quantified as
                           contingent liabilities in the notes to the
                           Consolidated Financial Statements of the Company as
                           of that date; PROVIDED, HOWEVER, that

                                      - 6-

                                                                         ANNEX A

                           Contingent Liabilities of the Company and
                           Subsidiaries shall exclude Another Person's Share of
                           Duplicated Obligations.

                           "Debt" means, as of any date, (1) in the case of the
                           Company, all indebtedness and liabilities for
                           borrowed money, secured or unsecured, of the Company;
                           (2) in the case of the Company's Consolidated
                           Subsidiaries, all indebtedness and liabilities for
                           borrowed money, secured or unsecured, of the
                           Consolidated Subsidiaries, including mortgage and
                           other notes payable but excluding any indebtedness
                           which is secured by cash, cash equivalents or
                           marketable securities or defeased; and (3) Contingent
                           Liabilities of the Company and Subsidiaries, in each
                           case as of that date.

                           "Duplicated Obligations" means, as of any date,
                           collectively, all those payment guaranties in respect
                           of indebtedness and other liabilities, secured or
                           unsecured, of Unconsolidated Joint Ventures,
                           including mortgage and other notes payable for which
                           the Company or any of its Subsidiaries, on one hand,
                           and another Person or Persons, on the other hand, are
                           jointly and severally liable.

                           "GAAP" means generally accepted accounting principles
                           in the United States of America as in effect from
                           time to time.

                           "Incur" means, with respect to any Debt or other
                           obligation of any Person, to create, assume,
                           guarantee or otherwise become liable in respect of
                           the Debt or other obligation, and "Incurrence" and
                           "Incurred" have the meanings correlative to the
                           foregoing.

                           "Intercompany Debt" means, as of any date, Debt to
                           which the only parties are Vornado Realty Trust, the
                           Company, or any Subsidiary of either of them as of
                           that date and which, in the case of an event of
                           default under this Security, is subordinated in right
                           of payment to this Security.

                           "Interest Expense" means, for any period of time, the
                           consolidated interest expense for such period of
                           time, whether paid, accrued or capitalized, without
                           deduction of consolidated interest income, of the
                           Company and its Consolidated Subsidiaries, including,
                           without limitation or duplication, or, to the extent
                           not so included, with the addition of: (1) the
                           portion of any rental obligation in respect of any

                                      - 7-

                                                                         ANNEX A

                           capital lease obligation allocable to interest
                           expense in accordance with GAAP; (2) the amortization
                           of Debt discounts; and (3) the interest expense and
                           items listed in clauses (1) and (2) above applicable
                           to each of the Unconsolidated Joint Ventures, to the
                           extent not included above, multiplied by the
                           Company's respective direct and indirect ownership
                           interests in the Unconsolidated Joint Ventures, in
                           all cases as reflected in the applicable Consolidated
                           Financial Statements.

                           "Lien" means, without duplication, any mortgage,
                           trust deed, deed of trust, deeds to secure Debt,
                           pledge, security interest, assignment for collateral
                           purposes, deposit arrangement, or other security
                           agreement, excluding any right of setoff but
                           including, without limitation, any conditional sale
                           or other title retention agreement, any financing
                           lease having substantially the same economic effect
                           as any of the foregoing, and any other like agreement
                           granting or conveying a security interest.

                           "Person" means an individual, partnership,
                           corporation, business trust, joint stock company,
                           trust, unincorporated association, joint venture,
                           limited liability company, governmental authority or
                           other entity of whatever nature. For the purposes of
                           this definition, "governmental authority" means any
                           nation or government, any state or other political
                           subdivision of any state, and any entity exercising
                           executive, legislative, judicial, regulatory or
                           administrative functions of or pertaining to
                           government.

                           "Secured Debt" means, as of any date, that portion of
                           Total Outstanding Debt as of that date that is
                           secured by a Lien on real property, securities or
                           intangible assets of the Company, the Consolidated
                           Subsidiaries of the Company or the Unconsolidated
                           Joint Ventures.

                           "Subsidiary" means, with respect to any Person, a
                           corporation, partnership, joint venture, limited
                           liability company or other entity, fifty percent
                           (50%) or more of the outstanding voting stock,
                           partnership interests or membership interests, as the
                           case may be, of which is owned, directly or
                           indirectly, by that Person or by one or more other
                           Subsidiaries of that Person and over which that
                           Person or one or more other Subsidiaries of that
                           Person exercise sole control. For the purposes of
                           this definition, "voting stock" means stock having
                           voting power for the election of directors or
                           trustees, as the case may be, whether at all times or
                           only so long as no senior class of stock has

                                      - 8-

                                                                         ANNEX A

                           voting power for the election of directors or
                           trustees by reason of any contingency, and "control"
                           means the power to direct the management and policies
                           of a Person, directly or indirectly, whether through
                           the ownership of voting securities, by contract or
                           otherwise.

                           "Total Assets" means, with respect to any Incurrence
                           of Debt or Secured Debt, as of any date, the sum of
                           (1) Combined EBITDA for the most recent quarterly
                           period covered by the Company's Annual Report on Form
                           10-K or Quarterly Report on Form 10-Q, as the case
                           may be, most recently filed with the SEC prior to
                           such date, annualized (I.E., multiplied by four (4)),
                           and capitalized at a rate of 9.0%, (2) cash, cash
                           equivalents and marketable securities of the Company
                           and its Consolidated Subsidiaries other than
                           restricted cash, cash equivalents and marketable
                           securities pledged to secure Debt, determined in
                           accordance with GAAP, (3) the Company's proportionate
                           portion, based on its direct and indirect ownership
                           interest, of cash, cash equivalents and marketable
                           securities of Unconsolidated Joint Ventures as of
                           such date, determined in accordance with GAAP, (4)
                           without duplication, the cost basis of properties of
                           the Company and its Consolidated Subsidiaries that
                           are under construction as of the end of the quarterly
                           period used for purposes of clause (1) above and the
                           Company's proportionate share of the cost basis of
                           properties of its Unconsolidated Joint Ventures that
                           are under construction as of the end of the quarterly
                           period used for purposes of clause (1) above, in each
                           case as determined by the Company, and (5) without
                           duplication, the proceeds of the Debt or Secured Debt
                           or the assets to be acquired in exchange for such
                           proceeds, as the case may be, other than Intercompany
                           Debt, Incurred from the end of the period covered by
                           the Company's Annual Report on Form 10-K or Quarterly
                           Report on Form 10-Q, as the case may be, most
                           recently filed with the SEC prior to the Incurrence
                           of the Debt or Secured Debt, as the case may be, to
                           the date of determination.

                           "Total Outstanding Debt" means, as of any date, the
                           sum, without duplication, of (1) the aggregate
                           principal amount of all outstanding Debt of the
                           Company as of that date; (2) the aggregate principal
                           amount of all outstanding Debt of the Company's
                           Consolidated Subsidiaries, all as of that date; and
                           (3) the sum of the aggregate principal amount of all
                           Unconsolidated Joint Venture Outstanding Debt of each
                           of the Unconsolidated Joint Ventures multiplied by
                           the Company's respective proportionate portion, based
                           on its direct and indirect ownership interest, in
                           such Unconsolidated Joint Venture as

                                      - 9-

                                                                         ANNEX A

                           of that date. For the purposes of this definition,
                           "Unconsolidated Joint Venture Outstanding Debt"
                           means, as of any date, the aggregate principal amount
                           of all outstanding indebtedness and liabilities for
                           borrowed money, secured or unsecured, of the
                           applicable Unconsolidated Joint Venture, including
                           mortgage and other notes payable but excluding any
                           indebtedness which is secured by cash, cash
                           equivalents or marketable securities, all as
                           reflected in the Consolidated Financial Statements of
                           such Unconsolidated Joint Venture as of such date.

                           "Unconsolidated Joint Ventures" means the
                           unconsolidated joint ventures and partially owned
                           entities in which the Company owns a beneficial
                           interest and which are accounted for under the equity
                           method in the Consolidated Financial Statements of
                           the Company. Unconsolidated Joint Ventures excludes
                           Prime Group Realty L.P. and any other unconsolidated
                           joint venture designated from time to time by the
                           Board of Trustees of Vornado Realty Trust as excluded
                           from Unconsolidated Joint Ventures for purposes of
                           these definitions so long as neither the Company nor
                           any of its Consolidated Subsidiaries is an obligor on
                           any indebtedness of that unconsolidated joint
                           venture.

                           "Unencumbered Annualized Combined EBITDA" means, for
                           any quarter, Unencumbered Combined EBITDA for that
                           quarter multiplied by four (4).

                           "Unencumbered Assets" means, as of any date, the sum
                           of (1) Unencumbered Annualized Combined EBITDA for
                           the most recent quarterly period covered by the
                           Company's Annual Report on Form 10- K or Quarterly
                           Report on Form 10-Q, as the case may be, most
                           recently filed with the SEC prior to such date, and
                           capitalized at a rate of 9.0%, (2) cash, cash
                           equivalents and marketable securities of the Company
                           and its Consolidated Subsidiaries as of such time,
                           other than restricted cash, cash equivalents and
                           marketable securities pledged to secure Debt,
                           determined in accordance with GAAP, (3) the Company's
                           proportionate portion, based on its direct and
                           indirect ownership interest, of cash, cash
                           equivalents and marketable securities of
                           Unconsolidated Joint Ventures as of such time, other
                           than restricted cash, cash equivalents and marketable
                           securities pledged to secure Debt, determined in
                           accordance with GAAP, (4) without duplication, the
                           cost basis of properties of the Company and its
                           Consolidated Subsidiaries and the Company's
                           proportionate share of the cost basis of properties
                           of its Unconsolidated Joint Ventures

                                      - 10-

                                                                         ANNEX A

                           that are under construction as of the end of the
                           quarterly period used for purposes of clause (1)
                           above, in each case as determined by the Company,
                           except in each case any properties that are pledged
                           to secure Debt, and (5) without duplication, the
                           proceeds of any Debt, other than Intercompany Debt,
                           Incurred from the end of the period covered by the
                           Company's Annual Report on Form 10-K or Quarterly
                           Report on Form 10-Q, as the case may be, most
                           recently filed with the SEC prior to such date, or
                           the assets to be acquired in exchange for such
                           proceeds, except in each case any proceeds or
                           assets that are pledged in respect of Secured Debt.

                           "Unencumbered Combined EBITDA" means, for any
                           quarter, Combined EBITDA for the most recent
                           quarterly period covered by the Company's Annual
                           Report on Form 10-K or Quarterly Report on Form 10-Q,
                           as the case may be, most recently filed with the SEC
                           prior to the time of determination less any portion
                           thereof attributable to assets serving as collateral
                           for Secured Debt, as determined in good faith by the
                           Company.

                           "Unsecured Debt" means, as of any date, that portion
                           of Total Outstanding Debt as of that date that is
                           neither Secured Debt nor Contingent Liabilities of
                           the Company and Subsidiaries.

                           (...)

                                      - 11-